Registred share capital (noK billion) 2.25 nominal value 31.12.2010 5 1 Beinsur index
Raising awareness is an important part of our management and employee development work. We stipulate environmental and social criteria for both investments and purchases. We conduct annual dilemma training as part of our ethics work. We are a driving force behind regulatory changes, which allows us to play a more important role in funding infrastructure. Our corporate responsibility goals are intended to create business opportunities that simultaneously solve important social problems.
A british company is currently excluded from storebrand’s investments due to serious environmental damage and breaches of human rights. the company recently lost a lot of money after the Indian environmental protection authorities rejected a mining application. this is one example of how investing responsibly can also be profitable.
In collaboration with pimco, the world’s largest fixed interest manager, we have established an innovative product that invests in national debt in emerging markets and at the same time stipulates strict requirements regarding sustainability.
3. The trend towards fund-based products without interest guarantees combined with a general increase in interest in long-term savings and pensions will intensify competition.
The pensions market is undergoing change. The transition to defined contribution pensions means Storebrand comes into contact with the insured more often, and competition within defined contribution-based products is strong. On 1 March 2011, Storebrand introduced a new customer-oriented business model to meet these new challenges. The new model is intended to ensure the strength and pace of the implementation of the Group’s strategy. Customer services are being gathered in one place due to restructuring in the
Solvency II is the term of a common set of European regulatory requirements for the insurance industry. The framework directive was adopted by the European Parliament in 2009. The work on supplementary provisions and adaptation to Norwegian legislation is underway and much is expected to be clarified during 2011. The
It will be possible to apply to the supervisory authorities to use a so-called “internal model”, which can fully or partly replace calculations using the standard model. The Storebrand-Group has initiated a project aimed at satisfying the comprehensive requirements for gaining approval to use an internal model for selected risks. The supervisory authorities will initiate a so-called investigation process during the first quarter of 2011. Participation in the investigation process can result in faster consideration of the final application for internal models when Solvency II comes into force.
The Group has put a lot of work into a project responsible for ensuring the proper implementation of Solvency II throughout the
The financial result was affected by the building up of reserves for long life for individual pension insurance and paid-up policies.
A total of NOK 557 million was recognised as income from upfront pricing of the interest guarantee and profit from risk for group defined benefit in 2010 compared to NOK 478 million in 2009.
Group pension - defined benefit 8,154 8,286 paid-up policies 98 101
The business area Life and Pensions Sweden (SPP) offers pension and insurance solutions, and advice to companies in the competitive segment of the occupational pensions market. The company also offers private pension savings and sickness- and health insurance.
Total assets amounted to NOK 122 billion at year-end 2010, which is equivalent to an increase of NOK 10 billion since 2009. The increase was due to good premium growth within unit linked insurance and good returns in the customer portfolios. The SEK has strengthened markedly against the NOK since 2009, which had a positive effect on the capital under management measured in NOK.
30 years Project Manager Storebrand Livsforsikring AS Employee Representative Board Member Storebrand ASA since 2010 2004 Master’s degree in economics and business administration, Handelshøyskolen BI
transferred to guaranteed products during payment will now be kept within the unit linked insurance product in the future.
NOK 407 billion in mutual funds, fund-in-funds, and individual portfolios for fund management companies, insurance companies, pension funds, local authorities, institutional investors, and investment companies. As per 31 December 2009, the assets under management amounted to NOK 351 billion. The following changes took place in 2010: • Mutual funds grew by NOK 12 billion.
(Hedge Fund Research Fund-of-Funds Composite Index) which amounted to 5.2 per cent in comparable currency.
Eiendomskreditt AS, amounted to NOK 351 million, equivalent to a costs ratio of 68 per cent in 2010. The costs ratio was 71 per cent in 2009.
Net income from financial instruments increased by NOK 5 million to
Operational risk is minimised through systematic risk reviews in all parts of the bank at least once a quarter, and at the start of projects and if special events occur.
capital ratio of 10.6 per cent. The target was 10 per cent.
