10 years in front It is announced that the norwegian key account fund «storebrand Aksje Innland» has beaten the index for the tenth year in a row - Alf Inge Gjerde has managed the fund the entire time.
FEBRUARY Awarded City Prize storebrand is awarded the acclaimed City prize for its new lysaker park head office. Fine architecture, strict environmental requirements and attractive workplaces are among the reasons stated by the jury.
Swan Award nordic ecolabelling awards the swan ecolabel to storebrand as the best purchaser for the second year in a row.
190,000 must make pension choices storebrand launches a wide-ranging campaign providing information to this target audience in connection with the introduction of the new pensions reform on 1 January 2011.
Norway’s best call centre storebrand bank AsA wins the 2010 Customer service Award for the best call centre in banking.
Pension calculator before summer, storebrand becomes the first financial group to launch its pension calculator which allows customers to simulate what their actual pension will be from 62 years.
Delphi Norway’s best delphi’s managers achieve a fantastic 7,192 per cent return over 23 years. delphi is the clear winner among dine penger’s advisers during this period. the share portfolio, which was started with noK 100,000 in 1987, has today grown to noK 7 million!
SEPtEMBER Sustainable company storebrand qualifies for the dow Jones sustainability Index for the 12th year in a row as one of the 10 per cent most sustainable companies in the world.
DECEMBER 10 years as CEO It is 10 years since Idar Kreutzer became the Ceo of storebrand. He was formally appointed to the position on 22 december 2000.
Declaration by the Members of the Board and the CEO 141
Vision Storebrand´s objective is to be the leading and most respected institution in the Nordic market for long-term savings and insurance
Share information (STB) 2010 share price 31.12.2009 (noK) 39.6 share price 31.12.2010 (noK) 43.6
Highest closing price 2010 (noK) 48.3 lowest closing price 2010 (noK) 31.3
number of shares traded 2010 (mill shares) 593 turnover velocity 132%
MCAp 31.12.2010 (noK billion) 19.6 number of ordinary shares (mill shares) 449 lot size 200
Investments in microfinance (noK million) 6 149 149 127 81 56 1 Figures for 2006-2007 have not been translated for the financial statement layouts used from 2008. 2 Defined as managerial position with personnel responsibilities. 3 2005-2009 applies to the previous head office, Filipstad Brygge 1, Oslo. 4 Dow Jones sustainability index includes the top 10 per cent on corporate responsibility in each industry. 5 FTse4Good is an international index for socially responsible companies. 6 storebrand has committed nOK 198 million to microfinance, of which nOK 149 million is invested as of 31.12.2010.
Final price per ordinary share (NOK) 43.65 39.56 16.75 56.70 79.30 7 Calculation based on average number of shares outstanding.
Storebrand can trace its history back to 1767. The company has provided occupational pensions to Norwegian employees since 1917, the same year SPP was established in Sweden. Storebrand Bank ASA opened for business in 1996, and in 2006 the group relaunched its property and casualty insurance business as a service for the retail market and selected segments of the corporate market.
Key figures (NOK million) 2010 2009 number of customers 51,423 40,499 total portfolio premium 467 346 share of p&C policies purchased online 38% 43%
Storebrand Livsforsikring AS is a leading provider of pensions in the Norwegian market and offers a wide range of products within occupational pensions, private pension savings, and life insurance to companies, public sector entities, and private individuals. Storebrand Livsforsikring AS aims to be Norway’s most respected and customer-oriented life insurance company by offering customers the most attractive products, the best advice and the best customer service.
Key figures (NOK million) 2010 2009 pre-tax profit 877 759 net transfers recieved 1,857 82 premium income after reinsurance 15,518 16,073
Assets under management exclusive spp 200,015 190,470 solvency margin 164% 170%
Storebrand Bank ASA aims to establish itself as Norway’s leading direct bank in the retail market, and is also a leading provider of advice, transaction services and financing for corporate customers within commercial property. The bank aims to utilise its position as a leading direct bank to actively recruit new customers to Storebrand and distribute the group’s products to its own customers. Storebrand Bank ASA is among the 10 largest banks in Norway and has NOK 39.4 billion of assets under management.
Assets under management 406,922 351,160 2 owned 50% by Storebrand aSa1 owned by Storebrand Life Insurance
STorebraNd HeaLTH INSuraNCe Increased awareness of health insurance as a means of reducing sick leave
Storebrand is well prepared for unstable markets also in the time ahead.
The keywords are pensions reform and Solvency II. The new occupational pensions act creates great flexibility for employees and a significant need for adaptation for the sector. We are meeting this in a proactive manner by intensifying our customer dialogue, product renewal and improvements to system solutions and settlement processes.
Storebrand has laid a good foundation for meeting the aforementioned changes the sector faces by implementing a number of measures. Reduced capital binding, operational efficiency and a stronger dialogue with Storebrand’s extensive customer base will be keywords for this work in the future. The overall result will be greater income stability and a solid foundation for future value creation.
The combination of income increasing and cost reducing measures resulted in an operational improvement of more than NOK 550 million in 2010. Operations improvements will continue during the coming three year period through simplification, coordination and further streamlining.
It is through the management of our customers’ pension funds and savings that we have the greatest opportunity to affect more sustainable development. Our goal is to combine a good return with a viable environment and society. It is therefore natural that we would support the corporate responsibility principles of the UN
The world is currently consuming the equivalent of 1.3 planets’ worth of natural resources. If we continue like this, we will be consuming the equivalent of around 2.3 planets’ worth of natural resources in 2050. This is not sustainable. Together with
PwC, Alcoa and Syngenta, Storebrand has led a World Business Concil for Sustainable
The final report, “Vision 2050”, was launched in Delhi in February 2010. Storebrand has discussed the implications of this work with other business actors, authorities, academia and non- governmental organisations.
Internally, the work has influenced product and service development, recruitment processes and investments. In the area of investments we have worked proactively to change the general conditions for European life insurance companies in order to, among other things, make investments in infrastructure more attractive. The group will also use its knowledge to become smarter at assessing risks in emerging markets.
Microfinance involves giving poor people access to financial services such as credit, insurance or savings. We have been involved in microfinance since 2005 because we believe it can be profitable for Storebrand and at the same time reduce poverty. These two considerations - profitability and development - must be balanced for microfinance to be
We have engaged both customers and employees through the norwegian Cancer society’s “All-out-effort against Cancer” and “pink Ribbon” campaigns.
our head office is a regular stop on the blood bus’s route and according to the blood bank storebrand is the “country’s most effective blood donor company”. no less than 10 per cent of our employees are blood donors. the average for the population as a whole is 2 per cent. We also participated in Mot’s “Courage to delight” day and courses given by Mot.
For example, we invested in Eye Fund, which lends money to three institutions that run eye clinics in China, Nigeria and
Paraguay. The loans are used to purchase equipment for eye operations. Income from commercial operations enables the clinics to perform i.e. cataract operations on people with low income and help solve a major social problem. You can read more about Storebrand’s responsible investments on the following pages.
In January 2010 the Board adopted new ethics rules for the group, and implementing the rules was a priority during the year. The revision was carried out due to regulatory changes, changed expectations to the financial sector, and a desire for common rules in the group including employees in
SPP. A thorough process resulted in revised ethics rules and guidelines for whistleblowing, events and anti-corruption.
the Global Compact – the un’s corporate responsibility initiative for companies.
the Forest Footprint disclosure (FFd) – an initiative created to help investors identify how companies deal with deforestation.
the World business Council for sustainable development (WbCsd) – an international organisation of business leaders from 200 companies.
Storebrand is one of the pioneers of sustainable investments. We started investing in the most environmentally friendly companies as early as 1995. A dedicated team of eight specialists monitors and analyses companies from around the world. We avoid the worst, and invest more in the best companies. However, the most important contribution we can make is to be an active owner and engage with companies on important issues. For 15 years we have encouraged listed companies to improve in more than 3,000 cases.
We have made demands and asked questions, and we expect environmental management, anti-corruption and human right systems to be in place. Storebrand’s customers can be confident their capital is responsibly invested. Our goal is sustainable development - which is profitable in every way.
Sustainability and corporate responsibility are likely to be two of the most important drivers for industrial and economic growth in the years ahead. Business conditions are changing due to global challenges such as climate change, scarce resources, extreme poverty, epidemics and demographic changes. To deliver a good returns to customers, we have to understand these changes and integrate them into our management systems.
In 2010, we increased the number of companies we monitor and analyse in emerging markets 1, including Brazil, Russia, India, and
Our work on sustainable investments reflects international conventions and guidelines, and spans all asset classes, sectors and geographical regions. The map opposite shows the number of companies excluded from our portfolios (per country in which they are listed) and cases we are working on involving serious alle gations of environmental damage, corruption or breaches of human rights (by country in which the incident took place). The text boxes contain examples of how we work and the results we have achieved.
1 The number of analyses and exclusions in these regions are expected to rise somewhat in 2011 as more analyses are completed.
Controversial weapons * The companies excluded in this category operate in industries in which there is a serious risk of human rights violations, environmental harm and corruption, without addressing this risk.
Mining storebrand believes it is important for the entire financial sector to be proactive in relation to sustainability. this is why we have systematically worked with our external fund managers since 2006. Around 100 externally managed funds are reviewed each quarter. If breaches are discovered, the relevant manager is contacted and encouraged to engage with excluded companies or sell their stake in them.
A proposal was put forward at statoil’s AGM in May 2010 concerning the company withdrawing from tar sand activities. storebrand and spp supported the proposal because we regard this type of activity as fundamentally conflicting with sustainable development.
94 excluded the Abb industrial group was excluded from investments for four years because of serious corruption. the company qualified for investments again in 1Q 2010 after implementing robust anti-corruption systems.
Corruption the analysis and comparison of the performance of companies within environmental management, social responsibility and corporate governance is called “best in Class”. the best companies in each sector are assigned this status and qualify for investments in our best in Class funds. As per 4Q, 72 companies had achieved this distinction.
72 companies Best in Class status storebrand was a founding signatory to the un’s principles for Responsible Investment (unpRI) in 2006. More than 800 institutional investors, equivalent to 10 per cent of global capital markets, have signed up to the principles so far.
Storebrand has provided pension services since 1917, however interest in and knowledge about pensions has never been higher than in recent years. This can also be clearly seen in other places in Europe where financial instability and increased national debt has turned the spotlight on the ability to sustain state pension benefits. Even though the
Nordic region have solid national finances and are experiencing a good recovery after the financial crisis, politicians have modified the pension system to ensure sustainable pension solutions in the future.
The regulatory changes being introduced pave the way for individuals to combine work and pensions, and are intended to motivate employees to stay in work longer. The changes will also result in lower state pensions, more choices and greater complexity.
Besides changes to the general conditions and strong growth, three market trends within the occupational pensions market are particularly important.
2. Occupational pensions are gradually being individualised due to the reduction in benefits in the National Insurance Scheme and a greater opportunity to influence one’s own pension in defined-contribution occupational pensions. This trend is resulting in greater risk and responsibilities for pension savings for each individual.
A life insurance company’s results consist of several different elements. the most important are: Administration result: the difference between the payments the company receives for management of more than noK 314 billion, less the costs associated with this.
Given the changed market conditions, customers’ needs and changes in the Nordic occupational pensions market, a comprehensive strategy process was conducted in autumn 2010. This resulted in well-defined goals and a clear direction for the future. The entire strategy is based on the goal that customers should encounter a unified Storebrand with competent staff who will ensure that important choices are made simpler for the group’s customers.
Nordic occupational pensions Storebrand takes pride in being able to provide good advice and offer good products to our pension customers. We achieve this by systematically collecting, analysing and processing customer and market information. We strive to convert our accumulated insight, competence and experience from our two core markets in Norway and Sweden into increased value for both countries’ customers. Storebrand will meet the changes in the occupational pensions market with enabling solutions for customers and by adapting our business to improve profitability and capital efficiency. Our intention is to ensure that customers will continue to rank Storebrand the Nordic region’s leading occupational pensions provider. This means we need to clarify distinct strategies and value proposals for customers who choose fund-based products and for customers who choose to continue their defined benefits plans.
The individualisation of the occupational pensions market means Storebrand is in contact with individuals in occupational pensions schemes more often, which provides us an opportunity to offer comprehensive personal financial advice. Storebrand wants to be the customer’s preferred alternative in all phases of their life and situations in which they need banking services and insurance and savings products. Developing Storebrand Group’s 1.7 million individual customers will be the main priority of the retail market strategy. Key elements in the retail market strategy will be: • Simplifying and improving all customer interfaces, which will make it easier to be a Storebrand customer.
• Developing the interaction between corporate and retail, increasing customer loyalty among corporate customers and increasing sales to their employees.
In an era of increased demand for flexibility and greater competition, Storebrand places great importance on staying ahead of developments and continuously streamlining its operations.
Facts FInAnCIAl RIsK MAnAGeMent dynamic risk management forms an integral part of the management of products with an interest guarantee. this protects customer buffers and equity. In years with low returns, previously accumulated customer buffers must be used to cover the interest guarantee in the norwegian business. If the customer buffers are inadequate, the com pany’s equity must be used. there is an equivalent mechanism for the swedish business, but in this case the buffers and equity cover any negative difference between the return on assets and the market value of liabilities.
storebrand’s risk management is based on two basic principles: 1. Contracts with different risk bearing capacity have different risk profiles. this gives customers with good risk bearing capacity a high expected return and ensures the protection of the buffer capital and equity in contracts with little risk bearing capacity.
solvency II is a common set of european regulatory requirements for the insurance industry. the regulations will formally come into effect on 1 January 2013.
under solvency II, the size of the capital requirement will be determined by the amount of risk to which the company is exposed. this means market risk, insurance risk, counterparty risk and operational risk.
storebrand supports the solvency II project, which in the opinion of the company is based on healthy risk management principles commensurate with how the company itself assesses and manages risk in its business. storebrand is actively working to adapt to solvency II through internal projects, participation in quantitative studies and an active dialogue with the authorities in norway, sweden and in european bodies.
Business development is monitored closely in Storebrand. This is done through the monthly reporting of both financial and non-financial key figures. The reporting is designed to monitor predefined key figures that are intended to reflect the extent to which goals are attained and provide the Board and management with good information about the extent to which strategies and goals are being followed and achieved.
(All amounts in noK million unless otherwise stated) 2010 2009 2008 2007 2006
Market return customer funds with guarantee 6.1% 4.7% -0.2% - booked return customer funds with guarantee 4.9% 4.7% 2.0% - solidity capital (storebrand life Group) 4 42,710 35,324 35,856 48,041 25,620
solvency margin (storebrand life Group) 5 164% 170% 160% 136% 175%
Life and Pensions Sweden policyholders fund including accrued profit (excl. vÅb) 6 113,029 108,778 98,971 95,824 - - of which funds with guaranteed return 79,569 77,415 77,999 65,544 -
Funds under management for external clients 71,657 56,004 58,445 57,661 54,800
The figures are based on iFrs. 1 The figures for 2006-2007 have not been converted to new layouts used from 2008.
2 (result after tax adjusted for amortisation expenses) / (opening equity - paid-out dividend - half of the shares bought back during the year). 3 sPP’s figures are only started from the moment of aquisition.
5 The figures for 2006 are related to storebrand Livsforsikring As. 6 nordben is not included in the figures before 2009.
In recent years, the company has systematically worked to change its earnings profile such that value is created less dependent of the development of the financial markets. This work was continued in 2010 through a programme for improving operations that set targets for all business areas. The programme includes both income and cost measures, which are reported on an ongoing basis. The operational improvement target for 2010 was NOK 550 million. This was achieved and surpassed with the improvements amounting to NOK 588 million.
Group have helped to reduce costs. Measures were also implemented to increase income through price adjustments, and customer funds and capital under management developed positively due to good markets.
When the Swedish company SPP was acquired in 2007, concrete annual synergy goals that would be realised by year-end 2010 were defined and communicated. The implementation process has proceeded well and when the interim result for 1Q 2010 was presented the reported annual synergies amounted to NOK 535 million, well above the target of NOK 400 million communicated at the time of acquisition. Further synergies will continue to be realised as potential is uncovered.
Norwegian and Swedish life and pensions businesses. This is intended to ensure good, comprehensive customer service.
However, the year ended with a strong upturn in equities and a relatively flat interest rate market compared with the start of the year.
Storebrand’s systems for risk management have coped well with the fluctuations in the financial markets and contributed to a competitive return for customers as well as owners.
55 years Chairman of the Board Storebrand ASA since 2009 1984 MBA INSEAD, France • 1979 M. Sc. University of Science and Technology, Trondheim (NTNU)
Positions of trust: 2010-, Chairman of the Board Hafslund ASA • 2010,- Chairman of the Board Aschehoug • 2010-, Chairman of the Board bMenu A/S • 2010,- Chairman of the Board Statoil Fuel & Retail ASA • 2010-, Board Member Kristian Gerhard Jebsens stiftelse • 2010-, Chairman of the Board Magnus & Co A/S • 2002-, Board Member Kristian Gerhard Jebsens Skibsrederi AS
Positions of trust: 2008-, Board Member Finansiel Stabilitet AS • 2006-, Board Member Novenco AS • 2006-, Board Member Arkil AS • 2005–, Board Member Buy-Aid
Status as per return on equity (after tax) 1 15% 10.8%
1 (Result after tax adjusted for amortisation costs) / (opening equity - dividend paid - half of bought back shares during the year). From 2012.
The operational targets shown administration result in the life and pensions businesses and costs/income for asset management and bank activities no longer apply from and including 2011. These will be replaced by a new operational target for the “Result before profit sharing and lending losses”. The “Result before profit sharing and lending losses” shall exceed NOK 2.5 billion by year-end 2013. The new operational targets result in a clear correlation between the
The new financial targets approved by the Board are as follows: Financial targets
Annual dividend payout ratio 1: >35% Solvency (I) Life Group: >150%
The Board places great importance on ensuring the Group proactively adapts to the challenges and opportunities changes in external conditions present. The most important activity in 2010 was preparing for the introduction of the Norwegian pensions reform and Solvency II.
common denominator is that total pension payments are directly linked to how long individuals stay in work. This principle has also been applied to private occupational pension schemes. Therefore,
The proposed amendments to the act relating to company pensions, defined contribution pensions, mandatory occupational pensions and individual pension schemes were submitted by the Ministry of Finance on 22 October 2010. The proposal was thereafter considered and adopted by the Norwegian Parliament in the middle of December 2010. New regulations apply from 1 January 2011 and contain the necessary adjustments for the new National Insurance
The pensions reform project delivered solutions in 2010 pursuant to the goals and plans for the year, as well as the statutory requirements as per 1 January 2011.
