STOREBRAND WANTS TO BUY OSLO REINSURANCE COMPANY ASA
Advance acceptances from Board members Kristian Siem, Haakon Korsgaard and Knut Wang and/or companies that they represent have been given on the condition that Oslo Stock Exchange makes an acceptation to the provision in Section 2-3 of the Securities Trading Act in accordance with an application for dispensation that has already been submitted.
For the most part, Oslo Re's operations are based on the former Storebrand International Reinsurance Company Ltd., which was established as a separate legal entity on 1 January 1972. Spinning off Oslo Re in 1995 was mainly a result of a desire to focus the Storebrand Group's resources on improvements in the direct non-life business, and to contribute to a purposeful reduction in the portfolio and risk in the reinsurance business. Storebrand's reinsurance operations were spun off into a separate company that was named Oslo Reinsurance Company ASA and was established with effect from 1 January 1995. Following a dispersal sale with pre-emption rights for Storebrand's existing shareholders, Oslo Re was listed on the Oslo Stock Exchange on 9 May 1995. Since the spin-off, Storebrand's holding of the company's outstanding shares has been maintained at 10%.
Since the spin-off, the risk inherent in Oslo Re has been reduced by way of normal run-off of obligations and by accelerated run-off of current contracts and the sale of subsidiaries. The company has reduced the number of employees from 177 at the end of 1994 to 39 at the end of 1998.
Claims reserves have been reduced through the systematic run-off of contracts. At the end of 1994, Oslo Re's total assets amounted to NOK 4,869 million. Of this, claim reserves were NOK 3,357 million. At the end of 1998, total assets had been reduced to NOK 1,903 million, of which NOK 1,033 million was claims reserves.
There is an international market for the run-off of reinsurance portfolios. Oslo Re has shown that it is able to run-off such portfolios in a cost-effective manner. Giving the company the status of a subsidiary of Storebrand Skadeforsikring AS will secure Oslo Re's competence and organisation.
Knut Francke, Managing Director of Storebrand Skadeforsikring AS, says that Storebrand Skadeforsikring will have a need for the type of competence Oslo Re represents in portfolio run-off related to the planned establishment of the Nordic non-life insurance company Newco. Oslo Re will not be included in Newco. We will not start writing new reinsurance, but stress the potential that lies in being able to offer run-off expertise in a situation where the non-life insurance industry is undergoing considerable restructuring. Capital synergies and an effective use of niche competence are important driving forces for Storebrand Skadeforsikring in this transaction. It is true to say that this is not a very large transaction, but it will have a positive effect on Storebrand and it will be a good solution for Oslo Re, says Francke.
Storebrand Skadeforsikring's bid will be presented i.a. with a condition that the acceptance rate is at least 90%, that a concession from the authorities is issued on acceptable terms, and due diligence. Storebrand Skadeforsikring AS may nevertheless choose to accept a lower acceptance rate. The offer period is 14 days, to start when due diligence has been completed. The offer document is published in mid- May 1999.
------------------------------------------------------------------------------
Presentation material will be made available at www.huginonline.com
Oslo, 29 April 1999
For further details, please contact: <br>Jack Frostad, Director of Corporate Communications, telephone + 47 22 31 57 57, <br>mobile 92826255 <br>Knut Francke, managing Director, telephone + 47 22 31 23 12, mobile 90765347 <br>