Our operations in Sweden, under the brand SPP, delivered yet another impressive result in 2019. Growth in new sales and transfers is very strong, supported by an increasing portfolio of digital solutions, including Sajna, a fully digital occupational pension that won Digital Project of the Year at this year’s CIO Awards.
Odd Arild Grefstad 2019 was an important year for Storebrand, with organisational changes making us even better equipped to meet our customers’ needs, and to create economic growth and good returns for both our customers and our shareholders. It was also a year where we noticed an increased focus on sustainability from financial markets and our customers, allowing us to further leverage our position as a leading provider of sustainable financial services.
• The competition to attract and retain the best talent is as fierce as ever.
The effects on investments and liabilities may be sudden in the form of market unrest or unfold gradually over time through lower average return and persistently low interest rates. A disorderly transition also poses a risk, for instance if policy initiatives are too strong relative to technology development and investment opportunities. Vulnerability from a lower oilprice and activity in the oil and gas-sector is a particular risk for
APPROACH A key success factor in realising our sustainable investment strategy is ensuring that portfolio managers have the necessary tools to make well-informed decisions when identifying sustainability risks and opportunities. Three important tools to address these issues are solutions-oriented investments, active ownership and exclusions.
Ensure exposure to companies that provide sustainable urbanisation and transport systems and reduce the environmental impact of cities. This includes companies that improve air quality and waste management, promote inclusion, resource efficiency, mitigation and adaptation to climate change, or resilience to natural disasters.
Active Ownership We exercise active ownership in the companies we hold shares in by voting at general meetings, including proxy voting, and direct dialogue with the management and boards of these companies. We prioritise direct dialogue when we believe this is the most effective way of influencing decisions relating to ESG issues. Through participation in the UN PRI (Principles for Responsible Investments), we work with other investors to engage with companies in relevant areas of sustainable business, including climate and deforestation.
Carbon footprint from equity investments: tonnes CO2e per 1 million NOK/SEK sales revenue (vs. index) 28 (18) 22 (32) 17 (22) N/A N/A
Our aim is to offer customers a range of services designed to meet the breadth of their financial needs at all stages of their lives. We shall offer relevant products and services in banking and insurance. Our goal for 2020 is a 10% increase in number of customers who have products from at least one product line.
• Efficient – I make the customer journey easy and I improve my organisation
Recognised for sustainable value creation (Retail Market Norway) New 2019 New 2019 #3 Top 3 #1
WHY Providing employees with opportunities for continuous learning combined with a deep understanding of our customers’ needs are prerequisites for continued competitiveness in an industry undergoing rapid change. Greater breadth and diversity in expertise will contribute to continued growth and the ability to meet changing customer expectations. Digital skills, knowledge of customer preferences and insight into market developments are important to our success.
We continued to extend the reach and use of our Human Capital Management (HCM) platform to encompass onboarding materials for new employees in addition to materials for existing employees with regards to security and data privacy. Our digital program for middle management, Storebrand Leadership Weekly, started in 2018, and continued in 2019 with more than 20 middle managers from Sweden and Norway participating. A key topic in 2019 was trust and transformational management.
54 Anti-corruption 56 Anti-money laundering, financial crime and terror financing 57 Reducing our internal carbon footprint 58 Sustainable practices throughout our value chain 60 Corporate citizenship 61 Key performance indicators
Activity that we suspect is in breach of the Norwegian Measures Against Money laundering and Terror Financing Act (2018) is reported to the police.
12.5 We aim to substantially reduce waste generation in our supply chain.
INITIATIVES Youth Entrepreneurship (YE) is a non-profit organisation encouraging high school students to establish and run their own enterprise. By initiating a sustainability award in this program, we educate students in how to run a sustainable business. In 2019, Storebrand and YE launched a mentor system, where the youth could discuss business issues with a Storebrand employee.
