Quarterly Report • Jul 14, 2022
Quarterly Report
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Storebrand Livsforsikring AS (unaudited)
| Storebrand Livsforsikring Group3 |
|---|
| Savings 5 |
| Insurance 6 |
| Guaranteed pension 8 |
| Other 10 |
| Balance, Solidity and Capital situation 11 |
| Outlook 13 |
| Statement of comprehensive income Storebrand Livsforsikring Group 17 | |
|---|---|
| Statement of financial position Storebrand Livsforsikring Group20 | |
| Statement of changes in equity Storebrand Livsforsikring Group23 | |
| Statement of cash flow 24 | |
| Statement of comprehensive income Storebrand Livsforsikring AS 25 | |
| Statement of financial position Storebrand Livsforsikring AS 28 | |
| Statement of changes in equity Storebrand Livsforsikring AS 31 | |
| Notes 32 | |
| Statement from the Board of Directors and the CEO48 | |
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. This document contains alternative performance measures (APM) as defined by The European Securities and Market Authority (ESMA). An overview of APM can be found at www.storebrand.com/ir.
Storebrand Livsforsikring AS is a wholly owned subsidiary of the listed company Storebrand ASA. For information about the Storebrand Group's 2nd quarter result please refer to the Storebrand Group's interim report for the 2nd quarter of 2022. Storebrand Group's ambition is to provide our customers with financial freedom and security by being the best provider of long-term savings and insurance. The Group offers an integrated product range spanning from life insurance, P&C insurance, asset management and banking to private individuals, companies and public sector entities. The Group is divided into the segments Savings, Insurance, Guaranteed Pension and Other.
The figures in brackets are from the corresponding period last year.
| 2022 | 2021 | 01.01 - 30.06 | Full year | |||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| Fee and administration income | 856 | 898 | 936 | 959 | 938 | 1,753 | 1,897 | 3,792 |
| Insurance result | 208 | 184 | 158 | 148 | 168 | 392 | 293 | 599 |
| Operational expenses | -625 | -617 | -724 | -602 | -614 | -1,243 | -1,198 | -2,523 |
| Operating profit | 438 | 464 | 371 | 505 | 492 | 902 | 992 | 1,868 |
| Financial items and risk result life & pension | -157 | -5 | 361 | 141 | 543 | -162 | 722 | 1,223 |
| Profit before amortisation | 281 | 459 | 731 | 646 | 1,035 | 740 | 1,713 | 3,091 |
| Amortisation | -88 | -87 | -90 | -92 | -91 | -175 | -183 | -366 |
| Profit before tax | 193 | 372 | 641 | 554 | 944 | 565 | 1,530 | 2,725 |
| Tax | 18 | 425 | -157 | -118 | -23 | 443 | -289 | -563 |
| Profit after tax | 211 | 797 | 484 | 436 | 921 | 1,008 | 1,241 | 2,162 |
The profit before amortisation was NOK 281m (NOK 1,035m) in the 2nd quarter and NOK 740m (NOK 1,713m) year to date. The figures in brackets are from the corresponding period last year, and include a positive gain of NOK 409m from the divestment of AS Værdalsbruket. Underlying growth continues to be strong across the business, but the growth in assets under management has paused due to weak market returns. The higher interest rate environment has strengthened Storebrand's solvency. Mark-tomarket effects from rising rates and wider credit spreads have led to lower financial results in the quarter and first half of the year. Moving forward, Storebrand's financial result is expected to benefit from higher yields. Strong buffer capital levels have and prudent risk management secured sufficient customer returns in the guaranteed products and shielded the Group's results during this year's volatile markets. The buffer capital remains intact at 10% of guaranteed customer reserves in the Group.
Total fee and administration income was amounted to NOK 856m (NOK 938m) in the 2nd quarter and NOK 1,753m (NOK 1,897m) year to date, corresponding to a decrease of 9% compared to the same quarter last year and a decrease of 8% year to date. Adjusted for currency effects, the change in fee and administration income was 7% and 5% in 2nd quarter and year to date, respectively. Underlying growth with positive net flows in Unit Linked and Public Occupational Pensions contribute to income growth. Lower assets under management from market returns and lower fee margins in Unit Link, mainly as a consequence of Individual Pensions Accounts having been introduced last year, have led to income decline as anticipated.
The Insurance result improved to NOK 208m (NOK 168m) in the 2nd quarter and NOK 392m (NOK 293m) year to date due to growth and lower claims ratios. The total combined ratio for the Insurance segment was 88% (90%) in the 2nd quarter and 89% (93%) year to date – slightly better than the target of 90-92%.
Operational cost amounted to NOK -625m (NOK -614m) in the 2nd quarter and NOK -1,243m (NOK -1,198m) year to date. Growth initiatives are expected to gradually increase costs during the year. Storebrand continues to focus on strong cost discipline, as has been demonstrated over the past decade.
Overall, the operating profit decreased to NOK 438m (NOK 492m) in the 2nd quarter and NOK 902m (NOK 992m) year to date.
The 'financial items and risk result' amounted to NOK -157m (NOK 543m) in the 2nd quarter and NOK -162m (NOK 772m) year to date. Last year's strong financial result benefited from the divestment of AS Værdalsbruket with a positive gain of NOK 409m. Rising interest rates, wider credit spreads and falling equities have resulted in lower mark-to-market valuations so far this year, leading to weaker investment results – particularly in Storebrand Life Insurance's company portfolios. Running yield in the portfolios have increased accordingly. Net profit sharing has been close to absent and amounted to NOK 11m (NOK 108m) in the 2nd quarter and NOK -28m (NOK 212m) year to date. The risk result has strengthened, particularly in the Norwegian guaranteed products with improving labour market conditions this year, and amounted to NOK 54m (NOK 21m) in the 2nd quarter and NOK 135m (NOK 54m) year to date.
Storebrand Livsforsikring Group booked a tax income of NOK 18m (expence NOK 23m) in the quarter and NOK 443m (expence NOK 289m) year to date. The low effective tax rate in the quarter is due to a reversal of taxable unrealised gains that occurred in the 1st quarter on currency hedges related to the Swedish business, as the Swedish krona depreciated 4% in the 1st quarter, but appreciated 3% against the Norwegian krone in the 2nd quarter. The tax income year to date is due to new information received in the 1st quarter from The Norwegian Tax Administration in connection with their decision on the uncertain tax position for the income year 2018. This resulted in a tax income of NOK 568m being booked in the 1st quarter. The estimated normal tax rate is 21-23%, depending on each legal entity's contribution to the lifeinsurance group result. Different tax rates in different countries of operations and currency fluctuations impact the quarterly tax rate. The lifeinsurance group has uncertain tax positions. Tax related issues are described more in the Outlook section and in note 8.
| 2022 | 2021 | 01.01 - 30.06 | Full year | |||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| Savings | 162 | 211 | 197 | 250 | 250 | 373 | 555 | 1,001 |
| Insurance | 97 | 81 | 55 | 64 | 86 | 178 | 142 | 261 |
| Guaranteed pensions | 254 | 232 | 485 | 315 | 310 | 485 | 631 | 1,432 |
| Other | -232 | -64 | -6 | 17 | 390 | -296 | 386 | 397 |
| Profit before amortisation | 281 | 459 | 731 | 646 | 1,035 | 740 | 1,713 | 3,091 |
The Group reports results by business segment. For a more detailed description of the results, see the sections by segment below. Savings reported a profit before amortisation of NOK 162m (NOK 250m) in the 2nd quarter and NOK 373m (NOK 555m) year to date, the decrease mainly as a consequence of Individual Pensions Accounts having been introduced last year, leading to income decline as anticipated. Profit before amortisation in Insurance increased to NOK 97m (NOK 86m) in the 2nd quarter and NOK 178m (NOK 142m) year to date. In Guaranteed pensions, the result decreased to NOK 254m (NOK 310m) in the 2nd quarter and NOK 485m NOK 631m) year to date due to lower profit sharing. In the Other segment, profit before amortisation also fell to NOK -232m (NOK 390m) in the 2nd quarter and -296m (NOK 386m) year to date due to weaker investment returns in company portfolios, while last year's result included the above mentioned divestment gain.
The solvency ratio was 195% at the end of the 2nd quarter, an increase of 11 percentage points from the previous quarter and 15 percentage points above the targeted range of 150-180%. Turbulent financial markets, with falling equity markets and wider credit spreads, detracted 9 percentage points from the solvency ratio while rising interest rates added 2 percentage points. Countercyclical regulatory factors, including an increase in the volatility adjustment (VA) and a lower symmetric equity stress, added 15 percentage points. Risk management actions, including changes made in the investment portfolios, improved the solvency ratio by 7 percentage points. The total of group profit after tax, net of capital set aside for dividends for 2022 and share buybacks, reduced the solvency ratio by 1 percentage point. Other factors detracted 3 percentage points.
During the 2nd quarter, S&P Global Ratings upgraded their ratings on Storebrand on ongoing profitable growth and improved financial strength. Storebrand Livsforsikring AS's rating was upgraded to 'A' from 'A-' with a stable outlook, reflecting the agency's expectation that Storebrand will continue to maintain its capital and balance sheet strength and profitable growth in diverse operations.
The Savings segment includes products for retirement savings with no interest rate guarantees. The segment consists of defined contribution pensions in Norway and Sweden.
| 2022 | 2021 | 01.01 - 30.06 | Full year | |||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| Fee and administration income | 460 | 507 | 519 | 536 | 530 | 967 | 1,106 | 2,161 |
| Operational expenses | -292 | -294 | -329 | -283 | -283 | -585 | -565 | -1,177 |
| Operating profit | 169 | 213 | 190 | 253 | 247 | 382 | 541 | 984 |
| Financial items and risk result life & pension | -7 | -2 | 6 | -3 | 3 | -9 | 13 | 17 |
| Profit before amortisation | 162 | 211 | 197 | 250 | 250 | 373 | 555 | 1,001 |
The Savings segment reported a profit before amortisation of NOK 162m (NOK 250m) in the 2nd quarter and NOK 373m (NOK 555m) year to date. Underlying growth continues to be strong, but negative market returns have led to a decline in assets under management this year.
The fee and administration income in the Savings segment remained stable and amounted to NOK 460m (NOK 530m) in the 2nd quarter and NOK 967m (NOK 1,106m) year to date. Within Unit Linked, falling equity markets and lower fee margins from the introduction of Individual Pension Accounts in 2021 have resulted in income decline in the first half of the year. In Norway, income fell by 12%, adjusted for a reallocation of fees of NOK 17m in the 1st quarter from Asset Management to Unit Linked Norway. In Sweden, income fell by 5% adjusted for currency and a transaction fee income amounting to SEK 37m last year.
The resulting fee margin in Unit Linked Norway was 0.62% (0.73%) in the quarter, down from 0.64% in the previous quarter (adjusted for the reallocation mentioned above). In Sweden, the margin was relatively stable from last quarter at 0.68% (0.74%).
Operational cost amounted to NOK -292m (NOK -283m) in the 2nd quarter and NOK -585m (NOK -565m) year to date, representing a stable cost development.
The financial result was NOK -7m (NOK 3m) in the 2nd quarter and NOK -9m (NOK 13m) year to date. The loss in the first half of the year stems primarily from lower mark to market values on credit bonds from wider spreads.
Unit Linked premiums were stable and amounted to NOK 5.3bn (NOK 5.3bn) in the quarter. Net inflow amounted to NOK 1.6bn (NOK -1.3bn) in the 2nd quarter and NOK 1.8bn (NOK -0.2bn) year to date. Due to weak financial markets, total assets under management in Unit Linked decreased by NOK 14.7bn (-5%) to NOK 276bn in the quarter and by NOK 18.9bn (-6%) compared to the same quarter last year.
In the Norwegian Unit Linked business, assets under management decreased during the quarter by NOK 8.3bn (-5%) to NOK 146bn, and decreased by NOK 4.8bn (-3%) from the same quarter last year. Underlying growth is driven by growth in occupational pension premium payments and new sales, but turbulent markets reduce assets under management. Storebrand is the second largest provider of Defined Contribution pensions in Norway, with a market share of 27% of gross premiums written (at the end of the 1st quarter 2022).
In the Swedish market, SPP is the second largest provider of nonunionised occupational pensions with a market share of 12% measured by gross premiums written including transfers within Unit Linked (as at the end of the 1st quarter 2022). Unit Linked assets under management decreased during the quarter by SEK 10.6bn (-7%) to SEK 136bn, and decreased by SEK 8.3bn (-6%) from the second quarter last year. The underlying growth is driven by strong growth in sales (APE), which were the highest on record in the second quarter and amounted to SEK 790m (SEK 522m). However, turbulent markets reduce assets under management both in the quarter and year to date.
