Storebrand Asa · OSL:STB
Storebrand Asa — JPM European Insurance Conference (2020)
61 slides from Storebrand Asa's conference presentation, 2020
Slide 1: Investor Presentation Q1 2020
Investor Presentation Q1 2020 Compelling combination of self-funded savings growth and capital return from maturing guaranteed back-book 1
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: Strategy
Strategy 3
Slide 4: 250 years of pioneering in the Nordic financial industry
250 years of pioneering in the Nordic financial industry 1767 1847 1861 1917 1995 2006 Foundation Expanded into Pioneered Pioneered Pioneered First - among the first other P&C Life Insurance Occupational sustainable fully digital Norwegian P&C insurance Pensions investments P&C operation companies d
Slide 5: Storebrand - An Integrated Financial Service Group
Storebrand - An Integrated Financial Service Group Insurance ▪ Health, P&C and group life Asset Management insurance ▪ NOK 829bn in AuM of ▪ NOK 5.0bn in which 40% external clients portfolio premiums ▪ 100% of investments Pension & Savings subject to sustainability ▪ 40k corporate customers screenin
Slide 6: Storebrand | Response to COVID19
Storebrand | Response to COVID19 1. Keep employees safe 2. Respond and allocate 7. Open to new opportunities resources to customers' partnerships and M&A needs Storebrand 6. Keep growing the core We're in this together 3. Operations are with the rest of society running close to normal 5. High degree
Slide 7: Leading position in Norway and strong contender in Sweden
Leading position in Norway and strong contender in Sweden Market share occupational pensions (Defined Contribution) Norway 1 Sweden 2 30% 20% 27% 16% 15% 14% 14% 11% 7% 9% Storebrand DNB Nordea Sparebank 1 Gjensidige LF SEB Skandia SPP Movestic Clear value proposition World leader in corporate susta
Slide 8: Demographic change has driven pension reforms in Norway with opportunities emerging
Demographic change has driven pension reforms in Norway with opportunities emerging Workers per pensioner Occupational pension coverage2 1950 Public pension replacement rate1 100 % 55 % II 60 % 40 % Before Now I Pension Now pillar Retail savings Before Now (AuM, bn NOK)3 III 1 000 380 2050 Now Soon
Slide 9: Moderate replacement rates and wealthy population fuel growth potential in retail savings
Moderate replacement rates and a wealthy population with an overweight in bank deposits fuel growth potential in retail market for savings Household disposable income1 Net replacement rate2 Household financial assets Norway3 NOK 1 600 bn Switzerland Netherlands 6% Norway 37 554 Italy 9% Germany Spai
Slide 10: Continued shift from Guaranteed to Non-guaranteed pension
Continued shift from Guaranteed to Non-guaranteed pension Historic premium income1 Current share of reserves2 Expected flow of reserves3 Guaranteed premiums Non-guaranteed premiums Guaranteed Non-guaranteed Claims NOKm Guaranteed Non-guaranteed NOKbn 18 000 5% 3 2 2 2 16 000 14 000 4% Share of reser
Slide 11: Successful transition from Guaranteed to non-guaranteed Savings
Successful transition from Guaranteed to non-guaranteed Savings Premiums Storebrand1 Profit Storebrand2 Shift in total Storebrand AUM3 26 278 3 037 831 24 584 20% 41% 40% 49% 15% 1 960 442 2% 14% 18% 64% 32% 15% 9% NOK bn NOK m NOK m 65% 45% 59% 36% 21% 26% 15% 14% 2012 2019 2012 2019 2012 2019 Exte
Slide 12: Our strategy: A compelling combination of self-funding growth and capital return
Our strategy: A compelling combination of self-funding growth and capital return from maturing guaranteed back-book 1 A B C D Asset manager with Build a world class Uniquely positioned in Leading position strong competitive Savings business growing retail savings Bolt-on M&A Occupational Pension pos
Slide 13: Growth in Savings and Insurance
1 Growth in Savings and Insurance Unit Linked Asset management +19% 220 +9% 831 179 721 707 168 140 535 571 577 128 442 487 105 85 64 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 UL reserves (NOKbn) AuM (NOKbn) Insurance Retail bank +5% +11% 48.2 46.5 42.1 4 327 4
Slide 14: Net premiums and market return drive AuM growth
A Occupational Pension Net premiums and market return drive AuM growth AuM development Unit Linked NOK bn 12-15% Drivers of expected net premiums 280 260 ▪ Majority of premiums generated by 240 active policies 220 ▪ Growth driven by: 200 180 ─ Increased salaries and savings rates 160 19% ─ Populatio
Slide 15: Premium and net flow development in pension savings
Premium and net flow development in pension savings Quarterly premium income, Unit Linked (NOK bn) Unit Linked flow (NOK bn) +19 % 3.3 5.0 5.0 220 4.2 -1.3 12.4 210 -29.1 AuM Premium Net transfers Claims/ Asset return Other/FX AuM 2019 Q1 2020 Q1 31.12.2019 income pension 31.03.2020 payments Net flo
