KLP Group
Report for the fourth quarter of 2024
A good quarter rounds off a year of strong results in all business areas:
- 9.0 per cent return on the pension assets in the common portfolio, and 1.8 per cent in the fourth quarter.
- NOK 37.7 billion transferred to the customers’ premium fund.
- Customers’ buffer fund increased by NOK 13.9 billion.
- Record results from the banking business.
- Increased profits from non-life insurance.
- Significant increase in assets under management in securities funds.
- The solvency margin for the Group is 298 per cent
- Good pensions expertise and new, modern system solutions position KLP well to handle pension cases effectively and to advise members on pension matters when new and complicated rules for public-sector occupational pensions come into effect in 2025.
KLP – a customer-owned group with a 75-year history
15 February 2024 marked 75 years since the directors of the Union of Norwegian Cities (Norges Byforbund) and the Norwegian Association of Rural Municipalities (Norges Herredsforbund) decided to establish a joint local government pension fund, KLP. The aim was to establish a pension scheme for small municipalities with few employees. KLP has gradually expanded its offering in response to its owners’ wishes, and now provides services in the areas of non-life insurance, banking and asset management in addition to public-sector occupational pensions. We are now Norway’s largest pension company.
At the end of the fourth quarter of 2024, the Group had total assets of NOK 1,147 billion.
Public-sector occupational pensions
| NOK MILLIONS | Customers | Company | Total |
|---|---|---|---|
| Investment result | 50 765 | 325 | 51 090 |
| Risk result | 790 | 790 | |
| Interest guarantee premium | 14 | 14 | |
| Administration result | 77 | 77 | |
| Net income from investments in the corporate portfolio and other income/expenses in non-technical accounts | 1 752 | 1 752 | |
| Tax | -356 | -356 | |
| Other profit/loss elements | 329 | 329 | |
| Profit/loss after Q4 2024 | 51 555 | 2 142 | 53 697 |
| Profit/loss after Q4 2023 | 29 819 | -213 | 29 606 |
Investment result
KLP manages the pension capital that covers the entitlements that have been accrued. The pension capital is mainly managed in the common portfolio.
The pension money has to be paid out over many years, so part of this amount must be covered from the return on the pension capital (guaranteed return). KLP’s return guarantee amounted to NOK 14.1 billion in 2024. Actual financial income amounted to NOK 65.6 billion, a return of 9.0 per cent, so the investment result was NOK 50.8 (29.2) billion.
| Per cent | 31.12.2024 | 31.12.2023 |
|---|---|---|
| Return on the common portfolio | 9,0 % | 6,4 % |
| Return incl. value changes in hold-to-maturity bonds and lending | 8,7 % | 6,8 % |
| The returns figures apply to the common portfolio | ||
| Capital adequacy, Solvency II | 298 % | 285 % |
| Capital adequacy, Solvency II, with transitional measures | 298 % | 285 % |
Management of the common portfolio
The assets in the common portfolio totalled NOK 803.4 (734.3) billion:
| Assets | 31.12.2024 | 31.12.2023 | ||
|---|---|---|---|---|
| All figures in per cent | Proportion | Return | Proportion | Return |
| Equities | 35,1 % | 19,2 % | 31,6 % | 16,1 % |
| Short-term bonds | 26,5 % | 3,6 % | 28,6 % | 3,2 % |
| Long-term/HTM bonds | 12,9 % | 4,7 % | 13,3 % | -3,2 % |
| Lending | 11,0 % | 4,7 % | 11,3 % | 3,9 % |
| Property | 10,8 % | 4,1 % | 11,5 % | 5,8 % |
| Other financial assets | 3,7 % | 5,4 % | 3,6 % | 4,7 % |
Shares and alternative investments
Total exposure in shares and alternative investments, including equity derivatives, was 35.1 per cent at the end of the fourth quarter. The total return on shares and alternative investments was 3.5 per cent in the quarter. The return on KLP’s global exchange-listed equities was 3.7 per cent, while its Norwegian equity portfolio returned 1.8 per cent in the fourth quarter.
The currency hedging ratio for equities in developed markets and the most liquid currencies in emerging markets was between 40 and 60 per cent. In the fourth quarter, the Norwegian krone depreciated against the US dollar, among other currencies.
Short-term bonds and the money market
Short-term bonds accounted for 10.8 per cent and money-market instruments 3.7 per cent of the assets in the common portfolio at the end of the quarter. Long-term government rates in Norway and around the world rose in the fourth quarter. KLP’s global government bond index achieved a currency-hedged return of minus 1.2 per cent in the quarter, while the return on the Norwegian government bond index was minus 1.7 per cent. Global credit margins decreased during the quarter. The quarterly return on KLP’s global credit bond index was minus 1.8 per cent, while the return on the Norwegian bond index was minus 0.8 per cent. In total, short-term bonds achieved returns of minus 0.5 per cent in the fourth quarter. The money market return was 1.2 per cent for the quarter.
Long-term bonds
Investment in long-term bonds made up around 26.5 per cent of the common portfolio at the end of the quarter. Unrecognised decreases in value in the common portfolio amounted to NOK 10.5 billion at the end of the fourth quarter. The portfolio is well diversified and consists of securities issued by creditworthy borrowers. The return measured at amortised cost in this quarter was 0.9 per cent.
Property
Property investments, including Norwegian and international real estate funds, made up 12.9 per cent of the common portfolio.
Property investments in the common portfolio achieved a return of 2.2 per cent in the fourth quarter and 4.7 per cent in the year. The returns include currency hedging.
Lending
Lending in the common portfolio totals NOK 87.5 billion. This is split between NOK 77.9 billion in loans to the public sector, NOK 3.4 billion in secured mortgage loans and NOK 6.1 billion in loans outside Norway secured against mortgages or government guarantees. The lending portfolio is of high quality, with no losses on municipal loans and very modest provisions for losses on mortgage loans. Unrecognised decreases in value in the lending portfolio (fixed-interest loans) totalled NOK 1.1 billion at the end of the quarter. The return amounts to 1.2 per cent for the fourth quarter and 4.7 per cent for the whole of 2024.
Returns on the corporate portfolio
The corporate portfolio covers assets financed by owners’ equity and subordinated loans/hybrid Tier 1 and Tier 2 securities.
The corporate portfolio is managed with a moderate-risk long-term investment horizon, with the objective of stable returns. Investments in the corporate portfolio achieved a return of 1.3 per cent in the fourth quarter, and 4.8 per cent for the whole of 2024.
Risk result
The risk result is an expression of how mortality and disability have developed in the insured population in relation to the assumptions used in the annual setting of premiums. The risk result came to NOK 370 (284) million in the fourth quarter. For the whole of 2024, the risk result is NOK 790 (648) million.
The risk result for longevity and death will generally see small fluctuations from year to year, and the mortality tables are still felt to provide ample margins. The risk result for disability will normally show larger fluctuations from year to year.
The risk result for longevity and death totals of NOK 64 (292) million in the fourth quarter and NOK 795 (928) million for the whole year. In 2024, as of 2023, mortality rates have been higher than normal. In the Pension Scheme for Hospital Doctors, the tariffs were changed (for lower mortality) from 31.12.2023, and a positive risk result for longevity and death may be observed for 2024.
The risk result for disability is NOK 306 (-8) million in the fourth quarter, and NOK -5 (-280) million for the year as a whole. We have seen increased provisions for disability in 2024 too. There are two factors that affected disability provisions in both 2023 and 2024. Firstly, the disability provisions rose after KLP contacted NAV to investigate whether there were people receiving a disability pension from NAV who had not applied for one from KLP even though they have accrued rights with us. Encouraging these people to apply for a disability pension from KLP has led to a backlog of cases, which has affected the disability payments and provisions this year. There will be an annual check against NAV to prevent such a backlog of disability cases in the future, and people qualifying for a disability pension will receive what they are entitled to as quickly as possible. Secondly, disability levels have been high both in KLP's insured population base and in society as a whole since the pandemic.
Administration result
The difference between the cost elements within premium income, withdrawals from management reserves and insurance-related operating expenses constitutes the administration result. This shows a surplus of NOK 77 (144) million for 2024. Insurance-related operating costs came to NOK 1,693 (1,512) million in 2024.
Financial strength and capital-related matters
KLP’s total assets increased by NOK 76.8 billion in 2024 and amount to NOK 863.9 billion. The premium reserve increased by NOK 42.3 billion to NOK 615.8 billion in the same period.
The buffer fund amounts to NOK 123.2 billion after NOK 13.9 billion was allocated from this year’s profit. The fund can be used to cover any shortfall in returns on the pension capital and constitutes a financial buffer.
The annual profit/loss to the company was NOK 2,142 (-213) million, and it is proposed to allocate this to equity (contributions and retained earnings).
Without applying transitional rules, the Company’s solvency capital requirement (SCR) is 360 per cent. This is an increase of 9 percentage points in the quarter. Owners’ equity contributions and positive interim results are the main reason for the increased solvency margin.
KLP’s target is for capital adequacy to exceed 150 per cent. Solvency is well above this target and thus enables sound and stable management of customer funds in a multi-year perspective.
Premium income
Premium income excluding premium reserves received on transfers in amounted to NOK 60.9 (70.2) billion at the end of the fourth quarter. Of this, premiums related to the settlement of accrued pension rights amount to NOK 25.4 (40.1) billion.
Premium income totalled NOK 9.1 billion in the fourth quarter (10.3).
Claims/benefits
Pensions paid and other claims, excluding ceded premium reserves, amounted to NOK 27.8 (26.1) billion at the end of the fourth quarter. For the fourth quarter, the payments amounted to NOK 7.2 billion (6.8).
Other matters
The market situation for public-sector occupational pensions is stable. KLP places great emphasis on close consultation with its customers to further develop service concepts and online solutions with good pension guidance. Efforts have been made in recent years to renew and further develop our pension systems. All benefits now fall within the new system, which enhances the customer experience and provides valuable guidance to the individual employee, as well as immediate responses to most pension applications.
Storebrand has filed a complaint against Norway with the ESA, alleging that KLP is receiving unlawful state aid, and that Norwegian municipalities and health trusts have breached the rules on public procurement. The government has rejected both complaints. KLP has provided relevant information to shed light on the complaint cases when this has been requested. The complaints are still being processed by the ESA, and no formal action has been initiated on either of them. In both cases, as part of its information gathering, the ESA has made its preliminary assessments and asked for the government’s comments on these.
Non-life insurance
Operating profit before tax was NOK 386 (273) million at the end of the fourth quarter of 2024. The fourth quarter produced a profit of NOK 190 (18) million. The growth in profit in the quarter is mainly due to good performance from insurance operations and good financial results. Operating costs were as expected.
Premium income increased by NOK 253 million, or 10.1 per cent, in 2024, and amounts to NOK 2,758 million. The retail market shows growth of NOK 137 million, or 13.6 per cent, while the public-sector and corporate market shows growth of NOK 116 million, or 7.8 per cent. The moderate growth in the public-sector and corporate market is due mainly to a decrease in customers in some high-risk segments.
The insurance result (premiums minus claims paid) for events occurring in 2024 was NOK 441 million, up NOK 91 million on 2023. The main reasons for the improved result are
that 2023 had a greater proportion of costs related to natural events, and that premium rates increased in 2024. Reinsurance costs were also slightly lower in 2024 than in 2023. Over the last few years, insurance segments with long settlement periods have grown, while property insurance in the public-sector and corporate markets in particular has poor profitability.