Sweden, and the EU to ensure the most appropriate formulation of the final regulations. The plan is for the Solvency II regulations to become law on 1 January 2013.
The Solvency II regulations are based on three pillars. Pillar 1 stipulates rules for capital adequacy, pillar 2 regulates the supervisory process and stipulates requirements for business management, and pillar 3 defines what should be reported to the supervisory authorities and the market.
The Storebrand Group produces its consolidated financial statements in accordance with the EU approved International
Financial Reporting Standards (IFRS). The financial statements of the parent company, Storebrand ASA, are prepared pursuant to Norwegian accounting law. IFRS is not applied to the parent company‘s financial statements. The Storebrand Group‘s group result prior to amortisation and write-downs was NOK 1,608 million for 2010 compared to NOK 1,245 million for 2009. After amortisation and write-downs the group result was NOK 1,217 million compared to NOK 855 million for 2009.
Previous positions: 1997-2006 Member of Orkla’s executive management • 1988-2006 various management positions within Orkla’s industrial activities and corporate staff functions • 1979-1988 Senior VP Christiania Bank • 1981-1984 Deputy Government Minister
Positions of trust: 2008-, Chairman of the Board, Norwegian Microfinance Initiative (NMI) • 2008-, Board Member Navamedic ASA • 2002–, Board Member Statkraft SF and Statskraft AS
Livsforsikring AS which offers a wide range of products within occupational pensions, private pension savings, and life insurance to companies, public sector entities, and private individuals.
Administration result 19 -169 risk result 212 229 profit from risk and interest rate guarantee 557 478
The result allocated to owners in Life and Pensions Norway amounted to NOK 877 million for 2010. This is an increase compared to the year before and was driven by a good booked return, improved administration results and volume growth. Good returns produced a satisfactory financial result allocated to owners and NOK 7.1 billion in total allocations to customers, of which NOK
The total administration result improved by NOK 209 million in 2010 compared with the year before, of which the owners‘ share amounted to NOK 188 million. A number of cost rationalisation measures involving staffing reductions, offshoring, and lower purchasing costs were implemented in 2010. On the income side, the underlying growth within defined contribution pensions is good. The development of the volume is also having a positive effect on income within unit-linked.
The risk result amounted to NOK 212 million, a reduction of NOK 17 million compared with 2009. The result was affected by an increase in reserves in line with the new model for incurred but not reported claims (IBNR) and for reported but not settled claims (RBNS). The disability result and long life result improved compared with the year before.
The risk equalisation fund amounted to NOK 287 million as per 31
The market return was good due to: • the positive development of equity markets in the second half of the year after weak development in the first half of the year
• the level of activity in the real estate market rose slightly in 2010 and the number of transactions has been climbing
Unrealised gains increased during the year by NOK 2.0 billion, which was also the balance at year-end 2010. Excess value on loans and receivables increased by NOK 0.6 billion due to falls in interest rates and amounted to NOK 0.7 billion at year-end 2010. The value of the real estate portfolio increased by NOK 182 million in excess of the current return during the year. The valuation of the real estate portfolio is supported by a broad range of external valuations.
In 2009, the result was NOK 90 million: minus NOK 21 million from individual endowment insurance and individual pensions and NOK
There is a need to build up reserves for individual pension insurance and paid-up policies due to assumptions concerning lower mortality in the future. NOK 423 million was allocated to building up reserves in 2010. At year-end 2010, the amount by which the reserves still need to be built up was calculated at around NOK 520 million: around NOK 430 million for individual pension insurance and around NOK 90 million for paid-up policies. The plan is to complete the build up of the reserves by the end of 2012. This build up of reserves can be covered by positive booked return results, but if the booked return for the individual portfolio is higher than 5.8 per cent this could result in profit sharing for the owner.
NOK 130 million per quarter for the next 12 months. Total interestbearing liabilities amounted to NOK 6.6 billion at year-end 2010.
The increase was due to volume growth and price changes for insurance contracts with reduced buffers.
Positions of trust: 2009-, Chairman of the Board Lindorff Decision AS • 2009-, Chairman of the Board Match AS • 2008-, Chairman of the Board Lindorff Norge AS • 2008-, Chairman of the Board Lindorff A/S
The group customers‘ investments were placed in three different investment profiles depending on available buffer capital. An aggressive profile had a 25 per cent proportion of equities at year-end 2010, a balanced profile 18 per cent, and a careful profile 9 per cent. At year-end 2009, the proportions of equities in the three profiles were 20 per cent, 12 per cent and 8 per cent, respectively.
Previous positions: 1998-2004 SVP Group Finance Statoil ASA • 1985-1998 Various positions in DnB ASA: Head of Oil & Gas Business Unit, Head of Industry Section Corporate Division, Head of Industry & International Financial Institutions Section Corporate Division, General Manager Singapore Branch with responsibility for DnB Group’s activities in ASEAN
Positions of trust: 2010-, Board Member Norsk Industri • 2010-, Board Member Statoil Fuel & Retail ASA
Previous positions: 2001–2008 CEO IKANO Bank Se • 1987–2000 Bank Director DnB ASA • 1986–1987 Financial Services Officer, Bank of America
2010). The occupational pensions market is characterised by heavy competition and changes associated with the Norwegian pensions reform. Storebrand has prioritised laying the ground work for good information provision with regard to the changes that will take effect in 2011 and we continue to work on solutions that are expected to be put in place from 2013.
The vast majority of our customers in the public sector, which has seen strong price competition in recent years, have chosen to continue their customer relationships in Storebrand. Three of our existing local authorities have chosen to move. Storebrand is working on strengthening its position within the public sector and sees a number of exciting opportunities for growth in the future.
Storebrand has experienced somewhat lower new sales in the retail market in recent years. However, we are succeeding well with sales to employees of our corporate customers and are actively working on refining the concepts within this area as an important part of our overall strategy in the retail market.
The net booked transfer balance amounted to a net inflow to
Storebrand of NOK 1,857 million in 2010 compared to NOK 82 million in 2009. Net sales of guarantee accounts in the retail market totalled NOK 1.5 billion in 2010 compared to NOK 1.7 billion in 2009. The level of sales of other unit linked contracts was low.
Total new premiums (APE) worth NOK 1,476 million were signed in 2010 compared to NOK 1,209 million in 2009. The increase since 2009 is primarily due to the increased APE for group defined benefit pensions. The company won a number of large tender competitions towards year-end 2009 and reserves for these have been transferred which resulted in increased APE in 2010.
The returns in the pension portfolios were good in 2010. After falling in 2Q, the equity markets rebounded strongly in 3Q
The administration result in SPP was NOK 84 million compared to minus NOK 101 million for 2009. The improvement is principally due to the effects of the streamlining and restructuring programme implemented in 2009. This resulted in substantially lower costs in 2010. At the same time administration income increased due to an increase in assets under management. In addition to this a larger proportion of the business comes from unit linked insurance, which is more profitable than traditional products.
The financial result amounted to NOK 31 million for 2010 compared to NOK 260 million for 2009. The year was characterised by strong returns in the equity markets at the beginning and end of the year, while the spring saw unstable markets and instability in the
European interest rate markets. In total this resulted in the financial result ending the year weakly positive.
The good total return on assets in the investment portfolios resulted in profit sharing totalling NOK 174 million in 2010 compared to NOK 160 million in 2009. A strong return on equities and alternative investments resulted in profit sharing in two of the three guaranteed defined contribution pension portfolios. The consolidation for the defined benefit pension portfolio did not exceed 107 per cent in 3Q, which is the condition for adjusting it upwards by the consumer price index and an expense for SPP.
The total recovery of capital reserved against equity to cover undercapitalised pension contracts, so-called deferred capital contribution, amounted to NOK 100 million.
SPP also has a hedging portfolio to protect equity against powerful market fluctuations. The hedging portfolio was increased in the second and third quarter to protect the company against further falls in the equity markets. Since the equity markets improved in the autumn the exposure in the hedging portfolio has been reduced. The hedging portfolio ended up at minus NOK 262 million and depressed the financial result.
SPP adjusts its exposure to equities in line with developments in the market via so-called dynamic risk management. SPP has divided customer assets into four portfolios according to guarantee level.
The exposure to equities in the customer portfolios increased slightly in three of these during the year, while the portfolio with the highest guarantee level slightly reduced its equity exposure.
48 years Senior Union Representative for Employees in Storebrand Employee Representative Board Member Storebrand ASA since 2007
59 years CEO & Deputy CEO SAS Group Board Member Storebrand ASA since 2009 1975 Cand. Merc. Copenhagen Business School
Previous positions: 1998-2002 EVP Group 4 Falck AS • 1996-998 EVP SAS Technical Division • 1994-1996 EVP ISS Scandinavia AS • 1990-1994 CEO SAS Data A/S • 1985-1990 EVP Top Danmark
Climbing market interest rates resulted in the SPP Group‘s solvency margin rising strongly towards the end of the year and at year-end 2010 it was 199 per cent.
Sales shifted to some extent from guaranteed products to unit linked insurance in 2010. Premiums for guaranteed products fell by 14 per cent, while unit linked insurance increased by 12 per cent. In autumn 2010, a new payment solution was introduced in unit linked insurance. The result of this is that contracts that were previously
Total new contracts increased by 11 per cent from NOK 919 million to NOK 1,021 million. The increase was primarily due to positive growth within unit linked insurance. Unit linked insurance accounted for 67 per cent of total new contracts. The sales organisation was strengthened in the autumn with more sales staff and greater efficiency. This is expected to have a positive effect on sales.
The asset management business‘ result before amortisation amounted to NOK 333 million for 2010 compared to NOK 240 million for 2009. The result consists of NOK 164 million from
NOK million 2010 2009 operating income 618 586 operating costs -422 -429
54 years Special Adviser Storebrand Livsforsikring AS Employee Representative Board Member Storebrand ASA since 2006
Positions of trust: 2007-, Chairman of the Board Housing Foundation Youth Housing in Asker • 2007,- Board Member Asker and Bærum Housing Cooperative • 2007-, Member Council for Banking, Insurance and Finance Studies • 2002-, Manager Project Board for Authorisation of Insurance Advisors, Finance Norway (FNO)
Storebrand Kapitalforvaltning AS also offers active management to a broad group of larger investors. In consultation with the customer it designs bespoke investment strategies suited to the customer‘s financial goals, investment horizon, and risk profile.
The Storebrand-Group sets strict corporate responsibility criteria for the management of the customers‘ capital. We believe it is important we utilise the influence our ownership affords us to promote sustainable development, and are one of a few European asset managers with a dedicated team of professionals in this area. More than 4,500 companies around the world are monitored and analysed, and Storebrand is an active owner. The company is in contact with several hundred companies each year. In cases where the risk is deemed unacceptable, the company is excluded from investments. However, Storebrand is always trying to encourage improvements. As per 31 December 2010, 94 companies were excluded for participation in breaches of human rights, corruption, or serious environmental harm, the production of landmines, cluster munitions, or nuclear weapons, or sales of tobacco.
As per 31 December 2010, 72 companies had attained “Best in
The absolute return was very good in 2010, especially for equities.
Two of our three internally managed hedge funds achieved returns better than their benchmark indices. Long/Short Europe achieved outperformance of 12.6 per cent and Long/Short Energi 1.3 per cent, while AGFIX experienced under-performance of 1.7 per cent.
Storebrand Kapitalforvaltning AS also offers fund-in-fund hedge funds. The return for Storebrand Multi Strategy was 6.5 per cent in 2010, while Storebrand Selecta produced a return of 5.5 per cent.
Private equity management has a long-term goal of a 4 percentage point better return than international equity markets. The return on private equity management was 17.7 per cent for the full year, which produced outperformance of 10 per cent measured against
In the retail market, Storebrand Bank is a no fees, direct bank which offers a broad range of banking services to the retail market.
Storebrand Bank delivered substantially better results for 2010 in a number of key areas compared with the two preceding years.
Result before losses 186 144 losses on lending/investment properties -29 -81
Net interest income in the banking group amounted to NOK 457 million compared to NOK 423 million in 2008. Net interest income as a percentage of average total assets was 1.10 per cent in 2010 compared to 0.95 per cent in 2009. The increase in net interest income in 2010 was primarily due to better deposit margins and reduced borrowing costs.
NOK 101 million for 2009 compared to NOK 148 million for 2009.
Eiendom AS and Hadrian Utvikling AS is included in other income.
Storebrand Bank Group were reduced from NOK 107 million in 2009 to NOK 84 million at year-end 2010. This was due to positive risk migration in the bank‘s lending portfolios.
The bank group‘s retail market portfolio represents 65 per cent of the bank‘s total lending and primarily comprises low risk
mortgages. The average weighted loan-to-collateral value ratio is around 54 per cent. Corporate market lending amounted to 35 per cent of the portfolio, of which approximately 80 per cent consists of lending to income generating property and 20 per cent lending to development projects. The bank has established syndication agreements with Storebrand Livsforsikring AS for good commercial property mortgages. Lending to income generating property is secured by lease properties, which at a portfolio level are characterised by a well diversified tenant profile and longterm leases. Few customers‘ commitments are non-performing or loss-exposed, and the level of losses in the portfolio is low.
The bank again prioritised growing deposits rather than lending in 2010, and at the end of the year had a deposit-to-loan ratio of 55 per cent compared to 51 per cent at year-end 2009.
Storebrand Bank ASA renegotiated its drawing facilities in autumn 2010. Previous drawing facilities amounting to EUR 220 million were replaced with a drawing facility of NOK 750 million and a term loan of NOK 500 million.
At year-end 2010, the Storebrand Bank Group had net primary capital amounting to NOK 2.8 billion compared to NOK 2.9 billion at year-end 2009. This represents a capital adequacy of 13.0 per cent compared to 13.5 per cent at year-end 2009. The core (tier 1) capital ratio was 10.6 per cent compared to 10.4 per cent at year-end 2009.
Our ambition in the retail market is to establish the bank as
The bank‘s role in the Storebrand Group in relation to the retail market was clarified during 2010 and the bank will deliver customer growth and cross-sales of the Group‘s products to its own customer base. In 2010, the bank‘s sales of P&C insurance increased by 345 per cent compared to 2009. The bank has thus become an important sales channel for Storebrand‘s P&C insurance products.
market, via cost-effective distribution and customer friendly online solutions. Storebrand Helseforsikring AS offers treatment insurance in the Norwegian and Swedish corporate and retail markets.
Reinsurance Company AS was merged with the P&C company in 4Q 2010. During 2010, Storebrand Skadeforsikring AS wound up fronting liability for risk associated with contracts taken out before
the transfer of P&C business to If in 2000, with the exception of a very limited portfolio which continues to run as 100 per cent reinsured by If.
Operating result before amortisation Storebrand Skadeforsikring AS -22 -45 oslo reinsurance Company As (run-off) 3 -6
Result Storebrand P&C Group before amortisation -21 -55 result storebrand Health before amortisation 28 6
NOK 45 million in 2009. The result reflects the extraordinarily high frequency of frost and water damage within building insurance due to the winter cold period, while other product areas were in line with expectations. The P&C business resulted in a positive result contribution in the last three quarters totalling NOK 14 million. Storebrand
NOK 21 million compared to NOK 55 million the year before.
The combined ratio finished the year at 110 per cent compared to 121 per cent for 2009.
NOK 155 million in 2009, and the claims ratio was 56 per cent. The claims ratio was 59 per cent in 2009. The costs ratio was reduced during the year by 8 percentage points compared to the year before, which reflects the company‘s increased cost-effectiveness.
Storebrand Health Insurance had more than 80,800 customers at year-end 2010 and greater attention is being paid to health insurance. Companies that actively focus on reducing sick leave use health insurance, among other things, as one of a number of means of achieving their goals. Customer satisfaction surveys relating to claims settlements show that Storebrand Health Insurance has very satisfied customers and confirm the high quality of deliveries to the customer. The company will continue to focus on profitable growth in 2011.
Storebrand ASA‘s official financial statements, which are prepared pursuant to Norwegian accounting law, show a pre-tax profit of
1,158 million, an increase of NOK 323 million compared to 2009.
Total applications 502 568 1 Includes write-downs on equity in Storebrand Bank ASA with NOK 425 million in 2010.
The continuous monitoring and active management of risk is a core area of the Group‘s activities. Managing operational risk forms are an integral part of management responsibility. The executive management team annually assesses risk which results in a risk summary and improvement measures. The risk assessment is presented to and considered by the Board.
Today these savings products have an average annual guaranteed return of just over 3.5 per cent. The average guaranteed interest rate is expected to fall in future years. From 2012 all new earnings will be subject to annual guarantee of 2.5 per cent. The life insurance company’s financial risk principally relates to its ability to meet the guaranteed return, which for the majority of the products applies for one year at a time. This places particular demands on how the capital is invested and how the risk is managed.
Both the Norwegian and international equity markets made positive return contributions in 2010. Market interest rates fell quite a lot in both Norway and internationally in the first half of the year, but rallied strongly after the summer. Long interest rates in Norway were at around the same level at year-end 2010 as they were at the start of the year. Assets invested in credit bonds and real estate produced returns in line with expectations.
Relatively high interest rate levels are preferable for the Norwegian life companies since this means guaranteed returns can be achieved more easily. The company has invested a proportion of the financial assets in bonds in the loans and receivables category. These bonds are not recognised at current market value, but will provide a steady current booked return substantially above the guaranteed interest rate from coupon payments. Loans and receivables help to reduce sensitivity to interest rate changes.
Operational risk refers to the risk of direct or indirect losses due to inadequate or failing internal processes or systems, human error or external events. Clear routines, clear descriptions of responsibilities and documented mandates have been put in place to try and reduce operational risk. Risks are monitored via the executive management team‘s quarterly risk reviews which document risks and measures, as well as the line management‘s continuous reporting, registration and follow-up of events. In addition to this comes the internal audit function‘s independent control via Board approved audit projects.
A net deferred capital contribution can also arise for some customers in SPP if the accumulated return on assets is lower than the size of the insurance liabilities. The company makes provisions in the financial statements to meet this and continuously monitors risk using tools such as Value at Risk measurements. A net deferred capital contribution can be reversed by a good return on a portfolio and/or increased market interest rates. SPP‘s risk management and investment strategy are designed and optimised for these regulations. The company‘s investment strategy sets limits for allocations to risky assets with the relevant continuous risk management. The risk management involves making adjustments to asset allocations in both the customer portfolio and the company portfolio. This can be done by changing allocations to risky assets or through the use of derivatives. Liquidity risk is managed by parts of the company‘s financial investments being invested in listed securities with good liquidity.
• Solvency margin SPP Group 1 After proforma group contribution 2 Before group contribution
The credit risk in the company is regarded as low. A large proportion of the income comes from other group companies and fees are drawn directly from the customer portfolio for a large proportion of other customers. The company experienced very few losses on receivables. The company‘s excess liquidity is invested in
Norwegian government paper and this is not deemed to present any credit risk.
