The Road to Nordic Leadership in Life insurance

Transcription

1 The Road to Nordic Leadership in Life insurance Capital Markets Day 12 November 2008 Idar Kreutzer Group CEO Key messages for today Storebrands short-term result negatively affected by the financial turmoil Adequate balance sheet and capital position Continued improvement to core business processes Transformation program Road to Nordic Leadership well underway 2 1

2 2008 a very eventful year Volatilities peaking from already high levels Equity markets down 35-45% Equity indices Rebased 100 = 01 Jan Credit spreads up 3x Spreads and volatilities Rebased 100= Jan /01/ /02/ /04/ /05/ /06/ /08/ /09/ Europe Norway Sweden Credit spreads Implied vols Eurostoxx 3 Source: Bloomberg The financial market turmoil has focused investors on short-term effects Short-term effects (0-6 months) Reduced buffer capital in Norway and Sweden Reduced proportion of assets in riskier asset classes Earnings redirected to retain and build buffers Medium-term effects (6 months-3 years) Return of rational markets and valuations Reduced market volatilities Pension markets showing consistent growth through the cycle 4 2

3 Storebrand balance sheet is adequate and value creation capability resilient RESULT BALANCE SHEET OPERATIONS Group loss: Q3 NOK 1,205 MM, YTD NOK 478 MM Write-down of SPP NOK 2.5 BN Balance sheet items valued at fair value Solvency margin 141% on pro forma basis* Strong market position Premium income growth Realisation of SPP synergies ahead of plan 5 * Following NOK 1 BN capital injection in Storebrand Life in October Storebrand historical strong RoE in Life insurance RoE pre tax, Solvency and Equity Storebrand Life Norway RoE / Equity 30 % 20 % Customer Buffer capital (NOK MM) % % 0-10 % * RoE Buffer capital (ASR+MVAR) Equity proportion in customer portfolios (%) As of Q Norwegian Life operations 6 3

4 Storebrand s objective remains sound Storebrand's objective is to be the leading and most respected institution in the Nordic market for long-term savings and insurance 7 Storebrand Life Insurance Norway - Occupational pensions Policyholders' funds* Corporate customers Employees in pension schemes** 8.6% CAGR NOK133 BN ~ ~ NOK66 BN ~9.000 ~ h *Including paid-up policies, excluding SPP **Including pensioners, excluding SPP 4

5 The Nordic market is strong wealthy and aging population GDP/capita US$ 0 20,000 40,000 60,000 80, ,000 Norw ay Ireland Denmark Sw itzerland Sweden Finland UK Storebrand Nethe rlands Austria key markets Be lgium France Germany Italy Spain Greece Hungary Poland Russ ia Rom ania Turkey Wealth distribution by age segments* (Norway 2007) Aging population increases need for savings and retirement solutions 9 Source: Oliver Wyman analysis * Total privat financial assets. Distributed by age The Nordic market is strong steady pensions growth through economic cycles Growth drivers Regulatory reforms - Anticipated increase in contributions (Norway) - Pension markets increasingly open to competition (Sweden) Occupational pensions less sensitive to market conditions Continued growth in wealthy and 50+ segments Projection of growth per capita, life and pensions savings ($ 000 ) Norway Sweden F F % 33% 19% 29% % of total PFA* per capita 10 Source: OECD, Oliver Wyman research & analysis * PFA = Personal Financial Assets 5

6 Value creation through managing the business model Manufacturing Value creation through lean administration and strong management of assets and risks for our customers NOK 9.0 BN* capital supports our manufacturing factory ~ NOK 1.7 BN** cash flow is generated on an annual basis New business Value creation through next generation product offering, transparent guarantees and customer capture NOK 0.3 BN* capital supports our new business 11 * As of Q3 2008, excluding risk products, Euroben and Nordben, referring to minimum solvency requirements ** Based on 2011 targeted earnings Manufacturing Strong capital position and risk management actions Solvency position as at Q3 08: Storebrand Group Core capital margin Life Group Core capital margin Life Group Solvency margin* Regulatory requirement Solvency capital 7,5% 8,8% 4% 100% Eligible regulatory core capital 141% Risk management in place Equity risk derisking programme in place in Norway and Sweden Introduction of guarantee groups in Sweden - Reduces cross-subsidy - Significant reduction in hedging cost portfolio now more attractive for new business 12 *Pro forma after equity injection in Storebrand Life Insurance 6

7 Manufacturing Achieving scale advantages Example: Cost and income improvements in Storebrand Investments Basis points Q Q Q Q Q Q Q Income Cost 13 Income = Income ex performance fee (12 month rolling) Cost = Total costs ex performance related pay (12 month rolling) New business Improving capital efficiency in corporate pension Number of employees with pension savings Average capital requirement 1,200 6% 6 % 150% capital cover 1,000 5% 800 4% 600 3% F 2010F 2015F 2% 1% 0% 4.0% Defined benefit 1.5% 1.0% Defined contribution The capital requirement for DC is only 25% of that of DB Defined contribution Defined benefit 14 Source: Fafo Report 2008:23 and Oliver Wyman analysis of Solvency regulations, and Storebrand Finance department 7

8 New business Retail market - innovation in fee generating products Distribution innovation e.g. Direct P&C Sales per distribution channel as at Q3 Internet 55% Other 9% Call centre 36% Product innovation e.g. Cancer product Top of mind survey* - cancer insurance providers Others 12% Gjensidige 8% IF 12% Distribution innovation e.g. Worksite marketing # of employees with occupational pensions buying individual products Q Target Product innovation e.g. Health insurance Insured thousand Not familiar with any supplier 39% Storebrand 26% TrygVesta 4% okt.08 # of insured SHB Norw ay # of insured SHB Sw eden 15 *TNS Gallup Sept. 08 Transformation program Five key initiatives underway Road to Nordic Leadership Manufacturing New business RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY COST AND PRODUCTIVITY REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN UTILISE SCALE AND REALISE SYNERGIES 16 8

9 Road to Nordic Leadership Leveraging scale advantage to drive Nordic leadership COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES RISK MITIGATION Growth in market Growth in market share Improve profitability x x Results and value CAPITAL EFFICIENT GROWTH IN NORWAY REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 17 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 18 9

10 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 19 SPP acquisition step to build scale integration is well underway UTILISE SCALE AND REALISE SYNERGIES SPP integration first phase Ongoing 1. Leverage broker relations 2. Leverage methodology for sales organisation 3. Improve SPP s visibility in the market 4. Increase investment returns 5. Win in the Swedish transfer market 6. Leverage skills to accelerate profitability and growth 7. Capture cross-selling opportunities 8. Grow in new markets 20 10

