Storebrand ASA — Interim / Quarterly Report 2018

Oct 24, 2018

Interim report 3rd quarter 2018 Storebrand Group

Contents

FINANCIAL PERFORMANCE BUSINESS AREAS

Storebrand Group 3
Savings 6
Insurance 7
Guaranteed pension 9
Other 11
Balance sheet, solidity and capital adequacy 12
Outlook 14

FINANCIAL STATEMENTS/ NOTES STOREBRAND GROUP

Income statement	16
Statement of comprehensive income	17
Statement of financial position	18
Statement of changes in equity	20
Statement of cash flow 21
Notes	22

STOREBRAND ASA

Income statement . 38
Statement of financial position	39
Statement of changes in equity	40
Statement of cash flow 41
Notes	42
Auditor´s review 43

Important notice:

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 future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in these forward-looking statements. Important factors that may cause such a difference for the Storebrand Group include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) market related risks such as changes in equity markets, interest rates and exchange rates, and the performance of financial markets generally. The Storebrand Group assumes no responsibility to update any of the forward-looking statements contained in this document or any other forward-looking statements it may make. This document contains alternative performance measures (APM) as defined by The European Securities and Market Authority (ESMA). An overview of APM can be found at www.storebrand.com/ir.

Storebrand Group

• • Group result1) of NOK 853m for the 3rd quarter and NOK 2 595m YTD
• • Results positively affected by strong risk results and low cost
• • Solvency II ratio 169%

Storebrand's ambition is to be the best provider of pension savings. The Group offers an integrated product range spanning from life insurance, P&C insurance, asset management and banking to private individuals, companies and public sector entities. The Group is divided into the segments Savings, Insurance, Guaranteed Pension and Other.

GROUP RESULT 2)

	2018			2017		01.01 - 30.09		Full year
(NOK million)	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Fee and administration income	1,246	1,245	1,220	1,531	1,116	3,710	3,240	4,771
Insurance result	316	358	335	261	320	1,009	885	1,146
Operational cost	-877	-958	-919	-989	-840	-2,755	-2,501	-3,490
Operating profit	685	645	635	803	596	1,965	1,624	2,427
Financial items and risk result life	168	167	296	-185	177	631	698	513
Profit before amortisation	853	812	931	618	773	2,595	2,322	2,940
Amortisation and write-downs of intangible assets	-98	-98	-64	-237	-101	-261	-299	-536
Profit before tax	755	714	866	381	672	2,335	2,023	2,404
Tax	-229	-126	-139	113	27	-494	-111	2
Profit after tax	526	587	728	494	698	1,841	1,912	2,405

The Group result before amortisation was NOK 853m (NOK 773m) in the 3rd quarter and NOK 2 595 (NOK 2 322m) year to date. The figures in brackets are from the corresponding period last year.3) Total fee and administration income amounted to NOK 1 246m (NOK 1 116m) for the 3rd quarter. This represents an increase of 6% compared to the same period last year, when adjusted for currency changes and effects stemming from the acquisition of Skagen. Income within the segment Guaranteed Pension was stable, while the Savings segment increased revenues by 19% compared to the same period last year. The Insurance result had a total combined ratio of 81% (85%) in the quarter. This is stronger than the targeted range of 90-92%.

The Group's operating costs are reduced compared to last year, excluding costs from Skagen. Non-recurring effects from changes in distribution and reversals of bonuses contribute with NOK 40m in lower costs, leading to reduced costs in the quarter. The underlying cost control is strong and the Group is on track to reach the goal of reduced nominal costs in 2018 compared to 2015, adjusted for the costs from Skagen.

Overall, the operating profit for the 3rd quarter increased by 9% compared to the same period last year and 20% year to date, adjusted for Skagen and currency. The 'Financial items and risk result' is positively affected by reserve releases in the Guaranteed business. The financial result is in line with the market movements in the quarter.

¹⁾ Earnings before amortisation and tax. www.storebrand.no/ir provides an overview of APMs used in financial reporting.

²⁾ The income statement is based on reported IFRS results for the individual group companies. The statement differs from the official accounts layout.

³⁾ The abbreviations NOK for Norwegian kroner, m for million, bn for billion and % for per cent are used throughtout the report.

Amortisation of intangible assets amounted to NOK -98m. Normal amortisation of intangible assets is expected to remain at around NOK 100m pr. quarter in 2018.

Income tax expense has been estimated based on an expected effective tax rate for 2018. The effective tax rate is influenced by the fact that the Group has operations in countries with tax rates that are different from Norway's, and it varies from quarter to quarter

depending on each legal entity's contribution to the Group result. The effective tax rate was 27% in the 3rd quarter (19% YTD) and is estimated to be in the range of 19-23% for the year1). Periodization effects causes a higher tax rate in the quarter. Proposed changes in tax rules for life insurance companies is expected to reduce quarterly volatility in the effective tax rate.

GROUP RESULT BY RESULT AREA

	2018		2017				01.01 - 30.09	Full year
(NOK million)	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Savings - non-guaranteed	336	307	296	639	314	940	872	1,511
Insurance	214	230	207	32	221	651	576	608
Guaranteed pension	292	234	398	31	244	925	735	766
Other profit	10	41	29	-84	-5	81	140	55
Profit before amortisation	853	812	931	618	773	2,595	2,322	2,940

The Savings segment reported a profit of NOK 336m for the 3rd quarter (NOK 314m). Growth within Unit linked savings and Storebrand Bank's lending volume contribute positively to the result. Investments for growth in the retail savings market increase costs in the Norwegian Unit linked business.

The Insurance segment reported a profit of NOK 214m (NOK 221m) in the quarter. The claims ratio decreased from 68% to 67% compared to the same period last year resulting in a combined ratio of 81% (85%) for the quarter. Fewer employees allocated to the area reduces the cost ratio. Run off gains and changed distribution affects results positively. Over time, the combined ratio is targeted to be in the area 90-92%.

The Guaranteed Pension segment achieved a profit before amortisation of NOK 292m (NOK 244m) for the 3rd quarter. Fee and administration income is stable compared with the same period last year. The products within Guaranteed Pension are in long-term runoff and reduced earnings from this segment are expected over time.

The Other segment reported a profit of NOK 10m (NOK -5m) for the 3rd quarter.

CAPITAL SITUATION

The Group's target solvency margin in accordance with the Solvency II regulations is a minimum of 150%, including use of the transitional rules. The solvency margin for the Storebrand Group was calculated at 169% at the end of the 3rd quarter of 2018, including transitional rules. Without transitional rules, the solvency margin was 166%. Storebrand uses the standard model for the calculation of Solvency II. The solvency margin without transitional rules strengthened due to good investment returns and increased interest rates as well as a strong operating result. The value of the transitional measures are reduced in the quarter.

MARKET AND SALES PERFORMANCE

The growth in Unit linked savings is driven by premiums from existing contracts, investment returns and conversion from defined benefit schemes and increased savings rates. Assets under management in the Unit Linked business in Norway increased by NOK 23bn (31%) relative to the Q3 2017. In Norway, Storebrand is the market leader in Unit Linked occupational pension with 31% of the market share of gross premiums written (at the end of the 2nd quarter 2018). SPP has a market share of 12% in the Swedish market for other occupational pensions ("Övrig Tjänstepension", at the end of 2nd quarter).

After the acquisition of Skagen the Storebrand Group has a 14.1% market share (Pr.30.09.2018) within retail mutual funds. The lending volume at Storebrand Bank increased by 11% compared to the same period previous year.

GROUP - KEY FIGURES

	2018			2017		01.01 - 30.09		Full year
(NOK million)	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Earnings per share1)	1.33	1.46	1.69	1.56	1.77	4.48	4.91	6.47
Equity	30,742	30,227	31,140	30,832	29,088	30,742	29,088	30,832
ROE, annualised1)	8.6%	9.6%	11.3%	11.3%	12.4%	9.6%	11.2%	11.0%
Solvency II	169%	167%	165%	172%	160%	169%	160%	172%

Financial targets	Target	Actual (Q3)
Return on equity (after tax)1	> 10%	9.6%
Dividend (after tax)	> 50%	N/A
Solvency II margin Storebrand Group	> 150%	169%

1) After tax, adjusted for amortisation of intangible assets.

Savings

• • Good return and strong volume growth in the quarter
• • Increased costs due to investments in growth

The Savings segment includes products for retirement savings with no interest rate guarantees. The segment consists of defined contribution pensions in Norway and Sweden, asset management and retail banking products.

SAVINGS - NON GUARENTEED

	2018			2017			01.01 - 30.09	Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Fee and administration income	905	909	889	1,189	761	2,702	2,205	3,394
Operational cost	-563	-599	-583	-554	-443	-1,745	-1,337	-1,891
Operating profit	342	310	306	635	318	957	868	1,503
Financial items and risk result life	-5	-2	-9	4	-4	-17	4	8
Profit before amortisation	336	307	296	639	314	940	872	1511

FINANCIAL PERFORMANCE

The Savings segment reported a profit before amortisation and tax of NOK 336m (NOK 314) for the 3rd quarter and NOK 940m (NOK 872m) year to date, including Skagen with NOK 33m for the 3rd quarter and NOK 17m year to date. Compared to the same period last year the result increased by 8% year to date. The Skagen acquisition closed 7 December 2017, and therefore Skagen is not included in the numbers for Q3 2017.

Fee and administration income increased by 6% during the quarter and 9% year to date (excluding Skagen with NOK 98m the 3rd quarter and NOK 308m year to date). Good returns, customer conversion from defined-benefit to defined-contribution pension schemes, new business and higher savings rates drives income growth. For the Norwegian Unit Linked products, increased competition contributes to moderate margin pressure, while there are relatively stable margins in the Swedish business and Asset Management. Year to date increased net interest rate margin (1.23% vs 1.18%) and lending volume have resulted in growth in net interest income for the banking business compared to the previous year. Due to higher NIBOR in the 3rd quarter, the net interest rate margin has decreased to 1.21% from 1.25% for the same period last year. Interest rate increases have been implemented with effect as of the 4th quarter.

Operating expenses includes Skagen with NOK 64m for the quarter and NOK 288m year to date. Exclusive of Skagen the operating expenses increased compared to previous year due to underlying growth in the business.

BALANCE SHEET AND MARKET TRENDS

The premiums for non-guaranteed occupational pensions were NOK 4.1bn in the 3rd quarter, an increase of 12% compared to previous year. Total reserves within the Unit Linked business have increased by 5% in the 3rd quarter and 18% over the last year, and amounted to NOK 187bn at the end of the quarter. Assets under management in the Unit Linked business in Norway increased by NOK 4.8bn (5%) in the quarter and NOK 23bn (31%) over last year, including the acquisition of Silver AS with NOK 8.5bn. The underlying growth is driven by premium payments for existing contracts, returns and conversion from defined benefit schemes. In Norway, Storebrand is the market leader in Unit Linked with 31% of the market share of gross premiums written (at the end of the 2nd quarter).

