Storebrand Asa · OSL:STB
Storebrand Asa — Q3 2007 Earnings Presentation
50 slides from Storebrand Asa's earnings presentation, Oct 17, 2007
Slide 1: Results 3rd Quarter 2007 Analyst Presentation
Storebrand Results 3rd Quarter 2007 17 October 2007 Analyst Presentation Analyst Presentation 3rd Quarter 2007 Page # Slide # • Storebrand Group Group CEO Idar Kreutzer 2-15 3-30 Back-up: • Storebrand Group 16-21 31-42 • Storebrand ASA 22-23 43-46 • Storebrand Life Insurance 24-35 47-70 • Storebrand
Slide 2: Highlights Q3 2007
Storebrand Results 3rd Quarter 2007 17 October 2007 Idar Kreutzer Group CEO Highlights Q3 2007 Group profit of NOK 357 million in Q3 and NOK 1,344 million year to date Strong premium growth and competitive strength in life and pensions business Customer growth continues in banking and P&C Reduced pe
Slide 3: Storebrand Group - Good development in results
Storebrand Group - Good development in results Q2 01.01. - 30.06 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 Life activities 307 250 1 041 836 1 198 Investment activities 6 38 101 90 156 Storebrand Bank 54 47 188 154 190 Other activities -9 -13 14 63 41 Group profit 357 321 1 344 1 142 1 585 5
Slide 4: Storebrand Life – satisfactory solidity
Storebrand Life – satisfactory solidity NOK billion and % 14,0 % 16.8 16.8 12,0 % Profit carried 13.6 11.0 13.6 forward 10,0 % Core capital 8,0 % margin 6,0 % Market value adj. res. 4,0 % 2,0 % Additional statutory reserves 0,0 % 2004 2005 2006 Q3 06 Q3 07 Graph shows risk capital as a percentage of
Slide 5: Competition in traditional group pension business
Competition in traditional group pension business 2007 Reported transfer balance group pensions YTD: 600 500 400 300 527 200 100 -12 -85 -5 0 0 Storebrand Vital KLP Nordea Sparebank 1 Pension Other -100 Fund -148 -277 -200 -300 -400 9 The graph shows transfers to/from Storebrand and towards the comp
Slide 6: Positive development for individual life products
Positive development for individual life products Strong sales of cancer insurance continues Stabilised development of individual life insurance reserves 11 700 new customers within life insurance (risk products) year to date 50% sales growth in individual risk products and health insurance 11 Q3 20
Slide 7: New investment choices based on the new life insurance act
New investment choices based on the new life insurance act Current product Tomorrow's standard products DB DB Paid up Retail Defined 1-YEAR 5-YEAR policies market benefit (DB) Asset allocation: Asset allocation: Asset allocation: Asset allocation: Moderate 30 % shares* 50 % shares Storebrand and rea
Slide 8: Storebrand Bank - satisfactory development
Storebrand Bank - satisfactory development Q3 01.01-30.09 Full Year NOK million 2007 2006 2007 2006 2006 Net interest income 108 109 303 318 419 Net fee and commission income 15 12 43 21 32 Other operating income 3 8 29 34 47 Total income 126 129 374 372 498 Operating expenses -83 -93 -247 -259 -355
Slide 9: Bank - stabilising net interest income
Storebrand Bank - stabilising net interest income NÒK mill 106 109 108 As a 102 101 102 1,50 percetage of 100 93 total assets 1,40 1,41 80 1,36 1,30 1,31 60 1,20 1,22 1,10 40 1,08 1,08 1,00 1,05 20 0,90 0 0,80 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 17 Q3 2007 Storebrand Bank - positive cost devel
Slide 10: Storebrand Investments - reduced performance-related fees
Storebrand Investments - reduced performance-related fees Q3 Year to date 01.01-31.12 NOK million 2007 2006 2007 2006 2006 Total income 49 98 247 246 399 Total costs -51 -67 -188 -185 -280 Net financial income/ other 8 7 42 29 37 Profit before tax 5 38 101 90 156 Reversal of previously accrued perfo
