Storebrand Asa · OSL:STB
Storebrand Asa — Storebrand Livsforsikring — Debt Investor Presentation (November 2022)
67 slides from Storebrand Asa's debt investor presentation, Nov 7, 2022
Slide 1: Storebrand Livsforsikring Green Tier 2 Bond Issue
Storebrand Livsforsikring Green Tier 2 Bond Issue 7. November Investor presentation 1
Slide 2: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing. The attached presentation is in summary form and relates to an offering of securities as currently contemplated and has been prepared solely for information purposes and on the basis of your acceptance of this disclaimer and does n
Slide 3: Presentation Content
Presentation Content Section Slide Number Storebrand Overview and Strategy 6 Sustainability at Storebrand 13 Storebrand Green Bond Framework 18 Capital and Solvency 28 Group results Q1 2022 42 3
Slide 4: Executive Summary
Executive Summary • Pension market leader in Norway and strong contender in Sweden, Nordic powerhouse in Asset Management and growing challenger in Norwegian retail market Storebrand1 • Active in structurally strong markets with resilient economic development • Digital frontrunner with growth focus
Slide 5: Green Tier 2 – Indicative Key Terms
Green Tier 2 – Indicative Key Terms Issuer Storebrand Livsforsikring AS Rating (S&P): Issuer: A / Issue: Expected BBB+ Type of Issue: Green [FRN/Fixed-to-Floating] Tier 2 Callable Bond Issue Status: The Bonds will constitute direct, unsecured and subordinated Tier 2 Instruments of the Issuer and/or
Slide 6: Storebrand Overview and Strategy
▪ Storebrand Overview and Strategy ▪ Sustainability at Storebrand Storebrand ▪ Storebrand Green Bond Framework Overview and Strategy ▪ Capital and Solvency ▪ Group results Q3 2022 6
Slide 7: An Integrated Financial Services Group with years of pioneering in the Nordic financial industry
An Integrated Financial Services Group with 250 years of pioneering in the Nordic financial industry Retail Insurance & Bank Asset Management Unit Linked Pensions and Guaranteed pensions Savings 1767 1847 1861 1917 1995 2022 2050 Foundation: P&C Pioneered Pioneered Pioneered ILLUSTRATIVE Norwegian I
Slide 8: Storebrand – A Nordic Savings and Insurance Group
Storebrand – A Nordic Savings and Insurance Group Insurance ▪ P&C, Health and Life insurance Asset Management ▪ NOK 7.6bn in ▪ NOK 1,001bn AuM annual written ▪ 47% external investors premiums ▪ 100% of investments subject to sustainability Pension & Savings screening ▪ 40k corporate customers ▪ 2m i
Slide 9: Future Storebrand is delivering strong growth in Savings and Insurance
Future Storebrand is delivering strong growth in Savings and Insurance Unit Linked (Defined Contribution) Pensions Asset management +9%1 +17%1 308 302 1,097 1,001 268 962 220 831 179 721 707 140 168 535 571 577 128 442 487 85 105 64 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q3 2012 2013 2014
Slide 10: Delivered on transition from guaranteed to capital light business
Delivered on transition from guaranteed to capital light business Premiums Storebrand1 Profit Storebrand2 Shift in total Storebrand AUM3 36 808 4 503 1 097 7% 14% 14% 32% 46% 24 584 9% 49% 1 960 3% 442 24% 72% 18% NOK bn NOK m NOK m 15% 61% 14% 4% 52% 9% 36% 21% 59% 27% 15% 2012 2021 2012 2021 2012
Slide 11: Sustainable Nordic Savings and Insurance Group
Pursuing our Group Strategy: Leading The Way In Sustainable Value Creation to be a leading Sustainable Nordic Savings and Insurance Group A B C Future Storebrand Leading Provider Growth focus in Nordic Powerhouse in Growing Challenger in Occupational Pensions capital-light business Asset Management
Slide 12: Group capital management policy sets thresholds for distribution of dividends
Group capital management policy sets thresholds for distribution of dividends Solvency 2 ratio ▪ Consider share buybacks when solvency ratio is above 180% without material use of transitional capital 180% 174% ▪ Ordinary dividend of >50% of Group profit after tax Q3 2022 ▪ Ambition is to pay nominal
Slide 13: Sustainability at Storebrand
▪ Storebrand Overview and Strategy ▪ Sustainability at Storebrand Sustainability at ▪ Storebrand Green Bond Framework Storebrand ▪ Capital and solvency ▪ Group results Q3 2022 13
Slide 14: Storebrand has invested in a sustainable future since 1995
Storebrand has invested in a sustainable future since 1995 25 years of Top 10% most Nr.1 sustainable Nr. 1 insurance sustainable sustainable company investments in Norway company globally1 investments in the world2 and Sweden3 Decision to integrate Next Commitment Sustainability Exclusions Storebran
