Storebrand Asa · OSL:STB
Storebrand Asa — Q2 2017 Earnings Presentation
52 slides from Storebrand Asa's earnings presentation, 2017
Slide 1: 250 Years of Risk Management – Steering to capital efficient growth
250 Years of Risk Management - Steering to capital efficient growth INVESTOR PRESENTATION Q2 2017 Established in 1767
Slide 2: Key takeaways
Key takeaways A Consistent strategy since 2012: Active management of the guaranteed balance sheet and create the new Storebrand through growth within Savings, Insurance and retail bank. B Doubled equity and delivered stable solvency margin above 150%. First dividend payout since 2011 and the back bo
Slide 3: Storebrand – the world's most sustainable insurer
Storebrand – the world's most sustainable insurer Storebrand was named the world's most sustainable insurance company, and the second most sustainable company in any category, at the World Economic Forum 2017. We are proud and humbled. Proud, because sustainability is at the core of our business. Hu
Slide 4: Storebrand – an Integrated Financial Services Group
Storebrand – an Integrated Financial Services Group Life and pensions Asset management 40k corporate customers NOK 621bn in AuM of which 26% 1.9m individual customers external assets NOK 408bn of reserves of which 100% of investments assessed by approx. 40% Unit Linked sustainability crite
Slide 5: Storebrand Group Structure (simplified)
Storebrand Group Structure (simplified) Legal structure (simplified) Storebrand ASA Storebrand Livsforsikring AS Storebrand Bank ASA Storebrand Asset management Storebrand Forsikring AS AS Reporting structure Storebrand Holding AB Benco Storebrand ASA Savings (non- Guaranteed Insurance Other guarant
Slide 6: Our strategy
Our strategy 1 Manage the guaranteed 2 Continued growth in Savings balance sheet and Insurance >150% SII margin Capital-light and profitable growth Cost reductions through automation and Market leading asset gatherer with strong Insurance outsourcing offering Manage for future capital release
Slide 7: Healthy growth in Nordic pension market supported by solid macro environment
Manage guaranteed 1 balance sheet 2 Growth in Savings Healthy growth in nordic pension market and Insurance supported by solid macro environment Unit Linked pension premium growth1 Norway, NOK bn Sweden, SEK bn 56 52 46 37 42 23 20 CAGR 17% 15 17 13 25 27 29 32 33 CAGR 9% 2012 2013 2014 2015 2016 In
Slide 8: Interest level stabilised and structurally higher than the euro zone
Manage guaranteed 1 balance sheet 2 Growth in Savings Interest level stabilised and structurally higher than the euro and Insurance zone 4,00 3,50 3,00 2,50 2,00 % 1,50 1,00 0,50 - ( 0,50) ( 1,00) 01.01.2013 01.07.2013 01.01.2014 01.07.2014 01.01.2015 01.07.2015 01.01.2016 01.07.2016 01.01.2017 01.0
Slide 9: Transition Into a Solvency II Based Regime has Required Discipline and Targeted Measures
Manage guaranteed 1 balance sheet 2 Growth in Savings Transition Into a Solvency II Based Regime has Required Discipline and Insurance and Targeted Measures Transfer out of guaranteed products.. .. Strong cost reduction.. ... And strengthened reserves for longevity NOK mil 39,886 Operational cost, N
Slide 10: Storebrand is Well Capitalized for Growth and Dividends
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Storebrand is Well Capitalized for Growth and Dividends Tangible equity near doubled since 2010 Strong solvency position NOKbn +96% 163% 23 Requirement 100% 12 2010 2016 Q2 2017 Tangible equity Solvency II margin 10
Slide 11: Targeted nominal flat costs 2012-2018 / NOK 800m cost reduction
Manage guaranteed 1 balance sheet 2 Growth in Savings Targeted nominal flat costs 2012-2018/ and Insurance NOK 800m cost reduction1 Operational cost 2012-20182 NOKm 3,228 3,212 <3,200 2012 2016 2018e Cost reduction completed 2012 – 2016 Further Cost Reductions to be Realized by 2018 Cost programme
Slide 12: Cost Target on Track
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Cost Target on Track Target to reduce costs nominally… …on track despite strong business growth 3 728 1 60 New investments in fast growing business Increased investments in new digital growth ~400 3 268 2 Financial tax in Norway + N
Slide 13: Balance sheet shifts to capital efficient products
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Balance sheet shifts to capital efficient products Forecast assets under management (NOKbn) Implications for capital ILLUSTRATION 2016: 2027e: 54% of AuM >80% of AuM 900 non guaranteed non guaranteed 800 700 1. Guaranteed portfolio
Slide 14: Defined Contribution Pension Savings - Leading Position in Norway and Strong Contender in Sweden
