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Storebrand Says Insurers to Raise Prices After Norway Tax Move

Jan. 4 (Bloomberg) -- Storebrand ASA, Norway’s largest publicly traded insurer, said the government’s plan to scrap an eight-year-old tax exemption for some life-insurance products will prompt the industry to charge customers more.

“There will be, over time, a strong movement in the market to try and take up a significant part of this cost increase in price adjustments,” Chief Financial Officer Lars Aa Loddesol said on a conference call today. “We are putting together the toolbox for management action.”

Norway’s Finance Ministry said on Jan. 1 that it would recommend removing the exemption on taxing income from equities held in guaranteed pension and so-called unit-linked portfolios. The proposal has pushed Storebrand’s shares down almost 9 percent this week, even as European stock benchmarks rose. Storebrand said on Jan. 2 that there would be a long-term “negative impact” for its life-insurance operations.

“They have gotten used to very generous tax regulations for many years,” Marius Pilgaard, a senior adviser in tax law at the Norwegian finance ministry, said in a phone interview today. “They get upset, but in the end they understand that the life-insurance companies should pay taxes more similar to all other companies in Norway.”

Most life insurers have tax deficits even in good years, allowing them to reduce their tax payable, Pilgaard said. “They will still have a very nice tax regime, it just won’t be as nice as it used to be,” he said.

The shares have also suffered because the new tax rules make it less likely that Storebrand will merge with Gjensidige Forsikring ASA, according to Vegard Eid Mediaas, an Oslo-based analyst at Pareto Securities AS. The new regulations would “effectively eliminate” possible merger synergies, he wrote in a report yesterday.

To contact the reporters on this story: Adam Ewing in Stockholm at;

To contact the editors responsible for this story: Frank Connelly at;

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