The asset management business‘ direct exposure to market risk is very limited since the company’s investments in securities are limited to investing surplus liquidity. The company‘s own investments are in Norwegian government paper and the company is exposed to market risk associated with this. However, indirectly the company‘s results are affected by developments in the securities markets, primarily through fees being linked to the market value of assets under management. Furthermore, a weak return can affect the customers‘ capacity and willingness to take risks through actively managed mandates, as well as affect the customers‘ asset composition which in turn can result in a shift from products with high margins to products with lower margins.
Operational risk in the management business refers to the risk of direct or indirect losses due to inadequate or failing internal processes, control routines, personal competence, or systems. The most common types of operational risk are errors that arise in the trading and settlement process, incorrect pricing, breaches of investment mandates, incorrect reporting, and errors in core systems.
The company is exposed to compliance risk linked to complying with the law and regulations. The company pays particular attention to risks associated with amendments to relevant legislation.
Eiendoms kreditt AS are credit risk and liquidity risk. The bank group is also exposed to market risk and operational risk.
The quality of the credit portfolio in the corporate market is considered good. At year-end 2010, the portfolio consists of approximately 80 per cent lending to income generating property and 20 per cent lending to development projects. The greatest risk in the portfolio is considered to be associated with loans to development properties.
The credit risk improved throughout the year due to new, low risk projects coming in, and the fact that existing commitments have developed positively. The concentration risk linked to large commitments in the corporate market has decreased in the last few years.
At year-end 2010, the Storebrand Bank Group had a core (tier 1)
In 2000, all the land-based Norwegian P&C insurance and all direct marine insurance in Storebrand Skadeforsikring AS was transferred to If through a 100 per cent reinsurance arrangement. Fronting liability was almost wound up during the year and the risk has been substantially reduced.
One of the most important drivers behind insurance risk in the health insurance business is the development of P&C inflation, i.e. the increase in P&C payments per insurance event. One of the important risk reducing measures Storebrand Helseforsikring AS is actively working on is agreements with treatment providers and partners.
When a claim first arises special reassurance agreements have been signed to reduce the insurance risk and scope of the claim.
The Storebrand-Group pays particular attention to the active management of equity and loans 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 preserve an appropriate balance between internal goals and regulatory requirements. The Group‘s goals are to achieve a solvency margin in life and pensions of more than 150 per cent and core (tier 1) capital ratio in the bank of more than 10 per cent over time. In addition, Storebrand Livsforsikring
Storebrand ASA has only one class of share. All shares have equal rights and are freely negotiable.
December 2010. The authorities‘ capital adequacy requirement is 8 per cent.
The Group‘s capital base, which consists of equity and subordinated loan capital, as well as the market value adjustment reserve, additional statutory reserves, conditional bonus, and other solvency capital in life and pensions, amounted to NOK 44.9 billion as per 31 December 2010 compared to NOK 38.4 billion at year-end 2009.
Storebrand Livsforsikring AS A3 (S) A- (S) P = positive outlook
Storebrand Boligkreditt AS Aaa na N = negative outlook corporate reSpoNSiBiLity
The Storebrand-Groups‘ corporate responsibility goals are intended to create business opportunities that simultaneously involve an improvement in social problems. The Group‘s ambition is to be a corporate responsibility leader in the Nordic region and a world leader within sustainable investments. Storebrand has worked systematically for 15 years to achieve the position the Group holds today. The work is anchored in the Group‘s vision, core values and corporate principles, and measures intended to achieve the goals one finds in the scorecards and actions plans for all administration and business units.
In order to ensure the ethics work has the desired effects, a special ethics indicator was produced consisting of four components: • The proportion of employees who have taken the e-learning course in ethics.
The results from the ethics indicator were incorporated into the scorecards of the CEO, executive vice presidents and Group, and were reported to the Board every quarter.
These efforts allow us as a pensions provider to help ensure that employees‘ health improves, we have a greater presence, fewer become disabled and more employees can stay in work longer. This is profitable for all parties. Our corporate customers get motivated, healthy employees, the employees stay healthy, Storebrand achieves a better risk result, and society avoids the extra costs associated with illness and disability.
These measures benefit society. The analyses also show the environmental measures are producing a positive present value for the company.
The Group can impact the environment via the properties we administer ourselves or which are administered by others. The
The Group qualified for the Dow Jones Sustainability Index, the leading global sustainability index, for the 12th time in a row. Only the top 10 per cent in the world within their industry qualify. The
Storebrand has been involved in various international groups working for more sustainable development in business through its corporate responsibility work. Storebrand is active in and supports the work of the World Business Council for Sustainable Development, the UNEP Finance Initiative and the UN‘s Global Compact.
At year-end 2010, the group had 2,206 employees, compared to 2,280 at the start of the year. Of these, 52 per cent were women.
The average age is 42 years and the average length of service is 10 years.
Systematic work in the area of diversity is important for attracting, retaining and developing qualified, motivated and adaptable employees. As a key actor in society the Storebrand-Group has a social responsibility to its employees and the market in which the
Group operates. Storebrand is fully committed to increasing the number of women in senior positions. 50 per cent of the members of the Board of Storebrand ASA are women, as are 20 per cent of the Group‘s executive management team. At year-end 38 per cent of those with management responsibilities in the Group were women.
flexible solutions for employees, including the right to 15 days off in lieu, flexible working hours within the Group‘s core hours, and the majority of employees having a portable PC. Employees receive their full pay if they, their children or their parents are sick and during pregnancy. Salary statistics are produced for specified levels and types of position in order to facilitate comparisons of salaries between male and female employees.
In 2010, 38 employees over the retirement age of 65 were in work, compared to 35 in 2009. There are no employees over the age of 65 in SPP. In Norway, we hired 9 new people over the age of 45.
Health and satisfaction were high on the agenda in the Storebrand-
No injuries to people, property damage, or accidents of significance were reported in Storebrand in 2010.
The company intensified its focus on skills training in 2010. Most managers and employees are now more aware of learning arenas and their own responsibilities vis-à-vis skills training. Special attention was paid to the fact that an important part of skills training takes place in the daily interactions between managers and employees and between employees. A common e-learning platform has made the training on offer more visible and available than before. This has resulted in more people taking advantage of the varied training the company offers. In addition to this there is an increased focus on training throughout the organisation, both centrally and locally in the units.
development plans in the satisfaction survey (MTI) show a positive trend and more than 16,000 hours were spent on courses/
e- learning in 2010. This highlights the strength of the measures that have been implemented.
In 2011 more standardised processes for identifying, developing and implementing skills training that directly support the
Board is subject to a specific mandate. The Board has established advisory committees on remuneration and internal auditing.
Group’s corporate bodies took place in 2010: The Board of Directors: Heidi Skaaret was elected as a new board member in place of Camilla Grieg. Kirsti Valborgland was elected as an employee representative in place of Erik Haug
Control Committee: An identical control committee for the companies in the Group that have a statutory obligation to have a control committee was elected in 2010. Finn Myhre was elected as the deputy chairman and new member. Tone Reierselmoen was elected as a new member. Ida Hjort Kraby was elected as a new substitute member. Substitute member Erik Naper stepped down from the Controll Comittee.
The Board wishes to thank the retiring members of the Board of
Directories, Board of Representatives and the Controll Committee for their valuable contributions to the Group.
Group from 1 March 2011. The new model is intended to ensure the strength and pace of the implementation of the strategic choices made in 2010. As part of the retail customer efforts, all customer activities will be gathered in the life insurance companies. The expert units for balance sheet management, web development and unit linked insurance will also be merged into nordic units. The changes are intended to ensure more efficient resource utilisation and result in comprehensive customer service which will strengthen
The Norwegian FSA has, due to the development of long interest rates, decided to lower the rates used for calculations, both for new contracts and for new accrued entitlements in existing contracts. The maximum rate for calculations for all new life insurance contracts established after 1 January 2011 will be 2.5 per cent, a reduction of 0.25 percentage points. The maximum rate for calculations for new accrued pension entitlements in existing group interest and pension insurance contracts will be reduced by 0.5 percentage points to 2.5 per cent from 1 January 2012. The reduction in the interest guarantee will result in higher premium payments for customers, but at the same time will provide a basis for higher expected returns in the long-term due to the providers‘
The industry is facing extensive regulatory changes due to the introduction of common European regulations, Solvency II, and the pensions reform in Norway. The Storebrand Group is playing an active part in these processes and is focused on product development and system modifications. During the preparations for the Solvency II regulations, which are expected to be introduced from 2013, The Norwegian FSA has stated that the
Potential changes could include adaptations that facilitate greater risk equalisation and better long-term asset management.
Annika Lundius Knut Dyre Haug Kirsti Valborgland Ann-Mari Gjøstein Idar Kreutzer Chief Executive Officer
Shareholders by number of shares and ownership interest as per 31 December 2010
Share capitaL, riGhtS iSSueS aNd NuMBer of ShareS Shares in Storebrand ASA are quoted on the Oslo Stock Exchange (OSE) with the ticker code STB. Storebrand ASA‘s share capital at the start of 2010 was NOK 2,249.5 million. The company has 449,909,891 shares each with a face value of NOK 5.
As per 31 December 2010, the company owned 3,838,932 of its own shares, equivalent to 0.85 per cent of the total share capital. The company has not issued any options that could dilute share capital.
Share purchaSe arraNGeMeNtS for eMpLoyeeS Every year since 1996, Storebrand ASA has given its employees an opportunity to purchase shares in the company through a share purchase scheme. The purpose of the scheme is to involve employees more closely in the company’s value creation. In June 2010, each employee was given the opportunity to buy between 167 and 877 shares at NOK 36.49 per share. All of SPP’s employees were given the same opportunity. Around 24 per cent of employees participated and purchased a total of 282,948 shares.
As per 31 December 2010, total foreign ownership amounted to 49.7 per cent, compared to 51.5 per cent at year-end 2009.
The Storebrand share produced a total return (including dividend) of plus 10.3 per cent over the course of 2010. The OSE benchmark index (OSEBX) rose by 18.3 per cent in the same period. In the last three years Storebrand has experienced a total return of 62 per cent, while the OSE benchmark index (OSEBX) has experienced a return of 49 per cent in the same period.
Storebrand’s dividend policy shall contribute towards providing shareholders with a competitive return and optimising the company’s capital structure. The dividend to shareholders will normally represent more than 35 per cent of the full-year profit after tax, but before amortisation costs. The Board wishes to have a dividend policy with a long-term horizon, and will aim for stable year-on-year growth in dividend per share. Given developments in the financial markets in recent years, building up financial strength and flexibility has been prioritised. Based on the current dividend policy, satisfactory results and a good financial position, the Board of Storebrand ASA recommends to the annual general meeting that a dividend of NOK 1.10 per share will be paid for 2010.
2011 financial calendar 16 February: Result 4Q 2010 9 March: Embedded Value for 2010
As one of the country’s leading financial institutions, Storebrand is dependent on maintaining an orderly relationship with the financial markets and supervisory authorities.
The company therefore places particular emphasis on ensuring that its routines and guidelines satisfy the formal requirements imposed by the authorities on securities trading. In connection with this, the company has produced internal guidelines on insider trading and own account trading based on current legislation and regulations. The company has its own compliance system to ensure that the guidelines are followed.
Storebrand places great importance on comprehensive and efficient communication with financial markets. Maintaining a continuous dialogue with shareholders, investors and analysts both in Norway and internationally is a high priority. The group has a special investor relations unit responsible for establishing and coordinating contact with analysts, the stock exchange, shareholders, investors and others. All interim reports, press releases and presentations of interim reports are published on Storebrand’s website www.storebrand.no/ir.
each year before the end of June. Shareholders who wish to participate in the general meeting must notify the company no later than 16:00 three business days before the general meeting. Shareholders who do not give notice of attendance before the deadline expires will be able to participate in the general meeting, but not vote.
Storebrand’s corporate values are described by its vision, core values and corporate principles. Together these provide the group with common goals and direction. The vision describes the group’s goals and ambitions. The four core values characterise what Storebrand as a company stands for. The six corporate principles provide guidance and support for the choices employees at all levels in the organisation have to make. Further discussion and clarification of the group’s corporate values can be found on the group’s website www.storebrand.no.
The group’s corporate responsibility guidelines are based on the principles set forth in the UN Global Compact and the UN’s Principles for Responsible Investment.
The group also has its own ethics rules, as well as guidelines for whistle-blowing, social and combating corruption. In 2010, all of our employees took an eLearning course in ethics and participation in dilemma training in their own departments. During the year, the Board of Storebrand ASA and the individual subsidiaries’ boards reviewed the ethics rules and their implementation in the organisation. A special ethics indicator was developed and incorporated into the executive management’s scorecard.
ASA is a financial group and its objective is to manage its equity interests in the group in compliance with the relevant legislation. The group’s main business areas comprises pension and life insurance, asset management, banking and P&C insurance. The full text of the articles of association can be found on the group’s website.
The market is kept informed of its goals and strategies through investor presentations held in connection with interim and annual reports and other specialised presentations, such as the Capital Markets Day whitch is held every second year, most recently on 9 March 2010. You can read more about the company’s goals and main strategies on page 12.
Report of the Board of Directors. The Board has adopted a dividend policy that states that the dividend paid to shareholders will normally amount to more than 35 per cent of the profit for the year after tax, but before amortisation costs. The dividend is set by the annual general meeting (AGM), based on a proposal put forward by the Board.
Storebrand ASA has only one class of shares, and Norwegian legislation does not permit shareholders to accumulate votes from one matter in order to cast additional votes for another matter (cumulative voting). Storebrand has no specific restrictions on the ownership of shares or voting rights in the company other than the restrictions imposed by the Financial Institutions Act. The general competence rules for board members and executive personnel are evident from the Board of Storebrand ASA’s instructions and the group’s ethics rules. Board members must inform the company if they have direct or indirect material interests in an agreement concluded by one of the group’s companies. The Board shall ensure that an independent third party assesses the value of transactions that are not insubstantial in nature. Furthermore, the Board’s instructions stipulate that no board member may participate in discussions or a decision concerning matters that are of such material importance to them or a close associate that the member must be regarded as having a conspicuous personal or financial special interest in the matter. Each board member has a responsibility to continuously assess whether or not such a situation exists. Transactions with close associates involving the group’s employ ees and other officers of the group are regulated by the group’s ethics rules. Employees shall on their own initiative immediately report conflicts of interest that may arise to their immediate superior as soon as they become aware of such a situation.
In general, an employee is defined as disqualified if circumstances exist that could result in others questioning the person’s impartiality in
Corporate Governance 1 The Norwegian Code of Practice for Corporate Governance, issued by the Norwegian Corporate Governance Board (NUES), is available from www.nues.no
For a complete report on shareholder matters, please see page 40.
All shares have equal rights and are freely negotiable. The articles of association do not impose any limitations on the negotiability of
AGM shall be held by the end of June each year. The 2010 AGM was held on 21 April. All shareholders with a known address receive written notice of the AGM by post, which is sent out no later than 21 days before the AGM. The deadline for registration is three working days before the AGM. At the 2010 AGM, the AGM voted to amend the company’s articles of association such that the support ing documents relating to all matters on which a vote will be taken, including the recommendations of the Election Committee concerning proposed candidates for election, will only be made available on the company’s website, unless shareholders ask for them to be sent by post. The new arrangement will apply from the 2011 AGM. All shareholders are entitled to attend general meetings, and arrangements are also made for proxy voting. Individual proxy votes can be attached to each individual item on the agenda. The voting rules for the AGM
allow separate votes for each member of the various bodies. Further information about the exercising of proxies and shareholders’ rights to have matters discussed at the AGM is available in the invitation and on
The AGM makes decisions concerning the following: • The approval of the annual report, financial statements and any dividend proposed by the Board.
• The choice of external auditor and setting of the auditor’s remuneration.
However, pursuant to Norwegian law a special majority is required for certain decisions, including decisions about departing from pre-emptive rights in connection with any share issue, mergers, demergers, and amendments to the articles of association or mandates for increasing or reducing share capital. Such decisions require the agreement of at least two thirds of both the votes cast and the share capital represented at the AGM.
Members are elected for terms of two years. The Control Committee is responsible for ensuring the group conducts its activities in a prudent and proper manner. The Storebrand Group believes a good working partnership with the Control Committee is important. The committee ensures that the group complies with all relevant legislation and regulations, and that it operates in accordance with the articles of association and resolutions passed by the group’s corporate bodies.
Storebrand ASA’s articles of association regulate the company’s nomination committee, called the Election Committee, which has four, or up to five, members. The chairman of the Election Committee and the other members are elected by the AGM. In accordance with the provisions of the articles of association approved by the AGM,
the chairman of the Board of Representatives shall be a permanent member of the Election Committee, if the person concerned has not already been elected by the AGM. An employee representative will also participate as a permanent member in discussions and recommendations concerning the election of the chairman and deputy chairman of the Board of Representatives and the Chairman of the Board, as well as in other contexts where this would be natural pursuant to an invitation from the chairman of the committee. The
Election Committee is independent of the Board and management, and its composition aims to ensure broad representation of shareholders’ interests. The articles of association stipulate that the
Committee should focus on during the preparation of nominations include: competence, experience, capacity, gender, independence and the interests of the community of shareholders. More information about the members is published on the group’s website. The
Election Committee reviews the annual appraisal of the work of the
Representatives, Board, Control Committee and Election Committee, and the remuneration of the members of these bodies. The Election
Committee proposes candidates on the basis of specific criteria and its own instructions. The committee’s members are also members of the election committees of Storebrand Livsforsikring AS, Storebrand Bank
The Election Committee held eight meetings in 2010, and made among other things recommendations for the election of new members of the
Board of Representatives, including the new chairman. It also made recommendations concerning the election of members to the Board and Control Committee. The Election Committee also prepared matters that will be considered in 2011.
The Board of Representatives elects the Board’s members and supervises the management of the company by the Board and CEO. Storebrand
ASA is legally required to have a board of representatives. It has 18 members, 12 of whom are elected by the AGM and six by the group’s employees. Members are each elected for a two-year term such that half the members retire each year. It is a statutory requirement that the members elected by the AGM shall reflect the company’s interested parties, customer structure and its function in society. The company’s share holders are broadly represented through the elections that are held.
Furthermore, the articles of association stipulate that six, or possibly seven board members, shall be elected following the Election Committee ’s recommendations. Three members shall be elected by and from the employees. The day-to-day management is not represented on 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. The backgrounds of the individual board members are described on page 16-25 of the annual report and on the group’s website. The composition of the
Time is set aside in each board meeting to evaluate the meeting without the management present. The Board is entitled to appoint external advisers to help it with its work whenever it deems this necessary. The
Board’s evaluation are made available to the Election Committee, which uses it in its work.
