The Norwegian Ministry of Finance has appointed two new members to the Ethical Council of the NOK3trn (€372bn) Government Pension Fund.
As of January 1 2011, Bente Rathe and Dag Olav Hessen take over from Professor Andreas Føllesdal and Anne Lill Gade.
Rathe is deputy chairperson at industrial group Norsk Hydro and sits on various other boards, including Svenska Handelsbanken. She was a member of the Graver Committee which proposed the ethical guidelines for the Fund. Hessen is Professor of Biology at the University of Oslo and has held numerous board positions.
Meanwhile, the new Strategy Council for the fund, headed up by Professor Elroy Dimson, has presented its report to the government – with the recommendation that the fund enter the insurance market.
“We recommend a further examination of the expected return and risk characteristics of various forms of insurance selling strategies,” the four-strong group writes, citing the fact that large long-horizon investors like the Government Pension Fund arenaturally suited to writing various forms of insurance.
They suggest strategies such as selling index volatility, certain structured products and providing protection against financial catastrophe, as well as traditional insurance against earthquakes and natural catastrophes, “and opportunistic provision of more standard forms of insurance”.
They warned that there are “headline risks” because of potential media reporting of dramatic single events, but said it would be unfortunate if this prevented the fund from insurance selling.
The group also proposed a new ‘Investment Advisory Board’ to meet what it called a “decision-making vacuum” on medium-term issues between the Ministry of Finance, which sets the fund’s strategy and Norges Bank Investment Management, the arm of the central bank which runs the fund’s assets.
“Such independent and critical reviews provides useful professional input while fostering greater transparency and discussion about important issues related to the long-term investment strategy of the Fund,” said Minister of Finance, Sigbjørn Johnsen.