Good afternoon, ladies and gentlemen. Welcome to Storebrand's fourth quarter and full year 2013 conference call, also including 2013 Embedded Value. My name is Trond Finn Eriksen, and I'm Head of Investor Relations at Storebrand. Together with me, I have Group CEO Odd Arild Grefstad, Group CFO Lars Aasulv Løddesøl, and Head of Economic Capital Allocation Lars Dahl. As we have notified, the slide presentation will be running on the webcast available on storebrand.no/ir. In the presentation today, Odd Arild Grefstad will first give an overall view of the development in Q4 and 2013, before Lars will give an update on the key figures and the development in Embedded Value. After the presentation, the operator will open up for questions. To be able to ask questions, you will need to dial into the conference call. I will leave the word to Storebrand's CEO Odd Arild Grefstad.
Mr. Grefstad will start the presentation on slide number two.
Thank you, Trond. Hello, everyone. I'm very proud today to present for you the strongest results in the company's history. Storebrand has a result of NOK 2,935 million, and a fourth quarter result of NOK 1,054 million. The strong financial markets during 2013, with rising equity markets and reduced the credit spreads, have, of course, provided tailwind for our business. As has the change of the pensions for the Storebrand own employees, also given a one-off effect in the fourth quarter of NOK 352 million. But even if we disregard these non-recurring items, it's still a very good result. It's 11.5% increase in the fee and administration income, in combination with a 6% nominal cost reduction.
That is adjusted for all non-recurring items in 2013 and 2012. Cost reductions are picking up pace, and we are—if we compare the fourth quarter in 2013 with the fourth quarter in 2012, there is a reduction of the cost of 17%. Altogether, this makes me confident that we will reach the targeted cost level of NOK 3.5 billion at the end of 2014. The growth in unit-linked defined contribution is also clear when we calculate our embedded value numbers. The increase of NOK 5.9 billion is mainly due to strong growth in this product, but the increase is also a result of our own measures, like cost reduction, changed product attributes, and increased sales. Increased interest rates is, of course, also very helpful.
Storebrand has a solvency ratio of 176% by the end of the year. This represents a 14 percentage points increase during 2013. In spite of these historic results, the board has decided to propose to the annual general meeting that no dividend is to be paid, and all the net profit of 2013 to be allocated to other equity. The group is still in a situation where it needs to strengthen its reserves for higher life expectancy, and the principles for the escalation plan is still not in place. Therefore, also, all our customers during 2013 has to give all the surplus return above the guarantee into the strengthening of the reserves. Let me now move to slide number 4.
A quick look at our strategy, as I do on a quarterly basis. We aim to manage the guaranteed business into a new regulatory environment without raising new equity capital. We want to develop a capital light business with focus on savings for retirement at its core, supported by additional retail marketing product offering in the context of worksite marketing. Moving to slide number 5, we see the effects of 2013 from the left-hand side of this strategy. We see that we have moved NOK 10 billion out of the guaranteed reserves during 2013. We have taken down the risk of the investment portfolios, the guaranteed investment portfolios, by, for example, selling 18% of our real estate portfolio. We have also substantially reduced the costs, sold our non-core assets, and introduced new capital light products in the market.
Moving to slide number six, we give an update on the regulatory environment in Norway. A number of changes are taking place in the regulatory framework for occupational pension. If you take it step by step, we can start with the changes that is already now implemented from the first of January, 2014, and then move into what is still in progress. Most important, the increased maximum savings rates with tax incentives for linked defined contribution pension has come through by the first of January, 2014, leaving the opportunity to save up to 25% of the wages into this. The new hybrid occupational pension product is also clear from the regulatory side by the first of January, 2014.
It might be a very important product into the public sector going forward, but so far, it's not very much demand for this product in the private sector. If you look forward, there is still some important elements that needs to be clarified going forward. Most important maybe is the transition rule for paid-up policies into paid-up policies with the investment choice. And we have strong belief that this will come in place by the first half of 2014, and then will be a product that can be in the market second half of 2014. Then the transition rules for the guaranteed results into Solvency II also is a key element.
There is now clarified the rules from EU and the Norwegian FSA will look at the implementation for the Norwegian products. At last, I also like to mention that the new government has introduced or spoken about introducing a more tax-favorable retail pension product, and we expect more clearance about that at the end of the year. If we then move to slide number 7, let me also give you an update on the longevity reserving. At the end of 2012, we estimated a shrinking gross strengthening need of the reserves for longevity of NOK 11.5 billion. At the end of 2013, this number is then NOK 12.5 billion, and the reason for that NOK 1 billion increase is new premiums coming in.
