Earnings Call: Q4 2020

Feb 10, 2021

Good morning, ladies and gentlemen. Welcome to Storebrand's 4th Quarter Result Presentation for 2020. My name is Daniel Sundahl. I'm Head of Investor Relations. As usual, we will start with CEO, Oudar Grefstel, giving you the biggest highlights of the quarter. And Lars Lederzel, our CFO, will follow-up with a deeper dive into the numbers. At the end of the presentation, We will open up for Q and A. And let me remind you that to ask a question, you need to be dialed in to the conference call. Details are found on the IR website or in the stock exchange occasion of this morning. With that, without further ado, I give the word to CEO, Ottar Griessdahn. Thank you, Daniel, and good morning, everyone. Despite the outbreak of the COVID-nineteen pandemic At the beginning of the year, Storebrand has been close to fully operational during 2020 and has been able to execute on strategic Attitudes according to plan. As a fully digital organization, Storebrand quickly adapted To a remote work environment, it has been essential to secure Storebrand's critical operations and to support customers with what they need when they need the services the most. We recognize that some customers and the industries are experiencing challenging times, And we will continue to do what we can to help. For the 4th quarter. The Storebrand Group delivers its strongest quarter on record, driven by continued growth in savings, asset under management and insurance premiums. The group's profit grew by 19% to $1,225,000,000 in the 4th quarter. Group profit before amortization for the full year was 2,711,000,000. The solvency ratio was 178% at the end of 2020, an increase of 2 percentage points from the end of 20 'nineteen. This is well above our targeted level of more than 150%. The solvency ratio without transitional rules was 166%, corresponding to an increase of 16 percentage points during the last quarter. Positive investment returns As well as strong group profit after tax, together with increased interest rate levels, Strengthens the solvency ratio in the quarter. The Board proposes an ordinary dividend of 3.25 per share for 2020, corresponding to a payout ratio of 65%. Storebrand once again ranked the world's most sustainable company in the insurance category in the Global 100 ranking by Corporate Knights. Storebrand was also included in the Dow Jones Sustainability Index, ranking the group as one of the world's top 10% most sustainable listed companies. This is an important recognition of our long term systematic work on sustainability. Moving to Storebrand's strategy. Storebrand follows a twofold strategy That gives a compelling combination of self funded growth in the front book called Future Storebrand and a capital return from a maturing back book of guaranteed pensions. Storebrand aims to be the leading provider of occupational pension in both Norway and Sweden and continue a strategy To build a Nordic powerhouse in asset management and ensure fast growth as a challenger in the Norwegian retail market for Financial Services. The combined synergies stemming from capital, Customer base, cost and data across the group provides a solid platform for profitable growth and value creation. The ambition is to deliver a profit before amortization and tax of about 4,000,000,000 in 2023. Storebrand also continues to manage capital and a back book with guaranteed product for capital release. All this together leads to a dividend policy of growing ordinary dividends from earnings as well as an estimated capital release of $10,000,000,000 towards 2,030. The only way to ensure a better future is to take part of creating it. That's why we firmly believe In sustainability as a differentiator. The group strategy is to lead the way in sustainable value creation. Our digital leadership and technology platform also represent a strategic differentiator well suited to accelerate further growth. Moving to growth in more detail. Unit linked assets under management grew by $48,000,000,000 compared to the Q4 2019. This represent a growth of 22% in 2020. Unit linked premiums amounted to NOK dollars 5,200,000,000 growing 13% compared to last year. The growth in unit linked savings It's driven by premiums from existing clients, new sales, investment return and increased savings rates. Both the Swedish and the Norwegian unit linked business manage now more than NOK 100,000,000,000 Norwegian kroner of pension assets each. Asset under management increased by €131,000,000,000 to €962,000,000,000 in 2020. This represents a 16% growth. Within insurance, the annual portfolio premium grew by 18% compared to the same period last year. At double digit growth across all product lines, The reported combined ratio is 87% for the 4th quarter. If we divide net flow in assets under management into internal and external assets, We recognize a net positive flow of SEK 7,000,000,000 from internal clients. That is mainly our 2 life insurance companies in Norway And Sweden. While the unit linked products, the future Storebrand represent SEK 18,000,000,000 in net inflow, The more capital intensive guaranteed products in runoff faced an outflow of SEK 11,000,000,000. This sums up to $7,000,000,000 in inflow from internal clients. When it comes to net flow towards external clients, 2020 has been a very strong year. We have seen successful sales to external clients, leading to net inflow of $45,000,000,000 with especially strong sales within alternatives. This gives confidence in building Storebrand Asset Management as a Nordic powerhouse for further growth. 