Storebrand Asa · OSL:STB
Storebrand Asa — Q2 2015 Earnings Presentation
52 slides from Storebrand Asa's earnings presentation, 2015
Slide 1: Investor presentation Updated Q2 2015
Investor presentation Updated Q2 2015
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 Q2 2015 29 3. Market and sales in Norway and Sweden 42 4. Capital structure 50 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 117 bn in Unit Linked reserves NOK 259 bn in Guaranteed reserves 100% of investments assessed by sustainability criteria History of the group d
Slide 5: Solid, profitable business with capital efficient growth
Solid, profitable business with capital efficient growth Group result Assets under Management2 MNOK 600 BNOK 3,032 2,938 358 500 416 519 1,960 257 1,612 400 1,279 441 1,245 158 2,265 2,546 300 362 1,454 1,570 1,714 883 200 -291 -195 -391 2009 2010 2011 2012 2013 2014 100 Net profit sharing and loan
Slide 6: Group equity and capital structure
Group equity and capital structure Group equity Group capital structure2 Tangible equity increased by 64% 2010-2014, Improved leverage ratio intangible equity amortised according to plan 32.567 30.184 27.250 26.023 26.273 24.741 22.775 24.741 20.175 22.775 (76%) 18.417 18.777 (75%) 18.417 18.777 20.
Slide 7: 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 7
Slide 8: Strategic business transformation continues
Strategic business transformation continues - Key factors that shape our financial landscape Illustrative A Income Savings and Insurance We grow our income in capital efficient savings and insurance.. B Income Guaranteed pensions … at the same time income from the guaranteed back book is in decline…
Slide 9: Transformation of the business model
Transformation of the business model Solid market fundamentals Back book challenges Attractive front book Dual strategy reiterated and reinforced Manage the guaranteed balance sheet Continued growth in savings and insurance Retail customers Employees Capital Risk optimization reduction Corporate rel
Slide 10: Managing the guaranteed balance sheet
Managing the guaranteed balance sheet - Balance sheet significantly improved, key back book challenges: Low interest rates and paid up polices Capital optimization Risk reduction Transfer out of guaranteed products 35.592 Reduced equity exposure 6.470 Longevity reserve strengthening ahead of pla
Slide 11: Paid up policies is the main challenge in a low interest scenario
Paid up policies is the main challenge in a low interest scenario and under SII… …But still manageable both short and long term Expected return paid up polices without use of buffers 2015-20201 …including reinvestment due and expected issuance 2015-2020: Longevity reserve of new paid up polices st
Slide 12: Longevity - 65% of reserve strengthening completed
Longevity - 65% of reserve strengthening completed Reserve strengthening Norwegian guaranteed products Negative result impact in the quarter 2013-2Q 2015 (BNOK) 2015-2020 (BNOK) 2Q 2015 (MNOK) 253 16.2 90 NOK 102 Indirect negative 12.4 result contribution 9.7 12 3.5 8.1 61 2.7 NOK 151 1.9 4.3 Direct
Slide 13: Estimated SII position Life Group and sensitivities
Estimated SII position Life Group and sensitivities Economic Solvency position(%)1 Estimated Sensitivities after 1.1.20162 Target SII margin 152 154 1.1.2016 =130% 54 40 Estimated economic SII-margin Q2 2015 154 98 114 Interest rates -50bp 134 Q1 2015 Q2 2015 Interest rates +50 bp 168 Transitional r
Slide 14: 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 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% 22% 11% 43% 11% 4% 30.06.2015 7
Slide 15: SPP asset allocation
SPP asset allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Alternative investments Bonds Equities 30.06.2014 6% 82% 12% 30.09.2014 6% 82% 12% 31.12.2014 6% 84% 10% 31.03.2015 5% 86% 9% 30.06.2015 6% 86% 9% 1 The graph shows the asset allocation for all products with an interest rate guarantee
