Investor and analyst update. 15 March 2013

Transcription

1 Investor and analyst update 15 March

2 Agenda Our strategy Financial position Commercial position Recap 2

3 Investor and analyst update - Our strategy Odd Arild Grefstad 3

4 The Storebrand Group 100% of investments assessed by sustainability criteria employees corporate customers individuals NOK 450 billion in assets under management yearly customers dialogues 4

5 Solid, profitable and growing business Group result Assets under Management MNOK 500 BNOK Solvency margin % 170 % 170 % 160 % 160 % 164 % 161 % 162 % Customer funds in defined contribution and unit linked BNOK 150 % 140 % % % Storebrand Life Group 2 Total funds under Management 3 Includes customer funds in DC and UL for Storebrand Life Insurance and SPP

6 Sound Nordic macro environment enables growth in pension savings GDP growth 1 Unemployment rates 1 4% 14,0 % 3% 12,0 % 10,0 % 2% 8,0 % 6,0 % 1% 4,0 % 0% -1% E 2014E Norway Sweden Euro area 2,0 % 0,0 % E 2014E Norway Sweden Euro area General government net liabilities OECD Economic Outlook No. 92, December 2012

7 Strong growth in saving and pension market Premiums written in occupational Retail savings Norway pension private sector Norway 1 4 BNOK MNOK Premiums written in occupational pension private sector Sweden 3 BSEK Retail savings Sweden 4 MSEK Unit Linked Guaranteed Mutual funds Stocks and bonds 7 1 FNO's report; market shares and accounting, insurance liabilities 2 Sum reduced with 7 KLP (83 BNOK) 3 Svensk försäkring; statistics on life insurance 4 Statistics Norway and Statistics Sweden, Sector balances households Life insurance savings Bank deposits

8 Future pension market Drivers for long term growth Trends Low interest rate environment Individualisation Demographics www Technology Regulations Transparency 8

9 Low interest rate environment www 4,0 3,5 3,0 2,5 2,0 1,5 Interest level Norwegian swap 10y Swedish swap 10y Bonds at amortized cost Interest rate Average rating 6 AAA 1 5 1,2 4 1,4 3 1, ,8 0 AA 2 Tradedates: Jan Mar 2013 Average last three trades, YTM Average rating in portfolio 9

10 Important regulatory changes www Longevity New tariffs Come in force Reserve strengthening Occupational pension product framework Act proposed Act passed Come in force 3 yr transition Pension certificates w/ investment choice 1 Act proposed Act passed Come in force Insurance & risk coverage Act proposed Act passed Come in force Transition Solvency II Come in force 10 1 Currently paid-up policies with investment choice

11 Longevity reservations under a changing regulatory framework www Longevity New tariffs Come in force Reserve strengthening Occupational pension product framework Act proposed Act passed Come in force 3 yr transition : Surplus returns from group pensions and paid up policies portfolios will be set aside for longevity reservation 2014: New mortality tables comes into force. Start of five year reservation periode 2015: New product legislation comes into force. May affect: - step up plans (longer reservation periods) - more flexible build up on use of buffers 11

12 Longevity - new mortality tables from Norwegian FSA www Mortality tables based on: Finance Norway's proposal for mortality in 2013, plus 12 percent safety margin Drop in mortality corresponding to Statistics Norway "middle alternative", plus 10 percent safety margin High safety margins for increased mortality related to widows and orphans insurance Reservation period of 5 years starting in per cent contribution from the company, including loss of profit sharing from paid-up policies Reservation need and reservation period based on existing rules Source: Press release Storebrand ASA 11 March

13 Longevity - implications for Storebrand www Reservation need and buffer capital BNOK 11.5 Possible result implications No profit sharing in paid-up policies (already part of market consensus) ASR Result effect in DB fee based portfolio of approximately 230 MNOK annually 5.2 Overvalue bonds at amortised cost An annual investment return of ~4.1%, will be sufficient to cover interest rate guarantee and longevity reservation 1.0 MVAR Total reservation need Reserved in 2011 and 2012 To be reserved Available buffer capital Can become available for longevity 13 ASR = additional statutory reserves MVAR = market value adjustment reserve

14 Market impacted by extensive product reform www New legal product framework in Norway Corporate view Individual view Defined contribution Pension certificates Defined benefit Paid-up policies Hybrid Pension certificates with investment choice 1 All new pension premiums in nonguaranteed products Pension rights are continued in pension certificates All guaranteed products available for transfer to nonguaranteed 14 1 Currently paid-up policies with investment choice