One large claim was reported during the quarter, estimated at NOK 24 million. In 2024, there were four major property claims totalling NOK 193 million. None of these claims affects the company’s reinsurance programme. Reversal of previous years’ claims is still positive, and this year NOK 109 million has so far been taken to income, equivalent to 4.6 per cent of the reserves at the beginning of the year.
Key figures
| 31.12.2024 | 31.12.2023 | |
|---|---|---|
| Claims ratio | 77 % | 84 % |
| Reinsurance percentage | 6 % | 3 % |
| Cost ratio | 13 % | 14 % |
| Combined ratio | 97 % | 100 % |
Net financial income at 31.12.3024 was NOK 379.8 (313.3) million, representing a return of 6.2 (5.5) per cent.
The solvency margin (SCR) increased from 238 per cent in the second quarter to 256 per cent at the end of the fourth quarter of 2024. The equivalent SCR at the end of 2023 was 227 percent.
Asset and fund management
KLP Kapitalforvaltning AS provides securities management in the KLP Group. It had a total of NOK 879 billion under management at the end of the fourth quarter, NOK 238 billion of it on behalf of external customers.
Net new subscriptions to the KLP funds were NOK 3.1 billion in the fourth quarter. External customers had positive net new subscriptions of NOK 4.2 billion in the same period. Net new subscriptions to the KLP securities funds for the whole of 2024 amounted to NOK 15.7 billion, with a net gain of NOK 20 billion from customers external to the Group in the course of the year.
KLP Kapitalforvaltning made a profit before tax of NOK 102.8 million in 2024.
Bank
The KLP Banken Group finances mortgages and other credit to individual customers (retail market) as well as loans to municipalities, county municipalities and companies that provide public services (public-sector market). The Bank’s lending business is financed by deposits from private customers and companies, loans from the securities market and owners’ equity. The Bank also manages a substantial volume of lending financed by pension assets in KLP.
The KLP Banken Group had a pre-tax operating profit of NOK 70.7 (82.3) million at the end of the fourth quarter. The KLP Banken Group’s operating profit before tax for 2024 was NOK 325.4 (285.4) million, which is the highest in the Bank's history. The change is mainly related to increased net interest income.
Broken down by area, profits were NOK 251.7 (199.4) million in the retail market and NOK 73.7 (86.0) million in the public-sector market.
Persistent high interest rates through 2024 contributed to increased earnings on the part of the Bank’s lending which is financed with equity. Average lending margins in the retail market have also increased slightly from last year. The Bank’s operating income, in the form of net interest income, was NOK 520.2 (464.7) million at the end of the fourth quarter.
At the end of the quarter, the income statement includes a net loss on changes in the value of financial instruments of NOK 7.0 (gain of 2.5) million. The main reason for the fall from last year is that changes in value on liquid investments produced lower income.
Operating expenses and depreciation amounted to NOK -282.7 (-270.1) million as of the fourth quarter.
Losses and loss provisions in the retail market taken to profit/loss total NOK -1.0 (-0.9) million in 2024. The high interest rates have not so far resulted in a significant increase in mortgage losses, but could lead to a reduction in borrowers’ ability to repay their loans in the longer term . Nor have we experienced any losses related to public-sector lending in 2024.
KLP Banken manages lending on its own account and loans financed by KLP totalling NOK 130 (125) billion. On its own balance sheet, the KLP Banken Group had loans to customers totalling NOK 42.8 (42.9) billion at 31 December 2024. Mortgage loans in the retail market and public-sector loans totalled NOK 24.1 (23.9) billion and 18.7 (19.0) billion respectively.
The KLP Banken Group manages NOK 3.4 (2.8) billion in mortgage loans and NOK 84.1 (79.3) billion in loans to public-sector borrowers and other businesses on behalf of KLP. The Bank’s mortgage products are aimed at the target group of members of the KLP pension schemes. Total net mortgage growth in 2024 was NOK 945 (432) million.
Lending volume to the public-sector market on KLP Banken’s balance sheet decreased by NOK 0.3 (0.2) billion in 2024. Loans to public-sector borrowers managed on behalf of KLP increased by NOK 3.4 (3.3) billion. New payments of public-sector loans in 2024 amount to NOK 12.0 (8.1) billion for KLP and KLP Banken together.
The KLP Banken Group’s external financing consists of deposits and bonds. At the time of reporting, deposits from individuals and businesses amounted to NOK 15.8 (14.4) billion. This represents a growth in deposits of NOK 1.7 billion, or 12.4 per cent. Fixed-rate deposits in the retail market were launched in April and made an important contribution to this growth. This is a result of the Bank’s commitment to attractive deposit products and resulted in a growth in retail customers of 10 per cent in 2024.
Group
KLP is a mutual insurance company which produces consolidated financial statements in accordance with IFRS Accounting Standards®. These accounting rules reflect the fact that, as a mutual insurance company where all value creation in KLP accrues to policyholders and is posted as a liability to them. The liability to policyholders is made up of the discounted value of future insurance payments, the risk adjustment for non-financial risk, and a remainder (“residual value”) which is any additional capital beyond what we expect to pay out in agreed benefits on the insurance contracts. The Group therefore has no profits or equity. However, some technical equity may still arise if assets or liabilities have been measured at anything other than fair value in the balance sheet, as the liability to policyholders is based on the fair value of net assets. The equity will then represent the difference between book value and fair value, and the change in the measurement difference will be posted as a net gain/loss. Changes in measurement differences amounted to NOK -710 million in the fourth quarter and NOK -163 million in 2024. Equity totals NOK -3,303 million, representing unrecognised increases in the value of the Group’s assets.
The Group achieved net investment income of NOK 10.9 billion (27,181 million) in the fourth quarter, and NOK 66,598 (NOK 47,480) million so far this year. This is sufficient to fund the growth in the best estimate of the liabilities and the change in risk adjustment and also to increase the residual value as shown in the table below.
| Change in Q4 2024 | 30.09.2024 | Change taken to profit/loss | Cash flows posted directly to the balance sheet | 31.12.2024 |
|---|---|---|---|---|
| Best estimate of insurance liability | 414 886 | -230 | -166 | 414 490 |
| Risk adjustment | 32 338 | -3 035 | - | 29 303 |
| Residual value | 381 490 | 14 330 | - | 395 820 |
| Total insurance liability | 828 714 | 11 065 | -166 | 839 613 |
| Change in 2024 | 01.01.2024 | Change taken to profit/loss | Cash flows posted directly to the balance sheet | 31.12.2024 |
|---|---|---|---|---|
| Best estimate of insurance liability | 381 006 | 25 258 | 8 226 | 414 490 |
| Risk adjustment | 29 196 | 107 000 | - | 29 303 |
| Residual value | 355 979 | 39 841 | - | 395 820 |
| Total insurance liability | 766 181 | 65 206 | 8 226 | 839 613 |
Sustainability
Climate-friendly investments
KLP is the first company in Norway to have had its climate estimates approved according to the SBTi’s new standard for financial institutions. The approval from the SBTi provides direction and credibility in our efforts to reduce greenhouse gas emissions and support a sustainable transition.
The goal is net zero emissions by 2050, with interim targets for 2030, 2035 and 2040. By 2030, 55 per cent of investments and loans should have SBTi-validated climate targets, and greenhouse gas emissions from the property portfolio should be reduced by 37 per cent per square metre. Direct emissions from operations will be halved, and from 2024 onwards, we have used 100 percent renewable electricity. An important measure to achieve KLP’s climate goal of net zero emissions is to increase climate-friendly investments. We will therefore invest NOK 30 billion a year in companies with ambitious climate change plans, and continue to increase climate-friendly investments by another NOK 6 billion.
Climate-friendly investments are investments that contribute directly to emission reductions, or otherwise contribute to the green transition. KLP’s climate-friendly investments have accumulated over time, and accounted for 12.3 per cent of its financial assets at the end of the fourth quarter. In the fourth quarter alone, these investments increased by around NOK 4 billion. This increase is mainly due to investments in a number of mutual funds which invest in renewable energy around the world, and green bonds in Norway.
| NOK MILLIONS | Q4/2024 | 31.12.2024 | 31.12.2023 |
|---|---|---|---|
| Amount invested | Fair value | ||
| Zero-emission investments | 2 351 | 53 785 | 39 035 |
| As a share of KLP’s investments | 0,0 % | 6,3 % | 5,0 % |
| Renewable energy | 2 351 | 50 945 | 36 438 |
| As a share of KLP’s investments | 0,0 % | 6,0 % | 4,7 % |
| of which: renewable energy in Norway | 742 | 28 095 | 19 543 |
| of which: renewable energy abroad | 1 304 | 19 821 | 15 325 |
| of which: renewable energy in developing countries | 305 | 3 028 | 1 569 |
| Sustainable forests | 0 | 2 840 | 2 597 |
| Transitional financing | 1 715 | 51 721 | 45 134 |
| As a share of KLP’s investments | 0,0 % | 6,1 % | 5,8 % |
| Green buildings in the property portfolio | 0 | 26 396 | 25 420 |
| Green buildings via mutual funds and bonds | 13 | 2 533 | 2 509 |
| Green loans | 1 100 | 13 855 | 9 703 |
| Green bonds | 360 | 4 642 | 3 737 |
| Sustainable infrastructure | 242 | 4 295 | 3 764 |
| Total climate-friendly investments | 4 066 | 105 506 | 84 169 |
| As a share of KLP’s investments | 0,0 % | 12,3 % | 10,8 % |
| Fossil energy | 0 | 13 385 | 16 872 |
| As a share of KLP’s investments | 0 % | 1,6 % | 2,2 % |
Active ownership
In the fourth quarter, KLP has been active in giving talks and participating in panel discussions on the topics of human rights in war and conflict situations and the related due diligence assessments, climate change, labour rights and biodiversity. It is important for us to be visible and participate in various forums where these topics are discussed, because this helps to promote our point of view and raise awareness of important sustainability topics.
KLP has initiated 85 company dialogues with ESG as a theme in this quarter (total 255 this year). We have focused most strongly on gender balance on boards, and on human and labour rights. The dialogues are part of our efforts to promote greater representation of women on boards, and to reduce the risk of our portfolio companies contributing to violations of human and labour rights. Dialogue is a tool which is time-consuming and takes time to produce results. In 2024, we saw that dialogues we held in previous years were a factor in Volkswagen selling its business in the Xinjiang region, for example. This is a region known for a high risk of forced labour.
KLP voted at 8,254 general meetings in 2024, 1,003 of them in the fourth quarter. The results from voting can be seen over time. Since we voted against the boards of over 60 companies in 2023 because of climate and natural risks, four companies (including Amazon and Kraft Heinz) have improved their deforestation policies, 13 companies (including Stellantis and Honda) have improved their climate change plans, and several Norwegian companies (including Protector Forsikring and Tomra Systems) have improved their remuneration reports.
Changes in the Board of Directors
Egil Matsen stepped down from the Board in the third quarter. At the corporate assembly on 14 November, Torkild Sindre Varran was elected as a new Board member.
Future prospects
KLP is preparing for the introduction of new rules for public-sector occupational pensions in 2025, which provide increased flexibility and incentives for working longer. As manpower shortages are a major challenge for KLP’s customers, the company will continue its work on guidance and digital solutions to support members in their pension choices and show the value of remaining at work for longer.
Increased digitisation and collaboration between pension providers ensures more efficient processes and better data quality. KLP invests in new technologies, including artificial intelligence and cloud-based solutions, to improve services, increase security and reduce costs.