• The proportion of managers who have carried out dilemma training in their department.
The Group has also contributed to the development of and is a signatory to the UN‘s principles for responsible investments
The Storebrand-Group has an actively used in-house health clinic with a comprehensive and interdisciplinary treatment concept.
A course called “Service Heroes” has been developed and implemented. This is a course in both written and verbal communication for employees. The course has helped enhance skills among service staff in the life insurance company. A similar course will be offered to other employees in similar positions in the future.
The Norwegian FSA is expected to present concrete proposals concerning changes to the business rules in 1Q 2011. Storebrand views this effort positively and is maintaining an active dialogue with the authorities with the aim of establishing general conditions that preserve effective long-term management of customers‘
Storebrand ASA recorded a profit for the year of NOK 502 million for 2010. During its discussion of the profit for the year in 2007, the Board of Storebrand ASA adopted a new dividend policy with an increased distribution ratio. The new dividend policy is as follows: “The 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 Group 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.”
You can read more about Storebrand’s dividend policy on page 41.
8. Board of repreSeNtativeS aNd Board of directorS: coMpoSitioN aNd iNdepeNdeNce
The final agenda is fixed in consultation with the Chairman of the Board.
Specific reporting instructions are drawn up each quarter and communicated to the subsidiaries. Internal meetings are held prior to subsidiaries’ submitting reports, as well as meetings in which the external auditor participates, to identify risk factors and measures linked to important accounting items or other factors. Corresponding quarterly meetings also held with various specialist areas in the group that play an important role in the assessment and appraisal of insurance obligations, investment properties and financial instruments, including lending. These meetings particularly focus on any changes in the market, specific situations relating to individual investments, transactions and operations factors, etc. Valuations associated with important accounting items and any changes to policies, etc are described in a separate document (Valuation Items Memo). The
The external auditor is elected by the AGM, and is responsible for the financial auditing of the group. The external auditor issues an auditor’s report in connection with the annual financial statements and conducts limited audits of interim financial statements. The external auditor attends board meetings in which interim financial statements are approved, all meetings of the Control Committee, and all meetings of the Audit Committee, unless the items on the agenda do not require the presence of the auditor. In 2007, the Board decided that the external auditor must rotate the partner responsible for the audit assignment every seven years. The external auditor’s work and independence are evaluated every year by the Board’s Audit
Agronomist, Agricultural University of Norway, Advanced Studies Business Analysis, Norwegian School of E conomics and Business Administration (NHH) and Authorised Financial Analyst (AFA) (NHH), Programme for Executive Development (PED), IMD Lausanne.
financial instruments General policies and definitions Recognition and derecognition financial assets and liabilities are included in the statement of financial position from such time storebrand becomes party to the instrument’s contractual terms and conditions. normal purchases and sales of financial instruments are booked on the transaction date. When a financial asset or a financial liability is first recognised in the financial statements, it is stated at fair value. first time recognition includes transaction costs directly related to the acquisition or issue of the financial asset/financial liability, if it is not a financial asset/financial liability at fair value in the profit and loss account.
At fair value through profit or loss in accordance with the fair value option (FVO) a significant proportion of storebrand’s financial instruments are classified as at fair value through profit and loss because: • such classification reduces a mismatch that would otherwise have occurred in measurement or recognition as a result of different rules for measurement of assets and liabilities, or because
Share lending a stock loan involves a transfer of shares from the company to a borrower in return for the borrower pledging security in the form of cash or securities. at the maturity of the stock loan, the identical securities are returned to storebrand. the borrower is required to compensate the lender for various events related to the shares lent, such as distributions of subscription rights, dividends etc. the borrower is entitled to exercise the voting rights of the shares during the period of the stock loan. shares lent out by storebrand are not removed from the statement of financial position, and fees earned on stock lending are recognised as income as they are received. received cash collateral and any reinvested collateral are recognised at their gross value. reinvested collateral is recognised at its gross value in the statement of financial position under the individual asset.