Slide 15: In 2020 Storebrand launched a company wide climate strategy covering the entire value chain
In 2020 Storebrand launched a company wide climate strategy covering the entire value chain Storebrand is aiming for climate neutrality throughout the In 2019, Storebrand was one of the founding members of the entire value chain in the climate strategy UN convened Net Zero Asset Owner Alliance Own O
Slide 16: To achieve net zero emissions by 2050, Storebrand has defined intermediate targets towards 2025
To achieve net zero emissions by 2050, Storebrand has defined intermediate targets towards 2025 Asset class targets Solution targets Active ownership Customer engagement -32% reduction in scope 1-2 GHG emissions of 15% of our total Special emphasis will be Make it easy for clients to Storebrand's to
Slide 17: Sustainability in numbers – From Storebrand's Annual Report 2021
Sustainability in numbers – From Storebrand's Annual Report 2021 About us Investments Operations People Investments in 318 Purchasing volume from Active dialogues Number of employees in Assets under management, solutions, NOK environmentally certified Storebrand ASA NOK billion billion (% of AUM) re
Slide 18: Storebrand Green Bond Framework
▪ Storebrand Overview and Strategy ▪ Sustainability at Storebrand Storebrand Green ▪ Storebrand Green Bond Framework Bond Framework ▪ Capital and Solvency ▪ Group results Q3 2022 18
Slide 19: Rationale for green bond framework
Rationale for green bond framework The financial services industry has an important role in the … and Storebrand’s ambition is to ensure that our investment transition towards sustainable, lower-carbon economies… portfolio and financing activities contribute positively ▪ Storebrand recognizes that t
Slide 20: Green bond framework overview
Green bond framework overview Updated: 2022 https://www.storebrand.no/en/investor-relations/rating-and-funding 20 Source: Storebrand Green Bond Framework
Slide 21: The Storebrand Green Bond Framework
The Storebrand Green Bond Framework 1 Use of the Green Bond proceeds 3 Project Evaluation and Selection ▪ An amount equal to the net proceeds of any Storebrand Green Bond issuance ▪ ‘Project Evaluation & Selection’ refers to the process of determining which will be used to finance and/or refinance E
Slide 22: Focus on the Use of Proceeds - Eligible Green Assets Categories
Focus on the Use of Proceeds - Eligible Green Assets Categories1 Category Sub-Category Eligibility Criteria Indicative metrics SDGs alignment Investments in or financing of new commercial buildings certified to either of, or a combination of, the following standards and levels: • BREEAM: Excellent o
Slide 23: Focus on the Use of Proceeds - Eligible Green Assets Categories
Focus on the Use of Proceeds - Eligible Green Assets Categories1 Category Sub-Category Eligibility Criteria Indicative metrics SDGs alignment Investments in or financing of renovation projects that achieve a reduction in net Primary Energy Demand of at least 30% in comparison to the baseline perform
Slide 24: Focus on the Use of Proceeds - Eligible Green Assets Categories
Focus on the Use of Proceeds - Eligible Green Assets Categories1 Category Sub-Category Eligibility Criteria Indicative metrics SDGs alignment Investments relating to the development, construction, acquisition, maintenance, and operation of electric rail infrastructure and electric rolling stock for
Slide 25: Green Bond Governance
Green Bond Governance To ensure that allocations are made to Eligible Green Assets as in the Green Bond Framework, Storebrand has established a Green Bond Committee The Green Bond Committee Scope The Green Bond Committee Composition Responsibilities Representatives ▪ Ensuring the proposed allocation
Slide 26: Second Party Opinion by Sustainalytics
Second Party Opinion by Sustainalytics Use of Proceeds Project Evaluation & Selection The eligible categories for the use of proceeds – Green Storebrand’s Green Bond Committee1 is responsible for Buildings, Renewable Energy, and Clean Transportation – are evaluating and selecting projects. Storebran
Slide 27: EUR Green Bond – Asset Allocation Figures
EUR Green Bond – Asset Allocation Figures 27 Source: Green Bond Allocation Report 2021
Slide 28: Capital and Solvency
▪ Storebrand Overview and Strategy ▪ Sustainability at Storebrand Capital and ▪ Storebrand Green Bond Framework Solvency ▪ Capital and Solvency ▪ Group results Q3 2022 28
