Interim Report 2nd Quarter 2005

Transcription

1 Interim Report 2nd Quarter 2005

2 Interim results for the Storebrand Group - second quarter 2005 MAIN FEATURES Storebrand reports group profit of NOK 392 million for Q2 as compared to NOK 113 million (NOK 1,492 million including profit from sale of If) for the same quarter in Storebrand Life Insurance s results reflect strong growth in premium income and high levels of activity. Storebrand Bank reports a further increase in earnings as a result of lower operating costs and a write-back of loan loss provisions. Group profit by quarter: Group profit: NOK million Q2 2004* Q Full year NOK million Life insurance Asset management Storebrand Bank Other activities Group profit Q Q4 Q1 Q kv *) Q includes a total profit contribution from If of NOK 1,379 million. Q The profit contribution from If has been excluded from comparative figures for 2004 in the following section: The group result, which represents the owner s share of operating profit, showed a profit of NOK 392 million in Q (NOK 113 million), bringing the group result for H to NOK 706 million (NOK 338 million). Operating profit for Q was NOK 1,193 million (NOK 472 million) and NOK 1,967 million for H1 (NOK 1,001 million). Figures for the corresponding period in 2004 shown in brackets. Storebrand Life Insurance reported premium income (excluding transfers) of NOK 11.1 billion for H This represents year-on-year increases of 63% in Q2 and 53% for H1. The continuing low level of interest rates has helped to maintain very strong sales of savings-related products to the retail market. Storebrand set up 200 new defined contribution pension schemes for corporate customers in H Around 1,300 companies have now set up defined contribution pension schemes with Storebrand Fondsforsikring since it launched this product in Storebrand Life Insurance generated a booked investment return of 3.1% for H1 2005, equivalent to an annualised return of 6.4%. The value-adjusted return was 3.3%, while the value-adjusted return including unrealised gains on bonds held to maturity was 3.5%. Storebrand Investments had assets under management of NOK 172 billion at the close of Q2. This represents an increase of NOK 7 billion since the start of the year. In H Storebrand Investments produced a better return than the comparable benchmark indices (before deducting management fees) on 52% of the securities funds it manages. Storebrand Bank again reported a strong improvement in earnings, with pre-tax profit of NOK 69 million in Q2. This brings the pre-tax profit for H to NOK 141 million, an improvement of NOK 107 million from the same period in