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| NOK mill | Q2 | Q1 | Q4 | Q3 | Q2 |
| Unit Linked Reserves | 276,319 | 291,036 | 308,351 | 295,790 | 295,195 |
| Unit Linked Premiums | 5,333 | 5,288 | 5,350 | 5,201 | 5,316 |
The Insurance segment provides personal risk products in the Norwegian and Swedish retail market and employee insurance and pensionrelated insurance in the Norwegian and Swedish corporate markets.
| 2022 | 2021 | 01.01 - 30.06 | Full year | |||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| Insurance result | 208 | 184 | 158 | 148 | 168 | 392 | 293 | 599 |
| - Insurance premiums f.o.a. | 803 | 770 | 759 | 745 | 742 | 1,573 | 1,484 | 2,988 |
| - Claims f.o.a. | -595 | -586 | -601 | -598 | -574 | -1,181 | -1,191 | -2,389 |
| Operational expenses | -114 | -108 | -115 | -94 | -96 | -222 | -195 | -404 |
| Operating profit | 94 | 76 | 43 | 54 | 72 | 170 | 98 | 195 |
| Financial items and risk result life & pension | 4 | 5 | 12 | 10 | 14 | 9 | 43 | 65 |
| Profit before amortisation | 97 | 81 | 55 | 64 | 86 | 178 | 142 | 261 |
Insurance premiums f.o.a. amounted to NOK 803m (NOK 742m) in the 2nd quarter and NOK 1,573m (NOK 1,484m) year to date, corresponding to an increase of 8% compared to the same quarter last year and an increase of 6% year to date. Profit before amortisation amounted to NOK 97m (NOK 86m) in the 2nd quarter and NOK 178m (NOK 142m) year to date. The total combined ratio was 88% (90%) in the 2nd quarter and 89% (93%) year to date. The result is slightly better than the target combined ratio of 90-92%. Improving labour market conditions in the economy, after the removal of infection controls, seem to have improved disability levels in the quarter, however future developments remain uncertain.
For Individual life, the profit before amortisation was NOK 50m (NOK 60m) in the 2nd quarter and NOK 85m (NOK 125m) year to date. The claims ratio was 55% (50%) in the 2nd quarter and 59% (53%) year to date. Disability levels improved in the quarter compared to the the previous quarter. Altogether, the product segment delivered a combined ratio of 85% (86%) in the 2nd quarter and 88% (90%) year to date.
Group life reported a profit before amortisation of NOK 14m (NOK -17m) in the 2nd quarter and NOK 15m (NOK -9m) year to date. Measures, including repricing, have been taken to improve the robustness and profitability in the Group Life product. The claims ratio was 85% (103%) in the 2nd quarter and 88% (97%) year to date.
The result for 'Pension related disability insurance Nordic' was NOK 34m (NOK 42m) in the 2nd quarter and NOK 78m (NOK
26m) year to date. While the Norwegian business experienced increases in disability claims in the 1st quarter, partly due to effects of infection controls on the labour market, the development in the 2nd quarter is positive. In the Swedish business, the result is driven by low claims and run-off gains. Altogether the claims ratio in the 2nd quarter was 78% (76%) and NOK 76% (84%) year to date.
Cost control has continued to be satisfactory. The cost ratio was 14% (13%) in the 2nd quarter and 14% (13%) year to date. The higher cost level is driven by the growth in the business.
Insurance's investment portfolio in Norway amounted to NOK 7.5bn1 as of the end of the 2nd quarter. It is primarily invested in fixed income securities with short to medium duration and achieved a financial return of 0.7% in the 2nd quarter and 1.5% year to date.
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.
Overall growth in annual portfolio premiums amounted to 12% compared to the same quarter last year. The Individual Life product line grew 10%, while Group Life had 16% increase. Pension related disability insurance grew by 10% in the 2nd quarter compared to the same period last year. Premium growth is driven by price adjustments, basic amount increase (salary inflation) and customer base development.
1NOK2.8bn of the investment portfolio is linked to disability coverages where the investment result goes to the customer reserves and not as a result element in the P&L
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 |
| Individual life * | 832 | 807 | 784 | 754 | 753 |
| Group life ** | 946 | 919 | 828 | 824 | 814 |
| Pension related disability insurance *** | 1,487 | 1,474 | 1,369 | 1,351 | 1,346 |
* Individual life disability insurance
** Group disability, workers compensation insurance
*** DC disability risk premium Norway and disability risk Sweden
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | |
| Claims ratio | 74% | 76% | 79% | 80% | 77% |
| Cost ratio | 14% | 14% | 15% | 13% | 13% |
| Combined ratio | 88% | 90% | 94% | 93% | 90% |
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.
| 2022 | 2021 | 01.01 - 30.06 | Full year | |||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| Fee and administration income | 395 | 391 | 418 | 423 | 407 | 786 | 790 | 1,631 |
| Operational expenses | -206 | -202 | -248 | -217 | -227 | -409 | -424 | -890 |
| Operating profit | 189 | 189 | 169 | 206 | 180 | 377 | 366 | 741 |
| Risk result life & pension | 54 | 82 | 63 | 70 | 21 | 135 | 54 | 187 |
| Net profit sharing | 11 | -39 | 253 | 38 | 108 | -28 | 212 | 504 |
| Profit before amortisation | 254 | 232 | 485 | 315 | 310 | 485 | 631 | 1,432 |
Guaranteed pension achieved a profit before amortisation of NOK 254m (NOK 310m) in the 2nd quarter and NOK 485m (NOK 631m) year to date.
Fee and administration income was stable at NOK 395m (NOK 407m) in the 2nd quarter and NOK 786m (NOK 790m) year to date. The majority of the guaranteed products are closed for new business and are in long term run-off. However, Public Occupational Pensions (reported as Defined Benefit Norway) is a growth area.
Operational cost amounted to NOK -206m (NOK -227m) in the 2nd quarter and NOK -409m (NOK -424m) year to date.
The operating profit improved to NOK 189m (NOK 180m) in the 2nd quarter and NOK 377m (NOK 366m) year to date.
The risk result increased to NOK 54m (NOK 21m) in the 2nd quarter and NOK 135m (NOK 54m) year to date. Improving disability risk results in Norwegian Paid-up policies and Defined Benefit products are the main contributors to the result in the quarter and first half of the year. The Swedish products also continued to report positive risk results.
Net profit sharing amounted to NOK 11m (NOK 108m) in the 2nd quarter and NOK -28m (NOK 212m) year to date. Falling equity markets and lower mark-to-market valuations of fixed income investments due to rising interest rates and wider credit spreads have resulted in weak investment returns in the first half of the year. In Norway, the returns have been absorbed by strong customer buffers. The main impact on the result to shareholders in the first half of the year has been an absence of profit sharing. In Sweden, net profit sharing amounted to NOK 15m (NOK 76m) in the quarter, but NOK -23m (NOK 177m) year to date. An increase in the volatility adjustment has offset mark to market losses from wider credit spreads in the 2nd quarter, while active risk management has limited the impact from rising interest rates, and the sale of real estate has contributed with positive
investment gains. Consequently, the consolidation ratio has remained stable at 111% (112%) in the largest Defined Benefit portfolio, allowing for partial indexation fees of NOK 13m (NOK 38m) in the quarter despite higher inflation.
The majority of the guaranteed products are in long term run-off as pension payments are paid out to policyholders. Most customers have switched from guaranteed to non-guaranteed products.
As of the 2nd quarter, customer reserves of guaranteed pensions amounted to NOK 275bn. This is a decrease of NOK 7bn in the 2nd quarter and NOK 20bn over the last year. Adjusted for currency effects this represent a reduction of 3.1% and 5.5% respectively, driven by a combination of weak financial market returns and the run-off profile of most of the products. Net flow of guaranteed pensions amounted to NOK -2.6bn 2nd quarter and NOK -10.8bn over the last year. As a share of the total balance sheet, guaranteed reserves amounted to 49.9% (50.0%) at the end of the 2nd quarter.
A growth area for Storebrand is public sector occupational pensions, where Storebrand won its first mandates in 2020. The public sector effort has been the driver for a net increase in Defined Benefit reserves in the Norwegian business over the last years. Mandates amounting to an estimated NOK 5.5bn of reserves were won in 2021, most of which has been transferred to Storebrand in the first half of the 2022. Public sector mandates are typically assigned in second half of the year.
Paid-up policies are experiencing some growth over time as active Defined Benefit contracts eventually become Paid-up policies. Reserves amounted to NOK 144bn as of the 2nd quarter, a decrease of NOK 5.4bn in 2022. The decrease is primarily attributed to drawdowns on pensions to policy holders.
Guaranteed portfolios in the Swedish business totalled NOK 80bn as of the 2nd quarter, a decrease of NOK 12.9bn in the first half of the year, as consequence of lower mark-to-market valuations of assets and liabilities. Adjusted for currency effects, the decrease was NOK 11.9bn..
Storebrand's strategy is to have solid buffer capital levels in order to secure customer returns and shield shareholder's equity under turbulent market conditions. Buffer capital decreased by NOK 4.0bn to NOK 24.5bn in the 2nd quarter, and by NOK 9.2bn year to date as a result of falling equity markets, rising interest rates, and wider credit spreads. As a share of guaranteed
reserves, buffer capital levels in Norwegian products still amount to 6.9% (11.3%) and 17.5% (15.1%) in Swedish products. This does not include off-balance sheet excess values of bonds at amortised cost, which at the end of the 2nd quarter amounted to a deficit of NOK -9.6bn from a surplus of NOK 3.4bn at the end of last year. The deficit indicates that the reinvestment yield in the market is currently higher than the average yield in the portfolio. As bonds at amortised cost mature, their excess values will tend to zero.
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| NOK mill | Q2 | Q1 | Q4 | Q3 | Q2 |
| Guaranteed reserves | 274,919 | 281,474 | 290,862 | 292,161 | 294,909 |
| Guaranteed reseves in % of total reserves | 50% | 49% | 49% | 50% | 50% |
| Net flow of premiums and claims | -2,564 | -2,609 | -2,663 | -2,948 | -2,551 |
| Buffer capital in % of customer reserves Storebrand | 7% | 9% | 11% | 11% | 11% |
| Buffer capital in % of customer reserves SPP | 18% | 18% | 18% | 16% | 15% |
Under other the company portfolios of Storebrand Livsforsikring and SPP are reported
| Profit before amortisation | -232 | -64 | -6 | 17 | 390 | -296 | 386 | 397 |
|---|---|---|---|---|---|---|---|---|
| Financial items and risk result life & pension | -218 | -51 | 26 | 24 | 397 | -270 | 399 | 450 |
| Operating profit | -14 | -13 | -32 | -7 | -7 | -26 | -13 | -53 |
| Operational expenses | -14 | -13 | -32 | -7 | -7 | -26 | -14 | -53 |
| NOK million | Q2 | Q1 | Q4 | Q3 | Q2 | 2022 | 2021 | 2021 |
| 2022 | 2021 | 01.01 - 30.06 | Full year |
The Other segment reported a profit before amortisation of NOK -232m (NOK 390m) in the 2nd quarter and -270m (NOK 399m) year to date. The loss this year stems primarily from negative returns on investments in company portfolios due to rising interest rates and wider credit spreads. Correspondingly, the running yield has increased. The result last year includes a positive financial result of NOK 409m from the divestment of AS Værdalsbruket.
The financial result for the Other segment includes the company portfolios of SPP and Storebrand Life Insurance. The financial result for the Other segment amounted to NOK -218m in the 2nd quarter and -270m year to date, primarily due to weak investment returns. The investments in the company portfolios are primarily in interest-bearing securities in Norway and Sweden. The Norwegian company portfolio achieved a return of -0.2% in the 2nd quarter and -0.1% year to date, while the Swedish company portfolio reported a return of -1.7% in the 2nd quarter and -2.3% year to date.
The Storebrand Life Insurance Group is funded by a combination of equity and subordinated loans. Interest expenses in the quarter amounted to NOK -94m. Given the interest rate level at the end of the 2nd quarter, interest expenses of approximately NOK -130m per quarter are expected going forward. The company portfolios in the Norwegian and Swedish life insurance companies and the holding company amounted to NOK 25.4bn at the end of the quarter.
Continuous monitoring and active risk management is a core area of Storebrand's business. Risk and solidity are both followed up on at the Group level and in the legal entities. Regulatory requirements for financial strength and risk management follow the legal entities to a large extent. The section is thus divided up by legal entities.
The Solidity capital1 measures the amount of IFRS capital available to cover customer liabilities. The solidity capital amounted to NOK 50.5bn at the end of 2nd quarter 2022, a decrease in the 2nd quarter by NOK 7.3bn and by NOK 23.6bn year to date. The change in the quarter and year to date is primarily due to increased interest rates and decreased customer buffers primarly in Norway.
Additional staturory reserves in % of customer funds with guarantee
The market value adjustment reserve and bufferfund decreased during the 2nd quarter by NOK 1.9bn and NOK 4.3 year to date. At the end of 2nd quarter the market value adjustment reserve and bufferfund amounted to NOK 2.0bn, corresponding to 1.2% (2.4% at the end of 1st quarter 2022) of customer funds with a guarantee. New business transferred in contributed positively with NOK 0.8bn in bufferfund year to date, no changes in 2nd quarter.
The additional statutory reserves amounted to NOK 10.5bn, corresponding to 6.3% (7.0% at the end of the 1st quarter 2022) of customer funds with guarantee, at the end of the 2nd quarter 2022. Investment returns in customer portfolios lower than the guaranteed interest rate in the quarter decreased reserves by NOK 1.3bn in 2nd quarter and NOK 1.8bn year to date. In connection with implemantation of buffer fund in Public Sector at the start of the year NOK 1bn was transferred between market value adjustment reserve and additional statutory reserves.
