14. Annual Accounts and notes 15. Shareholder matters 16. Sustainability assurance 17. Appendix
In the corporate market in Norway, we landed several large new customers in a competitive market. We also received renewed trust from existing customers who announced bids on tenders. We are prepared to roll up our sleeves as individual pension accounts are introduced in Norway in 2021. We will continue to work hard to provide good customer experiences, so that customers will prefer Storebrand.
Climate adaptation and the transition to a low-emission society involve both risks and opportunities for Storebrand. Through the investor initiative Net Zero Asset Owner Alliance (NZAOA), we are committed to adapting our investment portfolio to the 1.5-degree target of the Paris Agreement, which means that the investment portfolio must be carbon neutral by2050, at the latest. This is an ambitious goal that requires close dialogue with the companies we invest in to help reduce their emissions.
5) Compared to European Insurance Index Bone clock 5) Se kapittel 3, People - dette er fornoten på norsk?!
See attachments on page 215 for full resumes for board and committee members.
Material issues To ensure that we have a comprehensive and long-term approach to creating value for our shareholders, customers, employees and society at large, we regularly conduct a materiality analysis. This ensures alignment between our goals and prioritised areas, and our stakeholders’ expectations. The material analysis has been adjusted and updated through ongoing stakeholder dialogue in recent years and was further developed in 2020.
“Storebrand shall be known for our ability to create value through sustainable investments.”
A significant number of corporate customers also chose to enter into an agreement on digital payment of occupational pensions. After the service was introduced, more than 50 per cent of all private customers who retired in 2020 chose a fully digital pension payment solution.
Approach The starting point for all customer contact is the principle of putting the customer first. This is reflected in our service standards: • Trustworthy – I keep what I promise, and I am a professional.
Results In 2020, Storebrand was ranked 2nd in the Norwegian Customer Barometer’s annual measurement of customer satisfaction in the corporate market. The score of 73 points (out of 100) indicates that customers were well satisfied with their customer relationship. Storebrand received the highest score on loyalty among corporate customers. It is also pleasing that sustainability was an important driver of loyalty and trust. This confirmed that Storebrand’ s commitment to profitable sustainability will become an important differentiator in both the corporate and retail markets.
By being close to our customers, we can understand their behaviour, challenges and needs. Digital development had a high level of activity in 2020. Multiple improvements were made to existing solutions, while new services were developed throughout the year. We integrated the work with digital trust and information security in the teams, so that they have better conditions for safeguarding privacy and information security both in concept development, design, development, and operation of the services.
A total of 1 997 people participated in one or more courses under the auspices of Storebrand. Our employees completed a total of 7 702 hours of learning, an average of 3.9 hours per person. However, this figure does not give a complete picture of all digital learning through last year, as many employees take courses on other online platforms, as well as over Teams, which we do not keep statisticson. By the end of 2020, more than 70 per cent of our employees had completed training in the new Personal Data Act.
Number (share) of men at executive level 3 50% 26 (54%) 50% 50%
All employees up to intermediate managers, women’s share of salary per position category (Hay Grade 13-20) II) 98.8% 100% 100%
Gender balance all managers, proportion of women 39% 39% 39% 50% 50%
Why At Storebrand, sustainability is an integral part of our business strategy. We express clear expectations to the companies we invest in, our suppliers and partners. At the same time, we want to act as an example to follow. That’s why we work to ensure that our own operations are as sustainable as possible.
Approach We set clear requirements to our suppliers and business partners, by Storebrand’s Standard Annex for Sustainability. This is an annex to all tender requests and supplier contracts. In addition to following our internal procurement guidelines, a key principle is that goods and services purchased shall support our key objective of cost effective, sustainable business operations. Storebrand shall not purchase goods or services from companies listed on storebrand Kapitalforvaltning’s exclusion list.19), Our purchasing policy is based on the Group’s governing documents and related procedures, which are revised annually. 20)
Key performance indicators Result 2017 Result 2018 Result 2019 Result 2020 Goal 2020 Goal 2025
Number of complaints processed by the Financial Appeals Board 27) New 135 192 218 N/A N/A
CO2equivalents per FTE related to flights will be replaced from 2019. Emissions from flights have been recalculated for 2017-2019 as a result of updates to the emission factors in our travel agencies’ systems.
