Merger to create the leading Nordic P&C insurermb.cision.com/Main/6558/9394993/108873.pdfMerger to create the leading Nordic P&C insurer Press Conference, Oslo February, 22 1999 2

1

Merger to create theleading Nordic P&C insurer

Press Conference, OsloFebruary, 22 1999

2

Table of Content

8Introduction and highlights

8Rationale

8The New Group

8Synergies

8Financials

8Conditions and timing

3

Highlights of the transaction

8 Skandia and Storebrand combine their P&C activities in order tocreate the leading Nordic P&C insurance company

8 Merger of equals

8 The New Group will have an estimated pro forma Nordic marketshare in P&C insurance of 19%

8 The transaction is expected to create annual synergy gains ofSEK 450 million within 3 years from completion date

4

Highlights of the transaction (cont)

8 Skandia will own 56% and Storebrand will own 44% of thecapital of New Group

8 Voting rights will be equally shared between Skandia andStorebrand

8 The New Group will be headquartered in Stockholm

8 Domicile decision solely based on commercial criteria

8 Private lines and Marine & Energy will be managed fromNorway, while industrial lines will be managed from Sweden

5

Highlights of the transaction (cont)

8 Åge Korsvold, President and CEO of Storebrand, will beChairman of the New Group

8 Other members of the steering committee include GreteFaremo, Idar Kreutzer, Johan Fr. Odfjell, Lars-EricPetersson and Ulf Spång

8 Bo Ingemarson, Senior Executive Vice President of Skandia,will be CEO of the New Group

8 Hans-Erik Andersson, Knut Francke and Gunn Ovesen willalso be part of the executive management group

6

Structure of the transaction

8 Storebrand’s P&C activities will be transferred to anoperating company domiciled in Sweden. Storebrand willreceive shares in the holding company of the New Group

8 Call centres, service centres and the sales force will betransferred to the New Group, while branch offices will beretained by Skandia and Storebrand

8 The intention is that all activities outside Sweden will beorganised as branches to maximise operating and capitalsynergies

7

Why Skandia and Storebrand ?

8 Skandia and Storebrand share the same view ondevelopments in the P&C insurance market

8 Both companies regard the P&C insurance market asattractive and see significant value creation potential in aNordic restructuring

8 The P&C activities of Skandia and Storebrand are similarin size

8 Strong brand names in home markets

8 Two strong management teams

8 Complementary skills

8 Common social and cultural features in the Nordic market

8

-

5,000

10,000

15,000

20,000

25,000

The

New

Gro

up

Ska

ndia

Sto

rebr

and

LF W

asa

Sam

po

Fol

ksam

Try

g-B

altic

a

Gje

nsid

ige

Try

gg-H

ansa

Poh

jola

Top

danm

ark

Cod

an

Alm

. Bra

nd

Tap

iola

Market position in the Nordic Region

Gross Premiums Written, SEKM

9

Key figures

Skandia Storebrand The New Group

Gross premium written (1), SEK bn. 13.6 9.3 22.9

Total assets (2), SEK bn. 32.3 18.5 50.8

Shareholders' equity (2), SEK bn. 6.4 4.5 10.9

No of customers (1,000) 3,000 1,000 4,000

No of employees (appr.) 3,300 2,600 5,900

(1) Last 12 months ending September 30, 1998(2) September 30, 1998

10

Rationale for the transaction

IndustryCharacteristics

Combinedopportunity

Result

8 Low growth

8 Overcapacity

8 Large performance gapsbetween best practice andindustry average

8 Economies of scale andscope

8 Industry wide consolidation

8 Streamline operations andcapital allocation

8 Transfer internal “bestpractice” e.g.:

- Call Center

- Underwriting

- Claims settlement

- Risk management

8 Attract or acquire other P&Ccompanies

8 Substantial cost savingsand revenue enhancement

8 Capital efficiency

8 Improved profitability

The New Group creates a strong Nordic platform for future growth

11

Vision & Objectives

8 Establish a financially strong but capital efficient structure as abasis for continued development of the business

8 Establish a P&C organisation with unparalleled scale and coreskills in the Nordic region

8 Establish a combined organisation capable of achievingsubstantial synergies

To create the leading P&C company in the Nordic region

12

Strategic overview

8 Complete range of P&C insurance products for individualsand companies

8 The leading P&C insurer in the Nordic region, eventuallywith a strong market position i each market

8 Re-engineer the existing distribution networks and createan organisation with superior distribution capability

8 Size provides increased strategic flexibility and enables theNew Group to lead in the restructuring of the Nordicinsurance sector

