SWEDEN - The Finansinspektionen (FI), Sweden's Financial Supervisory Authority, has confirmed no insurance company has received a red light under the traffic light system, despite the recent market volatility.
Figures for the second quarter of 2008 revealed the buffer capital of Swedish pension companies "remains good despite the past year's large price fluctuations on the financial market".
The data from the FI's traffic light system, based on figures to 30 June 2008, showed the pension firms continued to have a good capacity to meet the guaranteed commitments to customers.
In addition, the latest report from the FI claimed "on the whole, the pension and non-life insurance companies are reporting reduced financial risks compared with the same quarter of 2007".
The second quarter figures revealed 191 insurance companies filed a report, which consisted of 14 occupational pension funds, 41 life insurance companies and 136 non-life insurance companies.
Concerns about the impact of the market turbulence led to the FI requesting additional reporting from companies in January, however all companies were said to have a "solid margin to the red light", and in the last two years only one pension fund - Prometheus - was given a red light rating, in 2006, however it had already been ordered to modify its risk exposure. (See earlier IPE article: Pensions get 'green light' over market turbulence)
The traffic-light model, introduced in 2005, measures the exposure of insurance companies to large price fluctuations on the financial markets - such as a 40% fall in Swedish shares and a 35% drop in real estate prices - with the aim of identifying at an early stage those companies with such high levels of risk exposure that they cannot "with sufficient security" meet their customer commitments.
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