We target a solvency ratio in accordance with Solvency II of at least 150 per cent, including the use of transitional rules. At the end of 2020, the solvency ratio for the Group was 178 per cent including transitional rules. Without transitional rules, the solvency margin was 166 per cent. Storebrand uses the standard model for the calculation of Solvency II. Prudent risk management and regulatory adjustment mechanisms in the solvency regulation compensate for occasionally challenging financial market conditions.
Storebrand Bank Group had a pure core capital adequacy ratio of 15.1 per cent and capital adequacy ratio of 18.7 per cent at the end of 2020. The company has satisfactory capital adequacy and liquidity based on its business activities. The lending portfolio consists primarily of low-risk home mortgages with an average LTV (loan-to-value) of 56 per cent.
Storebrand ASA reported a profit of NOK 2,804 million compared to NOK 2,952 million in 2019.
• The ability for companies to compensate customers who convert to paid up policies with investment choice.
In order to integrate assessments of companies’ ESG risks and opportunities into the investment process, proper tools are essential. Since 2012, Storebrand has developed and integrated a sustainability score providing a foundation for investment decisions, by ranking the companies on operations, products, and services. In this way, we can effectively identify companies that have the potential to deliver good returns, while helping to solve sustainability challenges. We calculate the sustainability scores of over 4 500 companies and base it on a 0-100 scale. We increase investments in companies that achieve high scores, an reduce investments in companies with low scores. Our target is that 15 per cent of our investments will be invested in solution by 2025, up from 9.6 per cent in 2020.
Companies that cause or contribute to serious and systematic violations of international law and human rights in areas of war.
Companies that deliberately and systematically work and lobby to counter the objectives enshrined in the Paris Agreement.
We will seek to build positive dialogue with companies, aiming to support their transition to low carbon and climate-resilient activities. This will be done both through individual dialogue, but also through investor initiatives such as the PRI and Climate Action 100+.
42) The figure applies to equity investments. For more information, see the chapter on climate risks and opportunities, especially page 70. See also description in the list of definitions from page 225.
NOK billion invested in fossil-free products 39) 60 68 277 379 N/A N/A
Covid-19 had limited impact on Storebrand’s operations, but it caused major fluctuations in the financial markets. The first phase was handled as an emergency situation. Home office and digital meeting places were adopted to prevent the risk for contagion. Work processes were successfully restructured without any significant negative events. Our customer service and deliveries were affected to a small extent.
The asset management business offers active and passive management, as well as management of fund-in-fund structures. Operational risks, including regulatory compliance, are the greatest risks.
Guaranteed pension Guaranteed Pension encompasses savings and pension products with guaranteed interest rates. The greatest risks are financial market risk and longevity risk.
• Be an active owner and driving force: Storebrand Asset Management (SAM) leads Storebrand’s work with active ownership. In line with SAM’s strategy for active ownership, particular focus will be placed on our active ownership and engagements with the 20 companies where we own the largest emissions.49) This will mainly be done in cooperation with other investors in initiatives such as Climate Action 100+.
Storebrand’s work on gender equality, human resources management, working environment and ethical regulations is described in more detail in the chapters People and Keeping our house in order. See our compilation of sustainability indicators on page 221.
Dividend policy Storebrand’s dividend policy sates that the aim is to pay an ordinary dividend of more than 50 per cent of the group result after tax and at least the same nominal amount as the previous year. Ordinary dividends will be paid at a solvency margin of more than 150 per cent. If the solvency margin is above 180 per cent, the Board intends to propose special dividends or share buy backs.
2) Includes undistributable funds in the risk equalisation fund amounting to NOK 438 million and security reserves amounting NOK 68 million.
Note 22: Remuneration to senior employees and elected officers of the company
A large majority of the financial assets are measured at fair value (the fair value option is used), whilst other financial instruments that are included in the categories Loans and receivables and Held to maturity are measured at amortised cost. Financial assets measured at amortised cost are largely related to Norwegian pension liabilities with annual interest rate guarantee.