11 Sales Improvement Separation & Integration Asset management SPP integration on target Synergy action plan phase 1 Synergy action plan phase 2 January-October 2008 Q Q Increased sales Improved productivity Strengthened broker relations Lean-pilot projects IT-separation from HB SPP in new organisation New investment strategy Altered risk management Improved fund offer Launch new products Lean in sales Strengthened distribution capacity IT-transition completed Discontinue TSA* Migrate asset management Continue to improve SPP's financial result Phase II fund offering UTILISE SCALE AND REALISE SYNERGIES Implemented In progress Design & implement Synergy capture & Nordic ambition Shared services Nordic corporate customer strategy Corporate-wide IT portfolio and project method Selectively shared IT applications Nordic private strategy Nordic organisation & common culture Nordic brand awareness 21 * Transitional Service Agreements UTILISE SCALE AND REALISE SYNERGIES Realising synergies MNOK Q4 Q4 Q Adjusted target Original target Realised * Tax synergies already achieved Cost synergies realised earlier than expected - Effects from lean, procurement and IT infrastructure Investment return synergies - Improved return and risk management - Reduced hedge costs Income synergies - Sales efforts and customer communication remain high - APE +16 % (+40 % excl Euroben) 22 *Only tax and cost synergies are measured as at Q3. Adjusted targets shown for all synergies. 11

12 UTILISE SCALE AND REALISE SYNERGIES SPP increasing the scale advantage SPP integration is a fundamental step on the Road to Nordic Leadership Synergies of nearly NOK500 MM now achievable Asset management synergies confirm the potential operational leverage Work is ongoing and we will continue to keep analysts updated on progress 23 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 24 12

13 Life insurance: Solid platform for continued value generation Capital Markets Day 12 November 2008 Odd Arild Grefstad Group CFO Agenda Resilient balance sheet Life insurance earnings and value creation Comprehensive cost program with ambitious targets 26 13

14 Agenda Resilient balance sheet Life insurance earnings and value creation Comprehensive cost program with ambitious targets 27 Adequate group capital position Position as at Q3 08 Storebrand group core capital margin Life group core capital margin Life group solvency margin¹ 4% 7,5 8,8 100% Strong de-risking implemented Capital injection in life company All balance sheet items valued at fair value Good liquidity & capital position in Storebrand Bank Regulatory requirement Solvency capital Eligible regulatory core capital Pro forma after equity injection in Storebrand Life Insurance 14

15 Adequate group liquidity structure Maturity structure Holding company (NOK BN) 1,4 1,3 0,75 2H H Bank debt Credit facilty drawn Senior Maturity structure Life group (NOK BN) jun Perpetual Hybrid Tier 1 Upper Tier 2 Lower Tier 2 Comments to Holding co.: Holding company holds NOK1.4bn* in liquidity, plus 75mn facility Up-stream of NOK 0.3 bn expected primo 2009 Repay NOK 1.4 bn 2H09 and keep targeted liquidity Target liquidity satisfied: two years interest and costs Long term ambition to have zero net debt ratio Strong cash generation capacity in subsidiaries 29 Note: Legal maturity structure * After capital injection in Storebrand Life. As at 29 October 2008 De-risked life insurance balance sheet Asset mix Storebrand Life 4 % 4 % 5 % 4 % 15 % 17 % 28 % 32 % 5 % 18 % 19 % 26 % 19 % 5 % Q Q Equity Bonds Money market Hold to maturity Real estate Alpha Other Asset mix SPP 3 % 5 % 1 % 57 % 40 % 75 % 20 % Q4 07 Q3 08 Equity Real estate Fixed income Other Running yield: 4.0 ->5.7% St. dev.: 5.1 ->2.6% Minor adjustments in Q4 Running yield 4.4% Significant adjustments in early Q

16 Insurance buffer capital holding up well Storebrand Life (NOK MM) SPP including Euroben 5,4 2,6 10,2 8,1 Q Q Additional statutory reserves Q Q Conditional bonus Focus on optimal capital allocation going forward Investment return Building buffers Building dividend capacity 31 Agenda Resilient balance sheet Life insurance earnings and value creation Comprehensive cost program with ambitious targets 32 16

17 Life business generates value three ways Traditional profit sharing Guarantees Limited new sales, long-term run off Important back book Cash flow generator Capital intensive Sensitivity to capital market development Fee-based guaranteed business Guarantees Limited new sales, long-term run off Important back book Cash flow generator Capital intensive Stable earnings Fee based unit linked and risk products No guarantees Strong growth and new business Not capital intensive Stable earnings 33 Key pensions portfolios make up >90% of the business Traditional profit sharing Fee-based guaranteed business Fee based Unit Linked and risk products Individual and paid-up policies (NOK 77bn) Defined contribution (SEK 46bn) Defined Benefit (NOK 76bn) Euroben (SEK 9bn) Defined contribution and Unit Linked (NOK 9bn) Unit linked (SEK 26bn) Defined benefit (SEK 36bn) Shareof insurancereserves: 55% 30% 15% 34 17

18 Strong normalised earnings in Norwegian life business (NOK MM) ~550 ~(50) ~300 ~200 ~100 ~ Defined benefit DC and Unit Linked Individual and paid-up policies Risk products Company portfolio Earnings capacity Note: Including result from subsidiaries (excl. SPP). Based on expected business volume and normalised market returns in 2009, ex. Swedish branch of Storebrand Life Profit improvement drivers (NOK MM) ~570 ~50 ~300 ~300 ~250 ~ Defined benefit DC and Unit Linked Individual and paid-up policies Risk products Company portfolio Earnings capacity 2011 Main profit improvement drivers Cost cutting, productivity and growth Administration results Building risk capacity Interest result Profit sharing results 36 Note: Including result from subsidiaries (excl. SPP). Ex. Swedish branch of Storebrand Life. Based on expected business volume and normalised market returns in