Financial stability is a priority, and solid buffers provide for good management of the pension assets. KLP will also continue its work on sustainable investments and further development of financial services for the public sector, for the benefit of customers and members.
| Oslo, 14 February 2025 | ||
|---|---|---|
| The Board of Directors of Kommunal Landspensjonskasse gjensidig forsikringsselskap | ||
Tine Sundtoft Chair | Terje Rootwelt Deputy Chair | Odd Haldgeir Larsen . |
| Kjerstin Fyllingen | Torkild Sinner Varran | Eli Arnstad |
Vibeke Heldal Elected by and from among the employees | Erling Bendiksen Elected by and from among the employees | |
Sverre Thornes CEO | ||
| Document signed electronically | ||
Income statement
KLP Group
| NOTE | NOK MILLIONS | Q4 2024 | Q4 2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 |
|---|---|---|---|---|---|
| 3, 5 | Insurance service result | 453 | - 999 | - 1 620 | - 2 277 |
| Net income from investments measured at fair value with changes in profit and loss | 15 818 | 37 571 | 99 618 | 76 494 | |
| 4 | Fair value adjustment investment properties and rental income | 2 239 | -90 | 5 011 | -2 547 |
| Net income from associated companies and joint ventures | 71 | 253 | -38 | 504 | |
| Interest income, effective interest method | 620 | 613 | 2 481 | 2 117 | |
| Interest expenses, effective interest method | -570 | -528 | -2 187 | -1 803 | |
| Unit holder's value change in consolidated securites funds | -7 312 | -10 638 | -38 287 | -27 286 | |
| Total net income | 10 867 | 27 181 | 66 598 | 47 480 | |
| Policyholder's share of changes in fair value of underlying items | -11 527 | -25 595 | -63 663 | -44 179 | |
| Other insurance related financial cost | 3 | -44 | -84 | -42 | |
| 5 | Net insurance related financial cost | -11 524 | -25 639 | -63 747 | -44 221 |
| Net insurance services and financial result | -203 | 544 | 1 231 | 982 | |
| 6 | Net costs subordinated loan and hybrid Tier 1 securities | -1 | -57 | -451 | -463 |
| Operating expenses | -218 | -209 | -808 | -773 | |
| Other Income and -expenses | 1 | 30 | -34 | 0 | |
| Pre-tax income | -421 | 307 | -61 | -254 | |
| Cost of taxes | -359 | 0 | -1 634 | -1 031 | |
| Income | -780 | 307 | -1 695 | -1 285 | |
| 12 | Change in actuarial asumptions own emplyees | 224 | -496 | 442 | -146 |
| Tax on items that will not be reclassified to profit or loss | -38 | 77 | -72 | 22 | |
| Items that will not be reclassified to profit or loss | 186 | -419 | 370 | -125 | |
| Fair value adjustment of properties for own use | 23 | -56 | 49 | -308 | |
| 4 | Translation difference foreign exchange | -133 | 566 | 1 124 | 2 139 |
| Tax on items that will be reclassified to profit or loss | -6 | 14 | -12 | 77 | |
| Items that will be reclassified to profit or loss | -115 | 524 | 1 161 | 1 908 | |
| Total other comprehensive income | 71 | 105 | 1 531 | 1 784 | |
| Total comprehensive income | -710 | 412 | -163 | 499 |
Financial position statement KLP Group
| NOTE | NOK MILLIONS | 31.12.2024 | 31.12.2023 |
|---|---|---|---|
| Deferred tax assets | 40 | 48 | |
| Intangible assets | 1 551 | 1 379 | |
| Tangible fixed assets | 2 312 | 2 277 | |
| Investments in associated companies and joint venture | 6 820 | 6 620 | |
| 4, 9 | Investment property | 98 889 | 92 322 |
| 5 | Reinsurance contract assets | 510 | 728 |
| 7, 9 | Equities and fund units | 477 165 | 354 757 |
| 7, 9 | Fixed income securitites at fair value through profit or loss | 419 077 | 410 807 |
| 7 | Fixed income securitites at amortized costs | 2 334 | 2 254 |
| 7, 9 | Lending customers at fair value through profit or loss | 87 092 | 81 141 |
| 7 | Lending customers at amortized costs | 42 836 | 42 856 |
| 7, 9 | Financial derivatives | 1 469 | 15 587 |
| 7 | Receivables | 3 534 | 2 433 |
| Cash and bank deposits | 3 762 | 3 509 | |
| TOTAL ASSETS | 1 147 389 | 1 016 719 | |
| 7, 8 | Hybrid Tier 1 securities | 1 429 | 1 434 |
| 7, 8 | Subordinated loan capital | 3 560 | 3 327 |
| 12 | Pension obligations | 543 | 913 |
| 5 | Insurance obligations | 839 613 | 766 181 |
| 7, 8 | Covered bonds issued | 31 529 | 30 504 |
| 7, 8 | Debt to credit institutions | 1 395 | 13 041 |
| 7, 8 | Liabilities to and deposits from customers | 15 801 | 14 060 |
| 7 | Financial derivatives | 11 304 | 3 249 |
| Deferred tax liabilites | 1 213 | 1 187 | |
| 13 | Other current liabilities | 5 427 | 6 034 |
| Equity | -3 303 | -3 140 | |
| Unit holders`s interest in consolidated securites funds | 238 879 | 179 929 | |
| TOTAL EQUITY AND LIABILITIES | 1 147 389 | 1 016 719 |
Changes in owners’ equity KLP Group
NOK MILLIONS | 2024 | 2023 |
|---|---|---|
| Owners’ equity 31 December | - 3 140 | 8 396 |
| Change of principle 01.01., IFRS 9 | 0 | -12 035 |
| Owners’ equity 1 January | - 3 140 | -3 639 |
| Income | - 1 695 | -1 284 |
| Other comprehensive income | 1 531 | 1 784 |
| Total comprehensive income | - 163 | 499 |
| Owners’ equity 31 December | - 3 303 | -3 140 |
Statement of cashflowKLP Group
| NOK MILLIONS | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 |
|---|---|---|
| Net cash flow from operational activities | -14 348 | -19 182 |
| Net cash flow from investment activities 1 | -400 | -470 |
| Net cash flow from financing activities 2 | 15 000 | 19 840 |
| Net changes in cash and bank deposits | 252 | 188 |
| Holdings of cash and bank deposits at start of period | 3 509 | 3 321 |
| Holdings of cash and bank deposits at end of period | 3 762 | 3 509 |
| 1 Payments on the purchase of tangible fixed assets. | ||
| 2 Net receipts of owners’ equity contribution, rising of new loans and repayment of debt, in addition to payments from unit holders in consolidated security funds. | ||
Notes to the financial statementKLP Group
Note 1 Accounting principles –and estimates
Accounting principles
The financial statements in this interim report show the Kommunal Landspensjonskasse (KLP) group financial statements financial statements for the period 01.01.2024 – 31.12.2024. The accounts have not been audited.
The consolidated financial statements for KLP have been prepared in accordance with IFRS® accounting standards, as approved by the EU, with additions set out in the Norwegian Regulations on annual accounts for insurance companies. The part of the interim report that relates to the Group financial statements has been prepared in accordance with IAS 34 Interim financial Reporting.
All amounts are presented in NOK millions without decimals unless indicated otherwise.
No other changes have been made to the accounting principles that affect the interim financial statements as of 31.12.2024. Refer to the Group’s annual report for 2023 for a more detailed description of accounting principles.
The interim financial statements do not contain all the information required for complete annual financial statements, and this interim report should be read in conjunction with the annual financial statements for 2023. The annual report can be retrieved from www.klp.no.
Changes in IFRS® Accounting Standards
A new accounting standard for presentation and disclosures in financial statements, IFRS 18, has been published by the IASB in April 2024. This new standard will replace IAS 1 Presentation of Financial Statements. If endorsed by the EU, the standard will be effective for annual reporting periods beginning on or after 1 January 2027. IFRS 18 is not expected to have a significant impact on the group's financial reporting. KLP does not plan to early implement the standard.
Accounting estimates
In preparing the interim financial statements, we have exercised discretion and used estimates and assumptions that affect the accounting figures. Actual figures may differ from the estimates used.
The measurement of insurance contracts under IFRS 17 uses a number of new parameters that are fraught with considerable uncertainty. The most important for the various business areas are:
Life insurance activities
- All cash flows arising from the insurance contracts that are within the contract limit are included in the measurement of the insurance contract. Future cash flows are calculated using assumptions of future annual wage growth/adjustment derived from a projection of the NAM (Norwegian Aggregate Model). The model produces a macro projection of key economic variables year by year based on the economic situation at the measurement date.
- The cash flow calculations use best estimates of mortality and disability.
- The cash flows are discounted with an interest rate curve that takes account of the time value of money and any financial risk that is not included in the estimated cash flows. The interest rate curve is based on the EIOPA interest rate curve with an illiquidity mark-up.
- The risk adjustment for non-financial risk is based on the risk appetite in the life insurance business and a 98 % confidence level and amounts to 8.4 % of the insurance liability in 2024.
Non-life insurance activities
- The claims provisions are estimated from the company’s historical payment patterns.
- The claims provisions are discounted with an interest rate curve that takes account of the time value of money and any financial risk that is not included in the estimated payments. The interest rate curve is based on the EIOPA interest rate curve with an illiquidity mark-up.
Insurance income under IFRS 17 corresponds to pro-rata premiums earned, adjusted for seasonal variations.
- Seasonal variations are estimated from the historical variation in the company’s history of claims received through the year.
The risk adjustment is derived from the company’s risk appetite. The risk adjustment represents an addition to technical provisions so there is a 75 % probability that they will be sufficient to cover all insurance obligations. The risk adjustment for non-financial risk is based on the risk appetite in the non-life insurance business and a 75 % confidence level and amounts to 4.1 % of the net insurance liability in 2024.
