Storebrand ASA ($STB)

Good morning, ladies and gentlemen, and welcome to Storebrand's First Quarter 2026 Results Presentation. As usual, our CEO, Odd Arild Grefstad, will present the key highlights, followed by CFO, Kjetil Krokje, who will dive deeper into the numbers. At the end of the presentation, participants in the Teams webinar will have a chance to ask questions. Details on how to join the webinar are found on the Investor Relations website. But without further ado, I give the word to our CEO, Odd Arild Grefstad.

Thank you, Johannes, and good morning, everyone. Storebrand delivered a solid start to 2026. The macro backdrop of the first quarter was challenging with volatile financial markets. Yet our business model proved robust with positive developments across all business segments. The operational result grew 28% to NOK 1,026 million. The cash-based earnings ended at NOK 1,353 million, despite a moderate financial result due to mark-to-market effects. Assets under management ended at NOK 1,543 billion. While market movements negatively impacted the AUM this quarter, the changes were mainly driven by currency effects. Net flows remain positive, and we have seen the market rebound in the second quarter. Our solvency ended at a new high of 206%. This underscores the solidity of our business and makes us confident that we will deliver on our capital distribution plans. It is encouraging to see all reporting segments delivering double-digit growth in operational results this quarter. This reflects the impact of our cost initiatives and demonstrates the resilience of our business model. Insurance had a strong first quarter with 151% result growth, mainly due to significant increase in new customers. In Savings, the operational result grew by 15% year-on-year. And Guaranteed Pension also achieved a double-digit growth for the quarter. I am pleased to see that the volume growth is converted into scalable operational results. Let me briefly touch on capital distribution. Storebrand maintains a strong capital position, and the buyback program remains on track. Of the NOK 2 billion program for 2026, NOK 1.4 billion remains to be executed. With a 206% solvency ratio, strong remittance this year with liquidity levels well above targeted minimum levels and a strong earnings outlook, I'm confident that Storebrand is well positioned to deliver on the 2025 CMD capital distribution ambitions. We keep executing our strategy to grow capital-light business areas. The strategy is built for Storebrand to take 3 commercial positions. A, to be the leading provider of occupational pension in both Norway and Sweden; and B, to be a Nordic powerhouse in asset management; and C, to be a fast-growing challenger in the Norwegian retail market for financial services. We take these positions and unlock growth by using our strategic enablers and group synergies. We continue to deliver strong growth in our strategic focus areas. Despite volatile markets in the quarter, the underlying growth path remains firm. This is a continuation of strong growth consistently delivered over many years. In Asset Management, the decline mainly reflects a negative currency effect and flows remains positive. Growth in the bank was somewhat lower this quarter, reflecting a deliberate adoption of the balance sheet to CRR3. Occupational pension are a core growth platform for Storebrand. I want to highlight an important milestone that Storebrand has worked for over time. In the quarter, the Norwegian parliament passed a bill, introducing significant changes to the regulation of paid-up policies and other guaranteed pension products. Key changes include more flexible guarantee rules designed to support longer-term investment strategies. This is expected to increase pensions and improve profit sharing. Kron continues to gain traction in the own pension account market. More than half of our sales within the own pension account market are now fully digital. Easy onboarding and intuitive fund selection ensure scalable and high conversion rates. Despite market volatility, Asset Management delivered a strong operational result growth of 41%. Disciplined cost management contributed significantly. Operating costs were reduced by 6% and the cost-income ratio improved by 9 percent points compared to last year. We also completed the merger of Storebrand Fonder into Storebrand Asset Management. This has further simplified the organization, streamlined processes and strengthened our scalable platform. We keep delivering strong growth in Norwegian retail market. Kron continues to attract new retail savings customers. Assets under management on the platform are now at NOK 43 billion, growing 80% year-on-year. Retail insurance is also an important growth area for us. Let me spend a moment on why this area is important for our long-term value creation. Norwegian retail P&C is a large and profitable market, and we are the fastest-growing actor in this market and now hold a market share of around 8%. Our brand is strong, our offering is competitive and the Solvency II diversification effects give us capital synergies that makes return on investment -- invested capital in the business very attractive. When very high return on capital compounds over time, it fuels the long-term Storebrand investment case in a way that few others can match. The underlying profitability is back on targeted levels despite high upfront distribution costs, reducing the reported profitability. And remember here, we have no deferred acquisition cost in Norway. With ongoing organic growth initiatives supported by new initiatives such as Santander distribution partnership that goes live on the 4th of May, I'm confident that we can further improve our position in this market. We have seen step change in the development of AI capabilities in the first quarter of 2026. I am now more than convinced than ever that AI is a key to remain competitive and strengthen our market position. We are measuring our progress across 5 strategic areas, and we are seeing real results. In customer service, our generative AI assistant now handles 60% of the chatbot traffic, improving customer satisfaction while reducing the need to escalate to human advisers. In the bank, we have automated over 650,000 customer cases, which is a key enabler of growth without proportional cost increase. And our technology teams are moving significantly faster as we scale AI-driven development and increase the share of software built in-house. We see significant further potential, and we are systematically mapping our value chain to identify where AI can have the greatest commercial and operational impact. And with that, I give the word back to you, Johannes.

