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STB reported a Q4 group profit of NOK 947m, 24%/19% below our estimate and consensus respectively. The miss was primarily driven by higher opex and slightly lower margins in the savings segment as well as a surprisingly weak insurance result in the quarter. We had already lowered our insurance estimates for FY24 ahead of the report, but lower them another 24% now as it will take some time for pricing measures to improve the situation. We are however fairly confident that STB will get closer to its 92% target for combined ratio in 2025 and have made minimal changes there. The FY23 DPS was relatively in line with estimates and combined with a continued pace of NOK 1.5bn in annual buybacks implies a ~7.8% total yield with further y/y growth from here. As such we still see an attractive medium- to long-term equity case in STB, but in the shorter term we don’t see any real triggers for a further re-rating. With estimates down 2-3% on the back of the report we lower our TP to NOK 101 (104) and reiterate our Hold recommendation.
STOREBRAND Storebrand ASA
Adj. PTP +1% ahead of ABGSCe, reported -22%. Adj. EPS'24e-25 up 1-2% on higher financials & AUM growth. Three-quarters of market cap to be distributed to shareholders.
Group profit NOK 947m vs ARCe/Cons 1,238m/1,169m, Solvency 192%Miss within Savings and Insurance, net profit in line due to tax incomeDPS NOK 4.10 vs ARCe/Cons 4.25/4.05, announced NOK 400m buybacksReport on the weak side, expect share to underperform today
Q4e: result before amortisation of NOK 1,170m and solvency ~199%. Estimates up and solvency down from changing rate curve. Expectations of restart of share buyback program a key focus - BUY.
We’ve lowered our FY24-25 estimates by 2-3% ahead of Q4 reporting, mainly due to softer margin guidance for the UL segment than expected at the December CMD. For Q4 we expect seasonally stronger results from the savings segment and good financial returns in the guaranteed segment and company portfolio, but see a weak result from the insurance segment in both Q4/23 and Q1/24. Elsewhere the CMD held few surprises as the NOK 5.0bn profit target for 2025 was relatively in line with expectations, but it did not imply any further upside to our estimates. We expect STB to propose a NOK 4.25 DPS for FY23 and keep up the current pace of NOK 1.5bn in annual buybacks through 2024/2025. Combined with good underlying growth it should continue to support an attractive long-term equity case, but as the share is now trading close to our 12-month TP of NOK 104 (105) we downgrade to Hold (Buy).
NOK 5bn group before amortisation, profit guidance by '25e up 42% vs. '23e. We trim 4-6% on softer profit sharing guiding and lower SBB. A second opportunity to BUY the winner of high interest rates.
ROE >14% and group profit NOK 5bn by '25e in line with consensus. Capital distribution, increasing DPS and NOK 1.5bn share BB (ann). Cons. est. rev minor; stock down 0 to 2% as decent ahead of the day.
Targets a group profit of NOK 5bn in 2025 and a >14% ROEDividend policy maintained, buyback ambition lifted to NOK 12bn (10bn)2025 target already reflected in consensus, so expect limited estimate impactLargely as expected, likely not enough to lift the shares today
STB will host a virtual CMD on Wednesday 13 DecemberWe expect a new nominal profit target and an updated ROE target.... And also believe STB should add a third leg to its dividend policyShould be a positive event, but recent strong performance sets a high bar
Expect an operating target and update on capital... but more importantly, details to on how to calculate profit sharing. We are well ahead of consensus on earnings and distribution: BUY.
Storebrand reported positive Q3 results, characterised by strong performances in three business segments: Savings, Guaranteed, and Other. Nevertheless, it faced quite a setback in the insurance result from adverse weather conditions. The company reached an unexpected solvency ratio of 204%, reflecting an 8% uptick from H1. This increase can be attributed to the impact of higher rates and lower equity exposure. Even with a write-down in the real estate portfolio, Storebrand’s solvency figure provides ample room for returns to shareholders.