Price of return guarantee and profit risk (fee incomes) - Storebrand Livsforsikring AS The return guarantees in group pension insurance with a return guarantee must be priced upfront. The level of the return guarantee, the size of the buffer capital (additional statutory reserves and unrealised gains), and the investment risk of the portfolio in which the pensions assets are invested determine the price that the customer pays for his or her return guarantee. Return guarantees are priced on the basis of the risk to which the equity is exposed. The insurance company bears all the downside risk and must carry reserves against the policy if the buffer reserves are insufficient or unavailable.
Insurance premiums consist of premium income relating to risk products (insurance segment) that are classified as premium income in the Group’s income statement.
For the life insurance companies, the financial assets are invested in a variety of sub-portfolios. Market risk affects Storebrand’s income and profit differently in the different sub-portfolios. There are three main types of sub-portfolio: company portfolios, customer portfolios without a guarantee (unit linked insurance) and customer portfolios with a guarantee.
Storebrand aims to take low financial risk for the company portfolios, and most of the funds are invested in short and medium-term fixed income securities with low credit risk.
Because it is the immediate market changes that are calculated, dynamic risk management will not affect the outcome. If it is assumed that the market changes occur over a period of time, then dynamic risk management would reduce the effect of the negative outcomes and reinforce the positive to some extent.
Sensitivity NOK million Share of portfolio NOK million Share of portfolio
Total subordinated loans and hybrid tier 1 capital 2019 8,925 1) Storebrand Bank ASA has issued hybrid tier 1 capital bonds/hybrid capital that is classified as equity. See the statement of changes in equity. 2) In the case of perpetual subordinated loans the cash flow is calculated through to the first call date. 3) The loans are subject to hedge accounting, see note 41
The maximum limits for credit exposure to individual counterparties and for overall credit exposure to rating categories are set by the Boards of the individual companies in the Group. Particular attention is paid to ensuring diversification of credit exposure in order to avoid concentrating credit exposure on any particular debtors or sectors. Changes in the credit standing of debtors are monitored and followed up. Thus far, the Group has used published credit ratings wherever possible, supplemented by the company’s own credit evaluation.
Underlying investments in funds managed by Storebrand are included in the tables.
Total bonds and other fixed-income securities 31.12.20 16,114 151,367 9,514 176,995
Total gains and losses on financial assets at fair value 4,612 9,684 10,127 24,423 447 23,977 43,562 - of which FVO (fair value option) 3,546 13 -13 3,547 163 3,775
Expected annual increase in social security pensions 1.75 % 2.00 %
Actuarial assumptions: In Norway standardised assumptions on rates of mortality and disability as well as other demographic factors are prepared by Finance Norway. With effect from 2014 a new mortality basis, K2013, has been introduced for group pension insurance in life insurance companies and pension funds. Storebrand has used the mortality table K2013BE (best estimate) in the actuarial calculations at 31 December 2020.
The Group has a retirement age of 70 years. In accordance with the general rules, employees can access a pension from the age of 62. There are no fixed schemes for early retirement pensions at the Group, nor for executive management.
The Board of Directors determines remuneration to the CEO following a proposal from the Compensation Committee. The CEO determines the compensation for other members of executive management based on a process with the Compensation Committee as the advisory body.
Calculations related to the future are uncertain. The value will be impacted by various growth parameters, expected return and the required rate of return used as a basis, etc. The aim of the calculations is to achieve a satisfactory level of certainty that the recoverable amount, cf. IAS 36, is not lower than the value recognised in the accounts. Simulation using reasonable assumptions indicates a value that justifies the book value.
of return. The utility value is calculated using a required rate of return after tax of 10 per cent.
3) The average duration of the leases is weighted based on the value of the individulal properties.
As of 31.12.20, Storebrand Livsforsikring had NOK 6 166 million invested in Storebrand Eiendomsfond Norge KS and Ruseløkkveien 26 AS, Oslo.The investments are classified as “Investment in associated Ccmpanies and joint ventures” in the Consolidated Financial Statements. Storebrand Eiendomsfond Norge KS and Ruseløkkveien 26 AS, Oslo invest exclusively in real estate at fair value.