Slide 16: Storebrand to enter Norwegian public sector pension market
A Occupational Pension Storebrand to enter Norwegian public sector pension market Large public sector market New regulation will make it attractive for opening up for competition Storebrand to enter the market again Annual market premium NOK bn1 ▪ With effect from 2020, the pension system for 52 pub
Slide 17: Building on our relationship with employers to reach out to individuals
B Building on our relationship with employers Retail to reach out to individuals Our position in the Norwegian ...gives us a customer base of 1.3 ..with above average financials occupational pension market… million individuals.. and savings capacity Household assets 31% +78% Market Retail 3 200 000
Slide 18: Fast growing Nordic asset manager with captive and external clients
C Fast growing Nordic asset manager with a blend of captive Asset Mgmt pension assets and external clients Main channels for AuM (NOK)1 Pension savings NO Institutional mandates External share and distributors2 External Captive 290 bn 298 bn 40% 60% AuM Pension savings SE 829 bn Direct retail Asset
Slide 19: Increased external share in Asset Management
C Asset Mgmt Increased external share in Asset Management AuM mix Revenue mix1 16% 24% 36% 40% 12% 9% 22% 72% 7% 24% 26% 3% 62% 2% 47% 11% 37% 32% 1% 14% 2009 2015 2019 2015 2019 External Other Unit Linked Guaranteed 19 1 Revenue & AuM include Skagen from 01.01.2017 proforma
Slide 20: Sustainability at the core of our business
Sustainability at the core of our business C Asset Mgmt NOK 829 bn AuM aligned to contribute to the UN Sustainability Goals AUM Sustainability Enhanced, Solutions NOK bn 277.3 829 bn 59.8 68.1 Active Exclusions ownership 3.0 10.3 2015 2016 2017 2018 2019 All assets under management are subject to su
Slide 21: Storebrand's History of Sustainable Investments
C Asset Mgmt Storebrand's History of Sustainable Investments World UN Sustainable Kyoto Protocol (2005) (2009) (2015) Development Goals 1995 2000 2005 2010 2015 2020 Next generation Storebrand Sustainability Exclusions across Storebrand standard Decision to integrate sustainability funds team establ
Slide 22: Ambition: Build a world class Savings business supported by Insurance
1 Ambition: Build a world class Savings business supported by Insurance Savings Insurance A B C Asset manager with strong Leading position Uniquely positioned in competitive position and clear SupportedInsurance by Insurance Occupational Pension growing retail savings market growth opportunities #1
Slide 23: Significant difference in capital consumption and return profile between old and new business
2 Significant difference in capital consumption and return profile between old and new business ILLUSTRATIVE FROM CMD 2018 Savings Insurance Guaranteed3 Group IFRS earnings1 (NOKm) 1 552 638 982 3 172 Allocated Equity2 (NOKbn) 5.5 2.0 23.6 31.1 Pro forma RoE adj(%)4 31% 36% 5% 11% The equity in the
Slide 24: Majority of AUM is capital efficient while guaranteed AUM is trailing off
2 Majority of AUM in Storebrand is already capital efficient and growing while capital consumptive guaranteed AUM is trailing off Forecast assets under management (NOKbn) Implications ILLUSTRATION 2019: 2029e: 71% of AuM ~85% of AuM 1 400 non guaranteed non guaranteed ▪ Guaranteed portfolio has reac
Slide 25: Capital generation from fee based earnings and capital release from back book
2 Capital generation from increasing fee based earnings in front book and capital release from the back book From CMD Estimated solvency generation (annual) short term1 Estimated reduced capital consumption back book Capital consumption includes sum of solvency capital requirement and sum of VIF for
Slide 26: Group capital management policy sets thresholds for distribution of cash dividends
2 Group capital management policy sets thresholds for distribution of cash dividends Solvency II Incl. transitional rules ▪ Share buybacks to be considered on a semi-annual basis 180% ▪ Dividend of more than 50% of Group result after tax 172% ▪ Ambition is to pay ordinary dividends per share of at l
Slide 27: Back book has reached peak capital and expected to contribute cash
2 Ambitions Capital – back book has reached peak capital and is expected to contribute with cash together with growing front book FROM CMD 2018 Low case: Base case: High case: Release capital from the business Release capital from the business Release capital from the business 2021 ▪ Regulatory chan
Slide 28: Financial Targets are maintained
Financial Targets are maintained Target Actual 2019 Return on equity1 > 10% 8.0% Suspended Dividend pay-out ratio2 > 50% due to Covid-19 % Solvency II margin Storebrand Group3 > 150% 176% 1 Before amortisation after tax. 28 2 After tax 3 Including transitional rules.
