Investing in a
sustainable future
STOREBRAND ANNUAL REPORT 2018
Facts and figures
2018
Group profit NOK million
Return on equity
3 158
13.7%
1)
Solvency margin
NOK billion invested in fossil free funds
173%
68
Assets under Management, NOK billion
Assets under Management
screened for sustainability criteria
707
100%
1) After tax, adjusted for amortisation of intangible assets
3
LETTER FROM THE GROUP CHIEF EXECUTIVE OFFICER
Investing in a
sustainable future
Odd Arild Grefstad
Group Chief Executive Officer
4
Investing in a
sustainable future
STOREBRAND ANNUAL REPORT 2018
2018 was a good year. Storebrand delivered great results and took a step along
the road to becoming a world-class savings group. We completed a successful inte-
gration of SKAGEN and Silver into the Group, explored and refined our sustainable
investments, and entered into close cooperation with the fintech company Dreams.
Our financial solidity was strengthened and there was an increase in the dividends
distributed to shareholders. At the same time, the financial markets experienced tur-
bulence at the end of the year, in a somewhat uncertain macroeconomic situation.
In 2018, Storebrand presented an ambition to build a world-
class savings group, supported by insurance. This ambition
builds on our position in the corporate market, as the
leading supplier of Norwegian occupational pensions and
an offensive challenger in the Swedish market. Our goal
is to create world-class customer experiences in our core
areas of savings and pensions. Our driving force is to give
our customers a future to look forward to by helping them
secure their current and future finances. People are living
longer and can expect smaller government pensions in the
future. For our customers, it will therefore be necessary to
save more in the years to come.
To achieve the goals we have set, we must understand
the needs of our customers and ensure good interaction
between the digital touchpoints and human interactions.
As an organisation, we need to be even more agile, keep
adapting and developing new solutions, and have a relent-
less focus on our customers. To support an agile way of
working, we created several cross-functional teams with
substantial freedom of action. These teams define, prioritise
and develop digital solutions and services. In 2018, we also
entered into several fintech collaborations, including as part
owner and partner of the savings app Dreams. Through an
understanding of behavioural psychology, Dreams makes
digital savings easy and fun, and they were awarded as one
of the 100 top fin-tech companies in the world in 2018.
In Norway, our savings and insurance business delivered
strong operational results. In Sweden, our subsidiary, SPP,
can also look back on a very good year, with strong premium
growth and a positive net flow of funds to the Company.
In 2019, SPP aims to deliver double-digit growth and rein-
force its digital lead. In Norway, we are busy planning and
building on our savings offerings , which will be the main
pillar of our growth strategy going forward. We are invest-
ing over NOK 400 million in the revitalisation and renewal of
several of our digital platforms in 2019. We want to be the
preferred customer choice when the “Individual Pension
Account” market opens in a year or two. The “Individual
Pension Account” is a new financial product spearheaded
by the authorities where Norwegians can combine all of
their defined contribution pensions from both current and
former employers.
Storebrand ended 2018 with record strong capital adequacy
and liquidity. The solvency margin at year end was 173 per
cent. Both the operating and financial results improved
compared with the previous year. This increase is driven by
strong growth in savings and insurance combined with strong
cost discipline in the Group. Overall, this gives the Board an
opportunity to increase the dividend to NOK 3 per share.
The acquisitions of SKAGEN and Silver strengthen our
savings strategy. I’m impressed with the work done by the
teams when both SKAGEN and the Silver portfolio were
integrated into the Storebrand family. SKAGEN comple-
ments and broadens Storebrand’s investment offerings
and customer base. This work will continue in 2019, includ-
ing a stronger focus on international distribution of fund
solutions. We benefit greatly from SKAGEN’s network and
presence in European markets.
Storebrand´s driving force is to create a future we and our
customers can look forward to. A great part of our work
is therefore about working to achieve the UN Sustainable
Development Goals. Sustainable and socially responsible
investments lie at the core of our savings strategy. Among
other things, we are supporting the UN Global Compact, the
world’s largest corporate social responsibility initiative. As
Norway’s largest private asset manager, our most important
influence on the UN Sustainable Development Goals is tied to
how we invest the more than NOK 700 billion that we manage.
5
The UN Climate Panel’s report in 2018 gave us an unpleas-
ant reminder of the major climate challenges we are facing,
which influence the choices we make as investors in the
short, medium and long term. The financial industry is an
important contributor in the efforts to limit global warming,
and we have a clear strategy to invest through our own,
targeted funds in companies that provide climate solutions.
However, most importantly, we have strict environmental,
climate and sustainability criteria for all our investments.
The entire Storebrand portfolio is regularly screened according
to our sustainability criteria. By the end of 2018, 171 compa-
nies were excluded from the Storebrand investment universe.
During the past year, we have had an owner dialogue with
314 companies. We have the industry’s strictest policy for the
exclusion of coal, and we are now tightening our policy further
with the goal of excluding any company that has more than 5
per cent of their earnings from coal 1) by 2026.
In 2018, we also launched three custom investment portfo-
lios, that we called “Wave”. Wave will only invest in companies
that contribute to solving the greatest challenges of our time
in the areas of renewable energy, equality and cities of the
future. Going forward, we will continue to seek new invest-
ment opportunities that contribute to sustainable solutions.
At the same time, we will exercise active ownership through
voting and dialogue with the companies in which we invest.
Our aim is to influence them to reduce their CO2 emissions
from their own activities, among other things. Sustainabil-
ity is not just about corporate social responsibility, it’s also
good business. Money placed with us, either in savings and
pension products, insurance or the bank, should be working
for our customers, and it should also be working for the
planet and society. It should be Good Money.
“Our driving force is to give
our customers a future to
look forward to by helping
them secure their current
and future finances.”
Odd Arild Grefstad
1) We have already excluded any company that has more than 25 per cent of its earnings from coal..
6
STOREBRAND ANNUAL REPORT 2018 STOREBRAND ANNUAL REPORT 2018
Important events
in 2018
Q1: January to March
Q2: April to June
• Storebrand acquired the remaining 9 per cent of
the shares in SKAGEN AS and now owns the company
wholly.
• Storebrand won the tender competition after Silver
was placed under public administration in 2017. 16,000
customers with 24,500 contracts and NOK10 billion in
assets under management were transferred to
Storebrand.
• Launch of Wave: portfolios in which the customer
invests in companies that are working to solve the
greatest challenges in gender equality (Sustainability
Goal 5), climate (Sustainability Goal 13) and Sustain-
able Cities (Sustainability Goal 11).
8
8
STOREBRAND ANNUAL REPORT 2018
Q3: July to September
• Storebrand became a co-owner of the Swedish
fintech company Dreams and launched the savings
application Dreams on the Norwegian market.
• SKAGEN AS launched Norway’s largest fund platform
for Share Savings Accounts (ASK), approximately 600
funds in a single platform.
• SPP launched the pension robot Gajda, a digital
tool that guides the employees through the various
pension elements and helps them make the right deci-
sion based on their life situation.
Q4: October to
December
• Zero coal by 2026: Storebrand introduced changes to its
investment policy for coal and will thus not be invested
in the coal industry by 2026.
• “Handshake of the Year” 2018: The food bank Matsen-
tralen received the Storebrand Sustainability Prize
during the “Our Planet” conference.
• Google Pay: Storebrand launched Google Pay for easy,
fast and secure mobile payments.
• The marketing campaign featuring the pink pension
piggy bank was launched . Encouraging Norwegians
to check their pension figures to see how much they
have in their piggy bank was well received in the market.
• SPP launched Sweden’s first fully digital occupa-
tional pension offering. A new IT platform and new
digital tools allow companies to obtain a need-adapted
pension plan without any manual work.
99
Important notice:
This document may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future
events and circumstances that may be beyond the Storebrand Group’s control. As a result, the Storebrand Group’s actual future financial condition, performance
and results may differ materially from the plans, goals and expectations set forth in these forward-looking statements. Important factors that may cause such a
difference for the Storebrand Group include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the
regulatory environment and other government actions and (iv) market related risks such as changes in equity markets, interest rates and exchange rates, and
the performance of financial markets generally. The Storebrand Group assumes no responsibility to update any of the forward-looking statements contained in
this document or any other forward-looking statements it may make.
10
STOREBRAND ANNUAL REPORT 2018 Table of contents
Introduction
5. Shareholder matters
2
4
8
Facts and figures 2018
Letter from the Group Chief Executive Officer
Important events in 2018
1. This is Storebrand
Storebrand at a glance
14
15 Organisation
17
20
22
Executive mangament
A sustainable strategy
Supporting the UN Sustainable Development Goals
2. Financial Capital and our
Investment Universe
26
27
30
32
34
Provide a return to the owners
A driving force for sustainable investments
Storebrand’s climate risk work
An active owner
Key performance indicators
3. Customers and Community
Relations
38
40
42
43
44
Lifelong savings
Engaging, relevant and responsible advisory services
Digital trust
Simple and digital customer experiences
Key performance indicators
4. People and Systems
48 A culture for learning
49
50
52
Committed and courageous employees
Diversity and equal opportunities
Good environmental and working conditions
throughout the entire value chain
53 Order in our own house
54
Key performance indicators People and Systems
58
Shareholder matters
6. Governance
62
65
66
68
Board of Directors Storebrand ASA
Committees
Companies in the Storebrand Group
Corporate governance
7. Directors’ Report
78
Strategic Highlights
82
Group financial results for 2018
88 Capital situation, rating and risk
91
95 Organisation, working environment and expertise
96 Corporate governance
97 Official financial statment of Storebrand ASA
Regulatory changes
8. Annual Accounts and Notes
100 Financial statements and Notes, Storebrand Group
185 Financial Statements and Notes, Storebrand ASA
203 Auditor’s Report
9. Sustainability Data
212 Definitions key performance indicators
214 Materiality analysis and GRI index
222 Auditor’s Report on Sustainability
11
1
This is Storebrand
We create a future to look forward to, by delivering
simple and sustainable pensions and savings.
14 Storebrand at a glance
15 Organisation
17 Executive mangament
20 A sustainable strategy
13
STOREBRAND ANNUAL REPORT 2018
Storebrand at a glance
Our vision and driving force
Our aim is to work for a future that we can look forward
to, through delivering better pensions – simple and
sustainable. We have been a part of people’s lives for over
250 years. Today, we are Norway’s largest private asset
manager, with over NOK 700 billion invested in companies
throughout the world. When more than 1.8 million Norwe-
gians and Swedes place their savings with us , it comes with
some clear obligations. We aim to manage our customers´
money profitably, so that their dream of a good retirement
can be fulfilled. However, money should be managed sus-
tainably, so that future generations have a future to look
forward to. In the area of sustainable investments, we will
be a courageous pathfinder and a role model for other
investors.
Our vision, Recommended by our customers, is simple
and gives a clear indication that the satisfaction of our
customers is the most important goal for us.
We offer pension, savings, insurance and banking products
to private individuals, businesses and public enterprises.
“Our vision is simple and
gives a clear indication that
the satisfaction of our
customers is the most
important goal for us”.
Solvency II 2018:
173%
Dividend 2018:2)
68%
Return on Equity
2018
13,7 %
2017
11,3 %
1) Including SKAGEN and SPP.
2) Adjusted for extraordinary tax income as per stock exchange release 15 January 2019.
14
SECTION 1. THIS IS STOREBRAND
Organisation
Legal structure (simplified)
Storebrand ASA
Storebrand
Livsforsikring AS
Storebrand
Forsikring AS
Storebrand
Bank ASA
Storebrand
Storebrand
Asset Management AS
Helseforsikring AS (50%)
SPP Pension & Försäkring AB
Storebrand Boligkreditt AS
SPP Fonder AB
SKAGEN AS
Asset Management
• NOK 707bn in AuM of which
33% external assets
• 100% of investments subject
to sustainability screening
Insurance
• Health, P&C and group life
insurance
• NOK 4.4bn in portfolio
premiums
Retail bank
• Internet Bank
• NOK 47bn of
net lending
Pension & Savings
• 40k corporate customers
• 2m individual customers
• NOK ~440bn of reserves
of which 40% Unit Linked
15
Reporting structure
The Group
Insurance, Guaranteed Pension and Other.
is divided
into
the segments Savings,
Savings consist of products that encompass pension
savings without interest rate guarantees. This includes
defined contribution pensions in Norway and Sweden, asset
management and banking products for private individuals.
Insurance is responsible for the Group’s risk products in
Norway and Sweden and provides health insurance in the
Norwegian and Swedish corporate and retail markets,
property and casualty insurance and personal risk products
in the Norwegian retail market and employer’s liability
insurance and pension-related insurance in the Norwegian
and Swedish corporate markets.
Guaranteed Pension consists of products that include
long-term savings to a pension, where customers have
a guaranteed return or performance. The area includes
defined benefit pensions in Norway and Sweden, paid-up
policies and individual capital and pension insurance.
Other: The result for Storebrand ASA is reported here, as
well as the result for the Company portfolios and small
subsidiaries of Storebrand Life Insurance and SPP. In addi-
tion, the results associated with lending to commercial
enterprises by Storebrand Bank and the activities of BenCo
are reported in this segment.
Storebrand ASA
Savings
Insurance
Guaranteed Pension
Other
16
STOREBRAND ANNUAL REPORT 2018 SECTION 1. THIS IS STOREBRAND
Executive management
Odd Arild Grefstad (1965)
Group Chief Executive Officer
Lars Aa. Løddesøl (1964)
Group CFO
Heidi Skaaret (1961)
Executive Vice President, People & Technology
Education
Education
Education
State-Authorised Public Accountant and
MSc in Economics and Business Administration
MSc in Economics and Business Administration
Authorised Financial Analyst, (AFA)
(Siviløkonom), BI Norwegian Business School
(Siviløkonom), University
Norwegian School of Economics and business
MBA, Thunderbird / American Graduate School
of Washington, USA
Administration (NHH)
of International Management, USA
Previous positions
Previous positions
Previous positions
2008–2012: Executive Vice President,
2011–2012: Managing Director,
2008–2011: Executive Vice President, Life and
Scandinavia Region, Managing Director of
Storebrand Life Insurance AS
Pensions Norway and Managing Director,
Lindorff AS in Norway, Lindorff Group AB
2002–2011: Executive Vice President,
Storebrand Livsforsikring AS
2001–2008: Managing Director,
CFO and group Legal, Storebrand ASA
2004–2008: Executive Vice President,
IKANO Finans ASA
1998–2002: Head of business Control,
Corporate Market Life Insurance,
1987–2000: Managerial positions,
Storebrand ASA
1997–1998: Group Controller,
Life Insurance, Storebrand ASA
Storebrand Livsforsikring AS
Den norske Bank ASA
2001–2004: CFO, Storebrand ASA
1986–1987: Financial Services Officer,
1994–2001: Vice President/Relationship Manager,
Bank of America, San Francisco, USA
1994–1997: Vice President, Internal Audit,
Citibank International plc
Storebrand ASA
1989–1994: External Auditor,
Arthur Andersen & Co
1990–1994: Asst. Treasurer,
Scandinavian Airlines Systems
Ownership in Storebrand
Ownership in Storebrand
Number of shares as of 31 December 2018:
Number of shares as of 31 December 2018:
83,521
141,634
Ownership in Storebrand
Number of shares as of 31 December 2018:
54,473
17
Jan Erik Saugestad (1965)
Executive Vice President, Asset Management
Wenche Annie Martinussen (1968)
Executive Vice President, Retail Market Norway
Education
Education
MSc, Norwegian University of Science and
Individual module in Master of Management in
Staffan Hansén (1965)
Executive Vice President,
SPP Pension & Forsäkring AB
Education
Licentiate degree (Economics),
Åbo Academy, Finland
PhD studies, Finnish Doctoral programme
in Economics,
PhD studies, Stockholm School of Economics
Previous positions
2013 -2015: CEO, Storebrand Asset Management
2011–2013: CIO, Storebrand Livsforsikring AS
2008–2011: CIO, SPP Livförsäkring AB
2006–2008: Responsible for strategic allocation,
SPP Livförsäkring AB
2003–2006: Head of Government and
Covered Bond trading, Svenska Handelsbanken
1996–2003: Head of Fixed Income,
Technology (NTNU)
MBA, NSEAD, France
Previous positions
2006–2015: CIO, Storebrand Asset Management
2002-2006: Head of Asset Allocation,
Storebrand Asset Management
1999–2002: Senior Portfolio Manager,
Storebrand Asset Management
1997–1999: Sector Head Equities,
Energy/Shipping, Handelsbanken Markets
1995–1997: Partner, Marsoft Capital
1992–1995: Head of Research, Nordea Markets
1990–1991: Junior Consultant,
McKinsey & Company
Alfred Berg Finland
Ownership in Storebrand
1994–1996: Trainee, Pohjola Bank (OKOBANK)
Number of shares as of 31 December 2018:
Ownership in Storebrand
Number of shares as of 31 December 2018:
55,034
44,378
18
Scenarios and Foresight,
BI Norwegian Business School
Individual modules in the Master of Management
in E-commerce and Master in Business and
Marketing, BI Norwegian Business School
Previous positions
2015–2017: Senior Vice President Retail,
Storebrand ASA
2013–2015: Senior Vice President
Storebrand Direct, Storebrand ASA
2011–2013: Senior Vice President Business
Development and Digitalisation,
Storebrand ASA
2007–2011: Senior Vice President Digital Sales
and Development, Storebrand ASA
2002–2007: Nordic Head of Internet, Group
Identity and Communications, Nordea Bank AB
2001–2002: Manager Web Content Management,
Electronic Banking, Nordea Bank AB
1996–2001: Sales, Product and Marketing
Manager, Norwegian Trade Council,
INDEX Publishing AS
Ownership in Storebrand
Number of shares as of 31 December 2018:
13,969
STOREBRAND ANNUAL REPORT 2018 SECTION 1. THIS IS STOREBRAND
Geir Holmgren (1972)
Executive Vice President, Corporate Market
Jostein Dalland (1969)
Executive Vice President, Digital Business
Education
Cand. Scient degree with actuarial qualifications,
University of Oslo, Norway
MBA, Griffith University Brisbane, Australia
Previous positions
2013–2015: Executive Vice President,
Guaranteed Pension, Storebrand ASA
2011–2012: Manager Customer Service
and Product, Storebrand Livsforsikring AS
2003–2011: Product Manager,
Storebrand Livsforsikring AS
2002–2003: Product Manager Unit linked
Insurance, Storebrand Livsforsikring AS
2000–2002: Product Manager Defined Contribu-
tion Pensions, Storebrand Livsforsikring AS
1998–2000: Sales International Life Insurance,
Storebrand Livsforsikring AS
1997–1998: Actuary Trainee,
Storebrand Livsforsikring AS
1995–1997: Teacher, University of Oslo
Ownership in Storebrand
Development
Education
Siviløkonom/MBA, St.FX University, Canada
Master of Technology Management, Norwegian
School of Economics (NHH)/Norwegian University
of Science and Technology (NTNU)
Previous positions
2015–2016: Senior Vice President Customer and
Business Development, Storebrand ASA
2011–2015: Chief Marketing Officer/SVP
Marketing, Storebrand ASA
2009–2011: CEO, Inven2 AS
2007–2009: Senior Vice President Marketing and
Sales, Aker BioMarine ASA
Karin Greve-Isdahl (1979)
Executive Vice President, Communications,
Sustainability and Industry Policy
Education
Master of International Relations,
Bond University, Australia
Bachelor of Communications,
Bond University, Australia
Previous positions
2014–2017: Vice President Communications,
Opera Software
2009–2014: Communications Director, SN Power
2008–2009: Business Reporter, TV 2
2005–2008: TV Reporter, CNBC/FBC Media
2004–2005: Researcher, CNBC Europe
2002–2007: CEO, Natural ASA
Ownership in Storebrand
2001–2002: Director/Partner, Reflex AS
Number of shares as of 31 December 2018: 6,681
1995–2001: Senior Vice President Pizza and various
marketing positions, Orkla Foods AS
1993–1995: Management Consulting
Ownership in Storebrand
Number of shares as of 31 December 2018:
Number of shares as of 31 December 2018:
16,701
54,722
19
A sustainable strategy
Overall strategic goals
Storebrand revised its business strategy in 2018 on the
basis of several development trends. In recent years, the
regulatory framework for savings and pensions has been
undergoing major changes. The introduction of the Share
Savings Accounts (ASK) and Individual Pension Accounts (IPS)
improved the savings terms and conditions for people. The
introduction of Individual Pension Accounts in the coming
years will change the occupational pension market and
provide customers with greater insight into their pensions.
Due to reduced benefits from the government for future
pensioners, people will have to take greater responsibility for
their own financial future. We expect that the changing regu-
latory framework will result in people saving more. These are
the main reasons why Storebrand chose to focus its strategy
towards pensions and savings.
In 2018, Storebrand developed three overall strategic goals: A
leading position in occupational pensions, a unique position-
ing in the private savings market and an asset manager with
strong competitive advantages and good growth opportuni-
ties. Broad insurance offerings to both the retail and corporate
markets are aimed at supporting our strategic goals.
Storebrand’s ambition is to build a world-class savings group,
supported by insurance. We will create first-class customer
experiences in the core areas of savings and pensions. We
aim to help our customers insure their lives and assets, so
that they can build a future that they can look forward to. Our
foundation is based on our position in the corporate market
as Norway’s leading provider of occupational pensions, and
as an offensive challenger in the Swedish market. People are
living longer and receiving less from the government, and our
customers must save more in the years to come. We offer a
broad palette of savings solutions, and through simple and
accessible digital advisory services, we will motivate custom-
ers to take charge of their own savings and future.
Our strategy is based on a genuine commitment to a sus-
tainable society and strong belief in sustainable investments.
Through the management of over NOK 700 billion, we create
a long-term return for both our owners and customers, and
we make sure that our activities support a more sustainable
world.
Our employees are our most important resource for deliver-
ing on our strategy. Continuous learning to understand the
needs of our customers is required. We want to have a multi-
20
tude of committed and courageous employees, who will find
the best solutions for our customers and make bold choices
that support a sustainable business model.
Three strategic focus areas
In order to ensure that we have a comprehensive and long-
term approach to how we create value for our shareholders,
customers, employees and society at large, we conducted a
materiality analysis in 2017. Through this, we defined our
main focus areas and the associated issues that we are
going to solve. It is essential that we manage these issues
in a good way.
Our three main focus areas and the associated
issues are:
• Financial capital and our investment universe –
our capital shall be managed sustainably with a
long-term perspective and give competitive return
for our customers
- Provide competitive returns to our
shareholders and customers
- A driving force for sustainable investments
- An active owner
• Customer and community relations –
our customers recommend us
- Lifelong savings
- Engaging, relevant and responsible
advisory services
- Digital trust
- Simple and digital customer experiences
• Our people and systems – people first, digital always
- A culture for learning
- Committed and courageous employees
- Diversity and equal opportunities
- Good environmental and working condi-
tions throughout the entire value chain
The three focus areas are described in the following sec-
tions, with the approach, goals, initiatives and results for
the related issues. The key performance indicators that are
stated for each focus area in the annual report are reported
to the executive management on a continuing basis and to
the Board semi-annually.
STOREBRAND ANNUAL REPORT 2018
SECTION 1. THIS IS STOREBRAND
The three focus areas are relevant to our three most
important strategic goals: a leading position in occupational
pensions, unique positioning in the private savings market
and asset management with strong competitive advantages
and growth opportunities.
Altogether, the focus areas give us a clear prioritisation of
the long-term challenges and how we will work with these
going forward.
The materiality analysis and focus areas are dealt with by
the executive management and the Board, and they form
the basis for our integrated reporting. The annual report
has been prepared in accordance with the Global Reporting
Initiative (GRI) standards. Read more about the materiality
analysis in the Other Content section.
Supporting the UN Sustainable Development Goals
A sustainable business model means that we must deliver a
return to our owners and customers, while creating positive
ripple effects for our society and managing our business
activities in a way that does not deprive future generations.
At Storebrand we believe that sustainability and profitability
go hand in hand. Storebrand, and the business community
in general, are dependent on both a well-functioning society
and markets in order to succeed.
Storebrand has sustainability principles that sum up how
sustainability is an integral part of our overall goals. The
principles were updated in 2018 and encompass all parts
of Storebrand’s activities, including investments, product
development, procurement, employee follow-up and inter-
nal operations.
The principles are:
• We base our business activities on the UN
Sustainable Development Goals.
• We help our customers to live more sustain-
ably. We do this by managing our customers’
money in a sustainable manner, in addition to
providing sustainable financing and insurance.
• We are a responsible employer.
• Our processes and decisions are based on sus-
tainability – from the Board and management,
who have the ultimate responsibility, to each
employee who promotes sustainability in their
own area.
• We collaborate to achieve the UN Sustainable
Development Goals with our customers,
suppliers, the authorities and partners.
• We are transparent about our work and our
sustainability results.
A leading position in
occupational pensions
A unique positioning in the
private savings market
An asset manager with strong
competitive advantages and
good growth opportunities
Supported by insurance
Financial Capital and
Investment Universe
• Provide a return to the
owners and customers
• A driving force for sustainable
investments
• An active owner
Customer and
community relations
• Lifelong savings
• Engaging, relevant and
responsible advisory services
• Digital trust
• Simple and digital customer
experiences
People and Systems
• A culture for learning
• Committed and courageous
employees
• Diversity and equal opportunities
• Good environmental and working
conditions throughout the entire value
chain
21
As an asset manager of more than NOK 700 billion on behalf
of our customers, Storebrand contributes first and foremost
to the realisation of the UN Sustainable Development Goals
through defining requirements for the companies we invest
in, investing in solution-oriented companies and influencing
the companies we are owners in through active ownership.
Storebrand has identified eight sustainability goals (3, 5, 6,
7, 8, 11, 12, 13) that we have the greatest impact on through
our investment activities. Several of these are relevant to the
three focus areas we have defined as essential to our busi-
ness. We use these sustainability goals actively in our asset
management, through a special sustainability rating, for
example.4)
Storebrand has also identified two sustainability goals
in which we can make a difference through our Group
business activities. Sustainability Goal 8, decent work
and economic growth, shall ensure access to and an
understanding of financial services. Storebrand is trying
to encourage more people to save for their pensions
and secure their own personal finances. Through our
business activities, Storebrand will also contribute to
achieving Goal 5, gender equality. 5)
Sustainability initiatives we support
•
The UN Principles for Corporate Social Responsibility
• UN Global Compact
• UN Human Rights Conventions
• UN Environmental Conventions
•
ILO Core Conventions
• UN Convention against Corruption
• UN Principles for Responsible Investment (PRI)
• UN Principles for Sustainable Insurance (PSI)
•
CDP Global 100 Paris 2015
• UNEP Finance Initiative
•
•
Portfolio Decarbonisation Coalition
Accounting for Sustainability (A4S)
• Montreal Pledge
•
•
Eco-Lighthouse
Climate Neutral Organisation
• Norwegian Code of Practice for Corporate Governance
• Norwegian Forum for Responsible and Sustainable
Investment
•
Tobacco Free Portfolios
4) Read more about how sustainability goals are implemented in our investment universe in Section 2.
5) Read more about our specific initiatives to ensure diversity and equality in Section 4.
22
STOREBRAND ANNUAL REPORT 2018 SECTION 1. THIS IS STOREBRAND
23
2
Financial Capital
and Investment
Universe
Storebrand will deliver profitable growth by building a
world-class savings group, supported by insurance,
through simple and sustainable solutions.
26 Provide a return to the owners
27 A driving force for sustainable investments
29 Zero coal by 2026
30 Storebrand’s climate risk work
32 An active owner
34 Key performance indicators
25
Provide a return to the owners
Why
As a listed company, Storebrand’s most important goal is
to generate a return for our shareholders. The return shall
be created in a sustainable manner and contribute to pos-
itive ripple effects for society.
Approach
Storebrand shall deliver profitable growth. The guaranteed
portfolios shall be managed in a capital-efficient manner
and free up capital for the shareholders over time. Occu-
pational pension is a core product in both Norway and
Sweden. In Norway, employees and former employees of
companies that have a pension agreement with Storebrand
are offered attractive solutions in the retail market. Our
vision is simple: We are successful when our customers rec-
ommend us.
Goals and ambitions
Storebrand’s ambition is to create an attractive and com-
petitive return through dividends and the creation of value.
The goal is to pay a dividend of more than 50 per cent of the
group profit after tax. The Board’s ambition is to ensure that
the ordinary dividend per share shall at least be at the same
nominal level as the previous year. Ordinary dividends will
be paid with a sustainable solvency margin of more than
150 per cent. If the solvency margin is over 180 per cent, the
Board’s intention is to propose an extraordinary dividend or
buyback of shares. Furthermore, Storebrand has an ambi-
tion to continue profitable growth in priority growth areas.
The Group’s goal is to deliver at least a 10 per cent return
on equity overall.
Storebrand has the following operational goals:
• Maintaining the market leader position in occupational
pensions in Norway
• Grow by more than ten per cent in the Swedish
occupational pensions market
• Double-digit growth in private savings in Norway
form and best practices with customers. We developed
our digital advisory services and savings solutions. In SPP,
the new advisory service tools and an improved welcome
process for new customers contributed to raising the
premium volume by 29 per cent compared with the previ-
ous year. Our management solutions are divided into three
main categories: affordable index solutions, price-effective
factor funds and narrow fund strategies that seek to gen-
erate a return greater than the market risk. All our savings
solutions contain stringent sustainability requirements.
Results
The results are discussed more fully in the Directors’ Report.
Storebrand delivered a return on equity of 13.7 per cent,
and the Board proposes to the General Meeting an ordi-
nary dividend of NOK 1,402 million, corresponding to NOK
3 per share for 2018. Operating income grew by 13 per
cent, driven by 8 per cent premium growth from collective
pension agreements in Norway and Sweden.
• Five per cent premium growth in insurance
Return on equity
Initiatives
Storebrand continued its focus on Savings and Insurance
throughout 2018. Several initiatives were carried out to
increase growth and profitability. The integration with
SKAGEN laid the foundation for a common operating plat-
2018
13.7 %
2017
11.3 %
26
STOREBRAND ANNUAL REPORT 2018
SECTION 2. FINANCIAL CAPITAL AND OUR INVESTMENT UNIVERSE
A driving force for sustainable investments
Why
A long-term perspective is key, both to ensuring sustainable
development and good management of the customers’
pension assets. That is why we established a dedicated
sustainability team for asset management already in 1995.
Sustainability has been integral to investment decisions
since then.
We believe that companies that take sustainability seriously
will become more profitable over time. Such companies see
and manage risk better, and they understand new invest-
ment opportunities when the trends change. For example,
it will be more expensive for carbon intensive companies
to raise capital if more investors have stringent carbon
footprint requirements. In addition, there are an increas-
ing number of new regulations that reinforce the risk of
causing large carbon emissions, such as higher prices for
CO2 quotas.
As an investor, we see great potential in future-oriented
companies that develop more efficient renewable energy
production and new energy consumption and distribution
solutions. Such companies are better positioned to meet
global challenges, achieve good results and deliver a good
return to Storebrand as an investor. The same applies to
companies with good anti-corruption systems that respect
human and labour rights.
Approach
Our portfolio managers have good tools for identifying risk
and opportunities and making good, sustainable investment
decisions. All companies in Storebrand’s investment port-
folio must satisfy the minimum requirements for human
rights and international law, corruption and financial crime,
climate and environmental damage, controversial weapons
and tobacco. We call this the Storebrand Standard. It
applies to all the funds and pension assets and shall ensure
that customers’ money is invested in companies that do not
violate international norms. In case of serious violations of
the Storebrand Standard, we use our role as the owner to
make improvements in the dialogue with the company. If
our dialogue is not successful, a company can be excluded
from our investments.6)
Storebrand has developed a rating that defines how sus-
tainable companies are. It helps us assess the company’s
environmental, social and management factors. The tool
makes it possible to invest in companies that perform
better with respect to sustainability. We also have a number
of additional sustainability criteria. In this way, we transfer
money flows from activities with a negative influence to
companies that participate in the transformation to a sus-
tainable society.
Storebrand supports and participates in a number of sus-
tainability initiatives globally.7)
Goals and ambitions
Our ambition is to put capital to work to finance socially
beneficial, sustainable solutions and to reduce exposure to
activities that impact society negatively. Therefore, all our
investments must satisfy the requirements of the Store-
brand Standard. In addition, we clearly focus on companies
with core business activities that produce goods or services
that contribute directly to achieving sustainable social devel-
opment. We also aim to strengthen our commitment to
fossil-free fund solutions.
Storebrand aims to reduce greenhouse gas emissions from
the companies we invest in and reports on our efforts in “The
Portfolio Decarbonisation Coalition”. We also push for port-
folio companies to use standardised reporting measures to
6) Read more about our sustainability standard in the section “an active owner”.
7) Read more about what initiatives we support and participate in “About Storebrand”.
27
STOREBRAND ANNUAL REPORT 2018
disclose climate risk towards investors and other stakehold-
ers. We are a driving force for recommendations to The Task
Force on Climate-related Financial Disclosures (TCFD), and
our goal is to report comprehensively in accordance with this
framework by 2020. Read more about this below.
Goal Number 6), which resulted in a report in collaboration
with Norwegian Church Aid. In addition, we have formulated
a special investment policy for deforestation, which encom-
passes soy, palm oil and cattle farming and will be launched
in 2019.
Initiatives
Our entire portfolio is screened for sustainability. Since 2013,
we have had a strict policy regarding investments in the coal
industry. This policy was further tightened in 2018.
Storebrand has been a pioneer in developing fossil-free
funds, which we started with in 2016 and expanded in 2017.
In 2018, our Swedish branch, SPP, launched SPP Global Mul-
tifactor Plus, a fossil-free factor fund. SPP also launched
two other fossil-free fund solutions in 2018, in addition to
relaunching SPP Global Solutions.
In 2018, we launched Wave, three custom portfolios that
invest exclusively in companies that contribute to solving
global challenges related to renewable energy, sustainable
cities and gender equality. We assess all companies in our
investment universe with respect to gender equality. In addi-
tion to assessing whether the companies have a policy to
prevent gender discrimination, we assess whether they have
initiatives to contribute to UN Sustainable Development Goal
Number 5 (equality) and 8 (decent work). Only companies
with high scores are selected for the Wave portfolios.
We also implemented several initiatives to strengthen our
sustainability analyses, and, among other things, focused on
water risk in our investments (UN Sustainable Development
Results
Our results with respect to the goals and ambitions men-
tioned above are summarised under key figures. This shows
that we had excluded 171 companies from our investment
universe as of the fourth quarter of 2018, because they
violated our sustainability standard. The
investments
through Storebrand’s and SPP’s funds have a total carbon
footprint of 21.8 tonnes of CO2 per NOK million of revenue.8)
This is lower than the funds’ comparable indexes, which
showed 31.8 tonnes in equivalent units of measurement.
In total, 23 per cent of our fund portfolio in SPP and Store-
brand is fossil free.
Nearly 5 per cent of assets under management in Store-
brand and SPPs fund portfolios is invested in companies
that contribute specifically to sustainable development. 9)
Storebrand was also recognised for its focus on sustain-
ability. In 2018, Storebrand came in second in the Ethical
Bank Guide’s ranking of sustainable financial institutions.
Storebrand’s Swedish subsidiary, SPP, received the top
ranking for sustainable investments, by both Max Matthies-
sen, Söderberg & Partners and the Sustainable Brand Index
(best of the pension companies).
For the results from our climate risk work, see the separate
section.
NOK bn invested in
fossile free products
Percent of AuM screened for
sustainability criteria
Certified green property
investments
68 100% 30%
8) The definition is based on TCFD. The fund’s total carbon footprint is the sum total of the companies’ carbon emissions relative to the companies’ revenues, weighted for our ownership in the respective
companies. The unit of measurement shows thus carbon emissions per million in the fund currency in NOK.
9) Defined as companies in which the core business activities are to produce goods or services that contribute to achieving sustainable social development.
28
SECTION 2. FINANCIAL CAPITAL AND OUR INVESTMENT UNIVERSE
Zero coal by 2026
The report from the UN Climate Panel is crystal clear. In order to achieve the goal
of limiting global warming to 1.5 degrees above the preindustrial level in 2100,
the use of coal must be close to zero in 2050. In advance of the climate summit in
December 2018, Storebrand announced its action plan for zero coal by 2026.
Already in 2013, Storebrand withdrew from companies with
more than 30 per cent of their business activities in coal. Up
until 2026, the Group, in accordance with the advice of the
UN Climate Panel, will gradually take steps to reduce the
percentage to five per cent, in practice zero coal.
“If we are to be successful in a movement towards zero
emissions, we must be responsible owners and give the
companies an opportunity to change. Selling out of com-
panies is in a way the last thing we want. We want the
companies to assess the risk of being in coal, and seek new
investment opportunities in renewable energy,” says the
Executive Vice President for Asset Management, Jan Erik
Saugestad.
In connection with the announcement, Storebrand encour-
aged other investors to tighten their coal criteria and get rid
of coal-exposed investments by 2026.
The financial industry must stop financing coal power if the
world is to achieve the global climate targets. Together with
other investors and companies in Europe, Storebrand will
make a focused effort to achieve a broad phase-out of coal,
gradually excluding coal companies from the portfolios,
with a total phase-out by 2026.
29
STOREBRAND ANNUAL REPORT 2018
STOREBRAND ANNUAL REPORT 2018
Storebrand’s climate risk work
Climate risk has two dimensions. Storebrand takes climate
risk into consideration on behalf of our shareholders because
it could impact our earnings and their return on investment.
We also take it into consideration on behalf of our customers
because it can affect their returns and payouts.
Storebrand’s exposure to climate risk shall be reviewed by
the Board twice a year, as part of the process for our own risk
and solvency assessment (ORSA). So far this has been a qual-
itative assessment. A process has been initiated to integrate
climate risk into our structured risk assessment framework.
This work is to be completed in 2019.
The Executive Vice President for Communications, Sustain-
ability and Industrial Policy has overall responsibility for
climate risk at the corporate level. Responsibility for risk
mapping and management is delegated to the business
areas. The most significant risks are related to asset man-
agement, the property portfolio, and property and casualty
insurance.
Asset management
Asset management’s largest financial climate risk is believed
to lie in the transition to a low-emission society, where
climate regulations, more rigorous emission requirements, a
changed cost picture and market preferences may affect the
value of investments. Our three most important initiatives to
reduce climate risk are:
• Pilot project under the auspices of UNEP FI “Implement-
ing the TFCD10) Recommendations for Investors”, in which
Storebrand, as one of 20 investors, participates to further
develop standardised reporting in accordance with the
TCFD Framework.
• Stress testing the portfolios: Storebrand Asset Manage-
ment stress tested its investments through the 2 Degrees
Investing Initiative scenario analysis tool PACTA.11) The tran-
sitional risk was mapped through exposure to high and low
carbon technologies in the most important sectors, includ-
ing fossil fuels and electrification in the transport sector.
The results indicate how our investments are influenced by
different scenarios, compared with reference portfolios.
• Company dialogue: Storebrand has participated in a
number of meetings with companies we have invested
in to gain knowledge of how climate-related data can be
used for investment analysis. An important goal has been
to understand the challenges and opportunities presented
by the TCFD framework, including which data can be easily
shared.
Property portfolio
Storebrand has a substantial property portfolio that may
be impacted by extreme weather and long-term weather
pattern changes, as well as by new requirements for energy
and climate efficiency. A survey of physical risk, transitional
risk and scenario analyses for existing property investments
is scheduled for completion in 2019, using the modelling
tool that has been developed by UNEP FI’s pilot project.
Property investments are considered to be well-protected
against transitional risk due to stricter energy requirements
and other climate-related regulations. The following risk
mitigation measures have been implemented:
• Energy/climate efficiency. 30 per cent of the managed
property portfolio is certified to meet environmental
requirements.The target is 74 per cent in 2025. Continuous
efficiency improvements are ensured through operational
optimisation initiatives. Financial performance is quanti-
fied and documented. Our property investments are rated
by GRESB (The Global property Sustainability Benchmark)
in four different portfolios that are ranked first, second,
third and fourth, respectively, in the Nordic region.
• Development of a climate accounting tool for property.
When extrapolated, this should strengthen our aims, ini-
tiative planning and documentation at the portfolio level.
• Pilot project under the auspices of UNEP FI: Storebrand’s
participation in the TCFD project for investors includes the
development of a special risk model for property invest-
ments. In 2019, the tool will contribute to the mapping and
scenario analysis of physical risk and transitional risk.
10) TCFD stands for Task Force on Climate-related Financial Disclosures and is a recommended reporting framework for climate risk.
11) The tool is designed for financial institutions that want to measure their investments against a two-degree scenario, in cooperation with the Principles for Responsible Investment (PRI).
30
30
SECTION 2. FINANCIAL CAPITAL AND OUR INVESTMENT UNIVERSE
STOREBRAND ANNUAL REPORT 2018
Property and casualty insurance
The greatest financial climate risk for property and casualty
insurance is considered to be physical risk in the form of
increased payments related to climate-related damage. In
the long term, rising sea levels and long-term changes in the
weather patterns also may have an impact. In addition, we
believe that transitional risks, such as changing customer
behaviour, technological developments and changing regu-
lations, will affect the property and casualty insurance area.
In 2018, the Board and the management of our property
and casualty insurance operations have simulated the
effects of flood scenarios, assessed how climate conditions
should be included in risk assessment and pricing in the
underwriting process, as well as how recourse and dialogue
can be used to influence municipalities and authorities. In
2019 quantitative mapping of risk exposure will be carried
out and transitional risk will be assessed. The following ini-
tiatives have been implemented:
• Pilot project under the auspices of UNEP FI: Storebrand
participates as one of 18 insurance companies to further
develop standardised reporting in accordance with the
TCFD framework through scenario analysis, financial
modelling and key figures for climate-related risk and
opportunities.
ing by business area. Today, these climate risk-related
indicators are followed up at the corporate level:
• Review of the underwriting process: developed a
method for the assessment of risk and pricing associated
with climate risk in underwriting.
• Carbon intensity in securities investments and direct prop-
erty investments
• Recourse and dialogue with municipalities: employment
of own resources to focus on recourse and dialogue with
municipalities related to climate-related claims settle-
ment.
• Reduction of investments in coal (down 5 per cent every
second year)
• Share of AUM invested in solution companies, cleantech
and renewable energy
• Scenario analyses with climate risk in connection with
Storebrand’s process for risk and solvency assessment
(ORSA)
• Number of active climate-related inquiries to companies
we invest in
Key measurement parameters and initiatives
The Group is working to develop a structured framework
for assessing and managing climate-related risk. This will
specify responsibilities, procedures, key figures and report-
• Share of AUM in direct property investments that are envi-
ronmentally classified in accordance with the BREEAM
standard12)
12) Building Research Establishment Environment Assessment Method.
31
31
An active owner
Why
We believe that companies with a sustainable business
model are the ones best equipped to both provide long-
term returns to their owners and to manage the greatest
challenges of our time. Therefore, we want to influence the
companies we invest in to develop in a more sustainable
direction. We do this through active ownership, among
other things.
Approach
We exercise active ownership by voting at general meetings
and through direct dialogue with the companies’ manage-
ment and boards. We also vote through proxies. In addition,
we express our views to relevant authorities. We prior-
itise direct dialogue with the companies when we believe
that this is the most effective way of influencing. Through
participation in the UN Principles for Responsible Invest-
ments (UN PRI), we work with other investors to put pressure
on the companies in the areas of climate and deforestation,
among other areas.
for 6 per cent of our investment portfolio. We place stringent
requirements on how the properties we manage perform,
and actively seek to make improvements.
Goals and ambitions
Our ambition is to be a strong driving force to achieve lasting
changes in the way companies are managed. To meet the
requirements of the Paris Agreement, in 2018 we priori-
tised dialogue with companies that are specifically exposed
to climate risk or have business activities that contribute
to global warming. This way, we contributed to reducing
risk and creating value on behalf of our customers. Going
forward, we will step up our efforts to prevent deforestation
and impose stricter investment criteria for companies that
are involved in the production of beef, soy and palm oil, by
requiring the implementation of a zero deforestation policy.
We have 100 per cent environmentally certified property
management,13) and our goal is to ensure that all individ-
ual properties are environmentally classified in accordance
with the BREEAM standard. 14)
Storebrand also manages direct property investments in
Norway and Sweden totalling NOK 43 billion, which account
Initiatives
In 2018, we expanded our deforestation efforts by partici-
13) Our property investments and all management services procured are ISO or Eco-Lighthouse certified.
14) Building Research Establishment Environment Assessment Method – a tool for the environmental certification of buildings.
32
STOREBRAND ANNUAL REPORT 2018
SECTION 2. FINANCIAL CAPITAL AND OUR INVESTMENT UNIVERSE
pating as a lead investor in three different UN PRI initiatives
that deal with soy, cattle and palm oil. Last year we also
developed a new deforestation policy that will be launched
in 2019.
Active ownership is also about visiting and following up the
companies we have invested in. Last year, we visited palm
oil plantations in Indonesia to discuss palm oil production,
deforestation, working conditions and the living condi-
tions of the local population. In South Korea, we discussed
working conditions and anti-corruption initiatives with two
different companies.
In 2018, a revised corporate policy for sustainable invest-
ments was established for the entire group – including
SKAGEN, SPP and Delphi, effective as of 1 January, 2019.
The most important change is a reinforcement of how we
exercise active ownership. In addition to keeping a list of the
companies we exclude, a list of companies we have under
observation was also created. For the companies on the
observation list, we retain our existing holdings, while we
make an active effort to achieve real changes in how they
operate.
Based on our new coal investment policy, we took a public
stance in 2018 against a German energy company, requir-
ing that they transform their energy portfolio away from
coal. Companies that have more than five per cent of their
business activities in coal will be excluded from our portfo-
lio by 2026.15)
In 2018, we also started to use proxy votes in order to influ-
ence international companies.
Results
We contacted, on our own and in cooperation with other
investors, 314 companies to influence their business activ-
ities in a sustainable direction. Our dialogue led to new
“Our ambition is to be a
strong driving force to achieve
lasting changes in the way
companies are managed.”
initiatives for the monitoring of deforestation caused by
palm oil suppliers, better follow-up of methane leakage with
some oil and gas companies, as well as voluntary pledges
related to methane emissions in the oil and gas industry. Our
talks also led to several companies engaged in soy and cattle
production improving their deforestation policy.
One telecommunications company was included in the port-
folio following an extensive dialogue to get the company to
withdraw from authoritarian countries that used telecom-
munications companies to monitor the population as a basis
for persecuting the opposition and journalists.
During 2018, Storebrand voted several times against the
management’s proposals in companies we had invested in.
We also voted in several cases against the management’s
recommendation in relation to proposals put forth by share-
holders. Examples of such proposals were the study of
climate risk and the mapping and exposure of costs related
to climate adaptation, the mapping of equality and wage
conditions, as well as the public disclosure of costs related to
lobbying or political donations.
Since 2013, 64 companies have been excluded from our
investment universe due to their association with the coal
industry. Another five companies will be excluded in 2020 if
they do not change their practices.
The share of environmentally classified property invest-
ments has increased from 23 per cent in 2016, to 26 per cent
in 2017 and 30 per cent of the AUM in 2018. We work contin-
uously with environmental management and investment in
initiatives to optimise the environmental performance of the
properties we manage, and we have reduced both energy
and water consumption by nearly 30 per cent through active
ownership since 2011. 16)
Percentage of
AGMs in portfolio companies
where we voted to further
Storebrand´s
sustainability criterias:
41.6%
15) Five per cent is the lowest that managers can guarantee, based on the quality of the data available about the companies and marketing rules for funds.
16) Measuring the reduction per square meter
33
Key performance indicators
See more detailed definitions in section 9 Sustainability data, page 212
Key performance indicators
Result 2017
Goal 2018
Result 2018
Goal 2020
Goal 2025
Return On Equity I)
Solvency II
Dividends II)
Bn NOK invested in fossil free
products III)
Total AuM invested in solution companies,
cleantech and renewable energy IV)
Percentage of AuM screened for
sustainability criteria
Carbon footprint in equity investments:
Tonnes CO2e per 1 million of sales
income NOK/SEK (vs Index) V)
Investments in green bonds,
bn NOK/share total AuM
Number/share of companies exclu-
ded from the investment universe
Number/share of companies that
have been contacted to discuss ESG
through active ownership
Number/share of General Meetings
at which the promotion of Store-
brand’s sustainability criteria has
been voted on
Energy consumption, property
management kWh/m2
Water consumption, property
management (Norway) m3/m2
Certified green property
Tonnes CO2 emissions per m2,
property management
Waste sorting, property management (N)
11,3%
172%
40%
>10%
>150%
>50%
13,7%
173%
68%
>10%
>150%
>50%
>10%
>150%
>50%
60
N/A
68
TBA
TBA
1.8%
2.0%
1.9%
3.0%
4.0%
100%
100%
100%
100%
100%
28/18
NEW
NEW
N/A
NEW
NEW
22(32)
8,4/2,9%
171/5,9%
N/A
TBA
N/A
N/A
TBA
N/A
NEW
NEW
314/10,8%
N/A
N/A
NEW
NEW
530/41,6%
191
0.35
26%
8.3
65%
191
0.34
35%
8.2
63%
198
0.382
30%
7.4
65%
N/A
183
0.34
48%
7.3
65%
N/A
172
0.32
74%
5.8
69%
I) Adjusted for extraordinary tax income: 8.2%
II) Pay-out ratio is adjusted for extraordinary tax income as per stock exchange release 15 January 2019
III) New definition 2018. Did not report in 2017.
IV) Storebrand, SPP and SKAGEN, total AuM.
V) pr. 4th quarter 2018
34
STOREBRAND ANNUAL REPORT 2018 Key performance indicators
SECTION 2. FINANCIAL CAPITAL AND OUR INVESTMENT UNIVERSE
35
3
Customer and
Community Relations
We encourage customers to take charge of their own
pensions and savings. We provide relevant and responsible
advisory services and products for savings, as well as
insurance and banking.
38 Lifelong savings
39
40 Engaging, relevant and responsible
IPS
advisory services
42 Digital trust
43 Simple and digital customer experiences
44 Gajda
44 Key performance indicators
Lifelong savings
Why
Pension savings represent Storebrand’s core service offer-
ings. (Helping customers make the right financial choices is
an important task.) In order to ensure a viable retirement,
customers must be aware of their future financial status
and plan accordingly.
Individuals have been given greater responsibility for their
own pension finances through changes in the Norwegian
pension system. Public awareness of individual responsi-
bilities is increasing. Life expectancy is longer, putting the
welfare system under pressure, and people understand
that they cannot expect as much help from the government
as before.
Approach
To increase the commitment to pension savings, we work to
simplify communications and offer user-friendly, digital tools
to our customers.
The relationship between employers and employees is
an opportunity to reinforce the understanding of pension
savings. We therefore actively collaborate with our corporate
customers to share knowledge and advice that can help their
employees make smarter choices.
Customer seminars, easy access to qualified advisers and
understandable communications are important elements in
our efforts to become a preferred savings group.
38
Market share
Individual Savings
Norway
21%
Customers shall rest assured that we manage their savings
professionally and sustainably, contributing to a good return.
Goals and ambitions
My Pension Figure is a digital tool that helps customers (and
potential customers) calculate their total expected pension.
Figures are retrieved from the National Insurance Scheme,
private savings and employers. The tool helps engage cus-
tomers in taking charge of their own pensions.
In 2019, our objective is for 9 per cent, or 100,000, of our
pension and savings customers to check their future
pension and get an overview of their pension finances.
Among them, our goal is for 33 per cent to take action to
improve their future pensions.
Initiatives
In 2018, our digital calculation tool My Pension Figure
played a key role in our efforts to encourage customers to
take charge of their own pension. More than 80 per cent
of all customers who establish a savings contract with
Storebrand have checked their expected pension figure in
advance. An oversized piggy bank was used as a symbol for
pension money in a 2018 marketing campaign that scored
121 per cent against a Penetrace benchmark composed of
other campaigns in our industry.
To make the tool more relevant and enhance the customer
experience of My Pension Figure we made some techni-
cal adjustments and improvements in 2018. Among them
was an improvement to the digital welcoming process for
STOREBRAND ANNUAL REPORT 2018
SECTION 3. CUSTOMER AND COMMUNITY RELATIONS
customers who checked their pension figure, and 2,500 cus-
tomers were followed up by our pension advisers during
the campaign period.
contributes to increasing numbers of people starting or
ramping up their own pension savings.
Results
Since 2013, about 420,000 people have obtained an over-
view of their expected pension using My Pension Figure at
storebrand.no. In 2018 alone, more than 200,000 custom-
ers found their pension figures using the tool.
In 2018, more than 25,000 of our customers established a
new savings agreement or expanded their savings scheme
with us. Among these, more than 80 per cent had checked
their pension figure first. This shows that the overview and
advice we provide in connection with the pension figure
Our customer centre received close to 80,000 inbound cus-
tomer inquiries concerning pensions and savings in 2018.
Overall, the Storebrand Retail Market reported profitable
growth of 40 per cent in 2018 – proof that our commitment
to loyalty customers and our shift towards the retail market
have been successful.
IPS
The Norwegian pension reform resulted in a financially sustainable and secure pen-
sion system. The pension level will be influenced more by events and choices during
working life. To ensure a secure financial future, pension planning and savings are
more important than ever. In the autumn of 2017, a tax-favoured savings scheme,
Individual Pension Savings (IPS), was improved. Storebrand became one of the mar-
ket leaders during the first year of the regime and grew an additional 30 per cent
in 2018. By year-end 2018 we managed nearly 18,000 IPS agreements. A total of 77
per cent of Storebrand’s IPS customers have a monthly savings agreement, which
represents average savings of NOK 19,000 annually. Women account for 45 per cent
of the agreements and save almost as much as men in this scheme, which is a higher
percentage than for other forms of savings.
Maximum savings of NOK 40,000 per year
Can be withdrawn after age 62
Deduction from ordinary income allowed
No tax while invested
Payments must be distributed until at
least age 80
Taxed as ordinary income when paid out
39
Engaging, relevant and responsible
advisory services
Why
Pensions and insurance are perceived by the general public
as complicated. It can be difficult to understand which agree-
ments and rights are collective and which are personal, as
well as which conditions apply to the various agreements. If
we are to succeed with our strategic goal of creating first-class
customer experiences in the area of savings and pensions,
we must take this challenge seriously.
Through the various phases of working life, to the point of
retirement, we work to provide our customers with an over-
view, necessary insight and understanding of their own
pension and insurance agreements.
Relevant and responsible advisory services are the main
prerequisites for customer satisfaction. We must guide our
customers to buy products and services that are relevant
and appropriate for their particular life situation. If we do this
effectively, we contribute to our vision of having “our custom-
ers recommend us”.
Approach
The starting point for all customer contact is the principle of
“the customer first”. This is reflected in our newly established
service standards (in order of priority):
• Trustworthy – I keep what I promise and I am professional
• Caring – I treat everyone individually and I help them and
give advice
• Enthusiastic – I radiate positive energy and I exceed
expectations
• Efficient – I make the customer journey easy and I improve
my organisation
40
STOREBRAND ANNUAL REPORT 2018 SECTION 3. CUSTOMER AND COMMUNITY RELATIONS
High ethical standards, good advisory services and other
customer care practices, as well as relevant and updated
expertise, are fundamental whenever we meet our custom-
ers. Our advisers are authorised either through a national
authorisation scheme for financial advisers (AFR) or the
approval scheme for salespersons and advisers in the area
of property and casualty insurance (GOS). Both regimes are
governed by the Financial Services Industry.
Our authorisation and qualification requirements shall be
reflected in our digital interfaces with our customers. Store-
brand supports Financial Services Industry in its work to
develop a quality standard for electronic advisory services.
Goals and ambitions
We focus on delivering engaging and excellent customer
experiences both in our efforts to attract new customers
and to ensure customer satisfaction. We aim to be known for
having the best sustainable savings and pension solutions. In
Norway, our goal is to have the best annual improvement on
the Sustainable Brand Index, whereas our goal in Sweden is
to be ranked number 1 in the industry (corporate market).
Our ambition is to become the industry leader in experi-
enced customer satisfaction, which is measured through
the Net Promoter System (NPS). Our ambition for 2018 was
to be in the top three. In addition, we aim to improve cus-
tomer loyalty by increasing the number of customers buying
several products from Storebrand.
Regardless of whether the contact is digital or physical, Store-
brand’s advice should be based on the customer’s needs and
life situation. In the area of savings, our ambition is for 75 per
cent of all our advisers to be authorised at any given time. 17)
Initiatives
The interaction between digital and physical customer
service is becoming increasingly important. Teams dedicated
to digital and physical customer service work together to
define, prioritise and develop initiatives and focus areas. The
development and further refinement of My Pension Figure,
as well as the development of a new purchase solution for
IPS, are examples of such joint initiatives.
In 2018, all customer advisers in the corporate and retail
markets were given an introduction to the Group’s newly
established service standards. All new advisers are autho-
rised, and 14 savings and investment advisers received AFR
authorisation in 2018. In addition, ten new advisers received
GOS authorisation, a corresponding approval scheme for
insurance advisers. We have a total of 75 savings advisers
and 56 insurance advisers.
An authorisation package for all Storebrand Bank advisers is
planned for 2019.
Results
In 2018, we improved customer satisfaction related to advi-
sory services measured by the NPS scores, from 41.5 per cent
in 2017 to 46.1 per cent in 2018, 3.4 percentage points higher
than the target for the year. At the same time, we received a
top ranking in the Norwegian Customer Barometer’s annual
survey of customer satisfaction in the corporate market.
In the retail market, we maintained an NPS score corre-
sponding to fourth place in 2018. Our goal for the year was
to make top three. In Sweden, SPP was number seven in the
NPS ranking, while our goal was to be number three.
With a market share of 19 per cent in 2018, Storebrand main-
tained its position as one of the market leaders in Individual
Pension Savings (IPS) in strong competition with the industry
at large.
