Storebrand Group with stronger result in first half of 2000
* Operating profit up NOK 886 million from same period last year to
NOK 4,209 million
* Group profit improved by NOK 109 million to NOK 561 million with
improvements in the results of all core business areas
* The life company realised a capital yield of 6 per cent or 12.4 per cent
annualised. Value adjusted yield for the period was 3.1 per cent
* Positive development in sale of Unit Linked products and mutual funds and good growth in external funds under management
In the course of the first six months of 2000 Storebrand has consolidated its position within the extended savings market. "It is particularly gratifying to note that the improvement in securities funds and Unit Linked products continues. With the internal reorganisation that was announced in June an important foundation has been laid for further growth in the various parts of Storebrand group", says Åge Korsvold, Managing Director of Storebrand ASA, commenting on the results for the first half of the year.
Positive result development
In the first half of 2000 Storebrand returned a group profit of NOK 561 million compared to NOK 452 million in the same period last year. The operating profit before distribution to life insurance policyholders amounted to NOK 4,209 million compared to NOK 3,323 million in the first six months of 1999. The improvement in the result comes from higher realised financial income in Storebrand Livsforsikring, a good profit contribution from Finansbanken and distinct improvement in both discretionary asset management and in Storebrand Bank. Storebrand Group's operating profit for the second quarter was NOK 1,765 million compared to NOK 1,600 million in the same period last year.
Net financial income on the investment portfolio amounted to NOK 3,745 million, or NOK 3,148 million lower than last year. This includes a reduction in unrealised gains in Storebrand Livsforsikring of NOK 2,808 million, of which NOK 1,662 million in the second quarter. The Group's equity capital at the end of June 2000 amounted to NOK 10,549 million. The capital ratio was 12.5 per cent, while the statutory minimum is 8 per cent. The Group's capital adequacy is very good. Earnings per share were NOK 1.28 compared to NOK 1.77 in the same period last year. The reducton is due to a lower result after tax, adjusted for changes i the security reserves in the non-life company.
With effect from August, Storebrand Group's organisation has changed in that Storebrand ASA is now a pure holding company with four independent business units, in addition to If. The four units are Storebrand Livsforsikring AS, Storebrand Kapitalforvaltning Holding AS, Finansbanken ASA and Storebrand Bank AS.
More to the life policyholders
The operating profit for distribution between policyholders and owners amounted to NOK 4,188 million compared to NOK 3,277 million in the same period last year. The increase is mainly a result of higher realised financial income. NOK 3,649 million of the operating profit goes to the policyholders and NOK 539 million to the owners. Corresponding figures for the first six months of 1999 were NOK 2,870 million and NOK 407 million respectively. Hence the policyholders' share has risen by NOK 779 million. The operating profit in the second quarter amounted to NOK 1,771 million, of which NOK 1,501 million to policyholders and NOK 270 million to the owners.
Booked premium earned, namely NOK 4,060 million, is 3 per cent higher than in the same period last year. It was especially sales of single premium policies in the individual market that contributed to this rise. Premium reserves received on transfers to the company were lower than in the same period last year, when the first quarter was characterised by major public sector transfers. Including premium reserves received, total premium income amounted to NOK 4,610 million. This is 17 per cent lower than in the preceding year.
Storebrand Livsforsikring realised financial income of NOK 6,306 million comprised of gains on the realisation of financial assets of NOK 3,515 million in addition to current financial income in the form of interest, dividends etc. This represents a booked capital yield for the period of 6 per cent or 12.4 per cent annualised. The value adjusted capital yield for the period was 3.1 per cent. Taking into account changes in unrealised gains in fixed assets it was 2.6 per cent.
Good Unit Linked sales
The Unit Linked company Storebrand Fondsforsikring enjoyed very positive sales trends. So far this year agreements have been reached on the sale of unit linked insurance for NOK 1,068 million. Booked premium income in the first half of 2000 amounted to NOK 954 million compared to NOK 177 million in the same period last year and NOK 1,262 million in the whole of 1999.
Storebrand's life insurance business also includes Storebrand Helseforsikring (health insurance), where Storebrand's stake is 50 per cent, and Storebrand Systemutvikling, which is responsible for the development of new system solutions for new and existing products. Together, these companies reduce the profit for the first half-year by NOK 6 million.