Together, the customer buffers amounted to 7.5% (9.4% at the end of the 1st quarter 2022) of customer funds with guarantee at the end of 2nd quarter 2022.
The excess value of bonds and loans valued at amortised cost decreased by NOK 4.8bn in the 2nd quarter and NOK 13.0bn year to date due to higher interest rates and amounted to minus NOK 9.6bn at the end of the 2nd quarter, but is not included in the financial statements..
Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022
Customer assets decreased in the 2nd quarter by NOK 11.0bn and by NOK 15.1bn year to date, amounting to NOK 341bn at the end of 2nd quarter 2022. Customer assets within non-guaranteed savings decreased by NOK 8.3bn during the 2nd quarter and by NOK 12.0bn year to date, amounting to NOK 146bn at the end of 2nd quarter 2022. Guaranteed customer assets are decreased by NOK 2.7bn in the 2nd quarter and by NOK 3.1bn year to date, amounting to NOK 195bn at the end of 2nd quarter 2022.
1Consists of equity, subordinated loan capital, market value adjustments reserve, risk equalisation reserve, unrealised gains/losses on bonds and loans and loans at amortised cost, additional statutory reserves, conditiional bonuses
Conditional bonuses in % of customer funds with guarantee
The buffer capital (conditional bonuses) amounted to SEK 12.5bn (SEK 12.6bn) at the end of the 2nd quarter..
Customer assets amounted to SEK 215bn (SEK 226bn) at the end of the quarter, corresponding to a decrease of SEK 11bn over the last year. Customer assets within non-guaranteed savings amounted to SEK 135bn (SEK 144bn) at the end of the quarter, which is a decrease of SEK 9bn compared to the same quarter last year. Guaranteed customer assets decreased by SEK 2bn in the same period and amounted to SEK 80bn (SEK 82bn) at the end of the quarter.
Storebrand Group follows a two-fold strategy that gives a compelling combination of self-funded growth in the front book, i.e. the growth areas of the "future Storebrand", and capital return from a maturing back book of guaranteed pensions.
Storebrand Group aims to be (a) the leading provider of Occupational Pensions in both Norway and Sweden, (b) continue a strategy to build a Nordic Powerhouse in Asset Management and (c) ensure fast growth as a challenger in the Norwegian retail market for financial services. The combined capital, customer base, cost and data synergies across the Group provide a solid platform for profitable growth and value creation.
The full economic effect of individual pension accounts is expected to give a negative result contribution of NOK 100m in 2022. On the other hand, the contribution from acquisition of Danica will have full effect from 2023. Weak market returns in 2022 have lowered assets under management, a primary source of income for the Group. However, strong growth across the Group provides a solid platform for profitable growth in the coming years and Storebrand maintains the profit ambition set out for 2023.
Storebrand continues to manage capital and a back book with guaranteed products for increased shareholder return. This includes both a dividend policy of growing ordinary dividends from earnings as well as managing the legacy products that carry interest guarantees in a capital-efficient manner. In 2020, Storebrand announced that the goal is to release an estimated NOK 10bn of capital by 2030.
In Norway, the market for private sector occupational pensions has experienced increased competition over the last years in anticipation of the new Individual Pension Accounts (IPA) introduced in 2021. Consequently, the Unit Linked segment in Norway has been reporting a gradually lower fee income margin. This has been reinforced by individuals' contracts being merged into one account in 2021. The product's profit is expected to decline in 2022, before recovering to previous levels in 2023 through strong underlying growth as well as measures to increase profitability. The market has grown structurally over the past years. High single-digit growth in Defined Contribution premiums are expected during the next years. We aim to defend Storebrand's strong position in the market, while also focusing on cost leadership and improved customer experience through end-to-end digitalisation.
In July 2022, Storebrand acquired Danica in Norway, which holds a market share of 5% in Defined Contribution pensions. This will strengthen Storebrand's presence in the segment for small and medium sized businesses, and it will increase Storebrand's distribution capacity of both Defined Contribution pensions and personal risk products.
As a leading occupational pension provider in the private sector, Storebrand also has a competitive offering to the public sector market. Premiums in the public sector pension market are growing and it is larger in reserves than the private sector. This represents a potential additional source of revenue generation for Storebrand. The ambition is to gain 1% market share annually, or approximately NOK 5bn in annual net inflow.
In Sweden, SPP has become a significant profit contributor to the Storebrand Group, driven by earnings growth and ongoing capital release. Growth is expected to continue, driven by an edge in digital and ESG-enhanced solutions, and a strong market position. The market is expected to grow about 8% annually, supported by increasing transfer volumes. Going forward, SPP's ambition is to grow 14-16% annually – twice the overall market growth – partly through capturing the largest share of transfers.
Overall reserves for guaranteed pensions are expected to start decreasing in the coming years. Guaranteed reserves represent a declining share of the Group's total pension reserves and amounted to 49.9% of the pension reserves at the end of the quarter, 1.5 percentage points lower than a year ago. Storebrand's strategy is to secure customer returns and shield shareholder's equity under turbulent market conditions by building customer buffers.
The individualisation of the market for pension and savings is expected to further increase and may be reinforced by the introduction of individual pension accounts in Norway. Retail has already become an increasingly larger part of Storebrand Group.
Strong cost discipline will be a critical success factor to deliver on the earnings ambition. Storebrand will continue to reduce underlying costs, but it will also be necessary to make selective investments to facilitate profitable growth. Should the growth not materialise, management has contingency plans in place to cut costs. High inflation rates, particularly wage inflation, is expected to increase the cost base and acquired business such as Danica will add to the total cost base.
Our risk management framework is designed to take appropriate risk in order to deliver returns to customers and shareholders. At the same time, the framework shall ensure that we shield our customers, shareholders, employees and other stakeholders from undesirable incidents and losses. The framework covers all risks that Storebrand may be exposed to.
Financial market risk is the Group's biggest risk, but main risks also include business risk, insurance risk, counterparty risk, operational risk, climate risk and liquidity risk. In the Board's self-assessment of risk and solvency (ORSA) process, developments in interest rates, credit spreads, and equity and property values are considered to be the biggest risks that influence the solvency of the Group. Should the economic situation worsen, and financial markets deteriorate,
investment losses may occur from reduced valuations of such instruments.
The 1st half of 2022, we have witnessed an outbreak of war on the European continent with increased geopolitical and economic uncertainty, resulting in increased financial market volatility. As a consequence, Storebrand has been on heightened alert with increased monitoring of suppliers and value chains, cyber risk, anti-money laundering (AML) and financial market risk.
Inflation expectations have risen in much of the world, including in Norway and Sweden, as a consequence of global supply chain risk and increased food and energy costs. High and rapidly rising inflation rates may increase costs and insurance claims in Storebrand. While pension premiums and some insurance premiums are directly linked to wage inflation, which could automatically result in premium growth, other products Group Life insurance will have to be repriced to mitigate the negative effects of inflation.
A consequence of higher inflation may be rising interest rates, as seen in the 1st half of the year. Higher interest rates strengthen Storebrand's balance sheet and improves our ability to fulfil guaranteed pension liabilities in the long run, which also strengthens the solvency ratio and reduces solvency risk. However, the immediate short term impact may be mark-to-market losses on fixed income investments and insufficient investment returns to fulfil the annual guarantee in a single year. To reduce the financial impact to shareholders from rising interest rates, Storebrand has made adjustments to the investment portfolios by shortening the duration on mark-to-market bonds, and has over time built a robust portfolio of long-duration bonds at amortised cost which is not affected in the accounts by rising rates. Storebrand has also prioritised building buffer capital from excess returns. The customer buffers limit the financial risk to shareholders and policyholders in markets with rising interest rates by absorbing investment losses. With close to 10% of customer buffers as a share of customer reserves, Storebrand effectively has NOK 25bn more in customer assets than liabilities.
In the long term, low interest rates represent a risk for products with guaranteed high interest rates. The level of the average annual interest rate guarantee is gradually reduced as older policies with higher guarantees are phased out. To reduce the risk, Storebrand has over time reduced the assetduration mismatch in the Norwegian portfolio and has an asset-duration matched portfolio in Sweden. Customer buffers also increase the expected booked returns in Norway and can compensate for a shortfall in returns in a low-rate environment, limiting the financial risk to shareholders and policyholders.
Increased longevity and development in disability are the main insurance risk factors for the Group. A weakening of the Norwegian economy that leads to higher unemployment may lead to higher disability levels, which can result in increased claims. The Covid-19 pandemic has led to increased uncertainty in disability and related claims. In the first half of the year, the removal of infection controls seems to have
improved disability levels, but Storebrand continues to monitor the development closely.
Operational risk may also influence solvency. Several regulatory processes, both on the domestic and international level, with potential implications for capital, customer returns and commercial opportunities are described below in a separate section.
Changes have been made to the Norwegian tax legislation for the insurance industry over many years. Storebrand and the Norwegian Tax Administration have interpreted some of the legislation changes and the associated transitional rules differently. Consequently, Storebrand has three uncertain tax positions with regards to recognised tax expenses. These are described in more detail in note 8. Should Storebrand's interpretation be accepted in all three cases, an estimated positive tax result of up to NOK 2.2bn may be recognised. Should all the Norwegian Tax Administration's interpretations be the final verdict, a tax expense of NOK 1.7bn could be recognised. The timeline for settling the process with the Norwegian Tax Administration might take several years. If necessary, Storebrand will seek clarification from the court of law on the matter.
Savings in Norwegian Defined Contribution pensions The transition period for new legislation making occupational pension contributions mandatory for all employees, regardless of age or employment fraction, ended 1 July 2022. It is estimated that the changes will increase total savings in the Defined Contribution pension market by about NOK 3bn per year, of which Storebrand expects to receive its market share of premiums which was 27% at the end of 2021.
Changes in the National Insurance Pension Scheme A report proposing changes in the Norwegian National Insurance Pension Scheme was delivered to the Government in June 2022. Among the proposals is automatic adjustment of retirement age for earliest possible withdrawal of pensions as longevity expectations increase. The report states that age limits in occupational and individual pension schemes should be adjusted accordingly.
The European Commission presented proposals for changes in the Solvency II standard model in September 2021. The Commission's proposals differ significantly compared to earlier proposals from The European Insurance and Occupational Pension Authority (EIOPA).
The main purpose of the revision is to ensure that insurance companies continue to invest in accordance with the political priorities of the EU, especially with regards to financing the post Covid-19 recovery by facilitating long-term investments and increasing the capacity to invest in European business. The Commission emphasises the insurance sector's important role when it comes to financing the green transition and helping society to adapt to climate change. The review intends to correct deficiencies in current regulation and make the insurance sector more robust.
Storebrand currently applies the standard model. In the review, changes to the interest rate risk module could increase the solvency capital requirement for Norwegian and Swedish insurers. The Commission's proposals appear more representative for Norwegian interest rates than earlier proposals from EIOPA. The Commission also proposes changes that could have offsetting effects to increased capital requirements, such as a reduced risk margin. Several changes are proposed in the calculation of the volatility adjustment as well as an increased interval for the symmetric adjustment for equity risk. As they are currently outlined, the Commission's proposals are not expected to have a significant overall impact on Storebrand's solvency ratio.
The Commission has not outlined a timeline for the further process on adapting changes in the standard model. We expect final conclusions to be drawn by the Commission, the Parliament and the Council in 2022. This will be followed by work on delegated acts and guidelines. Changes are not expected to enter into force until 2024-2025. The Commission will consider a phasing-in period of five years for new rules related to the calculation of interest rate risk and the new extrapolation method for interest rates will be phased in gradually until the end of 2031.
A new accounting standard for insurance contracts, IFRS 17, is set to be implemented in 2023. The purpose is to introduce common accounting rules for insurance contracts and improve the comparability of financial statements. IFRS 17 entails, among other things, fair value measurement of liabilities, grouping of insurance contracts based on risk characteristics, internal management and issue date, income recognition over the contract period rather than upfront, and an amendment of the profit and loss statement. Storebrand will implement IFRS 9 for financial instruments at the same time. In preparation for IFRS 9, The Ministry of Finance has conducted a public consultation on changes in Norwegian regulation to facilitate fixed income booked at amortised cost in customers' accounts.
For Storebrand's consolidated financial statements, the new standards will lead to changes in the recognition, measurement and presentation of insurance contracts, classification of fixed income investments and how profits are recognised. A new balance sheet item Contractual Service Margin (CSM), representing the unearned profits of insurance contracts, will be introduced as part of the transition to IFRS 17. Amortisations of CSM will be recognised as income as the service is provided. Storebrand expects that the transition to IFRS 17 will result in a portion of today's equity to become CSM. Estimated effects for Storebrand will be presented closer to implementation. Whether IFRS 17 is implemented in the statutory reporting requirements is decided by national regulations in each country. Storebrand expects that its property and casualty business will be required to implement IFRS 17 in the statutory reporting. For the life insurance business, IFRS 17 is not expected to be applied in the statutory reporting requirements. The effects from the implementation of IFRS 17 is thus not expected to significantly affect the Solvency calculations nor dividend capacity.