Slide 29: Capital Management
29 Capital Management G9 storebrand
Slide 30: Storebrand Group Structure
Storebrand Group Structure Diversified cash flow to holding company Storebrand ASA Legal structure (simplified) Storebrand ASA Storebrand Livsforsikring AS Storebrand Asset Storebrand Forsikring Storebrand Bank ASA Management AS AS Reporting structure Storebrand Holding Benco SKAGEN AS AB Storebrand
Slide 31: Strong Group IFRS equity and capital structure – reduced financial leverage
Strong Group IFRS equity and capital structure – reduced financial leverage Group equity (NOK bn) Group capital structure2 42,323 43,163 40,821 34,090 35,258 32,873 33,398 32,567 27,637 27,250 24,741 33,398 34,090 32,873 (79%) (79%) 25,120 27,637 (81%) 20,175 24,795 25,748 24,741 (75%) (77%) (74%) (
Slide 32: Strong liquidity and low leverage
Strong liquidity and low leverage Net liquidity ratio Storebrand ASA (holding) 10% 10% ▪ Proceeds from subsidiaries have been used to pay dividends, reduce debt in the holding company -3% 0% and increase the liquidity buffer -5% -4% -8% -9% -9% -9% -13% -11% -12% ▪ Holding company net liquidity rati
Slide 33: Group Liquidity NOK bn
Group Liquidity NOK bn 6.3 2.3 4.0 1.3 2.7 Liquidity Undrawn RCF Liquidity inc RCF Debt Financed Equity financed Total liquidty inc RCF RCF - Revolving Credit Facility of EUR 300 Million, exchange rate 11.494 applied. 33 Numbers as of 31.03.2020
Slide 34: Term structure debt – no refinancing needs until 2021
Term structure debt – no refinancing needs until 2021 Term structure sub-debt Storebrand Livsforsikring1 (bn NOK) Term structure senior debt Storebrand ASA (bn NOK) 3.8 Perpetual Non- perpetual 2.2 1.1 1.1 0.8 0.9 0.8 0.5 1.1 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025 34 1 EUR 300 M
Slide 35: The Solvency Calculation
The Solvency Calculation – moving to a market consistent balance sheet and risk sensitive capital requirements Solvency II Balance Sheet IFRS balance sheet Solvency II balance sheet under 1/200 years shock SCR Own Equity Funds Own Funds after shock Moving to 1 in 200 economic years shock balance she
Slide 36: SII position Storebrand Group
SII position Storebrand Group Group Solvency position(%)1 Estimated sensitivities Target SII margin 150% 176 172 2 17 SII-margin Q1 155 17 172 174 Interest 155 rates -50bp 140 34 174 Interest rates +50 bp 166 1 167 Q4 2019 Q1 2020 Transitional rules SII standard model Equity -25% 145 23 168 Key take
Slide 37: Rating migration would have limited impact
Rating migration would have limited impact because of high asset quality and relativly low credit duration Rating migration scenarios Estimated impact on solvency ratio (%) SII Q1 2020 172% 25% of bonds one notch down 166% 50% of bonds one notch down 161% 37 1 The analysis show the impact all else e
Slide 38: Movement from Q4 2019 to Q1 2020
Movement from Q4 2019 to Q1 2020 Group Storebrand Group Solvency Ratio +174 % +17 % +172 % -1 % -3 % +5 % +155 % +1 % +1 % +149 % +19 % +5 % -19 % -1 % +7 % -13 % -20 % Q4 2019 Model and UFR Interest Credit Volatility Equity Equity Risk Bank Earnings Dividend Q1 2020 No Q1 2020 Transitionals Q1 2020
Slide 39: High quality capital base under Solvency II
High quality capital base under Solvency II SCR and own funds (NOK bn) Own funds in % of SCR (excluding CRD IV subsidiaries) OF % OF % of Regulatory limit of SCR total 47 0 3 Tier 3 ≤ 15% SCR 1% 1% 8 1 28 CRD IV 3 Tier 2 ≤ 50% SCR 31% 16% capital ∑ T2+T3 requirements 35 Tier 1 ≤ 20% T1 4% 2% Restric
Slide 40: Solvency Capital Requirements (SCR)