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Defined Contribution Pension Savings - Leading Position in Norway and Strong Contender in Sweden Norway – market leader defined contribution Sweden – growing in defined contribution (private sector)1 (private sector)2 34% 28% 17% 17
Slide 15: Norway: Continued growth in Unit Linked reserves driven by premiums and expected market return
Manage guaranteed 1 balance sheet 2 Growth in Savings Norway: Continued growth in Unit Linked reserves driven by and Insurance premiums and expected market return Development Unit Linked reserves Drivers net premiums 110 000 CAGR ~19% Majority of premiums come 2016-18 100 000 from existing Unit Li
Slide 16: Storebrand Asset Management: Growing share of external assets
Manage guaranteed 1 balance sheet 2 Growth in Savings Storebrand Asset Management and Insurance Growing share of external assets, Sweden case in point Mutual funds growth Increased share of earnings1 Next step: distribution and scale SEK bn (SPP funds only) 1 Strengthen distribution Sweden AM, % rev
Slide 17: Sustainability is at the core of our investments
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Sustainability is at the core of our investments Our approach Product innovation • The world's first global, Invest fossil free index-near equity fund • Launched April 2017 Storebrand Global Pluss • Invests in 100 of the most Divest
Slide 18: Sustainability focused Asset Manager with scalable cost advantage
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Sustainability focused Asset Manager with scalable cost advantage Cost income (%) global asset managers 2016 AUM (EUR bn) 80,4 82,3 76,4 71,9 72,5 69,6 64,5 64,7 64,8 64,8 66,9 62,5 53,4 47,7 48,1 63 683 1,083 431 449 406 771 226 35
Slide 19: Pillar III Savings introduced in Norway with sales start 1 November
Manage guaranteed 1 balance sheet 2 Growth in Savings Finally! and Insurance Pillar III Savings introduced in Norway with sales start 1 November Pillar I Pillar II Pillar III State pensions Corporate Pensions Individual Savings 1 Savings for pension – Locked until retirement 2 Individuals can save N
Slide 20: Cross Selling to 1.9m Individuals through Corporate Clients and External Partners
Manage guaranteed 1 balance sheet 2 Growth in Savings Cross Selling to 1.9m Individuals through and Insurance Corporate Clients and External Partners 60,000 700,000 60,000 1,200,000 new new retirees and employees in former holders of employees employees 40,000 businesses pension certificates each ye
Slide 21: Front book has strong capital synergies
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Front book has strong capital synergies Capital efficient Solvency II Builds >2pp of Diversification mortgages on Capital capital solvency ratio benefits life balance synergies generative per year sheet Product areas Pension savings
Slide 22: Growth in Savings and Insurance
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Growth in Savings and Insurance Unit Linked Asset management +7% +21% 140 571 577 128 535 105 487 85 442 64 414 54 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 UL reserves (NOKbn) AuM (NOKbn) Insurance Retail bank +9%
Slide 23: Growth ambitions 2018
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Growth ambitions 2018 Unit Linked Asset mgmt. Insurance Retail bank #1 #1 ~ 10% Double market position Norwegian asset manager Long term growth2 Retail loan book Norway & Sweden1 NOK 150m 90-92% >10% Revenue growth Combined Ratio RO
Slide 24: Strong returns on IFRS equity in Savings and Insurance
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Strong returns on IFRS equity in Savings and Insurance ILLUSTRATIVE Savings Insurance Guaranteed Other Group IFRS earnings1 (NOKm) 910 554 934 296 2 694 Allocated Equity2 (NOKbn) 3.6 1.7 19.7 3.3 28.2 Pro forma 26% 33% 5% 9% 9,5% Ro
Slide 25: Group capital management policy
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Group capital management policy Solvency II level Consider increased pay out Consider share buy-backs 180% Dividend pay out 163% Q2 Maintain investment in growth No dividend if solvency ratio without transition rules <110
Slide 26: Dividend NOK 1.55 pr. share
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Dividend NOK 1.55 pr. share [market communication dividend from Q4 2016] Payout ratio >35% The Board proposes a dividend of NOK 35% 1.55 per share for 2016 27% Expected dividend of more than 35 per cent of the result for 20171
Slide 27: Financial targets
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Financial targets Target Status 2016 Return on equity1 > 10% 9.5% Dividend ratio1 > 35% 27% Solvency II margin Storebrand Group2 > 150% 157% 27 1 Before amortisation after tax. 2 Including transitional rules.