In the Swedish market, SPP is the fourth largest actor in the Other Occupational Pensions segment with a market share of 12% measured by premium income from Unit Linked. Customer assets increased by SEK 3.5bn (4%) in the 3rd quarter and SEK 12bn (14%) from the previous year.

Assets under management in Storebrand Asset Management have increased by NOK 18bn (3%) in the quarter. Compared to the same period last year the growth is NOK 99.3bn (16%). Good sales and returns drive growth. Skagen is included in the numbers with NOK 64bn.

The bank lending portfolio in the retail market is developing positively and grew by NOK 1.4bn (3%) in the 3rd quarter and NOK 4.7bn (11%) from the same period previous year. The portfolio consists of low-risk home mortgages with an average LTV of 56%. Storebrand Life Insurance manages NOK 18.1bn of the mortgages on its balance sheet.

SAVINGS - KEY FIGURES

	2018	2017
(NOK million)	Q3	Q2	Q1	Q4	Q3
Unit linked Reserves	187,016	178,498	171,749	167,849	157,984
Unit linked Premiums	4,096	3,892	3,947	3,981	3,670
AuM Asset Management	725,171	707,118	707,102	721,165	625,840
Retail Lending	45,641	44,310	43,047	42,133	40,996

Insurance

• • Satisfactory underlying risk development
• • Lower disability improves result
• • Fewer employees and one-off effects decrease cost ratio

The Insurance segment provides health insurance in the Norwegian and Swedish corporate and retail markets, P&C insurance and personal risk products in the Norwegian retail market and employer's liability insurance and pension-related insurance in the Norwegian and Swedish corporate markets.

INSURANCE

	2018			2017			01.01 - 30.09	Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Insurance premiums f.o.a.	949	946	955	968	993	2,850	2,904	3,872
Claims f.o.a.	-633	-588	-620	-707	-674	-1,841	-2,019	-2,726
Operational cost	-136	-147	-156	-193	-175	-438	-519	-711
Operating profit	181	211	179	68	145	571	366	435
Financial result	33	19	28	-36	76	80	209	173
Contribution from SB Helseforsikring AS	15	7	3	5	19	25	35	39
Profit before amortisation	214	230	207	32	221	651	576	608
Claims ratio	67%	62%	65%	73%	68%	65%	70%	70%
Cost ratio	14%	16%	16%	20%	18%	15%	18%	18%
Combined ratio	81%	78%	81%	93%	85%	80%	87%	89%

FINANCIAL PERFORMANCE

In the third quarter, Insurance delivered a result before amortization of NOK 214m (NOK 221m) for the 3rd quarter and NOK 651m (NOK 576m) year to date. The combined ratio for the quarter was 81% (85%) in the quarter. Run off gains and changed distribution affects results positively. The underlying combined ratio is targeted to be in the range 90-92%.

The 3rd quarter claims ratio was 67% (68%) and the underlying risk development is satisfactory. P&C insurance has a satisfactory claims development despite larger claims due to rain and flooding. Individual insurance coverage has a good development due to lower disability. Group Life continues to deliver a good risk result. Health

Insurance experiences slightly higher claim rates in the Norwegian business and stable claim rates in the Swedish business. The risk result for Group Disability Pension is significantly improved. During the period, there has been low disability, most likely due to recovery of economic conditions in Norway.

The cost ratio was 14% (18%) in the 3rd quarter. Fewer FTEs allocated to Insurance and one-off effects associated with changes in distribution agreements explains lower costs in the quarter. Insurance's investment portfolio in Norway amounted to NOK 8.3bn as of the 3rd quarter. It is primarily invested in fixed income securities with a short to medium duration.

BALANCE SHEET AND MARKET TRENDS

Storebrand aims to grow in the retail market, but strong competition and shift in distribution strategy resulted in lower growth than in the previous years. Steps have been implemented to improve pricing, products, sales and service solutions to strengthen competitiveness. The Akademiker portfolio is important for growth and delivers as expected. Health related insurance is growing and Storebrand is succeeding in the market.

INSURANCE PREMIUMS

	2018			2017		01.01 - 30.09		Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
P&C & Individual life*	1,717	1,714	1,707	1,731	1,750	1,717	1,750	1,731
Health & Group life 1) **	1,538	1,548	1,555	1,568	1,541	1,538	1,541	1,568
Pension related disability insurance Nordic***	1,153	1,155	1,163	1,164	1,183	1,153	1,183	1,164
Total written premiums	4,408	4,417	4,424	4,462	4,474	4,408	4,474	4,462
Investment portfolio2)	8,292	8,447	8,525	8,290	8,336	8,292	8,336	8,290

* Individual life and accident, property and casualty insurance

** Group accident, occupational injury and health insurance

*** Nordic disability cover related to defined contribution pensions

1) Includes all written premiums in Storebrand Helseforsikring AS (50/50 joint venture with Munich Health)

2) NOK 2,8bn of the investment portfolio is linked to disability coverages where the investment result goes to the customer reserves and not as a result element in the P&L.

Guaranteed pension

• Income reduction in line with strategy and product run-off

• Stronger risk result in the Norwegian business

The Guaranteed Pension segment includes long-term pension savings products that give customers a guaranteed rate of return. The area includes defined benefit pensions in Norway and Sweden, paid-up policies and individual capital and pension insurances.

GUARANTEED PENSION

	2018			2017		01.01 - 30.09		Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Fee and administration income	369	370	368	376	380	1,107	1,108	1,483
Operational cost	-181	-218	-203	-240	-212	-602	-649	-889
Operating profit	188	153	165	136	169	506	459	595
Risk result life & pensions	91	-140	183	18	9	134	49	67
Net profit sharing and loan losses	13	221	51	-123	66	285	227	104

RESULT

Guaranteed Pension achieved a profit before amortisation of NOK 292m (NOK 244m) for the 3rd quarter and NOK 925m year to date (NOK 735m).

Fee and administration income has performed consistent with the fact that a large part of the portfolio is mature and in long-term decline. Income was NOK 369m (NOK 380m) for the 3rd quarter and NOK 1 107m year to date (NOK 1 108m).

The operating costs are gradually being reduced due to the area being in long-term decline and amounted to NOK 181m (NOK 212m) for the 3rd quarter and NOK 602m year to date (NOK 649m).

The risk result life & pensions was NOK 91m (NOK 9m) for the 3rd quarter and NOK 134m year to date (NOK 49m). For the 3rd quarter the risk result in the Norwegian business was strong at NOK 83m (NOK 0m) based on improved portfolio and satisfactory disability

development. In the Swedish business the risk result returned to normal levels after a one-off effect in the 2nd quarter.

The result from profit sharing and loan losses consists of profit sharing and financial effects. The result was NOK 13m (NOK 66m) for the 3rd quarter and NOK 285m for the year to date (NOK 227m). The result was generated in the Swedish business and was moderate in the quarter driven by marginal positive levels on all items (profit sharing, indexation charges and deferred capital contribution). The Norwegian business is prioritising the build-up of buffers and reserves instead of profit sharing between customers and owners.

BALANCE SHEET AND MARKET TRENDS

The majority of products are closed for new business, and the customers' choice about transferring from guaranteed to non-guaranteed products is in line with the Group's strategy. As of the 3rd quarter, customer reserves for guaranteed pensions amounted to NOK 258bn, which is a decrease of approximately NOK 6.7bn year to date. The total premium income for guaranteed pensions (excluding transfers) was NOK 0.9bn (NOK 1.0bn) for the 3rd quarter and NOK 4.2bn year to date (NOK 5.2bn).

In the Norwegian business, paid-up policies was the only guaranteed pension portfolio experiencing growth, which amounted to NOK 133bn as of the 3rd quarter. This is an increase of NOK 4.8bn year to date. Since 2014, customers have been given the choice to convert

from traditional paid-up policies to paid-up policies with investment choice. Conversions amounted to NOK 250m year to date. Paid-up policies with investment choice are included in the Savings segment. Reserves for defined-benefit pensions in Norway amounted to NOK 34bn at the end of the 3rd quarter, a decline of NOK 2bn year to date.

Guaranteed portfolios in the Swedish business totalled NOK 77bn as of the 3rd quarter, a reduction of NOK 9bn year to date. However, the main reason for the reduction is attributed to changes in the SEK/ NOK exchange rate. The underlying reduction is NOK 1.5 bn when adjusted for currency effects.

GUARANTEED PENSION - KEY FIGURES

	2018		2017 01.01 - 30.09					Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Guaranteed reserves	257,570	257,783	259,426	264,320	261,652	257,570	261,652	264,320
Guaranteed reserves in % of total reserves	57.9%	59.1%	60.2%	61.2%	62.4%	57.9%	62.4%	61.2%
Net transfers	-24	-13	-118	-117	-103	-155	-842	-959
Buffer capital in % of customer reserves Norway	6.6%	6.5%	6.2%	7.2%	5.2%	6.6%	5.2%	7.2%
Buffer capital in % of customer reserves Sweden	9.5%	8.8%	9.0%	9.0%	9.3%	9.5%	9.3%	9.0%

Other/Eliminations

The result for Storebrand ASA is reported under Other, as well as the result for the company portfolios and small subsidiaries of Storebrand Life Insurance and SPP. In addition, the results associated with lending to commercial enterprises by Storebrand Bank and the activities at BenCo are reported in this segment. Group eliminations are reported in a separate table below.

RESULT EXCLUDING ELIMINATIONS

	2018			2017			01.01 - 30.09	Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Fee and administration income	32	25	21	20	19	79	63	83
Operational cost	-58	-54	-36	-56	-53	-148	-132	-188
Operating profit	-25	-29	-15	-36	-35	-69	-69	-105
Financial items and risk result life	35	70	80	-48	30	185	209	161
Profit before amortisation	10	41	29	-84	-5	116	140	55

ELIMINATIONS

	2018			2017		01.01 - 30.09		Full year
NOK million	Q3	Q2	Q1	Q4	Q3	2018	2017	2017
Fee and administration income	-60	-60	-58	-54	-44	-178	-136	-190
Operational cost	60	60	58	54	44	178	136	190
Financial result			-35			-35
Profit before amortisation			-35			-35

The Other segment reported a profit of NOK 10 (NOK -5m) for the 3rd quarter. Fee and administration income was stable in comparison with the same quarter last year. Increased income in BenCo and planned reduction of corporate loans at Storebrand Bank reduces income and affects the composition of the income line.

The financial result for the Other segment includes the company portfolios of SPP and Storebrand Life Insurance, and the financial result of Storebrand ASA.

The Storebrand Life Insurance Group is funded by a combination of equity and subordinated loans. Given the interest rate level at the

end of the 3rd quarter, interest expenses of approximately NOK 80m per quarter are expected. The company portfolios in the Norwegian and Swedish life insurance companies amounted to NOK 21bn at end of the quarter.

