Storebrand Asa · OSL:STB
Storebrand Asa — Investor Day (December 2020)
119 slides from Storebrand Asa's investor day presentation, Dec 10, 2020
Slide 1: On the Right Side of History
On the Right Side of History Leading the way in sustainable value creation ✓Compelling combination of self- funded growth and capital return for shareholders ✓Value beyond return for customers CAPITAL MARKETS DAY December 10, 2020 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 fu
Slide 3: Agenda
Agenda Topic Presenter Karin Greve-Isdahl Welcome EVP Communications & Sustainability Odd Arild Grefstad Sustainable Nordic Savings and Insurance Group Group CEO Staffan Hansén Digital Leader in the Swedish Pension Market EVP, CEO SPP Geir Holmgren Market Leader in a Growing and Changing Norwegian P
Slide 4: Sustainable Nordic Savings and Insurance Group
Sustainable Nordic Savings and Insurance Group Odd Arild Grefstad Group CEO 4
Slide 5: 250 years of pioneering in the Nordic financial industry
250 years of pioneering in the Nordic financial industry - Future Storebrand builds strategic strengths ILLUSTRATIVE Retail Insurance & Bank Asset Management Unit Linked Pensions and Guaranteed pensions Savings 1767 1847 1861 1917 1995 2020 2050 Foundation: P&C Pioneered Pioneered Pioneered Norwegia
Slide 6: Leader in Occupational Pension and Asset Management, and a challenger in Retail
Leader in 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 29% 18% 18
Slide 7: Structurally strong markets with resilient economic development
Structurally strong markets with resilient economic development GDP growth (IMF estimates 2020) Net Government Debt (% of GDP) 5,0 % 2,0 % 1,8 % 150,0 % 106,8 % 109,7 % 1,5 % 0,9 % 1,3 % 1,3 % 98,1 % 85,1 % 0,0 % 100,0 % 50,0 % 9,2 % -5,0 % -2,8 % -4,7 % -4,3 % 0,0 % -10,0 % -5,9 % -8,3 % -50,0 % -9
Slide 8: Nr.1 insurance company, Top 10% most sustainable
Nr.1 insurance company globally1 Top 10% most sustainable company 25 in the world2 years of sustainable Nr.1 investments sustainable investments in Norway and Sweden3 8 | 2 Corporate Knights ranking, January 2020 1 3 KANTAR SIFI | Prospera ranking 2020 Norway/Sweden Dow Jones Sustainability Indices,
Slide 9: Strong employee engagement and increasing attractiveness
8.3Employee engagement Strong employee score1 engagement and increasing attractiveness among young professionals #1 Most attractive2 employer in finance for young professionals 9| 1Score: 1-10, outperforming the benchmark for financial industry 7.8 2YPAI: Young Professional Attraction Index Norway,
Slide 10: Delivered strong growth in Savings and Insurance
Delivered strong growth in Savings and Insurance Unit Linked Asset management +19% +9% 220 831 179 721 707 168 571 577 128 140 487 535 105 442 85 64 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 UL reserves (NOK bn) AuM (NOK bn) Insurance Retail bank +5% +11% 46,5 4
Slide 11: 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 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 65% NOK m 45% 59% 36% 21% 26% 15% 14% 2012 2019 2012 2019 2012 2019 Ex
Slide 12: Delivered on commercial ambitions from CMD 2018
Delivered on commercial ambitions from CMD 2018 Occupational Asset Retail Savings Insurance Costs Pension Management Double Double #1 digit #1 digit >10% ~5% 90-92% 0% market position CAGR Pension Norwegian CAGR retail ROE Long term Combined Cost Pension Norway Sweden asset manager Savings Norway re
Slide 13: Group Strategy: Sustainable Nordic Savings and Insurance Group
Group Strategy 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 Norwegian Retail Market Norway & Sweden areas in front book Strategic D Lead
Slide 14: In Norway, manage for increased profits in a market with product changes in 2021
In Norway, manage for increased profits in a market with A Occupational product changes in 2021 Pension Changed market dynamics due to introduction of Storebrand responds with improvements in both Earnings expected to grow in 2023 IPA Savings and Insurance Operational improvements: Expected short te
Slide 15: In Sweden, gain market shares by winning the transfer market
In Sweden, gain market shares by winning the transfer market A Occupational Pension Attractive market with solid growth By being a leader in the transfer market… …SPP aims to grow faster than our competition 8% 25% 14-16% expected yearly market growth SPP market share1 in expected SPP growth CAGR in
Slide 16: In Asset Management, build a Nordic Powerhouse in sustainable investing
In Asset Management, build a Nordic Powerhouse in sustainable B Asset investing with profitable growth Management With foundation in captive assets from pension … grown to a leading multi-boutique asset Growth forward as a Nordic Powerhouse in savings… manager, with large part external clients susta
