Pressures confirmed for 2019
Storebrand posted a H1 19 net profit of NOK945m, down 28.1% yoy. Operating profits declined by 21.5% to NOK1,005m. This is the second disappointing quarter for the Norwegian insurer. While lower profitability was expected from the Guaranteed pensions segment (-27.8% in profit before amortisation to NOK460m), the core Savings (non-guaranteed) business was expected to be more resilient. The Insurance segment was hit by a higher combined ratio (89%). The pressure on the bottom line should continue in the next quarters.
12 Jul 19
Complex Q1 19
Contrary to expectations, Storebrand posted lower than expected Q1 19 figures. Profit after tax dropped by 32.1% to NOK494m. All segments showed weaknesses, mainly the Insurance business. The Savings (non-guaranteed) business, which is the future of the insurer’s profitability after the collapse of the traditional products’ portfolio, was also under pressure. In light of this performance, we will revise down our forecasts. The insurer should recover in the coming quarters, but achieving current guided figures would be difficult.
09 May 19
More dividend, again
Storebrand posted positive FY 18 figures but with a modest Q4. The group’s result before amortisation improved by 7.4% yoy to NOK3,158m. The new tax rules allowed it to record a tax income of c. NOK1.4bn in Q4 and propose the distribution of NOK3/share. Savings disappointed but Guaranteed pension saved the performance. To keep solid profitability in the long term, this earnings’ structure needs to change with a higher contribution from the Savings and Insurance segments.
13 Feb 19
The 50% dividend payout is confirmed
Storebrand announced a result before amortisation of NOK853m in Q3 18 (+10.3% yoy) and NOK2,595m ytd (+11.7% yoy). No changes were observed in the earnings structure, with a higher than expected operating earnings from the Guaranteed pension business that was behind the difference with our estimates. The improved capital position with a lower gap with Solvency II ratio without transitional rules are a guarantee for a 50% dividend payout. Our target price will be revised slightly up.
24 Oct 18
Positive earnings momentum
Storebrand posted a H1 18 net profit of NOK1,315m, up 8.4% yoy. Operating profits increased by 24.5% to NOK1,280m. The major contributor to earnings was Guaranteed pensions, but this is unlikely to be the case by the end of the year. The Savings (non-guaranteed) business, despite the slight decline recorded in the Q2 earnings, is the insurer’s locomotive. We appreciate the performance of the Insurance segment and the improved capital position. A payout of 50% should be confirmed.
13 Jul 18
Promising start for a strong dividend at the end of the year
Storebrand announced excellent figures for Q1 18, with a more than 50% jump in the insurer’s bottom line versus the same period in 2017. Compared to our model, the difference concerns the Guaranteed pension business, which outperformed estimates, representing 43% of the result before amortisation. For the moment, the integration of Skagen has led to higher operational costs, but Skagen is expected to contribute significantly to earnings by the end of the year.
25 Apr 18
Storebrand posted a 4% decrease in its operating earnings, but a 12.2% increase in its net profit, thanks to favourable corporate tax movements. The Savings business’s performance was boosted by the integration of SKAGEN’s figures, and no surprises were recorded in the Insurance and Guaranteed pension business lines. The insurer decided to distribute NOK2.1/share, but NOK0.4 of which is a special dividend. A new dividend policy will be implemented with a payout ratio of 50% if the Solvency II ratio exceeds 150%.
