Results 1999 March 9, 2000 Christian Storm Senior Vice President Analysts-presentation 8 March 2000 1
Storebrand Main aspects 1999 Operating result increased by 183% to NOK 5.347 million Proforma group result NOK 1.370 million Value adjusted return in Storebrand Life increased from 3,5% to 15,7% If Concession 20.12.99 and accounting gain before tax of NOK 3.230 million on the If transaction Board proposes a dividend of NOK 1,- per share New Storebrand has shown solid improvement in all important business areas in 1999 Analysts-presentation 8 March 2000 2
Storebrand Group Operating result 01.01. - 31.12. NOK million 1999 1998 Premiums for own account - insurance 10,530 9,099 Interests and similar income - banking 923 292 Financial income - insurance 23,561 15,662 Other income 832 557 Operating income 35,846 25,609 Insurance benefits, reserve allocations -14,291-11,615 Interests and similar costs - banking -676-232 Financial expenses - insurance -7,731-12,358 Operating costs -1,624-1,395 Other costs -611-590 Costs and expenses -24,933-26,189 Net result from non-life insurance 302 461 To (from) market price adjustment reserve -5,868 2,008 Operating profit 5,347 1,888 Analysts-presentation 8 March 2000 3
Storebrand Group Operating profit by sub-group 01.01. - 31.12. NOK million 1999 1998 Storebrand ASA (exclusive group transfers) -256-357 Storebrand Life insurance 4,956 1,786 Storebrand Non-life insurance 302 461 Storebrand Bank 5 11 Finansbanken ASA 96 Storebrand Unit Linked -1-1 Storebrand Funds 11 6 Storebrand Investment Management 24-14 Storebrand Health insurance (50%) -7-5 Others/eliminations 218 2 Operating result 5,347 1,888 Provisional allocation to policyholders -4,181-1,286 Group profit 1,166 603 Analysts-presentation 8 March 2000 4
Legal Accounting 1999 NOK mill. 1999 1998 Result to owners life business Operating result non-life business Result banking operations Result other activities 774 302 101 (11) 500 461 11 (369) Group profit 1.166 603 Analysts-presentation 8 March 2000 5
Proforma 1999 NOK mill. 1999 1998 Result to owners life business 774 500 Operating result non-life business 734 461 Result banking operations 173 11 Result other activities (311) (369) Proforma group result 1.370 603 Analysts-presentation 8 March 2000 6
Non-life Business Proforma and legal accounting (NOK mill) Proforma 1999 1998 33% of If for 12 months Oslo Re for 12 months Remaining Storebrand non-life Goodwill depreciation and deferred gain taken to income regarding If Funding costs Oslo Re 516 115 221 (93) (25) - - 461 Total proforma 734 461 - - Legal accounting 1999 1998 Operating profit Storebrand non-life full year 302 461 No effect on operating profit from the If transaction or Oslo Re Analysts-presentation 8 March 2000 7
Banking Operations Proforma and legal accounting (NOK mill) Proforma 1999 1998 Finansbanken for 12 months 168 - Storebrand Bank Group 5 11 Total proforma 173 11 Legal accounting 1999 1998 Finansbanken from 1.8.99 Storebrand Bank Group 96 5-11 Total legal accounting 101 11 Analysts-presentation 8 March 2000 8
Other Businesses Proforma and legal accounting (NOK mill) Proforma 1999 1998 Storebrand ASA Storebrand Kapitalforvaltning Storebrand Fondene Result other companies Goodwill depreciation Finansbanken Funding costs Finansbanken (256) 24 11 (8) (28) (54) (357) (14) 6 (9) - - Proforma operating profit other (311) (369) Legal accounting in addition 1999 1998 Sales gain on Nybygg in Storebrand ASA Elimination of interest costs life company Other adjustments Analysts-presentation 8 March 2000 9 175 80 45 Total legal accounting other (11) - - - -
Storebrand Group Profit for the year 01.01. - 31.12. NOK million 1999 1998 Group profit 1,166 603 Changes in security reserve etc. - non life 154-162 Profit from the sale of the non-life activity 3,230 Result ordinary operations 4,550 441 Extraordinary income 82 Profit before tax 4,632 441 Tax -1,131 1 Minority interests -2 Profit for the year 3,500 442 Analysts-presentation 8 March 2000 10
Storebrand Group Earnings per share NOK million 1999 1998 Group result 3.500 442 - Change in security reserve etc. -154 162 - Preference-surplus 0-11 Basis for calculation 3.346 593 Special items: - Profit from the sale of the non-life activity -2.326 0 - Extraordinary income -82 0 Basis for calculation excl. special items 938 593 Earnings per share * 12,07 2,14 Earnings per share excl. special items * 3,38 2,14 *) Number of ordinary shares is 277 million Analysts-presentation 8 March 2000 11