In 2019, for the third consecutive year, ten employees were given an opportunity to be a mentor to a student with a minority language background through the Catalyst Mentor Program. Through monthly meetings at Storebrand, the students gained insight into Norwegian working life, help in developing themselves and advice on school and working life. The program is a collaboration between Storebrand and the non-profit organisation Catalysts. The objective is to prevent students from dropping out of high school.
47) We have discontinued reporting on average number of flights per FTE. This is not perceived as a relevant indicator due to the fact that a flight will have a very different impact on the environment depending on the distance travelled. kgCO2e per FTE relating to air travel therefore replaces this indicator from 2019. CO2 emissions from air travel has been recalculated for 2017 – 2019 due to updates to emissions factors in our travel agency´s systems.
Dividend per ordinary share (NOK) 3.25 3.0 2.1 1.55 0 0
The reform will initially transfer pension contributions from a retail market for Pension capital certificates to a corporate market for active Defined Contribution schemes. We are well positioned in this market. Over time, the individual’s option to transfer the account to a provider of own choice may contribute to further individualisation of the market for pensions. This may require Storebrand to further strengthen its position in the retail market.
• Group profit51) NOK 3,037 million • Solvency margin of 176% • The Board proposes a dividend of NOK 3.25 per share
8. Segment information The segment information is based on the internal financial reporting structure of the most senior decision-maker. At Storebrand, the executive management is responsible for following-up and evaluating the results of the segments and is defined as the most senior decision-maker. Four segments are reported for: • Savings • Insurance • Guaranteed Pension • Other
21. Biological assets Pursuant to IAS 41, investments in forestry are measures as biological assets. Biological assets are measured at fair value, which is defined based on alternative fair value estimates, or the present value of expected net cash flows. Changes in the value of biological assets are recognised in the income statement. Ownership rights to biological assets are recognised at the point in time when the purchase agreement is signed. Annual income and expenses are calculated for forestry and outlying fields.
Excess value of NOK 383 million has been identified before deferred tax in the acquisition analysis. Of the total excess value, NOK 225 million is linked to customer relations, which is amortized over 7 years, while NOK 140 million is linked to customer contracts, which are amortized over 5 years. In addition, excess value has been identified excess value of NOK 18 million related to IT systems, which are amortized over 3 years. Deferred tax of NOK 92 million has been calculated for the excess value. Goodwill amounts to NOK 206 million and this item is not depreciated, but is tested yearly against impairment.
Group pre-tax profit 2,593 2,799 1) Amortisation of intangible assets are included in Storebrand Group 2) Includes eliminations of group transactions
STOREBRAND GROUP ARE REPRESENTED IN THE FOLLOWING COUNTRIES: Segment/Country Norway Sweden UK Netherlands Denmark Germany
The Board of Storebrand ASA has established a Risk Committee consisting of 3 Board members. The main task of the Risk Committee is to prepare matters to be considered by the Board in the area of risk, with a special focus on the Group’s appetite for risk, risk strategy and investment strategy. The Committee should contribute forward-looking, decision-making support related to the Board’s discussion of risk taking, financial forecasts and the treatment of risk reporting.
The insurance risk in Norway is largely standardised for contracts in the same industry as a result of detailed regulation from the authorities. In Sweden, the framework conditions for insurance contracts entail major differences between the contracts within the same industry.
In the Guaranteed Pensions segment, the Group has a significant insurance risk relating to estimation of life expectancy and future pension payments for group and individual insurance agreements. In addition, there is an insurance risk associated with estimates of disability and pensions left to spouses and/or children. The disability coverage in Guaranteed Pensions is primarily sold together with a retirement pension. The risk of mortality is low in Guaranteed Pensions when viewed in relation to other risks. In SPP it is possible to change the future premiums for the IF portfolio, reducing the risk significantly. In Norway it is also possible to change the future premiums of group policies, but only for new accumulation, entailing reduced risk.
Risk result The risk result consists of premiums the company charges to cover insurance risks less the actual costs in the form of insurance reserves and payments for insured events such as death, pensions, disability and accidents.
