53 Outlook 57 A driving force for sustainable investments 66 Risk 68 Climate risks and opportunities 72 Working environment and HSE
73 Progress on our most material sustainability KPIs 6. Shareholder matters 7. Annual Accounts and Notes
Storebrand Group 78 Income statement 79 Statement of total comprehensive income 80 Statement of financial position 82 Statement of changes in equity 83 Statement of cash flow 85 Notes
181 Independent auditor´s report 8. Governance 189 Corporate Governance 197 Companies in the Storebrand Group 9. Sustainability assurance 199 TCFD-index 201 GRI-index 208 Auditor’s statement on sustainability 10. Appendix 209 Executive management CVs 213 Group Board of Directors CVs 221 Complete list of Sustainability KPIs
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Sales of non-life insurance increased by 15 per cent from 2019 to 2020, and online sales in insurance rose by 63 percent. We see great growth opportunities in non-life insurance in the years to come.
In Norway, the “My Money” app was downloaded by over 120,000 people. The cooperation between the savings branch in the retail market, and Storebrand asset management continued its positive development. We will build on our strong position in asset management to strengthen our value proposal to retail clients.
Although 2020 was a different year, our regular employee surveys showed that we had a high level of engagement among our employees, significantly above the industry average. This is important to the more than 200 new employees who were employed at Storebrand through last year, and all existing employees.
This has made us capable of delivering good results throughout the year. The total return for the year was slightly higher than for comparable European companies5), and defined contribution pensions in Norway Storebrand still has higher average returns over the past five years than our competitors. Within savings, which is Storebrand’s core business, we see increased fee and administration income as a result of strong underlying volume growth in unit linked and asset management.
In the past two years, three of the largest brokerage companies have been acquired by private equity firms. This indicates a strong belief in growth in the financial advice market, in an industry that has traditionally been unavailable to new entrants. All competitors express strong growth ambitions.
Storebrand has a great starting point for strengthening our position in the public sector as well. The market potential is significant, and the public
service pension market is ripe for increased competition. Our new focus on public service pensions achieved several important breakthroughs in 2020. Based on our expertise and strong technological platform, and as the sole provider of occupational pensions to both the retail market and the public sector, we have all the prerequisites in place to achieve profitable growth, satisfied customers and efficient customer solutions.
The time ahead will present a number of exciting challenges for Storebrand. I am convinced that Storebrand’s employees will handle these in an excellent way. There is a high level of engagement in the organisation, and many employees highlight that sustainability gives their work and additional purpose. This will make Storebrand capable of delivering value beyond financial returns to our customers. Storebrand will continue to contribute to lasting and positive changes, in line with our customers and society’s expectations. We will continue to challenge ourselves, the companies in we invest in, our suppliers and partners, so that we all contribute to the transition we all face. At the same time, we will help our customers make good choices so that they have a future to look forward to.
The Nordic Group and the Storebrand Group merge 1984 Norges Brannkasse and Norske Folk become UNI Insurance
Consists of products that encompass pension savings without interest rate guarantees. This includes defined contribution pensions in Norway and Sweden, asset management and savings and banking products for private individuals.
Consists of the Group’s risk products in Norway and Sweden. This comprises health insurance in the corporate and retail markets, employer’s liability insurance and pensionrelated insurance in the corporate market as well ass property, accident, and personal risk insurance products in the Norwegian retail market.
Consists of products that include long-term pension savings, where customers have a guaranteed return. This area includes occupational pension schemes in Norway and Sweden, independent personal pensions and pension insurance.
The financial sector plays a key role in helping to achieve the UN Sustainable Development Goalsn(SDGs). Through good management, our pensions, savings and investments can be powerful tools to address key challenges and to realise the Sustainability goals. As a significant asset owner, insurer and asset manager, we also see great economic opportunities in the alignment of investment portfolios to a sustainable agenda, in line with international obligations. In the long term, this will also result in higher returns.
Companies with sustainability as a key part of their business strategy have good conditions for managing climate and sustainability risks and capitalizing on the opportunities they represent. There is growing consensus that companies that have a strategy in line with the SDGs and the Paris Agreement have better conditions than others to create long-term returns and may be better positioned to succeed in future markets.
At an operational level, our work on sustainability is divided into three areas: Keeping our house in order, products and services, and communication and stakeholder engagement.
• We use the precautionary principle when it comes to mitigating social and environmental risk.
We have identified three SDGs which we can significantly impact by the way we manage our group’s business and people processes.At the end of relevant chapters of this report, figures are provided that show how far we have come in this work.
We aim to protect labour rights and promote safe and secure working environments for all our workers, contractors and suppliers (target 8.8).
We strengthen resilience and adaptive capacity to climaterelated hazards and natural disasters in our operations and in our investments (target 13.1).
We have identified eight SDGs (below) where we can have the greatest impact through our investment activities. We use these sustainability goals actively in asset management, for example when applying our sustainability rating. In addition, we consider accountability and anti-corruption (SDG 16) when engaging with the companies we invest in (see page 62). For Specific measures and objectives related to these sustainability goals in our asset management are described in the chapter a driving force for sustainable investments.
Communication and stakeholder dialogue We are open about our sustainability efforts and report in accordance with several leading reporting standards, including the Global Reporting Initiative (GRI), task force on ClimateRelatedFinancial Disclosures (TCFD) and Carbon Disclosure Project (CDP), in line with the expectations of a number of key stakeholders. Strategic ambitions, specific goals, reporting and communication on sustainability are important success criteria in our work. In addition, we engage in international sustainability initiatives such as The Net Zero Asset Owner Alliance and Climate Action 100+ to help our customers have a future to look forward to.
We form strong partnerships to realise our sustainability objectives. This illustrates our strong commitment to Sustainable development goal17: collaboration to achieve the goals. In addition, through stakeholder dialogue and communication, we want to influence these sustainability goals: We encourage companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle (target 12.6).
From left: Trygve Håkedal (Executive Vice President Technology), Staffan Hansén (CEO, SPP), Terje Løken (Executive Vice President Digital and Innovation ), Jan Erik Saugestad ((Executive Vice President Ass.Mngt), Odd Arild Grefstad (CEO), Heidi Skaaret (Executive Vice President Retail Market), Karin Greve-Isdahl Executive Vice President Communications, Sustainability and Business Policy), Lars Løddesøl (Group CFO), Tove Selnes (executive vice president People), Geir Holmgren Executive Vice President Corporate Market).
See attachments on page 211 for full CVs for group management
Board shall ensure that business activities, accounting and asset management are subject to proper scrutiny. All Directors are independent and do not have significant business relations with Storebrand. All shareholder-elected directors are non-managerial staff.
COMMITTEES The Board has appointed four committees to support its role: the Audit Committee, the Compensation Committee, the Strategy Committee and the Risk Committee. More information on the role of each committee can be found on page 193.
The analysis defines the challenges and opportunities that both Storebrand and our stakeholders perceive as most crucial to reaching our long-term strategic goals, and where we have the greatest impact on society and the environment. Our main stakeholders, and those we consider most relevant to the analysis, are shareholders, customers, employees, authorities and NGOs. The analysis is publicly available. 7)
The focus areas and associated themes are presented in the materiality matrix above.
The material themes are ranked according to the influence they have on our stakeholders’ assessments and their decisions related to Storebrand, and their significance of business impact.
The materiality analysis forms the structure of this annual report and includes input from our stakeholders. The focus area financial capital and investment universe and the three underlying material topics are consistently ranked as very significant among our stakeholders. They are also very relevant to the Group’s strategy and risk management. Therefore, our reporting on this focus area has been included in the Directors Report. Other material themes are also ranked with high importance, including topic E: Engaging, relevant and responsible advice,
This report has been prepared in accordance with the GRI standards (Core option). Our GRI index can be viewed on page 201. The guidelines of the International Integrated Reporting Council (IIRC) are also used as foundation for the report.
In flu en ce o n st ak eh ol de r a ss es sm en ts a nd d ec is io ns
We shall help our customers achieve financial security and freedom to realise small and big dreams by providing holistic solutions and diligently looking after what our customers hold most important. We will motivate our customers to make good decisions in savings, banking and insurance by delivering customer experiences that meet their needs at different stages of life. Through good asset management and structures for risk management, we will ensure that our customers get good returns in a sustainable manner on their investments. Dialogue with our customers takes place through both digital and serviced channels. Our goal is to be closest to the customer, simple and sustainable.
Why Recent reforms to the Norwegian and Swedish pension systems require greater responsibility from individuals for their own longterm financial situation, including pensions. This is especially true considering that life expectancy has increased, and that Norwegians can expect less support from the government to meet living costs throughout retirement. Taking an active responsibility for your personal finances is important to lead the life you want, both throughout working life and as a pensioner.
Goals and ambitions Our aim is to offer customers a range of services designed to meet the breadth of their financial needs at all stages of life. In Norway, we offer relevant products and services in banking and insurance. In Sweden, our offer is limited to savings.
Our customers should be confident that we offer relevant and attractive products, and that we manage their savings so that they get the best return possible. We provide information and advice to our corporate customers to enable them to assist their employees in making better financial decisions. We work to build strong relationships with corporate customers and their employees through holistic and customised follow-up. Through digital solutions, customer seminars and consulting, we make it easier for companies to understand their pension schemes, and for their employees to gain oversight and control of their own pension. We value the use of qualified advisors and comprehensible communication. Overall, Storebrand is a preferred provider of pension services.
The Storebrand brand in Norway is communicated to the market through the communication concept “Good money”. Storebrand should be known for its ability to create value through sustainable investments, profitable sustainability. In 2020, we developed several products and services that support this strategy. The target for 2021 in Norway is to increase the number of customers who have products from at least one of our product lines by 10 per cent. In Sweden, SPP aims to be the occupational pension company known for being passionate about making occupational pensions easy for the employees of our corporate customers. We offer extensive expertise, digital services, tailored advice, and a complete product offering. We develop attractive benefit packages for employees and focus on sustainable investments, in line with the widespread demand for this type of pension and savings products in the Swedish market.
In Norway we launched a new version of “My Money”. The “My Money” app helps our customers get an overview and take control of their pension and other savings. Based on figures from the Norwegian public pension scheme (Folketrygdfondet), private pension savings and employers, customers can calculate their future pensions. We also use the app to encourage our own employees to become private customers at Storebrand. The service “SmartPension” enables customers approaching retirement age to plan their transition to a new phase in their lives. During this phase, we see a higher demand from our customers for counselling.
In 2020, SPP further developed digital services that make it even easier for companies to manage their occupational pensions. An example is the development of a new interface for calculating and updating pension contributions. In 2020, SPP also developed a fully digital service for employees to choose when and how they want their pension payouts.
In the autumn of 2020, we launched a digital tool called “your climate footprint” in Sweden. The tool shows the carbon footprint of the investments associated with an employee’s pensions and savings, compared to the carbon footprint if the investments had been made in funds without a sustainability profile. Companies use the information in communication with employees, in their own sustainability reporting, and to strengthen their own profiling on sustainability.
We are continuously working to stimulate, and expand access, to banking and insurance services and financial services for all (target 8.10).
Through the different phases of working life and up to retirement age, our customers receive insight and oversight of their own pension, savings and insurance agreements.
Relevant and responsible advisory services are the most important prerequisites for customer satisfaction. We will help customers purchase products and services that are relevant and appropriate in the life situation they are in.
Our authorisation and competency requirements are communicated to customers across digital platforms. In 2020, a separate framework for career development was developed among the advisors in the Norwegian retail market. The framework describes the requirements and responsibilities for the various roles, including the requirements for authorisations.
In the market for transferable savings9) had a market share of 21.7 per cent at the end of 2020, up from 19.9 in 2019. In the non-life insurance market, we had a market share of 4.5 per cent.
SPP has grown significantly in the Swedish market. Several companies demand sustainable management of employees’ pension funds. In 2020, 25 per cent of transferable funds in the occupational pension market were transferred to the SPP.
Approach Digital & Innovation was established as a separate commercial group unit in 2019, as a step to further develop our operations and customer experiences using technology and digital services. Digital business development takes place in multidisciplinary teams where product managers, business developers, analysts, developers and designers work together to understand customers, improve customer experiences, and solve the customers’ needs through digital services.
Digitalisation provides many opportunities for the development and provision of value-added services to our customers, based on their needs. In 2020, we partnered with Aprila Bank for credit to small and medium-sized businesses, with Homely for alarm services, with Justify for legal services and with The Home Doctors for Medical Care. In addition, we strengthened our cooperation with Dreams related to a new debt repayment service.
Results In 2020, we had more than four million visits to Storebrand.no.The number of page views increased by approximately 10 per cent from 2019, and organic traffic increased by 20 per cent. Additionally, the number of digital sales of insurance and savings increased by 25 per cent.
Almost half a million people checked their own retirement savings through our website and mobile app in 2020.
Storebrand Bank reached record high sales figures for mortgages in 2020. The bank is providing an updated digital service for loan applications- and the number of people taking out loans after using the service increased by 15 per cent. In addition, we entered partnerships for mortgages into with the real estate chain Nordvik and Huseierne.
Automation of settlement processes improves customer experiences. Improvements to the processes contributed to a significant increase in fully or partially automated payments of disability pensions in 2020, from 400 to 1 200 payments. Average waiting times were reduced by 75 percent, and the number of cases resolved within one day is increasing steadily.
In 2020 we launched the app “My Money”, which is a further development of “My Pension”. The app gives the customer insight of their pensions and other savings at Storebrand overall, making financial planning a lot easier. After six months, nearly 120,000 customers had downloaded and adopted the app.
Digital innovator in financial services 20) A customer and process-related incident is defined as an undesired situation that has occurred as a result of a failure of internal processes, operational disruptions, human error, violation of internal/external regulations or external matters. The consequences may be financial loss or gain, extra work, loss of reputation and/or sanctions related to the violation of internal/external regulations.
Goals and ambitions Storebrand aims to create increased perceived value for each customer by delivering personalised and seamless customer experiences across serviced and digital channels.
Approach An important step in 2020 was to introduce a new data-driven CRM platform for customer engagement. This work combines two disciplines for improved customer experiences: service design and new technology. The platform allows us to use data in a smarter way to offer solutions tailored to each customer. The platform is scheduled to be in effect for all customers in the retail market during 2021 and will be rolled out in the corporate market in 2022.
Results When introducing the new CRM platform in 2020, we established a customer-journey framework. The framework will help guide for how we meet the customer across our own and paid channels, with communications, concepts, and products. The work will continue in 2021.
Work on the development of a new concept for wealthy persons began in early 2020. The target group is people who have more than NOK 3 million in placeable wealth. In addition to a personal investment advisor, customers have access to personalised service and follow-up within all Storebrand’ s services in the retail market. The concept will be further developed in 2021.
Key performance indicators 24 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
Key performance indicators 31 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
In 2020, the organisation was put to the test, along with the rest of the world. At short notice, almost all employees had to start working from home, many of us while at the same time dealing with home schooling and closed kindergartens. Everyday life entailed new challenges for our society and for our employees. Many people felt uncertain and worried, and the challenges have unfortunately continued into 2021. Digital tools and employees’ ability to use them, meant that Storebrand was probably better equipped to cope with the situation than many other businesses. We redesigned working processes, interactions, training programs and activities to develop company culture swiftly. Employees initiated and adopted new methods of collaboration, and increased learning and knowledge across disciplines and organisational units were reported. We are proud of the willingness to change and the flexibility that our employees have shown throughout the year. Many challenging tasks, both directly and indirectly related to the pandemic were solved by making use of the foundations of the HR strategy: Learning, agility, and leadership in a new landscape.
Transparency and sharing are prerequisites for achieving the best possible interaction and learning across the group. In 2020, we introduced new communication and interaction tools to support this. More than 100 employees with a commitment to digital tools were engaged to ensure smart and efficient use, and this work will continue in 2021. Instead of offering traditional courses, we will adapt the training to specific needs as they emerge.
More than 35 middle managers participated in our digital leadership development program, “Storebrand Leadership Weekly”, focusing on issues of trust and transformation management through strength-based development. In 2010, the program was reinforced with a separate learning course in Campus Storebrand.
We conducted our summer internship program for students, “Sandbox”, partly digital. Students held weekly presentations over video. In order for participants to get to know each other well before they started, we facilitated a digital introduction (over four meetings) from May to June.
Why Storebrand’s employees are our main source of innovation, development and growth. Employees who are courageous pathfinders who dare to innovate, and challenge prevailing norms are essential to realizing our goal of becoming a world-class savings group.
Approach Storebrand relies on the trust of customers, partners, authorities, shareholders, and society at large. The business must be characterised by high ethical standards in order to gain trust. All employees shall act with due diligence, accountability and legality. The organisation uses e-learning for training in ethics, anticorruption, anti-money laundering and terror financing, and privacy and digital trust. The courses are mandatory to complete each year to ensure responsible business practices in line with our Code of Conduct.
The organisation also has an external third party notification channel through an auditing company ( We also have well-established procedures for dealing with complaints, harassment, and other unacceptable behavior.
Results In 2020, an average of 87 per cent of employees completed e-learning courses in ethics, anti-corruption, anti-money laundering and terror financing, and privacy and digital trust.
In 2020, our data protection and information security rules were distributed digitally through our HCM system. All employees must review the documents once a year and confirm that they have read and understood the content.
An average of 86 per cent of employees responded to the employee engagement survey at least once in the last three months throughout 2020.
In the latter half of 2020, employee engagement surveys also showed an improved score on all questions, and particularly on issues of organisational adaptation (including core values, sustainability and equality), self-determination, freedom of opinion, relationship with colleagues, support from the leader and significance of work tasks. The results showed room for improvement in terms of physical working environment. One of several initiatives to address this is experimentation around the workplace of the future to strengthen agile collaboration and work processes across the organisation.
We will contribute to the UN Sustainable Development Goal number 5, gender equality, by promoting gender equality in the workplace. At Storebrand, equal work should be paid equally.
Approach Storebrand works systematically to ensure diversity and equality through clearly defined processes in recruitment, reorganisations, salary adjustments, leadership training, and other development initiatives. In 2019, we established a diversity committee with participation from across the group. In 2020, the committee worked on various initiatives in diversity, inclusion and belonging.
Storebrand has participated in the tripartite programmemet Inclusive Working Life (IA) since 2002. The program is based on the assumption that work promotes good health and well-being, and that early, active intervention can prevent absence. The Group’s managers have established procedures for inclusive follow-up of employees in the event of illness.