It increased reserves by the guarantee rate and some asset that was moved early 2013, that was sold late 2012. It's important for me to also state that the whole portfolio is now calculated according to the new mortality tables, and that it should be the final reserve number that we need to focus on. More important is that we have been able to build substantially reserves towards this reservation during 2013. The most flexible reserve in our balance sheet is the market value adjustment reserve, and that is being increased by NOK 2.8 billion to NOK 3.8 billion. If you add that together with the reserve that is special set aside for longevity, it adds up to NOK 8.1 billion.
And if you take that against the total reservation need of NOK 12.5 billion, there is a need for reservation for the five years to come of NOK 4.4 billion, even if we take into account, before we take into account that there also should be a reservation from equity into this equalization. So, during the year, even if it has been an increase in the top number, it's been NOK 1.8 billion in a net reduction in the reservation need when we take the reservation directly and the market value adjustment reserve altogether. On top of that is also all the reserves that can be used for this situation if we choose to do so. Then Lars, I leave the word to you.
Thank you. On page eight, we show the key figures for the group, and you see that we now produce in excess of NOK 500 million in result before profit sharing and loan losses on a quarterly basis. In fact, last quarter, we produced NOK 597 million in result before profit sharing and loan losses, in addition to NOK 277 million in net non-recurring items, and NOK 180 million in net profit sharing and loan losses. In terms of earnings per share, this is after tax, you see a nice development through the year, and it makes and I would like to comment briefly on the tax issue here.
For the fourth quarter, on a standalone basis, the tax rate was calculated to 22%, but due to sale of properties with tax liabilities, we had a very low tax rate in the third quarter in particular, so that the tax rate for the year as a whole is down to 7%. And this is untaxable, as we still have tax loss carryforwards from previously. In terms of solvency ratio, that has been strengthening quarter by quarter. In the fourth quarter, the solvency ratio comes out at 176. As of the end of last year, the Swedish authorities changed the interest rate curve used for solvency calculation purposes, which in isolation reduces the ratio by eight percentage points.
Adjusted for this, there's a strengthening of the solvency ratio even in the fourth quarter. As you can see, solidity capital and customer buffers all develop favorably quarter by quarter and are strengthened. Moving over to the group results on page nine. Here you can see the points that, Mr. Grefstad alluded to earlier, with the fee and administration income increasing by 11.5% or NOK 448 million through the year. That's an increase in earnings, both from assets under management from the non-guaranteed business. It's an improvement in bank margins, and it's an improvement in the margins that we have for the guaranteed business. Furthermore, you can see that the operational cost is down by 6% at this point when we adjust for the non-occurring, non-reoccurring items.
In fact, the underlying, or the, if you just look at the accounting figures, the cost level is down 18%. I should also mention that below the line and not shown in this picture, is that we do a write-down of the goodwill in the bank of NOK 300 million. Storebrand Bank acquired Finansbanken back in 1999, and part of the goodwill in that transaction was related to the corporate bank. As we are now closing down the corporate bank, we have decided to write down the goodwill related to this asset, and that's a write-down of NOK 300 million. If you look at the result per business line, you see a strong improvement in results from all different businesses. Savings, non-guaranteed from NOK 288 million-NOK 670 million.
Insurance business is improving. The guaranteed business is improving significantly from just short of NOK 1.2 billion- NOK 1.665 billion, and also in other, there is an improvement. There is, in the documentation, more details on the different business areas, but in the interest of time, I'm not going to go through this now. Let's therefore move to page 17, which is the embedded value numbers. In 2013, there was an improvement in the embedded value earnings of Storebrand of NOK 5.4 billion, which gives them 24.7% return on opening embedded value and a 13.8% operating return. Including the IFRS value of other group companies, the total embedded value for the group is NOK 13.2 billion, equivalent to 67.6 kroner per share.
The opening balance was NOK 21.8 billion in the life company or in the life group. New business was added in 2013, adding NOK 0.5 billion to the value. If you look at the value of new business, the value in new business, of the new business is strengthened in Sweden in all the different product groups, while in Norway, the volume in defined contribution sales was down 15%, which led to a slight decrease in value of new business in Norway. Altogether, it's a slight improvement went from 12.