Thank you, Odd Arild. Now let's take a closer look at the numbers. Kjetil, please go ahead.

Thank you, Johannes. Let us start with the key figures for the quarter. The quarterly result was NOK 1.353 billion. This represents an increase of 16% compared to the same quarter last year, with earnings from operations up 28%. The result development confirms continued positive momentum across the business with double-digit result growth in all 3 core segments: Savings, Insurance and Guaranteed. Earnings per share ended at NOK 2.10, and the annualized return on equity for the quarter was 12%. Both these items are negatively impacted by an unusually high tax rate in the quarter. I will return to this in a moment. Let me move to the solvency ratio. The solvency margin ended at 206%, up from 194% last quarter. Changes to regulatory assumptions contribute positively alongside a 7% strengthening of NOK to SEK and low growth in the retail banking business. This was partly offset by high booked tax rate, accrued dividends in the quarter and the inclusion of the first NOK 1 billion tranche of the announced share buyback program. With the current level of solvency, buffers and interest rates, the balance sheet remains very robust to fluctuations in the financial markets. Let's go a little deeper into the results line by line at the group level and then turn to the reporting segments. The growth in the business continues. Fee and administration income is up 5% year-on-year and the insurance result is up 41% compared to the first quarter of last year. Growth, price increases and other measures in Insurance are giving the expected effects. Operational costs amounted to NOK 1.736 billion in the quarter, a 3% growth, excluding sales commissions. We have continuous work ongoing to address our cost base and find the development satisfactory in the current environment. For 2026, we expect to have around NOK 7.3 billion, NOK 7.4 billion in operational costs. This is before currency performance-related costs, and this is in line with earlier communication. Financial results are moderate this quarter due to challenging equity markets, increasing interest rates, which have a negative effect on profit sharing and result contribution from the company portfolios. All taken together, this leads to an improvement in the operating results of 28% and a group cash equivalent earnings before amortization of NOK 1.353 billion, the strongest first quarter result on record. The reported tax charge for the quarter was unusually high at 36%. This was due to a 7% strengthening of the NOK versus the SEK, impacting hedging instruments and this is a nonrecurring effect. We hedge our ownership of SPP for solvency purposes. The asset is at book value from a tax perspective and the hedge is at market value. This implies that the currency movements and asymmetry in how tax is calculated on assets and currency hedges will affect the tax cost quarter-to-quarter. And this quarter, the effect went the other way than it did the same quarter last year. Our tax guidance is still 19% to 22%. This table shows the same numbers as on the previous page, but split into the business lines, Savings, Insurance and Guaranteed. Savings and Insurance both report strong development in the quarter and Guaranteed delivers a result improvement driven by cost reduction and improved risk results. I will comment on each area in the coming slides. The Unit Linked business shows continued growth with reserves up by 12% compared to the same period last year. Premiums remained stable at just under NOK 8 billion. While top line margins are down by around 3 basis points year-on-year, our measures to improve operational efficiency are progressing, and we are reporting strong result development. The Asset Management business reports a strong result in the quarter with earnings before amortization up by 32% from the same quarter last year. This was achieved with limited event-driven income from real estate, which underlines the earnings capacity in this business. Total assets under management ended the quarter at NOK 1,543 billion, with the quarter-on-quarter movement reflecting NOK 55 billion in negative currency effects. Net flows remained positive. The bank delivers a softer quarter with the net interest margin down to 1.29%. This is driven by lower margins on deposits, and this is also in line with the CMD guiding. The lending portfolio has grown 9% year-on-year, but have been relatively flat over the last quarter. The bank had robust gross sales, but has chosen to adapt the balance sheet to optimize return on regulatory capital under CRR3. The insurance business continued to deliver stronger results after a challenging couple of years. The combined ratio has improved 4 percentage points to 93% for the quarter, a strong result given the seasonality in P&C and the disability-related business, combined with the cost for growth. Higher sales in the tied agent distribution channel had a NOK 34 million impact on operational costs in the Insurance segment compared to the first quarter in 2025. We book all sales costs upfront and do not book any deferred acquisition costs in the Insurance segment. So when sales are strong, all costs are taken upfront. The corporate insurance business delivered moderate results in the quarter. This is explained by higher-than-expected disability claims in the quarter for group life. Price increases were implemented at the start of the first quarter with churn within normal variation, and we continue to monitor the situation across the disability-related lines of business. The corporate P&C offering has continued to scale at satisfactory profitability levels. In Guaranteed, results improved year-on-year, driven by cost reduction and improved risk results with a positive contribution from the public sector pensions and stability in other segments. Profit sharing in the quarter was limited, reflecting weak equity markets and increasing interest rates. With a solid buffer capital situation and a 2% expected return above the guaranteed interest rates, the outlook for profit sharing is good and it's strengthening with the new regulation that has now arrived. Positive longevity and disability results for paid-up policies supported the improved risk results in the quarter. Moving on to the financial results on company capital in the Other segment. The main drivers in the segment are the return on company capital in the holdco and the life insurance companies, less the cost of debt. The result contribution in the quarter was NOK 37 million, down year-on-year due to mark-to-market effects from increased interest rates. The company portfolios in the Norwegian and Swedish life insurance companies and the holding company amounted to NOK 29 billion at the end of the quarter. As for the financial ambitions, with the results we present today, we have a strong start to the year and an excellent momentum in the Group to deliver on our 2028 ambitions. And with that, I hand it back to you, Johannes.