We aim to offer the best candidate journey, so that Storebrand is considered an attractive workplace.
Throughout 2020, we improved our recruitment and interview process to make it as digital and gender neutral as possible at every stage. Women and men shall be represented in the interview team, and there must be at least one female and one male final candidate when recruiting for leadership positions.
Results In the period from March 2020, all candidates were invited to digital first-time interviews. We employed over 200 employees who all signed their contracts digitally.
We work actively towards equal opportunities and gender balance in work and economic life (target 5.5). Our goal is a 50/50 distribution of men and women in leading positions, an equal distribution of men and women in our management development programmes, as well as recruitment processes for management positions
Why It is important that Storebrand’s organisation and business reflects our customers and the market in which we operate. Storebrand aims to be a good workplace for everyone, regardless of their background. We strongly believe in building an agile organisation and a culture of trust, inclusion and belonging. It is important that our employees have freedom and mandate to deliver unprecedented customer experiences regardless of their background.
Our goal is greater diversity and an equal distribution of men and women in senior positions in all parts of the Group. One strategy for achieving this is by nominating an increased proportion of women for leadership development programmes and in recruitment processes for leadership positions. For the Board of Storebrand ASA, the requirement is that each gender should be represented by at least 40 per cent.
Among the participants in the “Storebrand Academy” and at “Storebrand Leadership Weekly”, 40 per cent were women and 60 per cent men. In the Summer internship program, “Sandbox”, and in the graduate program “Storebrand Future Impact”, 60 per cent of the participants were female, and 40 per cent were male.
The group’s salary levels were reviewed in cooperation with the union representatives in connection with the wage adjustment process in 2020. The review showed slightly lower average earnings among female employees than male employees.
We have a good gender distribution among permanent employees in both Norway and Sweden, as can be seen in the table below.
Sickness absence has been low and stable for several years. In 2020, the absence rate was 2.3 per cent in our Norwegian operations and 1.8 per cent in our Swedish operations.
Number (share) of men at executive levels 1–3 50% 32 (56%) 50% 50%
Number of women on the Board of Directors 55.6 % 50% 50%
I) Based on Hay Grade 21-24. Hay Grade above 24 is not included, as only men are represented here (applies for 3 positions only). For Hay Grade definition, see page 212.
Women in group executive management 3 of 9 3 of 10 3 of 10 N/A N/A
Percentage of women at management level 3 46% 41% 38% 50% 50%
Extended top management, women’s share of men’s salary per position category (Hay Grade 21-23) 110% 100% 104% 100% 100%
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People
Internal misconduct 2 Uncovered two conditions of misconduct at external partner
Ethical guidelines and ethical practices at all levels of the organisation are prerequisites for gaining trust from customers, authorities, shareholders, and society in general. The trust stems from responsible business practices and employees with high levels of integrity.
Why We live in a digital world with an increasing risk that personal data may go astray, be stolen or be shared without our consent. Our customers must feel certain that their personal data is in safe hands and handled in a responsible manner. Therefore, we are reliant on proper security measures, established procedures and processes. Moreover, our employees receive training to ensure they have expertise in handling of personal information in a prudent manner.
New technology combined with smart use of information and personal data enables us to better understand our customers and their needs. As long as our customers continue to have high levels of trust, we can use this technology to develop better, more relevant and more customer-oriented products and services.
Goals and ambitions Our ambition is to engage our customers and build long-term relationships by delivering first-class customer experience across all channels. This requires us to safeguard our customers’ rights in accordance with the Personal Data Act.
If a personal data breach occurs, and the risk to our customers is considered medium-high or high, customers will be contacted directly by phone or email. In such cases, we inform customers about what has happened, what actions we have taken, and, if necessary, what measures the customer should take to protect their personal data.
Training in information security and privacy is mandatory for all employees and is carried out by e-learning and in thematic groups for each department.
The protection of personal data and information security is well integrated into our internal control systems and risk management processes. We continuously assess the ongoing privacy risks that our customers are exposed to.
We update our Privacy Policy when changes are made to the use of personal data, and our online customer portal gives the individual customer a better overview of his/her privacy settings.12) In addition, on our website we provide advice and recommendations on how our customers can reduce their risk of online fraud.
Results In 2020, a new e-learning course on privacy protection was established. The course is mandatory for all employees. We also conduct specific training for individual departments.
Goals and ambitions At Storebrand, we have a zero tolerance for corruption and other economic misconduct. We work methodically to identify areas with increased risk and have taken measures to prevent exploitation. Furthermore, we work systematically with our suppliers and partners.
Our guidelines increase awareness about corruption and ensure that each employee is capable of identifying potential corruption risks at an early stage. The guidelines also specify measures that should be taken to avoid corruption.
All employees are responsible for familiarizing themselves with and acting in accordance with anti-corruption guidelines, including completing mandatory training, and managers shall ensure that this is done. All new employees complete mandatory training as part of their onboarding process.
All events held on behalf of Storebrand shall be consistent with our role in society, all content shall be professionally relevant, and shall otherwise adhere to our guidelines for events.
Storebrand has established both an internal and external notification channel. Employees who suspect corruption or other financial misconduct shall report this in one of these channels. When reported externally, the reporter (whistle blower) can choose to remain anonymous.
Results 90 per cent of the group’s employees completed the mandatory course on corruption in 2020.13) No cases related to corruption were uncovered or reported in 2020. Two cases of internal misconduct were uncovered with an external partner. Both matters were handled as personnel matters with dismissal as a result.
13) Figures do not include Cubera Private Equity, as this company has its own anti-corruption Program.
Why We are a key player in the Nordic financial market. Therefore, we have a distinct responsibility to avoid being used in connection with the financing of terrorism, money laundering or other forms of financial crime. Our stakeholders expect us to handle with our responsibilities in an adequate manner. Routines and management are important for maintaining our reputation.
Goals and ambitions Storebrand shall act consistently and in compliance with relevant legislation related to money laundering, terror financing and financial crime in general.
Approach We have established policies to avoid money laundering (AML) and terror financing. The guidelines have been reviewed and approved by the Board of Storebrand ASA and are based on our code of conduct. Furthermore, we have implemented measures throughout the Group to avoid money laundering, financial crime, and terror financing.
All employees are required to familiarise themselves with our guidelines for preventing financial crime and shall complete our mandatory training program on AML and terror financing. All new employees complete mandatory training as part of their onboarding process.
The training also provides employees with a basic understanding of the regulatory framework concerning financial crime and terror financing, as well as our requirements to employees and managers. Senior managers and board members for the Group, and for each subsidiary also receive mandatory training in AML, financial crime and terror financing.
Storebrand is a member of Finance Norway’s economic crime committee. The committee cooperates closely with the authorities in Norway and provides guidance to all member companies.
Results In 2020, 46 cases related to suspected financial crime were reported to the police’s Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime, while 29 cases related to suspected fraud were reported directly to the police. The severity of the cases varied, from suspicion of money laundering, terror financing and tax evasion to falsifying documents and attempted insurance fraud.
16.5 We are committed to combating corruption and bribery in all their forms.
A dedicated department oversees energy and water consumption, waste production and levels of waste sorting in the office premises to ensure that we reach the lowest possible footprint. We buy electricity from renewable energy sources through purchasing guarantees of origin.
Goals and ambitions We are committed to setting science-based targets for our emissions, in line with the Paris Agreement. The plan is to set science-based targets in line with the 1.5-degree target for the entire business, including our own operations, by 2021. For our own operations, we aim to reduce greenhouse gas emissions by 7.615) per cent per annum with 2019 as a baseline year, in line with the 1.5-degree target and the findings of the UN Emissions Gap Report 2019.16)
We are continuously working to become more energy efficient, reduce waste production, increase the proportion of waste sorted, and reduce our carbon footprint in connection with flights and commuting.
Carbon emissions from our own operations were reduced significantly in 2020, compared to previous years. However, the reductions are mainly related to restrictions stemming from Covid19 restrictions rather than our environmental efforts.
50 employees used the offer to buy electric bikes for personal use at a discounted rate, with a interest-free loan from Storebrand.
Goals and ambitions A key objective is to avoid the use of suppliers where production processes or products violate international agreements, national legislation or internal guidelines. Through our own activities and procurement activities, we aim to contribute to sustainable development, and to ensure that human rights and workers’ rights are not infringed.
Our ambition for 2020 was to stabilise the share of environmentally certified purchasing volume of at least 55 percent, following our overachievement of this target in 2019. The target for 202517) was increased to a 60 per cent share of environmentally certified purchasing volume, to stimulate further improvement in the environmental performance of the supply chain. Even though we achieved a higher purchasing volume from environmentally certified suppliers in 2020, the dynamics of our supply chain and market conditions still make the 60 per cent target challenging. Therefore, our aim is to work on maintaining a share of purchases from environmentally certified suppliers of over 60%.
• By 2025, the goal is that all suppliers will be climate neutral 18)
• By 2030, the goal is that the entire value chain for our deliveries will be climate neutral
In 2020, we have developed a new framework for follow-up and evaluation of suppliers. Our approach focuses on collaboration for continuous improvement when it comes to sustainability, defined by the questions we ask suppliers and partners. Our approach to sustainable procurement follows the same three-folded strategy as our work with active ownership towards companies we are invested in.
12.5 We aim to significantly reduce the amount of waste through prevention, reduction, recycling and reuse in the supply chain.
12.6 We encourage companies to introduce sustainable working methods and integrate information about sustainability into their reporting routines.
8.7 Through our procurement practices, we strive to contribute to effective efforts to end modern slavery and eliminate child labour in our value chain.
We exclude - Storebrand shall not choose vendors, products or services that are in violation of international agreements, national regulations or internal policies. This is described in our sourcing principles. To get an overview of how good our suppliers are when it comes to sustainability, we are now mapping all suppliers with annual sales volume to Storebrand of more than 1 million NOK, through a questionnaire divided into the following main areas: • How sustainability is integrated into suppliers’ strategies
To measure progress, annual reporting on sustainability will be effective from 2020. An extended set of questions is also used to evaluate suppliers in purchasing processes.
Our most important and largest purchases include contracting IT and business processes, healthcare, damage settlement in insurance and management of direct real estate investments. The areas with the greatest risk and impact on sustainability are, in our judgment, outsourcing (including offshoring), damage settlement (car and property), and property management in general.
Results In 2020, contracts worth more than 1 million NOK totaled around 3,2 billion NOK. This accounts for more than 87 per cent of our total purchasing volume and includes the management and development of direct real estate investments. Of this volume, 62 per cent are with suppliers that are environmentally certified in accordance with our purchasing policy. This volume is divided into 290 suppliers, of which 62 (21 percent) are certified according to a recognised environmental management standard.
Our first survey of suppliers with over NOK 1 million in turnover was answered by 45 suppliers. Our total purchasing volume from these suppliers was 625 million NOK in 2020, almost 20 per cent of our total purchase volume for the year. We will continue to work on mapping our suppliers’ sustainability work and aim to provide further information on this in the annual report for 2021.
We’re rooting for: Volunteering is an important part of Norwegian culture, and there is a large amount of work to be done annually, including sports and leisure activities. Through our “We’re rooting for” competition, we provide financial support for various socially useful projects at home and abroad.
Environmentally certified purchases (share of the total expenditure that went to suppliers with certified environmental management system) 21) 38 % 46 % 57 % 62% 60% 60 %
Share of purchasing volume that has answered survey on sustainability of suppliers 22) New New New 17% Increse 100%
Greenhouse gas emissions from own operation (total) scope 1-3: tonnes of CO2 / tonnes CO2 per FTE 1,484 / 0.9 1,444 / 0.9 1,519 / 0.92 477 / 0.28 0.71 23) 0.6232)
CO2e-emissions per FTE due to air travel: Scope 3,tonnes25) 0.64 0.69 0.74 0.15 - -
DJSI score/ percentile global 69/74 63/74 75/81 81/93 Top 10% 24) Top 10% 24
E-learning completed, combating money laundering and financial crime: total / share of man-years26) New New 89 % 92% 100 % 100 %
Number of information security incidents 3 0 30 20 N/A N/A
22) Applies to volume of our purchases in NOK to suppliers with over NOK 1 million in sales to Storebrand 23) We have set a target to reduce our emissions by 7,6% per year by 2025 with a 2019 baseline year. Due to the Covid-19 pandemic, our emissions in 2020 were abnormally low. We will consider adjusting our long-term targets when the pandemic stabilises and working-life becomes more normalised.
24) A top 10% rank entails that Storebrand will be included in the Dow Jones Sustainability Wolrd Index. Score and percentile as expressed in the indicator can therefore not be directly compared with the target expressed here.
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People 4. Keeping Our House in Order
Progress on our most material sustainability KPIs 73 6. Shareholder matters 7. Annual Accounts and Notes 8. Governance 9. Sustainability assurance 10. Appendix
Storebrand aims to help customers achieve financial security and freedom by offering long-term savings and insurance solutions. Our goal is to deliver sustainable solutions tailored to the customer’s individual needs, so that customers can receive the best possible pension in a more sustainable world. This is how we create value for customers, shareholders, and society.
Chairman’s foreword 7 1. This is Storebrand 2. Customer relations 3. People 4. Keeping Our House in Order 5. Director´s report
Covid-19 and the effects on key accounting estimates and discretionary assessments.
Describes the processes associated with valuation and sensitivities for financial instruments.
The main impact of Covid-19 on Storebrand was the increased risk of lower employment and a subsequent rise in disability in the society. Reserves for insurance products with disability coverage were therefore strengthened in the first quarter, and these were still assessed to be adequate by the end of the year.
Growth in capital-light business areas in the front book The core of Storebrand’s strategy is to gather and manage savings from pension and institutional customers in Norway and Sweden, as well as retail customers in Norway. By the end of 2020, we managed NOK 962 billion of assets. This is our main revenue driver. In addition, we will build on existing savings and pension relationships by offering related products and solutions within insurance and banking in Norway.
In Sweden, where the defined contribution pension market is more mature, SPP increased its market share to 18 per cent from 16 per cent last year, becoming the second largest provider within non-unionised pensions 29). New digital sales tools and a successful strategy to encourage customers to transfer previously earned pension assets to SPP were main drivers for the growth.
Nordic Powerhouse in Asset Management In 2020, Storebrand’s total assets under management increased to NOK 962 billion, and 43 per cent are now external customers’ funds. We affirmed our position as Norway’s largest and the Nordic’s fifth largest private asset manager. A growing share of external customers drive earnings growth, and the ability to co-invest with our internal pension business provides us with a competitive advantage.
Storebrand has developed into a Nordic multi-boutique manager with several brands. SPP Fonder is currently the fifth largest mutual fund company in Sweden. SKAGEN, which was acquired in 2017, has provided Storebrand Asset Management with a common modern technological platform. SKAGEN has also been a catalyst for international expansion and strengthened Storebrand’s position in the retail market for mutual fund savings. With the 2019 acquisition of Cubera, we have also strengthened our capabilities within alternative asset classes, in particular private equity. During 2020, Cubera successfully raised NOK 9 billion in capital.
More information about our sustainability work is discussed in the section below A Driving Force for Sustainable Investments and in the chapter Keeping our house in order.
Digital frontrunner The use of technology makes it possible to combine growth initiatives and measures for increased competitiveness, while at the same time realising cost reductions and efficiency gains. Smart use of data paves the way for new business opportunities and efficiency gains, both through digitalisation and automation. Storebrand is adopting modern cloud solutions, enabling faster time-to-market and better access to new digital capabilities. Digital sales have increased 25 per cent annually over the past three years. The duration of handling disability claims has seen a reduction of up to 75 per cent, while fraud detection increased 85 per cent.
Digital customer experiences will be a high priority going forward. More information about our digital initiatives is described in the chapter Customer Relations under the section Digital Innovator in the Financial Sector.
Management of capital and balance sheet Storebrand is a blend of fast-growing capital-light business that deliver high returns on equity, and capital-intensive run-off business with low returns on equity. The run-off business of guaranteed pensions ties up more than three-quarters of the group’s equity and yielded a return on equity of 3 per cent in 2020. The growth business, on the other hand, yielded a return on equity of 54 per cent30) . The group’s overall return on equity31) was 8.6 per cent for 2020.
The solvency margin including transitional rules was 178 per cent at the end of 2020 - an increase of 2 percentage points from last year’s 176 per cent, despite occasionally challenging financial markets throughout the year. Without transitional rules, the solvency margin was 166 per cent. This corresponds to a decrease of 8 percentage points from last year’s 174 per cent. The reduction is mainly due to a lower interest rates at the end of 2020. However, this is to a large extent compensated for with transitional rules. Regulatory assumptions in the calculation of solvency ratio, such as reduced volatility adjustment and a lower ultimate forward rate, contributed negatively to the solvency ratio as well. Nevertheless, we were able to improve our solvency position through actions. A dynamic pricing model for interest rate guarantees was introduced, and the result in 2020 also helped to strengthen the solvency ratio by approximately 10 percentage points.
Financial targets Storebrand has the following financial targets: Key performance indicators Goal
30) Based on a pro forma distribution of IFRS equity per line of business. The capital is allocated based on the capital consumption under Solvency II and CRD IV. The segments Savings and Insurance and Other are calibrated to a solvency margin of 150%, while the rest of the capital is allocated to the segment Guaranteed pension.
31) After tax, adjusted for amortisation of intangible assets. This report contains alternative performance measures (APM) as defined by the European Securities and Market Authority (ESMA). There is summary of the APMs used in financial reporting at storebrand.com/ir.
Our financial result is reported by the following business segment: Savings, Insurance, Guaranteed Pension and Other, as well as on a consolidated Group level.
Storebrand achieved a group profit (before amortisation) of NOK 2,711 million (NOK 3,037 million). The figures in parentheses show the corresponding figures for last year.
Fee and administration income increased by 7 per cent to NOK 5,676 million (NOK 5,308 million), driven mainly by strong underlying growth in assets under management. Adjusted for a strengthened Swedish krona, the income growth was 3 per cent.
The insurance result was NOK 825 million (NOK 1,005 million) and resulted in a combined ratio of 97 per cent (91 per cent). Reserve strengthening in products with disability coverage weakened this year’s performance, as a result of the Covid-19 pandemic with the uncertain macroeconomic situation that occurred and the risk of increased disability in Norway.
Financial items and risk result life was NOK 278 million (NOK 739 million). The decrease in profits in 2020 is mainly due to a weak disability result in the Norwegian Defined Benefit pensions as well as an increased need for Deferred Capital Contributions in SPP due to lower discount rates and wider credit spreads.