In other operating MCEV earnings, you have the return on the embedded value from last year, as well as the fact that we had higher volumes, higher returns, and higher fees for interest rate guarantee than was anticipated in last year's numbers, which plays out in an improvement in other operating MCEV earnings. And those two components taken together gives you the operating return for the year. If you add on to that, the economic variances of NOK 3.5 billion, they can be divided equally in two parts. The result of the higher interest rate level in Norway and Sweden, which reduces the cost of the guarantees in our products. That explains approximately half of the NOK 3.5 billion.
The other half of this number comes from the fact that equity markets, in particular, did very well during 2013. We have more assets under management than expected last year, and therefore have higher expected return on these means in the coming years. Then you have to deduct the cost of non-hedgeable risk or other non-operating variances by NOK 1.1 billion. And as we have increased margins in our products, the risk of lapses or the reduction in earnings as a consequence of a possible lapse is increased, and that's this number of the cost of non-hedgeable risk. That gives us an MCEV or embedded value of Storebrand Life Group of NOK 27.2 billion at the end of the year.
In dividends and closing adjustments, that's primarily the effect of a strengthened Swedish kroner, which improves the value of an additional NOK 0.5 billion to NOK 27.7 billion. And then you add on to that, as I mentioned earlier, the IFRS value of other group companies like the asset management business and the bank, to get to the NOK 30.2 billion. And I think by that, I conclude the remarks, and we are opening up for questions.
Thank you, Lars. The operator will now open up for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad.... You will be advised when to ask your question. That's star one, if you wish to ask a question. Our first question today comes from the line of Matti Ahokas with Danske Bank. Please go ahead.
Yes, good afternoon. It's Matti Ahokas, Danske Bank Markets. Two questions, if I may. Firstly, on page 7, where you show that the increase in the longevity reserves of roughly NOK 1 billion, should one expect that if your premiums and reserves and transfers grow at the current pace, this figure will be NOK 13.5 billion in a year's time, or how should one read that? And then regarding the dividend, could you elaborate, was it mainly the longevity uncertainty behind the decision not to pay the dividends, or was there something other behind this as well? I know you've discussed this, but it would be great to hear the latest from what the board thinks about the situation. Thanks.
Thank you, Matti. The first question about longevity. It's important for me to stress that the whole portfolio now is put forward to the new tables, the 2013 tables. That means that it will not be any development with new premiums coming in. Everything now is taken into account with the new tables in place, so you should not expect this NOK 12.5 billion actually, actually to move very much going forward. Also, what I can say is that NOK 500 million out of this is from the public sector. That is already finalized for reservation. Basically, there is NOK 12 billion today that should be up for reservation during the next five years.
When it comes to dividends, it's clear that our main goal is to make sure that we ensure Storebrand into Solvency II in 2016, and with the reservation of longevity without going to the shareholders and ask for additional capital. That has been the clear statement from me from day one. Then, of course, there has been a very strong development when it comes to solidity and results during 2013, that leave us into a more normalized situation. So, that has been taken into account, but still, 2013 is a year before we start moving into the formal step-up plans. That is not finalized yet.
That is a year when we also then take all the surplus results out above the guarantees from our policyholders and set aside for reservation needs. In 2013, mainly through a market value adjustment reserves increase. In that situation, we don't pay any dividends for 2013.
Great, thanks.
Thank you. Our next question comes from the line of David Andrich with Morgan Stanley. Please go ahead.
Hi, good afternoon. Thanks for taking my questions. I guess just two on my side. First of all, in terms of the NOK 12.5 billion estimate, you know, I mean, I guess what could influence that in terms of making that larger going forward? I mean, you're saying that, you know, you've rolled it out across the portfolios now, and you are anticipating, you know, future premium contributions, et cetera. But are there any factors that could influence that to be bigger in the future?
Secondly, just in terms of the dividend for 2014, what would we need to see develop over the year to give you greater certainty in a dividend being paid for 2014? Thank you.
Well, when it comes to the longevity reservation, as I said earlier, first of all, standing in 2012, looking into 2013, there was, of course, a lot of uncertainty around how this balance would move during 2013. It was about the speed of the movement in the public sector reserves. It was about all the transition rules that was on the table, moving from the guaranteed business into the hybrid product with continuity. And it was also a proposal on the table to actually shut down the whole DB schemes in Norway within a three year horizon.
All of this has been cleared during the year, and we now have a very clear situation of how this balance are at, of course, the end of 2013. And when we now buy product by product, client by client, has really worked through this balance with the new mortality tables in place. From my view, anyway, I can't... It, it's hard to see what should really change this gross number based on the portfolio we have going forward. So it's more about how we are able to build market value adjustment reserve, realize that, and take that as a part of the reservation over the next years into the accounts. Second question was about? How the dividend...