15 Increased importance of occupational pension and retail savings www Traditional pension system Born in the 40s Today's pension system Born in the 80s Future pension system Private savings Private savings Private savings Occupational pension Occupational pension Occupational pension National Insurance Scheme National Insurance Scheme National Insurance Scheme 15

16 Transparency is a key factor for increased trust in the financial sector www SRI screening Storebrand Triple Smart The world's 100 most sustainable companies within their sector My pension number Transparent reporting 16

17 Our strategic response to changing market conditions We work hard to reach our vision: Recommended by our customers Managing the balance sheet Developing the business Capital optimization Risk reduction Concepts Employees Corporate relation Managing business without raising new equity capital Product optimization Cost reduction Save for < retirement 17

18 Completed actions as of Q Capital optimization 1,6 BNOK converted from guaranteed to non-guaranteed products Risk reduction Reduced equity allocation in guaranteed portfolios DB public sector close down by 2015 Product optimization Managing business without raising new equity capital Cost reduction Price increases in guaranteed products Introduced new capital light pension solutions Launched a 400 MNOK cost cut program to be completed by 2014 Annual savings of 68 MNOK 18

19 Completed actions so far 2013 Capital optimization Risk reduction 0,8 BNOK converted from guaranteed to nonguaranteed products Product optimization Managing business without raising new equity capital Cost reduction Annual savings of 137 MNOK SPP electable in largest collective pension platform ITP from July 2013 Renegotiated procurement agreements. Annual savings of 35 MNOK from 2014 Split of guaranteed and nonguaranteed business in SPP 19

20 Further actions to reach the target Capitial optimization Risk reduction Increase conversion from guaranteed to non-guaranteed products Optimize group structure Increase duration in guaranteed portfolios Review of property portfolio Product optimization Strategic pricing Customer driven, cost efficient DC product development Managing business without raising new equity capital Cost reduction Organization Guaranteed vs non-guaranteed Asset Management Banking IT re-design 20

21 Our strategic response to changing market conditions We work hard to reach our vision: Recommended by our customers Managing the balance sheet Developing the business Capital optimization Risk reduction Concepts Employees Corporate relation Managing business without raising new equity capital Product optimization Cost reduction Save for < retirement 21

22 Our business logic employees in business 1 How to get businesses to buy occupational pensions and services from us? 22

23 Our business logic new employees each year employees in business new former employees each year retirees and holders holders of pension certificates 1 2 How to get businesses to buy occupational pensions and services from us? How to get employees and former employees to buy individual products from us? 23

24 Investor and analyst update - Financial position Lars Aa. Løddesøl 24

25 A solid and profitable company Results development Earnings per share 1 MNOK Net profit sharing and loan losses Result before profit sharing and loan losses 2.08 Provisions for cost program ,960 1,310 1,612 1, , , ,454 1,570 1, Solvency ratio Storebrand Life Group Solvency ratio Solidity capital MNOK Customer buffers development Customer buffers Norway 4 % of customer funds 3 Customer buffers Sweden 170% 160% 164% 161% 162% % 11.3% 46,860 42, ,109 35,586 35, % 4.6% 3.1% 2.3% 3.3% 10.0% 4.0% 11.9% Earnings per share after tax adjusted for amortisation of intangible assets. 2 Based on changed methodology as noted in stock exchange notification dated 25 June Swedish buffer levels are restated due to sale of Benco to Storebrand Livsforsikring AS. Customer buffers in Benco are BNOK Solidity capital/customer buffers does not include BNOK 4.3 in provisions for future longevity reservations

26 Storebrand Life Group - highlights of MCEV 2012 results Key takeaways -12.4% BNOK 2012 embedded value earnings of -3.0 BNOK MCEV effect of -4.6 BNOK due to new tax regulation as of Storebrand Group MCEV of 54.8 NOK per share (63.3 NOK in 2011)² Opening MCEV 2011¹ New business 2012 Other operating MCEV earnings Economic variances Other non operating variances MCEV 2012 Dividends/ MCEV 2012 Storebrand Closing Storebrand Life adjustments Life 26 ¹ Published MCEV 2011 after restatement (excl. of Euroben) of -233 MNOK and opening adjustments of -206 MNOK ² (MCEV IFRS shareholder capital in other group entities)/number of shares