Slide 17: In Retail Norway, accelerate growth by building on strengths
In Retail Norway, accelerate growth by building on strengths C Retail from Corporate Market and Asset Management Building on leading strengths …we provide top-class financial services to Retail has become increasingly important part of in B2B markets… targeted retail customers the group… A Leading p
Slide 18: Sustainability as a differentiator, value beyond return
Sustainability as a differentiator, D Leadership in Sustainability the reason we focus on value beyond return Our Leadership in Sustainability is a foundation for increased value creation for all stakeholders Increased Employee Value Increased Customer Value Increased Shareholder Value Giving a high
Slide 19: The technology platform is our engine for growth
The technology platform is our engine for growth E Digital Frontrunner – and a key enabler for future competitiveness Our products, services and POWERED BY DATA & ANALYTICS • 17% improved disability pricing customer experience are driven by • 85% increase fraud detected our technology platform FULL
Slide 20: Storebrand Ambition 2021-2023: Earnings growth across the business
Storebrand Ambition 2021-2023: Earnings growth across the business A B C Leading Provider Nordic Powerhouse in Growing Challenger in Occupational Pensions Asset Management Norwegian Retail Market Norway & Sweden Norway: #1 private sector Double digit occupational pensions NOK 250 bn growth insurance
Slide 21: Blend of growing high ROE future business and low ROE run-off
Storebrand is a blend of growing high ROE future business, and low ROE run-off business Future Run-off ILLUSTRATIVE Storebrand business Savings & Insurance Guaranteed4 Group IFRS earnings1 (NOKm) 1 500 1 026 2 526 Allocated Equity2 32.9 (NOKbn) 5.3 27.5 Pro forma RoE adj. (%)3 28% 4% 8% The equity i
Slide 22: Capital ambition: growing ordinary dividends, run-off releases capital
Capital ambition: Earnings growth will continue to grow ordinary dividends, run-off of back book will realease excess capital I Growing ordinary dividends from earnings II NOK ∼10bn capital release from back book by 2030 Regulatory cancelled due to Covid-19 ∼10bn 3.25 3.00 2.50 0.40 NOK bn NOK 1.55
Slide 23: Financial targets maintained
Financial targets are maintained for a robust balance sheet, a profitable business, and reaffirming commitment to growing dividends Target Actual 2018 Actual 2019 % Solvency 2 margin Storebrand Group1 > 150% 173% 176% > 50% NOK 3.00 Cancelled Dividend pay-out ratio2 due to & nominal growth 68% Covid
Slide 24: Key Takeaways
▪ The Group is in strong growth and expects to deliver a group profit of approximately NOK 4 bn in 2023. We will continue with strong cost discipline while investing in new growth areas that will continue the transformation of the company. Key Takeaways ▪ Storebrand will get back to paying dividends
Slide 25: Digital Leader in the Swedish Pension Market
Digital Leader in the Swedish Pension Market Staffan Hansén EVP, CEO SPP 25
Slide 26: Key Takeaways
▪ SPP has become a significant result contributor to the Storebrand Group, driven by earnings growth and ongoing capital release Key Takeaways ▪ Growth is expected to continue, driven by an edge in digital solutions and a strong market position 26 |
Slide 27: Front book growth has improved the quality of earnings
Front book growth has improved the quality of earnings… Healthy growth in unit linked AuM... ... has improved core earnings … ..at a lower cost AuM (SEK bn) AuM (SEK bn) (SEK m) +14% 605 112 550 -9% +12% 522 451 146 87 88 168 79 362 71 996 870 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2
Slide 28: Pension payments from the back book have released capital
…while pension payments from the back book have released capital Guaranteed savings have peaked… ... with large pension payments… ... releasing capital in excess of earnings (SEK bn) (SEK bn) (SEK bn) SEK +3.1 bn 83 83 83 80 83 5.0 -5,4 -5,4 -5,4 -5,3 -5,3 1.9 2015 2016 2017 2018 2019 2015 2016 2017
Slide 29: SPP is growing in its core market
SPP is growing in its core market… Competitive market for occupational pensions, unit linked Market growth SPP growth (SEK bn) +8% +14-16% +7% +20% 7.4 6.2 Gross transfers 4.8 4.3 Gross transfers Premium income excl transfers Premium income excl transfers 2017 Q3 2018 Q3 2019 Q3 2020 Q3 2023e 2017 Q
Slide 30: Driving up market shares
... driving up market shares…. Premium income (Incl transfers) Transfers New Sales APE1 (Excl transfers) % % % 25 30 24 SPP 22 22% SPP 25 20 25% 20 18 SPP 20 16 18% 14 15 15 12 10 10 8 10 6 5 4 2 5 0 0 2016 Q4- 2017 Q4- 2018 Q4- 2019 Q4- 2016 Q4- 2017 Q4- 2018 Q4- 2019 Q4- 2016 Q4- 2017 Q4- 2018 Q4-
