Storebrand Q2 2026 Earnings Call | Digital Insurance Unit Growth Mitigates Volatile Yield Pressures

Good morning and welcome to Storebrand's second quarter 2026 result presentation. As usual, our CEO Odd Arild Grefstad will start by taking us through the key highlights. He will then be followed by our CFO Kjetil Køje who will dive deeper into the numbers. After the presentation, we will open up for questions from participants in the Teams webinar. Details on how to join the webinar are available on our investor relations website. With that, I'll hand it over to you, Odd Arild.

Thank you, Odd Arild. Now, let's take a closer look at the numbers. Kjetil, over to you.

Thank you, Stin. Let us start with the key figures for the quarter. The quarter result was 1 billion 799 million. This represents an increase of 26% compared to the same quarter last year, with earnings from operations up 17%. The result development confirms continued momentum across the business with double digit result growth in all core segments. Earnings per share for the quarter were 303.43 kroner, up 19% year on year. The annualized cash return on equity was 20%. Trailing 12 months, the return on equity is 16%. Let me move to the solvency position. The solvency margin ended at 200%, a decrease of 6 percentage points from 206 at the end of the first quarter. The decline is due to increased symmetrical adjustment of the equity stress driven by strong equity markets and reduced volatility adjustment for the interest rate curve. Strong results contributed positively. The share buyback program for the second half of the year is not yet reflected in the reported solvency ratio. With the current level of solvency, buffers and interest rates, the balance sheet remains very robust to financial market fluctuations. Let's go a little deeper into the results line by line at the group level and then turn to the reporting segments. The result growth in the business continues. Fee and administration income amounted to 2 billion 31 million, down 2% year on year but up 1% year to date. The soft year-on-year development despite strong AUM growth reflects three factors. First, performance fees in management were 97 million weaker this quarter compared to 2025. Second, interest rate development and higher funding costs led to temporarily lower income in the bank. And third, currency, namely Swedish Krona and Danish Krone, reduced the fee income level by low single digits. From the third quarter, income will be affected by the transfer out of a KNK 13 billion outflow of a customer within hybrid and guaranteed pensions. That effects negatively around 20 million per quarter, mostly in the guaranteed segment. Underlying there is good momentum in the in-force business. The insurance results again showed strong growth, which I will come back to. Operational costs amounted to 1 billion 801 million, a growth of less than 3% year on year. We have ongoing work to address our cost base and so far the development is satisfactory, especially in light of the sales costs within insurance being higher than expected. For 2026, we still expect operational costs of around 7.3 to 7.4 billion. Market results were strong this quarter at 680 million, up from 474 million, supported by higher profit sharing and solid returns in company portfolios. The reported tax charge was 355 million, an effective tax rate of around 20%, but with non-recurring items giving an elevated tax rate this quarter. This table shows the split into the business lines: savings, insurance and guaranteed. Savings delivered 708 million, up 12%. Insurance improved significantly to 480 million, up from 289 million last year. Guaranteed delivered 424 million, up 19%. And the other segment contributed 187 million. I will comment on each area in the coming slides. Let me start with savings. Equity markets and operational improvements drove 12% result growth year on year for the segment, driven by unit-linked and asset management. The unit-linked business continues to grow. Reserves are up 19% compared to the same period last year while premiums remained stable at just under 8 billion. Operational efficiency measures are progressing well and we report a strong result development with earnings at 30% year on year. Asset management showed satisfactory underlying development. Performance fees were weak and event-driven income was limited, but operational costs were down 12% year on year. This further improves the cost-income ratio for the area. Within asset management, 27 million financial income from the reevaluation of a future earnout liability was recognized. This is a non-recurring special