Storebrand and Idun move into their own new premises in the restored Vest-Vika area of Oslo. Brage-Fram and Norske Folk follow their lead.
• 1996 The company changes its name to Storebrand ASA and establishes Storebrand Bank AS.
• 2001 Norwegian and international stock markets fall sharply from September 2000 to February 2003.
Storebrand Bank offers traditional banking services such as accounts and lending in the retail market, as well as project financing for selected corporate customers. The bank is a commercial bank with total assets of NOK 46 billion. The bank aims to actively recruit new customers to Storebrand by offering “no-fees” banking for routine banking services.
Storebrand Health Insurance is jointly owned (50/50) by Storebrand ASA and Deutsche Krankenversicherung AG, and offers treatment insurance in the Norwegian and Swedish corporate and retail markets. The company was launched in autumn 1998 and has in recent years experienced strong growth in new customers (+31 percent in 2008).
Key figures (NOK million) 2008 2007 Total income 419 331 Total costs -280 -259 Net financial income/other 79 66 Pre-tax profit 2151 138 Cost/income ratio 57% 65% Assets under management 229 227 1 after amortisation of intangible assets of minus NOK 3 million.
Average number of ordinary shares (NOK ’000s) 6 445,091 251,517 247,965 258,576 272,933
Final price per ordinary share (NOK) 16.75 56.70 79.30 58.25 58.50 Calculation based on average number of shares outstanding.6
Bank’s market position in the retail segment is improved, with lending growth of 8 percent and deposit growth of 29 percent in 2008.
Costs reductions and strategic repositioning Ambitious goals for the ratio between costs and earnings have been stipulated for the business areas. Concrete measures that will reduce costs are being implemented and the retail strategy is being further refined. Sales will gain a clearer place in the group’s structure by collocating all the physical distribution capacity in Storebrand Sales Services, and amalgamating the regional retail and corporate networks. The focus on direct sales (online and via telephone) will also be strengthened through the establishment of a new business area, Storebrand Direct, which will include
A strong and adaptable organisation 2008 will enter the history books as an unusually demanding year. The effects of the financial crisis will also leave their mark on 2009. Managing the short-term effects of the financial crisis is a high priority and addressed continuously. However, it is just as important to look ahead and ensure we have the capacity to take advantage of the market opportunities Nordic pensions and insurance present. Storebrand is positioned in that part of the Nordic financial market that is expected to experience the most positive development in coming years. Our vision and ambition is to be the Nordic region’s leading and most respected partner within long-term savings and insurance. We are well equipped to take part in this competition and know that it is in the meeting between our employees and customers that Storebrand’s brand is built. Motivated employees who enjoy their work and have the right competence form the core of our competitiveness.
The assets must be managed such that they provide a satisfactory and competitive return for Storebrand’s customers and owners.
Risk and income source Storebrand’s risk and income source are the contracts that have been entered into with the customers. These have inherent properties that specify the payouts to the customer under different scenarios. The scenarios encompass payments for different outcomes in the financial markets, payments for disability, payments for surviving family members upon death and the like. The payments the customers make in order to receive such benefits are invested in a suitable manner in the capital market. The customer capital provides a return in consequence of it being made available to a capital market. Capital is a scarce resource and payments are made to utilise it. Shares, corporate bonds, real estate, infrastructure and other investments all have an expectation associated with them that the entity that makes capital available will receive something back in addition to the capital invested.
Pension schemes and other savings involve precisely this. Individuals and companies that have excess capital, or which must preserve it for later use, can choose to make it available to others in society. As payment for this, a return is obtained. The more uncertain such an investment appears, the greater the return it must be expected to provide. One can only achieve this if one assumes risk.
Storebrand’s long-term goal is to contribute to more sustainable development by encouraging or pushing the companies we invest in. Read more on: www.storebrand.no.
“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. (Brundtland Commission, 1987)
“…business cannot succeed in a society that fails” (Björn Stigson, WBCSD, 2008) WBCSC – World Business Council for Sustainable Development
Financial Supply Chain Some of the customers’ savings are invested in funds that are managed by others, so-called external asset managers. These constitute Storebrand’s financial supply chain.
We cannot guarantee that external funds are always in compliance with the corporate standard, but we do systematically monitor and maintain dialogues with all of them with this aim in mind 3.
Storebrand’s approach to its financial supply chain is important because it helps to keep sustainable development on the agenda in our sector. When our external managers make direct contact with the companies, further pressure is put on them to systematically take corporate responsibility into account.
Norwegian investment partnership In August 2008, a group of Norwegian investors launched a partnership which would focus on sustainable value creation in the
Transportation was shipping phosphates from Western Sahara. The extraction of natural resources in
Microfinance Microfinance is about making capital available to people who do not have access to traditional financial services such as loans, savings and insurance. Storebrand started investing in microfinance in 2005, and as of 31 December 2008 our commitments totalled USD 29 million, which are lent to micro finance banks throughout the world.
The investments in microfinance are profitable for Storebrand and at the same time make an important contribution to economic growth in emerging economies. When we invest, we stress that microfinance services must be offered in a proper manner, to preserve the customers’ dignity and improve their living conditions.
In June 2008, Storebrand signed an agreement to set up the Norwegian Microfinance
Storebrand is now the Nordic region’s leading provider of life insurance and pensions. Storebrand offers a comprehensive range of products to retail customers, corporate customers, municipalities and the public sector.
In 2008, the Board has placed special emphasis on ensuring that the group actively accommodates the challenges and opportunities that the changes in framework conditions and effects of the financial crisis involve, as well as following up on the integration processes with SPP.
The financial crisis has made 2008 an espec ially demanding year for the financial industry.
Trends in the financial markets are of great significance to Storebrand, both in relation to ensuring the guaranteed returns to the customers as well as the returns on the company’s own investments. The consolidated results for the group are, in consequence of low financial returns, less robust than is normally the case.
A new insurance law with associated regulations went into force in Norway on 1 January 2008. The new law involves comprehensive changes for the life insurance companies. The objective of the new Insurance Activity Act is to give greater predictability and transparency in the pricing of insurance products, as well as to create a clearer separation between customer funds and those of the insurance companies.
The combining of the companies will create a robust Nordic organisation. The work with realising the targeted synergies has shown good progress. The cost synergies have shown a positive trend and so far have been achieved earlier than was expected. Sales efforts have been high and the activities underway have shown positive results. In the purchasing area, agreements have been renegotiated and Nordic agreements entered into.
Standards (IFRS). The accounts of the holding company, Storebrand ASA, are produced in accordance with Norwegian accounting legislation, and the company has elected not
LEIV L. NERGAARD (64), Partner, Norscan Partners AS and Senior Adviser, Greenhill Int. LLP. Board Member, Deputy Chairman and Chairman of the Board (from 2000) for Storebrand ASA since 1997.
The new insurance act means that in the case of group defined benefit pensions and newly established guaranteed individual products, the profit shall go to the customer. The various elements of the pension provision are priced separately in advance and every price element can contain a profit element for the insurance company.
General Management Programme, CEDEP/Insead • 1986, Bachelor of Commerce, International Relations • 1993, Bachelor of Commerce, Economics and Finance.
Previous positions: 2003–2006: Advisor, Nielsen + Axelsson Asp • 1992–2003: CP/CFO, FLS Industries AS • 1983–1992: Danske Bank (1990–1992 as Vice President). Positions of trust: 2008: Board Member of Finansiel Stabilitet AS • 2006–2008: Board Member for JMI Invest II AS, Board Member for Netconcept AS • 2006- : Board Member for Novenco AS, Board Member for Arkil AS • 2005–: Board Member for Buy-Aid, Board Member for IDEAS A/S, Board Member for Faber AS • Board Member for Energinet.dk • 2004- : Board Member for Team Danmark • 2004-2007: Board Member for Royal Greenland.
The profits in 2008 were marked by extremely volatile financial markets. A net loss was realised on securities of NOK 4,837 million during the course of the year and the securities adjustment fund, which consists of the excess value of securities that are entered at their actual value in the group portfolio, was at zero at the end of the year. This has contributed to a resultant yield of minus NOK
NOK 377 million in 2007 to NOK 340 million in 2008. SPP has gone over to a new and improved computational model for valuation of the insurance obligations. In the new cash flow based model, the obligations are discounted on an interest curve instead of an interest point. In comparison with the previous model, the introduction of the new model brought about an improvement in the profit of around NOK 1.7 billion. This gives a better correlation between assets and obligations while at the same time reducing the volatility of security reserve costs and the financial profit in relation to fluctuations in the 10-year point on the interest curve.
122 million compared with NOK 78 million in 2007. The result before amortisation for the bank group was NOK 68 million compared with NOK 235 million in 2007. Net interest income displayed an upward trend in 2008, because the bank has managed to increase its lending margins despite the financial volatility and increased borrowing costs. Net interest income as a percentage of the average capital under administration comprised 1.17 percent, which is an increase of 0.1 percentage points in comparison with 2007.
NOK 135 million from Storebrand Kapitalforvaltning AS and NOK 63 million from the administration company Storebrand Eiendom
AS. The improvements in the results are a combination of increased revenues and lower expenses. For Storebrand Fondene AS
BARBARA ROSE MILIAN THORALFSSON (50), Director, Fleming Invest AS. Board Member for Storebrand ASA since 2006.
business and the holding company Storebrand ASA. The deficit experienced in 2008 in the P&C business amounting to minus
The increase is primarily due to a weak result for fire/combined private due to more fires.
Skade and Storebrand ASA, the result of minus NOK 158 million emerges after eliminations and IFRS effects for Storebrand ASA.