Slide 31: Selected portfolio transfers have added growth
…whilst selected portfolio transfers have added growth SEK 5.2 bn AuM (2020) 31 |
Slide 32: Strategic priorities towards 2023
Strategic priorities towards 2023 Digital Double digit Leader growth ▪ Digital to the core ▪ Trusted advisor ▪ Scalability ▪ Transfer factory ▪ Reduced time-to-market ▪ Sustainability brand strength 32 |
Slide 33: SPP has undergone a four year digitalisation journey
SPP has undergone a four year digitalisation journey… Digital Leader Digitalisation as a business New IT platform New ways of working differentiator Initially a IT cost case… …turned into a growth enabler… …transforming the whole SPP 33 |
Slide 34: Digitalisation has given SPP strong advantages
…which has given SPP strong advantages… Digital Leader Reduced Digital to the core Scalability time-to-market Front-end digitally linked Ability to grow at low Ability to react fast to back-end marginal cost to customer needs 34 |
Slide 35: The transfer market is a key pocket of growth for SPP
The transfer market is a key pocket of growth for SPP… Double Digit Growth Target annual SPP's market share Yearly transfers Yearly transfers growth in net in gross transfers today1 tomorrow? transfers 2% 7% 25% 2% 1 SEK 300 000 MSEK 1,300 bn 2016 2020 2020 2023 addressable market SPP's market share
Slide 36: Success rests on the features defining SPP
…where success rests on the features defining SPP Double Digit Growth Trusted advisor Transfer factory Brand strength The "go-to" for qualified advice The "go-to" for simplicity and The "go-to" for sustainable smoothness savings 36 |
Slide 37: Sustainable savings is becoming ever more important
Sustainable savings is becoming ever more important Digital Leader Double Digit Growth Your Carbon Footprint at SPP What's in it for SPPs customers? Your Comparable Visualizing carbon footprint savings savings Data input to company reporting New tool for employer branding 35% Tons Tons 9.0 13.9 All
Slide 38: Key Ambitions 2021-2023
Key Ambitions 2021-2023 Double digit #1 in unit linked market premium growth share1 38 | 1 Premium income including transfers, competitive "non-unionised" market for occupational pensions
Slide 39: Market Leader in a Growing and Changing Norwegian Market
Market Leader in a Growing and Changing Norwegian Market Geir Holmgren EVP, CEO Storebrand Livsforsikring AS 39
Slide 40: Key Takeaways
▪ Market leadership in an attractive and growing occupational pension market ▪ Well positioned for the new Individual Pension Account (IPA) market Key Takeaways ▪ A challenger in a profitable and fast-growing public sector pension market ▪ Expand insurance offering to P&C insurance for SMEs by reali
Slide 41: Market leader in an attractive growth market - Private sector occupational pensions
Market leader in an attractive growth market - Private sector occupational pensions Strong AuM market growth Defined Contribution, Market growth - Defined Contribution gross premiums run-off for Defined Benefit NOK bn NOK bn +5-8% Defined Contribution private sector Defined Benefit private sector (e
Slide 42: Key success factors in the corporate pension and insurance market
Key success factors in the corporate pension and insurance market Attractive Superior economic value client service proposition Sustainable high performing Market leading investment digital portals funds 42 |
Slide 43: Well positioned as a full range provider in a changing market
Well positioned as a full range provider in a changing market Product Market share1 Changes Competitive edge ▪ Barriers of entry: IT, scale Private sector 29% Individual Pension Accounts 2021 economies Occupational pension ▪ Only provider with a full product Public sector 1% Pension reform effective
Slide 44: Strategic priorities to maintain market leadership and profitability
Strategic priorities to maintain market leadership and profitability towards 2023 Remain #1 provider of Growing challenger in Expand insurance offering private sector occupational pensions public occupational pensions to P&C insurance for SMEs after implementation of Individual Pension Accounts (IPA
Slide 45: Well positioned to remain #1 provider of Individual Pension Accounts
IPA Public P&C Storebrand is well positioned to remain #1 provider of Individual Pension Accounts (IPA) 1 2 3 Well positioned for growth and Individual Pension Accounts from 2021 Bridging price changes individualisation 973 239 Pension and long-term savings 2019 2020e 2021e 2022e 2023e Total results
Slide 46: Competitive edge through end-to-end digitalisation