Storebrand Capital adequacy Risk weighted Net primary Capital ratio NOK million assets capital 31.12.99 31.12.98 Storebrand ASA 7.657 5.714 74,6 % 76,9 % Storebrand Life insurance 47.503 5.693 12,0 % 12,1 % Storebrand Non-life insurance 10.790 3.686 34,2 % 23,3 % Storebrand Bank 4.045 618 15,3 % 14,1 % Finansbanken 12.083 1.369 11,3 % 12,2 % Storebrand Group 75.393 10.564 14,0 % 13,4 % Analysts-presentation 8 March 2000 12
Storebrand Group Balance sheet 31.12. Share of total assets NOK million 1999 31.12.99 31.12.98 * Intangible assets 544 0 % 1 % Real estate 10,235 7 % 8 % Shares in associated companies 5,110 3 % 0 % Loans 22,306 15 % 8 % Bonds 60,446 40 % 47 % Certificates 3,105 2 % 3 % Shares and other equity investments 38,749 26 % 24 % Other financial assets 3,456 2 % 1 % Other assets 5,697 4 % 9 % Total assets 149,647 100 % 100 % Equity 10,182 7 % 5 % Minority interests 13 0 % 0 % Subordinated loan capital 4,536 3 % 2 % Market price adjustment reserve 8,596 6 % 2 % Technical reserves - Life 101,475 68 % 82 % Liabilities to financial institutions 3,117 2 % 0 % Deposits from and liabilities to customers 10,759 7 % 3 % Securities issued 7,257 5 % 3 % Other allocations and liabilities 3,711 2 % 2 % Total liabilities and equity capital 149,647 100 % 100 % * Total assets as at 31.12.98: NOK 126,531 million Analysts-presentation 8 March 2000 13
Storebrand ASA Profit for the year 01.01. - 31.12. NOK million 1999 1998 Group contributions and transfers 1.590 861 Interest income 96 138 Realized gains/losses on securities 14-24 Unrealized gains/losses on securities 101-61 Interest expense -209-185 Other financial income/costs 2-8 Net financial items 4-139 Total operating costs -260-218 Profit before tax 1.334 504 Tax -176-32 Profit for the year 1.157 471 Analysts-presentation 8 March 2000 14
Finansbanken ASA - Group Profit and loss accounts (NOK mill.) 1999 1998 Interest income etc. 1 031,7 998,6 Interest expenses etc. -702,5-677,3 Net interest and credit commission income 329,2 321,3 Total other operating income 41,7 29,4 Total operating expenses -130,7-107,8 Operating profit before losses and write-downs 240,1 243,0 Losses on loans and guarantees etc. -72,5-99,7 Operating profit 167,6 143,3 Taxes -48,2-39,0 Profit after tax 119,4 104,3 Analysts-presentation 8 March 2000 15
Storebrand Life Group Summary profit and loss account 01.01. - 31.12 Changes NOK mill. 1999 1998 in % Premiums written 7,167 6,882 4% Net transferes of premium reserve 11 847-99% Net income of financial investments 15,316 3,346 358% Claims paid -5,591-5,392 3% Change in technical reserves -4,950-4,874 2% Operating expenses SBL AS -896-817 10% Other income/cos ts -254-214 19% Change in market price adjustment reserve -5,868 2,008 392% Operating profit 4,955 1,786 177% Extraordinary items 234 Profit after extraordinary items 5,189 1,786 191% Trans ferred to policyholders -4,333-1,285 237% Profit to owner* 856* 501 71% * incl. extraordinary income of NOK 82 million Analysts-presentation 8 March 2000 16
Storebrand Investments Highlights 1999 Outperformance of 175 bps on life portfolio. Discretionary funds increased by NOK 6.3 billion (+119%). Mutual funds market share up from 6.3% to 8.1%*. Private Equity fund - of - funds launched in Norway. Increased focus on Private Banking through acquisition of Finansbanken and of Norwegian equity manager Delphi. Institutional sales offices opened in Stockholm, London and Paris. * Including acquisition of Delphi Fund Management the market share is 9.1% Analysts-presentation 8 March 2000 17
Market development - as of 31.12.99 160 150 Equity returns Norway and International 8.00% Yield to maturity Norway and International 140 7.50% 130 7.00% 120 6.50% 110 100 90 6.00% 5.50% 5.00% 4.50% 80 4.00% 70 3.50% 60 3.00% Dec-97 Feb-98 Apr-98 Jun-98 Aug-98 Oct-98 Dec-98 Feb-99 Apr-99 Jun-99 Aug-99 Oct-99 Dec-99 Dec-97 Feb-98 Apr-98 Jun-98 Aug-98 Oct-98 Dec-98 Feb-99 Apr-99 Jun-99 Aug-99 Okt-99 Dec-99 MSCI World Norway (Totx) MSCI (W) equals Morgan Stanley Capital Index World ex. Nordic ex. Finance currency hedged to Norwegian kroner. Totx. equals Oslo Stock Exchange All Share Index (TOTX) Analysts-presentation 8 March 2000 18 Norway ca. 4,8 y (DNB Stat Benchmark All) International ca. 5,7 y (J.P. Morgan WGBI) Norway 6 m (DNB State Certificate Index 180 d) International 6 m (constructed)
... Equity markets 1999 Index development by country 250 % 200 % 150 % 100 % 50 % 0 % Analysts-presentation 8 March 2000 19 BELGIUM IRELAND AUSTRIA PORTUGAL SWITZERLAND AUSTRALIA NEW ZEALAND UNITED KINGDOM ITALY USA SPAIN NETHERLANDS DENMARK GERMANY CANADA NORWAY JAPAN MALAYSIA MALAYSIA FREE FRANCE HONG KONG SINGAPORE FREE SWEDEN SINGAPORE FINLAND 1999 Desember Source: Morgan Stanley Capital International/Oslo Stock Exchange, return in local currency.