19 ILLUSTRATIVE Result sensitivity - Risk management limits downside 2,000 1,500 "2009-levels" 1,000 NOK MM % 1.0 % 2.0 % 3.0 % 4.0 % 5.0 % 6.0 % ,000-1,500-2,000-2,500-3,000 Return equal to guarantee Running yield Expected return 37 Note: Market return is based on 2009 expected asset allocation for each underlying portfolio. On average this involves expected return of 6.2% (4.7% net of building buffers), and running yield of 5.5% (4.6% net of building buffers). Average guarantee level for portfolios with guarantees is 3.5%, and at this point portfolios with guarantees have 3.5% return. "0% return" point means all customer portfolios have 0% return, while company portfolio has 3.5% return. Result to owner in upside market limited by expected priority to build long term buffer capital. ILLUSTRATIVE Result sensitivity - Risk management limits downside "2009-levels" "2010-levels" NOK MM ,0 % 1,0 % 2,0 % 3,0 % 4,0 % 5,0 % 6,0 % Return equal to guarantee Running yield Expected return Note: Market return is based on 2009 expected asset allocation for each underlying portfolio. On average this involves expected return of 6.2% (4.7% net of building buffers), and running yield of 5.5% (4.6% net of building buffers). Average guarantee level for portfolios with guarantees is 3.5%, and at this point portfolios with guarantees have 3.5% return. "0% return" point means all customer portfolios have 0% return, while company portfolio has 3.5% return. Result to owner in upside market limited by expected priority to build long term buffer capital levels if normalised 2009 results (Figures on x-axis refers to 2009 levels). 19

20 DC and Unit Linked Productivity and scale game Sizeable growth Still early days scale business Increased Unit Linked sales expected from 2009 Break-even expected by end of 2010 AuM DC, NOK BN ,2 5,2 1,1 2, M08 09P 10P 11P Key figures (NOK MM) M 08 Insurance reserves hereof DC hereof Unit Linked Premiums (top line) Fees to owner revenue IFRS earnings (9) (61) (44) (80) MCEV (VIF)* n/a n/a Stable Storebrand estimates for * MCEV includes risk products. Estimate as of Q3 08 DB Strong long-term cash generation DB remains strong in public sector Long-term run off and cash generator Guarantee fee, administration result and risk margin to owner 1 Reserves DB private sector Year 1,0 % 2,0 % 3,0 % NOK MM Key figures (NOK MM) Insurance reserves hereof ASRs Premiums (top line) Net transfers* IFRS earnings MCEV (VIF)** M n/a n/a Stable Reserves in Storebrand excl. public sector. Based on different assumptions on transfer rate from DB->DC * Incl. net transfers on paid-up policies, ref. next slide ** Estimate as of Q

21 Individual and paid-up policies - Strong long-term cash generation Growing paid-up business Individual: Up to 35% of result to owner Paid up: Up to 20% of interest result to owner, admin. result to owner Long-term cash generator, Q3 figures hit by markets Key figures 1 Expected return vs. guarantee 8% 6% 4% 2% 0% Guarantee (NOK MM) Sum reserves hereof individual hereof paid up pol. hereof ASRs* Premiums (top line) IFRS earnings MCEV (VIF)** Running yield Expected return M (469) n/a n/a Stable Average for individual and paid-up policies. Storebrand estimates. * At Q3 08 NOK581 MM of the ASRs related to paid up policies ** Estimate as of Q3 08 SPP's earnings capacity 2009 affected by negative short term effects (NOK MM) Administration result ~0 ~50 ~250 ~100 ~400 Risk result Financial result Other Earnings capacity SPP affected short-term by reduced consolidation ratio and weakened administration fees 42 Note: Including result from SPP's subsidiary Euroben. Based on normalised financial markets. 21

22 Improved SPP earnings capacity in 2011 (NOK MM) ~265 ~50 Administration result ~300 ~200 ~800 Risk result Financial result Other Earnings capacity 2011 Main profit improvement drivers Productivity improvements LEAN wave cross border Realising transaction synergies Result effect Administration results Financial risk management Building risk capacity Sales/product development Guarantee groups (DC) Cross border risk management Market development and risk management Improved product ratings Broker relations Finance result Profit sharing levels (finance result) Administration and finance result 43 Note: Including result from SPP's subsidiary Euroben. Based on normalised financial markets. Unit Linked Priority product Growth market Administration result to owner Risk result to owner New subscription (APE, SEK MM) M M 08 Key figures (SEK MM) M 08 Sum reserves Premiums (top line) Fees to owner revenue IFRS earnings MCEV (VIF) NOK MM* n/a Reduced 44 * Estimate as of Q

23 DC (with guarantee) Guarantee groups introduced Risk result to owner Admin. result to owner Profit sharing of finance result - Max 10% to owner - Investment return must be above guaranteed return (average guarantee 3.5%) Guarantee groups with individual asset allocation (Total NOK 38.1 BN) Key figures P250 P300 P520 (SEK MM) Sum reserves hereof cond. bonus Premiums (top line) IFRS earnings* MCEV (VIF) NOK MM** n/a M Stable 45 * IFRS earnings for DC and DB combined ** Estimate as of Q3 DB Strong impact of financial crisis Risk result to owner Administration result to owner Profit sharing of finance result Need to rebuild buffers Key figures (SEK MM) M 08 Sum reserves hereof pensioners hereof paid-up hereof cond. bonus Premiums (top line) IFRS earnings* MCEV (VIF) NOK MM** n/a Reduced 46 * IFRS earnings for DC and DB combined ** Estimate as of Q3. Including Euroben. 23

24 DB need to rebuild buffers Step 1: Interest rate guarantee and consolidation >105% Step 2: Compensation for CPI and profit sharing (depending on return) 100.0% 3.5% 5.0% Profit sharing 10 % 10% 10% 5 % 5% 5% Consolidation beginning of year Interest rate guarantee Strengthening of consolidation > 105 With 105% consolidation With 100% consolidation 0 % 2,0 % 3,5 % 5,0 % 6,5 % 8,0 % 9,5 % 11,0 % 12,5 % 14,0 % Return % Buffers to be rebuilt in order to obtain profit sharing Rebuilding capacity depends on market development 47 Agenda Resilient balance sheet Life insurance earnings and value creation Comprehensive cost program with ambitious targets 48 24

25 Comprehensive cost reduction program Overhead costs Moving HQ Headcount reduction in staff functions Nominal flat overhead costs in planning period Asset management Administration Distribution Lean Leverage building block Migrate to direct Offshoring philosophy channels Centralised Take on SPP asset Corporate and retail procurement management (scale) integration Reduce complexity Lean process Automation IT IT infrastructure IT development Capital efficiency 49 LEAN is key to our programme thus scope of the LEAN programme has been expanded Wave 6 Wave 7 Wave 8 New waves planned Pilots Wave 2 Wave 3 Wave 4 Wave Today s status of the LEAN programme 8 waves completed 44 projects completed involving more than 1,000 employees Achieved 26% increase in overall efficiency 1 and an additional year of LEAN LEAN with extended scope An additional wave will be executed SPP will fully implement LEAN Based on number as of Q3 08 (based on 7 waves) 25

