The Board of Directors would like to express its appreciation to the members retiring from the Board of Representatives and the Board of Directors for the valuable contribution they have made to the company.
Idar Kreutzer succeeded in restoring a normal situation for the group’s activities despite the difficult situation that led to his appointment as acting Chief Executive Officer. The Board resolved towards the end of the year to appoint Mr Kreutzer as the Chief Executive Officer of Storebrand ASA.
Corporate social responsibility Storebrand fully recognises its corporate social responsibility. This represents an understanding that we cannot achieve our goals unless the world in which we operate has a sustainable foundation. We have established a 10-point action plan for the period 2000-2002 in order to ensure that good intentions are turned into documented results in the areas of product development and our own health, safety and environment activities, as well as through our role as a force for change and a partner to others.
The company aims to further strengthen its competitive position. There is considerable scope to offer advice and sales of individual products to the employees of companies currently operating pension schemes through Storebrand. This will mainly be done through our Total Compensation Management (TCM) concept (see page 17). Storebrand has developed a very flexible defined contributions pension product for the corporate market. In addition the company can offer tailor-made products for larger companies through the Euroben operation based in Ireland.
About half of everyone interviewed believed that they had an individual insurance policy, whilst our estimates suggest that only 15-20% of the population have arranged such policies. Only around 40% of the sample thought that their family would be worse off if they were to die or become disabled, and only 20% had any detailed knowledge of the benefits provided by the national insurance scheme.
Insurance over the Internet The new millennium brings with it new demands on insurance companies. The increased role of Internet based services is a particularly important example. Storebrand is the first Norwegian company to offer sales of life insurance products over the Internet, and it is now possible to purchase child insurance, life insurance and disability pension from the keyboard.
Over recent years the process of making the various components of the employment package more visible to employees and offering greater freedom and flexibility has become a popular theme for Norwegian companies. Storebrand has launched a system to administer employee benefits and other forms of compensation and to make the value of the package more apparent to employees. The first system applications were delivered to a number of selected companies in 2000, and the target for 2001 is to provide full systems to an increasing number of companies and their employees.
By offering a comprehensive and first-class financial advice concept, Storebrand Bank intends to be the main relationship that its priority customers will use for all their financial requirements. The strategy of basing services on financial advice will be reinforced through all service channels, and the personal financial adviser will play a key role in the overall relationship with each customer. The bank's financial advisers all have a high level of essential expertise, and will receive further training and certification both from Storebrand Bank and through co-operation with the Norwegian School of Management BI. This will ensure that customers are served by the best financial advisers the market can offer. Storebrand Bank will also offer access to specialist expertise in areas such as tax, legal questions and inheritance.
Finansbanken’s electronic services Personal service alone does not create a complete service concept. The need for greater accessibility to the bank and its services and a more comprehensive flow of information means that electronic systems must play a central role in the overall relationship. Finansbanken intends to ensure that its customers enjoy good personal relationships with the bank through a number of different channels, and that both the information they need and their personal account manager are always available.
A pan-Nordic ambition Finansbanken’s ambition is to be a leading player for private banking throughout the Nordic market. The acquisition of Den Københavnske Bank represents an important step in this direction. The integration and development of Den Københavnske Bank’s activities is well advanced, and the newly acquired bank is moving in the right direction.
Public sector The new national employment conditions which came into force for local authorities in 2000 finally gave public sector occupational pension schemes a real opportunity to change the supplier of their pension arrangements, and a total of 16 local authorities took the opportunity to transfer to a different company. The authorities of Vadsø, Ballangen and Trysil chose to transfer to Storebrand, and the company now has 16 local authorities in its portfolio.
Retail market Storebrand maintained its leading position in the retail market for life insurance and mutual funds products in 2000. The group had a strong 32% share of this market as at the end of the third quarter of 2000.
cularly in the second half of the year. Storebrand Livsforsikring achieved a realised investment return of 8.7% for the year as compared to 10.0% in 1999. The value-adjusted return was 3.1% (3.0% if changes in the value of bonds classified as held to maturity are included).
High risk bearing capacity The second half of 2000 saw turbulent conditions in the equity markets. Storebrand Livsforsikring continues to maintain a high level of solidity. The company’s buffer capital at the end of 2000, measured in terms of the market value adjustment reserve, additional statutory reserves and core capital margin (i.e. the excess of capital over the statutory requirement), totalled NOK 8.7 billion. This is equivalent to 9.2% of policyholders’ funds, representing a reduction of 7.7 percentage points from 1999. The company’s buffer capital remains sufficient to ensure that Storebrand is well positioned to generate a good return for customers in the future.
Figures for exposure take into account derivative positions in all portfolios.