The European Union's Action Plan on Sustainable Finance aims to contribute to realising the Paris goals of reduced carbon emissions. It intends to increase the share of sustainable investments, promote long-termism and clarify which financial products are actually sustainable. This is followed by new regulation to increase investments in sustainable activities and increase the resilience of the financial system when it comes to climate risk. New legislation introducing the EU Taxonomy on classification of sustainable activities and regulation on climate-related disclosures in Norwegian law was passed in December 2021. The new rules for sustainable finance will establish standards for sustainable asset management, as well as clarify disclosure and customer information requirements. The development should result in a higher quality of financial and nonfinancial reporting, give better information to key stakeholders, and make it easier to compare data across the financial sector.
Lysaker, 13 July 2022 Board of Directors Storebrand Livsforsikring AS
| Q2 | 01.01 - 30.06 | Full year | |||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| TECHNICAL ACCOUNT: | |||||
| Gross premiums written | 7,417 | 7,042 | 15,452 | 15,430 | 29,467 |
| Reinsurance premiums ceded | -2 | -1 | -12 | -8 | -19 |
| Premium reserves and pension capital transferred from other companies | 2,282 | 3,140 | 7,948 | 11,818 | 22,064 |
| Premiums for own account | 9,697 | 10,181 | 23,388 | 27,239 | 51,512 |
| Income from investments in subsidiaries, associated companies and joint ventures companies |
21 | 39 | 116 | 101 | 654 |
| Interest income and dividends etc. from financial assets | 2,856 | 1,760 | 3,530 | 3,293 | 6,787 |
| Net operating income from properties | 176 | 228 | 427 | 629 | 1,053 |
| Changes in investment value | -7,726 | 1,891 | -14,491 | -971 | -1,577 |
| Realised gains and losses on investments | -1,728 | 1,267 | -3,758 | 2,104 | 3,939 |
| Total net income from investments in the collective portfolio | -6,401 | 5,187 | -14,176 | 5,155 | 10,856 |
| Income from investments in subsidiaries, associated companies and joint ventures companies |
13 | 11 | 34 | 30 | 136 |
| Interest income and dividends etc. from financial assets | 170 | 104 | 278 | 171 | 1,835 |
| Net operating income from properties | 46 | 47 | 77 | 90 | 178 |
| Changes in investment value | -18,759 | 9,972 | -35,703 | 24,268 | 37,659 |
| Realised gains and losses on investments | -2,543 | 1,868 | 1,069 | 4,374 | 7,875 |
| Total net income from investments in the investment selection portfolio |
-21,072 | 12,003 | -34,245 | 28,933 | 47,682 |
| Other insurance related income | 366 | 398 | 722 | 753 | 1,573 |
| Gross claims paid | -5,316 | -5,295 | -10,788 | -10,375 | -21,176 |
| Claims paid - reinsurance | 3 | 3 | 7 | 9 | |
| Premium reserves, pension capital etc., additional satutory reserves and buffer fund transferred to other companies |
-3,318 | -7,368 | -8,054 | -11,432 | -29,777 |
| Claims for own account | -8,631 | -12,662 | -18,839 | -21,800 | -50,945 |
| To/from premium reserve, gross | 5,085 | 1,595 | 6,722 | -2,767 | 373 |
| To/from additional statutory reserves | 1,276 | -1,501 | 1,840 | -2,060 | -2,290 |
| Change in market value adjustment fund | 1,114 | -1,271 | 4,962 | 350 | 861 |
| Change in buffer fund | 797 | 338 | |||
| Change in premium fund, deposit fund and the pension surplus fund | -1 | -9 | |||
| To/from technical reserves for non-life insurance business | 7 | 5 | -44 | -3 | 30 |
| Change in conditional bonus | 971 | -740 | 1,275 | -2,518 | -4,122 |
| Transfer of additional statutory reserves and buffer fund from other insurance companies/pension funds |
-355 | 781 | 402 | 1,226 | 724 |
| Changes in insurance obligations recognised in the Profit and Loss Account - contractual obligations |
8,895 | -1,131 | 15,495 | -5,772 | -4,433 |
| Change in pension capital | 18,383 | -12,389 | 30,121 | -31,561 | -49,599 |
| Q2 | 01.01 - 30.06 | Full year | |||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Profit on investment result | -1211 | ||||
| Risk result allocated to insurance contracts | -100 | ||||
| Other allocation of profit | -84 | ||||
| Unallocated profit | -84 | -298 | -166 | -415 | |
| Funds allocated to insurance contracts | -84 | -298 | -166 | -415 | -1,395 |
| Management expenses | -58 | -61 | -119 | -114 | -235 |
| Selling expenses | -188 | -184 | -368 | -378 | -765 |
| Change in pre-paid direct selling expenses | 10 | 7 | 16 | 15 | 29 |
| Insurance-related administration expenses (incl. commissions for reinsurance received) |
-372 | -367 | -731 | -697 | -1,488 |
| Insurance-related operating expenses | -608 | -604 | -1,202 | -1,173 | -2,459 |
| Other insurance related expenses | -35 | -41 | -75 | -88 | -164 |
| Technical insurance profit | 511 | 643 | 1,024 | 1,271 | 2,628 |
| NON-TECHNICAL ACCOUNT | |||||
| Income from investments in subsidiaries, associated companies and joint ventures companies |
-1 | -4 | 12 | 1 | 13 |
| Interest income and dividends etc. from financial assets | 258 | 80 | 356 | 163 | 370 |
| Changes in investment value | -194 | 22 | -324 | 10 | -43 |
| Realised gains and losses on investments | -161 | -18 | -118 | 29 | 150 |
| Net income from investments in company portfolio | -98 | 80 | -74 | 203 | 490 |
| Other income | 29 | 444 | 67 | 500 | 565 |
| Management expenses | -5 | -5 | -10 | -9 | -20 |
| Other expenses | -244 | -217 | -441 | -434 | -939 |
| Management expenses and other costs linked to the company portfolio |
-249 | -222 | -451 | -444 | -959 |
| Profit or loss on non-technical account | -318 | 302 | -459 | 259 | 96 |
| Profit before tax | 193 | 944 | 565 | 1,530 | 2,725 |
| Tax expenses | 18 | -23 | 443 | -289 | -563 |
| Profit before other comprehensive income | 211 | 921 | 1,008 | 1,241 | 2,162 |
| Change in actuarial assumptions | -2 | -4 | -4 | -5 | 124 |
| Fair value adjustment of properties for own use | 38 | 11 | 41 | 69 | 139 |
| Other comprehensive income allocated to customers | -38 | -11 | -41 | -69 | -139 |
| Tax on other profit elements not to be reclassified to profit/loss | 10 | ||||
| Other comprehensive income not to be reclassified to profit/loss | -2 | -4 | -4 | -6 | 134 |
| Q2 | 01.01 - 30.06 | Full year | |||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Profit/loss cash flow hedging | -8 | -9 | -15 | -27 | -56 |
| Translation differences foreign exchange | 7 | 63 | -124 | -73 | -137 |
| Other profit comprehensive income that may be reclassified to profit /loss |
-2 | 54 | -139 | -99 | -193 |
| Other comprehensive income | -4 | 50 | -143 | -105 | -59 |
| TOTAL COMPREHENSIVE INCOME | 207 | 971 | 865 | 1,136 | 2,103 |
| PROFIT IS ATTRIBUTABLE TO: | |||||
| Share of profit for the period - shareholders | 211 | 914 | 1,008 | 1,234 | 2,154 |
| Share of profit for the peride - non-controlling interests | 7 | 7 | 7 | ||
| COMPREHENSIVE INCOME IS ATTRIBUTABLE TO: | |||||
| Share of profit for the period - shareholders | 207 | 964 | 865 | 1,129 | 2,095 |
| Share of profit for the peride - non-controlling interests | 8 | 8 | 8 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| ASSETS | |||
| ASSETS IN COMPANY PORTFOLIO | |||
| Goodwill | 770 | 803 | 778 |
| Other intangible assets | 2,578 | 3,001 | 2,735 |
| Total intangible assets | 3,349 | 3,804 | 3,513 |
| Equities and units in subsidiaries, associated companies and joint ventures | 226 | 95 | 215 |
| Loans at amoritsed cost | 2,918 | 1 | 1 |
| Bonds at amortised cost | 7,520 | 8,463 | 9,408 |
| Deposits at amortised cost | 474 | -170 | 725 |
| Equities and fund units at fair value | 134 | 273 | 273 |
| Bonds and other fixed-income securities at fair value | 13,670 | 18,116 | 17,723 |
| Derivatives at fair value | 775 | 803 | 843 |
| Total investments | 25,716 | 27,581 | 29,189 |
| Receivables in connection with direct business transactions | 1,080 | 764 | 499 |
| Receivables in connection with reinsurance transactions | 3 | 1 | |
| Receivables with group company | 88 | 68 | 102 |
| Other receivables | 9,912 | 6,599 | 8,196 |
| Total receivables | 11,083 | 7,432 | 8,797 |
| Tangible fixed assets | 647 | 662 | 641 |
| Cash, bank | 4,080 | 1,949 | 1,971 |
| Tax assets | 1,230 | 1,325 | 1,058 |
| Total other assets | 5,957 | 3,936 | 3,670 |
| Pre-paid direct selling expenses | 708 | 708 | 699 |
| Other pre-paid costs and income earned and not received | 259 | 297 | 185 |
| Total pre-paid costs and income earned and not received | 967 | 1,005 | 884 |
| Total assets in company portfolio | 47,071 | 43,758 | 46,053 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| ASSETS IN CUSTOMER PORTFOLIOS | |||
| Properties at fair value | 29,532 | 27,680 | 28,543 |
| Properties for own use | 1,693 | 1,623 | 1,659 |
| Equities and units in subsidiaries, associated companies and joint ventures | 6,637 | 5,003 | 5,864 |
| Bonds held to maturity | 8,497 | 10,033 | 8,441 |
| Bonds at amortised cost | 106,555 | 105,078 | 104,974 |
| Loans at amortised cost | 17,155 | 22,402 | 22,043 |
| Deposits at amortised cost | 6,360 | 6,638 | 5,141 |
| Equities and fund units at fair value | 27,739 | 27,111 | 28,714 |
| Bonds and other fixed-income securities at fair value | 74,967 | 90,477 | 90,011 |
| Loans at fair value | 7,026 | 8,126 | 7,310 |
| Derivatives at fair value | 1,905 | 3,642 | 2,358 |
| Total investments in collective portfolio | 288,066 | 307,813 | 305,059 |
| Reinsurance share of insurance obligations | 39 | 13 | 13 |
| Properties at fair value | 4,370 | 4,816 | 4,833 |
| Equities and units in subsidiaries, associated companies and joint ventures | 1,904 | 1,134 | 1,277 |
| Loans | 871 | 1,006 | 1,008 |
| Deposits at amortised cost | 1,000 | 925 | 1,302 |
| Equities and fund units at fair value | 220,704 | 237,051 | 249,069 |
| Bonds and other fixed-income securities at fair value | 49,459 | 51,108 | 50,800 |
| Loans at fair value | 125 | 139 | 133 |
| Derivatives at fair value | 105 | 25 | 558 |
| Total investments in investment selection portfolio | 278,538 | 296,204 | 308,979 |
| Total assets in customer portfolio | 566,644 | 604,030 | 614,051 |
| TOTAL ASSETS | 613,714 | 647,787 | 660,104 |
| EQUITY AND LIABILITIES | |||
| Share capital | 3,540 | 3,540 | 3,540 |
| Share premium | 9,711 | 9,711 | 9,711 |
| Other paid in equity | 1,899 | 1,110 | 1,110 |
| Total paid in equity | 15,150 | 14,361 | 14,361 |
| Risk equalisation fund | 676 | 444 | 547 |
| Security reserves | 5 | 5 | 5 |
| Other earned equity | 8,623 | 10,234 | 11,097 |
| Total earned equity | 9,305 | 10,683 | 11,649 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| Perpetual subordinated loans | 1,970 | 1,100 | 1,976 |
| Dated subordinated loans | 9,045 | 9,829 | 8,889 |
| Total subordinated loans and hybrid tier 1 capital | 11,015 | 10,929 | 10,865 |
| Premium reserves | 253,867 | 266,015 | 261,044 |
| Additional statutory reserves | 10,470 | 13,333 | 13,602 |
| Market value adjustment reserve | 863 | 6,820 | 6,309 |
| Buffer fund | 1,164 | ||
| Premium fund, deposit fund and the pension surplus fund | 4,019 | 2,416 | 3,501 |
| Conditional bonus | 12,006 | 12,680 | 13,781 |
| Unallocated profit to insurance contracts | 173 | 444 | |
| Other technical reserve | 732 | 694 | 661 |
| Total insurance obligations in life insurance - contractual obligations | 283,294 | 302,402 | 298,900 |
| Pension capital | 276,298 | 295,190 | 308,331 |
| Total insurance obligations in life insurance - investment portfolio separately | 276,298 | 295,190 | 308,331 |
| Pension liabilities etc. | 30 | 171 | 31 |
| Deferred tax | 640 | 687 | 622 |
| Other provisions for liabilities | 44 | 108 | 48 |
| Total provisions for liabilities | 714 | 966 | 702 |
| Liabilities in connection with direct insurance | 1,126 | 1,197 | 999 |
| Liabilities in connection with reinsurance | 17 | 4 | 14 |
| Derivatives | 7,110 | 2,664 | 1,997 |
| Liabilities to group companies | 26 | 25 | 24 |
| Other liabilities | 8,881 | 8,938 | 11,751 |
| Total liabilities | 17,159 | 12,829 | 14,785 |
| Received, not acquired rental income | |||
| Other accrued expenses and received, unearned income | 779 | 428 | 510 |
