report_2009_6_eng by sandeshbhat

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									S U M M A R Y

2009-04-16

Finansinspektionen
Box 7821 SE-103 97 Stockholm, Sweden [Brunnsgatan 3] Tel +46 8 787 80 00 Fax +46 8 24 13 35 finansinspektionen@fi.se www.fi.se

Follow-up of technical provisions within life insurance
Report 2009:6 We can conclude that several insurance companies (life insurance companies and occupational pension funds) have deficits in their technical provisions and that the primary reason is an underestimation of the policyholders’ life expectancy rates. The companies’ provisions have been too low in order to cover this capital requirement. In the companies we investigated during the years 2007 and 2008, the deficit is estimated to have amounted to just over SEK 17 billion. Consequently, the companies have reported too high free funds compared with a more correct calculation of the provisions. The deficit in the short-term has had no direct impact on the level of pensions paid, because unrestricted funds exist nevertheless. The solvency position is not either threatened. We already know that at least 15 of the 17 million shortfall would have been covered by the end of 2008. FI will take the following measures In the cases in which we have identified problems with the deficit, we have conducted a dialogue with the life insurance companies and occupational pension funds. We have urged them to change their calculation assumptions in order to increase the provisions and announced that we are going to follow up this effort. The consequences for accounting of larger technical provisions for mutually working companies are that capital is transferred from the consolidation fund. This fund exists in order to regulate any future losses and to pay out future bonuses.

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