In the market for transferable savings19), Storebrand had a
market share of 20.8 per cent in 2018.
“Our ambition is to become
the industry leader in
customer satisfaction.”
17) The Net Promotor System (NPS) is a measurement tool for customer satisfaction, in which the customer gives a score from 0 to 10, with 10 as the best result.
18) The turnover among the positions explains why our ambition is not 100 per cent.
19) Free funds (Retail Market), individual pensions, individual capital, Pension Capital Certificates (PKB), and paid-up policies with investment options (FMI).
41
Digital trust
Why
As managers of our customers’ insurance, finances and future
financial stability, we rely on trust to succeed.
Intelligent use of information in general, and personal data in
particular, is critical in a digital world where office branches
and physical customer meetings no longer exist. This strength-
ens our need to invest in digital trust. Our customers must be
able to trust that we will handle their personal data properly
and in accordance with their wishes. At the same time, they
should experience that sharing personal information with us
creates value for them.
Approach
Storebrand’s guidelines for the processing of personal data
contain principles for digital trust, such as lawful and trans-
parent processing, purpose limitation, rights of data subjects,
and requirements for built-in privacy protection.
Our employees answer phones and e-mail, process applica-
tions and act as representatives of Storebrand. Therefore,
training and follow up of employees who receive and process
the information, in addition to ensuring good digital security
mechanisms, are key elements in building digital trust.
To document and control the effectiveness of our security
efforts, we have implemented an internal control system
throughout the entire value chain. Through this system, we
stipulate requirements, verify and continuously improve
security throughout the Group, internally, with our partners
and in our customer solutions.
Storebrand assesses the ongoing privacy risk we may expose
our customers to. When processing personal data that rep-
resent a high level of privacy risk, we consider the privacy
consequences.
Goals and ambitions
Our ambition is to engage our customers and build long-
term relationships through a good and transparent digital
dialogue. At the same time, we take responsibility for safe-
guarding our customers’ rights under the Personal Data Act,
and we take their information security very seriously. Secu-
rity and privacy training are mandatory for all employees,
and this is followed up by both managers and the Group’s
compliance function.
Initiatives
In 2018, we developed and strengthened our work to ensure
with privacy protection and digital trust through a group-
wide programme aimed at adapting Storebrand’s processing
of personal data to the requirements of the new General
Data Protection Regulation (GDPR).
We actively seek to improve employee security skills and
awareness through our mandatory security culture pro-
gramme. The program is mandatory for all managers and
employees, including the Group Chief Executive Officer.
To ensure that our systems are robust, we have installed
several layers in our security architecture. If a hole is detected
in one of the layers, the next layer will provide protection
until we have corrected the first. We conduct security tests
and cyber risk assessments, with subsequent risk manage-
ment measures as part of our daily operations.
Results
At the end of 2018, Storebrand had further strengthened
our framework for the processing of personal data, which
includes documentation of the processing that takes place,
routines for handling incidents and robust controls.
In 2018, 41 incidents20) related to the processing of personal
data were reported. We reported 11 of these as non-con-
formities to the Norwegian Data Protection Authority in
accordance with the General Data Protection Regulation. All
the incidents from 2018 have been processed and closed. For
non-conformities in which the risk to privacy protection was
assessed as medium to high, the affected customers were
contacted directly by phone or e-mail in accordance with
our policies. We provided information about what had hap-
pened, actions taken, and information about whether it was
necessary for the individual in question to take any separate
action to ensure his or her privacy.
We also introduced initiatives to strengthen our exper-
tise in the area of privacy protection for both employees
and customers. Examples include digital training for all our
employees and managers, an information film about privacy
protection for our customers, simplified consent and a new
privacy statement. In 2018, 89 per cent of our employees
started such training.
20) A customer and process-related incident is defined as an undesired situation that has occurred as a result of a failure of internal processes, operational disruptions, human error, violation of internal/external
regulations or external matters. The consequences may be financial loss or gain, extra work, loss of reputation and/or sanctions related to the violation of internal/external regulations.
42
STOREBRAND ANNUAL REPORT 2018
SECTION 3. CUSTOMER AND COMMUNITY RELATIONS
Simple and digital customer experiences
Why
Of all the changes affecting our industry, technology devel-
opments and digitalisation are probably the greatest.
Technology affects our entire business: our customers’
behaviour and expectations, opportunities to deliver ser-
vices to customers, opportunities to automate and
transform how our products are delivered and function.
Digitalisation enables new business models and partner-
ships, and it provides new opportunities and threat pictures.
Both corporate customers and institutional customers of
Storebrand Asset Management received brand new portal
solutions.
For the retail market, we developed automated loan appli-
cations, optimised digital sales and purchase processes in
all product areas, and we introduced major improvements
in self-service and advisory service solutions for individual
pension and savings customers.
Approach
When digital business development was established as a
separate commercial group unit in 2017, Storebrand chose
to integrate technology expertise as part of our business
development and operations, erasing the historical division
between “business” and “IT”.
Digital Business Development is an interdisciplinary organ-
isation, where business developers, pricing and product
experts, IT architects, developers and interaction designers
work together to improve customer experiences and solve
customer problems by means of technology and digital ser-
vices.
By maintaining a close relationship with our customers,
we can understand their behaviour, challenges and prob-
lems. Through efficient use of new technology and ways of
working (Cloud, Machine Learning, Big Data, Mobile, Flexi-
ble, Service Design, etc.), we can solve these problems in a
smarter, faster and better way.
Goals and ambitions
We have an overall goal to increase digital sales and the use
of our digital services, as well as to improve customer sat-
isfaction. For 2018, our goal was 100,000 digital sales. Our
digital customer experience is measured through the Net
Promotor System (NPS), in which the customer gives a score
from 0 to 10, with 10 as the best result. The goal for 2018
was to have as many positive (9–10) feedback responses as
negative responses (0–6).
Initiatives
In 2018, major boosts were seen in many areas, all of which
were provided by team-based work methods.
Digital Business Development delivered several initiatives
based on the exploration of new technologies, partner-
ships and business opportunities. In 2018, we contributed,
among other things, to thematic investments based on sus-
tainability goals (the savings solution Wave), automation of
chat (chatbots), changing the savings habits of young people
through the Dreams savings app, and digital services for
pension advice for customers approaching retirement age
(Soon a Pensioner).
Results
As many as 570,000 customers – 47 percent 21) – used our
digital solutions in 2018, an increase of 30 per cent compared
with 2017. The use of the savings solution My Pension Figure
increased the most.
The total volume of digital sales in 2018 reached 118,000,
corresponding to 43 per cent of total sales. This was signifi-
cantly above the targeted level. The result was an increase
of more than 65 per cent compared with 2017, and almost
triple compared with 2016. Savings reported the highest
volume of digital sales.
Results from the Net Promotor System (NPS), in which the
customer gives a score from 0 to 10, with 10 as the best, at
the beginning of 2018 showed that 25 per cent more scored
our solutions 0–6, rather than 9-10. By the end of 2018, just
as many gave a score of 9–10 as those who gave a score of 6
or lower, in line with our target for the year.
The partnership with Dreams resulted in one of the mar-
ket’s most popular savings services. At the end of the year,
Dreams reported more than 100,000 downloads in Norway,
and it was the second most popular app in the category
“Finance” in the App Store.
21) 1.3 million Norwegian customers, excluding SKAGEN
43
STOREBRAND ANNUAL REPORT 2018
Gajda
Our operations in Sweden, SPP, launched Gajda to help
companies shed light on occupational pensions as a benefit
for their employees, and to help them take charge of
important choices for their occupational pensions. Gajda
has been developed based on a customer-driven process
that combines technology and finance to make it as simple
and enjoyable as possible to understand pensions.
During its first year on the market, Gajda was awarded the
National Government Employee Pensions Board’s (SPV’s)
prestigious prize, Guldkanten, for the best pension informa-
tion in 2018. The service also contributed to attracting the
customers and positive feedback. At the request of the cus-
tomers, Gajda now provides a broader offering to help even
more companies engage their employees in their occupa-
tional pensions. The goal is to reach 80,000 customers by
2020.
Key performance indicators
See more detailed definitions in section 9 Sustainability data, page 212
Key performance indicators
Result 2017
Goal 2018
Result 2018
Goal 2020
Goal 2025
Dow Jones Sustainability Index
Not included
Included
Not included
Included
Included
GDPR courses employees have started
(number/per cent)
Net Promoter System Norway Retail Market
Net Promoter System Sweden Corporate
Market (priority enterprises)
Market share for Savings Norway
Market position for Occupational Pensions
Corporate Market
Share of female pension savers
Expected pension as a percentage of salary
NEW
#4
#8
22%
43%
NEW
Top 3
Top 3
Increase
#1
NEW
1488/89%
#4
#7
21%
#1
43%
N/A
Top 3
N/A
Top 3
Top 3
Top 3
Increase
Increase
#1
#1
Increase
Increase
(My Pension Figure)
58%
Increase
59%
Increase
Increase
Cases registered/handled by the Financial
Complaints Board
NEW
NEW
135
N/A
N/A
Sustainable Brand Index UK
Sustainable Brand Index Sweden
(B2B in the industry)
44
Score: 36/200
Place: 64/212
NEW
NEW
Best develop-
Best develop-
ment in the
ment in the
Score: 50/200
industry, year
industry, year
Place: 60/225
on year
on year
Position 1/6
1
1
SECTION 3. CUSTOMER AND COMMUNITY RELATIONS
Key performance indicators
45
4
People and
Systems
“People first, digital always” is Storebrand’s HR strategy
for the period 2017–2020. The strategy is designed to
ensure that our organisation is capable of continuous
change.
48 A culture for learning
49 Committed and courageous employees
50 Diversity and equal opportunities
51 Storebrand ranks high on the equality index
52 Good environmental and working conditions
throughout the entire value chain
53 Order in our own house
54 Key performance indicators People and Systems
A culture for learning
Why
Digital transition has enabled the development of prod-
ucts and services at a rate that the finance sector has never
previously seen. Our employees are our most important
resource for delivering on ambitious business goals. Con-
tinuous learning to understand our customers’ needs is
required to ensure competitiveness in an industry under-
going rapid change. We therefore recruit and develop
committed and courageous employees dedicated to finding
the best solutions for our customers.
Approach
Storebrand shall facilitate the development of our employ-
ees in their daily work. Greater breadth and diversity in
the expertise of employees will contribute to growth and
the ability to change. Digital skills, knowledge of customer
preferences and insight into market developments are
important to the success of Storebrand.22) A higher pace in
working life requires employees who can exercise self-man-
agement and continuously acquire new knowledge through
interdisciplinary collaboration in order to create the best
customer experiences.
We also completed our first digital programme for middle
management, Storebrand Leadership Weekly, with more
than 20 middle managers from Sweden and Norway partici-
pating. The topic of the programme was trust management.
We continued the rollout of work method “Build, Measure,
Learn” in large parts of the organisation. This work method
entails that we test, try and fail and get customer feedback
before we re-test and continue to build.
Results
In 2018, we offered 115 courses via the Campus Storebrand
digital learning platform. A total of 1,852 people attended
one or more courses and completed a total of 5,636 hours
of learning, with an average of 3.1 hours per person. By the
end of 2018, more than 80 per cent of our employees had
completed training for the new Personal Data Act. 23)
Our new HR system offers a digital candidate experience to
everyone who seeks employment at Storebrand. The appli-
cation and recruitment process are fully digitalised, from
entering an application into the system until new employees
sign their employment contract via a cell phone or a computer.
in
the research project
All participants at Storebrand Leadership Weekly par-
“Technology-based
ticipated
Management Development”. A 360-degree evaluation of
managers before and after the programme documented
a positive development in the categories of “management”
and “management performance”, which encompasses the
productivity, efficiency and satisfaction of employees.
Our summer internship programme Sandbox received
in excess of 300 applications in 2018. Ten students were
accepted. The students had backgrounds in economics,
technology, psychology, communications and design.
Goals and ambitions
Our ambition is to build a learning culture marked by inno-
vation, responsibility for one’s own learning and feedback
to ensure continuous improvement. At Storebrand, all
employees shall be able to develop in line with the Com-
pany’s needs. In 2019 we will facilitate additional digital
learning resources that strengthen the employees’ oppor-
tunity to take responsibility for their own learning.
Initiatives
In 2018, we launched a new digital learning platform,
Campus Storebrand to make mission-critical knowledge
available. Training for the new General Data Protection Reg-
ulation (GDPR) was our first major initiative. We also used
the platform for training courses in sales and customer
service for employees, and on employee days under the
theme “Learning is the Creation of Value”.
To simplify and digitalise our HR processes, we introduced
a new HR system, Workday, in March 2018. The system
encompasses security solutions and access control and helps
Storebrand comply with the new privacy protection rules.
22) Read more about our approach to digital business development in Section 3, customer and community relations.
23) Turnover explains why it was not 100 per cent.
48
STOREBRAND ANNUAL REPORT 2018
SECTION 4. PEOPLE AND SYSTEMS
Committed and courageous employees
Why
Storebrand’s employees are our most important source of
innovation, development and growth. Employees who dare
to innovate and challenge the organisation are essential if
we are to realise our goal of becoming a world-class savings
group.
Approach
Our business relies on the trust of customers, partners, gov-
ernments, shareholders and society at large. To gain trust,
our organisation must be professional, capable and marked
by high ethical standards. All employees shall act with due
care, integrity and objectivity.
Employee surveys are conducted regularly through the
Peakon tool to measure well-being, commitment to work
tasks, perception of sustainability and the experience of
self-determination. The surveys were introduced through-
out the Group in 2018, and results are followed up by the
Group management on a regular basis.
Goals and ambitions
Our ambition is to strengthen employee satisfaction, job
satisfaction and engagement through meaningful work,
good management, a motivating working environment,
development opportunities and trust in the management.
Our managers shall set a clear direction and encourage
employees to choose for themselves how to achieve their
goals.
Openness is a prerequisite for motivation, trust and confi-
dence. All employees shall experience that they can discuss
issues with management and others in the Group. Store-
brand has its own ethical guidelines.
Initiatives
With the Peakon tool, we introduced monthly “pulse mea-
surements” to measure engagement among employees
throughout the entire organisation in 2018. We have devel-
oped an e-learning course in ethics and anti-corruption that
all employees must complete every three years. An external
whistleblowing channel has been established through an
external law firm. We also have good routines for dealing
with harassment and improper conduct.
In 2019, mandatory ethics training will be offered via our
HR system, Workday. All employees must review the pro-
gramme annually and confirm that they have read and
understood the content. All new employees receive infor-
mation about the ethical rules.
Results
On average, 87 per cent of the employees responded to
pulse measurements through Peakon at least once during
the last three months of 2018. Peakon was introduced
throughout the Group in August 2018.
The engagement score measured in Peakon increased from
7.4 to 7.9, on a scale of 1–10, in which 1 is the lowest and
10 is the highest score. The pulse measurements in the last
half of 2018 also showed progress for issues such as the
extent to which employees experience freedom of opinion,
a high degree of self-determination or autonomy in their
daily work, support from management, and learning and
development. The results also showed room for improve-
ment for the working environment, among other things. In
2018, 243 employees completed the e-learning course in
ethics and anti-corruption. All employees are to complete
the course every three years. All members of the Board
and executive management shall complete anti-corruption
courses as part of the Group’s risk management.
Catalysts mentor programme
In 2018, for the second consecutive year, ten em-
ployees were given an opportunity to be a conver-
sation partner and adviser to a student with a minority
language background. Through monthly meetings at
Storebrand and strength-based learning (Appreciative
Enquiry), the students gained insight into Norwegian
working life, help in developing themselves and advice
on schools and working life.
The mentor programme is a collaboration between
Storebrand and the non-profit organisation Catalysts,
which is headed by Lisa Cooper. Storebrand partici-
pated as the first business partner in 2017. The objec-
tive is to prevent students from dropping out of high
school through inclusion in the local community.
49
Diversity and equal opportunities
Why
It is important that Storebrand’s organisation and business
activities reflect the customers and market in which we
operate. We believe that diversity contributes to an increased
rate of innovation and a broader understanding of the
breadth of the customer base. Our sustainability analyses
also show that companies that focus on diversity are more
innovative and profitable. Storebrand works systematically
to ensure diversity and equality through clearly defined pro-
cesses in recruitment, reorganisation, salary adjustments
and offers of management training and other development
initiatives.
Approach
All Storebrand employees are treated equally, regardless of
their age, gender, disability, cultural background or sexual ori-
entation. Individual qualities should be respected and valued,
and we encourage age diversity among our employees. Age
shall not be a decisive criterion, neither in recruitment pro-
cesses nor later in the employment relationship.
We make a conscious effort to ensure that all employees are
satisfied regardless of their cultural backgrounds. No form
of discrimination is accepted. There shall be a good balance
between women and men at all levels of the Company.
Since 2017, we have worked actively to ensure gender equal-
ity, through, among things, the programme FiftyFifty, targeted
recruitment measures as well as by nominating an equal
number of women and men to executive positions and man-
agement development programmes. We also work actively
to maintain a good gender balance among key persons who
act on behalf of the Company. We intend to have a recruit-
ment process that is as transparent and inclusive as possible.
We have a zero-tolerance policy against harassment and
discrimination, and we strive for equal treatment and equal
opportunities in all our recruitment and development pro-
cesses.
Storebrand has been an inclusive workplace enterprise since
2002, and the Group’s managers have established fixed rou-
tines for the inclusive follow-up of employees in the event of
illness.
Goals and ambitions
We aim to offer the best candidate journey, so that Store-
brand is considered an attractive workplace for courageous
pathfinders. We will continue the development of our own
employees and promote individual development of manage-
ment skills among women.
We shall contribute to the UN Sustainable Development
Goals of gender equality, especially equality in the workplace.
Our goal is a 50/50 distribution of men and women in leading
positions, and an equal distribution of men and women in
our management development programmes, as well as
recruitment processes for management positions.
Storebrand has the goal of equal pay for equal work.
Initiatives
Throughout 2018, we improved our communication with
potential new employees to make it as gender neutral as
possible. There shall be (at least) one female and one male
final candidate for recruitment to management positions. We
expanded the use of social media to promote vacant positions.
Every year, we nominate men and women on a 50/50 basis for
our management programmes, and in cooperation with our
elected representatives, we survey and analyse salary levels
for various positions in order to eliminate differences based
on gender.
50
STOREBRAND ANNUAL REPORT 2018 SECTION 4. PEOPLE AND SYSTEMS
Results
In Norway, 37 per cent of our managers are women, while
the percentage at SPP in Sweden is 48 per cent. Among all
employees, 46 per cent are women in Norway and 53 per
cent are women in Sweden.
In 2018, 56 per cent of Storebrand ASA’s board members
were women. Three of the nine members (33 per cent) of
the executive management team were women. Among the
managers who reported directly to the executive manage-
ment, 54 per cent were women, while women accounted for
44 per cent of all the managers in the Group.
The same number of women and men participated in the
management development offerings of the Storebrand
Academy and Storebrand Leadership Weekly, as well as in
the Sandbox programme for summer interns.
The Group salary levels were reviewed in cooperation with
the elected representatives in connection with the salary
adjustment process for 2018. We observed a slightly lower
average salary for women than for men.
The average age in the Storebrand Group was 43 at the end
of the year. Average seniority was 12 years in Norway and
ten years in Sweden. The Storebrand Group had a total of
1,765 employees as at 31 December 2018. 24)
Absence due to illness has been low and stable for several
years. The level was 3 per cent in 2018. Absence due to
illness in the Norwegian organisation was 2.7 per cent, while
it was 3.3 per cent in the Swedish organisation.
Storebrand ranks
high on equality
index
In 2018, Storebrand took a solid second place on the
She Index, an index that shows how well Norwegian
companies are working on gender balance.
In the spring of 2018, She Community Norway, asked
Norway’s 50 largest listed companies to participate in
an index showing how they work with equality in man-
agement, what the gender balance is on the Board and
top management levels and what they do to ensure
equal rights for men and women.
The goal of the index is to show the development of
gender balance in business over time. The index makes
it possible for companies to compare their own prog-
ress with others.
Share of female
leaders level 1-3:
44%
Women’s share of
men’s salary,
senior management*
107%
Women’s share
of men’s salary,
(employees up to
middle management):**
98.8%
*) Based on Hay Grade 21-24. Hay Grade above 24 is not included, as only men are represented here (applies for 3 positions only). For Hay Grade definition, see page 212.
**) Based on Hay Grade 13-20. For Hay Grade definition, see page 212.
24) 1,667 in Storebrand Norway and SPP in Sweden, as well as 131 in SKAGEN.
51
Good environmental and working conditions
throughout the entire value chain
Why
At Storebrand, sustainability is integrated into core business
activities. This means that the financial, social and environ-
mental aspects are assessed before we make decisions
about purchases. Procurement is one of several areas that
can directly or indirectly affect Storebrand’s sustainability
performance.
The focus on working conditions in the supply chain is
important for safeguarding human rights, as well as for
climate and environmental considerations.
Approach
Storebrand stipulates requirements for sustainability, cor-
porate social responsibility, environmental work and ethics,
both internally and for all of our partners and suppliers.
In addition to following internal procurement rules, all
procurement should help reduce the environmental and
climate impact of the goods and services procured.
Our procurement policy is based on the Group’s governing
documents.25) The governing documents and associated
routines are revised and updated annually. Sustainability is
an important part of evaluating new offers and is weighted
at least 20 per cent.
Storebrand is a member of the United Nations Global
Compact. Suppliers and subcontractors must demonstrate
that they follow the same minimum standard for human
rights, labour rights and corruption prevention. They also
must document the life cycle cost and environmental prop-
erties of their products. The supplier shall have good internal
ethical guidelines and should observe the Guidelines of the
Initiative for Ethical Trade or the social accountability/cor-
porate social responsibility standard (SA 8000).
The most important and largest purchases we make are for
the outsourcing of IT and business processes, health care
services, claims settlement and management of direct prop-
erty investments. We consider the areas with the greatest
risk and opportunities for influencing sustainability to be
outsourcing (offshoring), claims settlement (cars and prop-
erty), as well as property management in general.
Goals and ambitions
The Group shall not use suppliers or products that violate
international agreements, national legislation or inter-
nal policies. Storebrand shall contribute through its own
business and procurement activities to sustainable devel-
opment and to ensuring that human rights and labour laws
are not violated. Our ambition for 2018 was to increase the
share of environmentally certified 26) procurement to 40 per
cent, and up to 50 per cent in 2025.
Initiatives
We follow up our requirements for suppliers, both new
and existing, as an integral part of our procurement pro-
cesses. Sustainability is part of our requests for tenders that
the supplier must answer. Sustainability is part of our evalua-
tion of offers and negotiations, as well as in the signing of
contracts, where all new suppliers must sign “Storebrand’s
Standard Annex for Sustainability”.
We continuously follow up strategic suppliers in the largest
procurement categories. In addition, ongoing action is
taken against suppliers who violate the Storebrand stan-
dard for sustainable investments and are excluded from
our investment universe. In 2018, one technology provider
was excluded on this basis.
Results
In 2018, procurement contracts to suppliers valued at more
than NOK 1 million amounted to a procurement volume of
approximately NOK 2.1 billion. This also includes the man-
agement and development of direct property investments.
Of this volume, 46 per cent is environmentally certified
in accordance with our procurement policy. This volume
represents 286 suppliers, 56 of which are certified, which
accounts for 20 per cent of the suppliers.
All major new suppliers (procurement of over NOK 1 million)
are assessed on the basis of social and environmental
criteria.
25) The governing documents include the “Guidelines for Outsourced Activities”, “Guidelines for Granting Authorisations”, “Code of Ethics”, “Guidelines for Combating Corruption”, “Guidelines for Combating
Money Laundering, Terrorist Financing and Economic Crime”, “Guidelines for Dealing with Conflicts of Interest”, “Event Guidelines”, “Governing Document for Information Security” and the “Governing Docu-
ment for the Processing of Personal Data”.
26) Eco-Lighthouse, EMAS, ISO14001 and Nordic Swan Ecolabel
52
STOREBRAND ANNUAL REPORT 2018 SECTION 4. PEOPLE AND SYSTEMS
Order in our own house
Storebrand aims to be a courageous pathfinder in the area
of sustainability. This means that we want to reduce and
shed light on the carbon footprint of our own business
activities.
Storebrand also aims to be transparent. We are a member
of Finance Norway, the trade organisation for banks and
insurance companies. Storebrand has a direct dialogue
with the authorities and political parties concerning reg-
ulatory issues. There is no culture in Norway of financial
contributions from listed companies to political parties, and
Storebrand does not make any such contributions.
Key performance indicators
See more detailed definitions in section 9 Sustainability data, page 212.
Key performance indicators
Result 2017
Goal 2018
Result 2018
Goal 2020
Goal 2025
Environmental requirements for suppliers
Flights per full-time equivalent I)
Tonnes of CO2 emissions per full-time
equivalent
Energy consumption, head offices (KWh/m2)
Water consumption, head offices (m3/m2)
Waste sorting, head offices (sorting rate)
Paper consumption, head offices, kg per
full-time employee II)
Scope 1 per employee
(tonnes of CO2 per employee)
Scope 2 per employee
(tonnes of CO2 per employee)
Scope 3 per employee
(tonnes of CO2 per employee)
38%
3.9
0.71
151
0.30
82%
50
NEW
NEW
NEW
40%
3.7
0.68
162
0.31
78%
52
NEW
NEW
NEW
I) The increase in 2018 is probably lower, as the figures in 2017 was underreported
II) Copy paper 2018 was reduced due to surplus stock. Some increase is to be expected in 2019.
46%
4.3
0.72
147
0.29
72%
37
0
0.13
0.6
50%
3.7
0.66
145
0.28
79%
40
TBD
TBD
TBD
50%
3.4
0.61
141
0.28
80%
32
TBD
TBD
TBD
53
Key performance indicators People and Systems
These Key performance indicators include only data from Storebrand and SPP.
See more detailed definitions in section 9 Sustainability data, page 212
Key performance indicators
Result 2017
Goal 2018
Result 2018
Goal 2020
Goal 2025
243/26
New indicator
New indicator
E-Learning courses in ethics/anti-corruption
106/136
(14,6%/1,6%)
3.5%
3.5%
38%
3.5%
3.5%
50%
50 %
50%
50%
50%
2.7%
3.3%
39%
25 (44%)
32 (56%)
22 (46%)
26 (54%)
33.3 %
55.6 %
711,653
880,397
631,393
776,513
TBD
3.5%
3.5%
50%
50%
50%
50%
50%
50%
TBD
3.5%
3.5%
50%
50%
50%
50%
50%
50%
Absence due to illness (Norway)
Absence due to illness (Sweden)
Gender-balanced management
Number (share) of women at executive
levels 1–3
Number (share) of men at executive levels 1–3
Number (share) of women at executive
level 3
Number (share) of men at executive level 3
Number of women in group management
Number of women on the Board of Directors
Average salary in Norway 2018 Women
Average salary in Norway 2018 Men
Average salary in Sweden 2018 Women
Average salary in Sweden 2018 Men
Senior management, women's share of men’s
salary per position category (Hay Grade 21-24) I)
All employees up to intermediate managers,
women’s share of salary per position category
(Hay Grade 13-20) II)
Our employees
Number of employees (Norway + Sweden)
Turnover among women in the Group
Turnover among men in the Group
Number of employees (Norway + Sweden)
Number recruited to the Group
Number of women recruited
Number of men recruited
Male employees under 30
Female employees under 30
Male employees 30–50
Female employees 30–50
Male employees over 50
Women employees over 50
107%
100%
100%
98.8%
100%
100%
Result 2018
1,667
4.1%
3.9%
1,667
220
78
116
115
102
526
408
235
284
I) Based on Hay Grade 21-24. Hay Grade above 24 is not included, as only men are represented here (applies for 3 positions only). For Hay Grade definition, see page 212.
II) For Hay Grade definition, see page 212.
54
STOREBRAND ANNUAL REPORT 2018
Key performance indicators People and Systems
SECTION 4. PEOPLE AND SYSTEMS
55
5
Shareholder
matters
57
STOREBRAND ANNUAL REPORT 2018
Shareholder matters
Share capital, rights issues and number of shares
Shares in Storebrand are listed on Oslo Børs (Oslo Stock
Exchange) with the ticker code STB. Storebrand ASA’s share
capital at the start of 2018 was NOK 2,339.1 million. The
Company has 467,813,982 shares with a nominal value
of NOK 5. As at 31 December 2018, the Company owned
431,140 treasury shares, which corresponds to 0.09 per cent
of the total share capital. The Company has not issued any
options that can dilute the existing share capital.
Shareholders
Storebrand ASA is among the largest companies listed on
the Oslo Stock Exchange measured by the number of share-
holders. The Company has shareholders from almost all the
municipalities in Norway and from 48 countries. In terms
of market capitalisation, Storebrand was the 13th-largest
company on the Oslo Stock Exchange at the end of 2018.
Share purchase scheme for employees
Every year since 1996, Storebrand ASA has given its employ-
ees an opportunity to purchase shares in the Company
through a share purchase scheme. The purpose of the
scheme is to involve the employees more closely in the Com-
pany’s value creation. In 2018, each employee was given the
opportunity to buy shares in Storebrand. 787 employees,
around 45 per cent of the employees, participated and sub-
scribed for a total of 542,532 shares.
Foreign ownership
As at 31 December 2018, foreign ownership totalled 56.3 per
cent, compared with 57.1 per cent at the end of the 2017.
Trading volume for shares in storebrand
In 2018, 445 million shares were traded, compared with 427
million in 2017. The trading volume in monetary terms was
NOK 30,447 million in 2018, up from NOK 25,359 million in
2017. As measured in NOK, Storebrand was the 11th-most
traded stock on the Oslo Stock Exchange in 2018. In relation
to the average total number of shares, the turnover rate for
shares in Storebrand was 95 per cent.
Share price performance
Shares in Storebrand yielded a total return (including dividends)
of -4.22 per cent through 2018. In the corresponding period,
the Oslo Stock Exchange’s OSEBX Index ended at -1.84 per cent,
whereas the European Insurance Index Beinsur yielded a total
return of -5.32 per cent (NOK) for the corresponding period.
Dividend policy
Storebrand’s goal is to pay a dividend of more than 50 per
cent of the group profit after tax. The ambition of the Board
is to pay an ordinary dividend per share of at least the
same nominal level as in the previous year. Normally, divi-
dends are paid when there is a sustainable solvency margin
of more than 150 per cent. If the solvency margin is over
180 per cent, the Board’s intention is to propose an extra-
ordinary dividend or buyback of shares.
The Storebrand stock
Highest closing price (NOK)
Lowest closing price (NOK)
Closing price on 31/12 (NOK)
2018
75.20
59.48
61.64
2017
70.45
46.97
66.90
2016
47.10
28.45
45.92
2015
35.98
23.21
34.95
2014
40.65
27.52
29.90
2013
39.00
22.39
37.90
Market cap 31/12 (NOK million)
28,836
31,296
20,660
15,724
13,137
17,052
Annual turnover (1000s of shares)
770,485
614,991
703,382
707,870
546,156
569,138
Average daily turnover (1000s of shares)
Annual turnover (NOK million)
Rate of turnover (%)
Number of ordinary shares 31/12 (1000s of
3,094
30,477
95.3
2,450
25,359
94.9
2,780
21,249
131
2,820
20,907
157.3
2,185
19,123
121.4
2,286
17,067
126.5
shares)
467,814
467,814
449,910
449,910
449,910
449,910
Earnings per ordinary share (NOK)
Dividend per ordinary share (NOK)
Total return (%)
7.89
3.0
-4.2
5.28
2.1
49.1
4.73
1.55
31.4
2.63
0
19.7
4.61
0
-23
4.41
0
41.3
Historical share prices have been adjusted to take account of the split between shares and subscription rights carried out in 2007.
58
SECTION 5. SHAREHOLDER MATTERS
Capital gains taxation
From 2016, new rules came into force in Norway concerning
the taxation of dividends and gains on shares held by private
individuals. The shareholder model entails that share divi-
dends over the standard dividend tax exemption multiplied
up by an adjustment factor (1.33 for the 2018 income year)
are taxed as ordinary income for the personal shareholder
(the tax rate is 23 per cent for the 2018 income year, which,
together with the adjustment factor, gives an actual taxation
of 30.59 per cent).
Share dividends within the standard dividend tax exemption
are tax free. The dividend tax exemption is calculated by multi-
plying the dividend tax exemption basis by the dividend
exemption interest rate. The dividend exemption interest rate
is determined by the Directorate of Taxes in January of the year
after the income year, and it is based on the average three-month
interest rate on treasury bills (with an additional 0.5 per-
centage points from the 2017 income year) reduced by the tax.
Compliance
As one of the country’s leading financial institutions, Store-
brand is dependent on maintaining an orderly relationship
with the financial markets and supervisory authorities. The
Company therefore places particular emphasis on ensuring
that its routines and guidelines satisfy the formal require-
ments imposed by the authorities on securities trading. In
this context, the Company has prepared internal guidelines
for insider trading and own account trading based on the
current legislation and regulations. The Company has its own
compliance system to ensure that the guidelines are observed.
Investor relations
Storebrand attaches importance to comprehensive and
efficient communication with financial markets. Maintain-
ing a continuous dialogue with shareholders, investors
and analysts both in Norway and internationally is a high
priority. The Group has a special Investor Relations unit.
This unit is responsible for establishing and coordinating
contact between the Company and external parties such as
the stock exchange, analysts, shareholders and other inves-
tors. All interim reports, press releases and presentations
of interim reports are published on Storebrand’s website:
www.storebrand.no/ir.
General meeting
Storebrand has one class of shares, each share carrying one
vote. The Company holds its Annual General Meeting each year
by the end of June. Shareholders who wish to attend the General
Meeting must notify the Company no later than 4:00 p.m. three
business days before the General Meeting. Shareholders who
do not give notice of attendance before the deadline expires will
be able to attend the General Meeting, but not vote.
Shareholders’ contact with the company
Shareholders should generally contact the operator of their
securities account for questions or notification of changes,
such as address changes.
Largest shareholders
Fund Manager
Folketrygdfondet
T Rowe Price Global Investments
Danske Capital
Allianz Global Investors
DNB Asset Management
Vanguard Group
Varma
BlackRock
KLP
Handelsbanken Asset Management
M&G Investment Management
Storebrand Asset Management
JPMorgan Asset Management
Barings
Nordea Asset Management
Artemis Investment Management
Alfred Berg
Solbakken AS
OM Holding AS
Source Investment Management
Current Rank
Shares
% at 31.12.2018*
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
51 635 337
22 335 362
18 741 881
16 857 478
14 631 042
12 594 029
12 431 201
11 443 310
11 382 664
10 512 105
10 429 441
8 167 839
7 311 871
5 466 232
5 375 474
5 227 606
5 182 004
4 511 972
4 334 600
4 238 911
11.04
4.77
4.01
3.60
3.13
2.69
2.66
2.45
2.43
2.25
2.23
1.75
1.56
1.17
1.15
1.12
1.11
0.96
0.93
0.91
59
6
Governance
62 Board of Directors Storebrand ASA
65 Committees
66 Companies in the Storebrand Group
68 Corporate Governance
6161
Board of Directors
Storebrand ASA
The management of the Storebrand Group belongs under
the Board. This means, among other things, that the Board
will provide for a proper organisation of the business and
establish plans, budgets and guidelines. The Board over-
sees the management and keeps abreast of the Storebrand
Group’s financial position. In addition, the Board ensures
that business activities, accounting and asset management
are subject to proper scrutiny. All directors are independent
of significant business associates. All shareholder-elected
directors are independent of executive personnel.
The Board has appointed three subcommittees: The Com-
pensation Committee, the Audit Committee and the Risk
Committee.
Didrik Munch (1956)
Board Chairman Storebrand ASA since 2017
Position
Self-employed
Education
Norwegian Police University College
Cand. jur law degree
Previous positions
Laila S. Dahlen (1968)
Board member Storebrand ASA since 2013
Position
SVP Product and UX, Schibsted Marketplaces
Education
State-Authorised Public Accountant, Norwegian School of Economics (NHH)
MSc in Economics and Business Administration (MBA),
Norwegian Business School (Bl)
Group Chief Executive Officer of Schibsted Norway (2011–2018)
Master of Science in Finance, University of Wisconsin, USA
Group Chief Executive Officer of Media Norway (2008–2011)
Chief Executive Officer of Bergens Tidende (1997–2008)
Division Director, Corporate Market, DNB (1995–1997)
Previous positions
Product Director, FINN.no AS (2011–2017)
COO of Kelkoo/Yahoo London (2007–2009)
Regional Bank Manager, Corporate Market Bergen, DNB (1992–1995)
VP Marketplace at Yahoo Europe London (2006–2007)
Various managerial roles at Nevi and DNB (1987–1992)
Attorney at Kyrre AS (1987–1987)
Police intendant I/II at the Bergen Police Department (1984–1986)
Police inspector at the Oslo/Bergen Police Department (1979–1984)
Positions of trust
Board Member Grieg Star Shipping
Board Member Lerøy Seafood Group
Board Member Schibsted Media
Board Chairman SH Holding (Solstrand Fjord Hotel)
Number of shares: 15,000
62
Regional Manager Scandinavia and the Netherlands at Kelkoo/Yahoo Stockholm
(2003–2006)
VP International Operations at Kelkoo Paris (2000–2001)
Manager at PricewaterhouseCoopers Oslo (1993–2000)
Positions of trust
Board Member FINN.no AS
Board Member Personal Finance AS
Board Chairman Schibsted Marketplaces Products & Technology AS
Number of shares: 10,500
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
Jan Chr. Opsahl (1949)
Board member Storebrand ASA since 2016
Position
Board Chairman of Dallas Asset Management AS
Education
Sloan Fellow, London Business School
Computer Science, University of Strathclyde
Bachelor of Arts, University of Strathclyde
Previous positions
Senior Executive at Tandberg/Cisco (2010–2012)
Executive Chairman of Tandberg ASA (1997–2010)
Group Chief Executive Officer of Tandberg ASA (1989–1997)
Group Chief Executive Officer of Tomra Systems ASA (1986–1988)
Director of Unitor ASA (1983–1986)
Chief Marketing Officer of Dyno Industrier AS (1980–1983)
Positions of trust
Board Chairman Dallas Asset Management AS
Board Member Hidden ASA
Karin Bing Orgland (1959)
Board member Storebrand ASA since 2015
Position
Self-employed
Education
MSc in Economics and Business Administration (MBA)
Norwegian School of Economics (NHH)
Top Manager Programme IMD, BI Norwegian Business School
and Management in Lund
Previous positions
Executive Vice President of DNB, as well as various managerial positions in the
same group (1985–2013)
Consultant at the Ministry of Trade and Shipping (1983–1985)
Director and Chairman of the Audit Committee at Norske Skog ASA
Director of Norwegian Finance Holding ASA
Director of Scatec Solar ASA
Director of HAV Eiendom AS
Director of Boligselskapet INI AS, Grønland
Member of the Norwegian Academy of Technological Sciences
Board Chairman of Røisheim Hotell AS and director at Røisheim Eiendom AS
Board Member NEL Hydrogen ASA (2014–2017)
Board Member Rec Solar ASA (2013–2015)
Board Chairman Tomra Systems ASA (1989–2008)
Board Chairman Tandberg Television ASA (1989–2007)
Deputy Board Chairman Komplett ASA (1996–2003)
Chairman of Visit Jotunheimen AS
Positions of trust
Board Chairman Entur AS
Board Chairman GIEK
Board Member Grieg Seafood ASA
Number of shares: 1,100,000
Board Member and Head of Audit Committee KID ASA
Number of shares: 15,000
Liv Sandbæk (1962)
Board member Storebrand ASA since 2018
Education
State-Authorised Public Accountant Norwegian School of Economics (NHH)
MSc in Economics and Business Administration (MBA), Norwegian
Business School (BI)
Previous positions
Senior Managing Director & Technology Lead, Financial Services, EALA,
Accenture (2015–2018)
Chief Technology Officer, Accenture Operations (2013–2015)
Managing Director, Technology, Financial Services, EALA, Accenture
(1999–2013)
Employee of Accenture (1990–1998)
Number of shares: 0
63
Martin Skancke (1966)
Board member Storebrand ASA since 2014
Heidi Storruste (1965)
Employee-elected board member Storebrand ASA since 2013
Position
Independent consultant
Education
Authorised Financial Analyst Norwegian School of Economics (NHH)
MSc Econ,London School of Economics and Political Science
Intermediate level Russian,University of Oslo
International Finance Programme,Stockholm School of Economics
Position
Team Champion, Digital Business Development at Storebrand Livsforsikring AS
Education
Bachelor of Management, Norwegian Business School (Bl)
Certified Executive Coach, Coach Team AS
DNCF Certified Coach, Metaresource AS
Business Economist, Norwegian Business School (Bl)
MSc in Economics and Business Administration (MBA) Norwegian School of
Previous positions
Economics (NHH)
Previous positions
Special Adviser at Storebrand (2011–2013)
Deputy Director General and Director General at the Ministry of Finance
(1994–2001, 2006–2011)
Director General at the Office of the Prime Minister (2002–2006)
Management consultant at McKinsey & Company (2001–2002)
Positions of trust
Board Member Kommunalbanken AS
Board Member Norfund
Senior employee representative, Finance Sector Union of Norway at Storebrand/
Storebrand Livsforsikring AS (2013–2017)
Project manager at Storebrand Bank ASA (2011–2013)
Process Owner at Storebrand Bank ASA (2008–2011)
Senior Consultant, Retail Market Credit at Storebrand Bank ASA (1998–2008)
Financial Consultant, Retail Market Credit at Gjensidige Bank AS (1996–1998)
Customer Consultant at Sparebankenes Kredittselskap AS (1987–1996)
Positions of trust
Head of the Finance Sector Union of Norway at Storebrand
Board Member The Norwegian Coach Association
Board Chairman Principles for Responsible Investment (PRI)
Number of shares: 3,365
Board Member Storebrand Livsforsikring AS
Board Member Summa Equity AB
Number of shares: 16,414
Ingvild Pedersen (1985)
Employee-elected board member Storebrand ASA since 2017
Position
Manager of Corporate Partners at Storebrand Livsforsikring AS
Education
Arne Fredrik Håstein (1973)
Employee-elected board member Storebrand ASA since 2014
Position
Senior employee representative at Storebrand
Education
Master of Arts in International Finance and Accounting,
University of Newcastle upon Tyne
Bachelor of Business Administration, Norwegian Business School
(Bl) / University of Texas at Austin
Authorised Portfolio Manager Norwegian School of Economics (NHH/NFF)
Professional Study Programme in Economics, University of Bergen
Authorised Portfolio Manager, Norwegian School of Economics (NHH) / NFF
Specialisation in Valuation, Norwegian School of Economics (NHH) / NFF
Previous positions
Customer Insight Manager at Storebrand Livsforsikring AS (2017–2018)
Product Specialist, Asset Management, Storebrand Livsforsikring AS
(2015–2017)
Investment Manager at Storebrand (2011–2015)
Group Trainee at Storebrand (2009–2011)
Number of shares: 4,844
64
Previous positions
Expert Adviser, Savings and Pensions at Storebrand Livsforsikring AS (2014–2017)
Sales Manager and Product Manager at Delphi Fondene (2009–2014)
Sales Manager and Key Account Manager at Storebrand Kapitalforvaltning AS
(2005–2009)
Senior Financial Adviser at Focus Bank AS (2003–2005)
Senior Financial Adviser at Storebrand Livsforsikring AS (1999–2003)
Positions of trust
Board Member Finance Sector Union of Norway at Storebrand
Board Member Storebrand Art Association
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
Committees
Audit Committee
Chairman
Karin Bing Orgland
Members
Martin Skancke
Heidi Storruste (Employee-elected)
Compensation Committee
Chairman
Didrik Munch
Members
Laila S. Dahlen
Arne Fredrik Håstein (Employee-elected)
Risk Committee
Chairman
Martin Skancke
Members
Didrik Munch
Ingvild Pedersen (Employee-elected)
Nomination Committee
Chairman
Per Otto Dyb
Members
Leiv Askvig
Nils Halvard Bastiansen
Margareth Øvrum
Arne Fredrik Håstein (1973)
Employee-elected board member Storebrand ASA since 2014
Senior employee representative at Storebrand
Position
Education
Master of Arts in International Finance and Accounting,
University of Newcastle upon Tyne
Bachelor of Business Administration, Norwegian Business School
(Bl) / University of Texas at Austin
Authorised Portfolio Manager, Norwegian School of Economics (NHH) / NFF
Specialisation in Valuation, Norwegian School of Economics (NHH) / NFF
Previous positions
Expert Adviser, Savings and Pensions at Storebrand Livsforsikring AS (2014–2017)
Sales Manager and Product Manager at Delphi Fondene (2009–2014)
Sales Manager and Key Account Manager at Storebrand Kapitalforvaltning AS
(2005–2009)
Senior Financial Adviser at Focus Bank AS (2003–2005)
Senior Financial Adviser at Storebrand Livsforsikring AS (1999–2003)
Positions of trust
Board Member Finance Sector Union of Norway at Storebrand
Board Member Storebrand Art Association
65
STOREBRAND ANNUAL REPORT 2018
Companies in the
Storebrand Group
STOREBRAND ASA
Storebrand Livsforsikring AS
Storebrand Holding AB
SPP Konsult AB
SPP Spar AB
SPP Pension & Försäkring AB
SPP Fastigheter AB 1)
SPP Hyresförvaltning
Storebrand & SPP Business Services AB
Storebrand Eiendomsfond Invest AS
Storebrand Eiendom Trygg AS
Storebrand Eiendom Vekst AS
Storebrand Eiendom Utvikling AS
Storebrand Finansiell Rådgivning AS
Storebrand Pensjonstjenester AS
Storebrand Infrastruktur AS
AS Værdalsbruket 2)
Norsk Pensjon AS
Benco Insurance Holding BV
Norben Life & Pension Insurance Co. Ltd.
Euroben Life & Pension Ltd
Interben Trustees Limited
Storebrand Bank ASA
Storebrand Boligkreditt AS
Ring Eiendomsmegling AS
Storebrand Asset Management AS
SPP Fonder AB
Storebrand Fastigheter AB
SKAGEN AS
Storebrand Forsikring AS
Storebrand Helseforsikring AS
Organisation number
Ownership interest
916 300 484
958 995 369
556734-9815
556045-7581
556892-4830
556401-8599
556745-7428
556883-1340
556594-9517
995 871 424
876 734 702
916 268 416
990 653 402
989 150 200
931 936 492
991 853 545
920 082 165
890 050 212
34331716
953 299 216
990 645 515
987 227 575
930 208 868
556397-8922
556801-1802
867462732
930 553 506
980 126 196
100,0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
21.24%
100.0%
100.0%
100.0%
100.0 %
100.0 %
100.0 %
74.9 %
25.0 %
89.96 %
100.0 %
100.0 %
100.0%
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
50.0 %
1) Euroben Life & Pension Ltd. owns 7.3%
2) Storebrand ASA owns 25.1 per cent and Storebrand’s total ownership interest is 100 per cent for AS Værdalsbruket.
6666
SECTION 6. GOVERNANCE
6767
Corporate governance
Good corporate governance is important to ensure that
an enterprise can achieve its defined goals, including best
possible utilisation of resources and good value creation.
The Storebrand Group (hereinafter referred to as Store-
brand) works continuously on improving both the overall
decision-making processes and the day-to-day manage-
ment of the company.
Storebrand’s corporate governance principles have been
laid down in accordance with the Norwegian Code of Prac-
tice for Corporate Governance. The management and
Board of Directors of Storebrand ASA (hereafter referred
to as the Board) conduct an annual review of Storebrand’s
adopted corporate governance policies and compliance
therewith. Storebrand reports in accordance with section
3-3b of the Norwegian Accounting Act and the Norwegian
Code of Practice for Corporate Governance.
Storebrand publishes an integrated report that deals with
the financial, environmental and social conditions and cor-
porate governance that are the most important to Store-
brand. The materiality analysis is discussed in the annual
report.
Statement in accordance with the Norwegian Code of
Practice for Corporate Governance
The statement below describes how Storebrand complies
with the 15 sections of the Code of Practice.
1. Implementation and reporting on corporate gover-
nance (No deviations from the Code of Practice)
The Board has decided that the Norwegian Code of Prac-
tice for Corporate Governance shall be followed. Compli-
ance with the Code of Practice is discussed in the Direc-
tors’ Report. Storebrand complies with the Code of Practice
without any significant exceptions. One minor deviation
has been accounted for below under section 3.
2. Business (No deviations from the Code of Practice)
Storebrand ASA is the parent company in a financial group,
and its statutory object is to manage its equity interests in
Storebrand’s subsidiaries in compliance with the current
legislation. Storebrand’s main business areas encompass
68
pensions and savings, insurance and banking. The Articles
of Association are available in their entirety on the Store-
brand’s website www.storebrand.no.
The market is kept updated on Storebrand’s goals, strate-
gies and creation of value through quarterly performance
presentations and other thematic presentations. Read
more about the Company’s goals and main strategies in the
Directors’ Report under the heading Strategic highlights.
Storebrand aims to be a world-class savings group that
delivers better pensions – simple and sustainable. Store-
brand’s strategy and corporate values are described in the
framework “Our driving force” which represents a common
policy for how Storebrand will deliver attractive results to
customers and owners.
Storebrand’s strategy is to deliver profitable growth within
established focus areas through simple and sustainable
solutions. The Board conducts ongoing evaluations of the
goals, strategy and risk profile. More information about
“Our driving force” and focus areas can be found in the sec-
tion on Storebrand in the annual report.
For more than 20 years, Storebrand has been one of the
best companies in sustainable investments, taking an active
position on how both the customers and their own funds
are invested. Storebrand believes that companies that inte-
grate environmental, social and governance considerations
in their business activities reduce risk and create new op-
portunities for the business activities and capital owners.
Storebrand has the ambition of maintaining a position
among the best companies by integrating this perspective
in other business areas. Storebrand believes that this will
create increased value for customers, owners, society and
other stakeholders.
Storebrand believes that diversity enhances the business’s
relative ability to create value. Increased diversity is an im-
portant part of Storebrand’s recruitment policy. Storebrand
seeks to maintain and develop an organisation with real
equality.
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
Storebrand has its own code of ethics. Guidelines for whis-
tle-blowing, social events, combating corruption, etc. have
also been established.
3. Equity and dividends (deviations from the Code of
Practice)
The Board of Storebrand ASA continuously monitors Store-
brand’s capital adequacy in light of its goals, strategy and
risk profile. Read more about Storebrand’s capital situation
and capital adequacy under the heading “Capital situation,
rating and risk” in the Directors’ Report.
The Board of Directors has adopted and made known a div-
idend policy whereby Storebrand aims to pay a dividend
of over 50 per cent of the group profit after tax. The ambi-
tion of the Board is to pay an ordinary dividend per share
of at least the same nominal level as in the previous year.
Normally, dividends are paid when there is a sustainable
solvency margin of more than 150 per cent. With a solven-
cy margin above 180 per cent, the Board’s intention is to
propose extraordinary dividends or the buyback of shares.
The dividend is adopted by the General Meeting, based on
a proposal put forward by the Board of Directors. The Gen-
eral Meeting may, by simple majority, authorise the Board
of Directors to distribute a dividend pursuant to Section
8-1, second paragraph of the Norwegian Public Limited
Companies Act. This shall be based on the annual financial
statements adopted by the General Meeting. This authori-
sation may not be granted for a period longer than until the
next Annual General Meeting. In addition, the authorisation
shall be based on the adopted dividend policy. The General
Meeting was not requested to provide such authorisation in
2018. Read more about Storebrand’s dividend policy in the
Directors’ Report under the heading “Dividend for 2018”.
Storebrand ASA would like to have various tools available
for its efforts to maintain an optimal capital structure for
Storebrand to contribute to good shareholder returns and
financial resilience. At the 2018 Annual General Meeting,
the Board was granted authorisation to increase the share
capital through issuing new shares for a total maximum
value of NOK 233,906,991. This authorisation may be used
for the acquisition of businesses in consideration for new
shares or for increasing the share capital by other means.
The Board of Directors may decide to waive the sharehold-
ers’ preferential rights to subscribe for new shares in ac-
cordance with the authorisation. This authorisation may be
used for one or more new issues. This authorisation is valid
until the next Annual General Meeting.
At the same General Meeting, the Board of Directors was
authorised to buy back shares for a maximum value of
NOK 233,906,991. The total holdings of treasury shares
must, however, never exceed 10 per cent of the share cap-
ital. The buyback of treasury shares may be a tool for the
distribution of surplus capital to shareholders in addition
to dividends. In addition, each year Storebrand ASA sells
shares to employees from its own holdings in connection
with the share purchase scheme and long-term incen-
tive schemes for employees of Storebrand. Accordingly, it
is appropriate to authorise the Board of Directors to buy
shares in the market to cover the aforementioned needs
or any other needs. This authorisation is valid until the next
Annual General Meeting. Otherwise, there are no provisions
in Storebrand ASA’s Articles of Association that regulate the
buyback or issuance of shares.
Deviation from the Code of Practice: The Board’s authorisa-
tions to increase the share capital and buy back shares are
not completely limited to defined purposes. No provisions
have been made for the General Meeting to vote on each
individual purpose to be covered by the authorisations.
4. Equal treatment of shareholders and transactions
with close associates (No deviations from the Code of
Practice)
Storebrand ASA has only one class of share. There are no
specific restrictions on the ownership of shares or voting
rights beyond the restrictions imposed by the Act on Finan-
cial Undertakings and Financial Groups. Through their work,
the management and Board of Directors of Storebrand
focus strongly on the equal treatment of shareholders.
The general competence rules for board members and ex-
ecutive personnel may be found in the rules of procedure
for the Board of Storebrand ASA, rules of procedure for the
boards of subsidiaries, instructions for the CEO, guidelines
for conflicts of interest and Storebrand’s code of ethics.
Board members must inform the company if they have
direct or indirect material interests in an agreement con-
cluded by one of the companies in the Storebrand Group.
The Board shall ensure that an independent third party as-
sesses the value of transactions that are not insubstantial in
nature. Furthermore, the rules of procedure for the Board
stipulate that no board member may participate in discus-
sions or a decision concerning matters that are of such
material importance to them or a close associate that the
member must be regarded as having a conspicuous per-
sonal or special financial interest in the matter. Each board
member has a responsibility to continuously assess wheth-
er or not such a situation exists. Transactions with close
associates involving Storebrand’s employees and other of-
ficers of the Group are regulated by Storebrand’s code of
ethics. Employees shall on their own initiative immediately
report conflicts of interest that may arise to their immedi-
ate superior as soon as they become aware of such a situ-
ation. In general, an employee is defined as disqualified if
circumstances exist that could result in others questioning
the person’s impartiality in relation to matters other than
Storebrand’s interests.
69
In the event of capital increases in accordance with the au-
thorisation set out in Item 3 above, the Board may decide
that the shareholders’ preferential rights shall be waived.
For a complete account of shareholder matters, see Section
5 of the annual report.
5. Freely negotiable shares (No deviations from the
Code of Practice)
Shares in Storebrand ASA are listed on Oslo Børs (Oslo
Stock Exchange). The shares are freely negotiable, and the
Articles of Association do thus not contain any restrictions
with regard to the negotiability of the shares. All the shares
carry equal rights, cf.Section 4 above.
6. General Meeting (No deviations from the Code of
Practice)
General Meeting
Pursuant to the Articles of Association, Storebrand ASA’s
General Meeting shall be held by the end of June each
year. The General Meeting was held on 11. April 2018. All
shareholders with a known address will receive notice of
the General Meeting, which will be sent out no later than 21
days prior to the General Meeting. Pursuant to the Articles
of Association, the deadline for giving notice of attendance
shall be set at no later than five calendar days prior to the
General Meeting. In accordance with Storebrand’s Arti-
cles of Association, the opportunity to make other agenda
papers available on the Storebrand website is exercised, cf.
Section 5-11a of the Norwegian Public Limited Companies
Act. A shareholder may nevertheless demand to receive
agenda papers by post.
All shareholders may participate at the General Meeting.
Storebrand’s Articles of Association allow shareholders to
vote in advance by means of electronic communication, cf.
section 5-8b of the Norwegian Public Limited Companies
Act. The arrangement therefore gives the shareholders an
opportunity to vote without being represented at the Gen-
eral Meeting. As many shareholders as possible are thus
allowed to exert an influence on Storebrand by exercising
their voting rights.
It is also possible to vote by proxy. Provisions have been
made so that the proxy form is linked to each individual
item to be considered. We will seek whenever possible to
design the form so that it also allows voting for candidates
who are to be elected. The voting rules for the General
Meeting allow separate votes for each member of the var-
ious bodies. Further information about voting in advance,
use of proxies and the shareholders’ rights to have matters
discussed at the General Meeting is available both in the
notice of the General Meeting and on Storebrand’s website.
The Chairman of the Board, at least one representative
from the Nomination Committee and the external auditor
70
must attend the General Meeting. The board members of
Storebrand ASA are not obligated to attend, but are en-
couraged to attend. The Group Chief Executive Officer,
executive management team and the Group Legal Direc-
tor participate from the management. The minutes of the
General Meeting are available on Storebrand’s website
in both Norwegian and English. The General Meeting is
opened by the Chairman. The Board of Directors endorses
an independent meeting chairman elected by the General
Meeting.
The General Meeting shall:
• consider the annual accounts, consisting of the income
statement, the balance sheet and the annual report,
• including the consolidated income statement and bal-
ance sheet, and the auditor’s report,
• decide upon adoption of the income statement and bal-
ance sheet,
• decide upon adoption of the consolidated income state-
ment and balance sheet,
• decide upon the allocation of profit or manner of cover-
ing losses in
• accordance with the adopted balance sheet, and upon
the distribution of dividends,
• elect the auditor,
• appoint members to the Nomination Committee, and
this should include the Chairman of the Nomination
Committee,
• elect members to the Board of Directors, and this should
include the Chairman of the Board Directors,
• consider the Board’s statement on the fixing of salaries
and other remuneration to executive personnel,
• adopt the remuneration of the members of the Board of
Directors and board committees,
• adopt the remuneration of the members of the Nomi-
nation Committee,
• adopt the remuneration of the auditor,
• and transact any other business listed on the agenda.
