Storebrand has recently changed its vision to ”Recommended by our customers”. Why?
We are experiencing record low interest rates. This is negative for life insurance companies that must guarantee a specific annual minimum return. What investment opportunities does Storebrand have in a situation with low interest rates over a long period of time?
A new search engine at storebrand.no provides users with more accurate search results and a more streamlined experience of our websites.
On capital markets day analysts and investors have the opportunity to meet the group’s executive management team.
For the 13th time in a row, Storebrand qualifies for the Dow Jones Sustainability Index as one of the ten per cent most sustainable companies in the world.
Storebrand Realinvestering AS. All the management activities have a guaranteed sustainable profile. The company manages the assets of Storebrand Life Insurance and SPP. Storebrand offers a wide range of mutual funds to retail customers and institutions under the Delphi,
private customers, more than a million in Norway and 750,000 in Sweden (SPP).
Sustainability and corporate responsibility will be two of the most important drivers for industrial and economic growth in the years ahead. The external conditions for business are changing due to global trends, such as growth in emerging economies, climate change and the scarcity of resources, and a shift in consumption patterns towards more sustainable products. For companies that manage the risk and exploit the opportunities, this means that their core activities will be better positioned for greater growth and profitability.
Red Cross. We were given an opportunity to see how the Red Cross worked in the region and to meet NGOs and other stakeholders.
The analysis and comparison of the performance of companies with respect to environmental management, social responsibility and corporate governance is called
12 State Street Bank & Trust Co. NOM 4,980,000 1.13% USA
FINANCIAL TARGETS Storebrand has communicated a goal of achieving a profit before profit sharing and loan losses of NOK 2.5 billion in 2013. Turmoil in the financial markets has led to Storebrand, at the end of 2011, being behind the plan to achieve the targeted profit in 2013. Implemented cost reduction measures are progressing according to plan. The increase in revenue is, however, lower than foreseen in the plan. This is due to lower customer funds than expected, as a result of the fall in the stock markets through 2011. To compensate for the weaker than expected revenue growth, cost reduction measures will be implemented earlier than planned, and more extensively.
In Storebrand Life Insurance the result was reduced due to increased reserving for longevity as a result of weaker financial returns.The risk result and price of guaranteed interest and profit risk provide a sound and stabilising profit contribution. SPP has an improved administration result and maintained its strong risk result, but the troubled financial markets weaken the financial result. The result in the asset management business was affected by lower yield-based revenue compared to last year. In 2011, Storebrand Bank continued its positive development and the result of the banking operations improved in a number of key areas compared with 2010. The Insurance business area shows a positive result development with good insurance profits and an improved combined ratio.
The combined ratio improved to 91 per cent in 2011, from 98 per cent in 2010. The year was characterised by abnormally high precipitation levels, floods and storms with a higher injury rate, in addition to the terror attacks on 22 July. The result is only moderately affected by these incidents. For all product areas, the underlying risk trends and good claims ratio has evolved in line with expectations during the year. The improvement in the insurance result is mainly due to a lower proportion of winter-related claims compared with last year, and an increased degree of price differentiation in all product areas.
Continuous monitoring and active risk management are core areas in the Group. The basis for risk management lies with the Board's annual administrative handling of the strategy and planning process, including determination of the risk appetite, risk targets and overall risk limits for the business. Risk management and internal control is an integral part of Storebrand's management responsibility.
Storebrand Bank The most important forms of risk for Storebrand Bank are credit risk and liquidity risk. The bank group is also exposed to operational risk, compliance risk and to a lesser degree market risk.
The Group's primary capital, which consists of equity, subordinated loans and market value adjustment reserve, additional statutory reserves, conditional bonus and other solvency capital in life insurance, amounted to NOK 42 billion by year-end, compared with NOK 45 billion a year earlier.
World-class sustainable enterprise The Group requires sustainability in all internal processes and decisions. The Purchasing Department has requirements for sustainability as one of three essential criteria, HR has ethics and employee satisfaction high on the agenda, and sustainability is largely integrated into the core business. This means that Storebrand for 13 consecutive year has been eligible to be included in the Dow Jones Sustainability Index as one of the 10 per cent most sustainable companies in the world in our industry. Storebrand is to be found on the SAM Sustainability Leaders list for 2012. Furthermore, Storebrand qualified for the FTSE4Good, Leadership Index of the Carbon Disclosure Project and came in 9th on the list of the most sustainable companies in the world at Global 100, which the World Economic Forum compiles.