The investments are primarily in interest-bearing securities, with short maturities, in Norway and Sweden. The Norwegian company portfolio reported a return of 0.48% for the quarter. The Swedish company portfolio provided a return of minus -0.05% in the quarter

Balance sheet, solidity and capital situation

Continuous monitoring and active risk management is core to Storebrand's business. Risk and capital adequacy are both monitored at Group level and in the legal entities. Regulatory requirements for capital adequacy and risk management follow the legal entities. The section is thus divided by legal entities.

STOREBRAND GROUP

The Solvency II framework is the most material capital regulation for the Storebrand Group.The Solvency II margin in the Storebrand Group was 169% (incl. transitional rules) at the end of the 3rd quarter, an increase of 2 percentage points during the quarter. The underlying solvency margin increased by 3 percentage points due to good investment returns and increased interest rates as well as a strong operating result. The value of the transitional measures are reduced in the quarter.

STOREBRAND ASA

Storebrand ASA (holding company) held liquid assets of NOK 2.3 bn at the end of the quarter. Liquid assets consist primarily of short-term fixed income securities with a good credit rating and bank deposits. Storebrand ASA's total interest-bearing liabilities were NOK 2.3bn at the end of the quarter. This corresponds to a net debt-equity ratio of -0,4%. The next maturity date for bond debt is in October 2018. In addition to the liquidity portfolio, the company has an unused credit facility of EUR 240m that runs until December 2019.

Storebrand ASA owned 431 140 (0.09%) of the company's own shares at the end of the quarter.

STOREBRAND LIFE INSURANCE GROUP1)

The Solidity capital2) measures the amount of IFRS capital available to cover customer liabilities. The solidity capital amounted to NOK 57.7bn at the end of 3rd quarter 2018, a decrease of NOK 0.2bn in 3rd quarter and NOK 6.3bn year to date. The change in the quarter is due to increased customer buffers in the Swedish business, decreased customer buffer in the Norwegian business and dividend paid to Storebrand ASA. A subordinated loan of NOK 1.5bn was called in the 2nd quarter.

STOREBRAND LIVSFORSIKRING AS

The market value adjustment reserve increased during the 3rd quarter by NOK 0.1bn and decreased with NOK 0.9bn year to date and amounted to NOK 2.8bn at the end of the 3rd quarter of 2018. The additional statutory reserves are almost unchanged in the 3rd quarter and year to date and amounted to NOK 8.3bn at the end of the 3rd quarter of 2018. The excess value of bonds and loans valued at amortised cost decreased in the 3rd quarter by NOK 1.3bn and by NOK 3.5bn year to date and amounted to NOK 5.1bn at the end of the 3rd quarter 2018 due to increases in interest rates. The excess value of bonds and loans at amortised cost is not included in the financial statements.

CUSTOMER BUFFERS

Market value adjustment reserve in % of customer funds with guarantee

Additional reserves in % of customer funds with guarantee

ALLOCATION OF GUARANTEED CUSTOMER ASSETS

Customer assets increased by NOK 4.9bn in the 3rd quarter and NOK 20.0bn year to date due to positive returns and acquisition of Silver's pension portfolio in 1st quarter. Customer assets totaled NOK 279bn at the end of the 3rd quarter of 2018. Customer assets within non-guaranteed savings increased NOK 4.8bn during the 3rd quarter and NOK 18.1bn year to date. Guaranteed customer assets were unchanged during the 3rd quarter and increased by NOK 1.9 year to date.

1) Consists of equity, subordinated loan capital, market value adjustment reserve, risk equalisation reserve, unrealised gains/losses on bonds and loans at amortised cost, additional statutory reserves, conditional bonuses.

¹⁾ Storebrand Life Insurance, SPP and BenCo.

The buffer capital amounted to SEK 7.3bn (SEK 6,8bn in the second quarter) at the close of the 3rd quarter.

ALLOCATION OF GUARANTEED CUSTOMER ASSETS

Total assets under management in SPP were SEK 178bn for the 3rd quarter. This corresponds to an increase of 6.5% compared with the 3rd quarter of 2017. For customer assets in non-guaranteed savings, assets under management totalled SEK 97bn (SEK 83.3bn) at the end of 2nd quarter, which corresponds to an increase of 14.3%, compared with the 3rd quarter of 2017.

STOREBRAND BANK

The lending portfolio in the retail market, including loans managed on behalf of Storebrand Livsforsikring AS, amounted to NOK 46bn, of which NOK 18bn is managed on Storebrand Livsforsikring AS' balance sheet. The corporate market portfolio is now at NOK 34m and for all practical purposes out of the balance sheet.

The Storebrand Bank Group had a net capital base of NOK 2.2bn at the end of the 3rd quarter. The capital adequacy ratio was 18.4%, and the core equity tier 1 ratio was 14.6%.

Outlook

STRATEGY

Storebrand follows a twofold strategy. First, Storebrand aims to build a world class Savings Group supported by Insurance. Storebrand is the market leader in pension solutions to Norwegian businesses and a challenger in the Swedish market, and uniquely positioned in the growing retail savings market. Storebrand Asset Management has a strong competitive position and clear growth ambitions. Second, through cost control and disciplined use of capital Storebrand aims to increase return to shareholders. Storebrand expects to start capital release as dividends when the solvency margin is above 180%. The solvency margin is expected to grow 5 percentage points annually after dividends from today's level. The guaranteed business in long term run off is projected to release NOK 10bn in the next ten years until 2027.

FINANCIAL PERFORMANCE

The market for defined-contribution pensions is growing, and Storebrand's total reserves within Unit Linked increased by 18% in the last 12 months. Continued good growth for defined-contribution pensions is expected in the future. The loyalty program for employees with companies that have a pension scheme at Storebrand remains an important area of focus. The sale of banking products and P&C insurance contributes to growth within the Savings and Insurance segments. The competition in the market has resulted in pressure on margins within these segments. This in turn sets requirements for cost reductions and efficiency improvements in distribution and product solutions to achieve continued profitable growth. In order to realize the ambitions in the retail market, sales must continue to increase.

Asset management is an important business area within the Savings segment. Asset management has had a 14% growth in assets over the last 12 months and good earnings development. With the acquisition of Skagen, Storebrand became a top three mutual fund provider in Norway. The asset management platform is competitive and scalable for further growth.

The Guaranteed Pension segment is in long term runoff and the reserves for the Guaranteed Defined Benefit solutions are decreasing. However, there is continued growth in the reserves linked to paid-up policies due to companies choosing to convert existing defined-benefit schemes to defined-contribution schemes. It is expected that the growth in paid-up policies will decline in the the next few years and that there will be flat growth in reserves over several years before the reserves start to fall. The portfolio of paidup policies makes a limited contribution towards the Group results with the present interest rates. Guaranteed reserves represent an increasingly smaller share of the Group's total pension reserves and were 59.1% at the end of the quarter, a 4.1%-point reduction from the previous year.

Storebrand targets a nominally lower cost base in 2018 compared to the level at the end of 2015. The cost base is expected to remain at a nominal flat level towards 2020. The cost ambition is excluding any performance related costs in Asset Management. Storebrand will still make selected investments in growth. Lower cost through automation, digitalization and the partnership with Cognizant is expected to cover normal investments in business growth and inflation the coming years.

RISK

Market risk is the Group's biggest risk. In the Board's self-assessment of risk and solvency (ORSA) process, developments in interest rates, credit spreads, and equity and property values are considered to be the biggest risks that influence the solvency of the Group. Storebrand has adapted to the low interest rates by increasing duration in portfolios and building up buffer capital. The level of the average annual interest rate guarantee is gradually reduced as older policies with higher guarantees are phased out. In the long term, continued low interest rates will represent a risk for products with guaranteed high interest rates. Storebrand has adjusted its asset allocation by building a robust portfolio with bonds at amortised cost to achieve the guaranteed interest rate. For insurance risk, increased longevity and the development in disability are the factors that have greatest influence on solvency. Operational risk may have an effect on solvency. The risk is closely monitored.

INDIVIDUAL PENSION ACCOUNT

The Norwegian Ministry of Finance is expected to present a bill proposing a scheme for individual pension accounts to parliament before Christmas 2018. The proposal will be based on existing pension accounts in active defined contribution schemes. Defined contribution capital certificates issued by previous employers ("pensjonskapitalbevis") will be transferred into the active scheme based on a principle of "negative acceptance". This means the holder of a certificate actively has to make a choice to stay with its current provider. Connecting the active schemes and the capital certificates may lead to a risk for increased margin pressure. Storebrand currently has a higher market share for active defined contribution schemes than for certificates from such schemes. We would therefore expect some new net inflows of certificates as a result of the proposed changes. Main principles of the Ministry's proposals gained broad support in the consultation round.

NEW PUBLIC SERVICE PENSION

The Ministry of Labour and Social Affairs has reached an agreement with the labour market parties on a new occupational pension schemes for the public sector. The existing defined benefit scheme will be closed, so that only employees born in 1962 and earlier will continue in the old scheme. Employees born in 1963 and later will earn new pension rights in a hybrid-based scheme from 2020. Storebrand is considering business opportunities related to the new product.

REPORT ON PAID-UP POLICIES

An interdepartmental working group with participants from the Ministry of Finance, the Ministry of Labour and Social Affairs and the Financial Supervisory Authority of Norway, has presented a report with proposals for changes in regulation for guaranteed pension products, including paid-up policies.

The Working Group assessed the regulations for profit sharing and buffer building, as well as rules regulating the transfer of pension assets between providers. Changes in these parameters leading to more long term investment strategies are expected to have positive effects for customers and shareholders. The Working Group's report was published in September 2018. The Ministry of Finance will now consider the Working Groups proposals.

POTENTIAL CHANGE IN TAX RULES FOR INSURANCE COMPANIES IN NORWAY

The Ministry of Finance has proposed changes in tax rules for life insurance companies. The aim of the proposed changes is to establish a clear distinction between customer and corporate funds in terms of taxation. The changes will apply with effect from the tax year 2018. Under the new rules, life insurance companies' profits as well as gains on corporate funds will be subject to tax. Customer funds will no longer incur tax losses that give rise to tax losses carried forward for the companies. Tax losses carried forward that have already been recognised will not be affected. The transition rules to the new regime can have effects at year-end. Storebrand is working to interpret and implement the transition rules.

DIVIDEND POLICY

Storebrand has established a framework for capital management that links dividends to the solvency margin. The dividend policy intends to reflect the strong growth in fee based earnings, the more volatile financial markets related earnings and the future capital release from the guaranteed book. The Board's ambition is to pay a stable and growing base dividend combined with special dividends to reflect financial markets volatility and capital release. The expected capital release will lead to increased payout ratio over time. Storebrand aims to pay a dividend of more than 50% of Group result after tax. The Board of Directors' ambition is to pay ordinary dividends per share of at least the same nominal amount as the previous year. Ordinary dividends are subject to a sustainable solvency margin of above 150%. If the solvency margin is above 180%, the Board of Directors intends to propose special dividends or share buy backs.