Decisions are generally made on the basis of an ordinary
majority. Pursuant to Norwegian law, however, a special
majority is required for certain decisions, including deci-
sions about setting aside pre-emptive rights in connection
with any share issues, mergers, spin-offs, amendments to
the Articles of Association or authorisations to increase or
reduce the share capital. Such decisions require approval
by at least two-thirds of both the votes cast and the share
capital represented at the General Meeting.
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
7. Nomination Committee (No deviations from the
Code of Practice)
Storebrand ASA’s Articles of Association regulate the Nom-
ination Committee, which consists of four or five members
and an observer elected by the employees. For 2018–2019
election period, the Nomination Committee has four
members.
8. The composition and independence of the Board of
Directors (No deviations from the Code of Practice)
The Articles of Association stipulate that between five and
seven Board members shall be elected by the General
Meeting based on nominations from the Nomination Com-
mittee. The Board Chairman shall be elected by the General
Meeting.
The Chairman of the Nomination Committee and the other
members are elected annually by the General Meeting. The
employees’ representative will participate as a permanent
member of the Committee in discussions and nominations
concerning the election of the Chairman of the Board of Di-
rectors, as well as in other contexts where this would be
natural, in accordance with an invitation from the Chairman
of the Committee.
The majority of the Nomination Committee is independent
of the Board of Directors and the management. The Nom-
ination Committee is composed with a view to safeguard-
ing the interests of the community of shareholders. In the
General Meeting’s rules of procedure for the Nomination
Committee, there are provisions concerning the rotation of
members of the Nomination Committee
The Articles of Association stipulate that the Nomination
Committee should work in accordance with the rules of
procedure adopted by the General Meeting. The Nomina-
tion Committee’s rules of procedure were adopted at the
2018 Annual General Meeting. In accordance with the rules
of procedure, the Nomination Committee shall, for exam-
ple, give attention to the following when preparing nomina-
tions for representatives for the companies’ governing and
controlling bodies: expertise, experience, capacity, gender
distribution, independence and the interests of the commu-
nity of shareholders. More information about the members
has been published on Storebrand’s website. The Nomina-
tion Committee annually writes to the Company’s 30 largest
shareholders with an invitation to suggest candidates for
the Board of Directors and Nomination Committee. A cor-
responding request to the shareholders is published on the
company’s website.
The Nomination Committee is tasked with proposing can-
didates and remuneration for the Board of Directors and
Nomination Committee, through recommendations to the
General Meeting.
An attempt is made to adapt the remuneration of the mem-
bers of the Nomination Committee to the nature of the
tasks and time spent on committee work. The Nomination
Committee held 14 meetings in 2018.
Two members, or three members if the General Meeting
elects six or seven board members, shall be elected by and
from among the employees. The board members are elect-
ed for one year at a time. The day-to-day management is
not represented on the Board of Directors. At the end of
2018, the Board consisted of nine members (four men and
five women).
None of the members elected by the General Meeting have
any employment, professional or consultancy relationship
with Storebrand beyond their appointment to the Board of
Directors. The backgrounds of the individual board mem-
bers are described in the annual report and on Storebrand’s
website. The composition of the Board of Directors satisfies
the independence requirements set forth in the Code of
Practice. There are few instances of disqualification during
the consideration of matters by the Board (none in 2018).
An assessment of the individual board members’ indepen-
dence is noted in the list of governing and controlling bodies
under the heading “Members of Storebrand ASA’s Board of
Directors and Committees”. An overview of the number of
shares in Storebrand ASA owned by members of governing
bodies as at 31 December 2018 is included in the notes to
the financial statements for Storebrand ASA (Information
on related parties). None of the board members have held
office for more than ten years.
9. Work of the Board of Directors (no deviations from
the Code of Practice)
Duties of the Board of Directors
In 2018, eleven board meetings were held, of which two
meetings were conducted at the subsidiary SPP in Stock-
holm. Storebrand’s future strategy is discussed at the
Board’s annual strategy meeting, which establishes guide-
lines for the management’s preparation of plans and bud-
gets in connection with the annual financial plan, which
must be approved by the Board.
The Board shall stay informed about Storebrand’s finan-
cial position and development, and it shall ensure that the
Company’s value creation and profitability are safeguarded
in the best possible manner on behalf of the owners. The
Board shall also ensure that the activities are subjected to
adequate control and ensure that Storebrand has adequate
capital based on the scope of, and risks associated with, its
activities.
71
The Board has established guidelines that give board mem-
bers and senior employees a duty to familiarise Storebrand
with the essential interests they may have in matters that
the Board is to consider. This also applies to interests that
do not imply disqualification, but which may be necessary
to take into account when matters are considered. Refer-
ence is made to Item 4 above.
The work of the Board is regulated by special rules of proce-
dure for the Board, which are reviewed annually. In order to
ensure sound and well-considered decisions, importance is
attached to ensuring that meetings of the Board are well
prepared so that all the members can participate in the
decision-making process. The Board prepares an annual
schedule for its meetings and the topics it will consider. The
agenda for the next board meeting is normally presented
to the Board based on the approved schedule for the year
and a list of matters carried forward from previous meet-
ings. The final agenda is fixed in consultation with the Chair-
man of the Board. Time is set aside at each board meeting
to evaluate the meeting without the management present.
The Board is entitled to appoint external advisers to help it
with its work whenever it deems this necessary. The Board
has also drawn up instructions for the CEO.
The Board conducts an annual evaluation of its work and
methods, which provides a basis for changes and mea-
sures. The report from the Board’s evaluation, or relevant
excerpts, will be made available to the Nomination Commit-
tee, which will use the evaluation in its work.
Board Committees
The Board has established three subcommittees in the
form of the Compensation Committee, Audit Committee
and Risk Committee. The committees consist of three to
four board members, two to three shareholder-elected
board members and one employee-elected board member.
The composition helps ensure a thorough and independent
consideration of matters that concern internal control, fi-
nancial reporting, risk assessment and remuneration of
executive personnel. The committees are preparatory and
advisory working committees and assist the Board with the
preparation of items for consideration. Decisions are made,
however, by the full Board. The committees are able to hold
meetings and consider matters at their own initiative and
without the participation of company management.
The Compensation Committee assists the Board with all
matters concerning the Chief Executive Officer’s remuner-
ation. The Committee monitors the remuneration of Store-
brand’s executive personnel and proposes guidelines for
fixing executive personnel remuneration and the Board’s
statement on the fixing of executive personnel remunera-
tion, which is presented to the General Meeting annually. In
addition, the Committee safeguards the areas required by
the Compensation Regulations in Norway and Sweden. The
Compensation Committee held three meetings in 2018.
The Audit Committee assists the Board by reviewing, evaluat-
ing and, where necessary, proposing appropriate measures
with respect to the Group’s overall controls, financial and
operational reporting, risk management/control, and inter-
nal and external auditing. The Audit Committee held seven
meetings in 2018, including a joint meeting with the Risk
Committee. The external and internal auditors participate in
the meetings. The majority of the Committee members are
independent of the company.
The main task of the Risk Committee is to prepare matters to
be considered by the Group’s Board of Directors in the area
of risk, with a special focus on Storebrand’s risk appetite and
risk strategy, including the investment strategy. The Commit-
tee should contribute forward-looking decision-making sup-
port related to the Board’s discussion of risk taking, financial
forecasts and the treatment of risk reporting. The Risk Com-
mittee held seven meetings in 2018, including a joint meeting
with the Audit Committee.
10. Risk management and internal control (No deviations
from the Code of Practice)
Management and control
The Board of Directors has drawn up general policies and
guidelines for management and control. These policies deal
with the Board’s responsibility for determining Storebrand’s
appetite for risk and risk profile, approval of the organisa-
tion of the business, assignment of areas of responsibility
and authority, requirements concerning reporting lines and
information, and risk management and internal control re-
quirements. The Board’s and Chief Executive Officer’s areas
of responsibility are defined in the rules of procedure for the
Board and the instructions for the Chief Executive Officer, re-
spectively. The Board of Directors has drawn up instructions
for Storebrand’s subsidiaries that are to ensure that they
implement and comply with Storebrand’s management and
control policies and guidelines.
Storebrand’s sustainability principles summarise how the
work is an integral part of Storebrand’s overall goals and
management and control processes. The principles were
updated in 2018 and encompass all parts of Storebrand’s
activities, including investments, product development, pro-
curement, employee follow-up and internal operations. The
principles are discussed in the Directors’ Report, under the
heading Strategic highlights.
The Board adopts Storebrand’s sustainability goals and
scorecard, which are followed up three times a year by the
executive management. Storebrand also complies with the
international reporting standard GRI (Global Reporting Initia-
tive, version G4) and uses integrated reporting. The financial
72
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
results are audited by Storebrand’s external auditor, see
the Auditor’s Report in the Other section.
The Investor Relations guidelines ensure reliable, timely
and identical information to investors, lenders and other
stakeholders in the securities market.
levels (stress tests), scenario analysis is used to estimate
the effect of various sequences of events in the financial
markets on Storebrand’s financial performance and solven-
cy. This provides important premises for the Board’s gen-
eral discussion of risk appetite, risk allocation and capital
adequacy.
As an extension of the general policies and guidelines, a
code of ethics has been drawn up that applies to all em-
ployees and representatives of Storebrand, in addition to
corporate rules for areas such as risk management, inter-
nal control, financial reporting, handling inside information
and share trading by primary insiders. Guidelines and in-
formation about information security, contingency plans,
measures against money laundering and other financial
criminality have also been drawn up. Storebrand is subject
to statutory supervision in the countries where it has oper-
ations that require a licence, including the Financial Super-
visory Authority of Norway, as well as its own supervisory
bodies and external auditor.
Risk management and internal control
The assessment and management of risk are integrated
into Storebrand’s corporate governance. This management
system shall ensure that there is a correlation between
goals and actions at all levels of Storebrand and the overall
policy of creating value for Storebrand’s shareholders.
Storebrand’s financial and operational goals are defined
annually in a board-approved business plan. The busi-
ness plan builds on separate decisions on risk strategy and
investment strategies, and includes three-year financial
forecasts, budgets and action plans. The Board of Direc-
tors receives ongoing reports on the status of the strategy
implementation.
Storebrand Compass is the company’s monitoring tool. It
provides comprehensive reports for management and the
Board concerning financial and operational targets. In addi-
tion, the Board of Directors receives risk reports from the
risk management function, which monitors the develop-
ment of key figures for risk, solidity, etc.
Risk assessment forms part of the managerial responsibili-
ties in the organisation. Its purpose is to identify, assess and
manage risks that can hinder a unit’s ability to achieve its
goals. The process covers both the risk of incurring losses
and failing profitability linked to economic downturns,
changes in the general conditions, changed customer be-
haviour, etc., and the risk of incurring losses due to inade-
quate or failing internal processes, systems, human error
or external events. Developments in the financial markets
are important risk factors in relation to Storebrand’s earn-
ings and solvency position. In addition to assessing the ef-
fects of sudden shifts in the equity markets or interest rate
The responsibility for Storebrand’s control functions for risk
management and internal control lies with the Chief Risk
Officer function under the management of the Group Chief
Risk Officer. The Group Chief Risk Officer reports directly to
the Chief Executive Office. The Chief Risk Officer function is
responsible for supporting the Board and group manage-
ment team with respect to the establishment of a risk strat-
egy and operationalisation of the setting of limits and mon-
itoring of risk raking across Storebrand’s business areas.
Storebrand has a common internal audit function, which
conducts an independent review of the robustness of
the management model. The internal audit function’s in-
structions and annual plan are determined by the Board
pursuant to the current legislation, regulations and inter-
national standards. The internal audit function produces
quarterly reports for the boards of the respective Store-
brand companies.
The appraisal of all Storebrand employees is integrated into
corporate governance and is designed to ensure that the
adopted strategies are implemented. The policies for earn-
ing and paying any variable remuneration to Storebrand’s
risk managers comply with the regulations relating to re-
muneration in financial institutions, cf. Section 12 below.
The Chief Risk Officer and employees with control functions
related to risk management, internal control and compli-
ance only have fixed salaries.
Financial information and Storebrand’s accounting
process
Storebrand publishes four interim financial statements, in
addition to the ordinary annual financial statements. The
financial statements must satisfy legal and regulatory re-
quirements and be prepared in accordance with the adopt-
ed accounting policies and be published according to the
schedule adopted by the Board of Storebrand ASA.
Storebrand’s consolidated financial statements are prepared
by the Consolidated Accounts Unit, which reports to the
Group Chief Financial Officer. Key managers in the Consol-
idated Accounts Unit have fixed annual compensation that
is not influences by Storebrand’s accounting results. The
division of work involved in the preparation of the financial
statements is organised in such a way that the Consolidated
Accounts Unit does not carry out valuations of investment
assets. Instead it exercises a control function in relation to
the accounting processes of the group companies.
73
A series of risk assessment and control measures have
been established in connection with the preparation of the
financial statements. Assessments relating to significant
accounting items and any changes in principles etc. are de-
scribed in a separate document (assessment item memo).
The Board’s Audit Committee conducts a preparatory
review of interim financial statements and annual financial
statements, focusing in particular on the discretionary valu-
ations and estimates that have been made prior to consid-
eration by the Board.
Monthly and quarterly operating reports are prepared in
which the results by business area and product area are
analysed and assessed against set budgets. The operating
reports are reconciled against other financial reporting.
11. Remuneration of the Board of Directors (No devia-
tions from the Code of Practice)
The General Meeting fixes the Board’s remuneration an-
nually on the basis of the recommendations of the Nom-
ination Committee. The fees paid to the members of the
Board are not linked to earnings, option schemes or similar
arrangements. Members of the Board and Board Commit-
tees do not receive incentive-based remuneration; instead
they receive a fixed annual compensation, either per year
or per meeting the member attends, or a combination of
such remuneration. The shareholder-elected members
of the Board do not participate in Storebrand’s pension
schemes. None of the shareholder-elected members of
the Board carry out any duties for Storebrand beyond their
appointment to the Board. More detailed information on
the remuneration, loans and shareholdings of board mem-
bers can be found in Note 23 (Group) and Notes 6 and 17
(ASA). Board members are encouraged to hold shares in
the company.
12. Remuneration of executive personnel (No devia-
tions from the Code of Practice)
The Board determines the structure of the remuneration of
executive personnel at Storebrand, and a statement on the
fixing of remuneration (executive remuneration statement)
is presented to the General Meeting. The executive remu-
neration statement shall clearly specify which guidelines are
binding and which are advisory. The General Meeting shall
vote separately on the binding and advisory guidelines. The
remuneration consists of fixed salaries, variable remunera-
tion, pension schemes and other fringe benefits deemed to
be natural in a financial group. The aim of the remuneration
is to motivate greater efforts to ensure long-term value cre-
ation and resource utilisation in the company. In the opinion
of the Board, the overall remuneration shall be competitive,
but not leading. An annual assessment is carried out based
on external market data to ensure remuneration is adequate
in relation to equivalent positions in the market.
74
Storebrand shall have an incentive model that supports Com-
pany strategy, with emphasis on the customer’s interests and
long-term perspective and an ambitious model of coopera-
tion, as well as transparency that enhances the Storebrand’s
reputation. The Group’s executive management only receive
fixed salaries and use a percentage of their fixed salaries to
purchase shares in Storebrand with a lock-in period of three
years. This is to clarify that the Storebrand’s top management
acts in accordance with the long-term interests of the owners.
The employees’ performance and achievements are regular-
ly followed up against the operational goals of the individual
business areas, directly related to Storebrand’s strategy. This
helps to further strengthen agreement between the owners
and the management.
More detailed information about the remuneration of execu-
tive personnel may be found in Note 23 (Group) and Notes 6
and 17 (ASA), and in the Board’s statement on the fixing of sal-
aries 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.
13. Information and communication
(No deviations from the Code of Practice)
The Board has issued guidelines for the company’s report-
ing of financial and other information and for contact with
shareholders other than through the General Meeting. Store-
brand’s reporting with regard to sustainable investments
goes beyond the statutory requirements. Storebrand’s finan-
cial calendar is published on the Internet and in the compa-
ny’s annual report. Financial information is published in the
quarterly and annual reports, as described under Item 10
above – Financial information and Storebrand’s accounting
process. Documentation that is published is available on
Storebrand’s website. All reporting is based on the principle
of transparency and takes into account the need for the equal
treatment of all participants in the securities markets and the
rules concerning good stock exchange practices. Storebrand
has its own guidelines for handling insider information, see
also Item 10 – Management and control, above.
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 state-
ment on the Board’s opinion of the bid, in addition to obtain-
ing a valuation from an independent expert. In addition, the
Board of Directors 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.
STOREBRAND ANNUAL REPORT 2018 SECTION 6. GOVERNANCE
15. Auditor (No deviations from the Code of Practice)
The external auditor is elected by the General Meeting of
Storebrand ASA and is responsible for the financial auditing.
The external auditor issues an auditor’s report in connection
with the annual financial statements and conducts limited
audits of the interim financial statements. The external audi-
tor attends board meetings in which interim financial state-
ments are reviewed and all meetings of the Audit Committee,
unless the items on the agenda do not require the presence
of the auditor. The Board has decided that the external au-
ditor must rotate the partner responsible for the audit as-
signment every seven years. The external auditor’s work and
independence are evaluated annually by the Board’s Audit
Committee. The auditor shall also meet with the Board of Di-
rectors at least once a year without the management being
present. The other companies in Storebrand use the same
auditor as Storebrand ASA.
Other
As one of the largest investors in the Norwegian stock
market, Storebrand has considerable potential influence
over the development of listed companies. Storebrand
attaches importance to exercising its ownership in listed
companies on the basis of straightforward and consistent
ownership principles that place considerable emphasis on
sustainability. Storebrand applies the Norwegian Code of
Practice for Corporate Governance in this role. Storebrand
has had an administrative Corporate Governance Commit-
tee since 2006. The Committee is responsible for ensuring
good corporate governance across Storebrand.
Storebrand Asset Management AS has had a Corporate
Governance Committee for several years. The Committee
has a mandate to set the level of ambition and establish
frameworks for corporate governance. The Committee
shall coordinate Storebrand’s use of voting rights, including
prioritising matters and ensuring consistency in the work.
The Committee shall meet every quarter.
Storebrand has issued guidelines with respect to employees
holding positions of trust in external companies, which reg-
ulate, for example, the number of external board positions.
Further information on Storebrand’s corporate governance
may be found at www.storebrand.no > About Storebrand
> Facts on Storebrand, where we have also published an
overview of the members of Storebrand’s governing and
controlling bodies, CVs for the members of Storebrand
ASA’s Board of Directors, the Articles of Association, and
ownership policies.
Statement in accordance with Section 3-3b, second para-
graph of the Norwegian Accounting Act
A summary of the matters that Storebrand is to report on
in accordance with Section 3-3b, second paragraph of the
Norwegian Accounting Act follows here. The items follow
the numbering used in the provision.
The principles for Storebrand’s corporate governance have
been prepared in accordance with Norwegian law, and they
are based on the Norwegian Code of Practice for Corporate
Governance published by the Norwegian Corporate Gover-
nance Board (NUES).
The Norwegian Code of Practice for Corporate Governance
is available at www.nues.no.
Any deviations from the Code of Practice are commented
on under each section in the statement above, see the devi-
ations discussed in Item 3.
A description of the main elements of Storebrand’s systems
for internal control and risk management related to the
financial reporting process is discussed in Section 10 above.
Provisions in the Articles of Association that refer to the
provisions in Section 5 of the Norwegian Public Limited
Companies Act with regard to the General Meeting are dis-
cussed in Item 6 above.
The composition of the governing bodies and a description
of the main elements in the current rules of procedure and
guidelines can be found in Items 6, 7, 8 and 9 above.
The provisions in the Articles of Association that regulate
the appointment and replacement of board members are
discussed in Item 8 above.
Provisions in the Articles of Association and authorisations
granting the Board the authority to buy back or issue the
Group’s own shares are discussed in Item 3 above.
75
7
Directors´ report
78 Strategic Highlights
82 Group financial results for 2018
88 Capital situation, rating and risk
91 Regulatory changes
95 Organisation, working environment and expertise
96 Corporate governance
97 Official financial statment of Storebrand ASA
77
Strategic Highlights
A world-class savings group supported by insurance
Storebrand developed three overall strategic goals in 2018:
To have a leading position in occupational pensions, develop
a unique positioning in the private savings market and to
be an asset manager with strong competitive advantages
and good growth opportunities. Broad insurance offerings
to both the retail and corporate markets are aimed at sup-
porting our strategic goals.
We will create first-class customer experiences in our core
areas of savings and pensions. We aim to help our custom-
ers insure their lives and assets so that they can build a
future they can look forward to. Our foundation is based on
our position in the corporate market as Norway’s leading
provider of occupational pensions, and as a proactive chal-
lenger in the Swedish market. People live longer and receive
less from the government. Therefore, our customers must
save more in the years to come.
Continued strong growth in unit linked savings, as well as
competitive and sustainable returns to our customers, con-
tribute to increased assets under management. Storebrand
is the market leader in defined contribution pensions, and
is Norway’s largest private asset manager, with NOK 707
billion under management.
Throughout 2018, the Group took several steps to reinforce
this strategy. Acquisitions that can strengthen the Group’s
earning power within its strategic core are important sub-
jects of discussions and decisions made by the Board. The
acquisitions of SKAGEN and Silver, which were concluded
in 2018, were a key part of our savings strategy. SKAGEN
complements and broadens Storebrand’s investment offer-
ings and customer base. This work will continue in 2019,
including a stronger focus on international distribution of
fund solutions.
The Group’s strategy is based on a genuine commitment to
a sustainable society and strong faith in sustainable invest-
ments. As a major asset manager, we create long-term
returns for both our owners and customers, while at the
same time ensuring that our activities support a more sus-
tainable world. Storebrand’s and SPP’s sustainability work
strengthens the Group’s competitive position, creating
value for shareholders and positive ripple effects for society.
Storebrand’s sustainability principles summarise how our
work is an integral part of Storebrand’s overarching objec-
tives and management processes. The principles were
updated and adopted by the Board in 2018 and encompass
all parts of Storebrand’s activities, including investments,
product development, procurement, employee and organ-
isational development and internal operations.
The new principles are:
• We base our business activities on the UN Sustainable
Development Goals
• We help our customers live more sustainably. We do
this by managing our customers’ money in a sustainable
manner, in addition to providing sustainable financing
and insurance.
• We are a responsible employer.
• Our processes and decisions are based on sustainability –
from the Board and management, who have the ultimate
responsibility, to each employee who promotes sustain-
ability in their own area.
• We collaborate to achieve the UN Sustainable Develop-
ment Goals with our customers, suppliers, the authorities
and knowledge environments.
• We are open about our work and our sustainability
results.
The Board adopts Storebrand’s sustainability goals, which
are followed up three times a year by the executive man-
agement. Storebrand also complies with the international
reporting standard GRI (Global Reporting Initiative, version
G4) and uses integrated reporting. The financial results are
revised by Storebrand’s external auditor, see the Auditor’s
Report. 27)
27) Read more about our sustainability work and sustainable investments in our annual report in the sections About Storebrand: a sustainable strategy and Financial Capital and Our
Investment Universe: a driving force for sustainable investments.
78
STOREBRAND ANNUAL REPORT 2018
SECTION 7. DIRECTORS´ REPORT
Growth in Savings and Insurance
Corporates, and their current and former employees,
are the Group’s main target groups. Most defined bene-
fit-based pension schemes in the private sector have been
discontinued and new savings occur principally in defined
contribution-based schemes. In the corporate market,
Storebrand has maintained its position as the market leader
in defined contribution pensions in Norway, with a market
share of 31 per cent. In Sweden, SPP has a strong challenger
role with a market share of 13 per cent for occupational
pensions outside of the collective agreements. Our asset
management offers a broad range of asset classes through
the brands Storebrand, SKAGEN, SPP Fonder and Delphi
to the institutional and retail markets. Throughout 2018,
Storebrand’s commitment to sustainability was reinforced
through a common sustainability policy for investments for
all brands in the Group.
Storebrand’s insurance area is responsible for insurance
products in Norway and Sweden for businesses and private
individuals. Approximately 60 per cent of the premiums
come from the corporate market and the remainder come
from retail customers. Earnings and profitability improved
significantly in 2018. Volume growth was moderate, and ini-
tiatives taken increased the growth rate early in 2019.
Secure pensions and capital release from guaranteed
pensions
The Guaranteed Pensions area is in long-term decline. Com-
panies are requesting products with guaranteed interest
rates to a lesser extent, and these products are capital-in-
tensive for life insurance companies during periods of low
interest rates. The customers’ accrued pension rights are
secured through a solid solvency position and robust
systems for risk-taking in the business. As the pensions are
paid to our customers, capital is released that the Company
must pledge as security. This capital can be distributed over
time to the shareholders in the form of dividends, buyback of
shares or the acquisition of new capital-generating business.
Dividend for 2018
The Board adopted a new dividend policy with effect start-
ing from the 2018 financial year. The proposed dividend
policy should reflect the strong growth in fee-based earn-
ings, more volatile financial market-related earnings and
future capital release from business with guarantees. The
Board’s ambition is to pay a stable and increasing ordinary
dividend in combination with extraordinary dividends. The
expected release of capital will result in a higher distribution
ratio over time. The Board will adjust the result in the case
of non-operating extraordinary effects.
As a result of the transition to new tax rules, Storebrand has
recognised a deferred tax related to property investments
in 2018. In accordance with the old rules, the provisions
would have been released by the sale of the properties.
The transitional rules mean that the provisions are rec-
ognised as income earlier than expected. The tax income
does not change the Board’s long-term assessment of the
earning potential of Storebrand, and thus does not affect
the Board’s basis for the assessment of dividends.
Storebrand’s dividend policy from 2018:
Storebrand aims to pay a dividend of more than 50 per cent
of Group result after tax. The Board of Directors’ ambition is to
pay ordinary dividends per share of at least the same nominal
amount as the previous year. Ordinary dividends are subject
to a sustainable solvency margin of above 150 per cent. If the
solvency margin is above 180 per cent, the Board of Directors
intends to propose special dividends or share buy backs.
The Board proposes to the General Meeting an ordinary
dividend of NOK 1,402 million, corresponding to an ordi-
nary dividend of NOK 3.0 per share for 2018.
Return on equity 28)
Target: >10%
Dividend ratio 30)
Target: >50%
Solvency margin
(Storebrand Group)
Target: >150%
2018:
2018:
2018:
29)
8.2% /
13.7%
31)
68%
173%
28) After tax, adjusted for amortisation of intangible assets. This document contains alternative performance measures (APM) as defined by the European Securities and Market Authority (ESMA). There is
summary of the APMs used in financial reporting at storebrand.com/ir.
29) Results adjusted for the extraordinary tax effect discussed in Note 26.
30) The income statement is based on reported IFRS results for the individual companies.
31) Results adjusted for the extraordinary tax effect discussed in Note 26.
79
Outlook
Strategic direction
Storebrand follows a twofold strategy. First, Storebrand
aims to build a world class Savings Group supported by
Insurance. Storebrand is the market leader in pension
solutions to Norwegian businesses and a challenger in the
Swedish market, and uniquely positioned in the growing
retail savings market. Storebrand Asset Management has
a strong competitive position and clear growth ambitions.
Second, through cost control and disciplined use of capital,
Storebrand aims to increase return to shareholders. Store-
brand expects to start capital release as dividends and/or
share buy backs when the solvency margin is above 180 per
cent. The solvency margin is expected to grow 5 percentage
points annually after dividends from today’s level. The guar-
anteed business in long term run off is projected to release
NOK 10bn of capital in the next ten years until 2027.
Financial performance
The market for defined contribution pensions is growing,
and Storebrand’s reserves in Unit Linked increased by 7
per cent in 2018. Storebrand has a strong challenger role
in the sale of pension solutions to Swedish companies
through SPP. Good growth in defined contribution pensions
is expected in future. Measures are being implemented to
strengthen profitability in Unit Linked pensions.
The loyalty programme for the employees of companies
who have a pension scheme with Storebrand is an import-
ant future focus area. The sale of banking products and
property and casualty insurance results in increased loyalty
and profitability, contributing to the expected growth of the
Savings and Insurance segments. Competition in the market
has led to pressure on the margins in these segments,
which in turn requires cost reductions and adaptations to
the distribution and product solutions to achieve continued
profitable growth. In order to realise our ambitions for the
retail market, sales must increase going forward.
Asset management is an important business area in the
Savings segment. Asset management has underlying
growth in reserves from the occupational pension market
and good earnings improvement. The asset management
platform is competitive and scalable for continued growth.
The Guaranteed Pension segment is in long-term decline
and the combined reserves for the guaranteed business
are dwindling. However, there is still growth in the reserves
related to paid-up policies, as a result of companies opting
to convert their old defined benefit schemes to defined con-
tribution schemes. It is expected that the growth in paid-up
policies will decline in the future and that there will be flat
growth in reserves over several years before the reserves
start to fall. The paid-up policy portfolio contributes to a
limited extent to the Group’s profit at the current interest
rate level. Guaranteed reserves account for an increasingly
smaller portion of the Group’s total pension reserves and
were at 59.2 per cent at the end of the year.
Our goal is nominally flat costs from 2018 to 2020. This
yields a reduction in real costs. Storebrand will continue to
make selected investments in growth initiatives. Digitalisa-
tion, automation and our partnership with Cognizant are
expected to provide reduced costs for the Group over the
next few years.
Market performance
Norwegian interest rates increased marginally in 2018.
Swedish interest rates remained relatively unchanged com-
pared with the start of the year. Swedish interest rates are
influenced by a very expansive monetary policy.
The short-term interest rate remains low in the euro area,
influenced by the European Central Bank’s expansive mon-
etary policy. The first step in downscaling the central bank’s
programme to purchase fixed income securities has been
taken, and a gradual reduction is expected going forward.
This increases the likelihood of higher market interest rates.
Risk
Market risk is the Group’s greatest risk. In connection with
the Board’s ORSA process 31) , developments in interest rates,
credit spreads, and share and property values are considered
to be the greatest risks affecting the Group’s solvency. Store-
brand has adapted to low interest rates by building up buffer
capital. Over time, the level of the annual interest rate guar-
antee will be reduced. In the long term, sustained low interest
rates would represent a risk of products with high interest
rate guarantees incurring losses, and therefore it is import-
ant to be able to achieve a return that exceeds the interest
rate guarantee of the products. Storebrand has therefore
adjusted its assets by building a robust portfolio with bonds
at amortised cost to achieve the guaranteed interest rate. For
insurance risk, increased life expectancy and the disability
rate trends are the factors that have the greatest influence on
solvency. Operational risk is closely monitored and may also
have a significant effect on solvency.
Capital management and dividends
Storebrand has established a framework for capital man-
agement that links dividends to the solvency ratio and has
published a new dividend policy for 2018 onwards. The aim
is to have a solvency ratio of more than 150 per cent, includ-
ing the transitional rules. The solvency ratio at the end of the
31) ORSA: Own Solvency and Risk Assessment
80
STOREBRAND ANNUAL REPORT 2018 SECTION 7. DIRECTORS´ REPORT
fourth quarter was 173 per cent. Our solvency level shows
that the Group is robust in relation to the risks facing the
business. A gradual improvement is expected in the under-
lying solvency margin in the coming years. The expected
creation of value by the Group and reduced capital require-
ments from the guaranteed business are expected to
increase our solvency level in the coming years. Financial
market volatility and changes to regulatory requirements
may result in short-term movements in the solvency level.
The Board’s ambition is to pay consistently increasing div-
idends, combined with extraordinary dividends, to reflect
the financial market volatility and release of capital. The
expected release of capital will result in a higher distribu-
tion ratio over time.
A dividend of more than 50 per cent of the Group’s profit
after tax, as well as a higher nominal level than the ordinary
dividend for 2018, is expected for 2019.
81
Group financial results for 2018
The Storebrand Group’s annual financial statements have
been prepared in accordance with the International Finan-
cial Reporting Standards (IFRS). Pursuant to Norwegian
accounting legislation, the Board of Storebrand ASA con-
firms that the Company meets the conditions for preparing
its financial statements on the basis of a going concern
assumption.
Storebrand’s business activities are divided into the follow-
ing segments: Savings, Insurance, Guaranteed Pension and
Other.
• Group profit 32) NOK 3,158 million for 2018
•
•
•
Successful integration of SKAGEN and Silver
Solvency margin of 173 per cent
The Board proposes a dividend of NOK 3.0 per share
Group profit
NOK million
Fee and administration income
Insurance result
Operational cost
Operating profit
Financial items and risk result life
Profit before amortisation
Amortisation and write-downs of
intangible assets
Profit before tax
Tax
Profit after tax
2018
5.011
1.291
2017
4.771
1.146
-3.786
3.490
2.516
642
3.158
-360
2.799
898
3.698
2.427
513
2.940
-536
2.404
2
2.405
Storebrand achieved a group profit before amortisation
of NOK 3,158 million (2, 940 million) for 2018. Group profit
after tax was NOK 3,697 million (2,405 million). The figures
in brackets show the comparative figures for the same
period last year.
Fee and administration income increased by 3 per cent in
2018. 33) The underlying income performance is marked by
higher income from products without guaranteed interest
rates and a decline in income from products with guaran-
teed interest rates.
The insurance result had a combined ratio of 82 per cent (89
per cent). The dissolution of reserves had a positive impact
on the result.
Adjusted for the consolidation of SKAGEN, the Group’s oper-
ating costs were reduced by 1 per cent compared with the
previous year. Storebrand has reduced costs and delivered
on the goal to keep the nominal costs flat between 2015 and
2018. The goal is to have nominally flat costs from 2018 to
2020, which will entail a reduction in the real costs.
Overall, the operating profit for 2018 increased by 13 per
cent 34) , driven by income from savings and good insurance
results. The financial result is in line with expectations, given
the low interest rate level.
Amortisation of intangible assets amounted to NOK 360
million in 2018. Amortisation of NOK 136 million related to
the excess value associated with the acquisition of SKAGEN
increased the level of amortisation in 2017. Ordinary depre-
ciation of intangible assets is expected to be around NOK
100 million per quarter in 2019.
The Group reported taxable accounting income of NOK 898
million in 2018 (2 million).35) The effective tax rate is influ-
enced by the fact that the Group has operations in countries
with tax rates that are different from Norway, and it varies
from quarter to quarter depending on each legal entity’s
contribution to the group profit. The tax rate is estimated to
be between 20–23 per cent for 2019. For more information
on tax and uncertain tax positions, see Note 26.
Events after the balance sheet date
On 11 February 2019, Storebrand Asset Management
signed an agreement to buy 100 per cent of the shares in
the company Cubera Private Equity AS (Cubera). For more
information, see Note 46 in the annual financial statements.
32) Results before strengthening of longevity reserves, amortisation and taxes.
33) Adjusted for foreign exchange (NOK/SEK), but exclusive of income from SKAGEN for the comparative figures.
34) Adjusted for foreign exchange (NOK/SEK), but exclusive of income from SKAGEN for the comparative figures.
35) The change is described in more detail in the stock exchange notice of 15 January 2019 and in Note 26.
82
STOREBRAND ANNUAL REPORT 2018 SECTION 7. DIRECTORS´ REPORT
Group result by business area
NOK million
Savings - non-guaranteed
Insurance
Guaranteed pension
Other profit
2018
1.267
748
1.138
5
2017
1.511
608
766
55
Results Savings
The result was NOK 1,267 million in 2018. SKAGEN was
included with a result of NOK 259 million in 2017 and NOK
45 million in 2018. Adjusted for SKAGEN, the operating
result for Savings increased by 2 per cent from 2017 to
2018. The earnings improvement is driven by volume and
income growth.
Profit before amortisation
3.158
2.940
The Savings Segment reported growth in fee and admin-
istration income of 9 per cent from 2017 to 2018. The
result was NOK 1,267 million in 2018 (NOK 1,511 million in
2016). The reduction in the result is mainly due to low per-
formance-based income from SKAGEN. Growth in assets
under management in pensions and asset management, as
well as growth in bank lending contributed to the earnings
growth. The costs increase as a result of the acquisition,
development and marketing of new product lines.
Insurance reported flat premium income. The insurance
result was NOK 748 million for the year (NOK 608 million
in 2017), with a total combined ratio of 82 per cent (89 per
cent in 2017). The combined risk result gave a claims ratio
of 66 per cent (70 per cent in 2017). The financial result
reflects the low interest rate level and a conservative invest-
ment portfolio with an average rating of AA-.
Fee and administration income in the Guaranteed Pension
segment were marked by the fact that a large portion of the
portfolio is mature and in long-term decline. Administra-
tion income declined by 2.8 per cent. Operating costs have
diminished over time, also as a result of the area being
in long-term decline. The result amounted to NOK 1,138
million 2018 (NOK 766 mill in 2017). The higher result is
attributed to an improvement in operational performance,
increased risk result and a higher level of profit sharing.
The Other Segment consists primarily of financing and
investment of the Company’s funds. In addition, some
minor subsidiaries are reported here.
SAVINGS
The Savings Segment encompasses products for pension savings
without interest rate guarantees. The area includes defined con-
tribution pensions in Norway and Sweden, asset management
and banking products for retail customers.
NOK million
2018
2017
Fee and administration income
3,708
3,402
Operational cost
Operating profit
-2,394
-1,899
1,314
1,503
Financial items and risk result life
-46
8
Profit before amortisation
1,267
1,511
Total fee and administration income increased by 6 per cent
from 2017 to 2018, adjusted for income in SKAGEN, as well
as for a negative foreign exchange effect. Income growth is
driven by the customers’ conversion from defined-benefit to
defined-contribution pension schemes in combination with
the return, new sales and higher savings rates. In addition,
volume growth and transaction-based fees in asset manage-
ment contributed to growth. Higher margins for lending to
the retail market in the 4th quarter entailed that net interest
income as a percentage of the average total assets for 2018
was 1.20 per cent, compared with 1.22 per cent in the pre-
vious year. For the Norwegian Unit Linked products, strong
competition contributed to pressure on the margins. There
is also pressure on the margins for unit linked insurance
in Sweden. In Asset Management, an increasing relative
proportion of the customers’ AuM in low margin products
contributed to pressure on the average margins.
Adjusted for costs in SKAGEN, the nominal cost level
increased in accordance with the growth in volume related
to investments in new products, higher distribution costs
and other volume-related costs.
Defined contribution pensions continue to show strong
growth due to most companies now having chosen to
convert from defined benefit schemes to defined con-
tribution-based schemes. This increases the number of
members, ongoing 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. Volatile Financial markets
in 2018, especially in the 4th quarter, have contributed to
the reduction of customer assets in Sweden by 2 per cent,
compared with the previous year.
83
Return on standard defined contribution pension
portfolios in the ITP scheme
12
10
8
6
4
2
0
-2
-4
-6
-8
11.4%
7.4%
6.9%
7.3%
6.4%
4.9%
5.5%
2.9%
3.7%
2.3%
1.3%
-0.4%
-2.9%
-5.1%
-6.1%
Extra careful
Pension
Careful
Pension
Balanced
Pension
Agressive
Extra Agressive
Pension
Pension
2018
3 years
From inception*
12
10
8
6
4
2
0
-2
-4
-6
-8
*Careful, Balanced and Agressive Pension was esablished in March 2004 . Extra Careful and Extra Agressive Pension was
established in December 2011.
cent market share. Premium growth in the defined contribu-
tion-based occupational pensions in Norway was 7 per cent in
2018. Growth was driven by sales to new customers, conver-
sion from defined benefit pensions, higher savings rates and
growth from wage adjustments. There strong competition in
the market for defined contribution pensions is expected to
continue.
SPP had a market share of 13 per cent in the Swedish market
for other occupational pensions Unit Linked insurance. Pre-
mium income was 9 per cent higher than in 2017. The transfer
balance and new sales improved substantially with the previ-
ous year.
The asset management business had NOK 14 billion under
management in 2018, down from X in 2017. The decline was
attributed primarily to a weaker SEK and volatile financial mar-
kets. At the end of 2018, assets under management amounted
to NOK 707 billion, divided into securities funds, fund-in-funds
and individual portfolios for insurance companies, pension
funds, municipalities, institutional investors and investment
companies. For assets under management, see the graph
below.
Balance sheet and market performance
The premium income for savings without an interest rate guar-
antee amounted to NOK 16 billion in 2018, which was NOK
2 billion higher than in 2017. Total reserves in non-guaranteed
life insurance related savings grew by 7 per cent from 2017, to
NOK 179 billion.
In the Norwegian market, Storebrand retained its position as a
market leader in defined contribution schemes, with a 31 per
Key figures – Savings
NOK million
Unit Linked reserves
Unit Linked premiums
AuM Assets Management
Retail Market Lending
2018
2017
179,299
167,849
16,021
15,017
707,297 721,165
46,531
42,133
Pension savings NO
Institutional mandates
and distributors*
259 bn
245 bn
Pension savings SE
AuM
707bn
NOK
Direct retail savings NO
165 bn
39 bn
*) Pension customers encompass customers of Storebrand Life Insurance who save in pension products.
36) Health insurance is 50 per cent owned by Storebrand ASA and 50 per cent owned by Munich Health
84
STOREBRAND ANNUAL REPORT 2018
SECTION 7. DIRECTORS´ REPORT
INSURANCE
Insurance is responsible for the Group’s risk products in Norway
and Sweden. The unit provides health insurance in the Norwe-
gian and Swedish corporate and retail markets, property and
casualty insurance and personal risk products in the Norwegian
retail market, as well as employer’s liability insurance and pen-
sion-related insurance in the Norwegian and Swedish corporate
markets.
Results Insurance
NOK million
2018
2017
Insurance premiums for own account
3,854
3,872
Claims for own account
-2,562
-2,726
Operating costs
Financial result
Result before amortisation
-614
71
748
-711
173
608
The insurance result was NOK 748 million (608 million), with
a total combined ratio of 82 per cent (89 per cent in 2017).
Insurance premiums declined by 0.5 per cent in 2018. The
premiums declined in the retail market due to increased
competition and changes
in distribution. The Group
increased distribution capacity towards the end of the year.
It is expected that this will increase the premium volume.
The premium level was stable in the corporate market. The
claims ratio was lower, which was mainly explained by a sat-
isfactory risk performance for disability and property and
casualty products, as well as dissolution gains and the disso-
lution of reserves. The underlying profitability and efficiency
were good and showed satisfactory performance.
Key figures – Insurance
Key figures
Claims ratio
Cost ratio
Combined ratio
2018
66%
16%
82%
2017
70%
18%
89%
The combined risk result gave a claims ratio of 66 per cent (70
per cent in 2017) and the underlying risk performance was
very satisfying. Health insurance delivered good results due
to good claims performance, especially in the Swedish port-
folio. The result for employer’s liability insurance was good,
driven by good risk performance and dissolution of reserves.
Property and casualty insurance delivered a good underlying
result, which was been further strengthened by the dissolu-
tion of reserves. Group disability pensions also reported a
good result, which was driven by good disability performance
in Norway. In addition, the dissolution of reserves had a pos-
itive impact on the result. Personal insurance maintained
good profitability with marginal portfolio growth. The result
for the Swedish risk products was lower as a result of the
decline in premium income.
The cost percentage was 16 per cent (18 per cent in 2017).
Non-recurring effects related to the amendment of distri-
bution agreements previously entered into contributed to a
significant cost reduction. Ongoing efficiency improvements
are being made in the insurance area.
The investment portfolio of Insurance in Norway amounted
to NOK 8.1 billion, which was primarily invested in fixed
income securities with a short or medium duration. Financial
returns were lower due to the widening of credit spreads.
Balance sheet and market performance
The Insurance Segment offers a broad range of products
to the retail market in Norway, as well as to the corporate
market in both Norway and Sweden. The profitability of the
retail and corporate markets is considered to be satisfac-
tory in general. To maintain profitability, Insurance must
strive for competitive prices, simple and relevant products,
and good coverage. The total premiums written for the seg-
ment at the end of 2018 amounted to NOK 4.5 billion, of
which NOK 1.7 billion from the retail market and NOK 2.8
billion from the corporate market.
Storebrand has an established position in personal insur-
ance and a challenger position in property and casualty
insurance in the retail market. Storebrand’s growth in the
retail market has stagnated as a result of greater competi-
tion and a shift in the distribution strategy. Cooperation has
been established with external distributors, and combined
with separate channels, this should contribute to profitable
growth. The Akademiker portfolio is an important driver of
growth, and the rate of sales is stable. The growth in per-
sonal insurance is stable and in line with overall market
growth.
The corporate market is a more mature market with lower
margins and a strong focus on price. Profitability in group
disability pensions has grown stronger in recent years.
However, there is fierce competition, which puts pressure
on the margins. Health insurance is a growing market. In
terms of premiums written, Storebrand is one of the market
leaders in health insurance, where the profitability is also
good. Storebrand is a relatively small player in the market
for employer’s liability insurance, but the profitability is sat-
isfactory. In Sweden, the disability trend has been declining
for a long time, which has resulted in reduced premiums in
general.
85
The profit-sharing result was NOK 333 million in 2018,
compared with NOK 104 million for the previous year.
The result has essentially been generated by the Swedish
business. In 2018, profit sharing increased due to the disso-
lution of reserves in deferred capital contributions (DCC) of
NOK 200 million, which was a result of improved risk
management after transitioning to a new core IT system.
Reserve strengthening of approximately NOK 200 million
by SPP was charged to the result in 2017 as a consequence
of changes in the discount rate for the market valuation of
liabilities. The changes were due to a transition to a new
long-term interest rate (Ultimate Forward rate) in the sol-
vency calculations, which was also used as a basis for the
reserve calculations in SPP’s accounts.
Balance sheet and market performance
Customer reserves for Guaranteed Pension amounted to
NOK 261 billion at the end of 2018, which was 3.8 billion
lower than at the start of the year.
The products are in long-term decline, but the Norwe-
gian paid-up policy portfolio grew due to conversion from
defined benefit to defined contribution pensions. The
paid-up policies amounted to NOK 133 billion at the end of
2018, compared with NOK 128 billion for the previous year.
From 2014, the customers were given an offer to convert
from traditional paid-up policies to paid-up policies with
investment options, a product that is included in the Sav-
ings Segment.
The premium income for Guaranteed Pension (exclud-
ing transfers) was NOK 5.3 billion in 2018, on par with the
previous year. The majority of the products are closed for
new sales and the customers’ choices for transferring from
guaranteed to non-guaranteed products are in line with the
Group’s strategy.
Premium income (excluding transfers)
(NOK mill.)
Defined benefit (fee based)
Paid-up policies, Norway
Individual life and pension, Norway
Guaranteed products, Sweden
Sum
2018
3,066
120
232
1,846
5,265
2017
3,202
132
249
1,662
5,246
GUARANTEED PENSION
The Guaranteed Pension business area encompasses long-term
pension savings products that give customers a guaranteed
rate of return. The business area covers defined benefit pen-
sions in Norway and Sweden, paid-up policies and individual
capital and pension insurance.
Results
NOK million
2018
2017
Fee and administration income
1,441
1,483
Operating costs
Operating results
Risk result life & pensions
-828
-889
614
595
191
67
Financial results and risk result life
333
104
Result before amortisation
1 138
766
The result for Guaranteed Pension before amortisation
amounted to NOK 1,138 million in 2018, an increase of
NOK 372 million compared with 2017. The higher result was
attributed to an improvement in operational performance,
increased risk result and a higher level of profit sharing
from the Swedish business.
New subscriptions for guaranteed pensions have been
closed for most products, however, premium payments and
the accumulation of returns for existing customers means
that it will take some time before a nominal reduction in the
reserves is seen. Fee and administration income performed
throughout 2018 consistent with the fact that a large part
of the portfolio is mature and in long-term decline. Income
was NOK 1,441 million in 2018, compared with 1,483 million
for the previous year. In 2018, income declined by 2.8 per
cent compared with the previous year. Approximately half
of the reduction in revenue was driven by foreign exchange
fluctuations.
Operating costs were NOK 828 million in 2018, which was
NOK 61 million lower than in 2017. Operating costs have
diminished over time, as a result of the area being in long-
term decline.
The risk result was NOK 191 million in 2018, compared
with NOK 67 million for the previous year. There are strong
risk results in the Norwegian paid-up policy portfolio, with
good results for disability and reactivation in particular, but
also satisfying results for death and pure endowment. The
paid-up result was boosted by the dissolution of NOK 149
million in longevity reserves. In the Swedish business, the
risk result was negative, as a result of reserve strengthening
of NOK 216 million. SPP’s underlying risk result was stable.
86
STOREBRAND ANNUAL REPORT 2018
SECTION 7. DIRECTORS´ REPORT
Key figures – Guaranteed Pension
Eliminations
(NOK mill.)
2018
2017
NOK million
2018
2017
Guaranteed reserves
260,573
264,320
Fee and administration income
-239
-190
Guaranteed reserves as a % of total
59.2%
61.2%
Operating costs
reserves
Financial result
239
190
-35
0
Transfer of guaranteed reserves
165
-959
Result before amortisation
-35
0
Buffer capital as a % of customer assets
7.2%
7.2%
SBL
Buffer capital as a % of customer assets
9.0%
9.0%
SPP
OTHER RESULTS
The result for Storebrand ASA is reported under Other, as well
as the result of the company portfolios and small subsidiaries of
Storebrand Life Insurance and SPP.
Results for Other
(NOK mill.)
2018
2017
Fee and administration income
102
83
Operating costs
Operating profit
-190
-188
-89
-105
Financial results and risk results life
128
161
Result before amortisation
40
55
The result before amortisation for the Other Segment was
NOK 5 million in 2018, compared with NOK 55 million in
2017. The operating costs for 2018 were impacted by costs
related to the sale of business. In 2017, the result was
impacted by transaction costs associated with the acquisi-
tion of SKAGEN and Silver.
The Storebrand Life Insurance Group is funded by a com-
bination of equity and subordinated loans. Assuming the
current interest rate at the end of 2018, interest expenses
are expected to be approximately NOK 80 million quarterly.
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 in line with expectations, given the low interest rate level
throughout the year.
87
Capital situation, rating and risk
Capital situation
Storebrand adapts the level of equity and debt in the Group
continuously and systematically. The level is adjusted for
financial risk and capital requirements. The growth and
composition of business segments will be important driv-
ing forces behind the need for capital. Capital management
is designed to ensure an efficient capital structure and
maintain an appropriate balance between internal targets
and regulatory requirements. Capital should be as high as
possible in the structure to ensure flexibility.
The Group’s target is to have a solvency margin ratio in
accordance with Solvency II of at least 150 per cent, includ-
ing use of the transitional rules. The solvency margin for
the Storebrand Group was estimated at 173 per cent at
the end of 2018, including transitional rules. Without the
transitional rules, the solvency margin was 172 per cent.
Storebrand uses the standard model for the calculation of
Solvency II.
Good risk management and a positive impact of the regu-
latory adjustment mechanisms in the solvency regulations
more than compensate for demanding financial markets.
Together with a strong group profit after tax, this con-
tributed to the solvency margin without transitional rules
being strengthened by 17 percentage points in 2018. The
value of the transitional rules was considerably reduced
throughout the year, mainly due to higher discount rates.
Storebrand Livsforsikring AS aims for an A- rating. Store-
brand ASA aims to have liquid assets on par with the
Company’s interest-bearing debt and to fund portions of
the liquidity reserve by equity over time.
Storebrand ASA has only one class of share. All shares have
equal rights and the shares are freely negotiable. The Com-
pany is not aware of the existence of agreements between
shareholders that limit rights to sell shares or to exercise
related voting rights.
The Storebrand Livsforsikring Group’s solidity capital con-
sists of equity, subordinated loan capital, market value
adjustment reserves, additional statutory reserves, condi-
tional bonuses and risk equalisation reserves. The solidity
capital was reduced by NOK 5 billion in 2018. The market
value adjustment reserve was reduced by NOK 1.5 billion
due to the realisation of securities and falling markets. This
amounted to NOK 2.2 billion by the end of the year. Condi-
tional bonuses declined by NOK 0.9 billion and amounted
to NOK 8.2 billion. The booked return contributed to
88
increasing the additional statutory reserves. The additional
statutory reserves amounted to NOK 8.5 billion at the end
of the year, an increase of NOK 0.2 billion. The excess value
of bonds and loans that are assessed at amortised cost
decreased due to increased interest rates by NOK 3.5 billion
and amounted to NOK 5 billion as at 31 December 2018.
The excess value of bonds and loans at amortised cost is
not included in the financial statements.
The Storebrand Bank Group had pure core capital adequacy
of 16.6 per cent and capital adequacy of 18.9 per cent at
the end of 2018. The Bank Group has adapted to the new
capital requirements. The company has satisfactory capi-
tal adequacy and liquidity based on its business activities.
The lending portfolio consists primarily of low-risk home
mortgages.
Storebrand ASA (holding) held liquid assets of NOK 1.9 bil-
lion at the end of the year. Liquid assets consist primarily
of short-term fixed income securities with a good credit
rating. Storebrand ASA’s (holding) total interest-bearing
liabilities were NOK 1.8 billion at the end of the year. This
corresponds to a net debt-equity ratio of minus 0.2 per
cent. The next maturity date for bond debt for Storebrand
ASA is in September 2019. In addition to the liquidity port-
folio, the Company has an unused credit facility of EUR 200
million, which expires in December 2023, with the option
of an extension for another two years. Storebrand ASA
recognised dividends and group contributions from subsid-
iaries of NOK 4,131 million for 2018. Dividends allocated to
shareholders amounted to NOK 1,402 million
Rating
There are four companies in the Storebrand Group that issue
debt securities. Storebrand Livsforsikring AS issues subordi-
nated loans, Storebrand ASA issues senior debt, Storebrand
Bank ASA issues senior debt and subordinated loans, while
Storebrand Boligkreditt AS issues covered bonds. All four com-
panies are rated by the credit rating agency Standard & Poor’s.
In July 2018, Storebrand Livsforsikring AS and Storebrand Bank
ASA were upgraded to A-, with a stable outlook.
Risk
Storebrand’s risk management framework is designed
to help protect customers, owners, employees and other
stakeholders from adverse events or losses and covers all
risks to which Storebrand is, or may be, exposed. Store-
brand has defined a risk universe where the main risks are
business risk, financial market risk, insurance risk, counter-
STOREBRAND ANNUAL REPORT 2018 SECTION 7. DIRECTORS´ REPORT
party risk, operational risk, sustainability risk and liquidity
risk.
The Board of Directors of Storebrand ASA and the Boards
of subsidiaries discuss and adopt a risk appetite and risk
strategy at least annually. The risk appetite is the overall
risk level and what types of risk are acceptable to the Com-
pany to achieve its financial and operational goals. Our risk
strategy concretises the guidelines from the risk appetite
to the targets and frameworks for risk-taking, both overall
and for the various types of risk. Our risk appetite and risk
strategy provide guidelines and set limits for more detailed
strategies related, inter alia, to financial market risk (invest-
ment strategy), insurance risk, credit risk and liquidity risk.
Risk-taking should contribute to Storebrand achieving
its strategic and commercial goals, including customers
receiving a competitive return on their pension assets and
Storebrand receiving adequate payment for assuming risk
in relation to defined rates of return.
Out of consideration for customer protection and system
stability, the authorities have stipulated requirements
through the Solvency II Regulations that the solvency
margin shall be at least 100 per cent in a normal situation.
This should cover losses that are expected to occur every
200 years. The Board of Directors of Storebrand ASA has
limited risk-taking beyond this in its risk appetite. There
should be a low risk that the solvency margin falls below
the regulatory requirement of 100 per cent, especially due
to fluctuations in the financial market. The solvency margin
target has therefore been set at 150 per cent in a normal
situation. Risk-taking shall also contribute to reaching the
Group’s profitability target and growth target for Savings
and Pensions. In the Guaranteed Pension area, risk-taking
should contribute to the release of capital as the reserves
are reduced over time. Overall, this should support the
Group’s dividend policy.
Storebrand is dependent on large amounts of customer
data for managing its business activities and creating value.
The management of information shall entail that there is
a low risk of customer data or other sensitive information
being abused or misplaced.
The Group’s climate risk work is described in the Financial
Capital and Our Investment Universe section of our annual
report under “a driving force for sustainable investments”.
Savings
Savings consists of unit linked insurance, the asset manage-
ment business and the banking business.
For unit linked insurance, the customer bears the financial
market risk. The disbursements are generally time limited,
and therefore Storebrand bears low risk from increased life
expectancy.
For Storebrand, the risk for unit linked insurance is primarily
related to future income and cost changes. There is there-
fore an indirect market risk, because negative investment
returns will reduce future income, without a corresponding
reduction in costs. Incomes are also reduced if the customer
chooses to leave. Market risk, particularly equity price risk
and exit risk are therefore the greatest risks to unit linked
insurance. There is also a risk that costs may increase.
The asset management business offers active and passive
management and the management of fund-in-fund struc-
tures for the customers’ account and risk. Operational risks,
including regulatory compliance, are the greatest risks.
The greatest risks for the banking business are credit
risk and liquidity risk. Virtually the entire loan portfolio is
secured by mortgage on real property.
Insurance
Insurance consists of risk products and property and casu-
alty insurance. The price can normally be changed on an
annual basis if there are any changes in the risk situation.
The greatest risk is the disability risk. Storebrand has
risk connected to there being more disability cases than
expected and/or that fewer disabled persons will be able
to work again. Storebrand also offers cover that provides a
payout for death, but Storebrand’s risk from this is limited.
In property and casualty insurance, most of the risk is linked
to developments in claims payments from car and home
insurance.
Guaranteed Pension
Guaranteed Pension encompasses savings and pension
products with guaranteed interest rates in Norway and
Sweden. The greatest risks are financial market risk and life
expectancy risk.
