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Storebrand ASA: Detailed guidelines on implementation of new mortality tables

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Finanstilsynet[1] published 2nd April 2014 final guidelines for the step up plans for longevity reserve strengthening. These are in relations to the guidelines provided by the Ministry of Finance in a letter from 27th March 2014.

Finanstilsynet decided in March 2013 on new mortality tables for group pensions insurance, to be applied by life insurance companies and pension funds with effect from 1st January 2014. The tables require higher premiums and higher technical provisions to cover for future obligations.

Guidelines for reserve strengthening

  • Step up plans can have a maximum duration of seven years (up until 2020). Applications to be approved by Finanstilsynet.
  • The reserves may be funded with excess return in customer portfolios. Surplus return in one contract cannot be used to strengthen reserves on other contracts (no "solidarity").
  • The Insurance companies should contribute at least 20 percent of the increased reserves. Allocations shall be made to every contract.
  • The reserve strengthening must as a minimum be linear over the course of the step up plan.

Implications for Storebrand

  • Total reserve strengthening of NOK 12.5 billion.
  • Storebrand has in the period 2011 to 2013 allocated 4.3[2] billion for future reserve strengthening.
  • Storebrand also has other buffers that may be used to increase the booked return in the period.
  • The total contribution from the owner, will depend on the investment return on customer funds in the period:

Annual booked return Expected total result effect[3] Annual result3
4 % ~3 500 ~500
4.5 % ~2 100 ~300
5 % ~1 100 ~160

  • The result to shareholders for Q1 2014, will be charged with between NOK 80-100 million, based on an expected return of 4.4% in the step up period, and a 7 year step up plan.

For further information, see Storebrand.no/ir.

Lysaker, 3 April 2014

Contacts:

Geir Holmgren,Managing Director Storebrand Life Insurance, mob +47 934 80 034

Elin Myrmel-Johansen, Director of Communications, mob +47 934 80 538  

Trond Finn Eriksen, Head of Investor Relations, mob +47 991 64 135    

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)

[1] Norwegian FSA (Financial Services Authority)

[2] Provisions of 4.3 bn will be reduced by approximately 350 million based on "no solidarity" principle. Exact figures will be presented together with the result from Q1 2014, on May 7th .

[3] In addition to loss of profit sharing. All numbers in million NOK

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