Well, I've already alluded to that and said that the first goal, of course, is to make sure that we are able to move this company into Solvency II and into the full reservation without asking for new capital. The very strong development in 2013 is helpful. It's also clear that we, during 2014, we'll be moving into a more formal step-up plan, with also clarified situation around the capital that should be added is 20% from the shareholders. And of course, it's all about these elements, the longevity reservation, and the financial situation at the end of the year. But we are moving, we are progressing, and I'm very much also working towards be able to give dividends and look forward to that.
Great, thank you very much.
Thank you. Our next question is from the line of Pankaj Doshi with J.P. Morgan. Please go ahead.
Hello, good afternoon. Two questions on my side as well. The first one is on the risk result, and there are just two items within that. Firstly, SPP. What's the reason for the decline in the quarter to NOK 60 million versus the run rate, that we had seen in the first nine months, which you sort of alluded to last time, would be, a reasonable assumption going forward? And second of all, on disability insurance, there was a few comments on that in the report, but I just wanted to follow up on that as to why, we've seen a reduction there as well. And then on, on the guaranteed portfolio, within defined benefit, quite a bit of a jump in the fee and admin income line.
I just wanted to know what the impact was there, given that, if I understand this correctly, the repricing in the public DB book doesn't come until the first quarter in 2014. Thank you.
Can I take the risk result in Sweden? There is some weaker result in the fourth quarter. There will be quarterly changes in the results, of course.
Mm-hmm.
Then also, long term, we see that the shift from the old DB portfolio in Sweden towards a unit link type of products that will have an impact, long term, on the risk results. But we don't expect... We expect more normalized results for the risk result in Sweden in the first quarter and going forward. And when we look at the Norwegian reserve on stability, I will say that there was a reserve strengthening in the fourth quarter that impacted the numbers significantly. We are looking at the total customer value, of course, when we are doing the pricing of the risk products together with the savings products.
But we are aiming to make sure that we have a positive margin also on the risk disability product going forward, and has taken also then some reservation during 2014, 2013, to make sure that that will happen on port. And with respect to the increase in fee and administration income for the guaranteed portfolios, they were there is a final calculation on that at the end of the year, which played out positively in this quarter. And over time, this will go down as we are reducing the level of defined benefit pensions in Norway.
Okay, that's clear. And just to confirm, the normalization in the SPP risk result, that would be in line with the nine-month run rate, i.e., around NOK 40-NOK 45 million per quarter. Is that correct?
It's of course very difficult to be that precise around that number, but the magnitude of it should be more in that respect going forward.
Okay, great. Thank you.
Thank you. Our next question comes from the line of Blair Stewart with Bank of America. Please go ahead.
Thanks very much. Good afternoon, everyone. I think I've got three questions. The first one is, with regards to the cost to shareholders from the longevity provision. We've talked a lot about the gross numbers, but just looking at the net cost to shareholders, am I right in thinking that the roughly NOK 200 million or so deduction from the guaranteed book or the fee-based book is the right sort of run rate for an annual cost starting from this year? Is there anything that's happened that would alter that? Secondly, given the importance of the market value adjustment reserve and how quickly that can change, have you done anything to protect that number from the volatility in markets?
And thirdly, given the changes to the defined contribution contribution rates, are you seeing or do you expect to see any changes in customer behavior, specifically with regards to closing down DB schemes? Thank you.
Thank you, Blair. To start then, with the cost for shareholders for reservation, on the fee-based portfolio, when you calculate it that way, it's the, the minimum you start with is around NOK 230 million. That is then giving the fact that you have a surplus on the paid-up policies, that is enough to cover up for the reservation, have a return on the surplus on the paid-up policies. That will then in itself give the reservation for that portfolio. It's fair to say that the NOK 230 million is the very, rough-... Then again, it's very much up to the final, final settings of the rules.
It's about how you can be able to use research from one portfolio and one contract from another contract across DB, these, and pay the policies. That final rules around that, and also the use of equity on the different portfolios is not yet set. We expect that to be clarified by the regulator as soon as possible, actually. That will also impact on the final number in that respect. Protecting market value adjustment reserve. Well, in my view, it's more about what kind of asset allocation do you have on your balance sheets? We have done changes in allocation, reduced portfolio of real estate. We have quite a low allocation to shares in our portfolio, have been building up portfolios at amortized cost.
