Everyone’s need to think of their future provides the basis for all insurance and savings. Storebrand is a specialist in long-term savings and life insurance, and a market leader in Norway. This means that we are well positioned to meet increasing demand for products and services that help to give our customers a more secure financial future at a time when more and more people recognise the need to make their own arrangements to supplement the state system.
Nov/Dec> Storebrand receives a prize for the group's reporting on sustainability and corporate social responsibility for the 2002 accounting year. This is a new prize, and the jury comments that Storebrand was chosen because of the exemplary way in which its report dealt with commercial, environmental and social issues.
Storebrand Fondsforsikring launches Fondskonto Link, a new and flexible form of mutual fund savings with tax benefits.
Storebrand has played an active role in the development of the
2003 was a year of positive development for Storebrand in many areas. After several years of downturn, stock markets recovered in 2003 and share prices rose sharply over the course of the year. At the same time interest rates in Norway have fallen to historically low levels. These developments in the financial markets generated a significant improvement in earnings for
Storebrand Life Insurance group reported a profit for the year to be allocated between its policyholders and owner of NOK
As shown in note 26 to the accounts, goodwill arising on the purchase of Finansbanken (subsequently merged with
Non-life insurance: Non-life insurance activities produced a total operating profit of NOK 348 million, representing an improvement of NOK 590 million from 2002. Profit for the year including transfers to profit from statutory security reserves amounted to NOK
The identification and management of operational risk is an integrated part of management responsibility throughout the organisation. In addition the management groups in each business area carry out an annual risk evaluation in order to produce an overall risk summary and recommendations for improvement. This summary is presented to the group’s Board.
The Board of Directors has on a number of occasions reviewed its own working methods and the processes involved in preparing for and conducting board meetings. The Board carried out an evaluation of its work in 2003, and the executive management team participated in this process. The Board held 16 meetings and one Board Conference in 2003. The work of the
Storebrand Fondsforsikring will benefit from growth in assets under management, while Storebrand Bank will benefit from higher commission income from growth in sales of savings and life insurance products.
Financial markets can fluctuate widely in the space of a short time and so affect the company's risk exposure. Storebrand continually manages its risk exposure to keep it within predetermined limits approved by the Board of Directors. Risk exposure is managed in several ways: Firstly, considerable importance is attached to building a sufficient level of buffer capital in order to absorb any losses. Secondly, risk exposure is diversified as much as possible. This is achieved by investing in a number of different areas that are not expected to cause losses simultaneously. Thirdly, securities with different risk levels are bought and sold. Finally, financial contracts such as options are used. The combination of all these tools allows a good control of risk exposure to be maintained.
Measures include both ensuring environmentally friendly procedures and implementing suitable technical solutions.
In order to create a good working environment and cater for the needs of its employees, Storebrand has established policies on training, older employees and equality. The Norwegian organisation 'Equality, Management and Diversity' recognised
Child insurance Payment in respect of events such as disability, invalidity, serious illness, hospitalisation or death.
For the first two years after defined contribution pensions schemes were granted the same tax advantages as defined benefit schemes in 2001, interest in the new schemes was mainly limited to small companies with no existing pension arrangements. However in 2003 a number of larger companies elected to convert their existing defined benefit pension schemes to defined contribution schemes. Storebrand expects defined contribution pensions to account for a significant part of future growth in the pension market.
Operating profit. Storebrand Life Insurance reported an operating profit for the year of NOK 2,653 million, as compared to a loss of NOK 1,253 million in 2002. The profit allocated to policyholders was NOK 1,839 million (including NOK 470 million allocated to and NOK 21 million drawn from additional statutory reserves) and the profit to the owner was NOK 835 million.
Embedded Value. Embedded Value is defined as the net present value of future post-tax profits for the company’s owner.
RISK CAPITAL AS % OF POLICYHOLDERS’ FUNDS EXCLUDING ADDITIONAL STATUTORY RESERVES
Innovation. Storebrand Investments has for many years been a leading player for back office trading and settlement functions as well as related areas such as control and reporting.
The chart below shows that global stock market performance has a major effect on total net inflows to Norwegian mutual funds and therefore also on Storebrand Investments' earnings.
Key figures. The Storebrand Bank ASA Group reported a profit before loan loss provisions of NOK 103.1 million in 2003 (pro forma NOK 29.6 million in 2002). Losses and increases in loss provisions on loans and guarantees totalled NOK 173.8 million
Operating expenses totalled NOK 708.8 million, equivalent to 87.3% of total operating income. This represents a reduction in the overall cost base of NOK 121.4 million from 2002, equivalent to 15%. Operating expenses include non-recurring items of NOK 31.9 million in respect of property lease commitments, write-downs of fixed assets and costs incurred in reducing employee numbers. All these provisions will lead to lower costs in the future and the bank expects to further improve its cost base in 2004.
Finansbanken Formuesforvaltning ASA was sold in the fourth quarter of 2003, with an accounting loss of NOK 34.9 million before tax. In connection with this disposal, the parent company Finansbanken Forvaltning AS and fellow subsidiary
Financial review. Non-life insurance activities produced a profit for the year of NOK 386 million in 2003 as compared to NOK 133 million in the previous year. 2003 produced an operating profit of NOK 348 million as compared to a loss of NOK 242 million in 2002. This reflects stronger earnings at If, Fair and Oslo Re.