Committee. Both committees consist of two shareholder elected and one employee elected board member. This helps to ensure thorough and independent consideration of matters such as internal control, financial reporting and the remuneration of executive personnel. The committees assist the Board by preparing matters for consideration, but decisions are taken by the entire Board. Both committees are able to hold meetings and consider matters without the involvement of the company’s management.
The Audit Committee assists the Board by reviewing, evaluating and, where necessary, proposing appropriate measures with respect to the group’s overall controls, financial and operational reporting, risk management, and internal and external auditing. The Audit
Storebrand ASA’s Board has drawn up general principles and guidelines for management and control. The principles deal with the Board’s responsibility for determining the group’s risk profile, approving the organisation of the business, assigning areas of responsibility and authority, requirements concerning reporting lines and information, and risk management and internal control requirements. The Board’s and CEO’s areas of responsibility are defined in the instructions for the
As an extension of the general principles and guidelines, ethics rules have been drawn up that apply to all employees and officers of the group, as have corporate rules for areas such as risk management and internal control, financial statements, handling inside information and share trading by primary insiders. Guidelines and information about information security, contingency plans and financial criminality have also been drawn up. In addition to its own supervisory bodies and external auditor, the group is subject to statutory supervision by The
Storebrand’s interested parties. The system is based on a balanced scorecard which reflects both short-term and long-term value creation in the group.
The group’s strategy development is anchored in the Board via an annual strategy meeting and as a permanent item on the Board’s agenda. The Board’s guidelines for the business areas’ annual planning process are summarised in the form of challenge notes to business managers. The final product is a Board approved three-year plan for the group with goals and an action plan, financial forecasts and budgets, as well as a comprehensive assessment of the risk picture for the period covered by the plan.
Risk assessments form part of the managerial responsibilities in the organisation. The purpose is to identify, assess and manage risks that can hamper a unit’s ability to achieve its goals. Developments in the financial markets are important risk factors in relation to the group’s result and solvency position. In addition to assessing the effects of sudden shifts in the equity markets or interest rates (stress tests), scenario analysis are used to estimate the effect of various sequences
The group’s CFO is responsible for the group’s control functions for risk management and internal control. Given the importance of financial market risk in relation to the group’s activities, a central risk management function has been established. This has been tasked with supporting the Board and group’s executive management team in drawing up a risk strategy and operationalising the setting of limits and risk monitoring across the group’s activities. A corporate control function has also been established which is tasked with administering the value-based management system, coordinating planning and budget processes, the management’s risk assessments and internal control reporting, as well as Board and management reporting.
The group has a common internal audit function which carries out an independent review of the robustness of the management model.
Board pursuant to current legislation, regulations and international standards. The internal audit function produces quarterly reports for the boards of the group’s companies.
The guidelines for the continuous management reporting in Storebrand are drawn up in the strategy and planning process which stipulates goals and action plans. Storebrand Compass is the company’s monitoring tool and provides comprehensive reports for management and the Board concerning financial and operational targets for the results, risks and solvency.
The appraisal of Storebrand employees forms an integral part of the value-based management system, and is designed to ensure that the group’s strategies are implemented. The principles for earning and paying bonuses to the group’s risk managers comply with the regulations relating to remuneration in financial institutions. Employees performing control functions within risk management, internal control and compliance will only receive fixed salaries from 2011.
Storebrand’s consolidated financial statements are prepared by the consolidated financial statements unit, which reports to the group’s
CFO. Key executives in the consolidated financial statements unit receive a fixed annual remuneration that is not affected by the group’s accounting results. The work involved in the preparation of the financial statements is organised in such a way that the consolidated financial statements unit does not carry out valuations of investment assets. Instead it exercises a control function in relation to the accounting processes of the group’s companies.
A series of risk assessment and control measures have been established in connection with the preparation of financial statements.
Otherwise, continuous reconciliation of specialist systems, etc. takes place against the accounting system.
Board has adopted a new set of policies for Storebrand that addresses comply with the new requirements.
The Storebrand Group has chosen to only pay fixed salaries to employees for whom control tasks make up a large part of their duties.
The bonuses awarded are funded in relation to the risk-adjusted value creation. The bonuses awarded are also determined by the unit’s and individual’s results. The unit’s results are measured using a scorecard, which incor porates both quantitative and qualitative goals. The goals are both financial and operational. Employees’ performance is monitored by a special monitoring system. Performance is measured in relation to both the execution of individual action plans and compliance with the Storebrand Group’s corporate principles. The bonuses awarded are paid into a bonus bank and deposit paid with 1/3 every year. Half of the paid bonus (after tax) must be used to purchase shares in the Storebrand Group at market prices with a three year lock-in period. The unit’s scorecard and the individual’s action plan are directly linked to the strategy adopted by the Board. This helps to further strengthen agreement between owners and the management.
The “target bonus” is intended over time to lie between 20 per cent and 40 per cent of fixed salary. The bonus awarded for a given year is subject to a fixed ceiling and cannot exceed 90 per cent of the fixed salary. More detailed information about the remuneration of executive personnel can be found in notes 22 (Group) and 5 (ASA). Executive personnel are encouraged to hold shares in the company, including beyond the lock-in period.
Further information on Storebrand’s corporate governance can be found on www.storebrand.no > Corporate Responsibility >
Corporate Governance, including CVs and overviews of the members of Storebrand’s corporate bodies, the articles of association, and ownership principles.
45 years executive vice President, chief Financial Officer and group legal
Previous positions: 1998-2002 CFO Storebrand Group/Head of Business Control, Storebrand ASA. 1997-1998 Group Controller, Storebrand ASA. 1994-1997 Vice President, Internal Audit, Storebrand ASA. 1989-1994 auditing, Arthur Andersen & Co.
Master’s degree in economics and business administration, Norwegian School of Management (BI), MBA, Thunderbird (AGSIM), USA.
MA Latin American studies, Stanford University, Master’s degree in economics and business administration, Handelshögskolan Stockholm, BA Modern European History, Wesleyan University. CEP, L’Institut d’Etudes Politiques Paris.
Previous positions: 2004-2008 Executive Vice President and CIO, AMF Pension. 2001-2004 Head of ALM and Risk Management, Fourth AP Fund. 1998-2001 Director of Credit and Risk, GE Capital Nordic. 1992-1998 Chief Group Risk Controller, Svenska Handelsbanken AB. 1986-1992, Director, Financial Services, PricewaterhouseCoopers.
47 years executive vice President, long Term Savings and Asset Management, Managing director, Storebrand Kapital­ forvaltning AS
Previous positions: 2001-2005 Investment Director, Storebrand Kapitalforvaltning AS. 1994-2001 Head of Norwegian and International Equities, Storebrand Kapitalforvaltning AS. 1990-1994 Derivatives Specialist, Orkla Finans.
The CEO of Storebrand Bank ASA, Truls Nergaard, and Executive Vice President of Corporate Communications and Market Communication, Egil Thompson, will still report to the CEO of Storebrand ASA.
Previous positions: 2000-2009 Executive Vice President, Corporate Communications and Business Policy, Storebrand ASA. 1999-2000 Deputy Director, Corporate Communications, Storebrand ASA. 1994-1999 journalist and head of editorial staff, Aftenposten AS. 1990-1994 journalist, NTB AS.
Cash flow statement 59 business and risk notes note 1: accounting policies 61 note 2: profit sharing and result allocated to owner life insurance 67 note 3: important accounting estimates and judgements 70 note 4: risk management and internal control 71 note 5: insurance risk 73 note 6: market risk 78 note 7: liquidity risk 80 note 8: Credit risk 82 note 9: Valuation of financial instruments at fair value 84 note 10: segment reporting 88 result notes note 11: net premium income 91 note 12: net interest income - banking activities 91 note 13: net income analysed by class of financial instrument 92 note 14: net income from properties 92 note 15: to/from market value adjustment reserve 92 note 16: other income incl. fixed income and currency bank 93 note 17: insurance claims for own account 93 note 18: Changes in insurance liabilities – life insurance 94 note 19: losses from lending and reversals of previous losses 95 note 20: operating costs 95 note 21: pensions costs and pension liabilities 95 note 22: remuneration of senior employees and elected officers of the company note 23: remuneration paid to auditors 102 note 24: other costs incl. currency bank 103 note 25: interest expenses 103 note 26: tax 103
Statement of financial position notes note 27: intangible assets 105 note 28: tangible fixed assets and properties for own use 106 note 29: tangible fixed assets – operational leasing 107 note 30: investments and receivables in associated companies 108 note 31: Joint Ventures 109 note 32: Classification of financial assets and liabilities 110 note 33: fair value of financial assets and liabilities at amortised cost 110 note 34: bonds at amortised cost 111 note 35: lending to customers 111 note 36: reinsurers' share of technical reserves 112 note 37: real estate 112 note 38: biological assets 114 note 39: accounts receivable and other short-term receivables 114 note 40: equities and units 115 note 41: bonds and other fixed-income securities 115 note 42: derivatives 115 note 43: Currency exposure 116 note 44: reclassification 117 note 45: technical insurance reserves - life insurance 117 note 46: technical insurance reserves - p&C insurance 118 note 47: deposits from banking customers 119 note 48: other current liabilities 119 other notes note 49: hedge accounting 120 note 50: Collateral 120 note 51: Contingent liabilities 121 note 52: securities lending and buy back agreements 121 note 53: Capital requirements and solvency requirements 122 note 54: information about close associates 124 note 55: number of employees 124 note 56: sold business and discontinued operations 125
Cash flow statement 128 note 1: accounting policies 129 note 2: income from investments in subsidiaries 130 note 3: personnel costs 130 note 4: pensions costs and pension liabilities 131 note 5: remuneration of the Ceo and elected officers of the company 133 note 6: tax 134 note 7: parent company’s shares in subsidiaries and associated companies note 8: equities and units 135 note 9: bonds and other fixed-income securities 135 note 10: financial derivatives 136 note 11: financial risks 136 note 12: tangible fixed assets 137 note 13: equity 137 note 14: bond loans 137 note 15: hedge accounting 138 note 16: shareholders 138 note 17: information about close associates 139 note 18: number of employees/person-years 140
Net income from financial assets and property for the company: - equities and other units at fair value 13 64 -121 - bonds and other fixed-income securities at fair value 13 265 820 - financial derivatives at fair value 13 221 129 - net income from bonds at amortised cost 13 15 -21 - net income from properties 14 52 57 - result from investments in associated companies 30 2 -2
Write-down of intangible assets 27 -10 -6 amortisation of intangible assets 27 -380 -384
Gains/losses available-for-sale bonds -52 -1,377 total comprehensive income elements allocated to customers 110 1,377 total other result elements -268 105 total comprehensive income 1,212 1,039 total comprehenSive income iS due to: majority's share of total comprehensive income 1,207 1,047 minority's share of total comprehensive income 5 -8
Claims from associated companies 30 39 bonds at amortised cost 8,32,33,34 299 325 lending to financial institutions 8,32,33 701 425 lending to customers 8,32,33,35 34,209 35,843 reinsurers' share of technical reserves 36 185 1,229 real estate at fair value 6,37 1,231 1,288 properties for own use 28, 37 352 336 accounts receivable and other short-term receivables 32,39 1,900 2,041
Claims from associated companies 30 227 156 bonds at amortised cost 8,32,33,34 47,895 44,393 lending to customers 8,23,33,35 3,219 3,658 real estate at fair value 6,37 25,871 23,037 properties for own use 28, 37 1,316 1,382 accounts receivable and other short-term receivables 32,39 1,964 1,902
paid in capital 11,715 11,714 retained earnings 6,530 5,329 minority interests 172 174 total equity 18,417 17,217 subordinated loan capital 7,32,33 7,606 7,869 market value adjustment reserve 15 1,971 31 insurance reserves - life insurance 45 313,377 286,747
Financial liabilities: - liabilities to financial institutions 7,9,32,33 8,053 11,126 - deposits from banking customers 7,9,32,33,47 18,799 18,316 other current liabilities 7,32,48 6,718 7,127 liabilities sold/discontinued operations 56 37 total liabilities 371,997 348,942 total equity and liabilities 390,414 366,159
Annika Lundius Knut Dyre Haug Kirsti Valborgland Ann-Mari Gjøstein Idar Kreutzer
Change in value of properties for own use -48 44 -3 -4 total comprehensive income for the period -48 135 -13 973 1,047 -8 1,038 equity tranSactionS with ownerS
share issue 10 10 purchase of minority interests -1 -1 3 2 profit for the year 1,471 1,471 9 1,480
share issue 5 5 purchase of minority interests 9 9 -11 -2 1 449,909,891 shares with a nominal value of NOK 5. 2 Includes undistributable funds in the risk equalisation fund amounting to NOK 287 million and security reserves amounting NOK 244 million.
storebrand pays particular attention to the active management of 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, this is procured by the holding company storebrand asa, which is listed on the stock exchange and the Group’s parent company.
storebrand is a financial group subject to statutory requirements regarding primary capital under both the capital adequacy regulations and the solvency margin regulations. primary capital encompasses both equity and subordinated loan capital. for storebrand, these legal requirements carry the greatest significance in its capital management.
the Group’s goals are to achieve a core (tier 1) capital ratio in the bank of more than 10 per cent and a solvency margin in life and pensions of more than 150 per cent over time. in general, the equity of the Group can be managed without material restrictions if the capital requirements are met and the respective legal entities have adequate solidity. Capital can be transferred from foreign legal entities with the consent of local supervisory authorities.
payments - repayments of loans -4,612 -7,785 receipts - new loans 2,709 1,757 payments - interest on loans -769 -836 receipts - subordinated loan capital 981 payments - repayment of subordinated loan capital -175 -3,408 payments - interest on subordinated loan capital -558 -642 net receipts/payments - deposits from norges bank and other financial institutions -2,163 3,790 receipts - issuing of share capital 9 payments - repayment of share capital 10 net cash flow from financing activities -5,559 -6,134 net cash flow for the period -311 -3,139 - of which net cash flow in the period before financial assets and banking customers -2,997 -14,092 net movement in cash and cash equivalents -311 -3,139
financing activities financing activities include cash flows for equity, subordinated loans and other borrowing that helps fund the Group’s activities. payments of interest on borrowing and payments of share dividends to shareholders are financial activities.
cash/cash equivalents Cash/cash equivalents are defined as claims on central banks and claims on financial institutions without notice periods for the company portfolio. the amount does not include claims on financial institutions linked to the insurance customers portfolio, since these are liquid assets not available for use by the
basic policies the consolidated financial statements of storebrand asa are prepared in accordance with the eu approved international financial reporting standards (ifrs)
and appurtenant interpretations, as well as other norwegian disclosure obligations pursuant to the law and regulations.
Standards and interpretations of existing standards and where Storebrand has not chosen early application the Group has not made any changes to the accounting policies applied in 2010.
Changes to accounting standards have had no effect on the Group’s financial reporting as 31 december 2010.
the technical insurance reserves are intended to cover liabilities linked to issued insurance contracts. it is a requirement that the reserves must be adequate.
Various methods and principles are applied to establish the reserves for various insurance contracts. a significant proportion of the insurance liabilities are related to insurance contracts with an interest guarantee. recognised liabilities linked to norwegian insurance contracts with an interest guarantee are discounted using the premium calculation rate. recognised liabilities linked to swedish insurance contracts with an interest guarantee are discounted using a market interest rate. the reserve for the savings elements of pension insurance contracts will correspond with the pertinent asset portfolios.
the acquisition method of accounting is used to account for the purchase of subsidiaries. investments in associated companies (normally investments of between 20 per cent and 50 per cent of the associated companies’ equity) 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 financial statements.
Presentation currency and currency conversion for foreign companies the Group’s presentation currency is the norwegian krone (noK). foreign companies included in the Group that use a different functional currency are translated to noK by converting the profit and loss account at the average exchange rate for the accounting year and converting the statement of financial position at the exchange rate at close of the accounting year. any revaluation differences are booked directly against equity.
identified material and intangible assets and liabilities that have been taken over are stated at 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 financial statements as goodwill. if the acquisition cost 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 per cent of a company, 100 per cent of the extra value or shortfall in market value is recognised in statement of financial position, with the exception of goodwill of which only storebrand’s share is recognised.
Goodwill excess value arising from the acquisition of business activities that cannot be allocated to specific asset or liability items at the date of acquisition is classified as goodwill in the balance sheet. Goodwill is stated at its acquisition cost at the time of acquisition. Goodwill acquired by acquiring subsidiaries is classified as intangible assets. Goodwill acquired through interests in associated companies is included in the investment in the associated company and is tested for impairment as part of the value of the write-down recognised in statement of financial position.
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. extra value linked to these obligations, which is often referred to as the value of business in force (Vif), is recognised as an asset. a sufficiency test must be conducted of the insurance obligation, including Vif, pursuant to ifrs 4 every time the financial statements are presented. the test conducted looks at the calculated present values of cash flow to the contract issuer, often called embedded value. any write-down of Vif will be reversed if the basis for the write-down no longer exists.
• IT systems 3-8 years intangible assets with unspecified usable lifetimes are not written down, but are tested for impairment annually and at other times if there are indications of a fall in their value with a consequent need for a write-down.
investment properties primarily consist of centrally located office buildings and shopping centres. properties leased to tenants outside the Group are classified as investment properties. in the case of properties occupied partly by the Group for its own use and partly let out to tenants, the identifiable tenanted portion is treated as an investment property.
Definition of fair value fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, voluntary parties in an arm’s length transaction. the fair value of financial assets listed on a stock exchange or in another regulated market place in which regular trading takes place is
notes to the finanCial statements of storebrand Group determined as the bid price on the last trading day up to and including the statement of financial position date, and in the case of an asset that is to be acquired or a liability that is held, the offer price.
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 where available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, and options pricing models. if a valuation technique is in common use by participants in the market and this method has proved to provide reliable estimates of prices actually achieved in market transactions, this method is used.
the fair value of loans, which is recognised at amortised cost, is estimated on the basis of the current market rate of interest on similar lending. Write-downs of loans are taken into account both in the amortised cost and when estimating fair value. When estimating the fair value of a loan, consideration is also given to the development of the associated credit risk in general.
if there is objective evidence that impairment has occurred, the amount of the loss is measured as the difference between the asset’s book value and the present value of estimated cash flows (excluding future credit losses that have not occurred) discounted at the financial asset’s original effective interest rate
classification and measurement of financial assets and liabilities Financial assets are classified into one of the following categories: • held-for-sale
With the exception of derivatives, only a limited proportion of storebrand’s financial assets fall into this category.
held-for-sale financial assets are measured at fair value on the statement of financial position date. Changes in fair value are recognised in the profit and loss account.