| Total accrued expenses and received, unearned income | 779 | 428 | 510 |
| TOTAL EQUITY AND LIABILITIES | 613,714 | 647,787 | 660,104 |
| Majority's share of equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| NOK million | Share capital |
Share premium |
Other paid in equity |
Total paid in equity |
Risk equalisation fund |
Security reserves |
Other equity |
Non controlling interests |
Total equity |
| Equity at 31.12.2020 | 3,540 | 9,711 | 599 | 13,850 | 438 | 5 | 11,323 | 69 | 25,686 |
| Profit for the period | 6 | 1,236 | 1,241 | ||||||
| Other comprehensive income | -105 | -105 | |||||||
| Total comprehensive income for the period | 6 | 1,131 | 1,136 | ||||||
| Equity transactions with owner: | |||||||||
| Received dividend/group contributions | 511 | 511 | 511 | ||||||
| Paid dividend/group contributions | -2,220 | -2,220 | |||||||
| Other | -69 | -69 | |||||||
| Equity at 30.06.2021 | 3,540 | 9,711 | 1,110 | 14,361 | 444 | 5 | 10,235 | 25,044 | |
| Profit for the period | 109 | 2,053 | 2,162 | ||||||
| Other comprehensive income | -59 | -59 | |||||||
| Total comprehensive income for the period | 109 | 1,994 | 2,103 | ||||||
| Equity transactions with owner: | |||||||||
| Received dividend/group contributions | 511 | 511 | 511 | ||||||
| Paid dividend/group contributions | -2,220 | -2,220 | |||||||
| Other | -69 | -69 | |||||||
| Equity at 31.12.2021 | 3,540 | 9,711 | 1,110 | 14,361 | 547 | 5 | 11,098 | 26,010 | |
| Profit for the period | 129 | 879 | 1,008 | ||||||
| Other comprehensive income | -143 | -143 | |||||||
| Total comprehensive income for the period | 129 | 736 | 865 | ||||||
| Equity transactions with owner: | |||||||||
| Received dividend/group contributions | 790 | 790 | 790 | ||||||
| Paid dividend/group contributions | -3,210 | -3,210 | |||||||
| Other | |||||||||
| Equity at 30.06.2022 | 3,540 | 9,711 | 1,899 | 15,150 | 676 | 5 | 8,624 | 24,455 |
| 01.01 - 30.06 | 01.01 - 30.06 | |||
|---|---|---|---|---|
| 2021 | 2022 NOK million | 2022 | 2021 | |
| Cash flow from operating activities | ||||
| 14,920 | 14,856 Net received - direct insurance | 9,897 | 9,942 | |
| -9,870 | -10,683 Net claims/benefits paid - direct insurance | -6,559 | -5,644 | |
| 385 | -106 Net receipts/payments - policy transfers | 937 | 1,829 | |
| 3,974 | 109 Net change insurance liabilities | 785 | 4,004 | |
| -211 | -921 Taxes paid | -750 | -1 | |
| -1,173 | -1,202 Net receipts/payments operations | -722 | -677 | |
| 541 | 196 Net receipts/payments - other operational activities | -1,072 | -2,262 | |
| 8,567 | 2,249 Net cash flow from operating activities before financial assets | 2,517 | 7,192 | |
| -502 | 2,328 Net receipts/payments - loans to customers | 2,115 | 510 | |
| -12,442 | 822 Net receipts/payments - financial assets | -2,728 | -13,726 | |
| 309 | -15 Net receipts/payments - property activities | |||
| 481 | 622 Receipts - sale of investment properties | |||
| -931 | -789 Payment - purchase of investment properties | |||
| 2,636 | -942 Net change bank deposits insurance customers | 572 | 3,227 | |
| -10,448 | 2,025 Net cash flow from operating activities from financial assets | -41 | -9,989 | |
| -1,882 | 4,275 Net cash flow from operating activities | 2,475 | -2,798 | |
| Cash flow from investing activities | ||||
| 613 | Net payments - sale/purchase of subsidiaries | 621 | ||
| -562 Net payments - purchase/capitalisation associated companies | ||||
| -10 | -18 Net receipts/payments - sale/purchase of fixed assets | -3 | -3 | |
| 603 | -580 Net cash flow from investing activities | -3 | 618 | |
| Cash flow from financing activities | ||||
| 3,004 | 650 Receipts - subordinated loans issued | 650 | 3,004 | |
| -373 | -99 Repayment of subordinated loans | -99 | -373 | |
| -286 | -237 Payments - interest on subordinated loans | -237 | -286 | |
| 680 | 1,050 Payments received of dividend and group contribution | 2,432 | 1,884 | |
| -2,220 | -3,210 Payment of dividend and group contribution | -3,210 | -2,220 | |
| 805 | -1,846 Net cash flow from financing activities | -464 | 2,009 | |
| -474 | 1,849 Net cash flow for the period | 2,009 | -170 | |
| 9,975 | -176 of which net cash flow for the period before financial assets | 2,050 | 9,819 | |
| -474 | 1,849 Net movement in cash and cash equivalent assets | 2,009 | -170 | |
| 2,218 | 2,696 Cash and cash equivalents at the start of the period | 1,704 | 1,167 | |
| 34 | 9 Currency translation differences | |||
| 1,779 | 4,554 Cash and cash equivalent assets at the end of the period | 3,713 | 997 |
| Q2 | 01.01 - 30.06 | Full year | |||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| TECHNICAL ACCOUNT: | |||||
| Gross premiums written | 4,897 | 4,540 | 10,487 | 10,446 | 19,436 |
| Reinsurance premiums ceded | -7 | -6 | -9 | ||
| Premium reserves and pension capital transferred from other companies | 1,440 | 2,177 | 6,255 | 9,991 | 18,466 |
| Premiums for own account | 6,337 | 6,717 | 16,735 | 20,430 | 37,893 |
| Income from investments in subsidiaries, associated companies and joint ventures companies |
326 | 242 | 932 | 514 | 1,526 |
| of which from investment in property companies | 326 | 242 | 932 | 514 | 1,526 |
| Interest income and dividends etc. from financial assets | 2,492 | 1,367 | 2,820 | 2,371 | 5,130 |
| Changes in investment value | -1,902 | 1,269 | -5,549 | -300 | -754 |
| Realised gains and losses on investments | -2,339 | 851 | -2,872 | 1,154 | 1,957 |
| Total net income from investments in the collective portfolio | -1,424 | 3,729 | -4,668 | 3,739 | 7,859 |
| Income from investments in subsidiaries, associated companies and joint ventures companies |
70 | 76 | 207 | 160 | 405 |
| of which from investment in rproperty companies | 70 | 77 | 207 | 160 | 405 |
| Interest income and dividends etc. from financial assets | 170 | 104 | 277 | 171 | 1,834 |
| Changes in investment value | -7,640 | 4,265 | -15,893 | 7,379 | 9,307 |
| Realised gains and losses on investments | -2,550 | 1,865 | 1,039 | 4,366 | 7,869 |
| Total net income from investments in the investment selection portfolio |
-9,950 | 6,310 | -14,370 | 12,076 | 19,416 |
| Other insurance related income | 215 | 225 | 403 | 413 | 863 |
| Gross claims paid | -3,330 | -3,165 | -6,730 | -6,230 | -12,798 |
| Claims paid - reinsurance | 2 | 2 | 7 | 8 | |
| Premium reserves, pension capital etc., additional satutory reserves and buffer fund transferred to other companies |
-1,996 | -5,436 | -5,319 | -8,162 | -21,805 |
| Claims for own account | -5,323 | -8,601 | -12,046 | -14,385 | -34,595 |
| To/from premium reserve, gross | -128 | 1,070 | -3,854 | -6,288 | -5,448 |
| To/from additional statutory reserves | 23 | -769 | 44 | -1,203 | -2,290 |
| Change in market value adjustment fund | 1,114 | -1,271 | 4,962 | 350 | 861 |
| Change in buffer fund | 797 | 338 | |||
| Change in premium fund, deposit fund and the pension surplus fund | -1 | -9 | |||
| To/from technical reserves for non-life insurance business | 7 | 5 | -44 | -3 | 30 |
| Transfer of additional statutory reserves and buffer fund from other insurance companies/pension funds |
-355 | 781 | 402 | 1,226 | 724 |
| Changes in insurance obligations recognised in the Profit and Loss Account - contractual obligations |
1,458 | -184 | 1,848 | -5,918 | -6,132 |
| Change in pension capital | 8,248 | -6,428 | 11,939 | -13,688 | -20,913 |
| Changes in insurance obligations recognised in the Profit and Loss Account - investment portfolio separately |
8,248 | -6,428 | 11,939 | -13,688 | -20,913 |
| Q2 | 01.01 - 30.06 | Full year | |||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Profit on investment result | -1,211 | ||||
| Risk result allocated to insurance contracts | -100 | ||||
| Other allocation of profit | -84 | ||||
| Unallocated profit | -84 | -954 | -167 | -1,300 | |
| Funds allocated to insurance contracts | -84 | -954 | -167 | -1,300 | -1,395 |
| Management expenses | -58 | -61 | -119 | -114 | -235 |
| Selling expenses | -66 | -56 | -132 | -121 | -243 |
| Insurance-related administration expenses (incl. commissions for reinsurance received) |
-241 | -238 | -471 | -443 | -965 |
| Insurance-related operating expenses | -365 | -355 | -722 | -677 | -1,442 |
| Other insurance related expenses after reinsurance share | -31 | -36 | -67 | -68 | -135 |
| Technical insurance profit | -919 | 422 | -1,116 | 622 | 1,417 |
| NON-TECHNICAL ACCOUNT | |||||
| Income from investments in subsidiaries, associated companies and joint ventures companies |
128 | 691 | 1,341 | 1,596 | 1,506 |
| Interest income and dividends etc. from financial assets | 128 | 79 | 226 | 159 | 369 |
| Changes in investment value | -137 | 12 | -225 | -8 | -66 |
| Realised gains and losses on investments | -148 | -136 | 78 | 201 | 410 |
| Net income from investments in company portfolio | -28 | 645 | 1,421 | 1,948 | 2,220 |
| Other income | 4 | 6 | 1 | 12 | |
| Management expenses | -5 | -5 | -10 | -9 | -20 |
| Other expenses | -137 | -106 | -221 | -202 | -481 |
| Total management expenses and other costs linked to the company | -142 | -111 | -231 | -211 | -500 |
| portfolio | |||||
| Profit or loss on non-technical account | -167 | 534 | 1,196 | 1,737 | 1,732 |
| Profit before tax | -1,086 | 956 | 80 | 2,359 | 3,149 |
| Tax expenses | 325 | -36 | 869 | -220 | -504 |
| Profit before other comprehensive income | -761 | 921 | 949 | 2,139 | 2,645 |
| Change in actuarial assumptions | 2 | ||||
| Tax on other profit elements not to be reclassified to profit/loss | 14 | ||||
| Other comprehensive income not to be reclassified to profit/loss | 16 |
| Q2 01.01 - 30.06 |
Full year | ||||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Profit/loss cash flow hedging | -8 | -9 | -15 | -27 | -56 |
| Other profit comprehensive income that may be reclassified to profit /loss |
-8 | -9 | -15 | -27 | |
| Other comprehensive income | -8 | -9 | -15 | -27 | -40 |
| TOTAL COMPREHENSIVE INCOME | -770 | 911 | 934 | 2,113 | 2,605 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| ASSETS | |||
| ASSETS IN COMPANY PORTFOLIO | |||
| Other intangible assets | 464 | 468 | 455 |
| Total intangible assets | 464 | 468 | 455 |
| Equities and units in subsidiaries, associated companies and joint ventures | 12,401 | 12,750 | 12,478 |
| Loans at amortised cost | 2,917 | ||
| Bonds at amortised cost | 7,520 | 8,463 | 9,408 |
| Deposits at amoritsed cost | 456 | -204 | 715 |
| Equities and fund units at fair value | 351 | 362 | 476 |
| Bonds and other fixed-income securities at fair value | 9,568 | 12,724 | 12,419 |
| Derivatives at fair value | 775 | 803 | 843 |
| Total investments | 33,987 | 34,899 | 36,340 |
| Receivables in connection with direct business transactions | 1,075 | 755 | 495 |
| Receivables in connection with reinsurance transactions | 3 | 1 | |
| Receivables with group company | 62 | 42 | 1,111 |
| Other receivables | 6,819 | 4,522 | 5,823 |
| Total receivables | 7,959 | 5,319 | 7,430 |
| Tangible fixed assets | 9 | 12 | 10 |
| Cash, bank | 3,257 | 1,200 | 989 |
| Tax assets | 1,666 | 1,327 | 797 |
| Total other assets | 4,932 | 2,539 | 1,796 |
| Other pre-paid costs and income earned and not received | 49 | 47 | 40 |
| Total pre-paid costs and income earned and not received Total assets in company portfolio |
49 47,391 |
47 43,272 |
40 46,061 |
| ASSETS IN CUSTOMER PORTFOLIOS | |||
| Equities and units in subsidiaries, associated companies and joint ventures | 24,393 | 21,024 | 22,325 |
| of which investment in property companies | 24,393 | 21,024 | 22,325 |
| Bonds held to maturity | 8,497 | 10,033 | 8,441 |
| Bonds at amortised cost | 106,555 | 105,078 | 104,974 |
| Loans at amoritsed cost | 17,155 | 22,401 | 22,043 |
| Deposits at amoritsed cost | 2,485 | 3,392 | 2,701 |
| Equities and fund units at fair value | 19,120 | 16,810 | 19,006 |
| Bonds and other fixed-income securities at fair value | 23,950 | 25,552 | 26,107 |
| Derivatives at fair value | 1,566 | 2,132 | 1,276 |
| Total investments in collective portfolio | 203,723 | 206,422 | 206,875 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| Reinsurance share of insurance obligations | 31 | 4 | 4 |