Slide 11: The margin improvement continues in 2007
The margin improvement continues in 2007 bp 16 14 12 10 8 6 3. kv 2003 3. kv 2004 3. kv 2005 3. kv 2006 3. kv 2007 Income Cost 21 Income = Income ex performance-related fees and SAI (12 month rolling) / AuM Cost = Total costs ex performance-related costs (12 month rolling) / AuM Q3 2007 Storebrand I
Slide 12: Group - good development in P&C business
Storebrand Group - good development in P&C business Q3 01.01. -30.09 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 2005 Storebrand ASA *) -21 -8 1.062 1.017 1.012 0 Storebrand Skadeforsikring **) 12 -5 -19 39 21 0 Other companies/elimintations ***) 0 0 -1.029 -993 -991 0 Total profit other activ
Slide 13: SPP re-cap - transaction highlights
SPP re-cap - transaction highlights Gross purchase price of SEK 18.0bn (€1.9bn1/NOK15.3bn1) SPP excess capital of SEK2.0bn (NOK1.7bn) expected to be Price distributed to Handelsbanken pre closing resulting in net purchase price of SEK16.0bn (€1.7bn/NOK13.6bn) 1.1x P/MCEV and 13x normalised earnings²
Slide 14: SPP re-cap – a transforming transaction for Storebrand
SPP re-cap – a transforming transaction for Storebrand Creating a leading player Pre tax profit diversification 1 Premium income 2006 in Nordic countries Pre-tax profit² (€m) Storebrand+SPP 3,299 Nordea 3,167 (1) AM AM Norway Other 3% Norway Other 2% Vital 2,927 (2) 11% AM Sweden 6% 5% SEB 2,781 (3)
Slide 15: Storebrand's objective
Storebrand's objective is to be the leading and most respected institution in the Norwegian market for long-term savings and insurance 29 Q3 2007 (Page intentionally left blank) 30 Q3 2007 15
Slide 16: Storebrand Group - IFRS accounting
Storebrand Group IFRS accounting Storebrand ASA’s group accounts are presented in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union. 32 Q3 2007 16
Slide 17: Group profit by sub-group
Storebrand Group Group profit by sub-group Q2 01.01. - 30.06 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 Life activities 307 250 1 041 836 1 198 Investment activities 6 38 101 90 156 Storebrand Bank 54 47 188 154 190 Other activities -9 -13 14 63 41 Group profit 357 321 1 344 1 142 1 585 33 Q3
Slide 18: Earnings per share
Storebrand Group Earnings per share Q3 01.01. - 30.09 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 Group profit 357 321 1 344 1 142 1 585 Changes in security reserve etc. - non life -2 0 1 1 0 Profit before tax 355 321 1 345 1 143 1 585 Tax - 17 - 22 - 59 - 75 - 79 Profit for the year 338 298 1
Slide 19: Group profit by sub-group
Storebrand Group Group profit by sub-group 2007 2006 2005 NOK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Life activities 307 463 272 362 250 282 304 376 Investment activities 6 64 31 67 38 32 20 4 Storebrand Bank 54 55 79 36 47 59 48 59 Other activities -9 17 7 -21 -13 -18 94 -9 Group profit 357 599 389 444 32
Slide 20: Other activities and shareholder structure
Storebrand Group Other activities Q3 01.01. -30.09 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 2005 Storebrand ASA *) -21 -8 1.062 1.017 1.012 0 Storebrand Skadeforsikring **) 12 -5 -19 39 21 0 Other companies/elimintations ***) 0 0 -1.029 -993 -991 0 Total profit other activities -9 -13 14 63
Slide 21: Rating and key figures
Rating for Storebrand as at October 17 2007 Storebrand ASA Moody’s: Baa2 (S) S&P: BBB+ (N) Storebrand Storebrand Livsforsikring AS Bank ASA Moody’s: A2 (S) Moody’s: A2 (S) S&P: A (N) S&P: BBB+ (P) P=positive outlook, S=stable outlook, N=negative outlook 41 Q3 2007 Storebrand Group Key figures Q3 01.