IPA Public P&C Competitive edge through end-to-end digitalisation in the occupational pension market Digital Digital Automating Customer customer interface communication core processes satisfaction Cost leadership 46 |
Slide 47: Challenger in a profitable public sector market
IPA Public P&C Challenger in a profitable public sector market - Significant competence, technology and asset management synergies 1 2 3 High market Gradual entrance Profitable and potential1 into market capital light PUBLIC Ambition AuM MUNICIPALITIES CORPORATIONS new customers 5 BNOK 2022 35 BNOK
Slide 48: Expand insurance offering to P&C insurance for SMEs
IPA Public P&C Expand insurance offering to P&C insurance for SMEs - Significant customer, capital and distribution synergies 1 2 3 4 Improved value Build on existing High capital and Kickstarted with proposition systems and processes distribution synergies Insr-portfolio % ▪ Strong brand name ▪ In-
Slide 49: Key Ambitions 2021-2023
Key Ambitions 2021-2023 #1 market share NOK 5 bn Maintain profit level private sector annual AuM growth despite introduction of occupational pension public sector individual pension accounts 49 |
Slide 50: Nordic Powerhouse in Asset Management
Nordic Powerhouse in Asset Management Jan Erik Saugestad EVP, CEO Storebrand Asset Management 50
Slide 51: Key Takeaways
▪ Multi-boutique asset manager with a proven ability to grow the business both organically and through acquisitions ▪ E2E digitalisation and cloud platform to cater for digital client experiences and further scalability ▪ Growth through a broader Nordic distribution and Key Takeaways focused Interna
Slide 52: The Asset Management journey
The Asset Management journey Transformation and Modern and Future growth as a rise of Asset sustainable multi- Nordic Powerhouse Management boutique manager A Nordic Asset Manager with a recognised #1 position in sustainable investments AuM 921 bn #1 AuM Norway #5 AuM Nordics World Leader Sustainabi
Slide 53: Strong growth and increased share of non-captive assets have boosted revenues
Strong growth and increased share of non-captive Transformation and rise of Asset assets have boosted revenues Management Growth in AuM1 from organic and structural initiatives... ...have driven a high revenue growth NOK bn Pension savings Norway Institutional clients Revenues2 (NOK m) +84 +198 316
Slide 54: Successful sales to non-captive clients a key enabler for net inflow
Successful sales distribution to non-captive clients has been a key enabler for substantial net inflow Outflow of guaranteed payments constraints net flow in pensions Strong sales to external clients enables AuM growth Assets under Management Assets under Management Group internal pension savings Ex
Slide 55: Experienced and engaged employees in a larger and more diverse organisation
Experienced and engaged employees in a larger and more diverse organisation ~300 ~160 2015 Nov 2020 number of nationalities # of employees 11 7,2 8,0 average tenure (regular 2018 Nov 2020 Norway, Sweden , employees) >9 years improved engagement Denmark, UK , Germany score by employees 55 |
Slide 56: A modern and sustainable multi-boutique manager
A modern and sustainable multi-boutique manager well Modern and sustainable positioned for further consolidation and growth multi-boutique manager Index Active Fixed income Real Estate Cover key asset classes for clients Factor Private Equity Private Debt Infrastructure Autonomous and complementary
Slide 57: Highly recognised by our clients with a strong competitive position
Highly recognised by our clients and holds a strong competitive position Score1: Willingness to recommend Score1: Sustainable Investments Our position: Storebrand Asset Storebrand Asset 1 3,96 1 4,38 Management Management • High recognition and rating by 2 Company 2 3,92 2 Company 2 4,32 institution
Slide 58: Clear strategic priorities to increase AuM by NOK 250 billion
Clear strategic priorities to increase AuM by NOK 250 Future growth as a Nordic billion and maintain revenue margin through 2023 Powerhouse E2E digitalisation Market expansion, Keep recognised #1 Growth in active Bolt-on M&A to for client experience client growth outside in sustainable and alternati
Slide 59: Improve client experience and cost efficiency by End-to-End digitalisation
Improve client experience and cost efficiency by End-to- End digitalisation Digital Foundation Cost Efficiency Client Experience Wolf SCD -2 bps -1 bps 14 bps 12 bps 11 bps Cloud based infrastructure and data platform 2017 Q3 2020 2023 Fixed Cost per year in bps of AuM SAM invests in a strong digita
Slide 60: Market expansion to grow AuM and client base beyond Norway