Thank you, Kjetil. We're now happy to take questions from our audience. [Operator Instructions] The first question comes from Hans Rettedal Christiansen in Danske Bank.

So firstly, I guess, very positive to see the sort of cost income development in the business. And I think it came a lot quicker than a lot of us thought given that you were -- you announced it sort of in December. So my question is regarding how kind of sustainable is the run rate that you're at now? How much are the sort of nominal cost savings in the efficiency program? I suppose if I take NOK 1.7 billion and annualize that I arrive at sort of NOK 7 billion, which is below the NOK 7.3 billion to NOK 7.4 billion. And I understand that costs can be up and down, of course, from quarter-to-quarter. But just kind of trying to understand how sort of -- how much of that scalability that you were speaking about in the Capital Markets Day are we seeing already now? And how much is more just lower kind of costs in a lucky quarter in that sense? And then my second question is on the change in regulation and the loan to equity. And I understand sort of from the customers' point of view, this is a good thing and that you're a little bit tight-lipped about what it means sort of financially. But from a shareholder point of view, how should we think about it in terms of profit sharing potential from these changes in regulations going forward?

Perfect. Thank you, Hans. Let me start on the cost side. This has been a very good start of the year. As you see in our disclosure, it's roughly NOK 10 million. That is a, what you can say, a nonrecurring effect on the positive side. Other than that, this is a good reflection on where we are at, at the moment. And it shows that the effect of the programs we are doing, both in the corporate market in Norway and in asset management, especially as you see in the numbers. And then as you say, obviously, costs fluctuate a little bit from quarter-to-quarter. We haven't changed the guiding for the full year, but we feel much more confident now that we are on a very good trajectory to reach them and rather risk that we can go under rather than over is our current assessment.

Yes. And I think also just to comment on -- especially on the Asset Management side, where we have very much focused on scalability and worked with that for a long time, we see that we have been able to make changes in the operating model that has streamlined the organization and very pleased now to see actually real cost reduction coming through in the cost base in Asset Management and real scalability coming through.

As for the changes in the regulation, it enables us -- at the first instance, it will increase the solvency ratio a little bit, all else equal. And it enables us then to increase the risk targeted in the customer portfolios. And obviously, if we achieve higher returns in the customer portfolios, this will translate also into higher profit sharing to shareholders. We haven't been very precise on the change, but it means that we think we will reach a higher profit sharing level in Norway than the NOK 400 million we guided for on the CMD. And then we will revert. This is quite new still. We're working on balancing out what kind of asset classes we take more risk premiums in and what is the ideal for customers, both day 1 and after a shock to make sure that we do the right and prudent asset allocation, but that enables higher pensions for our customers.