That gives a much more stable return on a yearly basis compared to what you saw a few years ago in Storebrand. Then again, that portfolio, of course, also has some volatility, but that is the same if you have your market value adjustment or not. So in my view, market value adjustment reserves are the extreme, most flexible reserves you have, and is even of a higher quality, actually, when it comes to reservation for longevity, when you look at it compared to the exact reservation that is done for longevity. So that is my view of longevity reservation when it comes to both market value adjustment reserves and the exact reservation that is done so far. Contribution rates.
Well, so far, I would say that I had a lot of discussion with our large clients, of course, and there is quite a lot discussion within these companies about the opportunity to use higher contribution rates. They look at it in a total wage type of setting, increase of wages versus increase in savings rates for pension. Then again, most companies now today has their locked DB scheme that is in slow run off in the companies, and then all new employees comes into the company within DC schemes. So quite a few companies also say that we just now wait and see and don't do anything, changes in the DB scheme, and gradually this will be a DB, DC type of company anyway.
So you see all sorts of behavior in this respect. I don't expect a very rapid outflow of the DB schemes, now. Of course, we have this rule in place where we thought it would be a runoff within a three years horizon. I do think it will take more than three years now, and be over a quite longer period, where we will have DB schemes, on our books.
Yeah, if I can come back, Odd Arild, on the market value adjustment reserve, I'm not sure if you split it out anymore, but it used to be that a lot of that was held, was from equities. And my question was really regarding, is there anything being done to try and hedge equity levels and hedge yourself? Because, you know, with a setback in markets recently, you know, that market value adjustment reserve presumably goes lower, and that would obviously then reduce your flexibility, to, you know, to cover the reservations. Is that something that you worry about?
Well, I don't know if you have the split on it, on the different elements from Finn, but generally, I can say we don't have any, we have adjusted our allocation toward shares. So it's what we view as the optimal allocation, and we do not have any hedging program that will confuse that picture in place.
Okay.
Yeah, when it comes to the distribution of the market value adjustment reserves between different asset classes, we are not providing that anymore. Of course, we can provide that if you want to. The reason why it's taken out is due to the fact that we want to shorten somewhat of what we presented, but it's no reason providing that for you again, if that is wanted.
Okay. Thank you very much.
Thank you. Our next question is from the line of Gianandrea Roberti with Carnegie. Please go ahead.
Yes, good afternoon from me as well. I have three questions. So one is a bit nitty-gritty. It was asked before, the fee and admin result in the, in the defined benefit business, jumped nearly NOK 40 million in this quarter. And if I calculate that as a percentage of the average reserve in that business, I, I'm around 40 bips, and the average was around 35 bips in the previous three quarters. And I think, Lars, you say that, that number, it's gonna go down going forward simply as a function of reserves going down. But I'm more thinking, okay, should I need to assume this 40 bips on declining reserve, or I need to go back to the average 35 bips on declining reserve?
Because you can make quite a lot of difference on the overall result in defined benefit in Norway. That's the first question. The second one, what is the growth in unit link SPP adjusted for currencies? Because I can see it's around 41%, the reserves growth, when I look at your account in in SPP, but I suspect quite a lot of it has to do with currency. So if you can give me that number, would be very helpful. And also, just to pick up on one comment you made before, it's two thirty million, the longevity strengthening assumption. I think you used the word rock bottom there, which, if I understand correctly, English means the lowest assumption. Is it possible to have a worst-case assumption of that number anyway? Thanks.
Yeah, if I may start with the first question, Gianandrea. I think that the most relevant thing to look at is to find the correct bits to use, is to look at full year, divide it on four quarters. As Lars said, there will be some variations from between the quarters, and the final bill is made up in the fourth quarter. So the average. Going forward, you will see transfers, although amongst other, we expect approximately NOK 5 million of public defined benefit to leave us during the first quarter, 2014. That will influence, of course, the top numbers.
At the same time, you know that, during the Q3 presentation, said that we have increased prices, which will compensate that, to some extent. But over time, the revenues from this type of business will go down as you get the shifts from defined benefit to defined contribution. Your second question was a bit hard to actually get. Could you repeat the-
No, yes, it was actually quite simple. The growth in the reserves in unit-linked Sweden.
Yeah.
because I can see it's around 40% on a year-over-year, but I-
Forty percent?
Yeah, Unit-Linked SPP.
Yeah.
Is there quite a bit of currency movement in there, or?
