Storebrand Asa · OSL:STB

Storebrand Asa — Q2 2012 Earnings Presentation

29 slides from Storebrand Asa's earnings presentation, Jul 13, 2012

  1. Slide 1: Result Q2 2012

    Storebrand Result Q2 2012 13 July 2012 Odd Arild Grefstad – CEO Lars Aa. Løddesøl – CFO/COO

  2. Slide 2: Highlights Q2 2012

    Highlights Q2 2012 RESULT  Group result of NOK 346 mill in Q2, 1 012 mill YTD  14% increase in result before profit sharing and loan losses YTD  NOK 104 mill in result and 84% combined ratio in Storebrand Insurance OPERATIONS  Implementation of Solvency II measures including cost reduction progr

  3. Slide 3: Storebrand Group

    Storebrand Group Q2 01.01. - 30.06 Full year NOK mill. 2012 2011 2012 2011 2011 Storebrand Life Insurance 183 167 380 324 481 SPP 43 260 398 525 291 Asset management 40 53 71 130 293 Bank 57 61 113 112 213 Insurance 104 75 193 108 281 Storebrand ASA / other -81 -73 -142 -138 -278 Group Profit 346 54

  4. Slide 4: Storebrand Life Insurance - improved administration results

    Storebrand Life Insurance - improved administration results 01.01. - Full Q2 30.06 year  Returns above average interest rate guarantee for NOK mill. 2012 2011 2012 2011 2011 all products Administration result 48 31 68 52 101  Longevity reservation fully Risk result 40 31 90 31 117 covered by finan

  5. Slide 5: Storebrand Life Insurance - group solvency ratio

    Storebrand Life Insurance - group solvency ratio 1  New methodology applied from Q2 Solvency ratio 2012 as stated in stock exchange 180 % notification 170 % 164 % 163 % 161 %  Swedish regulatory floor 10 year 160 % 157%3 government rates can not, for 152 % discounting purposes, fall below the 140

  6. Slide 6: SPP - reduced financial result following market volatility

    SPP - reduced financial result following market volatility 01.01. - Full Q2 30.06 year  Indexation fee of 5 mill in NOK mill. 2012 2011 2012 2011 2011 Q2 Administration result 25 31 66 62 99  Solvency ratio of 225%, Risk result 29 38 75 113 289 methodology adjusted Financial result -48 156 167 277

  7. Slide 7: Asset Management - asset reallocation impacts revenues

    Asset Management - asset reallocation impacts revenues 01.01. - Full Q2 30.06 year  424 bn in AuM, reduction of 2 NOK mill. 2012 2011 2012 2011 2011 bn in Q2 Operating revenue 173 171 344 336 684  Pick up in sales to be reflected Operating cost -129 -123 -264 -241 -481 in Q3 Operational result 44

  8. Slide 8: Bank - improvement in net interest margin

    Bank - improvement in net interest margin 01.01. - Full Q2 30.06 year  Low loan losses NOK mill. 2012 2011 2012 2011 2011 Net interest income 123 111 236 227 443  Net interest rate margin Net fee and commission income 19 17 35 37 73 1.22% YTD Other operating 16 9 31 24 32 income  Core capital rat

  9. Slide 9: Insurance - consistent result improvement

    Insurance - consistent result improvement 01.01. - Full Q2 30.06 year  18% cost ratio NOK mill. 2012 2011 2012 2011 2011 Premiums earned, 471 466 941 891 1807  65% claims ratio net Claims incurred, net -308 -335 -620 -671 -1314  Strong sales within health Operation costs excl -86 -84 -171 -164 -3

  10. Slide 10: Storebrand Group – operational reporting

    Storebrand Group – operational reporting Full Q2 01.01. - 30.06 year Increased quality of earnings: NOK mill. 2012 2011 2012 2011 2011 Fee and administration income 1 067 1 004 2 083 1 998 3 952  Fee and adm results 9% growth YTD Operational cost -726 -690 -1 446 -1 393 -2 800 Fee and  Result befo

  11. Slide 11: Key figures

    Key figures Result development Earnings per share1 NOK mill. Net profit sharing and loan losses 1.38 1.24 Result before profit sharing and loan losses 667 544 268 211 345 120 424 398 404 455 420 0.52 -136 -75 0.21 -447 -49 -0.15 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q2 2011 Q3 2011 Q4 2011 Q1 2012

  12. Slide 12: Storebrand towards Solvency II

    Storebrand towards Solvency II - domestic regulatory process on track, Storebrand’s own measures are key Changes in Norwegian regulation Solvency II Solvency I Changes in EU Solvency II Storebrand’s own measures Current 1.1.2014 12

  13. Slide 13: Important changes to occupational pension legislation

    Changes in Norwegian regulation Important changes to occupational pension legislation: Occupational pension becomes mandatory – Storebrand 2006 – Mandatory gets 16,000 new corporate customers occupational pensions Transfer half the balance sheet from profit sharing to fee 2008 – New life insurance a