2020 have also demonstrated Storebrand's strong performance in both active funds and pension portfolios. Storebrand has outperformed our pension competitors in the Norwegian market. This gives us a strong position in the market for individual pension accounts with a strong track record and a leading position within sustainability. Storebrand is the only provider that also offers individuals private equity and real estate as a part of the pension allocation. I'm also extremely proud of some of the flagship funds delivering strong return to our customers. Here we see a set of brands like Storebrand SPP, Delphi and Skagen delivers very strong Funds across different categories like global funds, emerging market funds, Norwegian Equity, as well as more specialized sustainability funds like Global Solutions. This also contributes to strong performance fees and really proves the value of active managed funds. Through Storebrand's climate strategy and our membership in the net 0 asset owner alliance, we are committed This is consistent with a maximum temperature rise of 1.5 degree Celsius. We also set short term targets by 2025, reducing the emission from Storebrand's group equity, Corporate bond and real estate investment by at least 32% compared to 2018. We have also targeted solutions to be 15%, at least, of our total investment by 2025. This includes equity investments in solution companies, Green Bonds certified green real estate and investments in green infrastructure. Lastly, Storebrand will engage with clients and offer solutions that make it easy for them to understand and contribute to a low carbon future by increasing investments in projects, Companies and assets that actively contribute to mitigation and adaption to climate change. And with that, I will say thank you and give the word to our CFO, Lars Thank you, Odrill. The Q4 of 2020 was another good quarter For Storebrand, operating results for the second half of the year are back on track after a bumpy first half. The operating results for the Q4 was NOK709,000,000 and is the best in the history of the company. In addition, the financial result was strong at NOK298,000,000 and the performance related ended at 217,000,000 for the quarter, following good returns for our clients. The result before amortization and tax ended at 1,225,000,000. Earnings per share after tax adjusted for amortization is strong at NOK2.13 per share. The regulatory solvency is stable at 178%. Following good returns in all of our portfolios, Customer buffers are at record levels, securing returns to policyholders and protecting shareholders' capital. The solvency capital remains at a strong level. Lower cost contributes to a 1 percentage point improvement Under assumptions, the regulatory stress factor for equities have gone up following strong equity markets, Pulling the solvency down by 6 percentage points. Higher interest rates pulls the solvency up by 10 percentage points. The Norwegian 10 year swap rate ended the year at 1.29%, up 39 basis points in the quarter. The Swedish 10 year swap rate ended at 0.39%, up 9 basis points in the quarter. Strong financial markets in general, primarily credit spreads, equity markets and real estate contributes another 10 percentage point in solvency. Last but not least, strong 4th quarter results created 3 percentage points of solvency, while 2 percentage points have been set aside for dividends. The increase in interest rates in the quarter reduces the contribution of transitional capital by 17 percentage points to 12 percentage points, Bringing the solvency ratio to 178%. The full year movement Shows a negative contribution from interest rates as well as regulatory factors like lower volatility adjustment And lower UFR or ultimate forward rate. This was countered by concrete actions and good results. Under model improvements and assumption changes, there are 3 elements: better risk management, Dynamic pricing models and lower cost. Result generation is self explanatory. Transitional capital of 10 percentage points make up for only about 2 thirds of the solvency lost due to lower rates. The regulatory solvency shows resilience and stability after an unusual year. This picture shows the stability in the regulatory solvency together with an improved underlying solvency. Furthermore, the sensitivities show an overall resilience to different market movements. Despite this, we know from solvency movements earlier last year that we may experience basis risk between Volatility adjustment and credit spreads, disconnect between equity returns and equity stress and twists in the interest rate curve That can cause effect not fully captured by these sensitivities on a quarterly basis. Fee and administration income is up 7% in the quarter year to date. Insurance results are satisfactory. There is still strong cost control and the fixed cost base has been reduced. Adjusted for acquisitions and performance related expenses, The cost target of SEK 3,800,000,000 and flat nominal cost base since 2012 has been achieved. Adjusted for inflation, this means more than 20% cost reduction during a time when the group activity has expanded And assets under management has more than doubled. The operating cost line includes both performance related expenses relating to investment products as well as increased sales commission to