26 Target productivity improvements 1 Storebrand Life adm. result (NOK MM) M SPP adm. result (SEK MM) M Storebrand Investments C/I 70% 60% 50% 40% 30% 20% 10% 0% Banking activities C/I 80% 70% 60% 50% 40% 30% 20% 10% 0% M M Administration result to owner >0 in 2010 (minus NOK 129 in Q308) Note: Investments including real estate investments. Bank excl. real estate operations Summary Adequate capital position Strong earnings capability in life company but short term challenges Active risk management Comprehensive cost program to meet productivity targets in process 52 26

27 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 53 Appendix Storebrand Livsforsikring AS Defined benefit profile aggregat Careful profile Low profile Standard profile 5-year 1 5-year 2 5-year 3 Flex Risk pool etc. Asset allocation Quity 3% 5% 6% 5% 6% 7% 23% 3% 6% Bonds 30% 27% 19% 43% 32% 26% 45% 28% 21% Money market 16% 13% 18% 28% 36% 33% 10% 20% 17% Hold to maturity 29% 31% 31% 0% 0% 0% 0% 28% 30% Real estate 16% 16% 17% 15% 15% 20% 16% 15% 17% Alpha 2% 3% 4% 4% 6% 9% 4% 2% 4% Other 5% 4% 6% 4% 5% 5% 2% 5% 6% Value adjusted return YTD 1,3% -0,7% -2,0% -1,8% -4,0% -5,8% -3,5% 1,2% -1,7% Booked return YTD 3,8% 1,5% 0,3% 0,3% -1,2% -1,9% -1,6% 2,0% 0,5% AuM NOK bn 0,6 11,0 58,2 0,6 0,8 0,0 0,7 4,0 76,0 ASR NOK bn 0,0 0,2 1,1 0,0 0,0 0,0 0,0 n/a 1,3 Interest rate guarantee p.a 3,3% 3,3% 3,5% 3,4% 3,1% 3,3% 3,7% 3,4% 54 27

28 Appendix Storebrand Livsforsikring AS Defined benefit profile aggregat Individual Paid-up policies Guaranteed return account Asset allocation Quity 6% 5% 4% 6% Bonds 21% 21% 14% 41% Money market 17% 14% 23% 34% Hold to maturity 30% 34% 33% 0% Real estate 17% 18% 17% 16% Alpha 4% 4% 5% 4% Other 6% 4% 5% -1% Value adjusted return YTD -1,7% -1,7% -2,7% -1,2% Booked return YTD 0,5% 0,7% -0,4% n/a AuM NOK bn 76,0 27,6 49,5 0,5 ASR NOK bn 1,3 0,7 0,6 n/a Interest rate guarantee p.a 3,4% 3,5% 3,7% 55 Risk management through and post crisis Capital Markets Day 12 November 2008 Frederic Ottesen Group Finance Director 28

29 Topics Structure of financial risks Actively managing the risk profile in 2008 Managing remaining risks in Storebrand and SPP Impact of risk management actions - SPP 57 The life insurance balance sheet key levers for performance & risk 1) ALM mismatching provides upside, but also some risk 2) α out-performance Bonds and cash Equity Real estate PE/ hedge Insurance reserves MtM in Sweden Combination in Norway Client buffers Capital Subordinated loan Assets Liabilities 58 29

30 Framework for balancing the objectives in risk management 1. Policyholder expectations 2. Solvency and new regulations Impact on competitive position Impact on rating and pricing of debt Policyholder returns and guarantees Stress Stress tests tests (e.g. (e.g. traffic traffic light) light) Risk management trade-off Constraints for short-term hedging Accounting, P&L and earnings quality Embedded Embedded value value and and new new business businessvaluevalue Value proposition to shareholders 3. Earnings volatility Qualitative level Quantitative level 4. Shareholder value 59 Result sensitivity - Risk management limits downside Illustration 2,500 1,500 "2009-levels" "2010-levels" NOK MM 500 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% ,500-2, % expected return 6.5% expected return 60 Note: Market return is based on 2009 expected asset allocation for each underlying portfolio. On average this involves expected return of 6.2% (4.7% net of building buffers), and running yield of 5.5% (4.6% net of building buffers). Average guarantee level for portfolios with guarantees is 3.5%, and at this point portfolios with guarantees have 3.5% return. "0% return" point means all customer portfolios have 0% return, while company portfolio has 3.5% return. Result to owner in upside market limited by expected priority to build long term buffer capital levels if normalised 2009 results (Figures on x-axis refers to 2009 levels). 30

31 Structure of financial risks Swedish profit & risk profile Profit sharing contingent on: -Asset return in each of the guarantee groups > guarantee on annual basis - To be expected for P250 and P300 from Asset return in DB > guarantee of 3.5% plus Swedish CPI on annual basis, providing that consolidation is > 105% - Not to be expected for 2009/10 Risks associated with: -Segments without buffer capital -Duration gaps Opportunities associated with: -Alternative assets and equities -Rising interest rates Risk management focused on: -Mitigating equity volatility where there are no buffers -Controlling all other gaps -Duration matching issues 61 Actively managing the risk profile Norwegian equity risk CPPI risk management Example: One profile - Norway 30% Risk Adjusted share of equity Cumulative Buy/Sell 2, % -2,000 10% Reduction is a combination of selling futures short and selling off equity -4,000-6,000 0% -8,000 Q Q Q Q

32 Actively managing the risk profile Swedish equity and interest rate Example: Sweden Defined Contribution portfolio Introduced CPPI Equity exposure actively managed Guarantee Groups Actively reducing basis risk within portfolio New investment policy introduced Duration significantly increased Introduced revised CPPI Q Q Q Q Q Purchase of swaptions Introduced CPPI Reduced exposure to equity markets Duration significantly increased New investment policy introduced Introduce revised CPPI Defined Benefit portfolio Further management of equity risk exposure 63 Actively managing the risk profile guarantee groups implemented Pre GG September 30 th After introduction of GG Allocation per October 1 st All new sales P250 P300 P520 Equities 5 % 24 % 10 % 32 % 5 % 3 % 4 % 18 % Bonds Alternative investments 71 % 58 % 77 % 93 % Discount rate: Expected return: 4.6% 5.7% 4.5% 4.5% 4.5% 6.2% 5.4% 4.8% Volume: SEK41.6 BN SEK7.2 BN SEK18.6 BN SEK15.8 BN 64 Expected return per asset class: Equities 8.4%, Bonds at given discount rate, Alternative investments 8.8% 32

