Storebrand Asa · OSL:STB
Storebrand Asa — Q3 2005 Earnings Presentation
45 slides from Storebrand Asa's earnings presentation, Nov 2, 2005
Slide 1: Results 3rd Quarter 2005 - Analyst Presentation
Storebrand Results 3rd Quarter 2005 2 November 2005 Analyst Presentation Analyst Presentation 3rd quarter 2005 Page # Slide # • Storebrand Group Group CEO Idar Kreutzer 2-9 3-18 Back-up: • Storebrand Group 10-16 19-32 • Storebrand ASA 17-18 33-36 • Storebrand Life Insurance 19-31 37-62 • Storebrand
Slide 2: Highlights Q3 2005
Storebrand Results 3rd Quarter 2005 2 November 2005 Idar Kreutzer Group CEO Highlights Q3 2005 Group profit of NOK 318 million (NOK 265 million) - Group profit up 20%, earnings per share up 37% - RoE 15% for first nine months* Satisfactory result for the life company’s customers and owner - 31 %
Slide 3: Storebrand Group and Life Insurance - improved profit
Storebrand Group - improved profit Q3 01.01 - 30.09 01.01-31.12 NOK million 2005 2004 2005 2004 2004 Life activities 291 228 853 620 931 Investment activities -2 7 20 39 47 Storebrand Bank 42 32 182 66 121 Other activities -13 -2 -31 1 449 1 446 Group profit 318 265 1 024 2 174 2 545 Note: Effect fr
Slide 4: Life Insurance - progress in occupational pensions
Storebrand Life Insurance - progress in occupational pensions Transfer balance - total (NOK million) 1500 Positive (booked) net transfer balance of NOK 609 million for 1000 group pensions as per Q3 500 0 Important contracts won (but not yet booked) both in public -500 and private sector -1000 20
Slide 5: New life insurance act; Storebrand Bank developing according to plan
New life insurance act Draft regulations from Norwegian FSA 24 October 2005 Related to amendments in legislation previously approved in parliament Important aspects of the draft are in accordance with expectations, including: - New pricing system and modified profit sharing - Improved flexibilit
Slide 6: Storebrand Bank - stable development, increased competition
Storebrand Bank - stable development, increased competition Growth in lending Lending (NOK billion): according to plan Differentiated market 30 position through charge- free banking concept has increased customer inflow 25 Further decrease in non- 20 performing and loss exposed loans 15 Grow
Slide 7: Storebrand Investments
Storebrand Investments Return on Life Insurance Total assets under management assets NOK billion 177.0 Proportion of income related 165.0 158.8 to returns above benchmark 18,1 15,8 6,6 144.6 139.7 13,2 9,7 13,6 12,5 10,6 25,3 12,9 Outperformance in 5 of 10 22,9 21,6 10,1 portfolios managed for 1
Slide 8: Socially Responsible Investments and Summary
Socially Responsible Investments Minimum requirements - minimum requirements and specialised products Breach of labour conventions and human rights Corruption Worst 10% in Landmines high risk industries Cluster bombs Nuclear arms Serious environmental damage (from Q4 05) Tobacco discretionary Funds
Slide 9: Storebrand shall be the leading and most respected institution
Storebrand shall be the leading and most respected institution in the Norwegian market for long-term savings and life insurance Q3 2005 17 (Page intentionally left blank) Q3 2005 18 9
Slide 10: IFRS accounting
Storebrand Group IFRS accounting Storebrand ASA’s group accounts are presented in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union. The effects of the transition to IFRS are described in the notes to the interim report and in a separate note in th
Slide 11: IFRS accounting (continued); Group profit by sub-group
IFRS accounting (continued) Restating the opening balance sheet at 1 January 2004 in accordance with IFRS has reduced the group’s reported equity by NOK 323 million. The treatment of pensions for employees is the main reason for this change. Restating the balance sheet at 31 December 2004 in accorda
Slide 12: Storebrand Group Operating Profit