| Equities and units in subsidiaries, associated companies and joint ventures | 6,443 | 6,030 | 6,208 |
| of which investment in property companies | 6,443 | 6,030 | 6,208 |
| Loans at amoritsed cost | 871 | 1,007 | 1,008 |
| Deposits at amoritsed cost | 484 | 368 | 840 |
| Equities and fund units at fair value | 99,456 | 101,141 | 107,202 |
| Bonds and other fixed-income securities at fair value | 40,684 | 43,026 | 42,559 |
| Loans at fair value | 125 | 138 | 133 |
| Derivatives at fair value | 105 | 25 | 558 |
| Total investments in investment selection portfolio | 148,168 | 151,734 | 158,508 |
| Total assets in customer portfolios | 351,922 | 358,160 | 365,386 |
| TOTAL ASSETS | 399,313 | 401,432 | 411,447 |
| EQUITY AND LIABILITIES | |||
| Share capital | 3,540 | 3,540 | 3,540 |
| Share premium | 9,711 | 9,711 | 9,711 |
| Other paid in equity | 1,899 | 1,110 | 1,899 |
| Total paid in equity | 15,150 | 14,361 | 15,150 |
| Risk equalisation fund | 676 | 444 | 547 |
| Security reserves | 5 | 5 | 5 |
| Other earned equity | 10,820 | 12,836 | 10,015 |
| Total earned equity | 11,502 | 13,285 | 10,567 |
| Perpetual subordinated loans | 1,970 | 1,100 | 1,976 |
| Dated subordinated loans | 9,045 | 9,829 | 8,889 |
| Total subordinated loans and hybrid tier 1 capital | 11,015 | 10,929 | 10,865 |
| Premium reserves | 184,687 | 181,137 | 180,684 |
| Additional statutory reserves | 12,266 | 12,476 | 13,602 |
| Market value adjustment reserve | 863 | 6,820 | 6,309 |
| Buffer fund | 1,164 | ||
| Premium fund, deposit fund and the pension surplus fund | 4,019 | 2,416 | 3,501 |
| Unallocated profit to insurance contracts | 174 | 1,328 | |
| Other technical reserve | 732 | 694 | 661 |
| Total insurance obligations in life insurance - contractual obligations | 203,906 | 204,871 | 204,759 |
| Pension capital | 145,891 | 150,736 | 157,873 |
| Total insurance obligations in life insurance - investment portfolio separately | 145,891 | 150,736 | 157,873 |
| NOK million | 30.06.22 | 30.06.21 | 31.12.21 |
|---|---|---|---|
| Pension liabilities etc. | 2 | 7 | 2 |
| Total provisions for liabilities | 2 | 7 | 2 |
| Liabilities in connection with direct insurance | 1,021 | 1,037 | 825 |
| Derivatives | 6,024 | 2,207 | 1,638 |
| Liabilities to group companies | 20 | 20 | 3,235 |
| Other liabilities | 4,233 | 3,806 | 6,377 |
| Total liabilities | 11,298 | 7,071 | 12,075 |
| Other accrued expenses and received, unearned income | 550 | 171 | 156 |
| Total accrued expenses and received, unearned income | 550 | 171 | 156 |
| TOTAL EQUITY AND LIABILITIES | 399,313 | 401,432 | 411,447 |
| NOK million | Share capital1) |
Share premium reserve |
Other paid in capital |
Total paid in equity |
Risk equalisation fund |
Security reserves |
Other | equity Total equity |
|---|---|---|---|---|---|---|---|---|
| Equity at 31.12.2020 | 3,540 | 9,711 | 1,110 | 14,361 | 438 | 5 | 10,729 | 25,533 |
| Profit for the period | 6 | 2,134 | 2,139 | |||||
| Other comprehensive income | -27 | -27 | ||||||
| Total comprehensive income for the period | 6 | 2,107 | 2,113 | |||||
| Equity transactions with owner: | ||||||||
| Received dividend/group contributions | ||||||||
| Paid dividend/group contributions | ||||||||
| Other | ||||||||
| Equity at 30.06.2021 | 3,540 | 9,711 | 1,110 | 14,361 | 444 | 5 | 12,836 | 27,646 |
| Profit for the period | 109 | 2,536 | 949 | |||||
| Other comprehensive income | -40 | -15 | ||||||
| Total comprehensive income for the period | 109 | 2,496 | 934 | |||||
| Equity transactions with owner: | ||||||||
| Received dividend/group contributions | 789 | 789 | ||||||
| Paid dividend/group contributions | -3,210 | |||||||
| Other | ||||||||
| Equity at 31.12.2021 | 3,540 | 9,711 | 1,899 | 15,150 | 547 | 5 | 10,015 | 25,718 |
| Profit for the period | 129 | 820 | ||||||
| Other comprehensive income | -15 | |||||||
| Total comprehensive income for the period | 129 | 805 | ||||||
| Equity transactions with owner: | ||||||||
| Received dividend/group contributions | ||||||||
| Paid dividend/group contributions | ||||||||
| Other | ||||||||
| Equity at 30.06.2022 | 3,540 | 9,711 | 1,899 | 15,150 | 676 | 5 | 10,821 | 26,652 |
1) 35 404 200 shares of NOK 100 par value.
1
Accounting policies
The Group's interim financial statements include Storebrand Livsforsikring AS, subsidiaries, associated and joint-ventures companies. The financial statements are prepared in accordance with the "Regulation on the annual accounts etc. of lifeinsurance companies" for the parent company and the consolidated financial statements in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not contain all the information that is required in full annual financial statements.
A description of the accounting policies applied in the preparation of the financial statements are provided in the 2021 annual report, and the interim financial statements are prepared in accordance with these accounting policies.
The financial statements have been prepared in accordance with the accounting principles that were used in the annual report for 2021.
There are none new or changed accounting standards that entered into effect in 2022 that have significant effect on Storebrand's consolidated financial statements
Note 2
In preparing the Group's financial statements the management are required to make estimates, judgements and assumptions of 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.
Actual results may differ from these estimates.
A description of the most critical estimates and judgements that can affect recognised amounts is included in the 2021 annual report in note 2, insurance risk in note 7, valuation of financial instruments at fair value is described in note 13 and in the interim financial statements note 10 Solvency II.
3
Storebrand Livsforsikring AS has 20. December 2021 entered into an agreement to buy 100% of the shares in Danica Pensjonsforsikring AS, Norway ("Danica"), Danica, a subsidiary of Danske Bank, is the 6th largest provider of Defined Contribution pensions in Norway with 5% market share. Storebrand Livsforsikring AS will pay NOK 2.05 billion for the shares of Danica. The conclusion of the transaction is approved from the Norwegian Financial Supervisory Authority and the Norwegian Competition Authority, and the transaction was completed on 1 July 2022..
SPP Pension & Försäkring has reached an agreement with Stockholm Stadshus AB to acquire the shares in S:t Erik Livförsäkring AB at a purchase price of SEK 260 million. The company handles the City of Stockholm's commitment to the employees within the Stockholm Stadshus AB group and manages approx. SEK 2.5 billion distributed among 5 000 insured. Sweden Financial Supervisory Authority has approved the transaction and the purchase of the shares was completed on 8 July 2022.
4
Storebrand´s operation includes the segments Savings, Insurance, Guaranteed Pension and Other.
The savings segment includes products for retirement savings with no interest rate guarantees. The segment consists of
defined contribution pensions in Norway and Sweden. In addition, certain other subsidiaries in Storebrand Livsforsikring and SPP are included in Savings.
The insurance segment provides personal risk products in the Norwegian retail market in addition to employer's liability insurance and pension-related insurance in the Norwegian and Swedish corporate markets.
The guaranteed Pension segment includes long-term pension savings products which provides 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.
The result for the company portfolios of Storebrand Livsforsikring and SPP are reported in the Other segment.
Profit in the segments are reconciled with the corporate profit and loss account before tax. The corporate profit and loss account includes gross income and gross expenses linked to both the insurance customers and owners. The various segments are to a large extent followed up on net profit margins, including risk and administration results. The profit lines that are used in segment reporting will therefore not be identical with the profit lines in the corporate profit and loss account.
A description of the most important differences is included in the 2021 annual report in note 4 Segment reporting.
| Q2 01.01 - 30.06 |
Full year | ||||
|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Savings | 162 | 250 | 373 | 555 | 782 |
| Insurance | 97 | 86 | 178 | 142 | 89 |
| Guaranteed pension | 254 | 310 | 485 | 631 | 775 |
| Other | -232 | 390 | -296 | 386 | 61 |
| Profit before amortisation | 281 | 1,035 | 740 | 1,713 | 1,707 |
| Amortisation intangible assets | -88 | -91 | -175 | -183 | -372 |
| Profit before tax | 193 | 944 | 565 | 1,530 | 1,336 |
| Savings | Insurance | Guaranteed pension | ||||
|---|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Fee and administration income | 460 | 530 | 395 | 407 | ||
| Insurance result | 208 | 168 | ||||
| - Insurance premiums for own account | 803 | 742 | ||||
| - Claims for own account | -595 | -574 | ||||
| Operational cost | -292 | -283 | -114 | -96 | -206 | -227 |
| Operating profit | 169 | 247 | 94 | 72 | 189 | 180 |
| Financial items and risk result life & pension | -7 | 3 | 4 | 14 | 54 | 21 |
| Net profit sharing | 11 | 108 | ||||
| Profit before amortisation | 162 | 250 | 97 | 86 | 254 | 310 |
| Amortisation of intangible assets | ||||||
| Profit before tax | 162 | 250 | 97 | 86 | 254 | 310 |
| Other | Storebrand Livsforsikring group |
|||
|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 |
| Fee and administration income | 856 | 938 | ||
| Insurance result | 208 | 168 | ||
| - Insurance premiums for own account | 803 | 742 | ||
| - Claims for own account | -595 | -574 | ||
| Operational cost | -14 | -7 | -625 | -614 |
| Operating profit | -14 | -7 | 438 | 492 |
| Financial items and risk result life & pension | -218 | 397 | -157 | 543 |
| Profit before amortisation | -232 | 390 | 281 | 1,035 |
| Amortisation of intangible assets | -88 | -91 | ||
| Profit before tax | -232 | 390 | 193 | 944 |
| Tax | 18 | -23 | ||
| Profit after tax | 211 | 921 |
| Savings | Insurance | Guaranteed pension | ||||
|---|---|---|---|---|---|---|
| NOK million | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Fee and administration income | 967 | 1,106 | 786 | 790 | ||
| Insurance result | 392 | 293 | ||||
| - Insurance premiums for own account | 1,573 | 1,484 | ||||
| - Claims for own account | -1,181 | -1,191 | ||||
| Operational cost | -585 | -565 | -222 | -195 | -409 | -424 |
| Operating profit | 382 | 541 | 170 | 98 | 377 | 366 |
| Financial items and risk result life & pension | -9 | 13 | 9 | 43 | 135 | 54 |
| Net profit sharing | -28 | 212 | ||||
| Profit before amortisation | 373 | 555 | 178 | 142 | 485 | 631 |
| Amortisation of intangible assets | ||||||
| Profit before tax | 373 | 555 | 178 | 142 | 485 | 631 |
| Storebrand Livsforsikring | ||||
|---|---|---|---|---|
| Other | group | |||
| NOK million | 2022 | 2021 | 2022 | 2021 |
| Fee and administration income | 1,753 | 1,897 | ||
| Insurance result | 392 | 293 | ||
| - Insurance premiums for own account | 1,573 | 1,484 | ||
| - Claims for own account | -1,181 | -1,191 | ||
| Operational cost | -26 | -14 | -1,243 | -1,198 |
| Operating profit | -26 | -13 | 902 | 992 |
| Financial items and risk result life & pension | -270 | 399 | -162 | 722 |
| Profit before amortisation | -296 | 386 | 740 | 1,713 |
| Amortisation of intangible assets | -175 | -183 | ||
| Profit before tax | -296 | 386 | 565 | 1,530 |
| Tax | 443 | -289 | ||
| Profit after tax | 1,008 | 1,241 |
5
Risks are described in the annual report for 2021 in note 7 (Insurance risk), note 8 (Financial market risk), note 9 (Liquidity risk), note 10 (Credit risk) and note 11 (Concentrations of risk).
Market risk means changes in the value of assets due to unexpected volatility or price changes in the financial markets. It also refers to the risk that the value of the insurance liability develops differently than the assets due to interest rate changes. The most significant market risks for Storebrand are interest rate risk, equity market risk, property price risk, credit risk and currency exchange rate risk.