3 LIFE INSURANCE Storebrand Life Insurance and other life insurance activities: Q Full year NOK million Interest result Risk result Administration result Change in security and premium reserves Operating profit To additional statutory reserves Profit after transfer to additional statutory reserves Profit allocated to policyholders Profit to owner Storebrand Livsforsikring AS Profit to owner Storebrand Livsforsikring Group Other life insurance activities IFRS effects Total for life insurance activities Storebrand Livsforsikring (Storebrand Life Insurance) Storebrand Livsforsikring AS reported an operating profit of NOK 1,121 million for Q2 (NOK 574 million) bringing H1 operating profit to NOK 1,841 million (NOK 1,084 million). The risk result, which was NOK 99 million for H1 2005, was stronger than in H and also improved between Q1 and Q2 of this year. The strong sales performance has also caused increased sales costs, and this is the main reason for a decline in administration result to NOK million for H (NOK - 71 million). Setting up the branch operation in Sweden has also led to increased costs. Policyholders funds increased by NOK 10 billion in H1 2005, of which Q2 accounted for NOK 4 billion. As a result of the cost increases noted above, costs were equivalent to 1.0% of average policyholders' funds (0.91%). Sales of savings-related products to the retail market have now stabilised at a somewhat lower level, and sales costs are therefore expected to be lower in the second half of the year. The interest result for H was NOK 1,877 million (NOK 1,076 million) of which Q2 accounted for NOK 1,158 million. Net realised gains for H totalled NOK 1,312 million, of which NOK 649 million was realised in Q2. Unrealised gains increased by NOK 261 million in Q2, and totalled NOK 3,083 million at 30 June Pre-tax profit for the owner was NOK 315 million (NOK 211 million) for Q2 and NOK 570 million (NOK 412 million) for H1. Profit for the owner includes earnings from products not subject to profit sharing with policyholders of NOK 11 million in Q2 (NOK 14 million) and NOK 42 million for H1 (NOK 47 million). The decline in earnings from Q1 is due to changes in accruals, increased marketing costs and costs incurred in establishing the branch operation in Sweden. Storebrand Life Insurance reported premium income (excluding transfers) of NOK 11.1 billion for H This represents year-on-year increases of 63% in Q2 and 53% for H1. The continuing low level of interest rates has helped to maintain very strong sales of savings-related products to the retail market. Although sales showed some decline from Q1 to Q2, savings-related products generated year-on-year growth in premium income of 145% in H1. Group pension business showed a year-on-year increase in premium income in Q2, but premium income for H1 as a whole was somewhat lower than in This decline reflects lower annual wage increases and the trend towards defined contribution pensions. Transfers of pension business produced a net inflow to Storebrand of NOK 642 million in H1, of which Q2 accounted for NOK 313 million. Premium income for group life business showed little change from 2004, while personal pensions and annuity products were somewhat lower as a result of customers favouring endowment products. Storebrand Life Insurance s booked investment return for H was 3.1% (2.8%), of which 1.7 % in Q2. The value-adjusted return was 3.3% (3.2%), if which 1.9 % in Q2. Value-adjusted return including unrealised gains on bonds held to maturity was 3.5% (3.0%) in H Annualised investment returns: % 8.8% 7.2% 7.2% 7.6% 6.4% 4 3.6% 2 2.7% 1.8% 2.6% 1.9% 1.5% % 6.8% 6.4% H Booked Value-adjusted Value-adjusted including unrealised gains on bonds held to maturity Total assets increased by NOK 10 billion in H1 to stand at NOK billion at the end of Q2. Storebrand Life Insurance increased its overall exposure to equities, including derivatives positions, by 1 percentage point in Q2 to 21%, the same as at the start of the year. Net investment in bonds held to maturity has increased by NOK 3.1 billion since the start of the year, but was virtually unchanged in Q2. Bonds and commercial paper held as current assets increased by NOK 1.8 billion in Q2. There were no purchases or sales of real estate in the first six months. Unrealised gains on bonds held to maturity increased by NOK 0.8 billion in Q2, and totalled NOK 4.6 billion at the end of the quarter. Unrealised gains on this portfolio are not shown in the accounts, but ensure a relatively high and stable level of future interest income even if interest rates remain at their current low level. 3