Value added Active portfolio management for SBL added value of NOK 1.700 million in excess of benchmark return. Norway Return vs index 45.6% 45.5% Return Index Equities Fixed Income Norway 2.7% 2.9% Total value added for Storebrand Livsforsikring in 1999 NOK 1.700 million Equities PAC (+33,9%) Fixed Income (+0,1%) Nordic Europe N-Am. Pacific 35.8% 27.6% 32.0% 24.5% 53.6% 87.4% 109.7% 118.9% International Money market Real Estate 2.4% 2.1% 6.6% 6.3% 9.7% Aksjer NAM (+7,5%) Equities Europe (+8,2%) Allocation (+0,25%) Equities Norway (+0,1%) Other 44.1% 45.5% Mortgages 8.5% Analysts-presentation 8 March 2000 20
Storebrand Livsforsikring AS Asset allocation gave positive contribution in 1999 International securities account for appr. 2/3 in equity and fixed income portfolios. Equity allocation significantly increased through the year. Long in Asia and Norway. Increased credit exposure in international Fixed Income. NOK 5 billion into Norwegian Hold-to-Maturity bonds. 40% 30% 20% 10% 0% Allocation pr. asset class 40% 31.12.98 31.12.99 33% 29% 24% 23% 19% 9% 9% 5% 3% 3% 3% Equities Fixed Income M Market HTM Real Estate Mortgages Analysts-presentation 8 March 2000 21
Back-up Analysts-presentation 8 March 2000 22
Storebrand Group Booked gains and losses on securities 1. KVARTAL 01.01. - 31.03. Realized gains and losses on securities Urealized gains and losses on securities 01.01.-31.12. 01.01.-31.12. NOK million 1999 1998 1999 1998 Storebrand ASA 14-24 101-61 Storebrand Life insurance 4,378 383 5,868-2,008 Other companies 9-21 2 1 Storebrand Group 4,401 338 5,972-2,068 Analysts-presentation 8 March 2000 23
Storebrand Group Operating profit by sub-group: 3rd quarter 4th quarter NOK million 1999 1998 Storebrand ASA (exclusive group transfers) -101-104 Storebrand Life insurance 974 822 Storebrand Non-life insurance 188 399 Storebrand Bank -3 4 Finansbanken ASA 54 Storebrand Unit Linked -1-0 Storebrand Funds 1-2 Storebrand Investment Management 12-11 Storebrand Health insurance (50%) -2-5 Others/eliminations 224 3 Operating result 1,344 1,106 Provisional allocation to policyholders -772-660 Group profit 572 446 Analysts-presentation 8 March 2000 24
Storebrand ASA Balance sheet 31.12. Share of total assets NOK million 1999 31.12.99 31.12.98 * Deferred tax assets 146 1 % 4 % Real estate 59 1 % 1 % Shares in subsidiaries 6.660 66 % 59 % Investments 1.059 10 % 19 % Other assets 2.168 21 % 18 % Total assets 10.092 100 % 100 % Equity 6.134 61 % 64 % Allocated for dividend 277 3 % 0 % Bond loan 1.800 18 % 22 % Intra-group debt 467 5 % 7 % Other liabilities 1.414 14 % 8 % Total liabilities and equity capital 10.092 100 % 100 % * Total assets as at 31.12.98: NOK 8.290 million Analysts-presentation 8 March 2000 25
Storebrand Bank Group Main aspects 1999 10 The bank group recorded an operating loss of NOK 32 mill., an improvement from a loss of NOK 67 mill. last year. 10 Net interest income is NOK 139 mill., an increase of NOK 48 mill. compared to last year. 10 Net interest margin for Storebrand Bank AS increased from 1.29% to 1.50% in 1999. 10 Income from banking services increased NOK 8 mill., while other operating income fell NOK 20 mill. due to a change in fee structure for sale of mutual funds. 10 Non-interest expenses increased NOK 24 mill., principally as a result of increased personnel, establishment of several advisory offices and increased ITexpenses related to development of the bank s IT systems. 10 The growth in total assets is NOK 1,844 mill., is a result of a balanced growth in deposits and loans. 10 Income related to provision for credit losses fell NOK 41 mill., mainly caused by two large recoveries in Storebrand Finans AS in 1998. 10 Capital adequacy ratio is 15.3% at the end of 1999 compared to 14.1% at the end of 1998. Analysts-presentation 8 March 2000 26
Storebrand Bank Group Income Statement 01.01.-31.12. NOK million 1999 1998 Interest income 533.8 322.9 Interest expense 394.5 232.0 Net interest income 139.3 90.9 Other operating income 61.8 51.7 Operating expenses 233.2 209.2 Operating income -32.1-66.6 Provision for credit losses 36.6 77.5 Taxes -1.4 0.8 Profit after tax 3.1 11.7 Analysts-presentation 8 March 2000 27
Storebrand Bank Konsern Balance Sheet NOK million 31.12.99 31.12.98 Cash and due from banks 90.3 61.5 Net loans 6,810.6 5,006.9 Securities available for sale 925.7 917.7 Premises, furniture and equipment, net 17.5 17.5 Miscellaneous assets 247.1 243.6 Total assets 8,091.2 6,247.2 Loan from banks 520.0 358.0 Certificate loans 1,524.8 1,649.6 Interest-bearing deposits 5,155.8 3,519.2 Miscellaneous liabilities 140.9 148.8 Shareholders' equity 749.7 571.6 Total liabilities and shareholders' equity 8,091.2 6,247.2 Analysts-presentation 8 March 2000 28
Finansbanken ASA - Group Essential features 1999 The financial activities have increased throughout the year, and the annual report of 1999 shows an improvement in net lending and operating profit The increase in net lending and costumer accounts receivable occurred in the second quarter. NOK 1.3bn or 10.3% from real estate-, shipping- and financial investments In 1999 the bank has worked towards developing a business area of Private Banking- services for costumers of fortune In February 1999 81% of Finansbanken Index ASA was acquired. The financial activities and operating profit have been more than satisfactory An agreement of acquiring 89% of Delphi Forvaltning ASA has been made. It`s expected to be carried out within the first six months of 2000 Return on equity was 17.1% and 12.2% after tax. Costs as a percentage of operating income was 35.3% Operating profit before tax was NOK 167.6 million and NOK 119.4 million after tax Analysts-presentation 8 March 2000 29
Finansbanken ASA - Group Balance sheet (NOK million) 31.12.99 31.12.98 Cash and deposits with central banks 521,9 578,5 Net lendings to customers 12.222,5 11.052,1 Assets acquired 135,3 253,8 Commercial paper, bonds and other securities 778,1 714,1 Fixed/intangible assets and goodwill 27,1 27,7 Prepaid expenses and accrued income 244,0 199,8 Total Assets 13.928,8 12.825,9 Loans from credit institutions 2.596,8 2.096,3 Deposits from and debt to customers 5.603,5 5.852,5 Securities issued 3.932,3 3.115,0 Other liabilities/acc. exp. and prepaid inc./prov. for exp. and comm. 417,4 417,6 Subordinated loan capital 344,3 422,6 Total Equity 1.034,6 921,9 Total Liabilities and Equity 13.928,8 12.825,9 Analysts-presentation 8 March 2000 30