Slide 29: Storebrand Group Structure
Storebrand Group Structure Diversified cash flow to holding company Storebrand ASA Legal structure (simplified) Storebrand ASA Storebrand Asset Storebrand Livsforsikring AS Storebrand Bank ASA Storebrand Forsikring AS Management AS Reporting structure Storebrand Holding AB Storebrand ASA SPP Pension
Slide 30: Solid capital position with low leverage and strong liquidity gives financial flexibility
Solid capital position with low leverage and strong liquidity gives financial flexibility Group capital (NOK billion) and leverage ratio Liquidity position Storebrand ASA (NOK billion) 26% 24% 24% 22% 20% 20% 7.2 37.4 35.9 32.9 2.1 7.6 8.1 27.6 5.1 8.1 24.7 0.5 4.9 20.2 5.7 6.1 27.8 29.7 24.8 4.6 22
Slide 31: Term structure debt (to 1st ordinary call date)
Term structure debt (to 1st ordinary call date) Term structure sub-debt Storebrand Livsforsikring1 (bn NOK) Term structure senior debt Storebrand ASA (bn NOK) 2.8 2.4 2.1 1.1 1.4 0.9 0.9 0.7 0.5 1.0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2022 2023 2024 2025 Perpetual Non- perpetual 3
Slide 32: More robust capital position with increased capital generation and reduced interest rate sensitivity
More robust capital position with increased capital generation and reduced interest rate sensitivity Expected investment return above Reduced interest rate sensitivity: discount rate (%), Solvency II1 duration gap (years), Solvency II2 ∼1.3 % 2.6 0.9 Duration gap ∼0.7 % GUARANTEED NORWAY 6.0 5.3 Ass
Slide 33: High quality assets with fixed income as the backbone provide secure returns for guaranteed pensions
High quality assets with fixed income as the backbone provide secure returns for guaranteed pensions NOK 194 bn 6% Equities Bonds Bonds and Real estate at amortized cost Money Market 12% Bonds & Money market Loans Average rating Book yield Average rating AA- >3% AA 13% Bonds at amortized cost 14% Eq
Slide 34: Estimated solvency sensitivities
Estimated solvency sensitivities Storebrand Group Solvency position(%)1 Estimated sensitivities Target SII margin 150% 195 174 SII-margin Q3 174 Interest rates -50bp 172 Q2 2022 Q3 2022 Interest rates +50 bp 176 Key takeaways Equity -25% 160 ▪ Acquisition of Danica and large decrease in the volatili
Slide 35: Strong Solvency II development over the last decade
Strong Solvency II development over the last decade Solvency II ratio in STB ASA without transitional rules, development 2016-2022 Q3 (%) Provisions for dividends and performed share buybacks 6 6 6 5 4 3 172 179 166 175 174 144 155 2016 2017 2018 2019 2020 2021 2022 Q3 Dividend paid Reported Solvenc
Slide 36: Solvency movement from Q2 to Q3 2022
Solvency movement from Q2 to Q3 2022 Storebrand Group 195% 188% 0% -6% -10% 2% 174% -5% -2% Q2 2022 Danica Q2 2022 Model and Updated Market returns Group result Dividend Q3 2022 incl. Danica assumption VA and SA changes 36
Slide 37: Solvency capital base Q3 2022
Solvency 2 capital base Q3 2022 SCR and own funds (NOK bn) Own funds % (excluding CRD IV subsidiaries) OF % OF % of 48 Regulatory limit of SCR total CRD IV Capital 4 Tier 3 0 Tier 3 ≤ 15% SCR 2% 1% Tier 2 9 Tier 1 Restricted 2 27 Tier 2 ≤ 50% SCR 38% 21% ∑ T2+T3 4 CRD IV entities Tier 1 ≤ 20% T1 8%
Slide 38: Solvency position Storebrand Livsforsikring AS
Solvency position Storebrand Livsforsikring AS Solvency position(%)1 Comments 234 Main differences between the Storebrand Group solvency and 0 201 Storebrand Livsforsikring AS solo calculation: 0 ▪ SPP is treated as a strategic participations with a 22% 234 201 capital charge on the own funds value2
Slide 39: The mature back book of guaranteed pensions is in run-off
The mature back book of guaranteed pensions is in run-off Guaranteed pension reserves have declined The run-off of the guaranteed book will as a share of total pensions balance sheet continue as pensions are being paid out Accumulated net flow in guaranteed book, NOK bn 100% 90% -54 80% -108 70% -16
Slide 40: The transformational journey towards an asset management based and capital light business continues
The transformational journey towards an asset management based and capital light business continues Forecast assets under management in Storebrand Group (NOKbn) Implications ILLUSTRATIVE 2 000 2021: 2031e: ▪ Guaranteed pensions in run-off reduces 77% of AuM ~90% of AuM 1 500 capital consumption non-
Slide 41: Moderate leverage, fixed charge coverage, and rating give financial flexibility and more debt capacity