33 Actively managing the risk profile further reducing equity allocation After introduction of GG Allocation per November 3 rd All new sales Equities P250 P300 P % 15 % 5 % 9 % 2 % 2 % Bonds Alternative investments 75 % 86 % 96 % Discount rate: Expected return: 4.0% 4.0% 4.0% 5.1% 4.6% 4.2% 65 Expected return per asset class: Equities 8.4%, Bonds at given discount rate, Alternative investments 8.8% Actively managing the risk profile aligning risks with required returns Guarantee Groups portfolio asset returns 10% 8% 6% 4% 2% 0% -2% -4% -6% P250 P300 P

34 Managing remaining risks Interest rate convexity in Sweden Illustration of interest rate convexity for defined benefit business Earnings result Double guarantee reduces earnings if interest rates suddenly rise or fall Technical provisions appreciate relative to asset value Policyholder fund value remains stable, asset value falls Change in interest rate level 67 Managing remaining risks Interest rate convexity in Sweden Illustration of actions to reduce interest rate convexity Earnings result Financial instruments are used to reduce some of the asset convexity in the results As interest rates gradually shift from their current position the portfolio is dynamically rebalanced Change in interest rate level 68 34

35 Impact of risk management actions SPP relative to Swedish competitors Nordea Trygg 0,7 SEB Nya -1,3 Storebrand SE -2,9 SPP DB SHB Liv -4,8-5,6 SPP DC AMF Alecta Nordea Tillväxt Skandia Liv Swedbank SEB Gamla -9,3-9,4-9,4-10,2-5,8-7,1-7,4 Asset returns LF Liv -11,6 Alecta Optimal -13,5 LF Nya Världen -17,5 % Average: -7,7 69 Note: Return on investments pr Source: Pension Online and Company Reports Key takeaways risk management through and post crisis Storebrand has a strong risk management framework to manage critical trade-offs Focus in risk management is now on capital preservation Significant steps in risk management taken during 2008 (CPPI, guarantee groups, reduced duration gaps) Robust plans for further risk management measures over the next 12 months 70 35

36 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) 1 COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 71 Capturing value in the Norwegian market Capital Markets Day 12 November 2008 Lars Aa. Løddesøl Executive Vice President Life and Pensions Norway CEO Storebrand Livsforsikring AS 36

37 Overview of Norwegian Life solid portfolio built up since 1917 Total reserves NOK165 BN Premium development Group DB* % Q Q Q Q Q Group with investment choice /DC* +28% DB DC Trad life savings Paid-up policies Unit linked Risk products Q Q Q Q Q Q *12 month rolling premium income excl transfers Profitable DB business Strong base driving future business performance Total market reserves private sector NOK BN DB products including paid-up policies will be the dominant product for a long period of time By 2011 Paid-up policies will be the largest pension product P 2009 P 2010 P 2011 P 2012 P 2013 P 2014 P 2015 P 2016 P 2017 P 2018 P 2019 P 2020 DB Paid-up policies DB DC 74 Source: PA Consulting Group,

38 3 key value drivers in the Norwegian market High profitability in existing book Market development New opportunities for existing customers 75 Value in the Norwegian market High profitability in existing book Strong retention of profitable existing business Increasing productivity to improve administration result Market development New opportunities for existing customers 76 38

39 Storebrand Life has a history of providing strong returns RoE pre tax Storebrand Life company 30 % 20 % 10 % 0 % -10 % * As of Q Norwegian Life operations Strong competitive situation and positive transfer balance Net transfer to Storebrand since more than NOK9.6 BN Inflow Outflow 78 39

40 Significant efficiency improvements in pipeline Main levers Lean Outsourcing Automation Procurement Status 30% efficiency improvements in "leaned" departments NOK 10 MM cost reduction in 2009 Selected work processes improved by 90% New group procurement function and policy implemented 3 year objectives 20% improvements in new departments and 5-10% annual improvements going forward NOK 20 MM cost reduction Improved service tools and increased level of customer self service Reducing procurement cost by NOK 40 MM 79 Significant LEAN programme - achievements to date April 2008 September 2008 Increased customers satisfaction Through reduced lead times and improved quality in deliveries % Increased efficiency Example: Processing time per application for paid-up policies has decreased by 70%. Average improvement in excess of 30% Reduced Stable Improved Increased employee satisfaction Example: Employee surveys show improved satisfaction amongst 70% of "leaned" employees 80 40

41 Example: combining LEAN and IT to reduce complexity 90% improvement Automation adding significant value Invested in AAB Automated quotations and acceptance tool for defined contribution plans Input organisation number Check seller ID Input contact info + special agreements 90% reduced process handling time New business: 8 hours 10 minutes From other providers: 10 hours 1 hour Quotations are fully automated Select New business or From other provider Input necessary employee info Select product parameters Seller receives quotation by e- mail or delivers an acceptance 81 Example: Cost savings through offshoring to Lithuanian subsidiary Cost reduction Savings per year No of productive employees Talent pool ,4 mill x No of employees (NOK) Turnover rate and sickness rate very low Steep learning curve and high quality of personnel High education level (93% bachelor, 40% master) High language proficiency Productivity Settlements paid-up policies Apr May Jun Jul Aug Sept No. Of cases Percentage of cases handeled in Vilnius 80 % 60 % 40 % 20 % 0 % 82 41

42 Value in the Norwegian market High profitability in existing book Market development Demographics supporting long-term growth Growth from salary and saving rate increases Regulatory reforms supporting growth Storebrand well positioned to capture this growth New opportunities for existing customers 83 Demographic changes increase need for life and pension savings Life expectancy at birth Number of persons in age group Source: Statistics Norway (SSB) May,

43 Strong salary growth leads to even higher growth in pension savings Increasing salary levels support growth of annual pension premiums Norwegian salary levels * Index P 2008 P 2009 P 2010 P 2011 Salary CAGR : Salary inflation 4,7% Pension premiums Pension premiums: 16,7% 85 Source: Statistics Norway (October 2008), FNH Increased savings rates also expected for the DC customers Norwegian compulsion rates are low compared to international peers Example: Australian superannuation rate has grown significantly since its introduction Internationally compulsory rates have increased over time Only 13% of Storebrands MOP customers are saving more than 2% Norwegian maximum DC saving rates are low compared to e.g. Sweden 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Proposed level 86 Source: IBISWorld Industry Report, Superannuation Funds in Australia: K7412, Howe (1989) 43