Conditional bonus the conditional bonus arises when the value of customer assets is higher than the present value of the liabilities and it thus covers that part of the insurance capital that is not guaranteed. in the case of contracts where the customer assets are lower than the liabilities, the owners’ result is charged via deferred capital contribution allocations. the conditional bonus and deferred capital contribution are recognised on the same line in the statement of financial position.
price of interest guarantee and profit risk 543 15 557 478 assets under management (noK billion) 85 20 3 83 8 200 185 1 Interest result and profit sharing.
• Disability – payment in the event of illness or occupational disability.
Valuations of indirect real estate investments are particularly sensitive to changes in the required rate of return and assumed future cash flows. indirect real estate investments are mortgaged structures. on average, 60 per cent of the portfolio is mortgaged. 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 approx. noK 300 million.
Spp the pension plan for employees in spp follows the plan for bank employees in sweden. the ordinary retirement age is 65 in accordance with the pension agreement between the employer’s association of the swedish banking institutions (bao) and the union of finance sector employees and between bao and saCo (the swedish Confederation of professional associations). the amount is 10 percent of the annual salary up to 7.5 times the national insurance basic amount. the retirement pension is 65 per cent of the annual salary for the portion of salary between 7.5-20 times the national insurance basic amount, and 32.5 per cent of annual salary between 20-30 times the national insurance basic amount. no retirement pension is paid for the portion of salary in excess of 30 times the national insurance basic amount.
Changes to the pension scheme 6 net pension liabilities additions/disposals and currency adjustments 32 -45 reversed employer's ni contributions -2 -1 net pension liabilities 31.12 4,492 4,108 changes in the fair value of pension assets
the board of storebrand asa has had a special remuneration Committee since 2000. the remuneration Committee is tasked with providing recommendations to the board concerning all matters to do with the company’s remuneration of the Ceo. the Committee shall remain informed about and suggest guidelines for the fixing of remuneration for senior employees in the group. in addition the Committee is the advisory body for the Ceo in relation to remuneration regimes that cover all employees in the storebrand Group, including storebrand’s bonus system and pension scheme.
Two categories of financial remuneration senior employees and employees who influence the company‘s risk are divided into two categories with regard to financial remuneration. senior employees for whom accounting and control functions make up a large part of their duties receive fixed salaries only. the other senior employees have a bonus scheme linked to value creation in the Group, in the unit and through the performances of individual employees.
3 the senior employee remuneration policy practised in 2010 3.1 General the senior employee policy practised in 2010 was based on the statement regarding the fixing of the salary of senior employees that was dealt with by the annual general meeting in april 2010.
3.3 Calculation of bonus payment for 2009 qualifying year the average bonus entitlement for a member of the executive management team is calculated using the following formula: expected bonus level x Group‘s funding x individual target attainment the average expected bonus level was noK 1,075,000. Group funding was 70 per cent and the average target attainment by units and individuals was 105.9 per cent for the 2009 qualifying year.
the average expected bonus level for the executive management team was noK 1,197,500.
the awarding and payment of bonuses will comply with the applicable guidelines for 2010.
NOK million 2010 2009 interest costs, insurance -13 -42 insurance related costs -58 -35 borrowing expenses -13 -11
Currency differences from converting foreign units 11 32 550 1 46 640 -880 other changes 39 39
carrying amount brand name spp 10 years 10% straight line 121 brand name (hadrian eiendom) not depreciated 31 it systems 1-8 years 10-33.3% straight line 154
NOK million 2010 2009 lease payments through profit and loss account 163 195 future lease income through profit and loss account 3 3 this primarily concerns the lease for storebrand’s head office in lysaker, and the rental of coffee machines and photocopiers.
Joint ventures are businesses the Group operates together with external partners.
