Storebrand Livforsikring’s financial strength ‘BBB+’, Outlook Stable, says Fitch

Fitch Ratings has affirmed Norwegian life insurer Storebrand Livforsikring’s IFS (Insurer Financial Strength) rating of ‘BBB+’ , and IDR (Long-term Issuer Default Rating) of ‘BBB’.

The rating agency also affirmed Storebrand Livforsikring parent Storebrand ASA’s long-term IDR at ‘BBB-‘. The Livforsikring subordinated debt issues are rated at ‘BB+’ and Storebrand SA’s senior unsecured debt at ‘BB+’.

The agency said its ratings reflected financial resilience at Storebrand in 2011. The company has strong capital adequacy, healthy buffer reserves, and is operating in the context of a relatively sound Norwegian economy, Fitch said.

Reasons for not awarding the company stronger ratings included volatile results – group earnings fell last year, reducing net income to NOK681m (€91m) from NOK1.48bn (€198m) in 2010 – and expectations of continued depressed earnings.
Norwegians continue to live longer than predicted; Storebrand’s life business had to strengthen its longevity reserves by NOK1.1bn in 2011, and Fitch said further adjustments to reserves may have to be undertaken in future because of the rising longevity.

The group lowered its equity asset exposure compared to 2010, but it still remains relatively high, Fitch said.

“Storebrand Livforsikring’s ratings could be upgraded if the company manages to strengthen, on a sustainable basis, its buffer capital through additional statutory reserves to maintain an amount sufficient to cover one year of minimum guarantees (around NOK6bn). Other factors leading to a possible upgrade would include reduced sensitivity of earnings to changes in interest rates through better asset liability management, in particular in [its] SPP [business].”

Storebrand has around NOK70bn (€9.3bn) in assets under management in 46 funds in the Norwegian market via its Storebrand Fondene business, according to recent monthly figures published by the Norwegian Fund and Asset Management Association (Verdipapirfondenes forening).


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