Market expansion to grow both AuM and client base beyond Norway Our vision: Current position: Key enablers Foundation: Strong captive • Stronger Nordic distribution outside Norway • Robust position in Sweden; SAM Branch, SPP management Fonder, Storebrand Fastigheter • Streamlined hub for institution
Slide 61: Keep #1 position in sustainable investments
Keep #1 position in sustainable investments through innovative index solutions and active ownership Sustainable investments is a key selection Significant growth in sustainable solutions We continue to raise the bar to stay ahead criteria for asset management clients with a positive impact and creat
Slide 62: Continue to grow in alternatives through new capabilities and fund launches
Continue to grow in alternatives through new capabilities and fund launches Global trends highlights importance of alternative assets Storebrand is well positioned to capture growth Global revenues split by product1 (%) ▪ Total committed capital ~35bn Nordic gateway to ▪ Primary and secondary strate
Slide 63: Protect and develop active equity by capitalising on multi-boutique strengths
Protect and develop active equity by capitalising on our strengths as a multi-boutique Active remains a very important part of revenues in the future Storebrand is well positioned to manage active strategies Global revenues split by product1 (%) ▪ Clear, well documented investment rationale Sustaina
Slide 64: Maintain revenue margin through growth in alternative assets and active equity
Maintain revenue margin through growth in alternative assets and active equity Change of product mix Strong growth in revenue margin1 214bn (23%) 3 bps 20 bps 104bn 17 bps 79bn (13%) 24bn 110bn 55bn 2015 Q3 2020 2015 Q3 2020 Active equity2 Alternatives 64 | 2 Theoretical margin reflecting index perf
Slide 65: Track record of two recent and successful acquisitions
Storebrand has track record of two recent and successful acquisitions SKAGEN Funds, transaction Dec 2017 Cubera Private Equity, transaction April 2019 ✓ Significant system contribution to joint Asset ✓ Full range private equity offering to Nordic clients Management Platform ✓ Strong gateway to the N
Slide 66: Further M&A bolt-ons are considered
Further M&A bolt-ons are considered to build additional capabilities and client offering Consolidate Conventional Grow Alternatives Fintech Opportunities ▪ Products and solutions ▪ Private equity ▪ Client experience ▪ Markets and client ▪ Real estate ▪ E2E digitalisation segments ▪ Infrastructure ▪
Slide 67: Key Ambitions 2021-2023
Key Ambitions 2021-2023 AuM growth of NOK Maintain revenue Leadership in ~250 billion to 2023 margin sustainable investments 67 |
Slide 68: Accelerating Growth in the Norwegian Retail Market
Accelerating Growth in the Norwegian Retail Market Heidi Skaaret EVP, Retail Norway Photo by: Eirik Førde 68
Slide 69: Key Takeaways
▪ The retail market in Norway is increasingly important as an engine for growth and profitability for Storebrand ▪ Storebrand is a challenger in a profitable Key Takeaways market - building on group strengths and synergies ▪ Storebrand's digital first strategy offers data- driven tailored solutions
Slide 70: Ambitious retail growth strategy leveraging group strengths
Ambitious retail growth strategy leveraging group strengths and opportunities in an attractive market Attractive Norwegian retail market, with a We gain our customers trust by leveraging wealthy and digital mature population strategic group strengths GDP (NOK) per capita Market leader occupational p
Slide 71: Storebrand is a challenger in a growing market
Storebrand is a challenger in a growing market Market share mutual funds % Market share P&C insurance % 4.1 11,9 Skagen 9,8 9,5 8,9 ~8% ~4% annual market 3.7 annual market 4,3 growth growth 3,4 3,2 3.7 2,5 3.5 Storebrand 2017 2018 2019 Q3 2020 2017 2018 2019 Q3 2020 Market share unit linked % Market
Slide 72: The retail business system leverages large customer base and digital capabilities
The retail business system leverages Storebrand's large customer base, and excellent digital capabilities driving scalable growth DATA DRIVEN RECRUITING SEGMENTS AND CONCEPTS PRODUCT AREAS CUSTOMER DEVELOPMENT Insurance MASS MARKET Employees with Value propositions: occupational pension Young, New f
Slide 73: Targeting continued strong growth in retail segment
Targeting continued strong growth in retail segment Retail market revenues (NOK m) Volume growth (NOK bn) AuM retail savings 10-12% CAGR +16% +8% 36 39 32 25 +5% 2 870 2 647 2 498 2 385 2017 2018 2019 2020e 2023e Retail mortgages ∼10% +6% CAGR 42 47 48 50 2017 2018 2019 2020e 2023e Retail insurance