Note 2 Segment information
| NOK MILLIONS | Group pensions pub. sect. & group life | Non-life insurance | Banking | Asset management | Other and eliminiations | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 | |
| Result from insurance services | 0 | 0 | 88 | -9 | 0 | 0 | 0 | 0 | -1 708 | -2 268 | -1 620 | -2 277 |
| Premium income for own account | 60 883 | 70 326 | 0 | 0 | 0 | 0 | 0 | 0 | -60 883 | -70 326 | 0 | 0 |
| Net financial income from investments | 65 570 | 42 712 | 380 | 313 | 514 | 468 | 29 | 23 | 38 393 | 31 250 | 104 885 | 74 766 |
| Claims for own account | -30 200 | -28 261 | 0 | 0 | 0 | 0 | 0 | 0 | 30 200 | 28 261 | 0 | 0 |
| Insurance provisions for own account | -94 146 | -84 315 | 0 | 0 | 0 | 0 | 0 | 0 | 94 146 | 84 315 | 0 | 0 |
| Policyholder's share of changes in fair value of underlying items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -63 663 | -44 179 | -63 663 | -44 179 |
| Other insurance related financial cost | 0 | 0 | -84 | -42 | 0 | 0 | 0 | 0 | 0 | 0 | -84 | -42 |
| Unit holder's value change in consolidated security funds | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -38 287 | -27 286 | -38 287 | -27 286 |
| Net insurance services and financial result | 2 107 | 462 | 384 | 263 | 514 | 468 | 29 | 23 | -1 803 | -232 | 1 231 | 982 |
| Net financial income from investments in companys portefolio | 2 143 | 1 282 | 0 | 0 | 0 | 0 | 0 | 0 | -2 143 | -1 282 | 0 | 0 |
| Net costs subordinated loan and hybrid Tier 1 securities | -382 | -443 | 0 | 0 | 0 | 0 | 0 | 0 | -69 | -20 | -451 | -463 |
| Operating expenses | -1 693 | -1 512 | 0 | 0 | -280 | -268 | -520 | -528 | 1 686 | 1 536 | -808 | -773 |
| Other income and expenses | -6 | 192 | 2 | 10 | 92 | 85 | 593 | 560 | -714 | -848 | -34 | 0 |
| Pre-tax income | 2 169 | -20 | 386 | 273 | 325 | 285 | 103 | 55 | -2 324 | -286 | -61 | -253 |
| Cost of taxes | -356 | -82 | -61 | -37 | -10 | -19 | -24 | -12 | -1 182 | -881 | -1 634 | -1 031 |
| Income | 1 812 | -101 | 325 | 235 | 315 | 267 | 79 | 42 | -3 507 | -1 167 | -1 695 | -1 285 |
| Total other comprehensive income | 329 | -111 | 36 | -10 | 17 | -10 | 31 | -14 | 1 118 | 1 929 | 1 531 | 1 784 |
| Total comprehensive income | 2 142 | -213 | 361 | 225 | 332 | 257 | 110 | 29 | -2 389 | 762 | -163 | 499 |
| Lending | 106 343 | 103 989 | 0 | 0 | 44 033 | 44 434 | 0 | 0 | -20 449 | -24 426 | 129 927 | 123 997 |
| Other assets | 757 603 | 683 178 | 6 712 | 6 559 | 7 770 | 4 494 | 775 | 682 | 244 603 | 197 809 | 1 017 462 | 892 722 |
| Total assets | 863 946 | 787 167 | 6 712 | 6 559 | 51 803 | 48 928 | 775 | 682 | 224 154 | 173 373 | 1 147 389 | 1 016 719 |
| Insurance liabilites | 803 036 | 725 781 | 3 294 | 3 392 | 0 | 0 | 0 | 0 | 33 283 | 37 009 | 839 613 | 766 181 |
| Other liabilities | 13 675 | 17 541 | 464 | 573 | 48 364 | 45 754 | 282 | 260 | 248 295 | 189 549 | 311 080 | 253 678 |
| Total liabilities | 816 712 | 743 322 | 3 757 | 3 965 | 48 364 | 45 754 | 282 | 260 | 281 578 | 226 556 | 1 150 693 | 1 019 859 |
The KLP Group’s business is divided into the five areas: Group pensions public sector & group life, non-life insurance, banking, asset management and other. All business is directed towards customers in Norway.
PUBLIC SECTOR OCCUPATIONAL PENSION AND GROUP LIFE
Kommunal Landspensjonskasse offers group public sector occupational pensions. This segment is followed up according to NGAAP, which deviates from the IFRS Accounting Standards used in the group. Adjustments have therefore been entered in the elimination column to make the total reconcileable to the consolidated accounts.
NON-LIFE INSURANCE
KLP Skadeforsikring AS offers property and personal injury products to employers within the public and private sectors. In addition, a broad specter of standard insurance products is offered to the the retail market.
BANKING
KLP’s banking business embraces the companies KLP Banken AS and its wholly-owned subsidiaries: KLP Kommunekreditt AS and KLP Boligkreditt AS. The banking business covers services such as deposits and lending to the retail market, credit cards, as well as lending with public sector guarantee.
ASSET MANAGEMENT
Asset management is offered from the company KLP Kapitalforvaltning AS. The company offers a broad selection of securities mutual funds both to retail customers and to institutional customers. The securities management has a socially responsible profile.
OTHER
Other segments comprise KLP Forsikringsservice AS which offers a broad specter of services to local authority pension funds.
Note 3 Insurance service result
| NOK MILLIONS | Q4 2024 | Q4 2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 |
|---|---|---|---|---|
| Insurance income | 1 565 | 144 | 2 788 | 1 780 |
| Insurance service expenses | -1 105 | -1 159 | -4 230 | -3 986 |
| Reinsurance income (+)/ cost (-) | -7 | 17 | -178 | -71 |
| Insurance service result | 453 | -999 | -1 620 | -2 277 |
Note 4 Investment property
| NOK MILLIONS | Q4 2024 | Q4 2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 |
|---|---|---|---|---|
| Net rental income | 1 069 | 1 011 | 4 314 | 3 873 |
| Net value adjustment | 1 170 | -1 102 | 697 | -6 420 |
| Net income from investment properties | 2 239 | -90 | 5 011 | -2 547 |
| Translation difference foreign exchange (taken to other comprehensive income) | -133 | 566 | 1 124 | 2 139 |
| Net income from investment properties translation difference foreign exchange | 2 107 | 476 | 6 135 | -407 |
| NOK MILLIONS | 31.12.2024 | 31.12.2023 |
|---|---|---|
| Investment property 01.01. | 92 322 | 93 992 |
| Value adjustment, including translation difference foreign exchange | 1 821 | - 4 280 |
| Net additions | 4 749 | 2 653 |
| Reclassified property for own use | - 5 | 0 |
| Other changes | 2 | - 42 |
| Book value | 98 889 | 92 322 |
Note 5 Technical provisions
| NOK MILLIONS | 2024 | 2023 |
|---|---|---|
| Life insurance contracts | 836 319 | 762 789 |
| Non-life insurance contracts | 3 294 | 3 392 |
| Insurance obligations | 839 613 | 766 181 |
| NOK MILLIONS | Estimates of present value of future cash flows | Risk adjustment for non financial risk | Residual value | Total |
|---|---|---|---|---|
| Life insurance contracts 1 January 2024 | 377 742 | 29 068 | 355 979 | 762 789 |
| Changes that realte to current services | ||||
| Change in risk adjustment for non-financial risk for risk expired | 0 | 1 782 | 0 | 1 782 |
| Experience adjustment not related to future service | -73 | 0 | 0 | -73 |
| Insurance service result | -73 | 1 782 | 0 | 1 708 |
| Change in risk adjustment for non-financial risk at the start of the period | 0 | -924 | 924 | 0 |
| Accured interest | 16 492 | 1 386 | -17 878 | 0 |
| Released cash flows | -4 983 | 0 | 0 | -4 983 |
| Changes in estimates related to future service | 3 076 | 258 | -3 335 | 0 |
| Change due to changes in discount curve | -28 425 | -2 388 | 30 813 | 0 |
| Result addes to policyholders | 39 330 | 0 | 29 316 | 68 645 |
| Insurance related financial cost | 25 490 | -1 668 | 39 841 | 63 663 |
| Premium | 38 869 | 0 | 0 | 38 869 |
| Claims and other insurance service expenses (incl. Investmentcomponents) | -30 710 | 0 | 0 | -30 710 |
| Total cash flows | 8 159 | 0 | 0 | 8 159 |
| Life insurance contracts 31 December 2024 | 411 318 | 29 181 | 395 820 | 836 319 |
| NOK MILLIONS | Liability for incurred claims (LIC) | Liabilities for remaining coverage | Total | |
|---|---|---|---|---|
| Estimates of present value of future cash flows | Risk adjustment for non financial risk | |||
| Non-life insurance contracts 1 January 2024 | 2 944 | 128 | 320 | 3 392 |
| Insurance income | 0 | 0 | -2 758 | -2 758 |
| Claims | 2 098 | 84 | 0 | 2 182 |
| Expenses | 535 | 7 | 0 | 541 |
| Other movements realted to current service | 0 | -45 | 0 | -45 |
| Changes that relate to past service | -136 | -51 | 0 | 0 |
| Insurance service expenses | 2 497 | -5 | 0 | 2 492 |
| Insurance service result | 2 497 | -5 | -2 758 | -266 |
| Insurance related financial cost | 103 | -1 | 0 | 101 |
| Premium | 0 | 0 | 2 777 | 2 777 |
| Claims and other insurance service expenses | -2 741 | 0 | 0 | -2 741 |
| Total cash flows | -2 741 | 0 | 2 777 | 36 |
| Other changes | 5 | 0 | 26 | 32 |
| Non-life insurance contracts 31 December 2024 | 2 808 | 121 | 364 | 3 294 |
| NOK MILLIONS | Liability for incurred claims (LIC) | Liabilities for remaining coverage | Total | |
|---|---|---|---|---|
| Estimates of present value of future cash flows | Risk adjustment for non financial risk | |||
| Reinsurance contracts assets 1 January 2024 | 699 | 39 | -10 | 728 |
| Premium paid - reinsurance | 0 | 0 | -136 | -136 |
| Reinsurance expenses -related to past service | -23 | -19 | 0 | -42 |
| Insurance service expenses | -23 | -19 | 0 | -42 |
| Insurance service result | -23 | -19 | -136 | -178 |
| Insurance related financial cost | 19 | -1 | 0 | 17 |
| Premium | -342 | 0 | 143 | -199 |
| Total cash flows | -342 | 0 | 143 | -199 |
| Other changes | 141 | 0 | 0 | 141 |
| Reinsurance contracts assets 31 December 2024 | 494 | 18 | -3 | 510 |
| NOK MILLIONS | Life insurance contracts | Non-life insurance contracts | Reinsurance | Total |
|---|---|---|---|---|
| Specification of profit or loss items per product group 01.01.-31.12.2024 | ||||
| Insurance service result | -1 708 | 266 | -178 | -1 620 |
| Net insurance related financial cost | -63 663 | -101 | 17 | -63 747 |
| NOK MILLIONS | Estimates of present value of future cash flows | Risk adjustment for non financial risk | Residual value | Total |
|---|---|---|---|---|
| Life insurance contracts 1 January 2023 | 322 226 | 27 304 | 337 305 | 686 834 |
| Changes that realte to current services | ||||
| Change in risk adjustment for non-financial risk for risk expired | 0 | 2 321 | 0 | 2 321 |
| Experience adjustment not related to future service | -53 | 0 | 0 | -53 |
| Insurance service result | -53 | 2 321 | 0 | 2 268 |
| Change in risk adjustment for non-financial risk at the start of the period | 0 | -2 257 | 2 257 | 0 |
| Accured interest | 12 553 | 1 089 | -13 643 | 0 |
| Released cash flows | -15 978 | 0 | 0 | -15 978 |
| Changes in estimates related to future service | -2 558 | -222 | 2 780 | 0 |
| Change due to changes in discount curve | 9 599 | 833 | -10 432 | 0 |
| Result addes to policyholders' residual value | 22 526 | 0 | 37 631 | 60 158 |
| Insurance related financial cost | 26 143 | -557 | 18 594 | 44 179 |
| Premium | 57 921 | 0 | 0 | 57 921 |
| Claims and other insurance service expenses (incl. Investmentcomponents) | -28 494 | 0 | 0 | -28 494 |
| Total cash flows | 29 426 | 0 | 0 | 29 426 |
| Other changes | 0 | 0 | 81 | 81 |
| Life insurance contracts 31 December 2023 | 377 742 | 29 068 | 355 979 | 762 789 |
| NOK MILLIONS | Liability for incurred claims (LIC) | Liabilities for remaining coverage | Total | |
|---|---|---|---|---|
| Estimates of present value of future cash flows | Risk adjustment for non financial risk | |||
| Non-life insurance contracts 1 January 2023 | 2 790 | 115 | 276 | 3 181 |
| Insurance income | 0 | 0 | -2 505 | -2 505 |
| Claims | 2 043 | 83 | 0 | 2 126 |
| Expenses | 510 | 6 | 0 | 516 |
| Other movements realted to current service | 0 | -40 | 0 | -40 |
| Changes that relate to past service | -118 | -41 | 0 | -158 |
| Insurance service expenses | 2 435 | 9 | 0 | 2 444 |
| Insurance service result | 2 435 | 9 | -2 505 | -62 |