We have a next question from Ulrik Zürcher in Nordea.

So I was just wondering about the net flows here. On the transfer balance in Unit Linked Norway, negative again. Was it the loss of some big clients or was more general attrition? That's the first one. And then secondly, I just -- I know you said you didn't expect a lot of or didn't win contracts in the public occupational pension, but this was expected that transfer balance there would be basically 0, right?

So let me start on the Unit Linked side. I guess main message from us here is we're still in kind of a structurally growing market. We have been the market leader for many years, and we have been very -- we are very clear that we should have a disciplined approach to pricing and disciplined approach to scalability. And we see that now in the numbers. We increased the results on the operating side on Unit Linked with 14% now in the quarter. That said, the transfer balance you see is a more general attrition. It stems from Q4 last year and then the actual transfer happens then now in the first quarter. What we see so far in the first quarter is on the pure occupational pension Unit Linked side, we see quite good momentum for Storebrand. So of course, long term, we are not aiming to have a negative flow here, but we have done what is necessary to keep margins and keep scalability. And Johannes?

Yes. And when it comes to the public pensions question, Ulrik, we won NOK 3 billion during the autumn in public pension. So we expect that to be transferred during the second quarter.

Okay. Is that new? Because typically, it's been transferred in Q1. So I was just...

Yes, I think it's...

Than it was as expected.

Yes, it can vary a little bit from year-to-year exactly when the transfers happen.

Okay. That makes sense. Yes. And then all the -- when you say the margin on this -- in the Unit Linked segment and not Insurance, it just make it seems that these are large clients you have lost then?

So on the client side, and when we talk about margin, we talk about both the Insurance and the Savings side. So the real margin enhancement can be found in the pension-related disability insurance line.

We have a next question from David Barma in Bank of America.

Firstly, on the risk result and kind of disability, if I can ask you to elaborate around 3 areas there. One is the -- how sustainable the risk result in the guaranteed business is and whether that's driven more by seasonality, seasonally higher mortality in the period? And then on the non-life corporate business, I thought we would have seen a sharper improvement in the claims ratio this quarter on the back of the measures you've taken last year. So if you can update us on what you're doing there and how fast you think you can return to your targeted levels of profitability? And then kind of linked to that, on your answer just now on the Unit Linked transfer balance. I understand that more discipline for disability cover might be one of the areas that makes you less competitive. Is this what you're seeing as the key driver of the negative transfer balance? And if that's the case, why would it reverse this year? So those are my questions on the kind of risk and disability. If I can squeeze one -- other one on solvency. You're now at a very high level and you still have some modeling benefits to come next year. How should we think about your priorities to come back within your target range of solvency?

Perfect. Let's start with the results in Guaranteed, the risk results. We see a little bit higher results this quarter than what we guided on as a normalized result on the CMD. This is due to a little bit increased longevity in the paid-up policy portfolio and somewhat more people coming back to the workforce from disabilities. Those are the main effects. We -- these are long-tailed coverages, and it's hard to draw an inference from a single quarter. So we will monitor it and, of course, report this quarter, but we don't kind of change the guidance on the back of this. When it comes to group life, you are correct, still challenging. We have done high price increases in this area, and we will further this year consider if we are to be present in all the parts of the market we are present in today. I think that is the -- that is what we're working on now and obviously also working with further price increases. Should we go to the...

I think the question was also about the price pressure and the competitiveness in Unit Linked. And I think on that side, we see quite healthy margins now within the more insurance product linked with Unit Linked. So we are in a good place when it comes to be competitive going forward in the Unit Linked market.

Absolutely. And I think you are correct that it's that line of -- in our reporting that has been most competitive previously.

When it comes to solvency, we are reporting a record high solvency. As you know, we both look at the solvency ratio. We look at the liquidity in the holdco. That is also on a very high level. And we have a good reserve generation in the Group. All of this together is measures that we look at to be able to, with high confidence, deliver on the capital distribution plan we have put forward with a growing dividend and NOK 2 billion in share buybacks this year. And it gives, of course, an excellent momentum to deliver on these targets and also flexibility for the Board to review what they are going to do with distribution going forward.

We have a next question from Thomas Svendsen in SEB.

