Storebrand (Buy, TP: NOK90.00) - Buybacks and dividends
We see increased scope for extraordinary dividends or buybacks on the back of the interest-rate uplift in H2 2019 and Storebrand’s stronger solvency capital-generation. We believe extraordinary dividends could start as soon as six months from now, and estimate ~NOK1/share-worth of share buybacks in H2 2020e (in addition to an ordinary dividend of NOK4). We expect the introduction of pension accounts to be implemented in 2022 and to reduce Storebrand’s earnings by ~NOK150m YOY due to lower margins. We find Storebrand attractively valued and reiterate our BUY and NOK90 target price.Storebrand ASA is the parent company in a financial group. Co. is a provider of pension savings. Co. provides range of products within life insurance, property and casualty insurance, asset management and banking, to companies, public sector entities and private individuals. Co.'s corporate organization includes the business areas of Savings, which comprises of non-guaranteed Defined Contribution in Norway and Sweden, Asset Management and Bank products to the retail market; Insurance, which includes Co.'s risk products; Guaranteed Pensions, which includes long-term pension savings products that give customers a guaranteed rate of return; and Other.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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