Storebrand ASA — Earnings Release 2023

Jul 14, 2023

Storebrand Q2 2023

14 July 2023

Odd Arild Grefstad – CEO Lars Aa. Løddesøl – CFO

1

Strongly rising interest rates in the quarter. Storebrand is well positioned through its diversified and robust business model

Highlights Q2 2023 Record-high solvency and AUM, weak insurance results year to date. Share buyback amounting to NOK 1bn approved for H2 2023

Strong commitment to deliver capital returns in terms of share buybacks on top of ordinary increasing dividends

Increased claims in the insurance business

Development Combined ratio 12 months trailing Key take-aways

Claims inflation, increased claims frequency in motor and disability insurance products are the main drivers to the increased combined ratio

Storebrand's response:

• Price measures have been implemented which will have an increasing effect throughout the year
• Further repricing where needed with full effect from 2024

Pursuing our Group Strategy: Leading The Way In Sustainable Value Creation to be a leading Sustainable Nordic Savings and Insurance Group

Strong growth in the Occupational Pension businesses, several new customers taken on during the quarter

Commercial success in occupational pension High double digit premium growth in Norway and Sweden New mandate won in public sector Continued increasing market share Important mandates won in private sector Numbers in BSEK Norway Numbers in BNOK Sweden Q2 22 2,8 Q2 23 3,8 +35% Q2 22 2,8 Q2 23 2,2 +31% Renewal of agreement with Equinor, Norway's largest business. In addition, Storebrand has won two public listed companies with a total volume of around 1.5 billion in AUM

Leading Provider Occupational Pensions Norway & Sweden

A

Several new mandates won during the quarter. Strong flow and AUM at all time high

AUM growth driven by strong markets and 27bn flow YTD. Flow at 10bn in Q2. High performance-based fees year to date

Strong value proposition drives growth and strengthens footprint as a Nordic asset manager

By the end of the quarter Cubera's private equity boutique so far has raised in excess of EUR 630 million (NOK 7.4 bn) to its Nordic Cubera X fund
In Sweden, several new mandates were won and Storebrand Fonder recorded the second-best inflows in the market year-to date1
Real estate mandates of NOK 2bn in AUM taken over in Q2, another NOK 5bn expected to be closed within 2023
Positive development in Finland according to plan, 2.2 bn NOK of mandates won in this quarter
Strong footprint established and positive flow through several mandates won in Iceland

Continued growth in retail market with bank delivering historically strong quarter

Growing Challenger in Norwegian Retail Market C

Gaining market share since 2020 Retail market mortgage balance

Strong earnings growth

16% mortgage volume growth year on year, in combination with strong interest margins and improving cost-ratios, resulting in solid return on equity (above 10% Year to date)

Gaining market share

Continue among the fastest growing retail banks in the Norwegian market, outperforming other full-service retail banks

Value creation beyond bank

Record high sales of individual life and home insurance through bank distribution, value created reflected in the insurance segment

Recognized for our Leadership in Sustainability across various dimensions

Storebrand Boligkreditt AS issued a NOK 5.500m green bond in May 2022, which is now fully allocated

Recognised for the work and results on equality in the group Green Bond fully allocated

D Leadership in Sustainability

98.2/100 score based on different aspects of gender equality¹

Digital Frontrunner Digital transformation in corporate market through E2E digitalization enabling cost efficient SMB growth

#1 Digital Frontrunner for Life & Pension

Digital acceleration of SMB growth *

• 40% of Life & Pension sales digital
• 45% of digital sales fully automated
• 55% conversion rate in digital channel
• 1,5 products per sale in digital channel

Key Figures

Improved financial result and a solid solvency position

Customer buffers development³ SII Own funds⁴ and SCR

12 ¹ Cash earnings before amortisation and tax. ² Earnings per share after tax adjusted for amortisation of intangible assets. ³ Excluding Excess values of HTM bonds. ⁵ Restated special items for Q1 ⁴ Own Funds including transitional capital.

Solvency movement from Q1 2023 to Q2 2023 Storebrand Group

SII position Storebrand Group

▪ Robust solvency in all estimated sensitivities

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¹The estimated Economic solvency position of Storebrand Group is calculated using the current Storebrand implementation of the Solvency II Standard model. Output is sensitive to changes in financial markets, development of reserves, changes in assumptions and improvements of the calculation framework in the economic capital model as well as changes in the Solvency II legislation and national interpretation of transition rules.