07 Feb 18
In acquisition mode
Storebrand announced a better than expected group result before amortisation and longevity of NOK773m in Q3 17 (+14.3% yoy) and NOK2,322m ytd (+16% yoy). The pre-tax profit amounted to NOK2,023m (+19.7% yoy). The group’s performance was sustained by further efficiencies, with a limited increase in the operational costs in Q3 of 1.8% to NOK826m (+5.7% ytd to NOK2,462m) and a resilient financial result (NOK698m ytd). By business line, Savings posted a 33% increase in Q3 operating earnings, confirming the ytd strong positive trend (+17.5% at NOK872m). Unit-Linked premiums reached NOK3,670m (+6.5% yoy) and total reserves stood at NOK157,984m. AuM grew to NOK625.8bn. The lending portfolio in the retail market is developing positively and grew by NOK5.6bn ytd. Insurance grew by 37.2% in Q3 and 33.3% in the 9M to NOK221m and NOK576m, respectively. The combined ratio improved significantly to 85%. Premiums were slightly down by 0.9% to NOK4,474m in Q3. Even the Guaranteed pension is still recording high operating earnings at NOK735m in 9M vs. NOK375m for the same period in 2016. The Storebrand Life Insurance Group’s solvency II margin was 160% with transitional rules. Without them, the capital position is weaker with a solvency II ratio of 150%, but higher than the minimum regulatory level. Storebrand has also announced the acquisition of 90.95% of the share capital (99.9% of the voting rights) of the asset manager SKAGEN. The insurer will pay the selling shareholders a sum of NOK1.6bn for the shares at the time of transaction, of which 75% will be newly issued shares and 25% will be in cash. The cash payment will be financed by the sale of short-term bonds in Storebrand’s parent company’s liquidity portfolio. The transaction is expected to have an immediate 2% negative impact on the solvency margin. The insurer has also acquired Silver insurance, a provider of savings products, for NOK520m. Silver’s 21,000 policies and NOK10bn in pension assets will be transferred to Storebrand. The purchase is financed by the Storebrand Livsforsikring’s portfolio. The guaranteed defined benefit pensions in the acquired portfolio will be converted to defined contributions with investment choice before the takeover.
25 Oct 17
Everything goes, almost, smoothly
Storebrand today announced a group profit after tax of NOK749m for Q2 17, a 5% improvement relative to the same period in 2016. H1 17 earnings reached NOK1,213m, +18% yoy. The group’s results before amortisation and longevity for Q2 was NOK878m vs. NOK788m in Q2 16 (NOK1,549m for H1 17 vs. NOK1,325m in H1 16). These good figures were driven by a resilient Savings (non-guaranteed) business which recorded a 36% growth in underlying profit relative to Q2 16 to NOK319m (+10% to NOK558m in H1 17) and the Guaranteed Pension which recorded a good Q2 with 22% growth in its underlying earnings to NOK290m. Since the beginning of the year, the Guaranteed business has recorded a drop of 95% to NOK491m. The Insurance segment continues its recovery with an increase in underlying earnings of 21% to NOK184m (+31% to NOK355m in H1 17). The Other segment’s result has also contributed positively to the improvement in the insurer’s performance (NOK85m), but less than in Q2 16 (NOK166m). Efficiency was not improved in Q2 17 with a 14% increase in operational cost to NOK805m (+8% yoy to NOK1,636m). The financial result is still resilient and stood at NOK65m (+25% yoy) in Q2 and NOK133m ytd (+34%). The Storebrand Life Insurance Group’s solvency II margin was 163% with transitional rules. Without them, the capital position is weaker with a solvency II ratio of 110%.
18 Jul 17
Promising start of the year
Storebrand today announced a group profit after tax of NOK465m for Q1 17, a 49.5% improvement relative to the same period in 2016. The Q1 result before amortisation amounted to NOK671m, an increase of 24.9% yoy. The best performing segment was Guaranteed pension, which recorded a profit of NOK201m vs. NOK15m a year before. The Savings (non-guaranteed) business showed a pause with a 12% decline in earnings (NOK240m). The Insurance operations were positive with a 42.5% enhancement in Q1 profit to NOK171m. The combined ratio stood at 89% (92% a year before). The Storebrand Life Insurance Group’s solvency II margin was 159% in Q1 17 vs. 157% in December 2016.
27 Apr 17
Storebrand’s Q4 16 net premiums income increased by 3.7% to NOK5,670m, bringing the full-year sales to NOK25,829m, a slight 1.4% increase relative to 2015. The Q4 16 result before amortisation came to NOK912m (vs. NOK-1,101m in the same period in 2015) and NOK2,913m ytd (vs. €-42m in 2015). Operating costs decreased by 16.6% to NOK11,314m but the FY 16 total costs increased by 30.6% to NOK54,772m. Net profit stood at NOK676m in Q4 16, a 15.6% decline but the full-year performance was good with a 55% improvement to NOK2,143m. The group’s solvency margin stood at 170% at the end of 2016. Capital adequacy and core capital adequacy reached 17.7% and 15.7%, respectively. The board proposed a divided of NOK1.55/share.
