Johannes Narum: Good morning, ladies and gentlemen, and welcome to Storebrand Q3 2026 results presentation. As usual, our CEO, Odd Arild Grefstad, will present the key highlights, followed by CFO, Kjetil Krøkje, 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 first, without further ado, I give the word to our CEO, Odd Arild Grefstad.
Odd Arild Grefstad: Thank you, Johan, and good morning, everyone. Let me start with the highlights from a strong Q3. Healthy growth and cost discipline contributed to our record high operating results. We have seen continued growth. As AI changes how customers search, compare, and buy, we are preparing for several scenarios. As a strong challenger in key markets, our ambition is clear. We aim to come out of this shift stronger than we went in.
Odd Arild Grefstad: Storebrand is a data-rich company with modern digital platforms, and our approach is pragmatic. We buy proven capabilities where scale and speed matter and build where our data, expertise, and customer relationships create a distinctive advantage. At the same time, we are giving employees the tools and guardrails to create AI solutions close to the business while maintaining security, quality, and control. Let me now take you through the numbers.
Odd Arild Grefstad: Our operating result was the best on record. If we exclude performance-based income, the result grew 14%. This shows that we are able to turn revenue growth into increasing results. Higher interest rates pulled down profit sharing and the financial result this quarter, but it improves results going forward. Our result year to date is NOK 4.7 billion, up 12% compared to last year. Return on equity is 15% for the last 12 months.
Odd Arild Grefstad: We are well on track to reach our targets for 2028. A group result of NOK 7 billion and return on equity of 17%. Our solvency remains strong at 200%. Good results, strong solvency, and a solid liquid position give me confidence that we will deliver on our plans for dividends and share buybacks. Our commitment to growing dividends remains firm. We have steadily grown our dividends per share since 2016.
Odd Arild Grefstad: Based on the year-to-date performance, the board intends to propose an ordinary dividend of around NOK 6 per share for 2026. In addition, the board intends to propose a share buyback program of NOK 2 billion for 2027, up from the previously communicated NOK 1.5 billion. Both are subject to market conditions and necessary approvals. Now, let me turn to our strategy. We continue to execute on our ambitions to lead the way in sustainable value creation.
Odd Arild Grefstad: Our strategy is designed to grow capital light business areas by taking three clear commercial positions. First, to be the leading provider of occupational pension in both Norway and Sweden. Second, to be a Nordic powerhouse in asset management. Third, to be a fast-growing challenger in the Norwegian retail market for financial services. We are delivering on the strategy with consistent growth year after year.
Odd Arild Grefstad: We are present in attractive savings market with strong long-term growth. At the same time, we are taking market share in insurance. The stronger Norwegian krone has created some headwinds for currency effects this year, but underlying growth is strong. Let me now go through our three strategic positions one by one. First, occupational pensions, where we further strengthen our position as the leading provider in Norway and Sweden.
Odd Arild Grefstad: Our unit linked reserves stand at NOK 563 billion, and since 2018, they have grown by 16% a year on average. We have seen good sales momentum with contracts worth NOK 4.4 billion won within unit linked pensions in Norway. These assets will be transferred to us in the coming quarters. In Sweden, I am very pleased that the insurance brokers ranked SPP number 1 for sustainability and for ease of collaboration in an independent survey.
Odd Arild Grefstad: This shows that SPP has a strong position with the brokers who are an important sales channel for us. Moving to asset management, our work on cost continues to pay off. Operating costs are down 5% from last year, and the result growth proves the scalability in our asset management business. Our position in sustainable investing are also getting stronger. This quarter, Storebrand Asset Management was named Sustainable Investment Fund Management Group of the Year by Investment Week.
Odd Arild Grefstad: Our infrastructure manager, AIP, was named ESG Equity Asset Manager of the Year in Europe. Then to our third position, the Norwegian retail market, where we keep growing as a challenger. Within retail savings, Kron now has around 150,000 customers, up 23% year on year. We continue to build our Kron offering step by step. P&C insurance is still one of our most important growth drivers.
