Storebrand Asa · OSL:STB
Storebrand Asa — Investor Presentation (June 2014)
49 slides from Storebrand Asa's investor presentation, June 2014
Slide 1: Investor presentation
Investor presentation Updated June 2014
Slide 2: Important information
Important information: This document may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may be beyond the Storebrand Group’s control. As a result, the Storebrand Group’s actual f
Slide 3: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results Q1 2014 17 3. Regulatory changes 38 4. Market and sales in Norway and Sweden 43 3
Slide 4: The Storebrand Group
The Storebrand Group Leading Nordic Life and Pension provider 40 000 corporate customers 1.9 million individuals with pensions in Storebrand NOK 87 bn in Unit Linked reserves NOK 259 bn in Guaranteed reserves 100% of investments assessed by sustainability criteria Supported by: Asset Management Insu
Slide 5: A leading position on sustainable investments in Nordic finance
A leading position on sustainable investments in Nordic finance Sustainability is part of our DNA – 100% of investements are sustainble Sustainability rating system Examples › Sustainability rating system: Best › Retail fund – Storebrand Trippel Smart - Financially robust performers - Efficient and
Slide 6: Solid, profitable and growing business
Solid, profitable and growing business Group result Assets under Management2 MNOK BNOK 600 4000 500 3000 400 2000 300 200 1000 100 0 - 2009 2010 2011 2012 2013 Q1 2014 2009 2010 2011 2012 2013 Q12014 Solvency margin1 Customer funds in unit linked3 BNOK 100 176% 182% 90 170% 164% 80 161% 162% 70 60 5
Slide 7: Sound Nordic macro environment enables growth in pension savings
Sound Nordic macro environment enables growth in pension savings GDP growth1 Unemployment rates1 14 3,5 3 12 2,5 10 2 8 1,5 1 6 0,5 4 0 2012 2013 E 2014 E 2015 E 2 -0,5 -1 0 2009 2010 2011 2012 2013 E 2014 E 2015 E Sweden Norway Euro Area Sweden Norway Euro area General government net financial liab
Slide 8: Strong growth in savings and pensions
Strong growth in savings and pensions Premiums written in occupational Retail savings Norway4 pension private sector Norway1,2 BNOK MNOK 1 500 30 27 24 24 25 13 1,000 10 11 9 9 500 15 15 15 16 17 0 20082 2009 2010 2011 2012 1995 2000 2005 2010 2012 Premiums written in occupational Retail savings Swe
Slide 9: Storebrand is the market leader in the growing unit linked market
Storebrand is the market leader in the growing unit linked market Market share unit linked* Market share unit linked* (Norway private sector) (Sweden open market) 50 2.4% 45 2.2% 40 2.0% 35 1.8% 1.6% 30 1.4% 25 1.2% 20 1.0% 15 0.8% 0.6% 10 0.4% 5 0.2% 0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2
Slide 10: From guaranteed to non-guaranteed savings
From guaranteed to non-guaranteed savings Premium income Storebrand Life Insurance SBL MNOK Share of reserve distributed by age of policy-holder 10 000 0.5 % Non-guaranteed 8 000 Guaranteed 0.4 % 6 000 0.3 % 4 000 0.2 % 2 000 0 0.1 % Guaranteed Non-guaranteed 0.0 % 2008 2009 2010 2011 2012 2013 17 2
Slide 11: Future pension market - drivers for long term growth
Future pension market - drivers for long term growth Trends Low interest rate Individualisation environment Demographics www Technology § Regulations Transparency 11
Slide 12: Our strategic response to changing market conditions
Our strategic response to changing market conditions We work hard to reach our vision: Recommended by our customers Managing the balance sheet Developing the business Concepts Capital Risk Employees optimization reduction Corporate relation Managing business Save for without raising < retirement new
Slide 13: Main focus: shifting the balance sheet
Main focus: shifting the balance sheet ILLUSTRATION - for customer and shareholders values Guaranteed starting point Guaranteed after conversion Non-guaranteed starting point Reserves Non-guaranteed with growth initiatives BNOK 350 300 250 200 150 100 50 - 2012 2014 2016 2018 2020 2022 2024 2026 201
Slide 14: Managing the balance sheet
Managing the balance sheet Capital optimization Risk reduction Transfer out of guaranteed products Portfolio segmentations 21 329 Reduced real-estate portfolio – sold 7 7 300 shopping centers and 5 office buildings in 2013 (18% of real estate portfolio) MNOK 9 955 Asset allocation 4 074 Reduced equi
Slide 15: Leveraging the corporate market place – B2B2C
Leveraging the corporate market place – B2B2C 60 000 new 60 000 new 40 000 former employees employees annually annually Corporates Retirees and holders Employees of pension certificates Storebrand concepts 700 000 1 200 000 Individuals Individuals Products Pension Asset mgmt. Insurance Bank 15
Slide 16: Summary
Summary Market leader in Nordic growth market Dual strategy: − managing traditional guarantees − build leadership in life and pension business for the future Regulatory uncertainty, but clear action taken: − cost reductions − capital efficiency − risk reduction − product optimization 16
