Storebrand Asa · OSL:STB
Storebrand Asa — Q4 2012 Earnings Presentation
33 slides from Storebrand Asa's earnings presentation, Feb 13, 2013
Slide 1: Storebrand Q4 2012
Storebrand Q4 2012 13 February 2013 Odd Arild Grefstad – CEO Lars Aa. Løddesøl – CFO 1
Slide 2: Highlights 2012
Highlights 2012 RESULT Group result of NOK 1 960 mill in 2012, 489 mill in Q4 Administration results weakened by restructuring charges Board proposes no dividend for 2012 OPERATIONS Strong absolute and relative returns Provisions for future longevity increased to 4.3 bn in 2012 Proposed
Slide 3: Storebrand Group
Storebrand Group Q4 Full year NOK mill. 2012 2011 2012 2011 Storebrand Life Insurance 132 139 652 481 SPP 157 -14 803 291 Asset management 100 90 144 293 Bank 66 51 238 213 Insurance 116 77 402 281 Storebrand ASA / other -82 -75 -279 -278 Group Profit 489 268 1 960 1 279 Amortisation and write-downs
Slide 4: Storebrand Life Insurance
Storebrand Life Insurance 30 mill in cost related to discontinued operations and Q4 Full year changes in external NOK mill. 2012 2011 2012 2011 distribution agreements in Q4 Administration result -3 21 6 101 Risk result impacted by disability reserve Risk result 7 36 131 117 strengthening Financ
Slide 5: Storebrand Life Insurance - increased provisions for longevity
Storebrand Life Insurance - increased provisions for longevity Statistic Norway expected development in mortality (middle alternative) including a 10% security margin, gives ~7% reserve strengthening (~10 bn) for Storebrand 4.3 bn already reserved Norwegian FSA expected to publish new mortalit
Slide 6: SPP
SPP Q4 administration result Q4 Full year includes move to new premises and customer NOK mill. 2012 2011 2012 2011 activities Administration result 8 5 98 99 Risk result Contraction in credit 30 130 149 289 spreads strengthens Financial result 90 -182 395 -226 financial result Other 29 33 161 12
Slide 7: Asset Management
Asset Management Customer de-risking Q4 Full year continued to reduce income NOK mill. 2012 2011 2012 2011 and margins in 2012 Operating revenue 165 163 671 684 Value creation above Operating cost -143 -122 -590 -481 benchmark of 2.6 bn in 2012 Operational result 22 41 81 203 Net performance 75
Slide 8: Bank
Bank Q4 Full year Net interest rate margin NOK mill. 2012 2011 2012 2011 1.29% in Q4, 1.25% in 2012 Net interest income 133 104 490 443 Net fee and commission income 17 18 71 73 NOK 5 mill charge from Other operating discontinued business 8 7 55 32 income Total income 158 129 616 548 Low risk
Slide 9: Insurance
Insurance Q4 Full year 9% premium growth in NOK mill. 2012 2011 2012 2011 2012, 16% in Q4 Premiums earned, net 526 457 1 973 1 807 Improved cost ratio to 18% Claims incurred, net -380 -327 -1 333 -1 314 in Q4 Operating cost excl -95 -84 -375 -332 amortization Claims ratio 72%, good Insurance r
Slide 10: Storebrand Group – operational reporting
Storebrand Group – operational reporting Q4 Full year NOK mill. 2012 2011 2012 2011 Fee and administration income 1 034 973 4 152 3 952 Operating cost -796 -732 -2 958 -2 800 Fee and administration result 237 241 1 194 1 152 Risk and insurance 154 243 682 686 Holding company and company portfolios -
Slide 11: Tax
Tax New tax law 1. January 2012 Gains and losses from equity investments within EEA to be treated as other asset classes (taxable income) NOK 550 million in tax charge in 2012, whereof NOK 10 million in payable tax – 22% calculated tax for 2012, NOK 327 mill – Write-down of allowances (non rec
Slide 12: Key figures
Key figures Result development Earnings per share1 Net profit sharing and loan losses MNOK 1.38 Result before profit sharing and loan losses Provisions for cost program 667 458 0.87 211 129 489 268 346 0.52 176 0.38 404 455 420 511 0.20 327 -136 -75 -14 -181 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q
Slide 13: Buffer capital strengthened
Buffer capital strengthened 31.12.11 31.12.12 Change 2012 Market value adjustment reserves -103 1 027 1 130 Excess value of bonds at amortised cost 1 757 5 225 3 468 Additional statutory reserves 5 442 5 742 300 Provisions for new mortality tables 1 064 4 292 3 228 Total Storebrand Life Insurance 8
Slide 14: Clear target for optimising operations
Clear target for optimising operations Capital optimization Risk reduction Clear target: Managing business without raising new equity capital Product optimization Cost reduction 14
Slide 15: Risk reduction in guaranteed portfolios
Clear Risk reduction in guaranteed portfolios target Risk reduction Storebrand Life Insurance Equity allocation Norwegian swap 10y 14% 3,80 12% 3,70 10% 3,60 3,50 8% 3,40 13% 3,30 6% 11% 10% 3,20 4% 3,10 6% 2% 3,00 0% 31.03.2012 30.06.2012 30.09.2012 31.12.2012 SPP Equity allocation Swedish swap 10y
Slide 16: Cost reduction: program executed on plan
Clear Cost reduction: target - program executed on plan Cost reduction Number of initiatives Accumulated run-rate, annual effects distributed by progress 500 Completed 450 90 % 400 80 % 350 70 % 300 60 % 250 50 % 200 40 % 150 30 % 100 Goal 50 Reached 20 % 0 10 % 0% As of Q4-12 As of Q3-12 16
