Storebrand Asa · OSL:STB

Storebrand Asa — Q1 2015 Earnings Presentation

32 slides from Storebrand Asa's earnings presentation, Apr 29, 2015

  1. Slide 1: Storebrand Q1 2015 MCEV 2014

    Storebrand Q1 2015 MCEV 2014 29 April 2015 Better pensions Odd Arild Grefstad – CEO Lars Aa. Løddesøl – CFO

  2. Slide 2: Sustainable pensions = better pensions

    Sustainable pensions = better pensions Exclusion Ranking Rating 1 2 3 2

  3. Slide 3: Highlights Q1 2015

    Highlights Q1 2015 Result  Group result of NOK 450 mill in Q1  6.6% growth in fee and administration income1  Longevity strengthening prioritised over short term results Operations  Total AuM 558 NOK bn, up 13% last 12 months  NOK 1.7 bn converted to paid-up policies with investment choice in Q

  4. Slide 4: Transformation of the business model continues

    Transformation of the business model continues Dual strategy reiterated and reinforced Manage the guaranteed balance sheet Continued growth in savings and insurance Retail customers Employees Capital Risk optimization reduction Corporate relation >130% Save for Solvency II < retirement Margin Produc

  5. Slide 5: Transfer out from public sector and paid up policies in the quarter

    Transfer out from public sector and paid up policies in the quarter Transfer out of guaranteed products 2012-2015 Q1 34 160 5 038 MNOK 15 093 4 074 9 955 2012 2013 2014 2015 Q1 Sum 5

  6. Slide 6: Estimated SII position Life Group and sensitivities

    Estimated SII position Life Group and sensitivities Economic Solvency position1 Estimated Sensitivities after 1.1.20162 148 152 Target SII margin 1.1.2016 =130% 47 54 Estimated economic SII-margin Q1 2015 152 101 98 Interest Q4 2014 Q1 2015 rates -50bp 132 Transitional rules SII standard model Inter

  7. Slide 7: Longevity - 60% of reserve strengthening completed

    Longevity - 60% of reserve strengthening completed Reserve strengthening Norwegian guaranteed products Negative result impact in the quarter 2013-Q1 2015 (BNOK) 2015-2020 (BNOK) 1Q 2015 (MNOK) 20.7 275 NOK 121 12.8 109 Indirect negative 12.4 result contribution 3.5 12 7.4 64 2.7 NOK 154 1.2 5.0 5.9

  8. Slide 8: Growth in Savings and Insurance continues

    Growth in Savings and Insurance continues Unit Linked Asset management 33% 13% 116  17% Premium 558 495  Gathering 87 growth  Paid-up assets from policies life company w/investment  Strong sales choice adds  Strong return growth Q1 2014 Q1 2015  Strong return Q1 2014 Q1 2015 UL reserves (BNOK)

  9. Slide 9: Fee and administration income shifts from Guaranteed to Savings

    Fee and administration income shifts from Guaranteed to Savings - Income in Savings grows with 14% compared to 1Q last year - Income in Guaranteed pension reduced with 9% compared to 1Q last year Income growth of 6.6% adjusted for business in run-off1 Storebrand Group income development Fee- and adm

  10. Slide 10: Key figures

    Group Key figures Result development Earnings per share1 Net profit sharing and loan losses Sale discontinued business/change in pension plan MNOK Result before profit sharing and loan losses Longevity provision 1.78 923 728 750 25 1.38 1.33 632 1.08 40 71 200 477 450 62 0.78 58 707 640 660 541 546

  11. Slide 11: Storebrand Group

    Group Storebrand Group Result Q1 Full year NOK million 2015 2014 2014 Fee and administration income 1 069 1 057 4 272 Risk result life & pensions 9 75 480 Insurance premiums f.o.a. 867 770 3 115 Claims f.o.a. -652 -492 -2 226 Operational cost -828 -785 -2 617 Financial result 82 121 363 Result befor

  12. Slide 12: Storebrand Group

    Group Storebrand Group Result Q1 Full year NOK million 2015 2014 2014 Fee and administration income 1 069 1 057 4 272 Risk result life & pensions 9 75 480 Insurance premiums f.o.a. 867 770 3 115 Claims f.o.a. -652 -492 -2 226 Operational cost -828 -785 -2 617 Financial result 82 121 363 Result befor

  13. Slide 13: Savings (non-guaranteed) - strong results growth

    Savings (non-guaranteed) Savings - strong results growth Result Q1 Full year NOK million 2015 2014 2014 Fee and administration income 582 509 2 148 Risk result life & pensions -4 -2 -11 Operational cost -371 -321 -1 151 Financial result - - - Result before profit sharing and loan losses 207 186 987

  14. Slide 14: Savings - strong growth in UL reserves and premiums

    Savings (non-guaranteed) Savings - strong growth in UL reserves and premiums Reserves and premiums Unit Linked Comments 2 871 2 594 2 463 2 483 +17% 2 347  17% premium growth in UL 115.816 occupational pension premiums1 105.369 MNOK +33% 92.899 93.976  14% top line growth in Savings 87.105  Stron

  15. Slide 15: Insurance - continued P&C growth

    Insurance Insurance - continued P&C growth Result Q1 Full year NOK million 2015 2014 2014 Insurance premiums f.o.a. 867 770 3 115 Claims f.o.a. -652 -492 -2 226 Operational cost -128 -125 -387 Financial result 72 74 173 Result before amortisation 159 226 675 Result per product line Q1 Full year NOK

  16. Slide 16: Insurance - strong financial results

    Insurance Insurance - strong financial results Comments Combined ratio and Combined ratio Claims ratio Cost ratio Combined ratio financial result 90% 89% 93%1 90%  Good cost control 80%  Claims ratio affected by high claims in group life 73% 73% 76% 75% 64% 16%1  Strong financial results 16% 17%