Slide 17: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results Q1 2014 17 3. Regulatory changes 38 4. Market and sales in Norway and Sweden 43 17
Slide 18: Storebrand Q1 2014
Storebrand Q1 2014 7 May 2014 Odd Arild Grefstad – CEO Sigbjørn Birkeland – Finance Director 18
Slide 19: Highlights Q1 2014
Highlights Q1 2014 Result Group result of NOK 728 mill in Q1 2014 Strong risk results Nominal cost reductions of 5.4%1 from Q1 2013 Operations Clarity on longevity reserve strengthening 16% growth in occupational DC premiums 137 companies in Q1 on higher DC saving rates than previous max Balance she
Slide 20: Storebrand Group - strong results
Storebrand Group Group - strong results Result Q1 Full year NOK million 2014 2013 2013 Fee and administration income 1 057 1 021 4 253 Underwriting result 353 234 1 111 Operational cost (non-recurring items excluded) -785 -816 -2 938 Financial result 121 20 97 Result before profit sharing and loan l
Slide 21: Our strategic response to changing market conditions
Our strategic response to changing market conditions We work hard to reach our vision: Recommended by our customers Managing the balance sheet Developing the business Concepts Capital Risk Employees optimisation reduction Corporate relation Managing business Save for without raising < retirement new
Slide 22: Managing the balance sheet
Managing the balance sheet Capital optimization Risk reduction Transfer out of guaranteed products 21,221 7,192 Portfolio segmentations paid-up policies MNOK 9,955 4,074 Managing business 2012 2013 Q1 2014 Sum without raising new equity capital Product optimisation Cost reduction Accumulated run-rat
Slide 23: Longevity - 1.9 bn reserved for longevity in Q1
Longevity - 1.9 bn reserved for longevity in Q1 Final reserving rules Reserving needs and reserves Reserving need Step up plans can have a maximum Excess value Bond at Amortised Cost duration of seven years (up until MVAR 2020). Reserved by 31.03.2014 * 15.5 The reserves may be funded with excess re
Slide 24: Longevity - result impact dependent of financial returns
Longevity - result impact dependent of financial returns Asset allocation Expected result effects Other Equities 6% 9% Bonds Real estate Annual Expected Annual 11% booked restult result 21% return effect effect 4% ~3 500 ~500 4.4% ~2 300 ~330 4.5 % ~2 100 ~300 5% ~1 100 ~160 11% 43% NOK 90 million b
Slide 25: Paid-up policies with investment choice
Paid-up policies with investement choice Comments: Pro and cons of converting Hearing period concluded: Early conversion may trigger higher – Longevity reserving contribution from shareholders for – Pay out profiles longevity reserving – Advising Positive elements from conversion to Based on final r
Slide 26: Key figures
Key figures Group Result development Earnings per share1 Net profit sharing and loan losses MNOK 1.78 1.82 Sale discontinued business/change in pension plan Result before profit sharing and loan losses 1.43 1.38 Longevity provision 1,054 810 180 728 1.03 554 519 56 86 277 40 71 95 55 668 597 707 459
Slide 27: Storebrand Group - strong results
Storebrand Group Group - strong results Result Q1 Full year NOK million 2014 2013 2013 Fee and administration income 1 057 1 021 4 253 Underwriting result 353 234 1 111 Operational cost (non-recurring items excluded) -785 -816 -2 938 Financial result 121 20 97 Result before profit sharing and loan l
Slide 28: Savings (non-guaranteed) - continued result improvement
Savings (non-guaranteed) Savings - continued result improvement Result Q1 Full year NOK million 2014 2013 2013 Fee and administration income 509 448 1 888 Risk result life & pensions -2 0 7 Operational cost * -321 -335 -1 279 Financial result - - - Result before profit sharing and loan losses 186 11
Slide 29: Savings (non-guaranteed) - continued growth
Savings (non-guaranteed) Savings - continued growth Reserves and premiums Unit Linked Comments 2.768 2.463 2.318 2.296 2.273 16% growth in occupational pension 87.105 85.452 UL premiums MNOK 79.341 +24% 70.458 73.542 Growth in reserves backed by good equity markets 1Q 2013 2Q 2013 Q3 2013 Q4 2013 Q1
Slide 30: Insurance - Change in segment reporting
Insurance Insurance - Change in segment reporting Result Q1 Full year NOK million 2014 2013 2013 Insurance premiums f.o.a. 770 758 3 034 Claims f.o.a. -492 -566 -1 940 Operational cost -125 -128 -463 Financial result 74 32 143 Result before profit sharing and loan losses 226 95 774 Net profit sharin
Slide 31: Insurance - SPP risk products included in Insurance
Insurance Insurance - SPP risk products included in Insurance Combined ratio Comments Claims ratio Cost ratio Combined ratio 92% 80% 81% 80% From Q1 2014, SPP risk products are 65% reported under Insurance 75% Storebrand Health Insurance is from 71% 61% 64% 49% Q1 2014 no longer consolidated 17% 19%
Slide 32: Guaranteed pension - longevity charge
Guaranteed pension Guaranteed - longevity charge of NOK 90 mill Result Q1 Full year NOK million 2014 2013 2013 Fee and administration income 474 491 2 013 Risk result life & pensions 78 40 7 Operational cost -281 -271 -1 016 Financial result - - - Result before profit sharing and loan losses 272 260