Moderate leverage, fixed charge coverage, and rating give financial flexibility and more debt capacity Moderate leverage1 Strong debt servicing capacity1 Solid rating 19% 24% ~11x A stable outlook Insurance Financial Strength Rating (IFSR) "We believe Storebrand's capitalization will remain sound. W
Slide 42: Group results Q3 2022
▪ Storebrand Overview and Strategy Group results Q3 ▪ Sustainability at Storebrand 2022 ▪ Storebrand Green Bond Framework ▪ Capital and Solvency ▪ Group results Q3 2022 42
Slide 43: Highlights Q3 2022
Highlights Q3 2022 Strong operating profit driven by profitable Insurance growth, and underlying growth in Savings 1 001 bn NOK in assets under management Group result1 1 874 22% growth in Insurance2 MNOK 670 2 099 21% growth in Unit Linked premiums2 717 -47 -225 Q3 2022 YTD 2022 174% Solvency ratio
Slide 44: Continued volume growth despite financial market volatility
Continued volume growth despite financial market volatility A B C Leading Provider Occupational Pensions Nordic Powerhouse in Growing Challenger in Norwegian Retail Norway & Sweden Asset Management Market DC pensions (Unit Linked) Insurance Portfolio AuM (BNOK) Mortgage lending reserves (BNOK) Premi
Slide 45: Danica acquisition completed, integration has started
Danica acquisition completed, integration has started Expected contribution from Danica to Group Result Timeline integration Illustrati ve 2022 H2 ▪ Half a year's profit contribution from Danica standalone. NOK 151m ▪ Initial integration costs. 2023 Profit before ▪ Full year results from Danica. amo
Slide 46: Acquisition of Kron fast tracks our ambitions in the Norwegian retail savings market
Acquisition of Kron fast tracks our ambitions in the Norwegian retail savings market About Kron Why Storebrand+Kron Strategic Engaging and user-friendly savings Engaging and user-friendly savings application for mass application that is the most popular market that complements the current offering a
Slide 47: Reduced Volatility Adjustment from historic drop in spread to EUR rates
Reduced Volatility Adjustment from historic drop in spread to EUR rates Basis spread between NOK and SEK 10yr SWAP Estimated composition of NOK VA, bps Comments to EUR since the introduction of Solvency II, bps ▪ VA is a spread that is added to the risk-free discount NOK-EUR spread SEK-EUR spread NO
Slide 48: Leader in DC Occupational Pension and Asset Management, and a challenger in the Retail Market
Leader in DC Occupational Pension and Asset Management, and a challenger in the Retail Market Occupational Pensions Norway Occupational Pensions Sweden ✓ Digital leader Defined Contribution share1 Defined Contribution share2 in Sweden ✓ Best customer satisfaction with all time high score for 30% 29%
Slide 49: Key Figures
Key Figures Strong operating profit but weaker solvency ratio due to reduced Volatility Adjustment Result development1 Earnings per share2 Financial items and risk result life Performance related result MNOK Special items Operating profit 2.25 2.18 1,367 329 1.56 913 151 454 628 576 670 1.16 1.16 82
Slide 50: Storebrand Group
Storebrand Group Profit by line of business Profit1 Q3 YTD NOK million 2022 2021 2022 2021 Fee and administration income 1 507 1 544 4 421 4 499 Insurance result 482 342 1 277 894 Operational cost -1 272 -1 124 -3 598 -3 301 Operating profit 717 762 2 099 2 092 Financial items and risk result life -
Slide 51: Savings (non-guaranteed)
Savings (non-guaranteed) Key figures Reserves and premiums Unit Linked Retail bank balance and net interest margin (%) Life insurance balance sheet Bank balance sheet 5.2 5.4 5.3 5.3 6.3 1.22 1.19 1.22 1.16 1.20 308 302 296 63 65 291 56 57 59 MNOK 276 BNOK 39 40 46 48 39 17 18 19 16 17 Q3 2021 Q4 20
Slide 52: Insurance
Insurance Key figures Combined ratio Key Takeaways Combined Ratio and Results Claims ratio Cost ratio Combined ratio 96% 92% 90% 88% 88% ▪ 88% overall combined ratio (target 90-92%). ▪ Stable claims and cost ratio. ▪ Effective price adjustments contribute to profitability. 74% 78% 74% 70% 70% 15% 19
Slide 53: Guaranteed pension
Guaranteed pension Key figures Reserves guaranteed products Key Takeaways 292 291 281 275 276 32 34 ▪ Continued run-off of guaranteed reserves. 28 25 24 Customer buffers 25 26 28 29 28 Actively sold ▪ St:Erik life portfolio transfer to SPP of NOK 2.3bn in reserves. BNOK ▪ Higher interest rates give
Slide 54: Asset allocation – Guaranteed products