For the life insurance companies, the financial assets are invested in a variety of sub-portfolios. Market risk affects Storebrand's income and profit differently in the different portfolios. There are three main types of sub-portfolios: company portfolios, customer portfolios without a guarantee (unit linked) and customer portfolios with a guarantee.
The market risk in the company portfolios has a direct impact on Storebrand's profit.
The market risk in customer portfolios without a guarantee (unit linked) is borne by the customers, meaning Storebrand is not directly affected by changes in value. Nevertheless, changes in value do affect Storebrand's profit indirectly. Income is based mainly on the size of the portfolios, while the costs tend to be fixed. Lower returns from the financial market than expected will therefore have a negative effect on Storebrand's 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 risk sharing with customers depends on several factors, the most important being the size and flexibility of the customer buffers, and the level and duration of the interest rate guarantee. If the investment return is not sufficiently high to meet the guaranteed interest rate, the shortfall will be met by using customer buffers in the form of risk capital built up from previous years' surpluses. Risk capital primarily consists of unrealised gains, additional statutory reserves, and conditional bonuses. Storebrand is responsible for meeting any shortfall that cannot be covered by the customer buffers.
For guaranteed customer portfolios, the risk is affected by changes in the interest rate level. Rising interest rates are negative in the short term because resulting price depreciation for bonds and interest rates swaps reduce investment return and buffers. But long term, rising interest rates are positive due to higher probability of achieving a return above the guarantee.
The second quarter and the first half of the year has been volatile for financial markets, with negative returns for most risk assets.
Going into 2022, inflation was already increasing due to supply-shortages and increased demand post Covid. The trend has been reinforced during the first half as the Ukraine war has led to a surge in energy and raw-material prices. New Covid-related closures, especially in China, also adds to the price-pressure. There is growing risk for the pick-up in inflation to be more than transitory. This has led central banks to increase rates earlier and at a faster pace than expected at the start of the year. Bank of Norway has increased the policy rate by 0.75 pp to 1.25 percent during the first half of the year and signal further increases to approximately 3 percent by mid-2023. The Swedish Riksbank increased the policy rate by 0.25 percent during the first half and a further 0.5 percent to 0.75 percent in early July. The signal is for the rate to increase to approximately 2 percent by early 2023.
The effects from Covid-19, the increase in inflation and the effects from the war in Ukraine going forward, implies that the risk may still be higher than normal market risk. Storebrand has risk management which through policies and principles handles and dampens the effect of volatile financial markets.
Global equities fell 18 percent in the first half of the year, with most of the fall coming in the second quarter. Norwegian equities also fell in the second quarter. For the first half of the year, Norwegian equities fell a moderate 3 percent, as rising oil- and gas-price was a positive. The credit spreads for corporate bonds rose significantly during the second quarter and the first half of the year.
Long-term interest rates continued to rise strongly in the second quarter. The Norwegian 10-year swap-rate rose 0.5 pp in the second quarter to 3.3 percent. For the first half, the increase was 1.4 pp. The Swedish 10-year swap-rate rose 0.9 pp to 2.8 percent. For the first half, the increase was 1.8 pp. Short term interest rates have also increased, as the central banks continued to raise interest rates and signalled further increases going forward. Most of the interest rate investments in the Norwegian customer portfolios are held at amortized cost. This dampens the effect from interest rate changes on booked returns. The amortized cost portfolio valuation in the accounts is now higher than fair value. For other bond investments and exposure towards interest rate swaps, the increase in interest rates have affected investment returns negatively. Higher interest rates are positive for reinvestment opportunities and for the solvency position.
The Norwegian krone weakened in the second quarter, particularly against the US dollar. In the first half of the year, the Norwegian krone strengthened 1 percent against the Swedish krone, weakened 3 percent against the Euro and weakened 10 percent against the US dollar. A high degree of currency hedging in the portfolio means that the exchange rate fluctuations have a modest effect on results and Storebrand's market risk.
Financial instruments valued at fair value level three are priced based on models. Examples of such financial instruments are investment property, private equity, and mortgages. The valuation models gather and employ information from a wide range of well-informed sources. There is greater uncertainty regarding the input factors and the valuation from these models than normal. Any continued spread of Covid-19, governmental measurements to contain the spread, the war in Ukraine, sanctions against Russia and rapid increase in inflation, creates extra uncertainty for the economy and may have impact on the valuation of financial instruments. There is a large range of possible outcomes for these input data and thus for the modelled prices. Hence, the values reflect management's best estimate, but contain greater uncertainty than in a normal quarter.
During the second quarter and the first half of the year, the investment allocation towards equities has been somewhat reduced because of normal risk management. Interest rate duration has been reduced, as higher rates give lower hedging needs against the liabilities and for the solvency position.
The market-based return for guaranteed customer portfolios in Norway in general was negative in the second quarter and the first half of the year because of weak equity and credit markets and increased interest rates. The booked return was positive after use of customer buffers. The return for guaranteed customer portfolios in Sweden was negative. The effect on the financial result was limited, as reduced value of the liabilities from higher interest rates compensated for lower asset values.
The return for the unit linked portfolios was generally negative, both in the first quarter and the first half of the year due to weak equity markets.
The tables show the fall in value for Storebrand Life Insurance and SPP's investment portfolios because of immediate changes in value 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. The stresses have been applied to the company portfolio and guaranteed customer portfolios as of 30 June 2022. The effect of each stress changes the return in each investment 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. Two stress tests have been defined. Stress test 1 is a fall in the value of shares, corporate bonds, and property in combination with lower interest rates. Stress test 2 is a somewhat smaller fall in the value of shares, corporate bonds, and property in combination with higher interest rates.
| Stresstest 1 | Stresstest 2 | |
|---|---|---|
| Interest level (parallel shiftt) | -100bp | +100bp |
| Equity | -20% | -12% |
| Property | -12% | -7% |
| Credit spread (share of Solvency II) | 50% | 30% |
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, then dynamic risk management would reduce the effect of the negative outcomes and reinforce the positive outcomes to some extent.
As a result of customer buffers, the effect of the stresses on the result will be lower than the values described in the tables. As of 30 June 2022, the customer buffers are of such a size that the effects on the result are significantly lower.
| Storebrand Livsforsikring | SPP Pension & Försäkring | |||||
|---|---|---|---|---|---|---|
| Sensitivity | NOK Million | Share of portfolio | Share of portfolio | |||
| Interest rate risk | 2,015 | 0.9% | -289 | -0.4% | ||
| Equtiy risk | -3,184 | -1.4% | -2,162 | -2.7% | ||
| Property risk | -2,946 | -1.3% | -1,343 | -1.7% | ||
| Credit risk | -895 | -0.4% | -767 | -1.0% | ||
| Total | -5,010 | -2.2% | -4,561 | -5.7% |
Stresstest 2
| Storebrand Livsforsikring | SPP Pension & Försäkring | |||||
|---|---|---|---|---|---|---|
| Sensitivity | NOK Million | Share of portfolio | NOK Million | Share of portfolio | ||
| Interest rate risk | -2,015 | -0.9% | 289 | 0.4% | ||
| Equtiy risk | -1,911 | -0.9% | -1,297 | -1.6% | ||
| Property risk | -1,718 | -0.8% | -783 | -1.0% | ||
| Credit risk | -537 | -0.2% | -460 | -0.6% | ||
| Total | -6,181 | -2.8% | -2,252 | -2.8% |
Stress test 2, which includes an increase in interest rates, makes the greatest impact for Storebrand Livsforsikring. The overall market risk is NOK 6.2 billion (NOK 8.3 billion as of 31 March 2022), which is equivalent to 2.8 (3.6) percent of the investment portfolio.
If the stress causes the return to fall below the guarantee, it will have a negative impact on the result. Similarly, if the customer buffer is not adequate the result will also be negatively impacted. 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.
For SPP it is stress test 1, which includes a fall in interest rates, that creates the greatest impact. The overall market risk is SEK 4.6 billion (SEK 4.9 billion as of 31 March 2022), which is equivalent to 5.7 (5.7) percent of the investment portfolio.
The buffer situation for the individual contracts will determine if all or portions of the fall in value will affect the financial result. If the portion of the fall in value cannot be covered by the customer buffer the result will be affected. In addition, the reduced profit sharing or loss of the indexing fees may affect the financial result.
Insurance risk is the risk of higher-than-expected payments and/or an unfavourable change in the value of an insurance liability due to actual developments deviating from what was expected when premiums or provisions were calculated. Most of the insurance risk for the group is related to life insurance. Changes in longevity is the greatest insurance risk for Storebrand because higher longevity means that the guaranteed benefits must be paid over a longer period. There are also risks related to disability and early death.
The development of the insurance reserves is dependent on future scenarios and are currently more uncertain than normal. Storebrand will continue to monitor the development of Covid-19 and effects for the economy. A prolonged situation with high unemployment could lead to higher disability levels and increased reserves. However, the current insurance reserves represent Storebrand's best estimate of the insurance liabilities.
Other insurance risk was not materially changed during the second quarter.
| Nominal Currency |
Interest | Call | Book value Book value Book value | |||
|---|---|---|---|---|---|---|
| NOK million | value | rate | date | 30.06.22 | 30.06.21 | 31.12.21 |
| Issuer | ||||||
| Perpetual subordinated loans 1) | ||||||
| Storebrand Livsforsikring AS | 1,100 NOK | Variable | 2024 | 1,100 | 1,100 | 1,100 |
| Storebrand Livsforsikring AS 3) | 900 SEK | Variable | 2026 | 870 | 876 | |
| Dated subordinated loans | ||||||
| Storebrand Livsforsikring AS 2) | 750 SEK | Variable | 2021 | 760 | ||
| Storebrand Livsforsikring AS 3,5) | 899 SEK | Variable | 2022 | 869 | 1,008 | 976 |
| Storebrand Livsforsikring AS 3) | 900 SEK | Variable | 2025 | 867 | 907 | 877 |
| Storebrand Livsforsikring AS 3) | 1,000 SEK | Variable | 2024 | 965 | 1,009 | 976 |
| Storebrand Livsforsikring AS | 500 NOK | Variable | 2025 | 500 | 499 | 499 |
| Storebrand Livsforsikring AS 4) | 650 NOK | Variable | 2027 | 652 | ||
| Storebrand Livsforsikring AS 3) | 250 EUR | Fixed | 2023 | 2,639 | 2,666 | 2,685 |
| Storebrand Livsforsikring AS 3,4) | 300 EUR | Fixed | 2031 | 2,552 | 2,980 | 2,876 |
| Total subordinated loans and hybrid capital | 11,015 | 10,929 | 10,865 |
1) Regarding perpetual subordinated loans, the cash flow has been calculated until the first call.
2) The loan was repurchased on 11.10.2021
3) The loans are subject to hedge accounting.
4) Green bonds
5) The loan was partly repurchased on 19.05.2022
The Group categorises financial instruments valued at fair value on three different levels. Criteria for the categorisation and processes associated with valuing are described in more detail in note 13 in the annual report for 2021.
The company has established valuation models and gathers information from a wide range of well-informed sources with a view to minimize any uncertainty in the valuations.
| NOK million | Fair value 30.06.22 |
Fair value 31.12.21 |
Book value 30.06.22 |
Book value 31.12.21 |
|---|---|---|---|---|
| Financial assets | ||||
| Loans to customers - corporate | 4,548 | 5,055 | 4,662 | 5,044 |
| Loans to customers - retail | 16,046 | 18,021 | 16,282 | 18,008 |
| Bonds held to maturity | 8,584 | 9,103 | 8,497 | 8,441 |
| Bonds classified as loans and receivables | 104,742 | 117,077 | 114,074 | 114,383 |
| Financial liabilities | ||||
| Subordinated loan capital | 10,989 | 11,926 | 11,015 | 10,865 |
| Level 1 | Level 2 | Level 3 | |||
|---|---|---|---|---|---|
| Quoted | Observable | Non observable |
|||
| NOK million | prices | assumptions | assumptions | 30.06.22 | 31.12.21 |
| Assets | |||||
| Equities and fund units | |||||
| - Equities | 30,785 | 161 | 333 | 31,279 | 40,611 |
| - Fund units | 200,065 | 17,232 | 217,298 | 237,445 | |
| Total equities and fund units 30.06.2022 | 30,785 | 200,226 | 17,565 | 248,576 | |
| Total equities and fund units 31.12.2021 | 40,071 | 222,998 | 14,987 | 278,056 | |
| Total loans to customers | |||||
| - Loans to customers - corporate | 7,151 | 7,151 | 7,443 | ||
| Bonds and other fixed income securities | |||||
| - Government bonds | 11,992 | 8,740 | 20,733 | 30,911 | |
| - Corporate bonds | 48,797 | 8 | 48,804 | 55,354 | |
| - Collateralised securities | 2,946 | 2,946 | 3,528 | ||
| - Bond funds | 52,043 | 13,569 | 65,613 | 68,741 | |
| Total bonds and other fixed income securities 30.06.2022 | 11,992 | 112,527 | 13,577 | 138,096 | |
| Total bonds and other fixed income securities 31.12.2021 | 16,722 | 129,141 | 12,670 | 158,533 | |
| Derivatives: | |||||
| - Interest derivatives | -846 | -846 | 2,286 | ||
| - Currency derivatives | -3,478 | -3,478 | -523 | ||
| Total derivatives 30.06.2022 | -4,324 | -4,324 | |||
| - derivatives with a positive market value | 2,785 | 2,785 | 3,760 | ||
| - derivatives with a negative market value | -7,110 | -7,110 | -1,997 | ||
| Total derivatives 31.12.2021 | 1,763 | 1,763 | |||
| Properties: | |||||
| - investment properties | 33,901 | 33,901 | 33,376 | ||
| - Owner-occupied properties | 1,693 | 1,693 | 1,659 | ||
| Total properties 30.06.2022 | 35,594 | 35,594 | |||
| Total properties 31.12.2021 | 35,035 | 35,035 |
| Book value 30.06.2022 | 333 | 17,244 | 7,152 | 8 | 13,569 | 33,901 | 1,693 |
|---|---|---|---|---|---|---|---|
| Other | 382 | 2 | |||||
| Currency translation differences | -29 | -74 | -114 | -126 | -54 | ||
| Sales/overdue/settlement | -3 | -1,521 | -313 | -195 | -621 | ||
| Supply/disposal | 379 | 273 | 857 | 738 | 51 | ||
| Net profit/loss | 26 | 3,737 | -177 | 358 | 152 | 36 | |
| Book value 01.01 | 309 | 14,678 | 7,443 | 8 | 12,663 | 33,376 | 1,659 |
| NOK million | Equities | Fund units | Loans to customers |
Corporate bonds |
Bond funds | Investment properties |
Owner occupied properties |
As of 30.06.22, Storebrand Life Insurance had NOK 8.541 million invested in Storebrand Eiendomsfond Norge KS and Ruseløkkveien 26, Oslo.