Slide 17: Reduction of workforce on schedule
Clear Reduction of workforce on schedule target Cost reduction 2070 2060 2050 2040 2030 2020 Δ 59 2010 2056 2055 2046 2000 2037 2028 1990 1980 1996 1970 1960 aug.12 sep.12 okt.12 nov.12 des.12 jan.13 Norway and Sweden (FTE) 17
Slide 18: DB public sector discontinued
Clear DB public sector discontinued target Product optimalization Public pension DB reserves 21 11 of 25 municipals transferred (effect from 2013) 15 NOK 6 bn of 21 bn off balance as of January 2013 ? Storebrand still offers closed 0 pension fund and DC solutions to public sector 2012 2013 201
Slide 19: Key takeaways from proposals in NOU 2013:3
Clear Key takeaways from proposals in target NOU 2013:3 Product optimalization Options for corporate customers All new premiums to be earned in products well adapted to low DC interest rates, longevity and solvency II Pension certificate Paid-up policies are proposed moved (non-sponsored) into p
Slide 20: Conversion to products without guarantees
Clear Conversion to products without target guarantees Capital optimalization Storebrand Life Insurance MNOK Net transfer out of individual portfolio, accumulated 2 000 1 500 Active information and dialogue with customers regarding products with 1 000 guaranteed annuities: 1 553 1 330 500 752 1 08
Slide 21: Financial targets Storebrand
Financial targets Storebrand RoE* >10 % Annual dividend payout ratio* >35 % Solvency (I) Life Group >150 % Rating Life Insurance A level * Profit after tax before amortisation 21
Slide 22: New tax regulation and reduced expected profit sharing
New tax regulation and reduced expected profit sharing 15% • RoE target CMD 2011 of 15 % – New tax regulations >10% − Reduced profit sharing Decreased interest rates Derisking of portfolios Longevity strenthening + Cost program + Price increases Adjusted RoE target of >10 % RoE target New ta
Slide 23: Adjusted dividend policy adapted to new regulatory framework
Adjusted dividend policy adapted to new regulatory framework • Dividend payments will normally represent over 35 percent of full-year profit after tax, but before amortization costs • Dividends shall be adjusted to ensure an optimal capital structure for the group • Board proposes no dividend for 20
Slide 24: Summary
Summary Competitive customer return - strengthened customer buffers, 4.3 bn reserved for new mortality tables Proposed transition rules for Norwegian DB Strengthening operations through: Executing cost program Exit of public pension DB market Conversion of guaranteed products Board pro
Slide 25: Storebrand Investor and analyst update
Storebrand Investor and analyst update 15 March 2013 at the Langham Hotel in London Presentations held by Storebrand senior management will centre on how Storebrand works to improve operations and strengthen the market position in a period of regulatory changes Register on www.storebrand.no/ir
Slide 26: @d storebrand
@d storebrand @9 storebrand
Slide 27: Appendix
Appendix: 27 @9 storebrand
Slide 28: Storebrand – the worlds most sustainable insurance company
Storebrand – the worlds most sustainable insurance company 2012 2013 1 Novo Nordisk A/s 1 Umicore SA 2 Natura Cosmeticos S.a. 2 Natura Cosmeticos SA 3 Statoil ASA 3 Statoil ASA 4 Novozymes A/s 4 Neste Oil OYJ 5 ASML Holding Nv 5 Novo Nordisk A/S 6 BG Group Plc "The most 7 Westpac Banking Corporation
Slide 29: Cost reduction: several one offs in 2012
Cost reduction: - several one offs in 2012 2011 2012 Target cost base cost base1 SBL 1 072 1 134 SPP 902 918 Asset Management 481 538 Bank 345 369 Insurance 374 399 ASA 165 180 Adm cost allocated to product with profit sharing 185 218 Costs from subsidiaries 117 117 Total cost2 3 641 3 873 33500 500
Slide 30: Storebrand Life Insurance
Storebrand Life Insurance Defined Group contri- Individual defined bution and and paid-up Company Result Result Full year NOK mill. benefit * unit linked* policies** BenCo portfolio Q4 2012 Q4 2011 2012 Administration result -26 23 -8 8 0 -3 21 6 Risk result 67 -57 -7 5 0 7 36 131 Financial result1
Slide 31: Storebrand Life Insurance asset allocation
Storebrand Life Insurance asset allocation 50% 45% 40% 35% Allocation (%) 30% 25% 20% 15% 10% 5% 0% Bonds at Equities Bonds Money market Real estate Alpha Other amortized cost 31.03.2012 13% 16% 7% 43% 15% 2% 5% 30.06.2012 11% 18% 7% 43% 15% 2% 5% 30.09.2012 10% 18% 14% 38% 14% 1% 5% 31.12.2012 6% 2
Slide 32: SPP asset allocation
SPP asset allocation 90% 80% 70% 60% Allocation (%) 50% 40% 30% 20% 10% 0% Equities Bonds Other 31.03.2012 17% 75% 8% 30.06.2012 11% 80% 9% 30.09.2012 12% 80% 8% 31.12.2012 11% 82% 8% Asset allocation guaranteed products SPP AuM NOK 78 bn1 1 The graph shows the asset allocation for all products with
Slide 33: Storebrand Life Insurance - return by asset class and main portfolios
Storebrand Life Insurance - return by asset class and main portfolios Return by asset class Q4 2012 (%) Return Defined Benefit portfolios Value Booked Equity adjusted Returns proportion returns (Q4) (Q4) Real estate 0.6 (Q4) DB - High 1.7% 2.9% 18.2% Bonds at 0.9 DB - Balanced 1.7% 3.0% 10.9% amorti