Storebrand - Analyst-presentation 3Q 2001
Weak results for 2001 - but Storebrand retains its strong position
· The sharp falls seen in equity and savings markets in 2001 caused weak results for the year.
· The Group result showed a loss of NOK 196 million in the fourth quarter and a loss of NOK 1,430 million for the full year. The fourth quarter produced an operating profit of NOK 1,234 million and the full year showed an operating loss of NOK 1,837 million before release of additional statutory reserves.
· Storebrand Livsforsikring produced a value-adjusted investment return of 1.5% for 2001, and closed the year with a cost ratio of 0.88% and NOK 6.6 billion of buffer capital.
· Non-recurring items related to the sale of Storebrand Finans, the merger of If and Sampo's non-life business and changes implemented at Finansbanken and Storebrand Bank amounted to a charge of NOK 91 million in the fourth quarter.
Earnings per share showed a loss of NOK 4.15 as compared to a positive NOK 1.67 in 2000 excluding non-recurring items. The group's capital ratio was 12.9% at the close of 2001, an increase of 0.2 percentage points from the previous year.
In view of the loss for the year and the group's stated dividend policy, the Board recommended that no dividend is payed for the year 2001.
Continuing resilience despite a weak year
Storebrand Livforsikring's embedded value, which is a measure of the value of the business on the basis of future income, was NOK 7.4 billion at the close of 2001 as compared to NOK 7.7 billion at the close of 2000. The figure for 2001 includes a value for new sales of NOK 134 million. These figures demonstrate that the long-term value of the insurance company is relatively little affected by weaker results for a single year.
The life insurance company reported improvements in both risk result and administration result for 2001. Costs continue to be closely monitored, and the ratio of costs to average policyholders' funds fell to 0.88 in 2001. As a result of sound risk management throughout 2001 and a recovery in share prices in the fourth quarter, the life company starts 2002 with unrealised gains of NOK 844 million.
The falls seen in the stock market and lower inflows to savings products had a significant effect on results for Storebrand Bank. A comprehensive program of measures has been initiated to improve profitability, including a reduction in staffing of over 50 positions. The target of break-even for 2002 stands unchanged. Finansbanken reported a loss for the year as a whole due to a substantial increase in loan loss provisions for the shipping portfolio in the second quarter. The bank's underlying business showed a good performance in the fourth quarter, with a profit before loan losses and provisions of NOK 46 million and NOK 10 million profit after losses and provisions.
Storebrand Kapitalforvaltning reports a profit for 2001 of NOK 14 million as compared to NOK 67 million in 2000. Storebrand Optima was the best-performing Norwegian equity fund in 2001. Storebrand Fondene increased its market share despite challenging market conditions. Three local municipalities awarded SRI (socially responsible investment) mandates to Storebrand, representing a breakthrough for business with the local authority market. New distribution agreements for sales of Storebrand's SRI funds in France and Australia demonstrate the internationally competitive nature of these products. Storebrand Kapitalforvaltning has become the first Norwegian fund manager to be awarded a tactical asset allocation mandate by the Norwegian Government Petroleum Fund.
Storebrand Helseforsikring reported good sales figures for 2001, with particularly strong growth in the fourth quarter. Premium income of NOK 32 million for the year represented an increase of 82% from 2000.
Future prospects
Storebrand will continue to focus strongly on its business processes in order to improve profitability. This will include a strict approach to asset and liability management and the implementation of cost-reducing measures. Storebrand will continue to optimize the use of the group's total resources.
Storebrand's strategy for the non-life activities of If is value-maximisation, and in Storebrand's view the negative trend seen for non-life insurance business can be turned around by the current program of premium increases and a range of other measures. Storebrand therefore expects that If, as the dominant Nordic player, will produce significant improvements in future earnings.
Oslo, 20 February 2002
For further information contact: <br>Egil Thompson, Director of Corporate Communications <br>Tel: +47 22 48 95 86, Mobile +47 93 48 00 12. <br>Lars Aa Løddesøl, Executive Vice Present, Finance Director <br>Tel: +47 22 31 56 24, Mobile +47 93 48 01 51. <br>