Life and Pensions Norway (Storebrand Life Insurance)

Product Categories

The products offered by Storebrand Life and Pensions Norway cover all sections of the competitive retail and corporate markets in Norway. The actual products sold in the market have changed over time, both to match customers' needs and to comply with new regulations issued by the authorities.

From a financial perspective it is useful to divide the products into the following categories:

Traditional Products
This represents products with profit sharing and interest guarantees. This category contains a substantial proportion of Life and Pensions Norway's portfolio, namely the individual life annuity/pension, individual endowment insurance portfolio and paid-up policies (individual contracts that have left occupational pensions plans). The life insurance company's earnings are primarily generated by transferring a part of the products' annual investment result to the life company (profit sharing). Risk coverage (typically in the event of death or disability) is an integral part of the product.

Fee-based products with interest guarantees
This category covers the very important group defined benefit occupational pension product. This product used to be a traditional product with profit sharing, but became fee-based following changes to the law that came into effect at the start of 2008. New sales are concluded with lower interest guarantees than earlier contracts. Fee-based means that the life insurance company's earnings are based on fees that are billed upfront. Risk coverage (typically in the event of disability or mortality which leads to a spouse- and orphan pension) is an integral part of the product.

Unit linked and defined contribution pensions
This category represents fee-based and mutual fund-based products without interest guarantees. These products represent the new generation of pensions and savings products that are based on mutual funds as building blocks. Unit linked and defined contribution pension products have only been on the market for a relatively short period of time compared with the interest guarantee products described above. Volumes are consequently limited at the moment, but are growing substantially. The life insurance company's earnings are based on the asset management and administration fees paid by customers. Customers often buy risk coverage linked to the products.

Pure personal risk products
This category covers personal risk coverage without a savings element. The life insurance company offers a number of policies, typically for survivors in the event of death and disability coverage, but also among others payments in the event of injury, critical illness, a child's illness, accidents, etc. The coverage is designed as a lump sum. The life insurance company's earnings consist of the risk and administration premiums customers pay.

Life and Pensions Norway product overview
Insurance reserves as at 31.12.09



As the figure shows the largest proportion (90%) of Storebrand's Norwegian life insurance business involves guaranteed products. These are products in which the company has agreed a guaranteed benefit (pension) at some time in the future, and provides customers with an associated guaranteed annual return.

However, customers are increasingly choosing products without interest guarantees. The figure below illustrates the development of insurance reserves in Storebrand from 2005 to 2009.

Insurance reserves development per product area

Result Generation

The profit allocated to the life insurance company is generated through the above-mentioned product areas with different earnings structures and the return in the company portfolio, as well as profit from subsidiaries. This is summarized below.    

The life insurance company's result generation from the product areas
As the matrix below illustrates, the life company´s (owner) earnings consist of the different result elements linked to the various product groups.

The company portfolio result
The company portfolio consists of the life insurance company's equity, subordinated loan capital, and other net liability items. The company portfolio is established to provide the life insurance company with a capital base adequate to meet external and internal capital requirements, and as working capital for operations. The company capital is invested in the financial market in a separate portfolio that primarily consists of short-term fixed income securities. The net return on the company capital is generated from the return on the investments less the interest costs for subordinated loan capital and liabilities.

The subsidiaries' result
Storebrand Life Insurance owns subsidiaries that report on their own line in the financial statements. These include Storebrand Financial Advicing, Storebrand Pensions Systems and Actuary Systems.




For more information on result generation, please view our guide to result modelling.

Profit Allocated to Customers

Good results for customers are important to ensure competitiveness over time. The profit allocated to customers depends on developments in the financial markets and the profile customers have chosen for their investments. The profit allocated to the customers helps to finance the next year's premium payments or increase in pensions. The profit allocated to the customers is reported on a separate line in the profit and loss account for traditional products. The return on underlying funds/profiles represents the result for defined contribution plans and unit linked customers.