Asset allocation – Guaranteed products Storebrand Livsforsikring AS (Norway) SPP (Sweden) 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Bonds & Bonds at Bonds & Real Equities Money Loans amortised Equities Real estate Money Loans estate market cost market 30.09.2021 11% 11% 10% 13% 55% 30.09
Slide 55: Appendix Risk Factors
▪ Storebrand Overview and Strategy ▪ Sustainability at Storebrand Appendix ▪ Storebrand Green Bond Framework Risk Factors ▪ Capital and Solvency ▪ Group results Q3 2022 ▪ Appendix: Risk Factors 55
Slide 56: Risk factors
Risk factors Investing in bonds involves inherent risks. Prospective investors should carefully consider, among other things, the main risk factors – non exhaustive list below - before making an investment decision. A prospective investor should carefully consider all the risks related to the Issuer
Slide 57: Risk factors
Risk factors For guaranteed customer portfolios, the risk is affected by changes in interest rates. Falling interest rates are positive for the investment return in the short term due to price appreciation for bonds, but negative in the long term because it reduces the probability of achieving a ret
Slide 58: Risk factors
Risk factors Insurance risk Insurance risk (underwriting risk) is the risk of higher than expected claims and/or unfavourable changes in the value of an insurance liability due to the actual development differing from what was expected when premiums or provisions were calculated. Longevity risk is t
Slide 59: Risk factors
Risk factors Business risk General deterioration in major economics throughout the world would reduce the level of demand for the products and services of the Issuer, and lead to lower realisations, increased write-downs, impairments of investments and negative fair value adjustments of assets, and
Slide 60: Risk factors
Risk factors Legal and regulatory risk The Issuer is subject to government regulation primarily in Norway and Sweden, but also in other jurisdictions in which it conducts business. Regulatory agencies have broad jurisdiction over many aspects of these businesses, including, but not limited to, solve
Slide 61: Risk factors
Risk factors Accounting and taxation Changes in accounting standards, or in the interpretation of IFRS and other valuation methodologies, both specifically in relation to insurance and more generally, could have a negative impact on the financial position of the Issuer. The Issuer prepares its conso
Slide 62: Risk factors
Risk factors Liquidity risk Liquidity risk is the risk that the company is unable to fulfil its obligations without incurring substantial additional expenses in the form of reduced prices for assets that must be realised, or in the form of expensive financing. Adverse capital and credit market condi
Slide 63: Risk factors
Risk factors All investments in interest bearing securities have risk associated with such investment. The risk is related to the general volatility in the market for such securities, varying liquidity in a single bond issue as well as company specific risk factors. The Bonds may not be a suitable i
Slide 64: Risk factors
Risk factors Under certain conditions, interest payments under the Bonds may be optionally or mandatorily deferred The payment obligations by the Issuer under the Bonds are conditional upon the Issuer not being in breach of Applicable Regulations at the time of payment, and still not being in breach
Slide 65: Risk factors
Risk factors Changes in ranking and terms No limitation on issuing further debt and guarantees There is no restriction on the amount of debt which the Issuer may issue ranking equal or senior to the obligations. Such issuance of further debt may reduce the amount recoverable by the Bondholders upon
Slide 66: Risk factors
Risk factors Credit ratings may not reflect all risks The Bonds are, at the date of the Prospectus, rated by S&P. S&P is established in the European Economic Area (EEA) and registered under Regulation (EC) No 1060/2009, as amended (the CRA Regulation) and are, as of the date of this Prospectus, incl
Slide 67: Leading the way in sustainable value creation
Leading the way in sustainable value creation Contacts Lars Aa Løddesøl lars.loddesol@storebrand.no Group CFO +47 9348 0151 Nikola Heitmann nikola.heitmann@storebrand.no Head of Capital +47 41697236 Management Kjetil R. Krøkje kjetil.r.krokje@storebrand.no Group Head of +47 9341 2155 Finance & Strat
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