The investments are classified as "Investment in Associated Companies and joint ventures " in the Consolidated Financial Statements.
| Level 1 | Level 2 Observable |
Level 3 Non observable |
Total | Total | |
|---|---|---|---|---|---|
| NOK million | Quoted prices | assumptions | assumptions | 30.06.2022 | 31.12.2021 |
| Assets | |||||
| Equities and fund units | |||||
| - Equities | 29,364 | 144 | 333 | 29,840 | 38,851 |
| - Fund units | 74,928 | 14,159 | 89,087 | 87,834 | |
| Total equities and fund units 30.06.2022 | 29,364 | 75,072 | 14,492 | 118,927 | |
| Total equities and fund units 31.12.2021 | 38,320 | 76,055 | 12,310 | 126,685 | |
| Total loans to customers | |||||
| - Loans to customers - corporate | 125 | 125 | |||
| Bonds and other fixed income securities | |||||
| - Government bonds | 8,303 | 273 | 8,577 | 9,949 | |
| - Corporate bonds | 24,662 | 8 | 24,669 | 26,296 | |
| - Collateralised securities | 882 | 882 | 1,227 | ||
| - Bond funds | 38,182 | 1,893 | 40,075 | 43,613 | |
| Total bonds and other fixed income securities 30.06.2022 | 8,303 | 63,999 | 1,900 | 74,202 | |
| Total bonds and other fixed income securities 31.12.2021 | 9,667 | 69,975 | 1,443 | 81,086 | |
| Derivatives: | |||||
| - Interest derivatives | -404 | -404 | 1,517 | ||
| - Currency derivatives | -3,173 | -3,173 | -476 | ||
| Total derivatives 30.06.2022 | -3,577 | -3,577 | |||
| - derivatives with a positive market value | 2,446 | 2,446 | 2,678 | ||
| - derivatives with a negative market value | -6,024 | -6,024 | -1,638 | ||
| Total derivatives 31.12.2021 | 1,040 | 1,040 |
| Loans to | Corporate | ||||
|---|---|---|---|---|---|
| NOK million | Equities | Fund units | customers | bonds | Bond funds |
| Book value 01.01 | 309 | 12,001 | 133 | 8 | 1,435 |
| Net profit/loss | 26 | 2,916 | -7 | 125 | |
| Supply/disposal | 325 | 376 | |||
| Sales/overdue/settlement | -2 | -1,084 | -43 | ||
| Book value 30.06.2022 | 333 | 14,159 | 125 | 8 | 1,893 |
Sensitivity assessments of investments on level 3 are described in note 13 in the 2021 annual report. There is no significant change in sensitivity in this quarter or year to date.
The effective tax rate is influenced by the fact that the Group has operations in countries with tax rates that are different from Norway and differences from currency hedging of the Swedish subsidiary SPP. The tax rate for companies' subject to the financial tax is 25 per cent. 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).
The tax rate for companies in Sweden is 20.6 per cent, but a majority of Storebrand's business related to occupational pension is subject to a standardized return tax on the assets managed on behalf of policyholders and not company tax. The expected tax rate from Storebrand's Swedish business is therefore lower than the company tax rate."
Storebrand has hedged part of the currency risk from the investment in the Swedish subsidiaries. Gains/losses on currency derivatives are taxable/deductible, while agio/disagio on the shares in the subsidiaries falls under the exemption method. Hence, large SEK/NOK movements will affect the group tax cost.
The tax rules for the insurance industry have undergone changes in recent years. In some cases, Storebrand and the Norwegian Tax Administration have had different interpretations of the tax rules and associated transitional rules. As a result of this, uncertain tax positions arise in connection with the recognised tax expenses. Whether or not the uncertain tax positions have to be recognised in the financial statements is assessed in accordance with IAS 12 and IFRIC 23. Uncertain tax positions will only be recognised in the financial statements if the company considers it to be probable that the Norwegian Tax Administration's interpretation will be accepted in a court of law. Any paid tax related to the uncertain tax positions not recognised in the financial statements and is classified as receivables. Significant uncertain tax positions are described below.
Tax Administration's interpretation but considers it uncertain as to whether the company's interpretation will be accepted if the case is decided by a court of law. In April 2022 Storebrand received a decision from the Norwegian Tax Administration based on similar grounds as the ones outlined in the draft decision. Storebrand continues to disagree with the view of the Norwegian Tax Administration and has challenged the decision to the Norwegian Tax Appeals Committee. The uncertain tax position has therefore been recognised in the financial statements. Based on our revised best estimate, the difference between Storebrand's interpretation and the Norwegian Tax Administration's interpretation is approximately NOK 6.4 billion in an uncertain tax position. If Storebrand's interpretation is accepted, a deferred tax expense of approximately NOK 1.6 billion will be derecognised from the financial statements.
C) The outcome of the interpretation of tax rules for group contributions referred to above under (A) will have an impact when calculating the effect from the transitional rules for the new tax rules referred to under point (B). An equivalent interpretation to that described under (A) has been used as a basis in the financial statements when calculating tax input values on property shares owned by customer assets for 2016 and 2017. There is thus an uncertain tax position relating to the effect from the transitional rules described in (B). The received decision in April 2022 (described under (B)) has reduced the uncertain tax position and has led to a tax income of NOK 0.6 billion being booked in Q1 2022. This effect will depend on the interpretation and outcome of (A). If Storebrand's position is accepted under (A), Storebrand will recognise an additional tax income of approximately NOK 0.2 billion if Storebrand's position under (B) is accepted. If the Norwegian Tax Administration prevails with its argument under point (A), Storebrand will recognise a tax expense of approximately NOK 0.5 billion.
Storebrand has reviewed the uncertain tax positions as part of the reporting process. The review has not reduced the company's assessment of the probability that Storebrand's interpretation will be accepted in a court of law. The timeline for the continued process with the Norwegian Tax Appeals Committee is unclear, but if necessary, Storebrand will seek clarification from the court of law for the aforementioned uncertain tax positions.
| Storebrand Livsforsikring | Storebrand Livsforsikring | |||||
|---|---|---|---|---|---|---|
| group | AS | |||||
| NOK million | 30.06.22 | 31.12.21 | 30.06.22 | 31.12.21 | ||
| Uncalled residual liabilities limitied partnership | 4,410 | 4,870 | 4,054 | 4,469 | ||
| Uncalled residual liabilities in alternative investment funds | 10,198 | 10,093 | 8,220 | 7,843 | ||
| Total contigent liabilities | 14,609 | 14,963 | 12,274 | 12,312 |
Guarantees essentially encompass payment and contract guarantees
Unused credit facilities encompass granted and any unused credit accounts and credit cards, as well as, any unused flexible mortgage facilities.
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, see note 2 and note 44 in the 2021 annual report.
10
Storebrand Livsforsikring is an insurance company with capital requirements in accordance with Solvency II.
The calculations below are for Storebrand Livsforsikring AS when Storebrand Livsforsikring Group no longer entitled to report solvency.The requirement on consolidated level only applies to Storebrand Group.
The solvency capital requirement and minimum capital requirement are calculated in accordance with Section 46 (1) – (3) of the Solvency II Regulations using the standard method.
| 31.12.21 | ||||||
|---|---|---|---|---|---|---|
| NOK mill | Total | Group 1 unlimited |
Group 1 limited |
Group 2 | Group 3 | Total |
| Share capital | 3,540 | 3,540 | 3,540 | |||
| Share premium | 9,711 | 9,711 | 9,711 | |||
| Reconciliation reserve | 18,029 | 18,029 | 19,884 | |||
| Counting subordinated loans1) | 10,021 | 1,925 | 8,096 | 10,860 | ||
| Risk equalisation reserve | 676 | 676 | 547 | |||
| Expected dividend/group distributions | -1,000 | -1,000 | ||||
| Total solvency capital | 40,977 | 30,280 | 1,925 | 8,772 | 42,121 | |
| Total solvency capital available to cover the minimum capital requirement |
33,445 | 30,280 | 1,925 | 1,240 | 34,161 |
1) Following the increase in subordinated loans, the Tier 2 capital exceeds the limit of 50 per cent of the Solvency Capital Requirement, and the available Tier 2 capital is decreased by NOK 873 mill
| NOK mill | 30.06.22 | 31.12.21 |
|---|---|---|
| Market | 18,051 | 20,424 |
| Counterparty | 606 | 620 |
| Life | 6,898 | 7,266 |
| Health | 637 | 635 |
| Operational | 993 | 1,067 |
| Diversification | -4,928 | -5,228 |
| Loss-absorbing tax effect | -4,712 | -5,125 |
| Total solvency requirement | 17,544 | 19,659 |
| Solvency margin | 234% | 214% |
| Minimum capital requirement | 6,202 | 7,218 |
| Minimum margin | 5 | 5 |
Note 11
Storebrand conducts transactions with related parties as part of its normal business activities. These transactions take place on commercial terms. The terms for transactions with management and related parties are stipulated in notes 24 and 46 in the 2021 annual report.
Storebrand Livsforsikring has not carried out any material transactions other than normal business transactions with related parties during 2022, other than Storebrand Livsforsikring AS having acquired mortgages from the sister company Storebrand Bank ASA. The mortgages were transferred on commercial terms. Storebrand Livsforsikring transfers loans back to Storebrand Bank when mortgages are renegotiated or terminated. The total portfolio of loans bought as of 30th June 2022 is NOK 16,3 billion, net changes of NOK -1.1 billion year to date. Storebrand Livsforsikring AS pays management fees to Storebrand Bank ASA for management of the portfolios, the expence in the 2nd quarter is NOK 19,3 million, and 36,7 million year to date.
On this date, the Board and CEO have discussed and approved the annual report and annual financial statements for Storebrand Livsforsikring AS and Storebrand Livsforsikring Group for the first six months of 2022 (Report for the first six months, 2022).
The Interim report has been prepared in accordance with the requirements of IAS, 34 Interim Financial Reporting as adopted by the EU and additional Norwegian requirements pursuant to the Norwegian Securities Trading Act.
In the best judgment of the Board and CEO the financial statements and consolidated financial statements for the first six months of 2022 have been prepared in accordance with applicable accounting standards, and the information in the financial statements provides a fair and true picture of the assets, liabilities, financial standing and results as a whole of the parent company and the group as at 30 June 2022. In the best judgment of the Board and CEO the annual report provides a fair and true overview of important events during the accounting period and their effects on the financial statements and consolidated financial statements for the first six months. In the best judgment of the Board and CEO the descriptions of the most important risk and uncertainty factors the group faces in the next accounting period, as well as the descriptions of related parties' significant transactions, also provide a fair and true view
Lysaker, 13 July 2022 Board of Directors of Storebrand Livsforsikring AS
Odd Arild Grefstad
Chairman of the Board
Martin Skancke Anne Kathrine Slungård Hans Henrik Klouman
Trond Thire Mari Tårnesvik Grøtting Jan Otto Risebrobakken
Lars Aa Løddesøl Chief Executive Officer
26 October 2022 Results Q3 2022 8 February 2023 Results Q4 2022
Lars Aa. Løddesøl Group CFO [email protected] +47 934 80 151 Kjetil R. Krøkje Group Head of Finance, Strategy and M&A [email protected] +47 934 12 155 Daniel Sundahl Head of Investor Relations and Rating [email protected] +47 913 61 899
Storebrand Livsforsikring AS Professor Kohtsvei 9, P.O. Box 500, N-1327 Lysaker, Norway Phone +47 22 31 50 50
www.storebrand.com/ir
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