A dividend of more than 50% of the Group's result after tax and a higher nominal level than the 2017 ordinary dividend is expected for 2018.

Lysaker, 23. October 2018.

Storebrand Group Income statement

	Q3		01.01 - 30.09		Full year
(NOK million) Note	2018	2017	2018	2017	2017
Premium income	7,315	6,302	22,713	20,352	26,652
Net income from financial assets and real estate for the company:
- equities and fund units at fair value	1	15	1	24	31
- bonds and other fixed-income securities at fair value	81	69	275	392	507
- financial derivatives at fair value	-148	2	18	63	99
- loans at fair value	8	32	5	50	57
- bonds at amortised cost	30	28	85	107	134
- loans at amortised cost	164	162	500	493	665
- profit from investments in associated companies and joint ventures	16	18	36	112	119
Net income from financial assets and real estate for the customers:
- equities and fund units at fair value	5,620	2,598	11,024	10,017	16,943
- bonds and other fixed-income securities at fair value	424	805	646	2,429	3,157
- financial derivatives at fair value	-507	1,562	-463	1,836	848
- loans at fair value	34	56	105	82	113
- bonds at amortised cost	972	950	2,911	3,215	4,243
- loans at amortised cost	139	91	376	321	443
- properties	324	348	1,095	1,563	2,556
- profit from investments in associated companies and joint ventures	72	61	295	172	231
Other income	1,174	481	3,676	2,017	4,239
Total income	15,719	13,579	43,297	43,245	61,037
Insurance claims	-5,902	-5,908	-19,139	-19,260	-24,985
Change in insurance liabilities	-6,928	-5,216	-17,286	-16,671	-23,048
Change in capital buffer	-792	-481	161	-1,225	-3,943
Operating expenses 8	-1,051	-1,000	-3,298	-2,869	-4,266
Other expenses	-170	-31	-538	-222	-930
Interest expenses	-24	-171	-602	-676	-925
Total expenses before amortisation	-14,867	-12,806	-40,702	-40,922	-58,097
Group profit before amortisation	853	773	2,595	2,322	2,940
Amortisation of intangible assets	-98	-101	-261	-299	-536
Group pre-tax profit	755	672	2,335	2,023	2,404
Tax expenses 9	-229	27	-494	-111	2
Profit/loss for the period	526	698	1,841	1,912	2,405
Profit/loss for the period attributable to:
Share of profit for the period - shareholders	523	695	1,830	1,902	2,375
Share of profit for the period - hybrid capital investors	2	3	7	8	11
Share of profit for the period - minority	1	1	3	2	20
Total	526	698	1,841	1,912	2,405
Earnings per ordinary share (NOK)	1.12	1.55	3.92	4.24	5.28
Average number of shares as basis for calculation (million)			467.1	448.5	449.8
There is no dilution of the shares

Storebrand Group Statement of comprehensive income

	Q3		01.01 - 30.09		Full year
(NOK million)	2018	2017	2018	2017	2017
Profit/loss for the period	526	698	1,841	1,912	2,405
Change in actuarial assumptions	-3	-2	-8	-8	-117
Adjustment of value of properties for own use	4	85	46	432	130
Gains/losses from cash flow hedging	-16	-21	-53	-2	23
Total comprehensive income elements allocated to customers	-4	-85	-46	-432	-130
Tax on other comprehensive income elements not to be classified to profit/loss					2
Total other comprehensive income elements not to be classified to profit/loss	-20	-23	-61	-10	-92
Translation differences foreign exchange	18	-142	-555	204	387
Unrealised gains on financial instruments available for sale				6	8
Total other comprehensive income elements that may be classified to profit/loss	18	-142	-555	210	395
Total other comprehensive income elements	-2	-164	-616	200	303
Total comprehensive income	524	534	1,224	2,111	2,708
Total comprehensive income attributable to:
Share of total comprehensive income - shareholders	520	532	1,218	2,100	2,675
Share of total comprehensive income - hybrid capital investors	2	3	7	8	11
Share of total comprehensive income - minority	2		-1	3	22
Total	524	534	1,224	2,111	2,708

Storebrand Group Statement of financial position

(NOK million)	Note	30.09.18	30.09.17	31.12.17
Assets company portfolio
Deferred tax assets		653	584	637
Intangible assets and excess value on purchased insurance contracts		5,953	4,714	6,295
Pension assets		3	3	3
Tangible fixed assets		44	48	55
Investments in associated companies and joint ventures		243	278	291
Financial assets at amortised cost:
- Bonds	7	3,738	3,350	3,403
- Loans to financial institutions	7	253	44	313
- Loans to customers	7,10	27,290	27,167	26,678
Reinsurers' share of technical reserves		23	25	27
Investment properties at fair value	7	50	50	50
Biological assets		67	64	64
Accounts receivable and other short-term receivables		6,239	4,174	4,834
Financial assets at fair value:
- Equities and fund units	7	316	61	363
- Bonds and other fixed-income securities	7	28,120	30,741	31,719
- Derivatives	7	1,089	1,241	1,341
- Loans to customers	7,10	318	2,030	580
Bank deposits		3,073	2,387	3,466
Minority interests in consolidated mutual funds		30,201	26,294	30,303
Total assets company portfolio		107,674	103,254	110,424
Assets customer portfolio
Tangible fixed assets			452	488
Investments in associated companies and joint ventures		4,627	3,668	3,113
Receivables from associated companies		31	38	39
Financial assets at amortised cost:
- Bonds	7	88,544	84,348	84,071
- Bonds held-to-maturity	7	14,469	15,720	15,128
- Loans to customers	7,10	24,710	19,735	21,425
Reinsurers' share of technical reserves		56	71	63
Investment properties at fair value	7	27,151	25,387	27,403
Properties for own use	7	1,331	3,383	1,408
Biological assets			730	791
Accounts receivable and other short-term receivables		875	960	692
Financial assets at fair value:
- Equities and fund units	7	167,876	145,902	156,071
- Bonds and other fixed-income securities	7	127,767	134,385	135,042
- Derivatives	7	2,675	2,793	2,723
- Loans to customers	7,10	5,078	4,260	5,104
Bank deposits		5,068	4,267	4,958
Total assets customer portfolio		470,260	446,101	458,519

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Storebrand Group Statement of financial position (continue)

(NOK million) Note	30.09.18	30.09.17	31.12.17
Equity and liabilities
Paid-in capital	12,858	11,729	12,855
Retained earnings	17,655	17,078	17,652
Hybrid capital	176	226	226
Minority interests	53	55	99
Total equity	30,742	29,088	30,832
Subordinated loan capital 6,7	7,849	7,671	8,867
Capital buffer 11	19,952	17,983	21,137
Insurance liabilities	447,858	426,116	435,749
Pension liabilities	325	282	341
Deferred tax	260	176	238
Financial liabilities:
- Liabilities to financial institutions 6,7	35	405	155
- Deposits from banking customers 7	14,953	15,149	14,628
- Securities issued 6,7	16,454	17,241	16,575
- Derivatives company portfolio	77	228	282
- Derivatives customer portfolio	1,419	1,459	1,733
Other current liabilities	7,812	7,262	8,102
Minority interests in consolidated mutual funds	30,201	26,294	30,303
Total liabilities	547,192	520,267	538,110
Total equity and liabilities	577,935	549,355	568,943

Storebrand Group Statement of changes in equity

				Majority's share of equity
					Currency
	Share	Own	Share	Total paid in	translation	Other	Total retai	Hybrid	Minority	Total
(NOK million)	capital 1)	shares	premium	equity	differences	equity 2)	ned earnings	capital3)	interests	equity
Equity at 31 December 2016	2,250	-8	9,485	11,726	1,042	14,590	15,631	226	54	27,637
Profit for the period						2,375	2,375	11	20	2,405
Total other comprehensive income elements					385	-84	300		2	303
Total comprehensive income for the period					385	2,290	2,675	11	22	2,708
Equity transactions with owners:
Own shares		3		3		44	44			47
Issue of shares	90		1,037	1,126					3	1,129
Hybrid capital classified as equity						3	3			3
Paid out interest hybrid capital								-11		-11
Dividend paid						-695	-695		-2	-697
Purchase of minority interests						2	2			2
Other						-8	-8		21	13
Equity at 31 December 2017	2,339	-5	10,521	12,855	1,426	16,226	17,652	226	99	30,832
Profit for the period						1,830	1,830	7	3	1,841
Total other comprehnsive income
elements					-551	-61	-612		-4	-616
Total comprehensive income for
the period					-551	1,769	1,218	7	-1	1,224
Equity transactions with owners:
Own shares		3		3		48	48			50
Issue of shares									4	4
Hybrid capital classified as equity						2	2	-50		-48
Paid out interest hybrid capital								-7		-7
Dividend paid						-1,167	-1,167		-2	-1,169
Purchase of minority interests						-82	-82		-38	-120
Other						-16	-16		-8	-24
Equity at 30 September 2018	2,339	-2	10,521	12,858	875	16,779	17,655	176	54	30,742

¹) 467 813 982 shares with a nominal value of NOK 5.

2) Includes undistributable funds in the risk equalisation fund amounting to NOK 181 million and security reserves amounting NOK 56 million.

3) Perpetual hybrid tier 1 capital classified as equity.