4 Risk capital in NOK and % of customers funds excl. additional statutory reserves: 10% 8% 6% 4% 2% 0% -2% 5.8 bn 4.7 bn 8.9 bn Q Additional statutory reserves, up to 1 year s interest guarantee Adjusted core capital margin 11.0 bn 10.6 bn Market value adjustment reserve Profit accrued At the close of 2004 the company had risk capital of NOK 11.0 billion. Risk capital has since reduced as a result of the allocation of the profit for 2004 between the owner and policyholders. Risk capital was NOK 9.6 billion at the end of Q1 and increased by NOK 1.0 billion in Q2 to NOK 10.6 billion. The company satisfies all capital adequacy requirements by a sound margin. Q2 showed a decline in the capital ratio from 14.1% to 12.5%. This reduction reflects an increase in risk weighted assets. The company's solvency margin was 167.3% at the end of Q2. On the basis of a resolution passed by the Norwegian Parliament on 26 May 2005, the Banking Law Commission published draft legislation on 1 July for the introduction of mandatory occupational pensions from The proposed legislation will make it compulsory for all Norwegian undertakings to operate a pension scheme for their employees to provide pension benefits in addition to the existing state pension. Storebrand expects the introduction of mandatory pension schemes to create considerable additional activity, and is heavily involved in positioning itself as the preferred supplier for this market. This in turn means that additional costs must be expected in future quarters as a result of this commitment. Storebrand Fondsforsikring Storebrand Fondsforsikring reported a loss of NOK 3 million for H1 (loss of NOK 14 million), of which Q2 accounted for a loss of NOK 6 million (loss of NOK 9 million). Unit linked products showed a decline in premiums written from NOK 167 million in Q to NOK 116 million for the same period this year, while premiums for defined contribution pension products increased from NOK 122 million to NOK 183 million. Storebrand set up 50 new defined contribution pension schemes in Q2, bringing the total for H1 to around 200. Around 1,300 companies have now set up defined contribution pension schemes with Storebrand Fondsforsikring since it launched this product in At the close of Q2, 68% of customers assets managed by Storebrand Fondsforsikring were invested in equity funds, as compared to 66% at the start of the year and 67% at the close of Q1. Assets under management defined contribution pension products and unit linked: 5000 NOK million Q Q Q Q Q Q Q Q Storebrand Helse Storebrand Helseforsikring generated an operating profit of NOK 2.2 million in H1 (loss of NOK 0.3 million), with a profit of NOK 2.6 million in Q2 (loss of NOK 1.0 million). Storebrand has a 50% interest in this company, which provides health insurance products for the corporate and retail markets. H1 premium income was 28% higher than for the same period in 2004 at NOK 65.6 million. Sales of new policies to the Norwegian and Swedish markets in H1 represented annual premiums of NOK 29 million, of which Q2 accounted for NOK 14 million. ASSET MANAGEMENT ACTIVITIES Storebrand Investments reported a pre-tax profit of NOK 14 million for Q2 (NOK 15 million). Result Storebrand Investments: Q Full year NOK million Total income Total costs Net financial income/ other income Pre-tax profit Total revenue (management fees) amounted to NOK 68 million in Q2 (NOK 82 million). The decline in revenue relative to 2004 reflects the loss of revenue from If, which transferred its assets to internal management in Q Operating costs totalled NOK 60 million in Q2 (NOK 68 million). The reduction resulted mainly from lower personnel costs. 4

5 Storebrand Investments had assets under management of NOK 172 billion at the close of Q2, representing an increase of NOK 7 billion from the start of the year. Total funds under management were made up of NOK 148 billion of internal funds (including mutual funds) and NOK 24 billion of assets/funds managed for external clients. Net interest income amounted to NOK 112 million in Q2 (NOK 103 million). This represents an interest margin calculated on average total assets of 1.70%. Net interest income as a percentage of total assets: 2.00% Total assets under management: 1.50% NOK billion , Group internal External discretionary Q Real Estate (group internal) Securities funds Net new business represented an outflow of NOK 1,700 million in Q2 (inflow of NOK 500 million) and an outflow of NOK 1,200 billion for H1 (inflow of NOK 1,200 billion). In H Storebrand Investments produced a better return than the comparable benchmark indices (before deducting management fees) on 52% of the securities funds it manages. BANKING ACTIVITIES Storebrand Bank reported a profit for Q2 of NOK 46 million (NOK 28 million) before loan loss provisions and other gains/losses. Pre-tax profit for the quarter was NOK 69 million (NOK 15 million), bringing the bank's H1 pre-tax profit to NOK 141 million. Result Storebrand Bank Group: Q Full year NOK million Net interest income Other income Total income Operating costs Profit before loan losses Loan losses Gain/losses on securities Pre-tax profit % 0.50% 0.00% Q1 Q2 Q3 Q4 Q1 Q Operating expenses amounted to NOK 82 million in Q2 (NOK 154 million), and were somewhat lower than in Q1. The bank sold the Storebrand group s joint distribution unit for the retail market to Storebrand Livsforsikring AS with effect from 1 October This is a major factor in the reduction in operating costs from last year, but has also caused a reduction in non-interest income. Net new loan loss write-downs represented a write-back of NOK 23 million in Q2, principally due to a reduction in group provisions (general loan loss provisions). Gross nonperforming and loss-exposed loans totalled NOK 911 million at the close of Q2, virtually unchanged from the previous quarter. The bank s loan loss provisions totalled NOK 526 million at the close of Q2, of which specific provisions accounted for NOK 433 million. This represents a level of provisioning relative to non-performing and loss-exposed loans of 58%, down from 64% at the close of Q1. The bank's assets totalled NOK 28.4 billion at the close of Q2, and gross lending increased by NOK 947 million in the quarter. The deposit-to-loan ratio was 49% at the close of Q2, an increase from 45% at 31 March Storebrand Bank's net primary capital amounted to NOK 2.1 billion at 30 June The bank's capital ratio was 12.2% at the end of Q2, with a core capital ratio of 9.8%. Core capital is somewhat lower following the implementation in June 2005 of the approved reduction in the bank's equity of NOK 399 million. 5