Finansbanken ASA - Group Key Figures (NOK mill. and percentage of average total assets) 31-12-1999 31-12-1998 Net interest and credit commission income 2,50 % 2,50 % Total other operating income 0,32 % 0,23 % Total operating expenses -0,99 % -0,84 % Operating profit before losses and write-downs 1,82 % 1,89 % Losses on loans and guarantees etc. -0,55 % -0,77 % Operating profit 1,27 % 1,11 % Taxes -0,37 % -0,30 % Profit after tax 0,91 % 0,81 % Capital adequacy Net capital base 1 374,2 1 328,6 Capital ratio 11,37 % 12,21 % Core capital ratio 8,53 % 8,39 % Other key ratios Ratio of expenses to operating income 35,25 % 33,05 % Return on equity after tax 12,21% 12,92% Analysts-presentation 8 March 2000 31
Storebrand Life Group Main aspects at 1999 Value adjusted investment yield 15.74%. Realized investment income yield 9,97% Operating result increase by nearly three times compared to last year Premium income, including premium reserves transferred to the company, up by 4% compared to last year Cost ratio of 0.96%, an increase from 0.94% in 1998 because of a increase in operating costs Market sales in the Private market has decreased compared to last year Good development in sales to the corporate market Analysts-presentation 8 March 2000 32
Storebrand Livsforsikring AS Profit analysis NOK mill. 1999 1998 1997 Interest result 5,619 1,655 4,671 Risk result 284 279 388 Administration result -123-90 -30 Change in security and premium reserve -548-63 -675 Total result 5,232 1,781 4,354 Analysts-presentation 8 March 2000 33
Storebrand Livsforsikring AS Key figures 01.01.-31.12 1999 1998 Return on capital *) 9.97% 5.85% Value adjusted return 15.74% 3.50% Value adjusted return -including bonds held to maturity 14.91% 2.93% Solvency margin 208.4% 220.4% Capital ratio (SBL Group) 11.98% 12.10% Operating expenses as % of policyholders funds 0.96% 0.94% *) exc. change in value adjusted allocations Analysts-presentation 8 March 2000 34
Storebrand Livsforsikring AS Unrealized gains NOK mill 31.12.99 31.12.98 Change Shares 9,720 2,312 7,408 Fixed interest investments -1,124 415-1,539 To market price adjustment reserve 8,596 2,728 5,869 Bonds held to maturity -179 553-732 Total 8,417 3,281 5,136 Analysts-presentation 8 March 2000 35
Storebrand Livsforsikring AS Operating costs in % of average policyholders funds 1,2 1,0 1,15% 1,10% 1,02% 0,94% 0,96% 0,90% 0,8 0,6 0,4 0,2 0,0 1994 1995 1996 1997 1998 1999 Analysts-presentation 8 March 2000 36
Storebrand Life Group Balance sheet Share of Share of total assets total assets NOK mill. 31.12.99 31.12.99 31.12.98 Immaterial assets 4 0 % 0 % Real estate 10,103 9 % 8 % Long term shares and interests from group companies 205 0 % 0 % Bonds and other investments - fixed interest 25,125 22 % 18 % Mortage and other loans 3,177 3 % 5 % Shares and interests 37,256 32 % 28 % Other fixed interest financial investments 33,123 29 % 31 % Certificates 1,907 2 % 2 % Other short term financial assets 333 0 % 1 % Total financial assets 111,229 97 % 93 % Other assets 4,002 3 % 7 % Total assets 115,234 100 % 100 % Analysts-presentation 8 March 2000 37
Storebrand Life Group Balance sheet Share of Share of total assets total assets NOK mill. 31.12.99 31.12.99 31.12.98 Equity 2,961 3 % 3 % Subordinated loan capital 4,201 4 % 3 % Market price adjustment reserve 8,596 7 % 3 % Premium reserve for own account 81,783 71 % 75 % Additional statutory allocations 5,847 5 % 6 % Premuim/pension adjustment fund 9,160 8 % 8 % Claims reserve for own account 206 0 % 0 % Insurance fund reserves for own account 96,996 84 % 89 % Other insurance reserves 28 0 % 0 % Allocations to security reserves 592 1 % 1 % Insurance related reserves for own account 97,617 85 % 90 % Reserves for other risks and expenses 176 0 % 0 % Debt 1,538 1 % 1 % Prepaid costs and accured income 146 0 % 0 % Total equity and liabilities 115,234 100 % 100 % Analysts-presentation 8 March 2000 38
Storebrand Life Group Premium (inc. reserves transferred to the Company) 01.01. - 31.12 NOK mill. 1999 1998 Collective pensions 6,529 5,779 - of which premium reserves received 2,008 1,880 Group life 373 362 Individual endowment 1,549 1,839 Individual pension 813 907 Total premium income 9,264 8,887 - of which preium reserves received 2,098 2,006 Analysts-presentation 8 March 2000 39
Storebrand Livsforsikring AS Real estate fund Geographic allocation Key figures 31.12.99 31.12.98 The real estate fund: Gross yield *) 7.5% 7.5% Growth in value **) 9.7% 6.6% The fund's properties: Operating result I ***) 7,0 % 6.6% Cities 2% Rest of Norway 4% Shopping centres 47% Rest of Oslo 14% Total m2 712,000 685,000 Occupancy level 98.1% 98.1% *) Current rent in % of average market value Vika, Oslo 33% **) Includes revaluations of unrealised gains at 01.01.99 as a consequence of the new Companies Act ***) (Sum operating income - sum operating expenses) in % of average market value Analysts-presentation 8 March 2000 40
Storebrand Livsforsikring AS Loan fund Loans with security in real estate by valuation limits Key figures 31.12.99 31.12.98 Within 60% of valuation: 91% Portfolio: NOK mill. 3,100 5,000 Number of loans 14,100 20,000 Growth in value 8.5% 7.3% Defaulted loans in % 1.3% 0.8% Change in loss prov. *) 0.04% -0.03% *) % of average loan portefolio Other loans: 6% Above 60% of valuation: 3% Analysts-presentation 8 March 2000 41
Storebrand Livsforsikring AS Investment management 1999 Return on total assets : 15.74% Return on investment assets : 15,78% Return Percent 46.34 40.43 SBL Index 15.78 14.04 2.42 2.44 6.57 6.29 6.60 9.72 8.53 Total Equities Fixed Income Money Market HTM Real Estate Mortgages Asset Allocation Risk exposed asset allocation as percent of the on-balance assets. 33.0 24.2 40.0 28.7 3.0 2.5 23.1 18.6 9.0 8.7 5.1 2.8 31.12.99 31.12.98 Equities Fixed Income Money Market HTM Note: The on-balance equity portfolio and on-balance fixed income portfolio equals 33.38% and 28.66% respectively of the on-balance assets. Real Estate Mortgages Analysts-presentation 8 March 2000 42
Storebrand Livsforsikring AS Equities 1999 Return Percent 118.91 109.73 87.42 SBL Index 46.34 40.43 45.64 45.54 35.80 27.58 32.01 24.52 53.57 44.08 45.54 Total Norway Nordic Europe North- America Asia Other Allocation Percent of total equities 30.8 27.5 28.9 31.7 31.12.99 31.12.98 6.5 5.6 16.2 18.9 11.0 8.5 6.6 7.8 Norway Nordic Europe North-America Asia Other Analysts-presentation 8 March 2000 43