Slide 28: Results Q2 2017
Results Q2 2017 28 @® storebrand
Slide 29: Key figures
Group Key figures Result development1 Earnings per share2 Financial items and risk result life Special items MNOK Operating result 912 1.83 1.89 878 1.64 788 676 386 671 225 1.23 1.25 254 209 88 208 123 495 578 463 565 411 -27 -52 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q2 2016 Q3 2016 Q4 2016 Q1 20
Slide 30: Storebrand Group
Group Storebrand Group Profit1 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Fee and administration income 1 079 1 005 2 098 2 058 4 235 Insurance result 290 237 565 455 945 Operational cost2 -805 -7072 -1 636 -1 519 -3 191 Operating profit 565 535 1 028 994 1 989 Financial items and
Slide 31: Storebrand Group
Group Storebrand Group Profit 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Fee and administration income 1 079 1 005 2 098 2 058 4 235 Insurance result 290 237 565 455 945 Operational cost -805 -707 -1 636 -1 519 -3 191 Operating profit 565 535 1 028 994 1 989 Financial items and ri
Slide 32: Savings (non-guaranteed) - continued growth
Savings (non-guaranteed) Savings - continued growth Profit 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Fee and administration income 747 636 1447 1333 2 758 Operational cost -438 -414 -897 -833 -1 700 Operating profit 309 222 551 500 1 058 Financial items and risk result life 10 12
Slide 33: Savings (non-guaranteed) - strong growth in assets and retail lending
Savings (non-guaranteed) Savings - strong growth in assets and retail lending Reserves and premiums Unit Linked Comments 3,7 3,6 3,5 3,4 3,5 3% premium growth in UL premiums1 151 147 140 28% retail lending growth2 132 BNOK 128 9% growth asset management2 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Slide 34: Insurance
Insurance Insurance Profit 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Insurance premiums f.o.a. 971 962 1911 1909 3 828 Claims f.o.a. -681 -726 -1346 -1453 -2 883 Operational cost -171 -137 -344 -283 -602 Operating profit 119 99 222 173 342 Financial result 65 52 133 99 233 Profit
Slide 35: Insurance - Lagging growth, strong combined ratio
Insurance Insurance - Lagging growth, strong combined ratio Combined ratio Comments Combined ratio and results Claims ratio Combined ratio Cost ratio 90% 91% 91% 89% 88% Combined Ratio 88% Reduced premiums due to on-going shift to more cost-effective distribution and new 75% 75% 74% 71% 70% disa
Slide 36: Guaranteed pension - strong quarter but long term run off
Guaranteed pension Guaranteed - strong quarter but long term run off Profit 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Fee and administration income 369 383 727 787 1 566 Operational cost -216 -192 -437 -464 -981 Operating profit 153 191 290 323 585 Risk result life & pensions 6 -
Slide 37: Guaranteed pension - reserves in decline and robust buffer situation
Guaranteed pension Guaranteed - reserves in decline and robust buffer situation Reserves guaranteed products Comments 266 262 259 260 260 49 47 46 42 37 As companies convert to DC schemes, the migration from DB to lower-margin paid up policies 112 115 116 121 126 continues to reduce fee income in
Slide 38: Other
Other Other1 Profit 2Q 01.01-30.06 Full year NOK million 2017 2016 2017 2016 2016 Fee and administration income 23 53 44 70 145 Operational cost -39 -30 -79 -72 -141 Operating profit -16 23 -34 -2 4 Financial items and risk result life 102 143 179 298 401 Profit before amortisation 85 166 145 295 40
Slide 39: Solvency II and capital structure
Solvency II and capital structure 39
Slide 40: Long History of Economic Capital Modelling in Storebrand
Long History of Economic Capital Modelling in Storebrand 1998 2007 2008 2012 Today Embedded Adoption to Storebrand is using Value Solvency II the Solvency II introduced modelling since standard model QIS3 Market consistent "In house" better and Risk and business Embedded Value faster Solvency II mod