Available-for-sale financial assets are classified as available-for-sale if they are non-derivative financial assets that are classified as available-for-sale or are not classified as a)
derivatives Derivatives are defined as follows: a derivative is a financial instrument or other contract within the scope of ias 39 and which has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (sometimes called the ‘underlying’)
the major part of derivatives used routinely for asset management fall into this category.
storebrand utilises the rules concerning the hedging of net investments with respect to the investments in the subsidiary spp.
financial liabilities subsequent to inception, all financial liabilities are measured at amortised cost using an effective interest method or at fair value.
pursuant to ifrs 4 the technical insurance reserves must be adequate. When assessing the adequacy associated with recognised acquired insurance contracts including pertinent activated intangible assets, reference must also be made to ias 37 provisions, Contingent liabilities and Contingent assets, and so-called embedded value calculations.
the accounting policies for the most important technical insurance reserves are explained below.
Premium reserve premium reserve represents the present value of the company’s total insurance obligations including administration costs in accordance with the individual insurance contracts, after deducting the present value of future premiums. in the case of individual account policies with flexible premium payments, the total policy value is included in the premium reserve. the premium reserve is equivalent to 100 per cent of the guaranteed surrender/transfer value of insurance contracts prior to any charges for early surrender/transfer and the policies’ share of the market value adjustment reserve.
the premium reserve includes reserve amounts for future administration costs for all lines of insurance including settlement costs (administration reserve). in the case of paid-up policies, the present value of all future administration costs is provided in full in the premium reserve. in the case of policies with future premium payments, deduction is made for the proportion of future administration costs expected to be financed by future premium receipts.
a substantial proportion of the norwegian insurance contracts have a 1 year interest guarantee meaning that the guaranteed return must be achieved every year. meanwhile, a substantial proportion of the swedish insurance contracts have a guaranteed return up to the time of the pension payments.
life insurance - norway Additional statutory reserves the company is allowed to make additional statutory allocations to the insurance fund in order to ensure the solvency of its life insurance business. the maximum additional statutory reserve is set as the difference between the premium reserve calculated on the basis of a guaranteed return on policies outstanding, and the premium reserve calculated on the basis of the actual guaranteed return in the policies. the norwegian fsa has specified a limit for the additional statutory reserves that apply to each policy. this is defined as the premium reserve for the policy multiplied by twice the guaranteed rate for the policy.
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.
Insurance obligations special investments portfolio if a return guarantee is linked to a special investments portfolio, a supplementary provision is made to cover the guarantee obligation. the supplementary provision to cover the company’s obligation pursuant to section 11-1, fourth paragraph, of the Companies pension act shall equal the difference between the capitalised value of the company’s obligations vis-à-vis the insured, calculated pursuant to section 9-16 of the insurance act and the value of the investments portfolio.
Market value adjustment reserve net unrealised gains/losses for the current year on financial assets at fair value in the group portfolio in storebrand livsforsikring as are allocated to/reversed from the market value adjustment reserve in the statement of financial position assuming the portfolio has a net unrealised extra value. that part of the net unrealised gains/ losses for the current year on financial current assets denominated in foreign currencies that can be attributed to movements in exchange rates are not transferred to the market value adjustment reserve. similarly, the change in the value of the hedging instrument is not transferred to the market value adjustment reserve, but is charged directly to profit and loss. the foreign exchange risk associated with investments denominated in foreign currencies is to a very large extent hedged through foreign exchange contracts on a portfolio basis. in accordance with the accounting standard for insurance contracts
(ifrs 4) the market value adjustment reserve is shown as a liability.
Risk equalisation fund up to 50 per cent of the risk result for group pensions and paid up policies can be set aside in the risk equalisation fund to cover any future negative risk result. the risk equalisation fund is included as part of equity.
Reserves for unfixed insurance instances the reserves for claims that have been incurred consist of reserves for disability pensions, established claims, unestablished claims and claims processing reserves. When assessing the reserves for disability pensions a risk free market interest rate is used, which takes into account future index adjustment of the payments. in addition provisions are made for calculated claims that have been incurred but not reported (ibnr).
p&c insurance insurance premiums are recognised as income in pace with the period of insurance. Costs related to claims are recognised when the claims occur.
the claims reserve is a reserve for expected claims that have been notified but not settled. the reserve also covers expected claims for losses that have been incurred, but have not been reported at the expiry of the accounting period. the reserve includes the full amount of claims reported but not completed. a calculated provision is made in the reserve for claims incurred but not reported (ibnr) and claims reported but not settled (rbns).
pension liabilities for own employees storebrand’s pension scheme for its own employees as per 31 december 2010 is a defined benefit pension scheme. the defined benefit scheme in norway was closed to new employees from and including 1 January 2011, and as per 31 december 2010 employees could freely choose a defined contribution scheme.
pension costs and pension liabilities for defined benefit pension schemes are calculated using a linear accrual of entitlement to pension and expected final salary, based on assumptions for discount rate, future salary increases, pensions and benefits from the national insurance fund, the future return on pension notes to the finanCial statements of storebrand Group
assets and actuarial assumptions on mortality, disability and early leavers. the discount rate is equivalent to the risk-free interest rate taking into account the average remaining period for accrual of pension entitlement. the net pension cost for the period is made up of the sum of pension entitlement accrued in the period, interest cost on the calculated pension liability and the expected return on pension assets.
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.
equipment, fixtures and fittings, and vehicles are stated at acquisition cost reduced by accumulated depreciation and any write-downs.
properties used for the Group’s own activities are stated at written up value less accumulated depreciation and write-downs. the fair value of these properties is tested annually in the same way as described for investment properties. increases in the value of properties used for the Group’s own activities are not recognised in the profit and loss account but are recognised as a change in the revaluation reserve that forms part of equity. any write-down of the value of such a property is first applied to the revaluation reserve for increases in the value of the property in question. if the write-down exceeds the revaluation reserve for the property, the excess is recognised in the profit and loss account.
the depreciation period and the method of depreciation are reviewed annually to ensure that the method and period used correspond with the financial lifetime of the asset in question. this also applies to the disposal value. properties are split into components if different parts have different periods of expected commercial life. the depreciation period and method of depreciation are evaluated separately for each component.
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.
allocated dividend pursuant to ias 10, which deals with events after the balance sheet date, the proposed dividend/group contribution shall be classified as equity until such time as it is approved by the general meeting.
02 profit sharing and result allocated to owners - life insurance the generation of the result in a life insurance company is not easy to discern from the profit and loss account. this note provides a description of the content of the various elements of the generated result and an overview of the results allocated to owners and customers.
• Risk result the risk result consists of premiums the company charges to cover insurance risks less the actual costs in the form of insurance reserves and payments for insured events such as death, pensions, disability and accidents.
• Financial result the financial result consists of the net financial income from financial assets for the group portfolio less the guaranteed return.
Owners’ result generation descriptions of the result allocated to owners in the norwegian and swedish business are provided below.
Group investment with choice and unitlinked fee based risk products individual and paidup policies profit sharing company portfolio/
Administration result the administration result line includes all products apart from traditional individual products with profit sharing. administration and management costs must be charged upfront each year, and represent the final cost for the customer. the insurance company must then meet any deficit in the administration and management result, and similarly any profit is retained by the company. Where a policy’s assets are managed in the investment choice portfolio, the premium charged for asset management must be shown as a separate element of the overall charge.
Risk result the risk result from risk products is paid to the company.
in the case of group defined benefit pensions and newly established guaranteed individual products the profit from insurance risk goes to customers, while any deficit in the risk result must basically be covered by the insurance company. however, up to half of any risk profit on a particular line of insurance may be held in a risk equalisation fund. a deficit due to risk elements can be covered by the risk equalisation fund. the risk equalisation fund can as a maximum amount to 150 per cent of the total risk premium. the risk equalisation fund is classified as equity.
Financial result the net return on share capital is paid to the company. share capital consists of equity and subordinated loans.
any negative returns in customer portfolios and returns lower than the interest guarantee that cannot be covered by additional statutory reserves must be covered by the company’s equity and will be included in the financial result line.
the return from risk products is paid to the company and included in the financial result.
Profit sharing profit sharing is also included in the financial result line. a modified profit sharing regime was introduced for old and new individual policies that have left group pension insurance policies (paid-up policies) that allows the company to retain up to 20 per cent of the profit from returns after any allocations to additional statutory reserves. the modified profit sharing model means that any negative risk result can be deducted from the customers’ interest profit before sharing if it is not covered by the risk equalisation fund.
new contracts may not be established in this portfolio. the company can retain up to 35 per cent of the total result after allocations to additional statutory reserves.
Price of return guarantee and profit risk the return guarantees in group pension insurance with a return guarantee must be priced upfront. the level of the return guarantee, size of the buffer capital
Customers can choose long-term contracts with guarantee periods of up to 5 years. prices for multi-year return guarantees will be lower than for an annual return guarantee over the same period. however, it is a requirement that the liabilities to the insured must at all times be covered by sufficient technical insurance reserves, and that, if necessary, equity can also be used to ensure adequate reserves during the agreement period. Greater room for agreement exists between the customer and the company in the regulations pertaining to multi-year return guarantees. for example, customers can pledge their own buffer capital as collateral for returns under the calculated interest rate applied to the insurance. such an increase in the customer’s risk also reduces the total price of the return guarantee charged to the customer.
life and pensions Sweden financial performance - life and pensions Sweden
Administration result the administration result for all products are paid or charged to the result allocated to owners. income and costs related to spp’s consultant and service activities are also included in the administration result.
Risk result the risk result is paid to the owners in full for all products
Financial result in the case of insurance products with guaranteed interest, the financial result is primarily affected by three components: • profit sharing
• changes in deferred capital contribution to cover guaranteed capital if the total return on assets in one calendar year for a premium-specific insurance (dC portfolio) exceeds the guaranteed interest, profit sharing will be triggered. When profit sharing is triggered, 90 per cent of the total return on assets is paid to the policyholder and 10 per cent to the company. the company’s proportion of the total return on assets is included in the financial result.
half of the fee is charged if the pensions can be indexed by the entire change in the Cpi. the entire fee can be drawn if the paid-up policies can also be indexed by the entire change in the Cpi. a 100 per cent fee equals 0.8 per cent of the insurance capital.
the guaranteed liability is continuously monitored. if the guaranteed liability is higher than the value of assets, an allocation must be made in the form of a deferred capital contribution. if the assets are lower than the guaranteed liability when the insurance payments start, the company supplies capital up to the guaranteed value in the form of a realised capital contribution. Changes in the deferred capital contribution are included in the financial result. the financial result also includes the result of the hedging programme, which the company uses to protect itself against effects in deferred capital contribution.
in the case of unit linked insurance the technical insurance reserves are changed by the market return, regardless of whether it is positive or negative. this means the company has no financial result from unit linked insurance business.
Changes to estimates linked to insurance reserves, financial instruments, and investment properties associated with life customers in the life business in storebrand will not necessarily affect the owners’ result, though changes to estimates and judgements can affect the owners’ result. one key factor will be whether the life customers’ assets, including the year’s return, exceed the guaranteed liabilities.
there are no contracts with an annual interest guarantee in the swedish business (spp). however, there are insurance contracts with a final value guarantee. these contracts are discounted by a market interest rate. if the relevant customer assets have a higher value than the recognised values of these insurance-related liabilities, the difference will constitute a conditional customer allocated fund - conditional bonus (buffer capital). Changes to estimates and judgements may result in changed returns in customer portfolios. depending on the size of any fall in value, such a fall in value could be countered, wholly or partly, by a reduction in the conditional bonus such that the effect on the result allocated to owners can be limited. if the value of the individual insurance contract is higher than the relevant customer assets, the owners will have to cover the deficient capital.
the profit sharing rules in life insurance are also discussed in more detail in note 2.
investment properties investment properties are stated at fair value. the commercial real estate market in norway is not very liquid or transparent. some uncertainty will be linked to the valuations and these require the exercising of judgement.
Key elements included in valuations and which require the exercising of judgement are: • Market rent and vacancy trends
• Discounting interest rates for both certain and uncertain cash flow, as well as residual value external valuations are obtained throughout the year for a representative selection of the company’s properties to support its own valuations. see note 37 for further information about valuations and sensitivities linked to real estate investments.
please also refer to note 9 in which the valuation of financial instruments is described in more detail.
technical insurance reserves technical insurance reserves in life insurance are based on assumptions concerning life expectancy, mortality, disability, interest rate levels, and future costs, etc. Changes in such assumptions will affect the size of the liabilities, which in turn can affect the owners’ result. in the norwegian life insurance business the majority of the calculated payments are discounted by the appropriate guaranteed interest rate.
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.
these recognised intangible assets are, together with the pertinent recognised insurance liabilities, tested for impairment using a sufficiency test pursuant to ifrs 4 insurance Contracts. a key element of this assessment involves calculating future profit margins using embedded value calculations. embedded value calculations are affected by, among other things, volatility in the financial markets, interest rate expectations and the amount of buffer capital in spp.
04 risk management and internal control storebrand’s income, both short-term and long-term, depends on external factors with which some uncertainty is associated. the most important external risk factors are the development of the capital markets and changes in life expectancy in the norwegian and swedish populations. Certain internal operational factors can also result in losses, e.g. errors in the management of the customers’ assets.
Continuous monitoring and active risk management are therefore core areas of the Group’s activities and organisation. the subsidiaries in the Group have their own departments that continuously monitor and manage the risk in various product groups, and at the same time the Group has a separate department with responsibility for risk management across the Group. managing operational risk forms an integral part of management responsibility in the organisation and the executive management team annually assesses risk which results in a risk summary and improvement measures. the risk assessment is presented to and considered by the board.
Compliance the compliance function is tasked with advising the board and Ceo on relevant laws, rules and standards, keeping them informed about developments within these areas, and assessing the potential consequences changes to legislation may have for business. the compliance function also checks that the company has guidelines and procedures for uncovering any risk that the company is not fulfilling its obligations pursuant to the current regulations.
Compliance officers must also brief the board of directors and executive management when the board and executive management want relevant information or this is deemed necessary by the compliance officer.
Operational risk assessments of operational risks are linked to a unit’s ability to achieve goals and implement plans. the process covers both the risk of incurring losses and failing profitability linked to, among other things, economic downturns, changed general conditions, changed customer behaviour and the risk of incurring losses due to inadequate or failing internal processes, systems, human error or external events.
Internal audit storebrand has concluded an agreement with KpmG concerning the internal audit function. the responsible partner in KpmG reports directly to the board of storebrand asa, which stipulates the instructions for the internal audit and approves the audit’s annual plan. a primary contact person has been nominated for the internal audit in the Group Control department. Contact people have also been nominated in all subsidiaries who report to the Ceo or head of the company’s executive management staff.
below follows a description of the special situation concerning risk management and life insurance in relation to the relationship between customers and owners. as far as the risk associated with the business in the Group is concerned this is, apart from life insurance, risk that essentially impacts owners.
market risk, liquidity risk and credit risk are described in more detail in notes 6-8.
Life and Pensions Norway a significant proportion of savings products in the norwegian life insurance business incorporate a guaranteed minimum annual return. financial risk principally relates to the ability to meet the customers’ guaranteed return, which for the majority of the products applies for one year at a time. therefore, risk management in this business is designed to reduce the probability of the return falling below the annual guaranteed return for the various product groups in any single year.
the composition of the financial assets is determined by the company’s investment strategy. the investment strategy establishes guidelines and limits for the company’s risk management, credit exposure, counterparty exposure, currency risk, and use of derivative instruments, and criteria regarding the liquidity in the asset portfolio. the objectives of this dynamic risk management are to maintain good risk bearing capacity and to continuously adapt the financial risk to the company’s financial strength. by exercising this type of risk management, the company expects to create good returns both for individual years and over time. Given the current investment portfolio and dynamic risk management strategy, the annual return for the majority of the portfolio will normally fluctuate between 2 per cent and 8 per cent. smaller portions of the portfolio are invested in profiles with somewhat lower and somewhat higher market risk. dynamic risk management and hedging transactions reduce the likelihood of a low investment return. if investment return is not sufficient to meet the guaranteed interest rate, the shortfall will be met by using risk capital built up from previous surpluses. risk capital primarily consists of additional statutory reserves and unrealised gains. owners are responsible for meeting any shortfall that cannot be covered from risk capital. the average interest guarantee is expected to sink in the years ahead and from 2012 all new earnings will be linked to an annual guarantee of 2.5 per cent. the share capital is invested such that it is exposed to a low level of risk. it is the insured person who bears the financial risk related to contracts in the unit linked and defined contribution pension product categories.
• asset allocation that results in a good return over time
• the continuous implementation of risk management measures in the customer portfolios through dynamic risk management
assets and that the magnitude of the contracts’ assets are greater than the present value of the insurance liabilities. profit sharing becomes relevant in spp if the total return exceeds the guaranteed yield. in the case of some products a certain degree of consolidation, i.e. the assets are greater than the present value of the liabilities by a certain percentage, is required in order for owners to collect earnings. if the assets in an insurance contract in the company are smaller than the market value of the liability, an equity contribution is allocated that reflects this deficit. this is called the deferred capital contribution (dCC)
life insurance Products: life, pension and unit linked insurance contracts are offered as both group and individual contracts.
• Group defined contribution pensions are group defined contribution pensions the premium is stated as a percentage of pay, while the payments are unknown. the customer bears all the financial risk during the saving period.
• Individual endowment insurance are single payments in the event of attaining a specified age, death or disability.
• Long life – payments when a specified age is attained and until a specified age or for the rest of the person’s life.
significantly higher risk of disability in norway compared with for example oeCd.
legislative amendments that could act as an incentive for increased disability.
products are more bespoke based on demographic factors such as civil status, age and needs.
Problems associated with long life • Age and gender are not sufficient as explanatory variables, since other factors such as education, pay, civil status and place of residence also affect mortality.
• Medical “quantum leaps” that mean that people will live significantly longer than today.
risk premiums and tariffs Life and Pensions Norway tariffs for group life insurance and certain risk insurances within group pensions also depend on industry/occupation in addition to age and gender. Group life insurance also applies tariffs based on claims experience.
the company’s standard tariff for group life insurance, both for life and disability cover, is based on the company’s own experience and was last amended in 2003.
death and disability net annual risk premium for a sum insured of noK 100,000 for disability pensions, the premium for an annual disability pension of noK 10,000 paid until the person turns 67 years old.
