Sovereign Lifts Market Share And Profit

MEDIA RELEASE
18 August 2005

Sovereign Lifts Market Share And Profit

Statement made by Barbara Chapman, Managing Director, Sovereign

Industry leadership, diversity of activity and increased operational efficiency lifted Sovereign’s after tax operating profit by 18% to $80.9 million for the financial year ended June 30 2005. This is a pleasing result in an environment where investment markets have improved relative to last year, and the housing sector has remained buoyant.

In its core business of life risk insurance, Sovereign increased its annual net in-force premium income by 11% to $279 million. In the process, it lifted its share of regular premium new business to 31.8%, an increase in market share of over 3%, consolidating its leadership in this market. Sovereign’s new business market share is now bigger than the combined market share of its next three biggest rivals.

Despite these results, Sovereign is concerned that New Zealanders rate of life insurance uptake[1] presents an increasing risk, as it is not keeping pace with the growth in the levels of home mortgage lending[2]. This could have a flow on effect on families in the event of death, illness or a downturn in employment.

A noticeable feature of Sovereign’s risk management products is the combination of their contemporary nature, their focus on flexibility to meet customers changing circumstances, and the changes taking place within society itself.

An example of this is the revamp Sovereign undertook of its health insurance range during the year. A low cost product was introduced that meets modern health care needs based around an aging population and advances in health science.

In health insurance, Sovereign increased its annual net in-force premium income by 18% to $44 million.

The most buoyant business sector for us was home mortgage lending, with advances during the year topping $1.96 billion, bringing home mortgage advances in force to more than $4.5 billion, up 30%. This makes Sovereign Home Loans by far the largest non-bank in the home mortgage market.

During the year Sovereign Home Loans launched Go Low-Doc, a non-conforming home loan product, and now leads the market in this segment.

Funds under management at year-end were stable at $3.3 billion. The performance of Sovereign’s funds was recognised by being finalists in five of the eight Morningstar Fund Manager of the Year Award categories.

[1] For y/e 31 December 2004 term annual premium income up 9%, replacement income annual premium income up 3% - Source: ISI

[2] For y/e 31 December 2004 total housing loans up 16% - Source: RBNZ

ENDS

Sovereign is New Zealand's largest life insurance company, its largest home-loan provider outside the four major trading bank groups, and fifth largest investment company. We meet the financial service needs of over half a million customers. More information on Sovereign can be found at www.sovereign.co.nz

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