44 Principal market growing as predicted on Capital Markets Day 2006 DC introduced Reduced public pension 2000 Mandatory pension established 2006 New life insurance legislation 2012 Personal savings Personal savings and life insurance Personal savings and life insurance Personal savings and life insurance Public pensions Employment Public pension Public pension Public pension Private sector Municipal sector Government sector 87 Strengthened position in a dynamic and growing DC market Market share DC premiums written 60 % 50 % 40 % 30 % 20 % 10 % 0 % 21,4% 23,8% 29,7% 31,0% 31,9% 30,7% 28,9% Q Danic a Gjensidige Nordea SHB Liv Sparebank 1 Storebrand Vital Storebrand market share DC reserves: 33% Total market AuM NOK14 BN including active and paid-up policies Storebrand performance CAGR of reserves 138% - CAGR of premiums 98% 88 Source: FNH 44

45 Strengthened position in the consolidating DB market Market share DB premiums written 60 % 50 % 40 % 30 % 24,5% 19,6% 20,1% 20 % 21,5% 22,4% 21,5% 22,0% 10 % 0 % Q Gjensidige KLP Nordea SHB Liv (Handelsbanken) Sparebank 1 Storebrand Vital Storebrand market share of DB reserves 27% Total market AuM NOK466 BN including private sector, public sector and paid-up policies Storebrand performance CAGR of reserves 10% - CAGR of premiums 10% 89 Source: FNH DB numbers including private sector, public sector and paid-up policies Value in the Norwegian market High profitability in existing book Market development New opportunities for existing customers Broad and satisfied customer base Piloting new distribution channels to capture larger share of customer wallet 90 45

46 Storebrand has a large and satisfied customer base ,000 active DB pensions ,000 active DC pensions More than 340,000 paid up policies Storebrand 91 Direct to customers the Individual Pension Saving (IPS) Annual savings of NOK15,000/year with tax incentive Possibility for increased savings levels over time Storebrand's product released October 2008 Worksite Marketing as an effective distribution platform Estimated total market* : NOK8 BN : NOK20 BN 92 * AuM 46

47 Worksite marketing pilot initial success proves large potential Large client base More than 450,000 employees with occupational pension in Storebrand - turnover, more than 50,000 employees each year Storebrand's objective Increased customer satisfaction among corporate customers Increased sales to employees Effective direct distribution Success factors 17,000 employers agreed to join Worksite marketing program Quality in delivery Continuity # of employees with occupational pensions buying individual products Q Target 93 Summary Strong growth in Norwegian pensions Stable customer base with good profitability Intelligent cost cutting to improve administration results Optimising distribution through direct channels and work site marketing 94 47

48 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 95 Capturing value in the Swedish market Capital Markets Day 12 November 2008 Sarah McPhee Managing Director SPP from 1 December

49 Keys to value capture in the Swedish market The value formula Market growth x Market share Profitability growth x improvement Increased value 97 Market growth Strong underlying growth in the Swedish life insurance market 115,5 114,4 114,0 109,8 140,0 143,0 162,0 167,6 +5.8% Severance pension Q4/01 Q4/02 Q4/03 Q4/04 Q4/05 Q4/06 Q4/07 Q2/08 Key growth drivers Wage enhancements for the employed Aging population Focus on white collar workers Focus on pension capital requirements at retirement Deregulation of collectively agreed occupational pension 98 Source: Swedish Insurance Federation 49

50 Market growth SPP focused on occupational pensions - key driver of future stable growth Total premium income Scenario to 2010 Tax driven growth in one product SEK BN F 2008F 2009F 2010F Occupational pension Other capital insurances Private sickness and accident insurance Private pension Capital pension 99 Scenario for premiums in competitive businesses as reported to the Swedish Insurance Federation Does not include other types of pensions e.g. pension liabilities on/off balance sheets Market growth Improving our distribution position in key market segments Premiums per segment and distribution channel excluding capital pensions, 2006 total Swedish market (approx.) SEK BN 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 56 Mono-competitors 1 Internet 3 Brokers Bank office Own sales force Occupational pension/ Corporate 34 Organisations 2 Internet 3 Brokers Bank office Own sales force 10% 20% 30% 40% 50% 60% Private pension and group insurance 50 PPM Tick the box Bidding processes 70% 80% 90% 100% TTB and PPM ~SEK140 BN SPP has a strong position SPP to strengthen its position 100 Sources: Overview of the companies premiums, allocation based on annual report, press and Arkwright estimates and analysis. Excluding Endowment pensions. Including Pensions, Occ. Pension, Endowment insurance and PPM 1. Alecta, AMF, KPA 2. FL, Salus, LRF, Folksam 3. Avanza, Nordnet and share of others 50

51 Market share growth SPP experiencing positive development in the sales channels New premiums written external partners 1 (APE 2, SEK MM) New premiums written own sales (APE 2, SEK MM) +24% +109% P P High growth in the broker channel during first three quarters of 2008, and sales increased by 143% compared to same time period in 2007 (APE) Estimated 12% market share of new premiums written (APE) through own sales force SPP 16% growth in new premiums written (APE) pr 3Q 2008 compared to 3Q External partners incl. Storebrand SE 2. Annual Premium Equivalent (current premiums + single premiums/10) 3. P2008 shows sales results Q1-Q3 2008, and prognosis Q is based on linear projection of results Jan.2008-Aug.2008 Market share growth SPP advances in the broker channel Question: How would you describe SPP? Observations On the move Active product development A developed cooperation Trustworthy Proper handling of provisions Good product assortment SPP is increasingly recognised as being on the move as a life insurance company Brokers are in general more positive in their statements regarding SPP Strongest improvement in occupational pension insurance - SPP acknowledged as a competent business 102 Source: CMA is an annual survey on the attitude of insurance brokers towards insurance companies 51