Adequacy test In accordance with the accounting standard IFRS 4 Insurance Contracts, the insurance liabilities that are included shall be adequate and a liability adequacy test shall be performed. Storebrand satisfies the adequacy tests for 2019, and these therefore had no impact on the results in the financial statements for 2019.
Banking business Storebrand Bank ASA hedges net balance sheet items by means of forward contracts. The permitted limit for the bank’s foreign exchange position is 0.50 per cent of primary capital, which is approximately 12 million at present.
SPP Pension & Forsäkring The guaranteed interest rate is determined by the insurance company and is used when calculating the premium and the guaranteed benefit. The guaranteed interest rate does not entail that there is an annual minimum guarantee for the return as is the case in Norway.
Storebrand Livsforsikring For Storebrand Livsforsikring it is stress test 2, which includes an increase in interest rates, that makes the greatest impact. The overall market risk is NOK 7.2 billion, which is equivalent to 3.4 per cent of the investment portfolio.
Under Solvency II, the capital requirement from the CRD IV companies in the Group is included in accordance with their respective capital requirements. In a multi-sectoral financial group, all the capital requirements of the CRD IV companies are calculated based on their respective applicable requirements, including buffer requirement for the largest company in the Group (Storebrand Bank). This increases the total requirement from the CRD IV companies in relation to what is included in the Solvency II calculation. As at 31 December 2019, the difference amounted to NOK 255 million.
Total income properties 1,864 1,487 1) Of which real estate for own use 82 74 2) Of which properties for own use -29 -29
Actuarial loss (gain) - change in other financial assumptions -25 -17
Storebrand shall have an incentive model that supports the strategy, with emphasis on the customers’ interests and long-term perspective, an ambitious model of cooperation, as well as transparency that enhances the Group’s reputation. Therefore, the Company will primarily stress a fixed salary as a means of overall financial compensation, and utilise variable remuneration to a limited extent.
Allocation by company and customers: Properties for own use - customers 1,375 1,420
Net pension liabilities in the statement of financial position 154 161
Tax base for the year 662 428 - Use of losses carried forward -327
On this date, the Board of Directors and the Chief Executive Officer have considered and approved the annual report and annual financial statements for Storebrand ASA and the Storebrand Group for the 2019 financial year and as at 31 December 2019 (2019 Annual Report).
Since 1995 Storebrand has been focussed on sustainable investments, taking an active position on how both the customers and their own funds are invested. Storebrand believes that companies that integrate environmental, social and governance considerations in their business activities reduce risk and create new opportunities for the business activities and capital owners. Our work with sustainable investing is described in detail in section 3 of our annual report above. This includes our principles for sustainable investments, which are approved by the group board and integrated throughout the group’s operations.
Two members, or three members if the General Meeting elects six or seven board members, shall be elected by and from among the employees. The board members are elected for one year at a time. The day-to-day management is not represented on the Board of Directors. At the end of 2019, the Board consisted of nine members (four women and five men).
The Audit Committee assists the Board by reviewing, evaluating and, where necessary, proposing appropriate measures with respect to the Group’s overall controls, financial and operational reporting, risk management/control, and internal and external auditing. The Audit Committee held nine meetings in 2019, including a joint meeting with the Risk Committee. The external and internal auditors participate in the meetings. The majority of the Committee members are independent of the company.
Risk assessment forms part of the managerial responsibilities in the organisation. Its purpose is to identify, assess and manage risks that can hinder a unit’s ability to achieve its goals. The process covers both the risk of incurring losses and failing profitability linked to economic downturns, changes in the general conditions, changed customer behaviour, etc., and the risk of incurring losses due to inadequate or failing internal processes, systems, human error or external events. Developments in the financial markets are important risk factors in relation to Storebrand ’s earnings and solvency position. In addition to assessing the effects of sudden shifts in the equity markets or interest rate levels (stress tests), scenario analysis is used to estimate the effect of various sequences of events in the financial markets
Date of previous report 1st January 2018 - 31st December 2018 GRI Index GRI Index Full 102-52 Reporting cycle Annually GRI Index GRI Index Full 102-53 Contact point relations