Annual Report 2002 We enable our customers to make the most of their financial position, life situation and health. Content: Key Figures Group page 2 Accounts: Main Events of 2001 page 3 Storebrand ASA page 50 Storebrand at a Glance page 4 Storebrand Group page 52 In the words of the CEO page 8 Cash Flow Analysis page 54 Report of the Board of Directors page 12 Storebrand Livsforsikring Group page 56 Notes to the Accounts - Contents page 57 Storebrand Life Insurance page 20 Audit Report for 2001 page 58 Storebrand Investments page 26 Notes to the Accounts of Storebrand’s Banking Activities page 30 Storebrand ASA page 61 Non-Life Insurance page 36 Notes to the Accounts of the Storebrand Group page 70 Corporate Social Responsibility page 40 N GAAP and US GAAP page 83 Corporate Governance page 42 International Accounting Standard page 84 Shareholder Matters page 46 Storebrand Group Companies page 85 Terms and Expressions page 86 Storebrand´s Executive Management page 88 Addresses page 89 Storebrand Annual Report 2002 page 1 Storebrand made pension and insurance payments of over NOK 5 billion in 2002. This is one of the figures that underline the importance of the group's activities, not just for private individuals and companies but for society as a whole. We help ensure that our customers enjoy a more secure future by meeting their needs for financial predictability and independence. page 2 Key Figures Group Storebrand Annual Report 2002 Key Figures Group NOK million 2002 2001 2000 1999 1998 Operating profit -2 713 -1 837 4 475 5 347 1 888 Group profit -1 701 -1 430 523 1166 603 Total assets 148 551 152 214 156 744 149 647 126 531 Equity capital 8 536 9 617 10 545 10 113 6 421 No. of employees (full time equivalents) 1 337 1 473 1 478 1 636 4 001 Capital ratio (%) 16.0% 12.9% 12.7% 14.0% 13.4% Key figures per share Average number of ordinary shares (000's) 277 715 277 554 277 464 277 209 277 079 Earnings per ordinary share*) -3.73 -4.15 1.67 12.23 1.98 Dividend per ordinary share excl. extraordinary items**) -3.73 -4.15 1.67 3.54 1.98 Dividend per ordinary share (NOK) 1.10 1.00 *) Calculation is based on profit for the year adjusted for the year's legally required post-tax allocations to security reserves etc. for non-life insurance. **) Calculation base for 1999 has been adjusted for capital gain on sale of non-life insurance after tax and extraordinary items. OPERATING PROFIT (NOK million) GROUP PROFIT (NOK million) 5 347 1 166 4 475 603 523 -1 430 -1 701 1 888 -2 713 -1 837 98 99 00 01 02 98 99 00 01 02 TOTAL ASSETS (NOK million) EQUITY (NOK million) 10 545 10 113 9 617 156 744 152 214 149 647 148 551 8 536 126 531 6 421 98 99 00 01 02 98 99 00 01 02 Main Events of 2002 page 3 Main Events of 2002 >> January In parallell with new falls in the equity markets, the Storebrand Bank approves a reorganisation involving group's life insurance company makes major changes to its a reduction in headcount. Finansbanken decides to investment portfolio in order to protect its buffer capital. concentrate its Norwegian activities at its head office This also ensures a very competitive investment return. in Oslo. >> September >> March In response to the results of the major pensions and Storebrand ASA issues an exchangeable bond. The issue savings survey carried out earlier in the year, Storebrand is heavily oversubscribed. The proceeds of the issue are arranges 24 customer seminars around the country used to strengthen Storebrand ASA's liquidity and repay with a particular focus on pension arrangements for outstanding borrowings. employees. >> April >> October Storebrand and MMI carry out a nationwide savings and The Labour Court announces its ruling. The municipali- insurance market research survey. 3 500 Norwegians ties involved are given until 1 July 2003 to bring their reply to questions on their personal finances. pension arrangements in line with the Court's interpre- tation of the main collective employment tariff. In order The most extensive court hearing of a labour market to ensure a competitive marketplace, Storebrand applies dispute ever seen in Norway commences. Proceedings for permission to offer the same product as KLP. are brought against 11 municipalities because they have chosen to transfer their pension schemes from KLP to >> November private companies. Standard & Poor's publishes a ranking of all the mutual funds sold in Norway. Storebrand and Delphi achieve the >> May highest average score of all companies. The Boards of Directors of DnB and Storebrand announce that they have entered into an agreement The Board of Directors of Storebrand ASA approves under which the two companies intend to merge. the issue of a NOK 1.5 billion bond to refinance the company's existing bond that matures in June 2003. >> June Following the decision by DnB on 29 June to cancel the The decision is taken to merge Storebrand Bank and integration agreement, Storebrand’s Board of Directors Finansbanken. The name of the merged bank is to be votes unanimously on 30 June