Amortisation of intangible assets amounted to NOK -492 million (NOK -444 million). The increase is mainly due to a strengthened Swedish krona.
The Group ended the year with a tax income of NOK 136 million (NOK -511 million). The tax income is the result of new information and interpretation of the transitional rules for 2018. The estimated normal tax rate for the Group is 21-23 per cent, depending on each legal entity’s contribution to the group result. For more information on tax and uncertain tax positions, see note 26. Storebrand also has a policy for responsible taxation and publishes a separate tax transparency report on our website.
Group profit after tax was NOK 2,355 million (NOK 2,082 million).
Profit before amortisation increased to NOK 1,730 million (NOK 1,364 million) – an increase of 27 per cent in 2020.
The bank’s retail lending balance grew by NOK 1.3 billion (3 per cent) to NOK 49.5 billion.
Financial results Insurance premiums for own account (f.o.a.) grew by 11 per cent to NOK 4,331 million in 2020 (NOK 3,909 million), driven mainly by strong volume growth, but also price increases in less profitable products.
Earnings before amortisation amounted to NOK 775 million (NOK 1,029 million).
Balance sheet and market development Guaranteed reserves at the end of the year amounted to NOK 277 billion. This is an increase of NOK 13.5 billion in 2020, but adjusted for currency effects, the change is only NOK 4.7 billion. As a share of total reserves, this corresponds to 50.8 per cent (54.5 per cent) at the end of the year, a decrease of 3.7 percentage points since last year.
Storebrand’s strategy is to increase the buffer capital to secure customer returns and protect shareholder’s equity under turbulent market conditions. Buffer capital for guaranteed pensions increased to 11.0 per cent (8.6 per cent) of customer reserves in Norway and to 11.4 per cent (10.7 per cent) in Sweden. This corresponds to an overall increase of NOK 5.7 billion since last year.
The table above excludes eliminations. The segment result consists of the sum of the results for the business activities in the Other segment and eliminations.
Financial results The operating profit for the Other segment was NOK -75 million, in line with the previous year’s result (NOK -91 million). Financial items and risk result life was NOK 76 million, a decrease from last year’s NOK 296 million. The result is primarily based on returns in the company portfolios in Storebrand Livsforsikring and SPP, as well as the financial result in Storebrand ASA. Unrealised losses on investments in the portfolios that occurred in the first quarter during the market turmoil have been reversed throughout the rest of the year. Profit before amortisation amounted to NOK 1 million (NOK 205 million).
Dividend for 2020 Storebrand has established a framework for capital management that links dividends to the solvency margin. The dividend policy intends to reflect the strong growth in fee-based earnings, the more volatile financial markets related earnings and the future capital release from the guaranteed book. The Board’s ambition is to pay a gradually growing ordinary dividend. When the solvency margin reaches 180% without material use of transitional capital, the Board intends to initiate a share buyback program. The purpose of the buyback program is to return excess capital released from the guaranteed liabilities that are in long-term runoff. A review of the solvency level and related share buybacks will be conducted after the full year results for 2021.
Storebrand Livsforsikring Group’ssolidity capital consists of equity, subordinated loan capital, market value adjustment reserves, additional statutory reserves, conditional bonuses and risk equalisation reserves. The solidity capital was strengthened by NOK 10.3 billion in 2020. The market value adjustment reserve increased by NOK 1.7 billion as a result of positive market developments and amounted to NOK 7.2 billion at year-end. Conditional bonuses increased by NOK 1.5 billion and amounted to NOK 10.8 billion. Booked returns have increased the additional statutory reserves. The additional statutory reserves amounted to NOK 11.4 billion at the end of the year, an increase of NOK 2.4 billion for the year. The excess value of bonds and loans that are booked at amortised cost have increased by NOK 4.1 billion during the year and amounted to NOK 8.8 billion at year-end. The excess value of bonds and loans at amortised cost is not included in the financial statements.
Storebrand ASA (holding) held liquid assets of NOK 5.0 billion at the end of the year. Liquid assets consist mainly of short-term fixed income securities with high credit ratings. Storebrand ASA’s total interest-bearing liabilities were NOK 1.0 billion at the end of the year. The next maturity on bond debt for Storebrand ASA is in May 2022. In addition to the liquidity portfolio, the company has an unused credit facility of EUR 200 million, which expires in December 2024, with the option for an extension for another two years. Storebrand ASA recognised dividend and group contributions from subsidiaries of NOK 3,148 million in 2020. The dividend allocated to shareholders amounted to NOK 1,519 million.
Storebrand’s dividend policy: Storebrand aims to pay an ordinary dividend of more than 50% of Group result after tax. The Board of Directors’ ambition is to pay ordinary dividends per share of at least the same nominal amount as the previous year. Ordinary dividends are subject to a sustainable solvency margin of above 150%. If the solvency margin is above 180%, the Board of Directors intends to propose special dividends or share buy backs.
The Board proposes a dividend of NOK 1,519 million to the General Meeting, corresponding to an ordinary dividend of NOK 3.25 per share for the financial year 2020.
Market development Financial market developments affect both the Group’s solvency ratio and the financial results. Higher interest rates increase the solvency ratio and make it easier to achieve returns above the guaranteed rate. Defined Contribution pensions and asset management are largely exposed to the stock market. Market movements will therefore affect income earned on assets under management. Currency movements between the Norwegian and Swedish krone affect the reported balance sheet and results in SPP at a consolidated level. There is still uncertainty about the consequences of Covid-19 and how it will affect financial markets going forward. With a solid solvency margin of 178 per cent and more than 11 per cent buffer capital in guaranteed products, Storebrand is in a good position to navigate safely through demanding markets. The company also has a robust risk management framework, as described in a separate section below. Read more in note 2 about uncertainties related to the Covid-19 pandemic.
Regulatory changes Regulations enacted by the authorities can be of great importance to Storebrand. We describe the most important changes and their significance for Storebrand below.
European regulations Solvency II revision In December 2020, the European Supervisory Authority for Insurance and Occupational Pensions (EIOPA) submitted its final proposal for changes to the standard model under Solvency II to the European Commission. One of several proposals by EIOPA concerns changes to the interest rate risk module that could increase the solvency capital requirement for Norwegian and Swedish insurance companies.
EIOPA originally planned to submit its final proposals in June 2020, but the timetable was revised due to Covid-19. We expect final conclusions to be drawn by the Commission, the Parliament and the Council in 2022. This will be followed by work on delegated acts and guidelines. Changes are not expected to enter into force before 2026.
The new rules will establish standards for sustainable asset management and clarify reporting requirements and customer information.
We regard the regulations for sustainable finance to be positive. It will increase the requirements and improve the quality of financial and non-financial reporting, which in turn will provide better information to stakeholders and improve comparability within the financial sector.
Pension capital certificates accumulated from previous employments are automatically transferred to the Individual Pension Account, which is established at the current employer’s pension provider. Transfers are carried out unless the policyholder makes an active choice to opt-out (“negative acceptance”) and stay with the providers from previous employments. At the same time, it introduces the opportunity for policyholders to choose a provider of their own choice rather than staying with the employer’s collective scheme.
Transfers of pension capital certificates that have not optedout shall be carried out in the period between 1 May and 30 December 2021. Policyholders who do not want to wait may request that pension capital certificates shall be moved to their Individual Pension Account at once.
Storebrand participates in the Ministry of Finance’s implementation group for Individual Pension Accounts.
Guaranteed pension The Norwegian Financial Supervisory Authority’s proposed changes to the regulations for guaranteed pension products have been consulted. The Ministry of Finance is yet to decide which of the proposals for legislative changes are to be submitted to the parliament.
The Ministry of Finance decided in May 2020 that the Financial Supervisory Authority’s proposal to remove the possibility of booking bonds and loans at amortised costs will not be followed up. Bonds held at amortised costs are a key tool for risk management of paid-up policies, and the clarification provided reassurance that we can continue to make use this tool.
• The ability for the company to fulfil annual interest rate guarantees with borrowed equity.
• The ability for customers to choose faster pay-outs for small paid-up policies.
Swedish regulations Premium pensions (PPM) of the national retirement pension system The report on the Swedish premium pension system (PPM) is still being discussed in the Swedish parliament’s pension group. This will present the final requirements for a procured fund market, before for further processing. The inquiry period has been extended until 31 August 2021 so that the authorities can begin their work with the fund market on 1 September 2021. Today’s fund market is expected to be replaced by a procured market based on new criteria for fees, sustainability and quality.
The PPM fund market is a major distribution channel for SPP’s funds. We anticipate that the new fund market will offer fewer funds at a lower price, but it is too early to say anything about the consequences.
The Swedish government has been asked by the parliament to draw up further proposals for adjustments to the transfer fees for Unit Linked accounts (including deposit insurance). Proposed regulations were presented in October 2020. The new rules, which introduce an upper limit on fees, will come into force on 1 April 2021 and apply to policies dated back to 1 July 2007. An inquiry for policies established before 1 July will be conducted and proposed regulations are expected in September 2021.
Financial results In Norway, the market for private sector occupational pensions has experienced increased competition over the last years in anticipation of the new Individual Pension Accounts (IPA), described under regulatory changes above. As individuals’ contracts are merged into one account, fees will be reduced. The resulting economic effect is expected to be moderate in 2021 and slightly more negative in 2022, before recovering in 2023 through strong underlying growth as well as measures to increase profitability. The market has grown structurally over the past years. High single-digit growth in premiums and double-digit growth in assets under management are expected during the next years. We aim to defend Storebrand’s market leader position, while also focusing on cost leadership and improved customer experience through end-to-end digitalisation.
As a leading occupational pension provider in the private sector, Storebrand also has a competitive offering to the public sector market. The public sector pension market is fast growing and larger the private sector, thus representing a potential additional source of revenue generation for Storebrand. The ambition is to gain 1 per cent market share annually, or approximately NOK 5 billion in annual net inflow.
Overall reserves for guaranteed pensions are expected to start decreasing in the coming years. Guaranteed reserves represent a declining share of the Group’s total pension reserves and were 50.8 per cent at the end of the year, 3.7 percentage points lower than last year. Storebrand’s strategy is to secure customer returns and shield shareholder’s equity under turbulent market conditions by building customer buffers. Customer buffers make up more than 11 per cent of customer reserves in both Norway and Sweden. The levels will grow with an expected positive spread over the guaranteed rate on the policies.
Storebrand Asset Management is growing its external mandates from institutional and retail investors, both in the Nordics and across Europe, in addition to managing internal pension funds. Storebrand has a full product range including index, factor, and active management. We are also one of the strongest providers
Capital management Storebrand aims to maintain a solvency ratio of at least 150 per cent. At the end of 2020 it was 178 per cent. On an annual basis, a net capital generation of about 6-7 percentage points of solvency is expected over the next few years. Of this, approximately 10 percentage points are generated in the business, 3 additional percentage points are expected as a result of the guaranteed business being in run-off, and around 5-6 per cent are expected to pe paid out as dividend from the annual results. Financial market volatility, especially the development in long interest rates, and regulatory changes, may lead to short term volatility in the solvency ratio.
The Board’s ambition is to pay a gradually increasing ordinary dividend. When the solvency ratio exceeds 180 per cent without material use of transitional capital, the Board’s intention is to begin a share buy-back programme. The purpose of the buy-back program will be to return excess capital from the guaranteed business which is in long-term run-off. Under normal circumstances, the solvency ratio can be expected to reach 180 per cent in 2023. During the same period, it is expected that the transitional capital will be phased out as a result of the change in business mix from guaranteed to non-guaranteed business. We expect that approximately NOK 10 billion in capital will be released by 2030. In combination with increased earnings from capital light growth, the business mix shift will also lead to positive developments in return on equity over time. We expect to deliver a return on equity (adjusted for amortisation) of more than 10 per cent by the end of 2023 on a sustainable basis.
Having a long-term perspective is important for Storebrand, as we manage customers’ savings over decades. We fundamentally believe that investments in companies that are well positioned to deliver on the UN Sustainable Development Goals (SDG) will provide better risk-adjusted returns for our customers over time. Companies that rank highly on sustainability indicators have a better understanding of global developments, and how to navigate risks and opportunities, than other businesses. According to international studies, the most sustainable companies on the world’s stock exchanges tend to outperform their peers financially over time. We therefore believe such companies will be the winners of tomorrow and provide better returns for our customers.
In order to clarify and measure sustainability, we have defined sustainability as measurable subpoints under the Envionmental, Social and Governance (ESG) categories – environmental and social conditions, and corporate governance. Storebrand is both a significant asset owner and asset manager. With investments in over 4,500 companies worldwide, we are exposed a wide array of ESG risks. We work actively to reduce the risk of our portfolio having a negative impact on the environment and in societies. More specifically, we work to reduce the risk of our investments having indirectly contributed to environmental degradation, violations of international conventions on human rights and international law, suppression of children’s rights, corruption or economic crime. From a financial perspective, it is also crucial for us to reduce ESG risk to avoid negative effects on the value of our investments.
The Covid-19 pandemic affected us all in 2020, but the impacts were unevenly distributed. Just like the impact of climate change will challenge societies differently. In our work on responsible investments, we see that the pandemic has had major consequences for supply chains in developing countries and has consequently resulted in millions of people losing their livelihoods. The World Bank estimates that for the first time in 20 years the number of extremely poor increased, and it is estimated that around 100 million people have been driven into extreme poverty in 2020. 34)
We see a growing demand for sustainable investment products, especially products with a focus on climate solutions. In Sweden, our customers want to reduce the exposure to carbon-related activities in their portfolios. In this market, one-third of our total assets of NOK 962 billion are invested in fossil-free products that exclude companies in coal, oil and gas. In 2020 assets under management in fossil free products increased by more than NOK 130 billion. Our efforts to reduce CO2emissions among companies in our portfolio are driven by customer expectations, as well as our responsibility to manage financial risk on behalf of our customers and investors.
Our exposure to companies actively working to achieve the SDGs increased significantly in 2020. These businesses are called “solution companies” in Storebrand. Our investments in solution companies accounted for 13 per cent of our total equity investments in 2020, up from 8 per cent in 2019.
In 2020, we launched a new comprehensive climate policy for Storebrand’s investments. The work included a comprehensive analysis to uncover deforestation risks, and direct dialogue on deforestation with Brazilian and Indonesian authorities. We also decided not to invest in companies that engage in deliberate and systematic lobbying to counter the goals of the Paris Agreement.
Over time, we have had dialogue with the International Energy Agency (IEA), along with over 60 other international companies, organisations and academic researchers. We have urged the IEA to provide governments, investors and companies with better tools to align policies, investments and business strategies with the Paris Agreement’s goal of reducing global warming. In the “2020 World Energy Outlook,” the IEA included a renewable energy scenario for the first time, with net zero emissions by 2050. This is a positive development that shows that international cooperation works. We will continue to put pressure on the IEA to include a comprehensive 1.5-degree scenario in the World Energy Outlook report in 2021.
In 2020, we also assisted The Science Based Targets Initiative (SBTi) in the development of a methodology to adapt lending and investment portfolios to the ambitions of the Paris Agreement, by providing input on their Temperature Alignment Tool. In addition, we road tested the SBTi methodology to set goals for property investments, contributing to a report where we shared our target and experiences using the framework.
As these examples indicate, we expanded our sustainability work through cooperation with different types of stakeholders, as well as strengthening direct dialogue with the companies in which we are invested throughout the year.
We aim to be a driving force for lasting change in the way companies are managed, while ensuring good returns for our owners and customers. We put capital into action to fund socially purposeful, sustainable solutions and reduce exposure to activities that adversely affect society and the environment. Our work on sustainable investments consists mainly of three instruments; solutions, active ownership and exclusions
These three instruments enable us to be an active, driving force for sustainable investments that contributes to positive change and development, and to reduce financial risk.
We also invest in green bonds. These secure access to capital for new and existing projects with environmental benefits. By yearend in 2020, we had invested NOK 22.2 billion in green bonds, accounting for 5 per cent of our total bond investments, up from 2 per cent in 2019. Green bonds are part of what we call solutions, and are included in the total target of 15 per cent described above The table below shows how our strategy for increasing investments in solutions contributes positively to the UN Sustainable Development Goals.
We invest in solutions for safe drinking water at an affordable price, improved sanitation, water quality, efficient water consumption, water resources management and recovery of waterrelated ecosystems.
We invest in companies that support productive employment and decent work for all women and men. We increase exposure to companies that work against discrimination, which provide equal pay for equal work, and provide equal opportunities for senior positions at all levels of decision-making.
We invest in companies that contribute to inclusive, fair and good education for all. We increase exposure to companies that offer products and services that contribute to increased access and accessibility to education, companies that help young people and adults increase their ICT knowledge and contribute to knowledge sharing about sustainability.
We invest in companies that deliver climate solutions and help achieve the Paris Agreement.
We invest in companies that deliver solutions in sustainable management and efficient use of natural resources. Companies that contribute to circular economy and waste reduction in the life cycle of products.
We invest in companies that deliver sustainable urban development and sustainable transportation systems and reduce cities’ impact on the environment. More specifically, companies that improve air quality and waste management, promote inclusion, promote resource efficiency, mitigates and adapts to climate change and increases resilience to natural disasters.
In our active ownership, we prioritised four topics in 2020: Decarbonization of companies Our climate change policy aims to reduce investment exposure to climate risk. We are part of several global collaborations where we have a leading role in engaging with companies that are top carbon emitters. With the decision to phase out investments in coal by 2026, we are engaging with investee entities on reducing their exposure to coal production, distribution and consumption. We will also co-file shareholder proposals on two-degree scenario planning and methane emission reduction targets.
Conflict areas During 2020, Storebrand has carried out a screening to identify companies with operations in occupied Palestinian territories and occupied Western Sahara. These companies may contribute and profit from the occupation by supplying security and surveillance services and equipment. They may also profit from the maintenance, development and expansion of settlements by providing construction materials and services or directly financing the construction of settlements or by being involved in the exploitation of natural resources without the consent of the occupied people. According to reports from the UN and several Human Right organisations, the occupying powers in these territories continue expanding their occupation which in turn results in continuing violations of human rights. In addition, attention to these issues by companies and investors continues to be low. Therefore, we decided to make conflict areas one of our top engagement priorities. During the year we faced several dilemmas that highlighted the importance of thinking holistically about sustainability. Among other things, we chose to exclude companies with business activity in occupied territories, despite their business contributing to green restructuring.
