Highlights of 2015
The year was characterized by the robust growth of Valitor’s business internationally. Revenue generated outside Iceland now represents more than 50% of the company’s total revenue, which grew 33% from the previous year. At the same time the company reached a number of milestones in strengthening its infrastructure. The company’s more robust structure came into play when the Valitor acquiring platform was used in major international projects such as Comic Relief in the United Kingdom and one of the biggest retail days of the year, Black Friday. These tasks involved a huge volume of transactions requiring highest level of real time processing.
A new business model for the Icelandic market was implemented, bringing fundamental changes to a system which has largely remained unchanged since card transactions were first introduced in Iceland. One aspect of this was to fulfil obligations to the competition authorities in compliance with an agreement made in December 2014. Valitor performed strongly in Iceland during the year.
Valitor performed strongly in Iceland during the year.
One of the major projects in the field of issuing services was the development of a new multi-currency wallet for Caxton FX in cooperation with MasterCard. This large and complex project for the UK market clearly demonstrated the company’s unique qualities and the competence of its employees in product development and international cooperation.
During the year Valitor continued to implement its strategy of expanding in the key markets of the United Kingdom and the Nordic region, particularly in e-commerce.
During the year Valitor continued to implement its strategy of expanding in the key markets of the United Kingdom and the Nordic region, particularly in e-commerce.
At the end of 2014 Iteron Holding DK, a subsidiary of Iteron Holding Ltd, acquired the Danish company AltaPay A/S. Iteron Holding Ltd. is a subsidiary of Valitor and the acquisition signalled an important milestone for Valitor, which until now had relied solely on internal growth. AltaPay has developed an advanced payment system for online transactions that supports many prominent merchant websites in Europe. The integration of AltaPay and Valitor went smoothly in 2015. For example, AltaPay took over Valitor’s payment terminal business in Denmark and this change is expected to lead to an increase in business. AltaPay has offices in Copenhagen and London and employs 30 people. Iteron Holding Ltd. founded the company Markadis Ltd. in the United Kingdom in 2014. Markadis offers merchant acquiring services, both for traditional over the counter payments and e-commerce. In September the company announced some exciting new products under the name Mii-Promo / Mii-Town. It offers a unique service in a highly competitive market and includes a loyalty scheme and data analysis to help merchants expand their business.
Collaboration with Valitor’s main international partners continued to grow and prosper during the year. Particularly exciting were the partnerships with the US based company Stripe and the Swedish company Klarna. Both companies are global leaders in e-commerce in the fintech sector. Valitor participated in the Comic Relief, Red Nose Day charity event in the United Kingdom, acquiring web donations to support the initiative in cooperation with Stripe. Moreover, Valitor was one of the first acquirers in Europe to offer ApplePay.
Collaboration with Valitor’s main international partners continued to grow and prosper during the year. Particularly exciting were the partnerships with the US based company Stripe and the Swedish company Klarna.
Tasks ahead and opportunities in the future
Valitor’s core competences are its ability to develop and operate software solutions in the field of payment services and its capacity to provide outstanding service. Valitor has developed a valuable knowledge base, making the company highly competitive by international standards. The company sees exciting opportunities to further expand in its key overseas markets. Valitor aims to be one of the Europe's top 30 acquirers by 2017. According to the company’s budget, revenue generated overseas will then represent around 70% of the group’s total revenue. Valitor’s 2016 budget projects that the company will achieve sustained and robust growth internationally. As Valitor strives to expand its business it will also target increased scalability and operating efficiency, while at the same time develop unique products.
Stefnir is Iceland’s largest fund management company with assets of approximately ISK 400 billion under active management. The company is wholly owned by Arion Bank and it is based at the Bank’s headquarters. The assets managed by the company are owned by a diverse group of investors, from private individuals to Iceland's largest institutional investors. The fund members’ assets are invested in mutual funds, investment funds or institutional investor funds, and Stefnir has also entered agreements with a number of partnerships limited by shares. Stefnir had 23 employees at the end of 2015.
Assets under Management decreased slightly from the previous year, primarily owing to changes to Stefnir's largest institutional investor fund, ABMIIF. However, balanced funds and domestic equity funds grew substantially during the year. Assets under Management are well distributed between asset classes and the company’s revenue structure has improved from year to year after this was made a priority by the company's board.
Assets under Management are well distributed between asset classes and the company’s revenue structure has improved from year to year.
The employees and board of directors have focused on defining the company’s core competences and focuses over the next few years. The company has a clear strategy and the board has set key performance indicators for the company which are measured on a regular basis. The board of directors of Stefnir is committed to good corporate governance and endeavours to promote responsible behaviour and corporate culture within Stefnir for the benefit of all the company’s stakeholders. In 2015 the Center for Corporate Governance at the University of Iceland recognized Stefnir for the fourth time as a company which had achieved excellence in corporate governance. Stefnir was the first company to be recognized in this way. The company is constantly working on maintaining and developing corporate governance and re-attaining this recognition annually is part of this effort. The company now publishes a corporate governance statement on its website once a year, describing its activities and its focuses in the near term. Transparency is paramount and this is reflected by the keen focus on investor relations on the company's website. This disclosure of information is far more extensive than legally required.
2015 the Center for Corporate Governance at the University of Iceland recognized Stefnir for the fourth time as a company which had achieved excellence in corporate governance.
For the fourth year in a row Stefnir was recognized by Creditinfo as one of the outstanding companies of 2015. Stefnir is proud to be considered one of the companies contributing to the development of the Icelandic business sector.