to abandon the merger Storebrand Bank ASA. negotiations. >> December >> July Storebrand establishes an Executive Committee as its Deloitte & Touche is appointed by Storebrand to carry main management body, responsible for the group's out an independent review of the discrepancies that strategic positioning and overall profitability. The owner- DnB claimed to have identified in Storebrand’s accounts. ship interest in If (22.47%) was sold from Storebrand The review concludes that Storebrand’s accounts are in Skadeforsikring AS to Storebrand ASA, in a move to accordance with generally accepted accounting principles. make Storebrand Non-Life a pure run-off company. page 4 Storebrand at a Glance Storebrand Annual Report 2002 Activities Market position Storebrand Group Storebrand is a leading player in the markets Storebrand seeks to create value through for savings and life insurance. We have a strong customer focus, highly motivated strong position in life, pensions and health employees and profitable operations. The insurance as well as in banking services and company's activities combine environmental, asset management. Storebrand has an owner- social and financial targets. Storebrand is an ship interest in non-life insurance through its knowledge-based company, and is committed shareholding in If Skadeförsäkring. to the personal development of its employees through targeted training and other meas- ures. Through satisfied customers and skilled Employees Group 100% employees, Storebrand will provide a satisfac- tory return on the capital employed. Storebrand Storebrand Life Insurance is a leading pen- Storebrand maintained its market position Life Insurance sions and life insurance company, with a 29% in most of its areas of activity in 2002. share of the Norwegian market measured in In addition the company strengthened its terms of customers' funds under manage- position in new areas, including the market ment. The company’s main areas of focus are for public sector pensions and the health pensions, life insurance and health insurance insurance market. products for private individuals, corporate cus- tomers, Norwegian municipalities and inde- pendent public sector entities. Employees Life Insurance 43.9% Storebrand Storebrand Investments manages assets Storebrand increased its market share for Investments totalling NOK 140 billion for pension funds, mutual funds in 2002. Its share of the equity private and public sector institutions, private funds market increased by 1 percentage individuals and the Storebrand group compa- point. Gross inflows from new and existing nies. Storebrand offers discretionary asset institutional customers amounted to almost management services, a wide range of NOK 4 billion, despite a weak market for new Norwegian and international mutual funds investment. 68% of the discretionary port- and investment products with a particular folios outperformed the relevant benchmark focus on socially responsible investment (SRI) indices, while 33 of Storebrand’s 57 mutual for both Norwegian and international cus- funds produced a return before management Employees Investments 9.9% tomers. fees better than their benchmark return. Storebrand Bank Storebrand has until now carried out its bank- It was decided in November 2002 that the ing activities through two separate banks, two banks should be merged. By bringing Storebrand Bank and Finansbanken. together its banking activities into a single Storebrand Bank has been responsible since unit Storebrand will create a stronger and 2000 for the Storebrand group's distribution, more efficient banking operation, with total customer service and marketing of financial assets of approximately NOK 29 billion and products and services to the retail market. some 75 000 customers. Creating a new bank Finansbanken is a specialist bank for high net and ensuring closer collaboration with other worth individuals and selected segments of parts of the Storebrand group will give Employees Bank 35.6% the corporate market. Storebrand a more powerful presence in the Norwegian banking market. Storebrand at a Glance page 5 Key figures (NOK) Ambitions Number of employees:*) 1 361 We are committed to being seen as dependable, Life insurance policyholders' funds 102.5 billion forward-looking, easy to work with and a creator of Other funds under management 37.2 billion new opportunities. These core values form the basis Total assets of the group's banking activities 28.5 billion for Storebrand to enable customers to make the *) Incl. subsidiaries and 36 employees in Storebrand ASA most of their finances, life situation and health. Number of employees 641 Storebrand Life Insurance intends to retain and strengthen Funds under management (including unit linked products) 102.5 billion its position as the market leader for sales of pensions and Group pension schemes2) 7 084 life insurance products to the Norwegian corporate and Employees of companies, public sector entities and other organisations 202 522 retail market.