Investing in a sustainable future STOREBRAND ANNUAL REPORT 2018 Facts and figures 2018 Group profit NOK million Return on equity 3 158 13.7%1) Solvency margin NOK billion invested in fossil free funds 173% 68 Assets under Management, NOK billion Assets under Management screened for sustainability criteria 707 100% 1) After tax, adjusted for amortisation of intangible assets 3 LETTER FROM THE GROUP CHIEF EXECUTIVE OFFICER Investing in a sustainable future Odd Arild Grefstad Group Chief Executive Officer 4 STOREBRAND ANNUAL REPORT 2018 2018 was a good year. Storebrand delivered great results and took a step along Investing in a the road to becoming a world-class savings group. We completed a successful inte- gration of SKAGEN and Silver into the Group, explored and refined our sustainable sustainable future investments, and entered into close cooperation with the fintech company Dreams. Our financial solidity was strengthened and there was an increase in the dividends distributed to shareholders. At the same time, the financial markets experienced tur- bulence at the end of the year, in a somewhat uncertain macroeconomic situation. In 2018, Storebrand presented an ambition to build a world- several of our digital platforms in 2019. We want to be the class savings group, supported by insurance. This ambition preferred customer choice when the “Individual Pension builds on our position in the corporate market, as the Account” market opens in a year or two. The “Individual leading supplier of Norwegian occupational pensions and Pension Account” is a new financial product spearheaded an offensive challenger in the Swedish market. Our goal by the authorities where Norwegians can combine all of is to create world-class customer experiences in our core their defined contribution pensions from both current and areas of savings and pensions. Our driving force is to give former employers. our customers a future to look forward to by helping them secure their current and future finances. People are living Storebrand ended 2018 with record strong capital adequacy longer and can expect smaller government pensions in the and liquidity. The solvency margin at year end was 173 per future. For our customers, it will therefore be necessary to cent. Both the operating and financial results improved save more in the years to come. compared with the previous year. This increase is driven by strong growth in savings and insurance combined with strong To achieve the goals we have set, we must understand cost discipline in the Group. Overall, this gives the Board an the needs of our customers and ensure good interaction opportunity to increase the dividend to NOK 3 per share. between the digital touchpoints and human interactions. As an organisation, we need to be even more agile, keep The acquisitions of SKAGEN and Silver strengthen our adapting and developing new solutions, and have a relent- savings strategy. I’m impressed with the work done by the less focus on our customers. To support an agile way of teams when both SKAGEN and the Silver portfolio were working, we created several cross-functional teams with integrated into the Storebrand family. SKAGEN comple- substantial freedom of action. These teams define, prioritise ments and broadens Storebrand’s investment offerings and develop digital solutions and services. In 2018, we also and customer base. This work will continue in 2019, includ- entered into several fintech collaborations, including as part ing a stronger focus on international distribution of fund owner and partner of the savings app Dreams. Through an solutions. We benefit greatly from SKAGEN’s network and understanding of behavioural psychology, Dreams makes presence in European markets. digital savings easy and fun, and they were awarded as one of the 100 top fin-tech companies in the world in 2018. Storebrand´s driving force is to create a future we and our customers can look forward to. A great part of our work In Norway, our savings and insurance business delivered is therefore about working to achieve the UN Sustainable strong operational results. In Sweden, our subsidiary, SPP, Development Goals. Sustainable and socially responsible can also look back on a very good year, with strong premium investments lie at the core of our savings strategy. Among growth and a positive net flow of funds to the Company. other things, we are supporting the UN Global Compact, the In 2019, SPP aims to deliver double-digit growth and rein- world’s largest corporate social responsibility initiative. As force its digital lead. In Norway, we are busy planning and Norway’s largest private asset manager, our most important building on our savings offerings , which will be the main influence on the UN Sustainable Development Goals is tied to pillar of our growth strategy going forward. We are invest- how we invest the more than NOK 700 billion that we manage. ing over NOK 400 million in the revitalisation and renewal of 5 STOREBRAND ANNUAL REPORT 2018 The UN Climate Panel’s report in 2018 gave us an unpleas- ant reminder of the major climate challenges we are facing, which influence the choices we make as investors in the short, medium and long term. The financial industry is an important contributor in the efforts to limit global warming, and we have a clear strategy to invest through our own, targeted funds in companies that provide climate solutions. However, most importantly, we have strict environmental, climate and sustainability criteria for all our investments. The entire Storebrand portfolio is regularly screened according to our sustainability criteria. By the end of 2018, 171 compa- nies were excluded from the Storebrand investment universe. During the past year, we have had an owner dialogue with 314 companies. We have the industry’s strictest policy for the exclusion of coal, and we are now tightening our policy further with the goal of excluding any company that has more than 5 per cent of their earnings from coal 1) by 2026. In 2018, we also launched three custom investment portfo- lios, that we called “Wave”. Wave will only invest in companies that contribute to solving the greatest challenges of our time in the areas of renewable energy, equality and cities of the future. Going forward, we will continue to seek new invest- ment opportunities that contribute to sustainable solutions. At the same time, we will exercise active ownership through voting and dialogue with the companies in which we invest. Our aim is to influence them to reduce their CO2 emissions from their own activities, among other things. Sustainabil- ity is not just about corporate social responsibility, it’s also good business. Money placed with us, either in savings and pension products, insurance or the bank, should be working for our customers, and it should also be working for the planet and society. It should be Good Money. “Our driving force is to give our customers a future to look forward to by helping them secure their current and future finances.” Odd Arild Grefstad 1) We have already excluded any company that has more than 25 per cent of its earnings from coal.. 6 STOREBRAND ANNUAL REPORT 2018 Important events in 2018 Q1: January to March Q2: April to June • Launch of Wave: portfolios in which the customer • Storebrand acquired the remaining 9 per cent of invests in companies that are working to solve the the shares in SKAGEN AS and now owns the company greatest challenges in gender equality (Sustainability wholly. Goal 5), climate (Sustainability Goal 13) and Sustain- able Cities (Sustainability Goal 11). • Storebrand won the tender competition after Silver was placed under public administration in 2017. 16,000 customers with 24,500 contracts and NOK10 billion in assets under management were transferred to Storebrand. 8 Q3: July to September Q4: October to • Storebrand became a co-owner of the Swedish fintech company Dreams and launched the savings December application Dreams on the Norwegian market. • Zero coal by 2026: Storebrand introduced changes to its investment policy for coal and will thus not be invested • SKAGEN AS launched Norway’s largest fund platform in the coal industry by 2026. for Share Savings Accounts (ASK), approximately 600 funds in a single platform. • “Handshake of the Year” 2018: The food bank Matsen- tralen received the Storebrand Sustainability Prize • SPP launched the pension robot Gajda, a digital during the “Our Planet” conference. tool that guides the employees through the various pension elements and helps them make the right deci- • Google Pay: Storebrand launched Google Pay for easy, sion based on their life situation. fast and secure mobile payments. • The marketing campaign featuring the pink pension piggy bank was launched . Encouraging Norwegians to check their pension figures to see how much they have in their piggy bank was well received in the market. • SPP launched Sweden’s first fully digital occupa- tional pension offering. A new IT platform and new digital tools allow companies to obtain a need-adapted pension plan without any manual work. 9 STOREBRAND ANNUAL REPORT 2018 Important notice: This document may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may be beyond the Storebrand Group’s control. As a result, the Storebrand Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in these forward-looking statements. Important factors that may cause such a difference for the Storebrand Group include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) market related risks such as changes in equity markets, interest rates and exchange rates, and the performance of financial markets generally.