08 Feb 17
Shareholders will, finally, be remunerated
Storebrand announced a group profit after tax of NOK441m for Q3 16, a significant jump relative to the same period in 2015 (NOK64m). The 9M 16 earnings reached NOK1,466m, +152.3% yoy. The group’s results before amortisation and longevity for Q3 was NOK690m vs. NOK272m in Q3 15 (NOK2,034m for the 9M 16 vs. NOK1,487m in 9M 15). These good figures were driven by the Guaranteed pension, which recorded a new surprisingly good Q3 with huge growth in its underlying earnings to NOK126m. However, since the beginning of the year, this business is still recording a drop of 13.9% to NOK378m. The Savings (non-guaranteed) business posted a decline of 6.8% in underlying profit relative to Q3 16 to NOK246m (+6.3% to NOK766m ytd). Premiums reached NOK3,444m (+7.4% yoy) and total reserves stood at NOK131,571m. AuM grew to NOK570.3bn. The lending portfolio in the retail market is developing positively and grew by NOK5.4bn ytd. The Insurance segment showed a significant 35.8% increase in underlying earnings to NOK163m (-7% to NOK438m in 9M 16), with a combined ratio of 91%. Premiums were up by 5.5% to NOK4,511m in the Q3 16. The Other segment’s result has also contributed to the improvement in the insurer’s performance with a new excellent Q3 16 underlying earnings (NOK453m in the 9M 16). Efficiency was enhanced, with a limited increase in the operational cost in Q3 16 by 5.5% to NOK797m (-2.4% ytd to NOK2,299m) and an excellent financial result (NOK542m ytd). The Storebrand Life Insurance Group’s solvency II margin was 165% with transitional rules. Without them, the capital position is weaker with a solvency II ratio of 131%. Dividends will normally be more than 35% of the group result before amortisation and after tax. A minimum half dividend is expected for 2016. Share buy-backs could also be implemented.
27 Oct 16
The insurer did not miss its targets
Storebrand today announced a group profit after tax of NOK715m for Q2 16, a 177.1% improvement relative to the same period in 2015. The H1 16 earnings reached NOK1,025m, +98.2% yoy. The group’s results before amortisation and longevity for Q2 was NOK798m vs. NOK610m in Q2 15 (NOK1,344m for the H1 16 vs. NOK1,215m in H1 16). These good figures were driven by a resilient Savings (non-guaranteed) business which recorded a modest 1.7% growth in underlying profit relative to Q2 16 to NOK241m (+14.3% to NOK520m in H1 16) and the Guaranteed pension which recorded a surprisingly good Q2 with 29.5% growth in its underlying earnings to NOK237m. However, since the beginning of the year, the Guaranteed business has still recorded a drop of 39.8% to NOK252m. The Insurance segment continues to suffer with a new decrease in underlying earnings of 20.3% to NOK153m (-21.7% to NOK275m in H1 16). The Other segment’s result has also contributed to the improvement in the insurer’s performance with an excellent Q2 16 underlying earnings (NOK297m in the H1 16). Efficiency was improved, with a double-digit decrease in operational cost in Q2 16 to NOK698m (-13% yoy) and a resilient financial result (NOK200m). The Storebrand Life Insurance Group’s solvency II margin was 172% with transitional rules. Without them, the capital position is weaker with a solvency II ratio of 122%.
14 Jul 16
Promising Q1 16
Storebrand today announced a group profit after tax of NOK311m for Q1 16, a 20.5% improvement relative to the same period in 2015. The Q1 result before amortization amounted to NOK546m, an increase of 21.3% year-on-year. However, these good figures were driven by Savings (non-guaranteed) business which recorded 27.9% growth in underlying profit relative to Q1 15 while all other business areas recorded a drop, especially guaranteed pension (NOK15m in Q1 16 vs. NOK236m in Q1 15) and Insurance (NOK122m in Q1 16 vs. NOK159m in Q1 15). For the latter, premium income rose by 9.2% to NOK947m, while the combined ratio stood at 92% (90% a year before). Despite relatively resilient sales (-6.4% to NOK404m) and cost control (-2.1% to NOK271m), guaranteed pensions recorded a weak performance given the fall in interest rates caused by the negative impact on the Swedish business. The Storebrand Life Insurance Group’s solvency II margin was 175% in Q1 16 vs. 168% in December 2015.