Equity at 31 December 2016	2,250	-8	9,485	11,726	1,042	14,590	15,631	226	54	27,637
Profit for the period						1,902	1,902	8	2	1,912
Total other comprehensive income elements					203	-4	199		1	200
Total comprehensive income for the period					203	1,898	2,100	8	3	2,111
Equity transactions with owners:
Own shares		3		3		44	44			47
Hybrid capital classified as equity						2	2			2
Paid out interest hybrid capital								-8		-8
Dividend paid						-695	-695		-1	-696
Purchase of minority interests						2	2			2
Other						-7	-7		-1	-9
Equity at 30 September 2017	2,250	-5	9,485	11,729	1,245	15,833	17,078	226	54	29,088

Storebrand Group Statement of cash flow 01.01 - 30.09

(NOK million)	2018	2017
Cash flow from operational activities
Net receipts premium - insurance	19,165	18,146
Net payments compensation and insurance benefits	-15,100	-14,481
Net receipts/payments - transfers	-577	-2,721
Net change insurance liabilities	-5,868	-444
Receipts - interest, commission and fees from customers	2,430	1,878
Payments - interest, commission and fees to customers	-124	-211
Taxes paid	-54	-5
Payments relating to operations	-3,929	-2,474
Net receipts/payments - other operational activities	893	-59
Net cash flow from operations before financial assets and banking customers	-3,164	-371
Net receipts/payments - loans to customers	-3,882	-6,778
Net receipts/payments - deposits bank customers	282	-150
Net receipts/payments - securities	7,401	6,943
Net receipts/payments - investment properties	563	-821
Net change in bank deposits insurance customers	-150	440
Net cash flow from financial assets and banking customers	4,215	-366
Net cash flow from operational activities	1,051	-737
Cash flow from investment activities
Net receipts - sale of subsidaries	1,175	245
Net payments - purchase of group companies	-771	-2
Net receits/payments - sale/purchase of fixed assets	-39	-65
Net cash flow from investment activities	365	178
Cash flow from financing activities
Payments - repayments of loans	-2,125	-4,599
Receipts - new loans	2,701	4,895
Payments - interest on loans	-224	-248
Receipts - subordinated loan capital	845	150
Payments - repayment of subordinated loan capital	-1,501	-150
Payments - interest on subordinated loan capital	-337	-332
Net receipts/payments - loans to and claims from other financial institutions	-120	-1
Receipts - issuing of share capital / sale of shares to own employees	37	36
Payments - dividends	-1,168	-695
Receipts - hybrid capital	100
Payments - repayment of hybrid capital	-150
Payments - interest on hybrid capital	-7	-8
Net cash flow from financing activities	-1,948	-951
Net cash flow for the period	-532	-1,510
- of which net cash flow in the period before financial assets and banking customers	-4,747	-1,145
Net movement in cash and cash equivalents	-532	-1,510
Cash and cash equivalents at start of the period for new/sold out companies	35
Cash and cash equivalents at start of the period	3,780	3,965
Currency translation differences	43	-24
Cash and cash equivalents at the end of the period 1)	3,326	2,431
1) Consist of:
Loans to financial institutions	253	44
Bank deposits	3,073	2,387
Total	3,326	2,431

Notes to the interim accounts Storebrand Group

Accounting policies Note 01

The Group's interim financial statements include Storebrand ASA, subsidiaries, associated companies and joint ventures. The financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not contain all the information that is required in full annual financial statements.

A description of the accounting policies applied in the preparation of the financial statements are provided in the 2017 annual report, and the interim financial statements are prepared in accordance with these accounting policies.

During 2018 changes were made to the classification of certain types of transactions in the income statement, and comparable figures have been restated. The changes has no effect on the Group profit or the classification in the segment note. Below are the most significant result lines that are included in the changes:

• other income
• change in insurance liabilities
• operating expenses
• other expenses
• interest expenses

There are new accounting standards that entered into effect in 2018.

IFRS 9 Financial Instruments have replaced IAS39, and entered into force from 1 January 2018. For insurance-dominated groups and companies, IFRS 4 allows for either the implementation of IFRS 9 to be deferred (deferral approach) or to enter the differences between IAS39 and IFRS 9 through Other Comprehensive Income (overlay approach) until implementation of IFRS 17 on 1 January 2021. The Storebrand Group qualifies for temporary deferral of IFRS 9 because over 90 per cent of the Group's total liabilities as at 31 December 2015 relates to the insurance business. Storebrand Group will implement IFRS 9 together with IFRS 17, applicable from 1 January 2021.

The new standard IFRS 15 for recognising revenue from contracts with customers entered into force from 1 January 2018, and replaced IAS18. Revenue recognition in the Storebrand Group is primarily regulated by IAS39/IFRS9 and IFRS4. Revenue that will be recognised under Other Income is assessed in relation to IFRS 15. The implementation of IFRS15 have no impact on the Group result in Storebrand's consolidation financial statements.

Note

02

Estimates

In preparing the Group's financial statements the management are required to make estimates, judgements and assumptions of uncertain amounts. The estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical experience and expectations of future events and represent the management's best judgement at the time the financial statements were prepared.

Actual results may differ from these estimates.

A description of the most critical estimates and judgements that can affect recognised amounts is included in the 2017 annual report in note 2, insurance risk in note 7, valuation of financial instruments at fair value is described in note 12 and in the interim financial statements note 13 Solvency II.

Note 03

Aquisition

Silver

On 24 October 2017 Storebrand Livsforsikring AS entered into an agreement to acquire Silver Pensjonsforsikring (Silver). The transaction was completed in January 2018 after Silver was released from administration. The transaction was completed in two parts, with the first part as an acquisition of the bifurcated insurance portfolio (amounted to NOK 9.7 billion), and the latter as an acquisition of Silver Pensjonsforsikring AS with its remaining insurance portfolio (amounted to NOK 0.3 billion) and operations. The remaining insurance portfolio for Silver Pensjonsforsikring consisting of pension capital certificates and individual pension contracts with no guarantee. Before acquisition as a part of the administration solution, Silver's portfolio of paid-up policies has been converted to paid-up policies with investment options (FMI) for retirement pension coverage, amounted NOK 8.3 billion. Risk cover (paid-up policies) is continued based on a reduced base rate of 2.75%, amounted NOK 1.4 billion. Storebrand Livsforsikring AS paid a purchase price of NOK 520 million. The purchase price has been transferred to Silver's customers as a part of the administrative board's solution, and contributes to maintaining good pensions for the customers.

The amount of NOK 520 million has been transferred to Silver's customers, and in the acquisition analysis the excess value of the acquisition will be allocated to the insurance contracts (VIF –value of business in force) amounted NOK 280 million, which are amortised over 10 years, reserve strength due to transition to Storebrand's tariffs amounted NOK 97 million, deferred tax asset amounted NOK 374 million and negative goodwill amounted NOK 37 million.

As a part of simplifying the corporate structure, Storebrand Livsforsikring AS has completed a merger with the fully owned subsidiary Silver Pensjonsforsikring AS. The merger has been carried out without consideration pursuant to the Norwegian Limited Liability Companies Act §13-23 and §13-1 with accounting effect from 1 January 2018, and assuming tax continuity.

		Payment for	Excess value
(NOK million)	Book values in	financing insu	upon	Book
	the company	rance liabilities	acquistion	values
Assets
- VIF			280	280
- Deferred tax assets			374	374
Total intangible assets			654	654
Financial assets	9,525			9,525
Other assets		520		520
Bank deposits	35			35
Total assets	9,560	520	654	10,734
Liabilities
Insurance liabilities	10,026			10,026
Current liabilities	34	20		54
Net identifiable assets and liabilities	-500	500	654	654
Reserve strengthning				-97
Goodwill				-37
Fair value at acquisition date				520

ACQUISITION ANALYSIS SILVER

Skagen

Storebrand acquired 90.95% of the shares in SKAGEN in December 2017. The remaining shares representing 9.05% of the total share capital was B shares owned by the employees.

In the end of April 2018 Skagen AS purchased the B-shares from the employees for a consideration of NOK 120 million, complete with buy back of own shares. The transaction is completed and recorded as equity transaction with deduction from equity, and the shares will be erased.

After the transaction Storebrand Asset Management AS owns 100% of the shares in Skagen AS.

Note 04

Storebrand's operation includes the segments Savings, Insurance, Guaranteed Pension and Other.

Savings

The savings segment includes products for retirement savings with no interest rate guarantees. The segment consists of defined contribution pensions in Norway and Sweden, asset management and retail banking products. In addition, certain other subsidiaries in Storebrand Livsforsikring and SPP are included in Savings.

Insurance

The insurance segment provides health insurance in the Norwegian and Swedish corporate and retail markets, P&C insurance and personal risk products in the Norwegian retail market and employer's liability insurance and pension-related insurance in the Norwegian and Swedish corporate markets.

Guaranteed pension

Profit by segments

The guaranteed Pension segment includes long-term pension savings products that give customers a guaranteed rate of return. The area includes defined benefit pensions in Norway and Sweden, paid-up policies and individual capital and pension insurances.

Other

The result for Storebrand ASA is reported under Other, as well as the result for the company portfolios and small subsidiaries of Storebrand Life Insurance and SPP. In addition, the results associated with loans to commercial enterprises by Storebrand Bank and the activities at BenCo are reported in this segment. The elimination of intra-group transactions that have been included in the other segments has also been included.

Reconciliation with the official profit and loss accounting

Profit in the segments are reconciled with the corporate profit and loss account before tax. The corporate profit and loss account includes gross income and gross expenses linked to both the insurance customers and owners. The various segments are to a large extent followed up on net profit margins, including risk and administration results. The profit lines that are used in segment reporting will therefore not be identical with the profit lines in the corporate profit and loss account.

A description of the most important differences is included in the 2017 annual report in note 4 Segment reporting.

	Q3		01.01 - 30.09		Full year
(NOK million)	2018	2017	2018	2017	2017
Savings	336	314	940	872	1,511
Insurance	214	221	651	576	608
Guaranteed pension	292	244	925	735	766
Other	10	-5	81	140	55
Group profit before amortisation	853	773	2,595	2,322	2,940
Amortisation of intangible assets	-98	-101	-261	-299	-536
Group pre-tax profit	755	672	2,335	2,023	2,404

SEGMENT INFORMATION AS OF Q3

	Savings		Insurance		Guaranteed pension
	Q3			Q3		Q3
(NOK million)	2018	2017	2018	2017	2018	2017
Fee and administration income	905	761			369	380
Insurance result			316	320
- Insurance premiums for own account			949	993
- Claims for own account			-633	-674
Operating expense	-563	-443	-136	-175	-181	-212
Operating profit	342	318	181	145	188	169
Financial items and risk result life & pension	-5	-4	33	76	105	75
Group profit before amortisation	336	314	214	221	292	244
Amortisation of intangible assets 1)
Group pre-tax profit

	Other		Storebrand Group
	Q3		Q3
(NOK million)	2018	2017	2018	2017
Fee and administration income	-28	-25	1,246	1,116
Insurance result			316	320
- Insurance premiums for own account			949	993
- Claims for own account			-633	-674
Operating expense	3	-9	-877	-840
Operating profit	-25	-35	685	596
Financial items and risk result life & pension	35	30	168	177
Group profit before amortisation	10	-5	853	773
Amortisation of intangible assets 1)			-98	-101
Group pre-tax profit			755	672

1) Amortisation of intangible assets are included in Storebrand Group

SEGMENT INFORMATION AS OF 01.01 - 30.09

	Savings Insurance				Guaranteed pension
(NOK million)	30.09.18	30.09.17	30.09.18	30.09.17	30.09.18	30.09.17
Fee and administration income	2,702	2,205			1,107	1,108
Insurance result			1,009	885
- Insurance premiums for own account			2,850	2,904
- Claims for own account			-1,841	-2,019
Operating expense	-1,745	-1,337	-438	-519	-602	-649
Operating profit	957	868	571	366	506	459
Financial items and risk result life & pension	-17	4	80	209	419	276
Group profit before amortisation	940	872	651	576	925	735
Amortisation of intangible assets 1)
Group pre-tax profit

	Other		Storebrand Group
(NOK million)	30.09.18	30.09.17	30.09.18	30.09.17
Fee and administration income	-99	-73	3,710	3,240
Insurance result			1,009	885
- Insurance premiums for own account			2,850	2,904
- Claims for own account			-1,841	-2,019
Operating expense	30	4	-2,755	-2,501
Operating profit	-69	-69	1,965	1,624
Financial items and risk result life & pension	149	209	631	698
Group profit before amortisation	81	140	2,595	2,322
Amortisation of intangible assets 1)			-261	-299
Group pre-tax profit			2,335	2,023

1) Amortisation of intangible assets are included in Storebrand Group.