Odd Arild Grefstad: Portfolio premiums retail insurance have now passed NOK 7 billion, up 18% year on year. Our market share in retail P&C has grown to 8.3%, up from 7.6% a year ago. With Knif, it will be around 8.6% in market share. The combined ratio improved to 82% from 85% a year ago. Let me also give a brief update on Knif Trygghet Forsikring. We completed the acquisition on 16 October, just last week. Knif is a P&C insurer for Christian and nonprofit organizations in Norway.
Odd Arild Grefstad: The acquisition is fully in line with our strategy, where P&C insurance is one of our most important growth areas. Knif complements our existing setup very well with a new customer segment. I am very happy to welcome our new colleagues from Knif. They know their market and their customers very well. This will be important as we together build a leading offering in this segment.
Odd Arild Grefstad: With that, I give the word back to you, Johannes.
Johannes Narum: Thank you, Odd Arild. Now let's take a closer look at the numbers. Kjetil, please go ahead.
Kjetil Krøkje: Thank you. Let me start by taking you through the key figures for the quarter. The group result for Q3 was NOK 1,517 million, 4% lower than the same quarter last year. Earnings from operations increased 7% to NOK 1,162 million, the highest on record. Adjusted for NOK 20 million in non-recurring costs, operations delivered NOK 1,182 million, up 8%. The decline at group level concerns the financial results, as higher interest rates and wider credit spreads reduced profit sharing and returns on the company capital.
Kjetil Krøkje: Net special items were NOK 34 million, a NOK 54 million gain from revaluing the earn-out liability related to AIP, less the project costs mentioned above. Earnings per share were at NOK 2.54, compared with NOK 3.08, and the annualized return on equity was 14%. Both were held back by an unusually high tax rate, which I will come back to.
Kjetil Krøkje: On the 12 months basis, return on equity was 15%. Now to solvency. The solvency ratio was 200% at the end of the quarter, stable from Q2. Result generation and a stronger kroner against the Swedish kroner contributed positively. This was fully offset by the second buyback tranche of NOK 1 billion, which we initiated in July and which is now included in the ratio. As the sensitivities show, the ratio stays well above our 150% target in all stress scenarios.
Kjetil Krøkje: Looking ahead, we expect the solvency ratio to strengthen from Q1 2027, when the Solvency II amendments and the regulatory changes for guaranteed pension products take effect. The Solvency II amendments bring the standard model closer to our internal model and significantly reduce the risk margin. Together, we expect the two changes to lift the solvency ratio with more than 10 percentage points.
Kjetil Krøkje: Given our robust position today and this uplift, solvency is currently not a binding constraint for capital distribution. We continue to use and develop the internal model for our internal risk view, but we have made the decision to not submit an internal model application in the short to medium term as a consequence of the aforementioned changes. Let me now explain the main drivers of the group result before turning to the segments. Fee and administration income was NOK 2,139 million, up 1% or 6% adjusted for currency and performance fees.
Kjetil Krøkje: Growth in assets under management and unit-linked reserves lifted income, but this was largely offset by a stronger kroner, lower performance fees in asset management, and a lower net interest rate margin in bank. As flagged last quarters, the transfer of a large hybrid and guaranteed pension customer now reduces income, mainly in guaranteed.
Kjetil Krøkje: The insurance result increased by 28% to NOK 895 million, driven by retail. Operational costs were NOK 1,872 million, up 8%. Around two-thirds of the increase is in insurance, reflecting a strengthening of the organization due to high growth and increasing sales commissions. Outside insurance, costs were up 4% in the quarter and flat year to date.
Kjetil Krøkje: For the group, costs are up 5% so far this year, in line with our capital markets day guidance of around 5% annual growth. In other words, we are on track, and for 2026, we still expect around NOK 7.3 billion to NOK 7.4 billion before currency and performance-related costs. Financial items and risk results were NOK 355 million against NOK 495 million the year before.
