1H 2010: Good operations - instability in the financial markets impacts quarter's result

Thu, Jul 15, 2010 07:30 CET

·         Group result of NOK 239 million for the first half of 2010 and minus NOK 39 million for 2Q
·         Instability in the financial markets produced low level of financial income in Life and Pensions
·         Programme for improving operations ahead of schedule and making positive contribution to the result
·         Increased sales of unit-linked insurance in SPP: new sales increased by 61 per cent
·         Good solvency: solvency margin of 163 per cent for life insurance activities

The Board of Director's Interim report for first half 2010, 1H 2010 result presentation and Supplementary Information are attached on http://www.newsweb.no

Storebrand will today host a press and analyst conference in Storebrands head office at Lysaker, Professor Kohts vei 9, at 1000 CET (in Norwegian). An international conference call will be hosted at 1400 CET. To participate in the conference call please use link on http://www.storebrand.no/ir, or call in and register 10 minutes before the presentation starts. Dial: +47 80080119 (from Norway) or +47 23184501 (from Norway or abroad).

Full press release:

1H 2010: Good operations - instability in the financial markets impacts quarter's result

"In a quarter affected by falls in equity markets, the customers' return was competitive and the development of the business areas positive. Improving operations in the Group is strengthening the quality of the underlying earnings and having a good effect on the result. The work will continue at full strength," says CEO Idar Kreutzer.

NOK 3.1 billion to pensions customers
Life and Pensions Norway has allocated NOK 3.1 billion to insurance customers for the first half of 2010, NOK 336 million of which was profit in excess of the guaranteed return. The returns in the customer portfolios are competitive, but were negatively affected by market developments. This meant the result allocated to the owner during the quarter was charged with the building up of reserves for long life for the first six months of the year.

The new generation of products without an interest guarantee, defined contribution pensions and unit-linked, contributed better positive results. In total this produced a positive result for Life and Pensions Noway in 2Q, despite unstable financial markets during the period.

The net booked inflow of customer assets to Life and Pensions Noway amounted to NOK 305 million in 2Q and NOK 1.9 billion for the year-to-date. Total new premiums (APE) amounted to NOK 1.2 billion, NOK 332 million of which came in 2Q.

Strong growth in premiums in SPP
SPP's sales of unit-linked insurance increased by 61 per cent during the quarter compared to the same period last year. Total assets increased by NOK 1.5 billion in the quarter and by NOK 6.1 billion in the first half of 2010. SPP's result was affected by negative returns in the equity markets. The market developments made it necessary to make provisions for a deferred capital contribution, which is charged to the result allocated to the owner during the quarter. The administration result developed positively due to the implemented rationalisation measures and a good risk result for the quarter.

Good new sales in asset management
The volume of net new sales in asset management (external discretionary assets and mutual funds) was NOK 6.5 billion in 2Q: NOK 5.1 billion in the Norwegian business and NOK 1.4 billion in the Swedish business. The result in Storebrand Investments developed positively compared to the same period last year, and was driven by increases in volume-based income.

Bank's net interest income improves
Storebrand Bank experienced a positive development compared to the same period last year due to better net interest income, reduced operating expenses, and lower losses. The level of losses and defaults in banking is developing well.

Continued growth in P&C
P&C insurance's result is developing well. The quarter's result was strengthened by a good risk result and continued good growth in the business. The combined ratio for the quarter was 98 per cent. Insurance policy sales in the P&C insurance business remain good and continued to grow in 2Q. At the close of the period the company had more than 47,500 customers.

Improvements to operations
The Group has established a programme to improve operations associated with the income and cost sides in which measures and activities are closely monitored. The programme aims to achieve improvements to operations amounting to NOK 550 million in 2010. The development in the first half of 2010 was positive and the results from the programme to improve operations are ahead of schedule. During the period, improvements to operations of around NOK 270 million were achieved compared to the same period last year. The improvement is due to cost reducing measures, growth in customer assets, and income-related measures.

Capital situation
The Storebrand Group was in a sound financial position at the close of the quarter. The solvency margin of the Storebrand Life Insurance Group (Life and Pensions Norway and Life and Pensions Sweden) at the close of 2Q was 163 per cent.
The bank's core (tier 1) capital ratio was 10.4 per cent at the close of the quarter.
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Lysaker, 15 July 2010

Contact persons:

EVP Corporate Communications Egil Thompson: Mobile (+47) 93 48 00 12
Head of Investor Relations Trond Finn Eriksen: Mobile (+47) 99 16 41 35

Enclosure: The Board's Interim report first half 2010

The Storebrand Group is a leading actor in the Nordic market for life insurance, pensions and long-term savings. The Group consists of the following business areas: life insurance, asset management, banking, and P&C and health insurance.

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)

1H 2010: Good operations - instability in the financial markets impacts quarter's result

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