Slide 22: Storebrand ASA
Storebrand ASA Storebrand ASA Profit for the year *) Q3 01.01. - 30.09 01.01.-31.12 NOK million 2007 2006 2007 2006 2006 Group contributions and transfers 0 0 1 033 1 028 1 028 Interest income 28 18 76 55 73 Interest expense - 28 - 20 - 77 - 55 - 77 Realised/unrealised gains/losses on securities -5
Slide 23: Storebrand ASA Quarterly development
Storebrand ASA Quartely development 2007 2006 2005 NOK million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Group contributions and transfers 0 0 1 033 0 0 0 1 028 0 Interest income 28 30 19 18 18 21 16 17 Interest expense -28 -26 - 23 - 22 - 20 - 18 - 17 - 17 Realised/unrealised gains/losses on securities -5 44 44 21 1
Slide 24: Storebrand Life Group Highlights
Storebrand Life Storebrand Life Group Highlights as at 30.09.2007 Operating profit in Q3 was NOK 839 million, compared to NOK 639 million in Q3 2006 (before effects from IFRS). Operating profit as at 30.09.2007 was NOK 4,729 million compared to NOK 3,212 million as at 30.09.2006 Effects from IFRS is
Slide 25: Life Insurance Highlights as at 30.09.2007
Storebrand Life Insurance Highlights as at 30.09.2007 Total premium income (excluding net transfers) increased by 26 % in Q3 compared to the same period last year and has increased by 28 % as at 30.09.2007. Positive net transfer balance for life insurance in Q3 of NOK 47 million and NOK 658 million
Slide 26: Storebrand Livsforsikring AS Profit and loss
Storebrand Life Group Profit and loss Q3 01.01-30.09 Full year NOK Million 2007 2006 2007 2006 2006 Premiums written 3,750 2,965 12,731 9,953 13,069 Net transfers of premium reserve 47 1,368 658 4,843 5,260 Net income of financial investments 1,273 3,476 8,829 7,216 12,687 Net incom Unit Linked asse
Slide 27: Asset allocation
Storebrand Livsforsikring AS Asset allocation Allocation and policyholders' fund Q3-07 Q2-07 Q1-07 Q4-06 Q3-06 Q2-06 Q1-06 Q4-05 Equity Norwegian 6% 6% 6% 5% 5% 6% 7% 9% Equity Foreign 21 % 24 % 24 % 24 % 22 % 19 % 20 % 18 % Real Estate 12 % 12 % 11 % 11 % 11 % 11 % 10 % 9% Money market 5% 4% 6% 4%
Slide 28: Unrealised gains
Storebrand Livsforsikring AS Unrealised gains Change Q3 01.01-30.09 Full year Change NOK Million 2007 2006 2007 2006 2006 2007 Shares -949 1,074 6,132 4,023 6,151 -18 Fixed interest investments -346 423 -919 -171 -261 -658 Short term investments -1,296 1,497 5,213 3,851 5,890 -677 Bonds held to matu
Slide 29: Premiums excl. reserves transferred to the company
Storebrand Livsforsikring AS Premiums excl. reserves transferred to the company Q3 01.01-30.09 Full year NOK mill. 2007 2006 2007 2006 2006 Group pension 2,253 1,815 7,058 5,641 7,257 Group pension defined contribution 390 229 1,170 538 988 Group life 54 41 492 464 496 Individual endowment 762 547 2
Slide 30: Return on main asset classes – Q3 2007
Storebrand Livsforsikring Return on main asset classes– Q3 2007 Relative Return in percent year to date1) return Exposure2) Equity Norway 16,1 % +3,30 % 4,3 % Equity Foreign 7,0 % 3) 20,2 % Private Equity 16,1 % 3,3 % Bonds Foreign 2,2 % +0,09 % 71 % Bonds Norway 1,2 % -0,09 % 10,3 % Moneymarket 2,4
Slide 31: Profit analysis
Storebrand Life Group Net transfers of premium reserves in NOK million 5 260 1 493 564 658 2003 2004 2005 2006 9M2007 - 758 61 Q3 2007 Storebrand Livsforsikring AS Profit analysis Q3 01.01-30.09 Full year NOK Million 2007 2006 2007 2006 2006 Interest result 748 588 4,703 3,196 5,523 Risk result 103
