Storebrand Asa · OSL:STB
Storebrand Asa — Debt Investor Presentation (March 2021)
50 slides from Storebrand Asa's debt investor presentation, Mar 22, 2021
Slide 1: A Sustainable Nordic Savings and Insurance Group
A Sustainable Nordic Savings and Insurance Group Green EUR Tier 2 bond offering and Liability Management 22.03.2021 1
Slide 2: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing. The attached presentation is in summary form and relates to an offering of securities as currently contemplated and has been prepared solely for information purposes and on the basis of your acceptance of this disclaimer and does n
Slide 3: Presentation Content
Presentation Content Section Slide Number Storebrand Overview and Strategy 5 Focus on Performance and Solvency 14 Sustainability at Storebrand 27 Green Bond Framework 33 The Proposed Transaction 39 Appendix 42 3
Slide 4: Executive Summary
Executive Summary • Pension market leader in Norway and strong contender in Sweden, Nordic powerhouse in Asset Management and growing challenger in Norwegian retail market Storebrand1 • Active in structurally strong markets with resilient economic development • Digital frontrunner with growth focus
Slide 5: Storebrand Overview and Strategy
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency Storebrand ▪ Sustainability at Storebrand Overview and ▪ Green Bond Framework Strategy ▪ The Proposed Transaction ▪ Appendix 5
Slide 6: An Integrated Financial Services Group with 250 years of pioneering
An Integrated Financial Services Group with 250 years of pioneering in the Nordic financial industry Retail Insurance & Bank Asset Management Unit Linked Pensions and Guaranteed pensions Savings 1767 1847 1861 1917 1995 2020 2050 Foundation: P&C Pioneered Pioneered Pioneered ILLUSTRATIVE Norwegian I
Slide 7: Strategy - Sustainable Nordic Savings and Insurance Group
Strategy - Sustainable Nordic Savings and Insurance Group A B C Future Storebrand Leading Provider Growth focus in Nordic Powerhouse in Growing Challenger in Occupational Pensions capital-light business Asset Management Norwegian Retail Market Norway & Sweden areas in front book Strategic D Leadersh
Slide 8: Leader in Occupational Pension high customer satisfaction and strong digital capabilities
Leader in Occupational Pension high customer satisfaction and strong digital capabilities Occupational Pensions Norway ✓ Digital leader Defined Contribution share1 Defined Contribution share2 in Sweden ✓ Best customer satisfaction with all time high score for large Norwegian corporates 29% 18% 18% 2
Slide 9: Storebrand Group Structure
Storebrand Group Structure Diversified cash flow to holding company Storebrand ASA Legal structure (simplified) Storebrand ASA Issuing Entity Storebrand Asset Storebrand Livsforsikring AS Storebrand Bank ASA Storebrand Forsikring AS Management AS Reporting structure Storebrand Holding AB SKAGEN AS S
Slide 10: Delivering Strong Growth in Savings and Insurance
Delivering Strong Growth in Savings and Insurance Unit Linked Asset management 268 +10%1 +20%1 220 179 962 168 831 128 140 721 707 105 487 535 571 577 85 442 64 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020 UL reserves (NOK bn) AuM (NOK bn) Insurance Retai
Slide 11: Growth focus in capital-light business with Sustainability and Technology as strategic differentiators
Growth focus in capital-light business with Sustainability and Technology as strategic differentiators Storebrand 2021-2023: Earnings growth across the business - Group profit2 target1 of NOK ~4bn in 2023 A B C Leading Provider Occupational Pensions Nordic Powerhouse in Growing Challenger in Norwegi
Slide 12: Financial targets are maintained for a robust balance sheet, a profitable business, and growing dividends
Financial targets are maintained for a robust balance sheet, a profitable business, and reaffirming commitment to growing dividends Target Actual 2019 Actual 2020 % Solvency 2 margin Storebrand Group1 > 150% 176% 178% > 50% Cancelled Dividend pay-out ratio2 due to 65% & nominal growth Covid-19 Retur
Slide 13: Capital ambition: Earnings growth will continue to grow ordinary dividends
