In 2019, Storebrand was again ranked first in the annual Norwegian Customer Survey, which measures satisfaction and loyalty amongst corporate customers in Norway. We are committed to creating excellent customer experiences, such as gathering all occupational pensions in one place, giving customers better control over their future finances.
We also made the exciting decision to re-enter the Norwegian municipal occupational pensions market. This market is estimated to be twice the size of the corporate pensions market, and we are well-prepared to take part in tender processes for municipal occupational pensions in 2020.
Climate change and the transition to a low-emissions society has a material impact on our business. This may be exacerbated by changes in the Norwegian economy, which is vulnerable to a falling oil price and lower activity in the oil and gas industry. In developing our climate strategy, we have considered both how we affect climate change as well as how to avoid or mitigate being negatively affected by climate change and climate policy. In addition, we have identified some of the opportunities relating to the transition to a low-emissions economy.
• Exposure mapping and reinsurance: We reinsure assets in areas with a high exposure to physical risks associated with climate change.
• Grow annual insurance premiums by at least 5%, with a combined ratio of 90-92%
Promote solutions for safe and affordable drinking water, improved sanitation, water quality, water-use efficiency, water resource management and the restoration of water-related ecosystems.
All our property management services have a certified environmental management system. Our goal is to certify all individual properties in accordance with the BREEAM standard.
WHY Recent reforms to the Norwegian pension system have resulted in people having a larger responsibility for their own pension. This is especially true considering that life expectancy has increased, and that Norwegians can expect less support from the government to meet living costs throughout retirement. Pensions sit at the heart of our service offerings, and are our most important tool for helping customers achieve financial freedom.
We also made improvements to My pension in 2019, aiming to provide a better overview over individual pension entitlement.
An important step in 2019 was introducing the Customer Engagement Platform, a transformational program that is based on a modern, data-driven CRM platform. This has redesigned our customer experience, making improvements on smarter use of data, and a more personalised customer experience, allowing us to better meet customer needs.
INITIATIVES Digital development was a high priority in 2019, and a broad range of improvements have been made to existing solutions, while also developing new services.
We encourage a good work-life balance for all employees. We aim to accommodate our employees’ needs for flexible working hours. Of our 1742 employees, only 59 (3%) are employed on a part-time basis (of which 50 are female). This is due to employee preferences.
We have a good gender distribution in both Norway and Sweden amongst permanent staff, as detailed in the diagram below.
All employees are responsible for familiarising themselves with and acting in accordance with anti-corruption guidelines, including completing mandatory training, and managers shall ensure that this is done. All new employees complete mandatory training as part of their onboarding process.
INITIATIVES We have developed a designated area on our intranet for AML and terror-financing, with information about expected business conduct for employees. This applies across the Group’s companies. Employees shall complete a mandatory e-learning program in AML and terror financing.
13.2 We integrate climate change measures into our policies, strategies and planning.
Our procurement policy is based on the group’s governing documents and associated routines43), which are revised annually. Sustainability is an important part of evaluating and allocating new contracts and is weighted at least 20%. Declarations concerning sustainability are required during requests for tenders. Sustainability is part of our evaluation of tenders and allocation of contracts. Sustainability performance requirements are specified in all contracts.
E-learning completed: anti-corruption (total / percentage of FTE) New New 1479 / 86.6 % 100% 100%
46) Emissions from Storebrand Group offices in Sweden and Norway. Emissions factors have increased and we have therefore recalculated our GHG emissions for 2017 and 2018 to provide for comparability. GHG
Financial Performance Financial performance in Storebrand is reported by business segment. The Savings business is expected to continue to grow in assets under management. Growth in assets from occupational pensions in Sweden and Norway is expected at 12-15% annually. We aim to achieve additional growth in Asset Management from the sale of our investment solutions to external clients. This is supported by the newly completed distribution set up for international sale of funds and increased focus on co-investment opportunities into alternative asset classes. Margins are likely to continue to gradually decline in line with a general trend in the industry and with the introduction of Individual Pension Accounts. Efforts to mitigate the effect include strong cost control, a focus on alternative asset classes and alternative pricing models.
Good risk management and a positive impact of the regulatory adjustment mechanisms in the solvency regulations more than compensate for challenging financial markets. The solvency margin without transitional rules strengthened 2 percentage points in 2019. The value of the transitional rules remained marginal throughout the year.
Storebrand’s work in this area is elaborated on in Chapter 5 – People and Chapter 6 – Keeping Own House in Order.