Storebrand Livsforsikring AS Fixed Income 1999 Return Percent 4.53 4.46 2.70 2.90 2.41 2.11 6.57 6.29 6.60 9.74 SBL Index Total Fixed Inc. Norwa Fixed Inc Int. Money Market HTM Other Allocation Percent of total fixed income 20.9 21.6 31.4 40.3 42.2 33.8 31.12.99 31.12.98 4.7 3.5 0.8 0.8 Fixed Inc. Norway Fixed Inc Int. Money Market HTM Other Interest rate volatility as of 31.12.99 (31.12.1998) Total based on market values: NOK 2.474 millions (2.488) Accounting effect: NOK 1.554 millions (1.736) Analysts-presentation 8 March 2000 44
Storebrand Skadeforsikring group Operating Result NOK million 1999 1998 Written premiums f.o.a. 8.414 7.799,1 Opptjent premie fer. 8.117 7.544 Claims f.o.a. -7.311-5.544 Technical operating costs -2.234-2.102 Technical result -1.428-102 Financial income 1.729 563 Operating profit 302 461 Key-indicators 1999 2000 Effect of run-off result 70 397 Claims ratio f.o.a. 90,1 % 73,5 % Claims ratio f.o.a. current year 90,9 % 78,8 % Cost ratio f.o.a. 26,6 % 27,0 % Combined ratio f.o.a. 116,6 % 100,4 % Analysts-presentation 8 March 2000 45
Storebrand Skadeforsikring group Profit of the Year NOK million 1999 1998 Operating profit 302 461 Gains of sales 3.230 - Change in security reserves etc. due to If 428 - Additional change in security reserves etc. -273-162 Profit before tax 3.687 299 Tax -1.032-65 Profit of the year 2.654 234 Analysts-presentation 8 March 2000 46
Storebrand Skadeforsikring group Summary Balance Sheet 31.12.99 31.12.98 Euro- Non-Life Non-Life NOK million Skade AS peiske Oslo Re Group Group Interest in If 5.114 - - 5.075 - Interest in subsidiaries 399 - - - - Financial assets 1.443 37 1.272 2.752 14.333 Group contribution/dividends 211 - - - - Receivables 480 233 345 805 3.746 Total assets 7.647 270 1.617 8.632 18.079 Equity capital 4.882 92 389 4.936 2.349 Premium and claims reserve - - 789 789 10.483 Security reserve etc 937 32 131 1.100 3.225 Deferred tax 689 31-686 41 Group contribution/dividends 800 115 97 800 483 Liabilities 339-211 321 1.498 Total equity and liabilities 7.647 270 1.617 8.632 18.079 Analysts-presentation 8 March 2000 47
Storebrand Skadeforsikring group Interest in If (44%) Interest in If 01.03.1999 4.871 Share of result before tax 295 Goodwilldepreciations -52 Tax -39 Share of result after tax 204 Interest in If 31.12.1999 5.075 The share of result is charged directly to the equity in 1999, because of different point of time of the transaction (1.3.99) and the permission from the authorities (20.12.99). Straight-line deprecations of goodwill over 20 years. Analysts-presentation 8 March 2000 48
Bond markets 1999 Index development 22,00 % In local currency Hedged to NOK 17,00 % 12,00 % 7,00 % 2,00 % -3,00 % France USA Spain Italy Sweden Netherlands Belgium Australia Germany Canada UK Denmark Norway Japan -8,00 % -13,00 % Analysts-presentation 8 March 2000 49
Equity markets 1999 Index development by sector 120 % 100 % YTD December 80 % 60 % 40 % 20 % 0 % -20 % -40 % ENERGY MATERIALS INDUSTRIALS CONSUMER DISCRETIONARY CONSUMER STAPLES HEALTH CARE FINANCIALS INFORMATION TECHNOLOGY TELECOM SERVICES UTILITIES THE WORLD INDEX Source: Morgan Stanley Capital International Analysts-presentation 8 March 2000 50
Storebrand Livsforsikring AS Assets under management and return 1999 120 100 Development of AuM since 31.12.96 150 145 Accumulated return and benchmark return 1999 NOK billion 80 60 40 Index of return 140 135 130 125 120 115 Total Return 1999 20 110 105 0 1996 1997 1998 1999 100 Dec-98 Feb-99 Apr-99 Jun-99 Aug-99 Oct-99 Dec-99-20 Capital end of 1996 Capital gains Equity Fixed Income Equity benchm. Fixed Income benchm. Other net flow Analysts-presentation 8 March 2000 51
Return Norwegian life companies Storebrand second best return for the year 1999 Return Norwegian life companies 1999 20% 19.0% 18% 16% 15.8% 15.5% 15.1% 14% 13.3% 12% 10% 8% 6% 4% 2% 0% KLP Storebrand Vesta Vital Gjensidige Analysts-presentation 8 March 2000 52
Storebrand Investments Assets under management doubled in 4 years, and strong income growth in 1999 yields increased profitability NOK billion 160 147,3 140 10.3 123,8 11.0 120 114,6 9.6 11.5 100 80 9.5 9.5 99,2 8.8 5.2 8 2.3 77,6 5.7 5.5 3.5 60 114.5 40 94 99.5 85.6 68.8 20 0 1995 1996 1997 1998 1999 CAGR + 17% Internal Clients Discretionary accounts Mutual Funds Real Estate Total assets under management increased by NOK 23.5 bn, to NOK 147.3 bn. Operating income increased by 76% Operating costs up by 31% Total earnings increase of NOK 43.5 million Earnings from mutual funds business up by 88% Analysts-presentation 8 March 2000 53
Storebrand Fondene Mutual Funds Number of clients increased by 29% to 125.000. Total marketshare increased from 6.3% to 8.1% (Including Delphi the market share is 9.1%). 25% 20% 15% Cumulative market share net new subscriptions 1999 Assets under management increased from NOK 5.4 bn. to NOK 9.9 bn. (Including Delphi of NOK 11.1 bn.). Total of 32 funds, 4 new funds launched in 1999. 10% 5% 0% jan feb mar apr may jun jul aug sep oct nov dec Excess return in 16 of 32 funds. Top ranked funds on the Norwegian market in 1999: Storebrand Teknologi +174% return Storebrand Global + 27% overperformance Analysts-presentation 8 March 2000 54
Storebrand Investments Discretionary accounts Number of institutional clients increased from 29 to 45 Discretionary assets under management increased by NOK 6.3 billion 131 portfolios under management 2.3 Assets under management discretionary accounts NOK billion CAGR + 125% 5.2 5.0-0.3 1.6 11.5 Share of non-storebrand Group assets increased from 11.9% to 15.3% 31.12.97 31.12.98 Inflow Outflow Capital gains 31.12.99 Note: Figures do not include Delphi with appr. 340 clients and assets of NOK 1.3 billion under management. Analysts-presentation 8 March 2000 55
Private Equity 1999 Return Absolute return target: risk-free interest rate* + 10%. Return Private Equity 44.3% Total of NOK 2.6 billion under management Including committed capital 70% in international partnerships, with emphasis on European funds. 30% in Norway, invested directly or through investment companies. Realised NOK 600 mill., invested NOK 500 mill. Product development Launched NOK 100 mill. fund-of-funds, first of its kind in Norway. Geographic distribution NOK 2.6 billion Nordic 40% Apax Globis Japan 20% 20% Hicks, Muse, Tate, & Furst Europe Europe 40% Private Equity Fund - of - Funds 20% North- Amerika 17% Asia 3% Clayton, Dubilier & Rice 40% Kohlberg, Kravis, Roberts Europe Analysts-presentation 8 March 2000 56 * Observed 12 month Libor at the beginning of the year. For 1999 this was 6.8%.
