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Storebrand ASA 4Q 2011: Weaker result for owner - competitive return to customers

Schriftzug "News" (Symbolbild). pixabay.com

Group result^[1] of NOK 1,279 million for the full year 2011 and NOK 268 million for 4Q
Result negatively impacted by weak financial result in SPP
Good financial strength: solvency margin of 161 per cent in the Storebrand Life Insurance Group and 141 per cent in the SPP Group as at 31 December 2011
The Board of Directors recommends that no dividend be paid for 2011

The Board of Director's Interim report for 4Q 2011, 4Q 2011 result presentation and Supplementary Information are attached on http://www.newsweb.no

Storebrand will today host a press and analyst conference in Storebrands head office at Lysaker, Professor Kohts vei 9, at 1000 CET (in Norwegian). An international conference call will be hosted at 1400 CET. To participate in the conference call please use link on http://www.storebrand.no/ir, or call in and register 10 minutes before the presentation starts. Dial in number: +47 23184536.

Full press release:

4Q 2011: Weaker result for owner - competitive return to customers

Group result^[2] of NOK 1,279 million for the full year 2011 and NOK 268 million for 4Q
Result negatively impacted by weak financial result in SPP
Good financial strength: solvency margin of 161 per cent in the Storebrand Life Insurance Group and 141 per cent in the SPP Group as at 31 December 2011
The Board of Directors recommends that no dividend be paid for 2011

"In a turbulent financial market we have delivered competitive returns to Norwegian and Swedish pension customers, strengthened our buffer capital and built up reserves for increased life expectancy. The turbulent markets weakened the quarter's result, but the efforts to improve efficiency and cost-reducing measures continues with full force and have made a positive contribution," says CEO Idar Kreutzer.

Increased robustness
Result before profit sharing and loan losses improved by NOK 116 million throughout the year. This reflects an increased robustness in the group's earnings power, even in turbulent financial markets. The development is driven in part by a shift towards fund-based pension products in the life companies, and increased earnings from insurance. In total, unit linked insurance premiums grew 10 per cent in 2011.

Higher reserves in Norwegian life insurance
A return in excess of the interest rate guarantee in Storebrand Life Insurance has enabled setting aside NOK 1.1 billion for future longevity reserves beyond the previously communicated plan for reserves of NOK 323 million in the period. The additional statutory reserves are strengthened by NOK 600 million in 4Q.

Improved performance by SPP
Turbulent financial markets weakened the financial result of SPP. The risk result was strong as a result of a good sickness result. The operational performance is positive and the administration result has been strengthened throughout the year. The figures include a charge for non-recurring expenses of NOK 27 million for the quarter. The premium income in unit linked based insurance increased by 7 per cent compared with the corresponding period in 2010. As a percentage of SPP's total premium income, unit linked insurance has increased from 53 per cent in 2010 to 58 per cent in 2011.

Turbulent markets impact Asset Management
Assets under management increased by NOK 8.7 billion in Q4. The turbulence in the market throughout the year resulted in lower equity fund subscriptions, and caused a shift toward safer investments such as bank deposits and fixed income funds. The asset management business posted a result of NOK 293 million for 2011.

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Earnings growth in Insurance
Storebrand Insurance improved its result for both the quarter and full year. This development has been driven by a stronger risk result and higher cost effectiveness for the area. The combined ratio improved from 98 to 91 per cent throughout last year.

Improvement in Banking
Storebrand Bank improved its result by NOK 51 million compared with 2010, primarily as a result of an increase in other income and low losses. The bank group has decided to discontinue the ownership of Ring Eiendomsmegling.

Income tax expenses
Storebrand had an income tax expense of NOK 120 million for 4Q and NOK 144 million for 2011. As a result of the tax loss carry forward the tax is not payable. The tax loss carry forward has been reduced as a result of the fall in the equity market. There has also been a change in the temporary tax differences, which entails overall that net tax assets of NOK 58 million have been recognised in the balance sheet.

Adequate capital - no dividend
The Storebrand Group has adequate capital. The Storebrand Life Insurance Group's (Storebrand Life Insurance and SPP's) solvency margin was 161 per cent at the end of the year. The decline of 4 percentage points during the quarter is to a great extent attributed to the accounting tax charge in Storebrand Life Insurance. The SPP Group's solvency margin was 141 per cent at the end of the quarter. As of 10 February the solvency margin was 157 per cent.

The Board of Directors proposes to the General Meeting that no dividend be paid for 2011 and that the entire annual result be used to strengthen the company's equity and reduce the net debt in Storebrand ASA. The Board of Directors points out the implementation of the new Solvency II regulations, lack of clarification surrounding the Norwegian product regulations, expected new mortality tables and a historically low interest rate level.

Changes in the regulatory framework
The Ministry of Finance proposes to restrict the exemption method for shares held in the customer portfolios in life insurance and pension companies. Storebrand will have a tax expense of up to 28 per cent as a result of the proposed amendment. As a result of how the proposal has been formulated, Storebrand's tax loss carried forward can be maintained and shield the company for the payment of tax for a period of time.

The Banking Law Commission's report on paid-up policies and capital requirements was submitted to the Ministry of Finance on 17 January 2012. The Banking Law Commission proposes amendments that may contribute to a better adaptation of paid-up policies to the capital requirements in accordance with Solvency II. Changes to the Norwegian regulatory framework are required to ensure that there is a good, stable occupational pension system for companies and their employees under Solvency II. Storebrand is positive towards the proposed measures, but points out that they are not sufficient to resolve the challenges related to the introduction of Solvency II under the current Norwegian regulations.

The Financial Supervisory Authority of Norway has requested that the Norwegian Financial Services Association complete its work on the new mortality tables. The Financial Supervisory Authority of Norway will assess the need for additional longevity reserves for life insurance companies.

Lysaker, 14 February 2012

Contacts: Executive Vice President Egil Thompson: Mobile +47 93 48 00 12
Head of Investor Relations Trond Finn Eriksen: Mobile +47 99 16 41 35

Enclosure: Board of Directors' Interim Report for 4Q 2011

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act

[1] Group result before tax, write-downs and amortisation of intangible assets.

[2] Group result before tax, write-downs and amortisation of intangible assets.

Storebrand Q4 2011 interim report
Storebrand Q4 2011 Supplementary Information
Storebrand Q4 2011 presentation

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Storebrand ASA via Thomson Reuters ONE

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