The combined risk result gave a claims ratio of 74% (66%) and the underlying risk performance was satisfying. P&C insurance delivered a good underlying result and was further strengthened by dissolution gains. Individual life maintained good profitability. Higher disability claims increase the claims ratio in Individual life and Group life, while increased price competition weakened the result in Norwegian Pension related disability insurance. The result for the Swedish risk products was good and explained by a lower claims ratio.
Balance sheet and market performance The products are in long-term decline, but customer reserves for Guaranteed Pension amounted to NOK 263 billion at the end of 2019, which is 1% higher than at the start of the year. This is because the return on policies exceeded the net flow of premiums and pension claims. The net flow amounted to NOK -8.2 billion in 2019. The Norwegian Paid-up policy portfolio grew as Defined Benefit contracts eventually become Paid-up policies and amounted to NOK 137 billion (NOK 133 billion) at the end of 2019.
The financial result includes the return on the company portfolios in Storebrand Life Insurance and SPP, as well as the financial result of Storebrand ASA. The financial result is affected by the low interest rate level throughout the year, but tightened credit spreads contributed to positive returns in the company portfolios.
ALLOCATION OF THE PROFIT FOR THE YEAR Storebrand ASA reported a profit of NOK 2,952 million for 2019, compared with NOK 3,963 million for 2018.
Paid out interest hybrid capital -12 -12 1) 467,813,982 shares with a nominal value of NOK 5.
Receipts - issuing of share capital / sale of shares to own employees 33 37
For the most part, the liabilities side of the Group’s balance sheet comprises financial instruments (liabilities) and provisions relating to future pension and insurance payments (insurance liabilities). With the exception of derivatives, financial liabilities are measured at amortised cost.
Income from properties and financial assets Income from properties and financial assets are described in Sections 12 and 13.
11. Adequacy test for insurance liabilities and related excess values A liability adequacy test must be conducted of the insurance liability pursuant to IFRS 4 each time the financial statements are presented. The test conducted in Storebrand’s consolidated financial statements is based on the Group’s calculation of capital.
13-2. Classification and measurement of financial assets and liabilities Financial assets are classified into one of the following categories: • Financial assets held for trading. • Financial assets at fair value through profit or loss in accordance with the fair value option (FVO). • Financial assets held to maturity. • Financial assets, loans and receivables.
Held for trading A financial asset is held for trading if: • it has been acquired principally for the purpose of selling or repurchasing it in the short term, • is part of a portfolio of identified financial instruments that are managed together and there is evidence of a recent actual pattern of short-term profit-taking, or • it is a derivative that is not designated and effective as a hedging instrument.
14. Insurance liabilities The accounting standard IFRS 4 Insurance Contracts addresses the accounting treatment of insurance contracts. Storebrand’s insurance contracts fall within the scope of this standard. IFRS 4 is a temporary standard until IFRS 17 is to be used. IFRS 4 allows the use of non-uniform principles for the treatment of insurance contracts in consolidated financial statements. In the consolidated financial statements, the insurance liabilities in the respective subsidiaries are included as these are calculated on the basis of the laws of the individual countries. This also applies to insurance contracts acquired via business combinations. In such cases, positive excess values are capitalised as assets.
IBNS reserves Included in the premium reserve for insurance risk are provisions for claims either occurred but not yet reported or reported but not yet settled. IBNR are reserves for potential future payments when Storebrand has yet to be informed about whether an instance of disability, death or other instance entailing compensation has occurred. Since Storebrand is neither aware of the frequency nor the amount payable, IBNR is estimated using actuarial models based on historical information about the portfolio. Correspondingly, RBNS is a provision for potential future payments when Storebrand has knowledge of the incident, but has not settled the claim. Actuarial models based on historical information are also used to estimate the reserves.
The table above shows the currency positions as at 31 December 2019. The currency exposure is primarily related to investments in the Norwegian and Swedish insurance business.
As a result of customer buffers, the effect of the stresses on the result will be lower than the combined change in value in the table. As at 31 December 2019, the customer buffers are of such a size that the effects on the result are significantly lower.
Total loans to and receivables from customers 20182) 59,436 1 3,444 62,881 71 59 -21 108 1) 2019: - Of which Storebrand 2) 2018: - Of which Storebrand
The Group carries out continual checks to safeguard the quality of market data that has been collected from external sources. This involves controlling and assessing the likelihood of unusual changes.
