October 24, 2012 / 7:06 AM / in 5 years

UPDATE 1-Norwegian insurers earnings beat expectations

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OSLO, Oct 24 (Reuters) - Norway’s biggest insurers - Gjensidige and Storebrand - beat quarterly earnings expectations, helped by improving returns on bond and equity markets while claims fell.

Life insurance group Storebrand said while it had profited from rising equity markets at home and abroad it was behind on a plan to reach a result before profit sharing and loan losses of 2.5 billion Norwegian crowns ($436 million) by 2013.

Its third-quarter group profit was 458 million crowns, compared with a forecast for 399 million in a Reuters poll and after a 49 million loss in the 2011 period.

Gjensidige, a non-life insurer, said on Wednesday its third-quarter pretax profit more than doubled to 1.61 billion crowns, beating all estimates in a Reuters poll in which the average was for a 1.38 billion profit.

Shares in both companies were up 2.6 percent in early trading.

Storebrand plans to cut at least 400 million crowns costs by 2014 to meet new capital requirements without the need to raise new equity. The plan, which includes around 300 job losses, was on schedule, it said.

It also said while it was working to adapt to new Solvency II regulations, the next milestone in the directive was likely to be delayed from its Jan. 1, 2014 implementation deadline, and the greatest challenges were linked to how insurance contracts with long-term guarantees should be treated.

“The prospects for Storebrand remains roughly the same after these results,” Swedbank First Securities analyst Bengt Kirkoeen said. “If the outlook is to change, it is the regulatory framework that will change it and not the market.”

Storebrand said it expected growth on its home markets in Norway and Sweden in spite of economic uncertainties.


Gjensidige said claims fell and the return on its investment portfolio improved on stronger bond and equity markets.

Its combined ratio, which measures general insurance costs and claims as a percentage of premiums, fell to 82.9 percent compared with a forecast for 86.5 percent and 87.4 percent a year ago.

“Gjensidige’s result was clearly better than expected ... it shows that the whole Nordic insurance market, and especially the Norwegian, is really profitable,” Handelsbanken analyst Matti Ahokas said.

“Storebrand was a little better than expected, but it is hard to evaluate exactly because of restructuring costs.” ($1 = 5.7370 Norwegian crowns) (Reporting by Victoria Klesty; Additional reporting by Camilla Knudsen and Vegard Botterli; Editing by Dan Lalor)

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