important information - storebrand · pdf filegrowth, cash flow and capital efficiency capital...

Important information:

This document may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may be beyond the Storebrand Group’s control. As a result, the Storebrand Group’s actual 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.

2

Growth, cash flow and capital efficiency

Capital Markets Day

9 March 2011

Idar Kreutzer

Group CEO

3

4

Storebrand GroupThe Nordic region’s leading life and pensions provider

Life and PensionsNORWAY (Storebrand Life)

Premiums for own account: 21 NOK bn. Customer reserves: 191 NOK bn. Market share *: ~30 %

SWEDEN (SPP)

Premiums for own account: 7 NOK bn. Customer reserves: 125 NOK bn. Market share *: ~9 %

All numbers as of 31.12.2010

Storebrand Asset Management AuM: 407 NOK bn.

Storebrand Insurance Gross written premiums: 2 NOK bn.

Storebrand Bank Net lending: 34 NOK bn.

* Occupational pensions.

Attractive Nordic macro environment- supported by solid public finances

GDP growth (Real GDP Y/Y change)

Source: IMF (World Economic Outlook Database, October 2010). 1GDP Norway mainland, projections Norges Bank (Monetary Policy Report, October 2010).

Government net debt 2010 (% of GDP)

55

74

79

99

110

91

69

60

59

54

46

0

-13

-41

-152

-6 %

-4 %

-2 %

0 %

2 %

4 %

6 %

2008 2009 2010 2011 2012 2013

Norway Sweden Euro area

Unemployment rates

0 %2 %4 %6 %8 %

10 %12 %

2008 2009 2010 2011 2012 2013

Norway Sweden Euro area

“Scandinavia is quietly emerging as Europe’s own haven in the debt crisis. Underpinned by relatively strong public finances and a

reasonable economic recovery, the Nordic region is outperforming its European neighbours” (Financial Times, 2 June 2010)

1

5

Market dynamics and strategic implications

6

Key market drivers

Market dynamics and strategic implications

7

Key market drivers Clear strategic priorities 2011-2013

Cost leadership and operational excellence

Ambitious and integrated retail strategy

Develop position as Nordic region’s leading occupational

pension provider

Profitability and capital efficiency

Full year

NOK mill. 2010 2009

Fee and administration income 3,861 3,438

Operational cost -2,751 -2,891

Fee and administration result 1,110 547

Risk and insurance 596 466

Holding company and company portfolios

-249 -129

Result before profit sharing and loan losses

1,458 883

Net profit sharing and loan losses 150 362

Group profit 1,608 1,245

Increasing transparency with new reporting format

8

Full year

NOK mill. 2010 2009






-249 -129


1,458 883




9

Highquality earnings

Full year

NOK mill. 2010 2009






-249 -129


1,458 883




10

Profit sharing and loan losses

Highquality earnings

Full year

NOK mill. 2010 2009






-249 -129


1,458 883




11

3 ,861

• Administration income Life and Pensions• Fee for interest rate guarantee• Asset management fees1

• Total income Bank

-2,751

• Administration cost Life and Pension• Operating expenses in Bank and Asset Mngt.

596

• Risk result group pension Life and Pensions• Result Storebrand Insurance (P&C, Health,

Individual and Group Life)

-249• Result holding company• Net return company portfolio Life and Pensions

150• Profit sharing Life and Pensions• Net performance fees Asset Management• Loan losses Bank

1 Excluding performance related fees and costs

A clear ambition to increase result before profit sharing and loan losses – high quality earnings

12

NOK mill.


2010

1,458

13

2006

New insurance legislation Norway

SPP acquisition Growth in AuM Operational

excellence Cost reduction

Key drivers

NOK mill.


2010


277

1,458

Top-line growth Operational

excellence Cost focus Capital efficiency

14

NOK mill.

2006

Key drivers Key drivers

2013Target


2010





277

1,458

>2.5 bn

15

NOK mill.

