Storebrand reports better life insurance result, but weaker result for non-life
* Operating profit NOK 1,722 million compared to NOK 1,275 million last year
* Group profit NOK 209 million compared to NOK 523 million last year
* The activity's book yield for the period was 3 per cent - 11.8 per cent annualised
* Value adjusted yield for the period was 4.1 per cent, 16.4 per cent annualised
* Good sales of life and pension insurance in the corporate market - weaker in the private market
* More fires, damage to cars and occupational injuries put pressure on non-life profitability
* Work of establishing a Nordic non-life insurance company with Skandia is going as planned
The accounts for the 1st quarter of 1999 have been prepared in accordance with the new Accounting Act, and comparative figures have been restated.
In the 1st quarter of 1999, Storebrand Livsforsikring, the life insurance company, recorded an operating profit of NOK 1,737 million, which is NOK 825 million higher than in the same period last year. The book yield for the period was 3.0 per cent, compared to 2.0 per cent in the 1st quarter of 1998. On an annual basis, the book yield was 11.8 per cent compared to 8.4 per cent last year. The value adjusted capital yield, excluding bonds classified as fixed assets, was 4.1 per cent in the 1st quarter, compared to 3.9 per cent last year. This represents 16.4 per cent annualised, compared to 16.4 per cent in 1998.
The non-life company recorded an operating profit of NOK 29 million, compared to NOK 377 million last year. This decline was mainly due to a rise in claims paid.
The Storebrand Group's consolidated operating income in the 1st quarter amounted to NOK 13,362 million, which is NOK 1,153 million higher than in the same period last year. Total premium income for own account in the life and non-life companies amounted to NOK 6,103 million or NOK 1,050 million more than last year. Net financial income on the investment portfolio in the Group in the 1st quarter amounted to NOK 4,482 million, which is NOK 207 million higher than in the same period in 1998. Net gains on sales of securities totalled NOK 1,618 million, compared to NOK 765 million last year.
At the end of the 1st quarter, the Group had total assets of NOK 134,620 million, which is 6 per cent higher that at the beginning of the year. The capital ratio stood at 13.6 per cent at 31 March 1999 compared to 13.4 per cent at the beginning of the year. Earnings per ordinary share in the 1st quarter were NOK 0.97, compared to NOK 1.60 last year.
President and Chief Executive Officer Åge Korsvold
says that Storebrand is in a demanding period of restructuring, especially with regard to the establishment of the new Nordic non-life insurance group together with Skandia. The application for a licence has been submitted and the process of establishing the new company is proceeding as planned. Recently, 30 integration projects commenced with a view to starting up the new company in the autumn of 1999. Simultaneously, the company is working on plans for a new Group management structure and staff organisation for the remainder of Storebrand after the non-life insurance company is merged into the Nordic company.
Life insurance
The life insurance company recorded premium income for own account amounting to NOK 4,064 million in the 1st quarter, compared to NOK 3,161 million last year. In the corporate market, Storebrand has developed well in group pensions, with premium income being 19 per cent higher than the level in 1998. In the private market, premium income written fell by 44 per cent because of a reduction in endowment insurance written with single premiums.
Storebrand Livsforsikring's good performance in the corporate market is also reflected in NOK 1,048 million net customer funds being transferred to the company, compared to a net NOK 32 million transferred from the company in the same period last year.
The operating profit available for distribution to policyholders and owners amounted to NOK 1,737 million in the period, compared to NOK 912 million last year. Pursuant to the new Accounting Act, real estate was written up by NOK 234 million in the 1st quarter. Subsequently, the policyholders' share of the profit for the quarter is NOK 1,665 million and the owners' is NOK 306 million. Corresponding figures for the 1st quarter of 1998 were NOK 752 million to policyholders and NOK 160 million to the owners.
Net realised gains on the life insurance company's sales of securities in the period totalled NOK 1,499 million, compared to NOK 685 million in the 1st quarter last year. The unrealised gains in Storebrand Livsforsikring are allocated in their entirety to a price adjustment fund, which amounted to NOK 3,838 million at 31 March 1999, compared to NOK 2,728 million at the beginning of the year. Storebrand Livsforsikring had unrealised gains on bonds held to maturity of NOK 852 million at 31 March 1999, up NOK 299 million since the turn of the year.
Operating expenses as a percentage of customer funds were 1.01 per cent, compared to 0.89 per cent last year. This increase is due to increased emphasis on IT and product development, and a strengthening of the sales force.
Non-life insurance
Non-life premium income for own account in the 1st quarter of 1999 amounted to NOK 1,980 million including NOK 9 million recorded in Storebrand Livsforsikring AS, which is 6.5 per cent higher than in the same period in 1998. From the 1st quarter of 1998 to the 1st quarter of 1999, the non-life insurance company's profit fell by NOK 348 million, first and foremost because of the NOK 344 million increase in booked claims paid for own account. A higher number of fires, more damage to vehicles and higher repair costs have an impact on the figures for the 1st quarter of this year. The claims ratio for own account in the 1st quarter was 92 per cent, up 6 per cent compared to last year.
The technical result for non-life insurance was minus NOK 299 million, which is NOK 235 million weaker than last year. The accounting effects of run-off gains on prior-year claims and the minimum requirements of the Banking, Insurance and Securities Commission was minus NOK 66 million, compared to plus NOK 59 million in the same period last year.
Net financial income in the non-life company in the 1st quarter amounted to NOK 469 million, compared to NOK 575 million last year. Net gains on the sale of securities totalled NOK 131 million, compared to NOK 102 million last year.
Storebrand's market share of non-marine insurance has fallen by 0.2 percentage points since the beginning of the year to 38.7 per cent.
Storebrand Bank
Storebrand Bank AS is developing strongly and in the course of the last 12 months it has increased its total assets by NOK 2.8 billion. These totalled NOK 6.8 billion at the end of the 1st quarter. The Storebrand Bank group, which in addition to the bank also includes Storebrand Finans, recorded a loss of NOK 6 million in the 1st quarter, compared to a profit of NOK 19 million last year. Seen in isolation, Storebrand Bank AS recorded a loss of NOK 20 million, compared to a loss of NOK 16 million in the 1st quarter of 1998, if we exclude the result of Storebrand Finans AS. This impairment in the result is due to costs related to growth, and higher interest expenses. Storebrand Finans AS recorded a profit of NOK 14 million, compared to NOK 35 million in 1998.
Other activities
The holding company, Storebrand ASA, recorded an operating loss of NOK 36 million in the 1st quarter of 1999, compared to a loss of NOK 34 million in the same period in 1998.
During the 1st quarter of 1999, Storebrand Fondsforsikring AS signed Unit Linked insurance contracts for NOK 81 million, compared to NOK 44 million last year.
New sales in funds managed by Storebrand Fondene AS totalled NOK 359 million, and since the beginning of the year the company's market share has risen by 0.3 percentage points to 6.6 per cent.
External funds under management by Storebrand Kapitalforvaltning rose by NOK 1,090 million since the turn of the year, and stood at NOK 6,334 million at the end of the 1st quarter of 1999.
For full report with tables, follow the enclosed link
Oslo, 12 May 1999For further details, please contact: <br>Jack Frostad, Director of Corporate Communications, telephone + 47 22 31 57 57 <br>Christian Storm, Treasurer, telephone + 47 22 31 10 85 <br>