Financial results The Storebrand Bank group achieved a profit for the year of NOK 38 million in 2000, representing a significant improvement from the profit of NOK 3.1 million reported for 1999. Operating results showed an improvement from an operating loss of NOK 32.1 million in 1999 to an operating profit of NOK 6.7 million for 2000. The parent company Storebrand Bank AS reported a profit for the year of NOK 38 million. Storebrand Finans achieved a profit for the year of NOK 49.1 million as compared to NOK 41.3 million in 1999. Storebrand Bank's share in the results of BOS Finans was a loss of NOK 0.6 million as compared to a loss of NOK 0.4 million in 1999.
Main features of 2000 • Significant improvement in technical result for if, with a combined ratio of 110 percent (120 percent in 1999)
• Operating loss for the year of NOK 72 million as compared to an operating profit of NOK 302 million in 1999
Storebrand Skadeforsikring AS has a 44 percent shareholding in If Skadeförsäkring Holding AB (If), a 100 percent shareholding in Oslo Reinsurance Company ASA (Oslo Re) and a 100 percent shareholding in Europeiske Reiseforsikring AS. In addition the company manages a portfolio of financial assets.
Foreign ownership The EEA Agreement provides for Norwegian and foreign investors to have equal rights to purchase shares. As at 31 December 2000 total foreign ownership amounted to 38.6% as compared to 32.1% at the end of 1999.
Internet In order to improve further its service to the capital markets, Storebrand publishes its quarterly reports and other important press releases on its web pages at simultaneously with their release through traditional channels.
Premium reserve 84,600.1 81,783.4 Additional statutory reserves 4,847.3 5,846.7 Premium/pension adjustment fund 10,282.3 9,159.9 Claims reserve 216.1 206.4 Other technical reserves 39.0 28.4
Deferred tax The tax charge in the profit and loss account consists of tax payable and deferred tax/tax allowances.
Arrangement of long term funding The direct costs involved in taking up long-term funding are capitalised and are amortised to the next interest fixing/maturity date. Premiums/discounts on the issue of debt are recognised as income/expense by adjusting the interest expense of the bond issued over the period to maturity or the next interest fixing date. Holdings of own bonds are netted against bond loan indebtedness. Losses or gains arising as a result of the purchase or sale of own bonds in the secondary market are treated in the same way as premium/discounts on issue.
Storebrand ASA: dividends and group contribution The cost method of accounting is used to arrive at the value of subsidiaries in the parent company accounts.
The condition is that the income has been earned in the subsidiaries during the Storebrand’s ownership period. Contrary, it will be booked according to an equity transaction. This imply that the owner’s share in the subsidiaries will be reduced with received dividend or groups contribution.
Fair Financial Ireland Ltd. Denmark DKK 250 125 50.0% 142.7 Euroben Life & Pension A Ireland EUR 1.0 634 50.0% 75.0
The former Chief Executive Officer Åge Korsvold received salary and other benefits totalling NOK 3.2 million in 2000. Following his departure he entered into an agreement to receive salary during the notice period (six months) and a single payment of NOK 5 million. He is also entitled to rent a house owned by Storebrand ASA for representation purposes until 30 June 2001. Korsvold is entitled to receive a pension on attaining the age of 62. Chief Executive Officer Idar Kreutzer received salary and other benefits totalling NOK 2.3 million in 2000. His terms of employment provide a guarantee of 24 months' salary following the expiry of the normal notice period. All forms of work-related income from other sources, including consultancy assignments, will be deducted from such payments. Kreutzer is entitled to a bonus scheme based on the performance of Storebrand’s share price (see note 14) and he is a member of the Storebrand pension scheme on normal terms.
Straight line depreciation periods for operating assets are as follows: Equipment and inventory: 4 years Motor cars: 6 years Computer systems: 3 years
Interest and related expense on liabilities to credit institutions -23.4 -13.4 -16.4 -208.8 -35.7 -232.2 -49.1 -16.4 Interest and related expense on deposits from and liabilities to customers -307.8 -273.2 -102.7 -409.7 -122.4 -717.5 -395.6 -102.7 Interest and related expense on securities issued -145.3 -90.7 -106.0 -308.4 -94.0 -453.7 -184.7 -106.0 Interest and related expense on subordinated loan capital -29.9 -6.7 -29.9 -6.7 Other interest and related expense -222.2 -17.2 -6.9 -35.8 -22.4 -258.0 -39.6 -6.9
Disposals at purchase cost -248.4 -30.9 -279.3 Total depreciation and write-downs at 31 December -72.9 -457.5 -530.4
Ownership structure: Directly owned 4,200.9 Property company (AS) 5,819.8 Property partnership (ANS) 886.5
Total liabilities created by securities issued 3,798.8 5,209.8 1,800.0 10,808.6 5,457.2
Storebrand Fondene AS 100.0% NOK 1.2 Storebrand Luxembourg S.A. 99.8% EUR 0.1