Slide 16: Long term balance sheet shift
Long term balance sheet shift "Good guaranteed" "Medium guaranteed" Reserves "Bad guaranteed" Total ILLUSTRATION BNOK Non-guaranteed 500 450 400 350 300 250 200 150 100 50 0 2012 2014 2016 2018 2020 2022 2024 Non-guaranteed: Unit Linked Norway and Sweden "Good guaranteed:" Defined Benefit Norway "Me
Slide 17: Growth in Savings and Insurance continues I
Growth in Savings and Insurance continues I Unit Linked Asset management +25.1% 105 +8.9% 535 85 487 64 442 54 414 2011 2012 2013 2014 2011 2012 2013 2014 UL reserves (BNOK) AuM (BNOK) Save for retirement Insurance Retail loans 2.8% +7.0% 23.7 23.9 23.9 3 115 22.0 3 034 2 707 2 546 2011 2012 2013 20
Slide 18: Growth in Savings and Insurance continues II
Growth in Savings and Insurance continues II Unit Linked Asset management 26% 10% 117 23% Premium 552 502 Gathering 93 growth 1H Paid-up assets from policies life company w/investment Strong sales choice adds growth Q2 2014 Q2 2015 Q2 2014 Q2 2015 UL reserves (BNOK) AuM (BNOK) Save for retir
Slide 19: Attractive and growing Nordic occupational pensions market
Attractive and growing Nordic occupational pensions market Assets under Management Assets under Management in private sector Norway* Life insurance Sweden private sector** BNOK Defined contribution Defined benefit Unit linked Paid-up policies (from DB) Guaranteed 3 338 +12% 2 890 +10% 496 953 472 2
Slide 20: Storebrand is the market leader in the Norwegian defined contribution market
Storebrand is the market leader in the Norwegian defined contribution market Norway - Market share UL defined Sweden - UL defined contribution contribution (private sector)1 (private sector)2 24 50 22 45 20 40 18 16,9 15,9 35 16 30,8 30 28,3 14 12,3 25 12 10 20 8 15 6 10 4 5 2 0 0 2004 2005 2006 200
Slide 21: Strong sales and continued growth in Unit Linked premiums
Strong sales and continued growth in Unit Linked premiums Growth in 2015 will come from new customers… Letter of intent signed with Statoil: ~13 400 employees on a DC scheme Annual DC premiums of ~1 NOK bn Administration of closed DB pension fund …and market growth and new sales will ensure co
Slide 22: Asset gathering: AuM and revenue dynamics changing
Asset gathering: AuM and revenue dynamics changing AuM & Revenue mix AuM Revenue External Ambition: 10% annual 21% 31% increase in net revenues Unit linked 15% Other/ internal funds Increased savings rates 13% 22% boost asset growth 4% Guaranteed 51% 42% Long term outflows 2009 2010 2011 2012 2013 2
Slide 23: Storebrand Insurance - platform to cross sell corporates and individuals
Storebrand Insurance – platform to cross sell corporates and individuals Main product lines Portfolio premium1 Combined Ratio2 Market share 3,7%3 P&C & Property and motor 1,002 Retail Individual life 80% 10,8%3 PP1 1.607 MNOK Ind. life & disability 605 Corporate Health & Health 528 19,6%3 Group life
Slide 24: 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 25: Leveraging leading sustainability position to create customer value
Leveraging leading sustainability position to create customer value Sustainability rating on mutual funds Key takeaways Introduced in Sweden in 2014 and in Norway in Q1 2015 Built on leading in-house sustainability competence Most comprehensive system in the market Verified by DNV GL 25
Slide 26: Financial targets
Financial targets Target Status Q4 2014 Return on equity (after tax) > 10 % 10.8% After-tax dividend ratio > 35 % n/a Solvency II margin Storebrand Group > 130 % 152 %1 Rating Storebrand Life Insurance A-level BBB+/Baa1 1 Estimated solvency 2 ratio Storebrand Life Group including proposed transition
Slide 27: Key takeaways
Key takeaways Leading Nordic Occupational pension provider Solid and profitable company Well prepared for Solvency II Strong growth in attractive front book 27 27
