Storebrand ASA — Earnings Release 2014

Oct 29, 2014

Storebrand Q3 2014 29 October 2014

Odd Arild Grefstad – CEO Lars Aa. Løddesøl – CFO

Highlights Q3 2014

Result

• Group result of NOK 632 mill in Q3 and 2 110 mill YTD
• Strong increase in Fee and administration income in Savings, compensates reduction in Guaranteed pension
• 64% growth in results within Savings YTD

Operations

• Paid-up policies with investment choice introduced
• Proposal for 16 years transition period into Solvency II
• Nominal cost down 3.9% YTD

Balance sheet

• Buffer capital and longevity reserve strengthening of NOK 7.7 bn YTD¹
• Longevity reserve strengthening of NOK 2.7 bn² YTD
• Solvency ratio 182%

¹See table on page 17 for description

2 Consist of unallocated result of 2.4 b n and shareholders direct contribution of 0.3 bn.

Storebrand Group - strong results

Result
	Q3		01.01 - 30.09		Full year
NOK million	2014	2013	2014	2013	2013
Fee and administration income	1 096	1 067	3182	3139	4 253
Underwriting result	246	363	856	866	1 111
Operational cost (non-recurring items excluded)	-768	-798	-2348	-2444	-2 938
Financial result	85	93	356	87	97
Result before profit sharing and loan losses	660	725	2047	1647	2522
Net profit sharing and loan losses	62	86	333	236	416
Shareholder direct equity contribution for longevity	-90	0	-270	0	0
Result before amortisation and write-downs Amortisation and write downs of intangible assets	632 -108	811 -112	2110 -326	1883 -322	2 938 -739
Result before tax Tax Sold/liquidated business	524 -147 -0	699 -10 0	1 783 -401 -0	1561 28 -2	2 199 -209 -4
Profit after tax	376	689	1382	1587	1 987

Our strategic response to changing market conditions

We work hard to reach our vision: Recommended by our customers

Managing the balance sheet

5

Longevity - 2.4 bn reserved for longevity YTD

¹Includes unallocated customer results as of 30.09.2014 and previously allocated reserves for longevity. ²Previous reported 4.1bn. Final reserve sthrengthening rules (no solidarity) reduces this to 3.6 bn, as previously indicated

Latest regulatory clarification: rules for Solvency II implementation in Norway

Proposals from Norwegian FSA

• "Volatility adjustment": insurance companies can make use of the "volatility adjustment" rules (adjustment for credit risk) when calculating the value of the insurance liabilities for Solvency II purposes.
• Gradual increase in stress test for equites from 22% to 39% over 7 years
• 16 years gradual transition to the Solvency II value of the liabilities

Paid-up policies with investment choice

• Storebrand started offering paid-up policies with investment choice 15 October
• Targeted customer communication
• NOK 160 mill and 700 customers transferred by Monday 27th October

• 50% converted through internet

Innledning	Sammenligning	Dine tall	Riskoavklaring	Signining	Kvittering
			Bedre pensjon gjennom bevisste valg
Hva har du i dag?		Hva kan du bytte til?		Hva ber du giere nå?
	Din fripolise har i dag en garantert minsteavkastning som er nødvendig for å gi deg den garanterte årlige utbetalingen som		Du kan nå bytte til fripolise med investeringsvalg.		Vi ensker at du skal gjøre gode valg for din pensjon. Gå videre for å se hvike muligheter du har.
	pensjonist. Denne har du hittil ikke hatt mulighet til å påvirke.	à pàviña avkastningen og dermed din fremtidige pensjon. mined.	Ved å bytte til fripolise med investeringsvalg kan du være med Utbetalingene er ikke garanterte og kan variere fra måned til	Du vil få råd om å bytte dersom beregningen viser at du kan forvente à fà en hayere pensionsutbetaling. Du kan også velge à beholde dagens fripolise
f.	Hva er en fripolise?				o
	Hva består pensjon av?				o

New 'Akademikerne' insurance contract with 110 000 members

The Federation of Norwegian Professional Associations (Akademikerne) is the primary Norwegian organization dedicated to improving salary and working conditions for professionals with a higher education.

Key figures

¹Earnings per share after tax adjusted for amortisation of intangible assets.

² Customer buffers in Benco of NOK 2.0 bn are not included

³Solidity capital/customer buffers does not include provisions for future longevity reservations

Storebrand Group - top line growth and cost control

Result
		Q3		01.01 - 30.09
NOK million	2014	2013	2014	2013	2013
Fee and administration income	1 096	1 067	3182	3139	4 253
Underwriting result	246	363	856	866	1 111
Operational cost	-768	-798	-2348	-2444	-2 938
Financial result	85	93	356	87	97
Result before profit sharing and loan losses	660	725	2047	1647	2522
Net profit sharing and loan losses	62	86	333	236	416
Result before amortisation and write-downs	632	811	2110	1 883	2 938

Result per line of business

	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Savings (non-guaranteed)	241	146	612	373	670
Insurance	135	315	516	592	774
Guaranteed pension	233	293	847	928	1 376
Other	23	56	135	-10	119
Result before amortisation and write-downs	632	811	2110	1 883	2 938

Savings (non-guaranteed) - 13% top line growth

	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Fee and administration income	554	490	1585	1399	1 888
Risk result life & pensions	7	0	-1	4	7
Operational cost	-314	-328	-960	-985	-1 279
Financial result	-	-	-	-	-
Result before profit sharing and loan losses	248	162	624	418	616
Net profit sharing and loan losses	-6	-16	-13	-44	54
Result before amortisation	241	146	612	373	670