Storebrand Group

Solid result development driven by higher financial results

Profit¹

	Q 2		YTD
NOK million	2023	2022	2023	2022
Fee and administration income	1 591	1 456	3 143	2 914
Insurance result	382	427	739	799
Operational cost	-1 460	-1 181	-2 851	-2 326
Cash equivalent earnings from operations	513	703	1 031	1 387
Financial items and risk result life	264	-119	519	-168
Cash equivalent earnings before amortisation	777	583	1 550	1 219
Amortisation and write-downs of intangible assets	-56	-39	-119	-79
Cash equivalent earnings before tax	720	544	1 431	1 140
Tax	222	-37	292	349
Cash equivalent earnings after tax	942	507	1 723	1 489

Full consent¹ for Storebrand in ruling from Tax Appeals Committee

Important milestone that eliminates downside for the uncertain tax position – NOK 440m tax income booked in the quarter

Storebrand Group Profit by line of business

Profit1

	Q 2		YTD
NOK million	2023	2022	2023	2022
Fee and administration income	1 591	1 456	3 143	2 914
Insurance result	382	427	739	799
Operational cost	-1 460	-1 181	-2 851	-2 326
Cash equivalent earnings from operations	513	703	1 031	1 387
Financial items and risk result life	264	-119	519	-168
Cash equivalent earnings before amortisation	777	583	1 550	1 219

Profit per line of business

	Q 2		YTD
NOK million	2023	2022	2023	2022
Savings - non-guaranteed	395	392	757	796
Insurance	63	176	120	293
Guaranteed pension	293	254	578	485
Other profit	25	-238	95	-354
Cash equivalent earnings before amortisation	777	583	1 550	1 219

Savings (non-guaranteed)

Stable profit development despite high performance related cost and fewer transaction fees in Asset management. Strong result in Retail banking business

Profit

	Q 2		YTD
NOK million	2023	2022	2023	2022
Fee and administration income	1 269	1 130	2 503	2 266
Operational cost	-898	-718	-1 759	-1 420
Cash equivalent earnings from operations	371	412	745	846
Financial items and risk result life	24	-20	12	-50
Cash equivalent earnings before amortisation	395	392	757	796

Profit per product line

	Q 2		YTD
NOK million	2023	2022	2023	2022
Unit linked Norway	101	83	238	200
Unit linked Sweden	55	79	119	173
Asset management	112	166	199	314
Retail banking	152	64	248	109
Kron*	-25		-47
Cash equivalent earnings before amortisation	395	392	757	796

Savings (non-guaranteed)

Stable profit development despite high performance related cost and fewer transaction fees in Asset management. Strong result in Retail banking business

Assets under management

Movement in asset under management YTD¹

Savings

Insurance

Continued high growth, but weak results due to high claims in P&C (motor related) and Health & Group life

Profit

	Q 2		YTD
NOK million	2023	2022	2023	2022
Insurance premiums f .o.a.	1 727	1 449	3 399	2 846
Claims f .o.a.	-1 345	-1 021	-2 660	-2 047
Operational cost	-308	-260	-618	-510
Cash equivalent earnings from operations	74	168	121	289
Financial result	-11	8	-1	4
Cash equivalent earnings before amortisation	63	176	120	293

Profit per product line

	Q	2	YTD
NOK million	2023	2022	2023	2022
P&C & Individual life	82	128	154	206
Health & Group life	-81	14	-105	8
Pension related disability insurance Nordic	62	34	70	78
Cash equivalent earnings before amortisation	63	176	120	293

Insurance

Insurance

Continued high growth, but weak results due to high claims in P&C (motor related) and Health & Group life

Key Takeaways Combined Ratio and Results

• 96% overall combined ratio in the quarter and 94% trailing for the last 12 months
• The quarter is negatively impacted by high claims frequency in motor, claims inflation and high disability claims
• Health insurance business delivered a weak quarter due to high claims and reserve strengthening, contributed negatively to the financial results
• Measures, including further repricing with full effect from 2024, have been taken to improve the robustness and profitability in the affected segments

Portfolio premiums Key Takeaways Premiums and Growth¹

• 19% growth in Insurance premiums f.o.a.
• 12% growth in Insurance premiums f.o.a adjusted for Danica
• Increased retail P&C market share from 6.2% in Q2 2022 to 6.5% in Q2 2023

Guaranteed pension

Result development driven by an improved financial results

Profit

	Q 2		YTD
NOK million	2023	2022	2023	2022
Fee and administration income	387	395	765	786
Operational cost	-216	-206	-408	-409
Cash equivalent earnings from operations	171	189	357	377
Risk result life & pensions	69	54	149	135
profit Net sharing	53	11	72	-28
Cash equivalent earnings before amortisation	293	254	578	485

Profit per product line

	Q 2		YTD
NOK million	2023	2022	2023	2022
Defined benefit (private & public sector) Norway ,	58	84	117	152
Paid-up policies Norway ,	110	94	229	216
Individual life and pension Norway ,	8	5	12	8
Guaranteed products Sweden ,	118	70	219	108
Cash before equivalent earnings amortisation	293	254	578	485

Guaranteed pension

Result development driven by an improved financial results

NOK million	Q2 2023	Q1 2023	Change
reserve2 Market value adjustment	2 687	3 311	- 624
Excess value of bonds at amortised cost	-15 542	-9 817	- 5 725
Additional statutory reserve	8 308	8 700	- 391
Conditional bonuses SPP	14 408	13 567	+ 841
Total	9 862	15 761	- 5 899

• Continued run-off of guaranteed reserves with net flow of premiums and pension payments of NOK -2.5bn in the 2nd quarter
• Improved profit sharing result driven by the Swedish business
• Continued strong risk result
• New Public Occupational Pension tender offer won in the 2nd quarter 2023, representing NOK 0.5 bn to be transferred in 2024

Buffer capital¹ Guaranteed reserves in % of total reserves

23 ¹ The term Buffer capital in this table is not consistent with the definition of buffer capital made in the IFRS accounting. 2 Includes Public Occupational Pensions buffer fund.

