Swedish insurance companies assessed in stress test

The European Insurance and Occupational Pensions Authority, EIOPA, has conducted EU-wide stress tests to assess the resilience of European insurance undertakings to adverse market developments. In the Swedish part of the exercise, ten large insurance groups and insurance companies, who account for more than half of the Swedish insurance market, participated.

Before stress scenarios were applied, participating companies in the Swedish part of the exercise reported solvency capital in line with or above the requirements in the future Solvency 2 framework.

After applying a scenario where equity prices are severely stressed, several companies do not meet the solvency capital requirements. However, the companies have not been able to utilize all measures available in the Solvency 2 framework when calculating capital requirements in this exercise which would have mitigated the effects and improved the outcome.

Several of the participating companies in the Swedish part of the exercise also meet the solvency capital requirements in a prolonged low interest rate environment, a "Japanes-like scenario". Swedish life insurance companies however appear more vulnerable to a period of prolonged low interest rates than other European.

The stress tests comprised two elements, one part where market- and insurance risks were tested and one part where the impact of a prolonged low interest rate environment on life insurance undertakings was analyzed.