Money laundering Trust in the financial system is at the very core of our modern society. If banks and other financial institutions are used as tools to legitimate criminal activity through money laundering this trust will quickly erode. In recent years major banks all over the world, including major Scandinavian banks, have been implicated in money laundering scandals. We expect all financial institutions to follow international rules and the recommendations from the Financial Action Task Force on Anti-Money Laundering (AML). We will cooperate with other investors, to improve the AML systems in banks we are invested.
In collaboration with the Rainforest Foundation and KLP, we produced a report that maps the types of data sources, tools and methods investors can use to work systematically and factbased with deforestation. Based on the findings of the report, Storebrand conducted a comprehensive risk analysis and identified companies and sectors with high deforestation risk. Further work in this area will be one of our priorities in 2021.
Furthermore, Storebrand also initiated an investor coalition on deforestation, the Investors Policy Dialogue on Deforestation (IPDD). The coalition consists of 43 investors who manage approximately USD 6,000 billion and will work systematically towards governments in countries where deforestation is a problem. Storebrand and BlueBay Asset Management share the leadership responsibility for this work. Initially, the coalition focused on Brazil, where we led the dialogue with Brazilian authorities. The work gained great international recognition, and received massive media coverage in Brazil and internationally, giving us a solid starting point for our work to combat deforestation.
Loss of biodiversity is a priority for Storebrand. The value of natural goods is estimated to be over NOK 100,000 billion globally, and loss of nature can have major financial consequences for companies. For us, it is important to establish nature-related risk as a concept, in the same way as climate risk is. Internationally, we have been invited to work with governments, companies and other financial institutions to establish the Task Force on Naturerelated Financial Disclosures with accompanying standards for better company reporting for biodiversity.
We engage with companies involved in serious and/or systematic unsustainable production of palm oil, soy, cattle and timber. In 2020, we had dialogue with other important stakeholders, including the authorities in Brazil, on measures to reduce biodiversity loss and to prevent deforestation.
We engage with companies in the world that emit the most greenhouse gases, to reduce emissions, strengthen climaterelated financial reporting and improve climate management. In 2020, we worked to ensure that the companies we are invested in will set climate targets in line with the Paris Agreement and report on climate risks in accordance with the TCFD recommendations.
We engage with companies to reduce water consumption and greenhouse gas emissions in intensive livestock production. We raise environmental standards in key sectors, such as palm oil, soy, cattle and timber. In 2020, we analyzed companies with increased deforestation risk, that employ irresponsible production methods.
At the end of 2020, we had excluded 21536) companies for violating the Storebrand standard for sustainability. Of these exclusions, 139 were due to severe climate and environmental damage, which include conduct based exclusions such as; companies that derive more than 5 per cent of their revenues from coal and oil sands, companies that work against the goals and targets enshrined in the Paris Agreement and companies that are involved in severe and/
Government bonds issued by countries that are systematically corrupt, which systematically suppress basic social and political rights, or against which the UN Security Council has adopted sanctions.
Companies involved in serious environmental damage. Companies that receive more than 5 per cent of their revenue from coal or oil sands-based operations.
Companies that contribute to severe and/or systematic deforestation through unsatisfactory production of palm oil, soy, cattle or timber.
Companies where more than 5 per cent of their revenue comes from the production or distribution of gambling or pornography.
Using climate scenarios based on the climate models of the Intergovernmental Panel on Climate Change (IPCC) and limiting global warming to 1.5°C with no or with limited overshoot.
2. Reorient capital flows towards low-carbon, climateresilient and transition companies Using the EU taxonomy for sustainable activities and establishing methods for measuring, monitoring and reporting on climate-related risks and identify investment opportunities.
• Ranking and research: Use data to assess and manage climate-related risks and opportunities.
• Carbon footprint: Measure the carbon footprint of our portfolios and compare these with relevant indexes to map reduction targets. Use best available reporting practices.
• Adaptation metrics: Assess the preparedness of investee companies and entities to the physical impact risks associated with climate change. In addition, we will consider adaptation plans for companies that are particularly exposed to climate change.
The ratio of funds to index is similar with the current and previous method, but the absolute values on the indicators will thus differ from previous years’ reported figures.
Key performance indicators Result 2017 Result 2018 Result 2019 Result 2020 Goal 2021 Goal 2025
Share of total assets screened for sustainability 100 % 100 % 100 % 100% 100 % 100 %
Investments in solution companies, nok / share share investments New New 24.3 / 9.3 % 50.3 / 13.1% - -
Certified green property, nok/ share of total real estate investments New 13 / 30 % 17 / 41 % 20.1 / 43.0% 52 % 74 %
The Board of Storebrand ASA and the directors of the subsidiaries adopt a risk appetite and risk strategy at least once per year. Risktaking shall contribute to the achievement of our strategic and commercial goals, including customers receiving a competitive return on their pension funds, and that Storebrand receives adequate payment for taking on risk. Risk appetite is defined as the overall risk level and what types of risk are deemed acceptable. The guidelines from the risk appetite are incorporated in our risk strategy, which sets the targets and frameworks. Based on these, more detailed strategies are compiled for different risk categories. Storebrand publishes an annual Solvency and Financial Condition Report (SFCR) which helps customers and other stakeholders understand the risks in the business and how these are managed.
The risk picture differs between business units. The main risks are described per business unit below.
Insurance Insurance consists of risk products and property and casualty insurance. The price can normally be adjusted on an annual basis if the risk changes.
The greatest risk is disability risk. More people than expected may become disabled and/or fewer disabled people will be able to work again. Some policies provide a pay-out in the event of death, but Storebrand’s risk from this is limited.
Other The Other unit encompasses the holding company Storebrand ASA, as well as the company portfolios and smaller subsidiaries of Storebrand Life Insurance and SPP. The assets in Storebrand ASA and the company portfolios are invested at low risk, primarily in investment grade short-term interest-bearing securities.
Tax Changes have been made to the Norwegian tax legislation for the insurance industry in recent years. Storebrand and the Norwegian Tax Administration have interpreted some of the legislation changes and the associated transitional rules differently. Consequently, Storebrand has three significant uncertain tax positions with regards to recognised tax expenses. These are described in more detail in note 8. Should Storebrand’s interpretation be accepted in all three cases, an estimated positive tax result of up to NOK 2.8 billion may be recognised. Should all the Norwegian Tax Administration’s interpretations be the final verdict, a tax expense of NOK 1.8 billion could be recognised. The Norwegian Tax Administration is expected to come with their decision on whether to retroactively change Storebrand’s tax bill in early 2021. However, the timeline for settling the process with the Norwegian Tax Administration might take several years. If necessary, Storebrand will seek clarification from the court of law on the matter.
Why Climate change and the transition to a low-carbon society can have a significant impact on our business. This may be further exacerbated by changes in the Norwegian economy, which is vulnerable to falling oil prices and lower activity in the oil and gas industry. In developing our climate strategy, we looked at how Storebrand’ s activities affect climate change, how climate change and climate policy can affect our business, and how we can adapt to avoid or mitigate potential negative impacts. In addition, we identified opportunities as a result of a changing climate and the transition to a low-carbon economy, what these entail for us and how we can capitalise on them in the best possible way. This is described in the chapter A driving force for sustainable investments on page 57.
The effects on investments and liabilities may be sudden in the form of market unrest, or they may unfold gradually 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 oil price and activity in the oil and gas-sector is a particular risk for Norway. A potential trigger is if the policy is abruptly strengthened to achieve Norway’s goals based on the Paris agreement. A potential effect is a country-specific fall in interest rate. As part of our efforts to reduce risk, in 2020 we mapped Storebrand’s exposure to the fossil sector, analyzing revenues from pension premiums, and disability coverage related to the sector and underlying industries.
Our approach Storebrand assesses climate risk through the same framework as other risks. The overall risk, including climate risk, is summarised in the Board’s risk review. Risk assessments are broad and include reputational risks associated with Storebrand’s sustainability position. In the Group’s Own Risk and Solvency report (ORSA), the main objective is to assess climate risks for investments, insurance obligations and solvency margins in different scenarios.
Storebrand has defined three scenarios based on the framework developed by Network for Greening the Financial System (NGFS). The network is established by central banks and supervisory authorities. The aim is to develop a framework for assessing and managing climate risk and encouraging the financial sector to support the transition to a low-carbon economy. The scenarios will be further developed, including quantitative stress tests, as the basis for the supervision process and analyses of financial stability.
Scenario analysis Storebrand has used the NGFS framework and associated scenarios to assess climate risk. The scenarios used can be simplified as follows: 1) Controlled: Climate policy is restructured swiftly and with force with the aim of reaching zero emissions by 2050 and limiting global warming to 1.5 degrees. The restructuring is facilitated by the fact that carbon capture becomes technically and economically viable to some extent.
2) Delayed: Varying degrees of climate crisis understanding, complex decisionmaking and limited technology developments delay a coordinated restructuring of climate policy in relation to the goals of the Paris Agreement. From about 2025, clearer signs of negative climate change are increasing acceptance of costs of severe austerity. Overall, the restructuring will be large enough for global warming to remain below 2 degrees.
The economic implications of the potentially catastrophic climatic changes of scenario 3 cannot be quantified in a meaningful way. Therefore, we have based our assessment on the consequences of the scenarios controlled (1.5 °C) and delayed (> 2 °C). Based on these two scenarios, we have identified potential risks and assessed them in short (1-3 years) and long term (3-10 years). 45)
Overall findings Physical climate risk Physical climate change lead to lower returns, both for equities, bonds and property investments. The risk is mainly long-term and most prevalent if climate change is dramatic, expressed in scenario 3. Insurance obligations can also be negatively affected. Storebrand exposure to climate change through direct insurance is very low. Yet, limited economic growth can cause interest rates to remain lower than they would otherwise. This has a negative impact on our guaranteed obligations. The combination of lower returns on assets, and higher insurance liabilities could negatively affect our solvency margin. The effect can hit abruptly in the form of market turmoil, or over time in the form of lower average returns and persistently low interest rates.
In practice, climate effects on returns and interest rates are very difficult to isolate from other effects. The risk is therefore considered to be covered by the capital requirements for market risk. The scenarios for negative development in the financial market and persistently low interest rates are also relevant to climate risk, where climate change and climate policy could be affected by potentially contributing underlying causes.
Asset management Our asset management’s largest climate-related financial risks and opportunities are believed to lie in the transition to a low-emission society. Climate policy and regulations, more rigorous emission requirements, a changed cost structure and market preferences may affect our investments. Our most important initiatives to mitigate these risks and capitalise on potential opportunities are listed below and, in the chapter driving force for sustainable investments.
Through Storebrand’ s climate strategy for investments, and our commitments through Net Zero Asset Owner Alliance, our target is to ensure that our investment portfolio shall be climate neutral by 2050. Part of the commitment is for Storebrand to set intermediate targets for emission reductions and report on target achievement.
45) Since climate risk is integrated into our structured framework for risk assessment that only operates with these two time horizons, we have not included risk that could be felt in the even longer term, ie.
• Climate reduction objectives for high emission sectors: Storebrand will set targets for emissions reductions for highemission sectors during the first half of 2021 48). See our equity exposure to high emission sectors below.
Additional measurement parameters and measurements can be found in the chapter a driving force for sustainable investments.
46) Calculated as Weighted Average Carbon Intensity.See calculation methodology in Definitions from page 225.
52) See case on page 64 53) The GICS codes included in the various sectors are described in Definitions from page 225
• Sustainability rating of all real estate: Our direct real estate investments are rated by GRESB in four different portfolios, and the portfolios are among the best in the Nordic region. The score increased almost 4 per cent in 2020 from 82 in 2019, to an average of 85 out of 100. With that, three out of four portfolios are ranked in the top 20 per cent globally, and awarded the maximum 5 stars.
Insurance The direct impact of climate change on Storebrand’s insurance obligations is limited because our business is largely based on reassurance where the terms of the agreement are adjusted annually. As a responsible insurance company, we still have a responsibility to assist our customers in securing themselves and their assets against potential climate risks. The biggest climaterelated financial risk to our property and non-life insurance business is increased insurance settlements related to climaterelated damage. In the long term, rising sea levels and changes in weather patterns can also have an impact. Risks associated with changing customer behaviour, technological developments and new regulations will also affect the property and non-life insurance market.
Our main measures to reduce climate risk are the following: • Risk assessment and pricing: Climate factors are included in risk assessment and pricing in the underwriting process.
• Rewarding damage prevention: We actively communicate with our customers, encouraging damage prevention measures, such as securing property during periods prone to flooding
There were no (zero) injuries to a staff member in 2020. No damage to property was reported, and no accidents were otherwise reported in the Storebrand Group in 2020.
Carbon intensity property investments: co2/m2 9,12 tonn 7,9 tonn 6,5 tonn
Property investments with green certificates: share of property investments 41% 43 % 74 %
Gender balance managment all levels: share women 39 % 39 % 50 %
Engagement score all employees: Storebrand score/ industry average in peakon, scale from 1-10 8,0 (7,8) 8,3 (7,8) > 8,0
Share price performance Shares in Storebrand yielded a total return of -7.0 per cent in 2020. In the same period, the Oslo Stock Exchange’s OSEBX Index ended at 4.6 per cent, whereas the European Insurance Index Beinsur yielded a total return of -7.9 per cent for the corresponding period, measured in NOK.
Share Captial, rights issues and number of shares Shares in Storebrand are listed on the Oslo Stock Exchange (Oslo Børs) under the ticker code STB. Storebrand ASA’s share capital at the end of 2020 was 2,339.1 million kroner. The Company has 467,813,982 shares with a nominal value of NOK 5. As of 31 December 2020, the Company owned 416,255 treasury shares, which corresponds to 0.1 per cent of the total shares. The Company has not issued any options that can dilute the existing share capital.
Shareholders Storebrand ASA is among the largest companies listed on the Oslo Stock Exchange measured by the number of shareholders. The Company has shareholders from almost all the municipalities in Norway and from 48 countries. In terms of market capitalisation, Storebrand was the 16th largest company on the Oslo Stock Exchange at the end of 2020.
Earnings per ordinary share (NOK) 5.02 4.43 7.89 5.28 4.73 2.63
Dividend per ordinary share (NOK) 3.25 0 3.0 2.1 1.55 0
Insider trading As one of the country’s leading financial institutions, Storebrand is dependent on maintaining an orderly relationship with financial markets and supervisory authorities. The Company therefore places particular emphasis on ensuring that its routines and guidelines satisfy the formal requirements imposed by the authorities on securities trading. In this context, the Company has prepared internal guidelines for insider trading and own account trading based on the current legislation and regulations. The Company has its own compliance system to ensure that the guidelines are observed.
Investor relations Storebrand has a focus on comprehensive and effective communication with financial markets. Maintaining a continuous dialogue with shareholders, investors and analysts both in Norway and abroad is a high priority. The Group has a special Investor Relations unit. This unit is responsible for establishing and coordinating contact between the Company and external parties such as the stock exchange, analysts, shareholders and other investors. All quarterly reports, press releases and presentations of interim reports are published on Storebrand’s website: www.storebrand.com/ir. In December 2020, Storebrand held a capital markets day outlining the strategy for 2021-2023.
General meeting Storebrand has one class of shares, each share carrying one vote. The Company holds its Annual General Meeting each year by the end of June. Shareholders who wish to attend the General Meeting must notify the Company no later than 4:00 p.m. three business days before the General Meeting. Shareholders who do not give notice of attendance before the deadline expires will be able to attend the General Meeting, but concede their right to vote.
THE 20 LARGEST SHAREHOLDERS Based on a screening of the shareholder list per. 31.12.2020
Storebrand Group 78 Income statement 79 Statement of total comprehensive income 80 Statement of Financial Position 82 Statement of changes in equity 82 Statement of cash flow 85 Notes
Profit/loss for the period attributable to: Share of profit for the period - shareholders 2,345 2,067
Share of profit for the period - hybrid capital investors 10 12
Average number of shares as basis for calculation (million) 467.2 466.8
There is no financial instruments that gives diluted effect on earnings per share
Total other comprehensive income elements that may be reclassified to profit/loss 273 -204
Intangible assets and fair value adjustments on purchased insurance contracts 27 6,303 6,220
Financial assets at fair value: - Bonds and other fixed-income securities 8, 10,12, 30, 36 28,833 28,512
Financial assets at amortised cost: Reinsurers' share of technical reserves 24 69
Equity transactions with owners: Hybrid capital classified as equity 3 3 50 53
Total comprehensive income for the period 298 2,217 2,515 10 8 2,532
Net cash flow from operations before financial assets and banking customers 14,108 6,522
Receipts - issuing of share capital / sale of shares to employees 26 33
Cash and cash equivalents at the end of the period 1) 2,878 3,160 1) Consists of: Loans to financial institutions 103 41
The cash flow analysis shows the Group’s cash flows for operating, investing and financing activities pursuant to the direct method. The cash flows show the overall change in means of payment over the year.
Operating activities A substantial part of the activities in a financial group will be classified as operating. All receipts and payments from insurance activities are included from the insurance companies, and these cash flows are invested in financial assets that are also defined as operating activities. One subtotal is generated in the statement that shows the net cash flow from operations before financial assets and banking customers, and one subtotal that shows the cash flows from financial assets and banking customers. This shows that the composition of net cash flows from operational activities for a financial group includes cash flows from both operations and investments in financial assets. The life insurance companies’ balance sheets include substantial items linked to the insurance customers that are included on the individual lines in the cash flow analysis. Since the cash flow analysis is intended to show the change in cash flow for the company, the change in bank deposits for insurance customers is included on its own lines in operating activities to neutralise the cash flows associated with the customer portfolio in life insurance.
Investing activities Includes cash flows for holdings in group companies and tangible fixed assets.
Cash/cash equivalents Cash/cash equivalents are defined as claims on central banks and loans to and claims from financial institutions. The amount does not include claims on financial institutions linked to the insurance customers portfolio, since these are liquid assets that are not available for use by the Group.
Financial instruments - IFRS 9 IFRS 9 Financial Instruments replaces IAS 39, and was generally applicable from 1 January 2018. However, for insurance-dominated groups and companies, IFRS 4 allows for the implementation of IFRS 9 to be deferred until implementation of IFRS 17. The Storebrand Group qualifies for temporary deferral of IFRS 9 because over 90 per cent of the Group’s total liabilities as at 31 December 2015 were linked to the insurance businesses. For the Storebrand Group, IFRS 9 will be implemented together with IFRS 17, which is expected to be applicable from 1 January 2023.