52 Market share growth Competitive return on investments Nordea Trygg 0,7 SEB Nya -1,3 Storebrand SE -2,9 SPP DB SHB Liv -4,8-5,6 SPP DC AMF Alecta Nordea Tillväxt Skandia Liv Swedbank SEB Gamla -9,3-9,4-9,4-10,2-5,8-7,1-7,4 Asset returns LF Liv -11,6 Alecta Optimal -13,5 LF Nya Världen -17,5 % Average: -7,7 103 Note: Return on investments pr Source: Pension Online and Company Reports Market share growth Strong established position in PPM market Status today SPP 4 out of top 16 eligible funds 22% share of top 16 managed capital SPP meets customer needs in PPM through its generation funds Customers' choice driven by brand awareness not counseling Increasing competitiveness Strengthened in-house competencies - Experienced investment manager - Improved funds selection - Efficient replacement processes for funds Brand building -New logo - New advertising -Media Continuous innovation and product development Preparing for next generation of products

53 Profitability improvement SPP well positioned for advisory driven sales in key segments The Swedish pensions market 100% SEK165 BN Capital pensions Tick the box SEK15 BN Other PPM Capital pensions Tick the box Other 10 base amounts ~70% PPM 10 base amounts Private pensions (including IPS) Voluntary occupational pensions Private pensions (including IPS) Voluntary occupational pensions SPP has a strong business case and potential in advisory dominated segments Premium Income Fees 105 Sources: Swedish Insurance Federation, PPM, Electum, Pensionsvalet, FORA, Collectum, SPV, insurance companies and Arkwright estimates Profitability improvement SPP has a strong relative cost position compared to smaller players Assets under management and administrative expenses (2007) Administrative expenses as % of assets under management (2007) Administrative expenses in % of assets under management 1 1,2% 1,0% 0,8% 0,6% 0,4% 0,2% LF Liv Folksam Liv KPA Pensionsförsäkring SPP Skandia AMF Alecta Administrative expenses as % of assets under management 1 1,2% 1,0% 0,8% 0,6% 0,4% 0,2% 1,605 MSEK 868 MSEK 2, MSEK MSEK 824 MSEK Real estate Claims management Asset management Insurance operations 1,180 MSEK 691 MSEK 0,0% Assets under management (in thousands) 0,0% LF Liv Folksam Liv Skandia Liv KPA Pensionsf. SPP Alecta AMF 106 Source: Company reports Administrative expenses include administrative expenses in the insurance operations, claims management, asset management and real estate 53

54 Profitability improvement Results from Lean in SPP Broker Support From everybody does everything mentality Calls & mails Broker A Calls & mails Broker B Calls & mails Other Brokers Baseline implementation today (W42) Customer satisfaction 3,7 4,8 (Scale 1-6; 1= not satisfied, 6=very satisfied) Average waiting time (Seconds) Average handling time (Seconds) % -37% -8% to clear roles and responsibilities A Calls ~5 minutes C Complicated inquiries ~20 minutes+ B Mails ~5-20 minutes Service Level (Within 30 seconds) Service Level (Within 180 seconds) # requests/ftes (Pr. month) % +6% +15% Continuous improvement 107 SPP well positioned to capture value in the Swedish market The value formula Market growth x Market share growth x Profitability improvement Well positioned in growing Occupational pensions segment Deregulation of collective agreements Strong demographics Proven results from broker and own channels Traditional portfolio improved by risk management Varied and professional fund offering Strong relative cost position Successful implementation of LEAN philosophy from Storebrand Focus on processes and efficiency bottom line effect

55 Travelling the Road to Nordic Leadership 3 Risk management through and post crisis (Frederic) 6 Growth and value creation in Storebrand Investments (Hans) Manufacturing Road to Nordic Leadership New business 5 Capturing value in the Swedish market (Sarah) RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY 2 Life insurance as a solid platform for continued value generation (Odd Arild) COST AND PRODUCTIVITY UTILISE SCALE AND REALISE SYNERGIES REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN 1 Utilise scale and realise synergies (Idar) 4 Capturing value in the Norwegian market (Lars) 109 Growth and value creation in Storebrand Investments Capital Markets Day 12 November 2008 Hans Aasnæs, Managing Director Storebrand Investments 55

56 Key messages Strong profit growth from 2007 to 2011 Productivity improvement based upon achieving scale advantage through SPP acquisition Manage margin compression through active product portfolio management Focused program to extend client base driving increase in assets under management 111 Strong profit growth 2007 to Profit 2007 Increased income from growth in assets under management Increased total fees from improved margins Increased profit from cost efficiency ~350 Prognosis

57 Strong development in assets under management in a distressed market (NOK BN) ,8 9,7 12, ,6 29,7 26,0 20,3 29,4 30,3 28,0 34,7 14,6 20,0 25,6 27,9 126,6 140,6 142,1 144,1 136, Q Group internal External discretionary Real estate (group internal) Mutual funds 113 Exploiting scale advantage Positive income to cost growth Basis p oints Q Q Q Q Q Q Q Income Cost 114 Income = Income ex performance fee (12 month rolling) Cost = Total costs ex performance related pay (12 month rolling) 57

58 Key value levers to increasing profit in Storebrand Investments The value formula Growth in assets under management x Improving fees x Strong cost control Increased profit Life companies Institutional & Retail market Migration to high margin products in growth areas Strong cost control in core business Storebrand value levers 115 Key value levers to increasing profit in Storebrand Investments The value formula Growth in assets under management x Improving fees x Strong cost control Increased profit Life companies Institutional & Retail market Migration to high margin products in growth areas Strong cost control in core business Storebrand value levers

59 Growth in AuM Life insurance assets strong base to fuel growth in assets under management (NOK BN) ~100 SPP ~60 Growth in assets under management ~385 Conservatively estimated growth in assets under management of 160 billion for Q 2008 P Growth in AuM Extending our institutional and retail client base The long term savings expert Main features Cost leader Differentiator Institutional market & High Net Worth Retail mass market 1. Institutional sales a key focus area 2. Advisory based sales to increase HNWI 3. Direct distribution to retail mass market Specialised Standardised

60 Storebrand strong brand in volatile markets Institutional market & High Net Worth Past years: Changing legal terms FL chapt. 9 Solvency II Basel II High growth in institutional assets High growth in family offices Last 2 months: Financial crisis Significant losses for customers Challenging situation for private pension funds Today s trends: Trust and credibility key The advantage of risk diversification more important Relation based sales Storebrand Investments has experienced great success in relation based sales 119 Focusing the business on core offering Institutional market & High Net Worth Norwegian Stocks Swedish Stocks Index Swedish Bonds Norwegian Bonds Allocation Portfolio management Focusing the core product offering in areas where - Storebrand Investments has a distinct advantage - competence is important for our key customers Competencies in portfolio management more important