The following changes to the membership of the Storebrand Group’s corporate bodies took place in 2011: Board of Directors: Monica Caneman was elected a new Board member after Annika Lundius. Board of Representatives: Terje Andersen, Helge Leiro Baastad, Maalfrid Brath and Morten Fon (previously deputy members) were elected new members. Jostein Furnes was elected a new deputy member. Johan H. Andresen Jr., Merete Egelund Valderhaug, Roar Engleland, Henrik O. Madsen, Elin Korvald and Tuss Benum stepped down from the Board of Representatives. Control Committee: Anne-Grete Steinkjær was elected a new deputy member. Ida Hjort Kraby stepped down from the Control Committee. Nomination Committee: Kjetil Houg was elected a new member. Johan H. Andresen jr. declined re-election and resigned from the Nomination Committee
Results The Group's profit and cash flow will gradually be strengthened through the transition to products where results are less affected by market fluctuations. Storebrand's goal is to achieve a profit before profit sharing and loan losses of NOK 2.5 billion by the end of 2013. Measures have been introduced aiming at increasing the fixed earnings elements and adjusting the cost level. In addition, net profit sharing, yield-based fees and loan losses affect the consolidated result. These elements are more influenced by market developments. Financial market unrest has led to Storebrand being behind its income target in 2013 at the end of 2011. To compensate for slower growth in revenues than expected, cost-cutting measures will be implemented earlier than planned, and more extensively
Each board member has a responsibility to continuously assess whether or not such a situation exists. Transactions with close associates involving the group’s employees and other officers of the group are regulated by the group’s code of ethics.
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 adopted by the group’s decision-making bodies. The committee is entitled to look into any matter and has access to all relevant documentation and information.
The committee has the power to demand information from any employee and any member of the governing bodies. The committee held nine meetings in 2011 and reported on the committee’s work to the
Storebrand ASA’s Board has drawn up instructions for the group’s subsidiaries that are to ensure that they implement and comply with the group’s management and control policies and guidelines.
The system is based on a balanced scorecard, which reflects both short-term and long-term value creation in the group.
Storebrand Compass is the company’s monitoring tool and provides comprehensive reports for management and the Board concerning financial and operational targets for earnings, risk and solvency.
(elected by employees): Rune Pedersen 1 Not independent, see page 54 regarding corporate governance. ( ) Number of board meetings participated in 2011.
Financial assets at amortised cost: Reinsurers' share of technical reserves 38 176 185
Statement of Financial Position Storebrand Group 1 January – 31 December
6. INCOME RECOGNITION Premium revenue Net premium revenue includes the year's premiums written (including savings elements), premium reserves transferred and reinsurance. Annual premiums are accrued on a straight-line basis. Fees for issuing Norwegian interest guarantees and profit element risk are included in premium revenue.
7. 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 statement of financial position. Goodwill is recognised at acquisition cost at the time of acquisition. Goodwill acquired by acquiring subsidiaries is classified as intangible assets.
10-2 CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS AND LIABILITIES Financial assets are classified into one of the following categories: • Financial assets held for sale • Financial assets at fair value through profit or loss in accordance with the fair value option • Financial assets investments held to maturity • Financial assets loans and receivables • Financial assets available for sale
12. PENSION LIABILITIES FOR OWN EMPLOYEES Storebrand Group has country-specific pension schemes for its employees. With effect from 1.1.2011, Storebrand Group in Norway provides it employees with defined contribution pension schemes. Through to 31.12.2010, Storebrand had a defined benefits scheme for its Norwegian employees. The Norwegian benefits scheme was closed to new members with effect from 1.1.2011, and existing members could elect to transfer to the defined contribution scheme.
• Financial result The financial result consists of the net financial income from financial assets for the group portfolio less the guaranteed return. In addition to which there is the yield on the equity and subordinated debt. Any return-based fees are included in the financial result.
If the total return on assets in one calendar year for a premium determined 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 devolves on the policyholder and 10 per cent on the company. The company’s proportion of the total return on assets is included in the financial result.
Continuous monitoring and active risk management are therefore core areas of the Group’s activities and organisation. The basis for risk management is laid down in the Board's annual handling of the strategy and plan process, which sets the risk appetite, risk targets and overriding risk limits for the operations. In Storebrand Group, responsibility for risk management and internal control is an integrated part of management responsibility.
excess return. The products are created, serviced and managed by the various companies that make up Storebrand Group and the company assumes, therefore, also operational risk, for example through errors in the management of the customers' assets.
3. Group one-year risk covers are guaranteed payments upon death or disability, and a waiver of premiums in the event of disability. 4. Paid-up policies (defined benefit) and pension capital policies (defined contribution) are contracts with earned rights that are issued upon withdrawal from or the termination of pension contracts.
