Storebrand: Embedded Value (MCEV) for 2011 reduced to due low interest rates and high market volatility
- 2011 embedded value earnings of minus NOK 5.4 billion
- NOK 5.6 billion negative contribution from lower interest rates and increased market volatility
- Strong growth in existing business. Value of new business (VNB) reduced to NOK 385 million
- Embedded Value (MCEV) of NOK 25 billion FY 2011, the value of Unit Linked based products increases in proportion of the Group's value
- Group MCEV per share NOK 63.0
About embedded value
Embedded value (EV) is an actuarially determined estimate of the value of a company excluding any value attributable to future new business. The calculation of embedded value requires the use of a number of assumptions with respect to the business, economic conditions and financial markets.
Storebrand provides a separate EV report with detailed information. The EV report from Storebrand has been prepared using a market consistent approach (MCEV).
Result development 2011
The MCEV result is affected by turbulent financial markets. Lower interest rate level and increased market volatility reduces the value of expected future profits. Changes in the macro environment gives a net negatve contribution of NOK 5,6 billion.
Operational effects and management actions have increased the value of the business with NOK 467 million. The change is mainly caused by lower transfers and stronger growth of employees in existing contracts than expected. Costs has also been reduced and give a positive effect.
Estimated 'Value of new business' (VNB) of NOK 385 million. Previously communicated transferred customers in the municipal markets explains most of the reduction from 2010.
Unit Linked based products increases in proportion of the Group's value. This trend increases the quality of earnings going forward. The value of traditional guaranteed products have decreased due to fall in interest rates and market volatility, while the value of Unit Linked based products have increased in 2011.
Storebrand will arrange a press and analyst conference (in Norwegian) at Storebrand's head office in Professor Kohts vei 9, Lysaker 10:00 CET today. An international Analyst conference call in English will be held at 14:00 CET. It is possible to attend the conference by calling +47-23184536, or by listen to the conference by using the link
Oslo, 7. March 2012
Director of Public Affairs Jan Otto Risebrobakken: (+47) 48 08 26 02
Head of Investor Relations Trond Finn Eriksen: (+47) 99 16 41 35
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.