• The Asset Management Project has implemented Storebrand’s asset management philosophy for SPP’s funds and transferred the administration of the funds at SPP
Previous positions: 1979–1985: Consultant for Ajungilak AS • 1977–1979: Consultant for Fred. Olsen Spedisjon AS. Positions of trust: 1998–2002: Board Member for Storebrand Livsforsikring AS.
managed 47 mutual funds in Norway with total assets of NOK 25 billion. The retail market has been strongly marked by the large drop in the equity markets and the credit crisis. The position of Storebrand Fondene AS within the institutional market has deteriorated to some extent during the course of 2008. A number of institutional customers have been forced in consequence of their investment mandates to redeem equity funds in order to reduce their risks. The company has maintained its strong position with customers such as municipalities, pension funds and organisations.
Storebrand also avoids companies that operate within high-risk industries and have significant deficiencies in their risk management, as well as those companies scoring the worst on climate measures.
Previous positions: 2006- : Independent Advisor • 1997-2006: Member of Orkla’s executive management • 1988-2006: Various management positions for Orkla’s corporate staff. Positions of trust: 2008-: Chairman of the Board for the Norwegian Microfinance Initiative, NMI • 2008-: Board Member for Navamedic ASA • 2006–2007: Chairman of the Board for Oslo Børs ASA • 2002–: Board Member for Statkraft SF and Statskraft AS • 1994–2000: Chairman of the Board of Norges Forskningsråds Executive Board, Member of Board of Representatives for Storebrand ASA • 1986–1990: Chairman of the Board for NRK.
currency risks, use of derivatives and requirements for liquidity in the active portfolio. The objective of the dynamic risk management is to maintain sound risk-bearing capacity and to continuously adjust financial risk exposure to the company’s solidity. The company expects this to generate a good investment return, both in individual years and over time.
The total capital adequacy of the life insurance company declined by NOK 12.2 billion in 2008.
2.3 billion while the market value adjustment reserve stood at zero as per 31 December 2008. Insurance policies are long-term agreements, and involve uncertainty with respect to calculating future mortality and disability rates.
ANN-MARI GJøSTEIN (46), Senior Storebrand Employee Representative. Employee Representative Board Member for Storebrand ASA since 2007.
262 million during the course of 2008, 0r 0.6 percent in relation to gross lending. See also the figure below.
Storebrand Bank manages its exposure in the fixed income market so that the sensitivity to interest rates is as minimal as possible. The bank also practises a policy of full hedging and all instruments with an interest rate fixing period in excess of six months are subject to a specific hedging policy.
In 2000, Storebrand Skadeforsikring AS transferred all its run-off land-based Norwegian non-life insurance and all direct marine insurance to If through a 100% reinsurance arrangement.
The level is managed relative to financial risk and capital requirements in the business, where growth and the composition of business areas will be an active driving force behind the need for capital. The goal of capital management is to ensure an effective capital structure and preserve an appropriate balance between internal goals in relation to the statutory and rating companies’ requirements. The group has set long-term targets.
aims to have a net debt ratio of zero over the longer term.
NOK 1.4 billion at the close of 2008, and also has available an undrawn long-term credit facility of EUR 75 million. Storebrand ASA
At the close of 2008, Storebrand Livsforsikring AS was rated A2 and A- respectively by Moody’s and Standard & Poor’s. Storebrand ASA was rated Baa2 and BBB. Storebrand Bank’s rating was A2 from Moody’s and BBB+ from Standard & Poor’s.
org). In addition, we have contributed to the development of as well as signed the UN’s principles for responsible investments (PRI)
Storebrand performed a consolidation of the environments that work with competence development. The co-operation with the competence development environments at
Salary statistics are produced at specified management levels in order to facilitate the comparison of salaries between male and female employees.
Social Inclusion, have performed company visits in order to learn about Storebrand’s work in the area.
Storebrand has prepared its own ethical rules for the group and its employees.
Competency requirements were ratified in 2008 for financial consultants, with ethics as an integrated part, and where tangible organisational prerequisites are also described for the business in order to be able to comply with ethical guidelines within the group.
In 2008, Storebrand has been able to offer its employees an internal health clinic, with a holistic and interdisciplinary treatment concept, including psychology and mastery services. Studies show that over 40 percent of those surveyed report that the clinic caused them to avoid or shorten sick leave absences and over 80 percent regard
Storebrand as a more attractive workplace in consequence of the clinic. Employees are offered courses in quitting smoking through co-operation with the Cancer Society, subsidised memberships in fitness centres, fitness
No injuries to people, property damage or accidents of significance were reported within
connection with the acquisition of SPP have been verified and adjusted upwards during the course of 2008.
In addition, efforts are being made to further develop direct distribution to the customers, in line with the substantial successes that
Storebrand has, because of its long traditions and experienced and motivated employees, as well as its strategic efforts in corporate responsibility, a good basis for successfully achieving the group’s goals.
39,338 million in 2007. This made Storebrand the 18th most traded share on the OSE in 2008 in terms of monetary value. In relation to the average total number of shares, the turnover rate for Storebrand‘s share was 167 percent.
Storebrand ASA recommends to the annual general meeting that no dividend be paid out for 2008.
General meetings Storebrand has one class of shares, each carrying one vote. The company holds its AGM each year before the end of June. Shareholders who wish to participate in a general meeting must notify the company no later than 16:00 three business days before the meeting. Shareholders who do not give notice of attendance will be able to attend, but not vote.
Shareholders’ contact with the company Shareholders should generally contact the administrator of their share account with queries and notices of changes, e.g. changes of address. Storebrand’s own shareholders’
Storebrand launched its own principles for corporate governance in 1998, and views the Norwegian Code of Practice as a natural extension of these. The Board of Directors
As a large stock exchange listed company and an important participant in society, Storebrand is committed to building good relationships with its stakeholders, who include shareholders, corporate bodies, management, employees, customers, lenders, and society as a whole. Corporate governance plays a central role in this objective, and defines the legal and operational framework by which Storebrand directs and controls its activities in order to create value for its stakeholders. The dialogue with our stakeholders is a key part of our corporate responsibility.
9) The work of the board of directors √ 1 10) Risk management and internal control √
The full text of the Norwegian Code of Practice for Corporate Governance is available on the Oslo Stock Exchange’s website: www.oslobors.no/ob/cg. 1 Deviations from the Code of Practice – neither the law nor the Articles of Association require that a Deputy Chairman of the Board of Storebrand ASA be elected.
The Articles of Association do not impose any limitations on the negotiability of
was held on 23 April. All shareholders with a known address receive written notice of the
Board of Representatives is a permanent member of the Election Committee and its chairman. The other members are elected by the AGM. The company’s employees elect an observer to the committee, who participates as a full member in making recommendations for the election of the Chairman of the Board.
Committee reviews the annual appraisal of the work of the Board, and is responsible for proposing candidates to the Board of
Control Committee and the Election Committee, and the remuneration of the members of these bodies. The Election Committee applies specific criteria, and works in accordance with a formal mandate. The members of the Storebrand ASA Election Committee are also members of the election committees for
is not a member of the Board. None of the members elected by the Board of Representatives have any employment, professional or consultancy relationship with the group other than their appointment to the Board. CVs for the members of the Board are provided on pages 14–23 and on the group’s website. The
The Board conducts an annual appraisal of its work, which is made available to the Election
The Board has issued a written mandate setting out the management responsibilities of the CEO of Storebrand ASA. The role of the group’s CEO does not give rise to any conflicts of interest.
Storebrand’s executive management is charged with implementing the strategies approved by the Board, and is directly responsi-
The internal audit function in Storebrand is founded on a corporate governance model, whereby management is based on groupwide policies and internal regulations in areas such as ethics, information management and information security, as well as a value based system for financial and operational risk. The group has a common internal audit function which carries out an independent review of the robustness of the management model.
In addition to its own controlling bodies and external audit, the group is subject to statutory supervision by Kredittilsynet (the
The external auditor is elected by the AGM, and is responsible for the financial audit of the group. The external auditor issues the audit report concerning the annual accounts, performs a limited audit of the interim accounts, attends the Board meetings that approve the quarterly interim accounts, all meetings of the Control Committee, and attends meetings of the Audit Committee as appropriate. In 2007, the Board decided that the external auditor must rotate the partner responsible for the audit assignment every seven years. The external auditor’s work and independence is evaluated every year by the
Annual programs for internal audit work are determined by the boards of the group companies, based on the auditor’s recommendations and a risk assessment carried out by the group’s senior management. Internal audit produces quarterly reports for the boards. Reports from special investigations initiated by internal audit or management in respect of possible breaches of ethical rules are immediately reported to the chairman of the Audit Committee and the group’s CEO, with copies to the heads of Legal Services and Human Resources. Internal audit is subject to a formal mandate in accordance with current legislation, regulations and international standards. The Control Committee is entitled to use the resources of internal audit as required.
Management through group-wide policies and guidelines Group-wide policies have been approved for the following functions in the Storebrand group: accounting, finance and risk management, investor relations, corporate communications, branding, IT, human resources and legal services.
Remuneration of the Board and executive management (CoP sections 11 and 12) The remuneration of the members of the The remuneration of the members of the Board is decided annually by the AGM. The fees paid to the members of the Board are not linked to profits, option programs or similar arrangements. The members of the Board do not receive incentive-based remuneration, but receive a fixed annual fee. The shareholder elected members of the Board do not participate in the company’s pension arrangements. None of the shareholderelected members of the Board carry out any duties for the company other than their appointment to the Board. More detailed information on the remuneration, loans and shareholdings of the members of the Board can be found in notes 17 (Group) and 5 (ASA)
The declaration is available on the group’s website. The salary and other remuneration of the CEO are decided by the Board. More detailed information on the remuneration, loans and shareholdings of the members of the executive management can be found in notes 17 (Group) and 5 (ASA) of the notes to the accounts. Members of the executive management are encouraged to hold shares in the company.