Slide 74: Strategic priorities towards 2023
Strategic priorities towards 2023 Value propositions tailored Strong digital capabilities and Leverage partnerships and to segments through data attractive customer solutions explore new business models analytics and individualised to support scalable growth for increased distribution customer journ
Slide 75: Attractive value propositions tailored to segment needs
Attractive value propositions tailored to segment needs is a key driver of the growth agenda Developing value propositions tailored to life cycle Holistic customer concepts and customer potential Storebrand Storebrand Wealth Management Smart Pension 55 years+ Wealth Estimated potential. 40 000 Custo
Slide 76: Strong digital capabilities support scalable growth
Strong digital capabilities support scalable growth Digitalisation Distribution Digital sales retail savings, AuM New savings app ▪ >100.000 users +25% ▪ Platform for sales and engagement Claims 2017 2018 2019 2020 ▪ >85% digital claims share ▪ 43% claims process automation Digital sales insurance,
Slide 77: Leveraging partnerships with large customer base and new business models
Leveraging partnerships with large customer base and exploring new business models Growth through partners with large customer bases Growth through new business models ▪ Increased distribution power and strengthened ▪ Explore new services and business areas customer loyalty ▪ Explore strategic optio
Slide 78: Key Ambitions 2021-2023
Key Ambitions 2021-2023 Double digit growth Double digit growth Double digit growth retail insurance retail savings AUM retail mortgages premiums <92% combined ratio 78 |
Slide 79: Managing for Increased Profitability, a Strong Solvency Position and Growing Returns
Managing for Increased Profitability, a Strong Solvency Position and Growing Returns to Shareholders Lars Aa. Løddesøl Group CFO 79
Slide 80: Key Takeaways
▪ Earnings growth to bring group profit to NOK ∼4bn in 2023 ▪ Strong cash generation and liquidity ensure ordinary dividend growth ▪ High quality investments and solid customer Key Takeaways buffers secure customers returns and protect shareholders' equity ▪ Strong solvency position and sound capita
Slide 81: Growth ambitions to bring group profit to ~4bn NOK in 2023
Growth ambitions to bring group profit to ∼4bn NOK in 2023 81 |
Slide 82: Growth ambitions to bring group profit to NOK ~4bn in 2023
Growth ambitions to bring group profit to NOK ∼4bn in 2023 Group profit (before amortisation and tax, NOK billion) ∼ 4.0 3.0 1.4 2.0 0.3 0.6 0.4 1.0 1.0 0.1 0.2 2012 2019 2023 Other Guaranteed Insurance Savings 82 |
Slide 83: The ambition assumes margin pressure compensated by growth and cost discipline
The ambition to reach NOK 4bn assumes margin pressure to be compensated by growth and cost discipline Asset Unit Linked Bank Insurance Guaranteed Management Volume (NOK) AUM AUM Lending Premiums f.o.a.1 AUM Q3 2020 252 bn 921 bn 48 bn 4.3 bn 277 bn (FY2020 est.) CAGR ∼ 8-12 % ∼ 7-11 % ∼ 5-10 % ∼ 10-
Slide 84: Sensitivities outside group control that may impact the result
Sensitivities outside group control that may impact the result Todays forward curve Normal risk premiums Regulatory changes 84 |
Slide 85: Continued strong cost discipline and selective investments
Continued strong cost discipline and selective investments to support earnings growth Flat nominal costs1 2012-2020 NOK bn M&A, investments digitalisation and new business initiatives in 2021 3 4.4 Digital acceleration 4.0 3.8 New and acquired business 0.1 0.1 0.5 0.5 0.5 4.0 3.4 3.4 3.4 3.4 2012 20
Slide 86: Solvency regime rewards diversification of risk
Solvency regime rewards diversification of risk SCR dominated by financial market risk… …gives strong diversification benefits to adding more insurance risk1 % of net SCR before diversification Percent of SCR diversified away under Solvency 2 for Storebrand Group 76% 65% 67% Life 26% P&C & Health Co
Slide 87: Growing returns from front book and capital release will generate ROE >10%
Growing returns from front book and capital release from back book will generate a sustainable Return on Equity >10% ILLUSTRATIVE Future Run-off Storebrand business Savings Insurance Guaranteed4 Group IFRS earnings1 (NOK m) 1 135 365 1 026 2 526 Allocated Equity2 (NOK bn) 4.8 0.6 27.5 32.9 Pro forma
Slide 88: Sustainable ROE > 10% is expected from 2023
Sustainable ROE > 10% is expected from 2023 Return on IFRS equity 14%2 12% 11% 11% 10% Target >10%1 10% 8% 8% 7% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e 2022e 2023e (Q3 YTD annualised) 88 | 1 Return on Equity is defined as: profit after tax, adj. for amortisation / opening balance equity
