SWEDEN - Swedish national buffer fund AP7 is cooperating with United Nations Environment Programme Financial Initiative (UNEP FI) and Ethix SRI Advisors to bulld guidelines on tar sands, while Länsförsäkringar has aborted plans to demutualise.

AP7 is working with the organisations to help develop a framework of guidelines on the extraction of oil sand, also known as tar sands or extra heavy oil, within the next 12 months. The groups have also invited other financial players to participate.

Commercial scale extraction of oil sands - which has been too expensive in the past, but is becoming feasible in light of new technological developments - has large negative environmental impact, according to a statement from AP7.

AP7 became aware of the issue in 2009 and contacted both environmental groups and oil corporations to obtain a report on the subject. The findings showed that international guidelines were lagging behind the development, prompting AP7 to urge UNEP FI to speed up development of the guidelines.

Elsewhere, Länsförsäkringar, the Swedish banking, insurance and pension provider, has decided not to go ahead with its planned demutualisation of its life arm due to regulatory changes.

Sten Dunér, chief executive of Länsförsäkringar Group, said the aim of the proposed demutualisation was to improve the opportunities for customers to safeguard their savings with high long-term returns. But he said it was clear that a demutualisation under reasonable conditions for both the customers and the company was no longer possible.

According to Länsförsäkringar Group, changes to EU regulations and Solvency II requirements that had taken place since the demutualisation plan was first proposed had made the endeavour much more difficult.

Dunér also said that the Swedish government was now conducting a study into how the rules governing demutualisation could be made clearer. He added that it became obvious during the planning process that the rules were difficult to interpret.

The Swedish regulator, Finansinspektionen, would also like clearer rules for demutualisation of life companies. In October 2009, the regulator denied Länsförsäkringar the right to demutualise. The situation was resolved when Länsförsäkringar changed its stance to that of the regulator, citing a regulatory misunderstanding.

But by this point the deadline for demutualisation of 10 January 2010 was no longer deemed realistic. The point of contention related to the valuation of unspecified assets that are not included in the balance sheet of the life-assurance company.

In a recent report, the regulator has used the Länsförsäkringar case as an example for the need for clearer rules to avoid misunderstandings. The regulator wants policyholders to have more influence over decisions to demutualise.


These stories were first published by Pensionsnyheterna, a Swedish-language specialist news service, and translated in agreement with IPE.com.