STB - Q1 2009: Weak result - good customer growth
* Group result of minus NOK 733 million
* Satisfactory financial position: solvency margin of 148% for life insurance
activities
* The life insurance company repays subordinated debt of NOK 2.8 billion
* Good sales development and growth in premium income
The Board of Director's interim report for Q1 2009 and the analyst presentation are attached on http://www.newsweb.no
Storebrand will today host a press and analyst conference in Oslo at Felix Conference Centre, Bryggetorget 3, at 0900 CET (in Norwegian). An international conference call will be hosted at 16:00 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 23000400 (from Norway or abroad).
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Press Release:
Q1 2009:
Weak result - good customer growth
* Group result of minus NOK 733 million
* Satisfactory financial position: solvency margin of 148% for life insurance
activities
* The life insurance company repays subordinated debt of NOK 2.8 billion
* Good sales development and growth in premium income
"The financial market turmoil continues to cause large fluctuations in quarterly results. Solidity is satisfactory, and subordinated debt in the life insurance company has been repaid. Assets and liabilities are actively managed, and the proportion of assets with stable, good returns in the life insurance operations has increased in the period. Development in sales is good, premium income is growing, and cost reducing measures are implemented with vigour," says CEO Idar Kreutzer.
Unstable financial markets
The Norwegian life insurance business achieved a return for the quarter that was higher than the reference indices for equities and bonds. However, total returns are held back by negative return on unlisted equities and real estate funds, which resulted in booked returns that were below the interest guarantees in most investment profiles. This meant the owner had to contribute to meet the interest guarantee in insurance contracts withouth sufficient additional reserves, and the group result was weakened.
The result in the Swedish life insurance business is affected by various interest rate movements, which change the value of assets and liabilities.The asset side was negatively affected by increased bond interest rates and credit spreads during the quarter, while the company's insurance liabilities which are determined by swap rates showed little change. The increase in interest rates significantly improved SPP's solvency margin, but resulted in a negative contribution to the result from Swedish life insurance activities in the quarter.
Good sales strengthen market position
The good development in premium income from the occupational pensions market seen in previous quarters is continuing. The net booked inflow of customer assets to Storebrand Life Insurance amounted to NOK 1,102 million in the first three months of the year.
Sales also continue to grow in the Swedish part of Storebrand's life insurance business. New sales activities increased by 33% from Q1 2008, measured by total new premiums (APE). In total SPP's premium income increased by 6% compared with the same period in 2008.
Storebrand Investments has had a good start to the year with net subscriptions in both the retail and institutional markets. Securities funds in particular have experienced positive development with net subscriptions of NOK 600 million, excluding group internal customers, in Q1. Costs associated with the take-on of assets from SPP are fully charged to the profit in Q1, whilst income will accrue fully from Q2.
Storebrand Bank's total lending declined by 1.8% to NOK 38 billion during the quarter. The development in losses from banking activities was in line with expectations. Total growth in deposits in the retail segment amounted to 4% in the quarter, and the deposit-to-loan ratio has now increased to 51%.
Sales of insurance policies in the new P&C business were also satisfactory in Q1. At the close of the quarter the company had 95,000 active policies and 31,000 customers.
Financing and capital situation
Storebrand has made a number of adjustments to the group's capital structure and financing. In Q1 Storebrand ASA issued a new bond in the Norwegian market of NOK 405 million with a term to maturity of 3 years. In April Storebrand Holding AB, SPP's parent company in Sweden, carried out a capital increase of SEK 1.6 billion through a private placement with Storebrand Livsforsikring AS. Storebrand Holding AB used the proceeds to take over two perpetual subordinated loans in SPP from Svenska Handelsbanken pursuant to the acquisition agreement for SPP. The board of Storebrand Livsforsikring AS has also decided to call and prepay a EUR 175 million subordinated loan in June 2009.
The modifications to the capital structure were in line with the communicated plan. In total the changes have a positive effect on the group's financing structure and access to capital, and reduce financing costs.
Storebrand had a satisfactory financial position at the end of Q1. The Storebrand Life Insurance Group's solvency margin was 148% at the close of the quarter.
Oslo, 6 May 2009
Contact people:
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: Board's Interim Report for Q1 2009