Solvency Capital Requirements (SCR) SCR calculation Q1 2020 SCR dominated by financial market risk… NOKbn Operational P&C & Health 4% Currency 3% Interest Rate Down 16% Concentration 20% 0% SCR before diversification 38 Life 28% 29% 20% Diversification -8 Spread Equity 61% 16% Risk absorbing Financi
Slide 41: Reduced Solvency Capital Requirement from Guaranteed business
Reduced Solvency Capital Requirement from Guaranteed business Expected proportion of SCR 2019-2028 2% 2% 2% 100% 2% 2% 2% 2% 2% 2% 2% ▪ Guaranteed products have more financial market risk 33% ▪ High buffer need to SCR because of high 39% 36% 42% volatility 47% 44% 50% 54% 59% 64% 3% 3% 3% 3% ▪ Insur
Slide 42: Investment management
42 Investment management G9 storebrand
Slide 43: Liability Driven Investments expected to generate SII Capital and Stabilise IFRS Results
Liability Driven Investments are expected to generate SII Capital and Stabilise IFRS Results Expected excess SII buffer – assets over mark to market return1 guaranteed liabilities +0.7% +6.5% 1.7% 13.1% Long term perspective SII 1.0% 6.6% Risk management of own funds and SCR Expected Required Risk 2
Slide 44: High quality assets with fixed income as the backbone
High quality assets with fixed income as the backbone NOK 195 bn 4% Equities Real estate 11% 32% 80% Prime MSCI World Location & Quality 20% Local Index (OMX & OBX) SEK 86 bn 9% 11% Amortising 53% Fixed income bonds and loans 80% Average rating Average rating Norway Sweden AA- A Equities Fixed incom
Slide 45: High Quality Fixed Income I - Bonds at Amortised Cost
High Quality Fixed Income I - Characteristics of Bonds at Amortised Cost1 Market & book value – no reinvestment (NOKbn) Rating distribution (%) 123 121 6 6 112 6 101 5 19% AAA 79 74 27% 5 5 62 0% AA 116 4 52 A 115 106 43 96 3 37 13% 74 3 29 BBB 69 2 25 58 49 2 2 41 34 Unrated & BB 27 23 21% 20% Mort
Slide 46: High Quality Fixed Income II - Mark to Market Fixed Income
High Quality Fixed Income II - Characteristics of Mark to Market Fixed Income1 Rating distribution (%) Geographical distribution2 (%) 15% 20% 20% AAA Europe ex. NO & SWE 35% AA Norway 4% 5% A 2% Sweden BBB Other 14% Unrated & BB US 59% 14% Mortages, Loans & ABS 12% Sector distribution (%) 20% Sovere
Slide 47: Paid up policies in Norway: Segmentation According to Risk Capacity
Paid up policies in Norway: Segmentation According to Risk Capacity High Segment 4 50 bn. Segment 5 20 bn. Amortizing bonds and loans Government bonds Credit Segment 3 Real Estate Buffer level 27 bn. Equities Segment 2 26 bn. Segment 1 21 bn. Low Low Required book return High 47
Slide 48: Q1 2020 Results
48 Q1 2020 Results G9 storebrand
Slide 49: Key figures
Key figures Group Result development1 Earnings per share2 Financial items and risk result life Operating profit MNOK Special items 1.68 Performance related result 1,026 730 700 1.26 1.21 1.22 579 319 202 105 114 251 0.82 546 568 635 456 265 -18 -44 -50 -49 -588 -11 -334 Q1 2019 Q2 2019 Q3 2019 Q4 20
Slide 50: Storebrand Group Profit
Storebrand Group Group Profit1 Q1 Full year NOK million 2020 2019 2019 Fee and administration income 1 349 1 215 5 308 Insurance result -71 245 1 005 Operational cost -1 024 -929 -4 015 Operating profit 254 531 2 298 Financial items and risk result life -588 202 739 Profit before amortisation -334 7
Slide 51: Storebrand Group Profit per line of business
Storebrand Profit Group 1 Group Q1 Full year NOK million 2020 2019 2019 Fee and administration income 1 349 1 215 5 308 Insurance result -71 245 1 005 Operational cost -1 024 -929 -4 015 Operating profit 254 531 2 298 Financial items and risk result life -588 202 739 Profit before amortisation -334