item. Assets under management reached a new record of 1658 billion, up 10% year on year. Strong financial markets contributed around 100 billion in returns so far this year, partly offset by currency effects of around 45 billion and modestly negative net flows. The bank had a softer quarter. Net interest rate margin was down to 1.17%, driven by lower deposit margins and increased funding costs. While this is in line with the capital markets day guidance around 1.2%, we expect some increase when the interest rate adjustments are reflected in our portfolio. Lending grew around 7% year on year with continued modest growth as we continue to adapt the balance sheet to CRR3 and optimize the return on regulatory capital. Turning to insurance, we saw strong growth and result development within retail while corporate delivered more modest results this quarter. This is driven by a disability-related reserve strengthening in group life. The insurance portfolio premiums grew 12% year on year. Retail delivered 22%, driven by solid volume growth. The market share in Norwegian retail P&C increased further to 8.1% from 7.5%. Corporate insurance had a negative development in portfolio premiums. This was due to the outflow of a hybrid and guaranteed pension customer with a pension-related disability insurance. The combined ratio improved by four percentage points from the same quarter last year to 87% for the quarter. The segment result rose to 480 million from 289 million last year. Retail was the main driver with a combined ratio of 80% and a result of 397 million, more than double last year. The profitability in the quarter benefited from benign weather and run-off gains, and large losses were broadly in line with expectations. Successful sales in the tied agent channel added 32 million in operational costs in the quarter as we book all sales costs up front and do not carry any deferred acquisition cost in the insurance segment. Corporate insurance delivered a combined ratio of 96%. This is explained by higher than expected disability claims in group life, where we strengthened reserves in the quarter. Pension-related disability and corporate P&C developed well. We continue to monitor disability-related lines closely. In guaranteed pension, we delivered a strong result supported by profit sharing. Guarantee delivered cash equivalent earnings before amortization of 424 million, up 19% year on year. Net profit sharing was 242 million in the quarter and the risk result was a solid 26 million, supported by positive longevity and disability results for paid-up policies. The buffer capital position remains strong, increasing to 8.7% of customer reserves with guarantees in Norway and 29.8% in Sweden. Guaranteed reserves now make up 34.5% of reserves above the guaranteed rate. The outlook for profit sharing remains good. Moving on to the financial results on company capital in the other segment. Other segment reported a result of 187 million, up from 147 million last year. The main drivers are the returns on company capital in the holding company and the life insurance company less the cost of debt. The financial result was robust at 243 million, driven by strong returns in the company portfolios. The Norwegian portfolio returned 1% and the Swedish portfolio 1.1% in the quarter. The company portfolios in the Norwegian and Swedish life companies and the holding company amounted to 30.7 billion at the end of the quarter. Shorter term, we expect the result contribution from the company portfolios minus debt to be at least on the year-to-date levels. Costs in the segment will also be higher in Q3 due to the KNIF acquisition and project-related costs. The liquidity in the holding company is at very robust levels at 6.1 billion, reflecting that most of the capital upstream from the subsidiaries are now completed. We remain on track towards our 2030 goals. We have reduced financed emissions from listed equities and corporate bonds by 52% against our 2018 baseline. We are well on the way to our 60% target for 2030. 43% of these assets are now covered by science-based targets ahead of our 2027 milestone, and solution investments make up 20% of the portfolio. Finally, our financial ambitions from the capital market day remain firmly in place with a result target of 7 billion and a cash return on equity of 17% by 2028. We are doing 2 billion in share buybacks this year and at least 1.5 billion annually from 2027 to 2030. This comes in addition to growing dividends every year. With the results today, we have a strong first half and excellent momentum to deliver on these ambitions. And with that, let's open up for questions.