27 Analysis of changes MCEV 2012 BNOK MCEV SBL Life Group 2011¹ 24,6 Tax -4,6 Expected return New business 1,7 0,4 Reduced interest rates -1,7 Excess investment return 3,0 De-risk and increased buffer capital 2,5 Reduced guarantee portfolio Norway -2,4 Longevity reservation -2,0 Lower lapse 0,3 Week administration and risk results -0,2 Model changes and other 0,2 MCEV SBL Life Group ,8 27 ¹ Published MCEV 2011 after restatement (excl. of Euroben) of -233 MNOK and opening adjustments of -206 MNOK

28 Transformation of business model, growth and operational improvements Traditional profit sharing Fee based guaranteed business Fee based Unit Linked and risk products Insurance reserve % 4% 12% 50% 29% 21% Premiums % 3% 26% 13% 44% 43% VIF % 22% % 9% 110% 28 1 Premiums and reserves includes SPP figures from before acquisition in 2007 for comparison 2 Value of in-force

29 Transformation of business model, growth and operational improvements Insurance reserves % 12% 12% 12% 16% 17% 19% 21% 80 % 60 % 40 % Key takeaways Continuous shift in business from guaranteed to non-guaranteed over the last six years 20 % 0 % Premiums 1 VIF % 80 % 60 % 40 % 20 % 26% 24% 31% 39% 44% 41% 43% 100 % 80 % 60 % 40 % 20 % 0 % 22% 33% 12% 77% 51% 70% 110% 0 % % Traditional profit sharing Fee based guaranteed business Fee based Unit Linked and risk products 29 1 Premiums and reserves includes SPP figures from before acquisition in 2007 for comparison 2 Value of in-force

30 Value of In Force per product group - Storebrand Life Group Fee based unit linked and risk products 11,692 11,430 8,947 MNOK 12,535 Key insights Strong asset and premium growth in non-guaranteed Lower interest rates and increased lapse assumptions reduced value of guaranteed business 2009¹ 2010¹ 2011¹ Guaranteed business 10,381 10,456 8,035 7,488 4,753 5,653 2,346 2, ¹ 2010¹ 2011¹ 2012² Fee based guaranteed business 1,043-2,194-1, ² MNOK Traditional profit sharing De-risk and build-up of capital buffers positively impacts guaranteed business Negative effect in 2012 from inclusion of tax: -3.9 BNOK -0.7 BNOK 7.2 BNOK of tax loss carried forward not included 30 ¹ Euroben excluded ² Numbers incl. tax MCEV is the sum of the group VIF and shareholder surplus for Storebrand Life Group of 10.4 Billion NOK

31 Storebrand Life Group - MCEV sensitivities with extrapolation 2 Interest rate up (+100bp) Interest rate down (-100bp) -24% -19% -12% 9% 7% 7% Equity & property shock (-10%) -12% -8% Equity shock (-10%) -6% -4% Decrease in expenses (10%) 9% 7% Mortality shock - annuity business (-5%) -3% -4% Mortality shock - life business (-5%) 0% 1% -20% SII interest rate 3-18% 1 The 2011 published interest rate sensitivities (up +15% and down -36%) are restated due to model corrections (positive effects from assets were faulty not included in the published calculations) bps parallell shift for the first 10 years (market rates) then MCEV extrapolation method. The 2012 MCEV sensitivity: 100 bps 31 parallell shift throughout the whole period 3 Market rates (swap-10bp) for 10 years, Smith-Wilson extrapolation to 4,2% Ultimate Forward Rate from year 20

32 Potential development in pension reserves without further actions ILLUSTRATION Reserves, BNOK Paid up SBL Trad SBL DB SPP DB SBL DC SPP New Occupational Pension DC SBL UL SPP Total Total reserve Guaranteed Non-guaranteed

33 Ambition to reduce guaranteed business ILLUSTRATION Reserves BNOK 250 Guaranteed starting point Guaranteed with conversion years

34 Ambitions for growth in non-guaranteed business ILLUSTRATION Reserves BNOK Conversion SPP Conversion of paid-ups SBL New Occ Pension savings equals today's fee based level 1%-p increased savings in DC New Occ Pension savings equals today's DC level DC Norway Conversion Savings in new DC/hybrid instead of DB 1%-p increased saving in DC 100 Unit Linked SPP Starting point