Storebrand Eiendom Highlights 1999 Concentration of properties in Oslo Geographic value distribution 1999 NOK 10.0 billion Shopping Malls 43% Big cities 2% Total divestment of 10 properties, mainly outside Oslo Life company bought Filipstad brygge 1 og Hoffsveien 1 Other Oslo 14% Other Norway 3% Vika 39% Main rehabilitation project, Vika, completed at the end of 1999. 52.000 m 2 offices and 27.000 m 2 commercial Operating return of 7.0%, including Vika rehabilitation project Area type distribution 1999 712.000 m 2 Offices 34% Parking 20% Storage 9% Commercial 37% Analysts-presentation 8 March 2000 57
Analysts-presentation 8 March 2000 58
Storebrand ASA 1999 Annual Accounts Presentation to Analysts 9 March 2000 Espen Klitzing Manager Director Storebrand Livsforsikring AS Analysts-presentation 8 March 2000 59
Strong growth in net household wealth * NOK bn (1999 values) Forecasts from the Norwegian National budget 2000 336 357 380 404 430 303 290 246 155 182 208 89 20 42 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 * Household financial wealth (assets) less debt rebased to 1999 prices Source: Norges Bank, Ministry of Finance Analysts-presentation 8 March 2000 60
Mutual funds/life & pensions insurance account for a greater share of household financial wealth Other assets/liabilities Securities 12 % 10 % 9 % 6 % 13 % 20 % Insurance 24 % 31 % 35 % Cash and bank deposits 58 % 46 % 36 % 1980 1990 1999 Source: Norges Bank, 2000 Analysts-presentation 8 March 2000 61
1999 in strategic perspective If... established as a competitive platform for P&C For operations For owners Economies of scale Capital optimisation Develop expertise Financial and structural flexibility Focus on Storebrand's growth platforms New group structure New pensions products Unit Linked Investment Management Internet, corporate & retail Private Banking Analysts-presentation 8 March 2000 62
Storebrand - new operational structure paves the way for growth Storebrand Business areas: - Retail distribution - Corporate distribution - Products - Investment management Joint operating company Joint IT company Strategic investments: - If - Finansbanken - Oslo Re - Fair Analysts-presentation 8 March 2000 63
Investment management - positioned for growth 160 140 120 Funds under management NOK bn. CAGR = 17% Strong growth in funds under management over the next 3 years Further develop Storebrand's unique investment process 100 80 60 40 20 77,8 99,3 114,6 123,8 147,3 Build and exploit the brand Focused international expansion based on selected products 0 1995 1996 1997 1998 1999 New products and channels Analysts-presentation 8 March 2000 64
Discretionary management Developments in 1999 External funds under maangment (NOK bn) 2,3 CAGR + 125% 5,2 11,5 Increase in number of external clients from 29 to 45 Majority of portfolios outperformed their benchmark Net inflow of funds in 1999 of NOK 4.7 bn 1997 1998 1999 Analysts-presentation 8 March 2000 65
Storebrand Fondene - strong growth in 1999 Market share 1997-1999 25 20 15 15,7 22 Winning player in 1999 for net inflows to mutual funds Total new funds invested of NOK 1.9 bn, an increase of NOK 1.5 bn. 10 5 0 8,1 6,2 6,3 2,4 1997 1998 1999 Total funds under management of ca. NOK 9.9 bn, of which equity funds represent ca. 78%. Increased in market share from 6.3% to 8.1% Share of funds under management Share of net inflows Analysts-presentation 8 March 2000 66
Private Banking No. of individuals in Norway with financial wealth in excess of NOK 1 million 40,400 66,700 Strong growth in market for managing personal wealth both in Norway and internationally Finansbanken and Delphi are Storebrand's platform in Norway Provides the foundation for Nordic expansion 1992 1997 Analysts-presentation 8 March 2000 67
Finansbanken: 1999 performance NOK million 400 Net interest income Ordinary pre-tax profit 321 329 Acquired Finansbanken, the leading niche bank in Norway 200 143 168 The bank continues to perform strongly Finansbanken acquired Delphi Forvaltning ASA in November 1999 0 98 99 98 99 Analysts-presentation 8 March 2000 68
Life insurance - 1999 performance Market share of total premiums written (%) + 4 percentage points 27 31 Improved market share for both individual and collective lines Competitive investment return of 15.74% relative to benchmark comparable of 14.04% Operating profit up by 177% giving 55% improvement in profit to shareholders 1998 1999 Risk capital increased by 57% to over NOK 15 bn Analysts-presentation 8 March 2000 69
Corporate market Building on a strong position Market share of premiums written in the corporate market in 1999 28% 31% Emphasis on defined contribution pension schemes creates growth in a new market 14% 15% Further development of existing traditional defined contribution products (Flex) New and different products with greater emphasis on the individual scheme member Gjensidige Vital KLP Storebrand New concepts for customer service Internationalisation - development and launch of pan-scandinavian products Analysts-presentation 8 March 2000 70
Corporate - an important market Analysis of premiums* Storebrand Liv 1999 17% 9% 4% 70% Good results from investment management and a leading position in developing new products will further strengthen Storebrand's position in this important market for the group's core activities Collective pension Group life Individual endowment Individual pension * includes transfers Analysts-presentation 8 March 2000 71
Unit linked - market leader in 1999 50% Market shares in terms of premiums written 42% 40 30 20 10 13% 29% 28% 27% 23% Storebrand was the winning company in the unit linked market in 1999 The company sold NOK 1.26 bn of unit linked products 0 98 99 98 99 98 99 Storebrand Vital Skandia Analysts-presentation 8 March 2000 72