Slide 33: Guaranteed pension - strong booked return
Guaranteed pension Guaranteed - strong booked return Reserves guaranteed products Comments Transfer out of guaranteed products of 7,2 bn in Q1 -1% 2.0% booked return for portfolios with MNOK 261.502 258.654 262.126 263.776 259.353 reserving need 1.8 bn unallocated result that will mainly be used for
Slide 34: Other
Other Other Result Q1 Full year NOK million 2014 2013 2013 Fee and administration income 74 82 353 Risk result life & pensions -1 2 3 Operational cost -58 -82 -180 Financial result 47 -12 -46 Result before profit sharing and loan losses 62 -10 129 Net profit sharing and loan losses -48 -1 -11 Result
Slide 35: Summary
Summary Strong results 1.9 bn to be available for longevity reserve strengthening Cost program on plan: nominal cost reduced by 5% Conversion from guaranteed pension to non- guaranteed savings is reflected in balance and revenues 35
Slide 36: Appendix
Appendix: 36 @d storebrand
Slide 37: Storebrand Life Insurance asset allocation
Storebrand Life Insurance asset allocation 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Bonds at Equities Bonds Money market Real estate Other amortized cost 31.03.2013 7% 21% 16% 37% 14% 6% 30.06.2013 7% 20% 15% 40% 12% 5% 30.09.2013 8% 20% 15% 41% 11% 6% 31.12.2013 9% 19% 12% 42% 11% 6% 31.03.2014 9%
Slide 38: SPP asset allocation
SPP asset allocation 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Alternative investments Bonds Equities 31.03.2013 8% 81% 12% 30.06.2013 7% 81% 12% 30.09.2013 7% 83% 10% 31.12.2013 7% 82% 11% 31.03.2014 7% 82% 11% 1 The graph shows the asset allocation for all products with an interest rate guarantee in
Slide 39: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results 2013 17 3. Regulatory changes 38 4. Market and sales in Norway and Sweden 43 39
Slide 40: Important regulatory changes
Important regulatory changes § www 2012 2013 2014 2015 2016 2017 Reserve strengthening Longevity (NO) New Come tariffs in force Occupational pension product § framework (NO) Act passed Come in force Pension certificates w/ investment § choice(NO)1 Act proposed Act passed Come in force Solvency II (N
Slide 41: Market impacted by extensive product reform
Market impacted by extensive product reform – important regulatory changes in place New legal framework for Norwegian occupational pension Important changes 1. Increased maximum saving rates in 4 DC schemes, from 1 January 2014 DB Paid-up − Up to 7% for wages up to 7G* Defined benefit policies − Up
Slide 42: Proposed new pension product provides a significant growth opportunity
Proposed new pension product provides a significant growth opportunity Current defined contribution Proposed new savings rates regulations Annual Annual pension pension savings as a savings as a % of salary % of salary 2-7% 2-5% 2-25,1% 18,1% 18,1% 2-8% 583.066 985.464 Salary 583.066 985.464 (7,1G 2
Slide 43: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results 2013 17 3. Regulatory changes 38 4. Market and sales in Norway and Sweden 43 43
Slide 44: Clear market shift towards defined contribution
Clear market shift towards defined contribution Individuals covered by occupational Trends pensions in private sector # in thousands Private occupational pensions 1 387 Defined contribution 1 207 mandatory from 2006 Defined benefit 899 1 134 611 Rapid growth in annual premiums 464 125 and assets und
Slide 45: Increased pension savings provide a significant growth opportunity
Increased pension savings provide a significant growth opportunity Distribution of defined contribution Growth opportunities premiums in Storebrand as a % of salary 1 percentage point increase in average Contracts 57% 8% 25% 10% premiums as a % of salary = 1 BNOK in additional premiums Individuals 3
Slide 46: Systematic approach to transfer customers from guaranteed products
Systematic approach to transfer customers from guaranteed products Customer concepts Accumulated net transfer from Key insights individual product with guarantee MNOK 15 BNOK currently open for 1,553 1,672 transfer out of guaranteed 1,330 products 1,086 752 Systematic approach has 402 yielded 52 per
Slide 47: Storebrand will tailor transfer message based on a customer value proposition
Storebrand will tailor transfer message based on a customer value proposition Customer segment example* Approach Pension New estimated Customer reserves pension advice ~29 BNOK identified as most likely to be transferred Value of existing paid-up policy – Age – Size of paid-up policy BNOK 100% Advic
Slide 48: Trends in the Swedish pension market
Trends in the Swedish pension market SPP Market Share 20131 Trends New Sales APE Premiums Written SPP is a significant provider of Corporate Pensions Retail 3,1% Pensions 7,2% Corporate Pensions are moving from Guaranteed towards Unit Linked Corporate 2nd 3rd Pensions 11,8% largest 11,2% largest Uni
Slide 49: Storebrand
@S storebrand @d storebrand