Critical illness, non-smoker, individual 171 515 1,804 171 515 1,804 risk of death, group life insurance 55 146 821 33 88 493 risk of death, group pension insurance 48 146 743 23 77 403
spp’s tariffs contain no assumptions about inflation or transfer as is true for storebrand life norway.
the future is unpredictable as far as disability insurance is concerned. Changes in new incidences of disability are taking place much faster than changes in mortality/life expectancy. one of the reasons for this is the problems involved with determining the causes of and the degree of disability on the ground. the quickly increasing level of disability in the first few years of 2000 resulted in premium increases within the sector. many insurance companies were doubtful about offering voluntary disability cover in the future. however, since 2005 the number of disability incidences has fallen in a more balanced trend that resulted in spp reducing the risk premiums for disability cover. nonetheless, disability has been significantly lower than assumed in the tariff, which resulted in a strongly positive risk result for 2009.
• 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 utilises. the company’s maximum risk amount for own account is relatively high, and the risk reassured is therefore relatively modest. in 2010, the company will replace the current surplus agreement with internal insurance cover of the risk such that only those risks that might exceed the company’s actual maximum risk amounts for own account will be reinsured.
risk result the tables below specify the risk result in the various risk areas and also state the effect of reinsurance and pooling on the result.
NOK million 2010 2009 total risk result 249 180 the risk result in the table above shows the total risk result before sharing between customers and owners.
in 2010, storebrand continued its prior practice and conducted the test pursuant to section 16. the required analysis is carried out on the basis of norwegian principles for premium reserves and applies conservative calculation elements. the established form of analysis is based on the assumptions used for the calculation of embedded value in which the company uses the best estimates for the future base elements based on current experience. the sufficiency test is carried out by the company analysing the current margins between the assumptions used for setting reserves and the assumptions in the embedded value analysis.
based on the mortality surveys conducted using lower mortality assumptions for the future, a need to build up reserves for individual pension insurance has generally been identified in this line. as per 31 december 2010 there was a need to build up reserves in storebrand life norway by about noK 520 million, which is expected to be allocated linearly. the plan is to build up the reserve by 31 december 2012 and this is primarily expected to be covered by the financial result. storebrand satisfies the sufficiency test for 2010 and consequently has no effect on the result in the financial statements for 2010.
in the case of storebrand holding ab and storebrand life Group the test is conducted pursuant to “ifrs 4 basic for conclusions (bC 94 – 104)” and “ifrs 4 basic for conclusions (bC no. 151)”, which represent the preliminary work on the standard. the test is satisfied if the obligations booked in the financial statements are greater or equal to the net obligations stated at market value. here net obligations will mean the technical insurance obligations of storebrand holding ab and storebrand life Group stated at market value less the present value of the owners’ share of the profit for these insurance contracts. the preliminary work mentions that one can use embedded value-like techniques.
as per 31 december 2010, the calculated market value of the insurance contracts for spp and euroben is lower than the book value. this means that the buffers in the net obligation and the test are satisfied. therefore the test has no effects on the result in the annual financial statements for 2010.
Guaranteed rate (discounting rate) Life and Pensions Norway the norwegian fsa sets the highest basic interest rate permitted for new policies and for new members/new accrual of benefits in group pension insurance.
the highest basic interest rate for new policies was set at 3 per cent in 1993 and subsequently reduced in 2005 to 2.75 per cent for policies entered into after 1 January 2006. the highest basic interest rate for new members/new accrual of benefits in group pension insurance was reduced from 4 per cent to 3 per cent with effect from renewals in 2004. the guaranteed rate has been set at 2.5 per cent for new contracts from 1 January 2011.
the guaranteed rate is used both as the guaranteed interest and for discounting future payments.
average interest rate guarantee 2010 2009 individual endowment insurance 3.3% 3.3%
new business written in 2010 is subject to a 2.75 per cent basic interest rate. in the case of policies transferred to the company, the basic interest rate is determined by the rate applied to the policy by the insurance company from which the business is transferred, subject to a maximum of 4 per cent.
premiums and reserves for pension entitlements earned in 2010 in group pension insurance are calculated on the basis of a 3 per cent guaranteed rate for contracts established before 1 January 2006. new insurance contracts established after this date will be calculated at a guaranteed rate of 2.75 per cent.
Life and Pensions Sweden the table below shows the proportions of insurance liabilities as per 31 december 2010 with the following different final value guarantees: interest rate guarantee 2010 2009 notes to the finanCial statements of storebrand Group
• Health insurance the risk in the p&C business is mostly due to the fact that it has a small portfolio with which to absorb claims. this can mean that single large claims or special events may have a disproportionate impact on profit. the largest claims will typically arise from third party insurance for motor vehicles and home and contents fire insurance. in order to offset this risk, storebrand has covered itself with excess of loss reinsurance with a deductible of noK 5 million per claim after the first claim which has a deductible of noK 10 million. the cover has unlimited capacity in the case of motor vehicles. the cover has a capacity of noK
the risk within occupational hazard insurance is also covered by quota reinsurance and excess of loss protection, with a deductible of noK 5 million.
in the case of health insurance the company has excess of loss protection for of 80 per cent of all claims payments per person per year that exceed noK
300,000. this means that the level of insurance risk for health insurance for own account is very low.
storebrand’s earlier p&C portfolio was transferred to if in 2000. however, storebrand has retained fronting responsibility with respect to the customers, since the customers were not informed of the transfer of the risk from storebrand to if. this fronting liability has now essentially been run-off and the only fronting liability that remains is for marine and energy cover, which is now placed in Gard. the total reserves for this portfolio now amount to only noK 8.3 million.
the principal source of insurance risk in the residual portfolio from oslo re lies in the risk of increasing liability-related sectors. the company has for some considerable time minimised 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. a “scheme of arrangements” was also implemented in 2008 and 2010 which has significantly reduced future insurance risk for the company.
oslo reinsurance Company was merged with storebrand skadeforsikring as with accounting effect from 1 January 2010.
actual claims experience compared with earlier forecasts storebrand skadeforsikring as’ active portfolio experienced a small run-off loss of noK 1 million for previous years in 2010. in 2010, storebrand helseforsikring as achieved a larger run-off gain from previous years amounting to noK 11 million. this was primarily due to a change in reserve methods.
the old method was a simplified method approved by the norwegian fsa upon the company’s start-up in 1998. the new method uses statistical methods such as bornhuetter-ferguson to estimate claims reserves and provides a much more correct picture of claims liabilities.
06 market risk market risk is the risk of incurring losses on open positions in financial instruments due to changes in market variables and/or market conditions within a specified time horizon. therefore, market risk is the risk of price changes in the financial markets, i.e. the interest rate, currency, equity, property or commodity markets, affecting the value of the company’s financial instruments. storebrand continuously monitors market risk using a range of evaluation methods. the potential for losses in the investment portfolio on a one-year horizon is calculated and the portfolios are stress tested pursuant to the statutorily defined stress tests and internal models.
Life and Pensions Norway the largest contributions to short-term, result-related market risk for the norwegian life insurance business are falls in the value of equities and real estate, increased risk for credit bonds and rapid increases in interest rates. in the longer term, low market interest rates over time are a significant market risk for the company. the current formulation of the regulations means that technical insurance reserves in storebrand life insurance are not affected by changes in market interest rates.
Bank activities storebrand bank manages its interest rate risk through interest rate swap agreements to minimise the effect of a change in interest rates on its deposits and lending. market risk represents a minor part of the bank activities’ total risk.
Other subsidiaries the other subsidiaries in the Group are not particularly exposed to market risk.
for changes in market risk that arise during the course of 1 year, the effect on the result and equity will be as presented below, based on the balance sheet as per 31.12.
NOK million 2010 2009 interest rate +1.5% -6,935 -7,037 real estate +12% 3,667 3,440 effects on result/equity
items affected by one-time effects and which are recognised at fair value are the investment portfolio, fixed rate lending, borrowing via the government swap scheme, deposits with equity returns, and derivatives. the item affected by one-time effects and which is subject to hedge accounting is fixed rate borrowing.
07 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. storebrand life insurance’s and spp’s insurance liabilities are long-term and are usually known long before they fall due, but a solid liquidity buffer is still important for withstanding unforeseen events.
separate liquidity strategies have been drawn up for several of the subsidiaries in line with statutory requirements. these strategies specify limits and measures for ensuring good liquidity and a minimum allocation to assets that can be sold at short notice. the strategies define limits for allocations to various types of asset and mean the companies have money market investments, bonds, equities and other liquid investments that can be sold when needed.
during the financial crisis in 2008, the lack of liquidity was a problem for a number of financial companies, although liquidity has now returned to a normalised level.
the agreed remaining term provides limited information about the company‘s liquidity risk since the vast majority of investment assets can be realised more quickly in the secondary market than the agreed remaining term. the cash flow from perpetual subordinated loans is calculated up to the first call.
NOK million 0-6 months 6-12 months 1-3 years 3-5 years > 5 years total value carrying amount deposits from banking customers 18,639 160 18,799 18,799 uncalled residual liabilities re limited partnership 5,396 120 120 5,635 unused credit limit lending 5,281 5,281 lending commitments 817 817 1 Of which the minority interests in the real estate fund amount to NOK 1,108 million. After 3 years participants can present a demand for redemption every year. Redemption is conditional on a total demand of NOK 100 million. The redemption sum is set at 98.75 per cent of VEK. Also see note 48.
NOK million nominal value currency interest rate call date carrying amount issuer hybrid tier 1 capital storebrand bank asa 107 noK fixed 2014 111 storebrand bank asa 168 noK Variable 2014 169 storebrand livsforsikring as 1,500 noK Variable 2018 1,500 perpetual subordinated loan capital storebrand livsforsikring as 300 eur fixed 2013 2,553 storebrand livsforsikring as 1,700 noK Variable 2014 1,703 storebrand livsforsikring as 1,000 noK fixed 2015 1,069 dated subordinated loan capital storebrand bank asa 100 noK Variable 2011 100 storebrand bank asa 250 noK Variable 2012 251 storebrand bank asa 150 noK Variable 2012 150 total subordinated loans and hybrid tier 1 capital 2010 7,606 total subordinated loans and hybrid tier 1 capital 2009 7,869
NOK million 2010 2009 call date total liabilities to financial institutions 8,053 11,126
NOK million 2010 2009 call date accrued interest 187 total securities issued 11,623 12,408 signed loan agreements have standard covenant requirements. the terms and conditions have been redeemed pursuant to signed loan agreements.
NOK million of which derivatives in bond funds not managed by storebrand 380 -20 361 total derivatives excluding derivatives in bond funds 82 2,760 1,776 303 44 4,964 lending to financial institutions 668 33 701 rating classes are based on standard & poor’s ratings.
credit exposure in lending Corporate: lending to the corporate market is slightly above noK 15 billion. there is also around noK 2,400 million in unused credit facilities and about noK 300 million in guarantees.
in the case of loans in the corporate market with arrears, the loan-to-collateral value ratio is lower than 80 per cent in just under 80 per cent in the lending volume. most of the non-performing loans have a loan-to-collateral value ratio of under 100 per cent.
Private: the loans in the retail market are essentially secured by residential property mortgages. there is about noK 22 billion in lending to housing commitments with a further around noK 2 billion in unused credit facilities. the total commitment in housing commitments is thus around noK 24 billion.
retail customers are evaluated according to their ability and willingness to repay the loan. in addition to debt service capacity, the customers are checked in connection with policy rules and they are given scores in a scoring model. retail customers are subject to the overall limits for loan-to-collateral value ratio and ability to pay (as defined by the bank’s credit policy for the segment) that apply to this portfolio. the portfolio’s collateral is principally housing in the retail portfolio.
the average weighted loan-to-collateral value ratio in the bank group is around 54 per cent for residential mortgages: around 90 per cent of residential mortgages are within an 80 per cent loan-to-collateral value ratio and around 95 per cent are within a 90 per cent loan-to-collateral value ratio. around 56 per cent of the mortgages are within a 60 per cent loan-to-collateral value ratio in the bank group. the portfolio’s credit risk is regarded as low.
Commitments are regarded as non-performing and loss exposed when a credit facility has been overdrawn for more than 90 days and hen a repayment loan has arrears older than 90 days and the amount is at least noK 500. the same definition as that used in the Capital requirements regulations is used for commitments due, but the number of days in the definition is equal to the age distribution.
NOK million Gross non-performing commitments individual write-downs net non-performing commitments total booked value changes during the period development of building projects 9 10 3 sale and operation of real estate 339 49 290 -5 financial liabilities at fair value over the profit and loss account
Change in fair value of liabilities due to changes in credit risk 7 10 the difference between the liabilities' carrying amount and the contractual amount upon maturity 4 11 accumulated change in fair value of liabilities due to changes in credit risk 7 10 the difference between the liabilities' carrying amount and the contractual amount upon maturity 4 11 09 valuation of financial instruments at fair value the company carries out a comprehensive process to ensure that the values established for financial instruments are as in line with the market as possible.
unlisted derivatives, including primarily interest rate and currency instruments, are also valued theoretically. the money market rates, swap rates, exchange rates, and volatilities that provide the basis for valuations are obtained from reuters, and bloomberg.
Level 1: Financial instruments valued on the basis of quoted priced for identical assets in active markets this category encompasses listed equities that over the previous six months have experienced a daily average turnover equivalent to approximately noK 20 million or more. based on this, the equities are regarded as sufficiently liquid to be encompassed by this level. bonds, certificates or equivalent instruments issued by national governments are generally classified as level 1. in the case of derivatives, standardised equity-linked and interest rate futures will be encompassed by this level.
Level 2: Financial instruments valued on the basis of observable market information not covered by level 1 this category encompasses financial instruments that are valued on the basis of market information that can be directly observable or indirectly observable.
market information that is indirectly observable means that prices can be derived from observable, related markets. level 2 encompasses equities or equivalent equity instruments for which market prices are available, but where the turnover volume is too limited to meet the criteria in level 1. equities on this level will normally have been traded during the last month. bonds and equivalent instruments are generally classified as level 2. interest rate and currency swaps, non-standardised interest rate and currency derivatives, and credit default swaps are also classified as level 2. funds are generally classified as level 2, and encompass equity, interest rate, and hedge funds.
Level 3: Financial instruments valued on the basis of information that is not observable pursuant to by level 2 equities classified as level 3 encompass investments in primarily unlisted/private companies. these include investments in forestry, real estate and infrastructure. private equity is generally classified as level 3 through direct investments or investments in funds. asset backed securities (abs), residential mortgage backed securities (rmbs) and commercial mortgage backed securities (Cmbs) are classified as level 3 due to their generally limited liquidity and transparency in the market.
the types of mutual funds classified as level 3 are discussed in more detail below with a reference to the type of mutual fund and the valuation method.
unlisted equities/forestry Comprehensive external valuations were carried out as per 31 december 2010 and these provide a basis for the valuation of the company’s investments. the external valuations were based on models that included non-observable assumptions. besides the external valuations that had been conducted as per 31 december 2010, the equity investments were stated on the basis of value adjusted equity reported by external sources.
in the case of investments in which storebrand participates as a co-investor together with a leading investor that conducts a valuation, and no recent transactions exist, this value will be used by storebrand after being quality assured. in the case of investments for which storebrand has not received an up-to-date valuation as per 31 december from a leading investor by the time the annual financial statements are closed, the previous valuation is used and adjusted for any market effects during the period from the last valuation up to the reporting date. in those cases where no valuation is available from a leading investor in the syndicate, a separate valuation will be made, as described above.
asset backed securities this category primarily encompasses asset backed securities (abs), residential mortgage backed securities (rmbs) and commercial mortgage backed securities
(Cmbs). these are primarily valued on the basis of quoted prices from brokers or valuations obtained from international banks. the number of brokers who quote prices is very limited and the volume of transactions in the market relatively low.
indirect real estate investments indirect real estate investments are primarily investments in funds with underlying real estate investments. no units in funds that confirm the market price of the units have been traded recently. real estate funds are valued on the basis of information received from the individual fund manager.
most managers report on a quarterly basis and the commonest method used by the individual fund managers is an external quarterly valuation of the fund’s assets. this involves the manager calculating a net asset value (naV). funds often report naV with a quarter’s delay in relation to the preparation of storebrand’s financial statements. in order to take account of the changes in value in the last quarter, internal estimates are made of the changes in value based on developments in the market and by conferring with the respective managers.
storebrand’s private equity investments are usually made through unlisted companies meaning no observable market prices are available. large proportions of the portfolio are priced using comparable listed companies, while a smaller proportion of the portfolio is listed. the valuation of the private equity portfolio will thus be sensitive to fluctuations in the global equity markets. in the period 1997-2010, storebrand’s private equity portfolio has had a beta against the msCi World (net currency hedging to noK) of around 0.4. the annualised alpha in the same period has been around 8.9 per cent.
Valuations of asset backed securities will generally be sensitive to estimated loan repayment terms, probability of losses and discounting rate requirements.
Composition of abs/Cmbs/rmbs portfolio primarily based on exposure to underlying collateral: country asset backed
commercial mortgage backed residential mortgage backed total the netherlands 12% 12%
Composition of abs/Cmbs/rmbs portfolio based on rating from moody’s, alternatively fitch: rating asset backed commercial mortgage backed residential mortgage backed total
Group result before amortisation and write-downs of intangible assets 2 8 -49 179 -108 -410 -147 1,608 1,245
Write-downs and amortisation of intangible assets -9 -13 -390 -390 1 Life and Pensions Income from external customers includes the total premium income including savings premiums and transferred premium fund from other companies, net financial return and other income.
2 Income from other group companies Storebrand Investments manages financial assets for other group companies. Asset management fees are made up of fixed management fees and performance-related fees. Performance-based fees apply to the portfolios qualifying for such fees at any given time, and are recognised as income when they are assured. Asset management includes the income in Storebrand Fondene AS and Storebrand Kapitalforvaltning AS, while the group result before amortisation also includes the proportion of the results from Storebrand Eiendom AS and SPP Fonder AB. Storebrand Livsforsikring AS earns revenue from other group companies for product sales and management. These services are priced on commercial terms.
other other activities consist of activities in the Group that are not included in the four listed business areas above. Consists of the holding company storebrand asa, which invests in and manages subsidiaries. it also includes eliminations from intragroup transactions, which are included in the other segments.
life and pensions Sweden premium income after reinsurance 7,177 7,397 net inflow of premium reserves -829 -645 policyholders' fund incl. accrued profit (excl. conditional bonus) 113,029 108,778 - of which products with guaranteed return 79,569 77,415 return defined benefit 6.0% 4.1%
Conditional bonus 11,503 8,689 deferred capital contribution 2,233 2,286 solvency margin (spp life insurance Group) 199% 194%
asset management total funds under management 406,922 351,160 funds under management for external clients 71,657 56,004
2 The key figures are 12 month rolling figures. AuM = Assets under Management (total assets under management). bp = basis points. Costs encompass Storebrand Fondene AS and Storebrand Kapitalforvaltning AS after eliminations. The income also includes the proportion of the results from Storebrand Eiendom AS and SPP Fonder AB.
