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Storebrand ASA (OSL:STB) First half-year 2008: Solid position in a weak market
* Group profit of NOK 728 million for the first six months and NOK 193 million for the quarter * Good growth in customers' assets in the life insurance activities and growth in SPP's market shares * Robust buffer capital and improved solvency margin in Q2 * Integration work in SPP proceeding as planned
The Board of Director's half-year and interim report for Q2 2008 and the analyst presentation are attached on http://www.newsweb.no
Press release: First half-year 2008: Solid position in a weak market
* Group profit of NOK 728 million for the first six months and NOK 193 million for the quarter * Good growth in customers' assets in the life insurance activities and growth in SPP's market shares * Robust buffer capital and improved solvency margin in Q2 * Integration work in SPP proceeding as planned
"Storebrand has a strong financial position and is succeeding well in the competition for customers. The results from the first half of the year were affected by significant market volatility and we have benefited well from our systematic work on risk management. The integration of SPP is proceeding as planned, and the simplification and increased efficiency of Storebrand's operations are a top priority," says Group CEO Idar Kreutzer in a commentary.
Positive transfer balance The net transfer of customers' assets to Storebrand Life Insurance in the first six months was NOK 3,078 million and NOK 908 million in Q2. This is the 10th quarter in a row that Storebrand can show a positive net transfer balance from competitors. The life insurance company's profit in the first six months was affected by weak financial markets. During Q2 the company improved margins in relation to all capital requirements and it has robust statutory reserves. The solvency margin increased from 136% at the start of the year to 150% at the end of Q2.
Premium income in the occupational pensions market has developed well. Group insurance products with investment choice grew by 33% in the first six months and by 36% in Q2 compared with the same period last year. The increase was due to increased conversion from defined benefit pensions to defined contribution pensions and a positive transfer balance in relation to competitors.
The premium income in the retail market was affected because new business is not being signed in traditional individual endowment insurance and interest/pension insurance. The new pension product Individual Pension Saving (IPS) will be launched in Q3 2008.
Sales growth in SPP The positive sales and market trends in SPP have continued. The market share for new policies within occupational pensions increased from 6% to 9.8% from Q1 2007 to Q1 2008. During the same period the market share in the occupational pensions market measured by premium income increased from 5.9% to 7.6%.
SPP's half-year result was affected by demanding financial markets and weak returns. Storebrand Investments will take over the management of SPP's funds from the start of next year. It has already been decided to restructure the management of customers' pension assets and adapt the pertinent hedging programmes. The change entails the asset allocation and management being tailored to the different levels of guaranteed interest and will be put in place during the course of 2008.
Good development in asset management The asset management business achieved a profit before tax of NOK 99 million in the first six months, of which NOK 51 million was earned in Q2. The company achieved good returns in relation to its reference indices in a demanding market. Storebrand Investments had NOK 227 billion under management at the close of the first six months. Due to the development of the equity markets the assets under management are now back at the same level they were at the close of 2007. Compared to 2007 there is a positive trend in assets under management from external customers and funds.
Increased interest income in the bank Storebrand Bank's net interest income grew in the first six months compared with the previous year. Growth in deposits and lending and a repricing of the lending portfolio to cover increased funding costs had positive effects in the first six months of 2008.
The level of non-performing and loss-exposed loans is regarded as normal. In the short term the loss risk in the portfolio is regarded as unchanged from before. In January 2008, the subsidiary Storebrand Kredittforetak AS was granted a licence by Kredittilsynet to establish a credit institution and issue covered bonds. Storebrand Kredittforetak AS issued the first covered bonds in April and May. The bonds were issued in both the Norwegian and international markets. The established lending programme received a Aaa rating from Moody's.
P&C continues to grow Sales of insurance policies in Storebrand Skadeforsikring developed positively in Q2 as well. During the quarter the number of insurance policies in the portfolio increased by 9,000. The company now has more than 22,000 customers. In the first six months the portfolio premium has increased by 47% and is now at NOK 180 million.
Oslo, 13 August 2008
Contacts: EVP Corporate Communications Egil Thompson: Mobile (+47) 93 48 00 12 Head of Investor Relations Trond Finn Eriksen: Mobile (+47) 99 16 41 35
Enclosed: The Board of Director's half-year and interim report for Q2 2008