6 OTHER ACTIVITIES Other activities principally comprise Storebrand ASA (the holding company), Fair Forsikring and the run-off activities of Storebrand Skadeforsikring. Result other activities: Q Full year NOK million Storebrand ASA*) Fair Forsikring Storebrand Skadeforsikring Other companies/ eliminations**) Total other activities *) Including dividends/group contributions from subsidiaries. **) Including elimination of dividends/group contributions from subsidiaries and gains from if. Fair Forsikring and run-off activities (non-life insurance) Storebrand s pre-tax share in Fair s Q2 profit was NOK 8 million (NOK 0 million). The run-off activities of Storebrand Skadeforsikring and Oslo Re produced a profit of NOK 6 million in Q2 (loss of NOK 28 million). In addition to the operating result, run-off recognised a transfer of NOK 7 million (NOK 30 million) to profit from statutory security reserves for H1 of which NOK -2 million in Q2. its own shares in Q2 at an average price of NOK This was booked as a reduction in equity. Storebrand ASA held 7.1% of the company s own shares at 30 June The Board of Directors holds a mandate from the Annual General Meeting of Storebrand to buy back up to 10% of the company's share capital over the period to the 2006 Annual General Meeting. The Annual General Meeting of Storebrand held on 20 April 2005 resolved that 17,705,032 of the company's shares should be cancelled through a reduction in share capital. Due to an internal error that caused the deadline for notifying the cancellation of shares to the Register of Business Enterprises to be exceeded, the reduction in share capital approved by the Annual General Meeting cannot now be carried out without a new resolution from a General Meeting. The Board of Directors plans to call an Extraordinary General Meeting to obtain a new resolution to cancel the company's holdings of own shares. During the course of Q2, the majority of the investors in the Storebrand ASA s exchangeable bond exercised the right to convert their bonds to Orkla shares. The conversion involved the transfer of 7,561,869 Orkla shares from Storebrand ASA to investors, thereby cancelling 99.6% of the bond issue. The nominal outstanding value of the exchangeable bond at 30 June 2005 was EUR 550,000. The bond issue will be redeemed in full in August Storebrand ASA Net financial items represented income of NOK 12 million in Q2 (NOK 1,840 million). Q2 operating costs were NOK 25 million as compared to NOK 42 million in the same period last year. Result Storebrand ASA: Q Full year NOK million Group contributions and dividends Interest income Interest expense Gains/losses on securities Other financial income/expense Net financial items Operating costs Pre-tax profit Storebrand ASA held liquid assets of NOK 1.7 billion at the close of Q2, of which just under NOK 1.6 billion was invested in short-term interest-bearing securities with good credit ratings. In line with the program of work to adjust the group s capital structure, Storebrand bought 1,950,605 of IFRS accounting Storebrand ASA s group accounts are presented in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union. The effects of the transition to IFRS are described in the notes to the interim accounts below and in a separate note in the Storebrand 2004 Annual Report (page 83). The effects of the implementation of IFRS have been calculated on the basis of the IFRS standards expected to apply at 31 December 2005 and the current interpretation of these standards. Restating the opening balance sheet at 1 January 2004 in accordance with IFRS has reduced the group s reported equity by NOK 323 million. The treatment of pensions for employees is one of the main reasons for this change. Restating the balance sheet at 31 December 2004 in accordance with IFRS increases the group s reported equity by NOK 1,315 million, and a major part of this increase relates to the reversal of the provision for dividend. Profit after tax for 2004 restated in accordance with IFRS is NOK 12 million higher. The transition to the international accounting standard for financial instruments (IAS 39) has had only a limited net effect on the group s equity. Oslo, 9 August 2005 The Board of Directors of Storebrand ASA 6