"Net pension cost recognised in profit and loss account in the period" 229 203
STOREBRAND ASA – THE BOARD OF DIRECTORS’ STATEMENT ON THE FIXING OF SALARIES AND OTHER REMUNERATION OF EXECUTIVE PERSONNEL The Board of Directors’ statement on the fixing of the salaries and other remuneration of executive personnel, cf. Section 6-16 (a) of the Norwegian Public Limited Companies Act, shall be presented to the General Meeting for an advisory vote with regard to the indicative guidelines for the next financial year and a separate advisory vote with regard to binding guidelines for shares, subscription rights, etc. for the next financial year.
Intangible assets linked to the acquisition of Silver Storebrand Livsforsikring AS acquired Silver Pensjonsforsikring AS (Silver) in 2018 and the company was merged with Storebrand Livsforsikring AS the same year. The intangible assets linked to the acquisition of Silver include the value of business in force (VIF), which is included in Storebrand Livsforsikring’s liability adequacy test in accordance with the requirements in IFRS 4. To determine whether intangible assets linked to Silver have declined in value, an estimate is made of the recoverable amount for the contracts in the acquired business. The recoverable amount is determined by calculating the entity specific value of the business. Silver has been integrated into Storebrand Livsforsikring’s business and is predominantly part of the savings segment. The assessment of the intangible assets is done by estimating the value of the contracts that were purchased, despite these not being a separate cash-generating unit. The assets under management and income margins are forecasted based on observable developments since the acquisition and expected natural negative growth in the portfolio.
Net non-performing loans 1) 105 108 1) The figures apply in their entirety Storebrand Bank
Storebrand uses cash flow hedging of the foreign exchange risk for the principal and the foreign exchange risk for the credit margin. The hedged items are liabilities measured at amortised cost. Derivatives are recognised at fair value. The proportion of the profit or loss on the hedging instrument that is deemed to be effective hedging is recognised in total comprehensive income. The proportion is subsequently reclassified to profit or loss in step with the hedged item’s effect on earnings.
Booked value of securities pledged as collateral in other financial institutions 151 151
Loans in Storebrand Boligkreditt AS are security for covered bonds in the company, and these assets have therefore been mortgaged through the bondholders’ pre-emptive rights to the security in the company. Storebrand Boligkreditt AS has overcollateralization (OC) of 39,5 per cent, but committed OC is 11.59 per cent. Storebrand Boligkreditt AS therefore has security that is NOK 3.8 billion more than was committed in the loan programme. Storebrand Bank ASA considers the risk associated with the transfer rate of mortgages to Storebrand Boligkreditt AS as low.
Storebrand’s employees in Norway have a defined-contribution pension scheme. In a defined-contribution scheme, the company allocates an agreed contribution to a pension account. The future pension depends upon the amount of the contributions and the return on the pension account. When the contributions have been paid, the company has no further payment obligations relating to the defined-contribution pension and the payment to the pension account is charged as an expense on an ongoing basis. For regulatory reasons, there can be no savings in the defined-contribution pension for salaries that exceed 12G (G = National Insurance Scheme basic amount). Storebrand has pension savings in the savings product Extra Pension for employees with salaries exceeding 12G.
We obtained, read through and understood the internal valuation model. We concluded that the model contains the elements required by the financial reporting framework and therefore is appropriate as a basis for determining fair value on the Group’s investment properties. We tested whether and concluded that the model made mathematically correct calculations.
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
• consider the Board’s statement on the fixing of salaries and other remuneration to executive personnel,
More detailed information about the remuneration of executive personnel may be found in Note 23 (Group) and Notes 6 and 17 (ASA), and in the Board’s statement on the fixing of salaries and other remuneration to executive personnel, which is included in the notice of the General Meeting and available at www.storebrand.no. Executive personnel are encouraged to hold shares in Storebrand ASA, even beyond the lock-in period.
TCFD Recommended Disclosures Page Reference a Describe the board’s oversight of climate-related risks and opportunities b Describe the management’s role in assessing and managing climate-related risks and opportunities
TCFD Recommended Disclosures Page Reference a Disclose the metrics used by Storebrand to assess climate- related risks and opportunities in line with its strategy and risk management process.
Finanical Capital and Our Investment Universe Keep Own House in Order
Investment in solutions (solution companies, Green Bonds, and real estate with Green Building Certificate): clean tech and renewable energy and green bonds in both equity and interest investments in Storebrand and SPP. Direct Real Estate investments under operational control in Norway and Sweden with a Green building certification.
ARNE FREDRIK HÅSTEIN (1973) Employee-elected board member Storebrand ASA since 2014