Storebrand Group Operating Profit Q3 01.01 - 30.09 01.01-31.12 NOK million 2005 2004 2005 2004 2004 Net premiums - insurance 3 099 3 644 16 368 13 148 18 740 Interests income 148 191 451 528 574 Financial income 3 884 1 973 8 712 7 216 10 469 Other income 97 -130 309 382 648 Operating income 7 228 5
Slide 13: Storebrand Group Balance sheet
Storebrand Group Balance sheet 30.09 Share of 31.12 Share of NOK million 2005 totalt assets 2004 total assets Intangible assets 632 0% 720 0% Shares in associated companies 70 0% 70 0% Loans 25 781 14 % 24 124 14 % Bonds held to maturity 41 510 22 % 39 352 22 % Real estate at market value 12 345 7%
Slide 14: Capital adequacy and Other activities
Storebrand Group Capital adequacy Risk weighted Net primary Capital ratio NOK million assets 30.09.05 capital 30.09.05 30.09.05 31.12.04 Storebrand ASA 6 850 6 733 98,3 % 89,1 % Storebrand Life insurance 64 436 7 606 11,8 % 14,4 % Storebrand Non-life insurance 139 147 105,1 % 97,1 % Storebrand Bank
Slide 15: Shareholder structure and ratings
Shareholder structure as at 28 October 2005 20 largest shareholders By region % Other Countries Folketrygdfondet 10.20 15,3 % Storebrand ASA 7.38 Orkla ASA 7.06 State Street Bank Trust (NOM) 5.84 Norway Luxembourg Fidelity Funds - Europe 3.89 39,7 % 8,9 % Euroclear Bank S.A. (NOM) 3.54 State Street
Slide 16: Group Key figures
Storebrand Group Key figures Q3 01.01 - 30.09 01.01 - 31.12 NOK milion 2005 2004 2005 2004 2004 Group Earnings per share 1,18 0,86 3,73 6,40 8,53 Capital ratio 12,6 % 18,0 % 12,6 % 18,0 % 15,3 % Life Insurance (Storebrand Livsforsikring) Policyholders' funds 2 065 2 442 133 157 116 122 121 099 Booke
Slide 17: Storebrand ASA Profit for the year
Storebrand ASA Storebrand ASA Profit for the year Q3 01.01 - 30.09 01.01 - 31.12 NOK million 2005 2004 2005 2004 2004 Group contributions and transfers 0 0 611 568 568 Interest income 12 21 41 69 87 Interest expense -10 -17 -36 -99 -112 Realized/unrealized gains/losses on securities 11 6 136 1 926 1
Slide 18: Storebrand ASA Profit and Balance sheet
Storebrand ASA Profit for the year 2005 2004 NOK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Group contributions and transfers 0 0 611 0 0 0 535 Interest income 12 11 18 19 21 41 7 Interest expense -10 -4 -22 -14 -17 -43 -39 Realized/unrealized gains/losses on securities 11 116 9 19 6 1 863 58 Other financial inco
Slide 19: Storebrand Life Group Highlights as at 30.09.2005
Storebrand Life Insurance Storebrand Life Group Highlights as at 30.09.2005 Operating profit in Q3 2004 was NOK 606 million, an improvement from NOK 1.104 in Q3 2004. Operating profit as of Q3 was NOK 2.948 million compared to NOK 1.692 million as of Q3 2004. Booked and value adjusted return on
Slide 20: Life Group Highlights and Results
Storebrand Life Group Highlights as at 30.09.2005 Total premium income (excluding transfers to/from) increased by 31% compared to first nine months 2004 - Premium income in group pension lower than last year - Personal savings products increased by 72% Premium income in health insurance increase
Slide 21: Livsforsikring AS Profit and loss; solidity
Storebrand Life Group Profit and loss Q3 01.01.-30.09 Full year NOK Million 2005 2004 2005 2004 2004 Premiums written 2,495 3,094 13,576 10,345 15,293 Net transfers of premium reserve 48 104 690 -834 -588 Net income of financial investments 3,523 1,788 8,088 5,594 8,693 Claims paid -2,027 -1,655 -5,
Slide 22: Allocation and policyholders' funds
Storebrand Livsforsikring AS Allocation and policyholder’s funds Allocation and policyholders' fund Q3-05 Q2-05 Q1-05 Q4-04 Q3-04 Q2-04 Q1-04 Q4-03 Equity 24 % 22 % 22 % 22 % 22 % 20 % 19 % 17 % Real estate 9% 9% 9% 10 % 10 % 8% 8% 8% Money market 8% 11 % 11 % 13 % 13 % 11 % 15 % 20 % Bonds held to
Slide 23: Unrealised gains; Premiums by product
