Interim results Q1 2004

"Storebrand shows improved performance in all its business areas. The targeted program of work throughout the organisation is producing the intended results, and measures to improve profitability will be continued with undiminished force", comments Idar Kreutzer, Group CEO.

 

Strong growth in premium income

Storebrand Life Insurance's premium income, excluding transfers, was 53% higher than in Q1 2003 at NOK 4.7 billion. Premium income was higher for all lines of insurance, but sales of savings-related products to the retail market showed the largest increase.

 

The value-adjusted return for Q1 was 2.1%, equivalent to an annual return of 8.5%. Storebrand has increased its buffer capital rather than realising sizeable gains by selling investments. Booked investment return for Q1 was 1.3%, equivalent to an annual return of 5.4%. The value-adjusted return including unrealised gains on bonds held to maturity was 2.8% in Q1 2004, equivalent to an annual return of 11.6%. The market value adjustment reserve increased from NOK 1,670 million to NOK 2,623 million in the quarter. In addition unrealised gains in the hold-to-maturity portfolio increased with NOK 983 million to NOK 4,377 million.

 

Profit for Storebrand Bank

Storebrand Bank, which merged with Finansbanken a year ago, reported a pre-tax profit of NOK 21 million. The turn-around operation has produced the results expected. The bank's cost base has been reduced as planned and the balance sheet reflects the steps taken to reduce non-strategic and loss-exposed lending in favour of growth in lending to the retail market. Loan loss provisions were at a moderate level in Q1.

 

Investment returns ahead of benchmark indices

Storebrand Investments reported net new business of NOK 700 million in Q1 as compared to NOK 800 million for the whole of 2003 (excluding If). 67% of the securities funds managed by Storebrand Investments produced an investment return (before deducting management fees) in Q1 that was better than the comparable benchmark indices. Six of the eight portfolios managed for Storebrand Life Insurance outperformed their benchmark indices.

 

 

Sale of If shares completed

On 11 February 2004 Storebrand ASA entered into a conditional agreement with Sampo Oyj for the sale of all of Storebrand's shares in If Skadeförsäkring to Sampo. The conditions stipulated in the agreement were duly satisfied, and the sale was completed on 6 May. Storebrand received cash settlement of SEK 5.4 billion on 6 May, equivalent to approximately NOK 5.2 billion after taking Storebrand's currency hedging into account.

 

Storebrand intends to use part of the proceeds of the sale to reduce the indebtedness of Storebrand ASA (the holding company). In order to support expected growth in its life insurance activities, Storebrand has strengthened the capital of Storebrand Livsforsikring and Storebrand Fondsforsikring by NOK 750 million and NOK 50 million respectively. Storebrand intends to maintain an appropriate capital structure for the group. This implies that any surplus capital will be returned to shareholders in an efficient manner. A mandate is in place for the company to buy back up to 10% of its own shares.

 

The Board of Storebrand ASA has approved a new dividend policy that provides for a higher proportion of profit to be distributed as dividend. The new dividend policy is as follows: "The dividend policy shall contribute towards giving shareholders a competitive return and the company an appropriate capital structure. The dividend to shareholders will normally represent over 30% of the full-year profit after tax. The Board wishes to have a dividend policy with a long-term horizon, and will aim for stable year-on-year growth in dividend per share."

 

 

Oslo, 12 May 2004

 

Appendix: Board of Directors' Interim report for Q1 2004