7 Storebrand Group PROFIT AND LOSS ACCOUNT 1 JANUARY - 30 JUNE H1 Q2 FULL YEAR NOK MILLION Net premium income Net interest income - banking Net interest income - other activities Net commission income Net income from financial assets at fair value: - shares and other equity participations bonds and other fixed-income securities financial derivatives/other financial instruments Net income from bonds in hold to maturity portfolio Change in market value of investment assets Real estate rental income and gains from sales of real estate Other financial income Other income Total income Share of profit in associate companies and jointly controlled businesses in accordance with the equity method of accounting Insurance claims for own account Change in insurance reserves Interest expense Other financial expense Loan losses Operating costs Other costs Total costs To/from market value adjustment reserve Operating profit/loss To/from additional statutory reserves - life insurance Funds calculated/allocated to policyholders - life insurance Group profit/loss Changes in security reserve etc. - non life insurance Pre-tax profit/loss before extraordinary items Tax payable Minority interests' share of profit Profit/loss for the period Earnings per ordinary share Storebrand has not issued any options or other financial instruments that could cause dilution of its shares. 7

8 Storebrand Group BALANCE SHEET AT 30 JUNE NOK MILLION Assets Deferred tax assets Pension fund assets Tangible fixed assets Intangible assets Other assets Investments recognised on the equity method Bonds held to maturity Lending Reinsurers' share of technical reserves Real estate at actual value Other current assets Other current receivables Financial assets at actual value: - shares and other equity participations bonds and other fixed-income securities other financial instruments Bank deposits Total assets Equity and liabilities Paid in capital Retained earnings Value adjustment fund Minority interests Total equity Subordinated loan capital Market value adjustment reserve Insurance reserves - life insurance Premium and claims reserves - non life insurance Security reserves etc. - non life insurance Pension liabilities Liabilities to financial institutions Deposits from and due to customers Securities issued Liabilities in respect of reinsurance Other financial debt Provisions Other current liabilities Total equity and liabilities

9 Storebrand Group RECONCILIATION OF CHANGES IN EQUITY RETAINED EARNINGS PAID-IN VALUE ADJUST- CURRENCY OTHER MINORITY EQUITY EQUITY NOK MILLION SHARE CAPITAL MENT FUND DIFFERENCES EQUITY INTERESTS Equity at (opening balance) Earnings items applied directly to equity Profit for the period Equity transactions with owners: Own shares Dividend paid Currency differences/other Equity at (closing balance) CASH FLOW ANALYSIS NOK MILLION Cash flow from operational activities Net receipts/payments - insurance Net receipts/payments - interest, commissions and fees Net receipts/payments - lending Net receipts/payments - deposits from others (banking activities) Net receipts/payments - trading portfolio securities Net receipts/payments - other operational activities Net cash flow from operational activities Cash flow from investment activities Net receipts/payments - bonds held to maturity Net receipts from sales of subsidiaries Net receipts/payments on sale/purchase of real estate and operational assets Net cash flow from investment activities Cash flow from financing activities Net receipts/payments - borrowing Net receipts/payments - share capital -256 Payments - group contribution/dividend Net cash flow from financing activities Net cash flow for the period Net movement in cash and cash equivalent assets Cash and cash equivalent assets at start of the period Cash and cash equivalent assets at the end of the period