Kjetil Krøkje: Adjusted for special items in both quarters, the decline was from around NOK 425 million to around NOK 300 million, mainly due to lower profit sharing, especially in Sweden, and also lower returns on company capital. These are mark-to-market effects, and higher interest rates increase expected returns going forward. Tax was NOK 458 million with an effective tax rate of 32%. The reason is currency, when the SEK is weakening around 6% against the NOK.
Kjetil Krøkje: Our ownership in SPP is currently hedged to protect solvency. For tax purposes, changes in the value of shares are tax exempt under the Norwegian exemption method, whilst the gain and losses on the hedge are taxable. This tax asymmetry creates some tax volatility when the currency moves. Compared with a normal tax rate, this added around NOK 160 million. Our tax rate guidance remains 19% to 22%.
Kjetil Krøkje: At a normal tax rate, the return on equity would have been around 2 percentage points higher for the quarter. By business line, Savings delivered NOK 800 million, slightly below last year due to lower financial result and lower performance fees. Insurance grew 33% to NOK 485 million. Guaranteed delivered NOK 191 million against NOK 316 million, mainly due to lower profit sharing, and Other delivered NOK 41 million. Together, Savings and Insurance grew 9% to NOK 1,285 million.
Kjetil Krøkje: Starting with Savings, earnings from operations rose 3% to NOK 744 million. Unit linked delivered double-digit result growth in both Norway and Sweden. Income rose 16% in Norway, and in Sweden, income grew 7% in local currency but was flat in NOK. Reserves grew 13% to NOK 563 billion or around 11%. Premiums of NOK 7.6 billion were lower than last year, mainly due to currency and the hybrid customer that left in Q2.
Kjetil Krøkje: In Asset Management, fee income was flat but up 10% excluding performance fees, which were NOK 23 million against NOK 90 million Q3 last year. Costs fell 5%, helped by efficiency measures and currency. Assets under management grew 5% year over year in NOK and 9% in constant currencies. So far, returns of around NOK 107 billion and net inflows of NOK 3 billion have been partly offset by around NOK 86 billion in negative currency effects.
Kjetil Krøkje: The bank result was NOK 151 million, stable from Q2, but down NOK 208 million from last year. As we expected, the net interest rate margin rose to 126 from 117, as rate changes for existing customers took effect mid-July. In Insurance, the combined ratio was 87%, 2 percentage points better than last year. Over the last 12 months, it has improved from 94% to 90%. Premiums for own account grew 17%.
Kjetil Krøkje: Portfolio premiums grew 10% to NOK 11.3 billion, driven by retail, while corporate was flat due to the customer outflow in Q2. In retail, the claims ratio improved to 61% from 65%, helped by run-off gains and despite the fire in Drammen, which cost around NOK 55 million net of reinsurance. Costs rose to NOK 343 million from NOK 276 million, reflecting agent commissions from stronger sales and new teams to support growth.
Kjetil Krøkje: Across the insurance segment, higher sales through our tied agents added NOK 16 million to costs compared to Q3 last year. As all sales costs are expensed upfront, growth shows up in the costs immediately. Corporate insurance delivered NOK 115 million up from NOK 92 million, with a stable combined ratio of 94%. Premiums for own account grew 14%.
Kjetil Krøkje: Corporate P&C continued to grow strongly, with portfolio premiums in this business up more than 30% over the last 12 months and a solid claims ratio. We are now among the fastest-growing players in this market. Pension-related disability delivered stable results, while group life was positive but moderate, with repricing and other measures implemented. Disability remains an area we watch closely.
Kjetil Krøkje: Guaranteed pensions delivered NOK 191 million against NOK 316 million last year, while the year-to-date result of NOK 912 million is close to that of last year's level. Fee income fell to NOK 364 million from NOK 387 million, as growth in the public sector pensions was offset by the large customer transfer out. Net profit sharing was NOK 82 million in the quarter, compared to NOK 184 million in the same quarter last year, as rising interest rates and wider credit spreads reduced returns, particularly in Sweden.