35 Shift in the balance ILLUSTRATION Guaranteed starting point Guaranteed after conversion Non-guaranteed starting point Reserves BNOK Non-guaranteed with growth initiatives

36 Shift in the balance ILLUSTRATION Guaranteed starting point Guaranteed after conversion Non-guaranteed starting point Reserves BNOK Non-guaranteed with growth initiatives

37 Revenue management in transistion period ILLUSTRATION Revenue management 1. Maintain revenue from traditional business Price increases Conversion period Reserves BNOK Guaranteed starting point Non-guaranteed starting point 2. Optimize revenue in conversion phase Cost reduction Margin management Increase revenue from new business Sales X-sale Conversion

38 Three ways to measure value creation By traditional segment reporting 12 Bank Insurance Asset Management 6 % 11 % 18 % 36 % 29 % Life Norway SPP Key insight A diversified group with income from several business lines Strong growth in new generation products - maximize value and ensure capital efficiency of in-force guaranteed business Separating value creation in nonguaranteed business and traditional guaranteed business By quality of earnings 23 By risk and business area 2 Holding company and company portfolios Net profit sharing and loan losses Insurance and risk result 18 % 27 % -7 % 48 % Fee and administration result Guaranteed business Other 59 % -3 % 19 % 21 % Non-guaranteed business Insurance and risk 1 Excluding Other 2 Result before amortisation 38 3 Excluding one offs in 2012

39 From guaranteed to non-guaranteed savings Premium income Storebrand Life Insurance MNOK SBL Share of reserve distributed by age of policy-holder 5,0 % Non-guaranteed Guaranteed 4,0 % 3,0 % 2,0 % 0 Guaranteed Non-guaranteed 1,0 % ,0 % Premium income SPP Life Insurance MSEK SPP 6,0 % Non-guaranteed Guaranteed 5,0 % ,0 % ,0 % 2,0 % 0 Guaranteed Non-guaranteed ,0 % 0,0 %

40 Attractive and changing market for insurance and risk Customers & Market Key market drivers Increased market focus on pension and the need for individual saving and risk coverage Fast-changing customer need and buying behaviors New legislation on disability pensions supporting the "welfare-to-work" policy Claims ratio (%) Cost ratio (%) * Claims ratio (%) -8 %-p * Cost ratio (%) Primary source: Finance Norway (FNO) market statistics as of , all land-based insurance (traditional property and casualty product lines) 40

41 Storebrand Group by quality of earnings MNOK Fee and administration income Operating cost Fee and administration result Risk and insurance Holding company and company portfolios Provision for cost program and discontinued business Result before profit sharing and loan losses Net profit sharing and loans losses Group profit Amortisation and write-downs intangible assets Group pre-tax profit/loss

42 Storebrand Group by risk and business area 2012 MNOK Non-guaranteed Savings¹ Insurance & risk Guaranteed Savings (Life and pensions) Other Total Fee and administration income Risk result life & pension Insurance premiums f.o.a Claims f.o.a Operational cost Financial result Result before profit sharing and loan losses Net profit sharing and loan losses Group result before amortisation ¹Including retail banking and institutional asset mgmt

43 Savings (non-guaranteed) Key segment components Key value drivers 2012 MNOK DC & UL (Nor) Retail bank(nor) AM 1 (total) UL (Swe) Sum Strong market position Fee- & adm income Operational cost Financial result Result before profit sharing and loan losses Net profit sharing and loan losses Group result before amortisation Stable growth in reserves >30% DC market share Key figures Non-guaranteed reserves 64 BNOK 2012 MNOK DC & UL (Nor) Retail bank(nor) AM 1 (total) UL SPP (Swe) Sum Premiums SBL Premium growth % % 14 % AuM (bn) n/a SPP AuM growth % 14 % 7 % 14 % n/a Asset Manager Note: Retail banking savings in AuM figure