Product Offering

Geographic Focus

Distribution Strategy

Strategic position

13

Structure of the New Group

Denmark Branch

(existing)

“Newco” AB

“Newco”

Insurance AB

Storebrand Skandia44 % 56 %

Norway Branch

50 % 50 %

Capital Capital

VotesVotes

14

The Nordic P&C market

FinlandNorway

Sweden

Pohjola25%

Tapiola13%

Other19% Sampo

34%

F-Fennia9%

Tryg-Baltica21%

Codan13%

Alm.Brand9%

Skandia5%

Other38%

Topdanmark14%

Gjensidige29%

Samvirke8%

Other6%

Storebrand39%

Vesta18%

LF-Wasa27%

Skandia20%Trygg-Hansa

16%

Other19%

Folksam18%

Denmark

Total Gross Premiums: SEK 33.9 bn

Total Gross Premiums: SEK18.8 bn Total Gross Premiums: SEK19.1 bn

Total Gross Premiums: SEK30.6 bn

Market shares, 1997

The New Group will have a combined market share of 19%

15

The European P&C market

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

AllianzNo 1

AXANo 2

CGUNo 4

RSANo 6

Skandia/Storebrand

No 12

USD million, net premium written

16

Premiums by segment (1)

(1 ) Net premiums, 1997

Storebrand100% = SEK 7.8 bn

M&ECorporatemarket

Private

M&E

M&E

Private

Corporate

The New Group100% = SEK 18.9 bn

Skandia100% = SEK 11.1 bn

Private

Corporatemarket

58 %

8 %

34 %

42 %

4 %

54 %

48 %

6 %

46 %

17

Branding and distribution

8 Leveraging on strong existing brands and distribution capability

8 The New Group will inititate process to establish new brand. Co-branding with current brands following completion of thetransaction

8 Distribution channels which include:

qCall centresqSales and service centresqSales representativesqDistribution agreements with Skandia and StorebrandqInternet

8 Distribution alliances will be considered

Strengthened platform for efficient distribution

18

Sources of Value Creation

Synergies

Platform for growth

Stand-alone improvements

8Annual cost synergies of SEKM 450or 8 % of the combined cost base

8 Increased capital efficiency

8Significant opportunitiesfor skill transfers

8E.g. Denmark, Finland, Marine & Energy

19

Break-up of synergies

Total SEKM

Production and underwriting 110

Distribution 85

Administration 75

Claims handling 30

Support functions and other 150

Total annual synergies 450

20

Financial Strategy

8 The anticipated synergy gains, solid market position andfinancial strength create the foundation for sustainableearnings growth and high profitability

8 The New Group intends to operate with a solvency marginof 55%, and intends to pay out excess profits as dividend

8 The target cost ratio is 20 %

8 The target combined ratio over the cycle is 100 %

8 Target return over the cycle on solvency capital is risk freeinterest rate plus 6%-points

8 It is Skandia’s and Storebrand’s intention to float the NewGroup

21

Capitalisation and proforma financials

P&L Accounts Balance Sheet

Accounting principles and assumptions are explained in the press release

* 12 months period ending 30 September 1998

The New Group The New Group

(SEKM) 1997 1998 * (SEKM) 1997 1998 *

Gross premium written 22.278 22.922 Investments 45.692 46.595 Net premium written 19.070 19.814 Total assets 48.653 50.843

Shareholders' equity 10.456 10.910 Operating expenses 4.410 4.654 Technical result -362 62 Operating result 137 553

Key ratios:Claims ratio 87,0 % 84,0 %Cost ratio 23,2 % 24,1 %Combined ratio 110,2 % 108,1 %

22

Pro forma, financial information and capitalization

MSEK Skandia P&C Storebrand P&C The new Group

ResultTechnical resultAllocated investment income,non-technical

-207

282

269

209

62

491Operating resultBalance sheetTotal assetsInvestments-whereof NIGTechnical provisions, net

75

32 33130 3671 431

24 513

478

18 51215 958

013 989

553

50 84346 5951 431

38 502CapitalizationShareholders' equityShareholders' contribution NIGSolvency margin (%)

6 3871 43155%

4 5230

55%

10 9101 43155%

23

Conditions and timing

8 Confirmatory due-diligence to be completed byend of March

8 Regulatory approval and clearance fromcompetition authorities

8 Completion of Transaction