Slide 28: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results Q2 2015 29 3. Market and sales in Norway and Sweden 42 4. Capital structure 50 28
Slide 29: Highlights 2Q 2015
Highlights 2Q 2015 16% Insurance written Group result premium growth2 MNOK 459 661 23% Unit Linked premium growth2 -202 Q2 2015 Result before profit sharing and loan losses Net profit sharing and loan losses/Longevity provision 65% of longevity 11,5 % growth in fee and strengthening completed admi
Slide 30: 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 1.78 923 750 25 1.33 632 1.08 200 477 450 459 62 0.78 0.80 58 640 660 541 546 661 -90 -9
Slide 31: Storebrand Group profit
Group Storebrand Group Profit 2Q 01.01 - 30.06 Full year NOK million 2015 2014 2015 2014 2014 Fee and administration income 1 065 986 2 109 1 999 4 160 Risk result life & pensions 54 45 63 120 480 Insurance premiums f.o.a. 947 770 1 813 1 540 3 115 Claims f.o.a. -683 -558 -1 334 -1 050 -2 226 Operat
Slide 32: Storebrand Group profit per line of business
Group Storebrand Group Profit 2Q 01.01 - 30.06 Full year NOK million 2015 2014 2015 2014 2014 Fee and administration income 1 065 986 2 109 1 999 4 160 Risk result life & pensions 54 45 63 120 480 Insurance premiums f.o.a. 947 770 1 813 1 540 3 115 Claims f.o.a. -683 -558 -1 334 -1 050 -2 226 Operat
Slide 33: Cost control
Group Cost control Cost/Income1 below 60% target 12-month rolling MNOK Operational cost 3.143 = 58.8% Fee and admin income Underwriting result2 4.269 1.078 1 Operational cost and risk result life & pensions are adjusted for special items in 4Q 2014. 33 2 Underwriting result consists of insurance pre
Slide 34: Savings (non-guaranteed) - strong results growth
Savings (non-guaranteed) Savings - strong results growth Profit 2Q 01.01 - 30.06 Full year NOK million 2015 2014 2015 2014 2014 Fee and administration income 627 559 1 255 1 108 2 375 Risk result life & pensions 4 -7 0 -8 -11 Operational cost -394 -363 -802 -720 -1 289 Financial result 0 0 0 0 0 Res
Slide 35: Savings (non-guaranteed) - strong growth in UL premiums
Savings (non-guaranteed) Savings - strong growth in UL premiums Reserves and premiums Unit Linked Comments1 3,0 2,9 2,6 2,5 2,3 +29% 29% premium growth in UL 116 117 premiums2 105 +26% 94 12% top line growth in Savings 93 BNOK Strong result development in Asset Management continues Q2 2014 Q3
Slide 36: Insurance - continued P&C growth
Insurance Insurance - continued P&C growth Profit 2Q 01.01 - 30.06 Full year NOK million 2015 2014 2015 2014 2014 Insurance premiums f.o.a. 947 770 1 813 1 540 3 115 Claims f.o.a. -683 -558 -1 334 -1 050 -2 226 Operational cost -136 -131 -264 -256 -387 Financial result 64 74 136 147 173 Profit befor
Slide 37: Insurance - strong financial results
Insurance Insurance - strong financial results Comments Combined ratio and Combined ratio Claims ratio Cost ratio Combined ratio financial result 1 90% 93% 90% 89% 87% Combined Ratio 87% Investment portfolio co-invested 73% 73% 76% 75% 72% with common portfolio. Strong 16% 1 booked results 17% 1
Slide 38: Guaranteed pension - lower results is the new normal
Guaranteed pension Guaranteed - lower results is the new normal Profit Q2 01.01-30.06 Full year NOK million 2015 2014 2015 2014 2014 Fee and administration income 457 439 889 913 1 842 Risk result life & pensions 47 48 63 126 483 Operational cost -281 -281 -558 -562 -921 Financial result - - - - - P
Slide 39: Guaranteed pension - reserves below 70% of total reserves
Guaranteed pension Guaranteed - reserves below 70% of total reserves Reserves guaranteed products Comments Reversal of profit sharing due to low returns leads to weaker financial result in Sweden BNOK 263 264 261 259 257 Increased allocation to bonds at amortised cost Q2 2014 3Q 2014 4Q 2014 1Q
Slide 40: Other
