We have implemented structural changes in our organisation and established a shared service organisation. We are doing so in order to make it easier to be and remain a customer of Storebrand, and to strengthen our competitiveness. These changes have been challenging, but it is incredibly fun to see how quickly and constructively our employees have responded.
Environmental requirements to suppliers 57% 64% 65% of active contracts have environmental criteria
ABOUT SUSTAINABILITY REPORTING Storebrand has published environmental and corporate social responsibility reports since 1995, and these reports have been integrated into the Group’s annual report since 2008. Storebrand uses the Global Reporting Initiative (GRI) version G4 guidelines as a tool for reporting on sustainability. Our reporting practice is essentially in accordance with GRI's reporting principles and satisfies level CORE. Storebrand desires transparency and requires compliance and quality in its sustainability work. The results have therefore been reviewed and certified by Deloitte AS. Their conclusion may be found in the auditor's report on page 158 of the annual report. This increases the credibility of the reporting and data, and also engenders greater internal confidence that the information has been collected, analysed, and the quality assured in a proper manner. Additional information regarding the reporting process and the individual scorecard indicators, as well as the GRI Index table for the indicators that Storebrand is reporting on can be found on www.storebrand.no under sustainability.
A total of 707 million shares in Storebrand were traded in 2015, which is An Increase of 29 per cent from 2014. The trading volume in monetary terms totalled NOK 20.907 million in 2015, an increase from NOK 19.123 million in 2014. In monetary terms Storebrand was the 13th most traded share on Oslo Børs in 2015. In relation to the average total number of shares, the turnover rate for shares in Storebrand was 157.3 per cent.
GROWTH IN SAVINGS AND INSURANCE Companies and their current and former employees are the Group's main target. In the corporate market, the Group has maintained its position as the market leader for defined contribution pensions in Norway. In November, Storebrand won the tendering round for the largest pension agreement in the Norwegian pension market with the Confederation of Norwegian Enterprise (NHO). The agreement strengthened Storebrand's position as the market leader.
The Savings segment has been defined as a growth area for the Group. Adjusted for non-recurring effects in the 4th quarter in 2014 and 2015 the earnings growth for the year is 16 %. The earnings growth is driven by higher assets under management and good sales.
Total fee and administrative income has increased by 12 per cent from 2014 to 2015. Adjusted for non-recurring effects related to pension costs in 2014 and restructuring costs in 2015, the nominal cost level increased in accordance with the volume growth, which is attributed to higher distribution costs and other volume-related costs.
Defined contribution pensions continue to show strong growth due to a steadily rising number of companies choosing to convert from defined benefit schemes to defined contribution schemes. This increases both the number of members and the current premium payments and management volume in the defined contribution pension schemes in both Norway and Sweden, in addition to growth through the return on premium reserves. The combined growth in customer assets for the Group's defined contribution pension products was 22 per cent in 2015, compared with the previous year.
Storebrand has a history that goes back 248 years in time. Storebrand founded the insurance industry in Norway after the great city fire of 1767. Storebrand has worked since then on meeting and solving the challenges of society up until the present, where we are the market leader for sustainable investments. Today, each individual customer can readily choose the sustainability level of their investments, and pension portfolios are guided actively towards a higher level of sustainability through internal analyses.
FUNDAMENTAL PRINCIPLES Storebrand bases its work on sustainability and sustainable investments on global standards for environmental and human rights. For example, the UN principles for responsible business operation, the Global Compact. These principles provide a foundation for our sustainability guidelines. We also support the UN human rights conventions, UN environmental conventions, ILO Core Conventions, UN Convention against Corruption and the UN Guidelines for Business and Human Rights. We have also signed the UN Principles for Responsible Investment (PRI) and the UN Principles for Sustainable Insurance (PSI).
• Storebrand shall actively seek to prevent any activities that are harmful to society or criminal acts taking place in connection with our operations. • Storebrand shall have a transparent management structure in accordance with national and international corporate governance standards.
REGULATORY CHANGES Solvency II The new European solvency regulations, Solvency II, entered into force on 1 January 2016 and will apply to all the insurance companies in the EEA. The Financial Supervisory Authority of Norway has approved Storebrand’s application to use the transitional rules for technical insurance reserves.