STB delivered better results than expected within all reporting segments in Q3, though part of it was explained by better results from the soon to be divested Storebrand Helseforsikring. Nonetheless, underlying growth in the frontbook remains solid and with a 204% Solvency margin the pile of excess capital increased further – making the distribution plans ahead even more interesting. We look forward to the December CMD and continue to see attractive risk/reward in STB. On the back of the report we’ve lifted our EPS estimates by 1% and shareholder distribution (dividends and buybacks) by 8% for FY24/25. We reiterate our Buy recommendation with a NOK 105 (102) target price.
Profit sharing and strong solvency will make capital distribution high. Adj. EPS'23e up 11%, '24e'25e just up 1% on improved costs. A good time to buy the winner of high interest rates.
Q3 cash EPS NOK 1.73 vs ARCe/Cons 1.46/1.37P&L better on most lines in Q3, good underlying growth continuesSolvency well above estimates, 204% vs ARCe/Cons 194%/195%Solvency beat the main take-away, share should outperform today
STB will report Q3 results on Wednesday 25 October and we expect a small improvement q/q on pre-tax profit, but another challenging quarter within the insurance segment. We model a Q3 group result of NOK 831m and an adj. EPS (cash equivalent EPS) of NOK 1.46. Our FY23 estimates come down 4% primarily due to the insurance segment, while FY24/25 is mostly unchanged. The solvency margin should be relatively stable q/q and we expect it in the range of 193-194% vs 196% last quarter – ie still supportive of a strong capital distribution trend. As such we think any color on the distribution plans for FY24 and onwards is of more interest than short term results, assuming we're right about the underlying earnings trend remaining relatively unchanged. We reiterate our Buy recommendation and NOK 102 target price.
Q3e: result before amortisation NOK 800m and solvency ~195%. Estimates down from chg. rate curve, while solvency up with gain. Use any dip that could happen at a weak Q3 result to BUY.
2nd leg of NOK 1bn BB is likely to start ahead of 30 Sept. Already approved by the N-FSA, BoD in STB to sign it off. ABGSCe way ahead of cons. for adj. EPS and capital distribution
Agreed to sell its 50% owned health insurer to its co-partner. Book a gain of NOK 1.1bn (NOK 2.43/share) with ~0.6% EPS effect. Should strengthen future BB plans, we are ~30 to >100% above cons.
Divesting 50% stake in Storebrand Helseforsikring to ERGO International AGWill continue as a distributor of health insurance for ERGOAttractive price at ~2.5x premiums, will book NOK 1.1bn gain (~2.4 per share) at closeLimited impact on run-rate earnings, positive transaction for STB
STB reported a somewhat mixed bag in Q2, with the P&L coming in below due to a weak insurance result in particular, while the Solvency surprised on the upside. The company maintained its ambition for a NOK 4bn group profit in FY23, but we think that looks difficult given the performance YTD. We do however still see very strong profit growth y/y in FY24. On the back of the report we’ve lowered estimates for the Savings and Insurance segments, partially offset by the guaranteed segment. On the back of the strong Solvency and higher buyback pace than we anticipated we’ve increased share buybacks and now see total distributions of NOK 7.2/8.5/8.8 for 23/24/25. We reiterate our Buy recommendation.
High solvency makes capital repatriation front-loaded. Trim adj. EPS'23e -9%, 24e -2% on frequency and higher costs. BUY a higher interest rate winner at a good entry point.
Launch BB of NOK 1bn in two tranches as solvency 196%. Adj PTP -13%/-8% and cash EPS -12%/-6% vs. ABGe/Cons. Cons. est. rev: down 1-4%; stock down 2-6% given financials.