Other matters As one of the largest investors in the As one of the largest investors in the Norwegian stock market, Storebrand has considerable potential influence over listed companies, and pays great attention to exercising its ownership on the basis of straightforward and consistent ownership principles. Storebrand applies the Norwegian Code of Practice for Corporate Governance in this role, which represent a natural extension of the principles it first established in 1998. Storebrand has issued guidelines with respect to employees holding non-executive appointments in companies outside the group. The guidelines include restrictions on the number of such appointments any employee may hold.
storebrand.no > About Storebrand, including information on members of Storebrand’s corporate bodies, the company’s Articles of
1. GuNNAr roGSTAD (52), Executive Vice President, Storebrand Direkte, CEO Storebrand Skadeforsikring AS. Cand.Jur University of Oslo. 2005 Executive Vice President, Sampo. 2002-2005 Executive Vice President, If Skadeforsikring NUF, Head of Business Area Private Nordic. 1999-2002 Nordic Head of Corporate Claims If Skadeforsikring NUF. 1984-1999 National and regional Sales Manager for corporate life and non-life, UNI Storebrand. 1984 Product Manager, UNI Forsikring. 1982-1984 Product Manager/Claims Handler, Norges Brannkasse.
10. KLAuS-ANDerS NySTeeN (43), CEO Storebrand Bank ASA. Solstrand Leadership Programme, MBA Norwegian School of Economics and Business Administration (NHH). Management Programme in Logistics Norwegian School of Management (BI). Royal Norwegian Naval Academy, 1st and 2nd Section. 2001-2006 CEO/CFO Norway Post. 1999-2000 CFO Hydro Seafood AS. 1998-1999 Acting CEO/CFO Hydro Seafood GSP Ltd, Scotland. 1997-1998 CFO Hydro Seafood Norway AS. 1993-1997 Lecturer in Logistics and Management BI Bergen.
(All amounts in NOK million unless otherwise stated) 2008 2007 2006 2005 2004
Value-adjusted return (exclusive added value in “hold to maturity” portfolios) Storebrand Livsforsikring AS 7.26% 8.28% 7.55% 7.19%
Percentage of assets under management invested in equities 24% 23% 22% 23% 21%
In 2009, the Storebrand Group will actively seek to improve the efficiency of its operations to optimise the company’s costs.
Storebrand will intensify its work on creating a common platform for its Nordic activities and produce a clear Nordic strategy.
Storebrand’s activities. The biggest changes are taking place within life insurance. Brief descriptions of the most important regulatory changes and Storebrand’s responses are provided below.
The 2009 national budget made it clear that the pensions reform would be postponed for one year until 1 January 2011. The government drew up guidelines for the new regulations for the national insurance scheme and contractual early retirement schemes (AFP) in 2008. The consultation paper in early 2008 detailed how pension rights would be earned and taken out in the new national insurance scheme.
The new AFP’s main principles were clarified in last year’s collective pay settlement. The government’s timetable indicates that amendments to occupational pensions legislation for the private and public sectors will be clarified during 2009. Storebrand aims to improve its competitiveness via the pensions reform by adapting solutions and ensuring good communication with customers. Given the government’s timetable and our experience of the new life insurance act, Storebrand, like other players in the industry, will have little time to adapt between the stipulation of the regulations and their implementation.
The Norwegian Parliament passed a new individual pension saving law in June. Storebrand’s
This means that liquid assets must correspond to the level of interest-bearing liabilities.
Norwegian and Swedish markets. A number of new activities were initiated in 2008.
Storebrand’s position as a leading financial institution within corporate responsibility in the Nordic market.
It is through our investments that we can best influence people in the direction of more sustainable development, and this is therefore discussed in a separate article (see page 10). Developments within other important corporate responsibility focus areas in 2008 are described below.
An extensive, inclusive project commenced and in August 2008 the Storebrand group’s vision, core values and code of conduct were set out in a common document called the group’s guidebook. The six group principles developed through this process provide a clear basis for developing and running the company, and are important guidelines for how the group’s employees should act in the best interests of its owners, customers and
We have achieved some goals in areas such as paper consumption, waste sorting and recycling electronic equipment. The goal of recycling 100 percent of electronic equipment was met, and water consumption at the head office was stabilised. The source sorting rate at head office was 55 percent, 5 percent lower than the stipulated goal.
Storebrand has long been involved in various international sustainable development groups. An increasing number of society’s challenges are global and solutions require cooperation within industries and between industries, authorities and the general public.
The group bases its corporate responsibility work on the UN’s 10 Global Compact principles for good business practice and the
Group’s financial objectives Storebrand has published financial objectives for the group and for each business area.
This provides a basis for setting targets for each department and employee. The group’s financial goals were adjusted in February 2008 due to the acquisition of SPP. The financial goals were confirmed on the Capital
4.97 in 2008 compared to NOK 7.95 in 2007, based on the average number of shares outstanding. Further information about the individual business areas can be found on pages 42–57.
Storebrand Livsforsikring AS also aims to sustain an A level rating. The holding company aims to have a net debt ratio of zero over the longer term.
Net debt ratio is debt minus liquid assets divided by assets minus liquid assets. Calculated in accordance with IFRS. 1
Storebrand ASA’s net debt-equity ratio was 13 percent at year-end 2008. The reduction in relation to 2007 is due to the repayment of a syndicated loan of EUR 580 million, taken out in connection with the acquisition of SPP. The loan was repaid in full in 2008 by taking out perpetual subordinated loans and subordinated loans in Storebrand Life Insurance and an ordinary EUR 70 million bank loan in Storebrand ASA. Storebrand ASA held total liquid assets of NOK 1.4 billion at the close of 2008. The holding company also has an undrawn credit facility of EUR 75 million.
The Board of Storebrand ASA recommends no dividend be paid for 2008. Due to the instability in the financial markets the Board has chosen to prioritise the company’s financial strength.
Tax Tax costs in the Storebrand Group have been low in recent years. The normal tax rate for limited companies in Norway is 28 percent, while the effective tax rate for the group is normally far lower. The Storebrand group’s tax rate is affected by several factors that result in a departure from the normal tax rate.
No deferred tax asset has been recognised in the balance sheet due to uncertainty about whether the level of taxable income in the future will enable the utilisation of tax losses carried forward.
Storebrand bought the Swedish life insurance company SPP from Handelsbanken in autumn 2007 as part of its Nordic strategy. SPP is a leading Swedish life insurance and occupational pensions provider. SPP offers unit-linked products, traditional insurance, defined benefits pension products, advice services covering occupational pensions and insurance, and administration solutions for municipalities and other organisations. Storebrand and
The occupational pensions market has become more of a transfer market following the introduction of mandatory occupational pensions
The 2008 retail market was characterised by cancellations of individual life saving because increased interest rates during the year made bank saving more attractive. The new scheme for individual pension saving with tax deductions, IPS, was launched in autumn 2008.
241 contracts in Storebrand, covering almost 10,000 members, were converted from defined benefits pensions to defined contribution pensions in 2008. Compared with 2007, 20 percent fewer contracts were converted while 26 percent more members were affected by conversions. In 2008, the average converted contract covered 28 members, while in 2007 it covered 23 members.
(HSE). Systematically focusing on HSE results in greater satisfaction and improved life quality for employees. Corporate customers will experience better value creation and lower sick leave costs, as well as lower insurance premiums. Lower sick leave and fewer new people on disability pensions will also result in substantial savings for society as a whole.
Storebrand’s advisory teams for the corporate and retail markets were merged in 2008.
The new legislation also permits a new type of long-term policy. The guaranteed return has so far been linked to a single financial year, but it will now be possible to agree a guaranteed return for periods of up to five years. The premium for a guaranteed return over a number of years will be lower than for annual guarantees over the same period. The policyholders’ liabilities must still be supported by sufficient insurance reserves and, if necessary, equity can be used to ensure satisfactory reserves during the agreed guarantee period. The regulations governing guaranteed returns over a number of years provide greater room for reaching agreements between the customer and the company. The customer can, among other things, pledge his or her own buffer capital as collateral if the return is below the interest rate used in the contract’s calculations.
The various elements of the customer provision are priced separately in advance and every price element can contain a profit element for the insurance company.
However, the new Act contains a transitional rule that permits profits for pensioners in group pension schemes to be retained from 2008 to 2010. It will still be possible to make additional statutory provisions that in years with low rates of return can be used to offset returns between 0 percent and the guaranteed return. The statutory reserves must be distributed across the individual contracts. The Insurance Activities
Q2 to year-end 2008. The uncertainty experienced in the credit market was perhaps even greater. The credit spread increased strongly and liquidity decreased. This resulted in large losses for many investors in the credit market.
The increase in transferred premium reserves within group pensions was mirrored by the total new business premiums in 2008. Total new premiums (APE) in 2008 amounted to NOK
The total profit allocated to the owner before tax amounted to NOK 349 million in 2008 compared to NOK 1,635 million in 2007.
31 million. The profit allocated to the owner was also charged with NOK 31 million due to a negative return and a lack of additional statutory reserves in some contracts.
655 million has been calculated. The surplus consists of the positive risk result after allocations to the risk equalisation fund of NOK 120 million, and NOK 535 million in surplus from the investment result. NOK 2,241 million was drawn from additional statutory reserves to cover returns that were lower than the interest rate guarantees in some of the customer portfolios.
