OSLO, March 11 (Reuters) - Norway’s insurers need to build up to 50 billion crowns ($8.72 billion) in additional reserves in the coming years - more than previously forecast - to cover for increasing life expectancy, industry players said on Monday.
The financial regulator asked insurance companies to start building reserves from next year as Statistics Norway raised its long term projections, predicting an increase in life expectancy to over 86 years by 2050 from last year’s 81.3.
“The mortality tables are more stringent than expected,” Storebrand, one of the country’s top insurers said in a statement. “They (contain) added safety margins both for current mortality rates and for expected changes in mortality.”
Storebrand shares fell 9 percent in early trade on Monday.
The total increase for the sector could be between 45 and 50 billion crowns, FNO, the sector’s lobby group said on Monday, adding that much of this had already been anticipated.
The regulator earlier called for an increase in pension insurance reserves, starting next year for a period of five years, with 20 percent of the increase coming from shareholder contributions.
DNB, the country’s top bank, said the new calculations indicated its insurance arm required 14.4 billion crowns in additional reserves, of which 3.8 billion crowns had already been set aside.
“Even though the new longevity assumption will have a negative impact on DNB’s financial performance, it will not affect the group’s long-term financial targets,” DNB said in a statement.
Storebrand said it needed an estimated 11.5 billion crowns in reserves, of which 4.3 billion had already been set aside.
It added that the change would not have an impact on its short-term financial results. ($1 = 5.7328 Norwegian krones) (Reporting by Balazs Koranyi; Editing by Helen Massy-Beresford)