Debt raised by issuance of securities AC AC 18,729 18,728 20,649 20,738
Bonds and other fixed-income securities FVP&L (FVO) FVP&L 156,639 156,639 176,995 176,995
Intangible assets comprise excess value relating to insurance contracts and customer relations acquired in connection with a business combination and acquired and self-developed IT solutions. This excess value is measured at acquisition cost less annual amortisation and write-downs.
The recognised liabilities related to the Swedish insurance contracts with guaranteed interest rates in the subsidiary SPP are discounted by an observable market interest rate and by an estimated market interest rate for terms to maturity when no observable interest rate is available and corresponds essentially to the same interest rate that is used in the solvency calculations.
Insurance liabilities include Incurred But Not Settled (IBNS) reserves, which consist of amounts reserved for claims either incurred but not yet reported or reported but not yet settled (Incurred But Not Reported “IBNR” and Reported But Not Settled “RBNS”). IBNS reserves are included in the premium reserve.
4. Changes in accounting policies New accounting standards that have a significant impact on the consolidated financial statements have not been implemented in 2020. For changes in estimates, see Note 2 for further information.
Storebrand is working on preparing for implementation of IFRS17, including assessing the effects implementation of IFRS17 will have for Storebrand’s consolidated financial statements.
Storebrand consolidates certain funds in the Group’s balance sheet when the requirement for control has been met. This encompasses funds in which Storebrand has an ownership interest of approximately 40 per cent or more, which are managed by companies in the Storebrand Group. In the Group’s accounts, such funds are consolidated fully in the balance sheet, and the non-controlling interests are shown on a line for assets and on a corresponding line for liabilities. The non-controlling interests can demand redemption of their ownership interests and, as a result of this, they are classified as liabilities in the consolidated financial statements of Storebrand.
When making investments in subsidiaries, including purchasing investment properties, a decision is made as to whether the purchase constitutes acquisition of a business pursuant to IFRS 3. When such acquisitions are not regarded as an acquisition of a business, the acquisition method pursuant to IFRS 3 is not applied. Among other things, this does not entail provisions for deferred tax such as for business combinations.
Premium income Net premium income includes the year’s premiums written (including savings elements, administration premium, fees for issuing Norwegian interest rate guarantees and profit element risk), premium reserves transferred and ceded reinsurance. Annual premiums are generally accrued on a straight-line basis over the coverage period.
10. Goodwill and intangible assets Added value when acquiring a business that cannot be directly attributable to assets or liabilities on the date of the acquisition is classified as goodwill on the balance sheet. Goodwill is measured at acquisition cost on the date of the acquisition and classified as an intangible asset.
Goodwill is not amortised, instead it is tested for impairment. Goodwill is tested for impairment annually when assessing the recoverable amount or if there are indications that impairment has occurred. Goodwill is allocated to the relevant cash generating units that are expected to benefit from the acquisition so that it can subsequently be tested for impairment. If the discounted cash flow for the cash-generating unit(s) that goodwill is allocated to is lower than the recognised value, goodwill will be written down. Reversal of an impairment loss for goodwill is prohibited even if information later comes to light showing that there is no longer a need for the write-down or the impairment loss has been reduced.
12. Investment properties Investment properties are measured at fair value. Fair value is the amount for which an asset could be exchanged between well-informed, willing parties in an arm’s length transaction. Income from investment properties consists of both changes in fair value and rental income.
Recognition and derecognition Financial assets and liabilities are included in the balance sheet from such time Storebrand becomes party to the instrument’s contractual terms and conditions. General purchases and sales of financial instruments are recorded on the transaction date. When a financial asset or a financial liability is initially recognised in the financial statements, it is valued at fair value. Initial recognition includes transaction costs directly related to the date of acquisition or issue of the financial asset/liability if the financial asset/liability is not measured at fair value through profit or loss.
Financial liabilities are derecognised in the balance sheet when they cease to exist, i.e. once the contractual liability has been fulfilled, cancelled or has expired.
Financial assets are classified into one of the following categories: • Financial assets held for trading • Financial assets at fair value through profit or loss in accordance with the fair value option (FVO) • Financial assets held to maturity • Financial assets, loans and receivables
Held for trading A financial asset is classified as held for trading if: • it has been acquired principally for the purpose of selling or repurchasing it in the short term, • is part of a portfolio of identified financial instruments that are managed together and there is evidence of a recent actual pattern of short-term profit-taking, or • it is a derivative that is not designated and effective as a hedging instrument.
Accounting treatment of derivatives that are not hedging Derivatives that do not meet the criteria for hedge accounting are recognised as financial instruments held for trading. The fair value of such derivatives is classified as either an asset or a liability with changes in fair value through profit or loss.
Cash flow hedging Some borrowing in foreign currency is hedged by means of hedging instruments (derivatives). Storebrand uses cash flow hedging of the foreign exchange risk on the principal amount and foreign exchange risk for the credit margin. The net ongoing changes in value in the hedging instrument that is considered effective hedging are recognised in total comprehensive income and the non-effective share is recognised through profit or loss.
Storebrand has selected early implementation of “Interest Rate Benchmark Reform—Amendments to IAS 39 and IFRS 7” (IBOR Reform) that was issued in September 2019. In accordance with the transitional rules, the amendments have been subsequently applied to hedging arrangements that existed at the start of the reporting period or were identified thereafter and to the amount accumulated in the cash flow hedge reserve on that date. The amendments provide temporary relief from applying specific requirements for hedge accounting of hedging arrangements that are directly affected by the IBOR reform. This has the effect that the IBOR reform will not generally result in the conclusion of hedge accounting. However, all hedge ineffectiveness will still be recognised in the income statement. The stipulated amendments also determine when the relaxation of the rules shall no longer apply, which includes the uncertainty resulting from the Interest Rate Benchmark Reform no longer existing. See the discussion in Note 41.
Hedging of net investments Hedging of net investments in foreign businesses is recognised in the accounts in the same way as cash flow hedging. Gains and losses on the hedging instrument that relate to the effective part of the hedging are recognised through total comprehensive income, while gains
and losses that relate to the ineffective part are recognised in the income statement. The total loss or gain in equity is recognised in the income statement when the foreign business is sold or wound up.
Subsequent to initial recognition, all financial liabilities that are not derivatives are primarily measured at amortised cost using an effective interest method.
Claims for own account Claims for own account comprise claims settlements paid out, less reinsurance received, premium reserves transferred to other companies, and reinsurance ceded.
The premium reserve includes reserve amounts for future administration costs for all lines of insurance including settlement costs (administration reserve). In the case of paid-up contracts, the present value of all future administration costs is allocated in full to the premium reserve. In the case of contracts with future premium payments, a deduction is made for the cash value of the proportion of future administration costs expected to be financed by future premium receipts.
Transfers of premium reserves, etc. (transfers) Transfers of premium reserves resulting from transfers of policies between insurance companies are recorded in the profit and loss account as net premiums for own account in the case of reserves received and claims for own account in the case of reserves paid out. The recognition of costs and income takes place on the date the insured risk is ceded. The premium reserve in the insurance liabilities is reduced/increased on the same date. The premium reserve transferred includes the policy’s share of additional statutory reserves, the market value adjustment reserve, conditional bonus and the profit for the year. Transferred additional reserves are not shown as part of premium income, but are reported separately as changes in insurance liabilities. Transferred amounts are classified as current receivables or liabilities until the transfer takes place.
Selling costs All selling costs in the Norwegian life insurance business are expensed, whilst in the Swedish subsidiaries, parts of the selling costs are recorded in the balance sheet and amortised over the expected duration of the contract.
Additional statutory reserves The company is allowed to make allocations to the additional statutory reserves to ensure the solvency of its life insurance business. These additional reserves are divided among the contracts and can be used to cover a negative interest result up to the interest rate guarantee. In the event that the company does not achieve a return that equals the interest rate guarantee in any given year, the allocation can be reversed from the contract to enable the company to meet the interest rate guarantee. This will result in a reduction in the additional statutory reserves and a corresponding increase in the premium reserve for the contract. For allocated annuities, the additional statutory reserves are paid in instalments over the disbursement period.
Risk equalisation reserve Up to 50 per cent of the positive risk result for group pensions and paid-up policies can be allocated to the risk equalisation fund to cover
Life insurance liabilities The life insurance liabilities are estimated as the present value of the expected future guaranteed payments, administrative expenses and taxes, discounted by the current risk-free interest rate. Insurance reserves with guaranteed interest rates in SPP use a marked-based yield curve. A real discount curve is used for risk insurance within the defined-contribution portfolio. For endowment insurance within the defined-benefit and defined-contribution portfolios, as well as sickness insurance in the defined-benefit portfolio, the provisions are discounted using the nominal yield curve. As a starting point, the applicable discount rate is determined based on the methods used for the discount rate in Solvency II.
When calculating the life insurance liabilities, the estimated future administrative expenses that may reasonably be expected to arise and can be attributed to the existing insurance contracts are taken into account. The expenses are estimated according to the company’s own cost analyses and are based on the actual operating costs during the most recent year. Projection of the expected future costs follow the same principles on which Solvency II is based. Any future cost-rationalisation measures are not taken into account.
15. Pension liabilities for own employees Storebrand has country-specific pension schemes for its employees. The schemes are recognised in the accounts in accordance with IAS 19. In Norway, Storebrand has a defined-contribution pension. Storebrand is a member of the Norwegian contractual early retirement (AFP) pension scheme. The Norwegian AFP scheme is regarded as a defined-benefit scheme, but there is insufficient quantitative information to be able to estimate reliable accounting obligations and costs.
The tax cost in the income statement consists of tax payable and changes in deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in total comprehensive income. Deferred tax and deferred tax assets are calculated on the differences between accounting and tax values of assets and liabilities.
Deferred tax is calculated on the basis of the Group’s tax loss carryforward, deductible temporary differences and taxable temporary differences.
Any deferred tax assets shall be recognised if it is considered probable that the tax asset will be recovered. Assets and liabilities associated with deferred tax are recognised as a net amount when there is a legal right to offset assets and liabilities for tax payable and the Group has the ability and intention to settle net tax payable.
Changes in assets and liabilities associated with deferred tax that are due to changes in the tax rate are generally recognised in the income statement.
19. Leases Leases are recognised in the balance sheet. The present value of the combined lease payments shall be recognised on the balance sheet as debt and an asset that reflects the right of use of the asset during the lease period. Storebrand has chosen to classify the right to use
the asset as tangible fixed assets and the lease liability as other debt. The recognised asset is amortised over the lease period and the depreciation expense is recognised as an operating expense on an ongoing basis. The interest expense on the lease liability is recognised as a financial expense. Leases with a duration of less than 12 months and leases that include assets valued at less than approximately NOK 50,000 will not be recognised in the balance sheet, but rental amounts will be recognised as an operating expense over the lease period.
21. Biological assets Pursuant to IAS 41, investments in forestry are measures as biological assets. Biological assets are measured at fair value in accordance with IFRS 13. Changes in the value of biological assets are recognised in the profit and loss account. Ownership rights to biological assets are recognised on the date of transfer pursuant to the purchase agreement. Annual income and expenses for forestry and uncultivated land are recognised.
In the Norwegian business, a significant share of the insurance contracts have annual interest rate guarantees. Changes in estimates and valuations may entail a change in the return on the customer portfolios. Depending on the size of any impairment in value, such impairment may be offset by a reduction in the market value adjustment reserve and additional statutory reserves, so that the effect on the owner’s result may be limited. Correspondingly, increases in values could, to a large extent, increase the size of such funds.
in the assumptions for future cost, mortality and other biometric assumptions may also have a significant impact on the recognised insurance liabilities. Changes in estimates and valuations may entail a change in the return on the customer portfolios. Depending on the size of any impairment in value, such impairment may be offset by a reduction in the conditional bonus, so that the effect on the owner’s result may be limited. If the value of the individual insurance contract is higher than the associated customer assets, the owner will have to cover the deficient capital.
Investment properties Investment properties are measured at fair value. The commercial real estate market in Norway and Sweden is not particularly liquid, nor is it transparent. Uncertainty will be linked to the valuations, and they require exercise of professional judgement, especially in periods with turbulent finance markets.
Financial instruments at fair value There will be some uncertainty associated with the pricing of financial instruments, particularly instruments that are not priced in an active market. This is particularly true for the types of securities priced on the basis of non-observable assumptions , and for these investments various valuation techniques are applied in order to fix fair value. These include private equity investments, investments in foreign properties, and other financial instruments where theoretical models are used in pricing. Any changes to the assumptions could affect recognised amounts. The majority of such financial instruments are included in the customer portfolio.
Reference is also made to Note 12, in which the valuation of financial instruments at fair value is described in more detail.
Covid-19 and the uncertain macroeconomic situation mean that there is greater uncertainty relating to several estimates at the end of 2020 than was the situation prior to the start of the pandemic. There is still major uncertainty about the spread of Covid-19 and the consequences for society. There is thus also increased uncertainty regarding cash flows associated with financial instruments and investment properties that are priced based on level 3 calculations, as well as estimated expected losses on lending.
The Group’s business activities may give rise to disputes, etc. related to tax positions with an uncertain outcome. The Group makes provisions for uncertain and disputed tax positions with best estimates of expected amounts, subject to decisions by the tax authorities in accordance with IAS 12 and IFRIC 23. The provisions are reversed if the disputed tax position is decided to the benefit of the Group and can no longer be appealed.
The transition process for customers from Insr to Storebrand will take place gradually over a 12-month period from the renewal date for the customers, starting on 1 December 2020. Storebrand will pay consideration to Insr of 20-30% of renewed premiums, and has pledged to pay a minimum of NOK 70 million no later than six months after the end of the renewal period.
This transaction will be recognised under intangible assets in the balance sheet as the purchase of customer lists in line with the gradual transfer, and will not be recognised as a business combination.
Loan losses: Loan losses consist of individual and group write-downs on lending activities that are on the balance sheet of Storebrand Bank Group. In the Group’s income statement, the item is classified under loan losses. With regard to loan losses that are on the balance sheet of the Storebrand Livsforsikring Group, these will not be included on this line in either the alternative income statement or in the Group’s income statement, but in the Group’s income statement will be included in the item, net income from financial assets and property for customers.
Financial items and risk result life & pension -51 -11 91 83 162 372
THE STOREBRAND GROUP ARE REPRESENTED IN THE FOLLOWING COUNTRIES: Segment/Land Norway Sweden UK Netherlands Denmark Germany Luxemburg Ireland
The Boards of directors of both Storebrand ASA and the group companies have the overall responsibility for limiting and following up the risks associated with the activities. The Boards set annual limits and guidelines for risk-taking in the company, receive reports on the actual risk levels, and perform a forward-looking assessment of the risk situation.
The internal audit function is organised directly under the Board and shall provide the Boards of the relevant consolidated companies with confirmation concerning the appropriateness and effectiveness of the company’s risk management, including how well the various lines of defence are working.
The Group seeks to reduce operational risk through an effective system for internal control. Risks are followed up through the management ’s risk reviews, with documentation of risks, measures and the follow-up of incidents. In addition, Internal Audit carries out independent checks through audit projects adopted by the Board.
Contingency and continuity plans have been prepared to deal with serious incidents in business-critical processes.
The insurance risk in Norway is largely standardised for contracts within the same product category 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 product category. The insurance risk associated with an increase in life expectancy and thereby an increase in future pension payments (longevity) is the greatest risk for the Group. Other risks include disability risk and mortality risk. The life insurance risks are: 1. Long life expectancy – The risk of erroneously estimating life expectancy and future pension payments. Historical developments have shown that an increasing number of people attain retirement age and live longer as pensioners than was previously the case. There is a great deal of uncertainty surrounding future mortality development. In the event of longer life expectancy beyond that assumed in the premium tariffs, there is also an increased risk of the owner’s result having to be charged in order to cover necessary statutory provisions.
In the Insurance segment, the Group has an insurance risk associated with disability and death. In addition, there are insurance risks associated with occupational injury, critical illness, cancer insurance, child insurance, accident insurance and health insurance. For occupational injury, the risk is first and foremost potential errors in the assessment of the level of provisions, because the number of claim years can be up to 25 years. The insurance risk within critical illness, cancer, accident and health insurance is considered to be limited based on the volume and underlying volatility of the products. Within P&C insurance, the risk of house fire and personal injury for motor vehicle insurance constitute the main risks.
The Other segment also includes the insurance risk at Euroben, which offers pension products to Nordic companies, and the insurance risk is limited.
Risk premiums and tariffs Guaranteed Pension Group pension insurance schemes in Norway follow the premiums for traditional retirement and survivor coverage in the industry tariff K2013. The premiums for disability pensions are based on the company’s own experience. Expense premiums are determined annually with a view to securing full cover for the next year’s expected costs.
Insurance Tariffs for group life insurance and certain risk insurances within group pensions also depend on the industry or occupation, in addition to age and gender. Group life insurance also applies tariffs based on claims experience. The company’s tariff for group life insurance, both for life and disability cover, is based on the company’s own experience.
When writing individual risk cover, the customer is subject to a health check. The result of the health check is reflected in the level of premium quoted. When arranging group policies with risk cover, all employees of small companies are subject to a health check, while for companies with many employees a declaration of fitness for work is required. In the assessment of risk, the company’s business category, sector and sickness record are also taken into account.
The company also manages its insurance risk through international pooling. This implies that multinational corporate customers can equalise the results between the various units internationally. Pooling is offered for group life and risk cover within group pensions.
Part of the change in disability and waiver of premiums is covered by pooling and reinsurance, and SPP’s effect on result is expected to be approximately 95 per cent. The change in increased longevity and mortality have their full impact in SPP’s result.
Market risk means changes in the value of assets as a result of unexpected volatility or changes in prices on the financial markets. It also refers to the risk that the value of the insurance liability develops differently to that of the assets as a result of changes in interest rates.
The most significant market risks for Storebrand are interest rate risk, share market risk, property price risk, credit risk, and exchange rate risk.
The market risk in unit linked insurance is at the customers’ risk, meaning Storebrand is not directly affected by changes in value. Nevertheless, changes in value do affect Storebrand’s profit indirectly. Income is based largely on the size of the reserves, while the costs tend to be fixed. Lower than expected returns in the financial market will therefore have a negative effect on Storebrand’s future income and profit.