Adj. EPS NOK 2.16 vs ARCe/Cons 2.48/2.31.Solvency margin stronger at 196% vs ARCe/Cons 193%/190%.NOK 1bn in share buybacks for H2/23, first tranche NOK 500mMixed report, expect lower EPS estimates but some upside on buy-backs
We expect a good Q2 result from Storebrand, boosted by AUM tailwinds and a NOK 440m positive one-off on tax. We expect a group profit before tax and amortization of NOK 916m, up 15% q/q, and a net profit of NOK 1,102m for an adj. EPS of NOK 2.5. While we expect some Solvency headwind from value adjustments on real estate, it should still increase significantly q/q due to higher rates, stronger equity markets, increased VA and the aforementioned tax gain. We model a Q2 Solvency in the 192-194% range which should set up for a new NOK 500m buyback programme to be initiated. We stick to our Buy recommendation with a NOK 102 (100) TP.
Storebrand’s results were weak this quarter. Both the seasonality in the Nordics and the new risk stemming from disability insurance were a drag on the firm’s profitability. The solvency ratio decreased to 179% but the dynamic going forward could nevertheless be positive at pixel time although distributions are likely to be lower than we had anticipated.
Ahead of Q1 we make relatively minor estimate changes, with adj. EPS down 1-2% for FY23/24 while for FY25 we model a NOK 8.8 adj. EPS. For Q1 in isolation results should benefit from AUM tailwinds after a strong quarter for equity markets, while we think the net profit could also benefit from a low effective tax rate. We expect the Solvency margin to remain above 180% and expect buybacks to resume shortly, which should be supportive for the share price. We stick to Buy and our NOK 100 TP.
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Storebrand released Q4 22 figures below expectations. While the continued underperformance could be an issue, the immediate drivers lie in the distribution story, which is taking a long time coming considering what the market has paid for.
After another volatile quarter in the markets STB delivered a somewhat mixed P&L in Q4, though this was more due to opex than market movements. Cost guidance for FY23 was also a bit on the high end, but our EPS estimates are overall pretty unchanged. STB has also done well on capital management in the quarter leading to a 184% Solvency, indicating buybacks are likely to return soon and continue. We stick to our Buy recommendation and NOK 100 TP.
Group profit NOK 841m vs ARCe/Cons 933/926m Underlying volumes better than we expected, miss driven by higher opex Solvency margin 184% in Q4, DPS NOK 3.70 and NOK 500m in buybacks Mixed P&L, but the Solvency beat should be a key positive today
It’s been another volatile quarter in the markets, but we ended on a good note with equity markets higher (but avg. AUM likely flat), spreads tighter and long-term rates slightly down after a spike mid-quarter. In sum we see supportive movements for the P&L and have lifted FY23/24 adj. EPS by 1%/2%. The Solvency has many moving parts yet again but we see it coming in in the high 170s which should trigger a new buyback programme after Q4. We reiterate Buy.
Storebrand released a robust set of Q3 22 results, ahead of the consensus and our own expectations. However, the high volatility of the firm’s Solvency position (subject to a volatility adjustment component) damaged the SII ratio… at the closing of the quarter. In fact, volatility adjustments may have had a reverse impact since then and Solvency may again be close to 180%, synonymus with a special dividend or buy-back program. There is plenty of room for shareholder returns.
The Q3 operating profit showed sequential improvement yet again despite declining AUM and challenging markets, and underlying growth continues a strong trend. Apart from this it was the Solvency miss that got attention as it meant buybacks were put on hold for now, but STB went far in assuring the market that they will resume sooner rather than later. As such we stick to our positive view and with only small estimate changes stick to Buy with a NOK 100 TP.
Q3 group profit before tax/amort NOK 670m vs ARCe/Cons 707m/605m With the beat vs cons. explained by the savings and insurance segments Solvency drops to 174%, prompting a pause in buybacks until >180% again P&L decent in Q3, but expect share to trade lower on Solvency miss
Turbulent markets will continue to affect results negatively in the short term, while long-term profit and capital generation is boosted by higher rates. Estimates come down 5%/3% for FY22/23, while in Q3 we model an adj. EPS of NOK 1.28. A sharply reduced volatility adjustment (VA) will negatively impact the Solvency in Q3. We expect a drop to around 180% adding uncertainty, but still expect a new NOK 500m buyback programme to be announced for Q4.
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