Result per product line

	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Unit Linked Storebrand	68	27	130	77	106
Unit Linked SPP	40	26	94	50	78
Asset Management	87	46	240	136	313
Retail Banking	46	47	147	111	173
Result before amortisation	241	138	612	373	670

Savings (non-guaranteed) - strong results growth

Insurance - disability reserve strengthening

	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Insurance premiums f.o.a.	773	773	2 313	2 237	3 034
Claims f.o.a.	-564	-375	-1 614	-1 371	-1 940
Operational cost	-122	-126	-378	-386	-463
Financial result	48	44	195	112	143
Result before profit sharing and loan losses	135	315	516	592	774
Net profit sharing and loan losses	0	0	0	0	0
Result before amortisation	135	315	516	592	774

Result per product line

	Q3		01.01 -	30.06	Full year
NOK million	2014	2013	2014	2013	2013
P&C & Individual life*	89	71	234	206	314
Health & Group life**	40	50	112	165	225
Disability insurance***	7	194	169	221	234
Result before amortisation	135	315	516	592	774

* Individual life and disability, property and casualty insurance

** Group life, workers comp and 50% of result in Storebrand Health insurance

*** DC disability risk result Norwegian line of business and disability risk result from SPP

Insurance - stable development

Comments

• 12% growth and strong results in P&C
• Disability reserve strengthening reduces results

Reporting adjustments

• From Q1 2014, SPP risk products are reported under Insurance
• Storebrand Health Insurance (j/v) no longer consolidated
• Historic figures are updated accordingly

Guaranteed pension - strong results despite reduced reserves

Result
	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Fee and administration income	471	491	1384	1478	2 013
Risk result life & pensions	26	-31	152	-9	7
Operational cost	-275	-272	-837	-818	-1 016
Financial result	-	-	-	-	-
Result before profit sharing and loan losses	222	188	699	651	1 003
Net profit sharing and loan losses	101	105	418	276	373
Longevity provision	-90	-	-270	-	-
Result before amortisation	233	293	847	928	1 376

Result per product line

	Q3		01.01 -	30.09	Full year
NOK million	2014	2013	2014	2013	2013
Defined Benefit (fee based)	148	208	431	665	968
Paid-up policies	-66	47	-121	6	19
Traditional individual life and pension	-	-	-	0-	21
SPP Guaranteed Products	151	38	537	256	366
Result before amortisation	233	293	847	928	1 376

Guaranteed pension - strengthened buffer capital

			Change in
NOK million	30.09.2014	31.12.2013	2014
Market value adjustment reserve	3 812	3 823	-11
Excess value of bonds at amortised cost	10 117	5 160	4 958
Additional statutory reserve	4 298	4 458	-160
Provisions for new mortality tables*	4 138	4 558	-420
Unallocated customer results	3 552	0	3 552
Shareholders direct contribution, provisions for new mortality tables	270	0	270
Conditional bonuses SPP	10 540	11 010	-470
Total	36 727	29 008	7 719

*Provisions for new mortality tables are calculated on a solidarity basis. A "no solidarity" principle will reduce the reserves by approximately 500 mill.

Comments

• Reduction in guaranteed reserves slowed by declining interest rates (Sweden)
• NOK 5.5 bn of transferred out of guaranteed business in Q3, NOK 10.3 bn YTD
• Buffer capital strengthened by NOK 7.7 bn YTD

17

Other Other

		Q3		01.01 - 30.09
NOK million	2014	2013	2014	2013	2013
Fee and administration income	71	86	212	262	353
Risk result life & pensions	4	-4	6	5	3
Operational cost	-56	-71	-172	-256	-180
Financial result	38	49	161	-25	-46
Result before profit sharing and loan losses	56	60	207	-13	129
Net profit sharing and loan losses	-33	-3	-72	4	-11
Result before amortisation	23	56	135	-10	119

Result per product line

	Q3		01.01 -	30.06	Full year
NOK million	2014	2013	2014	2013	2013
Corporate Banking	-18	27	-15	69	113
BenCo	20	6	43	36	46
Holding company costs and net financial results in company portfolios	21	23	107	-114	-39
Result before amortisation	23	56	135	-9	119

Storebrand changes pension scheme for own employees

• Storebrand have decided to change pension scheme for own employees
• All employees will be on defined contribution schemes from 1st January 2015
• Expected to have a positive impact on shareholders equity in Q4 of approximately NOK 100 mill¹

¹Will be divided in a positive effect of approximately NOK 400 mill in the ordinary Result and have negative effect of approximately NOK 300 mill in OCI. All figures after tax

Summary

• Strong increase in Fee and administration income in Savings, compensates reduction in Guaranteed pension
• 64% increase in results from Savings YTD
• 3.9% nominal cost reduction YTD

Capital Markets Day London, 26 November 2014

Appendix:

Market impacted by extensive product reform – important regulatory changes in place

23 * G = base amount. 1 G is currently NOK 85 245

Storebrand Life Insurance asset allocation

¹The graph shows the asset allocation for all products with an interest rate guarantee in Storebrand Life Insurance Norwegian operations.

SPP asset allocation

1 The graph shows the asset allocation for all products with an interest rate guarantee in SPP.