Stefnir has pioneered the development of new products for its clients. The changeable investment environment requires the company’s experts to be ready to respond to investors’ shifting focuses by offering new investment options or when managing funds.
Stefnir has pioneered the development of new products for its clients.
Balanced funds with a long and proven track record
Balanced funds have long been an important part of the company’s product offering and Iceland's largest balanced fund, Stefnir - Balanced Fund, is celebrating its 20th year of operation in 2016. The fund is a popular investment option for regular savings and it has more than 4,000 unit holders. The fund yielded good returns last year, more than 30%, and it grew by 43% during the year.
The main focus in 2015 was on Icelandic equities which generated solid returns and Stefnir's Icelandic equities funds performed strongly. Stefnir - Icelandic Growth Fund generated a nominal return of more than 45% last year, outperforming the selected share index of Nasdaq Iceland. The unique position which Stefnir has attained as manager of Icelandic equities has led the company to establish a policy on proxy voting at shareholders’ meetings and Stefnir now states on its website how it casts proxy votes on behalf of unit holders. This policy and transparency on proxy voting are consistent with the company’s objective of providing detailed information to stakeholders, for example via the company’s website, on how it manages its funds and of setting an example in good corporate governance in Iceland.
Stefnir - Icelandic Growth Fund generated a nominal return of more than 45% last year, outperforming the selected share index of Nasdaq Iceland.
Stefnir's fixed income funds are a fundamental component of many asset portfolios of individual and institutional investors. It is interesting to see how Stefnir - Liquidity Fund, which primarily contains deposits of financial institutions, has grown and at the same time how the investor group has diversified.
Stefnir's strength as a manager of international equities funds is interesting for several reasons. The company employs an experienced team of experts to monitor economic developments and listed international companies and their approach to fund management has long attracted attention. Most international equities funds managed by Stefnir are rated by the international ratings agencies Morningstar and Lipper. The funds have been assigned good ratings by these companies. At the beginning of the year three of Stefnir’s funds had 3 or 4 star ratings from Morningstar and the second highest rating from Lipper.
At the beginning of the year three of Stefnir’s funds had 3 or 4 star ratings from Morningstar and the second highest rating from Lipper.
Stefnir has been a leader in private equity investments and alternative investments in Iceland for many years. There is an obvious appetite for a diverse range of investment options and Stefnir has met this demand with a variety of products suited to institutional investors' portfolios. Stefnir operates and manages both Icelandic and international private equity funds and the major owners of the funds are pension funds, insurance companies and other financial institutions.
OKKAR Life Insurance is the oldest life insurance company in Iceland. The company was founded in 1966 by Icelandic investors and a British insurance company under the name Althjoda liftryggingafelagid hf. The company's main role is to offer its customers financial protection in the event of illness, disability or death, while protecting the interests of the company’s owners. OKKAR had 16 employees at the end of 2015.
From the very beginning OKKAR has been a pioneer in the development of personal insurance in Iceland. OKKAR has been at the forefront on the Icelandic market in health insurance, children’s insurance, disability insurance and a range of group insurance policies. OKKAR is independent from other insurance companies. OKKAR has sales and distribution partnerships with Arion Bank and Tekjuvernd ehf, which also sells pension products on behalf of Arion Bank.
OKKAR is independent from other insurance companies. OKKAR has sales and distribution partnerships with Arion Bank and Tekjuvernd ehf, which also sells pension products on behalf of Arion Bank.
The company enjoyed a positive 2015. Earnings from insurance activities were strong, return on equity was 28% and the combined ratio was 91.5%. Financial income was 29.4% of earned premiums. The company achieved its targets on sales of new insurance policies during the year. Sales of a new pension product, “OKKAR séreign” which was launched in the autumn of 2012 with Arion Bank Asset Management, continued to be excellent and sales of the company’s other products also increased. The ratio of cancelled policies continued to decline, resulting in a steep increase in the total number of policies.
The company enjoyed a positive 2015. Earnings from insurance activities were strong, return on equity was 28% and the combined ratio was 91.5%. Financial income was 29.4% of earned premiums.
In 2015 ownership of Tekjuvernd ehf. was transferred from Arion Bank to OKKAR and the companies subsequently moved into new premises in Reykjavík. The new premises enable the companies to better develop their businesses in order to be able to offer their customers first rate service.
A key task during the year was the development and upgrading of the company’s software systems. A new insurance system and a new file system were introduced in 2015. The implementation is expected to have been formally completed in the spring of 2016.
OKKAR had a fruitful partnership with the Icelandic Cancer Society in 2015. The company is sponsoring a campaign into screening for bowel cancer in Iceland and a percentage of the proceeds from insurance policies sold in 2015 was donated to the Icelandic Cancer Society.
In 2015 the company continued to offer life insurance policies to Arion Bank customers. Sales continued to grow during the year which is encouraging for the future.
Tasks ahead
Arion Bank and OKKAR will continue to expand their range of services to customers and this partnership will remain a focal point over the coming year. A great deal of work has been invested in this project and the idea is that financial advisors from Arion Bank will analyze which insurance products are most needed by the Bank’s customers when they undergo a credit appraisal. The company also intends to digitalize the application process.
Outlook
The outlook for 2016 is bright. The company expects a moderate increase in sales this year, both in terms of the number of policies sold and paid premiums. The long-term prospects are also good, not least as a result of our successful partnership with Arion Bank.