Storebrand Group reports higher profits
- Operating profit of NOK 6,008 million and group profit of NOK 933 million – up NOK
2,005 million and NOK 339 million respectively on same period last year
- Profits to policyholders' share of profits up following high booked yield for Storebrand Livsforsikring
- Improved result in Storebrand Bank and in asset management activities
- Still market leader in new sales of Unit Linked products
- Higher loan loss provisions in Finansbanken
"The result at the end of the first nine months confirms Storebrand Group's sound position in the extended savings market. The result for distribution to policyholders is strong. At the same time, it is gratifying to note that the contribution to the Group's overall result from our banking and asset management activities are constantly increasing", says Idar Kreutzer, Acting Group Chief Executive Officer.
Kreutzer adds that the unrest surrounding Storebrand that has been caused lately in connection with the resignation of Åge Korsvold has not resulted in many cancellations by policyholders. So far, the situation is characterised by good stability.
"We very much regret the situation that arose and we are aware of the fact that faith in us has been put to the test. We are grateful that our customers have shown that they have confidence in us by distinguishing between the way we act as a company and the case in question", says Kreutzer.
High financial income
At the end of the 3 rd quarter 2000, Storebrand had a group profit of NOK 933 million compared to NOK 594 million at the same time last year. The operating profit before distribution to life customers was NOK 6,008 million compared to NOK 4,003 million at the end of the 3 rd quarter of 1999. The improvement in the result is primarily due to Storebrand Livsforsikring's higher realised financial income and the marked improvement in our banking and asset management operations.
The operating result in the 3 rd quarter was NOK 1,799 million compared to NOK 680 million in the same period last year. In addition to high booked financial income in Storebrand Livsforsikring in the 3 rd quarter as well, the result for the 3 rd quarter is also impacted by the especially sharp rise in the result recorded by Storebrand Bank and a sound improvement in the result returned by Storebrand Kapitalforvaltning.
At the end of the 3 rd quarter the Group had total shareholders equity of NOK 10,866 million. The capital ratio stood at 12.5 per cent, unchanged from the end of the second quarter. The statutory minimum is 8 per cent. The Group's financial soundness is very good. Earnings per share were NOK 2.30 compared to NOK 2.03 in the same period last year.
More to the life insurance policyholders
The operating profit available for distribution between policyholders and owners was NOK 5,974 million compared to NOK 3,982 million in the same period last year. The improvement in the result came from the high book yield. In the 3 rd quarter, the operating result was NOK 1,786 million, which was in line with the 2 nd quarter.
It is estimated that NOK 5,075 million of the result at 30 September 2000 will be distributed to the policyholders and NOK 899 million will go to the owners, or NOK 1,666 million and NOK 325 million respectively higher than in the same period in 1999.
Booked premium earned in the 3 rd quarter was at the same level as last year but so far this year is 2 per cent higher than in the same period last year. Single premiums contribute much to this growth. Premium reserves received as a result of transfers to Storebrand fell compared to last year when especially the 1 st quarter was influenced by major public sector transfers. Including premium reserves received, total premium income was NOK 6,425 million. This is 14 per cent lower than in 1999.
The company realised financial income of NOK 9,154 million. Realised financial income is comprised of realised gains of NOK 5,074 million in addition to current financial income in the form of interest and dividends etc. This represents a realised return on capital of 8.8 per cent, or 11.8 per cent annualised. The value-adjusted return on capital was 4.7 per cent.
Claims for own account are characterised by an increase in transfers of premium reserves to other companies and an increase in individual endowment insurance policies being redeemed. However, the level of both redemption and transferred premium reserves has been declining during the 3 rd quarter. The increase in premium reserves transferred is to a great extent a result of transfers to Storebrand Fondsforsikring AS where the customers are able to select their own investment profile. The increase in other claims is normal seen in the light of the development in the insurance portfolios.
The 3 rd quarter development in sales by Storebrand Fondsforsikring, the Unit Linked company, was positive, but the rate of growth was lower than in the 1 st and 2 nd quarter. So far, sales agreements for an amount of NOK 1,461 million have been signed for Unit Linked insurance products. Booked premium income at 30 September 2000 totalled NOK 1,332 million compared to NOK 604 million in the same period last year and NOK 1,262 million in the whole of 1999. The operating profit was NOK 0.9 million compared to NOK 0.7 million in the same period last year.
Euroben established
Euroben is a newly established Irish life insurance company owned 50/50 by Storebrand and Sweden's SPP. Following the receipt of approval from the Irish and Norwegian authorities, the company established its head office in Dublin. Approval is still pending for the establishment of branches in Norway and Sweden. A clarification is expected around the turn of the year. The company will provide occupational pension schemes to Nordic companies that operate in several countries.
The third largest fund manager
So far this year, Storebrand Fondene AS has accounted for 17 per cent of net new sales in mutual funds registered in Norway. This is approximately 5 percentage points lower than at the end of June. Since the beginning of this year, mutual funds have grown by NOK 3.3 billion, of which NOK 2.5 billion is fresh capital. Total assets at 30 September 2000 amounted to NOK 13.3 billion. Storebrand Fondene AS had a 9 per cent market share at the end of September (including Delphi it was 10.1 per cent). At the end of the third quarter Storebrand Fondene AS was Norway's third largest fund manager. At 30 September 2000, the company had an operating profit of NOK 24 million compared to NOK 10 million at the same time in 1999.