44 Insurance & Risk Key segment components Result 2012 NOK mill Premium income foa. Retail insur 1 Group insur 2 DC risk insur 3 Sum Claims costs foa Operational cost Financial income Operating result Key value drivers Profitable growth - sustaining strong renewal rates Gross written premiums % MNOK Retail insurance Group insurance ITP risk insurance Key figures Result 2012 NOK mill Retail insur 1 Group insur 2 DC risk insur 3 Sum Claims ratio 59 % 77 % 82 % 71 % Cost ratio 23 % 16 % 18 % 19 % Combined ratio 82 % 93 % 100 % 90 % Written premiums Growth 1 year 12 % 12 % 20 % 13 % - Growth 3 years 45 % 26 % 34 % 35 % Best in risk and high cost efficiency Combined ratio, % 98% 94% 94% 90% Claims ratio 73% 75% 76% Cost ratio 71% 25% 19% 18% 19% Individual life & disability, property and motor insurance 2 Group disability, workers comp. and health insurance (consolidated by 50% due to joint venture with Munich Health) 3 DC risk result Norwegian line of business

45 Savings guaranteed (traditional pensions) 2012 MNOK Key segment components Paid-up (Nor) DB (Nor) Individual (Nor) SPP Sum Fee- & adm income Risk res. life & pension Operational cost Result before profit sharing and loan losses Net profit sharing and loan losses Group result before amortisation Key value drivers Stable fee income De-risking of investment portfolios Mature portfolio natural reduction Conversion actions Group net transfer out of guaranteed products MNOK Key figures MNOK Paid-up (Nor) DB (Nor) Individual (Nor) SPP (Swe) Sum Premiums Premium growth % 0 % -35 % -8 % -4 % AuM (bn) AuM growth % 5 % -11 % -0,1 % 4 % Sep Oct Nov Dec Jan Feb SPP SBL 45

46 Other Key segment components 2012 Commersial Holding & MNOK banking company capital Sum Fee- & adm income Operational cost Financial result Finance result Storebrand ASA Investment res. comp. capital SBL Investment res. comp. capital SPP Baltic 6 6 Result before profit sharing and loan losses Net profit sharing and loan losses 7-7 Group result before amortisation MNOK Key figures Commercial banking Holding & company capital Sum AuM (bn) 12 AuM growth % n/a Key value drivers Niche commercial lending with improving margins Refinancing of subordinated debt Optimal capital structure Further reduction in holding company cost Company portfolio SBL Company portfolio SPP Storebrand ASA Investment portfolio 8.6 BNOK 7.4 BNOK 1.8 BNOK Subordinated loan 6.6 BNOK BNOK Investment strategy Short term fixed Short term fixed Short term fixed income securities income securities income securities 46

47 Summary Key Takeaways A solid and profitable company in a growing industry Industry going through transition phase in terms of products, guarantees and regulations Storebrand has implemented a number of actions to manage transition and create a competitive platform for the future Increased transparency in reporting, based on value drivers Future Reporting Revised operational reporting in place by Q

48 Investor and analyst update - Commercial position Norway Robin Kamark 48

49 Attractive growing pension market in Norway Assets under Management in private sector Defined contribution Pension capital certificates (from DC) Defined benefit Paid-up policies (from DB) BNOK Market characteristics 110,000 companies with occupational pension in private sector 20 pension providers, of which 10 with assets above 1 BNOK Growth in defined contribution Switch to individualised pension rights Q3 49 Source: FNO market share life insurance insurance reserves (table 3b) 1 In 2000, market statistics included both public and private sector pensions. Figures reflect total market excluding KLP (with almost exclusively public sector pensions)

50 Clear market shift towards defined contribution Individuals covered by occupational pensions in private sector Defined contribution Defined benefit AuM defined contribution Storebrand Pension capital certificates Defined contribution # in thousands 2011 BNOK Trends Private occupational pensions mandatory from 2006 Rapid growth in annual premiums and assets under management Continued reduction of individuals with a defined benefit pension plan Many companies have chosen to close the defined benefit plan for new employees, while existing employees are kept on it. New employees get a defined contribution plan 50 Source: FNO, Number of policies in private occupational pensions (table 4.1), Storebrand

51 Proposed new pension product provides a significant growth opportunity Annual pension savings as a % of salary Current defined contribution regulations Annual pension savings as a % of salary Proposed new pension product (replacing defined benefit) 2-5% 2-8% 18,1% 2-8% 18,1% 2-26,1% (7,1G 2 ) (12G) Salary (7,1G) (12G) Salary Covered by public pension system 1 Occupational pension products 51 1 Employees pay 18,1% pension tax on all income 2 "G" is used in Norway as a basic unit for measuring pensions and 1G=82.122