Other Other1 Profit 2Q 01.01 - 30.06 Full year NOK million 2015 2014 2015 2014 2014 Fee and administration income 35 53 78 117 233 Risk result life & pensions 3 3 -0 2 8 Operational cost -43 -53 -91 -107 -138 Financial result 12 82 22 127 175 Result before profit sharing and loan losses 8 85 8 139 2
Slide 41: Highlights 2Q 2015
Highlights 2Q 2015 16% Insurance written Group result premium growth2 MNOK 459 661 23% Unit Linked premium growth2 -202 Q2 2015 Result before profit sharing and loan losses Net profit sharing and loan losses/Longevity provision 65% of longevity 11,5 % growth in fee and strengthening completed admi
Slide 42: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results Q1 2015 29 3. Market and sales in Norway and Sweden 42 4. Capital structure 50 42
Slide 43: Storebrand is the market leader in the defined contribution market
Storebrand is the market leader in the defined contribution market Market share defined contribution* Market share defined benefit** (private sector) (private sector) 50 50 45 40 40 39,9 35 30,8 30 30 25 20 20 15 10 10 5 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007
Slide 44: SPP increasing market share
SPP increasing market share Other Occupational pensions - Total Other Occupational pensions –Unit Linked Market share written premiums - Total Market share written premiums – Unit Linked 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Skandia LF
Slide 45: Increased saving rates provide a significant growth opportunity
Increased saving rates provides a significant growth opportunity Former defined contribution regulations Increased saving rates defined contribution Annual pension savings as a % of salary Annual pension savings as a % of salary 2-7% 2-5% 2-25,1% 18,1% 18,1% 2-8% 620.029 1.047.936 620.029 1.047.936
Slide 46: Storebrand experiences high interest for increased saving rates from customers
Storebrand experiences high interest for increased saving rates from customers CMD March 2013 CMD October 2014 3% Contracts 57% 33% 10% Contracts 52% 35% 10% Individuals 38% 40% 22% Individuals 34% 36% 27% 3% Annual premiums 16% 41% 43% Annual premiums 12% 33% 48% 7% Minimum savings (2%) Minimum sav
Slide 47: Retail growth from target customer segment
Retail growth from target customer segment No. of employees in Storebrand No. of employees with retail product Advantage concept +38% 62.104 +15% 428.418 408.487 51.926 372.568 45.120 Jan.13 Dec.13 Dec.14 Jan.13 Dec.13 Dec.14 Observations • Number of employees Storebrand can target has increased by
Slide 48: The possibility to convert guaranteed policies to unit linked fuels growth
The possibility to convert guaranteed policies to unit linked fuels growth Conversion from guaranteed New digital solutions paid-up policies to UL CONVERSION Paid-up policies portfolio Key factors for customers to consider 90 BNOK Customer advice 45 Convert 26 Contact us 13 Not convert 6 Total reser
Slide 49: Contents
Contents Page: 1. Storebrand overview and strategy 4 2. Results Q1 2015 29 3. Market and sales in Norway and Sweden 42 4. Capital structure 50 49
Slide 50: Capital Structure - 2Q 2015
Capital Structure - 2Q 2015 STOREBRAND GROUP Equity: NOK 25.0 bn STOREBRAND ASA Hybrid and subordinated: NOK 7.5 bn* Equity: NOK 16.5 bn Equity/debt Senior debt: NOK 3.1 bn 77/23 (liquid assets: NOK 2.2 bn) Credit facility (EUR 240 mn) - amount drawn: NOK 0 bn STOREBRAND LIVSFORSIKRING G
Slide 51: Term structure debt
Term structure debt Net debt ratio Storebrand ASA (percentage) 14 13% 12% 12 11% 10 9% 9% 9% 8% 8 6 5% 0 2008 2009 2010 2011 2012 2013 2014 2Q2015 Term structure senior bond debt Storebrand ASA (MNOK) 1.000 850 450 500 300 2015 2016 2017 2018 2019 2020 Term structure debt Storebrand Livsforsikring1
Slide 52: 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 Lars Kramer VP Capital Management lars.kramer@st