Growth in asset management
The positive development in Storebrand Fondene and Storebrand Kapitalforvaltning continued in the second quarter. So far this year, Storebrand Fondene have accounted for 22.6 per cent of net new sales of Norwegian registered mutual funds. The good sales level contributed to a NOK 2.6 billion increase in mutual funds since the beginning of the year, of which NOK 2.2 billion are new assets. Storebrand Fondene's market share was 9.1 per cent at the end of June. If Delphi Forvaltning is
included it was 10.1 per cent. Of the five largest fund management companies at the beginning of the year only Storebrand Fondene and one other company have increased their market share, both with approximately 1 percentage point. The company's operating profit for the first half of the year was NOK 17 million, compared to NOK 0.4 million in the same period last year.
So far this year, Storebrand Kapitalforvaltning has recorded a net increase in assets under management for account of external customers of NOK 1,613 million, of which NOK 1,132 million in the second quarter. Total assets under management for external customers amounted to NOK 13.6 billion. The operating profit was NOK 19 million compared to NOK 5 million in the first six months of 1999.
Profits up in Storebrand Bank
Storebrand Bank Group recorded a pre-tax profit of NOK 22 million compared to a loss of NOK 3 million in the same period last year. Storebrand Bank AS returned a loss of NOK 13 million, which is NOK 19 million better than last year. The subsidiary Storebrand Finans had a pre-tax profit of NOK 35 million, which to a great extent is a result of payments on provisioned accounts.
In the second quarter, Storebrand Bank Group reported a profit of NOK 20 million compared to NOK 3 million in the same period in 1999.
...and in Finansbanken
Finansbanken Group returned a profit before losses of NOK 153 million compared to NOK 121 million in the same period last year. Profit after losses amounted to NOK 97 million compared to NOK 58 million at the end of the first half of 1999. Taking into account the amortisation of goodwill in the Storebrand Group the profit after losses was NOK 83 million. The result is characterised by high net interest income, good growth in other income and provisions relating to three commitments in the second quarter.
The figures for the first half of 1999 are not included in Storebrand's consolidated accounts for 1999 since Storebrand first received its licence to own the shares in Finansbanken on 30 July 1999.
The second quarter profit after losses amounted to NOK 20 million.
Gross loans rose by NOK 2.1 billion in the first half of 2000. In the second quarter, Finansbanken received an amount of NOK 200 million in new equity from Storebrand ASA.
Improvement in technical result for if…
The operating profit for Storebrand Skadeforsikring amounted to NOK 73 million in the first half of 2000, down NOK 62 million on the same period last year. The second quarter profit was NOK 2 million. The result is characterised by high financial income in Storebrand Skadeforsikring AS, a weak result from If and a positive contribution from Oslo Reinsurance ASA.
The share of the result of If, which is recorded in Storebrand's accounts in accordance with the equity method of accounts amounted to minus NOK 122 million (including goodwill amortisation of NOK 5 million) in the first six months.
There was a marked improvement in the underlying technical result. Comparable combined ratio improved by 8 percentage points to 112 per cent. There was also a positive development in the technical result for Private, Corporate and Marine/Energy lines, while Industry experienced a number of major claims this year. The development of costs was positive compared to the same period last year.
Storebrand owns 50 per cent of Fair Forsikring, which operates a newly started casualty and property insurance operation in Denmark. It is consolidated with effect from the second quarter with a negative contribution to profit of NOK 5 million.
Other activities
Storebrand ASA recorded an operating loss of NOK 182 million compared to a loss of NOK 90 million in the same period last year. Higher operating costs and lower interest income as a result of financing the acquisition of Finansbanken affect the performance. For the second quarter seen in isolation, the loss was NOK 52 million, which is on a par with the same period last year.
For full report with tables, follow the enclosed link:
<br>Storebrand ASA <br>Oslo, 23 August 2000 <br> <br>For further details, please contact: <br> <br>Egil Thompson, <br>Director of Corporate Communications: <br>telephone + 47 2248586 or mobile 93480012 <br> <br>Christian Storm, <br>Treasurer: <br>telephone + 47 22311085 or mobile 93402366 <br>