external agents. Financial return has been strong with contracting credit spreads and positive equity markets. Tax is calculated at 21% in the quarter. The tax income for the full year came from the Q1 where some deductible derivative losses and items related to the 2018 tax reform contributed to a tax gain. The normal tax rate remains at 20% to 23%. The profit after tax of SEK 2,355,000,000 is actually better than the previous year despite the impact of the pandemic. This is partly explained by tax gains in the Q1 and partly by record results in the second half of the year. Splitting up the results in the 3 profit areas, savings and insurance and guaranteed, We see savings contributing with strong growth in assets under management and a scalable business model. Insurance returning to good profitability from portfolio growth and lower claims and guaranteed, especially in Sweden, Recuperating deferred capital contributions from the first half of the year. Other profit is down from last year, primarily due to the lower interest rate level in Norway and Sweden reducing the running yield on the company portfolios. Despite some margin pressure, the savings area shows good growth, good cost control and improving results in line with our ambition and strategy. All of the business lines show improvement with the exception of the bank, which is negatively impacted by the low interest rate level. The margin contraction in Unit Linked Norway is partly explained by an adjustment in income booked in the 2 previous quarters. The asset management company shows particularly strong profit development. This picture illustrates the strong growth in pension reserves and assets under management. Some SEK7 billion in funds won in the public sector Has been received and invested in January this year and will show up in the assets under management next quarter. Our growth strategy has worked well even in the unusual pandemic year of 2020. The growth in the bank picked up towards the end of last year And margins have improved somewhat despite the low interest rate level. The insurance area shows good results in the quarter We start in 2020. The 4th quarter experienced no significant deviations in results. The operational cost is up due to the take on of Personnel to handle the Insure portfolio acquisition and as well as sales provisions to external agents. These expenses fuel profitable growth. A combined ratio of 87% is better than planned After a quarter with few large claims, we have strong growth in all business lines. The growth is partly driven by prices increases and partly by sales. New partnerships in distribution show promising results. The insure portfolio transfer started December 1 and led to 130,000,000 in new P and C premiums in 2020. The guaranteed area is in long term runoff. Overall, the results are satisfactory in the quarter Despite weak results in defined benefit Norway with negative disability results from less reactivation, I. E. People on sick leave Not returning to work due to weak employments through the COVID-nineteen period. Price adjustments in this product line Have been implemented as of January 1 in order to improve results. The results from Sweden Our OP and SPP has strengthened its consolidation following good investment returns. Also, Risk results in Sweden are generally strong. Furthermore, good financial return has allowed SPP to continue to win back deferred capital contributions from the first half of the year. The reserves in guaranteed has peaked. The recent reserves are up from last year is The stronger Swedish kroner to Norwegian kroner. The level of guaranteed assets under management as a percentage of total pension assets under management Continues to decline and is now 50.8%. With the current pace, non guaranteed pension reserves We'll surpass guaranteed reserves in the next few weeks. The buffer levels are at all time high after growing by 10,000,000,000 or 37% during 2020. This secures future customer returns and protects shareholder capital. As we said at the Q2 presentation, despite the low interest rate level, we can, Subject to normal risk premiums in the market, deliver guaranteed rates of return and not dip into the buffers on the balance sheet for the next decennium. And if market returns in any single year are lower, the buffers ensure guaranteed returns to customers without hurting shareholders' equity. With lower rates in Norway and Sweden through 2020, the return on some SEK 32,000,000,000 In low risk fixed income investments in the Storebrand ASA, Storebrand Life and SPP company portfolios has fallen. Eurobend has been sold from Storebrand Life to SPP and will be reported together with SPP guaranteed from now on. And with that, we sum up the presentation and I give the word back to you, Daniel. Thank you, Lars. Thank you, Adaril. With that, we've come to the end of this presentation, and we will move over to questions and answers. Just to remind you, to ask a question, you need to be dialed into the conference call. Details are found on the IR website. And with that, I give the word to the operator. Thank The first question comes from Peter Eliot from Kepler Cheuvreux. Thank you very much. And congratulations on the good results. I guess my first question probably won't surprise you, but in light of the review, I was just wondering if you could Elaborate on what you think that might mean for you in terms of the impact packed and what you can do to mitigate it. I