52 Increased pension savings provide a significant growth opportunity Distribution of defined contribution premiums in Storebrand as a % of salary Contracts 57% 8% 25% 10% Growth opportunities 1 percentage point increase in average premiums as a % of salary = 1 BNOK in additional premiums Individuals 38% 25% 15% 22% Proposed increase in both minimum and maximum rates as a % of salary Annual premiums 16% 21% Minimum savings (2+2%) Low savings (<4 %) 20% 43% High savings (>4%) Maximum savings (5+8%) Conversion from defined benefit to defined contribution with high saving rates 52 Source: Storebrand

53 Growing savings market Retail savings * Norway BNOK Key insights 65 Increasing awareness of need for personal savings Customers view saving for retirement as increasingly important Bank savings important, also for retirement savings Households responding to "Why do you save?"** (several responses possible) Mutual funds Stocks and bonds Life insurance savings Bank deposits Safety for me and my family Holidays and vacation Increase my pensions Home 17 Purchase a good in future 15 Longterm savings 7 Education 5 Other 53 Source: * Statistics Norway, Sector balances households ** Customer research in 2012 by E24, N=5452

54 Leveraging a strong market position Value drivers Strategic position Top line growth Lower unit costs Capital relief Save for retirement Brand preference 54

55 Capitalising on growth opportunities with a focused strategy 1. Attractive market 3. Worksite distribution B2B2C 2. Strong market position Market and customer concepts Employees Corporate relation 1 Save for retirement Attractive concepts 55

56 Storebrand is the market leader in the defined contribution market Market position Market share defined contribution* (private sector) Market share defined benefit** (private sector) % 30 30% Q Q3 Storebrand Sparebank 1 KLP DNB Sparebank 1 DNB Gjensidige SHB Liv Storebrand Others Nordea Danica Frende Nordea 56 Source: * FNO. Gross premiums defined contribution with and without investment choice ** FNO. Gross premiums defined benefit private sector

57 Attractive value proposition to corporate customers Market position Customer satisfaction/loyalty Success factors Storebrand Competitor Competitor Competitor 3 Customer satisfaction Loyalty 69 Competitor Competitor 5 Excellent customer service Excess pension investment returns Proactive customer counselling regarding new occupational pension products Return on pension portfolios since start-up* Storebrand Return on pension portfolios 2012* Storebrand Index 4,9 % 4,3 % 5,4 % 4,8 % 5,4 % Index 4,9 % 7,7 % 6,3 % 11,6 % 10,4 % 12,9 % 12,6 % Low risk portfolio Balanced portfolio High risk portfolio Low risk portfolio Balanced portfolio High risk portfolio 57 Source: Storebrand * Annual geometric average return excluding fees. Return from portfolio start March 2004 through end 2012.

58 Leveraging the corporate market place B2B2C Worksite distribution new employees annually Corporates 30% Market Share DC new former employees annually Employees Storebrand concepts Retirees and holders of pension certificates "Save for life" "House and Home" "Storebrand Pluss" % % + additional offerings Individuals of which retail customers Individuals of which retail customers Products Pension Asset mgmt. Insurance Bank 58

59 Multi-channel distribution approach across corporate and retail markets Worksite distribution Corporate sales: 1:1 and phone Market leader in corporate sector strong position in retail market Customers receive same information and experience across all channels Town hall meetings Employee channels Mass comm. Purchase 1:1 dialogue 1:1 advice Customer selects where to buy Web Call centre Develop Advisory 59

60 Customers prefer digital service 90% of the population use internet visitors at storebrand.no and spp.se in 2012 Worksite distribution 50% of the population have BankID 30% 20% 10% 0% Share of traffic from a mobile platform 1 Jan Des Storebrand.no

61 Storebrand's future is digital Worksite distribution 61

62 Systematic customer acquisition and retention to achieve growth objectives - Examples - Worksite distribution CRM activities Customer response 35 Tailored response Smart prospecting Smart activities through multi-channel individual customer needs surveys responses with detailed family and financial information Improved targeting being developed customer requests to be contacted, 35 per cent has purchased a product Establishing new sales capacity to follow-up sales leads WEB 62 Smart customer retention (NPS) Systematic customer feedback process using Net Promoter Score (NPS) methodology Appx text messages sent, answered, has scored us level 9 and 10 Follow-up in-depth interviews with Improvement initiatives implemented based on customer feedback