  14. Slide 14: Banking Law Commission phase III: transfer mechanisms and transition

    Changes in Norwegian regulation Banking Law Commission phase III: - transfer mechanisms and transition to new system NOU 2012:3 NOU 2012:13 • DC Unit Linked Fee based Unit • DC Unit Linked paid-up New basic model Linked and risk • Individual Unit Linked products New standard model Possible continuit

  15. Slide 15: New occupational pension products

    Changes in Norwegian regulation New occupational pension products Main features proposed products  Storebrand views the products Standard product Basic product attractive: – Well adapted to Solvency II  Premiums: 2 -25.1%  Premiums: 2 -26.1% – Ability to price and hedge risk of wage of wage – Lon

  16. Slide 16: New product – expected effects

    Changes in Norwegian regulation New product – expected effects - compared to DB under Solvency II  Maximum premium comparable with current DB schemes Premiums and income  Increase saving rates in DC expected Neutral  Income elements from administration, risk and financial guarantees  All product

  17. Slide 17: Positive changes in regulations in Europe

    Changes in EU Solvency II Positive changes in regulations in Europe  Sweden – floor on the discount rate  Denmark – introduction of new discounting model It is key that insurance companies and pension funds have the ability to provide the pensioners of the future the highest returns. The regulator

  18. Slide 18: Clear target for optimizing the operations towards Solvency II

    Storebrand’s own measures Clear target for optimizing the operations towards Solvency II Capital optimization Risk Clear target: reduction Managing business without raising new equity capital Product optimization Cost reduction 18

  19. Slide 19: Business margin part of capital under Solvency II

    Capital optimization Risk Clear target: reduction Managing business without raising new equity capital Product optimization Cost reduction Business margin part of capital under Solvency II Product profitability will be part of available capital NOK 100 mill in reduced costs = NOK 1 bn in contributio

  20. Slide 20: Cost reduction: a robust strategy

    Capital optimization Risk Clear target: reduction Managing business without raising new equity capital Product optimization Cost reduction Cost reduction: - a robust strategy 3,900 Cost cutting initiatives: By process: NOK~120 Increased automation and -400 use of direct distribution NOK ~80 Sourcing

  21. Slide 21: Product and risk optimization: Public Sector defined benefit

    Capital optimization Risk Clear target: reduction Managing business without raising new equity capital Product optimization Cost reduction Product and risk optimization: - example: Public Sector defined benefit Target: make product profitable Illustrative under Solvency II Based on today's pricing A

  22. Slide 22: Summary

    Summary  Sound underlying operations  New occupational pension products are well adapted for transfers from DB and Solvency II  Storebrand has identified measures to prepare for Solvency II, and is implementing them according to plan  Managing business without raising new equity capital 22

  23. Slide 23: @d storebrand

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  24. Slide 24: Appendix

    @d storebrand Appendix: 24

  25. Slide 25: Storebrand Life Insurance

    Storebrand Life Insurance Defined Individual Group contri- and paid- defined bution and up Company Result Result Full year NOK mill. benefit * unit linked* policies** BenCo portfolio Q2 2012 Q2 2011 2011 Administration result 3 29 6 9 0 48 31 101 Risk result 40 -7 1 5 0 40 31 117 Financial result1 0

  26. Slide 26: Storebrand Life Insurance - return by asset class and main portfolios

    Storebrand Life Insurance - return by asset class and main portfolios Return by asset class Q2 2012(%) Return Defined Benefit portfolios Value Booked Equity adjusted Returns proportion Real estate 0.4 returns (Q2) (Q2) (Q2) DB - High -0,3% 0,8% 20,6% Bonds at 1.2 DB - Balanced -0,1% 0,8% 17,1% amort

  27. Slide 27: Storebrand Life Insurance - increased allocation to bonds

    Storebrand Life Insurance - increased allocation to bonds 50 % 45 % 40 % 35 % Allocation (%) 30 % 25 % 20 % 15 % 10 % 5% 0% Bonds at Equities Bonds Money market Real estate Alpha Other amortised cost 30.09.2011 12 % 22 % 8% 37 % 17 % 2% 4% 31.12.2011 12 % 18 % 8% 41 % 15 % 2% 5% 31.03.2012 13 % 16 %

  28. Slide 28: SPP - financial result NOK -48 mill

    SPP - financial result NOK -48 mill Result development compared to disclosed sensitivities 1Q 2Q 2011 Anticipated development1 -3,9% +14 bps ~-20 NOK mill ~21 NOK mill -27 bps +25 bps ~-1 NOK mill ~-95 NOK mill ~+46 NOK mill other residual effects  ~+15 NOK mill less impact from market factors than

  29. Slide 29: SPP - increased allocation to bonds

    SPP - increased allocation to bonds 90 % 80 % 70 % 60 % Allocation (%) 50 % 40 % 30 % 20 % 10 % 0% Equities Bonds Other 30.09.2011 12 % 81 % 8% 31.12.2011 12 % 81 % 8% 31.03.2012 17 % 75 % 8% 30.06.2012 9% 82 % 9% Asset allocation guaranteed products SPP AuM NOK 80 bn1 1 The graph shows the asset al

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