Yes, but first use the raise hand function in the Teams webinar if you would like to ask a question. And to make sure everyone gets a chance, please limit yourself to two questions at the time. Kjetil, I'm filling in for Johannes today. You explain to us what has happened there; some changes in the starting lineup this time around? Johannes just became father for his first son very recently, so we wish him the best of luck in his new role as a father.

Yes, and to add on that, congratulations to you as well. You also became a father days ago. So I must say it's very good to see that the IR department takes responsibility for the demographic development in Norway. So that's good for sure. Big congratulations to you both.

Now let's move on to the questions and first question is from Thomas Svensen from SB. Thomas, please go ahead.

Yes. Good morning. So my first question on the total asset management. What could you say what the net flow was there from Q1 to Q2 and also I guess you have to do some adjustment because in the unit-linked assets there were also some non-recurring items as far as I can see. And the second question on the non-life side, you write something about run-off gains; could you quantify that on the retail?

Yes, okay. On the net flow, that was relatively close to zero in the quarter. And as regards with the flow within unit link, if that was your second question, there we have two factors. We have the association I talked about that moved out of the segment which was roughly 6 billion in the quarter. And then you have the move of all the Kron customers of roughly 12 billion in the quarter going into that line. That, when you look at the overall AUM, that internal change within the company does not count into that move, only the funds that move out. On the run-off gains, there was some run-off gains in the Norwegian P&C portfolio of some tens of millions. But when you look at the totality of the insurance segment, we did some reserve strengthening in the corporate lines, so the combined ratio we deliver on 87% is a good estimate of where we're at, and with 90% year-to-date, that's also a good estimate of where we're at.

Okay, thank you.

Thank you, Thomas. Next up is Faruk Honey from JP Morgan. Faruk, please go ahead.

Hi, thank you very much. Congratulations all of you for increasing the Storebrand family and the world population. So congratulations for that. Yeah, so I mean, just going back to insurance, you know, an amazing result again. It just seems Storebrand defies gravity as always. So just want to understand again the mix between volume growth and pricing and any kind of forward-looking statements you can give on the trends that you're seeing in the market around that. And you know, going back to the previous question, I mean, are you effectively saying that 87% is a fairly clean number? So I just want to understand again, subject to relative to your kind of less than 90% target, I get that weather is a factor in Q1 and Q4, but it just feels like you're getting there early if you can comment on that. Sorry, that's more than one question. Second question is around your early thoughts on profit sharing with the rule change. There are many ways you can approach this. You could use all of the capital gain that you get and invest that in higher risk or you can use some of it. And would you also consider now growing more actively, growing paid-up policies? You gonna make it easier to grow that book. Thank you.

Follow-up, apologies, but I think you gave some guidance on the potential impact from this range. Could you remind us of it and can you just say would you be wanting to use all of that up in some form?

Yes, so I think last quarter we said mid to high single digit. I think the updated estimate is mid single digit-ish of solvency impact. I think it is, we have the appetite to use the solvency but we need to also have the appetite for potential result volatility and doing the right risk management. So I think on the solvency side it's okay, but we need to kind of do the full holistic review of it. I think also one part that should be mentioned in this discussion is that we also see now better conditions when it comes to paid-up policies with investment choice and the opportunity now to move from the guaranteed paid-up policies into investment choice, also keep the allocation all the way in the paid-up policies within investment choice. That is something that I think compares favorably to unit-linked.

Thank you, Faruk. Next up is Herman from Pareto. Herman, please.

Yes, thank you. Good morning. Just following up, very interesting to hear that are new customers in P&C. Could you shed some light on your sort of cross-selling capabilities in insurance? It seems to still keep a very strong growth pace despite I guess the highest rate hikes now being behind us. How does that cross-selling compare to let's say one or two years ago? That's the first one on P&C. And then just if we assume the view that the Norwegian P&C market will stay disciplined and market very strong, should we rather sort of overshoot or undershoot on your combined ratio target below 90, or should we rather assume that you target even higher growth?

Okay, thank you. And then just follow up on that. Do you see your sort of insurance appetite sensitive to the interest rate level?

Thank you.

Thank you. We have another question from Thomas Svensen from SB. Thomas, please go ahead.

Just another question on the side. You talk about elevated disability in Norwegian society. Do you sort of think that the risk is that we could stay with a high combined ratio for a long period of time or is it a risk that material reserve strengthening may happen in the future? And also could you just give us an update about the issue of disability in the society?

Okay, understood. Thank you.

Thank you very much. And also another question from Faruk Hanif from JP Morgan. Faruk, please go ahead.

Hi, thank you very much. What can you tell us about profitability? You've given us premium level where it presumably going to be on the P&C side of the corporate segment. That's one question. And the second question is going back to your strong volume growth. I think there's an impression that you're getting there partly because of your distribution efforts and the cost that you're investing in that, but also partly because you're more cost effective, able to be the high combined ratio for now, willing to be of those are...