63 Developing attractive customer value propositions Customer concepts What is my number? New communication concept tailored to individualisation Storebrand Triple Smart Realising customer value from sustainability strengths Lifecycle portfolio Investment profile tailored to life stage Storebrand Pluss Concept targeted towards CEOs in SMEs with occupational pension Adaption to mobile Solutions adapted for mobile platforms Extra Pension Flexible individual pension savings utilising corporate products 63

64 Systematic approach to transfer customers from guaranteed products Accumulated net transfer from individual product with guarantee 402 Sep 752 Oct 1,086 Nov 1,330 Dec Paid-up policies age distribution (70 BNOK) 1,553 Jan MNOK 1,672 Feb 66 and younger 67 and older Key insights 15 BNOK currently open for transfer out of guaranteed products Systematic approach has yielded 52 per cent transfer out from one individual product with guarantee Additionally 70 BNOK will be opened with new law for paidup policies with investment choice ~70 per cent of reserves with individuals below 67 years ~50 per cent of reserves with individuals below 60 years Customer concepts

65 Storebrand will tailor transfer message based on a customer value proposition Customer concepts Customer segment example* Pension reserves BNOK 1,8 8,1 23,3 New estimated pension Value of existing paid-up policy 100% 110% 130% Customer advice Advice to keep paid-up policy Present possibility, neutral advice Active advice to transfer to paid-up policy with investment choice Approach ~33 BNOK identified as most likely to be transferred Age Size of paid-up policy Advice based on sound criteria Active advice with 30 per cent increase in expected pension Estimated investment returns based on industry standards All fees included in calculation 65 * Segment largely defined as individuals between 24 and 66 years, showing the reserves that can be transferred (i.e. excluding reserves covering disability pensions etc.)

66 Strategic actions in 2012 provides early indicators of success Net customer growth individuals # thousands Customer satisfaction through corporate relation * Number of new customers (net) ** Customer satisfaction among individuals with occupational pensions in Storebrand

67 What are our targets? Leading in "save for retirement" within 2016 Double digit (%) annual customer growth, increasing Improved top line growth from 2014 and onwards Reduced customer acquisition and customer service cost 15 BNOK in transfer out from paid-up policies 67

68 Investor and analyst update - Commercial position Sweden Sarah McPhee 68

69 The individualised Swedish pension market - B2B distribution: Retail logic 1 2 Employer chooses Individual chooses 11,8 Retail Pensions X One provider Corporate Pensions One provider X 60,0 Premiums 2012 (BSEK) SMEs External partners Large Enterprises Several providers One provider Tick-the-box (Unionized pensions) 48,6 ITP SAF-LO KAP-KL PA X One provider 76% of the premiums in 2012 were decided by individuals 69

70 Trends in the Swedish pension market SPP Market Share Retail Pensions Corporate Pensions Tick-the-box New Sales APE Premiums Written 3,6% 4,6% 2nd 12,2% largest 10,2% 2,2% 1% Total Market 2012 (BSEK): 12,5 120,4 5th largest Trends SPP is a significant provider of Corporate Pensions Corporate Pensions are moving from Guaranteed towards Unit Linked Unit Linked premiums grow at a faster pace than Guaranteed premiums Unit Linked premiums are robust in turbulent financial markets Unit Linked Premiums Written 1 Guaranteed Premiums Written , ,3 45,7 41,9 4,0 4,1 4,9 40 3, ,3 24,8 26,5 27, ,0 16,5 15,1 16,4 17, BSEK ,6 59,3 55, ,9 55,3 5,4 5,9 6,0 50 5,7 5, ,6 27,7 31,7 30,8 28, ,3 5,8 28, ,7 22,2 24, ,7 18,8 0 1,7 2,3 5,6 5,8 6, BSEK Tick-the-box Corporate Pensions Retail Pensions Tick-the-box (TTB) Corporate Pensions TTB Obligatory Guaranteed Retail Pensions 70 APE = Annualized Premium Equivalent 1 Svensk Försäkring, February 2013

71 SPP increasing market share Total Market 1 Unit Linked 1 30% 30% 25% 20% Skandia 25% 20% SEB Trygg Liv Länsförsäkringar 15% Länsförsäkringar 15% Skandia 10% SEB Trygg Liv SPP 10% SPP 5% 5% 0% SPP Skandia Länsförsäkringar SEB Trygg Liv Swedbank AMF Folksam-KPA Handelsbanken Danica 0% SPP Skandia Länsförsäkringar SEB Trygg Liv Swedbank AMF Folksam-KPA Handelsbanken Danica 71 1 Svensk Försäkring, February 2013

