Moody's changes its outlook on Storebrand

The rating agency said that the group's results have confirmed over the last couple of years the high quality of the company's franchise in the Norwegian life insurance market. Storebrand Life's market share has moderately improved recently, to around 30% in 1999, confirming the company's positionas the largest Norwegian life insurer, a position it has enjoyed for a number of years now. The Storebrand Group has also successfully developed new products, such as unit-linked products, and strengthened its comparatively low risk asset management operations. Moody's expects Storebrand to maintain its leadership going forward in Norway. Nevertheless, it also recognised that the Norwegian market is comparatively small and that the company has currently very limited geographical diversification of its earnings.

The rating agency noted that the group's potentially more volatile non-life insurance operations were transferred in 1999 to If P&C, the joint-venture created with Skandia (Sweden) and which is 44% owned by Storebrand (If Property & Casualty Insurance Ltd, rated A1 for financial strength with a negative outlook). The group's operations have in the last couple of years been refocused on life insurance and asset management operations, which are expected to provide recurring earnings with low volatility. Such operations have been complemented by the creation of an Internet bank and selective acquisitions in the private banking business, notably the 1999 acquisition of FinansBanken in Norway. Moody's expects the Storebrand Group to carry on seeking selective growth opportunities in the Nordic region, while maintaining an overall conservative strategy.

Moody's said that one of the main constraints on the company's rating so far has been the level of financial leverage of both Storebrand Life and Storebrand ASA, the group's holding company. Storebrand Life has been leveraged to facilitate investments in equities while maintaining adequate levels of solvency under Norwegian regulation. The company also needs to generate sufficient cash flow to help service the holding company's current senior debt. However, the expected flotation in 2001 of the group's investment in If P&C would provide the company with significant extra liquidity, which could improve the capital structure of the company and could help justify a rating upgrade.

Based in Oslo, Norway, Storebrand Livsforsikring AS is the largest subsidiary of Storebrand ASA and had 1999 consolidated total assets of NOK 115 billion and premiums written of NOK 7 billion.

London, 20 July 2000

<br>Mark Hewlett <br>Regent Managing Director <br>Financial Institutions Group <br>Moody's Investors Service Ltd <br> <br>Damien <br>Analyst <br>Financial Institutions Group <br>Moody's Investors Service Ltd. <br>