  17. Slide 17: Guaranteed pension - lower results is the new normal

    Guaranteed pension Guaranteed - lower results is the new normal Result Q1 Full year NOK million 2015 2014 2014 Fee and administration income 432 474 1 842 Risk result life & pensions1 16 78 483 Operational cost -277 -281 -921 Financial result - - - Result before profit sharing and loan losses 171 27

  18. Slide 18: Guaranteed pension - reserves below 70% of total reserves

    Guaranteed pension Guaranteed - reserves below 70% of total reserves Reserves guaranteed products Comments  Results in Norwegian guaranteed reduced by longevity reserve strengthening and success with conversion to non-guaranteed MNOK 259 799 263 370 257 425 264 290 261 276  Indexation fee and prof

  19. Slide 19: Other

    Other Other Result Q1 Full year NOK million 2015 2014 2014 Fee and administration income 54 74 282 Risk result life & pensions -4 -1 8 Operational cost -52 -58 -158 Financial result 10 47 190 Result before profit sharing and loan losses 9 62 322 Net profit sharing and loan losses -8 -14 -85 Result b

  20. Slide 20: Reporting adjustments from 2Q 2015

    Reporting adjustments from 2Q 2015 • Storebrand will align segment eliminations with offical reporting and move subsidiaries that are under the financial result in the segment 'Other' to the segment 'Savings' in 2Q. This does not affect the result as such, but there will be some changes in the cost

  21. Slide 21: Storebrand Group - highlights of MCEV 2014 results

    Storebrand Group - highlights of MCEV 2014 results  2014 embedded value earnings of + NOK 2.6 bn • + 9.5 % return on opening embedded value • + 27.3 % operating return  Storebrand Group MCEV of NOK 76.6 per share (NOK 67.6 in 2013)  Weak value of new business due to changes in cost allocation NOK

  22. Slide 22: Storebrand Life Group MCEV – Development 2014

    Storebrand Life Group MCEV – Development 2014 NOK bn 31.4 1.3 2.5 27.7 1.8 7.2 3.2 2.0 MCEV 2013 Decreased Strong asset VNB and Cost reduction Improved Other MCEV 2014 interest returns operational and cost investment rates and results allocation strategy and new interest model updates rate model 22

  23. Slide 23: MCEV and Solvency II calculated using same assumption

    MCEV and Solvency II calculated using same assumption Economic capital Life Group Q4 2014 Main differences MCEV and SII Mill. NOK 38,970  Different contract boundaries  MCEV allows future Subordinated loans 7,535 premiums on existing contracts 28,269  Solvency 2 only allows for premiums first yea

  24. Slide 24: MCEV and Solvency II calculated using same assumption

    MCEV and Solvency II calculated using same assumption Economic capital Life Group Q4 2014 Main differences MCEV and SII Mill. NOK 38,970 39,755  Different contract boundaries  MCEV allows future Subordinated loans 7,535 premiums on existing 11,486 Transition contracts rules  Solvency 2 only allow

  25. Slide 25: Key takeaways

    Key takeaways  6.6% growth in fee and administration income  Strong new sales in Insurance, 13% premium growth  Longevity strengthening prioritised over short term results  Solvency II ratio of 152% including transition rules  Group MCEV of NOK 34.2 bn in 2014 25

  26. Slide 26: Appendix

    Appendix 26 @® storebrand

  27. Slide 27: 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 31.03.2014 9% 21% 11% 43% 11% 6% 30.06.2014 10% 21% 10% 43% 11% 5% 30.09.2014 9% 20% 10% 44% 11% 6% 31.12.2014 7% 20% 12% 45% 11% 5% 31.03.2015 8

  28. Slide 28: SPP asset allocation

    SPP asset allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Alternative investments Bonds Equities 31.03.2014 7% 82% 11% 30.06.2014 6% 82% 12% 30.09.2014 6% 82% 12% 31.12.2014 6% 84% 10% 31.03.2015 5% 86% 9% 1 The graph shows the asset allocation for all products with an interest rate guarantee

  29. Slide 29: Value of New Business

    Value of New Business Per line of business Comments Savings (Life) Risk 426 471 Guaranteed Pensions  Reduction in VNB: − 12% reduction in APE 251 − Increased cost allocation to sales 412 424 − Increased sales of low margin product 204  Increased VNB for Risk in SBL due to 52 82 117 correction of e

  30. Slide 30: Value of In Force per product group

    Value of In Force per product group* SBL Change from 2013 to 2014 6,500 NOK mil 6,968 Savings: 6,863 + strong returns  asset growth - assumed reduced margin on pension certificates 6,905 9,290 Non-guaranteed pension 7,036 Fee based: Risk - decreased volumes 1,507 Guaranteed Pensions - decreased int

  31. Slide 31: Storebrand Life Group - Sensitivities

    Storebrand Life Group - Sensitivities 2013 2014 8% Interest rate up (+100bp) 24% -17% Interest rate down (-100bp) -25% -9% Equity & property shock (-10%) -11% -5% Equity shock (-10%) -7% 5% Decrease in expenses (10%) 5% -2% Mortality shock - annuity business (-5%) -2% 0% Mortality shock - life busin

  32. Slide 32: Investor Relations contacts

    Investor Relations contacts Lars Aa Løddesøl Group CFO lars.loddesol@storebrand.no +47 9348 0151 Sigbjørn Birkeland Finance Director sigbjorn.birkeland@storebrand.no +47 9348 0893 Kjetil R. Krøkje Head of IR kjetil.r.krokje@storebrand.no +47 9341 2155

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