Slide 41: The Solvency Calculation – moving to a market consistent balance sheet
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 42: Calculating Market Value of Liabilities under Solvency II
Calculating Market Value of Liabilities under Solvency II Solvency II balance sheet Market value of liabilities Consist of both traditional IFRS Own tangible capital, subordinated Both assets and liabilities Own Funds are mark to market debt and NPV of future profits Funds 43 bn For assets this
Slide 43: Solvency movement from Q1 2017 to Q2 2017
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance Solvency movement from Q1 2017 to Q2 2017 163% 4% 152% 11% 147% -2% 3% Q1 2017 ex. Model and Operating Economic Q2 2017 ex. Transitional Q2 2017 transitionals assumptions earnings2 variance3 transitionals rules Solvency ratio change
Slide 44: SII position Storebrand Group
Manage guaranteed 1 balance sheet 2 Growth in Savings and Insurance SII position Storebrand Group Solvency position(%)1 Estimated sensitivities Target SII margin 150% 159 163 12 11 Estimated economic 152 11 163 SII-margin Q2 2017 Interest 141 27 168 147 152 rates -50bp Interest rates +50 bp 160 3 16
Slide 45: Solvency Capital Requirements (SCR)
Solvency Capital Requirements (SCR) SCR calculation Q1 2017 SCR dominated by financial market risk… NOKbn Operational P&C & Health 4% Currency 3% Interest Rate Down 14% Concentration 23% 0% SCR before Life 36.6 25% diversification Spread 26% Diversification -6.6 23% Equity 2% 67% Counterparty 14% Pr
Slide 46: High quality capital base
High quality capital base SCR and own funds Q1 2017 (NOK bn) Own funds in % of SCR (excluding CRD IV subsidiaries) 43.3 2.7 0.1 OF % OF % of 4.5 Regulatory limit of SCR total 2.4 27.3 Tier 3 ≤ 15% SCR 0.5% 0.3% CRD IV capital 2.5 requirements Tier 2 ≤ 50% SCR ∑ T2+T3 18% 11% 33.5 SCR SII regulated 2
Slide 47: Solvency Capital allocation pr segment
Solvency Capital allocation pr segment – most of the capital allocated to the guaranteed segment ILLUSTRATIVE PRO FORMA ALLOCATION BASED ON 159% SOLVENCY RATIO PR Q1 2017 1 Savings Insurance Guaranteed Other Group Solvency II: Solvency II: Solvency II: Solvency II: Solvency II group calculation Unit
Slide 48: Group equity and capital structure – reduced financial leverage
Group equity and capital structure – reduced financial leverage Group equity Group capital structure2 Tangible equity increased by 86% 2011-2016, intangible equity Improved leverage ratio amortised according to plan 34,712 35,258 32,567 30,184 27,637 26,946 27,250 26,273 24,741 22,775 20,175 26,946
Slide 49: Term structure debt
Term structure debt Term structure senior bond debt Storebrand ASA (MNOK) 800 Senior unsecured 500 500 450 0 2017 2018 2019 2020 2021 2022 Term structure debt Storebrand Livsforsikring1 (MNOK) Hybrid T1 2.8112 Dated Subordinated T2 Perp. Subordinated T2 1.500 1.000 1.100 3 720 2017 2018 2019 2020 20
Slide 50: Storebrand Life Insurance asset allocation
Storebrand Life Insurance asset allocation 60% 50% 40% 30% 20% 10% 0% Bonds at Equities Bonds Money market Real estate Other amortized cost 30.06.2016 5% 29% 5% 49% 11% 1% 30.09.2016 5% 28% 6% 50% 11% 1% 31.12.2016 5% 27% 4% 52% 11% 1% 31.03.2017 6% 25% 4% 53% 11% 1% 30.06.2017 6% 25% 5% 52% 11% 1%
Slide 51: SPP asset allocation
SPP asset allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Alternative investments Bonds Equities 30.06.2016 8% 87% 5% 30.09.2016 8% 87% 5% 31.12.2016 8% 86% 6% 31.03.2017 9% 85% 6% 30.06.2017 9% 85% 6% Note: The graph shows the asset allocation for all products with an interest rate guarantee
Slide 52: Investor Relations contacts
Investor Relations contacts Lars Aa Løddesøl Group CFO lars.loddesol@storebrand.no +47 9348 0151 Kjetil R. Krøkje Head of IR kjetil.r.krokje@storebrand.no +47 9341 2155 This document contains Alternative Performance Measures as defined by the European Securities and Market Authority (ESMA). An overv