Kjetil Krøkje: The risk result improved to -NOK 7 million from -NOK 21 million, driven by defined benefit. High rates weigh on returns in the short term but lift expected returns. In Norway, the expected return is now 230 basis points above the average guaranteed rate. Buffer capital was at NOK 35.4 billion or 8.6% of guaranteed reserves in Norway and 31.2% in Sweden, both up from last year.
Kjetil Krøkje: Guaranteed reserves fell NOK 9.4 billion in the quarter to NOK 289 billion, mainly due to the weaker Swedish krona and account for 34% of total reserves. To the other segment. The other segment delivered NOK 41 million against NOK 91 million last year, as higher interest rates had a negative mark-to-market effect on the company portfolios. The Norwegian portfolio returned 1.2% in the quarter and the Swedish 0.3%, also affected by wider credit spreads.
Kjetil Krøkje: As indicated last quarter, costs increased to NOK 89 million due to the Knif acquisition and non-recurring project costs. Company portfolios total NOK 29 billion and liquidity in the holding company remains solid at NOK 5.7 billion. Our climate work remains on track. The emissions intensity of our listed equity and corporate bond holdings is 52% below the 2018 level against a 2030 target of 60%.
Kjetil Krøkje: 44% of these assets now have validated science-based targets above our 42% goal for 2027, and solution investments are at 20%, in line with our 2030 target. With energy security now a key structural growth driver, we continue to invest in climate solution. Recently, our infrastructure manager, AIP, announced the acquisition of two operational offshore wind farms in Sweden with a combined capacity of 312 megawatts.
Kjetil Krøkje: Going forward, stable and predictable policy is key for the financial sector to reach its climate goals, and a stable EU emissions trading system remains an important driver of the transition. To round off our CMD ambition stand firm. A result of NOK 7 billion and cash return on equity of 17% in 2028, and growing dividends every year. By the end of the quarter, we had completed NOK 1.5 billion of this year's NOK 2 billion buyback program, with the rest to follow in Q4.
Kjetil Krøkje: As Odd Arild mentioned, the board intends to propose NOK 2 billion in buybacks for 2027, above the NOK 1.5 billion guided at our CMD. Increasing the total buyback ambition to at least NOK 13.5 billion by the end of 2030. With a record operating result and 12% result growth so far this year, we are well-positioned to deliver on these ambitions.
Kjetil Krøkje: With that, we look forward to your questions.
Johannes Narum: Yes, Kjetil, thank you. We are now happy to take questions from our audience. Please use the raise hand function in the Teams webinar to be placed in line to ask a question. To give everyone an opportunity to ask questions, we kindly ask you to limit yourself to two questions at a time. We have a first question here from Ulrik in Nordea. Good morning, Ulrik.
Ulrik Årdal Zürcher: Hi. Good morning, Johannes. Two questions. The first one is on the transfer balance in the unit linked Norway. It is negative, but it looks like a step in the right direction. Also you are flagging some big corporate wins. I am just wondering how we should think about the direction of the transfer balance going forward. Can it turn positive?
Odd Arild Grefstad: Yeah. Should start with that one. We had some big customer wins in unit-linked Norway this quarter. A part of that will come into the booked numbers in this quarter, Q4, and also a part of it in Q1 2027. Everything equal, we expect to see then positive transfer balance from Norwegian business in these quarters.
Ulrik Årdal Zürcher: Great. Just on the solvency, because it seems like you are guiding a bit more specifically on the gain from the regulatory changes. I am also wondering how we should think about, or if you have anything to say about how the expected returns on the guaranteed assets will develop once you implement this.
Kjetil Krøkje: No, I can start there. With the changes we see both from the new standard model coming from Europe and also the changes in product rules, we expect more than 10 percentage points increase in the solvency ratio. When it comes to expected return in the guaranteed book in Norway, we have increased the equity allocation already this year. The discussion into next year is how to adapt the book further to reflect that. But it will be an incremental increase in expected return as most of the book is still in bonds.
