Storebrand ASA dropped the most in more than seven months in Oslo after Norway’s second-largest insurer posted profit that missed estimates and increased its guidance for the reserves it needs to meet new rules.
Storebrand fell as much as 9.4 percent, the most since June 25, and was 9.1 percent lower at 27.05 kroner as of 10:48 a.m. in the Norwegian capital, the largest decline on the Oslo stock exchange’s OBX index. More than 4 million shares have traded today, more than double the three-month daily average volume.
The company needs to increase its premium reserves by about 7 percent to meet new rules in Norway as people live longer, Oslo-based Storebrand said in a statement today. That compares with previous guidance for a strengthening of 3 percent to 7 percent.
“This amounts to a reserve strengthening of 10 billion kroner” ($1.8 billion) and is higher than the 6.5 percent figure that Pareto Securities AS was expecting, the broker said in an e-mailed note to clients. “We consider the report to be on the negative side.”
Storebrand is building up its balance sheet before planned changes to rules on occupational pension products to ensure insurers can adjust to stricter capital requirements and longer life expectancy. The insurer has set aside 4.3 billion kroner for its defined benefit portfolio in Norway, it said today.
The company is also preparing for common capital standards for insurers set to be introduced through regulations known as Solvency II. Norway’s Financial Supervisory Authority doesn’t expect full implementation of Solvency II rules before Jan. 1, 2015, and it doesn’t rule out further delays, it said in a letter published on its website on Feb. 4.
Storebrand today reported net income of 68 million kroner for the fourth quarter, up from 16 million kroner a year earlier and below the 332.2 million kroner average of nine analyst estimates compiled by Bloomberg. Net premium income rose 35 percent to 6.5 billion kroner, it said.
Gjensidige Forsikring ASA, Norway’s largest insurer, owns 24 percent of Storebrand.
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