noticed as well on that in your report, you mentioned that it's expected to come into force in 2026, That's been slightly later than I was expecting. I was just wondering if you could elaborate on that time line as well. And then the secondary I want to ask on was the P and C result, a very strong underwriting result there. I mean, if we strip out the impact of the land slide. And I'm guessing the combined ratio was in the 70s. So I'm just wondering if there's sort of anything in particular So note there, anything particular for this quarter. And I was wondering if you could say, the €130,000,000 That you've got from the inshore portfolio. I was wondering what sort of percent that represents of what you could have got, I. E, how much was renewing? So yes, just to get an indication of how much that business you're attaining. I'll leave it there, but thank you very much. Thank you, Peter. If I start with the EIOPA review, I will say, first of all, the time line, of course, is Just not sure, but what we have seen from the comments from Europe and Europe itself, it's a long process where you need to go All the way up to the commission and back again before you have the acts needed to start implement the changes. And we have seen 2025, 2020 It seeks us an estimate for doing this. You should also take into account that it is supposed to be transitional period to implement these new rules. When it comes to Storebrand, we have been working with our internal for a couple of years using that for our risk management In all ways. And we have we'll start also a dialogue with the regulator to have the internal model as also the basis for our solvency reporting going forward. And as you know, if we have had other type of regulations like The stress tests from EIOPA. Of course, we would also have a different set of risk management of our Liabilities. So we always adapt to the regulations in the market. So it's very hard to say anything about the Output of such regulation if we were to adapt to the new standard model. But as you understand, It's a long time line, and we expect also to move into more internal models by that time. So if you take the Yes. Just adding one comment to EIOPA and the impact. Obviously, by 2025 and 2026, our balance sheet will have been totally changed as well. As you just saw on the Presentation now, the amount of guaranteed liabilities is going down as a percentage of the total every quarter. Moving over to your P and C question, the landslide outside Oslo, we had limited exposure to that And also through the Norwegian, is it called, peril fund? Natural. Natural peril fund, there is also some Consolidation or collective responsibility for these kind of accidents and with a limited impact for Storebrand. The SEK 130,000,000 collected from inshore portfolios transferred to Storebrand In December, that's a large part of the renewals in the inshore portfolio during this period, But I don't have an exact percentage how much percent of the total that is, but it's a large part And somewhat larger than expected. That's great. A close follow-up very quickly. I mean, even if you sort of June 0 from the landslide, I mean, the 82% that you reported was still a very good number. I'm Just wondering to what extent we can sort of extrapolate that or we're listening to good experience. And on the Yoper Singh, I mean, I guess you gave some comments at your Capital Markets Day about the fact that internal moving to internal model And pulling some additional levers could give some upside to the sort of current reported ratio. I'm just wondering, I mean, is that Sort of still the case because I'm guessing that the Opus proposals haven't really affected your internal model. I mean, I know you don't have an internal model yet, but your view of what you might look like under an internal model. But I'm just wondering, is that right? Or does it also have some implications For the sort of internal model view? That is absolutely right, Peter. Our internal model is, of It was not affected of changes in the standard model from EIOPA. It's also the same view as we said In our Capital Markets Day, we work hard every day to ensure that we, as soon as possible, reach the level of 180% in solvency. That is a trigger for us to view ourselves as over capitalized and start doing share buybacks. And we are willing and unable to use levers to get to that level as soon as possible and We'll use those levels. On the landslide, the impact on our P and L was 11,000,000 in the quarter, but every quarter there are usually some large claims and we didn't have too many other large claims this quarter. So So if you want to implement that in your model or not, that's up to you. But basically it was more of a normalized result. And I think we can also add sorry, and then we can also add that in general, there has been less mobility in the society as Thanks very much. We do actually have 9 people in the queue. So I will start with Johan Strom from Carnegie. Please go ahead. Your line is now open. Thank you. I have a question for Lars on the margin contraction in Unit Linked Norway. Sorry, the line broke for me. But did you say that some of the effects came from, was it accruals? And if so, can you give Some more comments on what you're seeing in the underlying margin pressure for Unit Linked Norway? Absolutely. There were some adjustments between the quarters where The income was booked slightly too high in the second and third quarter and