Reuters: Hot Stocks: UPDATE 1-Storebrand profit misses forecast, cuts returns goal

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UPDATE 1-Storebrand profit misses forecast, cuts returns goal Feb 13th 2013, 13:03 Wed Feb 13, 2013 8:03am EST * Lowers return-on-equity target to above 10 pct from 15 pct * Does not propose a dividend * Core earnings NOK 489 mln vs mean forecast NOK 593 mln * Shares drop 9 pct (Adds quote by analyst, shares, background, detail) OSLO, Feb 13 (Reuters) - Storebrand, Norway's biggest life insurer, missed fourth-quarter profit forecasts and cut its return on equity target, saying it needed to boost reserves in the face of tougher regulations and rising life expectancy. Shares in the group fell around 9 percent on Wednesday. Storebrand said it made an underlying profit of 489 million Norwegian crowns ($89 million) in October-December, lagging the mean forecast of 593 million in a Reuters poll, though up from 268 million in the same period the year before. The group said it would not propose a dividend and cut its target for return on equity after tax and before amortisation to above 10 percent, from 15 percent previously. Storebrand must put more money aside due to new international regulations and to pay for the pensions of Norwegians, who are living longer than previously expected. Storebrand's fortunes contrasted with those of its Nordic cousin Sampo, which on Wednesday forecast a good year ahead after reporting a bigger-than-expected rise in fourth-quarter profit. Generally, Nordic financial institutions have served as safe havens during the euro zone debt crisis, thanks to high capital levels, solid profitability and limited exposure to risky sovereign debt. "It is probably due to the increased reserves regarding life expectancy, as much as the fourth-quarter results, that the shares are dropping," said Nils Christian Oeyen, an analyst at Sparebank 1 Markets. "The question is how much capital is needed to be reserved for (covering pensions due to longer life expectancy) and the degree of risk that shareholders must contribute in terms of ceded surplus." Storebrand will not pay a dividend for 2012 and probably not in 2013 either, said its chief executive. It may however consider it when the results for 2014 take shape and the new regulations have been put into place. "When I look at 2014 compared with 2013, then a lot of things would have fallen into place and been organised by then," Odd Arild Grefstad told Reuters after presenting the company's quarterly results. At 1250 GMT, Storebrand shares were down 9 percent at 27.12 crowns, lagging a flat Oslo benchmark index. ($1 = 5.4872 Norwegian crowns) (Reporting by Victoria Klesty, Joachim Dagenborg and Camilla Knudsen; Writing by Gwladys Fouche; Editing by Mark Potter) Link this Share this Digg this Email Reprints

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