KEY FIGURES BY BUSINESS AREA

	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4
(NOK million)	2018	2018	2018	2017	2017	2017	2017	2016
Group
Earnings per ordinary share 1)	3.92	2.80	1.55	5.28	4.24	2.69	1.03	4.73
Equity	30,742	30,227	31,140	30,832	29,088	28,559	28,208	27,637
Savings
Premium income Unit Linked 2)	4,096	3,892	3,947	3,981	3,670	3,649	3,716	3,466
Unit Linked reserves	187,016	178,498	171,749	167,849	157,984	151,425	147,311	139,822
AuM asset management	725,171	707,118	707,102	721,165	625,840	620,584	599,111	576,704
Retail lending	45,641	44,310	43,047	42,133	40,996	39,464	37,585	35,400
Insurance
Total written premiums	4,408	4,417	4,424	4,462	4,474	4,440	4,413	4,502
Claims ratio 2)	67%	62%	65%	73%	68%	70%	71%	74%
Cost ratio 2)	14%	16%	16%	20%	18%	18%	18%	18%
Combined ratio 2)	81%	78%	81%	93%	85%	88%	89%	91%
Guaranteed pension
Guaranteed reserves	257,570	257,783	259,426	264,320	261,652	260,459	261,148	258,723
Guaranteed reseves in % of total reserves	57.9%	59.1%	60.2%	61.2%	62.4%	63.2%	63.9%	64.9%
Net transfer out of guaranteed reserves 2)	24	13	118	117	103	199	541	245
Capital buffer in % of customer reserves Store brand Life Group 3)	6.6%	6.5%	6.2%	7.2%	5.2%	5.3%	5.4%	5.7%
Capital buffer in % of customer reserves SPP 4)	9.5%	8.8%	9.0%	9.0%	9.3%	8.4%	7.9%	6.7%
Solidity
Solvency II 5)	169%	167%	165%	172%	160%	163%	159%	157%
Solidity capital (Storebrand Life Group) 6)	57,702	57,869	58,849	63,972	59,332	58,875	57,139	56,381
Capital adequacy Storebrand Bank	18.4%	18.8%	18.8%	18.9%	18.1%	18.2%	17.9%	17.7%
Core Capital adequacy Stobrand Bank	16.1%	16.5%	16.6%	16.6%	16.0%	16.1%	15.8%	15.7%

) Accumulated

2) Quarterly figures

3) Additional statutory reserves + market value adjustment reserve

4) Conditional bonuses

5) See note 13 for specification of Solvency II

6) The term solidity capital encompasses equity, subordinated loan capital, the risk equalisation fund, the market value adjustment reserve, additional statutory reserves, conditional bonuses, excess value/deficit related to bonds at amortised cost and accrued profit.

Note 05

Financial market risk and insurance risk

Risks are described in the annual report for 2017 in note 7 (Insurance risk), note 8 (Financial market risk), note 9 (Liquidity risk), note 10 (Credit risk) and note 11 (Concentrations of risk).

Market risk means changes in the value of assets due to unexpected volatility or changes in prices in the financial markets. It also refers to the risk that the value of the insurance liability develops differently than the assets.

The most significant market risks for Storebrand are equity market risk, credit risk, property price risk, interest rate risk and currency exchange rate risk.

For the life insurance companies, the financial assets are invested in a variety of sub-portfolios. Market risk affects Storebrand's income and profit differently in the different portfolios. There are three main types of sub-portfolios: company portfolios, customer portfolios without a guarantee (unit linked) and customer portfolios with a guarantee.

The market risk in the company portfolios has a direct impact on Storebrand's profit.

The market risk in customer portfolios without a guarantee (unit linked) is at the customers' risk, meaning Storebrand is not directly affected by changes in value. Nevertheless, changes in value do affect Storebrand's profit indirectly. Income is based mainly on the size of the portfolios, while the costs tend to be fixed. Lower returns from the financial market than expected will therefore have a negative effect on Storebrand's income and profit.

For customer portfolios with a guarantee, the net risk for Storebrand will be lower than the gross market risk. The extent of risk sharing with customers depends on several factors, the most important being the size and flexibility of the customer buffers, and also the level and duration of the interest rate guarantee. If the investment return is not sufficiently high to meet the guaranteed interest rate, the shortfall will be met by using customer buffers in the form of risk capital built up from previous years' surpluses. Risk capital primarily consists of unrealised gains, additional statutory reserves and conditional bonuses. Storebrand is responsible for meeting any shortfall that cannot be covered by the customer buffers.

For guaranteed customer portfolios, the risk is affected by changes in the interest rate level. 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 return higher than the guarantee.

The equity market started the year on a positive note, but after reaching a peak in January, the uncertainty and volatility has increased. Initially, the market feared that a stronger labor market and less accommodating central banks could trigger higher interest rates. During the second quarter, the main concern has been the rising trade war and expected imposed tariffs. The political situation in Italy has also caused increased volatility. During the third quarter, the equity market has been strong.

The global equity market increased by 7 % during the first three quarters of the year. The Norwegian equity market rose 15 % on the back of rising oil-price. The market for corporate bonds has been affected by increased uncertainty, and there has been an increase in credit spreads since the beginning of the year.

Interest rates rose at the start of the year across all markets, but then fell back in many markets as the concern for increased inflation receded. For the first three quarters of the year the Norwegian 10-year interest rate swap increased by 0.4 pp. The Swedish 10-year interest swap rate increased by 0.1 pp. Due to the majority of the interest rate investments in the Norwegian customer portfolios being held at amortized cost, changes in interest rates have a limited effect on expected returns in the short term. However, with the present interest rates, new bond investments provide a lower return than the average interest rate guarantee. Higher interest rates are a positive factor for the solvency position.

The Norwegian krone has strengthened during the first three quarters of the year against the Swedish krona and the Euro, but is little changed against the US dollar. The increase is 4 % against the Euro and 8 % against the Swedish krona. A high degree of currency hedging in the portfolio means that the exchange rate fluctuations have a modest effect on results and risk.

There are minor changes in investment allocations during the first three quarters of the year.

Guaranteed portfolios in Norway on average provided returns that were almost in line with the interest rate guarantee in the first three quarters of the year. The return therefore has little impact on the results. Excess values of portfolios at amortized cost fell in the first three quarters of the year due to the increase in interest rates. Guaranteed portfolios in Sweden gave returns that were slightly better than the change in value of insurance liabilities, which created a positive result.

On average, unit linked insurance customers in Norway had positive returns during the first three quarters of the year. In Sweden, the return was even better, helped by a positive currency effect on international equity funds from the weak Swedish krona.

Insurance risk is the risk of higher than expected payments and/or an unfavorable change in the value of an insurance liability due to actual developments deviating from what was expected when premiums or provisions were calculated. Most of the insurance risk for the group is related to life insurance. Changes in longevity is the greatest risk because higher longevity means that the guaranteed benefits must be paid over a longer period. There are also risks related to disability and early death.

The insurance risk has only had minor changes during the first three quarters of the year.

Note 06

Liquidity risk

SPECIFICATION OF SUBORDINATED LOAN CAPITAL

	Nominal
(NOK million)	value	Currency	Interest rate	Call date	Book value
Issuer
Perpetual subordinated loan capital
Storebrand Livsforsikring AS	1,000	NOK	Variable	2020	1,001
Storebrand Livsforsikring AS	1,100	NOK	Variable	2024	1,100
Dated subordinated loan capital
Storebrand Livsforsikring AS	1,000	SEK	Variable	2022	916
Storebrand Livsforsikring AS	300	EUR	Fixed	2023	3,042
Storebrand Livsforsikring AS	750	SEK	Variable	2021	691
Storebrand Livsforsikring AS	900	SEK	Variable	2025	823
Storebrand Bank ASA	125	NOK	Variable	2019	126
Storebrand Bank ASA	150	NOK	Variable	2022	150
Total subordinated loans and hybrid tier 1 capital 30.09.18					7,849
Total subordinated loans and hybrid tier 1 capital 30.09.17					7,671
Total subordinated loans and hybrid tier 1 capital 31.12.17					8,867

SPECIFICATION OF LIABILITIES TO FINANCIAL INSTITUTIONS

Total liabilities to financial institutions	35	405	155
2018	35		155
2017		405
Call date
(NOK million)	30.09.18	30.09.17	31.12.17
		Book value

SPECIFICATION OF SECURITIES ISSUED

		Book value
(NOK million)	30.09.18	30.09.17	31.12.17
Call date
2017		301
2018	753	2,882	2,882
2019	3,170	3,221	3,152
2020	4,324	4,328	4,030
2021	3,702	3,506	3,509
2022	3,002	3,002	3,002
2023	1,503
Total securities issued	16,454	17,241	16,575

The loan agreements contain standard covenants.

Covered bonds

For issued covered bonds, a regulatory requirement for over-collateralisation of 102 per cent and an over-collateralisation requirement of 109.5 per cent for bonds issued before 21 June 2017 apply.

Credit facilities

Storebrand ASA has an unused credit facility of EUR 240 million.

Facilities for Storebrand Boligkreditt AS

Storebrand Bank has issued two credit facilities to Storebrand Boligkreditt AS. One of these is an ordinary overdraft facility, with a ceiling of NOK 6 billion. This has no expired date, but can be terminated by the bank with 15 months' notice. The other facility may not be terminated by Storebrand Bank until at least 3 months after the maturity date of the covered bond and the associated derivates with the longest period to maturity. Both agreements provide a minimum capacity to cover at least interests and payments on covered bonds and derivatives the following 31 days.

Valuation of financial instruments and investment properties

Note 07

The Group categorises financial instruments valued at fair value on three different levels. Criteria for the categorisation and processes associated with valuing are described in more detail in note 12 in annual report for 2017.

The company has established valuation models and gathers information from a wide range of well-informed sources with a view to minimising the uncertainty of valuations.