72 Strong trend for SPP towards unit linked Premiums Written MSEK Trends Guaranteed Unit Linked Growth in Unit Linked premiums exceeds market growth Natural outflow of Guaranteed assets Net Flow of Assets 1 MSEK Unit Linked Guaranteed Share of Guaranteed Reserves by Age 6% 5% 4% 3% 2% 1% 0% Unit Linked Guaranteed 72 1 Net flow of Assets: premiums written less claim payments and transfers

73 A complete savings platform with unique selling points Unit Linked Fund Selection Diversification The best in each category Always an inexpensive alternative SPP Spar - A new savings platform Tax shielded investment savings accounts Custodial accounts SPP fund selection concepts Builds customer loyalty The best customer service center SPP Funds Index tracking equity funds Actively managed fixed income funds Sustainable investment strategy Competitive fees Simplicity "SPP 1-2-3" Self-selection Managed saving profiles Lifecycle portfolio "SparaSäkra" Sustainable Investments Overview & Insight 73

74 How we succeed with corporates Overview, Insight & Simplicity Internet services - private and corporate Responsive design Interaction with customer service Retirement & Long-term Savings Insurance Solutions Pension Expertise & Advice Pension schemes Private savings Tax-shielded savings Injury Illness Health Life Administration Consulting SRI screening Expatriate 74

75 Our primary market for retail are individuals with an occupational pension relation to SPP ~ new employees annually Businesses ~ new former employees annually Employees with active pension savings SPP Concepts SME 5/10 Investment Savings Account Retirees and holders of paid up policies Individuals 15% Retail Pensions SPP Expatriate Executive Health Individuals 3% Retail Pensions Retirement & Long-term Savings Insurance Solutions Pension Expertise & Advice 75

76 Developing attractive customer concepts Investment Savings Account Tax-shielded savings platform for mutual funds, stocks and bonds SPP Global Topp 100 Mutual fund investing in the world's 100 most sustainable companies Lifecycle Portfolio Solution to reduce individual's equity exposure before retirement SME 5/10 Digital distribution for SMEs Adaption to Mobile Responsive internet GUI adapted to tablets and smartphones Me, Myself & I Communication concept to activate individuals 76

77 Insurance capital Conversion to products without guarantees - Our value proposition 1 Capture value in conditional bonuses 3 Transparency A rise in interest rates lowers conditional bonuses t1 Guaranteed Conditional bonus t2 2 Equity exposure 250% 200% 150% Equities Bonds Bills 100% 50% 0% Source: Bloomberg 77

78 Conversion to products without guarantees Cumulative Conversion from Guaranteed MSEK Trends SPP offers an attractive Unit Linked alternative to Guaranteed pensions for individuals. By engaging in dialogues with individuals regarding their pensions, we are able to activate them

79 What are our targets? Leading in "save for retirement" within 2016 Increase customer loyalty 20% market share of Corporate Pension new sales in Unit Linked in 2016 Double digit sales growth in Unit Linked 79

80 Investor and analyst update - Recap Odd Arild Grefstad 80

81 Financial targets Storebrand RoE* >10 % Annual dividend payout ratio* >35 % Solvency (I) Life Group >150 % Rating Life Insurance A level * Profit after tax before amortisation 81

82 Shift in the balance ILLUSTRATION Guaranteed starting point Non-guaranteed starting point Reserves BNOK

83 Shift in the balance ILLUSTRATION Guaranteed starting point Guaranteed after conversion Reserves BNOK Non-guaranteed starting point Managing business without raising new equity capital

84 Shift in the balance ILLUSTRATION Guaranteed starting point Guaranteed after conversion Non-guaranteed starting point Reserves BNOK Non-guaranteed with growth initiatives 350 Save for < retirement

85 Our strategic response to changing market conditions We work hard to reach our vision: Recommended by our customers Managing the balance sheet Developing the business Capital optimization Risk reduction Concepts Employees Corporate relation Managing business without raising new equity capital Product optimization Cost reduction Save for < retirement 85

86 We work hard to reach our vison: Recommended by our customers 86