Storebrand Livsforsikring AS Unrealised gains Q3 01.01.-30.09. Full year Change NOK Million 2005 2004 2005 2004 2004 2005 Shares 1,429 -327 3,864 1,849 2,137 1,728 Fixed interest investments -179 357 469 420 576 -107 Short term investments 1,250 30 4,333 2,269 2,712 1,621 Bonds held to maturity -439
Slide 24: Premiums excl. reserves transferred
Storebrand Livsforsikring AS Premiums excl. reserves transferred to the company Q3 01.01.-30.09. Full year NOK mill. 2005 2004 2005 2004 2004 Group pension 1,429 1,430 5,152 5,225 6,326 Group life 40 52 415 443 490 Individual endowment 857 1,564 7,517 4,287 7,645 Individual pension 146 25 409 330 75
Slide 25: Net transfers of premium reserves
Storebrand Life Group Net transfers of premium reserves Q3 01.01.-30.09. Full year NOK Million 2005 2004 2005 2004 2004 Premium reserves recieved Group pensions 237 262 1,841 1,939 2,299 Individual life insurance 44 123 159 290 345 Total 282 385 2,000 2,228 2,644 Premium reserves transferred Group p
Slide 26: Operating costs and Profit analysis
Storebrand Livsforsikring AS Operating costs as % of average policyholders funds 0,94 0,96 0,94 0,96 0,92 0,90 0,90 0,88 1998 1999 2000 2001 2002 2003 2004 as of Q3 05 *) *) annualised Q3 2005 51 Storebrand Livsforsikring AS Profit analysis Q3 01.01.-30.09. Full year NOK Million 2005 2004 2005 2004
Slide 27: Livsforsikring AS Profit analysis
Storebrand Livsforsikring AS Profit analysis 2005 2004 NOK Million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Interest result 977 1,158 719 1,445 573 566 510 Risk result 99 69 30 46 80 37 43 Administration result 31 -102 -29 -73 7 -30 -41 Change in security and premium reserve -2 -4 0 -125 -55 2 -3 Operating profit 1,104
Slide 28: Profit analysis - products without profit sharing; Balance sheet
Storebrand Livsforsikring AS Profit analysis -products without profit sharing Q3 01.01.-30.09. Full year NOK Million 2005 2004 2005 2004 2004 Interest result 14 10 41 30 53 Risk result 41 19 132 69 126 Administration result -3 2 -77 -20 -32 Change in security and premium reserve -1 0 -3 -1 -2 Operat
Slide 29: Life Group Balance sheet (continued)
Storebrand Life Group Balance sheet (continued) Share of Share of total assets total assets NOK Million 30.09.2005 30.09.2005 31.12.2004 31.12.2004 Equity 5,345 4% 5,029 3% Minority interests' share in equity 14 0% 13 0% Subordinated loan capital 2,824 2% 2,967 2% Market price adjustment reserve 4,3
Slide 30: Real estate fund; Fondsforsikring summary
Storebrand Livsforsikring AS Real estate fund 01.01.-30.09. Full year Key figures 2005 2004 2004 Portfolio allocation (Market value) The real estate fund: Growth in value 5.5% 5.5% 9.1% Shopping centres Booked yield *) 5.3% 5.5% 8.9% 39 % Direct yield 5.3% 5.5% 7.5% Office Revaluations 0.0% 0.0% 1.4
Slide 31: Fondsforsikring AS Balance sheet
Storebrand Fondsforsikring AS Balance sheet Share Share NOK Million 30.09.05 30.09.05 30.09.04 30.09.04 Deferred tax allowances 0% 36 1% Bonds and other fixed income securities 96 2% 100 2% Assets - Unit Link 5,317 97 % 4,287 96 % Cash and bank 32 1% 43 1% Intra group receivables 3 0% 2 0% Other rec
Slide 32: Storebrand Investments Highlights Q3
Storebrand Investments Storebrand Investments Highlights Q3 Decrease in income since last year. Operating costs develop according to plan. NOK 177 billion in assets under management as of Q3, an increase of NOK 12 billion year to date. Net sales Q3 was NOK -70 million. 5 out of 10 portfolios
Slide 33: Profit before tax and profit development
Profit before tax for Q3 2005 01.01- Q2 Year to date 31.12 NOK million 2005 2004 2005 2004 2004 Total income 42 80 177 240 316 Total costs -49 -76 -169 -208 -278 Net financial income/Storebrand 5 3 12 7 10 Alternative Investments (SAI) Profit before tax -2 7 20 39 47 The decline in income is due t
Slide 34: Profit development; contribution to Life portfolio
Profit development NOK million 340 320 Cost/income ratio is 89% 300 as of Q3 - Decline in management fees 280 - Decline in operating costs 268 260 16,9 15,4 14,4 240 13,2 239 7,7 7,0 7,7 7,5 220 5,9 4,2 -1,8 2) 2002 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- 03 03 03 03 04 04 04 04 05 05 05 Rolli