Slide 89: Strong cash generation and liquidity support ordinary dividend capacity
Strong cash generation and liquidity support ordinary dividend capacity 89 |
Slide 90: IFRS earnings close to cash, high remittance ratio
IFRS earnings close to cash, high remittance ratio Storebrand Life Storebrand Storebrand Storebrand Asset Storebrand Bank ∑ Group3 Group Forsikring Helseforsikring Management Earnings after tax1 1 846 101 24 213 414 2 082 (NOK m) Remittance2 1 520 118 65 60 576 2 339 (NOK m) Remittance ratio 82% 117
Slide 91: Strong liquidity position gives additional flexibility
Strong liquidity position gives additional flexibility Increased equity financed liquidity Liquidity position 2020e Storebrand ASA (holding), NOK bn 5,0 7.2 4,5 4,0 2.2 3,5 ~5.0 3,0 1.0 2,5 2,0 1,5 4.0 1,0 0,5 0,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e Liquidity Undrawn RC
Slide 92: Guaranteed book in run-off
Guaranteed book in run-off -High quality investments and solid customer buffers secure customers returns and protect shareholders' equity 92 |
Slide 93: Guaranteed Back Book is in Run-Off
Guaranteed Back Book is in Run-Off Premium income decline Policyholders retiring Net outflow expected NOK bn % of reserves Accumulated net flow in guaranteed book, NOK bn 12 4% To be claimed Under payment -54 -108 3% -160 8 -206 -245 2% -275 4 1% 0% 0 2012 2020e 10 20 30 40 50 60 70 80 90 100 2025 2
Slide 94: High and growing share of capital efficient AuM
High and growing share of capital efficient AuM Forecast assets under management in Storebrand Group (NOKbn) Implications ILLUSTRATION 2 000 2020: 2030e: 72% of AuM ~90% of AuM non guaranteed non guaranteed ▪ Guaranteed pensions in run-off 1 500 → will release capital ▪ AuM growth from external asse
Slide 95: High quality assets with fixed income as the backbone
High quality assets with fixed income as the backbone provide secure returns for guaranteed pensions NOK 187 bn Equities Bonds at amortized Bonds and Money 8% cost Market Real estate 10% Bonds & Money market Loans Average rating Average rating AA- AA 15% Bonds at amortized cost 14% Equities Real est
Slide 96: Return above discount rate generates capital, strong buffers
Return above discount rate generates capital, strong buffers give risk capacity and stability Investment return over solvency II discount rate generates capital Buffers shield shareholders from short term IFRS volatility Customer buffer in % of reserves – Growing with expected IFRS return above guar
Slide 97: Strong solvency position
Strong solvency position -Capital generation to grow the solvency ratio to 180% by ~2023 97 |
Slide 98: Continued capital generation will grow the solvency ratio and increase dividends
Continued capital generation will grow the solvency ratio and increase dividends ILLUSTRATIVE Annual solvency generation 2021-2023 (%-points without transitional capital) ▪ Underlying solvency ratio without Capital generation from business ∼10% transitional is expected to grow at ~6-7% after dividen
Slide 99: Solvency position is resilient towards market movements
Solvency position is resilient towards market movements Solvency 2 ratio main sensitivities (est.) 179 182 178 176 176 176 170 ▪ Lower interest rates and Solvency 13 30 45 37 23 31 30 market turmoil could target lead to a reduction in > 150%1 the solvency ratio w/o transitionals ▪ This could delay t
Slide 100: Target solvency ratios
Target solvency ratios - more low risk and less volatile business means less need for solvency buffer in the future SCR Buffer over SCR 'Future Storebrand' 'Run-off business' Solvency 2 Group (Q3 2020) Future Solvency 2 target range Low volatility business with less Interest rate sensitive business
Slide 101: Toolbox available to manage solvency
Toolbox available to manage solvency Solvency-increasing measures Adjustments in Risk Appetite at a cost Examples: Examples: ▪ Risk appetite and investment risk ▪ Subordinated Debt ▪ Group structure ▪ Investment hedging strategies ▪ M&A ▪ Reinsurance Balance Solvency level today VS Solvency Increase
Slide 102: Run-off of guaranteed book will release NOK ~10bn by 2030
Run-off of guaranteed book will release NOK ∼10bn by 2030, aim to start buy backs in 2023 102 |
Slide 103: Roadmap to capital release and share buybacks
Roadmap to capital release and share buybacks All scenarios: Regulatory change, market volatility and decreased earnings are risk factors that can affect the pace and magnitude of capital release. Scenario Description Exp. Capital Release 1 Increasing rates ▪ ▪ Expect to reach 180% solvency before 2
Slide 104: Group capital management policy sets thresholds for cash dividends