61 Offering supplemented with external & internal non-core products Institutional market & High Net Worth Core products Allocation Delphi Specialised products Norwegian Stocks Swedish Stocks Index Portfolio management European Stocks International Bonds Global Energy Stocks Swedish Bonds Infrastructure Norwegian Bonds Private Equity Real Estate Investments External products 121 Leverage institutional strength to extend into High Net Worth market Institutional market & High Net Worth Institutional market Further improving our strong position in institutional asset management Focusing on our core business and being the main asset manager for our costumers HNWI Using our experience and success in institutional market to capture a larger share of the high net worth market

62 Retail market trends moving in Storebrand s favour? Retail mass market Past 5 years: Few formal requirements for financial advisory Alternative savings products popular, low demand for traditional products High gearing Low transparency Last 12 months: Financial crisis MIFID Reduced trust in financial institutions Trends in the retail market today: Increased demand for transparent and simple products Building relationships with costumers more important = Storebrand's Market? 123 Retail mass market Exploiting scale advantage - quality products at competitive prices 340,000 Paid-up policy customers 342,000 Retail customers Direct distribution 381,000 Work site customers* Simple and transparent traditional savings products for mass market Storebrand Investments will succeed in this market by - Learning from SPP's success with Generation funds in Sweden - Exploiting scale advantages to offer quality products at competitive prices - Exploiting cross selling potential in Life insurance business

63 Key value levers to increasing profit in Storebrand Investments The value formula Growth in assets under management x Improving fees x Strong cost control Increased profit Life companies Institutional & Retail market Migration to high margin products in growth areas Strong cost control in core business Storebrand value levers 125 Improving fees Product management Creating customer value by switching to specialised products Allocation Delphi Index European Stocks Volume products Norwegian Stocks Swedish Stocks Portfolio management International Bonds Global Energy Stocks Specialised products Swedish Bonds Infrastructure Norwegian Bonds Private Equity Real Estate Investments

64 Improving fees Strong performance in high margin products Storebrand Norge Fund vs. Index 1 (YTD 2008) 2,50 % 2,00 % 1,50 % 1,00 % Storebrand Verdi Fund vs. Index 1 (YTD 2008) 8,00 % 7,00 % 6,00 % 5,00 % 0,50 % 4,00 % 0,00 % -0,50 % Jan Feb March Apr. May June July Aug. Sept. Oct 3,00 % 2,00 % -1,00 % 1,00 % -1,50 % -2,00 % 0,00 % Jan Feb March Apr. May June July Aug. Sept. Oct AGFIX Fund vs. Index 1 (YTD 2008) 12,00 % 10,00 % 8,00 % 6,00 % 4,00 % 2,00 % 0,00 % Jan Feb March Apr. May June July Aug. Sept ) Net of management fee Key value levers to increasing profit in Storebrand Investments The value formula Growth in assets under management x Improving fees x Strong cost control Increased profit Life companies Institutional & Retail market Migration to high margin products in growth areas Strong cost control in core business Storebrand value levers

65 Strong cost control Scaleable business model creates opportunity to take on larger volumes NOK MM YTD 2008 Transaction volumes Transaction volumes in Storebrand Investments has more than doubled since Annual transaction volumes: 2002: 53,000 YTD 2008: 101,000 Ability to grow cost efficiently creates opportunity even in a distressed market Profit before taxes Transaction volumes 129 Strong cost control High quality building blocks and cost efficient business Allocation Delphi Investment profiles Index European Stocks Norwegian Stocks Swedish Stocks Portfolio management International Bonds Global Energy Stocks Swedish Bonds Infrastructure Norwegian Bonds Private Equity Property Investments Profitability from using the same key building blocks in several products Strong core processes with institutional quality

66 Strong cost control Realising synergies by taking over asset management for SPP Life Annual effect Cost synergies Asset Management M NOK Q Q2 Target 2009 Q Q Q Q Q Q4 Cost synergies from reduced asset management costs in SPP Life Target for annualised cost synergies from taking over asset management set to ~55 million in 2009 and ~65 million in each of the following years 131 Strong cost control Realizing our scale advantage Increasing profitability as assets under management grow NOK MM Basis points -50 Q Q Q Q Q Q Q4 P2008 Q4 P2009 Profit before taxes (NOK MM) Income (bp) Cost (bp) Q4 P2010 Q Stable costs despite growth in volumes Turbulence in the financial markets in 2008 gives an expected set-back in income in the short run 132 Income = Income ex performance fee (12 month rolling) Cost = Total costs ex performance related pay (12 month rolling) 66

67 Strong cost control Storebrand Investments targets 50 % cost income ratio 120 % 100 % Cost income 80 % 60 % 40 % 20 % Target cost income ratio 50 % by % Q Q Q Q Q Q Q4 P2008 Q4 P2009 Q4 P2010 Q Income 1 = Income ex performance fee (12 month rolling) Cost = Total costs ex performance related pay (12 month rolling) 1) Includes net financial income and profit before tax from Storebrand Eiendom (12 months rolling). Summary 138 Profit 2007 Increased income from growth in assets under management Increased total fees from improved margins Increased profit from cost efficiency ~350 Prognosis

68 Capital Markets Day -closing remarks Capital Markets Day 12 November 2008 Idar Kreutzer Group CEO Transformation program Five key initiatives underway Road to Nordic Leadership Manufacturing New business RISK MITIGATION CAPITAL EFFICIENT GROWTH IN NORWAY COST AND PRODUCTIVITY REPOSITIONING, GROWTH & VALUE CREATION IN SWEDEN UTILISE SCALE AND REALISE SYNERGIES

69 Financial targets Target RoE (after tax)* Dividend in % of annual group result after tax* Capital Adequacy Ratio Storebrand Bank Solvency margin Storebrand Life Rating Storebrand Life Goal 15% >35% >10% >150% A Operational targets Administration result for the owner in Storebrand Life Administration result in SPP C/I Storebrand Investments C/I Storebrand Bank >0 >SEK300 MM <50% 60% 137 *Adjusted for amrotisation of SPP immaterial assets Leadership is underpinned by corporate social responsibility Delivering sound financial products in a responsible manner Growing customer awareness Creating new investments opportunities Customers Civil society Shareholders Authorities Employees 33% of students value CR as most important when choosing employer (Universum, 2007) Strong employee support for CR (90% in 2007) AuM worth 4 trillion US$ managed by global investors signing UN Principles for Responsible Investments