corrected with a negative impact for the 4th quarter. So we estimate that the running margin coming out of 2020 is approximately 0.8%, I. E. Higher than what is reported in supplementary, but somewhat lower than the average for the full year. And as you know, we go into the IPA, the individual pension account year this year. It will be a limited impact on margins For this year, but some impact and then it will be somewhat more impact coming into 2022. But the guiding that we gave on the margins and the margin development in our Capital Markets Day It stands firm and we have no reason to change any of that guiding. It's very clear. Thanks a lot. And the next Question comes from Ashik Musa Adi from JPMorgan. Please go ahead. Your line is now open. Yes. Thank you and good morning, Lars. Good morning, Otto. Just A couple of questions. First of all is on solvency to ratio. I mean, one of the slides shows that you have generated about 8 points or 9 points of capital So adjusting for dividends, so I mean that looks pretty high basically because that would imply about 16, 17 points of Capital generation on an annual basis. So how do we think about capital generation organically From your back book, that's one. The second question would be asset management. I mean, clearly, the asset management earnings were Supported strongly by performance fees in 4th quarter, which was higher than expectation. But how do you think about margin? Because it just felt like there was a bit of margin compression in 4th quarter as well. So how do we think about margin pressure in Asset Management going forward? And lastly, as I saw that there is some commentary mentioned that in the unit paying business as well, you have seen a bit of accelerated margin pressure. So how do we think about that? Yes, these three questions would be very helpful. Thank you. Okay. On the Solvency II capital generation, Which was on Page 10 in the presentation. The 9 percentage points also are positively impacted By the fact that we were canceling dividends for 2019. So your equation is not entirely correct. However, I would argue that some of the capital generation is also captured by the 8 percentage points in model improvements and assumption changes Linked to a lower cost level, dynamic pricing and better risk management. So I would argue that you should Look at both if you look at capital generation going forward. When it comes to Margins within Asset Management. Of course, we recognize the same as the whole industry is these margin pressures on all asset class In Asset Management, but we are able to also shift our balance from more low margin products into more alternatives. And that has kept our top margin quite stable on our 20 basis points, and that is also what we expect to see going forward. And on the last question on unit linked margin pressure, I think I answered that for Johan on the previous question. Yes. Okay. I mean just one thing, I mean asset management flows were pretty strong as well In 2019, especially the 3rd party. So is it you think it's more sustainable in nature or you would say that 2020 led to something which may have accelerated net inflows in 2020. Any surprise there? Or do you think that this is what You would expect in a normal year? On the net transfers? Net flows in Asset Management. Net flows, yes. Net inflows, Yes, and the net flows in Asset Management. Well, we are very pleased, of course, to see the net flow through 2020. We see breakthrough both in the Nordic area, but also internationally. And we have set high ambitions also for 2021 To really continue the strong flow and growth in asset management, both in the Nordic and internationally. And I should add that we have high ambitions in terms of Nordic and Northern European sales, Both in alternatives in real estate, private equity, private debt, etcetera and this has been extremely complicated in the COVID-nineteen world Without the possibility to meet new clients. So our ambition is that this will continue to grow And that we will be able to reach more clients when we once again can travel hopefully in the second half of the year. That's great. Thank you for this. The next question comes from Blair Stuart from Bank of America. Please go ahead. Your line is now open. Thanks very much. I've just got a couple of small clarification questions, please. Just on the Insure portfolio, you talked about the €130,000,000 How much would you reasonably expect To come through from that portfolio as we move through the year. Secondly, I noticed in the company portfolio Or in the Holdco, basically, the result was quite a bit below consensus expectations. Just wonder if you can Let's see why you think that was. Is it just a simple mark to market or something else? And In the individual pensions line within the guaranteed section, I think you reported 25,000,000 Of operating profit, again, a good bit higher than I would have expected. I just wonder, is there something Exceptional in that way. I know it's a small number or is that kind of new run rate for that segment? Thank you. Sure. The ensure expectations were guided at NOK 500,000,000 to NOK 600,000,000 initially. We're not changing that guiding, But we experienced somewhat better than expected start on the portfolio transfer in December. On the company portfolios being weak, you're correct, the running yield has been weak through the year and there is also There is a profit on one investment that was booked like