VALUATION OF FINANCIAL INSTRUMENTS TO AMORTISED COST

	Fair value	Fair value	Book value	Book value
(NOK million)	30.09.18	31.12.17	30.09.18	31.12.17
Financial assets
Loans to and due from financial institutions	253	313	253	313
Loans to customers - corporate	6,596	6,501	6,630	6,533
Loans to customers - retail	45,371	41,571	45,371	41,571
Bonds held to maturity	15,773	16,933	14,469	15,128
Bonds classified as loans and receivables	96,074	94,218	92,282	87,474
Total financial assets 30.09.18	164,067		159,005
Total financial assets 31.12.17		159,537		151,020
Financial liabilities
Debt raised by issuance of securities	16,598	16,634	16,454	16,575
Liabilities to financial institutions	35	155	35	155
Deposits from banking customers	14,953	14,628	14,953	14,628
Subordinatd loan capital	7,915	8,990	7,849	8,867
Total financial liabilities 30.09.18	39,501		39,290
Total financial liabilities 31.12.17		40,407		40,224

VALUATION OF FINANCIAL INSTRUMENTS AND REAL ESTATE AT FAIR VALUE

	Level 1	Level 2	Level 3
		Observable	Non-observable
(NOK million)	Quoted prices	assumptions	assumptions	30.09.18	31.12.17
Assets:
Equities and fund units
- Equities	25,372	333	654	26,359	23,360
- Fund units	311	133,769	7,752	141,832	133,074
Total equities and fund units 30.09.18	25,683	134,102	8,406	168,191
Total equities and fund units 31.12.17	22,563	125,425	8,445		156,433
Loans to customers 1)
- Loans to customers - corporate			5,078	5,078	5,104
- Loans to customers - retail			318	318	580
Loans to customers 30.09.18 1)			5,396	5,396
Loans to customers 31.12.17 1)			5,684		5,684
Bonds and other fixed-income securities
- Government bonds	15,760	19,715		35,475	49,022
- Corporate bonds	1	50,362	70	50,433	49,331
- Structured notes		75		75	81
- Collateralised securities		24,806		24,806	28,914
- Bond funds		43,504	1,594	45,099	39,412
Total bonds and other fixed-income securities 30.09.18	15,761	138,462	1,664	155,888
Total bonds and other fixed-income securities 31.12.17	24,186	142,467	108		166,761
Derivatives:
- Interest derivatives		1,624		1,624	2,799
- Currency derivatives		645		645	-751
Total derivatives 30.09.18		2,269		2,269
- of which derivatives with a positive market value		3,765		3,765	4,064
- of which derivatives with a negative market value		-1,496		-1,496	-2,015
Total derivatives 31.12.17		2,049			2,049
Properties:
Investment properties			27,201	27,201	27,453
Properties for own use			1,331	1,331	1,408
Total properties 30.09.18			28,532	28,532
Total properties 31.12.17			28,861		28,861

1) Includes loans to customers/liabilities to financial institutions classified at fair value through profit and loss

There is no significant movements between level 1 and level 2 in this quarter.

FINANCIAL INSTRUMENTS AND REAL ESTATE AT FAIR VALUE - LEVEL 3

			Loans to
(NOK million)			custo	Corporate		Investment	Properties for
	Equities	Fund units	mers	bonds	Bond funds	properties	own use
Book value 01.01.18	767	7,679	5,685	108		27,453	1,408
Net gains/losses on financial instruments	-6	-899	118	8	1	-496
Additions	30	2,199	1,014		1,594	916	79
Sales	-114	-1,028	-994	-41			-1
Currency translation differences	-22	-198	-426	-6		-887	-154
Other						214
Book value 30.09.18	654	7,752	5,396	70	1,594	27,201	1,331

As at 30.09.18, Storebrand Livsforisikring had NOK 4.590 million invested in Storebrand Eiendomsfond Norge KS and Ruseløkkveien 26, Oslo. The investments are classified as "Investment in associated Ccmpanies and joint ventures" in the Consolidated Financial Statements.

SENSITIVITY ASSESSMENTS

Sensitivity assessments of investments on level 3 are described in note 12 in the 2017 annual report. There is no significant changes in sensitivity in this quarter.

Operating costs Note 08

	Q3		01.01 - 30.09		Total
(NOK million)	2018	2017	2018	2017	2 017
Personnel expenses	-512	-492	-1,567	-1,429	-1,955
Amortisation/write-downs	-43	-43	-108	-126	-167
Other operating expenses	-496	-465	-1,624	-1,314	-2,145
Total operating expenses	-1,051	-1,000	-3,298	-2,869	-4,266

Note 09

Tax

The National Budget 2019, which was published on 8 October 2018, calls for changes in the taxation of insurance and pension undertakings with effect from 1 January 2018. The aim of the proposals is to establish a distinction between customer and corporate funds in terms of taxation. It is pointed out that all of the circumstances related to the proposed amendments have not been clarified, and the proposal will not be formally adopted by the Storting until December 2018 when the National Budget for 2019 is debated.

Hence, the proposed amendments to the Norwegian Tax Code have not been incorporated into the accounts as at the 3rd quarter of 2018, since this is considered an event after the balance sheet date that is not to be taken into account. The income tax expense as at the 3rd quarter has been estimated based on existing rules.

The tax rate for the Group will vary from quarter to quarter depending on the individual legal entities' contribution to earnings. The net income tax expense for the quarter and year also reflects effects that each give a higher or lower effective tax rate. The effective tax rate is influenced by the fact that the Group has operations in countries with tax rates that are different from Norway. In addition, the Group includes Norwegian entities that are both subject to and not subject to the financial tax. Therefore, the company tax rate that applies for the individual Norwegian Group companies, i.e. 23% or 25%, is used in the consolidated financial statements.

Note 10

Loans

(NOK million)	30.09.18	30.09.17	31.12.17
Corporate market 1)	11,748	17,726	11,685
Retail market	45,707	35,582	42,184
Gross loans	57,454	53,309	53,869
Write-down of loans losses	-57	-116	-80
Net loans 2)	57,397	53,193	53,788
1) Of which Storebrand Bank	39	813	360
2) Of which Storebrand Bank	27,607	29,195	27,257
Of which Storebrand Livsforsikring	29,790	23,998	26,531

NON-PERFORMING AND LOSS-EXPOSED LOANS

(NOK million)	30.09.18	30.09.17	31.12.17
Non-performing and loss-exposed loans without identified impairment	78	157	150
Non-performing and loss-exposed loans with identified impairment	62	85	114
Gross non-performing loans	141	241	265
Individual write-downs	-21	-30	-43
Net non-performing loans 1)	119	211	222

1) The figures apply in their entirety Storebrand Bank

Note 11

Capital buffer

(NOK million)	30.09.18	30.09.17	31.12.17
Additional statutory reserves	8,267	6,721	8,254
Market adjustment reserves	2,841	2,104	3,707
Conditional bonuses	8,843	9,158	9,176
Total	19,952	17,983	21,137

Note 12

Contingent liabilities

(NOK million)	30.09.18	30.09.17	31.12.17
Guarantees	12	22	20
Unused credit facilities	3,449	3,503	3,474
Uncalled residual liabilities re limited partnership	6,272	7,901	5,451
Loan commitment retail market	2,517	3,174	2,007
Debt instrument to Silver Pensjonsforsikring in connection with the acquisition1)			520
Total contingent liabilities	12,250	14,600	11,472

1) The debt instrument is conditional upon the company being released from administration

Guarantees essentially encompass payment and contract guarantees.

Unused credit facilities encompass granted and any unused credit accounts and credit cards, as well as, any unused flexible mortgage facilities.

Storebrand Group companies are engaged in extensive activities in Norway and abroad, and are subject for client complaints and may become a party in legal disputes, see note 2 and note 44 in the 2017 annual report.

Solvency II Note

13

The Storebrand Group is an insurance-dominated, cross-sectoral financial group with capital requirements in accordance with Solvency II. Storebrand calculates Solvency II according to the standard method as defined in the Solvency II Regulations.

Consolidation is carried out in accordance with Section 18-2 of the Norwegian Act relating to Financial Undertakings and Financial Groups.

The solvency capital requirement and minimum capital requirement for the group are calculated in accordance with Section 46 (1)-(3) of the Solvency II Regulations using the standard method and include the effect of the transitional arrangement for shares pursuant to Section 58 of the Solvency II Regulations.

The models used as a basis for the calculation of capital requirements and solvency capital are based on a number of requirements and assumptions that are partly specified in the regulations and partly interpreted by Storebrand based on the regulations. The most important assumptions and estimates in the calculation relate to the risk-reducing capacity of deferred tax, future margins and reserve developments, as well as the value of the customers guarantees and options. The assumptions and estimates are reviewed on an ongoing basis and re based on historical experience and expexctations of future events and represent the management's best judgement at the time the financial statement were prepared. Changes to the regulations, methods and interpretations may be made that could affect the Solvency II margin in the future.

The solvency capital largely appears as net assets in the Solvency II balance sheet with the addition of eligible subordinated loans and deducted for own shares and ineligible minority interests. The solvency capital is therefore significantly different to book equity in the financial statements. Technical insurance reserves are calculated in accordance with the standard method and include the effect of the transitional arrangement pursuant to Section 56 (1) - (6) of the Solvency II Regulations. The transitional arrangement entails that the increase in the value of the technical insurance reserves is phased in gradually over a period of 16 years. The composition of solvency capital appears in the table below.

The solvency capital is divided into three capital groups in accordance with Section 6 of the Solvency II Regulations. Group 1 capital consists of paid-in capital and reconciliation reserve1). It also includes perpetual subordinated loans (perpetual hybrid Tier 1 capital) with up to 20 per cent of Group 1 capital.

Other subordinated loans (time limited) and risk equalisation reserve are categorised as Group 2 capital. Group 2 capital can cover up to 50 per cent of the solvency capital requirement and up to 20 per cent of the minimum capital requirement. Eligible minority interests and deferred tax assets are categorised as Group 3 capital. Group 3 capital can cover up to 15 per cent of the solvency capital requirement. Group 3 capital cannot be used to cover the minimum capital requirement.

Subordinated loans issued prior to 17 January 2015 are covered by a transitional arrangement that will continue until 2026 and during this period these loans will qualify as Group 1 capital despite them not fully satisfying the requirements for viable capital in the Solvency II regulations.

The companies in the group governed by CRD IV are included in the group's solvency capital and solvency capital requirements with their respective primary capital and capital requirements.

1) Profit earned that is included as equity in the financial statements must be replaced by the reconciliation reserve in the solvency balance. The reconciliation reserve also includes profit earned, but based on the valuation of assets and liabilities in the solvency balance. The reconciliation reserve will also include the present value of future profits. The value of future profits is implicitly included as a consequence of the valuation of the insurance liability.