A common feature of the products is that Storebrand guar-
antees a minimum return. In Norway, the return must
exceed the guarantee in each year, while in Sweden it is
sufficient to achieve the guaranteed return as an average.
In Sweden, new premiums generally have a guarantee of
1.25 per cent for 85 per cent of the premium, while existing
reserves have a guaranteed annual return of up to 5.2 per.
In Norway, new premiums are written with a guaranteed
return of 2.0 per cent, and the upward adjustment of ben-
efits resulting from a surplus in excess of the interest rate
guarantee will be carried out with a 0.5 per cent guarantee.
The existing portfolio primarily has guarantee levels ranging
from 3 to 4 per cent. Over time, new premiums and possible
upward adjustment will contribute to the average guaran-
tee level falling.
To achieve adequate returns from the customer portfolios,
it is necessary to take investment risks (market risks). This
89
is primarily done by investing in equities, property and cor-
porate bonds.
Interest rate risk is in a special position because changes in
interest rates also affect the value of the insurance liability
in the solvency balance sheet. Since pension disbursements
may be many years in the future, the insurance liabilities are
particularly sensitive to changes in interest rates, and they
should ideally be balanced with the interest rate sensitivity
of the assets. It is not possible to eliminate the interest rate
risk in Norway, but accounting at amortised cost reduces
the solvency risk without increasing the risk from the annual
guarantee. In Sweden, there is good correlation between
the interest rate sensitivity of assets and liabilities.
The booked return for guaranteed customer portfolios in
Norway has on average been slightly higher than the guar-
antee in 2018. The return has been helped by a large share
of bonds held at amortised cost that benefit greatly from
securities purchased at interest rates higher than the cur-
rent level. Property also provided a good return. Shares
gave a negative return, and this has reduced the unrealised
gains. In Sweden, the return for guaranteed portfolios has
also been positive in 2018.
In Norway, interest rates rose slightly in 2018, especially at
the short end. Higher interest rates reduce Storebrand’s risk
because it increases the likelihood of a return higher than
the guarantee. A higher credit spread has also improved the
possibility of covering the interest guarantee by investing in
bonds. In Sweden, short-term interest rates also rose, but
the three-month money market rate remains negative. The
long-term interest rates fell somewhat in Sweden.
Changes in occupational pension schemes in Norway will
reduce the risk of low interest rates over time, since defined
benefit-based schemes are replaced by defined contri-
bution pensions or hybrid schemes without a guaranteed
return over zero per cent. The change has the greatest
effect on new premiums, while existing reserves will con-
tinue as paid-up policies.
The bulk of guaranteed pension agreements have lifelong
disbursements. These give higher disbursements if life span
increases more than expected. The risk is reduced by the
use of dynamic tariffs that include an increased longevity
trend.
Other
ther encompasses Storebrand ASA, as well as the com-
pany portfolios and smaller subsidiaries of Storebrand Life
Insurance and SPP. In addition, this business is included in
BenCo.
The assets in Storebrand ASA and the company portfolios are
invested at low risk, primarily in short-term interest-bearing
securities with a high credit rating.
90
STOREBRAND ANNUAL REPORT 2018 SECTION 7. DIRECTORS´ REPORT
Regulatory changes
The regulations that are adopted by the authorities are of
great importance to Storebrand. The Ministry of Finance
has introduced a legislative proposal to the Norwegian
parliament (Stortinget) for Separate Pension Accounts. The
parties in the private sector are considering changes in the
AFP early retirement scheme. The Ministry of Finance and
Financial Supervisory Authority of Norway are working on
amendments to the regulations for the management of
guaranteed pension products.
European regulations
Solvency II
The European Commission distributed changes to the stan-
dard model in Solvency II for comments. The consultation
round has been based on advice from EIOPA and encom-
passed questions concerning, inter alia, the loss-absorbing
capacity of deferred tax and the risk margin. EIOPA’s pro-
posal to change the interest risk module was not pursued
further by the Commission. EIOPA’s proposal had a device
that would have had a particularly conservative impact for
NOK and SEK. These consequences were not considered in
the proposal, but they were pointed out during the consulta-
tion period. Although the proposal is not being followed up
now, it is expected that changes to the interest risk module
will be considered in the planned 2020 revision of the Sol-
vency II Regulations.
Sustainable finance
The European Commission is working on a regulations for
sustainable finance. The regulations follows the action plan
for the financing of sustainable growth and is designed to
contribute to more investment in sustainable businesses, at
the same time as the financial system is robust with respect
to climate-related risk.
Regulations will be introduced in three main areas:
1) A uniform classification system (“taxonomy”) for what can
be regarded as sustainable economic activity.
2) Requirements for reporting (“disclosure”) on sustainable
investments and sustainability risk.
3) Reference values for carbon emissions (“carbon bench
marks”).
The classification system for climate shall be ready by
December 2019. Criteria for assessing businesses against
other environmental targets will be introduced in 2020 and
2021. The classification system shall be developed over time
and updated to take into account political or technological
developments.
The classification system does not constitute a product
standard or labelling scheme in itself, but the Commission
will consider whether a labelling scheme based on this
should be developed.
There are also ongoing processes to assess how sustain-
ability can be taken into account in Solvency II and IDD
(Insurance Distribution Directive).
EU regulations will establish standards for sustainable
management and stipulate requirements for reporting and
information to customers about this. Storebrand considers
this to be positive and is following the EU process closely.
Norwegian regulations
Individual Pension Accounts
The Ministry of Finance’s legislative proposal for Individual
Pension Accounts was put forward in December 2018, and
it is expected that it will be considered by the Norwegian
parliament in the spring of 2019. It is not yet clear when the
Individual Pension Accounts will be introduced. The Minis-
try will request comments on the scheme’s entry into force
when the regulations are distributed for consultation later
this year.
The proposal entails that pension capital certificates from
previous employment will be transferred to a single pen-
sion account with the current employer’s pension provider.
This transfer will occur automatically, unless the employee
actively opts out (passive consent).
The costs for administration of the pension scheme shall
be paid by the employer. The management costs for con-
tributions during the current employment (active part)
shall be covered by the employer, while the management
costs for any previously contributed funds (pension capital
certificates that are transferred in) shall be covered by the
employee. Other cost sharing schemes may be agreed on
locally at the individual company.
Employees will not be allowed to choose a management
solution for previous contributions other than the solution
that has been chosen for the current contributions. If the
employee wants to have a different management profile
for the previous contributions, this must be managed in a
separate agreement.
The Ministry proposes that employees should be able
to transfer both past and current contributions to a self-
91
selected provider. Employees may also elect to retain their
pension capital certificates, so that they are managed sep-
arately from the pension capital earned from the current
employer.
Employees who transfer to a self-selected provider must
cover the administration and management fees, but they
will receive compensation from their employer for this.
When pension accounts are introduced, employees will
be given a deadline of 3 months to opt out of pension
capital certificates being transferred to a separate pen-
sion account. The providers will then have a deadline of 1
month to transfer the funds.
It has been proposed that the 12-month rule be repealed.
Employees will thus be able to take their accrued pen-
sion capital with them when they resign, regardless of the
length of their employment.
Individual Pension Accounts are an important reform for
the Norwegian Confederation of Trade Unions (LO) and the
Confederation of Norwegian Enterprise (NHO). The legis-
lative proposal that has now been put forward follows up
previous studies by the parties and a consensus from the
annual wage settlement.
For employees, it is positive to be able to combine all pen-
sion contributions from different employers in one place.
Most people will likely benefit from following the main
track and not opt out of funds being transferred into a pen-
sion account in the employer’s scheme.
A key aim of the reform is to reduce the costs associated
with the administration and management of pension con-
tributions from previous employers. This will in turn entail
lower income for the providers.
When the Individual Pension Account scheme is intro-
duced, previous pension contributions will be transferred
from a retail market for pension capital certificates to a
corporate market for active defined contribution schemes.
Storebrand is well-positioned in this market.
The introduction of the Individual Pension Account scheme
is based on passive consent. This is a new principle in the
pension area. Along with the individual transfer of current
contributions, this gives rise to the need for new solutions
for distributing information to customers, handling opt-
outs, and exchanging information and payments between
the companies. For Storebrand, it is important to seek solu-
tions that ensure a good implementation of the reform,
while at the same time limiting extra administrative costs
as much as possible.
92
Public service pensions
New public occupational pensions will be introduced from
2020. The Government and the parties reached agreement
in March 2018 on a new markup model for retirement pen-
sions. This is an all-years accrual, holding-based model that
is well adapted to the pension reform and the new National
Insurance Scheme. Pension accrual for public employees
who are born in 1963 or later will change in the markup
model as of 2020. For these employees, the AFP scheme
will change from an early retirement scheme to a lifelong
supplementary pension based on the private sector model.
Members born in 1962 or earlier, will retain the accrual
based on the current model even after 2020 and retain the
current AFP early retirement scheme.
Storebrand currently provides administration and asset
management services for municipal pension funds. Store-
brand is considering whether the introduction of a new
public occupational pension can also facilitate the compa-
ny’s re-entry into the insured municipal pension market. If
so, Storebrand wants to provide a comprehensive solution,
which encompasses both the new markup scheme and the
existing gross scheme.
Storebrand offered insured municipal occupational pen-
sions until 2012. One of the main reasons that the company
pulled out of the market then was the fact that the market
did not work. Pension procurements were only put out
to tender in exceptional cases. The general rule was that
existing agreements with KLP continued without any
competition.
Legal considerations suggest that the introduction of a
new scheme entails, both in itself and in conjunction with
previous changes in 2011, a significant change in the munic-
ipalities’ existing contracts, which triggers an obligation to
invite public tenders in accordance with the Procurement
Regulations. Storebrand is considering business opportuni-
ties linked to the changes in public pensions. Confidence in
changed market dynamics will be an important prerequisite
for a new investment in the market for insured municipal
occupational pension.
Contractual pensions (AFP)
The Confederation of Trade Unions (LO) and Confederation
of Norwegian Enterprise (NHO) are studying changes to the
AFP early retirement scheme. The report was scheduled
to be ready before Christmas 2018 and form the basis for
negotiations on changes to the scheme during the annual
wage settlement in spring 2019. It is now clear that the
process will be delayed by a year. The report will thus be
completed in 2019, as a basis for the negotiations during
the annual wage settlement in the spring of 2020.
STOREBRAND ANNUAL REPORT 2018 SECTION 7. DIRECTORS´ REPORT
LO wants a scheme that will be more predictable for the
employees, while one must also qualify for the scheme, i.e.
the rights will be linked to employment in an enterprise
bound by a collective wage agreement. NHO is concerned
about the increasing undercoverage in the current scheme
and wants a scheme that will result in predictable costs for
the companies.
Today, companies only take AFP into account to a limited
extent when determining the level of their occupational
pension schemes. If AFP becomes more predictable for the
employees, this may change.
The financial services industry has noted that a transition
to defined contribution-based AFP could solve many of
the challenges associated with the scheme: There will be
greater predictability for employees, while the company
will also have predictable costs and not run the risk of not
recognising the liabilities. Time-limited benefits can provide
a better distribution profile. A transition from “pay as you
go” with partial funding to a fully funded scheme will be
demanding. At the same time, liabilities are currently being
“kicked down the road” and, according to NHO, the scheme
will not be sustainable in the long-term.
Regulations for guaranteed products
An interdepartmental working group with participants from
the Ministry of Finance, Ministry of Labour and Social Affairs
and the Financial Supervisory Authority of Norway have
studied possible changes to the regulations for guaranteed
products, including paid-up policies. The working group
report was published in the autumn of 2018.
The working group assessed various initiatives:
• The opportunity for companies to build up additional
statutory provisions separately for individual contracts.
• Merging the additional statutory reserves and the market
value adjustment reserve into a new customer-dis-
tributed buffer reserve that could also cover negative
returns.
• The opportunity for the company to fulfil annual interest
rate guarantees with borrowed equity.
• The opportunity for customers to choose faster disburse-
ments for small paid-up policies.
• The opportunity for the companies to compensate
customers when transitioning to paid-up policies with
investment options.
In collaboration with the working group, Storebrand has
simulated the effect of the rule changes in question. A
memorandum summing up this work has been attached to
the study report.
Storebrand’s analysis shows that life insurance companies
will benefit from increasing their share of equities in the
management of paid-up policies for each of the proposals
that are implemented. If all of the initiatives considered are
implemented, the share of equities and the expected pen-
sions could be significantly increased.
Storebrand’s simulations showed that a “Swedish solution”,
in which the annual interest guarantee can be covered by
borrowed equity would facilitate a significant increase in
the share of equities. The working group would not recom-
mend such a change, however.
The Ministry of Finance has asked the Financial Supervi-
sory Authority of Norway to prepare proposals for specific
statutory and regulatory changes based on all initiatives
considered in the working group’s report, not just those
recommended by the working group. The Supervisory
Authority has also been requested to give its assessment
of the proposals. The assessments should be ready by June
2019, and they will be circulated for consultation before the
Ministry decides which proposals will be put forward to the
parliament.
The Ministry has also requested that the Supervisory
Authority prepare a proposal to eliminate the right to retain
the market value adjustment reserve for up to 2 per cent
of the premium reserve in connection with transfers. This
change should become effective from 2020, and it would be
positive with a view to the future transfer market for munic-
ipal service pensions.
New tax rules for life insurance companies
The Norwegian parliament has adopted new tax rules for
life insurance companies. The aim of the new rules is to
establish a clear tax distinction between customer funds
and company funds. The changes will be effective as of the
2018 tax year.
Under the new rules, life insurance companies will be taxed
on the returns from company funds and the profit from
insurance business. Tax losses that provide a basis for tax
loss carryforwards will not arise from the customer funds.
Existing tax loss carryforwards will continue.
Swedish regulations
EU Occupational Pensions Directive
The EU Occupational Pensions Directive (IORP II), which is
a minimum directive will be implemented in Swedish law.
The government aims to prepare new business regulations
93
for the occupational pension companies based on IORP
II, but with reinforced capital requirements. A legislative
proposal is to be put forward in the spring of 2019 and leg-
islative amendments will not take effect until the end of the
first half of 2019. SPP is encompassed by Solvency II in its
entirety, but it follows the development of the regulations
for occupational pension companies and the stipulation of
capital requirements for these companies.
Sustainability in the Storebrand Group
Storebrand has worked systematically with sustainability for
over 20 years. Sustainability is a cornerstone of Storebrand’s
investment strategy. The Group has published environmental
reports since 1995 and sustainability reports since 1999. Sus-
tainability reporting has been an integral part of the annual
report and certified by an independent party since 2008.
Storebrand reports in accordance with the GRI standard.
In 2018, the Board adopted new principles for sustainabil-
ity that apply to all business activities, including investments,
product development, procurement, organisational develop-
ment and internal operations. The principles summarise how
work is an integral part of the Group’s overall objectives and
management processes. Read more about the principles in
the Directors’ Report under the heading Strategic highlights.
In 2017, Storebrand conducted a materiality analysis to iden-
tify the Group’s focus areas for long-term value creation. This
analysis was refined in 2018. Efforts to implement initiatives
in the focus areas to create financial results and positive
ripple effects for society are measured, followed up and
reported externally and internally. 37)
94
STOREBRAND ANNUAL REPORT 2018
SECTION 7. DIRECTORS´ REPORT
Organisation, working environment
and expertise
Learning and development
A high level of skill is one of Storebrand’s most important
factors for success, and it forms the foundation for renewed
growth. At Storebrand, expertise is synonymous with the
ability of each individual employee to perform and manage
certain tasks and situations. This ability is based on knowl-
edge and experience, skills, motivation and personality.
All employees should have an opportunity to develop in line
with the Company’s needs. In 2018, the Company focused
on strengthening its ability to learn and work more across
its organisational units and disciplines.
Digitalisation has enabled the development of products
and services at a rate that the finance sector has never pre-
viously seen. For an organisation that is to both represent
the long-term commitments Storebrand has to its custom-
ers and at the same time be in the driver’s seat for digital
improvements and innovation, fast and continuous learn-
ing is essential.
To communicate, involve and create a common under-
standing of our purpose, strategy and culture, we make use
of learning technologies to give our employees options for
flexible and easy access to learning, anywhere and anytime.
The Company’s performance in learning and development
is discussed in Section 4 of the annual report, People and
systems.
In 2018, we replaced an annual survey of employee satisfac-
tion with more frequent employee engagement surveys. On
average, 87 per cent of Storebrand employees responded
to an employee survey or pulse measurement at least
once during the last three months of 2018. The pulse mea-
surements from the last half of 2018 showed progress for
issues such as the extent to which employees experience
freedom of opinion, a high degree of self-determination or
autonomy in their daily work, support from management,
and learning and development.38)
Absence due to illness
Storebrand’s absence due to illness has been at a stable
low level for many years. The Group’s absence due to illness
in 2018 was 3.0 per cent. Absence due to illness was 2.7 per
cent in Norway and 3.3 per cent in the Swedish business.
Storebrand has been an “inclusive workplace” (IA) company
since 2002, and the Group’s managers have over the years
built up routines for the follow-up of employees who are ill.
All managers with Norwegian employees must complete a
mandatory HSE course, in which following up illness is part
of the training.
No injuries to people, property damage, or accidents were
reported in the Storebrand Group in 2018.
Diversity
Storebrand’s organisation must reflect our customers
and the market in which the Group operates. Diversity
contributes to increased innovation and learning in the
organisation. In addition, our sustainability analyses show
that companies that focus on diversity are more innovative
and profitable.
All Storebrand employees are treated equally, regardless of
their age, gender, disability, cultural background or sexual
orientation. Individual qualities should be respected and
valued, and we encourage age diversity among our employ-
ees. Age shall not be a decisive criterion, neither during
recruitment processes nor later on in the employment
relationship.
We make an active effort to ensure that all employees are
satisfied regardless of their cultural background. No dis-
crimination is accepted, neither in recruitment processes
nor later on in the employment relationship. There shall be
a good balance between women and men at all levels of the
Company.
We want to have an inclusive recruitment process that is
as transparent as possible and encourages diversity among
the candidates applying.
We have a zero-tolerance policy against harassment and
discrimination, and we strive for equal treatment and equal
opportunities in all our internal and external recruitment
and development processes.
We are actively working to maintain a gender balance
among key employees. Storebrand has for several years
worked systematically to identify future managerial candi-
dates and promote an even gender distribution. There has
been a focused effort on management development in the
37) More information on how Storebrand works with the long-term creation of value, the materiality analysis and the Board’s sustainability reporting can
be found in Section 1 of the annual report: About Storebrand, under the heading “A sustainable strategy”.
38) Read more about the results in Section 4 of the annual report, People and systems, under the heading Committed and courageous employees.
95
areas of strategic and operational management, communi-
cation and change.
Corporate governance
Storebrand’s executive management and Board of Direc-
tors review Storebrand’s corporate governance policies
annually. Storebrand established principles for corporate
governance in 1998. Storebrand reports on the policies
and practice for corporate governance in accordance with
Section 3-3b of the Norwegian Accounting Act and the Nor-
wegian Code of Practice for Corporate Governance of 17
October 2018. For further information on Storebrand’s cor-
porate governance, reference is made to a separate article
on corporate governance in the annual report. The Board
carried out an evaluation in 2018, in which the executive
management participated. In 2018, a total of 11 board
meetings were held. The work of the Board is regulated
by special rules of procedure for the Board. The Board has
established three advisory committees: the Compensation
Committee, Audit Committee and Risk Committee.
In 2018, the following changes were made to the composi-
tion of Storebrand’s corporate bodies:
Board of Directors of Storebrand ASA: Directors Håkon R.
Fure and Gyrid Skalleberg Ingerø left the Board, and Liv
Sandbæk was elected as a new director.
Nomination Committee: Members Odd Ivar Biller, Olaug
Svarva and Tor Olav Trøim left the Committee. Leif Askvig,
Nils Halvard Bastiansen and Margareth Øvrum were elect-
ed as new members.
The Board wishes to thank the retiring members of the
Board of Directors and Nomination Committee for their
valuable contributions to the Group.
The company seeks to ensure equal treatment and oppor-
tunities for all internal and external recruitment and
development processes.
Storebrand’s headquarters outside Oslo has been adapted
to meet individual needs. It is a universally designed build-
ing, which was re-certified as an Eco-Lighthouse in 2018.
The Group’s performance in diversity is discussed in Sec-
tion 4 of the annual report under the heading People and
systems.
Ethics and trust
Storebrand works systemically to live up to high ethical
standards. The Company sets strict requirements concern-
ing high ethical standards for the Group’s employees. The
Group’s common code of ethics is available on our intranet in
three languages and is reviewed by the Board of Storebrand
ASA once a year. Whistleblowing routines, brochures, an
anonymous mail box, dilemma bank, question and answer
summaries and presentations are all available to employ-
ees on the intranet, so that awareness of and reflection on
the subjects can be high on everyone’s agenda. Every year
all the managers must confirm in writing that they have dis-
cussed ethics and ethical dilemmas, information security,
financial crime and HSE in departmental meetings.
All employees shall complete the Company’s e-learning
course in ethics. In 2019, ethics training will be offered
through the digital tool ‘Workday’ and all employees will be
required to review the content annually. For new employ-
ees, information about ethical regulations is included in the
onboarding process.
The Group also has developed a mandatory ethics course for
managers. The course includes information about money
laundering and corruption. The Company’s authorised
financial advisers complete a tailored training programme.
The Group has established systems for both internal and
external whistleblowing. The external channel has been
established through a law firm. The Group also has compre-
hensive routines for preventing harassment and improper
conduct.
The Group’s approach to and results in this area are dis-
cussed in Section 4 of the annual report, People and
systems, under the headings Committed and courageous
employees and Good environmental and working condi-
tions throughout the entire value chain
96
STOREBRAND ANNUAL REPORT 2018
SECTION 7. DIRECTORS´ REPORT
Corporate governance
Official financial statements of
Storebrand ASA
Storebrand ASA is the holding company in the Storebrand
Group, and the accounts have been prepared in accordance
with the Norwegian Accounting Act, the generally accepted
accounting policies in Norway and the Norwegian Regula-
tions relating to annual accounts for insurance companies.
Storebrand ASA reported a pre-tax profit of NOK 4,074
million in 2018, compared with NOK 1,934 million in 2017.
in subsidiaries
Group contributions from
amounted to NOK 4,131 million, compared with NOK 2,154
million for the previous year.
investments
Statement of comprehensive income
NOK million
Profit for the year
2018
3,963
2017
1 824
Other income statement elements that
cannot subsequently be reclassified
through the income statement
Change in actuarial gains or losses
Tax on other income statement components
Total other income statement elements
9
-2
6
-34
8
-25
Total comprehensive income
3,969
1,798
Results for Storebrand ASA
NOK million
Group contribution and dividends
Net financial items
Operating expenses
Pre-tax profit/loss
Tax
Profit for the year
2018
4,131
28
-86
4,074
-111
3,963
2017
2,154
-96
-123
1,934
-110
1,824
Allocation of the profit for the year
Storebrand ASA reported a profit of NOK 3,963 million for
2018, compared with NOK 1,824 million for 2017.
The Board proposes a dividend of NOK 1,402 million to the
General Meeting, corresponding to an ordinary dividend of
NOK 3.0 per share for 2018 financial year.
Allocation of the profit for the year for Storebrand ASA
NOK million
Profit for the year
Allocations
Transferred to other reserves
Provision for shared dividends
Total allocations
2018
3,963
2,561
1,402
3,963
2017
1,824
656
1,168
1,824
Lysaker, 12. February 2019
Board of Directors of i Storebrand ASA
Didrik Munch
Chairman of the Board
Karin Bing Orgland
Laila S. Dahlen
Liv Sandbæk
Martin Skancke
Jan Chr. Opsahl
Arne Fredrik Håstein
Heidi Storruste
Ingvild Pedersen
Odd Arild Grefstad
Group Chief Executive Officer
97
8
Annual Accounts
and Notes
Storebrand Group
100 Income statement
101 Statement of total comprehensive income
102 Statement of finacial position
104 Statement of changes in equity
105 Statement of cach flow
107 Notes
Storebrand ASA
185 Income statement
185 Statement of total comprehensive income
186 Statement of finacial position
187 Statement of changes in equity
188 Statement of cach flow
189 Notes
202 Declaration by member of the Board and the CEO
203 Independent auditor´s report
9999
Storebrand Group
Income statement
NOK million
Premium income
Net income from financial assets and properties for the company:
- equities and other units at fair value
- bonds and other fixed-income securities at fair value
- financial derivatives at fair value
- loans at fair value
- bonds at amortised cost
- loans at amortised cost
- profit from investments in associated companies/joint controlled operation
Net income from financial assets and properties for the customers:
- equities and other units at fair value
- bonds and other fixed-income securities at fair value
- financial derivatives at fair value
- loans at fair value
- bonds at amortised cost
- loans at amortised cost
- properties
- profit from investments in associated companies
Other income
Total income
Insurance claims
Change in insurance liabilities
Change in capital buffer
Operating expenses
Other expenses
Interest expenses
Total expenses before amortisation and write-downs
Group profit before amortisation and write-downs
Amortisation and write-downs of intangible assets
Group pre-tax profit
Tax expenses
Profit/loss for the year
Profit/loss for the year due to:
Share of profit for the period - shareholders
Share of profit for the period - hybrid capital investors
Share of profit for the period - minority
Total
Earnings per ordinary share (NOK)
Average number of shares as basis for calculation (million)
There is no dilution of the shares
100
Note
14
15
15
15
15
15
15
29
15
15
15
15
15
15
16
29
17
18
19
20
21, 22, 23, 24
25
27
26
2018
29,631
2017
26,652
-10
286
50
4
116
665
46
-5,249
912
-2,288
140
4,254
541
1,487
303
4,930
35,819
-25,142
-3,042
1,730
-4,542
-851
-813
-32,661
3,158
-360
2,799
898
3,697
3,684
9
3
3,697
7.89
467.2
31
507
99
57
134
665
119
16,943
3,157
848
113
4,243
443
2,556
231
4,239
61,037
-24,985
-23,048
-3,943
-4,266
-930
-925
-58,097
2,940
-536
2,404
2
2,405
2,375
11
20
2,405
5.28
449.8
STOREBRAND ANNUAL REPORT 2018 Storebrand Group
Statement of total comprehensive income
NOK million
Profit/loss for the year
Change in actuarial assumptions
Adjustment of value of properties for own use
Gains/losses from cash flow hedging
Total comprehensive income elements allocated to customers
Tax on other comprehensive income elements not to be classified to profit/loss
Total other comprehensive income elements not to be classified to profit/loss
Translation differences foreign exchange
Change in unrealised gains on financial instruments available for sale
Total other comprehensive income elements that may be classified to profit/loss
Total other comprehensive income elements
Total comprehensive income
Total comprehensive attribute to:
Share of total comprehensive income - shareholders
Share of total comprehensive income - hybrid capital investors
Share of total comprehensive income - minority
Total
Note
2018
3,697
41
-26
48
-23
-48
1
-48
-318
-318
-366
3,331
3,320
9
2
3,331
2017
2,405
-117
130
23
-130
2
-92
387
8
395
303
2,708
2,675
11
22
2,708
101
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Storebrand Group
Statement of Financial Position
NOK million
Assets company portfolio
Deferred tax assets
Intangible assets and excess value on purchased insurance contracts
Pension assets
Tangible fixed assets
Investments in associated companies and joint ventures
Financial assets at amortised cost:
- Bonds
- Loans to financial institutions
- Loans to customers
Reinsurers' share of technical reserves
Investment properties at fair value
Biological assets
Note
31.12.18
31.12.17
26
27
22
28
29
10, 30, 31
10, 30
1,972
6,106
5
43
255
8,349
318
10, 30,3 2
28,236
8, 33
21
50
67
Accounts receivable and other short-term receivables
30, 34
7,005
Financial assets at fair value:
- Equities and other units
- Bonds and other fixed-income securities
- Derivatives
- Loans to customers
Bank deposits
Minority interests in consolidated mutual funds
Total assets company portfolio
Assets customer portfolio
Tangible fixed assets
Investments in associated companies
Receivables from associated companies and joint ventures
Financial assets at amortised cost:
- Bonds
- Bonds held-to-maturity
- Loans to customers
Reinsurers' share of technical reserves
Investment properties at fair value
Properties for own use
Biological assets
8,12, 30, 35
295
8,10,12, 30, 36
24,055
10,12, 30, 37
32
10, 30
28
29
29
10,30,31
10,30,31
10,30,32
8,33
33
1,226
220
3,633
29,290
111,145
4,406
86,374
14,403
25,270
48
28,217
1,420
Accounts receivable and other short-term receivables
30, 34
732
Financial assets at fair value:
- Equities and other units
- Bonds and other fixed-income securities
- Derivatives
- Loans to customers
Bank deposits
Total assets customer portfolio
Total assets
102
8,12, 30, 35
8,10,12, 30,3 6
10,12, 30, 37
32
10, 30
157,066
133,531
3,701
5,708
5,457
466,331
577,476
637
6,295
3
55
291
3,403
313
26,678
27
50
64
4,834
363
31,719
1,341
580
3,466
30,303
110,424
488
3,113
39
84,071
15,128
21,425
63
27,403
1,408
791
692
156,071
135,042
2,723
5,104
4,958
458,519
568,943
STOREBRAND ANNUAL REPORT 2018 NOK million
Equity and liabilities
Paid-in capital
Retained earnings
Hybrid capital
Minority interests
Total equity
Subordinated loan capital
Capital buffer
Insurance liabilities
Pension liabilities
Deferred tax
Financial liabilities:
- Liabilities to financial institutions
- Deposits from banking customers
- Securities issued
- Derivatives company portfolio
- Derivatives customer portfolio
Other current liabilities
Minority interests in consolidated mutual funds
Total liabilities
Total equity and liabilities
Lysaker, 12 February 2019
Board of Directors of Storebrand ASA
Didrik Munch
Chairman of the Board
Karin Bing Orgland
Laila S. Dahlen
Liv Sandbæk
Martin Skancke
Jan Chr. Oppsahl
Arne Fredrik Håstein
Heidi Storruste
Ingvild Pedersen
Odd Arild Grefstad
Chief Executive Officer
Note
31.12.18
31.12.17
12,858
19,782
176
57
32,873
8,224
18,983
444,218
322
258
2
14,419
17,529
460
4,147
6,751
29,290
544,604
577,476
9,30
38
38
22
26
9,12,30
9,12,30
9,30
10,12,30,37
10,12,30,37
9,30,40
12,855
17,652
226
99
30,832
8,867
21,137
435,749
341
238
155
14,628
16,575
282
1,733
8,102
30,303
538,110
568,943
103
SECTION 8. ANNUAL ACCOUNTS AND NOTES Storebrand Group
Statement of changes in equity
Share
capital
Statement of changes in equity
Total
Currency
Total
Own
Share
paid in
translation
Other
retained
Hybrid
Minority
Total
NOK million
1)
shares
premium
equity
differences
equity 2)
earnings
capital 3)
interests
equity
Equity at 31 December 2016
2,250
-8
9,485
11,726
1,042
14,590
15,631
2,375
2,375
385
-84
300
226
11
54
20
2
27,637
2,405
303
Profit for the period
Total other comprehensive
income elements
Total comprehensive
income for the period
Equity transactions with
owners:
Own shares
Issues of shares
Hybrid capital classified as
equity
Paid out interest hybrid capital
Dividend paid
Purchase of minority interests
Other
Profit for the period
Total other comprehensive
income elements
Total comprehensive
income for the period
Equity transactions with
owners:
Own shares
Issues of shares
Hybrid capital classified as
equity
Paid out interest hybrid capital
Dividend paid
Purchase of minority interests
Other
385
2,290
2,675
11
22
2,708
3
3
44
44
90
1,037
1,126
3
3
-11
47
3
1,129
3
-11
-695
-695
-2
-697
2
-8
2
-8
3,684
3,684
-317
-48
-365
226
9
2
13
30,832
3 697
-366
21
99
3
-1
-317
3,636
3,320
9
2
3 331
3
3
48
48
2
2
-50
-9
-1,167
-1,167
-82
9
-82
9
50
4
-48
-9
-1 169
-120
1
32 873
4
-2
-38
-8
57
Equity at 31 December 2017
2,339
-5
10,521
12,855
1,426
16,226
17,652
Equity at 31 December 2018
2 339
-2
10 521
12 858
1 110
18 672
19 782
176
1) 467,813,982 shares with a nominal value of NOK 5.
2) Includes undistributable funds in the risk equalisation fund amounting to NOK 234 million and security reserves amounting NOK 56 million.
3) Perpetual hybrid tier 1 capital classified as equity.
104
STOREBRAND ANNUAL REPORT 2018 Storebrand Group
Statement of cash flow
NOK million
Cash flow from operational activities
Net receipts premium - insurance
Net payments compensation and insurance benefits
Net receipts/payments - transfers
Net change insurance liabilities
Receipts - interest, commission and fees from customers
Payments - interest, commission and fees to customers
Taxes paid
Payments relating to operations
Net receipts/payments - other operational activities
Net cash flow from operations before financial assets and banking customers
Net receipts/payments - loans to customers
Net receipts/payments - deposits bank customers
Net receipts/payments - mutual funds
Net receipts/payments - investment properties
Net change in bank deposits insurance customers
Net cash flow from financial assets and banking customers
Net cash flow from operational activities
Cash flow from investment activities
Net receipts - sale of subsidaries
Net payments - purchase of group companies
Net receits/payments - sale/purchase of fixed assets
Net receipts/payments - sale of insurance portfolios
Net cash flow from investment activities
Cash flow from financing activities
Payments - repayments of loans
Receipts - new loans
Payments - interest on loans
Receipts - subordinated loan capital
Payments - repayment of subordinated loan capital
Payments - interest on subordinated loan capital
Net receipts/payments - loans to and claims from other financial institutions
Receipts - issuing of share capital / sale of shares to own employees
Payments - repayment of share capital
Payments - dividends
Receipts - hybrid capital
Payments - repayment of hybrid capital
Payments - interest on hybrid capital
Net cash flow from financing activities
Net cash flow for the period
2018
2017
25,211
-20,056
-699
-6,124
3,135
-333
-56
-4,633
-1,523
-5,079
-5,584
-209
12,308
296
-423
6,389
1,310
-487
1,010
-35
156
645
-3,195
4,177
-295
845
-1,501
-373
-153
-120
37
-1,168
100
-150
-9
-1,804
151
24,071
-19,221
-2,995
4,501
2,853
-372
-6
-3,432
-7
5,392
-7,412
-610
4,331
-623
-338
-4,653
739
245
-408
-98
-261
-4,899
4,899
-334
1,126
-150
-377
-252
36
-698
-11
-659
-181
105
SECTION 8. ANNUAL ACCOUNTS AND NOTES Storebrand Group
Statement of cash flow (continue)
NOK million
- of which net cash flow in the period before financial assets and banking customers
Net movement in cash and cash equivalents
Cash and cash equivalents at start of the period for new/sold out companies
Cash and cash equivalents at start of the period
Currency translation differences
Cash and cash equivalents at the end of the period 1)
1) Consist of:
Loans to financial institutions
Bank deposits
Total
2018
-6,238
151
91
3,724
-14
3,951
318
3,633
3,951
2017
4,471
-181
7
3,965
-11
3,780
313
3,466
3,780
The cash flow analysis shows the Group’s cash flows for operational, investment and financial activities pursuant to the direct method. The cash flows
show the overall change in means of payment over the year.
Operational activities
A substantial part of the activities in a financial group will be classified as operational. All receipts and payments from insurance activities are included
from the insurance companies, and these cash flows are invested in financial assets that are also defined as operational activities. One subtotal is
generated in the statement that shows the net cash flow from operations before financial assets and banking customers, and one subtotal that shows
the cash flows from financial assets and banking customers. This shows that the composition of net cash flows from operational activities for a financial
group includes cash flows from both operations and investments in financial assets. The life insurance companies’ balance sheets include substantial
items linked to the insurance customers that are included on the individual lines in the cash flow analysis. Since the cash flow analysis is intended to
show the change in cash flow for the company, the change in bank deposits for insurance customers is included on its own line in operating activities
to neutralise the cash flows associated with the customer portfolio in life insurance.
Investment activities
Includes cash flows for holdings in group companies and tangible fixed assets.
Financing activities
Financing activities include cash flows for equity, subordinated loans and other borrowing that helps fund the Group’s activities. Payments of interest
on borrowing and payments of share dividends to shareholders are financial activities.
Cash/cash equivalents
Cash/cash equivalents are defined as claims on central banks and claims on financial institutions without notice periods for the company portfolio. The
amount does not include claims on financial institutions linked to the insurance customers portfolio, since these are liquid assets that not available for
use by the Group.
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STOREBRAND ANNUAL REPORT 2018
Storebrand Group
Notes to the financial statement
Note 33:
Note 34:
Note 35:
Note 36:
Note 37:
Note 38:
Note 39:
Note 40:
Note 41:
Note 42:
Note 43:
Note 44:
Note 45:
Note 46:
Properties
Accounts receivable and other short-term receivables
Equities and fund units to fair value
Bonds and other fixed-income securities
Derivatives
Technical insurance reserves - life insurance
Technical insurance reserves - P&C insurance
Other current liabilities
OTHER NOTES
Hedge accounting
Collateral
Contingent liabilities
Information about related parties
Sold/liquidated business
Subsequent events
Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Note 16:
Note 17:
Note 18:
Note 19:
Note 20:
Note 21:
Note 22:
Note 23:
Note 24:
Note 25:
Note 26:
Note 27:
Note 28:
Note 29:
Note 30:
Note 31:
Note 32:
NOTES STOREBRAND GROUP
Corporate information and accounting policies
Important accounting estimates and discretionary
judgements
Acquisition
Segment reporting
Risk management and internal control
Operational risk
Insurance risk
Financial market risks
Liquidity risk
Credit risk
Risk concentration
Valuation of financial instruments and real estate
Solidity and capital management
PROFIT AND LOSS ACCOUNT NOTES
Premium income
Net income analysed by class of financial instrument
Net income from properties
Other income
Insurance claims
Changes in insurance liabilities – life insurance
Change in capital buffer
Operating expenses and number of employees
Pensions expenses and pension liabilities
Remuneration to senior employees and elected officers
of the company
Remuneration paid to auditors
Other expenses
Tax
STATEMENT OF FINANCIAL POSITION NOTES
Intangible assets
Tangible fixed assets
Investments in other companies
Classification of financial assets and liabilities
Bonds at amortised cost
Loans to customers
107
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 1: Company information and accounting policies
1. Company information
Storebrand ASA is a Norwegian public limited company that is listed on the Oslo Stock Exchange. The consolidated financial
statements for 2018 were approved by the Board of Directors of Storebrand ASA on 12 February 2019.
The Storebrand Group offers a comprehensive range of insurance and asset management services, as well as securities,
banking and investment services, to private individuals, companies, municipalities, and the public sector. The Storebrand
Group consists of the business areas Guaranteed Pensions, Savings, Insurance and Other. The Group’s head office is located
at Professor Kohts vei 9, in Lysaker, Norway.
2. Summary of significant accounting policies for material items on the balance sheet
For the most part, the asset side of the Group’s balance sheet comprises financial instruments and investment properties.
A large majority of the financial instruments are measured at fair value (the fair value option is used), whilst other financial
instruments that are included in the categories Loans and receivables and Held to maturity are measured at amortised cost.
Financial instruments measured at amortised cost are largely related to Norwegian pension liabilities with annual interest rate
guarantee.
Investment properties are measured at fair value.
Intangible assets primarily comprise excess value relating to insurance contracts and customer relations acquired in connec-
tion with a business combination. This excess value is measured at historical cost less annual amortisation and write-downs.
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.
Insurance liabilities must be adequate and cover liabilities relating to issued insurance contracts. Various methods and princi-
ples are used in the Group when assessing the reserves for different insurance contracts. A considerable part of the insurance
liabilities relate to insurance contracts with interest guarantees. The recognised liabilities related to Norwegian insurance con-
tracts with guaranteed interest rates are discounted by the basic interest rate (which corresponds to the guaranteed return/
interest rate) for the respective insurance contracts.
The recognised liabilities related to the Swedish insurance contracts with guaranteed interest rates in the subsidiary SPP are
discounted by an observable market interest rate and by an estimated market interest rate for terms to maturity when no
observable interest rate is available and corresponds essentially to the same interest rate that is used in the Solvency calcula-
tions.
In the case of unit-linked insurance contracts, reserves for the savings element in the contracts will correspond to the value of
related asset portfolios.
Due to the fact that the customers’ assets in the life insurance business (guaranteed pension) have historically yielded a return
that has exceeded the increased value in guaranteed insurance liabilities, the excess amount has been set aside as customer
buffers (liabilities), including in the form of additional reserves, value adjustment reserve and conditional bonus.
Insurance liabilities include Incurred But Not Settled (IBNS) reserves, which consist of amounts reserved for claims either
incurred but not yet reported or reported but not yet settled (Incurred But Not Reported “IBNR” and Reported But Not Settled
“RBNS”). IBNS reserves are included in the premium reserve.
IBNS reserves are measured using actuarial models based on historical information about the portfolio.
3. Basis for preparation of the financial statements
The accounting policies applied in the consolidated financial statements are described below. The policies are applied consis-
tently to similar transactions and to other events involving similar circumstances. There is no required use of uniform account-
ing policies for insurance contracts.
108
STOREBRAND ANNUAL REPORT 2018
Storebrand ASA’s consolidated financial statements are presented using EU-approved International Financial Reporting
Standards (IFRS) and related interpretations, as well as other Norwegian disclosure requirements laid down in legislation and
regulations.
Use of estimates when preparing the consolidated financial statements.
The preparation of the consolidated financial statements in accordance with IFRS requires the management to make judge-
ments, estimates and assumptions that affect assets, liabilities, revenue, expenses, the notes to the financial statements and
information on potential liabilities. Actual amounts may differ from these estimates. See Note 2 for further information.
4. Changes in accounting policies
New accounting standards that have a significant impact on the consolidated financial statements have not been implemented
in 2018. For changes in estimates, see Note 2 for further information.
IFRS 9
IFRS 9 Financial Instruments replaces the current IAS 39, and is generally applicable from
1 January 2018. However, for insurance-dominated groups and companies, IFRS 4 allows for either the implementation of IFRS
9 to be deferred (deferral approach) or to enter the differences between IAS 39 and IFRS 9 through Other Comprehensive
Income (overlay approach) until implementation of IFRS 17. The Storebrand Group qualifies for temporary deferral of IFRS 9
because over 90 per cent of the Group’s total liabilities as of 31 December 2015 were linked to the insurance businesses. For
the Storebrand Group, IFRS 9 will be implemented together with IFRS 17, which is expected to be applicable from 1 January
2022.
The Storebrand Group has conducted a provisional analysis of the classification and measurement of financial instruments in
accordance with the present IAS 39 for the transition to IFRS 9, based on the current business model for the individual instru-
ments. For financial instruments that are expected to be classified and measured at amortised cost or fair value through total
comprehensive income upon transition to IFRS 9, a SPPI (“Solely payment of principal and interest”) test is carried out. This is a
provisional categorisation under IFRS 9, based on the present asset allocation. No assessments have been made of any chang-
es in classification and measurement of financial assets under IFRS 9 in connection with the transition to IFRS 17.
IFRS9 - FINANCIAL INSTRUMENTS TO AMORTISED COST AND FVOCI
NOK million
Financial assets
Bank deposits
Bonds and other fixed-income securities
Loans to financial institutions
Loans to customers
Loans to customers
Accounts receivable and other short-term
receivables
Total financial assets
Financial liabilities
Deposits from banking customers
Liabilities to financial institutions
Debt raised by issuance of securities
Subordinatd loan capital
Other current liabilities
Total financial liabilities
IAS 39
IFRS 9
after IAS39
after IFRS9
after IAS39
after IFRS9
classification
classification
1.1.2018
1.1.2018
31.12.2018
31.12.2018
Booked value
Fari value
Booked value
Fari value
AC
AC
AC
AC
AC
AC
AC
AC
AC
AC
AC
AC
AC
AC
8,424
8,424
9,090
9,090
102,602
111,151
109,126
114,164
313
313
318
318
FVOCI
47,781
47,773
53,508
53,489
AC
AC
AC
AC
AC
AC
AC
323
299
5,516
5,516
7,710
7,710
164,960
173,477
179,751
184,770
-14 628
-14 341
-14 419
-14 419
-155
-155
-2
-2
-12 034
-12 049
-13 902
-13 906
8 314
8 137
8 432
8 137
7 672
6 810
7 663
6 810
-10 365
-9 975
-13 842
-13 854
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SECTION 8. ANNUAL ACCOUNTS AND NOTES IFRS9 - FINANCIAL INSTRUMENTS AT FAIR VALUE
NOK million
Financial assets
IAS 39
IFRS 9
after IAS39
after IFRS9
after IAS39
after IFRS9
classification
classification
1.1.2018
1.1.2018
31.12.2018
31.12.2018
Booked value
Fari value
Booked value
Fari value
Shares and fund units
FVP&L (FVO)
Bonds and other fixed-income securities
FVP&L (FVO)
Loans to customers
FVP&L (FVO)
FVP&L
FVP&L
FVP&L
156,433
156,433
157,361
157,361
166,761
166,761
157,586
157,586
5,684
5,684
5,928
5,928
Derivatives
Total financial assets
Financial liabilities
Derivatives
Total financial liabilities
FVP&L/ Hedge
accounting
FVP&L/ Hedge
accounting
4,064
4,064
4,926
4,926
332,942
332,942
325,801
325,801
FVP&L/ Hedge
FVP&L/ Hedge
accounting
accounting
1,738
1,738
1,738
1,738
4,463
4,463
4,463
4,463
IFRS 15
The new standard for recognising revenue from contracts with customers entered into force on 1 January 2018. Revenue
recognition in the Storebrand Group will be primarily regulated by IAS39 and IFRS4. Revenues that will be recognised under
Other Income are regulated by IFRS 15 and are recognised according to the rules in this standard. Of these, management fees
associated with the asset management business at Storebrand Asset Management are the most significant. The implementa-
tion of IFRS 15 has not had any significant impact on Storebrand’s consolidated financial statements.
During 2018, changes were made to the classification of certain types of transactions in the income statement, and compara-
ble figures have been restated. This has resulted in some minor changes between lines in the income statement, but has no
effect on the Group result or the classification in the segment note. Below are the most important result lines subject to the
changes:
- Other income
- Operating costs
5. New IFRS that have not entered into force
New standards and changes in standards that have not come into effect
IFRS 16
IFRS 16 Leases, replaces the current IAS 17 and is applicable from 1 January 2019. IFRS 16 establishes principles for the rec-
ognition, measurement, presentation and disclosure of leases. The new standard for leases will not result in major changes
for lessors, but will however significantly change accounting by lessees. IFRS 16 requires that, in principle, lessees recognise
all leases in the balance sheet according to a simplified model that resembles the accounting treatment of financial leases in
accordance with IAS17. The present value of the combined lease payments shall be recognised in the balance sheet as debt
and an asset that reflects the right of use of the asset during the lease period, with the exception of short-term agreements
and agreements in which the asset has a low value. The recognised asset is amortised over the lease period and the depreci-
ation expense is recognised as an operating expense on an ongoing basis. The interest expense on the lease commitment is
recognised as a financial expense.
IFRS 16 can be implemented according to either a full retrospective approach or a modified retrospective approach, and
Storebrand has selected the modified retrospective approach. This means that comparative figures are not restated and the
effect is entered in the balance sheet in the implementation year of 2019. Upon implementation, the right of use of the asset
and liability will be the same amount and will not impact on equity. The transition to IFRS 16 is expected to increase assets and
110
STOREBRAND ANNUAL REPORT 2018 liabilities by approximately NOK 0.9 billion on the transition date. It is expected that operating expenses will be reduced by
approximately NOK 15 million, financial expenses will increase by approximately NOK 26 million and the profit before tax will
thereby be reduced by approximately NOK 12 million in 2019. Leases with a duration of less than 12 months as at 1 January
2019 and leases that include assets valued at less than NOK 50,000 will not be recognised in the balance sheet, but will be
recognised as an operating expense over the lease period.
IFRS 17
IIFRS 17 replaces IFRS 4 Insurance Contracts and introduces new requirements for the recognition, measurement, presenta-
tion and disclosure of issued insurance contracts. The standard has not been approved by the EU, but is expected to be appli-
cable from 1 January 2022. The purpose of the new standard is to establish uniform practices for the accounting treatment of
insurance contracts.
IFRS 17 is a comprehensive and complex standard, with fundamental differences to the present standard for measuring liabil-
ities and recognising earnings. Insurance contracts must be recognised at the risk-adjusted present value of future cash flows,
with the addition of unearned profit in a group of contracts (Contractual Service Margin = CSM). Loss-making contracts must
be recognised immediately.
As a starting point, IFRS 17 must be retrospectively applied, but modified retrospective application is permitted or application
based on the fair value on the transition date if retrospective application is impracticable.
The implementation date is 1 January 2022, with a requirement that comparable figures are stated.
Storebrand is working on preparing for implementation of IFRS 17, including assessing the effects implementation of IFRS 17
will have for Storebrand’s consolidated financial statements.
6. Consolidation
The consolidated financial statements include Storebrand ASA and companies controlled by Storebrand ASA. Minority in-
terests are included in the Group’s equity, unless there are options or other conditions that entail minority interests being
measured as liabilities.
Storebrand Livsforsikring AS, Storebrand Asset Management AS, Storebrand Bank ASA and Storebrand Forsikring AS are sig-
nificant subsidiaries owned directly by Storebrand ASA. Storebrand Livsforsikring AS also owns the Swedish holding company
Storebrand Holding AB, which in turn owns SPP Pension & Försäkring AB (publ). On acquiring the Swedish operations in 2007,
the authorities instructed Storebrand to make an application to maintain a group structure by the end of 2009. Storebrand
has filed an application to maintain the existing group structure. Benco (which owns Euroben and Nordben) is also a company
owned by Storebrand Livsforsikring AS. A controlling interest in Skagen AS was acquired in 2017 and is owned by Storebrand
Asset Management AS. The Norwegian authorities have granted Storebrand an exemption from the requirement to organise
equivalent businesses in the same company. This exemption expires in 2022.
Investments in associated companies (normally investments of between 20 per cent and 50 per cent of the company’s equity)
in which the Group exercises significant influence, and investments in joint ventures are recognised in accordance with the
equity method. Investments in associated companies and joint ventures are initially recognised at acquisition cost.
Storebrand consolidates certain funds in the Group’s balance sheet when the requirement for control has been met. This en-
compasses funds in which Storebrand has an ownership interest of approximately 40 per cent or more, which are managed by
companies in the Storebrand Group. In the Group’s accounts, such funds are consolidated fully in the balance sheet, and the
non-controlling interests are shown on a line for assets and on a corresponding line for liabilities. The non-controlling interests
can demand redemption of their ownership interests and, as a result of this, they are classified as liabilities in the consolidated
financial statements of Storebrand.
Currencies and translation of foreign companies’ accounts
The Group’s presentation currency is Norwegian kroner. Foreign companies that are part of the Group and have different
functional currencies are converted to Norwegian kroner. Translation differences are included in the total comprehensive
income.
111
SECTION 8. ANNUAL ACCOUNTS AND NOTES Elimination of internal transactions
Internal receivables and payables, internal gains and losses, interest, dividends and similar between companies in the Group
are eliminated in the consolidated financial statements. Transactions between the customer portfolios and the company port-
folio in the life insurance business and between the customer portfolios in the life insurance business and other companies
in the Group will not be eliminated in the consolidated accounts. Pursuant to the life insurance regulations, transactions with
customer portfolios are carried out a fair value.
7. Business combinations
The acquisition method is applied when accounting for acquisition of businesses. The consideration is measured at fair value.
The direct acquisition expenses are expensed when they arise, with the exception of expenses related to raising debt or equity
(new issues).
When making investments, including purchasing investment properties, a decision is made as to whether the purchase con-
stitutes acquisition of a business pursuant to IFRS 3. When such acquisitions are not regarded as an acquisition of a business,
the acquisition method pursuant to IFRS 3 is not applied. Among other things, this does not entail provisions for deferred tax
such as for business combinations.
8. Segment information
The segment information is based on the internal financial reporting structure of the most senior decision-maker. At Store-
brand, the executive management is responsible for following-up and evaluating the results of the segments and is defined as
the most senior decision-maker. Four segments are reported for:
•
•
•
•
Savings
Insurance
Guaranteed Pension
Other
There are some differences between the result lines used in the income statement and the segment results. The Group’s
income statement includes gross income and costs linked to both the insurance customers and owners (shareholders). The
segment results only include result elements relating to owners (shareholders) which are the result elements that the Group
has performance measures and follow-up for.
Financial services provided between segments are priced at market terms. Services provided from joint functions and staff are
charged to the different segments based on supply agreements and distribution keys.
9. Income recognition
Premium income
Net premium income includes the year’s premiums written (including savings elements, administration premium, fees for issu-
ing Norwegian interest rate guarantees and profit element risk), premium reserves transferred and ceded reinsurance. Annual
premiums are generally accrued on a straight-line basis over the coverage period.
Income from properties and financial assets
Income from properties and financial assets are described in Sections 10 and 11.
Other income
Fees are recognised when the income can be measured reliably and is earned. Return-based revenues and performance fees
are recognised when the uncertainty associated with the income is no longer present. Fixed fees are recognised as income in
line with delivery of the service.
10. Goodwill and intangible assets
Added value when acquiring a business that cannot be directly attributable to assets or liabilities on the date of the acquisition
is classified as goodwill on the balance sheet. Goodwill is measured at acquisition cost on the date of the acquisition. Goodwill
arising from the acquisition of subsidiaries is classified as an intangible asset.
112
STOREBRAND ANNUAL REPORT 2018
Goodwill is not amortised, instead it is tested for impairment. Goodwill is reviewed for impairment if there are indications that
its value has become impaired. The review is conducted at least annually and determines the recoverable amount of goodwill.
If the discounted present value of the relevant discounted cash flow is less than the carrying value, goodwill will be written
down to its fair value. Reversal of an impairment loss for goodwill is prohibited even if information later comes to light show-
ing that there is no longer a need for the write-down or the impairment loss has been reduced. Goodwill is allocated to the
relevant cash flow generating units that are expected to benefit from the acquisition so that it can subsequently be tested for
impairment.
Goodwill arising from the acquisition of interests in associated companies is included in investments in associated companies,
and tested annually for impairment in connection with the assessment of book value.
Intangible assets with limited useful economic lives are measured at acquisition cost less accumulated amortisation and any
write downs. The useful life and amortisation method are measured each year. With initial recognition of intangible assets in
the balance sheet, it must be demonstrated that probable future economic benefits attributable to the asset will flow to the
Group. The cost of the asset must also be measured reliably. The value of an intangible asset is tested for impairment when
there are indications that its value has been impaired. In other respects intangible assets are subject to write-downs and
reversals of write-downs in the same manner as described for tangible fixed assets.
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.
12. Investment properties
IInvestment properties are measured at fair value. Fair value is the amount for which an asset could be exchanged between
well-informed, willing parties in an arm’s length transaction. Income from investment properties consists of both changes in
fair value and rental income.
Investment properties primarily consist of centrally located office buildings, shopping centres and logistics buildings. Proper-
ties leased to tenants outside the Group are classified as investment properties. In the case of properties partly occupied by
the Group for its own use and partly let to tenants, the identifiable tenanted portion is treated as an investment property. All
properties that are owned by the customer portfolios are measured at fair value and the changes in value are allocated to the
customer portfolios.
13. Financial instruments
13-1. General policies and definitions
Recognition and derecognition
Financial assets and liabilities are included in the balance sheet from such time Storebrand becomes party to the instrument’s
contractual terms and conditions. General purchases and sales of financial instruments are recorded on the transaction date.
When a financial asset or a financial liability is initially recognised in the financial statements, it is valued at fair value.
Initial recognition includes transaction costs directly related to the date of acquisition or issue of the financial asset/liability if it
is not a financial asset/liability at fair value through profit or loss.
Financial assets are derecognised when the contractual right to the cash flow from the financial asset expires, or when the
company transfers the financial asset to another party in a transaction by which all, or virtually all, the risk and reward associat-
ed with ownership of the asset is transferred.
Financial liabilities are derecognised in the balance sheet when they cease to exist, i.e. once the contractual liability has been
fulfilled, cancelled or has expired.
Impairment of financial assets
For financial assets carried at amortised cost, an assessment is made on each reporting date whether there is any objective
evidence that a financial asset or group of financial assets is impaired.
If there is objective evidence that impairment has occurred, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not
113
SECTION 8. ANNUAL ACCOUNTS AND NOTES
occurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate calculated at initial
recognition). The amount of the loss is recognised in the income statement.
Losses expected as a result of future events, no matter how likely, are not recognised.
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 near 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.
With the exception of derivatives, only a limited proportion of Storebrand’s financial assets fall into this category.
Financial assets held for trading are measured at fair value at the reporting date, with all changes in their fair value recognised
through profit or loss.
At fair value through profit or loss in accordance with the fair value option (FVO).
A significant proportion of Storebrand’s financial instruments are classified in the category of fair value through profit or loss
because:
•
such classification reduces the mismatch in the measurement or recognition that would otherwise arise as a result of
the different rules for measuring assets and liabilities, or
the financial assets form part of a portfolio that is managed and reported on a fair value basis
The accounting is equivalent to that of the held for trading category (the instruments are measured at fair value and
changes in value are recognised in the income statement).
•
Investments held to maturity
Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity and
that a company has the intention and ability to hold to maturity, with the exception of:
•
•
assets that are designated upon initial recognition as assets at fair value through profit or loss, or
assets that are defined as loans and receivables.
Assets held to maturity are recognised at amortised costs using the effective interest method. The category is used in the Nor-
wegian life insurance business for assets linked to insurance contracts with interest rate guarantees.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market, with the exception of assets that the company intends to sell immediately or in the near term that are classified as
held for trading and those that the company upon initial recognition designates at fair value through profit or loss.