The equity exposure in Storebrand’s customer portfolios and company portfolio was reduced during 2008. The risk adjusted equity exposure (taking into account derivatives)
The investment portfolios in the group portfolio achieved a market return of minus 0.2 percent in 2008. The return recognised was 2.0 percent in 2008. The total market and recognised returns in 2007 were 8.9 percent and 7.3 percent respectively.
In 2008, SPP commenced extensive separation, transfer, and integration work in a series of areas, including transferring the IT system from Handelsbanken to Storebrand. SPP’s applications and operating environments will be separated out from Handelsbanken and integrated in Storebrand to create a costeffective Nordic group.
In 2008, Storebrand commenced a project aimed at making savings within purchasing activities. It was decided in connection with the acquisition of SPP that further synergies and cost reductions should be achieved. An analysis of SPP’s costs was conducted at the start of 2008. This showed a need for groupwide rationalisation within purchasing.
SPP wants to provide its customers with the greatest possible customer value in each encounter, regardless of the distribution and communication channel. Therefore, one important part of the company’s strategy is to improve lead times, productivity, quality and customer satisfaction, as well as ensuring that all parts of the company cooperate in a quality securing and cost-effective manner.
SPP is employing the Lean competitiveness programme to achieve this by rationalising core processes and making thorough changes to management philosophy and corporate culture to achieve continuous improvements.
Liabilities increased due to reduced discounting rates throughout the year, which contributed a total of NOK 1,642 million to reserves. At the same time the security programme contributed a gain of NOK 1,786 million. A new, improved cash flow based model for valuing insurance liabilities was introduced in Q4.
large proportion of the result can be ascribed to the return in the equity portfolio. This portfolio is entirely invested in interest-bearing securities and achieved a satisfactory return in 2008. This also includes the result element interest on subordinated loan capital.
SPP introduced a new asset management model in 2008. It corresponds to the model Storebrand has used very successfully for many years. One cornerstone of this model is dynamic risk management, which entails the investment portfolio continuously being tailored to market developments. Dynamic risk management proved to be effective in the financial crisis in 2008.
This section provides information on the disclosure of the embedded value (EV) 2008 for
Value of In-force business 14,610 comprising - Present value of future profits (PVFP) 23,893 - Time value of financial options and gurantees (TVOG) -5,183 - Frictional costs of required capital (FCRC) -236 - Cost of residual non hedgeable risks (CNHR) -3,864
The total EV as of 31 December 2008 for the life insurance business of Storebrand Group after capital movements is NOK 23 billion.
The present value of future profits amounts to NOK 23.9 billion (including look-through profits of NOK 4 billion), while shareholder surplus is NOK 8.4 billion and the capital cost is NOK 236 million. The EV has been reduced by a volatility cost of NOK 5.2 billion.
A negative value was calculated for new business in 2008 in the Swedish business
amounting to NOK 109 million. This is primarily due to the sales volume still being too low to cover the costs associated with new sales and the reduction in interest rates. A
SPP that are expected to improve the value of new business in SPP.
Norwegian and international securities, global special products with absolute return targets, as well as effective management of market risk. Today, Storebrand Investments is Norway’s leading private asset manager.
Good returns and a clear management profile have helped increase demand and positive net subscriptions in most of our mutual funds that invest in the Oslo Stock Exchange.
New products are planned to meet the steadily increasing demand for long-term savings products within the contribution-based occupational pension markets in Sweden and
The focus on investment companies was affected by the turbulence in the financial markets. The capital from these companies is more fluid than that from Storebrand Investments ’ traditional customer groups. Part of the reason for the focus on this segment is the shorter decision processes, though this also means that the assets can be withdrawn faster than is the case with traditional customers. However, the assets that were realised in 2008 can be expected to return quickly when the companies return to an investment mode. The strategy of turning the sales focus towards private investment companies will be continued in 2009.
Demanding operating year and preparation for taking over SPP’s portfolio 2008 was a demanding operating year for
Insurance more complex. The management now involves 19 different profiles. The financial crisis and the consequent volatile markets in the second half of 2008 increased the pressure on Storebrand Investment’s operational system and its transaction volume more than doubled in 2008. It continuously seeks to simplify routines and standardise and automate process throughout the entire value chain. This improves both the organisation’s cost-effectiveness and scalability. A robust and flexible management platform is also being put in place that can produce simple management products as well as complex and flexible investment profiles, which will be offered through defined contribution pension schemes.
Storebrand is conscious of how its customers ’ funds are managed. We want to exercise our role as an investor in a way that contributes to more sustainable development in the long-term. The goal is to achieve the best possible return, but not at any price, and in Storebrand’s experience the corporate responsibility requirements have not negatively affected the return on investments. We stipulate strict requirements for our investments and emphasise dialogue and active ownership. We are in contact with around 400 companies every year. The aim of this work is not to exclude companies, but to encourage change for the better. However, in some cases we choose not to invest because we believe there is a major risk of repeated serious breaches of our group standard for responsible investments. As of 31 December 2008, 80 companies are excluded for reasons such as serious environmental damage, corruption, human rights violations, the production of landmines, cluster bombs, nuclear weapons and tobacco, and seriously deficient risk management. In 2008, we started introducing Storebrand’s group standard for socially responsible investments into SPP
Eiendom contributed a result of NOK 63 million to the asset management activities.
Sales of mutual funds were of course impacted by the weak market. Nervousness in the equity markets spread to Norwegian retail market customers. Figures from the Norwegian Mutual Fund Association show that retail customers redeemed a net NOK 1.3 billion in mutual funds in 2008. Meanwhile, the last three months of the year saw net positive subscriptions. In 2008, Storebrand Investments experienced net negative subscriptions in securities excluding assets from group customers and assets linked to funds-based life and pensions savings of minus NOK 79 million. However, like the rest of the market
Storebrand Fondene experienced a positive trend in Q4 with net subscriptions of NOK
380 million. Total assets under management from Norwegian retail customers amounted to NOK 8.7 billion as of 31 December 2008.
The 2008 stock exchange year will go down in history as one of the weakest years in recent history. Heavy falls in the equity markets and the collapse of the money and bond markets helped create a demanding investment climate.
Storebrand Investments’ management results were weak in 2008 and substantially lower than the results in 2007. Storebrand
The return in Storebrand funds in 2008 was affected by the market falls and total value creation in the funds was negative in 2008.
Delphi Verden and Rente+ especially are pulling in a negative direction. Storebrand Likviditet made the largest positive contribution.
The bank has experienced positive development in recent years, and strengthened its position in 2008 as well. The bank’s growth in customer numbers after the introduction of no-fees daily banking in 2005 continued in 2008. Both deposit and lending volumes in the retail area increased in 2008. On 1
purchased NOK 3.5 billion that can be used in the government exchange scheme.
and 13 companies in Ring Eiendomsmegling during 2007 and 2008 resulted in an increase in other income compared with 2007. Total operating income from these companies amounted to almost NOK 86 million in 2008.
NOK 710 million. This development in the risk is taken into account in the valuation of realised losses, individual write-downs and group write-downs. The uncertainty associated with the estimate has increased somewhat due to the market instability.
122 million in 2008. At year-end 2008 writedowns on individual loans in the balance sheet amounted to NOK 262 million. This is an increase of NOK 15 million from 31
The bank’s deposit-to-loan ratio was 46.9 percent compared with 47.1 percent in 2007.
Storebrand Bank ASA will continue its work to secure a competitive position through growth, continuous improvements, a high level of customer satisfaction and increased cross-sales. The bank’s position as the
Ranking of Life company's investment return relative to selected competitors (1-5) 1 2 3 2 3 Satisfactory
Administration result in SPP (NOK million) -120 na na na Potential for improvement
Growth in net interest income, last year (Storebrand Bank) (NOK million) 99 -6 -28 7 Very good
Market share (new business) 2 - Occupational pensions (benefit/contribution) excluding transfers 19% 37% 32% 43% Potential for improvement
- Corporate group life 29% 18% 23% 40% Very good - Long-term pensions savings and mutual funds 3 15% 8% 7% 6% Satisfactory
Number of new banking customers (gross) 5 10,610 11,556 9,631 5,427 Very good
The investment portfolio is subject to a range of quantitative and qualitative limits, and risk is measured and monitored continuously using a range of reports, models and tests.
folio, the Norwegian authorities specify that the company’s risk capital is the total of the market value adjustment reserve, additional statutory reserves, core capital in excess of the regulatory minimum and accrued earnings. This risk exposure is monitored using a stress test that estimates potential losses in the event of extreme market movements.
Directors in several ways. Firstly, considerable importance is attached to building up sufficient risk capital to absorb losses. Secondly, risk exposure is diversified as much as possible by investing in assets that are not expected to cause losses at the same time. Thirdly, risk is managed dynamically in relation to the company’s risk bearing capacity by buying and selling securities with different levels of risk tailored to the customer portfolio to which the assets’ portfolio belongs. Fourthly, financial hedging instruments, such as options and forward exchange contracts, are used.
Falling market interest rates in the latter part of 2008 combined with falling equity markets reduced risk-bearing capacity.
bonds category. These bonds will provide a regularly recognised return substantially in excess of the guaranteed interest rate.
Solvency II, that are expected to be implemented in 2012 at the earliest. Similar stress testing, called traffic light testing, has been introduced in Sweden. The stress tests cover both the assets and the liabilities sides of the balance sheet and provide a net capital requirement for the business. One important difference between the Swedish and
Norwegian models is that the profit sharing in Sweden is conditional, and a so-called
Lending to corporate customers over a certain limit requires the approval of a credit committee chaired by the bank’s managing director, or from the bank’s Board. Credit risk is monitored through a risk classification system that ranks each customer by ability to pay, financial condition and collateral. All loans on the bank’s watch list are reviewed at least quarterly in respect of the condition of the borrower and collateral, and of the steps being taken to protect the bank’s position.