| Insurance related financial cost | 62 | 5 | 0 | 66 |
| Premium | 0 | 0 | 2 551 | 2 551 |
| Claims and other insurance service expenses | -2 334 | 0 | 0 | -2 334 |
| Total cash flows | -1 983 | 0 | 2 551 | 568 |
| Other changes | -8 | 0 | -2 | -10 |
| Non-life insurance contracts 31 December | 2 944 | 128 | 320 | 3 392 |
| NOK MILLIONS | Liability for incurred claims (LIC) | Liabilities for remaining coverage | Total | |
|---|---|---|---|---|
| Estimates of present value of future cash flows | Risk adjustment for non financial risk | |||
| Reinsurance contracts assets 1 January 2023 | 705 | 30 | 0 | 736 |
| Premium paid - reinsurance | 0 | 0 | -164 | -164 |
| Recoveries of incurred claims and other insurance service expenses | 137 | 8 | 0 | 145 |
| Reinsurance expenses -related to past service | -44 | -8 | 0 | -52 |
| Insurance service expenses | 93 | 0 | 0 | 93 |
| Insurance service result | 93 | 0 | -164 | -71 |
| Insurance related financial cost | 16 | 9 | 0 | 25 |
| Premium | -108 | 0 | 154 | 45 |
| Total cash flows | -108 | 0 | 154 | 45 |
| Other changes | -7 | 0 | 0 | -7 |
| Reinsurance contracts assets 31 December 2023 | 699 | 39 | -10 | 728 |
| NOK MILLIONS | Life insurance contracts | Non-life insurance contracts | Reinsurance | Total |
|---|---|---|---|---|
| Specification of profit or loss items per product group 01.01. - 31.12.2023 | ||||
| Insurance service result | -2 268 | 62 | -71 | -2 277 |
| Insurance related financial cost | -44 179 | -66 | 25 | -44 221 |
IMPORTANT ASSUMPTIONS
Discount curve for IFRS 17
Expected cash flows from the insurance contracts will mature at various times in the future. The future cash flows are therefore discounted to the value on the balance sheet date with an interest rate curve that is determined on the balance sheet date. The discount curve for IFRS 17 is generally determined according to the same principles as the curve EIOPA calculates for Solvency II purposes. The main difference is that EIOPA's estimate for volatility adjustment is replaced with an estimate for the illiquidity spread in the bond market, and this is calibrated to the illiquidity degree of the KLP's obligation. Selected values of discounting curves for IFRS 17 are listed below:
| Year | 31.12.2024 | 31.12.2023 |
|---|---|---|
| 1 | 4,8 % | 4,8 % |
| 2 | 4,7 % | 4,7 % |
| 3 | 4,6 % | 4,4 % |
| 4 | 4,6 % | 4,2 % |
| 5 | 4,5 % | 4,1 % |
| 10 | 4,4 % | 4,0 % |
| 15 | 4,3 % | 4,0 % |
| 25 | 4,1 % | 3,9 % |
| 50 | 3,8 % | 3,7 % |
| 75 | 3,7 % | 3,7 % |
| 100 | 3,7 % | 3,6 % |
Salary growth curve
Future cash flows within the contract boundary are calculated with assumptions about annual future salary growth/regulation as stated in the table below. The salary growth curve is projected by the NAM model (Norwegian aggregate model), which makes a macro projection of key economic figures (salary growth, inflation, etc.) year by year.
| Year | 31.12.2024 | 31.12.2023 |
|---|---|---|
| 1 | 4,6 % | 5,3 % |
| 5 | 4,3 % | 4,9 % |
| 10 | 3,7 % | 3,7 % |
| 15 | 3,3 % | 3,2 % |
| 25 | 3,5 % | 3,3 % |
| 50 | 3,5 % | 3,5 % |
| 80 | 3,5 % | 3,5 % |
SENSITIVITY IFRS 17
The table below shows the consequence for the group's residual value of a change in the standard assumptions used in the best estimate. Sensitivity related to costs is also included in the overview. The residual value consists of the part of the insurance liability that is not included in the best estimate or the risk adjustment.
| NOK MILLIONER | Change | 31.12.2024 | 31.12.2023 |
|---|---|---|---|
| Reduced mortality | -5 % | -4 674 | -4 519 |
| Increased mortality | 5 % | 4 477 | 4 329 |
| Increased disability | 5 % | -414 | -401 |
| Reduced disability | -5 % | 418 | 404 |
| Increased costs | 5 % | -1 347 | -1 303 |
| Reduced costs | -5 % | 1 348 | 1 303 |
| Increased yield curve | *) | 35 002 | 33 594 |
| Reduced yield curve | **) | -40 015 | -42 074 |
| All changes to assumptions are in % change of the standard assumption applied as of 31/12/2024 (31/12/2023). | |||
| *) Increased interest rate curve by 50 basis points for the liquid part of the discount rate curve, 1:10 years. Then extrapolated to an estimate for long-term interest based on the sum of long-term real GDP growth and Norges Bank's inflation target. | |||
| **) Reduced by 50 basis points for the liquid part of the discount rate curve, 1:10 years. Then extrapolated to an estimate for long-term interest based on the sum of long-term real GDP growth and Norges Bank's inflation target. | |||
Note 6 Subordinated loans and perpetual hybrid tier 1 securities
| NOK MILLIONS | Q4 2024 | Q4 2023 | 01.01.2024 -31.12.2024 | 01.01.2023 -31.12.2023 |
|---|---|---|---|---|
| SUBORDINATED LOANS | ||||
| Interest costs | -37 | -35 | -146 | -153 |
| Value changes | 18 | -21 | -229 | -229 |
| Net costs subordinated loans | -19 | -56 | -375 | -382 |
| PERPETUAL HYBRID TIER 1 SECURITIES | ||||
| Interest costs | -22 | -17 | -80 | -75 |
| Value changes | 41 | 16 | 5 | -6 |
| Net costs perpetual hybrid tier 1 securities | 18 | -1 | -75 | -81 |
| Net costs subordinated loan and hybrid Tier 1 securities | -1 | -57 | -451 | -463 |
This note gives a specification of the line "Net costs subordinated loan and hybrid Tier 1 securities" in the income statement.
The fluctuations in value change are predominantly due to the loans being denominated in foreign currency. The subordinated loan is issued in euros and the perpetual hybrid Tier 1 security are issued in Japanese yen.
Note 7 Fair value of financial assets and liabilites
Fair value is to be a representative price based on what the equivalent assets or liabilites would be sold for under normal market terms and conditions. A financial instrument is considered as being listed in an active market if listed prices are easily and regularly accessible from a stock exchange, dealer, broker, commercial group, pricing service or regulatory authority, and such prices represent actual transactions that occur regularly at arm’s length. If the market for the security is not active, or the security is not listed on a stock exchange or similar, the Group uses valuation techniques to determine fair value. These are based on information on transactions recently carried out on business conditions, reference to the purchase and sale of similar instruments and pricing by means of externally obtained interest-rate curves and interest-rate differential curves. Estimates are based to the greatest possible extent on external observable market data, and to a small degree on company-specific information.
In the case of this note, there are three different categories of financial instruments: balance sheet classification, accounts classification, and type of instrument. It is for this last category that information is provided about how fair value is derived.
FINANCIAL INSTRUMENTS MEASURED AT AMORTISED COST
This category includes:
- Fixed-income securities and other debt instruments measured at amortised cost
- Lending to local government, enterprises & retail customers measured at amortised cost
- Liabilites to and deposits from customers
- Other debt issued (liabilities)
Financial instruments not measured at fair value are measured at amortised cost by using the effective interest rate method. The internal rate of exchange is determined by discounting contractual cash flows over their expected term. The cash flows include arrangement/up-front fees and direct transaction costs as well as any residual value on the expiry of the expected term. Amortised cost is the present value of these cash flows discounted by the internal rate of interest. This note contains information about the fair value of the financial instruments that are measured at amortised cost.
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
This category includes:
- Equity instruments
- Fixed-income securities and other debt instruments measured at fair value
- Lending local government, enterprises & retail customers at fair value through profit/loss
- Derivatives (assets and liabilites)
- Debt to credit institutions (liabilites)
- Subordinated loan capital (liabilities)
Below is a list of which types of financial instrument come under the various accounts categories, and how fair value is calculated.
FIXED-INCOME SECURITIES AND OTHER DEBT INSTRUMENTS MEASURED AT FAIR VALUE
a) Foreign fixed-income securities
Foreign fixed-income securities are generally priced based on prices obtained from an index provider. At the same time, prices are compared between several different sources to spot any errors.
The following sources are used:
- Bloomberg Barcalys Indicies
- Bloomberg
Barclays Capital Indices have first priority (they cover foreign government and foreign credit respecitvely). Then comes Bloomberg based on Bloomberg’s pricing service Business Valuator Accredited in Litigation (BVAL). BVAL has verified prices from Bloomberg.
b) Norwegian fixed-income securities – government
Nordic Bond Pricing is used as the primary source for pricing Norwegian Government Bonds.
c) Norwegian fixed-income securities – other than government ones
Norwegian fixed-income securities – other than government ones Norwegian fixed-income securities (denominated in NOK) are generally priced based on rates from Nordic Bond Pricing. Securities not covered by Nordic Bond Pricing are priced theoretically. The theoretical price should be based on the discounted value of the security's future cash flows. Discounting is performed using a swap curve adjusted for credit spread and liquidity spread. The credit spread should, to the extent possible, be based on a comparable bond from the same issuer. The liquidity spread is determined at the discretion of the evaluator.
d) Fixed-income securities issued by foreign enterprises but denominated in NOK
Fair value is calculated on the same general principles as those applied on Norwegian fixed-income securities described above.
e) Receivables on credit institutions
The fair value of these are considered as being approximately the same as the book value since the terms and conditions of the contract are continually revised in accordance with changes in the market rates.
f) Loans to municipalities and enterprises with municipal guarantee
Receivables are valued by means of a valuation model using relevant credit premium adjustments obtained in the market. For guaranteed loans fair value is calculated as discounted cash flow based on the same interest-rate curves as direct loans, but the credit margin is adjusted to market values for the appropriate combination of guarantee category and type of guarantee. The guarantor is either a state, municipality or a bank.
g) Loans secured by mortgage
The principles for calculating fair value are subject to the loans having fixed-interest rates or not. Fair value of fixed-rate loans is calculated by discounting contractual cash flows by the market rate including a relevant risk margin on the reporting date. The fair value of loans with no fixed rate is approximately equal to book value since the terms and conditions of the contract are continually revised in accordance with changes in the market rates.
EQUITY INSTRUMENTS
h) Shares (listed)
Liquid shares are generally valued on the basis of prices from an index provider. At the same time, prices are compared between different sources in order to spot any errors.