Yeah, there is some currency elements on all the SPP numbers, and what is whispering around here is around 10% on the currency effects on it. So, it has an impact, but there is a strong growth both in the Norwegian and the Swedish DB, DC numbers, and altogether, it's a 35% growth on the volumes from year to year.
Sorry, 35% altogether, you mean, Norway, Sweden, or you're referring to, to SPP now? Sorry, I missed that.
No, that was Norway, Sweden, altogether.
Norway, Sweden, altogether. Okay.
Look at the balance of unit-linked defined contribution. It is a 35% growth-
Right.
during the year.
Okay. Okay, thanks.
When it comes to what could be the worst case, it's a bit difficult to answer, actually. If you, if you look at what we have put forward in this slide, we have today both reservation, market value adjustment reserves, and overvalues in our bonds at amortized costs. So we could actually have locked down the whole reservation today with, with going out and realize these gains. But then again, of course, that would have reduced, especially when it comes to the, the reservation for, or the, the, the values on, amortized, the cost for the bonds, it would have reduced the run rate, of the, the, the portfolio going forward. So this is a balancing act. We have quite a strong set of results towards this in the, in the portfolio.
We have a time frame that we can use, fully or partly, and we are monitoring this, the best possible way, of course, to reduce or minimize also the use of equity, as such. But. So, I think that is how precise it can be on that question, today.
I appreciate that. Thanks a lot.
Thank you. We currently have no questions coming through. So just a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. And we have a question from the line of Peter Elliott with Berenberg. Please go ahead. Mr. Elliott, your line is unmuted. You're free to speak.
Sorry, sorry about that. Hopefully, you can hear me now.
Yes.
Thank you. Just one last question for me, please, which was on... Just wondering if you could update us or remind us on the current state of affairs between the, the sort of interconnection of the longevity reserving and the transfers. Now, I know there was some talk about, you know, possibly being able to reserve some policies ahead of others in order to accelerate, you know, the time frame of building up some, so that some could switch out ahead of ahead of others. And just perhaps you could just update us the general background around that, please.
Yes, I think what you are alluding to is the connection between the market that will open up for moving paid-up policies into paid-up policies with the investment choice.
Mm.
Of course, being able to fulfill the full reservation for longevity on the paid-up policy that has the intention to move into investment choice will be very interesting to do to make sure that that market really kicks off. And it is possible also, in that respect, to use the 20% equity the policies that really need that contribution to be fully financed to move into investment choice. But then again, this final tunings around the rules for how to use surplus returns across portfolios and contracts, and also how to use equity across portfolios and contract is not finalized.
But it is, as we view it, important opportunity to also really get kick-starting the market of maybe if paid-up policies with the investment choice that we expect starts second half 2014.
Okay, thanks a lot.
Thank you. We have a follow-up question from Blair Stewart with Bank of America. Please go ahead.
Thanks. It's just on the dividend really, it's probably more of a comment than a question, and feel free not to answer this. But I just feel, you know, looking at Bloomberg, almost every analyst that covers the stock expects a dividend in 2014. And some of your comments, Oddvar, around, you know, the company being in buffer building mode, you know, no surplus returns for policyholders over and above the guarantee. You know, and building up the various buffers as much as possible in a formal step-up plan, et cetera, et cetera. All these things are unlikely to change in 2014, I would have thought, unless something miraculous happens.
I just wonder if it would be in your interest to be a bit more clear about the prospect of a dividend actually being paid this year.
It's a quite fair question, Blair. I think the only things that is a big difference from 2013 to 2014 is that we have the clearance around the longevity reservation and are in a situation where we are part of a formal step-up plan with a clear contribution from equity. That might be a different element into that discussion compared to what you have seen in 2012 and 2013.
Yeah. Okay, that's, that's great. Thank you. Maybe, maybe talk more about that tomorrow. Thank you.
Thank you.
We have a follow-up question as well from Pankaj Doshi with J.P. Morgan. Please go ahead.
Hi, just one quick question from me. The final reservation into the 12.5 or the 12.0, how much of that, of that is related to defined benefit, and how much of it is related to paid up policies? Is that still around 50%?
It's somewhat around NOK 77 billion on the paid-up policies, the remaining on the front benefit.
Okay, great. Thank you.
Thank you. We have no further questions coming through. One last reminder, if you would like to ask a question, it's star one. And as we appear to have no further questions, I'll hand back to your host for any concluding remarks.
Well, then we just like to thank everyone for participating in the conference call today. Have a nice, nice evening. Bye.
Thank you for joining today's call. You may now disconnect your lines. Thank you.