27 Apr 16
Shareholders likely to wait until 2016 for the dividend
Storebrand’s Q4 15 net premiums income decreased by 5.3% to NOK5,465m, but the insurer succeeded in ending the year with a slight 0.9% increase to NOK25,220m. The Q4 15 result before amortisation came to NOK-1,087m (vs. a NOK923m in the same period in 2014) and NOK-438m ytd (vs. €2,601m in 2014). If we do not take the impact of reserve strengthening into account, the result would have been NOK275m in Q4 15 and NOK1,044m for the full year. Operating costs reduced by 9.6% in Q4 15 to NOK14,652m, allowing ytd costs to stand at NOK41,947m (-30.8% yoy). Net profit recorded a 13.9% increase in Q4 15 to NOK801m but a 33.7% decline ytd to NOK1,382m. The group’s solvency margin stood at 168% at the end of 2015. Capital adequacy and core capital adequacy reached 14.3% and 11.9%, respectively. At the end of 2015, NOK1.8bn has been allocated to reserves for increased longevity. The board proposed that no dividend should be paid for 2015, but plans to pay a dividend for 2016.
17 Feb 16
A zero-sum game ?
Storebrand announced that it implemented several measures in 4Q 15 aimed at strengthening its Solvency II margin but with a neutral effect on the Group’s profit after tax. The estimated Solvency II margin as of year-end 2015 is about 160% with transition rules (120% without). The Norwich insurer has also changed the interest rate curve used to discount the liabilities in its Swedish neutral effect on net earnings subsidiary SPP to one similar to the interest rate curve used in the pan-European Solvency II regulation. The expected negative accounting effect of this change, combined with other assumption changes, is approximately NOK300m. Another important decision has been taken by the insurer concerning the strengthening of its longevity reserve. In Q3 15, the remaining direct result contribution for this purpose was estimated at NOK1.4bn until 2020. Storebrand has decided to charge the entire amount to the 4Q 15 result, alongside restructuring costs caused by previously-announced staff reductions in Norway and Sweden (NOK100m) and the negative effect of weak disability results (NOK100m). p=. !impact.bmp!
29 Jan 16
Navigating an environment of record low rates
Storebrand’s net premiums income increased by 13% to NOK5,954m in Q3 15, allowing the insurer to make up the backlog recorded in Q1 15. Ytd sales amounted to NOK19,994m, +2.8% yoy. Banking activities' income posted new quarterly and annual decreases to NOK92m (-16.3% year-on-year) and NOK281m (-20.2% year-on-year), respectively. The Q3 15 result before amortisation came to NOK176m (-72.1% relative to the same period in 2014) and NOK1,085m ytd (-48.6% year-on-year). Operating costs reduced by 38.5% in 9M 15 to NOK27,294m. Net profit recorded an 84.3% drop in Q3 15 to NOK59m and a 59% decline ytd to NOK560m. The Storebrand Life Insurance Group’s solvency margin stood at 179% at the end of 9M 15, a reduction of 4% since the beginning of the year. Capital adequacy and core capital adequacy reached 13.6% and 11.6%, respectively. At the end of 9M 15, NOK8.3bn has been allocated to reserves for increased longevity and the remaining required strengthening of reserves is NOK4.1bn.
28 Oct 15
More difficult than expected
Storebrand’s net premiums income increased slightly by 0.8% to NOK5,814m in Q2 15, but sales remained down on a year-on-year basis (-1% at NOK14,040m). Banking activities' income also posted quarterly and annual decreases to NOK95m (-17.3% year-on-year) and NOK188m (-22.6% year-on-year), respectively. The Q2 15 result before amortisation came to NOK459m (-38.8% relative to the same period in 2014) and NOK909m for the full year (-38.4% year-on-year). Operating costs reduced by 21.2% in H1 15 to NOK25,734m. Net profit recorded a 47.9% drop in Q2 15 to NOK258m and a 48.6% decline ytd to NOK517m. The Storebrand Life Insurance Group’s solvency margin stood at 183% at the end of Q2 15, an increase of 8% since the beginning of the year. Capital adequacy and core capital adequacy reached 13.6% and 14.5%, respectively. At the end of H1 15, NOK8.1bn has been allocated to reserves for increased longevity and the remaining required strengthening of reserves is NOK4.3bn.
21 Jul 15