Storebrand ASA is the holding company in the Storebrand Group, and the accounts have been prepared in accordance with the Norwegian Accounting Act, generally accepted accounting policies in Norway, and the Norwegian Regulations relating to annual accounts, etc. for insurance companies.
The General Meeting makes decisions concerning the following: • Approval of the annual report, financial statements and any dividend proposed by the Board. • Statement on the fixing of remuneration to executive personnel • Election of shareholder representatives to the Board of Representatives and members of the Nomination Committee and the Control Committee. • Remuneration of the Board of Represent atives, Nomination Committee and Control Committee. • Election of an external auditor and fixing the auditor’s remuneration. • Any matters listed on the agenda en closed with the notice of the meeting.
The Act on Financial Undertakings and Financial Groups, which entered into force on 1 January 2016, revoked the requirement of having a board of representatives. At the same time, the establishment of a so-called corporate assembly was made optional. The Board of Directors proposes to the Annual General Meeting that no corporate assembly be established.
The responsibility for Storebrand's control functions for risk management and internal control lies in the CRO function under the management of the Group CRO. The Group CRO reports directly to the CEO. The CRO function is responsible for supporting the Board and group management team with respect to the establishment of a risk strategy and operationalisation of the setting of limits and monitoring of risk raking across Storebrand's business areas. In addition, this function is responsible for managing the value-based management system and coordinating the financial planning process, as well as the management's risk assessment and internal control reporting.
14. TAKEOVERS (NO DEVIATIONS FROM THE CODE OF PRACTICE) The Board of Directors has prepared guidelines for how to act in the event of a possible takeover bid for the company. These guidelines are based on the Board of Directors ensuring the transparency of the process and that all the shareholders are treated equally and given an opportunity to evaluate the bid that has been made. It follows from the guidelines that the Board of Directors will evaluate the bid¬ and issue a statement on the Board's opinion of the bid, in addition to obtaining a valuation from an independent expert. Moreover, the Board will in the event of any takeover bid¬ seek whenever possible to maximise the shareholders’ assets. The guidelines cover the situation before and after a bid is made.
Hodnesdal has worked for the Storebrand Group since 1996. She began as a corporate trainee, and has extensive experience as an executive in the area of strategy, business development, P&C insurance, and life and pension insurance.
Storruste has previously worked at Storebrand Bank ASA as a Project Manager at the Product and Development department, and Senior Consultant at the Credit Department Retail. Her previous positions include Gjensidige Bank AS, Incentiva Resultatutvikling DA and Sparebankenes Kredittselskap AS.
Financial assets at amortised cost: - Bonds held-to-maturity 10,32,33 15,648 15,131
Net movement in cash and cash equivalents -2 341 1 260
Cash and cash equivalents at the end of the period1 3 132 5 473 1) Consist of: Lending to financial institutions 123 207
Note 1 - Corporate information and accounting policies 1. COMPANY INFORMATION
When calculating the life insurance reserves, the estimated future administrative expenses that may reasonably be expected to arise and can be attributed to the existing insurance contracts are taken into account. The expenses are estimated according to the company's own cost analyses and are based on the actual operating costs during the the most recent year. Projection of the expected future costs follow the same principles on which Solvency II is based. Any future cost-rationalisation measures are not taken into account.
The defined contribution pension scheme involves the Group in paying an annual contribution to the employees' collective pension savings. The future pension will depend upon the size of the contribution and the annual return on the pension savings. The Group does not have any further work-related obligations after the annual contribution has been paid. No provisions are made for ongoing pension liabilities for these types of schemes. Defined-contribution pension schemes are recognised directly in the financial statements.
PROFIT SHARING Storebrand Life Insurance A modified profit-sharing regime was introduced for old and new individual contracts that have left group pension insurance policies (paid-up policies), which 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.
Any negative returns on 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 net profit-sharing and losses line.
Group profit before profit sharing and loan losses -27 278 2,193 3,431
6. Health and P&C insurance contracts are group contracts with lump-sum payments for occupational injury insurance, critical illness, cancer insurance, child insurance or accident insurance.
7. Disability and survivor products in the payment phase without accrual of a paid-up policy.
Starting from 2014 group pension insurance schemes in Norway follow the premiums for traditional retirement and survivor coverage in the industry tariff K2013. The premiums for disability pensions are based on the company's own experience. Expense premiums are determined annually with a view to securing full cover for the next year's expected costs.
The greatest risks are linked to the equity price risk, interest rate risk (higher rates), property price risk and credit risk (spread risk).