The following sources are used for Norwegian shares:
- Oslo Børs/Oslo Stock Exchange (primary source)
- Morgan Stanley Capital International (MSCI)
- Bloomberg
The following sources are used for foreign shares:
- Morgan Stanley Capital International (MSCI) (primary source)
- Bloomberg
i) Shares (unlisted)
As far as possible, The Group uses the Norwegian Mutual Funds Association’s industry recommendations. This basically means the following:
This means that the last traded price is used as long as it is considered representative. If the price information is deemed outdated, a derived valuation is performed in relation to a relevant proxy (such as a stock index or one or more companies). If this is not possible, a discretionary assessment is made, which may be based on fundamental analysis, broker evaluations, or risk and liquidity adjustments to the price.
j) Private Equity
Most of the investment in Private Equity goes through funds. The funds’ fair value is to be based on reported market values that follow from the International Private Equity and Venture Capital Valuation Guidelines (’IPEV Guidelines). These guidelines are established by the European Venture Capital Association (EVCA) and are based on the principle of approximate market assessment of the companies. Fair value is calculated on the basis of the funds’ reported market value adjusted for payments in and out during the period between the fund’s last reported market value and the period being reported on for the Group. Direct investments in Private Equity are treated in the same way as with current stocks, but valuation can be daily, quarterly or yearly. In cases where it's possible to obtain information on what co-investments are priced within the funds, it will be considered in the valuation process. Other direct investments are valued based on either cost prices, reported market values from companies or available trading prices.
DERIVATIVES
k) Futures/FRA/IRF
All futures contracts for KLP are traded on the stock exchange. Bloomberg is used as a price source. Prices are also obtained from another source in order to check that Bloombergs’ prices are correct. Reuters acts as a secondary source.
l) Options
Bloomberg is used as a source for pricing options traded on the stockmarket. Reuters is a secondary source.
m) Interest-rate swaps
Interest-rate swaps are valued in a model that takes observable market data such as interest-rate curves and relevant credit premiums into account.
n) FX-swaps
FX-swaps with a one-year maturity or less are priced on curves that are built up from FX swap-points obtained from Reuters. The market is not considered particularly liquid for FX-swaps with a maturity of more than one year and basis-adjusted swap curves are used for pricing purposes.
DEBT TO CREDIT INSTITUTIONS
o) Placements with credit institutions and deposits
Placements with credit institutions are made as short-term deposits. Fair value is calculated by discounting contractual cash flows by market rate including a relevant risk margin on the reporting date. Deposits are prices on swap curves.
SUBORDINATED LOAN CAPITAL, OTHER DEBT ISSUED, AND DEPOSITS FROM CUSTOMERS
p) Fair value of subordinated loans
The observable price is used as the fair value of loans listed on an active stock exchange. In the case of other loans that are not part of an active market the fair value is based on an internal valuation model based on observable data.
q) Fair value of subordinated bond/perpetual bond issued
Fair value in this category is determined on the basis of internal valuation models based on external observable data.
r) Covered bonds issued
Fair value in this category is determined on the basis of internal valuation models based on observable data.
s) Deposits from customers
All deposits are without fixed-rate interest. The fair value of these is considered as approximately equal to book value since the contractual terms are continually revised in accordance with the market rate.
The tables below give a more detailed specification of the content of the different classes of assets and financial liabilities.
| NOK MILLIONS | 31.12.2024 | 31.12.2023 | ||
|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | |
| FIXED-INCOME SECURITIES AND OTHER DEBT INSTRUMENTS AT AMORTIZED COST | ||||
| Norwegian bonds | 1 102 | 1 052 | 1 017 | 935 |
| Foreign bonds | 1 232 | 1 166 | 1 237 | 1 108 |
| Fixed-income securities and other debt instruments at amortized cost | 2 334 | 2 219 | 2 254 | 2 043 |
| LENDING LOCAL GOVERNMENT, ENTERPRISES & RETAIL CUSTOMERS AT FAIR VALUE THROUGH PROFIT/LOSS | ||||
| Loans secured by mortgage | 3 197 | 3 197 | 2 569 | 2 569 |
| Loans to local government sector or enterprises with local government guarantee | 76 844 | 76 844 | 72 705 | 72 705 |
| Loans abroad secured by mortage and local government guarantee | 6 311 | 6 311 | 5 245 | 5 245 |
| Other lending | 740 | 740 | 622 | 622 |
| Total loans to local government, enterprises & retail customers at fair value | 87 092 | 87 092 | 81 141 | 81 141 |
| LENDING TO LOCAL GOVERNMENT, ENTERPRISES & RETAIL CUSTOMERS – AT AMORTIZED COST | ||||
| Loans to and receivables from customers | 42 836 | 42 851 | 42 856 | 42 850 |
| Total loans to local government, enterprises & retail customers at amortized cost | 42 836 | 42 851 | 42 856 | 42 850 |
| FIXED-INCOME SECURITIES AND OTHER DEBT INSTRUMENTS AT FAIR VALUE | ||||
| Norwegian bonds | 137 843 | 137 843 | 133 716 | 133 716 |
| Norwegian certificates | 12 361 | 12 361 | 8 189 | 8 189 |
| Foreign bonds | 215 443 | 215 443 | 209 125 | 209 125 |
| Foreign certificates | 0 | 0 | 898 | 898 |
| Investments with credit institutions | 53 431 | 53 431 | 58 880 | 58 880 |
| Fixed income securitites and other debt instruments at fair value | 419 077 | 419 077 | 410 807 | 410 807 |
| EQUITY CAPITAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS | ||||
| Shares | 410 894 | 410 894 | 302 882 | 302 882 |
| Equity funds | 53 887 | 53 887 | 44 885 | 44 885 |
| Property funds | 8 040 | 8 040 | 6 990 | 6 990 |
| Total equity capital instruments at fair value | 477 165 | 477 165 | 354 757 | 354 757 |
| RECEIVABLES | ||||
| Receivables related to direct business | 1 383 | 1 383 | 750 | 750 |
| Receivables related to reinsurance agreements | 0 | 0 | 0 | 0 |
| Reinsurance share of gross claims reserve | 0 | 0 | 0 | 0 |
| Receivables related to securites | 1 797 | 1 797 | 1 309 | 1 309 |
| Prepaid rent related to real estate activites | 348 | 348 | 148 | 148 |
| Other receivables | 7 | 7 | 225 | 225 |
| Total other loans and receivables including receivables from policyholders | 3 534 | 3 534 | 2 433 | 2 433 |
| FINANCIAL LIABILITIES | ||||
| Debt to credit institutions | 1 395 | 1 395 | 13 041 | 13 041 |
| Covered bonds issued | 31 529 | 31 596 | 30 504 | 30 526 |
| Liabilities and deposits from customers | 15 801 | 15 801 | 14 060 | 14 060 |
| Hybrid Tier 1 securities | 1 429 | 1 429 | 1 434 | 1 434 |
| Subordinated loan capital | 3 560 | 3 560 | 3 327 | 3 327 |
| Total financial liabilities | 53 713 | 53 781 | 62 366 | 62 389 |
| NOK MILLIONS | 31.12.2024 | 31.12.2023 | ||
|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | |
| FINANCIAL DERIVATIVES - AT FAIR VALUE THROUGH PROFIT OR LOSS | ||||
| Forward exchange contracts | 781 | 7 070 | 13 525 | 1 152 |
| Interest rate swaps | 243 | 4 235 | 1 383 | 2 096 |
| Interest rate and currency swaps | 445 | 0 | 679 | 0 |
| Total financial derivatives | 1 469 | 11 304 | 15 587 | 3 249 |
Note 8 Borrowing
| NOK MILLIONS | Nominal in NOK | Currency | Interest | Due date | Book value 31.12.2024 | Book value 31.12.2023 |
|---|---|---|---|---|---|---|
| FIXED - TERM SUBORDINATED LOAN | ||||||
| Kommunal Landspensjonskasse | 2 530 | EUR | Fixed ¹ | 2045 | 3 560 | 3 327 |
| Total subordinated loan capital | 2 530 | 3 560 | 3 327 | |||
| HYBRID TIER 1 SECURITIES | ||||||
| Kommunal Landspensjonskasse | 984 | JPY | Fixed ² | 2034 | 1 429 | 1 434 |
| Total hybrid Tier 1 securities | 984 | 1 429 | 1 434 | |||
| COVERED BONDS | ||||||
| KLP Kommunekreditt AS | 0 | NOK | Floating | 2024 | 0 | 1 562 |
| KLP Kommunekreditt AS | 1 886 | NOK | Floating | 2025 | 1 892 | 5 015 |
| KLP Kommunekreditt AS | 5 000 | NOK | Floating | 2026 | 5 053 | 5 053 |
| KLP Kommunekreditt AS | 1 000 | NOK | Fixed | 2027 | 1 012 | 1 012 |
| KLP Kommunekreditt AS | 6 000 | NOK | Floating | 2027 | 6 050 | 6 052 |
| KLP Kommunekreditt AS | 6 250 | NOK | Floating | 2028 | 6 306 | 0 |
| KLP Kommunekreditt AS | 700 | NOK | Fixed | 2029 | 706 | 706 |
| KLP Boligkreditt AS | 2 500 | NOK | Floating | 2025 | 2 501 | 1 555 |
| KLP Boligkreditt AS | 4 500 | NOK | Floating | 2026 | 4 535 | 2 501 |
| KLP Boligkreditt AS | 2 500 | NOK | Floating | 2027 | 2 516 | 4 536 |
| KLP Boligkreditt AS | 1 000 | NOK | Floating | 2028 | 1 003 | 2 516 |
| Other | -45 | -4 | ||||
| Total covered bonds | 31 336 | 31 529 | 30 504 | |||
| DEBT TO CREDIT INSTITUTIONS | ||||||
| KLP Banken AS | 0 | NOK | Floating | 2024 | 0 | 453 |
| KLP Banken AS | 300 | NOK | Floating | 2025 | 301 | 301 |
| KLP Banken AS | 150 | NOK | Floating | 2026 | 151 | 151 |
| KLP Banken AS | 350 | NOK | Floating | 2027 | 353 | 0 |
| KLP Fond | 0 | NOK/EUR/USD | Floating | 2023 | 0 | 4 218 |
| KLP Fond | 0 | NOK/EUR/USD | Fixed | 2023 | 0 | 1 111 |
| KLP Fond | 0 | NOK/EUR/USD | Floating | 2024 | 30 | 0 |
| Kommunal Landspensjonskasse | 0 | NOK/EUR/USD | Floating | 2023 | 0 | 6 727 |
| Kommunal Landspensjonskasse | 0 | NOK/EUR/USD | Floating | 2024 | 512 | 0 |
| Other | 47 | 80 | ||||
| Total liabilities to credit institutions | 800 | 1 395 | 13 041 | |||
| LIABILITIES AND DEPOSITS FROM CUSTOMERS ³ | ||||||
| KLP Banken AS | 15 801 | NOK | 15 801 | 14 060 | ||
| Liabilities to and deposits from customers | 15 801 | 15 801 | 14 060 | |||
| Total financial liabilities | 51 450 | 53 713 | 62 366 | |||
| 1 The loan has an interest change date in 2025. | ||||||
| 2 The loan has an interest change date in 2034. | ||||||
| 3 There is no contractual maturity date on deposits. | ||||||
This note shows the financial liabilities that the Group had at the end of the reporting period; where the majority is funding for KLP Bank Group.
The companies listed above are the issuers of the financial debt. Deposits belongs to KLP Banken AS.