2006

Key drivers Key drivers

2013Target

~0.6-0.7bn

Net profit sharing and loan losses


2010

150

Total earnings growth

Top-line growth Operational

excellence Cost focus Capital efficiency




277

1,458

>2.5 bn

1,608

~3.2 bn

Nordic integration to the next level

16

True Nordic organisation

Balance sheet management

Product and service Product and service

Defined contribution and Unit link

Storebrand Asset Management

Storebrand Insurance

Storebrand Bank

MarkedSales Marketing Sales Marketing

Nordic organisationIntegrated customer processes

True Nordic organisation

17






Storebrand Bank


Nordic organisationIntegrated customer processes

Integrated customer interface

Utilise potential in customer base -1.7 million individual and 56,000 corporate customers

Automation

Next phase Nordic synergies

Optimise next level sourcing strategy

Integrated balance sheet management and Solvency II adaption

Nordic integration to the next level

Operational efficiency

Cost reductions

18

Lean project

Storebrand Baltic

Synergy realisation

Delta One

1 Result improvement, measured against 2009 levels, for the Norwegian and Swedish life business only includes the administration result (both customer and owner).

Lean project

Process methodology reduces lead time and improves efficiency

75 projects completed, 4 ongoing

More than 520 full time equivalentsreleased

Synergy realisation

Yearly synergies in excess of 400 mill NOK announced in SPP deal

Yearly synergies in excess of 535 mill NOK achieved

Cross border synergies

Delta One

Comprehensive programme introduced to further strengthen results1

MNOK 588 in operational improvements in 2010.

Comprises both cost and income measures

2006

2007

2008

2010

Storebrand Baltic

100% Storebrand owned operational centre in Lithuania

114 full time equivalents

Skilled workers and high productivity

Nordic organisation2011

Achieving operational excellence through multiple initiatives

Nordic organisation

Integrated customer processes

Nordic balance sheet management

Nordic product development within DC and UL

95

96

208

95

96

208

550588

Target Achieved



Defined contribution and unit linked



Storebrand Bank


Proven track record of operational improvements

19

-177 -169

19

-104 -101

84

-200

-150

-100

-50

0

50

100

2008 2009 2010

Adm res to owner LPN Adm res to owner SPP

156 138

218240

333

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010

Profit before tax

0,4 %

0,6 %

0,8 %

1,0 %

1,2 %

2006 2007 2008 2009 2010

Costs/customer funds Norway Costs/customer funds Sweden

Asset Management - significant result improvement NOK mill.

NOK mill.

0,00 %

0,05 %

0,10 %

0,15 %

0,20 %

2006 2007 2008 2009 2010

Revenue/AuM Costs/AuM

Asset Management – increased margins1

Life and Pensions – reduced cost level Life and Pensions – significant resultimprovement

1) Excluding performance related fees and costs.

Capturing growth in the Nordic market

20

Programme: 11:00- 11:45 Sarah McPhee & Morten Unneberg






Storebrand Bank


21

Demographic ageing trend will increase pension savings

Norway – People aged 65+

0 %

10 %

20 %

30 %

0,0

0,5

1,0

1,5

2,0

2000 2025 2050

% of total populationPeople over 65 (mm)

Sweden – People aged 65+

0 %

5 %

10 %

15 %

20 %

25 %

30 %

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2000 2025 2050

Source: Statistics Norway

% of total populationPeople over 65 (mm)

Number of employees per pensioner

1967: 3,9

2003: 2,6

2050: 1,6

648

1,752

2010

1,314

2000 E2015

787

338

E2015

1,255

20102000

Significant growth in key markets

22

2011

General financial savings market General financial savings market

Projected growth in occupational pensions NOK bn (premium reserves)