Storebrand Bank has established good liquidity buffers, and continuously monitors liquidity reserves against internal limits. Committed credit lines from other banks are also available to the bank if necessary. Storebrand
Note 5: Remuneration of the CEO and elected officers of the company 132
Note 16: Holdings of shares in Storebrand ASA by executive management and members of corporate bodies 138
Auditor’s report for control committee – and Board of Representatives statement 2008 141
Note 3: New layouts for profit and loss account and balance sheet 75
Note 17: Remuneration of senior employees and elected officers of the company 88
Net income from financial assets and property for the customers: - shares and other equity participations at fair value 28 -22,987.0 - bonds and other fixed-income securities at fair value 28 12,851.6 - financial derivatives at fair value 28 -2,170.9 - to (from) market value adjustment reserve 3,534.6 - net income from bonds at amortised cost 28 2,403.5 - net income from investment properties 25 1,653.1
Financial assets at fair value: - Shares and other equity participations 30,31,39 73,661.1 - Bonds and other fixed-income securities 30,31,40 112,025.6 - Life insurance assets with investment choice 39,083.4 - Other financial assets 4,853.4
Net receipts/payments - lending to and claims from other financial institutions -777.2 -234.9
Net receipts/payments - deposits from Norges Bank and other financial institutions 5,298.7 279.0
Net receipts/payments - issuing of bond debt and other long-term debt 2,226.8 2,006.2
Use of estimates in preparing the annual accounts The preparation of the accounts in accordance with IFRS requires the management to make valuations, estimates and assumptions that affect assets, liabilities , revenue, costs, the notes to the accounts and information on potential liabilities. The final values realised may differ from these estimates. See note 2 for further information about this
Changes to accounting policies No changes to the accounting policies were made in 2008.
Consolidation The consolidated financial statements combine Storebrand ASA and companies where Storebrand ASA has the power to exercise a controlling influence. A controlling influence is normally achieved where the group owns, directly or indirectly, more than 50 percent of the shares in a company and the group has the power to exercise control over the company. Minority interests are included in the group’s equity capital.
The acquisition method of accounting is used to account for the purchase of subsidiaries. Investments in associated companies (normally investments of between 20 percent and 50 percent of the associated companies’ equity capital) where the company exercises significant influence are consolidated in accordance with the equity method. Interests in joint ventures are consolidated in accordance with the proportional consolidation method, i.e. by including the proportion of revenue, costs, assets and liabilities in the appropriate lines in the accounts.
Elimination of internal transactions Internal receivables and payables, internal profits and losses, interest and dividends, etc between group companies are eliminated in the consolidated accounts. Transactions between customer portfolios and the company portfolio in Storebrand Livsforsikring AS and between customer portfolios in Storebrand Livsforsikring AS and other units in the group are not eliminated.
Integration of business The acquisition method is used when business is acquired. The acquisition cost is measured at its fair value after taking into account any equity instruments as well as direct expenses with respect to the acquisition. Any share issue expenses are not included in the acquisition cost, but are charged to equity.
Identified materials and intangible assets and liabilities that have been taken over are valued as their fair value at the time of acquisition. If the acquisition cost exceeds the value of the identified assets and liabilities, the difference is recognised in the accounts as goodwill. If the acquisition costs is less than the identified assets and liabilities, the difference is recognised in the profit and loss account at the time of the transaction. In the event of acquisitions of less than a 100 percent of a company, 100 percent of the extra value or shortfall in market value is recognised in the balance sheet, with the exception of goodwill of which only Storebrand’s share is recognised.
Assets are assessed for impairment if there are indications of a fall in its value. Any write-downs are recognised as the difference between the value recognised in the balance sheet and the recoverable amount. The recoverable amount is the highest of fair value less deductions for selling expenses and the value in use. Whether or not any previous write-downs of non-financial assets can be reversed must be assessed on every reporting date.
Intangible assets Intangible assets with limited useable lifetimes are valued at acquisition cost reduced by accumulated depreciation and any write-downs. The depreciation period and the method of depreciation are reviewed annually. New intangible assets are only capitalised if it can be demonstrated that it is likely that the group will gain future commercial benefit that is directly applicable to the asset in question. In addition, it must be possible to estimate the cost price of the asset reliably. The value of an intangible asset is tested for impairment if there are indications of a fall in its value; otherwise intangible assets are subject to write-downs and reversals of write-downs in the same manner described for tangible fixed assets. When insurance contracts are purchased as part of the integration of an enterprise, the insurance obligations are recognised on the basis of the underlying company’s accounting policies. Shortfalls in value linked to these obligations, which are often referred to as value of business in force (VIF), are recognised as an assets. A sufficiency test must be conducted of the insurance obligation, including VIF, pursuant to IFRS 4 every time the accounts are presented. The test looks at the current values of the policy issuer’s cash flows, which is often referred to as embedded value. Any writedowns of VIF will be reversed if the basis for the write-down no longer exists.
Storebrand has both insured and uninsured pension arrangements. The insured scheme in Norway is insured with Storebrand Livsforsikring AS (Storebrand Life Insurance), which is a company in the Storebrand group. Premiums paid on behalf of Storebrand employees in Norway are eliminated from consolidated premium income.
If a market for a financial instrument is not active, fair value is determined by using valuation techniques. Such valuation techniques make use of recent arm’s length market transactions between knowledgeable and independent parties
Classification and measurement of financial assets and liabilities Financial assets are classified into one of the following categories: • held for sale • at fair value through profit or loss in accordance with the fair value option
(FVO) • hold to maturity investments • loans and receivables • available for sale
• it is a derivative except for a derivative that is a designated as an effective hedging instrument.
At fair value through profit or loss in accordance with the fair value option (FVO) A significant proportion of Storebrand’s financial instruments are classified as at fair value through profit and loss because: • such classification reduces a mismatch that would otherwise have occurred in measurement or recognition as a result of different rules for measurement of assets and liabilities, or because
Hold to maturity investments Hold to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the company has the intention and ability to hold to maturity, with the exclusion of: • assets that are designated at inception as assets at fair value in the profit and loss account, and • assets that are defined as loans and receivables.
Hold to maturity investments are recognised at amortised cost using the effective interest method. In 2008, all the investments included in the hold to maturity category were reclassified as per 31 December 2008 and included in the available for sale category. The hold to maturity cannot be used in Storebrand’s consolidated accounts in 2009 and 2010.
Stock lending A stock loan involves a transfer of shares from Storebrand to a borrower in return for the borrower pledging security in the form of cash or securities. At the maturity of the stock loan, the identical securities are returned to Storebrand. The borrower is required to compensate the lender for various events related to the shares lent, such as distributions of subscription rights, dividends etc. The borrower is entitled to exercise the voting rights of the shares during the period of the stock loan. Shares lent by Storebrand are not removed from the Storebrand balance sheet, and fees earned on stock lending are recognised to income as they are received. Reinvested collateral is recognised at its gross value in the balance sheet under the individual asset.
Income recognition for asset management activities Asset management fees and performance fees are recognised when the income can be measured reliably and it is likely that the company will receive the commercial benefit arising from the transaction.
Distribution of life insurance inventories, income and expenses pursuant to the new insurance act The distribution of the various assets between the various portfolios/subportfolios as per 1 January 2008 was based on market value. The portfolio is divided into the main portfolios group, with investment choice and company portfolio. The group portfolio consists of seven profiles. The with investment choice portfolio consists of 24 profiles. The company portfolio is a separate portfolio group with underlying discretionary portfolios. The various profiles invest in “building blocks” that consist of notional funds and securities funds that enable common management of Storebrand Life Insurance’s financial assets. The building blocks are reposted to profiles at the close of the period so that asset and result elements can be reported by distribution between the group, with investment choice, and company portfolios. This distribution is based on each profile’s return in NOK in the relevant building block. The balance is allocated on the basis of each profile’s ownership interest in the various ”building blocks” on the reporting date. The profit is allocated on the basis of the ownership interest’s return result so far in the year.
Accounting for the insurance business The accounting standard IFRS 4 addresses the accounting treatment of insurance contracts. The Storebrand group’s insurance contracts fall within the scope of the standard. In the consolidated accounts the technical insurance reserves in the respective subsidiaries, calculated on the basis of the individual countries ’ particular laws, are carried forward. The accounting policies for the most important technical insurance reserves are explained below.
Sufficiency test Sufficiency tests are conducted in life and P&C insurance on every balance sheet day pursuant to IFRS 4 to check whether the level of provisions to the premium reserves and claims reserves match the obligations to the customers.
Claims paid Claims for own account comprise claims settlements paid out less reinsurance received, premium reserves transferred to other companies, reinsurance ceded and changes in claims reserves. Claims not settled or paid out are provided for by allocation to the claims reserve as part of allocations to technical insurance reserves.
Profit allocated to insurance policyholders The guaranteed yield on the premium reserve and on the premium fund, as well as the other return for customers is recognised in the profit and loss account as part of the item ‘guaranteed yield and allocation to insurance policyholders’.
The premium reserve is calculated using the same assumptions as those used to calculate premiums for individual insurance contracts, i.e. assumptions on mortality and disability rates, interest rates and costs. Premium tariffs are based on the observed level of mortality and disability in the population with the addition of security margins that take into account, inter alia, expected future developments in this respect.
conditional allocation to policyholders that is recognised in the profit and loss account as a statutory reserve and accordingly reduces net profit. Additional statutory reserves can be used to meet a shortfall in the individual customer’s guaranteed return. This is shown in the profit and loss account in the item ‘to/ from additional statutory reserves’. The amount released cannot exceed the equivalent of one year’s interest rate guarantee.