Note 9 Fair value hierarchy
| NOK MILLIONS | Level 1 | Level 2 | Level 3 | 31.12.2024 | 31.12.2023 |
|---|---|---|---|---|---|
| ASSETS BOOKED AT FAIR VALUE | |||||
| Land/plots | 0 | 0 | 1 283 | 1 283 | 1 283 |
| Buildings | 0 | 0 | 97 606 | 97 606 | 91 040 |
| Investment property | 0 | 0 | 98 889 | 98 889 | 92 322 |
| Lending at fair value | 0 | 87 092 | 0 | 87 092 | 81 141 |
| Certificates | 2 948 | 9 413 | 0 | 12 361 | 9 086 |
| Bonds | 23 439 | 329 835 | 0 | 353 274 | 342 850 |
| Fixed-income funds | 0 | 9 503 | 17 279 | 26 782 | 25 632 |
| Loans and receivables | 25 977 | 684 | 0 | 26 661 | 33 238 |
| Bonds and other fixed-income securities | 52 363 | 349 435 | 17 279 | 419 077 | 410 807 |
| Shares | 398 263 | 6 572 | 6 059 | 410 894 | 302 882 |
| Equity funds | 2 915 | 0 | 37 | 2 952 | 2 415 |
| Property funds | 0 | 2 635 | 5 405 | 8 040 | 6 990 |
| Special funds | 0 | 2 536 | 1 809 | 4 345 | 0 |
| Private Equity | 0 | 0 | 50 936 | 50 936 | 42 470 |
| Shares and units | 401 178 | 11 743 | 64 245 | 477 165 | 354 757 |
| Financial derivatives | 0 | 1 469 | 0 | 1 469 | 15 587 |
| Total assets at fair value | 453 541 | 449 738 | 180 412 | 1 083 691 | 954 613 |
| LIABILITIES BOOKED AT FAIR VALUE | |||||
| Financial derivatives | 0 | 11 304 | 0 | 11 304 | 3 249 |
| Debt to credit institutions ¹ | 589 | 0 | 1 | 590 | 12 137 |
| Subordinated loan capital | 0 | 3 560 | 0 | 3 560 | 3 327 |
| Hybrid Tier 1 securities | 0 | 1 429 | 0 | 1 429 | 1 434 |
| Total financial liabilities at fair value | 589 | 16 293 | 1 | 16 884 | 20 146 |
| ¹ The line «Debt to credit institutions» includes liabilities measured at fair value and amortized cost. This line is therefore not reconcilable against the Balance sheet. The liabilities measured at amortized cost amounted to NOK 804 million per 31.12.2024. | |||||
| Changes in level 3, financial assets and investment property | Financial assets | Investment property | Total |
|---|---|---|---|
| Opening balance 1 January | 67 055 | 92 322 | 159 377 |
| Sold | -5 990 | 177 | -5 813 |
| Bought | 13 298 | 4 572 | 17 870 |
| Unrealised changes | 7 159 | 1 821 | 8 980 |
| Other changes | 0 | -4 | -4 |
| Closing balance | 81 522 | 98 889 | 180 410 |
| Realised gains/losses | 2 215 | 0 | 2 215 |
Unrealised changes and realized gains/losses are reflected on the line "Net value changes on financial instruments" in the consolidated income statement.
The table "Changes in level 3" shows changes in level 3 classified instruments in the period indicated.
Fair value shall be a representative price based on what a corresponding asset or liability would have been traded for on normal market terms and conditions. Highest quality in regard to fair value is based on listed prices in an active market. A financial instrument is considered as noted in an active market if noted prices are easily and regularly available from a stock market, dealer, broker, industry grouping, price setting service or regulatory authority, and these prices represent actual and regularly occurring transactions at arm’s length.
Level 1:
Instruments at this level obtain fair value from listed prices in an active market for identical assets or liabilities that the entity has access to at the reporting date. Examples of instruments at Level 1 are stock market listed securities.
Level 2:
Instruments at this level obtain fair value from observable market data. This includes prices based on identical instruments, but where the instrument does not maintain a high enough trading frequency and is corresponding therefore not considered to be traded in an active market, as well as prices based on assets and price-leading indicators that can be confirmed from market information. Example instruments at Level 2 are fixed income securities priced on the basis of interest rate paths.
Level 3:
Instruments at Level 3 contain no observable market data or are traded in markets considered to be inactive. The price is based generally on discrete calculations where the actual fair value may deviate if the instrument were to be traded. The instruments covered at Level 3 in the Group include unlisted shares and Private Equity.
Valuations related to items in the various levels are described in Note 7. For description of the pricing of investment property, please see the last published annual financial statements. No sensitivity analysis has been carried out on securities included in Level 3. A sensitivity analysis for investment property is available in the annual report. A change in the variables of the pricing is considered of little significance. On a general basis, a 5 percent change in the pricing would produce a change of NOK 9 021 million as of 31.12.2024.
With regard to transferring securities between the levels, a limit is set for the number of trading days and the amount of trading for shares by separating Level 1 and Level 2. The general principles related to the distribution between levels basically concern whether the asset or liability is listed or not and whether the listing can be stated to be in an active market. As regards shares, there is a further distinction between trading days and amount of trading which separates out listed securities that do not form part of an active market. The values at the end of the reporting period provide the basis for any movement between the levels.
During the 4th quarter, NOK 470 million in stocks moved from Level 1 to Level 2, and NOK 38 million moved from level 1 to level 3. In addition 1 458 million in stocks moved from level 2 to level 1, and 4 million from level 3 to level 1. The movements are due to changes in liquidity.
Note 10 Presentation of assets and liabilities that are subject to net settlement
| 31.12.2024 NOK MILLIONS | Related amounts not presented net | |||||
|---|---|---|---|---|---|---|
| Gross financial assets/ liabilities | Financial instruments | Security in cash | Security in securities | Net amount | Adjusted for the unit holders' interest in consolidated securities funds | |
| ASSETS | ||||||
| Financial derivatives | 1 469 | -1 431 | -483 | -2 483 | 37 | 37 |
| Repos | 6 896 | 0 | 0 | 0 | 6 896 | 6 896 |
| Total | 8 365 | -1 431 | -483 | -2 483 | 6 934 | 6 934 |
| LIABILITIES | ||||||
| Financial derivatives | 11 304 | -1 431 | -1 673 | -6 420 | 3 267 | 3 288 |
| Repos | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 11 304 | -1 431 | -1 673 | -6 420 | 3 267 | 3 288 |
| 31.12.2023 NOK MILLIONS | Related amounts not presented net | |||||
|---|---|---|---|---|---|---|
| Gross financial assets/ liabilities | Financial instruments | Security in cash | Security in securities | Net amount | Adjusted for the unit holders' interest in consolidated securities funds | |
| ASSETS | ||||||
| Financial derivatives | 15 587 | -1 376 | -10 882 | -7 399 | 214 | 209 |
| Repos | 6 172 | -1 113 | 0 | 0 | 5 058 | 5 058 |
| Total | 21 759 | -2 489 | -10 882 | -7 399 | 5 272 | 5 267 |
| LIABILITIES | ||||||
| Financial derivatives | 3 249 | -1 376 | -25 | -6 | 1 866 | 1 885 |
| Repos | 1 111 | 0 | 0 | 0 | 1 111 | 0 |
| Total | 4 360 | -1 376 | -25 | -6 | 2 977 | 1 885 |
The purpose of the note is to show the potential effect of netting agreements at the KLP Group; what possibilities the KLP Group has to net bilateral agreements against other counterparties should the latter go bankrupt and the remaining amount if all such netting agreements are materialized. The note shows derivative positions and repo agreements in the financial position statement. Repos are a part of the line "Debt to credit institutions" in the balance sheet.
The consolidated figures include all entities the KLP Group is considered to have control over. In addition, the outer line shows which de facto net amount remains if all the Groups netting agreements are set off; which only includes subsidiaries and entities, where the Group carries the risk.
Note 11 Solvency ratio
The Solvency II balance sheet includes assets and liabilities at fair value. There are no observable market values for KLP’s insurance liabilities, which are thus calculated by way of a best estimate based on actuarial assumptions. In addition there is a risk margin that is to reflect a third party’s capital costs by taking over these liabilities.
Tier 1 own funds appear from the Solvency II balance sheet and hybrid tier 1 securities. In the calculation of eligible own funds hybrid tier 1 securities are limited to a maximum of 20 per cent of total eligible tier 1 own funds. Any excess exposure is eligible as tier 2 own funds. Tier 2 own funds otherwise consist of subordinated debt, the risk equalization fund, the natural perils fund and ancillary own funds. The Financial Supervisory Authority of Norway has accepted that KLP’s right to call in further member contribution if necessary, which is laid down in the Company’s articles of association, can be counted as ancillary own funds, the amount corresponding to 2.5 per cent of the Company’s premium reserve. Any net deferred tax asset will be considered tier 3 own funds.
In the calculation of eligible own funds to cover the solvency capital requirement, eligible tier 1 own funds shall be at least 50 per cent of the solvency capital requirement, eligible tier 3 own funds shall be less than 15 per cent of the solvency capital requirement, and the sum of eligible tier 2 and tier 3 own funds shall not exceed 50 per cent of the solvency capital requirement before capital requirement contributions from other financial sectors (KLP Banken and KLP Kapitalforvaltning). In the calculation of eligible own funds to cover the minimum consolidated group capital requirement, eligible tier 1 own funds shall be at least 80 per cent of the minimum requirement, and eligible tier 2 own funds shall not exceed 20 per cent of the minimum requirement. Own funds from other financial sectors (KLP Banken and KLP Kapitalforvaltning), tier 3 own funds and ancillary own funds are not eligible to cover the minimum requirement.
Without the use of the transitional measure on technical provisions the Company’s SCR ratio is 298 per cent, which is well over the Company’s target of at least 150 per cent. With the transitional measure on technical provisions the SCR ratio is 298 per cent.