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People 4. Keeping Our House in Order 5. Director´s report 6. Shareholder matters 7. Annual Accounts and Notes
Allocation by company and customers: Equities and fund units - company 384 323
Provision for dividend -1,519 -1,519 1) 467 813 982 shares with a nominal value of NOK 5.
Bonds and other fixed income securities are recognised at fair value. Fair value is the amount for which an asset could be sold for, or a liability settled with, between knowledgeable, willing parties in an arm’s length transaction. For financial assets that are listed on an exchange or other regulated market place, fair value is determined as the bid price on the last trading day up to and including the balance sheet date, and in the case of an asset that is to be acquired or a liability that is held, the offer price.
Storebrand Helseforsikring AS Oslo 50% 78 78 1) Group contribution in 2020 of NOK 511 million as capital contribution.
We also assessed and came to the conclusion that the information about investment properties in the notes to the financial statements were in accordance with the accounting principles and provides an adequate
Storebrand’s sustainability principles summarise how the work is an integral part of the Group’s overall objectives and governance and control processes. The principles were updated in 2018 and include all parts of the business, including investments, product development, procurement, employee follow-up and house operations.
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People 4. Keeping Our House in Order 5. Director´s report 6. Shareholder matters 7. Annual Accounts and Notes 8. Governance
6. General Meeting (No deviation from the code of practice) Pursuant to the Articles of Association, Storebrand ASA’s General Meeting shall be held by the end of June each year. The General Meeting was held on 10th April 2020. All shareholders with a known address will receive notice of the General Meeting, which will be sent out no later than 21 days prior to the General Meeting. Pursuant to the Articles of Association, the deadline for giving notice of attendance shall be set at no later than five calendar days prior to the General Meeting. In accordance with Storebrand’s Articles of Association, the opportunity to make other agenda papers available on the Storebrand website is exercised, cf. Section 5-11a of the Norwegian Public Limited Companies Act. A shareholder may nevertheless demand to receive agenda papers by post
The access to electronic voting and the use of proxy allows shareholders to cast their votes without even attending the general meeting. All shareholders are thus given an opportunity to exert influence on Storebrand through the use of the right to vote.
Companies in the Storebrand Group 197 9. Sustainability assurance 10. Appendix
Described in the chapters: People in the sub-chapter Engaged, competent and courageous employees People under Key figures
Full 102-41 Collective bargaining agreements Described in chapter: This is Storebrand under the sub-chapter Material issues
Described in chapter: This is Storebrand under the sub-chapter Material issues Described in the ”Why” section at the beginning of each sub-chapter
Full 102-55 GRI Index This table is the GRI index Full 102-56 External verification Appears in the auditor’s report Full
Active ownership and reduce ESG (environmental, social and governance) risk (C)
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People 4. Keeping Our House in Order 5. Director´s report 6. Shareholder matters 7. Annual Accounts and Notes 8. Governance 9. Sustainability assurance 10. Appendix
67) We have stopped reporting on two indicators from 2019 on 2019: a) GDPR courses (this is an important indicator to make sure that new routines are implemented, but we are confident that these routines are working well and that all relevant employees receive GDPR training as part of the onboarding) and b) Sustainable Brand Index scores for the UK and Sweden (these indicators are replaced by others). In addition, complaints are now discussed under chapter 5 below.
Exposure to high-emitting sectors: Indicates our exposure to high-emitting sectors in NOK and as a share of total equity investments. The definition of high-emitting sectors follows the methodology recommendation of the Net Zero Asset Owner Alliance, and includes the following GICS codes for each sector: Steel, 15104050 Shipping, 20303010 Cement 15102010
CO2 emissions from air travel: Emissions from service trips the employees of the Group’s Norwegian and Swedish operations have done by air. Scope 1: Tonnes of CO2 equivalents, measured in accordance with Greehouse gas protocol. Scope 2: Tonnes of CO2 equivalents, measured in accordance with Greehouse gas protocol. Scope 3: Tonnes of CO2 equivalents, measured according to Greehouse gas protocol.
Information security events: An information security incident is a suspected, attempted, successful or imminent threat of unauthorised access, use, disclosure, violation, alteration or destruction of information; disruption of IT operations; or significant violation of the responsible use policy.