Storebrand Bank - 1999 performance Proportion of customers using internet banking 42% 71% Further growth in number of internet banking customers in 1999 No. of transactions 60 % 50 % 40 % 30 % 20 % 10 % 0 % 1998 1999 Payment methods % Storebrand Bank Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Analysts-presentation 8 March 2000 73 Month Manual giro Letter Direct Debit Telegiro Internet 48 % 27 % 15 % 9 % 0,5 % Storebrand Bank voted best internet bank in Norway several times Storebrand Bank upgraded its internet-bank in Autumn 1999 NOK 35 million improvement in operating profit for Storebrand Bank Part of a multi-channel strategy for the retail market
Internet Systematic development of new technology @ Storebrand's internet bank - voted best in Norway for several years - was upgraded in 1999 @ Mutual funds 'on the net' @ Life insurance products 'on the net' @ Net based service concept for the corporate market INTERNET TECHNOLOGY - Priority tool in creating growth and improving profitability - Sales & service functionality for the corporate market particularly important - Net technology paves the way for work place distribution - Platform for cross selling Analysts-presentation 8 March 2000 74
New Internet initiatives Target group Retail market Employees of corporate customers Corporate and public sectors HNWI Internal organisation Initiative Financial portal for the retail market Employee services External net and 'cafeteria' choice Finansbanken e - enabling Focus Service, new sales, repeat sales Advice and sales Customer service and flexible systems Service, new sales, repeat sales Internal processes Analysts-presentation 8 March 2000 75
Goals of Storebrand s internet strategy Attract new customers Further improve level of service for existing customers - in both retail and corporate markets Increase sales to existing customers Improve efficiency and reduce costs Storebrand's centralised group structure, a clear internal separation between products and their distribution and the systematic application of new technology provide a sound basis for success Analysts-presentation 8 March 2000 76
Capital situation 18.000 16.000 14.000 12.000 10.000 8.000 6.000 4.000 2.000 0 Equity* Market cap.* Current price 1995 1996 1997 1998 1999 Storebrand has a strong capital position at end 1999 Partial sale of If will provide a good injection of liquidity for Storebrand Storebrand will continually strive to maintain the most efficient capital structure possible * Excludes preference share capital Analysts-presentation 8 March 2000 77
Dividend for 1999 Board proposes a dividend of NOK 1,- per share for 1999 Dividend represents approx 25% of the group's underlying profit after tax for 1999 Storebrand's dividend policy targets a dividend of 15% to 30% of profit after tax Storebrand will strive to maintain relatively stable annual growth in dividend per share Analysts-presentation 8 March 2000 78
Financial targets New Storebrand will aim to produce return on book equity (ROE) of 15 % and return on value-adjusted book equity (RONAV) of 13 % Target to be achieved within three years, i.e. by the end of 2002 Analysts-presentation 8 March 2000 79
Shareholder value model for setting business unit targets Conceptual BU base case reports After tax earnings 10% MO 1 Economic profit Group base case CAGR =X% Total earnings MO 2 CoE MO 3 MO 4 2000 2002 2004 2006 2008 2009 Target Growth ROE Gap ROE Value/stock price implications Target setting MO MO Sum Aspirations Base case CoE Growth Return Capital Value added........... Growth in earnings Value gap relative to Analysts-presentation 8 March 2000 aspirations 80
Maintain strategic freedom of manoeuvre Six platforms which can be developed as stand-alone businesses in various combinations, or as a single entity Investment management Private banking Retail distribution Life insurance products and corproate distribution Health insurance P&C insurance Analysts-presentation 8 March 2000 81
Summary Proforma profit NOK million + 127% 603 98 99 1,370 New Storebrand made good progress in terms of many crucial success factors in 1999 Storebrand's multi-channel distribution strategy and advisory concept is producing results Storebrand is well placed to win a major share of the growing savings market The group is strongly capitalised Storebrand has been an active developer of internet systems since 1996 and will continue to develop new intranet and internet functionality Storebrand intends to be the leading savings company with a focus on growth through distribution efficiency, market leading product development and high quality investment management Analysts-presentation 8 March 2000 82
Life insurance Main features of 1999 Premium volume maintained with further increases in market share Very strong investment return - both absolute and relative Sharp increase in risk bearing capacity Market leader unit linked products Marginal increase in cost ratio Well positioned for future growth and profitability Analysts-presentation 8 March 2000 83
Sales performance Net transfer of business to Storebrand continues Strong growth in premium income in corporate market Increased market share in both corporate and retail markets Analysts-presentation 8 March 2000 84
Net transfers - Storebrand Life (book values) * Unit link 1 026 NOK mill. 920 1 015 1991 1992 1993 1994 1995 1996 1997 1998 73 11 1999-674 -580-686 -1 364-2 100 % of policyholders' funds (inc. conditional reserves) -2 463 Policyholders' funds NOK bn (exc. conditional reserves) -1.1% -3.3% -3.8% -0.9% 0.1% -1.8% -0.9% 1.1% 1.2% 65 64 66 69 75 78 85 89 97 Analysts-presentation 8 March 2000 85
