Jefferies sees Norwegian life insurers to benefit amid higher inflation

Gjensidige Forsikring ASA

31/10/2022 10:10

** Jefferies expects Norwegian life insurers to benefit from
higher returns, improving capital adequacy, while non-life
insurers may face margin compression and reserve headwinds amid
higher inflation  
    ** The broker expects the high level of inflation to be
prolonged, with the key difference between countries being the
extent to which central banks can hike rates to manage the cost
    ** It sees Norges Bank, the first major central bank to
raise rates, to continue hiking rates earlier, faster, and
higher than many of its peers
    ** The brokerage starts Storebrand  STB.OL  with "buy" and
Gjensidige Forsikring  GJFG.OL  with "underperform" expecting
inflation to reverse the market's long-held preference for
non-life
    ** Rising inflation poses a risk to the adequacy of reserves
for non-life insurers, as existing claims will cost more to
settle, compelling underwriters to pass on higher expected
claims costs to policyholders, Jefferies points out   
    ** On the other hand, life insurers, with their higher
relative exposure to investment returns, disproportionately
benefit from higher bond yields, it adds
 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))