DNB Bank ASA — M&A Activity 2018

Sep 24, 2018

DNB and SpareBank 1 Gruppen enter into insurance merger

DNB and SpareBank 1 Gruppen enter into insurance merger

On 24 September, DNB and SpareBank 1 Gruppen entered into an agreement to merge

their insurance operations, thus establishing one of Norway's largest insurance

companies.

The new insurance company will result from the merger of DNB Forsikring AS and

SpareBank 1 Skadeforsikring AS. The merged company will have a virtually

complete product portfolio within non-life insurance aimed at the personal and

SME markets.

As part of the transaction, the individual personal risk insurances from DNB

Livsforsikring AS and SpareBank 1 Forsikring AS (the life insurance company), as

well as the company-paid personal risk insurances from SpareBank 1 Forsikring

AS, will be transferred to the new company.

DNB ASA will have a holding of 35 per cent and SpareBank 1 Gruppen AS one of 65

per cent in the new company. In addition, DNB has secured an option to increase

their holding to 40 per cent.

The merger agreement assumes an exchange ratio of approximately 80 per cent for

SpareBank 1 Gruppen and approximately 20 per cent for DNB. This exchange ratio

is based on a negotiated market value of the two non-life insurance companies,

including the value of the transferred personal risk products.

In the transaction, the new non-life insurance company is valued at NOK 19.75

billion, including the value of the personal risk products to be transferred

from the respective life insurance companies to the new company. An equivalent

value is assumed when DNB is to increase its holding from 20 to 35 per cent. The

purchase price for 15 per cent of the shares will thus be NOK 2.96 billion. The

total volume of premiums on the personal risk products is approximately NOK 3

billion, generating a profit of about NOK 0.5 billion after tax. The pro-forma

profit after tax for the new company for 2017 was approximately NOK 1.8 billion,

out of which DNB's operations amounted to NOK 300 million.

For DNB, this will, on completion of the transaction, mean a recorded gain of

around NOK 3 billion in the group accounts, and a reduction of the common equity

Tier 1 capital ratio (CET 1) for the Group of about 30 basis points.

The parties will soon establish an interim Board of Directors and appoint the

head of the new company. The tentative merger date is 1 January 2019, subject to

the approval of the authorities.

For further information, please contact:

Even Westerveld, EVP, Corporate Communications, tel. no. (+47) 400 16 744

Rune Helland, Head of Investor Relations, tel. (+47) 23 26 84 00 / (+47) 977 13

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