Storebrand Livsforsikring & Fondsforsikring Premium income (including transfers received) NOK. mill 1999 1998 Collective 6,529 5,779 -of which transfers 2,008 1,880 Group life 373 362 Individual endowment 1,549 1,839 Individual pension 813 907 Unit Linked 1,262 211 Total 10,526 9,098 - of which reserves transferred* 2,098 2,006 * Excludes Unit Linked Analysts-presentation 8 March 2000 86
Market shares - premiums written * total including unit linked products NOK mill. Vesta/Skandia 20 691 23 358 28 985 33 443 33 838 4 % 6 % 7 % 6 % 8 % Gjensidige NOR 22 % 24 % 20 % 18 % 17 % Sparebank 1 KLP Norske Liv Vital Vår 1 % 19 % 4 % 19 % 3 % 2 % 1 % 1 % 1 % 16 % 19 % 19 % 19 % 10 % 7 % 4 % 5 % 17 % 17 % 19 % 17 % 3 % 3 % 3 % 2 % Storebrand 28 % 25 % 26 % 27 % 31 % 1995 1996 1997 1998 1999 * Inc. reserves transferred Source: Association of Norwegian Insurance Companies (ANIC) and company information Analysts-presentation 8 March 2000 87
Market shares - premium written * total retail lines including unit linked products NOK mill. Vesta/Skandia 5 873 6 216 11 239 10 947 11 319 1 % 1 % 3 % 5 % 10 % Gjensidige NOR 31 % 31 % 25 % 27 % 22 % Sparebank 1 Norske Liv 4 % 3 % 9 % 11 % 4 % 3 % 4 % 22 % 17 % 9 % Vital Vår 21 % 21 % 4 % 3 % 18 % 19 % 2 % 2 % 22 % 2 % Storebrand 29 % 29 % 26 % 27 % 32 % * Inc. reserves transferred Source: Association of Norwegian Insurance Companies (ANIC) and Skandia Analysts-presentation 8 March 2000 88 1995 1996 1997 1998 1999
Market shares - premiums written * total corporate market NOK mill. 14 818 17 142 17 745 22 496 22 519 Vesta Liv/Skade 6 % 8 % 9 % 7 % 6 % Gjensidige NOR 18 % 22 % 16 % 13 % 14 % KLP Norske Liv Vital Vår 27 % 1 % 18 % 3 % 26 % 2 % 15 % 3 % 27 % 3 % 16 % 4 % 28 % 28 % 2 % 2 % 19 % 15 % 3 % 3 % Storebrand 28 % 24 % 25 % 28 % 31 % 1995 1996 1997 1998 1999 * Inc. Reserves transferred N.B.: Sparebank 1 has 0% market share and is excluded from this chart Source: Association of Norwegian Insurance Companies (ANIC). Analysts-presentation 8 March 2000 89
Storebrand Livsforsikring AS: Investment return 16 % 14 % 12 % 10 % 9.9 % 10.0 % 10.0 10.5 % 8 % 8.5 % 8.5 % 6 % 6.9 % 5.9 % 4 % 2 % 2.4 % 3.5 % 0 % 1994 1995 1996 1997 1998 1999 15.7 % 10.0 % Book Value adjusted Analysts-presentation 8 March 2000 90
Sharp increase in risk bearing capacity 15.4 bn. 9.8 bn. 11.6 bn. 9.7 bn. 7.3 bn. 1999 1998 1997 1996 1995 Addn. Stat. Res. Mkt.ValueAdj.Res. Core Capital Margin Analysts-presentation 8 March 2000 91
Market share - premiums written * unit linked 1997-1999 NOK mill. Other*** Handelsbanken** 860 1,685 4,398 20% 06 % 3 % Skandia** 30 % 26 % 23 % Gjensidige NOR K-Fondsforsikring** 8 % 2 % 7 % 6 % 6 % 7 % Vital 34 % 42 % 28 % 1 % Vår 10 % 2 % 29 % Storebrand 13 % 13 % * Inc. Reserves transferred 1997 1998 1999 ** Company does not provide statistics to ANIC. Our figures taken from company information. K-Fondsforsikring and Spb 1 figures provided to ANIC only from 1999. *** Sparebank 1, SEB and Commercial Union Analysts-presentation 8 March 2000 92
Cost performance Higher total costs due to increased distribution capacity, IT investments and higher investment management charges. Average cost ratio slightly higher in collective lines, but strong competitive position maintained in all segments Cost ratio higher for retail lines, but cost ratio and cost increase relative to administration premium are still very competitive relative to other life companies and competing savings products. Investment management fees are determined in part by investment performance relative to an index portfolio. Good investment results in 1999 triggered an additional fee of NOK 34 million. Analysts-presentation 8 March 2000 93
Total costs as % of average policyholders' funds 1.02 % 0.90 % 0.86 % 0.94 % 0.96 % 1995 1996 1997 1998 1999 Analysts-presentation 8 March 2000 94
Well positioned for further growth and profitability Expect to see growth in all markets - but particularly in the corporate market New technology offers more efficient access to private individuals, both as private customers and as employees of corporate customers Storebrand will launch the next generation of pension products for the corporate market during 2000 All distribution channels for the retail market are now concentrated into one strong unit Analysts-presentation 8 March 2000 95
Occupational pensions - market penetration Illustrative Pension funds Public sector Private companies with occupational pension schemes Private companies with no occupational pension scheme Analysts-presentation 8 March 2000 96
Work place distribution Personal advice at the work place Customer centres - long opening hours The employee Staff meetings and themed seminars Information on employer's pension scheme and the life company's role Simulation tools and comprehensive overview on the Internet Analysts-presentation 8 March 2000 97
Complete range of group based products Products Format Defined benefit Defined contribution Yes Yes 1 Jan 2001 Yes Life company Pension fund Bank Mutual funds Pay as you go Tax qualifying Non tax qualifying Analysts-presentation 8 March 2000 98
Combined strength in distribution for the retail market Staff numbers 70 20 20 280 Internet Work place distribution External channels 135 35 Financial advisers Cust. centres Franchise Co. agents Bank Total Analysts-presentation 8 March 2000 99
Increasing share of the retail market Per cent Traditional insurance 29 32 1998 1999 Unit Links 13 29 Mutual funds 6 8 1 9 Delphi Analysts-presentation 8 March 2000 100