Loans and receivables are recognised at amortised cost using the effective interest method. The category is used in the Nor-
wegian life insurance business linked to insurance contracts with a guaranteed interest rate, and in the banking business.
Loans and receivables that are designated as hedged items are subject to measurement under the hedge accounting require-
ments.
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STOREBRAND ANNUAL REPORT 2018
13-3. Derivatives
Accounting treatment of derivatives that are not hedging
Derivatives that do not meet the criteria for hedge accounting are recognised as financial instruments held for trading. The fair
value of such derivatives is classified as either an asset or a liability with changes in fair value through profit or loss.
The majority of the derivatives used routinely for asset management fall into this category.
Some of the Group’s insurance contracts contain embedded derivatives such as interest rate guarantees. These insurance
contracts do not follow the accounting standard IAS 39 Financial Instruments, but instead follow the accounting standard IFRS
4 Insurance Contracts, and the embedded derivatives are not continually measured at fair value.
13-4. Hedge accounting
Fair value hedging
Storebrand uses fair value hedging. The items hedged are financial assets and financial liabilities measured at amortised cost.
Derivatives are recognised at fair value through profit or loss or are included in total comprehensive income. Changes in the
value of the hedged item that are attributable to the hedged risk adjusts the carrying amount of the hedged item and is rec-
ognised through profit or loss.
Hedging of net investments
Hedging of net investments in foreign businesses is recognised in the accounts in the same way as cash flow hedging. Gains
and losses on the hedging instrument that relate to the effective part of the hedging are recognised through total comprehen-
sive income, while gains and losses that relate to the ineffective part are immediately recognised in the income statement. The
total loss or gain in equity is recognised in the income statement when the foreign business is sold or wound up.
Combined fair value and cash flow hedging
Some borrowing in foreign currency is hedged by means of hedging instruments (derivatives). The cash flows in the hedged
item coincide with the cash flows of the hedging instruments. Derivatives are recognised at fair value. Hedge accounting is
carried out by dividing the hedge into fair value hedging of the interest and a cash flow hedging of the margin. Net changes in
the value of the cash flow hedge are recognised in the Statement of Total Comprehensive Income.
13-5. Financial liabilities
Subsequent to initial recognition, all financial liabilities are primarily measured at amortised cost using an effective interest
method.
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 meant to be a temporary standard and it 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.
Pursuant to IFRS 4, provisions for insurance liabilities must be adequate. When assessing the adequacy associated with rec-
ognised acquired insurance contracts, reference must also be made to IAS 37 Provisions, Contingent Liabilities and Contingent
Assets, and Solvency II calculations.
An explanation of the accounting policies for the most important insurance liabilities can be found below.
14-1. General – life insurance
Claims for own account
Claims for own account comprise claims settlements paid out, less reinsurance received, premium reserves transferred to
other companies, and reinsurance ceded.
Changes in insurance liabilities
Changes in insurance liabilities comprise premium savings that are taken to income under premium income and payments, as
well as changes in provisions for future claims This item also includes added guaranteed returns on the premium reserve and
the premium fund, as well as returns to customers beyond the guaranteed returns.
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SECTION 8. ANNUAL ACCOUNTS AND NOTES
Insurance liabilities
The premium reserve represents the present value of the company’s total insurance liabilities, including future administration
costs in accordance with the individual insurance contracts, after deducting the present value of agreed future premiums. In
the case of individual account policies with flexible premium payments, the total policy value is included in the premium re-
serve. The premium reserve is equivalent to 100 per cent of the guaranteed surrender or transfer value of insurance contracts
prior to any fees for early surrender or transfer and the policies’ share of the market value adjustment reserve.
The premium reserve is calculated using the same assumptions as those used to calculate premiums for the individual insur-
ance contracts, i.e. assumptions about mortality and disability rates, interest rates and costs. Premium tariffs are based on the
observed level of mortality and disability in the population with the addition of security margins that include expected future
developments in this respect.
The premium reserve includes reserve amounts for future administration costs for all lines of insurance including settlement
costs (administration reserve). In the case of paid-up contracts, the present value of all future administration costs is allocated
in full to the premium reserve. In the case of contracts with future premium payments, a deduction is made for the proportion
of future administration costs expected to be financed by future premium receipts.
A substantial proportion of the Norwegian insurance contracts have a one-year interest guarantee, meaning that the guar-
anteed return must be achieved every year. A substantial proportion of the Swedish insurance contracts have a guaranteed
return up to the time of the pension payments.
Insurance liabilities, special investments portfolio
Insurance liabilities associated with the value of the special investments portfolio must always equal the value of the invest-
ments portfolio assigned to the contract. The proportion of profit in the risk result is included. The company is not exposed
to investment risk on customer assets, since the customers are not guaranteed a minimum return. The only exception is in
the event of death, when the beneficiaries are repaid the amount originally paid in for annuity insurance and for guaranteed
account (Garantikonto).
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.
Transfers of premium reserves, etc. (transfers)
Transfers of premium reserves resulting from transfers of policies between insurance companies are recorded in the income
statement as net premiums for own account in the case of reserves received and claims for own account in the case of re-
serves paid out. The recognition of costs and income takes place on the date the insured risk is ceded. The premium reserve
in the insurance liabilities is reduced/increased on the same date. The premium reserve transferred includes the policy’s share
of additional statutory reserves, the market value adjustment reserve, conditional bonus and the profit for the year. Trans-
ferred additional reserves are not shown as part of premium income, but are reported separately as changes in insurance
liabilities. Transferred amounts are classified as current receivables or liabilities until the transfer takes place.
Selling costs
Selling costs in the Norwegian life insurance business are expensed, whilst in the Swedish subsidiaries, selling costs are re-
corded in the balance sheet and amortised over the expected duration of the contract.
14-2. Life insurance – Norway
Additional statutory reserves
The company is permitted to make allocations to the additional statutory reserves to ensure the solvency of its life insurance
business. These additional reserves are divided among the contracts and can be used to cover a negative interest result up to
the interest rate guarantee. In the event that the company does not achieve a return that equals the interest rate guarantee
in any given year, the allocation can be reversed from the contract to enable the company to meet the interest rate guarantee.
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STOREBRAND ANNUAL REPORT 2018 This will result in a reduction in the additional statutory reserves and a corresponding increase in the premium reserve for the
contract. For allocated annuities, the additional statutory reserves are paid in instalments over the disbursement period.
The additional statutory reserves cannot exceed 12 per cent of the premium reserve. If the limit is exceeded, the excess
amount is assigned to the contract as surplus.
Premium fund, deposit reserve and pensioners’ surplus fund
The premium fund contains premiums prepaid by policyholders as a result of taxation regulations for individual and group
pension insurance and allocated profit shares. Credits and withdrawals are not recognised through the income statement but
are taken directly to the balance sheet.
The pensioners’ surplus fund comprises surplus assigned to the premium reserve in respect of pensions in group payments.
The fund is applied each year as a single premium payment to secure additional benefits for pensioners.
Market value adjustment reserve
The current year’s net unrealised gains/losses on financial assets at fair value in the group portfolio are allocated to or reversed
from the market value adjustment reserve in the balance sheet assuming the portfolio has a net unrealised excess value. The
portion of the current year’s net unrealised gains/losses on financial current assets denominated in foreign currencies that
can be attributed to fluctuations in exchange rates is not transferred to the market value adjustment reserve. The foreign
exchange fluctuations associated with investments denominated in foreign currencies are largely hedged through foreign
exchange contracts on a portfolio basis. Similarly, the change in the value of the hedging instrument is not transferred to the
market value adjustment reserve, but is charged directly to the income statement. Pursuant to accounting standard for insur-
ance contracts (IFRS 4) the market value adjustment reserve is shown as a liability.
Risk equalisation reserve
DUp to 50 per cent of the positive risk result for group pensions and paid-up policies can be allocated to the risk equalisation
fund to cover any future negative risk result. The risk equalisation reserve is not considered to be a liability according to IFRS
and is included as part of the equity (undistributable equity).
14-3. Life insurance Sweden
Life insurance liabilities
The life insurance liabilities are estimated as the present value of the expected future guaranteed payments, administrative
expenses and taxes, discounted by the current risk-free interest rate. Insurance reserves with guaranteed interest rates in SPP
use a modelled discount rate. A real discount curve is used for risk insurance within the defined-contribution portfolio. For
endowment insurance within the defined-benefit and defined-contribution portfolios, as well as sickness insurance in the de-
fined-benefit portfolio, the provisions are discounted using the nominal yield curve. As a starting point, the applicable discount
rate is determined based on the methods used for the discount rate in Solvency II.
When calculating the life insurance liabilities, 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 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.
Conditional bonus and deferred capital contribution
The conditional bonus arises when the value of customer assets is higher than the present value of the liabilities, and thus cov-
ers the portion of the insurance capital that is not guaranteed. In the case of contracts where customer assets are lower than
liabilities, the owners’ result is charged via deferred capital contribution allocations. The conditional bonus and deferred capital
contribution are recognised on the same line in the balance sheet.
14-4. P&C insurance
Costs related to insurance claims are recognised when the claims occur. The following allocations have been made:
Reserve for unearned premium for own account concerns on-going policies that are in force at the time the financial state-
ments were closed and is intended to cover the contracts’ remaining risk period.
117
SECTION 8. ANNUAL ACCOUNTS AND NOTES The claims reserve is a reserve for expected claims that have been reported, but not settled (RBNS). The reserve also covers
expected claims for losses that have been incurred, but have not been reported (IBNR) at the expiry of the accounting period.
In addition, claims reserves shall include a separate provision for future claims on losses that have not been settled.
15. Pension liabilities for own employees
Storebrand has country-specific pension schemes for its employees. The schemes are recognised in the accounts in accor-
dance with IAS 19. In Norway, Storebrand has a defined-contribution pension. Storebrand is a member of the Norwegian
contractual early retirement (AFP) pension scheme. The Norwegian AFP scheme is regarded as a defined-benefit scheme, but
there is insufficient quantitative information to be able to estimate reliable accounting obligations and costs.
In Sweden, SPP has agreed, in accordance with the Finance Companies’ Service Pension Plan (BTP Plan), to collective, de-
fined-benefit pension plans for its employees. A group defined-benefit pension implies that an employee is guaranteed a
certain pension based on the pay scale at the time of retirement on termination of the employment.
15-1. Defined-benefit scheme
Pension costs and pension obligations for defined-benefit pension schemes are determined using a linear accrual formula and
expected final salary as the basis for the entitlements, based on assumptions about the discount rate, future salary increases,
pensions and National Insurance benefits, future returns on pension plan assets as well as actuarial estimates of mortality,
disability and voluntary early leavers. The net pension cost for the period comprises the total of the accrued future pension
entitlements during the period, the interest cost on the calculated pension liability and the calculated return on pension plan
assets.
Actuarial gains and losses and the impact of changes in assumptions are recognised in total comprehensive income during the
period in which they arise. Employees who resign before reaching retirement age or leave the scheme will be issued ordinary
paid-up policies.
15-2. Defined-contribution scheme
A defined-contribution pension scheme involves the Group in paying an annual contribution to the employees’ collective pen-
sion 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.
16. Tangible fixed assets and intangible assets
The Group’s tangible fixed assets comprise equipment, fixtures and fittings, IT systems and properties used by the Group for
its own activities.
Equipment, inventory and IT systems are valued at acquisition cost less accumulated depreciation and any write-downs.
Properties used for the Group’s own activities are measured at appreciated value less accumulated depreciation and write-
downs. The fair value of these properties is tested annually in the same way as described for investment properties. The
increase in value for buildings used by the Group for its own activities is recognised through total comprehensive income. Any
write-down of the value of such a property is recognised first in the revaluation reserve for increases in the value of the prop-
erty in question. If the write-down exceeds the revaluation reserve for the property in question, the excess is recognised in the
income statement.
The write-down period and method are reviewed annually to ensure that the method and period being used both corre-
spond to the useful economic life of the asset. The disposal value is similarly reviewed. Properties are split into components if
different parts have different useful economic lives. The depreciation period and method of depreciation are measured then
separately for each component.
The value of a tangible fixed asset is tested when there are indications that its value has been impaired. Any impairment losses
are charged to the income statement as the difference between the carrying value and the recoverable amount. The recover-
able amount is the greater of the fair value less costs of sale and the value in use. On each reporting date it is determined as
to whether there is a basis for reversing previous impairment losses on non-financial assets.
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STOREBRAND ANNUAL REPORT 2018
17. Tax
The tax cost in the income statement consists of tax payable and changes in deferred tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised in total comprehensive income. Deferred tax and deferred
tax assets are calculated on the differences between accounting and tax values of assets and liabilities.
Deferred tax is calculated on the basis of the Group’s tax loss carryforward, deductible temporary differences and taxable
temporary differences.
Any deferred tax assets shall be recognised if it is considered probable that the tax asset will be recovered. Assets and liabil-
ities associated with deferred tax are recognised as a net amount when there is a legal right to offset assets and liabilities for
tax payable and the Group has the ability and intention to settle net tax payable.
Changes in assets and liabilities associated with deferred tax that are due to changes in the tax rate are generally recognised
in the income statement.
New tax rules for pension and life insurance companies
In December 2018, the Norwegian Parliament (Storting) adopted amendments to the tax rules for pension and life insurance
companies. For life insurance companies, the new rules entail that, effective from the 2018 financial year, the taxation of
income and expenses associated with assets in the group portfolio and investment option portfolio (customer assets) must
take place in accordance with accounting legislation. A consequence of this is that the income and expenses must not only be
accrued and dated in accordance with the accounts, but must generally be taxed in accordance with the accounts.
The principle applies to both financial assets and other types of assets (such as business assets, etc.) that are owned by
customer assets. The technical result that appears in the accounts is used as a basis for the taxation and no permanent or
temporary differences for tax purposes will therefore arise.
When introducing the new rules, transitional rules were also adopted whereby net unrealised gains linked to customer assets
shall be recognised as income for tax purposes in 2018. These previously provided a basis for tax deductions through insur-
ance reserves.
Tax deductions are no longer permitted for provisions to the risk equalisation fund (RUF). In accordance with the transitional
rules, provisions to the RUF at the end of 2017 are allocated to a separate account that is recognised as income for tax pur-
poses upon discontinuation of the business. No tax expense will arise if the going concern assumption is in place and there
will thus be no basis for capitalising deferred tax.
New tax rules for p&c insurance companies
In December 2018, the Norwegian Parliament adopted amendments to the tax rules for P&C insurance companies which also
apply for risk products in life insurance companies. The amendments entered into force from and including the 2018 financial
year and entail that tax deductions will only be permitted on an ongoing basis for expenses that will most probably arise. This
specifically restricts deductions for provisions for probable future expenses linked to insurance liabilities. The deduction rule is
based on the following accounting balance sheet figures:
•
•
•
Provisions for unearned gross premium
Provisions for unexpired risk
Gross claims reserve
Therefore, tax deductions are no longer permitted for provisions to the guarantee scheme or National Fund for Natural Disas-
ter Assistance.
When introducing the new rules, transitional rules were also adopted which allow P&C insurance companies to transfer the
difference between the provision for 2017 and the provisions for 2018 to a separate account with 10 per cent straight-line
income recognition over 10 years from and including the 2018 financial year. The companies in the Group have made use of
this transitional rule.
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SECTION 8. ANNUAL ACCOUNTS AND NOTES Under the transitional rules, net provisions to the National Fund for Natural Disaster Assistance and guarantee scheme at
the end of 2017 can be allocated to a separate account recognised as income for tax purposes upon discontinuation of the
business. No tax expense will arise if the going concern assumption is in place and there will thus be no basis for capitalising
deferred tax.
Financial tax
In connection with the national budget for 2018, it was agreed to continue with a financial tax consisting of two elements:
•
•
Financial tax on salaries. This is set at 5 per cent and will follow the rules for employer’s National Insurance
contributions.
The tax rate on the ordinary income for companies subject to the financial tax will be continued at the 2016 level (25
per cent), while it will otherwise be reduced from 23 per cent to 22 per cent from 1 January 2019.
The Storebrand Group includes companies that are both subject to and not subject to the financial tax. Therefore, when
capitalising deferred tax/deferred tax assets in the consolidated financial statements, the company tax rate that applies for the
individual companies is used (22 or 25 per cent).
Reference is made to Note 26 - Tax for further information.
18. Provision for dividends
The proposed dividend is classified as equity until approved by the general meeting and presented as liabilities after this date.
The proposed dividend is not included in the calculation of the solvency capital.
19. Leasing
A lease is classified as a finance lease if it mainly transfers the risk and rewards incident to ownership. Other leases are classi-
fied as operating leases. Storebrand has no financial lease agreements.
20. Statement of cash flows
The statement of cash flows is prepared using the direct method and shows cash flows grouped by sources and use. Cash is
defined as cash, receivables from central banks and receivables from credit institutions with no agreed period of notice.
21. Biological assets
Pursuant to IAS 41, investments in forestry are measures as biological assets. Biological assets are measured at fair value,
which is defined based on alternative fair value estimates, or the present value of expected net cash flows. Changes in the
value of biological assets are recognised in the income statement. Ownership rights to biological assets are recognised at the
point in time when the purchase agreement is signed. Annual income and expenses are calculated for forestry and outlying
fields.
Note 2: Critical accounting estimates and judgements
In preparing the consolidated financial statements the management are required to apply estimates, make discretionary
assessments and apply assumptions for uncertain amounts. The estimates and underlying assumptions are reviewed on an
ongoing basis and are based on historical experience and expectations of future events and represent the management’s best
judgement at the time the financial statements were prepared.
A description of the most important elements and assessments in which discretion is used and which may influence rec-
ognised amounts or key figures is provided below and in Note 13 for Solvency II and in Note 26 for Tax.
Actual results may differ from these estimates.
Insurance contracts
Insurance risk is the risk of higher than expected payments and/or unfavourable changes in the value of an insurance liability
due to the actual development differing from what was expected when premiums or provisions were calculated.
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STOREBRAND ANNUAL REPORT 2018
In the consolidated accounts, insurance liabilities with a guaranteed interest rate are included, but using different principles in
the Norwegian and the Swedish activities. An immaterial asset (value of business in-force – VIF) linked to the insurance con-
tracts in the Swedish activities is also included. This asset originated from Storebrand’s purchase of the insurance business.
There are several factors that may have an impact on the size of the insurance liabilities including VIF, such as biometric factors
relating to higher life expectancy, future returns and invalidity, as well as the development of future costs and legal aspects,
such as amendments to legislation and judgments handed down in court cases, etc.
In the long term, a low interest rate will represent a challenge for insurance contracts with a guaranteed interest rate and, to-
gether with a reduced customer buffer, may have an impact on the amount recorded that is linked to the insurance contracts.
The Norwegian insurance contracts with guaranteed interest rates are discounted at the premium calculation rate (around 3.2
per cent on average). The Swedish insurance liabilities with guaranteed interest rates have been discounted by a yield curve
that coincides with the Solvency II yield curve.
In the Norwegian business, a significant share of the insurance contracts have annual interest rate guarantees. Changes in
estimates and valuations may entail a change in the return on the customer portfolios. Depending on the size of any impair-
ment in value, such impairment may be offset by a reduction in the market value adjustment reserve and additional statutory
reserves, so that the effect on the owner’s result may be limited. Correspondingly, increases in values could, to a large extent,
increase the size of such funds.
In the Swedish business, there are no contracts with an annual interest rate guarantee. However, there are insurance contracts
with a terminal value guarantee. These contracts are discounted by a market-based calculated interest rate where parts of the
yield curve used are not liquid. Changes in the discount rate may have a significant impact on the size of the insurance liabili-
ties and impact the result. If the associated customer assets have a higher value than the recognised value of these insurance
liabilities, then the difference will represent a conditional customer allocated fund – conditional bonus (buffer capital). Changes
in the assumptions for future administrative expenses (cost assumptions) may also have a significant impact on the recognised
insurance liabilities. Changes in estimates and valuations may entail a change in the return on the customer portfolios. De-
pending on the size of any impairment in value, such impairment may be offset by a reduction in the conditional bonus, so that
the effect on the owner’s result may be limited. If the value of the individual insurance contract is higher than the associated
customer assets, the owner will have to cover the deficient capital.
Further information about insurance liabilities is provided in Notes 7, 38 and 39.
Investment properties
Investment properties are measured at fair value. The commercial real estate market in Norway and Sweden is not particularly
liquid, nor is it transparent. Uncertainty will be linked to the valuations, and they require exercise of professional judgement,
especially in periods with turbulent finance markets.
Key elements included in valuations that require exercising judgement are:
•
•
•
•
•
Market rent and vacancy trends
Quality and duration of rental income
Owners’ costs
Technical standard and any need for upgrading
Discount rates for both certain and uncertain cash flows, as well as residual value
External valuations are also obtained for parts of the portfolio every quarter. All properties must have an external valuation
during at least a 3 year period.
Reference is also made to Note 12 in which the valuation of investment properties at fair value is described in more detail.
Financial instruments at fair value
There will be some uncertainty associated with the pricing of financial instruments, particularly instruments that are not priced
in an active market. This is particularly true for the types of securities priced on the basis of non-observable assumptions, and
for these investments various valuation techniques are applied in order to fix fair value. These include private equity invest-
ments, investments in foreign properties, and other financial instruments where theoretical models are used in pricing. Any
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SECTION 8. ANNUAL ACCOUNTS AND NOTES
changes to the assumptions could affect recognised amounts. The majority of such financial instruments are included in the
customer portfolio.
There is uncertainty linked to fixed-rate loans recorded at fair value, due to variation in the interest rate terms offered by banks
and since individual borrowers have different credit risk.
Reference is also made to Note 12 in which the valuation of financial instruments at fair value is described in more detail.
Deferred tax and uncertain tax positions
Calculation of deferred tax assets, deferred tax liabilities and the income tax expense is based on the interpretation of rules
and estimates.
The Group’s business activities may give rise to disputes, etc. related to tax positions with an uncertain outcome. The Group
makes provisions for uncertain and disputed tax positions with best estimates of expected amounts, subject to notices or deci-
sions by the tax authorities. The provisions are reversed if the disputed tax position is decided to the benefit of the Group and
can no longer be appealed.
Reference is made to further information in Note 26.
Note 3: Acquistion
Silver
On 24 October 2017, Storebrand Livsforsikring AS entered into an agreement to acquire Silver Pensjonsforsikring (Silver). On
17 October 2017, Silver was set under administration.
The transaction was completed in January 2018 after Silver was released from administration. The transaction was completed
in two parts, with the first part as an acquisition of the bifurcated insurance portfolio (amounted to NOK 9.7 billion), and the
latter as an acquisition of Silver Pensjonsforsikring AS with its remaining insurance portfolio (amounted to NOK 0.3 billion) and
operations. The remaining insurance portfolio for Silver Pensjonsforsikring consisting of pension capital certificates and individ-
ual pension contracts with no guarantee.
Before acquisition as a part of the administration solution, Silver’s portfolio of paid-up policies has been converted to paid-up
policies with investment options (FMI) for retirement pension coverage, amounted NOK 8.3 billion. Risk cover (paid-up policies)
is continued based on a reduced base rate of 2.75%, amounted NOK 1.4 billion.
Storebrand Livsforsikring AS paid a purchase price of NOK 520 million funded by the company portfolio. The purchase price
has been transferred to Silver’s customers as a part of the administrative board’s solution, and contributes to maintaining good
pensions for the customers.
The amount of NOK 520 million has been transferred to Silver’s customers, and in the acquisition analysis the excess value of
the acquisition will be allocated to the insurance contracts (VIF –value of business in force) amounted NOK 280 million, which
are amortised over 10 years, reserve strength due to transition to Storebrand’s tariffs amounted NOK 97 million, deferred tax
asset amounted NOK 374 million and negative goodwill amounted NOK 37 million.
As a part of simplifying the corporate structure, Storebrand Livsforsikring AS has completed a merger with the fully owned sub-
sidiary Silver Pensjonsforsikring AS. The merger has been carried out without consideration pursuant to the Norwegian Limited
Liability Companies Act §13-23 and §13-1 with accounting effect from 1 January 2018.
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STOREBRAND ANNUAL REPORT 2018 ACQUISITION ANALYSIS SILVER
NOK million
Assets
- VIF
- Deferred tax assets
Total intangible assets
Financial assets
Other assets
Bank deposits
Total assets
Liabilities
Insurance liabilities
Current liabilities
Net identifiable assets and liabilities
Reserve strengthning
Goodwill
Fair value at acquisition date
Book values in the
financing insurance
Excess value upon
company
liabilities
acquistion
Book values
Payment for
9,525
35
9,560
10,026
34
-500
520
520
20
500
280
374
654
654
654
280
374
654
9,525
520
35
10,734
10,026
54
654
-97
-37
520
Skagen
Storebrand acquired 90.95% of the shares in SKAGEN in December 2017. The remaining shares representing 9.05% of the
total share capital was B shares owned by the employees.
In the end of April 2018 Skagen AS purchased the B-shares from the employees for a consideration of NOK 120 million,
complete with buy back of own shares. The transaction is completed and recorded as equity transaction with deduction from
equity, and the shares will be erased.
After the transaction Storebrand Asset Management AS owns 100% of the shares in Skagen AS.
Note 4: Profit by segments
Storebrand’s operation includes the segments Savings, Insurance, Guaranteed Pension and Other.
Savings
The savings segment includes products for retirement savings with no interest rate guarantees. The segment consists of de-
fined contribution pensions in Norway and Sweden, asset management and retail banking products. In addition, certain other
subsidiaries in Storebrand Livsforsikring and SPP are included in Savings.
Insurance
The insurance segment provides health insurance in the Norwegian and Swedish corporate and retail markets, P&C insurance
and personal risk products in the Norwegian retail market and employer’s liability insurance and pension-related insurance in
the Norwegian and Swedish corporate markets.
Guaranteed pension
The guaranteed Pension segment includes long-term pension savings products that give customers a guaranteed rate of
return. The area includes defined benefit pensions in Norway and Sweden, paid-up policies and individual capital and pension
insurances.
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SECTION 8. ANNUAL ACCOUNTS AND NOTES
Other
The result for Storebrand ASA is reported under Other, as well as the result for the company portfolios and small subsidiaries
of Storebrand Life Insurance and SPP. In addition, the results associated with loans to commercial enterprises by Storebrand
Bank and the activities at BenCo are reported in this segment. The elimination of intra-group transactions that have been
included in the other segments has also been included.
Reconciliation between the income statement and alternative statement of the result (segment)
The results in the segments are reconciled against the Group result before amortisation and write-downs of intangible assets.
The Group’s income statement includes gross income and costs linked to both the insurance customers and owners (share-
holders). The alternative statement of the result only includes result elements relating to owners (shareholders) which are
the result elements that the Group has performance measures and follow-up for. The result lines that are used in segment
reporting will therefore not be identical with the result lines in the Group’s income statement. Below is an overall description of
the most important differences.
Fee and administration income consists of fees and fixed administrative income. In the Group’s income statement, the item is
classified as premium income, net interest income from bank or other income depending on the type of activity. The Group’s
income statement also includes savings elements for insurance contracts and possibly transferred reserve.
Price of return guarantee and profit risk (fee incomes) – Storebrand Life Insurance AS
The return guarantees in group pension insurance with a return guarantee must be priced upfront. The level of the return
guarantee, the size of the buffer capital (additional statutory reserves and unrealised gains), and the investment risk of the
portfolio in which the pensions assets are invested determine the price that the customer pays for his or her return guaran-
tee. Return guarantees are priced on the basis of the risk to which the equity is exposed. The insurance company bears all the
downside risk and must carry reserves against the policy if the buffer reserves are insufficient or unavailable.
The insurance result consists of insurance premiums and claims.
Insurance premiums consist of premium income relating to risk products (insurance segment) that are classified as premium
income in the Group’s income statement.
Claims consist of paid-out claims and changes in provisions for claims incurred but not reported (IBNR) and claims reported
but not settled (RBNS) relating to risk products that are classified as claims in the Group’s income statement.
Administration costs consist of the Group’s operating costs in the Group’s income statement minus operating costs allocated
to traditional individual products with profit sharing.
Financial items and risk result life and pensions include Risk Result Life and Pensions and Financial Result includes net profit
sharing and Loan Losses.
Risk result life and pensions consists of the difference between risk premium and claims for products relating to defined-contri-
bution pension, unit linked insurance contracts (savings segment) and defined-benefit pension (guaranteed pension segment).
Risk premium is classified as premium income in the Group’s income statement.
The financial result consists of the return for the company portfolios of Storebrand ASA, Storebrand Livsforsikring AS and SPP
Pension & Försäkring AB (Other segment), while returns for the other company portfolios in the Group are a financial result
within the segment which the business is associated with. Returns on company portfolios are classified as net income from
financial assets and property for companies in the Group’s income statement. The financial result also includes returns on cus-
tomer assets relating to products within the insurance segment, and in the Group’s income statement this item will be entered
under net income from financial assets and property for customers. In the alternative income statement, the result before tax
of certain unimportant subsidiaries is included in the financial result, while in the Group’s income statement, this is shown as
other income, operating costs and other costs.
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STOREBRAND ANNUAL REPORT 2018
Net profit sharing
Storebrand Livsforsikring AS
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.
Individual endowment insurance and pensions written by the Group prior to 1 January 2008 will continue to apply the profit
rules effective prior to 2008. New contracts may not be established in this portfolio. The Group can retain up to 35 per cent of
the total result after allocations to additional statutory reserves.
Any negative returns on customer portfolios and returns lower than the interest guarantee that cannot be covered by addi-
tional statutory reserves must be covered by the company’s equity and will be included in the net profit-sharing and losses
line.
SPP Pension & Försäkring AB
For premiums paid from and including 2016, previous profit sharing is replaced by a guarantee fee. The guarantee fee is annu-
al and is calculated as a percentage of the capital. It goes to the company.
For contributions agreed to prior to 2016, the profit sharing is maintained, i.e. that if the total return on assets in one calendar
year for a premium-determined insurance (IF portfolio) exceeds the guaranteed interest, profit sharing will be triggered. When
profit sharing is triggered, 90 per cent of the total return on assets passes to the policyholder and 10 per cent to the company.
The company’s share of the total return on assets is included in the financial result.
In the case of defined-benefit contracts (KF portfolio), the company is entitled to charge an indexing fee if the group profit
allows the indexing of the insurance. Indexing is allowed up to a maximum equalling the change in the consumer price index
(CPI) between the previous two Septembers. Pensions that are paid out are indexed if the consolidated figures on 30 Septem-
ber exceed 107 per cent, and half of the fee is charged. The whole fee is charged if the consolidated figures on 30 September
exceed 120 per cent, in which case paid-up policies can also be included. The total fee equals 0.8 per cent of the insurance
capital.
The guaranteed liability is continuously monitored. If the guaranteed liability is higher than the value of the assets, a provision
must be made in the form of a deferred capital contribution. If the assets are lower than the guaranteed liability when the
insurance payments start, the company supplies capital up to the guaranteed liability in the form of a realised capital contribu-
tion. Changes in the deferred capital contribution are included in the financial result.
In the case of defined-benefit contracts (KF portfolio), the company is entitled to charge an indexing fee if the group profit
allows the indexing of the insurance.
Loan losses:
Loan losses consist of individual and group write-downs on lending activities that are on the balance sheet of Storebrand Bank
Group. In the Group’s income statement, the item is classified under loan losses. With regard to loan losses that are on the
balance sheet of the Storebrand Livforsikring Group, these will not be included on this line in either the alternative income
statement or in the Group’s income statement, but in the Group’s income statement will be included in the item, net income
from financial assets and property for customers.
Amortisation of intangible assets includes depreciation and possible write-downs of intangible assets established through
acquisitions of enterprises.
125
SECTION 8. ANNUAL ACCOUNTS AND NOTES
2018
1,267
748
1,138
5
3,158
-360
2,799
2017
1,511
608
766
55
2,940
-536
2,404
Savings
2018
3,708
2017
3,394
Insurance
Guaranteed pension
2018
2017
2018
1,441
2017
1,483
1,291
3,854
-2,562
-614
677
71
748
1,146
3,872
-2,726
-711
435
173
608
-828
614
525
1,138
-2,394
1,314
-46
1,267
-1,891
1,503
8
1,511
Other
Storebrand Group
2018
-138
2017
-107
49
-89
93
5
2
-105
161
55
2018
5,011
1,291
3,854
-2,562
-3,786
2,516
642
3,158
-360
2,799
-889
595
171
766
2017
4,771
1,146
3,872
-2,726
-3,490
2,427
513
2,940
-536
2,404
GROUP PROFIT BY SEGMENTS
NOK million
Savings
Insurance
Guaranteed pension
Other
Group profit before amortisation
Amortisation of intangible assets 1)
Group pre-tax profit
NOK million
Fee and administation income
Insurance result
- Insurance premiums f.o.a.
- Claims f.o.a.
Operating cost
Operating profit
Financial items and risk result life & pension
Group profit before amortisation
Amortisation of intangible assets1)
Group pre-tax profit
NOK million
Fee and administation income
Insurance result
- Insurance premiums f.o.a.
- Claims f.o.a.
Operating cost
Operating profit
Financial items and risk result life & pension
Group profit before amortisation
Amortisation of intangible assets 1)
Group pre-tax profit
1) Amortisation of intangible assets are included in Storebrand Group
126
STOREBRAND ANNUAL REPORT 2018 STOREBRAND GROUP ARE REPRESENTED IN THE FOLLOWING COUNTRIES:
Segment/Country
Norway
Sweden
Savings
Insurance
Guaranteed pension
Other
KEY FIGURES BY BUSINESS AREA
X
X
X
X
X
X
X
X
NOK million
Group
Earnings per ordinary share
Equity
Savings
Premium income Unit Linked
Unit Linked reserves
AuM asset management
Retail lending
Insurance
Total written premiums
Claims ratio
Cost ratio
Combined ratio
Guaranteed pension
Guaranteed reserves
Guaranteed reseves in % of total reserves
Net transfer out of guaranteed reserves
Buffer capital in % of customer reserves Storebrand Life Group 1)
Buffer capital in % of customer reserves SPP 2)
Solidity
Solvency II 3)
Solidity capital (Storebrand Life Group) 4)
Capital adequacy Storebrand Bank
Core Capital adequacy Stobrand Bank
1) Additional statutory reserves + market value adjustment reserve
2) Conditional bonuses
3) See note 13 for specification of Solvency II
UK
X
Guernsey
Netherlands
Denmark
X
X
X
X
2018
2017
7,89
32 873
16,021
179,299
707,297
46,526
4,455
66%
16%
82%
260,573
59.2%
10
6.4%
8.7%
173%
58,978
18.9%
16.6%
5,28
30 832
15,008
167,849
721,165
42,137
4,462
70%
18%
89%
264,320
61.2%
117
7.2%
9.0%
172%
63,972
18.9%
16.6%
4) The term solidity capital encompasses equity, subordinated loan capital, the risk equalisation fund, the market value adjustment reserve, additional statutory reserves, conditional bonuses,
excess value/deficit related to bonds at amortised cost and accrued profit.
127
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 5: Risk management and internal control
Storebrand’s income and performance are dependent on external factors that are associated with uncertainty. The most
important external risk factors are the developments in the financial markets and changes in life expectancy in the Norwegian
and Swedish populations. Certain internal operational factors can also result in losses, e.g. errors linked to the management of
the customers’ assets or payment of pension.
Continuous monitoring and active risk management are core areas of the Group’s activities and organisation. The basis for
risk management is laid down in the Board’s annual review of the strategy and planning process, which sets the appetite for
risk, risk targets and overriding risk limits for the operations. At the Storebrand group, responsibility for risk management and
internal control is an integral part of management responsibility
Organisation of risk management
The Group’s organisation of the responsibility for risk management follows a model based on three lines of defence. The obje-
ctive of the model is to safeguard the responsibility for risk management at both company and Group level.
Board of Directors
CEO
Executive management
CRO Group
Independent control functions
Internal
auditing
Risk
management
Actuary
function
Compliance
Anti-money
laundering (AML)
Privacy
(DPO)
The boards of directors of both Storebrand ASA and the group companies have the overall responsibility for limiting and
following up the risks associated with the activities. The boards set annual limits and guidelines for risk-taking in the company,
receive reports on the actual risk levels, and perform a forward-looking assessment of the risk situation.
The Board of Storebrand ASA has established a Risk Committee consisting of 3 Board members. The main task of the Risk
Committee is to prepare matters to be considered by the Board in the area of risk, with a special focus on the Group’s appetite
for risk, risk strategy and investment strategy. The Committee should contribute forward-looking decision-making support
related to the Board’s discussion of risk taking, financial forecasts and the treatment of risk reporting.
Managers at all levels in the company are responsible for risk management within their own area of responsibility. Good risk
management requires targeted work on objectives, strategies and action plans, identification and assessment of risks, docu-
mentation of processes and routines, prioritisation and implementation of improvement measures, and good communication,
information and reporting.
128
STOREBRAND ANNUAL REPORT 2018 Independent control functions
Independent control functions have been established for risk management for the business (Risk Management Function/Chief
Risk Officer), for compliance with the regulations (Compliance Function), for ensuring the insurance liabilities are calculated
correctly (Actuary Function), for data protection (Data Protection Officer), for money laundering (Anti-Money Laundering) and
for the bank’s lending. Relevant functions have been established for both the Storebrand Group (the Group) and all of the
companies requiring a licence. The independent control functions are organised directly under the companies’ managing dire-
ctors and report to the boards of the respective companies.
In terms of function the independent control functions are affiliated with the Group CRO, who is responsible to the group CEO
and reports to the board of Storebrand ASA. The Group CRO shall ensure that all significant risks are identified, measured and
appropriately reported. The Group CRO function shall be actively involved in the development of the Group’s risk strategy and
maintain a holistic view of the company’s risk exposure. This includes responsibility for ensuring compliance with the relevant
regulations for risk management and the consolidated companies’ operations.
The internal audit function is organised directly under the Board and shall provide the boards of the relevant consolidated
companies with confirmation concerning the appropriateness and effectiveness of the company’s risk management, including
how well the various lines of defence are working.
Note 6: Operational risk
Operational risk is the risk of loss due to inadequate or failing internal processes or systems, human error or external events.
The definition includes compliance risk: Compliance risk is the risk of loss or public sanctions as a result of non-compliance
with external or internal rules.
Risk management shall ensure that the risk level at any time is compatible with the appetite for risk and within internal and
regulatory frameworks. The Group seeks to reduce operational risk through an effective system for internal control. Risks are
followed up through the management’s risk reviews, with documentation of risks, measures and the follow-up of incidents. In
addition, Internal Audit carries out independent checks through audit projects adopted by the Board.
Contingency plans have been prepared to deal with serious incidents in business-critical processes and recovery plans.
Storebrand’s IT systems are vital for operations and reliable financial reporting. Errors and disruptions may have consequ-
ences for operations and can impact on the trust the Group has from both customers and shareholders. In the worst case,
abnormal situations can result in penalties from the supervisory authorities. Storebrand’s IT platform is characterised by
complexity and integration between different specialist systems and joint systems. The operation of the IT systems has largely
been outsourced to different service providers. A management model has been established with close follow-up of providers
and internal control activities in order to reduce the risk associated with the development, administration and operation of
the IT systems, as well as information security. The bank platform and insurance platform are based on purchased standard
systems that are operated and monitored through outsourcing agreements. There is a greater degree of own development for
the life insurance activities, but parts of the operation of this have also been outsourced. The individual portfolio is handled in
a purchased standard system.
129
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 7: Insurance risk
Storebrand offers traditional life and pension insurance as both group and individual contracts. Contracts are also offered in
which the customer has the choice of investment.
The insurance risk in Norway is largely standardised between the contracts in the same industry as a result of detailed regulati-
on from the authorities. In Sweden, the framework conditions for insurance contracts entail major differences between the
contracts within the same industry.
The risk of long life expectancy is the greatest insurance risk in the Group. Other risks include the risk of disability and risk of
mortality. The life insurance risks are:
1.
2.
3.
Long life expectancy – The risk of erroneously estimating life expectancy and future pension payments. Historical
developments have shown that an increasing number of people attain retirement age and live longer as pensioners
than was previously the case. There is a great deal of uncertainty surrounding future mortality development
In the event of longer life expectancy beyond that assumed in the premium tariffs, the owner could risk higher char
ges on the owner’s result in order to cover necessary statutory provisions.
Disability – The risk of erroneous estimation of future illness and disability. There will be uncertainty associated with
the future development of disability, including disability pensioners who are returned to the workforce.
Death – The risk of erroneous estimation of mortality or erroneous estimation of payment to surviving relatives. Over
the last few years, a decrease in mortality and fewer young surviving relatives have been registered, compared with
earlier years.
In the Guaranteed Pensions segment, the Group has a significant insurance risk relating to long life expectancy for group and
individual insurance agreements. In addition, there is an insurance risk associated with disability and pensions left to spouses
and/or children. The disability coverage in Guaranteed Pensions is primarily sold together with a retirement pension. The risk
of mortality is low in Guaranteed Pensions when viewed in relation to other risks. In SPP it is possible to change the future pre-
miums for the IF portfolio, reducing the risk significantly. In Norway it is also possible to change the future premiums of group
policies, but only for new accumulation, entailing reduced risk.
Occupational pension agreements (hybrid) are reported in the Guaranteed Pension segment when a customer has an agree-
ment without a choice for investment of the pension assets. This is a small portfolio with limited insurance risk.
In the Savings segment the Group has a low insurance risk. The insurance risk is largely associated with death, with some
long-life risk for paid-up policies with investment options.
In the Insurance segment, the Group has an insurance risk associated with disability and death. In addition, there are insuran-
ce risks associated with occupational injury, critical illness, cancer insurance, child insurance, accident insurance and health
insurance. For occupational injury, the risk is first and foremost potential errors in the assessment of the level of provisions,
because the number of claim years can be up to 25 years. The risk within critical illness, cancer, accident and health insurance
is considered to be limited based on the volume and underlying volatility of the products. Within P&C insurance, the risk of
house fire and personal injury for motor vehicle insurance constitute the main risks.
The Other segment includes the insurance risk at BenCo. BenCo offers pension products to multinational companies through
Nordben and Euroben. The insurance risk at BenCo primarily relates to group life insurance, early retirement pensions and
pensions for expatriate employees. These are defined-benefit pensions that can be time-limited or lifelong. Many of the agree-
ments have short durations, typically five-year early retirement pensions, and the insurance risk is therefore limited.
130
STOREBRAND ANNUAL REPORT 2018
Description of products
Risk premiums and tariffs
Guaranteed Pension
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.
For individual insurance in Norway, the premiums for death risk and long life expectancy risk are based on tariffs produced by
insurance companies on the basis of their shared experience. This applies to both endowment and pension insurance. Disabi-
lity premiums are based on the company’s own experience.
The risk premium for group insurance in Sweden is calculated as an equalised premium within the insurance group, based on
the group distribution of age and gender, as well as the requirement for coverage of next of kin. The risk premium for individu-
al insurance is determined individually and is based on age and gender.
SPP’s mortality assumptions are based on the general mortality tariff DUS14, adjusted for the company’s own observations.
Insurance
Tariffs for group life insurance and certain risk insurances within group pensions also depend on the industry or occupation,
in addition to age and gender. Group life insurance also applies tariffs based on claims experience. The company’s tariff for
group life insurance, both for life and disability cover, is based on the company’s own experience.
Newer individual endowment policies are priced without taking gender into account. The tariffs for all individual endowment
policies are based on the company’s own experiences.
For P&C insurance (occupational injury, property and motor vehicle) the tariffs are based on the company’s own experiences.
Management of insurance risk
Insurance risk is monitored separately for every line of insurance in the current insurance portfolio. The development of the
risk results is followed throughout the year. For each type of risk, the ordinary risk result for a period represents the differen-
ce between the risk premiums the company has collected for the period and the sum of provisions and payments that must
be made for insured events that occur in the period. The risk result takes into account insured events that have not yet been
reported, but which the company, on the basis of experience, assumes have occurred.
When writing individual risk cover, the customer is subject to a health check. The result of the health check is reflected in the
level of premium quoted. When arranging group policies with risk cover, all employees of small companies are subject to a
health check, while for companies with many employees a declaration of fitness for work is required. In the assessment of risk
(underwriting), the company’s industrial category, sector and sickness record are also taken into account.
Large claims or special events constitute a major risk for all products. The largest claims will typically be in the group life, oc-
cupational injury and personal injury (motor vehicle accidents) segments.
The company manages its insurance risk through a variety of reinsurance programmes. Through catastrophe reinsurance
(excess of loss), the company covers losses (single claims and reserves provisions) where a single event causes more than two
deaths or disability cases. This cover is also subject to an upper limit. A reinsurance agreement for life policies covers death
and disability risk that exceeds the maximum risk amount for own account the company practises. The company’s maximum
risk amount for own account is relatively high, and the risk reinsured is therefore relatively modest.
The company also manages its insurance risk through international pooling. This implies that multinational corporate custo-
mers can equalise the results between the various units internationally. Pooling is offered for group life and risk cover within
group defined-benefit and defined-contribution pensions.
131
SECTION 8. ANNUAL ACCOUNTS AND NOTES Risk result
The risk result consists of premiums the company charges to cover insurance risks less the actual costs in the form of insurance
reserves and payments for insured events such as death, pensions, disability and accidents.
The table below specifies the risk result for the largest entities in the Group and also states the effect of reinsurance and pooling
on the result. The risk result in the table shows the total risk result for distribution to customers and owner (the insurance
company).
SPECIFICATION OF RISK RESULT
NOK million
Survival
Death
Disability
Reinsurance
Pooling
Other 1)
Total risk result
Storebrand Life Insurance AS
SPP Pension & Försäkring AB
2018
2017
2018
2017
2
367
643
47
52
-29
1,081
-52
440
218
-18
19
-3
603
23
-4
74
-3
-16
-223
-150
67
21
84
-3
-1
-8
161
1) Change in estimate linked to closed risk product in SPP.
Adequacy test
In accordance with the accounting standard IFRS 4 Insurance Contracts, the insurance liabilities that are included shall be ade-
quate and a liability adequacy test shall be performed. Storebrand satisfies the adequacy tests for 2018, and they have thus
no impact on the results in the financial statements for 2018.
Note 8: Financial market risk
Market risk means changes in the value of assets as a result of unexpected volatility or changes in prices on the financial
markets. It also refers to the risk that the value of the insurance liability develops differently to that of the assets.
The most significant market risks for Storebrand are share market risk, credit risk, property price risk, interest rate risk and
exchange rate risk.
For the life insurance companies, the financial assets are invested in a variety of sub-portfolios. Market risk affects Store-
brand’s income and profit differently in the different portfolios. There are three main types of sub-portfolio: company portfoli-
os, customer portfolios without a guarantee (unit linked insurance) and customer portfolios with a guarantee.
The market risk in the company portfolios has a direct impact on the profit.
The market risk in unit linked insurance is at the customers’ risk and expense, meaning Storebrand is not directly affected by
changes in value. Nevertheless, changes in value do affect Storebrand’s profit indirectly. Income is based largely on the size of
the reserves, while the costs tend to be fixed. Lower returns on the financial market than expected will therefore have a nega-
tive effect on Storebrand’s future income and profit.
For customer portfolios with a guarantee, the net risk for Storebrand will be lower than the gross market risk. The extent of
measures to reduce risk depends on several factors, the most important being the size and flexibility of the customer buffers
and level and duration of the return guarantee. If the investment return is not sufficient to meet the guaranteed interest rate,
the shortfall may be met by using customer buffers built up from previous years’ surpluses. Customer buffers primarily consist
of unrealised gains and additional reserves in Norway (one year’s interest rate guarantee) and conditional bonus in Sweden.
Storebrand must cover any deviations between return and interest rate guarantee if the return is lower than the interest rate
guarantee and the difference cannot be covered by customer buffers or the return will be negative.
132
STOREBRAND ANNUAL REPORT 2018
For guaranteed customer portfolios, the risk is affected by changes in interest rates. Falling interest rates are positive for the
investment return in the short term due to price appreciation for bonds, but negative in the long term because it reduces the
probability of achieving a return higher than the guarantee. Long-term interest rates increased slightly in Norway in 2018, but
fell slightly in Sweden. Short-term money market rates increased in both Norway and Sweden, but the interest rate in Sweden
remains negative. Paid-up policies have a particularly high risk in a low interest rate scenario, because there are very limited
opportunities for changing the price or terms. In Norway, the effect of low interest rates will be dampened in the coming years
by a large proportion of amortised cost portfolios that will greatly benefit from securities purchased at interest rate levels
higher than the current levels.
The composition of the assets within each sub-portfolio is determined by the company’s investment strategy. The investment
strategy also establishes guidelines and limits for the company’s risk management, credit exposure, counterparty exposure,
currency risk, use of derivatives, and requirements regarding liquidity.
ASSET ALLOCATION
Properties at fair value
Bonds at amortised cost
Money market
Bonds at fair value
Equities at fair value
Loans at amortised cost
Total
Customer portfolios
Customer portfolios
with guarantee
without guarantee
Company portfolios
11%
37%
1%
30%
7%
13%
100%
2%
5%
17%
76%
29%
1%
70%
100%
100%
Storebrand aims to take low financial risk for the company portfolios, and most of the funds were invested in short and medi-
um-term fixed income securities with low credit risk.
The financial risk related to customer portfolios without a guarantee is borne by the insured person, and the insured person
can choose the risk profile. Storebrand’s role is to offer a good, broad range of funds, to assemble profiles adapted to diffe-
rent risk profiles, and to offer systematic reduction of risk towards retirement age. The most significant market risks are share
market risk and exchange rate risk.
The most significant market risks facing guaranteed customer portfolios are linked to equity risk, interest rate risk, credit risk
and property price risk. There were no major changes in the investment allocation during 2018. In Norway most of the credit
risk is linked to securities, which are carried at amortised cost. This reduces the risk to the company’s profit significantly.
The market risk is managed by segmenting the portfolios in relation to risk-bearing capacity. For customers who have large
customer buffers, investments are made with higher market risk that give increased expected returns. Equity risk is also ma-
naged by means of dynamic risk management, the objectives of which are to maintain good risk-bearing capacity and to adjust
the financial risk to the buffer situation and the company’s financial strength. By exercising this type of risk management,
Storebrand expects to create good returns both for individual years and over time.
For company portfolios and guaranteed customer portfolios, most of the assets that are in currencies other than the domestic
currency are hedged. This limits the currency risk from the investment portfolios.
Foreign exchange risk primarily arises as a result of investments in international securities, including as a result of ownership
in SPP. Hedging is performed by means of forward foreign exchange contracts at the portfolio level, and the currency posi-
tions are monitored continuously against a total limit. Negative currency positions are closed out no later than the day after
they arose.
In the consolidated financial statements, the value of assets and results from the Swedish operations are affected by changes
in the value of the Swedish krona. Storebrand Livsforsikring AS has hedged parts of the value of SPP through forward foreign
exchange contracts and borrowings in Swedish kroner.
133
SECTION 8. ANNUAL ACCOUNTS AND NOTES FINANCIAL ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NOK million
Net in balance sheet
Net sales
in currency
in NOK
Balance sheet items exclu-
ding currency derivatives
Forwad contracts
Net position
DKK
CAD
EUR
GBP
JPY
SEK
USD
NOK1)
1,362
113
1,225
127
21,682
182,674
3,117
27,432
-197
-286
-1,354
-197
-37,419
-471
-4,347
-2,297
Other currency types
Insurance liabilities in foreign exchange
-188,104
Total net currency positions 2018
Total net currency positions 2017
1) Equity and bond funds denominated in NOK with foreign currency exposurein i.a. EUR and USD NOK 22 billion.
1,164
-173
-128
-71
-15,738
182,204
-1,225
25,134
-188,104
1,572
-1,099
-1,268
-779
-1,242
177,958
-10,579
25,134
-826
-183,719
5,152
9,571
The table above shows the currency positions as at 31 December 2018. Currency exposure is associated primarily with invest-
ments in the Norwegian and Swedish life insurance businesses.
Storebrand Livsforsikring
The company hedges most of the foreign exchange risk in the customer portfolios on an ongoing basis. Foreign exchange risk
exists primarily as a result of investments in international securities, as well as subordinated loans in a foreign currency to a
certain extent. Hedging is performed by means of forward foreign exchange contracts at the portfolio level, and the currency
positions are monitored continuously against a total limit. Negative currency positions are closed out no later than the day
after they arose. In addition, separate limits have been defined so that active currency positions can be taken. Storebrand em-
ploys a currency hedging principle called block hedging, which makes the execution of currency hedging more efficient.
SPP
SPP uses currency hedging for its investments to a certain degree. Currency exposure may be between 0 and 30 per cent in
accordance with the investment strategy.
Banking business
Storebrand Bank ASA hedges net balance sheet items by means of forward contracts.
The permitted limit for the bank’s foreign exchange position is 0.50 per cent of primary capital, which is presently approximate-
ly NOK 12 million.
Guaranteed customer portfolios in more detail
Storebrand Livsforsikring
The annual guaranteed return to the customers follows the basic interest rate. From 2018, new premiums were taken in with a
basic interest rate of 2.0 per cent, and pensions were adjusted upwards with a basic interest rate of 0.5 per cent.
The percentage distribution of the insurance reserves by the various basic annual interest rates as at 31 December is as fol-
lows:
134
STOREBRAND ANNUAL REPORT 2018
Interest rate
6%
5%
4%
3.4 %
3%
2.75%
2.50%
2.00%
0.50%
0%
The table includes premium reserve excluding IBNS
Average interest rate guarantee in per cent
Individual endowment insurance
Individual pension insurance
Group pension insurance
Paid-up policy
Group life insurance
Total
The table includes premium reserve including IBNS
2018
0.3 %
0.3 %
45.8 %
0.4 %
29.5 %
1.8 %
11.0 %
9.5 %
1.0 %
0.5 %
2018
2.6 %
3.8 %
2.5 %
3.3 %
0.1 %
3.2 %
2017
0.3 %
0.3 %
47.8 %
0.4 %
30.1 %
1.1 %
11.3 %
7.6 %
0.7 %
0.4 %
2017
2.7 %
3.8 %
2.7 %
3.4 %
0.1 %
3.2 %
There is a 0 per cent interest rate guarantee for premium funds, defined-contribution funds, pensioners’ surplus funds and
additional statutory reserves.
The interest rate guarantee must be fulfilled on an annual basis. If the company’s investment return in any given year is lower
than the guaranteed interest rate, the equivalent of up to one year’s guaranteed return for the individual policy can be cover-
ed by transfers from the policy’s additional statutory reserves.
To achieve adequate returns with the present interest rates, it is necessary to take an investment risk. This is primarily done by
investing in shares, property and corporate bonds.
Interest rate risk is in a special position because changes in interest rates also affect the fair value of the insurance liability for
the solvency calculation. Since pension disbursements may be many years in the future, the insurance liability is particularly
sensitive to changes in interest rates. In the Norwegian business, greater interest rate sensitivity from the investments will
entail increased risk that the return is below the guaranteed level. The risk management must therefore balance the risk of
the profit for the year (interest rate increase) with the reinvestment risk if interest rates fall below the guarantee in the future.
Bonds at amortised cost are an important risk management tool.
SPP Pension & Insurance
The guaranteed interest rate is determined by the insurance company and is used when calculating the premium and the
guaranteed benefit. The guaranteed interest rate does not entail that there is an annual minimum guarantee for the return as
is the case in Norway.
New premiums in individual defined-contribution pensions (IF) have a guarantee of 1.25% for 85% of the premium. Group
defined-benefit pension (KF) is closed to new members.
SPP bears the risk of achieving a return equal to the guaranteed interest on the policyholders’ assets over time and that the
level of the contracts’ assets is greater than the present value of the insurance liabilities. For IF, profit sharing becomes rele-
vant in SPP if the return exceeds the guaranteed yield. The contracts’ buffer capital must be intact in order for profit sharing
135
SECTION 8. ANNUAL ACCOUNTS AND NOTES
to represent a net income for SPP. In the case of KF, a certain degree of consolidation, i.e. that the assets are greater than
the present value of the liabilities by a certain percentage, is required in order for the owner to receive profit-sharing income
(indexing fee).
If the assets in an insurance contract in the company are less than the market value of the liability, an equity contribution is
allocated that reflects this shortfall. This is termed a deferred capital contribution (DCC), and changes in DCC are recognised in
the income statement as they occur. When the contracts’ assets exceed the present value of the liabilities, a buffer, which is
termed the conditional bonus, is established. Changes in this customer buffer are not recognised in the income statement.
Interest rate
5.20%
4,5%-5,2%
4.00%
3.00%
2,75%-4,0%
2.70%
2.50%
1.60%
1.50%
1.25%
1,25% *
0,5%-2,5%
0.00%
* 1,25% på 85% av Premien
Average interest rate guarantee in per cent
Individual pension insurance
Group pension insurance
Individual occupational pension insurance
Total
2018
13.0 %
0.4 %
1.6 %
47.0 %
7.0 %
0.1 %
6.9 %
0.0 %
4.1 %
4.6 %
5.1 %
4.3 %
5.9 %
2018
3.3 %
2.5 %
3.1 %
2.8 %
2017
13.4 %
0.4 %
1.5 %
49.4 %
7.1 %
0.1 %
7.2 %
0.1 %
4.0 %
4.9 %
2.8 %
4.6 %
4.3 %
2017
3.4 %
2.6 %
3.2 %
2.9 %
In the Swedish operations management of interest rate risk is based on the principle that the interest rate risk from assets
shall approximately correspond to the interest rate risk from the insurance liabilities.
Sensitivity analyses
The tables show the fall in value for Storebrand Life Insurance and SPP’s investment portfolios as a result of immediate value
changes related to financial market risk. The calculation is model-based and the result is dependent on the choice of stress
level for each category of asset and assumptions for diversification. The stresses have been applied to the company portfolio
and guaranteed customer portfolios as at 31 December 2018. The effect of each stress changes the return in each profile.