So 2 questions from me as well. So first on this new regulation from the parliament there. If you were to use sort of the new flexibility improve solvency, could you sort of indicate the range of what the solvency ratio would increase with if you took that decision? And also on the parliament's sort of decision here, they asked the government to look at other things as well. So could you give some more flavor on that? Is that -- if there is any significant things there that could impact you that the parliament asks for? And second question on Asset Management operations and the flows there. The bridge you show that the net flows was moderate in this quarter. So does this have something to do with sort of your cost-cutting efforts in that operations and external lack of sales of external mandates, et cetera?

Well, let's start on the solvency ratio. The effect just taking it straight in without doing any measures is mid-single-digit plus. So somewhere between 5% and 10% points would be a fair assumption. But I want to stress that we are going to look at the best asset allocation to get good pension for pensioners and also, of course, higher profit sharing for our shareholders. And on other discussions and also with the parliament...

Well, I think it's a lot of positive elements. It's also some good elements when it comes to paid-up policies with profit sharing.

Investment choice.

With the investment choice in here, both when it comes to opportunities to have a good asset allocation also in the payout phase. It's making it more easy to do good advices around paid-up policies with the investment choice. So it's going on the whole broad direction of both the old guaranteed paid-up policies and the paid-up policies with the investment choice that should bring new momentum into this market.

I think it's also fair to say on the asset management side, there have come some positive news on the regulatory side for Norwegian domicile now in the latest publication from the government. So we see that things are happening. And then you had the last question on the flows in Asset Management, Thomas?

Yes.

Yes. On the flows of Asset Management, I think we have seen that the PPM system in Sweden had a negative influence on the flow in the quarter. That was some billions. I don't remember exactly number now, but that there was an outflow with quite low fees, but we have an inflow that was then very positive. And the net number was not that big, but it is still a good momentum in sales and growth and net flows, I think, in Asset Management.

We have a next question from Michele in KBW.

Just one question about the -- I'm sure you're following the consolidation wave in the banking sector in Norway. Just wanted to ask if you have any intention to participate to this consolidation?

Well, we, of course, are following the market and the players very, very tight. And we see a consolidation, especially for the savings bank sector in Norway. We are not in the market to add any banking activities to our balance sheet. We have a bank setup that suits us well to be a savings actor. The integration with Kron is going very well for us to increase our savings and our cross-sales activities based on the bank we have. So we are happy with the bank setup we have. We are -- you should not expect us to take part actively to add banking activities to our balance sheet.

It looks like we've covered all the questions. So that wraps up today's presentation. Actually, there's a follow-up question here from Thomas in SEB.

Just a very quick one on the bank. NII declined sharply Q-o-Q. Do you expect it to rebound over the next 1 or 2 quarters? What should we expect there?

Well, I think it's a bit of countervailing forces there. I guess if the interest rate curve materializes and interest rate goes up, that obviously, in banking, hurts a little bit in the short time period and but feels better in the long time period. So that is one factor. And then on the other hand, we are working to adapt the balance sheet even more to CRR3 and you saw a decline in LTV in the quarter. And that is, of course, something we can work with ourselves to do changes in the LTV and also engage more customer as daily, what we call daily bank customers that could go the other way.

It seems like we have a next question from Herman Zahl in Pareto.

Just on the bank, you're saying the lower growth is somewhat related to adjustments in the CRR3 and new sales were stable. So should we read that as sort of the underlying growth is similar to recent trajectory and there were some deliberate specific exposures in this quarter?

What we said on the CMD was we expected 5% to 10% growth in the bank over the next year. I guess with the growth you see this quarter, we are more at the bottom end of that trajectory rather than the top end.

Yes. And because we saw that the NSSA published a report on the bank. So could you just state your view on that and if you see any sort of changes needed remaining to sort of meet that criticism?

Well, first of all, the bank has been growing a lot for a very long time. We have had this report from the FSA. It was based on the situation back in 2024, and it was also based on a quite limited part of the portfolio. Of course, we have taken a lot of measures from 2024 to now to increase some important functions within the bank to cope up with the growth of the bank balance. And I think we are in a much better place now compared to what we were back in 2024. And I feel comfortable about the bank balance and our growth going forward.

It seems like we're done through all the questions. So that wraps up today's presentation. We look forward to seeing you again at the second quarter result presentation on July 15. Thank you for attending, and goodbye.