Source: Econ Pöyry

-

100

200

300

400

500

600

700

800

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Individual Pension Funds

Group Pension Funds

Mutual Funds

Other Securities

Bank Savings

Other2011

Bill

ion

Eu

ro

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Individual Pension Funds

Group Pension Funds

Mutual Funds

Other Securities

Bank Savings

Other

Bill

ion

Eu

ro

1000

900

800

700

600

500

400

300

200

100

Projected growth in occupational pensions NOK bn (premium reserves)

2011

Providing banking products to Life and Pensions customers

23






Storebrand Bank


Storebrand Bank – increased profitability and strategically important products for the Group

158

64

230

E201320102009

E2018 - IRB Corporate

11.7

E2013 -IRB Retail

14.8

2010

21.5

Result targets*:

Estimated RWA with IRB implemented*

* Estimated risk weighted assets based on balance sheet 31.12.2010 and IRB advanced approval with current rules except transition floor

Strategic fit:

High frequency customer interface driving cross sales initiatives

Integration of technological platform with pension solutions

Utilise bank platform for tax efficient savings products in Norway and Sweden

NO

K m

ill

24

NO

K b

n

147%

Target

Capital:

High quality loan portfolio

− 2/3 residential mortgages

Increased capital efficiency

− Implementation of IRB

* IFRS result before tax and amortisation

Nordic synergies and operational excellence

25

Programme: 13:00- 13:45

Hans Aasnæs & Gunnar Rogstad



Defined contribution and unit linked



Storebrand Bank


24

156 138

218240

333

>450

2005 2006 2007 2008 2009 2010 2011 2012 E2013

Continuing profit improvement in Asset Management

Asset gathering

Cost control

Extending value chain

1 Profit before amortisation

26

Profit Asset Management 2005 – E20131

NO

K m

ill

Covering the insurance needs of existing customers through worksite marketing

Retail market Corporate market

Direct distribution and product bundling

Health Property & motorIndividual life &

disabilityGroup life &

workers comp.

27

302 million in premiums1




1 Gross written premiums 2010

Active balance sheet management

28

Programme: 14:15- 15:00

Odd Arild Grefstad & Staffan HansénBalance sheet management





Storebrand Bank


In 2006 Storebrand’s portfolio was primarily guaranteed business

Insurance reserve

VIF*

Premiums

78% 22%

Traditional profitsharing

Fee basedguaranteed

business

Fee based Unit Linked and risk

products

84% 4% 12%

72% 3% 26%

*Value of in-force

Premiums and reserves includes SPP figures from before acquisition in 2007 for comparison.

29

2006

2006

2006

Successfully managed the business towards more capital light products

Insurance reserve

VIF*

Premiums

78% 22%


Fee basedguaranteed

business


products

84% 4% 12%

72% 3% 26%

30

51% 32% 17%

2006

2010

2006

2010 17% 39% 44%

13% 51%36%

2006

2010

*Value of in-force

Premiums and reserves includes SPP figures from before acquisition in 2007 for comparison.

Managing the balance sheet towards capital light products and optimise strategies for each category

31


Fee basedguaranteed

business


products

Long term run off Asset liability matching Reduce volatility

Asset liability matchingWell adopted to Solvency II High quality of earnings Limited new schemes

Well adopted to Solvency IIHigh quality of earnings Strong new sales

Maximise value ofin-force and ensurecapital release

Manage profitablegrowth with strongcash generation

Actively growingprofitable business

Product categories Clear strategiesCharacteristics

32

287

316

42

35

Solidity capital Life and Pension (NOK bn)

1,318

1,860

Customer reserves life business (NOK bn)

+ 41 %

+ 21 %

+ 10 %

Growth

IFRS result

Solidity

Group IFRS result after tax adjusted for amortisation (NOK mill)

Cash, growth and solidity in Storebrand Group

• Double the result within 2013

• Increased earnings quality

Earnings capacity

• Active balance sheet management

• Capital efficient growthCapital

• Competitive

• Predictable

• IncreasingDividend

33

Earnings, capital and dividend

34

Storebrand's objective is to be the leading and most respected institution in the Nordic market for long-term savings and insurance

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