January 1 or something that will come into the Q1 this year. So it's somewhat weaker than you would expect on a normalized basis, But the overall explanation for the weak results is a lower running yield And thirdly, you're in the individual pension account no, sorry, individual pensions Products profit was high due to profit split in the 4th quarter and the profit split comes as a consequence of good financial return And customer buffers that are on some contracts already full and it's not possible to add more To that, so and also the risk result in that in those products goes into the profit split And the profit split, as you may recall on these products is 35, 65, so when there is a surplus return, Then it's positive both for customers and for shareholders. And that is an important point of course because we You'll see that with very strong buffers that Lars alluded to with more than 11% both in Norway and Sweden. Some contracts and more and more contracts start to be full by buffers. And then we are into the territory of profit sharing. So If we are able to get good returns going forward, that will also be the case. Would it be too strong to say that the €25,000,000 is an appropriate run rate? And just on the The portfolio is Lars. Is there any guidance you can give us to how we should be thinking about that going into this year? It's difficult to talk about run rate because you need a surplus return. And of course, the running rate normally in this portfolio This is quite close to the guaranteed level. But this year has been a very good market that has led to Increased buffer building and also increased profit sharing, but it's hard to guide on today run rate when it comes to profit sharing in these guaranteed portfolios. Yeah. I don't really want to guide you on the company portfolios either, but you could see in the It's supplementary. The size of the portfolios and you see the interest rate level in Norway for short term and Sweden for short term investments And you see the operating cost in the holding company which has been stable for some time and then you will end up with a Result which is slightly better than this than 2020, but I leave it up to you to put the numbers together. Yeah, okay. Thank you. The next questions come from Roy Tilly from Arctic. Please go ahead, your line is now open. Thank you and good morning and congratulations on the strong results. I have Three questions really. The first one on another question on insurance. Just wondering if you had Any numbers to give on what kind of price increases you are pushing through at renewal there? And secondly, you're right that you expect an update on the outstanding tax cases in early 2021. Is that all the three tax cases or just a few of them? And you can talk a bit more about that because I see that your range of outcomes there It's pretty wide. And then just lastly on the individual pension account. Do you have any early data to share with us in terms of Activity from customers, how many are logging in? What kind of what do you see from your retail customers? Thank you. On the inter price increases, basically we've put this into our own Tariffs, when they are transferred to Storebrand and in some parts of the portfolio, there are some price increases, but I don't have a number In terms of percentage points and how much that would be on average. So but in some for some Customers, there will be some price increases, for other there will be basically a flat price. In terms of tax update, There are, as you say, 3 different things that are important and they are We have comments on that in the notes in the accounting, so you can see more details on the different cases, It's primarily the first case, the 2015 tax receipts for Storebrand Life that we expect that we May I get some clarification on in the first half of this year. Obviously, we hope to I'll get clarification on these things as soon as possible to put that behind us. When it comes to the New World pension account, It's of course still early days. It's been a week now more or less with opening of the opportunities to do Investigations of your own pension account. We see strong interest. There's a lot of customers logging into our sites. It's a high opening of all the e mails we have sent out. And we also You'll see that we have a lot of conference calls with corporates, where a majority actually of the employees attend and And we really feel, as I said in my presentation, that we have a very strong offering By having this superior return from our portfolios with a very strong offering into the pension Accounts, including private equity and real estate as a part of the offering. And I think it's important to stress that the pension savings is much more than just selecting Mutual Funds, it's all about savings and insurance, it's about rebalancing, it's about having the right asset allocation And the right also risk towards your pension age. And all of this is proven track record from Storebrand's offerings. And we are sure that we are able to meet the needs for our customers, both on the corporate side and For the ones that choose also to have their own pension account more retail based. And even payout solutions. And payout solutions is also very important. Thank you very much. Can I just ask more final quick question just on the retail side? Haven't heard anything about Dreams lately. Is that partnership still a focus area and something you're working on? Absolutely. Dreams