For customer portfolios with a guarantee, the net risk for Storebrand will be lower than the gross market risk. The extent of measures to reduce risk depends on several factors, the most important being the size and flexibility of the customer buffers and level and duration of the return guarantee. If the investment return is not sufficient to meet the guaranteed interest rate, the shortfall may be met by using customer buffers built up from previous years’ surpluses.
ASSET ALLOCATION Customer portfolios with guarantee Customer portfolios without guarantee Company portfolios
The financial risk related to customer portfolios without a guarantee is borne by the insured person, and the insured person can choose the risk profile. Storebrand’s role is to offer a good, broad range of funds, to assemble profiles adapted to different risk profiles, and to offer systematic reduction of risk towards retirement age. The most significant market risks are share market risk and exchange rate risk.
Total net currency positions 2019 7,080 1) Equity and bond funds denominated in NOK with foreign currency exposurein i.a. EUR and USD NOK 34 billion.
The table above shows the currency positions as at 31 December 2020. The currency exposure is primarily related to investments in the Norwegian and Swedish insurance business.
Storebrand Livsforsikring: The company hedges most of the foreign exchange risk in the customer portfolios on an ongoing basis. Foreign exchange risk exists primarily as a result of investments in international securities, as well as subordinated loans in a foreign currency to a certain extent. Hedging is performed by means of forward foreign exchange contracts at the portfolio level, and the currency positions are monitored continuously against a total limit. Negative currency positions are closed out no later than the day after they arose. In addition, separate limits have been defined so that active currency positions can be taken.
The percentage distribution of the insurance reserves by the various basic annual interest rates as at 31 December is as follows: Interest rate 2020 2019
The interest rate guarantee must be fulfilled on an annual basis. If the company’s investment return in any given year is lower than the guaranteed interest rate, the equivalent of up to one year’s guaranteed return for the individual policy can be covered by transfers from the policy’s additional statutory reserves.
To achieve adequate returns with the present interest rates, it is necessary to take an investment risk. This is primarily done by investing in shares, property and corporate bonds.
Interest rate 2020 2019 * 1,25 per cent on 85 per cent of the premium
Sensitivity analyses The tables show the fall in value for Storebrand Livsforsikring and SPP’s investment portfolios as a result of immediate changes in value related to financial market risk. The calculation is model-based and the result is dependent on the choice of stress level for each category of asset. The stresses have been applied to the company portfolio and guaranteed customer portfolios as at 31 December 2020. The effect of each stress changes the return in each profile.
Separate liquidity strategies have also been drawn up for other subsidiaries in accordance with the statutory requirements. These strategies specify limits and measures for ensuring good liquidity and a minimum allocation to assets that can be sold at short notice. The strategies define limits for allocations to various asset types and mean the companies have money market investments, bonds, equities and other liquid investments that can be disposed of as required.
Credit facilities Storebrand ASA has an unused credit facility of EUR 240 million, expiration December 2024.
Storebrand is exposed to risk of losses as a result of counterparties not fulfilling their debt obligations. This risk also includes losses on lending and losses related to the failure of counterparties to fulfil their financial derivative contracts.
Government and government guaranteed bonds 26,568 12,787 236 13 18 39,622
Total interest bearing securities stated by rating 56,989 19,147 32,182 39,776 5,675 1 153,769
Total bank deposits excluding bank deposits in bond funds 2020 50 3,626 9,265 124 13,064
This year's change in fair value due to change in credit risk 10 -283
Accumulated change in fair value due to change in credit risk -914
Sale and operation of real estate 11,411 11,411 22 9 30
The weighted average loan-to-value ratio for home loans is approximately 57 per cent. Over 97 per cent of home loans have a loan to value ratio within 85 per cent and approximately 99.2 per cent are within a 100 per cent loan to value ratio. Approximately 56 per cent of the home loans are within a 60 per cent LVR. The portfolio is considered to have a low credit risk.
Most of the risk for the Storebrand Group relates to the guaranteed pension products in the life insurance companies. These risks are consolidated in the Storebrand Livsforsikring Group, which includes Storebrand Livsforsikring AS and SPP Livförsäkring AB. Other companies directly owned by Storebrand ASA that are exposed to significant risks are Storebrand Forsikring AS, Storebrand Helseforsikring AS, Storebrand Asset Management Group and Storebrand Bank Group.
For the life insurance businesses, the greatest risks are largely the same in Norway and Sweden. The financial market risk will depend significantly on global circumstances that influence the investment portfolios in all businesses. The insurance risk may be different for the various companies, and long life risk in particular can be influenced by universal trends.
Both the insurance business and the banking business are exposed to credit risk. The insurance business primarily has a credit risk relating to bonds with significant geographical and industry-related diversification, while the bank is mostly exposed to direct loans for residential property in Norway. There is no significant concentration risk across bonds and loans.
For alternative investments organised as limited liability companies, equity investments are valued based on the value-adjusted equity reported by external sources when available.
In the case of private equity investments, the valuation is normally based on either the most recent transaction or a model in which a company that is in continuous operation is assessed by comparing the key figures with groups of equivalent listed companies.
Loans to customers The value of fixed-rate loans is determined by discounting the agreed cash flows over the remaining maturity by the current discount rate adjusted for market spread. The discount rate that is used is based on a swap interest rate (mid swap) with a maturity that corresponds to the remaining lock-in period for the underlying loans. The market spread that is used on the balance sheet date is determined by assessing the market conditions, market price and the associated swap interest rate. However, the fair value of loans to corporate customers with margin loans is lower than the amortised cost because certain loans run with lower margins than they would have done if they had been taken up as of the end of 2019. The value shortfall is calculated by discounting the difference between the agreed margin and the current market price over the remaining duration.
Corporate bonds Bonds are normally not priced at level 3, but if the loan is in default and a payment is expected, these are priced based on the expected payment. As at 31 December 2020, this was not a significant amount for Storebrand’s financial statements.
The required rate of return is divided into the following elements: • Risk-free interest • Risk premium, adjusted for: • Type of property • Location • Structural standard • Environmental standard • Duration of the contract • Quality of tenant • Other factors such as transactions and perception in the market, vacancy and general knowledge about the market and the individual property.
A long-term, time-weighted average of the annual observations is calculated in which the oldest observations are weighted with the lowest importance. For non-contractual rent in the short-term, the current rental prices and market situation are used. For trading, the forecast is based on the development of the shopping centre.
For quality control and updating of the internal model, external valuations shall be obtained each quarter from reputable appraisers to verify the value that appears when using the internal model. When obtaining such valuations, the individual appraiser’s routines for valuations, including collection of information, inspections etc., shall apply. External valuations shall be rotated in such a way that all segments are regularly appraised. The task of valuing investment properties shall be rotated between reputable appraisers within a reasonable time interval, and knowledge of the property must be taken into consideration. In the event of a discrepancy between the valuation and value obtained using the internal model, the model shall be used as long as the discrepancy is within what is discretionarily considered to be best practice in the market. If there is a discrepancy of more than 5% between the internal and external valuation, the discrepancy shall be reported and the grounds for this provided in the valuation memorandum/valuation item memorandum that is presented to the Board of Storebrand Livsforsikring AS.
Loans and deposits from credit institutions 20,750 20,750 20,649 18,728 18,729
Derivatives: - Equity derivatives 1 - of which derivatives with a positive market value 9,977 9,977 -995 - of which derivatives with a negative market value -964 -964 4,319
Net gains/losses on financial instruments -117 184 -170 308 -287 84 72
Loans from SPP Pension & Försäkring AB are appraised at fair value. The value of these loans is determined by future cash flows being discounted by an associated swap curve adjusted for a customer-specific credit spread.
The valuation of property is particularly sensitive to a change in the required rate of return and the expected future cash flow. A change of 0.25 per cent in the required rate of return where everything else remains unchanged will result in a change in the value of Storebrand’s property portfolio of approximately 5.0 per cent. In the order of 25 per cent of the property’s cash flow is linked to lease agreements entered into. This means that the changes in the uncertain parts of the cash flow by 1 per cent will result in a change in value of 0.75 per cent.
The Storebrand Group is an insurance-dominated, cross-sectoral financial group with capital requirements in accordance with Solvency II. Storebrand calculates Solvency II according to the standard method as defined in the Solvency II Regulations.
Consolidation is carried out in accordance with Section 18-2 of the Norwegian Act relating to Financial Undertakings and Financial Groups. The solvency capital requirement and minimum capital requirement for the group are calculated in accordance with Section 46 (1)-(3) of the Solvency II Regulations using the standard method.
The Storebrand companies are subject to various capital requirements depending on the type of business. In addition to the capital requirements for the Storebrand Group and insurance companies, the banking and asset management businesses have capital requirements in accordance with CRD IV. The companies in the group governed by CRD IV are included in the group’s solvency capital and solvency capital requirements with their respective primary capital and capital requirements.
Storebrand has the goal of paying a dividend of more than 50% of the Group profit after tax. The Board has the ambition of ordinary dividends per share being, at a minimum, at the same nominal level as the previous year. The normal dividend is paid with a sustainable solvency margin of more than 150%. If there is a solvency margin of more than 180%, the Board’s intention is to propose extraordinary dividends or share buy-backs. In general, equity in the Group can be controlled without material limitations if the capital requirement is met and the respective legal entities have sufficient solvency.
Subordinated capital for subsidiaries regulated in accordance with CRD IV 3,006 2,970
Capital requirements for subsidiaries regulated in accordance with CRD IV 2,565 2,683
Net primary capital for companies included in the CRD IV report 3,006 2,970
Of which premium reserve transferred to company 15,437 6,239 1) Individual life and disability, property and caualty insurance 2) Group life, workers comp. And health insurance
Total gains and losses on financial assets at amortised cost 5,556 452 6,009 898 5,111 5,474
Operating expenses (including maintenance and repairs) relating to properties that have provided rent income during the period 2) -393 -346
Total income properties 1,680 1,864 1) Of which real estate for own use 97 82 2) Of which properties for own use -42 -29
Allocation by company and customers: Total income from properties 1,680 1,864
The overview also excludes the natural damage pool (Naturskadepool), Norwegian Motor Insurers’ Bureau (TFF), reinsurance and claims settlement costs on all products.
The pension in the BTP2 agreement (defined-benefit occupational pension that is a closed scheme) amounts to 10 per cent of the annual salary up to 7.5 times the “basic income amount” (which was SEK 66,800 in 2020 and will be SEK 68.200 in 2021), 65 per cent of salary in the interval from 7.5 to 20, and 32.5 per cent in the interval from 20 to 30. No retirement pension is paid for the portion of salary in excess of 30 times the ”basic income amount”. Full pension entitlement is reached after 30 years of membership in the pension scheme. In addition to the defined-benefit part, the BTP plan has a smaller defined-contribution component. Here the employees can decide themselves how assets are to be invested (traditional insurance or unit-linked insurance). The defined-contribution part is 2 per cent of the annual salary.
Real estate at fair value 15 % 13 % 12 % 12 %
Equities and units at fair value 12 % 15 % 13 % 11%
Net pension cost recognised in profit and loss account in the period 258 229
Actuarial loss (gain) - change in other financial assumptions -11 -25
Expected annual increase in pensions payment 0.0 % 0.0 % 2.0 % 2.0 %
The actuarial assumptions in Sweden follow the industry’s mutual mortality table DUS14 adjusted for corporate differences. The average employee turnover rate is estimated to be 4 per cent p.a.
The following estimates are based on facts and circumstances as of 31 December 2020 and are calculated for each individual when all other assumptions are kept constant.
Discount rate Expected earnings growth Expected annual increase in pensions payment Expected annual increase in pensions payment
Percentage change in pension: - The period's net pension costs -12 % 14 % 6 % -5 % 0 % 0 % 1 % -1 %
2) Comprises company car, telephone, insurance, concessionary interest rate, other taxable benefits.
3) Employees can borrow up to NOK 7.0 million at a subsidised interest rate, currently 1,19 per cent p.a.. Excess loan amounts will be subject to market terms.
Fredrik Törnquist 86 1) The summary shows the number of shares owned by the individual, as well as his or her close family and companies where the individual exercises significant influence, cf. the Accounting Act, Section 7-26.
For the 2021 Annual General Meeting, the Board of Directors of Storebrand ASA will present new Guidelines for the fixing of salaries and other remuneration of executive personnel in accordance with the new provision in Section 6-16a of the Norwegian Public Limited Liability Companies Act. Pursuant to the new provision in Section 6-16b of the Norwegian Public Limited Liability Companies Act, a report on salaries and other remuneration to executive personnel will first be presented at the annual general meeting in 2022. The guidelines and salaries report will replace the executive remuneration statement which was stipulated in the previous provision in Section 6-16a. Since no salaries report for 2020 will be presented at the 2021 general meeting, the Board of Directors has issued a limited statement on the implementation of the executive employee remuneration policy that was carried out during the previous financial year, as well as a statement on the effect of agreements for share-based remuneration.
The Board of Directors presents the following guidelines for the approval of the general meeting: GUIDELINES FOR THE DETERMINATION OF REMUNERATION OF EXECUTIVE MANAGEMENT ETC. These guidelines were stipulated by the Board of Directors of Storebrand ASA on 9 February 2021 in accordance with Section 6-16 (a) of the Norwegian Public Limited Liability Companies Act.
In a labour market characterised by strong competition for the most qualified employees, Storebrand shall have competitive, transparent and motivating salary principles that help attract, develop and retain employees.
Remuneration of executive management is governed by laws and regulations relating to remuneration schemes and does not include variable remuneration. This ensures a high level of predictability and also ensures that total remuneration is financially sustainable for the Group.
The normative level of the desired equity exposure in relation to gross salary is a minimum of 200% for the CEO, 150% for the Chief Financial Officer and for executive vice presidents who are responsible for the profit & loss units, and 100% for other executive vice presidents. The share salary scheme was introduced in 2015. Until each member of executive management reaches the normative level, salary increases will primarily be given for the share part. When the normative level has been reached, following an individual assessment, a salary increase can also be given for the cash part.
As is the case with other Storebrand employees, executive management have the option to purchase a limited number of shares in Storebrand ASA at a discount in accordance with the share programme for employees.
4. The duration of agreements and schemes for executive management Everyone in the Group’s executive management team has a six month period of notice.
Executive management are entitled to severance pay if their contracts are terminated by the company. The right to severance pay also applies if the employee decides to leave the Company due to substantial changes in the organisation, or equivalent circumstances, which result in the individual being unable to naturally continue in his/her position. The CEO is entitled to severance pay up to 24 months after the end of the notice period. Other members of the Group’s executive management team have equivalent severance pay agreements for up to 12 to 18 months from their agreed resignation. New agreements entered into for executive vice presidents will have a severance pay agreement for up to 12 months. The severance pay corresponds to the pensionable salary at the end of employment, excluding any bonus schemes. The amount of any severance pay will be subject to assessment in accordance with the individual agreement and the relevant remuneration regulations.
executive management’s gross salary is used for share purchases with a lock-in period of three years to ensure that their interests coincide with the interests of the shareholders.
The company’ strategy and objectives are of importance to the assessment of each individual’s total remuneration. Sustainability is an important part of Storebrand’s business strategy. The goals each area of the Group has set for sustainability will therefore also be an important part of the overall salary assessment.
The Compensation Committee is responsible for keeping itself informed about and proposing guidelines for the determination of remuneration of executive employees in the Group, including these guidelines, which are then adopted by the Board. The Compensation Committee also acts as an advisory body to the Chief Executive Officer with regard to remuneration schemes that encompass all employees of the Storebrand Group, including Storebrand’s bonus and pension schemes. The Compensation Committee satisfies the follow-up requirements stipulated in regulations relating to remuneration schemes.
7. Employees who are board members Employee-elected board members shall receive remuneration as board members that is determined by the general meeting in accordance with a proposal from Storebrand ASA’s nomination committee.
8. Consideration at the general meeting These guidelines shall be presented to the general meeting for consideration and approval in the event of any significant changes and at least every fourth year.
2) Based on new information and an interpretation of transitional rules from 2018, taxable accounting income of NOK 356 million was recognised for 2020.
3) The effective tax rate is influenced by the fact that the Group has operations in countries with tax rates that are different from Norway. The income tax expense is also influenced by tax effects relating to previous years. The tax rate for companies in Norway is 22 per cent. For companies subject to financial tax is the tax rate 25 per cent. The Storebrand Group includes companies that are both subject to and not subject to the financial tax. Therefore, when capitalising deferred tax/deferred tax assets in the consolidated financial statements, the company tax rate that applies for the individual companies is used (22 or 25 per cent). The tax rate for companies in Sweden is 21.4 per cent.
Net deferred tax assets/liabilities in balance sheet1), 2), 3), 4) -931 -663
C. The outcome of the interpretation of tax rules for group contributions referred to above under (A) will have an impact when calculating the effect from the transitional rules for the new tax rules referred to under point (B). An equivalent interpretation to that described under (A) has been used as a basis in the financial statements when calculating tax input values on property shares owned by customer assets for 2016 and 2017. There is thus an uncertain tax position relating to the effect from the transitional rules described in (B). This effect will depend on the interpretation and outcome of (A). If Storebrand’s position is accepted under (A), Storebrand will recognise a tax income of approximately NOK 0.8 billion. If the Norwegian Tax Administration prevails with its argument under point (A), Storebrand will recognise a tax expense of approximately NOK 0.6 billion. The timeline for the continued process with the Norwegian Tax Administration is unclear, but if necessary, Storebrand will seek clarification from the court of law for the aforementioned uncertain tax positions.
Currency differences on converting foreign units 25 1,028 71 85 1,209 -440
Currency adjustment on converting foreign units -2 -756 -70 -828 284
Acc. depreciation and write-downs 31.12 -708 -7,954 -1,149 -305 -10,116 -8,681 1) Value of business-in-force, the difference between market value and book value of the insurance liabilities in SPP and Silver
NOK million Useful economic life Depr. rate Depr. method Book value 2020
Value of business in force SPP 20 years 5 % Straight line 2,451
In 2007, Storebrand Livsforsikring AS acquired SPP Pension & Försäkring AB and its subsidiaries (SPP). The majority of the intangible assets linked to the acquisition of SPP include the value of business in force (VIF), for which liability adequacy tests are conducted in accordance with the requirements in IFRS 4. To determine whether goodwill and other intangible assets linked to SPP have declined in value, an estimate is made of the recoverable amount by calculating the entity specific value of the business. SPP is considered to be a separate cash flow generating unit.
