Nordic life insurers look set to enjoy
continued growth in, but market liberalisation and Solvency II
regulation, are likely to reshape the Nordic life sector, according
to a new report from Fitch Ratings.

In the first place, the ratings agency
predicts long-term profitable growth opportunities for the Nordic
life market due to the strong economic prospects, rising life
expectancy and  growing consumer awareness of the need for
occupational and private pensions to complement state welfare and
pensions.

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Fitch also warned that under the incoming
Solvency II regulation, life insurers will have to assess the
economic viability of offering traditional business with investment
guarantees as these will attract high capital charges.

The ratings agency said such products
still dominate the Nordic life market, and it believes that scale
and cost efficiencies will be critical for providers to remain
profitable.

As a result, Fitch expects a gradual
consolidation of traditional non-unit-linked life
insurers/portfolios in the region.

Bjorn Norrman, associate director at Fitch
Ratings, said: “Life insurance policies with investment guarantees
still account for two-thirds of premiums in the Nordic
region.”

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Scale matters

Norrman added: “Scale and cost
efficiencies will be paramount to long-term survival for insurers
offering this business, with consolidation likely as a
result.”

Overall, Fitch Ratings said there is a
continuing trend in the Nordic life market to place more
responsibility on individuals to actively manage their savings.
Linked to this is a trend towards market liberalisation, whereby
obstacles to pension transfers are gradually being
removed.

The report said: “This will increase
competition. In Fitch’s opinion, the ability to offer
straightforward and reliable advisory services will be an
increasingly important factor for life insurers looking to gain a
competitive advantage.”