SPP Life insurance reserves Life insurance reserves are calculated on the basis of the expected payments for each individual insurance contract. Assumptions concerning interest rates, mortality, disability, tax, duties and other risk elements affect the value of the life insurance reserves. Changes in these elements can affect the reserves and thus also the company’s accounting result.
In Q4 2008, SPP introduced a cash flow model for discounting life insurance reserves.
The model employs a swap curve (monthly) for the term to maturity in those cases where it is assessed that there is sufficient liquidity in the Swedish market.
Death risk Assumptions concerning mortality vary depending on the various policies that are signed. The assumptions that are used as the basis are based on general sector statistics.
The insurance companies in the group are subject to their own specific legal requirements for technical insurance reserves, including administration reserves, security reserves, and guarantee reserves. In Storebrand’s consolidated accounts, which are prepared in accordance with IFRS, security reserves with high security margin natural disaster fund and guarantee reserves are not treated as liabilities.
Investment properties The company conducts its own valuations of its properties. Each investment property is valued separately by discounting the future net cash flow by a rate equivalent to the yield requirement for the investment in question. The net cash flow takes into account current and future loss of income due to vacancy, essential investment and an estimate of future changes in market rent. The yield requirement is determined on the basis of the expected long-term real interest rate plus an individually determined risk premium dependent on the rental situation, the building’s location and standard of the property. Shopping centre buildings are valued on the basis of a market yield (direct yield in year one) for the individual property and non-discounted long-term cash flow. Where it is known there will be substantial changes in expected cash flows in later years, these are taken account of in the valuation. The number of transactions in the market has been limited due to the financial instability and in general the uncertainty associated with the base data used for valuations has increased compared with 2007. External valuations have also been obtained for a representative selection of the company’s properties to support its own valuations.
Intangible assets Goodwill and intangible assets with undefined usable lifetimes are tested for impairment annually. Goodwill is allocated to the group’s cash flow generating units identified by the relevant country in which one is carrying out activities. The test’s valuation involves estimating the cash flows that arise in the relevant cash flow generating units and applying a relevant discount rate. Fixed assets and other intangible assets are assessed annually to ensure the method and period being used correspond with economic realities.
Financial instruments valued at amortised costs are assessed on the balance sheet date to see whether or not there are objective indications that the financial asset or a group of financial assets have fallen in value. Storebrand Bank utilises both individual and group write-downs on lending. Group write-downs on lending are calculated separately for commercial and retail loans. Changes in the debtors’ ability to pay, collateral/loan-to-asset value ratio and other business-related risk factors can affect the recognised write-downs.
The layouts for the group’s profit and loss account and balance sheet have changed in 2008 in connection with the new insurance act for life insurance coming into force. The act has led to changes with respect to how Storebrand’s consolidated accounts are presented because it is believed that it is appropriate to change the old layouts in order to provide a better presentation of the business results pursuant to the new insurance act. This will comply with IAS 1 no. 27, and the change involves the life insurance company differentiating between customer portfolios and the company portfolio. The number of lines in both the profit and loss account and balance sheet has increased since there are separate lines for the customer portfolio. Also see note 4 for a more detailed description of the new insurance act.
The transition to the new insurance act has resulted in significant changes in how the profit in the life insurance business has to be distributed between the owner and policyholders. The new life insurance act means that the insurance company’s assets (Storebrand Life Insurance) must be allocated to customer portfolios and a company portfolio. The rules that applied in 2007 entailed no such distribution.
Opening balance 1 January 2008 The allocation of financial assets between customers and the owner is based on section 9-7 of the insurance act, which, among other things, refers to good business practice.
Comparable figures from earlier periods According to IFRS, comparison figures must basically be adapted unless the company considers and documents that this is not practically possible. This follows from both IAS 8 no. 5 and IAS 1 no. 40. The owner’s result from risk, administration, the interest guarantee and return have been totally changed in 2008 compared with previously, cf. the description above. Based on the IFRS rules no adaptation of the comparable figures has been made. Previous official accounts have been used in the interim report for the year as comparison figures. These are shown on their own pages in the report. In the case of the balance sheet, the previous year is included at the end of the financial year with the balance sheet for comparison.
In September 2007, Storebrand Livsforsikring AS and Handelsbanken (Sweden) signed an agreement concerning the acquisition of SPP Livförsäkring AB and its subsidiaries, as well as some other companies directly owned by Handelsbanken (“SPP“). The purchase sum amounted to a total of SEK 16,4 billion , and SEK 265 million in transactions costs were included as part of the cost price of the shares. Storebrand Holding AB, a wholly owned subsidiary of Storebrand Livsforsikring AS, was established in connection with the acquisition of the shares in SPP. It is Storebrand Holding AB that has acquired the shares in SPP. The transaction was conducted on 21 December 2007. It was implemented in the accounts on the basis of SPP’s equity as per 31 December 2007.
A preliminary acquisition analysis was presented in the accounts as per 31 December 2007. A final acquisition analysis has now been conducted and this has been used in the annual accounts as per 31 December 2008, and is presented below. The acquisition analysis has been assessed by both internal and external assessors during 2008.
During the identification of extra value, the estimated market value of the acquired insurance policies was substantially lower than the booked value of the liabilities. The difference between the booked value and the market value represents what is called the value of business in force (VIF) and is calculated on the basis of embedded value calculations. At the time of the acquisition this value represented around NOK 7,7 billion and is included as intangible assets in the balance sheet. In relation to the preliminary acquisition analysis VIF has been adjusted upwards by around NOK 0.5 billion due to the longer lifespans of policyholders in Sweden. A corresponding amount has increased the insurance reserves. Correspondingly VIF has been adjusted downwards by around NOK 0.2 billion due to calculated surplus reserves in risk insurance (sickness reserve). The insurance reserves increased by a net amount of around NOK 0.3 billion.
Identified extra values and shortfalls in value are adjusted for the appropriate deferred tax of around NOK 301 million. It is assumed, with respect to the included VIF, that it is only the result associated with the risk result that will be subject to tax. The taxable proportion of VIF amounts to around 10% of the included VIF.
Storebrand Life Insurance’s liquidity strategy, in line with the regulations, specifies limits and measures for ensuring good liquidity in the customer portfolio . These specify a minimum allocation for assets that can be sold at short notice. Storebrand Life Insurance has money market investments, bonds, equities and other liquid investments that can be liquidated if required.
Storebrand Bank manages its liquidity position on the basis of a minimum liquidity holding, a continuous liquidity gap and long-term funding indicators. The liquidity gap measures liquidity in excess of the minimum requirement over the next 90 days. The minimum requirement takes into account all deposit maturities and an exceptional outflow of customer deposits at 25% annually. Long-term funding indicators are calculated in accordance with the Kredittilsynet’s guidelines, and show the mismatch between expected future inward and outward cash flows.
Storebrand Bank manages its interest rate risk through swap agreements to minimise the effect of a change in interest rates on its deposits and lending. It is Storebrand’s policy to fully hedge currency risks associated with international investments. Currency position limits are set for investment management to ensure effective practical implementation of currency hedging. Currency hedging is mainly carried out through rolling short-term forward foreign exchange contracts, and so-called block hedging is used.
Liquidity risk Liquidity risk is the risk that the company will not be able to meet its payment obligations when they fall due, or that the company will not be able to sell securities at acceptable prices. This risk is limited by part of the assets being invested in listed securities with good liquidity. Liquidity in the interest rate market fell somewhat in 2008.
Credit risk Credit risk is the risk that a counterparty is unable to meet his obligations. Creditworthiness is determined using both internal and external credit checks. Placements in fixed-income securities with a lower rating than “BBB“ require the approval of the Board. The determination is made to avoid having too great a concentration on individual issuers. The group has framework agreements with all counterparties to reduce their risk with respect to outstanding derivative transactions. These regulate how collateral against changes in market values, calculated on a daily basis, should be pledged placed.
Policyholder’s funds incl. accrued profit (excl. conditional bonuses) 3 98,627 95,824 - of which funds with guaranteed return 77,656 65,544
Other revenue from companies other than banking and insurance 186.2 53.1
Deferred tax assets have been written down as a result of uncertainty as to whether future taxable income will be sufficient for all losses carried forward to be used for business in Norway. The primary reason behind this is the exemption method from taxation for share dividends and gains/losses on shares in the EEA area, and it is expected that the group will continued to derive income from such investments in future years. Allowances carried forward date from the years 1998–2003, and must be used within 10 years.
Acquired via mergers, acquisitions, etc 18.7 1.1 8.9 13.8 49.7 92.2 9,717.0
The utility value is computed by applying an after-tax discounting factor between 10 and 11 percent during the period. This is computed with risk-free interest as a basis and added to a premium that reflects the risk in the enterprise. The management have assessed the recyclable amount of goodwill as per 31.12.2008 and concluded that a write-down is not necessary. The management are of the opinion that it is improbable that possible reasonable changes in the key presumptions would bring about a need for a write-down.