Other¹

Financial result improving from a higher interest rate level. Operational costs includes integration cost

Profit

	Q	2	YTD
NOK million	2023	2022	2023	2022
Fee and administration income	6	4	11	9
Operational cost	-109	-70	-203	-134
Cash equivalent earnings from operations	-104	-66	-192	-125
Financial items and risk result life	129	-172	287	-230
Cash equivalent earnings before amortisation	25	-238	95	-354

Simplified¹ P&L under IFRS – Key takeaways

		Q2		YTD
Profit & Loss IFRS (MNOK)	2023	20221	2023	20221
Income from unit linked	523	419	1 032	870
Income from asset management	712	689	1 381	1 348
Income from banking activities	686	305	1 302	561
Other income	137	107	197	213
Operating income excl. Insurance	2 059	1 521	3 911	2 992
[3] Insurance revenue	2 251	2 059	4 521	4 076
Insurance services expense	-1 715	-1 357	-3 330	-2 666
Net income from reinsurance contracts	-49	-8	-68	-30
[2] Insurance service result	487	693	1 123	1 380
Operating income incl. insurance result	2 546	2 214	5 035	4 372
Operating expenses	-1 306	-1 044	-2 550	-2 064
Interest expenses from banking activities	-449	-132	-842	-225
Other expenses	-107	26	-219	-21
Total expenses	-1 863	-1 150	-3 611	-2 310
Operating profit	683	1 064	1 424	2 062
Net financial result1	-67	-509	349	-789
[1] Profit/loss before amortisation and tax	616	555	1 773	1 274
Amortisation of intangible assets	-92	-70	-190	-140
Tax expenses	292	-11	282	401
Profit/loss for the period	816	475	1 866	1 535

Comments

[1] Group's profit before amortisation and tax was NOK 616m in quarter, compared to NOK 555m in 2022²

▪ Higher volatility is expected on a general basis under IFRS 17 due to measurement models applied

[2] Insurance service result under IFRS was NOK 487m in the 2 nd quarter (NOK 687m)

▪ The decrease is related to mainly IFRS 17 contracts with a coverage period on less than 12 months and is driven by an increase in reported claims and inflation

[3] CSM release of NOK 466m in the quarter, CSM sensitivities shown in the appendix

CSM movement fra Q1 2023 to Q2 2023 mill. NOK

Virtual Capital Markets Day

14 December 2023 09:00-12:00 CET

Presentation will be held by Storebrand's executive management with a focus on the company's growth strategy and ambitions

Registration will open at storebrand.no/ir

Q&A

Please join the MS Teams Webinar to participate in the Q&A session.

Group CFO

Group CEO

Group CIO & Investor relations Interim

Lars Aa. Løddesøl

Odd Arild Grefstad

Trond Finn Eriksen

Appendix

Real estate portfolio – Norway*

Weighted average unexpired lease term (WAULT): 5,2 years

WAULT and expired rental income Sub-portfolio yield distribution Q2 2023

Real estate portfolio – Sweden¹

Weighted average unexpired lease term (WAULT): 7,7 years

WAULT and expired rental income Sub-portfolio yield² distribution Q2 2023

Asset allocation – Guaranteed products

Equities Real estate Bonds & Money market Loans Bonds at amortised cost 30.06.2022 6% 12% 14% 14% 54% 30.09.2022 6% 12% 13% 14% 54% 31.12.2022 5% 12% 15% 14% 54% 31.03.2023 8% 12% 4% 14% 61% 30.06.2023 9% 12% 5% 14% 61% 0% 10% 20% 30% 40% 50% 60% 70%

IFRS sensitivities Q2 2023

Key takeaways

• CSM is most sensitive to changes in market conditions, while changes in non-financial factors have less impact
• The sensitivities have decreased from last quarter due to increased interest rates and buffer capital from strong equity market. The effect of an additional 50 basis points interest increases though nearly half

CSM - 30.06.2023 in MNOK Estimated sensitivities in MNOK

Leading the way in sustainable value creation

Investor Relations contacts

Lars Aa Løddesøl Group CFO

lars.loddesol@storebrand.no +47 9348 0151

Trond Finn Eriksen Investor Relations (Interim)

trond.finn.eriksen@storebrand.no +47 99164 135

This document contains Alternative Performance Measures as defined by the European Securities and Market Authority (ESMA). An overview of APMs used in financial reporting is available on storebrand.com/ir.