Based on the stress test, SPP has an overall market risk of SEK 3.3 billion, while the buffer capital totals SEK 5.3 billion. The buffer capital consists of the conditional bonus (accrued customer surpluses) minus deferred capital contributions.
Debt raised from issuance of securities 4,147 212 8,918 5,640 18,917 15,475
In the retail market, most of the loans are secured by means of home mortgages. There are housing loans amounting to about NOK 26.6 billion with an additional NOK 2.6 billion in unused credit facilities. Total loans and credit facilities in housing are therefore about NOK 29.2 billion. Customers are evaluated according to their capacity and intent to repay the loan. In addition to their capacity to service debt, customers are checked regarding policy regulations, and customers are scored using a scoring model.
Loans to customers/liabilities to credit institutions/liabilities established by issuing securities for Storebrand Bank: The fair value of loans to customers with adjustable interest is valued at book value. However, the fair value of loans to corporate customers with margin loans is lower than the book value because certain loans run with lower margins that they would have done if they had been taken up as at 31 December 2015. The value shortfall is calculated by discounting the difference between the agreed margin and the current market price over the remaining duration. In addition, the fair value is adjusted for write-downs. The fair value of loans, liabilities to credit
LENDING TO CUSTOMERS Fixed-rate lending is valued at fair value. The value of these loans is determined by discounting the agreed cash flows over the remaining fixed-interest-rate period. The discount rate is the associated swap curve adjusted for the market spread.
Change in insurance liabilities - life insurance -12,513 1,615 -5,183 83 -15,998 -21,417 1) Including strengthening of longevity reserves, see
Senior employees 1) Storebrand discontinued target bonuses for executive personnel in 2015. Portions of the former target bonus were converted to fixed salary and accounted for a large portion of the fixed salary increase from 2014 to 2015. See Note 26 in the annual report for 2014 for further information on compensation and payments for accrued rights related to the pension scheme change as of 1 January 2015. 2) Comprises company car, telephone, insurance, concessionary interest rate, other taxable benefits. 3) Employees can borrow up to NOK 3,5 million with subsidised rates while excess loanamount hold market rate. 4) The summary shows the number of shares owned by the individual, as well as his or her close family and companies where the individual exercises significant influence, cf. the Accounting Act, Section 7-26.
THE BOARD’S STATEMENT ON THE FIXING OF SALARIES AND OTHER REMUNERATION TO EXECUTIVE PERSONNEL
Storebrand shall have an incentive model that supports the Group's strategy, with emphasis on the customer's interests and long-term perspective, an ambitious model of cooperation, as well as transparency that enhances the Group's reputation. Therefore the company will primarily stress a fixed salary as a means of overall financial compensation, and utilise variable remuneration to a limited extent.
Tax effect of realised/unrealised shares 1,918 10 share dividends received -11 6 associated companies -2 permanent differences -311 153
As of 31.12.15, Storebrand Life Insurance had NOK 1 427 million invested in Storebrand Eiendomsfond Norge KS. The investment is classified as “Investment in Associated Companies” in the Consolidated Financial Statements. The investment is classified as “Investment in Associated Companies” in the Consolidated Financial Statements.
VACANCY Norway At the end of 2015, a total of 13.9 per cent (8.9 per cent) of the floor space in the investment properties was vacant. Of the total vacancy, 6.8 per cent (3.3 per cent) is related to space that is unavailable for leasing due to ongoing development projects.
Debt raised through issuance of securities 2,115 2,352 30 3,207 3,531 -49 1) Book values as at 31.12.
Of total loans of NOK 29.3 billion , NOK 14.3 billion has been mortgaged in connection with the issuing of covered bonds (covered bond rate) in Storebrand Boligkreditt AS.
NOK million Share capital1 Own shares Share premium Other equity Total equity
Net pension cost booked to profit and loss accounts in the period 7 -39
The actuarial assumptions in Sweden follow the industry's mutual mortality table DUS14 adjusted for corporate differences. The average employee turnover rate is estimated to be 4 per cent p.a.
THE DIFFERENCE BETWEEN THE FINANCIAL RESULTS AND THE TAX BASIS FOR THE YEAR IS PROVIDED BELOW
Paid-in capital includes share capital, share premium reserve and other paid-in capital. Retained earnings include other equity and reserves.