Skandia Sells American Skandia

STOCKHOLM, Sweden, Dec. 20, 2002 (PRIMEZONE) -- Skandia announces that an agreement has been reached with Prudential Financial, Inc. (U.S.) under which Prudential Financial will acquire American Skandia.

Following the transaction Skandia will be going forward to:

-- Improve profit margins and shareholder returns

-- Increase strategic flexibility by substantially reducing debt and
   cash consumption

-- Focus on further developing its strong European core franchises

-- Deploy resources and continue to support successful expansion in new 
   growth markets with attractive return characteristics

Skandia expects lower future growth and profitability in the U.S. market, given the change in market conditions and its impact on American Skandia's rating environment. This has decreased the probability that American Skandia will reach Skandia's return targets. This transaction will therefore enable American Skandia to improve its future development within a U.S. financial institution that has diversified U.S. product lines and complementary distribution channels.

The transaction

The transaction values American Skandia at USD 1,150 million (SEK 10.7 billion) as of September 30, 2002, including intra-group debt and USD 277 million of external securitizations. The proceeds of the transaction will be used to repay external debt. The agreement between Skandia and Prudential Financial contains standard representation and warranty provisions. In addition, both parties have agreed to a market standard non-compete agreement.

The transaction is subject to regulatory approval and is expected to close during the second quarter of 2003.

Impact of the transaction on Skandia financials

Skandia will incur a total negative result impact related to the transaction of SEK 4.4 billion net after tax. On a pro forma basis as of September 30, 2002, net asset value will be SEK 28.0 billion, of which shareholders' equity will be SEK 15.7 billion. On the same pro forma basis, the sale will bring Skandia's AuM to SEK 536.0 billion, sales to SEK 57.0 billion and operating result (excluding the exceptional impact of the transaction) to SEK 1,821 million.


Lars Ramqvist, Chairman of Skandia, said: "This is a solid solution from the shareholders' perspective. The Board fully supports Skandia management's plans for further profitable growth that this transaction has enabled."

Lars-Eric Petersson, CEO of Skandia, said: "We have rebalanced Skandia's risk-return profile and significantly enhanced our financial and operating flexibility."

Impact on other Skandia operations

This transaction has no effect on Skandia Global Funds and other Skandia operations located in the U.S. Nor does it have any effect on Skandia's operations in other countries than the U.S. or any relation between customers or other parties and any company in the Skandia group besides American Skandia.

Skandia Press Meeting and Analyst Presentations On Friday, December 20, 2002, Skandia will hold a press and analyst meeting at 13:00, local time, at Skandia's headquarters, Sveavagen 44, Stockholm. A call-in telephone conference for analysts and the media will be held at 9:30 CET (8:30 GMT). To participate in the teleconference, call +44 (0) 20 7162 0125 or +1 334 323 6203 and request the Skandia teleconference.

A recorded version of the teleconference will also be available through December 25, 2002 on tel. +44 (0) 20 8288 4459, code 252 790, or +1 334 323 6222, code 252 790.

An audiocast of the teleconference along with an accompanying slide presentation will be available on the Internet at

An investor day will be held in London on Friday, February 14, 2003.

Information on parties to the transaction

About Skandia

Skandia Insurance Company Ltd. (publ.) is an international long-term savings and pension provider. Founded in 1855, Swedish-based Skandia currently operates in 24 countries, with the U.K. and Sweden as its largest markets. Skandia is one of the largest providers of investment products to the independent broker-dealer channel worldwide. Additional information on Skandia can be found at

About American Skandia

American Skandia, a leading distributor of variable annuities in the U.S., pioneered the "multimanager" concept in America. Investment managers included in the American Skandia lineup meet rigorous investment policy standards. Variable annuities, variable life insurance and qualified plans are issued by American Skandia Life Assurance Corporation and distributed by American Skandia Marketing, Inc. For more information about American Skandia, visit

About Prudential Financial, Inc. (U.S.)

Prudential Financial companies, with approximately USD 533 billion in total assets under management and administration as of September 30, 2002, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. For more information, visit

Important Legal Information

This press release contains forward-looking statements. While these forward-looking statements represent our judgments and future expectations, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, the risk that Skandia will not enter into the proposed transaction or any other transactions. Neither Skandia nor American Skandia is under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Figures in this press release have not been subject to review by the company's auditors.

For questions, please contact:

Odd Eiken, EVP, Strategy & Communication
tel. +46-8-788 2880

Jan Erik Back, Chief Financial Officer
tel. +46-8-788 3720

Michael Wolf, Chief Investment Officer
tel. +46-8-788 4559

Harry Vos, Head of Investor Relations
tel. +46-8-788 3643

Financial implications of the transaction in summary

Result of the transaction                          
                                        SEK billion
Transaction value of American Skandia          10.7
Capital employed in American Skandia          -16.8
Result of the transaction before tax           -6.1

Result of the transaction after tax            -4.4

Key data                                  Interim report       Pro forma
                                              Sept. 2002      Sept. 2002
                                             SEK million     SEK million
Sales                                             92,306          56,975
Result of operations                               1,389           1,616
Operating result(1)                               -2,309           1,821

One-time effect on operating result of a         +/- 166          +/- 52
1% increase/decrease in stock market
                                             SEK billion     SEK billion
Total assets                                       498.8           283.7
Assets under management                            779.7           536.0
Funds under management                             487.7           250.5

Shareholders' equity                                20.1            15.7
Deferred tax liability, net                          4.2             2.1
Value of business in force                          10.1            10.1
Other surplus values                                 0.1             0.1
Net asset value                                     34.5            28.0

Key ratios                                             %               %
Operational return on NAV                            7.7             9.4
Profit margin unit linked, new sales                10.1            13.5
DAC/Funds under management, unit linked              4.7             3.4

Per-share data (before dilution)                     SEK             SEK
Operating result                                   -2.25            1.78
Earnings                                            0.20            2.59
Net asset value                                    33.74           27.36
Shareholders' equity                               19.61           15.34

(1) Of which, items affecting comparability, SEK 2,016 million.

For result items, pro forma financial data pertains to the result stated in the interim report dated September 30, 2002, excluding the result attributable to American Skandia. For balance sheet items and net asset value, pro forma data pertains to the interim figures after the deconsolidation of American Skandia and taking into account the effects of the transaction. The result effect of the transaction has been converted at the closing rate as per September 30 (1 USD = 9.27 SEK).

To maintain comparability, all figures have been converted in accordance with the exchange rates that were used in connection with the interim report as per September 30, 2002.

Closing rate          1 USD = 9.27 SEK
Average rate          1 USD = 9.94 SEK

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