Higher profits for Storebrand 1. quarter 1998: Good trend in sales for the life company and positive development in financial markets

· Booked Group result rose by NOK 138 million to NOK 279 million
· Value-adjusted operating profit rose by NOK 1,235 million to NOK 3,013 million
· Unrealised gains rose by NOK 1,982 million in the first quarter to NOK 8,531 million
· Claims paid stay at high level
· The Group`s capital position continues to be highly satisfactory

In the first quarter of 1998, the Storebrand Group`s operating profit was NOK 1,031 million before distribution of profit to the life and pension insurance policyholders. The operating profit was NOK 95 million lower than in the first quarter of 1997. After distribution of the policyholders` share of the profit from life and pension insurance, the Group`s result amounted to NOK 279 million, compared to NOK 141 million in the same period last year. Good financial income had an impact on the result. The Group`s value-adjusted operating profit for the first quarter amounted to NOK 3,013 million, a rise of NOK 1,235 million compared to the preceding year.

The life company, Storebrand Livsforsikring, returned a first quarter operating profit of NOK 912 million, compared to NOK 1,139 million in 1997. Booked yield for the period was 2.0 per cent (2.2 per cent in 1997), or 8.4 per cent (9.2 per cent) annualised. The value-adjusted yield for the period was 3.9 per cent (2.6 per cent), or 16.4 per cent (10.8 per cent) on an annual basis.

The non-life insurance company, Storebrand Skadeforsikring, returned an operating profit of NOK 169 million at the end of the first quarter, compared to NOK 24 million at the same time last year. Higher investment income explains most of the improvement in the result.

Net financial income in the Storebrand Group`s insurance activity amounted to NOK 2,218 million in the first quarter, compared to NOK 2,105 million last year. The Group`s unrealised gains have risen by NOK 1,982 million since the turn of the year, and at the end of the first quarter stood at NOK 8,531 million.

The Group had total assets of NOK 120,206 million at the end of the first quarter. This is about 5 per cent more than at the beginning of the year. The capital ratio stood at 14.2 per cent on 31 March 1998, compared to 14.4 per cent at the turn of the year. The decision to redeem the preference capital, and growth in total assets with higher investments in shares and bonds had a negative impact on the capital ratio, while raising a new perpetual subordinated loan had a positive effect.

Earnings per ordinary share amounted to NOK 0.92 in the first quarter, compared to NOK 0.39 in the same period last year.

Commenting on the Group`s results, Chief Executive Officer Åge Korsvold says that Storebrand is in a period with a high investment level aimed at improving its business systems. `Planned improvement programmes, increased sales capacity in life insurance, and IT investments resulted in expenses rising in both life and non-life insurance in the first quarter. In the life company, expenses as a percentage of customer funds rose from 0.82 per cent last year to 0.89 per cent this year, but despite this rise the company is still the most cost-effective life insurance company. In the case of non-life insurance, the cost ratio for own account rose from 18.1 per cent last year to 20.0 per cent this year. Storebrand`s goal to achieve a cost ratio in non-life insurance towards 20 per cent within 3 years is maintained.

Life insurance
In life insurance, Storebrand recorded premium income for own account of NOK 3,195 million in the first quarter, compared to NOK 2,925 million last year. In the market for private insurance, individual endowment insurance sold particularly well, with premium rising by 49 per cent compared to the same period last year. In the corporate market, premium income from group pension insurance was 8 per cent higher than in 1997.

The operating profit for the period (compared to the same period last year) was NOK 912 million (NOK 1,139 million). NOK 752 million (NOK 985 million) is to be transferred to the policyholders and NOK 160 million (154 million) to the owners.

Net gains on the sale of securities in the period amounted to NOK 674 million, compared to NOK 682 million last year. Storebrand Livsforsikring had unrealised gains of NOK 7,606 million at 31 March 1998, a rise of NOK 1,791 million since the beginning of the year. 77 per cent of these unrealised gains were in the share portfolio, 15 per cent in the long-term bond portfolio, and 8 per cent in other interest-bearing securities.

At the end of the first quarter, Storebrand had a net transfer of premium reserves to the company of NOK 2 million, compared to a net transfer from the company of NOK 145 million in the same period last year.

Non-life insurance
Non-life insurance recorded a NOK 145 million improvement in its operating result, to NOK 169 million, mainly due to booked investment income rising by NOK 112 million to NOK 367 million. The non-life company had unrealised gains on securities of NOK 860 million at 31 March 1998, which is NOK 153 million higher than at the beginning of the year. The value-adjusted operating profit was NOK 322 million, compared to NOK 116 million in 1997.

The technical result was minus NOK 212 million, an improvement of NOK 44 million compared to 1997. The positive effect on the accounts of run-off gains on claims reported previously and the minimum requirements of the Banking, Insurance and Securities Commission was NOK 59 million. The claims ratio (for own account) was 83.0 per cent, compared to 88.4 per cent last year. Adjusted for the minimum requirements of the Banking, Insurance and Securities Commission and run-off gains on previous underwriting years, the claims ratio for own account in the first quarter was 86 per cent and in line with last year.

Non-life insurance is still characterised by pressure on rates. However, compared to the fourth quarter of last year, the loss trend is stable.

Storebrand`s market share of non-marine insurance fell by 0.2 percentage points since the beginning of the year, and now stands at 38.7 per cent.

Other activities
The holding company, Storebrand ASA, returned an operating profit of NOK 122 million in the first quarter, compared to a loss of NOK 41 million in 1997. The improvement in the result is due to a dividend payment of NOK 192 million from Storebrand Livsforsikring.

Storebrand Bank AS returned a profit of NOK 47 million. This is NOK 54 million more than last year. This improvement in the result was mainly due to a dividend of NOK 63 million from Storebrand Finans AS, which is part of the Storebrand Bank Group.

Oslo, 13 May 1998

For further details, please contact:
Vidar Ullenrød, Director of Public Relations 22311444, mobile 91696803
Christian Storm, Treasurer, 22311085, private 22437403
Jack Frostad, Chief Information Officer. 22315757, mobile 92826255

Full press release includint tables is ready for download on http://www.huginonline.no/STB/DR/stb98k1_eng.pdf

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