Unit linked insurance without a guaranteed annual return is not included in the analysis. For these products, the customers
bear the market risk and the effect of a falling market will not directly affect the result or buffer capital.
The amount of stress is the same that is used for the company’s risk management. The stresses include a 12 per cent fall in
shares, 7 per cent fall in property, and an increase in credit spreads of 60 basis points. For interest rates, the stresses include
both an increase and fall of 50 basis points, where the most negative is used. The increase in interest rates is negative for the
result, while the solvency position is negatively affected by a fall in interest rates.
136
STOREBRAND ANNUAL REPORT 2018
The stresses are applied individually, but the overall market risk is less than the sum of the individual stresses, because
diversification is assumed. The correlation between the stresses is the same that is used for Solvency II.
Because it is the immediate market changes that are calculated, dynamic risk management will not affect the outcome.
If it is assumed that the market changes occur over a period of time, then dynamic risk management would reduce the
effect of the negative outcomes and reinforce the positive to some extent.
Resultrisk
Interest rate risk
Equity price risk
Property price risk
Credit risk
Diversification
Result
Storebrand Life Insurance
SPP Pension & Försäkring
NOK million
Share of portfolio
SEK million
Share of portfolio
2,584
1,336
1,377
710
-849
5,158
1.3%
0.6%
0.7%
0.3%
-0.4%
2.5%
331
1,111
594
736
-385
2,387
0.4%
1.3%
0.7%
0.8%
-0.4%
2.8%
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 2018, the customer buffers are of such a size that the effects on the result are significa-
ntly lower.
Storebrand Livsforsikring
Based on the stress test, Storebrand Life Insurance has an overall market risk of NOK 5.2 billion, which is equivalent to
2.5 per cent of the investment portfolio.
If the stress causes the return to fall below the guarantee, it will have a negative impact on the result if the customer
buffer is not adequate. Other negative effects on the result are a lower return from the company portfolio and that there
is no profit sharing from paid-up policies and individual contracts.
SPP Pension & Insurance
Based on the stress test, SPP has an overall market risk of SEK 2.4 billion, which is equivalent to 2.8 per cent of the in-
vestment portfolio.
The buffer situation for the individual contracts will determine if all or portions of the fall in value will affect the financi-
al result. Only the portion of the fall in value that cannot be settled against the customer buffer will be charged to the
result. In addition, the reduced profit sharing or loss of the indexing fees may affect the financial result.
Other operations
The other companies in the Storebrand Group are not included in the sensitivity analysis, as there is little market risk in
these areas. The equity of these companies is invested with little or no allocation to high-risk assets, and the products do
not entail a direct risk for the company as a result of price fluctuations in the financial market.
137
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 9: Liquidity risk
Liquidity risk is the risk that the company is unable to fulfil its obligations without incurring substantial additional expenses in
the form of reduced prices for assets that must be realised, or in the form of especially expensive financing.
For the insurance companies, the life insurance companies in particular, the insurance liabilities are long-term and the cash
flows are generally known long before they fall due. In addition, liquidity is required to handle payments related to operations,
and there are liquidity needs related to derivative contracts. The liquidity risk is handled by liquidity forecasts and the fact that
portions of the investments are in very liquid securities, such as government bonds. The liquidity risk is considered low based
on these measures.
Liquidity risk is one of the largest risk factors for the banking business, and the regulations stipulate requirements for liquidity
management and liquidity indicators. The guidelines for liquidity risk specify principles for liquidity management, and limits
stipulated by the Board for different minimum liquidity and financing indicators. In addition to this, an annual funding strategy
and funding plan are being drawn up that set out the overall limits for the bank’s funding activities.
Separate liquidity strategies have also been drawn up for other subsidiaries in accordance with the statutory requirements.
These strategies specify limits and measures for ensuring good liquidity and a minimum allocation to assets that can be sold
at short notice. The strategies define limits for allocations to various asset types and mean the companies have money market
investments, bonds, equities and other liquid investments that can be disposed of as required.
In addition to clear strategies and the risk management of liquidity reserves in each subsidiary, the Group’s holding compa-
ny has established a liquidity buffer. The development of the liquid holdings is continuously monitored at the Group level in
relation to internal limits. A particular risk is the fact that during certain periods the financial markets can be closed for new
borrowing. Measures for minimising the liquidity risk are to maintain a regular maturity structure for the loans, low costs, an
adequate liquidity buffer and credit agreements with banks which the company can draw on if necessary.
UNDISCOUNTED CASH FLOWS FOR FINANCIAL LIABILITIES 1)
NOK million
0-6 months
6-12 months
1-3 years
3-5 years
> 5 years
cashflows
booked value
Total
Total
Subordinated loan capital
2)
Liabilities to financial
institutions
Deposits from bank
customers
Debt raised from issuan-
ce of securities
Other current liabilities
Uncalled residual liabiliti-
es Limited partnership
Unused credit lines
lending
Lending commitments
Total financial
liabilities 2018
Derivatives related to
funding 2018
Total financial liabilities 2017
279
2
14,419
273
6,646
5,818
3,362
1,672
204
2,517
4,477
2,049
9,525
8,224
1,199
9,658
105
7,357
2
2
14,419
14,419
17,529
6,751
18,487
6,751
5,818
3,362
1,672
32,471
1,403
12,280
11,834
2,049
60,036
46,926
-111
40,089
29
1,230
-76
9,575
-159
9,092
4,298
-317
64,284
23
48,326
1) Liabilities for which repayment may be demanded immediately are included in the 0-6 month column.
2) In the case of perpetual subordinated loans the cash flow is calculated through to the first call date.
138
STOREBRAND ANNUAL REPORT 2018 SPECIFICATION OF SUBORDINATED LOAN CAPITAL
Nominal value
Currency
Interest
Maturity
Book value
NOK million
Issuer
Perpetual subordinated loan capital
Storebrand Livsforsikring AS
Storebrand Livsforsikring AS
Dated subordinated loan capital
Storebrand Livsforsikring AS
Storebrand Livsforsikring AS
Storebrand Livsforsikring AS
Storebrand Livsforsikring AS
Storebrand Bank ASA
Storebrand Bank ASA
Total subordinated loans and hybrid tier
1 capital 2018
Total subordinated loans and hybrid tier 1
capital 2017
1,000
1,100
1,000
300
750
900
125
150
Variable
Variable
Variable
Fixed
Variable
Variable
NOK
NOK
SEK
EUR
SEK
SEK
NOK
NOK
SPESIFICATION OF LIABILITIES TO FINANCIAL INSTITUTIONS
NOK million
Call date
2018
2019
Total liabilities to financial institutions
SPESIFICATION OF LIABILITIES TO FINANCIAL INSTITUTIONS
NOK million
Call date
2018
2019
2020
2021
2022
2023
2020
2024
2022
2023
2021
2025
2019
2022
Book value
2018
2
2
Book value
2018
2,779
4,314
4,414
4,519
1,503
1,001
1,100
977
3,255
738
877
126
150
8,224
8,867
2017
155
155
2017
2,882
3,152
4,030
3,509
3,002
Total debt raised through issuance of securities
17,529
16,575
The loan agreements and credit facilities contain covenants.
Covered bonds
For issued covered bonds, a regulatory requirement for over-collateralisation of 102 per cent and an over-collateralisation
requirement of 109.5 per cent for bonds issued before 21 June 2017 apply.
139
SECTION 8. ANNUAL ACCOUNTS AND NOTES Credit facilities
Storebrand ASA has an unused credit facility of EUR 240 million, expiration December 2023.
Facilities issued to Storebrand Boligkreditt AS
Storebrand Bank has issued two credit facilities to Storebrand Boligkreditt AS. One of these is an ordinary overdraft facility,
with a ceiling of NOK 6 billion. This has no expired date, but can be terminated by the bank with 15 months’ notice. The other
facility may not be terminated by Storebrand Bank until at least 3 months after the maturity date of the covered bond and
the associated derivates with the longest period to maturity. Both agreements provide a minimum capacity to cover at least
interests and payments on covered bonds and derivatives the following 31 days.
FINANCING ACTIVITIES - MOVEMENTS DURING THE YEAR
NOK million
Book value 1.1.18
Admission of new loans/liabilities
Repayment of loans/liabilities
Change in accrued interest
Translation differences
Change in value/amortisation
Book value 31.12.18
Note 10: Credit risk
Subordinated loan
Liabilities to financial
capital
8,867
995
-1,651
-4
15
2
8,224
institutions
Securities issued
155
2
-155
2
16,575
4,708
-2,987
-762
-6
17,529
Storebrand is exposed to risk of losses as a result of counterparties not fulfilling their debt obligations. This risk also includes
losses on lending and losses related to the failure of counterparties to fulfil their financial derivative contracts.
The maximum limits for credit exposure to individual counterparties and for overall credit exposure to rating categories are
set by the boards of the individual companies in the Group. Particular attention is paid to ensuring diversification of credit
exposure in order to avoid concentrating credit exposure on any particular debtors or sectors. Changes in the credit standing
of debtors are monitored and followed up. Thus far, the Group has used published credit ratings wherever possible, supple-
mented by the company’s own credit evaluation.
Underlying investments in funds managed by Storebrand are included in the tables.
140
STOREBRAND ANNUAL REPORT 2018 Credit risk by counterparty
BONDS AND OTHER FIXED-INCOME SECURITIES AT FAIR VALUE
NOK million
Fair value
Fair value
Virkelig verdi
Fair value
Fair value
Fair value
Fair value
AAA
AA
A
BBB
Other
NIG
Total
Government and go-
vernment guaranteed
bonds
Corporate bonds
Structured notes
11,151
14,331
8,106
18,682
10,715
21,701
Collateralised securities
18,492
1,761
2,197
5,704
19,732
79
937
1,417
2,169
855
17
606
37,844
76,719
79
24,010
Total interest bearing
securities stated by
rating
Bond funds not mana-
ged by Storebrand
Non-interest bearing
securities managed by
Storebrand
Total 2018
Total 2017
43,974
28,548
34,613
26,452
1,434
3,630
138,652
43,974
69,129
28,548
21,062
34,613
31,157
26,452
29,625
1,434
741
3,630
1,708
3,938
14,996
157,586
166,761
INTEREST BEARING SECURITIES AT AMORTISED COST
Category of issuer or guarantor
NOK million
Fair value
Fair value
Fair value
Fair value
Fair value
Fair value
Fair value
AAA
AA
A
BBB
Other
NIG
Total
Government and govern-
ment guaranteed bonds
Corporate bonds
Collateralised securities
Total 2018
Total 2017
16,405
9,463
14,260
40,127
40,744
11,857
9,472
4,616
25,945
24,511
4,741
12,932
7,548
25,220
25,432
3,075
7,093
10,168
11,415
2,466
9,344
11,810
8,079
38,543
48,304
26,424
113,270
111,105
925
141
SECTION 8. ANNUAL ACCOUNTS AND NOTES AAA
AA
A
BBB
Other
NIG
Total
Fair value
Fair value
Fair value
Fair value
Fair value
Fair value
Fair value
4,053
2,003
77
876
7,009
1,570
513
2,082
2,484
1,490
77
876
4,926
797
2,218
105
15
19
73
159
3,089
6,489
186
4,064
9,276
186
COUNTERPARTIES
NOK million
Derivatives
Of which derivatives in
bond funds, managed
by Storebrand
Total derivatives
excluding derivatives
in bond funds 2018
Total derivatives exclu-
ding derivatives in bond
funds 2017
Of which bank deposits
in bond funds, mana-
ged by Storebrand
Total bank deposits
excluding bank
deposits in bond
funds 2018
Total bank deposits
excluding bank deposits
Bank deposits
376
15
11
19
159
9,090
35
8,424
318
376
6,303
2,218
in bond funds 2017
472
7,207
Loans to financial
institutions
252
699
66
Rating classes based on Standard & Poor’s.
NIG = Non-investment grade.
142
STOREBRAND ANNUAL REPORT 2018
Loan portfolio
Credit risk for the loan portfolio
COMMITMENTS BY CUSTOMER GOUPS
Lending to
and receiva-
bles from
Total
Unimpaired
Impaired
Individual
defaulted
Net
Unused
commit-
commit-
commit-
NOK million
customers
Guarantees
credit-lines
ments
ments
ments
Sale and operation of
real estate
Other service providers
Wage-earners and
others
Others
Total
- Individual write-downs
+ Group write-downs
Total loans to and
receivables from
customers 2018 1)
Total loans to and
receivables from custo-
7,861
10
46,532
5,136
59,540
-71
-33
59,436
1
1
1
3,415
28
3,444
7,862
11
49,948
5,165
62,985
-71
-33
22
37
59
69
2
71
3,444
62,881
71
59
mers 2017 2)
53,788
20
3,574
57,382
150
114
write-
downs
commit-
ments
9
12
21
21
43
13
93
2
108
108
222
1) 2018:
- Of whcih Storebrand
Bank
28,456
1
3,362
31,819
71
59
21
108
- Of which Storebrand
Livsforsikring
30,980
83
31,062
2) 2017:
- Of whcih Storebrand
Bank
27,268
24
3,548
30,840
107
88
27
168
- Of which Storebrand
Livsforsikring
19,074
105
19,180
The division into customer groups is based on Statistics Norway’s standard for sector and business grouping. The placement of the individual customer
is determined by the customer’s primary business.
The majority of the loans at Storebrand consist of home loans to retail market customers. The home loans are approved and
administered by Storebrand Bank, but an increasing share of the loans have been transferred to Storebrand Livsforsikring as
a part of the investment portfolio. Storebrand Livsforsikring and SPP also have loans to companies as part of the investment
portfolio. Storebrand Bank’s corporate market segment has largely been discontinued.
As of 31 December 2018, Storebrand had loans to customers totalling NOK 59.4 billion net after provisions for losses of NOK
0.1 billion. Of this, NOK 13 billion was to the corporate market and NOK 46.5 billion to the retail market.
The corporate market portfolio consists of income generating properties and development properties with few customers
and low level of default that are primarily secured by mortgage in commercial property. Corporate market loans at Storebrand
Bank have largely been discontinued and therefore everything other than NOK 0.1 billion of the loans has been provided by
Storebrand Livsforsikring and SPP
143
SECTION 8. ANNUAL ACCOUNTS AND NOTES In the retail market, most of the loans are secured by means of home mortgages. Customers are evaluated according to their
capacity and intent to repay the loan. In addition to their capacity to service debt, customers are checked in relation to policy
regulations, and customers are given a credit store using a scoring model. The balance of mortgages sold from Storebrand
Bank to sister company Storebrand Livsforsikring is NOK 18.1 billion. The mortgages were sold on commercial terms.
The weighted average loan-to-value ratio for home loans is approximately 57 per cent. Over 97 per cent of home loans have
a loan to value ratio within 85 per cent and approximately 99.6 per cent are within a 100 per cent loan to value ratio. Appro-
ximately 52 per cent of the home loans are within a 60 per cent LVR. The portfolio is considered to have a low to moderate
credit risk.
TOTAL COMMITTMENTS BY REMAINING TERM
2018
2017
Loans to
and receiva-
bles from
Loans to
Total
and receiva-
Total
Unused
commit-
bles from
Unused
commit-
NOK million
customers
Guarantees
credit line
ments
customers
Guarantees
credit line
ments
Up to one month
1 - 3 months
3 months - 1 year
1 -5 years
More than 5 years
Total gross commit-
ments
234
318
1,782
9,527
47,679
59,540
1
1
4
35
139
881
2,385
238
353
1,922
10,408
50,064
243
91
1,096
8,298
44,140
2
16
1
24
55
294
859
268
148
1,406
9,159
2,341
46,482
3,444
62,985
53,868
20
3,574
57,462
Commitments are regarded as non-performing and loss exposed when a credit facility has been overdrawn for more than 90
days and when an instalment loan has arrears older than 90 days and the amount is at least NOK 2000.
CREDIT RISKS BY CUSTOMER GROUPS
NOK million
ming commitments
write-downs
commitments
during the period
Gross non-perfor-
Individual
performing
value changes
Net non-
Total recognised
Sale and operation of real estate
Other service providers
Wage-earners and others
Others
Total 2018
Total 2017
22
106
2
129
265
9
12
-50
-28
32
13
93
2
108
222
-11
-9
-1
-59
-80
4
In the case of default, Storebrand Bank ASA will sell the securities or repossess the properties if this is most suitable.
144
STOREBRAND ANNUAL REPORT 2018 TOTAL ENGAGEMENT AMOUNT BY REMAINING TERM TO MATURITY
NOK million
Overdue 1-30 days
Overdue 31-60 days
Overdue 61-90 days
Overdue more than 90 days
Total
2018
2017
Loans to and
Loans to and
receivables
Unused
Total
receivables
Unused
Total
from
credit-
commit-
from
credit-
commit-
customers
lines
ments
customers
lines
ments
155
54
2
71
281
1
2
156
54
2
71
283
379
101
50
150
681
3
1
2
7
383
102
50
153
688
Counterparty risk - derivates
INVESTMENTS SUBJECT TO NETTING AGREEMENTS/CSA
Net booked
Collateral
NOK million
Booked value
Booked value
fin. assets/
fin. assets
fin. liabilites
liabilities
"Cash
(+/-)"
Investments subject to netting agreements
4,367
4,094
Investments not subject to netting agree-
ments
Total 2018
559
4,926
512
4,607
273
47
319
Securities
(+/-)
Net exposure
-1,748
2,021
The Group has entered into framework agreements with all its counterparties to reduce the risk inherent in outstanding de-
rivative transactions. These regulate how collateral is to be pledged against changes in market values that are calculated on a
daily basis, among other things.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (FVO)
NOK million
Booke value maximum exposure for credit risk 1)
Net credit risk
This year’s change in fair value due to change in credit risk 1)
1) Figures are excluding interest fund
Storebrand has none related credit derivatives or collateral
2018
123,734
123,734
-712
145
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Note 11: Concentrations of risk
Most of the risk for the Storebrand Group relates to the guaranteed pension products in the life insurance companies.
These risks are consolidated in the Storebrand Life Insurance Group, which includes the Storebrand Livsforsikring AS, SPP
Livförsäkring AB and the business in Ireland and Guernsey (BenCo). Other companies directly owned by Storebrand ASA that
are exposed to significant risks are Storebrand Forsikring AS, Storebrand Helseforsikring AS, Storebrand Asset Management
Group and Storebrand Bank Group.
For the life insurance businesses, the greatest risks are largely the same in Norway and Sweden. The financial market risk will
depend significantly on global circumstances that influence the investment portfolios in all businesses. The insurance risk may
be different for the various companies, and long life in particular can be influenced by universal trends.
Both the insurance business and the banking business are exposed to credit risk. The insurance business primarily has a cre-
dit risk relating to bonds with significant geographical and industry-related diversification, while the bank is mostly exposed to
direct loans for residential property in Norway. There is no significant concentration risk across bonds and loans.
The financial market and investment risks are largely related to the customer portfolios in the life insurance business. The risk
associated with a negative outcome in the financial market is described and quantified in Note 8, financial market risk. The
banking business has little direct exposure to types of risk other than credit.
In the short term, an interest rate increase will negatively impact on the returns for the life insurance companies. An interest
rate increase can also result in bank customers having lower debt-servicing capacity and increased losses for the banking
business.
The risk from the P&C insurance and health insurance risk in Storebrand Skadeforsikring AS and Storebrand Helseforsikring AS
has a low correlation with the risk from the rest of the businesses in the Group.
In the asset management business, the principal risk is operational risk in the form of behaviour that can trigger claims and/
or impact on reputation. Since the asset management business is the principal manager of the insurance businesses, errors in
asset management could result in errors in the insurance businesses.
Note 12: Valuation of financial instruments and properties
The Group conducts a comprehensive process to ensure that financial instruments are valued as closely as possible to their
market value. Publicly listed financial instruments are valued on the basis of the official closing price on stock exchanges,
supplied by Reuters and Bloomberg. Fund units are generally valued at the updated official NAV prices when such prices exist.
Bonds are generally valued based on prices collected from Nordic bond pricing and Bloomberg. Bonds that are not regularly
quoted will normally be valued using recognised theoretical models. This principally applies to bonds denominated in Norwegi-
an kroner. Discount rates composed of the swap rates plus a credit premium are used as a basis for these types of valuations.
The credit premium will most often be specific to the issuer.
Unlisted derivatives, such as forward exchange contracts and interest rate and foreign exchange swaps, are also valued theo-
retically. Money market rates, swap rates and exchange rates that form the basis for valuations are supplied by Reuters and
Bloomberg. The valuations of currency options and swaptions are provided by Markit.
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.
The Group categorises financial instruments valued at fair value on three different levels, which are described in more de-
tail below. The levels express the differing degrees of liquidity and different measurement methods used. The company has
established valuation models to gather information from a wide range of well-informed sources with a view to minimising the
uncertainty of valuations.
146
STOREBRAND ANNUAL REPORT 2018 Level 1: Financial instruments valued on the basis of quoted prices for identical assets in active markets
This category encompasses listed equities that over the previous three months have experienced average daily trading equ-
ivalent to approximately NOK 20 million or more. Based on this, the equities are regarded as sufficiently liquid to be included
at this level. Bonds, certificates or equivalent instruments issued by national governments are generally classified as level 1.
When it comes to derivatives, standardised stock index futures and interest rate futures will also be included at this level.
Level 2: Financial instruments valued on the basis of observable market information not covered by level 1
This category encompasses financial instruments that are valued on the basis of market information that can be directly ob-
servable or indirectly observable. Market information that is indirectly observable means that the prices can be derived from
observable related markets. Level 2 includes shares or equivalent equity instruments for which market prices are available, but
where the volume of transactions is too limited to fulfil the criteria in level 1. Shares in this level will normally have been traded
during the last month. Bonds and equivalent instruments are generally classified in this level. Moreover, interest rate and fore-
ign exchange swaps, as well as non-standardised interest rate and foreign exchange derivatives are classified as level 2. Fund
investments, with the exception of private equity funds, are generally classified as level 2, and encompass equity, interest rate,
and hedge funds.
Level 3: Financial instruments valued on the basis of information that is not observable in accordance with level 2
Equities classified as level 3 encompass investments in primarily unlisted/private companies. These include investments in
forestry, real estate, microfinance and infrastructure. Private equity is generally classified as level 3 through direct investments
or investments in funds.
The types of mutual funds classified as level 3 are discussed in more detail below with a reference to the type of mutual fund
and the valuation method. Storebrand is of the opinion that the valuation method used represents a best estimate of the
mutual fund’s market value.
Equities
Forestry represents most of the value of the level 3 shares. An external valuation was carried out as at 31 December which
forms the basis for the valuation of the company’s investments. The valuation is based on models that include non-observable
assumptions.
Alternative investments organised as limited liability companies (such as microfinance, property and infrastructure) are equity
investments that are valued based on the value-adjusted equity reported by external sources when available.
In the case of direct private equity investments, the valuation is normally based on either the most recent transaction or a
model in which a company that is in continuous operation is assessed by comparing the key figures with groups of equivalent
listed companies.
Units
Of the fund units, it is primarily private equity investments and property funds that represent the majority at level 3. Moreover,
there are also some other types of funds, such as infrastructure funds and microfinance funds here. The majority of Store-
brand’s private equity investments are investments in private equity funds. These fund investments are valued based on the
value reported by the funds. Most of the funds report on a quarterly basis, while a few report less often. Reporting typically
takes place with a few months’ delay. The most recently received valuations are used as a basis, adjusted for cash flows and
market effects in the period from the most recent valuation until the reporting date. For private equity, the market effect is
calculated based on the development in value in the relevant index, multiplied by the estimated beta in relation to the relevant
index.
Indirect real estate investments are primarily investments in funds with underlying real estate investments where Storebrand’s
intention is to own the investments throughout the fund’s lifetime. The valuation of the property funds is carried out based on
information received from each fund manager, adjusted for cash flows in the period from the most recent valuation until the
reporting date. Estimated values prepared by the fund companies will be used if these are available.
147
SECTION 8. ANNUAL ACCOUNTS AND NOTES Loans to customers
The value of fixed-rate loans is determined by discounting the agreed cash flows over the remaining maturity by the current
discount rate adjusted for market spread. The discount rate that is used is based on a swap interest rate (mid swap) with a
maturity that corresponds to the remaining lock-in period for the underlying loans. The market spread that is used on the date
of the balance sheet is determined by assessing the market conditions, market price and the associated swap interest rate.
However, the fair value of loans to corporate customers with margin loans is lower than the amortised cost because certain
loans run with lower margins that they would have done if they had been taken up as of the end of 2018. The value shortfall is
calculated by discounting the difference between the agreed margin and the current market price over the remaining duration.
Corporate bonds
Among the bonds at level 3, we find microfinance investments structured as loans. In addition, there are a small number of
private equity investments organised as loans that are valued at the most recent reported value. In addition, non-performing
loans will be left for estimated expected payment.
Investment properties
The investment properties primarily consist of office buildings located in Oslo and Stockholm and shopping centres in South-
ern Norway.
Office properties and shopping centres in Norway:
When calculating fair value, Storebrand uses an internal cash flow model. The required rate of return is of greatest importan-
ce when calculating the fair value for investment properties. Net cash flows for the individual property are discounted by an
individual required rate of return. A future income and expense picture for the first 10 years has been estimated for the office
properties and a final value has been calculated for the end of the 10th year based on market rent and normal operating costs
for the property. In the net income stream, consideration has been made to existing and future loss of income due to vaca-
ncy, necessary investments and an assessment of the future development in the market rent. The majority of new contracts
that are entered into have a duration of five or ten years. The cash flows from these lease agreements (contractual rent) are
included in the valuations. To estimate the long-term, future non-contractual rental incomes, a forecasting model has been
developed. The model is based on historical observations in Dagens Næringsliv’s property index (adjusted by CPI) and market
estimates. A long-term, time-weighted average of the annual observations is calculated in which the oldest observations are
weighted with the lowest importance. For non-contractual rent in the short-term, the current rental prices and market situati-
on are used.
An individual required rate of return is determined for each property. The required rate of return is viewed in connection with
the related cash flow for the property. The knowledge available about the market’s required rate of return, including transacti-
ons and appraisals, is used when determining the cash flow.
The required rate of return is divided into the following elements:
•
•
•
•
•
•
•
•
•
Risk-free interest
Risk premium, adjusted for:
Type of property
Location
Structural standard
Environmental standard
Duration of contract
Quality of tenant
Other factors such as transactions and perception in the market, vacancy and general knowledge about the market
and the individual property.
External valuation:
For properties in Norwegian activities, a methodical approach is taken to a selection of properties that are to be externally va-
lued each quarter so that all properties have had an external valuation at least every three years. In 2018, external valuations
were obtained for properties worth NOK 14 billion (72 per cent of the portfolio’s value as of 31 December 2018).
External valuations are obtained for properties in the Swedish business. Shopping centres and commercial premises are va-
lued annually, while other wholly-owned property investments are valued on a quarterly basis.
148
STOREBRAND ANNUAL REPORT 2018
VALUATION OF FINANCIAL INSTRUMENTS AND PROPERTIES AT FAIR VALUE
Level 1
Level 2
Level 3
Non-
Quoted
Observable
observable
prices
assumptions
assumptions
31.1218
31.12.17
NOK million
Assets:
Equities and units
- Equities
- Fund units
Total equities and fund units 31.12.18
Total equities and fund units 31.12.17
Loans to customers 1)
- Loans to customers - corporate
- Loans to customers - retail
Loans to customers 31.12.18 1)
Loans to customers 31.12.17 1)
Bonds and other fixed-income securities
- Government bonds
- Corporate bonds
- Structured notes
- Collateralised securities
- Bond funds
Total bonds and other fixed-income securities 31.12.18
Total bonds and other fixed-income securities 31.12.17
13,839
24,186
Derivatives:
- Interest derivatives
- Currency derivatives
Total derivatives 31.12.18
- of which derivatives with a positive market value
- of which derivatives with a negative market value
Total derivatives 31.12.17
Properties:
Investment properties
Properties for own use
Total properties 31.12.18
Total properties 31.12.17
1) Includes lending to customers/liabilities to financial institutions classified at fair value through profit and loss
23,039
340
23,379
22,563
359
125,133
125,493
125,425
13,839
20,507
50,834
79
22,793
46,157
140,370
142,467
3,100
-2,781
319
4,926
-4,607
2,049
640
7,849
8,489
8,445
5,708
220
5,928
5,684
56
3,321
3,377
108
28,266
1,420
29,686
28,861
24,038
133,323
157,361
5,708
220
5,928
34,347
50,890
79
22,793
49,478
157,586
3,100
-2,781
319
4,926
-4,607
28,266
1,420
29,686
23,360
133,074
156,433
5,104
580
5,684
49,022
49,331
81
28,914
39,412
166,761
2,799
-751
4,064
-2,015
2,049
27,453
1,408
28,861
149
SECTION 8. ANNUAL ACCOUNTS AND NOTES MOVEMENTS BETWEEN QUOTED PRICES AND OBSERVABLE ASSUMPTIONS
NOK million
Equities and fund units
From quoted prices to
From observable assump-
observable assumptions
tions to quoted prices
6
87
Movements from level 1 to level 2 reflect a reduction in the trading volume of relevant equities and bonds during the most
recent measurement period. On the other hand, movements from level 2 to level 1 indicate an increase in the market value of
relevant equities and bonds during the most recent measurement period.
FINANCIAL INSTRUMENTS AND REAL ESTATE AT FAIR VALUE - LEVEL 3
NOK million
Equities
Fund units
customers
bonds
Bond funds
properties
for own use
Book value 01.01.18
767
7,679
5,684
108
27,453
1,408
Loans to
Corporrate
Investment
Properties
Net gains/losses on financial
instruments
Supply
Sales
Translation differences
Other
-31
30
-121
-6
-2,397
3,967
-1,347
-53
42
1,420
-1,105
-114
10
-60
-1
134
3,202
-15
-314
1,259
-341
209
82
-2
-68
Book value 31.12.18
640
7,849
5,928
56
3,321
28,266
1,420
As of 31.12.18, Storebrand Livsforisikring had NOK 4.376 million invested in Storebrand Eiendomsfond Norge KS and Ruse-
løkkveien 26, Oslo. The investments are classified as “Investment in associated Ccmpanies and joint ventures” in the Consolida-
ted Financial Statements.
150
STOREBRAND ANNUAL REPORT 2018 VALUATION OF FINANCIAL INSTRUMENTS AT AMORTISED COST
Level 1
Level 2
Level 3
Non-
Total
Total
Quoted
Observable
observable
fair value
fair value
Book value
Book value
prices
assumptions
assumptions
31.12.18
31.12.17
31.12.18
31.12.17
NOK million
Financial assets
Loans to and due from financial
institutions
Loans to customers - corporate
Loans to customers - retail
Bonds held to maturity
Bonds classified as loans and
receivables
Total financial assets 31.12.2018
Total financial assets 31.12.2017
1
Financial liabilities
Debt raised by issuance of
securities
Liabilities to financial institutions
Deposits from banking customers
Subordinatd loan capital
Total financial liabilities
31.12.2018
Total financial liabilities
31.12.2017
SENSITIVITY ASSESSMENTS
318
316
15,679
98,485
114,798
138,118
17,565
2
14,419
8,218
40,205
40,109
6,981
46,192
53,173
21,418
318
6,981
46,508
15,679
313
6,501
41,571
16,933
318
6,999
46,508
14,403
313
6,533
41,571
15,128
98,485
94,218
94,723
87,474
167,971
162,951
159,537
151,020
17,565
16,634
17,529
16,575
2
14,419
8,218
40,205
155
14,628
8,990
2
14,419
8,224
40,175
155
14,628
8,867
40,407
40,224
Equities
It is primarily investments in forests that are classified under equity at level 3. Forestry investments are characterised by,
among other things, very long cash flow periods. There can be some uncertainty associated with future cash flows due to
future income and costs growth, even though these assumptions are based on recognised sources. Nonetheless, valuations of
forestry investments will be particularly sensitive to the discount rate used in the estimate. The company bases its valuation on
external valuations. These utilise an estimated market-related required rate of return.
NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
Change in value at change in discount rate
Increase + 25 bp
Decrease - 25 bp
-56
-43
57
45
Fund units
Large portions of the portfolio are private equity funds invested in companies priced against comparable listed companies The
valuation of the private equity portfolio will thus be sensitive to fluctuations in global equity markets. The private equity portfo-
lio has an estimated Beta relative to the MSCI World (Net – currency hedged to NOK) of around 0.46.
151
SECTION 8. ANNUAL ACCOUNTS AND NOTES NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
Change MSCI World
Increase + 10 %
Increase + 10 %
455
323
-455
-323
The valuation of indirect property investments will be sensitive to a change in the required rate of return and the expected
future cash flow. Remaining indirect property investments are no longer leveraged.
NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
Change in value underlying real estate
Increase + 10 %
Decrease - 10 %
1
19
-1
-19
Loans to customers
The value of fixed-rate loans is determined by discounting the agreed cash flows over the remaining maturity by the current
discount rate adjusted for market spread. The discount rate that is used is based on a swap interest rate (mid swap) with a
maturity that corresponds to the remaining lock-in period for the underlying loans. The market spread that is used on the
date of the balance sheet is determined by assessing the market conditions, market price and the associated swap interest
rate.
Loans from SPP Pension & Försäkring AB are appraised at fair value. The value of these loans is determined by future cash
flows being discounted by an associated swap curve adjusted for a customer-specific credit.
NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
Change in marketspread
+ 10 bp
-34
-24
- 10 bp
34
24
Corporate bonds
Corporate bonds at level 3 are microfinance funds, private equity debt funds and convertible bonds. They are not priced by
a discount rate as bonds normally are, and therefore these investments are included in the same sensitivity test as private
equity.
NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
Change MSCI World
Increase + 10 %
Decrease - 10 %
3
6
-3
-6
Properties
The sensitivity assessment for real estate includes both investments properties and owner occupied properties.
The valuation of property is particularly sensitive to a change in the required rate of return and the expected future cash flow.
A change of 0.25 per cent in the required rate of return when everything else remains unchanged will result in a change in the
value of Storebrand’s property portfolio of approximately 4.5 per cent. About 25 per cent of the property’s cash flow is linked
to lease agreement. This means that the changes in the uncertain parts of the cash flow by 1 per cent result in a change in
value of 0.75 per cent.
NOK million
Change in fair value per 31.12.18
Change in fair value per 31.12.17
152
Change in required rate of return
0,25 %
-1,373
-1,317
-0,25 %
1,522
1,459
STOREBRAND ANNUAL REPORT 2018 Note 13: Solidity and capital management
The Storebrand Group is an insurance-dominated, cross-sectoral financial group with capital requirements in accordance with
Solvency II. Storebrand calculates Solvency II according to the standard method as defined in the Solvency II Regulations.
Consolidation is carried out in accordance with Section 18-2 of the Norwegian Act relating to Financial Undertakings and
Financial Groups. The solvency capital requirement and minimum capital requirement for the group are calculated in accor-
dance with Section 46 (1)-(3) of the Solvency II Regulations using the standard method and include the effect of the transitional
arrangement for shares pursuant to Section 58 of the Solvency II Regulations.
Capital management
Storebrand places particular emphasis on continually and systematically adapting the levels of equity in the Group. The level
is adapted to the financial risk and capital requirements in the business, where growth and the composition of segments are
important motivating factors for the need for capital. The purpose of capital management is to ensure an efficient capital
structure and provide for an appropriate balance between in-house goals and regulatory and rating company requirements.
If there is a need for new capital, this is raised by the holding company Storebrand ASA, which is listed on the stock exchange
and is the ultimate parent company.
The Storebrand companies are subject to various capital requirements depending on the type of business. In addition to the
capital requirements for the Storebrand Group and insurance companies, the banking and asset management businesses
have capital requirements in accordance with CRD IV. The companies in the group governed by CRD IV are included in the
group’s solvency capital and solvency capital requirements with their respective primary capital and capital requirements.
Storebrand has the goal of paying a dividend of more than 50% of the Group profit after tax. The board has the ambition of
ordinary dividends per share being, at a minimum, at the same nominal level as the previous year. The normal dividend is paid
with a sustainable solvency margin of more than 150%. If there is a solvency margin of more than 180%, the board’s intention
is to propose extraordinary dividends or share buy-backs. In general, equity in the Group can be controlled without material
limitations if the capital requirement is met and the respective legal entities have sufficient solvency.
SOLVENCY CAPITAL
NOK million
Share capital
Share premium
Reconciliation reserve
Including the effect of the transitional arrangement
Subordinated loans
Deferred tax assets
Risk equalisation reserve
Minority interests
Unavailable minority interests
Group 1
unlimited
2,339
10,521
23,444
Total
2,339
10,521
23,444
7,780
873
234
56
-37
Deductions for CRD IV subsidiaries
-3,311
-3,311
Expected paid out dividend 2017
Expected paid out dividend 2018
Total basic solvency capital
Subordinated capital for subsidiaries regulated in
accordance with CRD IV
Total solvency capital
Total solvency capital available to cover the
-1,402
31,591
-1,402
40,498
3,311
43,808
31.12.18
Group 1
limited
Group 2
Group 3
1,089
6,691
234
873
56
-37
31.12.17
Total
2,339
10,521
25,694
4,513
8,547
71
143
49
-33
-2,929
-1,168
1,089
6,925
892
43,234
2,929
46,164
39,294
153
minimum capital requirement
34,623
31,591
1,089
1,942
SECTION 8. ANNUAL ACCOUNTS AND NOTES
SOLVENCY CAPITAL REQUIREMENT AND -MARGIN
NOK million
Market
Counterparty
Life
Health
P&C
Operational
Diversification
Loss-absorbing tax effect
Total solvency capital requirement - insurance company
Capital requirements for subsidiaries regulated in accordance with CRD IV
Total solvency capital requirement
Solvency margin with transitional rules
Minimum capital requirement
Minimum margin
2018
20,917
625
10,412
713
278
1,485
-6,838
-4,764
22,827
2,482
25,309
173%
9,711
357%
2017
22,936
565
10,453
744
283
1,496
-7,023
-5,002
24,452
2,458
26,910
172%
9,599
409%
The Storebrand Group has also a requirement to report capital adequacy in a multi-sectoral financial group (conglomerate
directive). The calculation in accordance with the Solvency II regulations and capital adequacy calculation in accordance with
the conglomerate directive give the same primary capital and essentially the same capital requirements.
CAPITAL- AND CAPITAL REQUIREMENT IN ACCORDANCE WITH THE CONGLOMERATE DIRECTIVE
NOK million
Capital requirements for CRD IV companies
Solvency captial requirements for insurance
Total capital requirements
Net primary capital for companies included in the CRD IV report
Net primary capital for insurance
Total net primary capital
Overfunding
2018
2,714
22,827
25,541
3,311
40,498
43,808
18,267
2017
2,687
24,452
27,138
2,929
43,234
46,164
19,025
Under Solvency II, the capital requirement from the CRD IV companies in the Group is included in accordance with their
respective capital requirements. In a multi-sectoral financial group, all the capital requirements of the CRD IV companies are
calculated based on their respective applicable requirements, including buffer requirement for the largest company in the
Group (Storebrand Bank). This increases the total requirement from the CRD IV companies in relation to what is included in the
Solvency II calculation. As at 31 December 2018, the difference amounted to NOK 232 million.
154
STOREBRAND ANNUAL REPORT 2018 Note 14: Premium income
NOK million
Savings:
Unit Linked Storebrand Life Insurance
Unit Linked SPP
Total savings
Of which premium reserve transferred to company
Insurance:
P&C & Individual life 1)
Group life 2)
Pension related disability insurance
Total insurance
Of which premium reserve transferred to company
Guaranteed pension:
Defined Benefit (fee based) Storebrand Life Insurance
Paid-up policies Storebrand Life Insurance
Traditional individual life and pension Storebrand Life Insurance
SPP Guaranteed Products
Total guaranteed pension
Of which premium reserve transferred to company
Other:
BenCo
Total other
Total premium income
Of which premium reserve transferred to company
1) Individual life and disability, property and caualty insurance
2) Group life, workers comp. And health insurance
2018
13,173
7,326
20,499
4,479
1,817
732
1,151
3,700
10
3,086
-50
238
2,068
5,342
77
90
90
29,631
4,566
2017
11,893
5,772
17,666
2,648
1,831
737
1,297
3,864
110
3,142
-277
259
1,817
4,940
182
182
26,652
2,758
155
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 15: Net income analysed by class of financial instrument
Dividend/
Net gains and
Net reva-
interest
losses on fi-
luation on
Of which
NOK million
income etc.
nancial assets
investments
Total 2018
Company
Customer
Profit on equities and fund units
719
2 820
-8 797
-5 258
-10
-5 249
2,389
1,183
152
4,443
3,173
1,159
4,048
1,206
5,254
-1,470
-420
-8
-10,695
-5
-7
279
-3,001
98
-10
322
322
1,198
-2,238
144
-6,154
3,158
1,152
4,370
1,206
5,576
286
50
4
330
27
-7
116
665
781
912
-2,288
140
-6,484
4,254
541
2017
16 974
3,664
946
170
21,754
20,647
943
4,377
1,108
Profit on bonds and other fixed-
income securities at fair value
Profit on financial derivatives
Profit on loans
Total gains and losses on financial
assets at fair value
- of which FVO (fair value option)
- of which trading
Net income bonds to amortised
cost, loans and accounts receivables
Net income loans
Total gains and losses on financial
assets at amortised cost
LOSSES FROM LOANS
NOK million
Write-downs/income recognition for loans and guarantees for the period
Change in individual loan write-downs for the period
Change in grouped loan write-downs for the period
Other corrections to write-downs
Realised losses on loans where provisions have previously been made
Realised losses on loans where no provisions have previously been made
Recovery of loan losses realised previously
Write-downs/income recognition for loans and guarantees for the period
Note 16: Net income from properties
NOK million
Rent income from properties 1)
Operating expenses (including maintenance and repairs) relating to properties that have
provided rent income during the period 2)
Total
Change in fair value
Total income properties
1) Of which real estate for own use
2) Of which properties for own use
Allocation by company and customers:
Customer
Total income from properties
156
4,795
5,486
2018
2017
22
-12
1
-25
-11
3
-23
2018
1,357
-327
1,030
457
1,487
74
-29
1,487
1,487
-15
8
-2
-5
2
-13
2017
1,376
-294
1,082
1,474
2,556
184
-40
2,556
2,556
STOREBRAND ANNUAL REPORT 2018 Note 17: Other income
NOK million
Fee and commission income, banking
Management fees, asset management
Net agio/disagio Bank
Management fees
Return commissions/Kick-back
Insurance related income
Revenue from companies other than banking and insurance
Other income
Total other income
Note 18: Insurance claims
NOK million
Savings:
Unit Linked Storebrand Life Insurance
Unit Linked SPP
Total savings
Of which premium reserve transferred to company
Insurance:
P&C & Individual life 1)
Group life 2)
Pension related disability insurance
Total insurance
Of which premium reserve transferred to company
Guaranteed pension:
Defined Benefit (fee based) Storebrand Life Insurance
Paid-up policies Storebrand Life Insurance
Traditional individual life and pension Storebrand Life Insurance
SPP Guaranteed Products
Total guaranteed pension
Of which premium reserve transferred to company
Other:
BenCo
Total other
Total net premium income
Of which premium reserve transferred to company
1) Individual life and disability, property and caualty insurance
2) Group life, workers comp. And health insurance
2018
106
1,937
221
810
972
430
126
330
4,930
2018
-4 614
-3 487
-8 101
-4 238
-1,065
-622
-147
-1,833
-32
-1,219
-5,829
-1,395
-5,710
-14,153
-995
-1,054
-1,054
-25,142
-5,265
2017
79
1,960
126
826
848
315
-40
126
4,239
2017
-4 646
-3 456
-8 102
-3 310
-1,080
-514
-158
-1,752
-30
-2,091
-4,989
-1,499
-5,275
-13,854
-642
-1,277
-1,277
-24,985
-3,982
157
SECTION 8. ANNUAL ACCOUNTS AND NOTES The table below shows the anticipated compensation payments
DEVELOPMENT IN EXECTED INSURANCE CLAIM PAYMENTS - LIFE INSURANCE
NOK billion
0-1 year
1-3 years
> 3 years
Total
Storebrand Life Insurance
15
33
220
268
SPP
6
12
143
161
BenCo
1
3
10
14
DEVELOPMENT IN INSURANCE CLAIM PAYMENT - P&C INSURANCE, EXLUSIVE RUN-OFF
NOK million
2013
2014
2015
2016
2017
2018
Total
Calculated gross cost of claims
At end of the policy year
- one year later
- two years later
- three years later
- four years later
- five years later
Calculated amount 31.12.18
Total disbursed to present
Claims reserve
Claims reserve for previous years
(before 2013)
464
486
482
482
475
468
448
20
513
501
500
489
478
461
17
685
687
661
648
606
42
793
774
750
797
764
760
691
60
664
100
488
273
3,357
512
19
The overview shows the development in the estimate for occurred insurance claims over time and the remaining claims reserve.
Note 19: Change in insurance liabilities - life insurance
NOK million
Guaranteed return
Other changes in premium
reserves customer funds with
guaranteed return
Change in premium reserve
customer funds without
guaranteed return
Change in premuim fund/
pensioners surplus fund
Profit to customers
Change in allocations, risk products
Change in insurance liabilities -
Storebrand
Life Insurance
-5,814
6,149
-4,530
-5
-415
-5
BenCo
-30
331
69
SPP
-1,372
2018
-7,216
2017
-8,809
3,386
9,866
10,021
-806
-5,266
-24,009
-5
-415
-5
313
-574
9
life insurance
-4,620
369
1,208
-3,042
-23,049
158
STOREBRAND ANNUAL REPORT 2018 Note 20: Change in capital buffer
NOK million
Change in market value adjustment reserve
Change in additional statutory reserves
Change in conditional bonuses
Total change in capital buffer
Note 21: Operating expenses and number of employees
OPERATING EXPENSES
NOK million
Personnel expenses
Amortisation/write-downs
Other operating expenses
Total operating expenses
NUMBER OF EMPLOYEES 1)
Number of employees 31.12
Average number of employees
Number of person-years 31.12
Average number of person-years
2018
1,462
-68
336
1,729
2018
-2,143
-147
-2,252
-4,542
2018
1,789
1,766
1,767
1,747
2017
-1,024
-1,387
-1,532
-3,943
2017
-1,955
-167
-2,145
-4,266
2017
1,795
1,759
1,773
1,738
1) Including Storebrand Helseforsikring with 100 per cent.
Note 22: Pension expenses and pension liabilities
Storebrand Group has country-specific pension schemes.
Storebrand’s employees in Norway have e 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 contri-
butions 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.
The premiums and content of the defined-contribution pension scheme are as follows:
-
-
Saving starts from the first krone of salary
Savings rate of 7 per cent of salary from 0 to 12 G (the National Insurance basic amount ”G” was NOK 96,883 at
31 December 2018)
In addition, 13 per cent of salary between 7.1 and 12 G is saved.
Savings rate for salary over 12 G is 20 per cent.
-
-
Employees and former employees who had salaries in excess of 12G until 31 December 2014 were offered a cash redemption
option for their accrued rights with payment at the start of 2015. For employees who were a part of the executive manage-
ment team, these payments were distributed over 5 years.
159
SECTION 8. ANNUAL ACCOUNTS AND NOTES
The Norwegian companies participate in the Joint Scheme for Collective Agreement Pensions (AFP). The private AFP sche-
me provides a lifelong supplement to an ordinary pension and is a multi-employer pension scheme, but there is no reliable
information available for inclusion of this liability on the statement of financial position. The scheme is financed by means of an
annual premium that is defined as a percentage of salaries from 1 G to 7.1 G, and the premium rate was 2.5 % in 2018. Store-
brand employees in Norway who were born before 1 January 1956 can choose between drawing an AFP scheme pension or
retiring at the age of 65 and receiving a direct pension from the company until they reach the age of 67. Employees can choose
to receive benefits from the AFP scheme from the age of 62 and still continue to work.
Employees who were on sick leave and partiality disabled during the transition to the defined-contribution pension, remain in
the defined-benefit pension scheme. There are also pension liabilities for the defined-benefit scheme related to direct pensi-
ons for certain former employees and former board members.
The pension plan for employees at SPP in Sweden follows the plan for bank employees in Sweden (BTP).
SPP has a defined-contribution occupational pension known as BTP1. All new employees were enrolled in this pension agree-
ment from and including 1 January 2014. In BTP1, the employer pays a premium for pension savings that is calculated based
on pensionable salary up to 30 times the ”basic income amount” (inkomstbasbelopp). The insurance includes retirement pensi-
on with or without mortality inheritance, disability pension and children’s pension. The premium is calculated independently of
age and is calculated primarily based on the monthly salary. The premium is paid monthly in two parts, a fixed part that is 2.5
per cent of the pensionable salary up to and including 7.5 times the “basic income amount”. The optional part of the premium
is 2 per cent of salary up to and including 7.5 times the “basic income amount” and 30 per cent of salary between 7.5 and 30
times the “basic income amount”.
The pension in the BTP2 agreement (defined-benefit occupational pension that is a closed scheme) amounts to 10 per cent of
the annual salary up to 7.5 times the “basic income amount” (which was SEK 62,500 in 2018 and will be SEK 64.400 in 2019), 65
per cent of salary in the interval from 7.5 to 20, and 32.5 per cent in the interval from 20 to 30. No retirement pension is paid
for the portion of salary in excess of 30 times the ”basic income amount”. Full pension entitlement is reached after 30 years of
membership in the pension scheme. In addition to the defined-benefit part, the BTP plan has a smaller defined-contribution
component. Here the employees can decide themselves how assets are to be invested (traditional insurance or unit-linked
insurance). The defined-contribution part is 2 per cent of the annual salary.
The ordinary retirement age is 65 in accordance with the pension agreement between the Employer’s Association of the Swe-
dish Banking Institutions (BAO) and the trade unions that are part of BTP.
The retirement age for SPP’s CEO is 65 years. The CEO is covered by BTP1. In addition, the CEO has a defined-contribution
based additional pension with SPP. The premium for this insurance is 20 per cent of salary that exceeds 30 times the “basic
income amount”.
The pension for the employees at Nordben Life and Pension Insurance Company LTD and Euroben Life and Pension LTD is co-
vered by a defined-contribution scheme. In addition, the employees of Nordben are covered by a lump sum upon death during
their period of service.
RECONCILIATION OF PENSION ASSETS AND LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION
NOK million
Present value of insured pension liabilities
Fair value of pension assets
Net pension liabilities/assets insured scheme
Asset ceiling
Present value of unsecured liabilities
Net pension liabilities recognised in statement of financial position
Includes employer contributions on net under-financed liabilities in the gross liabilities
31.12.18
31.12.17
1,018
-913
105
213
317
994
-928
66
5
267
338
160
STOREBRAND ANNUAL REPORT 2018 BOOKED IN STATEMENT OF FINANCIAL POSITION
NOK million
Pension assets
Pension liabilities
31.12.18
5
322
31.12.17
3
341
CHANGES IN THE NET DEFINED BENEFIT PENSION LIABILITIES IN THE PERIOD
NOK million
changes in the net defined benefit pension liabilities in the period
31.12.18
1,260
31.12.17
1,237
Pensions earned in the period
Pension cost recognised in period
Estimate deviations
Gain/loss on insurance reductions
Pensions paid
Pension liabilities additions/disposals and currency adjustments
15
17
18
-4
-55
-21
17
32
18
2
-89
43
Net pension liabilities 31.12
1,231
1,260
CHANGES IN THE FAIR VALUE OF PENSION ASSETS
NOK million
Pension assets at fair value 01.01
Expected return
Estimate deviation
Premiums paid
Pensions paid
Pension liabilities additions/disposals and currency adjustments
Net pension assets 31.12
Expected premium payments (pension assets) in 2019
Expected premium payments (contributions) in 2019
Expected AFP early retirement scheme payments in 2019
Expected payments from operations (uninsured scheme)
in 2019
13
187
14
51
31.12.18
31.12.17
928
21
-15
27
-27
-20
914
PENSION ASSETS ARE BASED ON THE FINANCIAL ASSETS HELD BY STOREBRAND LIFE INSURANCE/SPP
COMPOSED AT 31.12.18:
NOK million
Real estate at fair value
Bonds at amortised cost
Loans at amortised cost
Equities and units at fair value
Bonds at fair value
Other short-term financial assets
Total
Storebrand Life Insurance
SPP
2018
14%
36%
14%
12%
24%
1%
100%
2017
12%
32%
12%
15%
27%
2018
12%
11%
9%
68%
100%
100%
948
26
-96
32
-34
51
928
2017
11%
8%
81%
100%
161
SECTION 8. ANNUAL ACCOUNTS AND NOTES ”The table shows the percentage asset allocation of pension assets at year-end managed by Storebrand Life Insurance.”
Realised return on assets
2018
2,2%
2017
3,8 %
2018
2,3 %
2017
3,7 %
NET PENSION EXPENSES BOOKED TO PROFIT AND LOSS ACCOUNT, SPECIFIED AS FOLLOWS
NOK million
Current service cost
Net interest cost/expected return
Changes to pension scheme
Gain/loss on insurance reductions
Total for defined benefit schemes
The period's payment to contribution scheme
The period's payment to contractual pension
Net pension cost recognised in profit and loss account
in the period
OTHER COMPREHENSIVE INCOME (OCI) IN THE PERIOD
NOK million
Actuarial loss (gain) - change in discount rate
Actuarial loss (gain) - change in other financial assumptions
Actuarial loss (gain) - experience DBO
Loss (gain) - experience Assets
Asset ceiling - asset adjustment
Remeasurements loss (gain) in the period
MAIN ASSUMPTIONS USED WHEN CALCULATING NET PENSION LIABILITY 31.12.18
2018
15
8
-4
19
166
17
203
2018
59
-17
-36
27
-5
28
NOK million
Discount rate
Expected earnings growth
Expected annual increase in social security
pensions
Expected annual increase in pensions payment
Disability table
Mortality table
Storebrand Life Insurance
SPP
2018
2,8 %
2,50 %
2,50 %
0,0 %
KU
2017
2,6 %
2,25 %
2,25 %
0,0 %
KU
2018
2,3 %
3,5 %
3,0 %
2,0 %
K2013BE
K2013BE
DUS14
DUS14
Financial assumptions:
The financial assumptions have been determined on the basis of the regulations in IAS 19. Long-term assumptions such as
future inflation, real interest rates, real wage growth and adjustment of the basic amount are subject to a particularly high
degree of uncertainty.
In Norway, a discount rate based on covered bonds is used. Based on the market and volume trends observed, the Norwegian
covered bond market must be perceived as a deep market.
Specific company conditions including expected direct wage growth are taken into account when determining the financial
assumptions.
162
2017
17
8
3
29
161
17
207
2017
98
-10
-70
95
5
119
2017
2,3 %
3,5 %
3,0 %
2,0 %
STOREBRAND ANNUAL REPORT 2018
Actuarial assumptions:
In Norway standardised assumptions on rates of mortality and disability as well as other demographic factors are prepared
by Finance Norway. With effect from 2014 a new mortality basis, K2013, has been introduced for group pension insurance in
life insurance companies and pension funds. Storebrand has used the mortality table K2013BE (best estimate) in the actuarial
calculations at 31 December 2018.
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.
Sensitivity analysis pension calculations
Storebrand’s risk associated with the pension scheme relates to the changes in the financial and actuarial assumptions that
must be used in the calculations and the actual return on the pension funds. The pension liabilities are particularly sensitive to
changes in the discount rate. A reduction of the discount rate will in isolation entail an increase in pension liabilities.
For the Norwegian companies that have converted to defined contribution pensions as of 1 January 2015, the sensitivity has
not been calculated, and the figures below illustrate the sensitivity for the Swedish companies.
The following estimates are based on facts and circumstances as of 31 December 2017 and are calculated for each individual
when all other assumptions are kept constant.
SWEDEN
Percentage change in pension:
- Pension liabilities
- The period's net pension costs
Discount rate
Expected earnings growth
in pensions payment
expected life expectancy
1,0 %
-1,0 %
1,0 %
-1,0 %
1,0 %
+ 1 år
- 1 år
Expected annual increase
Mortality - change in
-10 %
-12 %
12 %
14 %
8 %
-4 %
-7 %
7 %
8 %
4 %
-10 %
-4 %
-17 %
Note 23: Remuneration to senior employees and elected officers of the
company
NOK thousand
Senior employees
Odd Arild Grefstad
Lars Aa. Løddesøl
Geir Holmgren
Heidi Skaaret
Staffan Hansén
Jan Erik Saugestad
Jostein Dalland
Karin Greve-Isdahl
Wenche Annie Martinussen
Total 2018
Total 2017
Total
Post
remunera-
Pension
terminati-
Ordinary
Other
tion for the
accrued for
on salary
No. of
shares
salary 1)
benefits 2)
year
the year
(months)
Loan 3)
owned 4)
6,761
5,159
4,275
4,279
4,934
5,743
3,167
2,508
3,183
194
218
228
180
33
153
131
17
158
6,954
5,377
4,503
4,460
4,967
5,895
3,297
2,525
3,341
40,010
41,100
1,311
1,474
41,321
42,574
1,253
952
763
764
1,152
1,050
551
418
565
7,467
7,231
24
18
12
12
12
12
12
12
12
6,934
7,006
8,273
3,366
1,200
15,568
9,163
51,509
31,810
141,634
83,521
54,722
54,473
55,034
44,378
16,701
6,881
13,969
471,313
352,050
1) A proportion of the executive management’s fixed salary will be linked to the purchase of physical STB shares with a lock-in period of three years. The purchase of shares will take place once a year.
2) Comprises company car, telephone, insurance, concessionary interest rate, other taxable benefits.
3) Employees can borrow up to NOK 7.0 million at a subsidised interest rate, which is set at 40 bp below the best current market interest rate. Excess loan amounts will be subject to market terms.
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..