Capital ambition: Earnings growth will continue to grow ordinary dividends, run-off of back book will release excess capital 1 Growing ordinary dividends from earnings 2 NOK ∼10bn capital release from back book by 2030 Regulatory cancelled ▪ Storebrand also continues to manage capital and a back boo
Slide 14: Focus on Performance and Solvency
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency Focus on ▪ Sustainability at Storebrand Performance and ▪ Green Bond Framework Solvency ▪ The Proposed Transaction ▪ Appendix 14
Slide 15: Highlights Q4 2020
Highlights Q4 2020 Group result1 #1 sustainable insurance company in the world4 2 711 278 Double digit growth in core business2 MNOK 1 225 298 2 433 926 178% Solvency margin3 Q4 2020 FY 2020 Financial items and risk result life NOK 3.25 proposed ordinary dividend5 Operating profit 15 1 Result before
Slide 16: Storebrand Group
Storebrand Group Profit1 Q4 Full year NOK Million 2020 2019 2020 2019 Fee and administration income 1,674 1,561 5,676 5,308 Insurance results 338 223 825 1,005 Operational cost -1,086 -1,077 -4,068 -4,015 Operational profit 926 707 2,433 2,298 Financial items and risk result life 298 319 278 739 Pro
Slide 17: Key figures for Storebrand Group
Key figures for Storebrand Group Result development1 Earnings per share2 Financial items and risk result life Performance related result MNOK Special items Operating profit 2.13 1.90 1,225 1.68 1,026 1,012 808 298 319 340 217 1.23 228 251 599 703 709 0.82 456 265 -19 -31 -588 -11 -334 Q4 2019 Q1 202
Slide 18: Savings (non-guaranteed)
Savings (non-guaranteed)1 Reserves and premiums Unit Linked Comments 5.0 5.1 5.2 4.9 4.6 ▪ 13% growth in Unit Linked premiums2 268 252 235 ▪ 22% growth in Unit Linked reserves2 220 210 BNOK ▪ 16% growth in overall assets under management2 ▪ Lending growth increasing and net interest margin improving
Slide 19: Insurance
Insurance1 Combined ratio Comments Combined ratio and results Claims ratio Cost ratio Combined ratio 124% ▪ 12% growth in premiums f.o.a. 96% 92% 88% 87% ▪ 87% combined ratio, better than target (90-92%) ▪ Strong cost control maintained with stable cost ratio at 17%. Cost 107% increase from newly hi
Slide 20: Guaranteed pension
Guaranteed pension1 Reserves guaranteed products Comments 272 274 277 277 263 ▪ Profit sharing in both Norwegian and Swedish products 30 30 30 30 33 143 145 145 ▪ Flat development in overall level of reserves in the quarter 142 BNOK 137 12 12 12 12 12 ▪ Increased buffer capital level to >11% in both
Slide 21: Strong Group IFRS equity and capital structure – reduced financial leverage
Strong Group IFRS equity and capital structure – reduced financial leverage Group equity (NOK million) Liquidity position Q4 2020 Storebrand ASA (holding), NOK bn ~ 7.1 35,923 32,873 33,398 ~ 2.1 27,637 ~5.0 24,741 1.0 20,175 25,748 27,840 24,795 (77%) (77%) (75%) 19,031 22,779 14,079 (77%) (82%) (7
Slide 22: Solvency II Margin movement from Q4 2019 to Q4 2020
Solvency II Margin movement from Q4 2019 to Q4 2020 Storebrand ASA, with transitional rules +10 178% 176% +9% +8% -15% -10% 31.12.2019 Interest rates and Regulatory Model Result generation ∆ Transitional 31.12.2020 asset returns updated VA, UFR improvements net of dividend and symmetric and assumpti
Slide 23: Solvency II margin is resilient towards market movements
Solvency II margin is resilient towards market movements Storebrand Group Solvency margin(%)1 Estimated sensitivities Target SII margin 150% 179 178 29 12 SII-margin 31.12.2020 166 12 178 166 Interest 150 rates -50bp 154 28 182 Interest 30.09.2020 31.12.2020 rates +50 bp 176 0 176 Transitional rules
Slide 24: Storebrand ASA Solvency II capital base Q4 2020
Storebrand ASA Solvency II capital base Q4 2020 SCR and own funds (NOK bn) Own funds in % of SCR (excluding CRD IV subsidiaries) OF % OF % of Regulatory limit of SCR total 53 3 CRD IV capital Tier 3 ≤ 15% SCR 1% 0% 8 Tier 2 1 Tier 1 restricted 30 CRD IV capital requirements 3 Tier 2 ≤ 50% SCR 30% 16
Slide 25: SII position Storebrand Livsforsikring AS
SII position Storebrand Livsforsikring AS1 Solvency II position(%) Estimated sensitivities Target SII margin 150% 225 215 SII-margin 31.12.2020 197 18 215 Interest rates -50bp 182 40 223 Interest rates +50 bp 211 0 211 31.12.2019 31.12.2020 SII standard model Equity -25% 190 28 219 Solid buffer abov