Ulrik Årdal Zürcher: Yeah. It seems like you will have some capacity. You are telling us what you are going to distribute of capital, and it just seems like you have quite some capacity maybe to, if you want to allocate to higher yielding bonds or, as you say, equities, but you have not decided anything, is what you are saying.
Kjetil Krøkje: We are working on that right now, looking at the investment strategy for next year, both for the customers and for the company capital. As you say, we will have larger risk capacity with these new rules and also with the regulatory changes. That will be taken into account, but we will also make sure that we have a fortress balance sheet to make sure that we can withstand any volatility that may occur in the market. It is the balance between the two that is important both for us but also for the customer returns.
Odd Arild Grefstad: I think also that the effect from the EIOPA changes in itself make us comfortable to guide beyond 40 is 10% plus increase in solvency.
Ulrik Årdal Zürcher: Thank you for your answers.
Johannes Narum: Thank you, Ulrik. Next up is Nimrat Kaur from Bank of America. Good morning, Nimrat.
Nimrat Kaur: Hi. Good morning. Thank you for the presentation. I have the first one on rates. You say that the higher rates are supportive over long term. How quickly do they feed into the returns and profit sharing? Is the 2028 target of profit sharing for both Norway and Sweden still intact?
Kjetil Krøkje: Yes. No, I think on the rate side, if they stay like they are now, they will feed into the results already from next quarter on the company capital, right? So in the other segment and in the insurance segment, that will pick up again with higher running yields from the get-go. As for profit-sharing, all else equal, expectations are a little bit higher than what we communicated on the capital markets day, given that we are running at a somewhat higher expected return in that book of business now.
Nimrat Kaur: Thank you. On the retail, what kind of repricing are you still putting in? From the claims ratio improvement, how much of that is underlying versus run-off gains?
Kjetil Krøkje: On the retail side, what we have seen this quarter is not any kind of substantial run of gains or losses. I do not know, Johannes, if you have any other comments on that, but what we have seen in general is a little bit lower frequency in the main lines in the Norwegian markets that has been helpful on the claims ratio, and of course also the repricing that we did last year. As per forward-looking repricing, we are not really guiding on that other than that in the long term, we expect this market to price at inflation plus pricing through the cycle.
Nimrat Kaur: Yeah. Thank you.
Johannes Narum: Excellent, Nimrat. Thank you. We have a next question from Hans Rettedal Christiansen in Danske Bank. Please go ahead, Hans.
Hans Rettedal Christiansen: Good morning, and thanks for taking my question. I want to ask a little bit about AI, given that you brought it up, Odd Arild Grefstad, in the beginning of the presentation, and you say you are preparing for several scenarios in customer distribution. Can you elaborate a little bit about what those scenarios are and where you see that going?
Odd Arild Grefstad: Yes, I would love to. First of all, we work, of course, very heavily with AI in all different areas of Storebrand, both for more productivity, but also into the customer base. We see, like Meta's Muse in the US now is also able to do agent voice buying of our financial products. I think for us, it is all about being ready for different distribution opportunities, making our data ready, making sure that our web pages is aligned to such a situation where we can be present in the best way.
Odd Arild Grefstad: It is a relative game, and we are a challenger, especially in insurance as we talk about here. I think we are well prepared in a concentrated market with our brand name to also meet the competition from more AI agents coming in. We are preparing for that in all different ways.
Kjetil Krøkje: Yeah, I think so far we see little adoption. As you well know, these tools are not available in the Norwegian market yet. We still see that there are moats around this business with strong customer relationship, brand, and trust still matter quite a bit. So we still think that is the base case going forward. I think we are also very offensive, on the offense about exploring the opportunities and thinking about scenarios where the customer prompt will look very different. I think that is a very important part of how we work with this right now.
Odd Arild Grefstad: Having the synergies we have in insurance, especially also aiming for a combined ratio of 90%, as we do now or lower, and still be able to deliver very high return on equity with such combined ratios, makes me quite confident into also such a market.
