Primary capital may consist of core (tier 1) capital and tier 2 capital.
Primary capital must at least equal the calculated capital requirement. The capital adequacy ratio is calculated by measuring the total primary capital in relation to the capital requirement of 8 per cent.
The core (tier 1) capital will be adjusted for the valuations that are used as the basis for credit calculations at a national level for foreign companies.
Issued hybrid tier 1 capital may account for 15 per cent of the core (tier 1) capital, while any amount exceeding 15 per cent may be included in the tier 2 capital.
capital, while dated subordinated loan capital cannot exceed 50 per cent of core (tier 1) capital. To be fully eligible as primary capital, the remaining term must be at least five years. If the remaining term is less, the eligible portion is reduced by 20 per cent per annum.
Solvency II, the size of the capital requirement will be determined by the amount of risk the company is exposed to.
reserves for the compensation of reported, but not yet settled claims.
Life insurance offering an investment choice, whereby the customer can influence the level of risk and return by selecting in which funds assets are to be invested. Applies to both individual policies and group defined contribution pensions.
Contracts with guaranteed payments for as long as the insured person lives. Alternatively, it can be agreed that the pension will end at a specified age.
Allocations to premium reserves for contractual liabilities shall, as a minimum, equal the difference between the capital value of the company’s future liabilities and the capital value of future net premiums (prospective calculation method).
The administration result is the difference between the premiums paid by customers pursuant to the tariff and the company’s actual operating costs.
Buffer capital consists of the market value adjustment reserve, additional statutory reserves and conditional bonuses.
For a more detailed description of the technical insurance reserves and accrual accounting for premiums and compensation, see note 1 accounting policies, pages 78-80.
The term "financial derivatives" embraces a wide range of financial instruments for which the current value and future price movements are determined by equities, bonds, foreign currencies or other traditional financial instruments. Derivatives require less capital than is the case for traditional financial instruments, such as equities and bonds, and are used as a flexible and cost-effective supplement to traditional instruments in portfolio management.
Stock futures contracts can be related to individual shares, but are normally related to stock market indices. Stock futures contracts are standardised futures contracts, which are exchange traded, and are subject to established clearing arrangements.
Profits and losses on futures contracts are recognised daily, and are settled on the following day.
This difference is settled at the start of the future interest period. FRA contracts are particularly appropriate for the management of short-term interest rate exposure.
Andreas (40): I save NOK 1,100 every month and will retire when I am 67. I can expect an additional pension of NOK 55,000 a year for 15 years.
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