NOK million Equipment Vehicles Fixtures & fittings Financial leases Real estate 1 Total
Future lease income through profit and loss account 5.5 16.7 19.2
Present value of the uninsured pension liabilities including employer's NI contributions
Net pension cost recognised in the period including provision for employer's NI contributions
Main assumptions used when calculating net pension liability at 31.12: Storebrand SPP
Financial: Expected return on pension fund assets in the period 6,3% 5,8% 5,0%
Expected annual increase in social security pensions 4,3% 4,3% 3,0% 3,0%
Expected annual increase in pensions in payment 2,0% 1,9% 2,0% 2,0%
of which Deloitte of which other auditorsNOK million Total Norway Sweden Total
The valuation is primarily based on the utility value/return value calculation. Annual revenue and expenses are calculated from forestry and land. The net revenue is capitalised at a rate of 4%.
for investment properties that produced rental income in the period. -178.7 -180.6
Offices (including parking and storage) 11,551.5 11,305.1 1,464 4.3 733,997 99.0
Shopping centres (including parking and storage) 10,571.0 9,504.2 1,401 5.7 441,772 96.7
A further NOK 1.2 billion has been committed for property purchases in 2008, however the assumption of risk and finalisation of the agreements will occur in 2009.
Computation of fair value for properties The company will perform the valuation of the properties itself. The properties are appraised individually by an assumed future net to revenue stream being discounted by an interest rate corresponding to the required return for the individual investment. In the net revenue stream regard has been paid to existing and future income losses in consequence of vacancies, necessary investments and an assessment of future trends in market rents. The required return is based upon expected long/term real interest rates and an individually established risk premium, depending upon the tenancy situation as well as the location and standard of the building. For shopping centres, the value of the properties are computed based upon a market-related yield (direct return in year 1) for the individual property and not a discounted long-term cash flow. In cases where there is an awareness of significant changes in the expected cash flow in subsequent years, such is taken into account in the valuation. In connection with financial market volatility there have been limited transactions in the market and in general the uncertainty in the underlying basis of information that is used in valuations has increased in comparison with 2007. In order to support our own appraisals, external appraisals have also been procured for a representative selection of the company’s properties. The property in Sweden was purchased in December 2008 and the market value has been set to its cost price as per 31.12.2008
NOK million Life Group P&C Group Bank group SB ASA Group
Notes Storebrand Group 28 Net income analysed by class of financial instrument
Net gains/losses on disposal of shares, other equity investments and equity derivatives -2,997.8 3,431.5
Realised losses on loans where provisions have previously been made 79.8 -59.6
Reversals of write-downs of individual loans in the period -18.6 -66.1
NOK million Balance sheet value Fair value Balance sheet value Fair value
Fair value of liabilities is equal to their market value and not their hedging value. The values are theoretically computed in the QRM risk management system. Spreads are 1 used that correspond to the last known sales data from the market.
Securities pledged as collateral are linked to lending access in Norges Bank for which, pursuant to the regulations, the loans must be fully guaranteed with collateral in interest-bearing securities and/or the bank’s deposits in Norges Bank. Storebrand Bank ASA has an F loan for NOK 1.5 billion in Norges Bank as per 31.12.2008.
Guarantees principally concern payment guarantees and contract guarantees. Undrawn credit facilities concern granted and undrawn overdrafts and credit cards, as well as unused facility for credit loans secured by property.
Hedging effectiveness - prospective for hedging contracts at Storebrand Livsforsikring AS 98%
Book value at 31.12.1 Fair value for hedge accounting is calculated on the basis of the original spread, which takes into accounting amortisation, commission income and costs, as well as option 2 costs in connection with structured products.
The effective yield for each security is calculated using the booked value and the observed market price (fair value). The effective yield of securities without observed market prices is calculated on the basis of the fixed interest rate period and classification of the individual security with respect to liquidity and credit risk. Calculated effective yields are weighted to give an average effective yield on the basis of each security’s share of the total interest rate sensitivity.
In December 2008, Storebrand changed its intention to not to hold all instruments included in the hold-to-maturity category to maturity. The entire portfolio was reclassified and included in the category available-for-sale, cf. IAS 39.
Base amount for analysis by currency 17,841.5 155,964.9 173,806.3 4,823.4 583.6 179,213.3 111,592.3
NOK million Nominal value Currency Interest rate Call date and other conditions Book value
Storebrand Bank ASA 168,0 NOK 3 mnth NIBOR + 1.5% 2014 167.0
SPP1 1,000,0 SEK 3 mnth STIBOR + 2.0% Termination 5 yr 885.4
SPP1 600,0 SEK 3 mnth STIBOR + 2.0% Termination 5 yr 531.3
Storebrand Bank ASA 175,0 NOK 3 mnth NIBOR + 0.70% 2010 175.0
Storebrand Bank ASA 100,0 NOK 3 mnth NIBOR + 0.57% 2011 99.9
Storebrand Bank ASA 250,0 NOK 3 mnth NIBOR + 0.58% 2012 249.7
Storebrand Bank ASA 150,0 NOK 3 mnth NIBOR + 1.65% 2012 150.0
Bank debt Storebrand Bank AS 3,064.5 10,707.3 -7,680.0 409.4 7.9 8.0 6,517.1
Total liabilities to financial institutions 7,653.3 12,594.7 -12,286.0 679.7 7.9 27.8 8,677.4
Bank deposits and loans to financial institutions AAA AA A BBB NIG Total
Counterparties Fair value Fair value Fair value Fair value Fair value Fair value
For changes in market risk that arise during the course of 1 year, the effect on the profits and equity will be as presented below, based on the balance sheet as per 31.12.2008: The asset side of Storebrand (excluding SPP) has been stress tested in order to estimate how much this in given situations can affect the owners’ result in relation to the expectations for 2009. The estimates have been applied to the investment portfolio as per 31 December 2008 and the outcome shows the estimated effect on profits for the year as a whole. The stresses that have been applied are equities +/- 20 percent, interest +/-150 basis points and property +/- 12 percent. With respect to currency risks, the investment portfolios are nearly 100 percent currency hedged, and changes in exchanges rates will only affect the expected result for 2009 to a minor extent.
The stresses were applied individually. If several of the negative stress tests were to occur simultaneously, the negative effect would be greater than simply the sum of the two individual effects alone.
Total revenue and costs for the period 20.6 311.1 1,790.7 2,101.8 3.1 2,125.5
Purchase/sale of minority interests -1.1 -1.1 2.9 1.8 449 909 891 shares of NOK 5.1 Includes risk equalisation fund which is undistributable funds of NOK 153 million.2
Storebrand pays particular attention to the active management of the equity in the group. This management is tailored to the business-related financial risk and capital requirements in which the composition of its business areas and their growth will be an important driver for the group’s capital requirements. The goal of the capital management is to ensure an effective capital structure and reserve an appropriate balance between internal goals in relation to regulatory and the rating companies’ requirements. If there is a need for new equity capital, such must be procured by the holding company Storebrand ASA, which is exchange-listed and the core of the group.
For further information on the group’s fulfilment of the capital requirements, see note 26.
Under the item ‹Reserves – life insurance’ it is assumed that NOK 9.6 billion will be paid out as claims or benefits (excl. repurchase and payment) in 2009 by Storebrand Livsforsikring AS and SEK 4.0 billion by SPP. The table below shows the anticipated compensation payments (excl. repurchase and payment). The residual balance after 5 years is equal to the obligations carried on the balance sheet of the accounts.
Adjustment of insurance liabilities from other profit components -2,120.0 74.0 -23.3 -2,069.3 -2,069.3
Also includes premiums for Storebrand Skadeforsikring AS and Storebrand Helseforsikring AS. 1
Also includes claims for Storebrand Skadeforsikring AS and Storebrand Helseforsikring AS.
Result before taxes Norwegian life insurance enterprise 578.4 -97.0 207.5 -249.0 -90.7 349.2
The products with profit sharing are divided up into three different categories with three different profit sharing models.
The administration result The administration result is the difference between the fees charged for the policies to cover the company’s administration costs and the actual administration costs. The fees can be based on the policy’s capital, premium or number. The administration result is for the account of the company.
Insurance risk Most of the company’s lines of insurance include cover for disability through either a disability pension, exemptions from premiums or one-off payments . Individual policies and group life policies also include life cover. Group pension insurance also provides widow or widower’s pensions with payment commencing on the death of the insured.
Risk management – Storebrand Life Insurance Evaluation of insurance risk (underwriting) 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 Storebrand requires declarations of fitness for work. Underwriting also takes into account the company’s industrial category, sector and sickness record.
Control and monitoring of insurance risk Insurance risk is separately monitored for every line of insurance in the current insurance portfolio. The risk result for each product group is broken down into the elements of death, accident and disability. The development of risk result is followed throughout the year. For each type of risk, the ordinary risk result for a period represents the difference between the risk premiums the company has collected for the period and the sum of provisions and payments that must be made for insured events that occur in the period. The risk result takes into account insured events that have not yet been reported but which the company, on the basis of its experience, assumes have occurred.
Reinsurance The company also manages its insurance risk through a variety of reinsurance programs. Through catastrophe reinsurance (excess of loss) the company covers losses (single claims and reserves provision) where a single event causes more than 3 deaths or disability. This cover is also subject to an upper limit. Surplus reinsurance on life policies covers death and disability risk that exceeds the maximum risk amount for own account the company is permitted to carry by its articles of association. The company’s maximum risk amount for own account is relatively high, and the risk reassured is therefore relatively modest. The company’s risk within workmen’s compensation insurance is covered by both quota reinsurance and “excess of loss” cover purchased by the company. In connection with the relaunch of P&C insurance, the company purchased “excess of loss“ cover for unlimited liability for motor insurance and included travel insurance in the catastrophe reinsurance cover.