10 Notes to the interim accounts NOTE 1 INTERIM ACCOUNTS PRESENTED IN ACCORDANCE WITH EU APPROVED IFRS STANDARDS Storebrand s consolidated accounts for the first six months of 2005 are presented in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union. The quarterly accounts have been prepared on the basis of the IFRS standards expected to apply at 31 December 2005 and the current interpretation of these standards. The quarterly accounts are in accordance with the requirements of IAS 34 for interim accounts. In preparing the quarterly accounts, Storebrand has used assumptions and estimates that affect reported figures related to assets, liabilities, revenues and costs, as well as the information on contingent liabilities. Future events may cause the estimates to change. NOTE 2 CHANGES TO COMPARABLE HISTORIC FIGURES AND CHANGES TO ACCOUNTING PRINCIPLES Comparable figures for 2004 have been restated in accordance with IFRS with the exception of items accounted for in accordance with IAS 39 on accounting for financial instruments. IAS 39 has been applied for the period 1 January June This is in accordance with the IFRS transition rules. The Storebrand ASA 2004 Annual Report provides a separate note on the effects of the transition to IFRS (page 83 of the Annual Report). This note provides quantitative information on the changes to the group's equity capital at 1 January 2004 and 31 December 2004 and restated earnings for The note also provides a draft opening balance sheet at 1 January 2005 and information on the effect of the transition to IAS 39. The transition to IFRS has caused changes from the accounting standards and principles on which the official annual accounts for 2004 were based. The following sections provide information on the most significant changes caused by IFRS. Insurance contracts IFRS 4 deals with the accounting treatment of insurance contracts. Storebrand s insurance products are subject to this standard, and this means that the Storebrand group can, to a large extent, continue to apply its previous accounting principles for insurance contracts. IFRS 4 requires that reinsurance of the group s insurance liabilities must be shown separately as an asset, whereas reinsurance was previously incorporated as a reduction to total (gross) insurance reserves. In Storebrand s restated consolidated accounts, the pre-tax effects of IFRS in respect of Storebrand Livsforsikring AS have been shared between the group s equity and the accounting item policyholders funds in the ratio 35:65. Financial instruments IAS 39, which deals with the accounting treatment of financial instruments, is of particular importance for Storebrand. The Storebrand group holds significant investments in financial instruments, and these have previously been recognised mainly at actual value or amortised cost. This will largely continue to be the case under IAS 39. Some effects relating to the group's banking activities are described below: Loan loss provisions Where there is objective evidence that the value of an individual loan has fallen, IAS 39 requires that the loan is valued at the discounted value of future cash flows. This discounting effect has not previously been applied. The reduction in the discounting effect on a loan as the cash flow moves closer in time will be recognised as interest income, and will have a positive effect on future net interest income. The bank will not be permitted to maintain general loan loss provisions in the way they have been calculated up to and including However, groups of loans can be valued together for the calculation of loan loss provisions if certain criteria are satisfied. Any fall in the value of such a group of loans must also be based on objective evidence. Structured products synthetic financial instruments The bank s treatment of equity linked bonds up to and including 2004 has been to recognise net commissions and fees earned at the time of issue. IAS 39 requires that bonds issued should be recognised at amortised cost using the effective yield method, and this means that all cash flows related to the loan are amortised over its life. Relative to the previous accounting treatment, the implementation of this change reduces the income recognised at the time such bonds are issued, but also causes a reduction in interest expense in future periods. Hedge accounting and use of actual values for derivatives and investment assets by the banking activities The bank makes extensive use of interest rate derivatives to hedge most of its net interest rate exposure. Unrealised gains and losses on interest rate derivatives were not shown in the balance sheet up to and including IAS 39 requires that derivatives are recognised at actual value, and hedge accounting can only be applied if strict conditions on the effectiveness of hedging transactions and their documentation are satisfied. The bank has applied hedge accounting since 1 January