Storebrand’s share of the results of Fair Forsikring was a loss of
The appraisal and remuneration of all Storebrand employees forms part of the value-based management system, and in the same way that targets are set for Storebrand and the business areas, each department and its individual staff members have targets that are consistent with and support the company’s objectives. This provides the basis for bonus payments, linking them both to the overall level of the company’s value creation and to individual performance.
Storebrand’s procedures and principles for corporate governance are in accordance with the recommendations published by the Norwegian working group in January 2004.
Storebrand shares changed hands in 2003, 23.5% more than 2002 (302 million shares traded). The value of shares traded in 2003 was NOK 12,842 million, up from NOK 11,934 million in 2002. This made Storebrand the 12th most traded share on the OSE in terms of value, with a turnover rate of 134.2%.
Premium and claims reserves – non life insurance 518.0 452.3 562.1
Total equity capital and liabilities 156 650.2 148 551.3 152 214.4
Items classified as investment or financing activities -145.4 17.8 325.1 -144.6 81.1 367.3
• the information in the Board of Directors report concerning the financial statements, the going concern assumption, and the proposal to apply the profit for the year are consistent with the financial statements and comply with the law and regulations.
Deferred tax and deferred tax assets are calculated on the basis of timing differences between accounting and tax values and losses and unused allowances carried forward. Net deferred tax assets are recorded in the balance sheet to the extent it is considered likely that it will be possible to make use of the benefit they represent at some future date.
Long term funding/subordinated loans/bond loans. The direct costs involved in taking up long-term funding are capitalised and amortised to the next interest fixing date/maturity if the costs are material. Premiums/discounts on the issue of debt are recognised as income/expense by adjusting the interest expense of the bonds over the period to maturity, or the next interest fixing date. Holdings of own bonds are netted against bonds issued. Where own bonds are purchased in order to be cancelled, any losses or gains arising as a result of the purchase are recognised to the profit and loss account. The group's banking activities routinely buy back own bonds as part of their continuing funding activities. Losses or gains arising as a result of the purchase or sale of own bonds for this purpose are amortised over the remaining maturity.
Premium fund/pension adjustment fund in the insurance fund. The premium fund contains premiums prepaid by policyholders on individual and group pension insurance as a result of taxation regulations. The pension adjustment fund consists of payments from policyholders on group pension insurance also resulting from taxation regulations. The fund is to be applied in payments of future benefit increases to pensioners.
Book NOK million Interest rate Currency value NOK Share Maturity Exchangeable bond loan *) 2.25% EUR 1 332.2 Orkla ASA 2006 Bond loan 2002/2007 7.18% NOK 579.0 2007 Bond loan 2002/2007 3 month NIBOR+0.80% NOK 921.0 2007 Total 2 832.2 *) Hedged with a currency swap.
Per Alm Knudsen 840 Board of Representatives Alf Bruun 1 375 Sven Ullring 385 May Molderhauer 115 Inger Lise Gjørv 0 Paul Eggen jr. 1 375 Stein Erik Hagen 0 1 000 000*) Astrid Olive Aanerud 465 Mille Marie Treschow 2 349 Per Ivar Laneskog 0 Eli Sætersmoen 0 Solvei Hage 690 Trond Berg-Andreassen 0 Inger L. Rognehaug 1 037 Terje R. Venold 0 Trude Eidsheim 350 Finn Jebsen 3 234 14 000***) Jostein Lindgren 0 Ole Enger 0 Wenche Meldahl 0 External Auditors Brit Seim Jahre 0 Arne Frogner 0 Tore Lindholt 156 Ole M. Klette 0 *) Canica AS **) Ferd Invest AS ***) Bele AS
Non-life insurance 348.2 -242.2 -766.9 *) Storebrand Bank AS and Finansbanken ASA merged with accounting effect from 1 January 2003. Numbers for 2002 and 2001 are pro forma. The merger was carried out with accounting continuity. Result includes write-down of group goodwill.
Total costs of financial assets -7 278.6 -18 496.8 -17 465.6 -7 540.0 -19 401.2 -18 210.8 Total net income from financial assets 9 240.4 1 884.8 1 437.8 10 116.2 1 312.2 1 069.4 *) Of which administration costs -5.5 -5.8 -6.7 **) Of which administration costs -145.1 -133.3 -116.5
Pension costs and pension liabilities are treated for accounting purposes in accordance with the accounting standards for pension costs issued by the Norwegian Accounting Standards Board. (see also Accounting principles). Both insured and uninsured schemes are treated as defined benefit plans. In view of lower interest rates, the financial assumptions were amended with effect from 31 December 2003.
If the changed assumptions were applied to 2003, net pension cost in 2003 would be NOK 16.2 million higher.
Deferred tax – net change -170.1 635.3 468.7 Changes to tax for previous years 2.1 -8.3
Geographic distribution (Life Insurance company) Oslo-Vika/Filipstad Brygge 3 718.1 Oslo – other 2 264.7 Norway – other 3 668.2
Total shares and other equity investments – Norwegian 5 036.3 6 212.3 International shares
Loans and deposits from financial institutions on demand or with no fixed maturity date 65.1 7.5 6.1 Loans and deposits from financial institutions with agreed notice period or fixed maturity date 3 146.2 4 283.1 4 344.6 Total liabilities to other financial institutions 3 211.3 4 290.6 4 350.7