In calculating the utility value, the management have made use of budgets and forecasts approved by the Board for the next three years (2021-2023). The management has made assessments for the period from 2024 to 2030, and the annual growth for each element in the income statement has been estimated. When calculating the terminal value, a growth rate equivalent to observed inflation of 0.5 per cent is used. This is lower than Riksbanken’s inflation target of 2.0 per cent, but is consistent with the risk-free interest rate used in the required rate of return. The primary drivers of improved long-term results will be the return on total assets, underlying inflation and wage growth in the market (which drive premium growth). In addition to cash flows from the forecasted result, the change in expected regulatory tying-up of capital is also used in the valuation. The utility value is calculated using a required rate of return of 7.0 per cent. The required rate of return is calculated based on the risk-free interest rate and added to a premium that reflects the risk of the business.
Intangible assets linked to the banking business When calculating the utility value for the banking business, a cash flow based assessment of value has been made using the expected profit after taxes. Budgets and forecasts approved by the Board for the next three years (2021 to 2023) are used as the basis for the valuation.
The cash flow is based on two elements, profit/loss to equity and change in expected regulatory tying-up of capital. It is also assumed that all capital in addition to regulatory tied-up capital, can be withdrawn at the end of each period. The management has made assessments for the period from 2024 to 2030, and the annual growth has been determined in the income statement. A growth rate of 1.0 per cent is used when calculating the terminal value. This is lower than Norges Bank’s inflation target, but consistent with the riskfree interest rate used in the required rate of return. The utility value is calculated using a required rate of return of 4.5 per cent. The required rate of return is calculated based on the risk-free interest rate and added to a premium that reflects the risk of the business. There will be uncertainty related to the assumptions that have been made in the valuation. The value will be affected by the assumptions for the interest rate margin, expected losses on lending, growth parameters and capital requirements, as well as what required rate of return is assumed, etc. It is noted that the aim of the calculations is to achieve a satisfactory level of certainty that the utility value, cf. IAS 36, is not lower than the value recognised in the accounts. Simulations with reasonable and also conservative assumptions indicate a value that justifies the book value.
There are uncertainty related to the assumptions that have been made in the valuation. The value will be influenced by changes in the assumptions regarding expected returns of the financial markets, costs, management fees, growth parameters, and the discount rate. The aim of the calculations is to achieve a satisfactory level of certainty that the entity specific value, cf. IAS 36, is not lower than the value recognised in the accounts. Simulations with reasonable and also conservative assumptions indicate a value that justifies the book value.
There are uncertainty related to the assumptions that have been made in the valuation. The value will be influenced by the assumptions regarding expected returns in the financial markets, costs, transfers, income development and the discount rate. The aim of the estimation is to achieve a satisfactory level of certainty that the entity specific value, cf. IAS 36, is not lower than the value recognised in the accounts. Simulations with reasonable and also conservative assumptions indicate a value that justifies the book value.
Applied practical solutions The Group also leases PCs, IT equipment and machinery with contract terms from 1 to 3 years. The Group has decided not to recognise leases when the underlying asset has a low value and therefore does not recognise lease liabilities and right-of-use assets for any of these leases. Instead, the lease payments are expensed as they are incurred. The Group also does not recognise lease liabilities and right-of-use assets for short-term leases of less than 12 months.
Total comprehensive income 32 1) Benco is no longer a substantial minority as Storebrand Livsforsikring AS during 2020 has bought out the minority share.
Distribution beween company and customers: Bonds held to maturity - customers with guarantees 13,026 13,377
Allocation by company and customers: Net loans to customers - company 31,780 30,187 net loans to customers - customers with guarantee 31,434 30,471
Allocation by company and customers: Properties - customers with guarantee 29,261 26,901
Vacancy Norway The vacancy rate for lettable areas was 7.4 per cent (6.3 per cent) at the end of 2020. The vacancy rate for areas that are not available for rent due to ongoing development projects is 78.6 per cent (57.2 per cent). At the end of 2020, a total of 13.8 per cent (12.1 per cent) of the floor space in the investment properties was vacant
Sweden At the end of 2020, the vacancy for investment properties was 0,4 per cent
Transactions:: Purchases: Further SEK 684 millions in property acquistions in SPP have been agreed on in 4th quarter 2020 in addtition to the figures that have been finalised and included in the financial statements as of 31 December 2020. Sale: No further property sales has been agreed on in Storebrand/SPP in addiition to the figures that has been finalised and included in the financial statements as of 31 December 2020
Allocation by company and customers: Properties for own use - customers 1,609 1,375
Allocation by company and customers: Accounts receivable and other short-term receivables - company 7,018 4,823
Gross nominal volume principally indicates the size of the exposure, while net nominal volume provides some indication of the risk exposure. However , nominal volume is not a measure which necessarily provides a comparison of the risk represented by different types of derivatives. Unlike gross nominal volume, the calculation of net nominal volume also takes into account which direction of market risk exposure the instrument represents by differentiating between long (asset) positions and short (liability) positions.
Total insurance liabilities - life insurance 01.01 241,674 219,803 6,216 8,346 476,040 437,845
Claims reserve 650 594 - of which IBNS 620 566 - of which administration reserve 30 28
Fair value hedging of interest rate risk and cash flow hedging of foreign exchange risk Storebrand uses fair value hedging for the interest rate risk. The hedged items are financial assets and liabilities measured at amortised cost. Derivatives are recognised at fair value through profit or loss. Changes in the value of the hedged item that are attributable to the hedged risk adjust the carrying amount of the hedged item and are recognised through profit or loss.
Storebrand uses cash flow hedging for the credit margin. The hedged items are liabilities measured at amortised cost. Derivatives are recognised at fair value. The proportion of the profit or loss on the hedging instrument that is deemed to be effective hedging is recognised in total comprehensive income. The proportion is subsequently reclassified to profit or loss in step with the hedged item’s effect on earnings. Hedge effectiveness is 94 per cent per 31.12.20.
Hedging of net investment in Storebrand Holding AB In 2020, Storebrand used cash flow hedging of the foreign exchange risk linked to Storebrand’s net investment in Storebrand Holding AB. Three-month rolling currency derivatives were used, and the spot element of these was used as a hedging instrument. The effective share of the hedging instruments is recognised in total comprehensive income. There is partial hedging of the net investment in Storebrand Holding AS and it is therefore expected that the hedge effectiveness in the future will be about 100 per cent. Expenses of NOK 868 million were recognised in total comprehensive income in connection with the hedging of Storebrand Holding AB, compared with income of NOK 322 million in 2019.
Storebrand hedges an exposure of EUR 300 million nominal value in EURIBOR 3M. Storebrand follows market developments relating to the discontinuation of reference interest rates. New reference interest rates will influence the management of customer portfolios, but the scope and efficiency will particularly depend on the future for NIBOR and STIBOR
LIBOR for different currencies will be available until the end of 2021, but the transition to new “overnight interest rates” appears to be progressing faster than first assumed. This may result in some of the “Panel banks” not providing data to maintain the LIBOR interest rates until the end of 2021. This could make the LIBOR interest rates less attractive to use and the transition to new “overnight” reference interest rates” before the end of 2021 may be in all of the parties’ interests. The transition to new reference interest rates and specification of “fallbacks” will be calculated by ISDA and published by Bloomberg. To ensure the wording of the agreements between the market players, ISDA will release a “Protocol” at the end of Q1 2020 and it is expected that most market players will accede to the “Protocol”. Storebrand Asset Management has the ambition of acceding to the “Protocol” on behalf of the life insurance companies in the Group. NIBOR and STIBOR will not be immediately affected, and the administrator of these reference interest rates has an ambition of also continuing these beyond 2021. GBP LIBOR is expected to be replaced by SONIA (Sterling Overnight Index Average). USD LIBOR is expected to be replaced by SOFR (Secured Overnight Financing Rate), and EUR LIBOR will be replaced by EUR ESTER. The transfer to “overnight interest rates” for the major currencies may also influence the continuation of NIBOR. NIBOR will then be able to be replaced with NOWA (Norwegian Overnight Weighted Average).
Book value of bonds pledged as collateral for the bank's lending from Norges Bank 1,703 904
F-loan in Norges Bank as per 31.12.2020. Of total loans of NOK 31.5 billion, NOK 21,1 billion has been mortgaged in connection with the issuing of covered bonds (covered bond rate) in Storebrand Boligkreditt AS.Loans in Storebrand Boligkreditt AS are security for covered bonds in the company, and these assets have therefore been mortgaged through the bondholders’ pre-emptive rights to the security in the company.
Storebrand Boligkreditt AS has over-collateralisation (OC) of 16 per cent. The company must maintain the applicable OC that the rating agency requires if the company wishes to retain the current AAA rating. This requirement was 9.13 per cent at the end of 2020. The statutory OC is 2 per cent. Through commitments from previous prospectuses for covered bond issues, the company is obligated to maintain OC of up to 9.5% until these securities mature. Storebrand Boligkreditt AS has security that is NOK 1.3 billion more than what the present rating requires. Storebrand Bank ASA therefore considers the security to be adequate.
Investments in trading portfolio: - equities and other units 9 57 44 - bonds and other fixed-income securities 10,12 4,894 3,260 - financial derivatives/other financial instruments 11,12 3
2) In 2020, 526 935 shares were sold to our own employees.
Cash and cash equivalents at the end of the period 61 34
Profit and loss account and statement of financial position Storebrand ASA is a holding company with subsidiaries in the fields of insurance, banking and asset management. The layout plan in the Regulations relating to annual financial statements for nonlife insurance companies has not been used, a custom layout plan has been used.
Pension liabilities for company’s own employees Storebrand ASA have defined-contribution pension, but have some pension obligation that are recorded as defined-benefit pension. The defined-contribution pension scheme involves the company paying an annual contribution to the employees’ collective pension savings. The future pension will depend upon the size of the contribution and the annual return on the pension savings. The company does not have any further work-related obligations after the annual contribution has been paid. No provisions are made for ongoing pension liabilities for these types of schemes. Defined-contribution pension schemes are recognised directly in the financial statements.
– of which FVO (Fair Value Option) 72 2 -5 69 52
The premiums and content of the defined-contribution pension scheme are as follows: – Saving starts from the first krone of salary – Savings rate of 7 per cent of salary from 0 to 12 G (the National Insurance basic amount “G” was NOK 101,351 as at 31 December 2020) – In addition, 13 per cent of salary between 7.1 and 12 G is saved – Savings rate for salary over 12 G is 20 per cent
Net pension liabilities in the statement of financial position 157 154
Net pension cost booked to profit and loss accounts in the period 8 8
Economic assumptions : Expected annual increase in social security pension 1.75 % 2.00 %
Specific company conditions including expected direct wage growth are taken into account when determining the financial assumptions .
Other non-audit services 50 25 1) Odd Arild Grefstad is the CEO of Storebrand ASA and the amount stated in the note is the total remuneration from the Group. He has a guaranteed salary for 24 months after the ordinary period of notice. All work-related income including consulting assignments will be deducted.
Net deferred tax asset/liability in the statement of financial position 44 41
3) Dividend of NOK 120 million was posted as a repayment of capital.
Total bond and bank loans 2) 1,001 1,309 1) Loans with fixed rates are hedged by interest swaps, which are booked at fair value through profit and loss. Changes in values of loans that can be related to the hedged risk are included in the carrying amount and included in the result. 2) Loans are booked at amortised cost and include earned not due interest.
Statement of financial position items: Due from group companies 3,139 3,166
Storebrand ASA and the Storebrand Group – Declaration by the members of the Board and the CEO 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 2020 financial year and as at 31 December 2020 (2020 Annual Report).
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm
We have audited the financial statements of Storebrand ASA, which comprise: • The financial statements of the parent company Storebrand ASA (the Company), which comprise the statement of financial position as at 31 December 2020, the income statement, statement of total comprehensive income, statement of changes in equity and statement of cash flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and
• The consolidated financial statements of Storebrand ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2020, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations, and we have fulfilled our other ethical responsibilities in
The group’s activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or other material events that qualified as new key audit matters for our audit of the 2020 financial statements.
In our assessment of the valuation, we challenged the assumptions for expected future cash flows and discount rate by comparing a sample of properties against information from relevant external sources. Substantial changes in value from previous periods was subject to discussions with management. We concluded that assumptions were consistent with information from relevant sources and that explanations regarding substantial changes in value were based on changes in the information from relevant sources.
We also assessed the qualifications, competence and objectivity of the external valuers. We reviewed the engagement letters with the valuers to assess whether there were any clauses or fee provisions that may have affected their objectivity or in any other way limited their engagement. We did not find any indications of such circumstances.
We compared the internal valuations against the valuers estimates on values for a sample of properties. We challenged management on substantial deviations and obtained explanations on deviations. We assessed management’s explanations as reasonable.
For financial assets that is measured based on models and certain assumptions that is not observable (level 3 investments), we focused on assessing both the models and the assumptions underlying the valuation. Refer to note 1, 2 and 12 in the financial statements for a further description of management’s valuation of financial assets measured at fair value.
In our audit we considered design and tested effectiveness of Storebrand’s established controls over valuation of financial assets measured at fair value. Particularly we focused on those controls that ensured complete and accurate use of quoted market prices and other observable masterdata, return on investments controls and IT General Controls relevant for financial reporting. In our opinion, the controls that we have chosen to base our audit on are working effectively. For financial assets measured through use of models and assumptions that are not observable, we assessed valuation principles, the models and assumptions that were used. We found that the models and assumptions were reasonable and used consistently. For a sample of investments, we also tested that fair value was in accordance with external valuations. We considered the reliability of the sources of information, when relevant. Our tests did not reveal substantial deviations. We also assessed and found that the information in the notes regarding the Group’s valuation principles and fair value determination were sufficient and adequate.
We have reviewed and challenged management assessment of the uncertain tax positions. Management obtained external legal opinions as a basis for their conclusions. We evaluated the competence, integrity and objectivity of the external legal advisors. We evaluated the external legal opinions, and whether the arguments used by the legal advisors are reasonable and that the considerations were neutral.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the Company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Good corporate governance is important to ensure that an enterprise can achieve its defined goals, including best possible utilisation of resources and good value creation. The Storebrand Group (hereinafter referred to as Storebrand) works continuously on improving both the overall decision-making processes and the day-to-day management of the company.
Storebrand publishes an integrated annual report presenting financial, social, environmental and governance issues that are material for Storebrand and our stakeholders. The materiality analysis is can be found on page 16-17 above.
2. Business (no deviations from the code of practice). Storebrand ASA is the parent company in a financial group, and its statutory object is to manage its equity interests in Storebrand’s subsidiaries in compliance with the current legislation. Storebrand’s main business areas encompass pensions and savings, insurance and banking. The Articles of Association are available in their entirety on the Storebrand’s website www.storebrand.no.
Storebrand aims to be a world-class savings group that delivers better pensions – simple and sustainable. Storebrand’s strategy and corporate values are described in the framework “Our driving force” which represents a common direction for how Storebrand will deliver attractive results to customers and owners.
Storebrand’s strategy is to deliver profitable growth within established focus areas through simple and sustainable solutions. The Board conducts ongoing evaluations of the goals, strategy and risk profile. More information about “Our driving force” and focus areas can be found in the section this is Storebrand in the 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 the chapter a driving force for sustainable investments in the directors report above. This includes our principles for sustainable investments, which are approved by the group board and integrated throughout the group’s operations.
The Board of Directors adopts Storebrand’ s overall goals for the work on sustainability, which is in line with these principles. The group management is responsible for realizing the strategic goals. An overall strategic goal in 2020 has been to strengthen
At the same General Meeting, the Board of Directors was authorised to buy back shares for a maximum value of NOK 233,906,991. The total holdings of treasury shares must, however, never exceed 10 per cent of the share capital. The buyback of treasury shares may be a tool for the distribution of surplus capital to shareholders in addition to dividends. In addition, each year Storebrand ASA sells shares to employees from its own holdings in connection with the share purchase scheme and long-term incentive schemes for employees of Storebrand. Accordingly, it is appropriate to authorise the Board of Directors to buy shares in the market to cover the aforementioned needs or any other needs. This authorisation is valid until the next Annual General Meeting. Otherwise, there are no provisions in Storebrand ASA’s Articles of Association that regulate the buyback or issuance of shares
Apart from this, there are no provisions in Storebrand ASA’s Articles of Association that regulate the buyback or issuance of shares.
Deviation from the Code of Practice: The Board’s authorizations to increase the share capital and buy back shares are limited to defined purposes. However, no provision was made for the General Meeting to vote on each individual purpose to be covered by the authorizations.
5. Freely negotiable shares (No deviation from the code of practice) Shares in Storebrand ASA are listed on Oslo Børs (Oslo Stock Exchange). The shares are freely negotiable, and the Articles of Association do thus not contain any restrictions with regard to the negotiability of the shares. All the shares carry equal rights, cf. point 4 above.
The Chairman of the Board, at least one representative from the Nomination Committee and the external auditor must attend the General Meeting. The board members of Storebrand ASA are not obligated to attend but are encouraged to attend. The Group Chief Executive Officer, executive management team and the Group Legal Director participate from the management. The minutes of the General Meeting are available on Storebrand’s website in both Norwegian and English. The General Meeting is opened by the Chairman. The Board of Directors endorses an independent meeting chairman elected by the General Meeting.
• decide upon adoption of the consolidated income statement and balance sheet,
• appoint members to the Nomination Committee, and this should include the Chairman of the Nomination Commit- tee, elect members to the Board of Directors, and this should include the Chairman of the Board Directors,
• consider the Board’s statement on the fixing of salaries and other remuneration to executive personnel, • adopt the remuneration of the members of the Board of Directors and board committees,
Decisions are generally made on the basis of an ordinary majority. Pursuant to Norwegian law, however, a special majority is required for certain decisions, including decisions about setting aside pre-emptive rights in connection with any share issues, mergers, spin-offs, amendments to the Articles of Association, or authorizations to increase or reduce the share capital. Such decisions require approval by at least two-thirds of both the votes cast and the share capital represented at the General Meeting.
None of the members elected by the General Meeting have any employment, professional or consultancy relationship with Storebrand beyond their appointment to the Board of Directors. The backgrounds of the individual board members are described in the annual report and on Storebrand’s website. The composition of the Board of Directors satisfies the independence requirements set forth in the Code of Practice. There are few instances of disqualification during the consideration of matters by the Board (none in 2020). An assessment of the individual board members’ independence is noted in the list of governing and controlling bodies under the heading “Members of Storebrand ASA’s Board of Directors and Committees”. An overview of the number of shares in Storebrand ASA owned by members of governing bodies as at 31 December 2020 is included in the notes to the financial statements for Storebrand ASA (Information on related parties). None of the board members have held office for more than ten years.
