Skandia reports profits boost

Swedish insurer Skandia, which is being stalked as takeover prey by foreign competitors, reported on Tuesday improved earnings for the first quarter, underlining its status as a juicy bid target.

Pre-tax profit more than doubled to 386 million kronor, against 186 million a year earlier. Net profit fell to 423 million kronor from 1.21 billion, but this included a 834 million kronor one-off capital gain in the first quarter of 2004 from the sale of its Japanese operation.

“We can say that business is performing well and that we are achieving the financial targets that we have set,” chief executive officer Hans-Erik Andersson said in a statement.

Andersson highlighted Skandia’s higher market share in Britain’s insurance market, which analysts believe to be the company’s most tempting asset in the eyes of sector predators.

Old Mutual, an international financial services group of South African origin listed in Britain, acknowledged earlier this month that it was in talks with Skandia in view of a “possible transaction”.

But other insurers and banks, such as Nordic banking group Nordea, are also believed to be eyeing Skandia, possibly with the intention of breaking up the company and selling off the unwanted bits.

French group Axa and America’s AIG have also been rumoured as possible bidders.

For months, financial markets have been rife with speculation that Skandia, which has been embroiled in a financial and legal scandal, would be snapped up by a foreign insurer.

Skandia made headlines in 2003 amid allegations of fraud, creative accounting and exorbitant bonuses, and an internal Skandia probe which confirmed many of the allegations sent ripples of shock and indignation through Sweden’s financial establishment.

Skandia’s Swedish business was badly hit by the scandal, but Andersson said on Tuesday that operations in its home market had begun to recover.