Slide 52: Storebrand Group Profit adjusted for performance related items
Storebrand Profit Group 1 Group Q1 Full year NOK million 2020 2019 2019 Fee and administration income 1 349 1 215 5 308 Insurance result -71 245 1 005 Operational cost -1 024 -929 -4 015 Operating profit 254 531 2 298 Operating profit adjusted for performance related income and costs2 Q1 Full year N
Slide 53: Savings (non-guaranteed)
Savings (non-guaranteed) Savings Profit Q1 Full year NOK million 2020 2019 2019 Fee and administration income 1 043 896 3 996 Operational cost -669 -615 -2 621 Operating profit 375 281 1 375 Financial items and risk result life -98 9 -11 Profit before amortisation 276 290 1 364 Profit per product li
Slide 54: Savings (non-guaranteed) adjusted profit
Savings Savings Profit (non-guaranteed) Q1 Full year NOK million 2020 2019 2019 Fee and administration income 1 043 896 3 996 Operational cost -669 -615 -2 621 Operating profit 375 281 1 375 Operating profit adjusted for performance related income and costs1 Q1 Full year NOK million 2020 2019 2019 B
Slide 55: Savings (non-guaranteed) - strong growth
Savings (non-guaranteed) - strong growth Savings Reserves and premiums Unit Linked Comments1 5.0 4.6 4.2 4.2 4.2 ▪ 19% growth in UL premiums 220 210 207 ▪ 10% growth in UL reserves 198 191 BNOK ▪ 14% growth in assets under management Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 ▪ Stable interest margin i
Slide 56: Insurance
Insurance Insurance Profit Q1 Full year NOK million 2020 2019 2019 Insurance premiums f.o.a. 1 019 948 3 909 Claims f.o.a. -1 090 -703 -2 904 Operational cost -175 -150 -648 Operating profit -246 95 357 Financial result -22 8 83 Profit before amortisation -268 103 439 Profit per product line Q1 Full
Slide 57: Insurance – reserve strengthening
Insurance – reserve strengthening Insurance Combined ratio Comments Combined ratio and results Claims ratio Cost ratio Combined ratio 124% ▪ 124% combined ratio 2019 due to reserve strengthening for contracts with disability coverage 90% 96% 89% 89% ▪ Good cost control with stable 17% cost ratio 107
Slide 58: Guaranteed pension
Guaranteed pension Guaranteed Profit Q1 Full year NOK million 2020 2019 2019 Fee and administration income 349 361 1 475 Operational cost -202 -186 -819 Operating profit 147 174 657 Risk result life & pensions -26 61 215 Net profit sharing -26 13 157 Profit before amortisation 95 249 1 029 Profit pe
Slide 59: Guaranteed pension - robust buffer situation
Guaranteed pension - robust buffer situation Guaranteed Reserves guaranteed products Comments 261 262 264 263 272 32 33 33 33 30 ▪ Result dampened by disability reserve strengthening 142 ▪ Last large Norwegian DB contract converted to BNOK 136 137 137 137 Hybrid plan, increases Paid up policies 12 1
Slide 60: Other
Other1 Other Profit Q1 Full year NOK million 2020 2019 2019 Fee and administration income 13 14 51 Operational cost -35 -33 -143 Operating profit -22 -19 -91 Financial items and risk result life -416 111 296 Profit before amortisation -437 91 205 Profit per product line Q1 Full year NOK million 2020
Slide 61: Investor Relations contacts
Investor Relations contacts Lars Aa. Løddesøl Group CFO lars.loddesol@storebrand.no +47 9348 0151 Kjetil R. Krøkje Group Head of Finance, Strategy and M&A kjetil.r.krokje@storebrand.no +47 9341 2155 Daniel Sundahl Head of Investor Relations & Rating daniel.sundahl@storebrand.no +47 9136 1899 This do
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