is a partner with our bank and all the bank accounts that is opened in the Dreams app that is a Very successful app, especially for younger people to save for their dreams. And it's also been introduced some opportunities to pay down your debt through that app that has also been Introduced successfully in combination with the Storebrand Bank and Ream. So that is a partnership that is up and running, and we are investigating new ways of corporations for savings and debt The next questions come from Ulrik Oren Suchar from Nordea. Please go ahead. Your line is now open. Matt, thank you and congratulations on the good results. You talked a bit about individual life and pension in Norway, but I was wondering if the I think the same in paid up policies in Norway, that is you a lot of buffer accounts are starting to get So, also, I'd like the outlook for more profit sharing there has increased or not? That's the first question. The second question is on especially ESG fund sale internationally because you had a breakthrough there In December, I think. And as I understood, Lars, it's like the COVID is making it a bit difficult to do new sale during lock Down. But in general, should we expect some sort of snowball effect there that's like when you sold one fund So whoever is like you can use that as a case for other potential clients and then so forth, Yes. You can put an increase in your ESG franchise in London. How do you view that? Yes, it's my 3 questions. If I just start, well, of course, when we have Record high buffers that supports our guaranteed products both in Norway and Sweden. That makes it easier to reach to a point We start doing profit sharing. So we also see some profit sharing for the paid up policies this year Due to the fact again that the buffers are full and that we have had a very strong booked return this year. So it's, as I said, Very much up to creating strong book return, then you will see increasingly profit sharing coming through. But It's really important to see this book to return on an annual basis to have their profit sharing coming through. And when it comes to the international sales, of course, we are very happy to see the breakthrough in 2020 in The U. K. Market. We also have very strong international sales of our private equity operations from Cubera. And as Lars said, it's we find it easy to do business with the clients we have already In touch with and have contacts with, it's harder to get new cold clients, so to say, Up to speed when we are not able to have this personal contact. But we have, of course, a very strong customer base already where we are able to sell our funds and solutions. And it's absolutely the case that we hope to see And increased international sales based on the breakthrough when it comes to sustainable fund solutions into the U. K. Market during 20 21. So I should say in terms of profit sharing, with normalized returns, We are pretty much on target to deliver what we should do. If we can get excess returns from a normalized basis, Then we are able to do more profits sharing. And we have been doing quite well in terms of excess returns in the last few years and hopefully that will continue. Got it. Thank you. We do have 5 people in the queue. So I will quickly continue with Vega Tuvorud from Pareto Securities. Please go ahead. Your line is now open. Good morning. I tried to withdraw my question as already been answered, But I was not able to. Thank you. Then we quickly go forward. Next person is David Walker from Insurance CRM, please go ahead. Your line is now open. Thank you very much for the presentation. One company specific question, A more general one, please. The company specific question is the investment sensitivities of your solvency ratio For equities, spreads and so forth moving, how have they changed recently? And are you planning on reducing them or increase Consciously over time at Storebrand. And then my more general question is to what extent you may see Unique features in the sustainable investing of yourself and then other Scandinavian and Nordic inshowers. Thank you. Thank you for your questions. I can just start with the sensitivities towards market movements for the solvency ratio. These Sensitivities are fairly stable quarter on quarter, always some minor changes. It's we optimize Our risk management for a level that we feel comfortable in terms of what risk we take, so this It can be expected to be fairly stable going forward as well. When it comes to sustainability in the Nordic market, I think we have a very strong Track record, Storebrand has been working with sustainable investments since 1994. It's a part of our DNA in the company. And I think also the society is quite mature when it comes to sustainability altogether. We see that clients both in the corporate space and Also gradually more in the retail space, both in Norway and Sweden, look at sustainability and sustainable solutions As some of the main features when they are picking financial partners. So I think both from a Customer side and also, of course, from an investor side, Storebrand's position as a sustainable Company is very important for our growth and our prosperity going forward. Thank you. The next question comes from Hakan Astrid from DNB. Please go ahead. Your line is now open. Good morning. So I have one question left. There has been some talk about Repricing of the insurance element altogether with the fine contribution pensions, can you