Slide 32: Balance sheet IFRS
Storebrand Livsforsikring AS Profit analysis -products without profit sharing Risk products Q3 01.01-30.09 Full year NOK Million 2007 2006 2007 2006 2006 Interest result 20 13 81 51 87 Risk result 58 52 179 129 167 Administration result -20 -25 -97 -71 -112 Change in security and premium reserve -1
Slide 33: Balance sheet (continued)
Storebrand Life Group Balance sheet (continued) Share of Share of total assets total assets NOK Million 30.09.07 30.09.07 31.12.06 31.12.06 Equity 6,198 3% 6,043 3% Minority interests' share in equity 20 0% 20 0% Subordinated loan capital 2,782 1% 2,962 2% Market price adjustment reserve 5,213 3% 5,
Slide 34: Key figures
Storebrand Livsforsikring AS Key figures Q3 01.01-30.09 Full year 2007 2006 2007 2006 2006 Booked return - year-to-date 1.73% 1.37% 6.14% 4.82% Booked return - annualised 7.10% 5.59% 8.26% 6.48% 7.12% Value adjusted return - year-to-date 0.88% 2.33% 5.50% 4.73% Value adjusted return - annualised 3.5
Slide 35: Profit analysis
Storebrand Livsforsikring AS Profit analysis 2007 2006 2005 NOK Million Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Interest result 748 3,085 870 2,327 588 1,561 1,047 1,505 Risk result 103 118 80 -65 93 105 87 166 Administration result -9 -117 -135 -298 -36 -123 -95 -238 Change in security and premium reserve -3 3 -9
Slide 36: Storebrand Investments Highlights Q3
Storebrand Investments Storebrand Investments Highlights Q3 Profit before tax NOK 5 million compared to NOK 38 million 3 rd quarter last year. Strong operating profit margin, due to good fixed and volume related income combined with good cost control. Poor investment results for the Storebrand Life
Slide 37: Profit before tax
Profit before tax Q3 2007 Q3 Year to date 01.01-31.12 NOK million 2007 2006 2007 2006 2006 Total income 49 98 247 246 399 Total costs -51 -67 -188 -185 -280 Net financial income/ other 8 7 42 29 37 Profit before tax 5 38 101 90 156 There is low income in Q3 due to reset of earlier accounted performa
Slide 38: Profit development
Profit development NOK million 500 480 460 450 Cost/income ratio 63 percent1 440 420 as of Q3 (60 percent1 as of Q2, 400 64% in 2006). 380 Growth in fixed and volume 360 67 related income. 340 64 320 Reset in performance fees, due 300 to poor investments result in 280 38 31 283 Q3. 260 32 Good cost
Slide 39: Contribution to Storebrand Life portfolio year to date
Contribution to Storebrand Life portfolio year to date Relative performance Equity Norway 13,7 % 12,7 % 1,0% Equity Global Active -9,4 % -2,7 % -6,7% Equity Global Quant -4,1 % -2,7 % -1,4% Money Market Norway 3,0 % 3,0 % 0,0% Money Market OECD 2,5 % 3,1 % -0,6% Money Market Foreign Credit 1,4 % 2,4
Slide 40: Market share Norwegian registered mutual funds
Market share Norwegian registered mutual funds Equity funds market in Norway All mutual funds (market share in %) 8,3 7,8 Norwegian equity funds exceed 7,2 6,8 6,9 12,0 NOK 250 billion in assets under 12,7 12,8 12,9 11,6 Nordea management. Odin 16,7 17,0 16,5 18,0 19,1 The overall market consist of
Slide 41: Assets under management