Hans Rettedal Christiansen: Thank you. I guess staying on the same subject, but in terms of your own ambitions since the CMD last year, what are you seeing in terms of potential cost savings? I guess you have seen DNB with some efficiency programs. LS in Sweden have also announced similar. Do you see increased potential on taking out costs going forwards in terms of AI? Related to that, just on token usage, how is your token usage developing, and are you seeing some cost savings on that front as well?
Kjetil Krøkje: Yep. No, I think our main thesis is that we will stick with the cost guidance from the CMD. That is kind of the starting point. But underneath that, it happens quite a lot. If you look at our capital or asset manager, we have reduced the cost base 5% from last year, and we have reinvested heavily in insurance and in digitalization and underwriting and more.
Kjetil Krøkje: So we see effects from using technology, including AI, to streamline the business. But our main hypothesis right now as we are growing the business is to reinvest those cost savings in growth and keeping the cost ambition from the CMD. When it comes to some concrete examples, we also, of course, see it in the development of software.
Kjetil Krøkje: We see large time savings and productivity gains in the coding of software, which we are also taking out in the decision and discussion about what we make ourselves and what we buy from vendors. That is also an important aspect. Altogether now we have done a value chain analysis of the whole business.
Kjetil Krøkje: We are looking to identify where we have both the highest potential, i.e., the largest cost base, and where the technology is mature enough to start doing measures. Then we are setting the project in motion and using AI to make the business more efficient.
Hans Rettedal Christiansen: You said in the CMD that you would provide a strategic update in 2026 through 2027 on the progress. When do you plan on having this, do you think?
Kjetil Krøkje: I think, for sure not in 2026. I think we will revert during 2027 with a little bit of a broader update on how we are progressing towards the capital markets day targets and what have changed since we launched them.
Hans Rettedal Christiansen: Thank you so much.
Johannes Narum: Thank you, Hans. We have a next question from Farooq Hanif in J.P. Morgan. Please go ahead, Farooq.
Farooq Hanif: Hi, guys. Good morning. Thanks very much. Just going back to the comment about expected return and profit-sharing rules in Norway. Now that you have a number on the solvency impact in mind, I am guessing it is still roughly mid-single digit for profit sharing and another mid-single digit plus for Solvency II review.
Farooq Hanif: But now that you have that number, can you give us a bit of a qualitative guide to how this will support both profit sharing in Norway, due to flexibility, but also remittances? I am guessing it will help you take out cash to the holding to use for reinvesting in the group. Secondly, going back to Nimrat's question a little bit. Your combined ratio is really good given that you have roughly 2 points in the quarter from Drammen.
Farooq Hanif: Can we just unpick a little bit the detail of the run-off ratio, the Drammen loss and just what is underlying here? I know that Nat Cat is a big feature here, but it feels like you are doing a lot better than 90 to me. If you could comment on that would be great.
Kjetil Krøkje: Yeah. Should we start on the solvency and the expected return? I think solvency is not a binding constraint, neither for remittance or for allocating capital to shareholders through dividends or buyback. It is more remittance earnings and future outlook that is the binding constraint on that. I do not think we are going to do a lot of changes based on some percentage points or more than 10 percentage points increase in the solvency.
Kjetil Krøkje: That said, it enables us to do changes in asset allocation that should increase expected profit sharing for customers and for shareholders. That is a good thing. We can also consider risk levels in other parts of the investment portfolio which also could support higher cash generation. I think those are the main effects to be expected from this change.
Kjetil Krøkje: When it comes to the combined ratio, when you look at the large losses in the quarter, you had the Drammen incident, but we did not have a lot of other large losses. So actually looking through the whole portfolio, large losses was roughly as we would think it would be. The way we look at it is that this number is pretty close to the underlying business. But taking into account that we are growing rapidly and that has a cost.
Farooq Hanif: Just, if I may come back. Sorry to hog the mic, but just to come back on the first question. I think what I was trying to get at was just the profit sharing itself in the cash result. Just obviously it gives you more flexibility. So of course, part of it is because you can take more risk and part of it is just that you can realize more.