11 Notes to the interim accounts IAS 39 has also caused some changes to the bank s approach to valuing certain investments in shares, which together with other items must now be valued at actual value. Pensions (for the group s employees) The effect of adopting IAS 19 on pension benefits relates mainly to the accounting treatment of deviations from estimates at 1 January 2004 and the discount rate used. IAS 19 requires that the discount rate used to calculate pension liabilities is equivalent to the risk-free return over the average remaining period. The discount rates applied in accordance with IFRS and the rate used in the official annual accounts are as follows: IFRS ACTUAL 1 January % 7.0 % 31 December % 6.5 % Charging the deviation from estimates directly to equity and the change in the discount rate have caused an increase in pension liabilities. Real estate The Storebrand group accounts have previously applied actual value to most real estate assets. The implementation of IFRS requires that the group s forestry holdings are also valued at actual value, giving an overall increase in the value of the group s real estate. IFRS requires that properties occupied by the group for its own use must be depreciated. However, real estate is carried in the balance sheet at restated actual value, so the effect on equity will only be the difference between depreciation and restated actual value. Goodwill The transition to IFRS means that goodwill is no longer depreciated in the group accounts. In its place, the standard has introduced an annual write-down test to ensure that any fall in value is charged to the accounts. The group included written-back depreciation of NOK 30 million in its pre-tax profit for NOTE 3: RECONCILIATION OF EQUITY AND EARNINGS BETWEEN NGAAP AND IFRS*) NOK MILLION Equity at NGAAP Pensions -625 Bonus scheme for senior employees -5 Real estate 34 Deferred tax assets 167 Biological assets 15 Goodwill 1 Equity at IFRS NOK MILLION Earnings to NGAAP Pensions -5 Bonus scheme for senior employees 1 Depreciation of properties for own use -3 Goodwill 15 Gain on sale of shares 123 Earnings to IFRS *) NGAAP means Norwegian generally accepted accounting principles excluding IFRS. NOTE 4: ANALYSIS OF PROFIT AND LOSS BY BUSINESS AREA NOK MILLION Life insurance Asset management Storebrand Bank Other activities Total

12 Notes to the interim accounts ReclameService 08/2005 NOTE 5: OPERATING COSTS NOK MILLION Q Q Personnel costs Depreciation Other operating costs Total operating costs NOTE 6: PROFIT AND LOSS BY QUARTER NOK MILLION Q Q Q Q Q Q Total operating income Total costs Operating profit Group profit Pre-tax profit Profit for the period Profit by business area Life insurance Asset management Storebrand Bank Other activities Group profit NOTE 7: KEY FIGURES BY BUSINESS AREA - CUMULATIVE FIGURES NOK MILLION Q Q Q Q Q Q Group Earnings per ordinary share (NOK) Equity Capital ratio 13.6 % 14.6 % 15.3 % 18.0 % 19.4 % 14.7 % Life Insurance Storebrand Livsforsikring Premiums for own account *) Policyholders' funds incl. accrued profit Investment yield I **) annualised 6.4 % 5.7 % 6.4 % 5.7 % 5.7 % 5.4 % Investment yield II **) year to date 3.3 % 1.4 % 7.2 % 4.6 % 3.2 % 2.1 % Capital ratio (Storebrand Life group) 12.5 % 14.1 % 14.4 % 17.3 % 18.4 % 14.8 % Operating costs as % of policyholders' funds 1.00 % 0.86 % 0.90 % 0.87 % 0.91 % 0.93 % Storebrand Fondsforsikring Premiums for own account Policyholders' funds Storebrand Bank Interest margin % 1.69 % 1.78 % 1.63 % 1.63 % 1.63 % 1.68 % Cost/income % 63 % 61 % 84 % 84 % 84 % 84 % Non-interest income/total income % 15 % 17 % 39 % 44 % 45 % 46 % Net lending Capital ratio 12.2 % 15.1 % 13.8 % 12.4 % 12.3 % 12.8 % Storebrand Investments (Asset management) Total funds under management Funds under mgmt. for external clients *) Including inward transfers of premium reserves **) Investment yield I: Realised financial income including revaluations (positive or negative) of real estate. Investment yield II: As Investment yield I but including change in unrealised gains on financial current assets. 12