Slide 35: Storebrand's mutual funds performance and rating
Storebrand’s mutual funds Performance / Rating 54% (27 out of 501) of Storebrand’s mutual funds verdipapirfond have outperformed index (measured before management fees) According to Standard & Poors rating2 48% of Storebrand’s mutual funds are among the top 30% and 77% among the top 50% S t a nd
Slide 36: Sales development and Assets under management
Sales development Mutual funds market Storebrand (funds and discretionary) Net subscription year to date in the 9 new institutional customers year to date mutual funds market NOK 16.8 billion Positive development in margins compared to NOK 13.1 billion last year Storebrand’s share of net sub
Slide 37: Storebrand Bank Highlights Q3 2005
Storebrand Bank Storebrand Bank Highlights Q3 2005 Storebrand Bank reports a profit of NOK 42 million in Q3 (NOK 32 million in Q3 04) Growth in gross lending of NOK 1.1 billion in Q3 Net new loan losses represents write-downs of NOK 3 million Continued reduction in net interest margin to 1.4
Slide 38: Bank profit and loss
Profit and loss Q3 01.01-30.09 Full year NOK million 2005 2004 2005 2004 2004 Net interest income 106 106 338 317 427 Other income 19 82 59 252 274 Total income 124 188 397 568 701 Operating expenses -80 -155 -250 -475 -585 Operating profit before losses 45 33 147 94 116 Loan loss provisions -3 -1 1
Slide 39: Net interest income and Balance sheet
Development in net interest income Improved competitiveness Net interest income / avg. total assets on retail mortgages Longer duration and 2.00 % reduced risk in corporate 1.50 % Less interest income as a 1.00 % consequence of changes in loss provided volume 0.50 % 0.00 % Pressure on margin
Slide 40: Development in loan portfolio and defaulted loans
Development in loan portfolio Development in gross lending Gross lending by sector NOK billion 5% 25.9 25.6 Residential 24.8 mortgages 24.5 24.1 24.1 29 % 23.8 23.6 Other retail 23.3 23.0 22.7 22.6 52 % Real estate Other corporate Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 14 % 2002 2003 2003 2003 2003 200
Slide 41: Customer deposits and Capital adequacy
Development in customer deposits NOK million 16 000 60 % Customer deposits is 14 000 50 % reduced by NOK 349 12 000 40 % 10 000 million in Q3 8 000 30 % 6 000 20 % 4 000 Low interest rates favours 2 000 10 % other types of investments 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2003 2003 2004 2004 200
Slide 42: Defaulted loans and loss provisions
Defaulted loans and loss provisions NOK million 31.12.04 01.01.05 31.03.05 30.06.05 30.09.2005 NPLs where value reductions are identified 55 668 47 139 89 811 138 175 145 001 + NPLs where value reductions are not identified 790 770 879 893 829 499 771 395 761 619 = Total NPLs 846 437 927 032 919 310
Slide 43: Storebrand Non-Life Highlights Q3 2005
Storebrand Non-Life Non-Life Highlights Q3 2005 Operating income in Q3 was NOK 17 million (NOK 8 million) and YTD NOK 26 million (NOK 174 million). Income adjusted for statutory insurance reserves in Q3 amounts to NOK 25 million (NOK 15 million) and YTD NOK 41 million (NOK 211 million) Result from
Slide 44: Non-Life Group and Oslo Re Profit and loss
Non-Life Group Profit and loss Q3 01.01. -30.09 01.01. - 31.12. NOK million 2005 2004 2005 2004 2004 22,47 % share of result from If Skadeforsäkring *) 0 0 0 189 189 50% share of result from Fair 18 8 26 12 14 Operating result non-life insurance 18 8 26 201 203 Oslo Reinsurance Company ASA 0 -4 1 12
Slide 45: Oslo Re Balance sheet
Oslo Re Balance sheet Share Share NOK million 30.09.05 30.09.05 31.12.04 31.12.04 Deferred tax asset 13 2% 13 2% Financial assets 454 67 % 514 75 % Receivables 62 9% 58 8% Other assets 150 22 % 104 15 % Total assets 679 100 % 689 100 % Equity 147 22 % 147 21 % Premium and claims reserve 367 54 % 356