Positive development in core activities, but result impaired by non-life and loan loss provisions
He points out that Storebrand is the market winner for unit linked products and for mutual funds. In addition, Storebrand is well positioned to take a considerable part of the newly established market for defined contribution pensions. "It is also satisfying to note a clear improvement in the results for asset management and Storebrand Bank", adds Kreutzer.
The Group's profit for 2000 was NOK 523 million compared to NOK 1,166 million in 1999, while Storebrand's operating profit was NOK 4,475 million compared to NOK 5,347 million in 1999. Net premium income amounted to NOK 9,596 million in 2000 or NOK 934 million lower than in the preceding year. This was due to premium reserves transferred to the life insurance company being lower than in 1999. Assets under management aggregated NOK 151 billion at the end of 2000.
Earnings per share were NOK 1.67 compared to NOK 3.54 in 1999 excluding extraordinary items. The Group's book equity rose by NOK 421 million to NOK 10,533 million. The Group's liquidity and capital adequacy are good.
The Board proposes a distribution of NOK 1.10 per share in dividend for 2000, an increase of NOK 0.10 per share compared to 1999. The Board has chosen to increase the dividend for 2000 on the grounds that special issues for the most part caused the decline in profit in 2000. The Board will seek a stable growth in dividend per share in the years to come, in line with the adopted dividend policy.
Market leader in unit linked
Life insurance operations made the largest contribution to Group profit in 2000 as well. Last year, the development in sales was especially good for new products such as unit linked, where the company continues to be the market leader. In 2000, the total market share was 22 per cent.
Whilst life insurance operations in the small and medium-sized business market performed extremely well last year, total premium income declined. This was due to a decrease in funds transferred in the large customer market and from the public sector and the loss of two major customers toward the end of the year.
The life insurance group's operating result in 2000 was NOK 4,789 million compared to NOK 4,956 million in 1999. NOK 3,951 million of the operating result was transferred to the policyholders and NOK 838 million to the owners and for taxes. In 1999 the corresponding figures were NOK 4,181 million and NOK 775 million respectively. Storebrand Livsforsikring AS achieved a book yield of 8.7 per cent and a value-adjusted yield of 3.1 per cent in 2000.
Last year saw a need to strengthen reserves because of higher disability payments and this reduced the positive risk result. However, good cost control gave lower operating costs as a percentage of the insurance fund and the company had substantial unrealised gains at year-end. This ensures that the company's ability to bear risk is good in 2001.
Euroben, the Irish life insurance company that is owned 50/50 by Storebrand and SPP has now received all necessary licences. In the first quarter of 2001, the head office in Dublin was formally opened. Through the Irish company, Storebrand and SPP can now offer service pension schemes to Nordic companies that operate in several countries.
Improvement in results for Storebrand Bank
Storebrand Bank, which assumed responsibility for the distribution of Storebrand's products in the private market from 1 January 2000, enjoyed a positive sales development. This is especially so for mutual funds and unit linked. To consolidate its position even more, the bank made substantial investments in the fourth quarter in the development and marketing of a new advisory service concept and the further development of the Internet bank, which again last year was voted the best in the market.
Storebrand Bank's total interest income amounted to NOK 877 million, up 75 per cent on 1999 and the Storebrand Bank Group, which includes Storebrand Finans, recorded a pre-tax operating profit of NOK 53 million, compared to NOK 5 million in 1999. The bank's total assets rose from NOK 8.1 billion to NOK 11.2 billion. This growth was mainly related to a rise in mortgage-secured lending for housing purposes.
Shipping reduces result of Finansbanken
Finansbanken had its first full year of operations in the Storebrand Group in 2000 and during the year has specialised its activities into three fields: private banking, capital markets and project financing. New areas of concentration such as private banking and capital markets are growing sharply, and at the same time traditional areas such as project financing for real estate and securities financing give Finansbanken favourable conditions for growth.
The bank's financial performance during the year shows a considerable increase in volume and profit before losses as a result of the high activity level and growth in the number of customers. However, a comprehensive review and evaluation of the Group's shipping portfolio was made. This review brought to light a need to make further loan loss provisions in the fourth quarter, NOK 123.8 million in specific loan loss provisions and NOK 25 million in unspecified provisions. Subsequent to this, loan loss provisions at year-end totalled NOK 454.9 million, of which NOK 286.7 million in specific loan loss provisions and NOK 168.1 million in unspecified provisions.
In 2001, Finansbanken's shipping loan portfolio will be monitored especially actively. A new focused shipping strategy is adopted, where key relationships will form part of the private banking business. A separate work-out team has been given responsibility for handling the non-core shipping loan portfolio.
The bank's profit before losses rose from NOK 240 million in 1999 to NOK 313 million last year. Profit before tax amounted to NOK 18 million. The bank's total assets rose from NOK 13.9 billion to NOK 20.1 billion in 2000.
Sharp rise in profit from Asset Management
The number of Asset Management customers rose again in 2000, as did assets under management for institutional customers. For the year as a whole, Storebrand Fondene was the winner in the mutual funds new sales market with a market share of 23.6 per cent. In 2000, sales through external channels rose especially. At the same time, Storebrand Kapitalforvaltning expanded its international efforts in 2000. The company is now established in Oslo, Stockholm, London and Paris.
Asset Management returned a total operating profit of NOK 67 million, up 90 per cent on 1999. Both Storebrand Fondene and Storebrand Kapitalforvaltning recorded a considerable increase in profit, due both to the increase in assets under management and the fact that the portfolios had a higher percentage of shares. In total, profit from asset management operations was almost doubled from NOK 35 million to NOK 67 million.
Property and casualty insurance
Storebrand Skadeforsikring, which is the holding company for Storebrand's non-life insurance interests, recorded a profit before tax of NOK 300 million. This includes a negative contribution from If Skadeforsikring of NOK 307 million and the capitalisation of security reserves of NOK 336 million.
If, in which Storebrand has a 44 per cent stake, recorded a loss before tax of SEK 989 million. The technical result shows a combined ratio of 110.2 per cent. This is a marked improvement from 120.0 per cent in 1999. This improvement comes from internal enhancement projects, synergies and higher premium income and applies to all main lines. The company had low financial income because of the poor performance of the international stock markets.
Oslo Reinsurance Company ASA, which is a company specialising in running off insurance portfolios was consolidated into Storebrand's accounts for the first time in 2000 after the company was acquired in 1999. The company continued its good performance with an operating profit of NOK 96 million. It continued to run off reserves and at the end of 2000 the company had NOK 696 million in net booked claims reserves.
Storebrand Skadeforsikring wants at all times to have the most optimal capitalisation of the various non-life operations possible. Against this backdrop, a total of NOK 1.5 billion in capital was freed from If and Oslo Reinsurance Company in 2000.
The result of operations in the parent company, Storebrand ASA, was minus NOK 344 million after tax in 2000 compared to minus NOK 256 million in 1999. This impairment in the result was mainly due to higher net financial expenses.
- Key Figures - Group profit and Key Figures - Storebrand Livsforsikring
- Storebrand Group: Profit and Loss Account
- Storebrand Group: Balance Sheet
please follow the enclosed link
Oslo, 21 February 2000 <BR> <BR> <BR> <BR>For further details please contact: <BR> <BR>Egil Thompson, Director of Corporate Communications: telephone + 47 22489586 - 93480012 <BR>Jan Erik Braathen, Acting Finance Director: telephone + 47 22311983 - 93403799 <BR>