Group capital management policy sets thresholds for distribution of cash dividends Solvency II ratio ▪ Consider share buybacks when solvency ratio is above 180% without material use of transitional capital 180% 179% ▪ Ordinary dividend of >50% of Group profit after tax Current level ▪ Ambition is to
Slide 105: Commitment to deliver growing ordinary dividends
Storebrand reaffirms its commitment to deliver growing ordinary dividends to shareholders Regulatory cancelled due to Covid-19 3.25 3.00 ▪ IFRS result growth - Ordinary 2.50 dividends minimum 50% of result after tax with nominal growth. 0.40 1.55 ▪ Capital release from back book when solvency ratio
Slide 106: Wrap-up: Managing for increased profitability and strong solvency
Wrap-up: Managing for increased profitability, a strong solvency position and increased return to shareholders 106 |
Slide 107: Ambition to deliver on all financial targets by 2023
Ambition to deliver on all financial targets by 2023 Target % Solvency II margin Storebrand Group1 > 150% > 50% Dividend pay-out ratio2 & nominal growth Return on equity3 > 10% 107 | 1 Including transitional rules 2 Dividend / Profit after tax. 3 Profit after tax adj. for amortisation / opening bala
Slide 108: Group Strategy: Sustainable Nordic Savings and Insurance Group
Group Strategy 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 Norwegian Retail Market Norway & Sweden areas in front book Strategic D Lead
Slide 109: Appendix
Appendix Group structure Group debt Solvency 2 capital base Q3 2020 Investments 109 |
Slide 110: 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 Bank ASA Storebrand Forsikring AS Management AS Reporting structure Storebrand Holding AB Benco SKAGEN AS Storebrand
Slide 111: Moderate leverage, fixed charge coverage, and rating give financial flexibility
Moderate leverage, fixed charge coverage, and rating give financial flexibility and more debt capacity Moderate leverage Strong debt servicing capacity Solid rating 21% ~10x 17% A- stable outlook Insurance Financial Strength Rating (IFSR) "We also anticipate that Storebrand's capitalization will rem
Slide 112: Term structure debt
Term structure debt Term structure sub-debt Storebrand Livsforsikring1 (NOK bn) Term structure senior debt Storebrand ASA (NOK bn) 3.8 Perpetual Non- perpetual 2.1 1.1 1.4 1.0 0.5 0.5 0.8 1.0 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025 112 | Numbers as per Q3 2020
Slide 113: Solvency II capital base Q3 2020
Solvency II capital base Q3 2020 SCR and own funds (NOK bn) Own funds in % of SCR (excluding CRD IV subsidiaries) OF % OF % of Regulatory limit of SCR total 53 3 CRD IV capital Tier 3 ≤ 15% SCR 0% 0% 8 Tier 2 1 Tier 1 restricted* 29 CRD IV capital requirements 3 Tier 2 ≤ 50% SCR 31% 17% ∑ T2+T3 40 T
Slide 114: From IFRS equity to Solvency 2 Own Funds
From IFRS equity to Solvency 2 Own Funds NOK bn IFRS Shareholders equity 35.2 Intangible assets -7.1 Full market values of assets +10.5 Best estimate liabilities -1.7 Transitional rules pre tax +11.6 Subordinated loans +8.9 Changes in deferred tax -2.6 Other -0.8 Forseeable dividends -1.1 Solvency 2
Slide 115: Solvency Capital allocation main products
Solvency Capital allocation main products ILLUSTRATIVE PRO FORMA ALLOCATION BASED ON 179% SOLVENCY RATIO PER Q3 2020 Hard capital to Contribution Solvency ratio Reserves have 179%1 Run off/ to Own Funds SCR – before use of (NOK bn) Solvency ratio Growth ('VIF') hard capital (NOK bn) Back book Paid u
Slide 116: 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 (NOK bn) Rating distribution (%) 107 107 101 0% 10 10 93 9 87 9 83 22% AAA 8 8 71 27% 63 AA 7 6 53 5 45 A 98 97 92 37 84 78 4 75 64 3 27 BBB 57 48 3 41 33 Unrated & BB 25 25% 25% Q3 2020 2
Slide 117: 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 distribution (%) 7% 17% AAA 24% 17% Europe ex. NO & SWE AA 2% 3% Norway 47% A Sweden BBB 14% Other Unrated & BB US 15% 55% Sector distribution (%) 16% Sovereign and gov. Guaranteed 36%
Slide 118: Paid-up policies Norway risk management tailored to liability characteristics
Paid-up policies Norway risk management tailored to liability characteristics NOK Allocation 4 Allocation 5 49 bn. 19 bn. High Allocation 3 26 bn. Buffer level Allocation 2 Equity 24 bn. Bonds Amortizing Bonds & Loans Real Estate Allocation 1 19 bn. Low Low Required book return High 118 |
Slide 119: A future to look forward to
A future to look forward to Investor Relations contacts Lars Aa Løddesøl lars.loddesol@storebrand.no Group CFO +47 9348 0151 Kjetil R. Krøkje kjetil.r.krokje@storebrand.no Group Head of +47 9341 2155 Finance & Strategy Daniel Sundahl daniel.sundahl@storebrand.no Group Head of +47 9136 1899 IR & Rati