9. Work of the Board of Directors (No deviation from the code of practice) Duties of the board of directors In 2020, 15 board meetings were held, one of which was held at the subsidiary SPP in Stockholm. Storebrand’ s future strategy is discussed at the Board’s annual strategy meeting, which establishes guidelines for the management’s preparation of plans and budgets in connection with the annual financial plan, which must be approved by the Board.
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 2020, 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. The main task of the Risk Committee is to prepare matters to be considered by the Group’s Board of Directors in the area of risk, with a special focus on Storebrand’s risk appetite and risk strategy, including the 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 Risk Committee held seven meetings in 2020, including a joint meeting with the Audit Committee
10. Risk management and internal control (No deviation from the recommendation) Overall management and control The Board of Directors has drawn up general policies and guidelines for management and control. These policies deal with the Board’s responsibility for determining Storebrand’s appetite for risk and risk profile, approval of the organisation of the business, assignment of areas of responsibility and authority, requirements concerning reporting lines and information, and risk management and internal control requirements. The Board’s and Chief Executive Officer’s areas of responsibility are defined in the rules of procedure for the Board and the instructions for the Chief Executive Officer, respectively. The Board of Directors has drawn up instructions for Storebrand’s subsidiaries that are to ensure that they implement and comply with Storebrand’s management and control policies and guidelines.
The responsibility for Storebrand’s control functions for risk management and internal control lies with the Chief Risk Officer function under the management of the Group Chief Risk Officer. The Group Chief Risk Officer reports directly to the Chief Executive Office. The Chief Risk Officer function is responsible for supporting the Board and group management team with respect to the establishment of a risk strategy and operationalisation of the setting of limits and monitoring of risk raking across Storebrand’s business areas.
A series of risk assessment and control measures have been established in connection with the preparation of the financial statements. Assessments relating to significant accounting items and any changes in principles etc. are described in a separate document (assessment item memo). The Board’s Audit Committee conducts a preparatory review of interim financial statements and annual financial statements, focusing in particular on the discretionary valuations and estimates that have been made prior to consideration by the Board.
11. Remuneration to the Board of Directors (No deviation from the code of practice) The General Meeting determines fixes the Board’s remuneration annually on the basis of the recommendations of the Nomination Committee. The fees paid to the members of the Board are not linked to earnings, option schemes or similar arrangements. Members of the Board and Board Committees do not receive incentive-based remuneration; instead they receive a fixed annual compensation, either per year or per meeting the member attends, or a combination of such remuneration. The shareholderelected members of the Board do not participate in Storebrand’s pension schemes. None of the shareholder-elected members of the Board carry out any duties for Storebrand beyond their appointment to the Board. More detailed information on the remuneration, loans and shareholdings of board members can be found in Note 23 (Group) and Notes 6 and 17 (ASA). Board members are encouraged to hold shares in the company 12. Remuneration to senior management (No deviation from the code of practice) The Board of Directors decides the structure of the remuneration for senior executives in Storebrand, and guidelines on the remuneration (previously the executive remuneration statement) are presented to the general meeting. The remuneration consists of fixed salary, variable remuneration, pension scheme and other personnel benefits that are common for a financial group. The remuneration shall motivate good efforts for long-term value creation and resource utilization in the company. The board’s stance is that the total remuneration should be competitive, but not leading within the industry.
The salary of the group management is determined based on the level of responsibility and complexity of the position. An annual assessment is carried out based on external market data to ensure remuneration is adequate in relation to equivalent positions in the market.. Storebrand shall have an incentive model that supports Company strategy, with emphasis on the customer’s interests and longterm perspective and an ambitious model of cooperation, as well as transparency that enhances the Storebrand’s reputation. The Group’s executive management only receive fixed salaries and use a percentage of their fixed salaries to purchase shares in Storebrand with a lock-in period of three years. This is to clarify that the Storebrand’s top management acts in accordance with the long-term interests of the owners.
More detailed information about the remuneration of executive personnel may be found in Note 23 (Group) and Notes 6 and 17 (ASA), and in the Board’s statement on the fixing of salaries and other remuneration to executive personnel, which is included in the notice of the General Meeting and available at www. storebrand.no. Executive personnel are encouraged to hold shares in Storebrand ASA, even beyond the lock-in period.
14. Corporate takeover (No deviation from the recommendation) The Board of Directors has prepared guidelines for how to act in the event of a possible takeover bid for the company. These guidelines are based on the Board of Directors ensuring the transparency of the process and that all the shareholders are treated equally and given an opportunity to evaluate the bid that has been made. It follows from the guidelines that the Board of Directors will evaluate the bid and issue a statement on the Board’s opinion of the bid, in addition to obtaining a valuation from an independent expert. In addition, the Board of Directors will, in the event of any takeover bid, seek whenever possible to maximise the shareholders’ assets. The guidelines cover the situation before and after a bid is made.
meetings in which interim financial statements are reviewed and all meetings of the Audit Committee, unless the items on the agenda do not require the presence of the auditor. The Board has decided that the external auditor must rotate the partner responsible for the audit assignment every seven years, and Storebrand shall carry out a tender process for the selection of external audit companies at least every ten years. Each year, the work and independence of the external auditor is evaluated by the board’s audit committee. The auditor also holds an annual meeting with the board without the administration being present. The other companies in Storebrand have the same auditor as Storebrand ASA.
Further information on Storebrand’s corporate governance may be found at www.storebrand.no > About Storebrand > Facts on Storebrand, where we have also published an overview of the members of Storebrand’s governing and controlling bodies, CVs for the members of Storebrand ASA’s Board of Directors, the Articles of Association, and ownership policies.
58) Storebrand ASA owns 25.1 per cent and Storebrand’s total ownership interest is 100 per cent for AS Værdalsbruket.
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
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
b Disclose Scope 1, Scope 2 and Scope 3 GHG emissions, and the related risks c Disclose the targets used by Storebrand to manage climate-related risks and opportunities and performance against targets
Her følger en indeks med GRI-indikatorene vi rapporterer på og hvor i rapporten informasjonen om indikatoren finnes.
Full 102-5 Ownership and legal form Described in chapter: Directors’ Report and sub-chapter Overview of companies in the Storebrand Group
Full 102-7 The size of the organisation Described in the chapters: This is Storebrand, sub-chapter About Storebrand People under Key figures Directors’ Report, sub-chapter Group’s Results 2020
Partial 102-9 Supply chain Described in the chapters: Keeping our house in order in sub-chapter Sustainable practices throughout our value chain
In the sub-chapter: Sustainable practices throughout our value chain Director’s Reort in the sub-chapter A driving force for sustainable investments, Climate risks and opportunities
Initiatives: UN PRI, UN Global Compact, Global Reporting Initiative, UN Sustainability Goals. Task Force on Climate-related Financial Disclosures (TCFD), Paris Agreement 2015, Carbon Disclosure Project, Global 100, UN Principles for Responsible Business Conduct, UN Declaration of Human Rights, UN Environmental Conventions, UN Principles for Sustainable Insurance, UNEP Finance Initiative, Portfolio DecarbonisationCoalition, Accounting for Sustainability, UN Convention Against Corruption, THE CORE CONVENTION, Montreal Pledge, Tobacco-Free Portfolios, UN Principles for Empowering Women,SHIFT, CEOs for a Sustainable Future, Know Chain the
Reporting 102-13 Membership in organisations Described in the chapters: This is Storebrand Keeping our house in order
Organizations: UNEP FI group working with Climate Risk, Climate Action 100+, Net-Zero Asset Owner Alliance, Global Real Estate Sustainability Benchmark (GRESB),NORSIF, SWESIF, PRI Investor Commitment to Support a Just Transition on Climate Change
Stakeholder engagement 102-40 List of stakeholder groups Described in chapter: This is Storebrand under the sub-chapter Material issues
Reporting practices 102-45 Entities covered by the organisation’s consolidated financial statements
Described in: Director’s report under the sub-chapter The Group’s profit 2020
Full 102-48 Restatements of information Changes occur and are described in the chapters: People, Keeping our house in order and Directors’ report
For all chapters mentioned above, the changes in the table with key figures apply
Described in chapter: This is Storebrand under the sub-chapter Material issues
Described in the chapters: Ceo’s foreword and Chairman’s preface This is Storebrand
Directors’ Report in the sub-chapters: A driving force for sustainable investments and Climate risks and opportunities
Full 201-2 Financial implications and other risks and opportunities resulting from climate change
Described in the chapters: Ceo’s foreword, Chairman’s preface This is Storebrand in the sub-chapter About Storebrand
FS10 Share and number of companies in the portfolio that the reporting organisation has interacted with on environmental or societal conditions
Described in: Directors’ report in the sub-chapter A driving force for sustainable investments under Key figures
Directors’ Report in the sub-chapters: Strategic highlights, A driving force for sustainable investments, Active ownership, Exclusions and Climate risks and opportunities
Described in Directors’ report in the sub-chapter: A driving force for sustainable investments under Key figures
Described in chapter: Customer relations under the sub-chapter Engaging relevant and responsible advice
Described in chapter: Customer relations under sub-chapter Digital innovator in financial services
Described in chapter: Customer relationships under the sub-chapters Simple and seamless customer experiences and Key figures
Described in the chapter: People under the subchapter A culture of learning
Described in the chapter: People under the sub-chapter Engaged, competent and courageous employees
STB-4 Engagement scores all employees: Storebrand’s score vs. the industry average in Peakon
Described in: Directors’ Report under the sub-chapter Progress on our most material sustainability KPIs
Described in the chapter: Keeping our house in order under sub-chaptert Corporate governance and compliance: Privacy and combating financial crime, including Privacy and digital trust, Counter-corruption,Counter-terrorism and terrorist financing
Described in chapter: Keeping our house in order under the sub-chapter Corporate Governance and Compliance: Privacy and Combating Financial Crime, including Privacy and Digital Trust, Counter-Terrorism, Counter-Terrorism and Terrorist Financing
Described in chapter: Keeping our house in order under the sub-chapters Countering corruption and Key figures
Described in chapter: Keeping our house in order under the sub-chapter Corporate governance and compliance: Privacy and combating financial crime and Key figures
Described in chapter: Keeping our house in order under the sub-chapter Sustainable supply chain
Described in chapter: Keeping our house in order under the sub-chapter Sustainable practices throughout our value chain
Described in chapter: Keeping our house in order under sub-chapter Sustainable practices throughout our value chain
Described in chapter: Keeping our house in order under the sub-chapters Sustainable practices throughout our value chain and key figures
Described in chapter: Keeping our house in order under the sub-chapter Corporate Social Responsibility and Corporate Governance and Compliance: Privacy and Combating Financial Crime
Described in chapter: Keeping our house in order under the sub-chapter Responsible resource use
Described in chapter: Keeping our house in order under Key figures
Nøkkeltall for bærekraft er tabeller som viser indikatorer på bærekraft som Storebrand ASA måler og følger opp. Tabellene er tilgjengelige og inngår i Storebrand ASAs årsrapport for 2020, nærmere bestemt til slutt i hvert av kapitlene «En pådriver for bærekraftige investeringer», «Kunderelasjoner», «Mennesker» og «Orden i eget hus». De ulike tabellene er også tilgjengelig i samleoversikten «Komplett liste med bærekraftsindikatorer» som er et vedlegg til årsrapporten. Storebrand har definert nøkkeltallene og forklart hvordan de måles i noteverk til tabellene som er tilgjengelig og inngår i årsrapporten (kriterier). Vi har kontrollert grunnlaget for målingene og har etterberegnet målingene.
Ledelsen er ansvarlig for Storebrand ASAs rapportering om bærekraft og for at det er utarbeidet i overensstemmelse med kriterier som beskrevet over. Ansvaret omfatter å utforme, implementere og vedlikeholde en intern kontroll som ivaretar Storebrand ASAs rapportering om bærekraft.
Vår oppgave er å gi uttrykk for en mening om saksforholdet basert på vår kontroll.
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
Storebrand’s GRI Index for 2020 is an overview of which principles, aspects and indicators from the The Global Reporting Initiative guidelines that Storebrand ASA use to measure and report on sustainability; together with a reference to where material sustainability information is reported. Storebrand’s GRI Index 2020 is available on Storebrand’s website (www.Storebrand.no/sustainability/reports). We have examined whether Storebrand has developed a GRI Index for 2020 and whether mandatory disclosures are presented according the Standards published by The Global Reporting Initiative (www.globalreporting.org/standards) (criteria).
The Auditors responsibilities Our responsibility is to express an opinion on Storebrand ASA’s sustainability reporting based on our control. We have performed our work and will issue our statement in accordance with the Standard on
Our work involves performing procedures to obtain evidence that Storebrand’s GRI Index 2020 and key performance indicators for sustainability are developed in accordance with the Standards published by The Global Reporting Initiative and the criteria for reporting and measurement that are given in relation to each table containing key performance indicators. The procedures selected depend on our judgement, including assessments of the risks that the sustainability reporting as a whole are free from material misstatement, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of the subject matter. Therefore, we design procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. Our control also includes an assessment of whether the applied criteria are appropriate and an assessment of the overall presentation of the subject matter.
In our opinion, sufficient evidence has been obtained and we consider that our work provides an appropriate basis to form our conclusion.
Key performance indicators for sustainability are, in all material aspects, developed, measured and reported in accordance with the definitions and explanations provided in relation to each table containing key performance indicators.
Engineer), Fast Search & Transfer 1999-2001: Computer Engineer, Sintef Tele og Data
Storebrand Group 2009-2013 Enterprise Architect, Storebrand Group 2008-2009 Analyst, Goldman Sachs 2006-2008 Consultant, Accenture 2003-2004 Project Test Manager, Opera Software
DIDRIK MUNCH (1956) Chairman of the Board at Storebrand ASA since 2017
KARIN BING ORGLAND (1959) Director of the Board at Storebrand ASA since 2015
Executive Vice President of DNB, and various managerial positions in the same group (1985–2013)
Board Director and Chairman of the Audit Committee at Norske Skog ASA
MARIANNE BERGMANN RØREN (1968) Director of the Board at Storebrand ASA since 2020
MARTIN SKANCKE (1966) Director of the Board at Storebrand ASA since 2014
Various positions in EQT, Sweden, Hong Kong, Germany and England (1996-)
HANS-PETTER SALVESEN (1968) Employee Representative of the Board at Storebrand ASA since 2020
Head of Union Representatives, The Finance Sector Union of Norway in Storebrand ASA
BODIL CATHERINE VALVIK (1973) Employee Representative of the Board at Storebrand ASA since 2020
NOK billion invested in fossil-free products 61) 60 68 277 379 N/A N/A
Carbon footprint from equity investments: tonnes of CO2e per NOK 1 million in sales income (against index) 62) 28 (18) 22 (32) 18 (24) 12 (18) N/A N/A
Exposure to high emission sectors64): NOK billion / share of equity investments New 37.7 / 19% 34.6 /13% 32.2 / 8% N/A N/A
Companies excluded from the investment universe of the Storebrand Group: number/share of investment universe New 171 / 5.9 % 182 / 4.3 % 215 / 4.6% N/A N/A
Votes at general meetings to promote Storebrand’s ESG criteria: number/ share of investment universe New 530 / 41.6 % 151 / 4.3 % 503 / 13% N/A N/A
Energy intensity direct real estate investments: kWh/m2 192 kWh/m2 201 kWh/m2 194 kWh/m2 181 kWh/m2 190 kWh/m2 181 kWh/m2
Carbon footprint direct real estate investments: tonnes co2e / kg CO2e per m2
GRESB score direct real estate investments (value-weighted average)66) 76% 82% 85% Increase Increase
Customer satisfaction 68) Nr. 4 Nr. 4 Nr. 4 Nr. 6 Top 3 Top 3
Market position: Pension, corporate market Norway Nr. 1 Nr. 1 Nr. 1 Nr. 1 Nr. 1 Nr. 1
Recognised for sustainable value creation (Retail Norway) New 2019 New 2019 Nr. 3 Nr. 5 Top 3 Nr. 1
Footnotes “Investments”: 61) Fossil-free products are one of several ways to achieve our overall goal of net zero emissions, and therefore we have not set a specific target for how much should be invested in fossil-free products.
62) The method of carbon footprint calculations has been further developed for the annual report 2020. Similar indicators for 2017 – 2019 are rendered with the same methodology to ensure a consistent comparison basis.The ratio of funds to index is similar with the current and previous method, but the absolute values on the indicators will thus differ from previous years’ reported figures.
63) The method of carbon footprint calculations has been further developed for the annual report 2020. Similar indicators for 2017 – 2019 are rendered with the same methodology to ensure a consistent comparison basis. The ratio of funds to index is similar with the current and previous method, but the absolute values on the indicators will thus differ from previous years’ reported figures.
64) 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.
65) We have decided to set an overall target for 2020 and 2025, and not a target for each asset class.
Number of men hired during the year 116 126 161 N/A N/A
Greenhouse gas emissions from own operation (total) scope 1-3: tonnes of CO2 / tonnes CO2 per FTE 1,484 / 0.9 1,444 / 0.9 1,519 / 0.92 477 / 0.28 0.71 71) 0.671)
Scope 2-emission: tonnes CO2 / tonnes CO2 per FTE 320 / 0.19 201 / 0.13 179 / 0.11 164 / 0.09 - -
Scope 3-emission: tonnes CO2 / tonnes CO2 per FTE 1,162 / 0.71 1,241 / 0.77 1,339 / 0.81 313 / 0.18 - -
E-learning conducted, ethics: total / share of man-years74) New New 89 % 91% 100 % 100 %
E-learning completed, combating money laundering and financial crime: total / share of man-years74) New New 89 % 92% 100 % 100 %
E-learning completed, privacy: total/ share of man-years 74) New New New 85% 100% 100%
Number of complaints processed by the Financial Appeals Board 75) New 135 192 218 N/A N/A
Number of breaches of code of conduct/ Code of Conduct New New 9 2 N/A N/A
69) Even though we achieved a higher purchasing volume from environmentally certified suppliers in 2020, the dynamics of our supply chain and market conditions still make the 60 per cent target challenging. Therefore, our aim is to work on maintaining a share of purchases from environmentally certified suppliers of over 60%.