| NOK MILLIONS | 31.12.2024 | 31.12.2023 |
|---|---|---|
| ELIGIBLE OWN FUNDS | ||
| Assets | 853 499 | 779 311 |
| Liabilities | 805 290 | 734 864 |
| Excess of assets over liabilities | 48 209 | 44 447 |
| - Risk equalization fund | -4 188 | -3 864 |
| + Hybrid tier 1 securities | 1 429 | 1 434 |
| Adjustment for other financial sector own funds | -98 | -25 |
| Tier 1 basic own funds | 45 352 | 41 992 |
| Sum tier 1 own funds | 45 352 | 41 992 |
| Subordinated debt | 3 514 | 3 280 |
| Risk equalization fund and natural perils fund | 4 188 | 3 864 |
| Tier 2 basic own funds | 7 702 | 7 144 |
| Ancillary own funds | 15 396 | 14 339 |
| Tier 2 ancillary own funds | 15 396 | 14 339 |
| Sum tier 2 own funds | 23 098 | 21 483 |
| Deferred tax asset | 0 | 0 |
| Tier 3 basic own funds | 0 | 0 |
| Sum tier 3 own funds | 0 | 0 |
| Eligible own funds to cover the solvency capital requirement - tier 1 | 45 352 | 41 992 |
| Eligible own funds to cover the solvency capital requirement - tier 2 | 7 405 | 7 269 |
| Eligible own funds to cover the solvency capital requirement - tier 3 | 0 | 0 |
| A Eligible own funds to cover the solvency capital requirement | 52 757 | 49 261 |
| Eligible own funds to cover the minimum requirement - tier 1 | 41 518 | 38 420 |
| Eligible own funds to cover the minimum requirement - tier 2 | 839 | 935 |
| B Eligible own funds to cover the minimum consolidated group capital requirement | 42 357 | 39 355 |
| CAPITAL REQUIREMENT | ||
| Market risk | 176 801 | 141 163 |
| Counterparty risk | 3 058 | 3 549 |
| Life risk | 139 577 | 112 930 |
| Non-life risk | 695 | 666 |
| Health risk | 471 | 436 |
| Diversification | -68 191 | -55 716 |
| Operational risk | 3 576 | 3 291 |
| Loss absorbing capacity of technical provisions | -239 464 | -190 317 |
| Loss absorbing capacity deferred tax | -1 713 | -1 581 |
| Capital requirement for other financial sectors | 2 921 | 2 878 |
| C Solvency capital requirement | 17 731 | 17 299 |
| Minimum capital requirement, KLP | 3 675 | 4 191 |
| Minimum capital requirement, KLP Skadeforsikring | 522 | 484 |
| D Minimum consolidated group capital requirement | 4 196 | 4 675 |
| SOLVENCY RATIO | ||
| SCR ratio (A/C) | 298 % | 285 % |
| MCR ratio (B/D) | 1009 % | 842 % |
| 1 Numbers per 31.12.2023 are changed to reflect a new capital requirement for the bank, taking effect by year-end 2023 for KLP group. | ||
Note 12 Pension obligations
| NOK MILLIONS | 31.12.2024 | 31.12.2023 |
|---|---|---|
| Capitalized net liability 01.01. | 913 | 815 |
| Capitalized pension costs | 234 | 197 |
| Capitalized financial costs | 34 | 28 |
| Actuarial gains and losses | -442 | 146 |
| Premiums / contributions received | -195 | -274 |
| Capitalized net liability | 543 | 913 |
| Assumptions | 31.12.2024 | 31.12.2023 |
|---|---|---|
| Discount rate | 3.90% | 3.10% |
| Salary growth | 4.00% | 3.50% |
| The National Insurance basic amount (G) | 3.75% | 3.25% |
| Pension increases | 3.00% | 2.80% |
| Social security contribution rate | 14.10% | 14.10% |
| Capital activity tax | 5.00% | 5.00% |
The effect of changes in pension assumptions reduces the pension liability for employees with NOK 442 million as of 31.12.2024. The change is recognized in other comprehensive income in the income statement.
Note 13 Other current liabilities
| NOK MILLIONS | 31.12.2024 | 31.12.2023 |
|---|---|---|
| Short-term payables trade in securities | 2 019 | 3 357 |
| Incurred not assessed taxes | 1 206 | 572 |
| Accounts payable | 274 | 301 |
| Public fees | 829 | 691 |
| Other current liabilities | 1 100 | 1 112 |
| Total other current liabilities | 5 427 | 6 034 |
Key figures – Accumulated
| NOK MILLIONS | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 |
|---|---|---|---|---|---|---|---|---|
| KLP GROUP | ||||||||
| Total assets | 1 147 389 | 1 128 114 | 1 079 281 | 1 065 541 | 1 016 721 | 972 345 | 956 311 | 948 185 |
| Equity | -3 303 | -2 594 | -2 556 | -3 090 | -3 140 | -3 555 | -3 684 | -3 687 |
| Solvency SCR ratio | 298 % | 289 % | 283 % | 288 % | 285 % | 332 % | 297 % | 282 % |
| Number of employees in the Group | 1 169 | 1 168 | 1 168 | 1 153 | 1 133 | 1 120 | 1 099 | 1 091 |
| KOMMUNAL LANDSPENSJONSKASSE | ||||||||
| Profit before tax | 2 169 | 1 663 | 926 | 183 | -20 | 1 136 | 774 | 539 |
| Premium income for own account | 60 883 | 51 795 | 37 257 | 7 842 | 70 326 | 60 032 | 51 102 | 7 663 |
| - of which inflow of premium reserve | 1 | 1 | 1 | 0 | 92 | 91 | 91 | 91 |
| Insurance customers' funds incl. acc. profit | 30 200 | 23 024 | 16 132 | 9 265 | 28 261 | 21 501 | 14 840 | 8 331 |
| - of which funds with guaranteed returns | 2 423 | 2 423 | 2 419 | 2 456 | 2 139 | 2 125 | 2 121 | 2 125 |
| Net investment common portfolio | 803 441 | 790 200 | 761 757 | 751 512 | 734 337 | 718 214 | 701 944 | 690 902 |
| Net investment choice portfolio | 3 135 | 3 063 | 3 064 | 2 953 | 2 830 | 2 730 | 2 833 | 2 683 |
| Insurance funds incl. earnings for the year | 803 036 | 788 668 | 778 458 | 745 385 | 725 781 | 704 815 | 715 239 | 668 235 |
| - of which funds with guaranteed interest | 679 801 | 638 919 | 642 860 | 617 219 | 616 315 | 586 941 | 592 053 | 552 840 |
| Solvency capital requirement (SCR) | 52 973 | 52 772 | 50 482 | 49 575 | 49 517 | 49 918 | 47 624 | 46 768 |
| Solvency SCR ratio | 360 % | 351 % | 344 % | 351 % | 346 % | 368 % | 329 % | 316 % |
| Riskprofit | 790 | 420 | 81 | 82 | 648 | 364 | 270 | 71 |
| Return profits | 51 090 | 40 471 | 26 553 | 18 729 | 29 466 | 15 822 | 21 243 | 13 232 |
| Administration profit | 77 | 129 | 65 | -8 | 144 | 176 | 62 | 54 |
| Solvency capital | 162 859 | 193 589 | 167 161 | 155 824 | 164 487 | 147 893 | 151 993 | 151 550 |
| Value-adjusted return on common portfolio | 9,0 % | 7,0 % | 4,6 % | 3,0 % | 6,4 % | 3,9 % | 4,2 % | 2,5 % |
| Return on unit-linked portfolio | 10,8 % | 8,6 % | 5,8 % | 4,0 % | 8,3 % | 4,8 % | 5,6 % | 3,4 % |
| Return on corporate portfolio | 4,8 % | 3,4 % | 1,9 % | 0,5 % | 3,0 % | 2,1 % | 1,5 % | 0,9 % |
| KLP SKADEFORSIKRING AS | ||||||||
| Profit before tax | 386 | 196 | 64 | -118 | 273 | 255 | 189 | 99 |
| Insurance income | 2 758 | 2 053 | 1 365 | 707 | 2 505 | 1 863 | 1 230 | 630 |
| Owners' equity | 2 955 | 2 760 | 2 669 | 2 523 | 2 594 | 2 589 | 2 543 | 2 446 |
| Claims ratio, gross | 77,3 % | 79,2 % | 81,4 % | 98,2 % | 83,5 % | 78,9 % | 82,6 % | 93,9 % |
| Net reinsurance ratio | 6,4 % | 8,3 % | 9,7 % | 15,0 % | 2,8 % | 4,7 % | 5,0 % | -2,2 % |
| Claims ratio, net of reinsurance | 83,8 % | 87,6 % | 91,2 % | 113,1 % | 86,3 % | 83,6 % | 87,6 % | 91,7 % |
| Cost ratio | 13,0 % | 13,6 % | 13,6 % | 14,6 % | 14,0 % | 13,0 % | 13,9 % | 13,9 % |
| Combined ratio | 96,8 % | 101,1 % | 104,8 % | 127,7 % | 100,4 % | 96,6 % | 101,5 % | 105,6 % |
| Return on assets under management | 6,2 % | 5,0 % | 2,9 % | 1,7 % | 5,5 % | 3,3 % | 3,6 % | 2,7 % |
| Solvency capital requirement (SCR) | 2 969 | 2 785 | 2 598 | 2 487 | 2 446 | 2 514 | 2 377 | 2 309 |
| Solvency SCR ratio | 256 % | 238 % | 223 % | 210 % | 227 % | 246 % | 222 % | 215 % |
| Annual premium in force – retail market | 1 620 | 1 178 | 1 149 | 1 107 | 1 068 | 1 042 | 1 013 | 982 |
| Annual premium in force – public sector market | 1 222 | 1 613 | 1 601 | 1 624 | 1 517 | 1 533 | 1 521 | 1 474 |
| Net new subscriptions (accumulated within the year) | 20 | -14 | -38 | -3 | 72 | 61 | 43 | 20 |
| KLP BANKEN GROUP | ||||||||
| Profit/loss before tax | 325 | 255 | 167 | 75 | 285 | 203 | 122 | 53 |
| Net interest income | 520 | 386 | 255 | 127 | 465 | 340 | 221 | 110 |
| Other operating income | 96 | 71 | 46 | 22 | 89 | 67 | 44 | 21 |
| Operating expenses and depreciation | -284 | -208 | -140 | -81 | -271 | -201 | -134 | -71 |
| Net realized/unrealized changes in financial instruments to fair value | -7 | 6 | 6 | 7 | 3 | -3 | -9 | -7 |
| Contributions | 15 800 | 15 685 | 15 628 | 14 158 | 14 061 | 14 351 | 14 524 | 14 136 |
| Housing mortgages granted | 21 148 | 24 222 | 24 494 | 24 102 | 23 855 | 23 754 | 23 481 | 23 333 |
| Loan(s) with public guarantee(s) | 18 688 | 18 006 | 18 311 | 18 735 | 19 001 | 19 371 | 19 449 | 19 384 |
| Defaulted loans | 64 | 58 | 54 | 53 | 44 | 52 | 43 | 46 |
| Borrowing on the issuance of securities | 32 335 | 32 543 | 30 767 | 31 253 | 31 408 | 31 616 | 31 661 | 31 999 |
| Total assets | 51 803 | 51 931 | 49 973 | 48 857 | 48 928 | 49 403 | 49 557 | 49 373 |
| Average total assets | 50 365 | 50 429 | 49 450 | 48 892 | 49 719 | 49 957 | 50 034 | 49 942 |
| Owners' equity | 3 439 | 3 359 | 3 280 | 3 189 | 3 174 | 3 132 | 3 072 | 3 008 |
| Net interest rate | 1,03 % | 0,76 % | 0,51 % | 0,26 % | 0,93 % | 0,68 % | 0,44 % | 0,22 % |
| Profit/loss from general operations before tax | 0,65 % | 0,51 % | 0,34 % | 0,15 % | 0,57 % | 0,41 % | 0,24 % | 0,11 % |
| Return on owners’ equity before tax | 10,25 % | 10,70 % | 10,52 % | 9,47 % | 9,62 % | 9,13 % | 8,19 % | 7,16 % |
| Capital adequacy | 22,7 % | 20,6 % | 20,8 % | 21,2 % | 21,7 % | 20,2 % | 20,3 % | 20,5 % |
| Number of private customers | 57 679 | 56 601 | 55 670 | 54 058 | 52 488 | 51 340 | 50 231 | 49 697 |
| Of this members of KLP | 37 955 | 37 430 | 36 986 | 36 139 | 35 390 | 34 802 | 34 307 | 33 512 |
| KLP KAPITALFORVALTNING AS | ||||||||
| Profit/loss before tax | 103 | 81 | 53 | 12 | 55 | 42 | 4 | 11 |
| Total assets under management | 878 867 | 859 290 | 818 496 | 797 875 | 760 484 | 715 698 | 687 956 | 670 937 |
| Assets managed for external customers | 238 104 | 226 091 | 214 053 | 202 680 | 179 219 | 162 321 | 163 444 | 151 269 |