SPP The company’s risk with respect to savings in life insurance partly comes from investment yield from assets under management and partly from the policyholders’ life and health. The uncertainty surrounding the policyholders’ life and health is called insurance risk and can be divided into the following main categories: • death – payment to the policyholder’s surviving relatives • pension – payment for as long as the policyholder lives • disability – payment in the event of illness or occupational disability
The Swedish Insurance Research Council (FTN), which is a sector organisation, conducted an analysis of mortality in 2006 that makes it possible to look at mortality forecasts that take account of changes in the level of change trends. Such a forecast is crucial when it comes to the setting prices for both life cover and pension insurance. Insurance products are usually designed in such a way that the premium calculation for the entire period of cover is based on mortality/life expectancy at the time the policy was taken out.
Premiums written by the newly established P&C business in 2008 totalled NOK 225 million. Of this, the premium earned was NOK 172 million and the cost of claims in 2008 was NOK 137 million. No premiums were received in respect of the run-off business which is 100 percent reinsured by If.
At end of the policy year 21.3 28.6 79.2 197.1 - four years later 9.7 18.4 - five years later
In addition, the risk exposure arising from travel insurance may increase sharply in the event of possible catastrophes such as the tsunami in South East Asia in 2004. Travel insurance is therefore now also included in the group’s catastrophe reinsurance. We will monitor this portfolio carefully in 2009, and may consider laying off cumulative risk with reinsurers.
Insurance risk The principal source of insurance risk lies in the risk of increasing asbestos-related claims. The company has strived for some considerable time to reduce this risk by entering into commutation agreements with insured parties/cedents, and this has resulted in a significant reduction in exposure to this type of claim.
Trading portfolio investments: - shares and other equity investments 8 74.1 143.9 - bonds and other fixed-income securities 9,11 758.1 1,375.8 - financial derivatives/other financial instruments 10,11 152.5
Halvor Stenstadvold Sigurdur Einarsson Camilla M. Grieg Barbara Rose Milian Thoralfsson Birgitte Nielsen
Interest, commission and fees paid to customers -285.8 -117.5 - shares and other equity investments 4.5 216.5 - bonds and other fixed-income securities 595.1 549.6 - Dividend receipts from the trading portfolio 7.3 8.0
Cash and bank deposits at start of the period 257.7 90.9
Classification and valuation policies Assets and liabilities have been valued in accordance with the general valuation rules of the Accounting Act. Assets intended for permanent ownership and use are classified as fixed assets, while assets and receivables due for payment within one year are classified as current assets. Equivalent policies have been applied to liability items.
Profit and loss account and balance sheet statements Storebrand ASA is a holding company with subsidiaries within insurance, banking and investments. The statement in the Regulations relating to annual accounts, for insurance companies has not been used, and a statement that complies with the Accounting Act has been used.
This treatment can only be applied to income earned by subsidiaries during Storebrand’s ownership. Otherwise, receipts are recognised as equity transactions, and the value of the investment in the subsidiary is reduced by the amount of the group contribution or dividend received.
The effect of changes to the pension scheme is charged to the profit and loss account as incurred, unless the change is conditional on future accrual of pension entitlement. If this is the case, the effect is allocated on a linear basis over the period until the entitlement is fully earned. The employers’ national insurance contributions are included as part of the pension liability, and are included in both the balance sheet value of pension liabilities and in experience adjustments
Financial derivatives Financial derivatives are valued at fair value. Financial derivatives are designated as financial assets or financial liabilities at fair value in the profit and loss account.
Bond loans Bond loans are valued at amortised cost using the effective yield method. The amortised cost includes the transaction costs on the date of issue.
Group contribution booked as equity transaction 1 22.7 03 Personnel expenses
The table shows the percentage asset allocation of pension assets managed by Storebrand Life Insurance at year-end. The book (realised) investment return on assets managed by Storebrand Life Insurance was 2.0% in 2008 and 8.9% in 2007.
Main assumptions used when calculating net pension liability at 31 Dec
Expected return on pension fund assets in the period 6.3% 5.8%
05 Remuneration of the CEO and elected officers of the company
The Board’s Remuneration Committe The Board of Storebrand ASA has had a special Remuneration Committee since 2000. The Remuneration Committee is tasked with providing recommendations to the Board concerning all matters to do with the company’s remuneration of the CEO. The Committee shall remain informed about and suggest guidelines for the fixing of remuneration for senior employees in the group. In addition the Committee is the advisory body for the CEO in relation to remuneration regimes that cover all employees in the Storebrand Group. including Storebrand’s bonus system and pension scheme.
Share programme for employees Like other employees in Storebrand. senior employees have an opportunity to purchase a limited number of shares in Storebrand ASA at a discount in accordance with a shares programme for employees. A lock-in period of one year is practised for this programme.
The balance sheet value of deferred tax assets has been written down. This is because future income from subsidiaries will principally be in the form of dividends rather than 1 taxable group contribution. Unused allowances carried forward arose in the years 1999 - 2003. and must be used within 10 years.
Base figure for allocation by currency 223.8 534.3 758.1 1 375.8
Forward foreign exchange contracts 1.479.8 283.2 1.479.8 139.0 11 Financial risk
Short-term holdings of interest-bearing securities Category of issuer or guarantor NOK million
The figures for 2008 include coupon rate during the period. while the figures for 2007 only include amounts in the balance sheet as per 31 Dec 2007. Storebrand ASA had as per 31 Dec 2008 liquid assets of NOK 1.4 billion.
NOK million Share capital 1 Own shares Share premium Other equity
The consolidated accounts are submitted in accordance with the EU-approved International Financial Reporting Standards (IFRS) and accompanying interpretations, as well as the other Norwegian obligations to disclose that follow from the Accounting Act and must be used as per 31 December 2008. The annual accounts for the parent company are submitted in accordance with the Accounting Act, the Annual Accounts
Regulations for Insurance Companies and Norwegian supplemental requirements in the Securities Trading Act. The Board of Directors’ report for the group and parent company are in compliance with the requirements of the Accounting Act and Norwegian Accounting Standard No. 16 as per 31 December 2008.
• the parent company‘s financial statements are prepared in accordance with law and regulations and give a true and fair view of the financial position of the Company and of the Group as of 31 December 2008, and the results of its operations and its cash flows for the year then ended, in accordance with generally accepted accounting practice in Norway
The Board of Directors’ proposed annual report and the annual accounts, together with the auditor’s report and the Control Committee’s statement have, in the manner required by law, been presented to the Board of Representatives. The Board of Representatives recommends that the
Shareholders Return on equity after tax 24% 15% - 9% 15%
Solvency margin of Storebrand Life Insurance 136% > 150% 160% > 150%
Percentage of tel. calls answered within 20 sec. (customer centre) 73% 80% 66% Dropped
Customer satisfaction – retail customers with personal adviser - - - 66
Prosessing time for complaints 61% within 3 weeks 70% within 3 weeks 59% within 3 weeks 70% within 3 weeks
Employees Percentage of management positions held by women 37% 40% 38% 40%
Employee satisfaction among senior employees Not measured 90% Not measured Dropped
Proportion of employees who believe that Storebrand is a “great place to work” 4
Proportion of employees who understand/are aware of Storebrand ’s corporate responsibility 5
Financial support for organisations and other local measures NOK 3.35 million
Paper consumption 73.2 tonnes Reduce by 10% 89 tonnes Reduce by 10%
Prepared all managed properties for energy marking - - - Analyse
Proportion of paperless customers and customers with direct debit/eBills in Storebrand Skadeforsikring
Storebrand desires to have openness surrounding its work with corporate responsibility and poses requirements for compliance and quality in this work. The goals and the data that have been collected in the corporate responsibility field have hence been reviewed by Deloitte. Such a review increases the credibility of the reporting and the data that is presented. In addition, better security is achieved internally in seeing to it that information that has been collected is being handled in an appropriate, correct and systematic manner.
As part of an overall priority of corporate responsibility, Storebrand ASA has issued non-financial reports on corporate responsibility since 1995.
CO2 emissions may require the application of more specific benchmarks, and changed benchmarks may change the reported CO2 emission significantly.
Equity capital consists of share capital subscribed and accrued earnings. Share capital subscribed is recorded as share capital and share premium reserve. Accrued earnings are recorded as other equity.
Subordinated loan capital is loan capital which ranks after all other debt. Subordinated loan capital forms part of Tier 2 capital in the calculation of capital adequacy.
Eligible primary capital as a percentage of the risk-weighted balance sheet. Individual assets and off-balance sheet items are given a risk weighting based on the estimated credit risk they represent.
Individual life insurance where the insured amount is payable on either the expiry of the insurance period or the death of the insured if earlier. Such insurance can be extended to provide disability pensions or disability insurance.
A group pension insurance scheme where pensions are paid in instalments from an agreed age, during the life of the insured. Such insurance normally includes spouse, child and disability pensions.
( contractually established obligations) of financial assets that are carried at their fair value on the income statement.
Life insurance offering investment choice whereby the customer can influence the level of risk and return by selecting in which funds assets are to be invested.
Reserve for future compensation payments for claims that have been incurred at the end of the accounting year but have not been settled with final effect. The reserve also includes an estimate of the compensation for claims that have been incurred but not yet reported to the company.
An instalment loan is a loan on which the borrower makes regular partial repayments of principal in equal amounts throughout the repayment period. The borrower pays the sum of a fixed instalment amount and a reducing interest amount at each instalment date.
Payments accordingly reduce over the life of the loan assuming a fixed interest rate.
A foreign exchange option confers a right (but not an obligation)
Interest rate futures contracts are related to government bond rates or short-term reference interest rates. Interest rate futures are standardised contracts which are exchange traded and are subject to established clearing arrangements. Profits and losses on futures contracts are recognised daily, and are settled on the following day.
(also known as bond options) confers a right (but not an obligation)
The purchase of share options confers a right (but not an obligation)