Capital Update 2022
Enhanced Shareholder Value in a Higher Interest Rate Environment
Storebrand hosted a Capital Update presentation today, focusing on what today's higher interest rate environment means for Storebrand's investments in guaranteed products, the balance sheet and solvency position, and capital and cash generation. Storebrand will also provide a high level introduction to IFRS 17 and what it means for the company's financial reporting.
Key takeaways from today's presentation:
Higher capital and cash generation is expected, with a compelling combination of earnings growth, and capital release from the run-off of guaranteed business. Storebrand therefore reaffirms its commitment to deliver growing ordinary dividends to shareholders. In addition, the ambition is to return NOK 10 billion through share buybacks by 2030, subject to a solvency ratio above 175%, while simultaneously generating additional capital.
With the continued shift in business mix, Storebrand announces an updated dividend policy today, which lowers the solvency threshold for overcapitalisation to 175%.
Storebrand's new dividend policy is:
Storebrand aims to pay an ordinary dividend of more than 50% of Group profit after tax. The Board of Directors’ ambition is to pay ordinary dividends per share of at least the same nominal amount as the previous year. Ordinary dividends are subject to a sustainable solvency ratio above 150%. If the solvency ratio is above 175%, the Board of Directors intends to propose special dividends or share buybacks.
During the presentation, Storebrand will also address new accounting standards that will be implemented next year for insurance contracts (IFRS 17) and assets (IFRS 9). This does not change Storebrand's business or underlying value creation, but provides an additional source of information and disclosure. Storebrand will simultaneously continue its current reporting, focusing on cash earnings, solvency capital generation, and the ability to convert earnings to free cash flow for shareholders.