Write-down of lending losses -257 -289 net lending 37,428 39,501 non-performing and loss-exposed and lending losses, guarantees, etc
in the solvency margin requirement that is used for the insurance companies, this requirement is calculated as 4 per cent of the gross insurance fund. the solvency margin capital in insurance differs slightly from primary capital which is used in capital adequacy. primary capital includes a proportion of conditional bonuses, but this capital cannot be included in the solvency margin capital. a proportion of additional statutory reserves and the risk equalisation fund are also included in the solvency margin capital.
net payments - sale/capitalisation of subsidiaries -184 316 net receipts/payments - sale/purchase of property and fixed assets -5 -6 net cash flow from investment activities -189 310 caSh flow from financinG activitieS
currency Current assets and liabilities are translated at the exchange rate on the balance sheet date. shares held as fixed assets are translated at the exchange rate on the date of acquisition.
bonds and other fixed income securities financial assets and liabilities are included in the statement of financial position from such time storebrand becomes party to the instrument’s contractual terms and conditions. normal purchases and sales of financial instruments are booked on the transaction date. When a financial asset or a financial liability is first recognised in the accounts, it is valued at fair value plus, in the case of a financial asset or a financial liability that is not a financial asset or a financial liability at fair value in the profit and loss account, transaction costs directly related to the acquisition or issue of the financial asset or the financial liability.
NOK million 2010 2009 pension assets at fair value 01.01 1,720 1,749 expected return 92 106 pension experience adjustments -34 premium paid 48 34 pensions paid -166 -169 net pension assets 1,660 1,720 expected premium payments (pension assets) in 2011: 28
NOK million 2010 2009 net pension cost recognised in the period 4 7 interest on pension liabilities 79 83 expected return on pension assets -92 -106 pension experience adjustments 11 net pension cost booked to profit and loss account in the period -9 -6 net pension cost includes employer’s national insurance contribution and is included in operating costs.
Change in temporary differences -34 -111 tax base for the year -20 -13 payable tax
NOK million interest rate currency net nominal value 2010 2009 bond loan 2005/2011 Variable noK 750 752 751 bond loan 2009/2012 Variable noK 405 406 405 bond loan 2010/2013 1 fixed noK 200 210 bond loan 2010/2013 Variable noK 400 400 bank loan 2008/2010 Variable eur 110 914 1 Loans with fixed rates are hedged by interest swaps, which are booked at fair value through profit and loss. Changes in values of loans that can be related to the hedged risk are included in the carrying amount and included in the result.
Citibank n.a. 0.9 storebrand asa 0.9 oslo pensjonsforsikring 0.8 morgan stanley & Co 0.8 foreign ownership of total shares 49.7%
Group’s assets, liabilities, financial standing and results as a whole as per 31 December 2010. In the best judgement of the Board and
The Board of Representatives recommends that the Annual General Meeting approve the Board of Directors proposed Annual Report and
With reference to the auditor’s report of 15 February 2011, the Control Committee recommends that the proposed company accounts, consolidated accounts and annual report be adopted as the Annual Report and Accounts of Storebrand ASA for 2010.
The average remaining term of cash flow on interest-bearing securities. Modified duration is calculated on the basis of duration and is an expression of sensitivity to changes in underlying interest rates.
Earnings per share is calculated as the majority’s proportion of the result after tax costs divided by the number of shares. The number of shares used in the calculation is taken as the average number of ordinary shares outstanding over the course of the year. In case of new issues of shares, the new shares are included from the date of subscription.
(tier 1) capital pursuant to the conditions set by The Norwegian FSA.
following the split from denmark, management of the fire insurance scheme is transferred to Christiania, as the capital of norway was called at that time. in 1913 the scheme is converted into a public sector company called norges brannkasse.
storebrand acquires europeiske – the leading travel insurance company in norway.
storebrand asa professor Kohts vei 9 p. o. box 500 no-1327 lysaker, norway www.storebrand.no