Storebrand Kapitalforvaltning returns higher profit
So far this year, Storebrand Kapitalforvaltning has registered a NOK 1,894 million net increase in assets under management for external customers. Total assets under management for external customers now amounts to NOK 14.1 billion (including If Skadeforsikring's assets the total is NOK 28.1 billion). Storebrand Kapitalforvaltning ASA had an operating result of NOK 33 million at 30 September 2000 compared to NOK 12 million in the same period last year.
Strong improvement in Storebrand Bank's result
Storebrand Bank Group recorded a pre-tax profit of NOK 67 million, compared to NOK 8 million in the same period last year. Storebrand Bank AS improved the latest quarter result by NOK 30 million to NOK 17 million at 30 September 2000. This is NOK 50 million better than at the same time last year. The good 3 rd quarter result comes from higher net interest income as a result of good share-index bond sales and balance sheet growth. Storebrand Bank AS had total assets of NOK 9.8 billion at 30 September 2000, up NOK 1.8 billion since the beginning of the year. The subsidiary Storebrand Finans returned a pre-tax profit of NOK 51 million at 30 September 2000, compared to NOK 41 million at the same time in 1999.
Higher loan loss provisions in Finansbanken
At the end of the 3 rd quarter, Finansbanken Group had a profit before losses of NOK 231 million compared to NOK 173 million at the same time last year. The profit after losses was NOK 85 million compared to NOK 114 million last year. Taking into account the amortisation of goodwill in Storebrand, the profit after losses was NOK 64 million. In 1999, Finansbanken was consolidated into Storebrand's group accounts from 1 August.
The 3 rd quarter result was influenced by strong growth in lending, net interest remaining good and higher loss provisions on three old shipping loans. Net loans amounted to NOK 16.4 billion at the end of the period while deposits totalled NOK 8.1 billion. At 30 September 2000, total assets amounted to NOK 19.5 billion. In September, Finansbanken ASA raised a subordinated loan of NOK 200 million to strengthen its capital base.
In August, Finansbanken ASA received permission to acquire the shares in Den Københavnske Bank (Copenhagen, Denmark) which has total assets of NOK 1.1 billion. The result is consolidated from 1 July 2000 but had little impact on the 3 rd quarter result.
Marked improvement in If
At the end of the 3 rd quarter, Storebrand Skadeforsikring's operating profit amounted to NOK 96 million, NOK 18 million lower than in the same period last year. In the 3 rd quarter seen in isolation the operating profit was NOK 23 million. High finance income in Storebrand Skadeforsikring AS, a good result for Oslo Reinsurance Company ASA, a positive trend in insurance results and low financial income in If were the main components of the development. The pre-tax profit was positively affected by the dissolution of the security reserve etc. in the amount of NOK 240 million. In 1999, the security reserve etc. was strengthened by an equivalent amount.
The share of the result of If that is accounted for in Storebrand accounts in accordance with the equity method of accounting was a loss of NOK 115 million at the end of the 3 rd quarter (including goodwill amortisation of NOK 7 million). This reflects a marked improvement in the underlying technical result for If. The combined ratio through to the end of September improved from 117 in 1999 to 110 this year, excluding the costs of launching the company. Including these launching costs, the combined ratio was 111 at the end of the 2 nd quarter. In the 3 rd quarter the combined ratio was 106. All business areas registered a positive development compared to last year. This improvement is mainly due to increases in premiums and few major claims. Financial income is low, influenced by the investment portfolio's low risk profile, a weak stock market, and higher bond yields globally.
Oslo Reinsurance Group recorded an operating profit of NOK 84 million, of which NOK 44 million refers to the 3 rd quarter.
Storebrand owns 50 per cent of Fair Forsikring, which offers non-life (casualty and property) insurance in the private market in Denmark. It is consolidated into the accounts with effect from the 2 nd quarter with a deficit of NOK 16 million.
Other activity
At the end of the 3 rd quarter, Storebrand ASA had an operating loss of NOK 232 million compared to a loss of NOK 156 million last year. Compared to the 1 st and 2 nd quarters of 2000, the result for the 3 rd quarter reflects good financial income and lower operating expenses. The 3 rd quarter result seen in isolation was a deficit of NOK 50 million while it was a deficit of NOK 66 million in the 3 rd quarter of 1999. As was the case last year, operating expenses this year are affected by consultants' fees related to various projects.
Oslo, 8 November 2000
Appendices
- Key Figures - Group profit and Key Figures -Storebrand Livsforsikring
- Storebrand Group: Profit and Loss Account
- Storebrand Group: Balance Sheet
For full report including appendices, follow the enclosed link.
<br>For further details please contact: <br>Christian Storm, Treasurer: telephone (+ 47) 22311085 or mobile (+ 47) 93403266 <br>Egil Thompson, Director of Corporate Communications: telephone (+ 47) 22489586 or mobile (+ 47) 93480012 <br>