163
SECTION 8. ANNUAL ACCOUNTS AND NOTES
NOK thousand
Board of Directors
Didrik Munch
Gyrid Skalleberg Ingerø
Laila Synnøve Dahlen
Martin Skancke
Håkon Reistad Fure
Karin Bing Orgland
Jan Chr. Opsahl
Liv Sandbæk
Heidi Storruste
Arne Fredrik Håstein
Ingvild Pedersen
Total 2018
Total 2017
Remuneration
Loan
No. of shares
owned 1)
760
99
340
720
128
482
332
290
433
355
433
4,371
4,372
15,000
5,000
10,500
16,414
15,000
1,100,000
3,365
4,844
1,824
1,171,947
1,208,362
3,916
3,178
2,307
9,401
10,349
1) 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.
Loans to Group employees totalled NOK 2.706 million.
STOREBRAND ASA – THE BOARD OF DIRECTORS’ STATEMENT ON THE FIXING OF SALARIES AND OTHER REMUNERATION
OF EXECUTIVE PERSONNEL
The Board of Directors of Storebrand ASA has had a dedicated Compensation Committee since 2000. The Compensation
Committee is tasked with making a recommendation to the Board of Directors concerning all matters regarding the company’s
remuneration of its Chief Executive Officer. The Committee is responsible for keeping itself informed and proposing guidelines
for the determination of remuneration of executive employees in the Group. The Committee also acts as an advisory body
to the Chief Executive Officer with regard to remuneration schemes that encompass all employees of the Storebrand Group,
including Storebrand’s bonus and pension schemes. The Compensation Committee satisfies the follow-up requirements set
forth in the remuneration schemes.
Storebrand Asset Management AS’ subsidiary Skagen AS, which was acquired in December 2017, has its own compensation
committee and separate guidelines for financial consideration. Storebrand’s compensation committee is kept continually upda-
ted. The Group’s guidelines will therefore not directly apply for Skagen AS in 2019.
1.ADVISORY GUIDELINES FOR THE COMING FINANCIAL YEAR
Storebrand aims to base remuneration on competitive and motivating principles that help attract, develop and retain highly
qualified staff. Storebrand shall have an incentive model that supports the strategy, with emphasis on the customers’ 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. The salaries of executive employees are determined based on the position’s responsibilities
and level of complexity. Comparisons with equivalent external positions are regularly made in order to adjust the salary level to
the market rates. Storebrand does not wish to be a pay leader in relation to the industry.
Bonus scheme
The Group’s executive management team and executive personnel who have a significant influence on the company’s risk
receive only fixed salaries.
Pension scheme
The company shall arrange and pay for ordinary group pension insurance common to all employees, from the moment
employment commences, and in accordance with the pension rules in force at any given time. Since 2015, the company has
had defined-contribution pension schemes for all employees. For group management, the calculated cash value of pension
rights for pay above 12 G that was already earned as of the transition to a defined-contribution scheme will be paid out over a
five-year period, with payment no later than 2019. The payment period is fixed regardless of whether the employee leaves the
164
STOREBRAND ANNUAL REPORT 2018 company before the end of this period.
Severance pay
The Chief Executive Officer and executive vice presidents are entitled to severance pay if their contracts are terminated by the
company. Entitlement to a severance package is also available if the employee decides to leave the company due to substantial
changes in the organisation, or equivalent circumstances, which result in the individual being unable to naturally continue in
his/her position. If the employment is brought to an end due to a gross breach of duty or other material non-performance of
the employment contract, the provisions in this section will not apply.
Deductions are made to the termination pay for all work-related income, including fees from the provision of services, offices
held, etc. The termination pay corresponds to the pensionable salary at the end of the employment, excluding any bonus
schemes. The CEO is entitled to 24 months of termination pay. Other executive vice presidents are entitled to 18 months of
termination pay.
2. BINDING GUIDELINES FOR SHARES, SUBSCRIPTION RIGHTS, OPTIONS, ETC. FOR THE UPCOMING 2019
FINANCIAL YEAR
To ensure that the Group’s executive management team has incentive schemes that accord with the long-term interests of the
owners, a proportion of the fixed salary will be linked to the purchase of physical Storebrand shares with a lock-in period of
three years. The CEO can decide that a limited group of employees shall be covered by an equivalent scheme. The purchase of
shares will take place once a year.
Like other employees in Storebrand, executive employees have an opportunity to purchase a limited number of shares in Sto-
rebrand ASA at a discount in accordance with the share programme for employees.
3.STATEMENT ON THE EXECUTIVE EMPLOYEE REMUNERATION POLICY DURING THE PREVIOUS FINANCIAL YEAR
The guidelines for executive remuneration policy set for 2018 have been followed. The annual independent assessment of the
guidelines and the practising of these guidelines in connection with bonuses to be paid in 2019 will be carried out during the
first half of 2019.
4. STATEMENT ON THE EFFECTS OF SHARE-BASED REMUNERATION AGREEMENTS ON THE COMPANY AND
THE SHAREHOLDERS
A proportion of the executive management’s fixed salary will be linked to the purchase of physical Storebrand shares with a
lock-in period of three years. The CEO can decide that a limited group of employees shall be covered by an equivalent scheme.
The purchase of shares will take place once a year.
In the opinion of the Board of Directors, this has a positive effect on the company and the shareholders, given the structure of
the scheme and the size of each executive vice president’s portfolio of shares in Storebrand ASA.
165
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 24: Remuneration paid to auditors
NOK million
Statutory audit
Other reporting duties
Tax advice
Other non-audit services
Total remuneration to auditors
The amounts are excluding VAT.
2018
-10,1
-1,1
-0,9
-0,7
-12,9
2017
-11,3
-1,3
-0,5
-0,2
-13,3
The Storebrand Group changed external auditor in 2018. Auditing expenses include expenses for both PwC and Deloitte.
Note 25: Other expenses
NOK million
Incurance related expenses
Losses on claims, insurance
Management fees
Earnout
Other expenses
Total other expenses
Note 26: Tax
TAX EXPENSES IN THE RESULT
NOK million
Tax payable
Change in deferred tax
Total tax charge
166
2018
-53
-118
-618
35
-98
-851
2018
-17
915
898
2017
-100
-119
-551
-51
-109
-930
2017
-72
74
2
STOREBRAND ANNUAL REPORT 2018 RECONCILIATION OF EXPECTED AND ACTUAL TAX EXPENSES
NOK million
Ordinary pre-tax profit
Expected income tax at nominal rate
Tax effect of
realised/unrealised shares
share dividends received
associated companies
other permanent differences
recognition/write-down of tax assets
change in tax rate
Changes from previous years
Total tax charge
Effective tax rate 1)
2018
2,799
-700
-112
12
11
1,680
6
898
-32%
2017
2,404
-601
112
66
14
496
1
104
-190
2
0%
1) As a result of new tax rules for pension and life insurance companies, it has been concluded in accordance with IAS 12 that there are no longer grounds for capitalising deferred tax linked
to temporary differences in property owned by customer assets. In accordance with the transitional rules, net unrealised gains linked to customer assets must be recognised as income for
tax purposes in 2018, when these have previously provided a basis for tax deductions through insurance reserves. The overall transitional effect of the transitional rules results in tax income
of approximately NOK 1.6 billion. The effective tax rate is also affected by the fact that the Group has operations in countries with tax rates that are different from Norway. The income tax
expense is also influenced by tax effects relating to previous years.
CALCULATION OF DEFERRED TAX ASSETS AND DEFERRED TAX ON TEMPORARY DIFFERENCES AND LOSSES CARRIED
FORWARD
NOK million
Tax-increasing temporary differences
Securities
Properties 1)
Fixed assets
Securities liabilities
Gains/losses account
Other
Total tax-increasing temporary differences
Tax-increasing temporary differences
Securities 1)
Fixed assets
Provisions
Accrued pension liabilities
Gains/losses account
Other
Total tax-reducing temporary differences
Carryforward losses
Net basis for deferred tax and tax assets
Net deferred tax assets/liabilities in balance sheet 1) 2) 3)
Recognised in balance sheet
Deferred tax assets
Deferred tax
2018
8
67
1,202
1,278
-144
-51
-26
-183
86
-318
-7,808
-6,848
-1,714
1,972
258
2017
15,095
10,452
8
65
84
1,281
26,984
-43
-39
-10,682
-240
-9
-3
-11,015
-16,649
-679
-399
637
238
167
SECTION 8. ANNUAL ACCOUNTS AND NOTES
1) As a result of new tax rules for pension and life insurance companies, it has been concluded in accordance with IAS 12 that there are no longer grounds for capitalising deferred tax linked
to temporary differences in property owned by customer assets. In accordance with the transitional rules, net unrealised gains linked to customer assets must be recognised as income for
tax purposes in 2018, when these have previously provided a basis for tax deductions through insurance reserves. The overall transitional effect of the transitional rules results in tax income
of approximately NOK 1.6 billion. The effective tax rate is also affected by the fact that the Group has operations in countries with tax rates that are different from Norway. The income tax
expense is also influenced by tax effects relating to previous years.
2) In December 2018, the Norwegian Parliament (Storting) agreed to reduce the company tax rate from 23 to 22 per cent with effect from 1 January 2019. It was also agreed to keep the rate
at 25 per cent for companies subject to the financial tax. The Storebrand Group includes companies that are both subject to and not subject to the financial tax. Therefore, when capitalising
deferred tax/deferred tax assets in the consolidated financial statements, the company tax rate that applies for the individual companies is used (22 or 25 per cent).
3) Uncertain tax positions
A. I In 2015, Storebrand Livsforsikring AS discontinued a wholly-owned Norwegian subsidiary, Storebrand Eiendom Holding AS, with a tax loss of approximately NOK 6.5 billion and with a
corresponding increase in the loss carryforward. In January 2018, Storebrand Livsforsikring received notice of an adjustment to the tax assessment for 2015 (dated 21 December 2017) which
claimed that the calculated loss was excessive, but provided no further quantification. Storebrand Livsforsikring AS disagrees with the arguments that were put forward and submitted its
response to the tax authorities on 2 March 2018. The notice is unclear. Based on the notice, a provision was made in the annual financial statements for 2017 for an uncertain tax position.
The best estimate of the reduction in the loss, where Storebrand’s interpretation of the Norwegian Tax Administration’s notice is used as a basis, is approximately NOK 1.6 billion (appears as a
reduction in the loss carryforward and, in isolation, gives an associated increased tax expense for 2017 of approximately NOK 400 million). The case is still being processed by the Norwegian
Tax Administration and Storebrand Livsforsikring AS had still not received any new information when the annual financial statements for 2018 were prepared. Therefore, the uncertain tax
position has been carried forward.
B. When calculating net gains according to the transitional rules - see 1) above - a method equivalent to that under (A) was used to calculate the tax values of property shares owned by custo-
mer assets. By accepting Storebrand’s interpretation of the Norwegian Tax Administration’s position, as described under (A), it has been taken into account that the tax values were reduced
by approximately NOK 3.25 billion. This entails an equivalent reduction in the loss carryforward and an increase in the tax basis for 2018. If Storebrand’s view had been accepted in the annual
financial statements and not treated as an uncertain tax position, taxable accounting income would, in isolation, have been approximately NOK 800 million higher for 2018.
Note 27: Intangible assets and excess value on purchased insurance contracts
NOK million
IT systems
Acquisition cost 01.01.18
Additions in the period
- Developed internally
- Purchased separately
- Purchased via acquistion/merger
Disposals in the period
Currency differences on converting
foreign units
Other changes
Acquisition cost 31.12.18
Accumulated depreciation and wri-
te-downs 01.01
Write-downs in the period
Amortisation in the period
Disposals in the period
Currency differences on converting
foreign units
Acc. depreciation and write-downs
31.12.18
Book value 31.12.18
851
56
137
-48
-3
993
-460
-29
-107
28
-567
426
Intangible assets
Other
intangible
assets
1,384
VIF 1)
9,890
Goodwill
2,310
2018
14,434
2017
12,048
281
56
137
281
-48
-221
-15
-17
-256
43
73
1,715
-36
590
1
9,669
1,649
2,292
14,604
14,434
-6,535
-315
132
-6,717
2,952
-841
-83
15
-909
741
-304
-8,139
-7,190
-29
-504
28
147
-8,498
6,106
-619
33
-363
-8,139
6,295
-1
-305
1,987
1) Value of business-in-force, the difference between market value and book value of the insurance liabilities in SPP.
168
STOREBRAND ANNUAL REPORT 2018
Intangible assets linked to acquisition of SPP
Storebrand Livsforsikring AS acquired SPP Livförsäkring AB and its subsidiaries in 2007. The majority of the intangible assets
associated with SPP comprise the value of in-force business (VIF), for which a separate liability adequacy test has been per-
formed in accordance with the requirements of IFRS 4. In order to determine whether goodwill and other intangible assets
associated with SPP have suffered an impairment in value, estimates are made of the recoverable amount for the relevant
cash-flow generating units. Recoverable amounts are established by calculating the enterprise’s utility value. SPP is regarded
as a single cash flow generating unit, and the development of future administration results, risk results and financial results for
SPP will affect its utility value.
In calculating the utility value, the management have made use of budgets and forecasts approved by the Board for the next
three years (2019-2021). The management has made assessments for the period from 2022 to 2028, and the annual growth
for each element in the income statement has been estimated. When calculating the terminal value, a growth rate equivalent
to Sveriges Riksbank’s inflation target of 2.0 per cent is used. The primary drivers of improved long-term results will be the
return on total assets, underlying inflation and wage growth in the market (which drive premium growth). The utility value is
calculated using a required rate of return after tax of 5.4 per cent. The required rate of return is calculated based on the risk-
free interest rate and added to a premium that reflects the risk of the business.
Calculations related to the future will be uncertain. The value will be affected by various growth parameters, expected return
and what required rate of return is assumed, etc. It is pointed out that the aim of the calculations is to ensure adequate relia-
bility that the utility value, cf. IAS 36, is not lower than the recognised value in the accounts. Simulation with reasonable, as well
as conservative, assumptions indicates a value for the investment that justifies the book value.
Intangible assets linked to the banking business
A cash flow based valuation based on the expected result after tax is used when calculating the utility value of the banking
business. Budgets and forecasts approved by the Board for the next three years (2019 to 2021) are used as the basis for the
valuation.
The cash flow is based on two elements, profit/loss after tax to equity and change in expected regulatory tying-up of capital.
It is also assumed that all capital in addition to regulatory tied-up capital, can be withdrawn at the end of each period. For the
period after 2021, a growth rate of 2.0 percent has been used for the retail market which is also included in the calculation of
the terminal value.The utility value is calculated using a required rate of return after tax of 5.4 per cent. The required rate of
return is calculated based on the risk-free interest rate and added to a premium that reflects the risk of the business.
There will be uncertainty related to the assumptions that have been made in the valuation. The value will be affected by the
assumptions for the interest rate margin, expected losses on lending, growth parameters and capital requirements, as well as
what required rate of return is assumed, etc. It is pointed out that the aim of the calculations is to ensure adequate reliability
that the utility value, cf. IAS 36, is not lower than the recognised value in the accounts. Simulation with reasonable, as well as
conservative, assumptions indicates a value for the investment that justifies the book .
Intangible assets linked to the acquisition of Skagen
Storebrand Asset Management AS acquired Skagen AS in 2017. The intangible assets linked to Skagen are customer lists, bran-
ded products, technology and goodwill. Budgets and forecasts approved by the Board for the next three years (2019 to 2021)
are used as the basis for the valuation. For the period from 2021 to 2023, a growth rate in line with the stock market is expec-
ted for revenues and in line with inflation for costs. A growth rate equivalent to Norges Bank’s inflation target of 2.0 per cent is
used for calculating the terminal value. The utility value is calculated using a required rate of return after tax of 10 per cent.
There will be uncertainty related to the assumptions that have been made in the valuation. The value will be influenced by
the assumptions regarding expected returns in the financial markets, costs, management fees, growth parameters, and the
required rate of return that is used as a basis. Please note that the aim of the calculations is to achieve a satisfactory level of
certainty that the utility value, cf. IAS 36, is not lower than the value recognised in the accounts. Simulation using reasonable,
as well as conservative, assumptions indicates a value for the investment that justifies the book value.
169
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Intangible assets linked to the acquisition of Silver
Storebrand Livsforsikring AS acquired Silver Pensjonsforsikring AS in 2018 and the company was merged with Storebrand
Livsforsikring AS in the same year. The intangible assets linked to the acquisition of Silver include the value of business in force
(VIF), for which a separate adequacy test was conducted 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 utility value of the business. Silver has been
integrated into Storebrand Livsforsikring’s business and is predominantly part of the savings segment. In this instance, it is
considered more accurate to estimate the utility value of the contracts in isolation as opposed to the overall savings segment
as a cash flow generating unit.
The value of the portfolios acquired from Silver is calculated as the discounted value of future, expected cash flows to Store-
brand. The calculations are carried out based on the specific portfolio and are made in Storebrand’s capital model, which is
equivalent to that used for Solvency II. The calculations are based on a set of realistic assumptions, including assumptions regar-
ding returns, transfer, costs and income performance. The assumptions are later assessed in relation to actual experiences.
Calculations related to the future will be uncertain. The value will be impacted by various growth parameters, expected return
and the required rate of return used as a basis, etc. Please note that the aim of the calculations is to achieve a satisfactory
level of certainty that the utility value, cf. IAS 36, is not lower than the value recognised in the accounts. Simulation with reaso-
nable and also conservative assumptions indicates a VIF that justifies the capitalised value.
SPECIFICATION OF INTAGIBLE ASSETS
NOK million
Brand name Skagen
Value of business in force Silver
IT systems
Customer lists Skagen
Value of business in force SPP
Total
Useful economic life
Depr. rate
Depr. method
Book value 2018
10 years
10 years
3-8 years
10 years
20 years
10 %
10 %
20 %
10 %
5 %
Straight line
Straight line
Straight line
Straight line
Straight line
129
253
426
358
2 952
4 119
GOODWILL DISTRIBUTED BY BUSINESS ACQUISITION
Acquisition cost
write-downs
Accumulated
Supply/
disposals/
NOK million
Business area
Delphi Fondsforvaltning
SPP Fonder
Storebrand Bank ASA
SPP
Skagen
Total
Savings
Savings
Other
Guarant. pensi-
on/Savings
Savings
01.01
35
48
422
797
1 007
2 310
Goodwill is not amortised, but is tested annually for impairment.
01.01
Book value 01.01
currency effect
Book value 31.12
-4
-300
-304
32
48
122
797
1 007
2 006
-1
-17
-18
32
47
122
780
1 007
1 987
170
STOREBRAND ANNUAL REPORT 2018
Note 28: Tangible fixed assets
Vehicles/ equipment
Real estate
52
3
-2
-1
-9
42
491
-490
1
NOK million
Book value 01.01
Additions
Disposals
Value adjustment recognised through the
balance sheet
Addition via acquisition/merger
Depreciation
Currency differences from converting foreign
units
Other changes
Book value 31.12
Allocation by company and customers
Tangible fixed assets - company
Tangible fixed assets - customers
Total tangilbe fixed assets
DEPRECIATION PLAN AND FINANCIAL LIFETIME:
Depreciation method:
Maskiner/utstyr
Inventar
Eiendom
Straight line
3-10 år
3-8 år
15 år
2018
543
3
-492
-1
-9
43
43
43
2017
481
11
-2
23
10
-19
38
1
543
56
488
543
Note 29: Investments in other companies
Applies to subsidiaries with a significant minority, associated companies and joint ventures.
IFRS 10 establishes a model for evaluating control that will apply to all companies, and the content of the control concept has
changed in IFRS 10 in relation to IAS 27 and will entail an increased degree of assessment of units that are controlled by the
company. Control exists when the investor has power over the investment object and possesses the right to variable yields
from the investment object and simultaneously possesses the power and possibility to steer activities in the investment object
that affect the yield.
In the Group’s financial statements, securities funds in which Storebrand has an ownership percentage of around 40 per cent
or more, and which are also managed by management companies within the Storebrand Group, are consolidated 100 per
cent on the balance sheet. Minority ownership interests in consolidated securities funds are shown on one line for assets and
correspondingly on one line for liabilities. In consequence of other investors in the funds being able to request redemption of
their ownership interests from the respective funds, such are deemed to be minority interests that are classified as liabilities in
Storebrand’s consolidated financial statements.
171
SECTION 8. ANNUAL ACCOUNTS AND NOTES
SPECIFICATION OF SUBSIDARIES WITH SUBSTANTIAL MINORITY (100% FIGURES)
NOK million
Assets
Liabilities
Equity - majority
Equity - minority
Ownership intereest - minority
Voting rights as a percentage of the total number of shares
Income
Result after tax
Total comprehensive income
Dividend paid to minority
2018
Benco
16,376
15,877
449
50
10
10
486
30
30
2
SPECIFICATION OF ASSOCIATED COMPANIES AND JOINT VENTURES CLASSIFED AS SUBSTANTIAL (100% FIGURES)
NOK million
Accounting method
Type of operation
Type of interest
Current assets
Fixed assets
Short term liabilities
Long term liabilities
Cash and cash equivalents
Income
Result after tax
Total comprehensive income
Dividend paid
Storebrand Helseforsikring AS
2018
Equity-method
Insurance
Joint venture
700
38
66
363
29
689
64
64
79
OWNERSHIP INTERESTS IN ASSOCIATED COMPANIES AND JOINT VENTURES
NOK million
Associated companies
Inntre Holding AS
Handelsboderna i Sverige Fastighets AB
Storebrand Eiendomsfond Invest AS
Joint ventures
Försäkringsgirot AB
Storebrand Helseforsikring AS
Total
Allocation by company and customers:
Investments in associated companies - company
Investments in associated companies - customers
Total
172
Business location
Ownership share
Book value 31.12
Steinkjær
Stockholm
Oslo
Stockholm
Lysaker
34,3 %
50,0 %
21,2 %
25,0 %
50,0 %
97
30
4,376
3
155
4,661
255
4,406
4,661
STOREBRAND ANNUAL REPORT 2018 RECEIVABLES FOR ASSOCIATED COMPANIES AND JOINT VENTURES
NOK million
Handelsboden Örebro Rävgräva 4:4 AB
Total
Allocation by company and customers
Receivables in associated companies - customers
Total receivables for associated companies
INCOME FROM ASSOCIATED COMPANIES AND JOINT VENTURES
NOK million
Proportion of the result
Interest income
Realised change in value
Unrealised change in value
Total
Allocation by company and customers
Receivables in associated companies - company
Receivables in associated companies - customers
Total receivables from associated companies
2018
2018
347
1
1
349
46
303
349
2017
39
39
39
39
2017
245
88
17
350
119
231
350
173
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 30: Classification of financial assets and liabilities
NOK million
Financial assets
Bank deposits
Shares and fund units
Bonds and other fixed-income
securities
Loans to financial institutions
Loans to customers
Accounts receivable and other
short-term receivables
Derivatives
Total financial assets 2018
Total financial assets 2017
Financial liabilities
Subordinated loan capital
Liabilities to financial instituti-
ons
Deposits from banking custo-
mers
Securities issued
Derivatives
Other current liabilities
Total financial liabilities 2018
Total financial liabilities 2017
Investments,
Liabilities at
Loans and
held to
Fair value,
Fair value,
Available
amortised
receivables
maturity
held for sale
FVO
for sale
cost
Total
9,090
94,723
318
53,508
7,737
14,403
165,375
149,841
14,403
15,128
4,831
4,831
4,064
157,361
157,586
5,928
95
320,970
328,865
14
4,535
4,535
139
72
72
1,876
9,090
157,361
266,712
318
59,436
7,737
4,926
505,579
497,911
8,224
8,224
2
2
14,419
17,529
6,751
46,926
48,326
14,419
17,529
4,607
6,751
51,533
50,341
Note 31: Bonds at amortised cost
NOK million
Government bonds
Corporate bonds
Structured notes
Collateralised securities
Total bonds at amortised cost
Storebrand Bank
Modified duration
Average effective yield
Storebrand Life Insurance
Modified duration
Average effective yield
Distribution beween company and customers
Loans and receivables company
Loans and receivables customers with guarantee
174
Total
2018
2017
Book value
Fair value
Book value
Fair value
28,945
67,757
1,482
301
98,485
0,2
1,4%
6,4
3,4%
26,994
65,944
1,484
300
94,723
2,7%
8 349
86 374
94 723
28,148
40,798
1,020
17,510
87,474
1,3%
3 403
84 071
87 474
31,268
42,419
1,034
19,497
94,218
0,2
0,7%
7,0
0,9%
STOREBRAND ANNUAL REPORT 2018 BONDS HELD TO MATURITY
NOK million
Corporate bonds
Collateralised securities
Total bonds at amortised cost
Modifed duration
Average effective yield
Distribution beween company and customers:
Bonds held to maturity - customers with guarantees
Total
2018
2017
Balanseført verdi
Virkelig verdi
Balanseført verdi
Virkelig verdi
15,109
570
15,679
4,3
4,5%
13,880
523
14,403
2,7%
14,403
14,403
5,828
9,300
15,128
2,2%
15,128
15,128
6,490
10,443
16,933
4,9
1,2%
A yield is calculated for each bond, based on both the paper’s book value and the observed market price (fair value). For fixed
income securities with no observed market prices the effective interest rate is calculated on the basis of of the fixed interest
rate period and classification of the individual security with respect to liquidity and credit risk. Calculated effective yields are
weighted to give an average effective yield on the basis of each security’s share of the total interest rate sensitivity.
Note 32: Loans to customers
NOK million
Corporate market 1)
Retail market
Gross loans
Write-downs of loans losses
Net loans 2)
1) Of which Storebrand Bank
2) Of which Storebrand Bank
Of which Storebrand Livsforsikring
Fordeling på selskap og kunder:
Netto utlån til kunder - selskap
Netto utlån til kunder - kunder m/garanti
Sum
NON-PERFORMING AND LOSS-EXPOSED LOANS
NOK million
Non-performing and loss-exposed loans without identified impairment
Non-performing and loss-exposed loans with identified impairment
Gross non-performing loans
Individual write-downs
Net non-performing loans 1)
1) The figures apply in their entirety Storebrand Bank
For further information about lending, see note 10 Credit risk.
31.12.18
31.12.17
12,752
46,754
59,506
-63
59,444
29
28,464
30,980
28,466
30,978
59,444
2018
71
59
129
-21
108
11,685
42,184
53,869
-80
53,788
360
27,257
26,531
27,259
26,529
53,788
2017
150
114
265
-43
222
175
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 33: Properties
NOK million
31.12.18
31.12.17
of return % 1)
(years) 3)
m2
31.12.18
Average dura-
Required rate
tion of lease
Office buildings (including parking and storage):
Oslo-Vika/Filipstad Brygge
Rest of Greater Oslo
Office buildings in Sweden
Shopping centres (including parking and storage)
Oslo-Vika/Filipstad Brygge
Rest of Greater Oslo
Rest of Norway
Housing Sweden 2)
Car parks
Multi-storey car parks in Oslo
Multi-storey car parks in Sweden 2)
Other properties:
Cultural/conference centres in Sweden 2)
Trading Sweden 2)
Hotel Sweden 2)
Service properties Sverige 2)
Properties Norway
Total investment properties
Properties for own use
Total properties
Allocation by company and customers:
Properties - company
Properties - customers with guarantee
Properties - customers without guarantee
Total
7,201
4,102
693
635
6,101
2,131
924
224
1,775
2,508
1,923
50
28,266
1,420
29,686
50
26,333
3,303
29,686
6,838
3,935
1,259
611
6,151
1,909
933
62
264
1,236
2,391
1,814
50
27,453
1,408
28,861
50
25,857
2,954
28,861
4,0 - 4,45
3,95 - 6
4,5
7,6
4,45 - 7,3
5,7
4,3
6,8
4,3
4,4
5,0
4,0
4,9
4,3
6,0
3,0
5,0
3,0
14,0
11,0
11,0
3,0
93,952
85,253
16,886
38,820
164,170
84,769
27,393
18,757
37,754
35,386
64,103
667,243
19,442
686,685
1) The properties are valued on the basis of the following effective required rate of return (included 2.5 per cent inflation)
2) All of the proporties in Sweden are appraised externally. The appraisal is based on the required rates of return in the market (including 2 per cent inflation)
3) The average duration of the leases has been calculated proportionately based on the value of the individulal properties.
As of 31.12.18, Storebrand Life Insurance had NOK 4 376 million invested in Storebrand Eiendomsfond Norge KS and Ruseløkkveien
26, Oslo.
The investments are classified as “Investment in associated Ccmpanies and joint ventures” in the Consolidated Financial Statements.
Storebrand Eiendomsfond Norge KS and Ruseløkkveien 26, Oslo invest exclusively in real estate at fair value.
176
STOREBRAND ANNUAL REPORT 2018 Vacancy
Norway
The vacancy rate for lettable areas was 6.1 per cent (4.1 per cent) at the end of 2018. Of the total vacancy, 6.6 per cent (9,3
per cant) is related to to space that is unavaiilable for leasing due to ongoing development procjects At the end of 2018, a total
of 12.7 per cent (13.3 per cent) of the floor space in the investment properties was vacant.
Sweden
At the end of 2018, there was practically no vacancy in the investment properties
Transactions:
Purchases: Further NOK 248 millions in property acquisitions in SPP have been agreed on in 4th quarter 2018 in addition to
the figures that has been finalised and included in the finacial statements as of 31 December 2018
Sale: No further property sales has been agreed on in Storebrand/SPP in addiition to the figures that has been finalised and
included in the finacial statements as of 31 December 2018
PROPERTIES FOR OWN USE
NOK million
Book value 01.01
Additions
Disposals
Revaluation booked in balance sheet
Depreciation
Write-ups due to write-downs in the period
Currency differences from converting foreign units
Other change
Book value 31.12
Acquisition cost opening balance
Acquisition cost closing balance
Accumulated depreciation and write-downs opening balance
Accumulated depreciation and write-downs closing balance
Allocation by company and customers:
Properties for own use - customers
Total
Depreciation method:
Depreciation plan and financial lifetime
Straight line
50 years
2018
1,408
6
39
-13
12
-31
1,420
534
540
-587
-600
1,420
1,420
2017
2,863
120
-2,225
69
-65
64
69
514
1,408
2,639
534
-521
-587
1,408
1,408
177
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 34: Accounts receivable and other short-term receivables
NOK million
Accounts receivable
Receivables in connection with direct insurance
Interest earned/pre-paid expenses
Fee earned
Claims on insurance brokers
Prepayment of yield tax
Collateral
Tax receivable
Activated sales costs (Swedish business)
Other current receivables
Book value 31.12
Allocation by company and customers:
Accounts receivable and other short-term receivables - company
Accounts receivable and other short-term receivables - customers
Total
AGE DISTRIBUTION FOR ACCOUNTS RECEIVABLE 31.12 (GROSS)
NOK million
Receivables not fallen due
Past due 1 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past due > 90 days
Gross accounts receivable
Provisions for losses 31.12
Net accounts receivable
Note 35: Equities and fund units
NOK million
Equities
Private Equity fund investments
Fund units
Total equities and fund units
Allocation by company and customers:
Equities and fund units - company
Equities and fund units - customers with guarantee
Equities and fund units - customers without guarantee
Sum
178
2018
633
539
215
72
395
408
1,614
2,975
553
332
7,737
7,005
732
7,737
2018
619
12
1
1
1
635
-2
633
2018
24,038
1,418
131,904
157,361
295
23,402
133,664
157,361
2017
646
533
178
376
439
414
674
1,414
537
316
5,526
4,834
691
5,526
2017
587
53
4
3
2
648
-2
646
2017
22,465
133,968
156,434
363
24,556
131,514
156,434
STOREBRAND ANNUAL REPORT 2018 Note 36: Bonds and other fixed-income securities
NOK million
Government bonds
Corporate bonds
Structured notes
Collateralised securities
Bond funds
Total bonds and other fixed-income securities
Allocation by company and customers:
Bonds and other fixed-income securities - company
Bonds and other fixed-income securities - customers with guarantee
Bonds and other fixed-income securities - customers without guarantee
Total
2018
34,491
51,028
79
22,510
49,478
157,586
24,055
91,894
41,637
157,586
2017
49,022
49,331
81
28,914
39,412
166,761
31,718
101,897
33,146
166,761
Modified duration
Average effective yield
Storebrand
Fair value
Life
SPP Pension
Storebrand
Storebrand
Storebrand
Insurance
& Insurance
Euroben
Bank
Insurance
6,9
2,6 %
8,3
1,2 %
4,7
0,6 %
0,2
1,2 %
0,5
1,6 %
ASA
0,6
1,1 %
The effective yield for each security is calculated using the observed market price. Calculated effective yields are weighted to
give an average effective yield on the basis of each security’s share of the total interest rate sensitivity. Interest derivatives are
included in the calculation of modified duration and average effective interest rate.
Note 37: Derivatives
Nominal volume
Financial derivatives are related to underlying amounts which are not recognised in the statement of financial position. In
order to quantify the scope of the derivatives, reference is made to amounts described as the underlying nominal principal,
nominal volume, etc. Nominal volume is arrived at differently for different classes of derivatives, and provides some indication
of the size of the position and risk the derivative presents.
Gross nominal volume principally indicates the size of the exposure, whilst net nominal volume provides some indication of
the risk exposure. However , nominal volume is not a measure which necessarily provides a comparison of the risk repre-
sented by different types of derivatives. Unlike gross nominal volume, the calculation of net nominal volume also takes into
account which direction of market risk exposure the instrument represents by differentiating between long (asset) positions
and short (liability) positions.
A long position in an equity derivative produces a gain in value if the share price increases. For interest rate derivatives, a
long position produces a gain if interest rates fall, as is the case for bonds. For currency derivatives, a long position results in a
positive change in value if the relevant exchange rate strengthens against the NOK. Average gross nominal volume are based
on daily calculations of gross nominal volume.
179
SECTION 8. ANNUAL ACCOUNTS AND NOTES Gross nominal
Gross booked
value fin. liabi-
Gross booked
volume 1)
value fin. assets
88,044
103,192
3,897
1,029
4,926
4,064
lities
796
3,810
4,607
2,015
Net amounts taken into account
netting agreements
Fin. assets
Fin. liabilities
Net amount
9
79
89
1,280
806
3,100
-2,781
319
2,049
766
832
-1 278
319
NOK million
Interest derivatives
Currency derivatives
Total derivater 31.12.18
Total derivater 31.12.17
Distribution between company
and customers:
Derivatives - company
Derivatives - customers with
guarantee
Derivatives - customers without
guarantee
Total
1) Values 31.12.
Note 38: Technical insurance reserves - life insurance
NOK million
pension
Savings
Insurance *)
BenCo
Guaranteed
Additional statutory reserves
Conditional bonus
Market value adjustment reserve
Total buffer capital
8,494
6,462
2,146
17,103
99
99
SPECIFICATION OF BALANCE SHEET ITEMS CONSERNING LIFE INSURANCE
Total Store-
Total Store-
brand Group
brand Group
2018
8,494
8,243
2,245
2017
8,254
9,176
3,707
1,781
1,781
18,983
21,137
NOK million
Premium reserve
- of which IBNS
Pension surplus fund
Premium fund/deposit fund
Other technical reserves
- of which IBNS
Supplerende avsetning
Guaranteed
pension
242,733
1,991
4
2,153
Savings
Insurance 1)
179,169
7
8
4,677
2,840
622
562
BenCo
13,802
45
Total Store-
Total Store-
brand Group
brand Group
2018
2017
440,381
431,462
4,883
4
2,153
622
562
8
5,145
6
2,557
631
573
Total insurance liabilities - life insurance
244,890
179,177
5,298
13,802
443,167
434,657
1) Including personal risk and employee insurance of the Insurance segment.
180
STOREBRAND ANNUAL REPORT 2018 MARKET VALUE ADJUSTMENT RESERVE
NOK million
Equities
Interest-bearing
Total market value adjustment reserves at fair value
See note 39 for insurance liabilities - P&C.
Note 39: Technical insurance reserves - P&C insurance
ASSETS AND LIABILITIES - P&C INSURANCE
NOK million
Reinsurance share of insurance technical reserves
Total assets
Premium reserve
Claims reserve
- of which IBNS
- of which administration reserve
Total liabilities
See note 38 for insurance liabilities - life insurance.
Note 40: Other current liabilities
NOK million
Accounts payable
Accrued expenses/appropriations
Appropriations earnout
Other appropriations
Governmental fees and tax withholding
Collateral received derivates in cash
Liabilities in connection with direct insurance
Liabilities to broker
Minority SPP Fastighet KB
Other current liabilities
Book value 31.12
2018
1,776
469
2,246
2018
21
21
470
581
553
28
1,051
2018
260
701
105
290
145
1,709
1,485
319
891
845
6,752
2017
3,037
670
3,707
2017
27
27
460
632
602
30
1,092
2017
255
637
273
500
217
2,037
1,584
917
841
842
8,102
181
SECTION 8. ANNUAL ACCOUNTS AND NOTES SPECIFICATION OF RESTRUCTURING RESERVES
NOK million
Book value 01.01
Increase in the period
Amount recognised against reserves in the period
Reversal of previous allocations due to estimate discrepancies.
Change due to currency
Book value 31.12
Note 41 Hedge accounting
2018
49
7
-18
38
2017
100
23
-67
-7
1
49
Fair value hedging of the interest rate risk and cash flow hedging of the credit margin
Storebrand uses fair value hedging for interest risk. The hedged items are financial assets and financial liabilities measured at
amortised cost. Derivatives are recognised at fair value over profit or loss . Changes in the value of the hedged item that can
be attributed to the hedged risk are adjusted in the book value of the hedged item and reconised in the income statement.
The effectiveness of hedging is monitored at the individual security level.
Storebrand utilises cash flow hedging of its credit margin. The hedged items are liabilities that are measured at amortised cost.
Derivatives are recognised at fair value in the accounts. The proportion of the gain 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
HEDGING INSTRUMENT/HEDGED ITEM
2018
Book value 1)
2017
Book value 1)
Contract/
nominal
Recog-
nised of
compre-
Contract/
hensive
nominal
Recog-
nised of
compre-
hensive
NOK million
value
Assets
Liabilities
Booked
income
value
Assets Liabilities
Booked
income
Interest rate swaps
Subordinated loans
Debt raised through
4,623
-2,238
1,171
issuance of securities
2,350
3,255
2,406
-60
-14
45
-12
14
4,623
-2,238
2,350
1,245
3,227
2,459
188
-154
-39
-22
37
1) Book values as at 31.12.
Currency hedging of net investment in Storebrand HOlding AB
In 2018, Storebrand utilised cash flow hedging for the currency risk linked to Storebrand’s net investment in Storebrand Hol-
ding AB. 3 month rolling currency derivatives were used in which the spot element in these is used as the hedging instrument.
In 2018, a dated subordinated loan of SEK 900 million was taken up. The loan was used as a hedging instrument relating to
the hedging of the net investment in Storebrand Holding AB. The effective share of hedging instruments is recognised in the
total comprehensive income. The net investment in Storebrand Holding AB is partly hedged and therefore the expectation is
that future hedge effectiveness will be around 100 per cent.
182
STOREBRAND ANNUAL REPORT 2018 69
749
2017
2,249
-21
2,228
2018
Book value 1)
2017
Book value 1)
Contract/
Kontrakt/
nominal value
Assets
Liabilities
nominell verdi
Assets
Liabilities
-5,302
-2,650
222
2,588
-4,200
-750
9,242
5,862
HEDGING INSTRUMENT/HEDGED ITEM
NOK million
Currency derivatives
Loan used as hedging instrument
Underlying items
1) Book values at 31.12.
Note 42: Collateral
NOK million
Collateral for Derivatives trading
Collateral received in connection with Derivatives trading
Total received and pledged collateral
2018
4,055
-1,669
2,385
Collateral pledged in connection with futures and options are regulated on a daily basis in the daily margin clearing on indivi-
dual contracts. Collatrals are received and given both as cash and securities.
.
NOK million
Book value of bonds pledged as collateral for the bank's lending from Norges Bank
Booked value of securities pledged as collateral in other financial institutions
Total
2018
1,205
151
1,355
2017
888
302
1,190
Securities pledged as collateral are linked to lending access in Norges Bank for which, pursuant to the regulations, the loans
must be fully guaranteed with collateral in interest-bearing securities and/or the bank’s deposits in Norges bank. Storebrand
Bank ASA has none F-loan in Norges Bank as per 31.12.2018.
Of total loans of NOK 28.1 billion, NOK 18,5 billion has been mortgaged in connection with the issuing of covered bonds (co-
vered bond rate) in Storebrand Boligkreditt AS.
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 over-
collateralization (OC) of 29 per cent, but committed OC is 9.5 per cent. Storebrand Boligkreditt AS therefore has security that
is NOK 1.2 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
183
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 43: Contingent liabilities
NOK million
Guarantees
Unused credit limit lending
Uncalled residual liabilities re limited partnership
Loan commitment retail market
Debt instrument to Silver Pensjonsforsikring in connection with the acquisition1)
Total contingent liabilities
1) The debt instrument is conditional upon the company being released from administration
2018
1
3,362
5,818
1,672
10,853
2017
20
3,474
5,451
2,007
520
11,472
Guarantees principally concern payment guarantees and contract guarantees.
Unused credit facilities concern granted and unused overdrafts and credit cards, as well as unused facility for credit loans
secured by property.
Storebrand Group companies are engaged in extensive activities in Norway and abroad, and are subject for client complaints
and may become a party in legal disputes.
Note 44: Information related parties
Companies in the Storebrand Group have transactions with related parties who are shareholders in Storebrand ASA and
senior employees. These are transactions that are part of the products and services offered by the Group‘s companies to their
customers. The transactions are entered into on commercial terms and include occupational pensions, private pensions sa-
vings, P&C insurance, leasing of premises, bank deposits, lending, asset management and fund saving. See note 23 for further
information about senior employees.
Internal transactions between group companies are eliminated in the consolidated financial statements, with the exception of
transactions between the customer portfolio in Storebrand Livsforsikring AS and other units in the Group. See note 1 Accoun-
ting Policies for further information.
For further information about close associates, see notes 29 and 40.
Note 45: Sold/liquidated business
In December 2018, an agreement was entered into for the sale of Nordben Life and Pension Insurance Company Ltd. The exe-
cution of the transaction is conditional upon government approval and is expected to be completed in the first quarter of 2019.
Note 46: Subsequent events
Storebrand Asset Management AS has signed an agreement to acquire Cubera Private Equity AS
On February 12th, Storebrand Asset Management AS signed an agreement to acquire 100 % of the shares in Cubera Private
Equity AS (Cubera). The purchase price of the acquisition is NOK 300 million. The purchase price may increase with up to
NOK 225 million related to fundraising to new funds managed by Cubera.The transaction is settled with cash only.
The transaction is contingent on public and private approvals. The transaction is expected to be completed during the first half
of 2019.
184
STOREBRAND ANNUAL REPORT 2018 Storebrand ASA
Income statement
NOK million
Operating income
Income from investments in subsidiaries
Net income and gains from financial instruments:
- equities and other units
- bonds and other fixed-income securities
- financial derivatives/other financial instruments
Other financial instruments
Operating income
Interest expenses
Other financial expenses
Operating expenses
Personnel expenses
Amortisation
Other operating expenses
Total operating expenses
Total expenses
Pre-tax profit
Tax
Profit for year
Note
2018
2
3
3
3
4, 5, 6
13
4,131
1
26
-7
33
4,184
-60
35
-41
-44
-86
-111
4,074
7
-111
3,963
Statement of total comprehensive income
NOK million
Profit for year
Other result elements not to be classified to profit/loss
Change in estimate deviation pension
Tax on other result elements
Total other result elements
Note
2018
3,963
5
9
-2
6
2017
2,154
36
-4
2
2,188
-69
-62
-41
-1
-81
-123
-254
1,934
-110
1,824
2017
1,824
-34
8
-25
Total comprehensive income
3,969
1,798
185
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Storebrand ASA
Statement of financial position
NOK million
Fixed assets
Deferred tax assets
Tangible fixed assets
Shares in subsidiaries and associated companies
Total fixed assets
Current assets
Owed within group
Other current receivables
Investments in trading portfolio:
- equities and other units
- bonds and other fixed-income securities
- financial derivatives/other financial instruments
Bank deposits
Total current assets
Total assets
Equity and liabilities
Share capital
Own shares
Share premium reserve
Total paid in equity
Other equity
Total equity
Non-current liabilities
Pension liabilities
Securities issued
Total non-current liabilities
Current liabilities
Debt within group
Provision for dividend
Other current liabilities
Total current liabilities
Total equity and liabilities
Note
31.12.18
31.12.17
7
13
8
17
9
10, 12
11, 12, 15
12
5
14, 15
17
47
26
19,286
19,359
4,092
21
22
1,820
9
34
5,998
25,357
2,339
-2
10,521
12,858
8,395
21,253
161
1,813
1,974
597
1,402
131
2,130
25,357
135
28
18,724
18,886
2,207
3
1,380
16
53
3,659
22,545
2,339
-5
10,521
12,855
5,793
18,648
176
2,270
2,446
3
1,168
280
1,451
22,545
Lysaker, 12 February 2019
Board of Directors of Storebrand ASA
Didrik Munch
Chairman of the Board
Karin Bing Orgland
Laila S. Dahlen
Liv Sandbæk
Martin Skancke
Jan Chr. Oppsahl
Arne Fredrik Håstein
186
Heidi Storruste
Ingvild Pedersen
Odd Arild Grefstad
Chief Executive Officer
STOREBRAND ANNUAL REPORT 2018 Storebrand ASA
Statement of changes in equity
NOK million
Share capital 1)
Own shares
Share premium
Other equity
Total equity
Equity at 31. December 2016
2,250
-8
9,485
Profit for the period
Total other result elements
Total comprehensive income
Issue of shares
Provision for dividend
Own share bought back 2)
Employee share 2)
Equity at 31. December 2017
2,339
Profit for the period
Total other result elements
Total comprehensive income
Provision for dividend
Own share bought back 2)
Employee share 2)
Equity at 31. December 2018
2,339
90
1,037
3
-5
3
-2
10,521
10,521
1) 467,813,982 shares with a nominal value of NOK 5.
2) In 2018, 542,532 shares were sold to our own employees. Holding of own shares 31. December 2018 was 431,140.
5,129
1,824
-25
1,798
-1,168
44
-11
5,793
3,963
6
3,969
-1,402
48
-13
8,395
16,855
1,824
-25
1,798
1,126
-1,168
47
-11
18,648
3,963
6
3,969
-1,402
50
-13
21,253
187
SECTION 8. ANNUAL ACCOUNTS AND NOTES Storebrand ASA
Statement of cach flow
NOK million
Cash flow from operational activities
Receipts - interest, commission and fees from customers
Net receipts/payments - securities at fair value
Payments relating to operations
Net receipts/payments - other operational activities
Net cash flow from operational activities
Cash flow from investment activities
Net receipts - sale of subsidiaries
Net payments - sale/capitalisation of subsidiaries
Net receipts/payments - sale/purchase of property and fixed assets
Net cash flow from investment activities
Cash flow from financing activities
Payments - repayments of loans
Receipts - new loans
Payments - interest on loans
Receipts - sold own shart to employees
Payments - dividends
Net cash flow from financing activities
Net cash flow for the period
Net movement in cash and cash equivalents
Cash and cash equivalents at start of the period
Cash and cash equivalents at the end of the period
2018
47
-477
-89
2,247
1,728
33
-131
2
-95
-450
1
-72
37
-1,168
-1,651
-19
-19
53
34
2017
50
732
-165
934
1,551
-408
2
-407
-1,425
1,001
-81
36
-695
-1,163
-19
-19
72
53
188
STOREBRAND ANNUAL REPORT 2018 Storebrand ASA
Notes to the financial statement
Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Accounting policies
Income from investments in subsidiaries
Net income for various classes of financial instruments
Personnel costs
Pensions costs and pension liabilities
Remuneration to the CEO and elected officers of the company
Tax
Parent company’s shares in subsidiaries and associated companies
Equities
Note 10:
Bonds and other fixed-income securities
Note 11:
Financial derivatives
Note 12:
Financial risks
Note 13:
Tangible fixed assets
Note 14:
Securities issued
Note 15:
Hedge accounting
Note 16:
Shareholders
Note 17:
Information about close associates
Note 18:
Number of employees/person-years
189
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 1: Accounting policies
Storebrand ASA is the holding company of the Storebrand Group. The Storebrand Group is engaged in life and P&C insurance,
banking and asset management, with insurance being the primary business. The financial statements of Storebrand ASA have
accordingly been prepared in accordance with the Norwegian Accounting Act, generally accepted accounting policies in Norway,
and the Norwegian Regulations relating to annual accounts for nonlife insurance companies. Storebrand ASA has used the simpli-
fied IFRS provisions in the regulations for recognition and measurement.
Use of estimates and discretionary assumptions
In preparing the annual financial statements, Storebrand has made assumptions and used estimates that affect the reported
value of assets, liabilities, revenues, costs, as well as the information provided on contingent liabilities. Future events may cause
these estimates to change. Such changes will be recognised in the financial statements when there is a sufficient basis for using
new estimates. The most important estimates and assessments are related to the valuation of the company’s subsidiaries and the
assumptions used for pension calculations.
Classification and valuation policies
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.
Profit and loss account and statement of financial position
Storebrand ASA is a holding company with subsidiaries in the fields of insurance, banking and asset management. The layout plan
in the Regulations relating to annual financial statements for nonlife insurance companies has not been used, a custom layout plan
has been used.
Investments in subsidiaries, dividends and group contributions
In the company’s accounts, investments in subsidiaries and associated companies are valued at the acquisition cost less any write-
downs. The need to write down is assessed at the end of each accounting period. Storebrand ASA’s primary income is the return on
capital invested in subsidiaries. Group contributions and dividends received in respect of these investments are therefore recorded
as ordinary operating income. Proposed and approved dividends and group contributions from subsidiaries at the end of the year
are recognised in the financial statements of Storebrand ASA as income in that financial year.
A prerequisite for recognition is that this is earned equity by a subsidiary. Otherwise, this is recognised as an equity transaction,
which means that the ownership interest in the subsidiary is reduced by dividends or group contributions.
Tangible fixed assets
Tangible fixed assets for own use are recognised at acquisition cost less accumulated depreciation. Write-downs are made if the
book value exceeds the recoverable amount of the asset.
Pension liabilities for company’s own employees
Storebrand ASA have defined-contribution pension, but have some pension obligation that are recorded as defined-benefit
pension.
The defined-contribution pension scheme involves the company 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 company 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.
Tax
The tax cost in the profit and loss account consists of tax payable and changes in deferred tax. Deferred tax and deferred tax assets
are calculated on the differences between accounting and tax values of assets and liabilities. Deferred tax assets are recorded on
the balance sheet to the extent it is considered likely that the company will have sufficient taxable profit in the future to make use
of the tax asset. Deferred tax is applied directly against equity to the extent that it relates to items that are themselves directly
applied against equity.
Currency
Current assets and liabilities are translated at the exchange rate on the balance sheet date. Shares held as fixed assets are trans-
lated at the exchange rate on the date of acquisition.
190
STOREBRAND ANNUAL REPORT 2018 Financial instruments
Equities and units
Equities and units are valued at fair value. For securities listed on an exchange or other regulated market, fair value is deter-
mined as the bid price on the last trading day immediately prior to or on the balance sheet date.
Any repurchase of own shares is dealt with as an equity transaction, and own shares (treasury stock) are presented as a reduc-
tion in equity.
Bonds and other fixed income securities
Bonds and other fixed income securities are included i the statement of financial position from such time the company becomes
party to the instrument’s contractual terms and conditions. Ordinary purchases and sales of financial instruments are recognised
on the transaction date. When a financial asset or a financial liability is initially recognised in the financial statements, it is valued
at fair value. Initial recognition includes transaction costs directly related to the acquisition or issue of the financial asset/liability.
Financial assets are derecognised when the contractual right to the cash flows from the financial asset expires, or when the
company transfers the financial asset to another party in a transaction by which all, or virtually all, the risk and reward associated
with ownership of the asset is transferred.
Bonds and other fixed income securities are recognised at fair value.
Fair value is the amount for which an asset could be sold for, or a liability settled with, between knowledgeable, willing parties
in an arm’s length transaction. For financial assets that are listed on an exchange or other regulated market place, fair value is
determined as the bid price on the last trading day up to and including the balance sheet date, and in the case of an asset that
is to be acquired or a liability that is held, the offer price.
Financial derivatives
Financial derivatives are recognised at fair value. The fair value of such derivatives is classified as either an asset or a liability with
changes in fair value through profit or loss.
Bond funding
Bond loans are recorded at amortised cost using the effective interest rate method. The amortised cost includes the transaction
costs on the date of issue.
Accounting treatment of derivatives as hedging
Fair value hedging
Storebrand uses fair value hedging, and the hedged items are fixed rate funding measured at amortised cost. Derivatives that
fall within this category are recognised at fair value through profit or loss. Changes in the value of the hedged item that relate to
the hedged risk are applied to the book value of the item and recognised through profit or loss.
Note 2: Income from investments in subsidiaries
NOK million
Storebrand Livsforsikring
Storebrand Bank ASA
Storebrand Asset Management AS
Storebrand Forsikring AS
AS Værdalsbruket
Storebrand Helseforsikring AS
Total
2018
3,200
153
415
324
39
4,131
2017
1,300
192
535
81
10
36
2,154
191
SECTION 8. ANNUAL ACCOUNTS AND NOTES Note 3: Net income for various classes of financial instruments
NOK million
terest income
on realisation
sed gain/loss
2018
2017
Dividend/ in-
Net gain/loss
Net unreali-
Net income from equities and units
Net income from bonds and other fixed income securi-
ties
Net income from financial derivatives
Net income and gains from financial assets at fair
value
– of which FVO (Fair Value Option)
– of which trading
42
42
42
-10
-10
-10
1
-6
-7
-12
-5
-7
1
26
-7
20
27
-7
Note 4: Personnel costs
NOK million
Ordinary wages and salaries
Employer's social security contributions
Personnel costs 1)
Other benefits
Total
1) See the spesification in note 5
2018
-21
-6
-9
-6
-41
36
-4
33
36
-4
2017
-19
-5
-7
-10
-41
Note 5 : Pensions costs and pension liabilities
Storebrand Group has country-specific pension schemes.
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.
The premiums and content of the defined-contribution pension scheme are as follows:
– Saving starts from the first krone of salary
– Savings rate of 7 per cent of salary from 0 to 12 G (the National Insurance basic amount “G” was NOK 96,883 as at 31
December 2018)
– In addition, 13 per cent of salary between 7.1 and 12 G is saved
– Savings rate for salary over 12 G is 20 per cent
Employees and former employees who had salaries in excess of 12G until 31 December 2014 were offered a cash redemp-
tion option for their accrued rights with payment at the start of 2015. For employees who were a part of the executive
management team, these payments were distributed over 5 years.
The Norwegian companies participate in the Joint Scheme for Collective Agreement Pensions (AFP). The private AFP scheme
provides a lifelong supplement to an ordinary pension and is a multi-employer pension scheme, but there is no reliable
information available for inclusion of this liability on the statement of financial position. The scheme is financed by means
192
STOREBRAND ANNUAL REPORT 2018
of an annual premium that is defined as a percentage of salaries from 1 G to 7.1 G, and the premium rate was 2.5 % in
2018. Storebrand employees in Norway who were born before 1 January 1956 can choose between drawing an AFP scheme
pension or retiring at the age of 65 and receiving a direct pension from the company until they reach the age of 67. Employ-
ees can choose to receive benefits from the AFP scheme from the age of 62 and still continue to work.
Employees who were on sick leave and partiality disabled during the transition to the defined-contribution pension, remain
in the defined-benefit pension scheme. There are also pension liabilities for the defined-benefit scheme related to direct
pensions for certain former employees and former board members.
RECONSILIATION OF PENSION ASSETS AND LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION
NOK million
Present value of insured pension benefit liabilities
Pension assets at fair value
Net pension liabilities/assets for the insured schemes
Present value of the uninsured pension liabilities
Net pension liabilities in the statement of financial position
CHANGES IN THE NET DEFINED BENEFITS PENSION LIABILITIES IN THE PERIOD:
NOK million
Net pension liabilities 01.01
Interest on pension liabilities
Pension experience adjustments
Pensions paid
Net pension liabilities 31.12
CHANGES IN THE FAIR VALUE OF PENSION ASSETS
NOK million
Pension assets at fair value 01.01.
Pension experience adjustments
Net pension assets 31.12
2018
2
-7
-5
166
161
2018
183
5
-9
-11
168
2018
7
7
2017
2
-7
-5
181
176
2017
167
4
33
-21
183
2017
8
-1
7
Expected premium payments are estimated to be NOK 1 million and the payments from operations are estimated to be
NOK 13 million in 2019.
PENSION ASSETS ARE BASED ON THE FINANCIAL ASSETS HELD BY STOREBRAND LIFE INSURANCE, WHICH ARE COM-
POSED OF AS PER 31.12.:
NOK million
Properties and real estate
Bonds at amortised cost
Loan
Equities and units
Bonds
Other short term financial assets
Total
Booked returns on assets managed by Storebrand Life Insurance were:
2018
14%
36%
14%
12%
24%
1%
100%
2,2%
2017
12%
32%
12%
15%
27%
100%
3,8%
193
SECTION 8. ANNUAL ACCOUNTS AND NOTES
NET PENSION COST BOOKED TO PROFIT AND LOSS ACCOUNTS IN THE PERIOD
NOK million
Net interest/expected return
Total for defined benefit schemes
The period's payment to contribution scheme
Net pension cost booked to profit and loss accounts in the period
OTHER COMPREHENSIVE INCOME (OCI) IN THE PERIOD
NOK million
Actuarial loss (gain) - change in discount rate
Actuarial loss (gain) - experience DBO
Loss (gain) - experience Assets
Remeasurements loss (gain) in the period
MAIN ASSUMPTIONS USED WHEN CALCULATING NET PENSION LIABILITY AS PER 31.12.