say update us on how Yes, we saw weak results in defined benefit pensions in Norway Through 2020 and we have done some implemented a more dynamic pricing, which includes A higher price for the interest rate guarantee when the rates have gone down. So the rates fell last year and these price increases were implemented In the beginning of in January 2021. I don't know if this sounds a little bit more here, Hakon. Did you ask about Contribution or defined benefit? Defined benefit. Defined contribution, so the pension element sold together. Exactly. And so I think we Okay. Sorry, I thought you said define benefit, but Yes. So yes, there's been, of course, some discussion About how that element will be priced when the savings and insurance split will be more separated going into individual pension account. But As we are entering into own pension account now. We're and we'll, of course, follow The market closely, but there's still early days, I think, here on this settlement. Perfect. So you have not done anything yet? We have done normal price increases and normal price adjustments on the line, but Nothing more to say than that. The next question comes from Thomas Svensson from SEB. Please go ahead. Your line is now open. Yes, good morning. A question to your costs. You raised or your increased target there on costs 2021, could you say how that will go throughout the year? Should we expect a full Increase in Q1 or would it be a gradual increase in Q1? And the second question goes to Regarding the amount of EBITDA policies, you have NOK 145,000,000,000 there. Is this the peak, I didn't hear your second question. Your line was really bad, Thomas. I can try. Sorry. I think I heard it. I'm a little bit closer to the speaker, but the sound is a bit muddled here, so Apologies for that. But there's still SEK 30,000,000,000 left in defined contribution pensions in Defined benefit pensions in Norway. So there might be somewhat increases in the paid up stock during the year from that. But All else equal, it shouldn't increase a lot on its own. And in terms of cost increases, we have guided that the Take on the Insure portfolio as well as digital acceleration investments We'll add approximately 400,000,000 to the cost base this year. We will obviously continue to monitor the cost base very closely In line with the result ambitions that we have put forward on Capital Markets Day And our ambition to reach a total Group result of SEK 4,000,000,000 by 2023. So You should expect, as we have guided, SEK 400,000,000 more costs related to these two items, but also a very close monitoring of the cost development in line with our profit emissions. Yes, and I'll stress that we are looking of On cost income ratios, combined ratios and cost ratios and so on on different lines. And we will allow cost increase As long as we see stronger increase in the top line and ensuring Growing results, so it's a very strong and tight cost control to ensure higher results. Okay. Thank you. Ladies and gentlemen, if you would like to ask And we do have a follow-up question from Peter Eliot from Kepler Just one quick follow-up. The consolidation ratio, I mean, now at 109%, So I'll turn it off a bit further. Just would it be fair to say that a greater proportion of the funds are now high enough So extract indexation fees and whether that the run rate therefore could go up a little bit more going forwards, it would be great to see a bit of guidance on that. Thank you. No, you should expect approximately the same results as you saw for the full year 2020 So the full year results for 2021 should be approximately the same as 2020, but instead of booking everything in the second and third no, 3rd and fourth quarter Like we did last year, you should expect a quarter of that booked every quarter. Perfect. Thank you. The next question comes from Jan Erik Gjerland From ABG Sundal Collier. Please go ahead. Your line is now open. Thank you. Most of my questions are answered, but I have one left. The public sector growth, you started to sort of the last quarter, you talked about the public sector growth and how many municipalities you have taken into your book. Could you shed some light into the activity in 2021? And what the pipeline looks like? And how much you have sort of been able to We have now early days. Well, thank you, Jan Erik. We, of course, are very pleased to see the What we see as the real breakthrough throughout 2020 in the public sector with approximately SEK 9,000,000,000 in transfers That will gradually come in 2021. Most of the assets already came on the start of the year, dollars 7,000,000,000 actually. And that is a very good base of course for the activities in 2021. We hope that A lot of municipalities around 10 to 15 Municipalities will go into tender offerings during the year. And on top of that, of course, this is a huge market also for corporate For public companies, so it's not only the municipality market. We also had great success in Public companies during 2020 and of course is working also with the company part of the public sector together with also then the municipality. So really look forward to continue the growth, Have high ambitions in this area and is very pleased to see the breakthrough in 2020. Thank you very much. That's all for me. And with that Sorry, continue. I'm so sorry. Thank you very much. With that, we have come to the end of today's quarterly presentation. Thank you for tuning in, and have a nice day.