Slide 26: Rating
A- rating1 with stable outlook from S&P Global -reflecting business and capital improvement during the past years Rating and underlying rationale Key Comments Insurance Financial Strength Rating (IFSR) ▪ S&P Global has assigned an "A-" rating with a stable outlook reflecting their belief that: A- ▪
Slide 27: Sustainability at Storebrand
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency Sustainability at ▪ Sustainability at Storebrand Storebrand ▪ Green Bond Framework ▪ The Proposed Transaction ▪ Appendix 27
Slide 28: Storebrand has worked systematically with sustainability since 1995
Storebrand has worked systematically with sustainability since 1995 Decision to integrate Next Commitment Sustainability Exclusions Storebrand sustainability generation to achieve net team across life standard in all funds sustainability zero emissions established insurance launched through ESG fund
Slide 29: Widespread global industry recognition as a leader in Sustainability
Widespread global industry recognition as a leader in Sustainability, highly recognised by our clients 25 years of Top 10% most Nr.1 sustainable Nr. 1 insurance sustainable sustainable company investments in Norway company globally1 investments in the world2 and Sweden3 Score4: Sustainable Investmen
Slide 30: Storebrand aims for transparency in our sustainability work
Storebrand aims for transparency in our sustainability work and reports on a wide range of KPIs to track progress Sustainability questions - Sustainability library Integral annual report since 2008 procurement All sustainability documents Focus on transparency and All the basic sustainability (guide
Slide 31: In 2020 Storebrand launched a company wide climate strategy
In 2020 Storebrand launched a company wide climate strategy covering the entire value chain In 2019, Storebrand was one of the founding members of the Storebrand is aiming for climate neutrality throughout the UN convened Net Zero Asset Owner Alliance entire value chain in the climate strategy Own O
Slide 32: To achieve net zero emissions by 2050, Storebrand has defined intermediate targets towards 2025
To achieve net zero emissions by 2050, Storebrand has defined intermediate targets towards 2025 Asset class targets Solution targets Active ownership Customer engagement -32% reduction in scope 1-2 GHG emissions of 15% of our total Special emphasis will be Make it easy for clients to Storebrand's to
Slide 33: Green Bond Framework
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency Green Bond ▪ Sustainability at Storebrand Framework ▪ Green Bond Framework ▪ The Proposed Transaction ▪ Appendix 33
Slide 34: Rationale for Issuance
Rationale for Issuance The financial services industry has an important role in the … and Storebrand’s ambition is to ensure that our investment transition towards sustainable, lower-carbon economies… portfolio and financing activities contribute positively ▪ Storebrand recognizes that the financial
Slide 35: The Storebrand Green Bond Framework
The Storebrand Green Bond Framework 1 Use of the Green Bond proceeds 3 Project Evaluation and Selection ▪ An amount equal to the net proceeds of any Storebrand Green Bond issuance ▪ ‘Project Evaluation & Selection’ refers to the process of determining which will be used to finance and/or refinance E
Slide 36: Focus on the Use of Proceeds - Eligible Green Assets Categories
Focus on the Use of Proceeds - Eligible Green Assets Categories1 Category Sub-Category Eligibility Criteria Indicative metrics SDGs alignment New green buildings tCO2e avoided Obtain at least one of the following environmental certifications/levels: Renovation and ▪ BREEAM: Very Good, Excellent or O
Slide 37: Green Bond Governance
Green Bond Governance To ensure that allocations are made to Eligible Green Assets as in the Green Bond Framework, Storebrand will establish a Green Bond Committee The Green Bond Committee Scope The Green Bond Committee Composition Responsibilities Representatives ▪ Ensuring the proposed allocations
Slide 38: Second Party Opinion by Sustainalytics