Storebrand Investments Assets under management Total assets under management Allocation assets under management Real estate 10 % Other 226 6% 217 Hold to 205 30,2 24,6 maturity Equit y Norway NOK billion 20,3 24 % 5% 165 30,3 29,2 159 29,4 15,8 22,4 13,2 20,0 9,7 14,6 25,3 12,9 10,1 M oney market Eq
Slide 42: Storebrand Bank Group Highlights Q3 2007
Storebrand Bank Storebrand Bank Group Highlights Q3 2007 Storebrand Bank reported consolidated pre-tax profit of NOK 54 million for Q3 Net interest income as a percentage of average total assets was 1.08% in Q3 and 1.07% for the first nine months (annualised figures) Net fee and commission income am
Slide 43: Profit and loss
Profit and loss Q3 01.01-30.09 Full Year NOK million 2007 2006 2007 2006 2006 Net interest income 108 109 303 318 419 Net fee and commission income 15 12 43 21 32 Other operating income 3 8 29 34 47 Total income 126 129 374 372 498 Operating expenses -83 -93 -247 -259 -355 Operating profit before lo
Slide 44: Balance sheet
Balance sheet Share Share NOK million 30.09.2007 30.09.2007 31.12.2006 31.12.2006 Cash and deposits with central banks 431 1,1 % 394 1,2 % Loans to and deposits with credit institutions 804 2,0 % 115 0,3 % Financial assets designated at fair value through p&l 3 077 7,7 % 2 350 6,9 % Net lending to c
Slide 45: Development in loan portfolio
Development in loan portfolio Growth in lending – Last 4 quarters Gross lending by sector NOK billion 7% 8,0 (5 %) 7,0 6,0 Residential 5,0 28 % mortgages 4,0 (32 %) 3,0 Other retail 56 % 2,0 (54 %) 1,0 Real estate 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2006 2006 2006 2007 2007 2007 Other corporate 9% (9 %) T
Slide 46: Development in customer deposits
Development in customer deposits NOK million Customer deposits have 20 000 60 % increased by NOK 408 16 000 50 % million in Q3 40 % 12 000 30 % 8 000 20 % Deposits / gross lending 4 000 10 % was 44.4 % at Q3 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2006 2006 2006 2007 2007 2007 Customer deposits Customer deposi
Slide 47: Retail Customers
Retail Customers 70.000 65.000 60.000 55.000 50.000 45.000 40.000 4 04 5 05 6 06 7 07 04 05 06 07 -0 -0 -0 -0 p. p. p. p. n. n. n. n. ay ay ay ay se se se se ja ja ja ja M M M M Retail customers 93 Q3 2007 (Page intentionally left blank) 94 Q3 2007 47
Slide 48: Non-Life Highlights Q3 2007
Storebrand Non-life Non-Life Highlights Q3 2007 Storebrand Non-Life reports an operating profit of NOK 12 million in Q3 (loss of NOK 5 million). Operating loss in SB Skade AS was NOK 1 million (NOK 7 million). The operating loss is due to the start-up costs in connection with the new P&C insurance b
Slide 49: Non-Life Group Profit and loss
Non-Life Group Profit and loss Q3 01.01- 30.09 Full year NOK million 2007 2006 2007 2006 2006 50% share of result from Fair 0 0 0 -1 -1 Storebrand Skadeforsikring AS -1 -7 -28 39 7 Oslo Reinsurance Company ASA (run-off) 13 2 9 0 -2 Eliminations 0 0 0 0 16 Operating result non life insurance 12 -5 -1
Slide 50: Oslo Reinsurance Company Profit and loss
Oslo Reinsurance Company Profit and loss Q3 01.01 - 30.09 Full year NOK million 2007 2006 2007 2006 2006 Premiums for own account 0 1 2 2 3 Claims for own account -2 -1 -11 -5 -11 Insurance related operating costs -3 -6 -14 -20 -22 Financial income 16 6 25 12 18 Other income/costs 2 2 7 9 11 Operati