Sovereign's $102.6 Million Profit a Record

MEDIA STATEMENT

17 August 2006

Sovereign’s $102.6 Million Profit a Record

Statement made by Jon Raby, Acting Managing Director, Sovereign

Sovereign today announced a record after tax profit of $102.6 million, up 27%, for the year ending 30 June 2006.

The result reflects Sovereign’s focus on improving the service it delivers to its customers and its key distribution partners – independent financial advisers, institutional partners and specialist workplace brokers. These improvements are best illustrated by Sovereign’s leap from 5th= in 2004, to 2nd in 2005, in the independent W A Taylor survey of adviser satisfaction, which compares Sovereign against its competitors.

During the year we increased our new risk annual premiums by 9% to $51.7 million lifting our 12-month rolling average market share by just under 1% to 32.7%. Our in force annual risk premiums increased by 13% to $316 million. This growth increased our share of the annual risk premium in force business to 31.4%. In the risk area, Sovereign’s long established partnerships with the country’s leading independent financial advisers, combined with our focus on value-for-money, innovative products is strengthening our market position.

Our health insurance business increased in force annual premiums by 14% to $50.7 million. New Zealanders are continuing to realise the wisdom of insuring against the cost of major medical care whilst paying their primary care costs out of their own pocket. This has resulted in a clear market trend away from comprehensive medical cover to the kinds of major medical products that Sovereign offers.

Sovereign strengthened its position as the country’s leading non-bank home loan lender, and during the year the level of loans we settled increased by 24% to $2.43 billion.

At period end – 30 June 2006, the size of Sovereign’s home loan portfolio stood at $5.74 billion, an increase of 26%.

Sovereign’s funds under management at year-end remained relatively stable at $3.2 billion.

This is the first full year that Sovereign has reported under the new International Financial Reporting Standards, therefore some of the financial data cannot strictly be compared to previous year’s figures.

ENDS

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