Kjetil Krøkje: Yeah. It gives the ability to take more risk and then have a higher expected return. But there is also these assets are per contract, and there is not so many collective buffers. So it is hard to realize returns across the portfolio. So the higher risk you take, the more volatility you can expect in the result line. Then we need to weigh those two factors against each other, both thinking about customers and the shareholders to find the right risk level and the right profit sharing level for customers and shareholders.
Odd Arild Grefstad: But I think everything we equal from capital markets day, increased interest rates, quite a large buffer between the guarantee and expected return. You should expect somewhat increased opportunities for profit sharing compared to what we said at that time.
Kjetil Krøkje: Absolutely.
Farooq Hanif: Thank you very much.
Johannes Narum: Thank you, Farooq. We have a next question from Thomas Svendsen from SEB. Please go ahead, Thomas.
Thomas Svendsen: Yes. Hi. Good morning. Two questions from my side. Just on the bank, you pointed out that the net interest margin is going up. While the results are flat Q-over-Q, this seems to be due to the higher costs Q-over-Q. Can you comment on the costs there in the bank, the move there?
Thomas Svendsen: The second question on dividend and the dividend guidance. You show these graphs, it is 15% CAGR historically, and now you are taking it down to 10% for 2026. What are the considerations there between buybacks and taking down the growth in dividends, and how should we think about that going forward?
Odd Arild Grefstad: Can start with the dividends. We were very clear on our capital markets day that we, going forward, were aiming for more than 10% growth in dividends. On top of that, the share buyback. Then we had done some considerations, also talked with a lot of our shareholders about the combination of dividends and the share buybacks.
Odd Arild Grefstad: We feel very strongly that doing share buybacks in these conditions with the growth and opportunities we see for Storebrand going forward is value creative for our shareholders and has then focused on increasing the share buyback from NOK 1.5 billion to NOK 2 billion, when we have the opportunity to increase the total payout ratio. Then we aim to have a very stable growth in dividends going forward. So we will be now focused on increasing our dividends steadily year by year.
Odd Arild Grefstad: We feel that a growth rate of 10% plus, NOK 6 is 11% in a way. That is what we are seeing as a mix going forward, more than 10% growth in dividends and more volatility actually around the share buybacks. When we have opportunities, we increase, but we can also reduce share buybacks.
Kjetil Krøkje: On the bank, what we see from the last quarter to this is somewhat higher costs but also a higher operational result. I think the operational result is up by NOK 20 million. Then, as you rightly point out, the total result is roughly flat as the last quarter had a positive financial result from a gain from a share we owned in a subsidiary.
Kjetil Krøkje: Whilst this quarter, it is moderately negative, giving the bottom line being relatively flat between the quarters. So somewhat increased costs, often a little bit higher in this quarter, but also some cost in line with the bank growing and professionalizing all functions.
Odd Arild Grefstad: Yeah, you know our bank is also the distribution channel very much for the whole retail area. We have built Kron now into the bank, developing Kron functionality, coming also in now with bank functionality into the Kron app gradually. We see the distribution mix altogether with also more advisors in combination with digital solutions into a more private banking area is something we are working with in the bank that has some upfront cost elements, but also huge opportunities for cross-selling and revenue generation going forward.
Thomas Svendsen: Just a small follow-up on the bank. The lending growth was also quite slow Q-over-Q. Is this something that has happened, or have you increased prices too much in this July hike, so clients have left you, or what are your targets over the next 4 quarters, for instance?
Odd Arild Grefstad: Yeah, no, I think this is in line with what we said earlier this year, that we are adapting the balance sheet to CRR3, getting some of the higher loans with high LTVs out or priced up in the balance sheet, and that has resulted in some outflow. Other than that, the guidance of somewhere around mid-single digit growth is what we expect over the cycle.
Thomas Svendsen: Okay, understood. Thank you very much.
Johannes Narum: Thank you, Thomas. We have a next question from Michele Ballatore from KBW. Please go ahead, Michele.