3 Consists of the companies Storebrand Bank ASA, Storebrand Boligkreditt AS and Storebrand Eiendomskreditt AS.
Group with investment choice 3,592 3,196 individual endowment insurance and pensions 720 1,543 individual with investment choice 2,178 2,153 risk products without profit sharing 1 1,103 1,484 net premium income life and pensions norway 20,708 18,599 of which premium reserve transferred to company 5,358 2,684 life and pensions Sweden
Guaranteed products 3,077 3,387 unit link 3,565 3,161 net premium income life and pensions Sweden 7,401 7,467 of which premium reserve transferred to company 224 70 total net premium income 28,661 26,475 of which net premium reserve transferred to company 5,582 2,754 1 Includes P&C products in Storebrand Livsforsikring AS.
NOK million 2010 2009 fixed income and similar income from lending to and receivables from financial institutions 20 28 fixed income and similar income from lending to and receivables from customers 1,388 1,662 fixed income and similar income from commercial paper, bonds, and other interest-bearing paper 106 116 other interest income and similar income 8 12 total interest income 1 1,522 1,818 interest and similar costs from liabilities to financial institutions -285 -278 interest and similar costs from deposits from and liabilities to customers -452 -606 interest and similar costs from issued securities -267 -410 interest and similar costs from subordinated loan capital -32 -39 other interest costs and similar costs -30 -61 total interest costs 2 -1,065 -1,394 total net interest income 457 423 1 The total interest income for lending, etc, that is not stated at fair value. 1,378 1,675 2 The total interest costs for deposits, etc, that are not stated at fair value. -845 -1,227 interest costs and value changes on borrowing at fair value (fvo)
net income from equities and units 1,663 506 6,925 9,095 64 9,031 6,937 net income from bonds, bond funds and other fixed-income securities 4,509 17 -1,065 3,461 265 3,197 7,489 net income from financial derivatives 292 2,564 -141 2,715 221 2,494 3,116 net income and gains from financial assets at fair value 6,465 3,088 5,719 15,271 550 14,722 17,542 - of which fVo (fair value option) 5,711 717 5,862 12,290 357 11,933 12,234 - of which available-for-sale 461 -93 368 368 2,211 net income from bonds at amortised cost 2,249 -165 2,084 15 2,069 1,082 change in value of available-for-sale bonds recognised in equity -52 -52 -1,377 14 net income from real estate
NOK million 2010 2009 rent income from properties 1 1,623 1,578 operating costs (including maintenance and repairs) relating to properties that have provided rent income during the period 2 -337 -299 realised gains/losses 1 -2
Change in fair value 154 -254 total income real estate 1,441 1,024 1 Of which properties for own use. 67 94 2 Of which properties for own use. -12 -18 allocation by company and customers total income from investment properties 1,441 1,024 change in value real estate investments
Currency gains/losses, banking 112 107 other income -91 -191 total other income customers 96 -54 17 insurance claims for own account
NOK million 2010 2009 life and pensions norway: Group occupational pensions -9,289 -8,597 paid up policies 710 1,176
the table below shows the anticipated compensation payments (excluding repurchase and payment). the residual balance after 3 years is equal to the obligations carried on the statement of financial position in the financial statements.
NOK billion life and pensions norway life and pensions Sweden development in insurance claim payment - p&c insurance, exclusive run-off calculated gross cost of claims at end of the policy year 21 29 79 197 304 431 - four years later 27 28 - five years later 21
Claims reserve for claims from prior years (before 2005) 20 20 total trend in claims disbursed 199 18 change in insurance liabilities – life insurance
NOK million life and pensions norway life and pensions Sweden 2010 2009 to/from premium reserve excluding guaranteed return 6,391 1,362 7,753 11,371
NOK million 2010 2009 write-downs/income recognition for lending and guarantees for the period
NOK million 2010 2009 pension assets at fair value 01.01 2,973 2,897 expected return 160 175 pension experience adjustments -91 -50 premium paid 196 164 pensions paid -178 -194
Changes to the pension scheme -16 6 net pension liabilities additions/disposals and currency adjustments 21 -25 net pension assets 31.12 3,066 2,973 expected premium payments (pension assets) in 2011 191 pension assets are based on the financial assets held by storebrand life insurance/spp composed at 31.12: Storebrand life insurance Spp properties and real estate 16% 15%
the book (realised) return on the assets 4,7% 5,0% 6,0% 4,1%
net pension cost booked to profit and loss account, specified as follows
Current service cost including employer's national insurance contributions 214 250 interest on pension liabilities 172 173 expected return on pension assets -160 -175 pension experience adjustments
Corrected costs included in previous years -2 net pension cost booked to profit and loss account in the period 224 248 main assumptions used when calculating net pension liability 31.12
expected annual increase in pensions in payment 2.0% 2.0% 2.0% 2.0%
disability table Ku Ku mortality table K2005 K2005 dus06 dus06 financial assumptions the calculation assumptions are set based on the guidelines issued by the norwegian accounting standards board adjusted for company specific factors, including an expected return based on the selected investment profile.
net pension liability 31.12 discounted current value of defined benefit pension liabilities 4,493 4,108 4,296 3,677 3,560 fair value of pension assets -3,066 -2,973 -2,897 -2,760 -2,747 fact based adjustments pension liabilities 1 -125 7 fact based adjustments pension assets -90 -50 -323
22 remuneration of senior employees and elected officers of the company
Klaus-anders nysteen 49,807 notes to the finanCial statements of storebrand Group
Jon arnt Jacobsen 275 birgitte nielsen 325 ann-mari Gjøstein 319 258
Group’s value-based management system. The Group’s value creation finances the overall amount of the bonus, but individual performance determines what proportion of the bonus is allocated. The bonus allocated to an individual is credited to a bonus account, and 1/3 of the balance on the bonus account is paid each year. If the total annual payments exceed the total bonuses awarded and return this will result in parts of Storebrand’s initial contribution forming part of the annual payment. Senior employees, with the exception of the CEO, received an initial contribution when the bonus bank was established. If the employee leaves the company, the positive amount of the initial deposit will be retained by Storebrand. The balance of the bonus account is exposed 50 percent to Storebrand’s share price and 50 percent to the best interest rate paid by Storebrand Bank. Over time the balances in the ”share bank“ and ”interest bank“ will grow separately.
4 The return on the ”share bank“ shows the annual gain in value of the individual’s bonus account caused by the performance of the Storebrand share price in 2010 adjusted for dividend.
the board of storebrand asa will submit a statement to the 2011 annual general meeting on the salary and other remuneration of senior employees, confere section 6-16 a of the public limited liabilities Companies act, based on the Group’s previously adopted guidelines concerning remuneration for senior employees in storebrand.
financial remuneration shall be designed to: 1. help support continuous improvement, stimulate internal cooperation and create a values-based performance culture 2. help focus the efforts of employees 3. ensure the Group‘s strategy and plans provide the basis for the goals and requirements set for employees‘ performance 4. ensure it is based on long-term thinking, balanced goal-oriented management, and real value creation 5. ensure it is based on an assessment of the individual‘s results and compliance with corporate principles 6. facilitate a clear, transparent and team-based process for setting goals and goal structures 7. ensure that both the development of financial remuneration and job requirements are embedded in the employee‘s role, responsibilities and influence in the Group 8. ensure that the composition and level of the components of the financial remuneration are balanced and in line with the market the salaries of senior employees are fixed on the basis of a position’s responsibilities and complexity. regular comparisons are made with corresponding positions in the market in order to adjust the pay level to the market. storebrand does not wish to be a pay leader in relation to the sector.
2 binding guidelines for shares, subscription rights, options, etc, for 2011 financial year 2.1 The bonus system The main elements of the bonus system will be continued the storebrand Group‘s bonus scheme for the 2011 financial year complies with the regulations laid down by the ministry of finance on 1 december 2010 relating to remuneration schemes in financial institutions. much of the Group‘s bonus scheme for senior employees in 2011 is a continuation of earlier bonus schemes. earlier bonus schemes have been very robust with regard to ensuring the overall goals of increasing the correspondence between owners‘ and managers‘ incentives and helping to ensure the management does not take inappropriately large risks.
bonuses are funded by value creation in the Group, while their awarding depends on a unit‘s value creation and the employee‘s individual performance. the bonus entitlement is credited to a bonus account. 1/3 of the bonus account balance is paid each year.
Funding specific quantitative goals for how the value creation in the company will fund bonuses are set each year. the value creation target is based on the risk adjusted result, which excludes market dependent results and profit sharing. significant one-time effects must also be eliminated by adjustment.
Calculation of the allotment result a unit‘s value creation is measured using a scorecard that is anchored in the unit‘s strategic, financial and operation goals. scorecards contain both quantitative and qualitative goals.
the allotment result depends on both the unit‘s result and individual target attainment.
1/3 of the bonus account balance is paid each year. the bonus bank balance can be withheld if the bonus entitlement has been calculated on the basis of incorrect information.
2.3 Termination pay the Ceo and executive vice presidents are entitled to termination pay if their contracts are terminated by the company.
if the employment relationship is brought to an end due to a gross breach of duty or other material non-performance of the employment contract, the provisions in this section do not apply.
the termination pay amounts to the pensionable salary at the end of the employment relationship, excluding any bonus schemes.
2.4 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 pursuant to the share programme for employees.
storebrand has offered employees an opportunity to purchase shares in storebrand at a 20 per cent discount since 1996. the tax-free discount is limited to noK 1,500 per annum pursuant to the tax rules. in 2006, the investment opportunity was expanded to the maximum loan amount from the company (3/5 G)
a maximum of noK 40,000 of shares can be bought at a total discount of noK 8,000. noK 6,500 of this discount will be taxed as pay.
a lock-in period of 1 year is practised for this scheme.
3.2 Paid bonus for 2009 qualifying year the targets set for funding bonuses were achieved in the 2009 qualifying year. therefore, bonuses were awarded to senior employees based on results and performance in 2009 and which were paid out in march 2010.
payments from the bonus bank in march 2010 were made pursuant to the rules that applied in the 2009 qualifying year. 1/3 of the existing balance in the bonus bank was paid out after the awarding of the bonus for the 2009 qualifying year and after calculating the return using the bank interest rate and the development of the storebrand share between 1 January 2009 and 31 december 2009 and 31.12.2009, respectively.
in 2009, the return on the cash portion of the bonus bank was 3.68 per cent and the return on the share portion of the bonus bank was 136.20 per cent.
the awarding and payment of bonuses complied with the applicable guidelines for 2009.
the funding of bonuses is linked to the internal programme for improving operations and requirements concerning the group result and solvency. the funding result was 114 per cent, calculated pursuant to the guidelines for the bonus scheme. assuming 100 per cent target attainment by units and individuals, the average bonus entitlement would be noK 1,365,150.
the allotment for 2010 will also depend on the units‘ results and individual results. the bonus entitlement is credited to the bonus bank.
in the opinion of the board of directors this has no negative consequences for the company and shareholders given the orientation of the scheme and the size of the individual executive vice presidents‘ portfolio of shares in storebrand asa.
NOK million total norway abroad 2009 other reporting duties 3 3 8 tax advice 2 other non-audit services 1 1 1 1 total remuneration to auditors 15 11 4 26 the amounts excluding Vat notes to the finanCial statements of storebrand Group
NOK million 2010 2009 tax payable -67 -3 deferred tax 367 50 total tax charge 300 47 reconciliation of expected and actual tax cost
NOK million 2010 2009 tax increasing temporary differences real estate 4,674 4,416 operating assets 291 298 pre-paid pensions 786 44 securities liabilities 51
during 2010, the storebrand bank Group carried out a noK 5 million write-down in intangible assets. the write-down was primarily linked to it systems for credit risk that are no longer in use. Goodwill linked to hadrian utvikling as was written down in its entirety as per 31 december 2010. the amount was noK 5 million.
Intangible assets linked to acquisition of SPP storebrand livsforsikring as acquired spp livförsäkring ab and its subsidiaries in 2007. the majority of the intangible assets associated with spp are assets of Vif (value of business in force), for which a separate sufficiency test has been performed as per the requirements of ifrs 4. in order to determine whether goodwill and other intangible assets connected with spp has been the subject of a drop in value, estimates are made of the recyclable amount for the relevant cash-flow generating units. recyclable amounts are established by computing the enterprise’s utility value. spp is regarded as a single cash flow generating unit and the development of future administration results, risk results and financial results for spp will affect its utility value. in the computation of this utility value, the management have made use of board-addressed budgets and prognoses for the coming three-year period.
the prognoses for the various elements of the result are based on the development in recent years, effects of measures during the prognosis period, as well as assumptions about the normalised development of the financial markets based on the current financial strategy and applicable market interest rates. the administration result is expected to develop positively due to the cost-efficiency measures, and the growth in sales of products and services that are cost-effective to administer and have lower capital requirements. in addition to the coming three-year period, cash flows are projected for the period 2014 to 2020 based on growth in the various result elements of between 0 percent and 5 percent per annum. a stable growth rate of 2.5 per cent is also assumed in the calculation of the terminal value. Growth is generally expected in the occupational pensions market due to growth factors such as demography with the expected increase in the number of pensioners, higher employment rate,and regulatory conditions, including the transition from defined benefits to defined contribution pensions. the utility value is calculated using a required rate of return after tax of 8 per cent. the required rate of return is computed on the basis of risk-free interest and added to a premium that reflects the risk in the enterprise.
NOK million business area acquisition cost 01.01 acc. depr. 01.01 carrying amount
carrying amount delphi fondsforvaltning sb fondene 35 -4 32 32 hadrian eiendom as sb bank 16 16 16 storebrand bank asa sb bank 563 -141 422 422 other subsidiaries in the storebrand bank Group sb bank 47 -13 34 1 -5 30 storebrand baltic sb life 4 4 4 evoco sb life 4 4 4
NOK million equipment vehicles fixtures & fittings real estate 2010 2009 revaluation booked in balance sheet -1
distribution by company and customers: properties for own use - company 352 336 properties for own use - customers 1,316 1,382 depreciation method: straight line depreciation plan and financial lifetime: equipment 4-6 years
Vehicles 6 years fixtures & fittings 4 years real estate 15 years/50 years 29 tangible fixed assets – operational leasing minimum future payments on operational leases for fixed assets are as follows: NOK million minimum lease payment < 1 year minimum lease payment 1 - 5 years minimum lease payment > 5 years of which future lease income 42 amount through profit and loss account
NOK million 2010 2009 formuesforvaltning as 39 156 handelsbodarna ab 96 nrep logistics ab (publ) 131 allocation by company and customers: receivables in associated companies - company 39 receivables in associated companies - customers 227 156 total receivables from associated companies 266 156 income from associated companies
NOK million 2010 2009 proportion of the result 2 -2 interest income 13 unrealised change in value 46 allocation by company and customers: result from investments in associated companies - company 2 -2 result from investments in associated companies - customers 59 total result from associated companies 61 -2 31 Joint ventures
Group result storebrand helseforsikring as 28 6 evoco assets storebrand helseforsikring as 187 167 liabilities storebrand helseforsikring as 96 100 evoco ownership interests storebrand helseforsikring as 50% 50%
NOK million loans and receivables fair value, held for sale fair value, fvo availablefor sale liabilities at amortised cost total financial assets bank deposits 8,390 8,390 equities and units 92,843 92,843 bonds and other fixed-income securities 48,194 148,414 8,331 204,939 lending to financial institutions 701 701 lending to customers 36,755 673 37,428 accounts receivable and other short-term receivables 3,864 3,864 financial liabilities subordinated loan capital 7,606 7,606 liabilities to financial institutions 5,856 2,197 8,053 deposits from banking customers 179 18,620 18,799 securities issued 11,623 11,623 other current liabilities 6,718 6,718 33 fair value of financial assets and liabilities at amortised cost
Securities issued the bonds are stated on the basis of our theoretical models using the credit spread for storebrand asa over swap.
bonds are stated on the basis of registered sales of the bonds and quoted prices from brokers. all prices are quality assured in relation to eom (end of month) reports from brokers.
Subordinated loan capital the fair value of subordinated loan capital is determined on the basis of registered sales of the bonds and quoted prices from brokers. all prices are quality assured in relation to eom (end of month) reports from brokers.
36 reinsurers‘ share of technical reserves reinsurance share of gross insurance liabilities
2 Storebrand Bank Group has taken over properties in connection with defaulted loans. The properties are valued individually on the basis of the estimated income and costs associated with the completion/sale of the property projects.
NOK million 2010 2009 oslo - Vika/fillipstad brygge 5,625 5,377 rest of Greater oslo 7,603 8,903 rest of norway 14,512 11,184 total properties 28,770 26,043 a further noK 450 million was agreed for property purchases in 2010, but the assumption of the risk and final conclusion of contracts will occur in 2011.
the required rate of return is set on the basis of expected future risk free interest and an individually set risk premium. the following, among other things, is taken into account when setting the required rate of return: • transactions in the market
Sensitivities Valuations are particularly sensitive to changes in the required rate of return and assumed future cash flows. a change of 0.25 per cent in the required rate of return, where everything else remains the same, would result in a change in value in the real estate portfolio of noK 931 million, which is equivalent to 3.36 per cent. around 25 per cent of a property’s cash flow is linked to signed leases. this means that changes in the uncertain components of the cash flow of 1 per cent result in a change in value of 0.75 per cent.
