A stable, well-functioning financial market for allA stable, well-functioning financial market for allInternal transactions in life insurance companies – a follow-up inquiry
For several years, FI has emphasized the need for confidence-building measures within life insurance companies, in which mutuality requires that interests of savers must be assigned special importance.
One such measure is that transactions between the companies in a group or corporation must be fully transparent. It is important that life insurance companies formulate and apply documented guidelines about how intra-Group transactions are to be handled in order to neutralize the risk of conflicts of interest. The ultimate goal is that the savers' funds in life insurance companies are protected. Jointly with representatives of non-profit-distributing life insurance companies, FI has discussed criteria for what a good standard would imply in regard to rules and routines for internal transactions. The standard that has been developed for intra-Group transactions is a step towards providing company management and the Board with guidance in this work.
During spring 2005, FI conducted a survey of the regulatory mechanism for intra-Group transactions in eight non-profit-distributing life insurance companies and one mutual life insurance company. The companies that participated in the survey were Folksam Liv, KPA Pensionsförsäkring, Länsförsäkringar Liv, Nordea liv I, SalusAnsvar Liv, SEB Trygg Liv Gamla, SEB Trygg Liv Nya, Skandia Liv and SPP Liv.
After having studied the regulatory mechanism in the nine companies, FI could note that most of the companies had not prioritized any work to prepare rules for internal transactions. As far as FI could ascertain, only Nordea Liv I had prepared a complete regulatory mechanism for the management and control of internal transactions. The other eight companies had prepared guidelines that in certain areas could be regarded as satisfactory but in others could be regarded as insufficiently clear or firm.
FI reported its findings to the companies, which have now supplemented or revised their guidelines. Accordingly, satisfactory regulatory documentation is now in place within the surveyed companies.
As a result of the new legal requirements in regard to Board independence, the FI survey also included a study of the Board composition within the nine companies. In FI's opinion, this legislative requirement has been met.
FI has also studied the annual reports of the nine life insurance companies to ascertain how well the requirement in regard to accounting of related parties is met within the annual reports. FI can report that eight companies have included the requisite information but that information about relations to related companies, internal pricing and transparency could be improved. It was further noted that as recently as December 15 SalusAnsvar Liv totally lacked the information specified in the new regulations in regard to internal pricing and related-party agreements.