SOLVENCY CAPITAL

			30.09.18
		Group 1	Group 1			31.12.17
NOK million	Total	unlimited	limited	Group 2	Group 3	Total
Share capital	2,339	2,339				2,339
Share premium	10,521	10,521				10,521
Reconciliation reserve	23,665	23,665				25,694
Including the effect of the transitional arrangement						4,513
Subordinated loans	7,533		1,118	6,415		8,547
Deferred tax assets	55				55	71
Risk equalisation reserve	181			181		143
Minority interests	46				46	49
Unavailable minority interests	-30				-30	-33
Deductions for CRD IV subsidiaries	-2,749	-2,299	-175	-275		-2,929
Unpaid dividend 2017						-1,168
Expected dividend 2018	-915	-915
Total basic solvency capital	40,647	33,312	943	6,321	71	43,234
Subordinated capital for subsidiaries regulated in accordance with	2,749					2,929
CRD IV
Total solvency capital	43,396					46,164
Total solvency capital available to cover the minimum capital
requirement	36,106	33,312	943	1,851		39,294

The capital requirement in Solvency II appears as the total of changes in solvency capital calculated under different types of stress, less diversification. The largest part of the capital requirement appears from financial market stress and particularly relates to changes in interest rates and falls in the equity markets, as well as increased credit spreads. There is also the insurance risk, for which the most important capital requirement comes from stress relating to the transfer of existing customers within defined contribution pensions. The solvency capital requirement appears in the table below.

SOLVENCY CAPITAL REQUIREMENTS AND - MARGIN

NOK million	30.09.18	31.12.17
Market	21,265	22,936
Counterparty	401	565
Life	10,945	10,453
Health	706	744
P&C	281	283
Operational	1,451	1,496
Diversification	-6,949	-7,023
Loss-absorbing tax effect	-4,842	-5,002
Total solvency capital requirement - insurance company	23,259	24,452
Capital requirements for subsidiaries regulated in accordance with CRD IV	2,446	2,458
Total solvency capital requirement	25,705	26,910
Solvency margin with transitional rules	169%	172%
Minimum capital requirement	9,255	9,599
Minimum margin	390%	409%

Cross-sectoral financial group Note

The Storebrand Group has a requirement to report capital adequacy in a multi-sectoral financial group (conglomerate directive). The calculation in accordance with the Solvency II regulations and capital adequacy calculation in accordance with the conglomerate directive give the same primary capital and essentially the same capital requirements.

NOK million	30.09.18	31.12.17
Capital requirements for CRD IV companies	2,678	2,687
Solvency captial requirements for insurance	23,259	24,452
Total capital requirements	25,936	27,138
Net primary capital for companies included in the CRD IV report	2,749	2,929
Net primary capital for insurance	40,647	43,234
Total net primary capital	43,396	46,164
Overfunding	17,460	19,025

Under Solvency II, the capital requirement from the CRD IV companies in the Group is included in accordance with their respective capital requirements. In a multi-sectoral financial group, all the capital requirements of the CRD IV companies are calculated based on their respective applicable requirements, including buffer requirement for the largest company in the Group (Storebrand Bank). This increases the total requirement from the CRD IV companies in relation to what is included in the Solvency II calculation. As at 30 September 2018, the difference amounted to NOK 232 million.

Note 15

14

Information about related parties

Storebrand conducts transactions with related parties as part of its normal business activities. These transactions take place on commercial terms. The terms for transactions with management and related parties are stipulated in notes 24 and 46 in the 2017 annual report.

Storebrand has not carried out any material transactions other than normal business transactions with related parties at the close of the 3rd quarter 2018.

Storebrand ASA Profit and loss account

	Q3		01.01. - 30.09		Full year
(NOK million)	2018	2017	2018	2017	2017
Operating income
Income from investments in subsidiaries			39	37	2,154
Net income and gains from financial instruments:
- bonds and other fixed-income securities	8	8	21	32	36
- financial derivatives/other financial instruments	-2	-1	-6	-2	-4
Other financial income			32	2	2
Operating income	6	7	86	68	2,188
Interest expenses	-15	-14	-44	-54	-69
Other financial expenses	8	-2	38	-9	-62
Operating expenses
Personnel expenses	-10	-25	-33	-48	-41
Amortisation				-1	-1
Other operating expenses	-7	-15	-30	-39	-81
Total operating expenses	-17	-41	-63	-87	-123
Total expenses	-24	-57	-69	-150	-254
Pre-tax profit	-18	-50	17	-82	1,934
Tax	6	13	22	30	-110
Profit for the period	-12	-38	39	-53	1,824

STATEMENT OF TOTAL COMPREHENSIVE INCOME

	Q3		01.01. - 30.09		Full year
(NOK million)	2018	2017	2018	2017	2017
Profit for the period	-12	-38	39	-53	1,824
Other result elements not to be classified to profit/loss
Change in estimate deviation pension					-34
Tax on other comprehensive elements					8
Total other comprehensive income elements					-25
Total comprehensive income	-12	-38	39	-53	1,798

Storebrand ASA Statement of financial position

(NOK million)	30.09.18	30.09.17	31.12.17
Fixed assets
Deferred tax assets	156	266	135
Tangible fixed assets	27	28	28
Shares in subsidiaries and associated companies	18,716	17,100	18,724
Total fixed assets	18,899	17,394	18,886
Current assets
Owed within group			2,207
Other current receivables	11	40
Investments in trading portfolio:
- equities and other units	21	3	3
- bonds and other fixed-income securities	2,305	1,871	1,380
- financial derivatives/other financial instruments	21	29	16
Bank deposits	42	45	53
Total current assets	2,400	1,988	3,659
Total assets	21,299	19,382	22,545
Equity and liabilities
Share capital	2,339	2,250	2,339
Own shares	-2	-5	-5
Share premium reserve	10,521	9,485	10,521
Total paid in equity	12,858	11,729	12,855
Other equity	5,867	5,110	5,793
Total equity	18,725	16,839	18,648
Non-current liabilities
Pension liabilities	176	159	176
Securities issued	2,277	2,282	2,270
Total non-current liabilities	2,453	2,441	2,446
Current liabilities
Debt within group		1	3
Provision for dividend			1,168
Other current liabilities	121	101	280
Total current liabilities	122	102	1,451
Total equity and liabilities	21,299	19,382	22,545

Storebrand ASA Statement of changes in equity

(NOK million)	Share capital 1)	Own shares	Share premium	Other equity	Total equity
Equity at 31. December 2016	2,250	-8	9,485	5,129	16,855
Profit for the period				1,824	1,824
Total other result elements				-25	-25
Total comprehensive income				1,798	1,798
Issue of shares	90		1,037		1,126
Provision for dividend				-1,168	-1,168
Own share bought back 2)		3		44	47
Employee share 2)				-11	-11
Equity at 31. December 2017	2,339	-5	10,521	5,793	18,648
Profit for the period				39	39
Total comprehensive income				39	39
Own share bought back 2)		3		48	50
Employee share 2)				-13	-13
Equity at 30. September 2018	2,339	-2	10,521	5,867	18,725

1) 467 813 982 shares with a nominal value of NOK 5.

2) In 2018, 542 532 shares were sold to our own employees. Holding of own shares 30. September 2018 was 431 140.

2,250	-8	9,485	5,129	16,855
			-53	-53
			-53	-53
	3		44	47
			-11	-11
2,250	-5	9,485	5,110	16,839

Storebrand ASA Statement of cash flow

	01.01 - 30.09
(NOK million)	2018	2017
Cash flow from operational activities
Receipts - interest, commission and fees from customers	30	40
Net receipts/payments - securities at fair value	-950	247
Payments relating to operations	-65	-91
Net receipts/payments - other operational activities	2,247	924
Net cash flow from operational activities	1,262	1,120
Cash flow from investment activities
Net receipts - sale of subsidiaries	33
Net payments - sale/capitalisation of subsidiaries	-131	-2
Net receipts/payments - sale/purchase of property and fixed assets	2	1
Net cash flow from investment activities	-96
Cash flow from financing activities
Payments - repayments of loans		-1,425
Receipts - new loans	1	1,000
Payments - interest on loans	-47	-64
Receipts - sold own shart to employees	37	36
Payments - dividends	-1,168	-695
Net cash flow from financing activities	-1,176	-1,146
Net cash flow for the period	-11	-27
Net movement in cash and cash equivalents	-11	-27
Cash and cash equivalents at start of the period	53	72
Cash and cash equivalents at the end of the period	42	45

Notes to the financial statements Storebrand ASA

Note 01

Accounting policies

The financial statements are presented in accordance with the accounting policies applied in the annual financial statements for 2017. The accounting policies are described in the 2017 annual report. Storebrand ASA does not apply IFRS to the parent company's financial statements.

Note 02

Estimates

In preparing the interim accounts, Storebrand has used assumptions and estimates that affect reported amounts of assets, liabilities, revenues, and costs, and information in the notes to the financial statements. The final values realised may differ from these estimates.

Bond and bank loans

(NOK million)	Interest rate	Currency	Net nominal value	30.09.18	30.09.17	31.12.17
Bond loan 2013/2020 1)	Fixed	NOK	300	323	330	317
Bond loan 2013/2018	Variable	NOK	450	452	452	452
Bond loan 2014/2019	Variable	NOK	500	500	500	500
Bond loan 2017/2020	Variable	NOK	500	501	501	501
Bond loan 2017/2022	Variable	NOK	500	501	500	500
Total 2)				2,277	2,282	2,270

1) Loans with fixed rates are hedged by interest swaps, which are booked at fair value through profit and loss. Changes in values of

loans that can be related to the hedged risk are included in the carrying amount and included in the result.

2) Loans are booked at amortised cost and include earned not due interest.

Signed loan agreements have covenant requirements.

Storebrand ASA has an unused drawing facility for EUR 240 million.

HOVEDKONTOR:

ØVRIGE SELSKAPER I KONSERNET:

Storebrand ASA Professor Kohts vei 9 Postboks 500 1327 Lysaker, Norge Tlf.: 22 31 50 50 www.storebrand.no

Kundesenter: 08880

SPP Livförsäkring AB Vasagatan 10 S-105 39 Stockholm, Sverige Tlf.: +46 8 451 70 00 www.spp.se

Storebrand Livsforsikring AS - filial Sverige Vasagatan 10 S-105 39 Stockholm, Sverige Tlf.: +46 8 700 22 00 www.storebrand.se

Storebrand Kapitalforvaltning AS filial Sverige Vasagatan 10 S-105 39 Stockholm, Sverige Tlf.: +46 8 614 24 00 www.storebrand.se

Storebrand Helseforsikring AS Professor Kohts vei 9 Postboks 464 1327 Lysaker, Norge Tlf.: 22 31 13 30 www.storebrandhelse.no

DKV Hälsa Vasagatan 10 S-105 39 Stockholm, Sverige Tlf.: +46 8 619 62 00 www.dkvhalsa.se

Financial calendar 2019

13th February Results Q4 2018 10th April Annual General Meeting 8th May Results Q1 2019 17th July Results Q2 2019 23rd October Results Q3 2019 February 2020 Results Q4 2019

Investor Relations contacts

Kjetil Ramberg Krøkje	Head of IR	kjetil.r.krokje@storebrand.no	+47 9341 2155
Lars Løddesøl	CFO	lars.loddesol@storebrand.no	+47 2231 5624

Storebrand ASA Professor Kohtsvei 9, P.O. Box 500, N-1327 Lysaker, Norway Telephone +47 22 31 50 50

www.storebrand.com/ir