NOK million 2010 2009 additions due to purchases/new planting (forest) 36 46 disposals -1 translation difference -28 -70
Change in fair value less sales expenses 29 53 biological assets booked in the statement of financial statement consist of forests in the subsidiaries as Værdalsbruket and foran real estate sia in latvia.
receivables not fallen due 1,154 79 1,544 past due > 90 days 22 49
Gross accounts receivable/receivables from reinsurance 1,353 79 1,678 11 net accounts receivable/receivables from reinsurance 1,351 79 1,656 9 notes to the finanCial statements of storebrand Group
Spp livförsäkring euroben modified duration 2.4 4.9 average effective yield 2.8% 3.0%
42 derivatives nominal volume financial derivative contracts are related to underlying amounts which are not capitalised in the statement of financial position. in order to quantify a derivative position, reference is made to amounts described as the underlying nominal principal, nominal volume, etc. nominal volume is arrived at differently for different classes of derivatives, and provides some indication of the size of the position and risk the derivative creates. Gross nominal volume principally indicates the size of the exposure, whilst net nominal volume provides some indication of the risk exposure. however nominal volume is not a measure which necessarily provides a comparison of the risk represented by different types of derivatives. unlike gross nominal volume, the calculation of net nominal volume also takes into account which direction of market risk exposure the instrument represents by differentiating between long (asset) positions and short
(liability) positions. a long position in an equity derivative produces a gain in value if the share price increases. for interest rate derivatives, a long position produces a gain if interest rates fall, as is the case for bonds. for currency derivatives, a long position results in a positive change in value if the relevant exchange rate strengthens against the noK. figures for average gross nominal volume are based on daily calculations of gross nominal volume.
total short-term foreign currency 125,149 122,917 long-term foreign currency 1,448 insurance liabilities spp Group in seK -124,532 -124,532 total long-term foreign currency -123,084 -124,532 total net position foreign currency 2010 2,065 -1,615 total net position foreign currency 2009 5,693 5,744 1 Equity and bond funds denominated in NOK with foreign currency exposure, including in EUR and USD, amount to NOK 11 billion.
life and pensions norway the company actively hedges the major part of its foreign currency risk. Currency risk arises from investments in international securities, and to a lesser extent from subordinated loans denominated in foreign currencies. Currency risk is hedged through forward foreign exchange contracts at the portfolio level, and currency positions are regularly monitored within specified total limits. short positions are closed no later than the business day following the date on which they arise. in addition, there are separate limits for creating active currency positions. these positions are included in the note relating to short-term debt instruments and bonds. storebrand utilises a currency hedging principle called block hedging, which makes currency hedging more efficient. the currency positions outstanding as per 31 december 2010 are typical of the company’s small limits for currency.
life and pensions Sweden spp practices currency hedging to a certain extent with respect to its international investments. in the case of equities the currency hedging will be between 50 per cent and 100 per cent, and for other classes it actively hedges the major part of its foreign currency risk.
Carrying amount 8,610 fair value 8,632 effect on result if not reclassified -484 the principal and coupon interest are expected to be repaid for the reclassified paper.
Storebrand Group 2009 - of which premium income premium reserve/deposit total change in insurance liabilities – life insurance 84,951 20,346 1,578 81,971 188,845 77,464 32,026 15,042 124,532 313,377 286,747 provisions after application of sufficiency test notes to the finanCial statements of storebrand Group
motor vehicle other retail total retail total corporate other 1 run-off portf. 2 reserves for oslo re 2010 2009 reserve for undischarged risk
The Norwegian FSA's minimum requirement 57 130 18 206 20 65 291 226
The Norwegian FSA's minimum requirement 6 13 7 25 13 5 1 45 44 1 Consists of natural disaster pool and the Norwegian Motor Insurance Association. 2 This consists of liabilities for insurance subscribed to before the transfer of the insurance enterprise to If in 1999 for agreements that were not renewed by If. This liability is in its entirety reinsured in If.
Change in administration reserve 1 6 exchange rate changes -4 -33 other changes -81 notes to the finanCial statements of storebrand Group
assets and liabilities - p&c insurance reinsurance share of insurance technical reserves 185 1,229 receivables concerning insurance contracts 177 151 total assets 361 1,380 premium reserve 291 232
Claims reserve 601 1,555 - of which rbns 161 397 - of which ibnr 439 1,158 administration reserve 45 44 liabilities concerning insurance contracts 6 20 total liabilities 942 1,851 47 deposits from banking customers
Corporate market 7,448 6,861 retail market 11,351 11,455 48 other current liabilities
NOK million 2010 2009 accounts payable 84 123 accrued expenses/appropriations 577 819 appropriations earnout 18 31
NOK million restructuring earnout total total increase in the period 3 2 6 8 amount recognised against reserves in the period -5 -18 -23 -17
currency hedging of net investment in Spp in 2010, storebrand utilised cash flow hedging for the currency risk linked to storebrand’s net investment in spp. 3 month rolling currency derivatives were used in which the spot element in these is used as the hedging instrument. the effective share of hedging instruments is recognised in total comprehensive income. the net amount recognised in total comprehensive income in 2010, i.e. the effective share of the hedging instruments and the currency effect on the hedged object was noK 29 million. the net investment in spp is partly hedged and therefore the expectation is that future hedge effectiveness will be around 100 per cent.
Collateral received in connection with futures trading 978 received collateral for security lending programme J.p. morgan 391 586 total received and pledged collateral -471 -701 pledged collateral for futures and options are adjusted daily based on the daily margin statement for the individual contracts.
Collateral linked to securities lending will be settled upon the return of lent securities.
Carrying amount for bonds pledged as collateral for swap arrangement of state paper for covered bonds 5,856 6,841 securities pledged as collateral are linked to lending access in norges bank for which, pursuant to the regulations, the loans must be fully guaranteed by 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 december 2010.
NOK million 2010 2009 unused credit limit lending 5,844 2,984 uncalled residual liabilities re limited partnership 5,635 4,483 other liabilities/lending commitments 817 468 total contingent liabilities 12,597 8,182
Guarantees principally concern payment guarantees and contract guarantees. unused credit facilities concern granted and unused overdrafts and credit cards, as well as unused facility for credit loans secured by property.
53 capital requirements and solvency requirements the storebrand Group is a cross-sectoral financial group subject to capital requirements pursuant to basel i/ii (capital adequacy) and the solvency rules on a consolidated basis. pursuant to the solvency rules, solvency margin requirements are calculated for the insurance companies‘ in the Group, while for the other companies a capital requirement pursuant the capital adequacy regulations is calculated. the calculations in the tables below conform to the regulations relating to the application of the solvency rules on a consolidate basis, etc., section 7.
primary capital consists of core (tier 1) capital and supplementary capital. pursuant to the regulations for calculating primary capital, core (tier 1) capital is materially different to equity in the financial statements. the table below shows a reconciliation of core (tier 1) capital in relation to equity. issued hybrid tier 1 capital can account for 15 per cent of the core (tier 1) capital, while any overshoot can be included in the tier 2 capital. a percentage of the conditional bonus is included in the core (tier 1) capital pursuant to the conditions stipulated by the norwegian fsa and this applies to that part of the insurance capital that is not guaranteed in spp. tier 2 capital which consists of subordinated loans cannot exceed more than 100 per cent of the core (tier 1) capital, while dated subordinated loan capital cannot exceed more than 50 per cent of the core (tier 1) capital.
in a cross-sectoral financial group the sum of the primary capital and other solvency margin capital shall cover the sum of the solvency margin requirements for the insurance activities and the requirements for primary capital of financial institutions and securities firms.
NOK million 2010 2009 share capital 2,250 2,250 other equity 16,168 14,967 hybrid tier 1 capital 1,779 1,715
Capital adequacy reserve -399 -254 net primary capital 20,382 19,453 notes to the finanCial statements of storebrand Group
Capital requirements other 60 36 total minimum requirements credit risk 12,373 11,113 operational risk/settlement risk 132 128 minimum requirements primary capital 12,427 11,182 capital adequacy ratio 13,1% 13,9%
NOK million 2010 2009 requirements re primary capital and solvency capital
Capital requirements pursuant to capital adequacy regulations 1,755 1,776 requirements re solvency margin capital insurance 10,905 10,208 total requirements re primary capital and solvency capital 12,660 11,984 primary capital and solvency capital net primary capital 20,382 19,453
Conditional bonus - not approved as solvency capital -3,359 -2,755 other solvency capital 2,955 2,513 total primary capital and solvency capital 19,978 19,211 overshoot solvency capital 7,318 7,227 notes to the finanCial statements of storebrand Group
notes to the finanCial statements of storebrand Group 54 information about close associates
internal transactions between group companies are eliminated in the consolidated financial statements, with the exception of transactions between the customer portfolio in storebrand livsforsikring as and other units in the Group. see note 1 accounting policies for further information.
55 number of employees number of employees 31.12 2,206 2,280 average number of employees 2,242 2,330 number of person-years 31.12 2,163 2,185 average number of person-years 2,173 2,260
Cash and cash equivalents at start of the period 126 cash and cash equivalents at the end of the period 50
Net income and gains from financial instruments: - equities and units 11 -10 - bonds and other fixed-income securities 41 292 - financial derivatives/other financial instruments -8 -244 other financial instruments 1 2 operating income 1,204 874 interest expenses -131 -129 other financial expenses 7 -441 -14 operatinG coStS
other operating costs -106 -108 total operating costs -131 -162 total costs -703 -306 pre-tax profit 502 568 tax cost 6 profit/loss for the year 502 568 allocationS
other equity 11 568 allocated dividend 491 total allocations 502 568 profit and loss aCCount storebrand asa
tangible fixed assets 12 45 41 shares in subsidiaries 7 16,609 16,947 total fixed assets 16,683 17,355 current aSSetS
Financial assets at fair value: - equities and units 8 59 - bonds and other fixed-income securities 9,11 1,313 1,152 - financial derivatives/other financial instruments 10,11,15 37 11 bank deposits 74 48 total current assets 2,621 2,251 total assets 19,304 19,606 equity and liabilitieS
share premium reserve 13 9,485 9,485 total paid in equity 11,715 11,714 non-current liabilitieS
liabilities to financial institutions 14 914 debt within group 17 54 142 other financial liabilities 10,11 16 allocated dividend 13 491 other current liabilities 44 65 total current liabilities 589 1,137 total equity and liabilities 19,304 19,606 statement of finanCial position storebrand asa
Birgitte Nielsen Jon Arnt Jacobsen Halvor Stenstadvold Heidi Skaaret John S. Dueholm
receipts - interest, commission and fees from customers 37 65 net receipts/payments - securities at fair value -51 -452 payments relating to operations -231 -196 net receipts/payments - other operational activities 965 147 net cash flow from operational activities 720 -436 caSh flow from inveStment activitieS
notes to the finanCial statements of storebrand asa 01 accounting policies the financial statements of storebrand asa have been prepared in accordance with the accounting act, generally accepted accounting policies in norway, and the regulations relating to annual accounts, etc, for insurance companies. storebrand asa does not apply ifrs to the parent company’s financial statements.
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 statement of financial position storebrand asa is a holding company with subsidiaries within insurance, banking and investments. the statement in the regulations relating to annual financial statements for insurance companies has not been used. a statement that complies with the accounting act has been used.
the net pension cost for the period is made up of the sum of pension entitlement accrued in the period, interest cost on the calculated pension liability and the expected return on pension assets. pension costs and pension liabilities for defined benefits schemes are calculated using a linear profile for the accrual of pension entitlement and expected final salary as the basis for calculating the benefit obligation, based on assumptions about discount rate, future increases in salary, pensions and social security pension benefits, the future return on pension assets and actuarial assumptions about mortality, staff turnover etc. the discount rate used is the risk-free interest rate appropriate for the remaining maturity. Where a scheme is funded, the pension assets are valued at fair value and deducted to show the net liability in the balance sheet.
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. in such a case, the effect is amortised linearly over the time until the entitlement is fully earned. employer’s social security contributions are included in pension liability and in experience adjustments included in equity.
other equities and units are valued at their fair value. Where the share or interest in question is listed on a stock exchange or other regulated market, fair value is determined as the bid price on the last trading day immediately prior to or on the statement of financial position date.
purchases of the company’s own shares are treated as an equity transaction, and the holding of own shares is reported as a reduction in equity.
financial assets are derecognised when the contractual right to the cash flow from the financial asset expires, or when the company transfers the financial asset to another party in a transaction by which all, or virtually all, the risk and reward associated with ownership of the asset is transferred.
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.
accounting treatment of derivatives for hedging Fair value hedging storebrand uses fair value hedging, where the item hedged is fixed rate funding measured at amortised cost. derivatives that fall within this category are recognised at fair value in the profit and loss account. Changes in the value of the hedged item that relate to the hedged risk are applied to the carrying amount of the item and are recognised in the profit and loss account.
NOK million 2010 2009 storebrand livsforsikring as 850 610 storebrand fondene as 80 35 storebrand bank asa 1 50 35 storebrand Kapitalforvaltning as 178 155 1 Group contribution booked as equity transaction. 130 03 personnel costs
NOK million 2010 2009 ordinary wages and salaries -16 -36 employer's social security contributions -9 -12 other benefits -8 -11 1 See the specification in note 4.
the company’s pension scheme satisfies the requirements of this act. storebrand asa has substantial pension liabilities linked to pensioners who historically speaking were employed by storebrand asa.
the company is obliged to have an occupational pension scheme pursuant to the act relating to mandatory occupational pensions. the company’s pension scheme satisfies the requirements of the act. storebrand’s defined benefit scheme was closed with effect from 1 January 2011. from and including 2011, new employees will be included in storebrand defined contribution scheme.
reconciliation of pension assets and liabilities in the statement of financial position
NOK million 2010 2009 present value of insured pension benefit liabilities 1,630 1,676 pension assets at fair value -1,660 -1,720 net pension liability/surplus for the insured schemes -30 -44 present value of the uninsured pension liabilities 183 218 pension experience adjustments not applied -356 net pension liabilities in the statement of financial position 153 -182 booked in the statement of financial position: NOK million 2010 2009 pension assets 30 367 pension liabilities 183 186 changes in the net defined benefits pension liabilities in the period
NOK million 2010 2009 net pension liabilities 01.01 1,894 2,000 net pension cost recognised in the period 4 7 interest on pension liabilities 79 83 pension experience adjustments 24 -9 pensions paid -188 -186 net pension liability 1,813 1,894 changes in the fair value of pension assets
booked returns on assets managed by storebrand life insurance were: 4.7% 5.0%
main assumptions used when calculating net pension liability 31.12 discount rate 4,0% 4,4%
notes to the finanCial statements of storebrand asa 05 remuneration of the ceo and elected officers of the company chief executive officer bonus (performance-based) 1,377 1,009 other taxable benefits 266 282 board of representatives 512 530
Chairman of the board 566 538 board of directors including the Chairman 3,505 2,805 remuneration paid to auditors other reporting duties 986 5,317 other non-audit services 253 169 1 Pension costs relate to accrual for the year. 2 The Control Committee covers all the Norwegian companies in the group which are required to have a control committee.
Write-down of deferred tax assets 1 1,752 1,766 net tax increasing/(reducing) temporary differences 0 0 net deferred tax asset/liability in the statement of financial position 0 0 1 The statement of financial position 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 taxable group contributions. Allowances carried forward date from the 2002 and 2003, and must be used within 10 years.
Jointly controlled/associated companies storebrand helseforsikring as oslo 50,0% 78 78 1 The shares in Storebrand Bank ASA were written down by NOK 425 million in 2010. A cash flow based valuation based on the expected pre-tax result is conducted when calculating the utility value for the banking group. The management have made use of Board adopted budgets and prognoses for the coming three-year period in the calculation. A stable growth rate of 2.5 per cent is assumed in the calculation of the terminal value, equal to expected inflation. The utility value is calculated using a required rate of return after tax of 9 per cent. The required rate of return is computed on the basis of risk-free interest and added to a premium that reflects the risk in the enterprise.
2 Made a group contribution in 2010 of NOK 20 million as a capital injection. 3 Made a group contribution in 2010 of NOK 30 million as a capital injection. 4 74.9 per cent owned by Storebrand Livsforsikring AS.
Gross nominal volume average nominal volume net nominal volume fair value
NOK million assets liabilities 1 Used for hedge accounting, also see note 15.
11 financial risks credit risk by rating Short-term holdings of interest-bearing securities. category of issuer or guarantor aaa fair value aa fair value a fair value bbb fair value total fair valueNOK million state and state guaranteed 269 127 4 400
Covered bonds 226 226 aa fair value a fair value totalt fair value counterparties
an increase/reduction of 1.5 percentage points in the interest rate will change the value of bonds and other securities by noK 5 million.
NOK million 0-6 months 6-12 months 1-3 years 3-5 years total value carrying amount storebrand asa had as per 31 december 2010 liquid assets of noK 1.4 billion.
currency risk storebrand asa is exposed to limited currency risk and currency amounts to noK 0.3 million.
notes to the finanCial statements of storebrand asa 12 tangible fixed assets real estate equipment, vehicles, fixtures & fittings 2010 2009NOK million depreciation/write-downs for the year 1 -1 -2 -2 -1 1 Depreciation of property recognised under other financial income.
2 Loans are booked at amortised cost and include earned not due interest. Signed loan agreements have standard covenant requirements. The terms and conditions have been redeemed pursuant to signed loan agreements. Storebrand ASA has an unused drawing facility of EUR 210 million.
15 hedge accounting the company uses fair value hedging to hedge interest rate risk. the effectiveness of hedging is monitored at the individual security level.
Varma mutual pension Company 1.8 state street bank 1.4 the northern trust 1.4
Citibank n.a. 1.1 hsbC bank plc 1.0 bank of new york 0.9
Senior employees idar Kreutzer 96,232 odd arild Grefstad 30,018 egil thompson 19,632 lars aa. løddesøl 32,149 roar thoresen 32,888 hans aasnæs 48,750 elin m. myrmel-Johansen 8,491
Gunnar rogstad 102,040 sarah mCphee 39,532 board of directors leiv l. nergaard halvor stenstadvold 8,645 sigurd einarsson annika lundius erik haug hansen 6,043 barbara rose milian thoralfsson
Kirsti Valborgland 2,072 heidi skaaret birgitte nielsen control committee elisabeth Wille 747 ole Klette harald moen 595 ida hjort Kraby tone m. reierselmoen 1,734 finn myhre erling naper board of representatives arvid Grundekjøn 11,300 merete egelund Valderhaug terje r. Venold 2,031
Kristian Wibe nina hjellup tore eugen Kvalheim pål syversen paul eggen Jr per-erik hauge 1 The summary shows the number of shares owned by the individual, as well as his or her immediate family and companies where the individual exercises significant influence, confer the Accounting Act, Section 7-26.
notes to the finanCial statements of storebrand asa transactions between group companies
NOK million 2010 2009 profit and loss account items: Group contributions and dividends from subsidiaries 1,158 835 purchase and sale of services (net) -76 53
Statement of financial position items: subordinated loans to group companies 17 17 due from group companies 1,158 953 payable to group companies 54 142 18 number of employees/person-years number of employees 11 38 number of full time equivalent positions 11 37 average number of employees 11 42
storebrand asa and the storebrand Group – deClaration by the members of the board and the Ceo
On this date, the Board and CEO have considered and approved the annual report and annual financial statements for Storebrand ASA and the Storebrand Group for the 2010 financial year and as per 31 December 2010 (2010 Annual Report).
Accounting Act, Norwegian Annual Accounts Regulations for Insurance Companies and the additional requirements in the Norwegian
Securities Trading Act. The annual report for the group and parent company complies with the requirements of the Norwegian Accounting
In the best judgement of the Board and CEO the annual financial statements for 2010 have been prepared in accordance with applicable accounting standards, and the information in the financial statements provides a fair and true picture of the parent company’s and