The effect on the result of products without a guaranteed return, primarily contribution pension and unit linked, are not included in the analysis. For these products, the customers bear the market risk and the effect on the owner's result will be very limited.
The difference between the liabilities' book value and the contractual amount at maturity 4 4 note 10 | Operational risk
Transferred to quoted prices from observable assumptions note 12 | Segment reporting
ASSET MANAGEMENT Storebrand's asset management activities include the companies Storebrand Kapitalforvaltning AS, Storebrand Fondene AS, Storebrand Eiendom AS, and Storebrand Realinvesteringer AS and SPP Fonder AB. All the management activities have a guaranteed socially responsible profile. Storebrand offers a wide range of mutual funds to retail customers and institutions under the Delphi and Storebrand Fondene brand names. Storebrand Eiendom is one of Norway's largest real estate companies and manages real estate portfolios both in Norway and abroad.
Total income real estate 1,663 1,441 1 Of which real estate for own use 73 67 2 Of which real estate for own use -6 -12
Storebrand's employees in Norway have both a defined contribution pension scheme and a defined benefit pension scheme that are established in Storebrand Livsforsikring AS. With effect from 1 January 2011, no new members have been included in the defined benefit scheme. From that date, a defined contribution scheme was established. The defined contribution scheme applies to all new employees from 1 January 2011, and for those who elected to transfer from defined benefit to defined contribution pensions. In the case of the defined contribution scheme, the cost is equal to the period's contribution to the employees' pension savings, which amounts to 5 per cent of the contribution basis between 1G and 6G (G = the public pension base rate in the National Insurance Scheme at 31.12.2011, amounting to NOK 79 216), plus 8 per cent of the contribution basis between 6G and 12G. Contributions are credited to the employees' pension accounts monthly. Future pensions are dependent on the size of the contributions and the return on the pension savings. Employees who are members of the defined benefit contribution scheme are secured a pension equivalent to approximately 70 per cent of the pension basis at the date of retirement. Full pension rights are earned after 30 years membership in the scheme. The period's cost shows the employees' pension earnings of future defined pensions in the accounting year. From 1.7.2011, retirement age is 67 years. Nevertheless, employees are entitled to retire at the age of 65 and receive a pension which is paid directly over the income statement. In the case of underwriters, retirement age is 65 years.
Expected annual increase in social security pensions 3.75% 3.75% 3.0% 3.0%
3.4 CALCULATION OF BONUS ENTITLEMENT FOR 2011 The criteria for funding bonuses were achieved in 2011. The funding of the bonus was linked to risk-adjusted profit. The minimum requirement to consolidated profit, ROE and capital adequacy requirements were met. The Financing result was 59% calculated according to the guidelines for the bonus scheme. Given the individual results of 100% was the average bonus awarded NOK 493 000. The allocation for 2011 was also dependent on the units' performance and individual performance. 50% of the allotted bonus (40% in Sweden) was paid in cash, while the remaining amount was converted to a number of synthetic shares based on market price and registered in a share bank with a 3 -year lock-in period.. Allocation of bonus followed the guidelines that applied for 2011. A report on the implementation of the compensation scheme will be prepared by an independent control function.
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 manage and have lower capital requirements. In addition to the coming
• Contract duration • Quality of tenant • All other information about property values, the market and the individual property
Amount recognised against reserves in the period -8 -11 -19 -14
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, and assets and receivables due for payment within one year are classified as current assets. Equivalent policies have been applied to liability items.
Idar Kreutzer is the Chief Executive Officer of Storebrand ASA and the figures provided in the notes are for total remuneration from the group. He is entitled to 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.
Tax base for the year -105 -20 - Use of losses carried forward
AS Værdalsbruket3 Værdal 25% 4 1 1. Made a group contribution in 2011 of NOK 26 million as a capital injection. 2. Made a group contribution in 2011 of NOK 15 million as a capital injection. 3. 74.9 per cent owned by Storebrand Livsforsikring AS.
The Group’s Scorecard for sustainability (formerly the Corporate Responsibility Action Plan) is a dynamic compilation of the Group’s defined sustainability targets that Storebrand Group considers most important to report to the stock market. Together, they form the basis for our reporting to relative sustainability indexes such as Dow Jones Sustainability Index and FTSE4Good.
1) Storebrand ASA owns 25.1 per cent and the total stake in Storebrand is 100 per cent of AS Værdalsbruket. 2) SPP Livförsäkring AB owns 29.4 per cent and Storebrand Livsforsikring AS owns 66.4 per cent of SIA Front Real Estate.