Nordic roundup: AP fund review, SPP, ATP, the 'traffic-light' system
EUROPE - The inquiry into Sweden's AP buffer funds - commissioned by the government and led by industry veteran Mats Langensjö - will also include a range of pensions experts, academics and politicians who will collaborate with Langensjö to determine the funds' future.
Two secretaries and a team of nine experts within the pensions field have been named.
These include Sarah McPhee, chief executive at SPP, the pension insurer owned by Norway's Storebrand; Lars Rodhe, chief executive at ATP, the largest institutional investor in Denmark; and Paul Söderlind, professor at the University of St Gallen.
There are also two experts from the department of finance and the Pensions Agency, as well as two others from the private sector.
At the end of September, the government hired Langensjö, a former managing director at consultancy Aon Hewitt, for a review of the AP system that could result in the closure of two funds.
As part of the review, the investment rules and governance structures for the first four AP funds will be examined, as well as the benefits and risks that could be posed by a possible consolidation of their assets into fewer vehicles.
Langensjö is expected to present his report on the inquiry no later than 1 August 2012.
In other news, Finansinspektionen, Sweden's regulator, has focused less on the so-called 'traffic-light' system - which reflects solvency levels in the life and pensions industry - in its semi-annual report on the state of the market.
The regulator asked the industry for extra information due to the recent volatility and included the information in its report.
It also sent out letters to insurers, informing them that it would be "more understanding" in its treatment of companies that received a red light in the near future.
The regulator said the traffic-light system was a monitoring tool and a stress test, but that the current environment had made it less relevant.
Finansinspektionen's report - which normally looks at the first six months of the year, but, due to ongoing volatility, runs to the end of August - shows that capital buffers have declined by 9%.
The regulator said it would give the industry more time to sort out its solvency issues. But at the same time it warned about the vicious circle that can arise when insurers reduce risk by selling equities, which can drive prices even lower and, in turn, further damage solvency levels.
The regulator also said companies should review their products to ensure the guarantees promised were viable in the long term.