Second Party Opinion by Sustainalytics Use of Proceeds Project Evaluation & Selection The eligible categories for the use of proceeds – Green Storebrand’s internal process in evaluating and selecting projects Buildings, Renewable Energy, and Clean Transportation – are is managed by the Green Bond Co
Slide 39: The Proposed Transaction
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency The Proposed ▪ Sustainability at Storebrand Transaction ▪ Green Bond Framework ▪ The Proposed Transaction ▪ Appendix 39
Slide 40: Transaction Summary – Indicative Key Terms
Transaction Summary – Indicative Key Terms Issuer Storebrand Livsforsikring AS Size / Format € 300,000,000 / 30.5NC10.5 Reg S Bearer Scheduled Maturity [•] September 2051, subject to the preconditions to redemption, purchase, substitution and variation First Reset Date [•] September 2031, subject to
Slide 41: Liability Management Overview
Liability Management Overview Target Notes 6.875% € 300,000,000 Fixed/Floating Rate Dated Subordinated Notes Due 2043 Non Call 2023 ISIN XS0909773268 Purchase Spread +100 bps Benchmark Rate April 2023 Interpolated Mid-Swap Rate Target Amount Up to € 50,000,000 The Offer in conjunction with an issue
Slide 42: Appendix
▪ Storebrand Overview and Strategy ▪ Focus on Performance and Solvency ▪ Sustainability at Storebrand Appendix ▪ Green Bond Framework ▪ The Proposed Transaction ▪ Appendix 42
Slide 43: Moderate leverage, fixed charge coverage, and rating give financial flexibility
Moderate leverage, fixed charge coverage, and rating give financial flexibility and more debt capacity Moderate leverage2 Strong debt servicing capacity2 Solid rating 21% ~9x A- 20% stable outlook Insurance Financial Strength Rating (IFSR) "We also anticipate that Storebrand's capitalization will re
Slide 44: Storebrand Life Insurance asset allocation
Storebrand Life Insurance asset allocation 60% 50% 40% 30% 20% 10% 0% Bonds & Bonds at Equities Real estate Loans Money market amortised cost 31.12.2019 9% 10% 13% 15% 53% 31.03.2020 4% 11% 20% 14% 51% 30.06.2020 6% 11% 16% 15% 52% 30.09.2020 8% 10% 15% 14% 52% 31.12.2020 9% 11% 13% 15% 52% Note: Th
Slide 45: SPP asset allocation
SPP asset allocation 70% 60% 50% 40% 30% 20% 10% 0% Bonds & Money Equities Real estate Loans market 31.12.2019 12% 12% 61% 15% 31.03.2020 10% 12% 62% 16% 30.06.2020 11% 12% 59% 17% 30.09.2020 12% 12% 57% 18% 31.12.2020 13% 12% 57% 17% Note: The graph shows the asset allocation for all products with
Slide 46: Term structure debt
Term structure debt Term structure sub-debt Storebrand Livsforsikring1 (bn NOK) Term structure senior debt Storebrand ASA (bn NOK) 3.1 Perpetual 2.1 Non-perpetual 1.1 1.4 1.0 0.8 1.0 0.5 0.5 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 46 1 Bonds in foreign currencies is converted to NOK with t
Slide 47: Seeking to achieve a real-world reduction in carbon emissions from our suppliers
Seeking to achieve a real-world reduction in carbon emissions from our suppliers Suggested process for suppliers - we encourage our We have set three specific goals for our suppliers and suppliers to business partners1: 1. Measure their greenhouse gas emissions - • By 2025, the goal is that all supp
Slide 48: Pushing for sustainability reporting through national and Nordic collaborations
Pushing for sustainability reporting through national and Nordic collaborations Co-led climate track in The Nordic CEOs for a Sustainable Led the Finance climate track in Skift – Norwegian Future group climate leaders within business All 14 companies committed to: All 36 companies committed to: - Re
Slide 49: Examples of Storebrand investment KPIs
Examples of Storebrand investment KPIs Key Performance Indicator Results 2018 Results 2019 Target 2025 Carbon footprint from equity investments: tonnes CO2e per 1 22 17 N/A million NOK/SEK sales revenue (vs. index) Billion NOK invested in fossil-free products 68 277 Investment in solutions (solution
Slide 50: Leading the way in sustainable value creation
Leading the way in sustainable value creation Contacts Lars Aa Løddesøl lars.loddesol@storebrand.no Group CFO +47 9348 0151 Kjetil R. Krøkje kjetil.r.krokje@storebrand.no Group Head of +47 9341 2155 Finance & Strategy Daniel Sundahl daniel.sundahl@storebrand.no Group Head of +47 9136 1899 IR & Ratin