Michele Ballatore: Yes, thank you for taking my question. So two questions from me. The first is on the solvency. In light of the, let's say, de-risking process you are doing, what kind of impact we should expect on the solvency capital requirement? I believe if you invest more in equity or high yielding corporates, maybe there is an impact there.
Michele Ballatore: If you can talk more about that and also on the sensitivity eventually. The second question is more about the fees in asset management. I can see the inflows are quite low in asset management, but can you maybe talk more about the development of the fee income there, also the outlook for the competitive environment? Thank you.
Kjetil Krøkje: Yep. Should I start with the solvency?
Odd Arild Grefstad: Yep.
Kjetil Krøkje: In expectation, as you say, if you take on more risk, you will also have a higher capital charge.
Kjetil Krøkje: I think bar that we will still expect it to be around the 10 percentage point increase, even if we increase risk somewhat in the business. I think that's the best estimate as of now, then of course, we will revert and update you on that as time goes by.
Odd Arild Grefstad: If I start on asset management, then we see quite stable overall top line fees in our asset management, and we have been able to press the cost margin down with the real cost reductions as you see from last year. So that's healthy for the results. I think if you see the result without performance fees, that has changed from one year to another. I think we have around 40% result increase from the same quarter last year. So that really comes through.
Odd Arild Grefstad: We are also both in more conventional assets and in more private markets, and we have very success in our private equity arm, Cubera, with more higher fees than you have, of course, in some of the other areas. Also, you see some transaction in real estate comes through now, so that is healthy for the overall piece. So altogether, quite a stable situation.
Odd Arild Grefstad: And also when you mentioned the transfer balance, Q3 was a pickup in transfers when we saw NOK 11 billion in transfer in for that quarter. So it also seems to be a positive development in that area.
Kjetil Krøkje: And more forward-looking, we still expect between 18 to 21 basis points in top line margin in the asset manager. So that guiding stands firm.
Michele Ballatore: Thank you.
Johannes Narum: Thank you, Michele Ballatore. Next up is Simon Brun from ABG Sundal Collier. Please go ahead, Simon.
Simon Brun: Yes. Thank you, Johannes, and good morning all. Good to have you back, Kjetil. Congratulations on the new family member during the summer. Just an apologies if this is highlighted before, but on the acquisition of Knif Forsikring. One housekeeping question, when do you expect to consolidate that into your reported numbers in the insurance segment?
Simon Brun: Secondly, in terms of synergies, I know you said that there are talented co-workers that you want to have with you in the future as well, but in terms of top line synergies, potentially to other products from these strong owners in the past, the membership base there, and also specifically on the synergies related to reinsurance. Is it too early to say anything about that? If not, please help me out. Thank you.
Kjetil Krøkje: Yes. No, I think on the result contribution, we will book the result from closing, i.e., last Friday, until the end of Q4. That will come into the results when we present the Q4 results, and on a continuous basis, obviously, in the insurance segment after that. On the synergy side, I think it's a synergy in itself that the growth journey we're funding within insurance,
Kjetil Krøkje: we can now get help from the new colleagues we're getting from Knif, which are highly skilled specialists that can fit right into our organization, working both with the Knif portfolio, but also with the growth of the rest of the corporate P&C portfolio in Storebrand. Remember, we are the fastest growing in corporate P&C now in Norway with, I think, 33% growth over the last 12 months.
Kjetil Krøkje: So I think those new employees are very well sought after, and we look forward to welcoming them to Storebrand. In addition, we have the capital synergies we have within insurance, so that will, of course, be a part of it day one.
Odd Arild Grefstad: There will also be synergies, especially on reinsurance, but I think it's a bit early days to be too precise on that kind of numbers.
Simon Brun: Thank you.
Johannes Narum: Thank you, Simon. It looks like we have covered all the questions, so that wraps up today's presentation. We look forward to seeing you again on the Q4 result presentation on 10 February. Thank you for attending, and goodbye.
