Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Storebrand, DNB Drop on Strict Norway Pension Rules: Oslo Mover

March 11 (Bloomberg) -- Storebrand ASA, Norway’s second-largest insurer, and DNB ASA, the biggest lender, declined in Oslo trading after the companies said they need to set aside more cash amid stricter rules on group pension plans.

Shares in Storebrand fell as much as 10 percent to 24.28 kroner, the lowest intraday level since Aug. 31, while DNB dropped as much as 3 percent, the most in more than six weeks. Life insurance providers in Norway must boost premiums and reserves to meet an increase in life expectancy, the Financial Supervisory Authority said on March 8. At least 20 percent of the increase must be covered by the companies, it said.

“While the required level of reserves was slightly higher than anticipated,” the impact for Storebrand shareholders “was significantly higher,” Pareto Securities ASA analysts Vegard Eid Mediaas and Jon David Gjertsen said. The changes will reduce Storebrand and DNB’s earnings more than expected, the analysts said in separate notes.

DNB said that while its financial performance will be hurt, the company is maintaining its long-term targets. Norway’s largest bank estimates the rule change will require a reserve increase of about 14.4 billion kroner ($2.5 billion) with shareholders contributing 2.9 billion kroner, it said. DNB had already set aside 3.8 billion kroner as of Dec 31.

The changes are more stringent than expected and will raise the insurer’s total reserves requirement to 11.5 billion kroner, Storebrand said in a statement today.

Shareholder Contribution

The insurer didn’t expect to need to increase its reserves to more than about 10 billion kroner, Chief Executive Officer Odd Arild Grefstad said in an interview on Feb. 13.

The required contribution from shareholders is estimated to be about 2.3 billion kroner, Storebrand said. The insurer has already set aside 4.3 billion kroner, it said.

Storebrand traded 7.6 percent lower at 24.96 kroner as of 11:44 a.m. local time, while DNB was down 2.4 percent at 90.3 kroner. Gjensidige Forsikring ASA, Norway’s largest insurer, which owns 24 percent of Storebrand, fell as much as 1.5 percent to 93.3 kroner.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.