NOK million
Economic assumptions:
Discount rate
Expected earnings growth
Expected annual increase in social security pension
Expected annual increase in pensions in payment
Disability table
Mortality table
2018
2017
4
4
5
9
2018
-2
-6
-9
2018
2,8%
2,50%
2,50%
0,0%
KU
3
3
4
7
2017
33
1
34
2017
2,6%
2,25%
2,25%
0,0%
KU
K2013BE
K2013BE
Financial assumptions:
The financial assumptions have been determined on the basis of the regulations in IAS 19. Long-term assumptions such as
future inflation, real interest rates, real wage growth and adjustment of the basic amount are subject to a particularly high
degree of uncertainty.
In Norway, a discount rate based on covered bonds is used. Based on the market and volume trends observed, the Norwegian
covered bond market must be perceived as a deep market.
Specific company conditions including expected direct wage growth are taken into account when determining the financial
assumptions.
Actuarial assumptions:
In Norway standardised assumptions on rates of mortality and disability as well as other demographic factors are prepared
by Finance Norway. With effect from 2014 a new mortality basis, K2013, has been introduced for group pension insurance in
life insurance companies and pension funds. Storebrand has used the mortality table K2013BE (best estimate) in the actuarial
calculations at 31 December 2018.
194
STOREBRAND ANNUAL REPORT 2018
Note 6: Remuneration of the CEO and elected officers of the company
NOK thousand
Chief Executive Officer 1)
Salery2)
Other taxable benefits
Total remuneration
Pension costs 3)
Chairman of the Board
Board of Directors including the Chairman
Remuneration paid to auditors
Statutory audit 4)
Other reporting duties
2018
6,761
194
6,955
1,253
760
4,371
1,261
33
2017
6,881
199
7,080
1,107
660
4,372
1,754
239
1) Odd Arild Grefstad is the CEO of Storebrand ASA and the amount stated in the note is the total remuneration from the Group. He has a guaranteed salary for 24 months after the
ordinary period of notice. All work-related income including consulting assignments will be deducted.
2) A proportion of the executive management’s fixed salary will be linked to the purchase of physical STB shares with a lock-in period of three years. The purchase of shares will take
place once a year.
3) Pension costs include accrual for the year. See also the description of the pension scheme in Note 5.
4) The Storebrand Group changed external auditor in 2018. Auditing expenses include expenses for both PwC and Deloitte.
For further information on senior employees, the Board of Directors and the Board’s statement on fixing the salary and other remuneration of senior employees, see note 24 in the
Storebrand Group.
Note 7: Tax
THE DIFFERENCE BETWEEN THE FINANCIAL RESULTS AND THE TAX BASIS FOR THE YEAR IS PROVIDED BELOW.
NOK million
Pre-tax profit
Dividend
Gain/loss equities
Tax-free group contribution
Permanent differences
Change in temporary differences
Tax base for the year
- Use of losses carried forward
Payable tax
2018
4,074
-39
-28
-3,527
-27
-24
428
-327
101
2017
1,934
-1,446
-122
40
7
414
-414
195
SECTION 8. ANNUAL ACCOUNTS AND NOTES
TAX COST
NOK million
Payable tax
Change in deferred tax
Tax cost
2018
-25
-86
-111
2017
-110
-110
CALCULATION OF DEFERRED TAX ASSETS AND DEFERRED TAX ON TEMPORARY DIFFERENCES AND LOSSES
CARRIED FORWARD
2018
2017
1
1
-8
-1
-6
-161
-2
-10
-188
-187
-187
47
2018
4,074
-1,018
10
7
890
-111
3%
1
1
-2
-1
-12
-176
-3
-19
-212
-211
-327
-538
134
2017
1,934
-484
361
12
-110
6%
NOK million
Tax increasing temporary differences
Other
Total tax increasing temporary differences
Tax reducing temporary differences
Securities
Operating assets
Provisions
Accrued pension liabilities
Gains/losses account
Other
Total tax reducing temporary differences
Net tax increasing/(reducing) temporary differences
Losses carried forward
Net tax increasing/(reducing) temporary differences
Net deferred tax asset/liability in the statement of financial position
RECONCILIATION OF TAX COST AND ORDINARY PROFIT
NOK million
Pre-tax profit
Expected tax at nominal rate (27%)
Tax effect of:
'dividends received
gains on equities
'permanent differences
Tax cost
Effective tax rate 1)
196
STOREBRAND ANNUAL REPORT 2018 Note 8: Parent company’s shares in subsidiaries and associated companies
Business
office
Interest/
votes in %
Carrying amount
2018
2017
Oslo
Oslo
Oslo
Oslo
Oslo
Vilnius
Værdal
100%
100%
100%
100%
50%
-
25,1%
13,788
2,309
2,748
359
78
4
13,703
2,239
2,335
359
78
6
4
19 286
18 724
NOK million
Subsidiaries
Storebrand Livsforsikring AS 1)
Storebrand Bank ASA 2)
Storebrand Asset Management AS 3)
Storebrand Forsikring AS
Jointly controlled/associated companies
Storebrand Helseforsikring AS
Cognizant Technologi Solutions Lithyanua UAB
AS Værdalsbruket 4)
Sum
1) Group contribution in 2018 of NOK 85 million as capital contribution.
2) Group contribution in 2018 of NOK 70 million as capital contribution.
3) Group contribution in 2018 of NOK 415 million as capital contribution.
4) 74.9 per cent owned by Storebrand Livsforsikring AS
Note 9: Equities
NOK million
Equities
Total equities
Note 10: Bonds and other fixed-income securities
NOK million
State and state guaranteed
Company bonds
Covered bonds
Total bonds and other fixed-income securities
Modified duration
Average effective yield
Fair value
2018
22
22
Fair value
2018
363
1,024
433
1,820
0,6
1,1%
2017
3
3
2017
277
646
457
1,380
0,6
1,1%
197
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Note 11: Financial derivatives
NOK million
Interest rate swaps 1)
Total derivatives 2018
Total derivatives 2017
1) Used for hedge accounting, also see note 14
Note 12: Financial risks
Gross nominal vo-
Gross booked value
lume 1)
fin. assetsr
Net amount
300
300
300
9
9
16
9
9
16
Short-term holdings of interest-bearing securities Category of issuer or guarantor
CREDIT RISK BY RATING
NOK million
State and state guaranteed
Company bonds
Supranational organisations
Total 2018
Total 2017
COUNTERPARTIES
NOK million
Derivatives
Bank deposits
AAA
16
108
364
487
457
Virkelig verdi
A
25
876
901
581
BBB
65
Virkelig verdi
A
30
AA
381
50
431
277
AA
9
4
Total
422
1,035
364
1,820
1,380
Total
9
34
The rating classes are based on Standard & Poors’s NIG = Non-investment grade.
Interest rate risk
Storebrand ASA has both interest-bearing securities and interest-bearing debt. A change in interest rates will have a limited
effect on the company’s equity.
198
STOREBRAND ANNUAL REPORT 2018 Liquidity risk
UNDISCOUNTED CASH FLOWS FOR FINANCIAL LIABILITIES
NOK million
0-6 mnd
6-12 mnd
1-3 år
3-5 år
Total verdi
Securities issued/bank loans
Total financial liabilities 2018
Derivatives related to funding 2018
Total financial liabilities 2017
Derivatives related to funding 2017
19
19
5
22
4
531
531
-10
487
-11
850
850
-6
1,377
-13
507
507
518
1,907
1,907
-11
2,404
-19
Balanseført
verdi
1,813
1,813
-9
2,270
-16
Storebrand ASA had as per 31 December 2018 liquid assets of NOK 1.8 billion.
Currency risk
Storebrand ASA has low currency risk
Note 13: Tangible fixed assets
EQUIPMENT, FIXTURES & FITTINGS
NOK million
Acquisition cost 01.01
Accumulated depreciation
Carrying amount 01.01
Depreciation/write-downs for the year
Carrying amount 31.12
Bokført verdi per 31.12
Straight line depreciation periods for tangible fixed assets are as follows
Equipment. fixtures and fittings
IT systems
4-8 years
3 years
Note 14: Bond
NOK million
Bond loan 2014/2020 1)
Bond loan 2014/2018
Bond loan 2017/2019
Bond loan 2018/2020
Bond loan 2018/2022
Total bond and bank loans 2)
Interest rate
Currency
value
Net nominal
Fast
Flytende
Flytende
Flytende
Flytende
NOK
NOK
NOK
NOK
NOK
300
450
500
500
500
2018
311
500
501
501
1 813
1) Loans with fixed rates are hedged by interest swaps, which are booked at fair value through profit and loss. Changes in values of
loans that can be related to the hedged risk are included in the carrying amount and included in the result.
2) Loans are booked at amortised cost and include earned not due interest.
Signed loan agreements and drawing facility have covenant requirements.
Storebrand ASA has an unused drawing facility of EUR 200 million, expiration december 2023.
2018
2017
36
-7
28
-2
26
36
-7
29
-1
28
2017
317
452
500
501
500
2 270
199
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Note 15: Hedge accounting
The company uses fair value hedging to hedge interest rate risk. The effectiveness of hedging is monitored at the individual
security level.
HEDGING INSTRUMENT/HEDGED ITEM – FAIR VALUE HEDGING
Contract/
nominal
2018
Carrying amount 1)
Contract/
nominal
2017
Carrying amount 1)
value
Assets
Liabilities
Booked
value
Assets
Liabilities
Booked
300
300
9
311
-7
-7
300
300
16
317
-4
4
Ownership
interest in %
11,0
4,8
4,0
3,6
3,1
2,7
2,7
2,4
2,4
2,2
2,2
1,7
1,6
1,2
1,1
1,1
1,1
1,0
0,9
0,9
57%
NOK million
Interest rate swaps
Securities issued
1) Carrying amount 31.12.
Note 16: Shareholders
THE 20 LARGEST SHAREHOLDERS 1)
Folketrygdfondet
T Rowe Price Global Investments
Danske Capital
Allianz Global Investors
DNB Asset Management
Vanguard Group
Varma
BlackRock
KLP
Handelsbanken Asset Management
M&G Investment Management
Storebrand Asset Management
JPMorgan Asset Management
Barings
Nordea Asset Management
Artemis Investment Management
Alfred Berg
Solbakken AS
OM Holding AS
Source Investment Management
Foreign ownership of total shares
1) The summary includes Nominee (client account).
200
STOREBRAND ANNUAL REPORT 2018 Note 17: Information about close associates
Senior employees
Odd Arild Grefstad
Lars Aa. Løddesøl
Geir Holmgren
Heidi Skaaret
Staffan Hansén
Jan Erik Saugestad
Jostein Chr. Dalland
Karin Greve-Isdahl
Wenche Annie Martinussen
Board of Directors
Didrik Munch
Laila S. Dahlen
Martin Skancke
Karin Bing Orgland
Jan Chr. Opsahl
Liv Sandbæk
Heidi Storruste
Arne Fredrik Håstein
Ingvild Pedersen
1) The summary shows the number of shares owned by the individual, as well as his or her immediate family and companies where the
individual exercises significant influence, confer the Accounting Act, Section 7-26.
TRANSACTIONS BETWEEN GROUP COMPANIES
NOK million
Profit and loss account items:
Group contributions and dividends from subsidiaries
Purchase and sale of services (net)
Statement of financial position items:
Due from group companies
Payable to group companies
Note 18: Number of employees/person-years
Number of employees
Number of full time equivalent positions
Average number of employees
2018
4,131
-26
4,092
597
2018
8
8
8
Number of
shares 1)
141,634
83,521
54,722
54,473
55,034
44,378
16,701
6,881
13,969
15,000
10,500
16,414
15,000
1,100,000
0
3,365
4,844
1,824
2017
2,154
-30
2,207
3
2017
8
8
8
201
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Storebrand ASA and the Storebrand Group
– Declaration by the members of the Board
and the CEO
On this date, the Board of Directors and the Chief Executive Officer have considered and approved the annual report
and annual financial statements for Storebrand ASA and the Storebrand Group for the 2018 financial year and as at 31
December 2018 (2018 Annual Report).
The consolidated financial statements have been prepared in accordance with the EU-approved International Financial
Reporting Standards (IFRS) and the associated interpretations, as well as the other disclosure obligations stipulated in the
Norwegian Accounting Act that must be applied as at 31 December 2018. The annual financial statements for the parent
company have been prepared in accordance with the Norwegian Accounting Act, Norwegian Regulations relating to annu-
al accounts, etc. for insurance companies and the additional requirements in the Norwegian Securities Trading Act. The
annual report for the Group and parent company complies with the requirements of the Norwegian Accounting Act and
Norwegian Accounting Standard no. 16 as at 31 December 2018.
In the best judgment of the Board and the CEO, the annual financial statements for 2018 have been prepared in acco-
rdance with applicable accounting standards, and the information in the financial statements provides a fair and true
picture of the parent company’s and Group’s assets, liabilities, financial standing and results as a whole as at 31 Decem-
ber 2018. In the best judgment of the Board and the CEO, the annual report provides a fair and true overview of impor-
tant events during the accounting period and their effects on the annual financial statements for Storebrand ASA and the
Storebrand Group. In the best judgement of the Board and the CEO, the descriptions of the most important elements
of risk and uncertainty that the group faces in the next accounting period, and a description of related parties’ material
transactions, also provide a true and fair view.
Lysaker, 12. February 2019
Board of Directors of i Storebrand ASA
Didrik Munch
Chairman of the Board
Karin Bing Orgland
Laila S. Dahlen
Liv Sandbæk
Martin Skancke
Jan Chr. Opsahl
Arne Fredrik Håstein
Heidi Storruste
Ingvild Pedersen
Odd Arild Grefstad
Administrerende direktør
202
STOREBRAND ANNUAL REPORT 2018
To the General Meeting of Storebrand ASA
Independent auditor’s report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Storebrand ASA, which comprise:
• The financial statements of the parent company Storebrand ASA (the Company), which
comprise the statement of financial position as at 31 December 2018, the income statement,
statement of total comprehensive income, statement of changes in equity and statement of
cash flow for the year then ended, and notes to the financial statements, including a summary
of significant accounting policies, and
• The consolidated financial statements of Storebrand ASA and its subsidiaries (the Group),
which comprise the statement of financial position as at 31 December 2018, the income
statement, statement of comprehensive income, statement of changes in equity and statement
of cash flow for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion:
• The financial statements are prepared in accordance with the law and regulations.
• The accompanying financial statements give a true and fair view of the financial position of the
Company as at 31 December 2018, and its financial performance and its cash flows for the year
then ended in accordance with the Norwegian Accounting Act and accounting standards and
practices generally accepted in Norway.
• The accompanying consolidated financial statements give a true and fair view of the financial
position of the Group as at 31 December 2018, and its financial performance and its cash flows
for the year then ended in accordance with International Financial Reporting Standards as
adopted by the EU.
Basis for Opinion
We conducted our audit in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 VAT, www.pwc.no
State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised
accounting firm
203
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Auditors Report - Storebrand ASA
Auditors Report - Storebrand ASA
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit Matter
Valuation of life insurance liabilities
We focused on the valuation of the
insurance liabilities because it is
significant estimates in the financial
statements. The estimates involves
complex assessment concerning the
probability that insured events occurs, and
uncertainty related to whether the
provisions are sufficient to cover the total
liabilities to the policyholders. Small
adjustments of the assumptions may have
significant impact on the estimates.
The calculation of the insurance liabilities
will to a large extent depend on good
quality of data in the insurance system and
use of assumptions that are in accordance
with regulatory requirements and
appropriate industry standards.
Refer to note 1, 2, 7 and 38 in the financial
statements where management further
describes the insurance liabilities,
assumptions and uncertainty of the
estimates.
In our audit we have considered and tested the design
and effectiveness of established controls for review of
used assumptions and calculation methods, including
the company’s internal recalculations of the insurance
liabilities. We also examined whether management had
established effective controls that ensured good data
quality for the calculation of the insurance liabilities.
This included controls related to data collection, data
processing and reconciliation of the insurance systems.
Those controls we elected to base our audit on, was
working efficiently.
We also performed independent calculations for a
selection of insurance obligations using our internal
actuarial models and compared these with the company’s
calculations. We used our internal actuaries for this
work. The comparison did not indicate any deviations of
significance.
We considered and challenged management’s use of key
assumptions such as risk of death, risk of disability, long
life expectancy, discount rate and other actuarial
assumptions that the estimated insurance liabilities are
based on. We did the same for the method and the
models the management used. We used our own internal
actuaries for parts of this work. Our findings is that
assumptions, methods and models were in accordance
with industry standards, regulatory requirements, and
that they were used consistently.
We also considered and found that the information
regarding the insurance liabilities in notes to the
financial statements is sufficient and adequate.
Valuation of investment properties
The Group has investment properties that
mainly consists of office and retail
properties. We have focused on investment
property because it represents an estimate
Through our audit we have assessed and tested design
and effectiveness of established controls for review of
applied assumptions and calculation methods, including
the company’s internal valuation of investment
properties. We particularly examined whether
and a substantial part of the assets in the
management had established controls to ensure
Group’s statement of financial position.
assessment of market rent and discount rate. We found
These properties are measured at fair
value and classified in level 3 according to
IFRS 13. Valuation of the properties
involves use of assumptions which are
subject to management judgement.
that routines to ensure that these elements regularly
were checked against both external valuations and
marked data was established. Those controls that we
elected to base our audit on, was in our view working
efficiently.
Important assumptions for the value of
We obtained, read through and understood the internal
individual properties are primarily
valuation model. We concluded that the model contain
expected future cash flows and discount
the elements required by the financial reporting
rate.
The basis for management’s estimate is an
internal valuation model and external
valuations. Management obtain
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.
observations of market data from various
In our assessment of the valuation, we challenged the
market participants. Management
assumptions for expected future cash flows and discount
considers reasonableness of their own
rate by comparing a sample of properties against
estimates through obtaining valuations
information from relevant external sources. Substantial
from external valuers for a sample of
properties on a continuing basis. The
valuers were engaged by management.
Refer to note 1, 2, 12 and 33 in the
financial statements for management’s
further description of investment
assumptions the valuations are based on.
properties, the methods used and the
We also assessed the qualifications, competence and
changes in value from previous periods was subject to
discussions with management. We concluded that
assumptions were consistent with information from
relevant sources and that explanations regarding
substantial changes in value were based on changes in
the information from relevant sources.
objectivity of the external valuers We reviewed the
engagement letters with the valuers to assess whether
there were any clauses or fee provisions that may have
affected their objectivity or in any other way limited their
engagement. We did not find any indications of such
circumstances.
We compared the internal valuations against the valuers
estimates on values for a sample of properties. We
challenged management on substantial deviations and
obtained explanations on deviations. We assessed
management’s explanations as reasonable.
We also assessed and came to the conclusion that the
information about investment properties in the notes to
the financial statements were in accordance with the
accounting principles and provides an adequate
description of the method and the underlying
assumptions that is used for the valuation.
Valuation of financial assets measured at
fair value
We have focused on this area both because
In our audit we considered design and tested
effectiveness of Storebrand’s established controls over
204
(2)
(3)
STOREBRAND ANNUAL REPORT 2018
Auditors Report - Storebrand ASA
and a substantial part of the assets in the
Group’s statement of financial position.
These properties are measured at fair
value and classified in level 3 according to
IFRS 13. Valuation of the properties
involves use of assumptions which are
subject to management judgement.
Important assumptions for the value of
individual properties are primarily
expected future cash flows and discount
rate.
The basis for management’s estimate is an
internal valuation model and external
valuations. Management obtain
observations of market data from various
market participants. Management
considers reasonableness of their own
estimates through obtaining valuations
from external valuers for a sample of
properties on a continuing basis. The
valuers were engaged by management.
Refer to note 1, 2, 12 and 33 in the
financial statements for management’s
further description of investment
properties, the methods used and the
assumptions the valuations are based on.
management had established controls to ensure
assessment of market rent and discount rate. We found
that routines to ensure that these elements regularly
were checked against both external valuations and
marked data was established. Those controls that we
elected to base our audit on, was in our view working
efficiently.
We obtained, read through and understood the internal
valuation model. We concluded that the model contain
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.
In our assessment of the valuation, we challenged the
assumptions for expected future cash flows and discount
rate by comparing a sample of properties against
information from relevant external sources. Substantial
changes in value from previous periods was subject to
discussions with management. We concluded that
assumptions were consistent with information from
relevant sources and that explanations regarding
substantial changes in value were based on changes in
the information from relevant sources.
We also assessed the qualifications, competence and
objectivity of the external valuers We reviewed the
engagement letters with the valuers to assess whether
there were any clauses or fee provisions that may have
affected their objectivity or in any other way limited their
engagement. We did not find any indications of such
circumstances.
We compared the internal valuations against the valuers
estimates on values for a sample of properties. We
challenged management on substantial deviations and
obtained explanations on deviations. We assessed
management’s explanations as reasonable.
We also assessed and came to the conclusion that the
information about investment properties in the notes to
the financial statements were in accordance with the
accounting principles and provides an adequate
description of the method and the underlying
assumptions that is used for the valuation.
Valuation of financial assets measured at
fair value
We have focused on this area both because
In our audit we considered design and tested
effectiveness of Storebrand’s established controls over
(3)
205
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Auditors Report - Storebrand ASA
financial assets represent a substantial
part of the assets in the statement of
financial position, and because the fair
value in certain instances will have to be
estimated using valuation models that
apply judgement.
Most of the financial assets that are
measured at fair value is based on quoted
prices in active markets (level 1
investments), or derived from observable
market information (level 2 investments).
Routines and processes that ensures an
accurate basis for the valuation is
important for these assets.
For financial assets that is measured based
on models and certain assumptions that is
not observable (level 3 investments), we
focused on assessing both the models and
the assumptions underlying the valuation.
Refer to note 2 and 12 in the financial
statements for a further description of
management’s valuation of financial assets
measured at fair value.
IT systems supporting financial reporting
We have focused on this area as
Storebrand’s financial reporting systems
and operations are dependent on complex
IT systems. Potential weaknesses in
automated processes and associated IT-
dependent manual controls may cause
problems related to the ongoing operations
of the IT systems and risk of
misstatements.
Refer to note 6 for a further description of
the Group’s management and operation of
the IT systems
valuation of financial assets measured at fair value.
Particularly we focused on those controls that ensured
complete and accurate use of quoted market prices and
other observable masterdata, holdings- and transaction
reconciliations and return on investments controls. In
our opinion, the controls that we have chosen to base our
audit on are working effectively.
For financial assets measured through use of models and
assumptions that are not observable, we assessed
valuation principles, the models and assumptions that
were used. We found that the models and assumptions
were reasonable and used consistently.
For a sample of investments we also tested that fair value
was in accordance with external valuations. We
considered the reliability of the sources of information,
when relevant. Our tests did not reveal substantial
deviations.
We also assessed and found that the information in the
notes regarding the Group’s valuation principles and fair
value determination were sufficient and adequate.
Storebrand has established a governance model and
control activities related to the IT systems. We obtained
an understanding of the Group’s governance model and
control activities for the IT systems that were relevant for
the financial reporting.
We conducted testing of selected general IT controls
regarding access management, change management, and
IT operations. The audit team has performed testing of
application controls for key IT systems. We concluded
that we could rely on these controls in our audit.
Storebrand use external service providers to operate
some of the key IT systems. The auditor at the relevant
service organization evaluated the design and efficiency
of the established control systems, and tested the
controls designed to ensure the integrity of the IT system
that were relevant to financial reporting. We examined
the reports and evaluated possible misstatement and
improvements.
(4)
206
STOREBRAND ANNUAL REPORT 2018
Auditors Report - Storebrand ASA
Auditors Report - Storebrand ASA
financial assets represent a substantial
valuation of financial assets measured at fair value.
part of the assets in the statement of
Particularly we focused on those controls that ensured
financial position, and because the fair
complete and accurate use of quoted market prices and
value in certain instances will have to be
other observable masterdata, holdings- and transaction
estimated using valuation models that
reconciliations and return on investments controls. In
apply judgement.
Most of the financial assets that are
our opinion, the controls that we have chosen to base our
audit on are working effectively.
measured at fair value is based on quoted
For financial assets measured through use of models and
prices in active markets (level 1
assumptions that are not observable, we assessed
investments), or derived from observable
valuation principles, the models and assumptions that
market information (level 2 investments).
were used. We found that the models and assumptions
Routines and processes that ensures an
were reasonable and used consistently.
accurate basis for the valuation is
important for these assets.
For financial assets that is measured based
considered the reliability of the sources of information,
on models and certain assumptions that is
when relevant. Our tests did not reveal substantial
not observable (level 3 investments), we
focused on assessing both the models and
the assumptions underlying the valuation.
deviations.
Refer to note 2 and 12 in the financial
statements for a further description of
management’s valuation of financial assets
measured at fair value.
IT systems supporting financial reporting
We also assessed and found that the information in the
notes regarding the Group’s valuation principles and fair
value determination were sufficient and adequate.
We have focused on this area as
Storebrand has established a governance model and
Storebrand’s financial reporting systems
control activities related to the IT systems. We obtained
and operations are dependent on complex
an understanding of the Group’s governance model and
IT systems. Potential weaknesses in
automated processes and associated IT-
dependent manual controls may cause
problems related to the ongoing operations
of the IT systems and risk of
misstatements.
Refer to note 6 for a further description of
the Group’s management and operation of
the IT systems
control activities for the IT systems that were relevant for
the financial reporting.
We conducted testing of selected general IT controls
regarding access management, change management, and
IT operations. The audit team has performed testing of
application controls for key IT systems. We concluded
that we could rely on these controls in our audit.
Storebrand use external service providers to operate
some of the key IT systems. The auditor at the relevant
service organization evaluated the design and efficiency
of the established control systems, and tested the
controls designed to ensure the integrity of the IT system
that were relevant to financial reporting. We examined
the reports and evaluated possible misstatement and
improvements.
Other information
Management is responsible for the other information. The other information comprises information in
the annual report, except the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
For a sample of investments we also tested that fair value
was in accordance with external valuations. We
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and the Managing Director for the
Financial Statements
The Board of Directors and the Managing Director (Management) are responsible for the preparation
in accordance with law and regulations, including fair presentation of the financial statements of the
Company in accordance with the Norwegian Accounting Act and accounting standards and practices
generally accepted in Norway, and for the preparation and fair presentation of the consolidated
financial statements of the Group in accordance with International Financial Reporting Standards as
adopted by the EU, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern. The financial statements of the Company use the going concern basis of accounting insofar as
it is not likely that the enterprise will cease operations. The consolidated financial statements of the
Group use the going concern basis of accounting unless management either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
(4)
(5)
207
SECTION 8. ANNUAL ACCOUNTS AND NOTES
Auditors Report - Storebrand ASA
Auditors Report - Storebrand ASA
•
identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
•
•
evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company and the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company and the Group to cease to continue as a going concern.
•
evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Opinion on the Board of Directors’ report
Based on our audit of the financial statements as described above, it is our opinion that the
information presented in the Board of Directors’ report and in the statements on Corporate
Governance and Corporate Social Responsibility concerning the financial statements, the going
concern assumption and the proposed allocation of the result is consistent with the financial
statements and complies with the law and regulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures we have
considered necessary in accordance with the International Standard on Assurance Engagements
(ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial
Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly
set out registration and documentation of the Company’s accounting information in accordance with
the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 12 February 2019
PricewaterhouseCoopers AS
Magne Sem
State Authorised Public Accountant
Note: This translation from Norwegian has been prepared for information purposes only.
208
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STOREBRAND ANNUAL REPORT 2018
Auditors Report - Storebrand ASA
Auditors Report - Storebrand ASA
•
identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
•
•
evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company and the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company and the Group to cease to continue as a going concern.
•
evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Opinion on the Board of Directors’ report
Based on our audit of the financial statements as described above, it is our opinion that the
information presented in the Board of Directors’ report and in the statements on Corporate
Governance and Corporate Social Responsibility concerning the financial statements, the going
concern assumption and the proposed allocation of the result is consistent with the financial
statements and complies with the law and regulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures we have
considered necessary in accordance with the International Standard on Assurance Engagements
(ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial
Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly
set out registration and documentation of the Company’s accounting information in accordance with
the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 12 February 2019
PricewaterhouseCoopers AS
Magne Sem
State Authorised Public Accountant
Note: This translation from Norwegian has been prepared for information purposes only.
(6)
(7)
209
SECTION 8. ANNUAL ACCOUNTS AND NOTES
9
Sustainability
Data
212 Definitions key performance indicators
214 Materiality analysis and GRI index
222 Auditor’s Report on Sustainability
SECTION 8. ANNUAL ACCOUNTS AND NOTES
211211
Definitions key performance
indicators
These definitions refer to the tables of key performance indicators in the
sections Finance capital and investment universe, Customer and community
relations and People and systems.
2. Financial capital and our investment universe
Return On Equity: Return on equity
Solvency II: Common European regulatory framework for insurance
regulation. Under Solvency II, the size of the capital requirement will be
determined by how much risk the company is exposed to.
Dividends: Storebrand aims to pay a dividend of more than 50% of
Group result after tax. The Board of Directors´ ambition is to pay
ordinary dividends per share of at least the same nominal amount as the
previous year. Ordinary dividends are subject to a sustainable solvency
margin of above 150%. If the solvency margin is above 180%, the Board
of Directors intends to propose special dividends or share buy backs.
Bn NOK invested in fossil free products: NOK billion AuM in fossil
free funds. The companies should not have more than 5% revenue from
the production or distribution of fossil fuels, and fossil reserves should
not exceed 100 million tonnes of CO2.
Total AuM invested in solution companies, cleantech and renewable
energy: Investments in sustainable projects and companies through
our portfolio of clean tech and renewable energy and green bonds in
both equity and interest investments in Storebrand and SPP. Solution
companies; companies whose core business is to produce goods or
services that contribute to achieving sustainable social development
Percentage of AuM that have been screened for sustainability
criteria:
All companies in our investment universe is screened for sustainability
according to our standards:https://www.storebrand.no/en/sustainability/
investments
Tonnes CO2e per 1 million of sales income NOK/SEK (vs index):
Results per Q3 2018 based on TCFD’s definition. Total carbon footprint is
the sum of the companies’ carbon emissions over the companies’ revenues,
weighted for our ownership in the respective companies. The measurement
unit shows carbon emissions per million fund currency in NOK.
Energy consumption, property management: Temperature corrected
energy consumption per gross square meter of heated property area
in direct real estate investments under operational control in Norway
and Sweden. Comsumption measured by energy suppliers (electricity,
district heating/cooling and other) and registered in the environmental
monitoring system.
Water consumption, property management (Norway): Water
consumption in cubic meters per square meter of heated property
area in direct real estate investments under operational control in
Norway and Sweden. Consumption measured and registered in the
environmental monitoring system.
Certified green property: Share of direct real estate investments
under operational control in Norway and Sweden wtih a Green building
certification, in percent of Assets under Management.
Tonnes CO2 emissions per m2, property management: GHG
emissions from direct real estate investments, per square meter of gross
heated area. Includes direct and indirect emissions (scope1-3), including
tenants’ energy and water consumption as well as waste production.
The carbon footprint is calculated by CemaSys AS according to the GHG
protocol. Nordic mix emission factor is the basis for the calculation of
emissions from electric power with ”location based” method.
Waste sorting, property management (N): Rate of waste from building
operations including tenants, sorted at the source for recycling. The rest
fraction is further sorted mechanically at the waste recycling centre,
where non-recyclables goes to incineration with heat recovery. Includes
direct real estate investments under operational control in Norway.
3. Customer and Community Relations
Net Promoter System Norway Retail Market: Net Promoter System
(NPS) is a measurement tool for customer satisfaction where the
customer gives a score from 0 to 10 with 10 as the best result
Net Promoter System Sweden Corporate Market (priority
enterprises): Net Promoter System (NPS) is a measurement tool for
customer satisfaction where the customer gives a score from 0 to 10
with 10 as the best result
Market share for Savings Norway: Based on Q3 figures from
Finance Norway
Market position for Occupational Pensions Corporate Market:
Based on Q3 figures from Finance Norway
Share of female pension savers: Share of female customers who
are saving for pension
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STOREBRAND ANNUAL REPORT 2018
SECTION 9. SUSTAINABILITY DATA
Financial literacy: Expected pension as a percentage of salary (My
Pension Figure): The pension percentage (median) is the customers
expected pension from all sources (including private savings, folketrygden,
AFP and defined benefit/defined contribution pension, as a percentage
of customers existing salary.
Energy consumption, head offices (KWh/m2): Temperature corrected
energy consumption per square meter heated area in head offices in
Norway and Sweden. Consumption measured by the energy suppliers,
electricity and district heating/cooling and registered in the environmental
monitoring system
Sustainable Brand Index UK: A company with a 200 score is considered
by the customers to perform very good in environmental and social
responsibility.
4. People and systems
E-Learning courses in ethics/anti-corruption: Number and % of
employees that finish the e-learning course (ethics/anti-corruption)
In addition, all board members and executive management have
completed training in anti-corruption. Other employees must complete
courses every 3 years.
Absence due to illness (Norway): Number of sick leave hours divided
by number of hours worked Storebrand Norway
Absence due to illness (Sweden): Number of sick leave hours divided
by number of hours worked SPP Sweden
Gender-balanced management: Share of female employees. Defined
as a management position with personnel responsibilities. Project
managers are not included.
Number (share) of men/ women at executive levels 1–3: Level
1= Chief Executive Officer, Level 2 = Executive management, Level 3
= Reporting to executive management
Senior management, women’s share of men’s salary per
position cateogory (Hay Grade 21-24)/All employees, women’s
share of men’s salary per position category (Hay Grade 13-20):
The figures only applies for Storebrand in Norway. Hay Grade above
24 is not included, as only men are represented here (applies for 3
positions only). Hay Grade is a widely recognised method to enable
organisations to map and align roles. The system is used by several
organisations in Norway and internationally. The systems allows
for comparisons of salaries for positions with similar demands to
competence, experience and complexity. The system is used for
comparing salaries for positions across the organisation and similar
positions with similar Hay Grade in the labor market.
Environmental requirements for suppliers: Share of contracts
on active suppliers where Storebrand has a spend above 1MNOK in
procurement and that are certified or fulfill requirements according to
one or several of the following environmental certifications: Miljøbas,
Eco-Lighthouse, Svanen, ISO 14001, CO2 neutral ISO 14001
Flights per full-time equivalent: Number of individual flights pr.
FTE made by the employees of the Group’s Norwegian and Swedish
operations in service purposes.
Tonnes of CO2 emissions per full-time equivalent: GHG emissions
pr. FTE from the Group’s Norwegian and Swedish operations. Includes
direct and indirect emissions, including airtravel and other transportation,
energy consumption and waste (scope1-3). The carbon footprint is
calculated by CemaSys AS according to the GHG protocol. Nordic mix
emission factor is the basis for the calculation of emissions from electric
power with ”location based” method.
Water consumption, head offices (m3/m2): Water consumption
in cubic meters per square meter of heated area in head offices in
Norway and Sweden. Consumption measured and registered in the
environmental monitoring system.
Waste sorting, head offices (sorting rate): Rate of waste sorted at
the source for recycling in head offices in Norway and Sweden. The rest
fraction is further sorted mechanically at the waste recycling centre,
where non-recyclables goes to incineration with heat recovery. Includes
direct real estate investments under operational control in Norway.
Paper consumption, head offices, kg per full-time employee:
Consumption of office paper (copy- and bond paper), envelopes,
advertising, including externally reprinted and regulatory letter
attachments in Kg per full time employee in both Norwegian and
Swedish operations.
Scope 1 per employee: Tonnes CO2-equivalents, measured in accordance
to Greenhouse gas protocol, per FTE
Scope 2 per employee: Tonnes CO2-equivalents, measured in accordance
to Greenhouse gas protocol, per FTE
Scope 3 per employee: Tonnes CO2-equivalents, measured in accordance
to Greenhouse gas protocol, per FTE
213
213
Materiality analysis and
GRI index
The materiality analysis follows the principles of the Global
Reporting Initiative (GRI) with regard to how environmental
and social impact, as well as stakeholder expectations, are
mapped and integrated into the report. The guidelines of
the International Integrated Reporting Council (IIRC) have
also been used as a basis for reporting.
About the materiality analysis
We report on the challenges and issues that both Store-
brand and our stakeholders perceive as most essential, so
that the Group can continue to improve our sustainable
business model. Shareholders, customers, employees,
authorities and public opinion/NGOs are defined as our
main stakeholders, key to our offerings and most affected
by Storebrand’s business activities. Our stakeholder dia-
logue has been conducted through interviews, conferences,
direct dialogue and surveys. We integrate input from stake-
holders into our decision-making processes that concern
them. Below is a table of the most important stakeholders
who have contributed to the materiality analysis through
ongoing dialogue in 2018.
Intresseoversikt
Who
How
Subject
Initiatives
Shareholders
Customers
Meetings and telephone conferences
Capital Markets Day
Quarterly reporting
Roadshows
Customer surveys, customer dia-
logue, Net Promoter System (NPS),
social media
Capital structure, accounting figures,
risk, sustainability policy
Dividends, company dialogue
Simple customer solutions, sustaina-
ble products
Dreams savings app, fund product
Wave
Employees
Employee surveys
Committed employees, skills devel-
opment, diversity and equal oppor-
tunities
50/50 programme for women
Initiatives for targeted recruitment
Authorities
Public opin-
ion/NGOs
Meetings and telephone conferenc-
es, collaborative projects, the press,
social media
Ensure good public pension schemes
and framework conditions. Contrib-
ute expertise in pension products and
sustainable investments
An active role in social debate, create
an understanding of pensions, im-
prove the framework conditions and
sustainable investments
Meetings and telephone conferenc-
es, collaborative projects, the press,
social media
Sustainable investments
Fund products, exclusion of compa-
nies from our investment universe,
development of an investment policy
for sustainable investments
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STOREBRAND ANNUAL REPORT 2018 SECTION 9. SUSTAINABILITY DATA
GRI Index
An index of the GRI indicators we are reporting on and where the report contains information about the indicators follows
below.
GRI Standards - Compulsory Indicators
Standard
Number
Disclosure
number
Organizational Profile
GRI 102
102-1
Disclosure title
Text
Section
Subsection
Name of the
organisation
Storebrand ASA
Section 9. Sustainability data GRI Index
GRI 102
102-2
Activities, brands,
products, and services
Section 1. This is Storebrand
Our vision and driving force
Organisation
GRI 102
102-3
Location of head-quarters
Professor Kohts vei 9,
Lysaker, Oslo, Norway
Section 9. Sustainability data GRI Index
GRI 102
102-4
Location of operations
Section 1. This is Storebrand Organisation
GRI 102
102-5
Ownership and legal
form
Section 1. This is Storebrand Organisation
GRI 102
102-6
Markets served
Section 1. This is Storebrand
People and systems
Our vision and driving
force
Key performance indica-
tors
GRI 102
102-7
Scale of organisation
Section 1. This is Storebrand Organisation
Section 7. Audtors’ Report
Group result
Group result by business
area
GRI 102
102-8
Information on
employees and
other workers
GRI 102
102-9
Supply chain
GRI 102
102-10
GRI 102
102-11
Significant changes to
the organisation and its
supply chain
Precautionary Principle
or approach
a. Women in permanent
positions: 795,
men in permanent positi-
ons: 879,
women in temporary
positions: 17,
men in temporary positi-
ons: 14
b. Permanen in Norway
1216,
Permanent in Sweden:
458, Temporary in Nor-
way: 28,
Temporary in Sweden: 11
c. Women full-time: 762,
Men full-time: 878,
Women part-time: 50,
Men part-time: 15
d. N/A
e. N/A
Section 9. Sustainability data GRI Index
Section 1. This is Storebrand
Section 4. People and systems
Our vision and driving force
Good environmental and
working conditions throug-
hout the entire value chain
Group Chief Executive
Officer's comments
Group Chief Executive
Officer’s comments
Important events in 2018
Sustainability initiatives we
support
Sustainability initiatives we
215
215
support
GRI 102
102-12
External initiatives
Section 1. This is Storebrand
GRI 102
102-13
Membership of
associations
Section 1.
This is Storebrand
Standard
Number
Disclosure
number
Strategy
GRI 102
102-14
Ethics and integrity
Disclosure title
Text
Section
Subsection
Statement from senior
decision maker
Group Chief Executive
Officer’s comments
GRI 102
102-16
Values, standards,
principles and norms
Governance
GRI 102
102-18
Governance structure
Stakeholder Engagement
Section 4. People and
systems.
Directors’ Report
Corporate governance
Section 4: Good en-
vironmental and working
conditions throughout the
entire value chain, Dire-
ctors’ Report: Organisation,
working environment and
expertise,
Corporate governance:
Ethics and trust
Section 1: This is Store-
brand, as well as Sections 2,
3 and 4, where the appro-
ach to each major theme is
discussed.
Three strategic focus
areas
GRI 102
102-40
GRI 102
102-41
List of stakeholder
groups
Section 9. Sustainability data
About the materiality
analysis
Collective bargaining
agreements
100 per cent in Sweden
and Norway
Section 9. Sustainability data GRI Index
GRI 102
102-42
Identifying and selecting
stakeholders
GRI 102
102-43
Approach to stakeholder
engagement
GRI 102
102-44
Key topics and
concerns raised
Section 1. This is Storebrand
Section 9. Sustainability data
Section 1. This is Storebrand
Section 9. Sustainability data
Section 1: A sustainable
strategy, Section 9: About
the materiality analysis
Section 1: A sustainable
strategy, Section 9: About
the materiality analysis
Section 1. This is Storebrand A sustainable strategy
216216
STOREBRAND ANNUAL REPORT 2018
SECTION 9. SUSTAINABILITY DATA
Standard
Number
Disclosure
number
Reporting Practice
Disclosure title
Text
Section
Subsection
102-45
Entities included in the
consolidated financial
statements
Group financial results for
2018
Business areas
102-46
Defining report content
and topic Boundaries
Section 1. This is Storebrand
102-47
List of material topics
Section 1. This is Storebrand
Section 9. Sustainability data
A sustainable strategy
Overall strategic objecti-
ves, About the materiality
analysis
Section 1: Three strategic
focus areas,
Section 9: About the
materiality analysis
102-48
Restatements of
information
GRI 102
The figures for CO2
emissions in property ma-
nagement for 2017 have
been recalculated due to
additional properties and
improved data access.
The key figures for the
2017 will therefore deviate
from previously reported
emissions
Section 9. Sustainability data GRI Index
102-49
102-50
Changes in reporting
No changes
Section 9. Sustainability data GRI Index
Reporting period
2018
Section 9. Sustainability data GRI Index
102-51
Date of previous report
Storebrand Annual
Report for 2017
Section 9. Sustainability data GRI Index
102-52
Reporting cycle
Annual
Section 9. Sustainability data GRI Index
102-53
Contact point
102-54
Claims of reporting
in accordance with
the GRI Standards
https://www.storebrand.
no/en/investor-relations
This report has been
prepared in accordance
with the GRI Standards:
Core option.
Section 9. Sustainability data GRI Index
Section 9. Sustainability data GRI Index
102-55
GRI content index
Section 9. Sustainability data GRI Index
102-56
External assurance
Section 9. Sustainability data
Auditor's statement –
sustainability
217
217
Disclosure title
Text
Section
Subsection
GRI Standards- Performance Indicators
Standard
Number
Disclosure
number
Economic Performance
GRI 103
103-1
Explanation of the
material topic and its
Boundary
GRI 103
103-2
The management appro-
ach and its components
GRI 103
103-3
Evaluation of the mana-
gement approach
GRI 201
201-1
201-2
Anti-corruption
GRI 103
103-1
GRI 103
103-2
Direct economic value
generated and distri-
buted
Financial implications
and other risks and
opportunities due to
climate change
Explanation of the
material topic and its
Boundary
The management
approach and its
components
Directors’ Report, Section
2 Financial capital and our
investment universe
Directors’ Report, Section
2 Financial capital and our
investment universe
Directors’ Report, Section
2 Financial capital and our
investment universe
Directors’ Report
Group financial results for
2018
Section 2. Financial capital
and our investment
universe
Directors’ Report Financial
objectives and Section 2:
Provide a return to the
owners: Why/approach
Directors’ Report: Financial
objectives and Section 2:
Provide a return to the
owners: Approach/initiati-
ves/goals and ambitions
Directors’ Report: Group
financial results for 2018,
Section 2: Provide a return
to the owners: Results
Group result by business
area
Storebrand’s climate risk
work
Directors’ Report, Section
4 People and systems
Directors’ Report, Section
4 People and systems
Directors’ Report: Ethics
and trust, Section 4:
Committed and courageo-
us employees
Directors’ Report: Ethics
and trust, Section 4:
Committed and courageo-
us employees
Directors’ Report: Ethics
and trust, Section 4:
Committed and courageo-
us employees
Directors’ Report: Organi-
sation, working environ-
ment and expertise,
Section 4: Committed and
courageous employees
and key figures
GRI 103
103-3
Evaluation of the
management approach
Directors’ Report, Section
4 People and systems
205-2
Communication and
training about
anti-corruption policies
and procedures
Directors’ Report,
Section 4
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STOREBRAND ANNUAL REPORT 2018
SECTION 9. SUSTAINABILITY DATA
Standard
Number
Disclosure
number
Emissions
Disclosure title
Text
Section
Subsection
GRI 103
103-1
Explanation of the
material topic and its
Boundary
GRI 103
103-2
The management appro-
ach and its components
GRI 103
103-3
Evaluation of the
management approach
305-4
GHG emissions intensity
Diversity and Equal Opportunity
GRI 103
103-1
material topic and its
Explanation of the
Boundary
Section 4 People and sys-
tems, Section 2 Financial
capital and our investment
universe
Section 4 People and sys-
tems, Section 2 Financial
capital and our investment
universe
Section 4 People and sys-
tems, Section 2 Financial
capital and our investment
universe
Section 2: Financial capital
and our investment uni-
verse
Section 4: People and
systems
Section 4: Order in our
own house, Section 2: A
driving force for sustai-
nable investments: Why/
approach
Section 4: Order in our
own house, Section 2: A
driving force for sustaina-
ble investments: Appro-
ach/initiatives/goals and
ambitions
Section 4: Order in our
own house, Section
2: A driving force for
sustainable investments:
Results/key performance
indicators
key performance indica-
tors
Order in our own house/
key performance indica-
tors
Section 4 People and sys-
Diversity and equal oppor-
tems, Directors’ Report
tunities: Why
GRI 103
103-2
approach and its
The management
components
Section 4 People and
systems, Directors’ Report
GRI 103
103-3
Evaluation of the
management approach
Section 4 People and sys-
tems, Directors’ Report
Ratio of basic salary and
405-2
renumeration of women
to men
Section 4 People and
systems
Section 4: Diversity and
equal opportunities:
Approach/initiatives/goals
and ambitions, Directors’
Report: Organisation,
working environment and
expertise
Section 4: Diversity and
equal opportunities:
Approach/initiatives/goals
and ambitions, Directors’
Report: Organisation,
working environment and
expertise
Section 4: Diversity and
equal opportunities/key
performance indicators
219
219
Standard
Number
Disclosure
number
Disclosure title
Text
Section
Subsection
Human Rights Assessment
GRI 103
103-1
material topic and its
Explanation of the
Boundary
GRI 103
103-2
approach and its
The management
components
GRI 103
103-3
Evaluation of the
management approach
412-3
Significant invest-
ment agreements and
contracts that include
human rights clauses or
that underwent human
rights screening
Public Policy
GRI 103
103-1
material topic and its
Explanation of the
GRI 103
103-2
GRI 103
103-3
Boundary
The management appro-
ach and its components
Evaluation of the mana-
gement approach
GRI 415
415-1
Political contributions
Do not make contributions
to political parties
Section 2: A driving
Section 2 Financial capital
force for sustainable
and our investment
investments, Section
universe,
4: Good environmental
Section 4 People and
and working conditions
systems
throughout the entire
value chain
Section 2: A driving
Section 2 Financial capital
force for sustainable
and our investment
investments, Section
universe,
4: Good environmental
Section 4 People and
and working conditions
systems
throughout the entire
value chain
Section 2: A driving
Section 2 Financial capital
force for sustainable
and our investment
investments, Section
universe,
4: Good environmental
Section 4 People and
and working conditions
systems
throughout the entire
value chain
Section 2: A driving
Section 2. Financial capital
force for sustainable
and our investment uni-
investments, Section
verse,
4: Good environmental
Section 4: People and
and working conditions
systems
throughout the entire
value chain
Section 4 People and
systems
Section 4 People and
systems
Section 4 People and
systems
Section 9 Sustainability
data
Order in our own house
Order in our own house
Order in our own house
GRI Index
220220
STOREBRAND ANNUAL REPORT 2018 SECTION 9. SUSTAINABILITY DATA
Standard
Number
Disclosure
number
Marketing and Labeling
Disclosure title
Text
Section
Subsection
GRI 103
103-1
material topic and its
Explanation of the
Boundary
Lifelong savings and Enga-
Section 3 Customer and
ging, relevant and respon-
community relations
sible advisory services for
GRI 103
103-2
The management appro-
ach and its components
Section 3 Customer and
community relations
GRI 103
103-3
Evaluation of the
management approach
Section 3 Customer and
community relations
customers: Why/approach
Lifelong savings and Enga-
ging, relevant and respon-
sible advisory services for
customers: Approach/initia-
tives/goals and ambitions
Lifelong savings and
Engaging, relevant and re-
sponsible advisory services
for customers: Results and
key performance indicators
Key performance indi-
cators: Cases before the
Financial Complaints Board
Key performance indi-
cators: Cases before the
Financial Complaints Board
Section 3. Customer and
community relations.
Section 3. Customer and
community relations.
Section 3 Customer and
Digital trust: Why,
community relations
approach
Section 3 Customer and
community relations
Section 3 Customer and
community relations
Digital trust: approach,
initiatives, goals and
ambitions
Digital trust: results
Section 3. Customer and
community relations
Digital trust, Results and
table: key performance
indicators
Section 2 Financial capital
An active owner: Why/
and our investment universe
approach
Section 2 Financial capital
and our investment universe
Section 2 Financial capital
and our investment universe
An active owner: Appro-
ach, initiatives, goals and
ambitions
An active owner: Results
Section 2. Financial capital
and our investment
universe
An active owner, key
performance indicators
Section 2. Financial capital
and our investment
universe
A driving force for sustai-
nable investments
221
221
417-2
Incidents of non-compli-
ance concerning product
and service information
and labeling
Incidents of non-compli-
417-3
ance concerning marke-
ting communications
Customer Privacy
GRI 103
103-1
Explanation of the materi-
al topic and its Boundary
The management
GRI 103
103-2
approach and its
GRI 103
103-3
components
Evaluation of the
management approach
Substantiated
complaints concerning
GRI 418
418-1
breaches of customer
Active ownership
GRI 103
103-1
GRI 103
103-2
GRI 103
103-3
Sector
disclosure
- Financial
Services
Sector
disclosure
- Financial
Services
FS11
privacy and losses of
customer data
Explanation of the material
topic and its Boundary
The management appro-
ach and its components
Evaluation of the
management approach
Percentage and number
of companies held in the
institution's portfolio
organisation as interac-
ted on evironmental or
social issues.
Percentage of assets
subject to positive and
negative environmental
or social screening
FS10
with which the reporting
To: Board of Directors in Storebrand ASA
Independent statement regarding Storebrand ASA’s sustainability
reporting
We have examined whether Storebrand ASA has developed GRI Index for 2018 and measurements
and reporting of key performance indicators for sustainability (sustainability reporting).
Storebrand’s GRI Index is an overview of which principles, aspects and indicators from the The
Global Reporting Initiative guidelines that Storebrand ASA use to measure and report on
sustainability; together with a reference to where material sustainability information is reported.
Storebrand’s GRI Index 2018 is available on Storebrand’s website
(www.Storebrand.no/sustainability/reports). We have examined whether Storebrand has
developed a GRI Index for 2018 and whether mandatory disclosures are presented according the
Standards published by The Global Reporting Initiative (www.globalreporting.org/standards)
(criteria).
Key performance indicators for sustainability are the tables containing sustainability indicators
that Storebrand ASA measure and control. The tables titled «Key performance indicators» are
available and included in Storebrand ASA’s annual report 2018, specifically at the end of the three
chapters titled «Financial capital and our investment universe», «Customer and community
relations», and «People and systems». Storebrand has defined the key performance indicators
and explained how they are measured in the tables (criteria). We have examined the basis for the
measurements and checked the calculations of the measurements.
Tasks and responsibilities of management
Management is responsible for the GRI Index and that the index is developed in accordance with the
Standards published by The Global Reporting Initiative. Management is also responsible for key
performance indicators for sustainability and that these are developed in accordance with the
definitions given in the tables at the end of the chapters «Financial capital and our investment
universe», «Customer and community relations», and «People and systems». Their responsibility
includes developing, implementing and maintaining internal controls that ensure the development
and reporting of the GRI Index and key performance indicators for sustainability.
Our independence and quality control
We are independent of the company in accordance with applicable laws and regulations and the Code
of Ethics for Professional Accountants (IESBA Code) and with the ethical requirements that are
relevant to our independent statement, and we have fulfilled our ethical obligations in accordance with
these requirements and IESBA Code. We use ISQC 1 - Quality Control for Firms that Perform Audits
and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and
maintains a comprehensive quality control system including documented policies and procedures of
the ethical standards, professional standards and applicable legal and regulatory claim.
The Auditors responsibilities
Our responsibility is to express an opinion on the subject matter based on our control. We have
performed our work and will issue our statement in accordance with the Standard on Assurance
222222
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
STOREBRAND ANNUAL REPORT 2018
To: Board of Directors in Storebrand ASA
Independent statement regarding Storebrand ASA’s sustainability
reporting
We have examined whether Storebrand ASA has developed GRI Index for 2018 and measurements
and reporting of key performance indicators for sustainability (sustainability reporting).
Storebrand’s GRI Index is an overview of which principles, aspects and indicators from the The
Global Reporting Initiative guidelines that Storebrand ASA use to measure and report on
sustainability; together with a reference to where material sustainability information is reported.
Storebrand’s GRI Index 2018 is available on Storebrand’s website
(www.Storebrand.no/sustainability/reports). We have examined whether Storebrand has
developed a GRI Index for 2018 and whether mandatory disclosures are presented according the
Standards published by The Global Reporting Initiative (www.globalreporting.org/standards)
(criteria).
Key performance indicators for sustainability are the tables containing sustainability indicators
that Storebrand ASA measure and control. The tables titled «Key performance indicators» are
available and included in Storebrand ASA’s annual report 2018, specifically at the end of the three
chapters titled «Financial capital and our investment universe», «Customer and community
relations», and «People and systems». Storebrand has defined the key performance indicators
and explained how they are measured in the tables (criteria). We have examined the basis for the
measurements and checked the calculations of the measurements.
Tasks and responsibilities of management
Management is responsible for the GRI Index and that the index is developed in accordance with the
Standards published by The Global Reporting Initiative. Management is also responsible for key
performance indicators for sustainability and that these are developed in accordance with the
definitions given in the tables at the end of the chapters «Financial capital and our investment
universe», «Customer and community relations», and «People and systems». Their responsibility
includes developing, implementing and maintaining internal controls that ensure the development
and reporting of the GRI Index and key performance indicators for sustainability.
Our independence and quality control
We are independent of the company in accordance with applicable laws and regulations and the Code
of Ethics for Professional Accountants (IESBA Code) and with the ethical requirements that are
relevant to our independent statement, and we have fulfilled our ethical obligations in accordance with
these requirements and IESBA Code. We use ISQC 1 - Quality Control for Firms that Perform Audits
and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and
maintains a comprehensive quality control system including documented policies and procedures of
the ethical standards, professional standards and applicable legal and regulatory claim.
The Auditors responsibilities
Our responsibility is to express an opinion on the subject matter based on our control. We have
performed our work and will issue our statement in accordance with the Standard on Assurance
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
SECTION 9. SUSTAINABILITY DATA
Engagements ISAE 3000: “Assurance engagements other than audits or review of historical financial
information".
Our work involves performing procedures to obtain evidence that Storebrand’s GRI Index 2018 and
key performance indicators for sustainability are developed in accordance with the Standards
published by The Global Reporting Initiative and the criteria for reporting and measurement that are
given in relation to each table containing key performance indicators. The procedures selected depend
on our judgement, including assessments of the risks that the sustainability reporting as a whole are
free from material misstatement, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the preparation of the subject matter. Therefore, we design
procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of internal control. Our control also includes an assessment of whether the applied
criteria are appropriate and an assessment of the overall presentation of the subject matter.
Our controls include meetings with representatives from Storebrand ASA that are responsible for the
key areas covered by the sustainability reporting, including responsible for investing, HR and those
responsible for the sustainability reporting for Storebrand ASA’s own operations and real estate
portfolios; evaluating internal controls and procedures for reporting key performance indicators for
sustainability; collecting and reviewing relevant information that supports the presentation of key
performance indicators; evaluating the completeness and accuracy of the key performance indicators;
and controlling the calculations of key performance indicators based on an assessment of the risk that
the key performance indicators contain information that is incorrect.
In our opinion, sufficient evidence has been obtained and we consider that our work provides an
appropriate basis to form our conclusion with a limited level of assurance.
Conclusion
In our opinion
The GRI Index is, in all material respects, developed and presented in accordance with the
requirements of the Standards published by The Global Reporting Initiative; and
Key performance indicators for sustainability is, in all material aspects, developed, measured and
reported in accordance with the definitions and explanations provided in relation to each table
containing key performance indicators.
Oslo, 20. February 2019
PricewaterhouseCoopers AS
Magne Sem
State authorized public accountant
(This translation from Norwegian has been made for information purposes only)
(2)
223
223
Main office:
Professor Kohts vei 9
Postboks 500, 1327
Lysaker, Norway
Phone: +47 08880
storebrand.no