Q4 2007: Strong growth - good earnings

 

- Group profit of NOK 676 million for Q4 and NOK 2,020 million for the year

- Strong growth in customer numbers for pensions, banking and P&C insurance

- SPP acquisition completed and integration proceeding as planned

On the basis of Storebrand's dividend policy, the Board of Directors of Storebrand ASA will recommend that the Annual General Meeting approve a dividend for 2007 of NOK 1.20 per share. Excluding the company's holdings of its own shares, the dividend will be equivalent to NOK 534 million. The dividend is proposed on the basis of the number of shares before the acquisition of SPP and the related share issue, which took place at the 2007 year-end. In terms of the number of shares before the share issue, the dividend is equivalent to NOK 2.18 per share. 

Quarterly report, analyst presentation and embedded value report 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). A web cast of the presentation will be available on Storebrand.no. An international conference call will be hosted at 1500 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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Full press release:

• Group profit of NOK 676 million for Q4 and NOK 2,020 million for the year
• Strong growth in customer numbers for pensions, banking and P&C insurance
• SPP acquisition completed and integration proceeding as planned

"Storebrand has concluded a year characterised by good results and strong market development. The integration of SPP is proceeding according to plan and the entire organisation is working well", comments Idar Kreutzer, Group CEO.   

 

Group profit for Q4 was positively affected by a non-recurring item of NOK 215 million in the life insurance activities. The non-recurring item, which is a result of IFRS, is a write-back of pension costs included in the life company's model for profit sharing with customers.

 

Storebrand Life Insurance reports earnings that reflect a good inflow of new customers and strong growth in premium income. Q4 saw a net inflow of NOK 398 million of pension reserves, bringing the total for the year to NOK 1,056 million. This reflects good sales of pension products to the corporate marketwhere net transfersin 2007 total NOK 4,086 million. The major part of these transfers will be booked in 2008. Sales to the retail market in Q4 were strong for pension, savings and risk products.

 

Total premium income, excluding transfers of pension reserves to Storebrand Life Insurance, was 23% higher than in the same quarter of 2006 at NOK 3.8 billion. The management of the life insurance company's assets produced a value-adjusted investment return of 1.8% for the quarter. The booked investment return for the quarter was 2.7%.

 

Embedded value for the life insurance activities including SPP amounted to NOK 29.9 billion at the close of 2007. This corresponds to NOK 67.3 per share.

 

In response to the turbulent financial market conditions seen at the start of 2008, Storebrand Life Insurance has effected solvency-based risk management, and has accordingly markedly reduced the equity exposure of its customers' investment portfolios. Buffer capital remains strong. As at 7 February 2008, additional statutory reserves amounted to NOK 5.8 billion and the market value adjustment reserve stood at approximately NOK 1.5 billion.

 

The results reported by Storebrand Investments for the quarter reflected high fixed and volume-based revenue as a result of increased assets under management. Low performance-based fees for the period caused total revenue to be lower than in the same quarter of 2006. Storebrand Investments had NOK 227 billion of assets under management at the close of 2007.

 

Storebrand Bank reported good growth in both customer numbers and lending in 2007. The bank's assets totalled NOK 42 billion at the close of Q4. Total lending increased by 19% or NOK 6 billion in 2007.

 

Sales of P & C insurance products were again strong in Q4. During the quarter the company achieved a net increase of 3,176 in its customer numbers. The company had around 16,000 customers at the end of the year, and a portfolio of NOK 129 million of annual premium income.

 

The Internet is the most important sales channel for Storebrand Skadeforsikring. 59% of new customers in 2007 used the company's web site to purchase P&C insurance products.

 

On 3 September 2007, Storebrand entered into an agreement with Handelsbanken to acquire SPP and related companies, including the mutual fund management company SPP Fonder. The transaction was completed on 21 December 2007. This acquisition makes Storebrand and SPP the leading supplier of life insurance and pension products in the Nordic region.

 

The integration of SPP is proceeding according to plan, and both organisations are working well. The synergies originally anticipated at the time the acquisition was agreed have proved to be justified. Cost synergies have been revised upwards by 50% to NOK 150 million.

 

Storebrand has a two-year option to acquire Handelsbanken's remaining occupational pension business in Handelsbanken Liv, and has in addition entered into a three-year exclusive distribution agreement with Handelsbanken for the sale of occupational pensions through the Handelsbanken network.

 

On the basis of Storebrand's dividend policy, the Board of Directors of Storebrand ASA will recommend that the Annual General Meeting approve a dividend for 2007 of NOK 1.20 per share. Excluding the company's holdings of its own shares, the dividend will be equivalent to NOK 534 million.

 

The dividend is proposed on the basis of the number of shares before the acquisition of SPP and the related share issue, which took place at the 2007 year-end. In terms of the number of shares before the share issue, the dividend is equivalent to NOK 2.18 per share. 

 

The Board of Directors of Storebrand ASA has approved a new dividend policy that envisages distributing a higher proportion of earnings. The new dividend policy is as follows: "The dividend policy shall contribute towards giving shareholders a competitive return and towards optimising the company's capital structure. The dividend to shareholders will normally represent over 35% of the full-year profit after tax, but before amortisation costs. 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, 13 February 2008

 

For further information contact:

Egil Thompson, Director of Corporate Communications.

Tel. +47 22 48 95 86 Mobile +47 93 48 00 12

 

Trond Finn Eriksen, Investor Relations. Mobile +47 99 16 41 35

 

Appendix: Board of Directors' Interim report for Q4 2007