Sweden’s financial watchdog said Alecta has broken several regulations – an initial conclusion the authority has arrived at after investigating the high-profile investment failures that tipped the country’s largest pension provider into crisis a year ago.
A spokesman for the Swedish Financial Supervisory Authority (Finansinpektionen, FI) told IPE yesterday: “We have notified Alecta about our observations from our investigations. Our preliminary assessment is that Alecta has violated several regulations.”
He said FI had also moved the probe into a sanction review.
“This means that we now will make a legal assessment in order to find out if there are reasons for us to intervene,” he said.
Last September, FI announced an investigation into Alecta, regarding its investments in the property firm Heimstaden Bostad, whose largest shareholder is Swedish listed property firm Heimstaden.
The authority commented on the scope of that investigation at the time by saying its supervision included examining and assessing whether occupational pension companies followed rules that applied to investments.
The SEK1.29trn (€110bn) occupational pensions giant Alecta had already hired lawyers to conduct its own investigation into whether the Heimstaden Bostad investment it had made 10 years ago, followed the rules.
Alecta owns 38% of the value of the firm, but only has 30% of the votes, while Heimstaden owns the same amount but has 50.1% of the voting power.
FI’s probe around the Heimstaden Bostad investment – worth some SEK50bn – was in addition to a review already in progress on Alecta’s risk management and particularly how the Stockholm-based firm measured the risks in various investments.
That original investigation, initiated at the beginning of May 2023, had its starting point in the company’s investments in Silicon Valley Bank, First Republic Bank and Signature Bank – which resulted in SEK20bn of losses.
Asked for comment today, a spokesman for Alecta told IPE: “As part of the review process, Alecta has taken note of an opinion letter with FI’s preliminary assessments, and will respond to it in accordance with the usual process.
“After that, we have to wait and see how the Financial Supervisory Authority proceeds with the information we provided and what decision they make,” he said.
Alecta’s spokesman said there was still no decision from the FSA, but that this was an ongoing review process.
“When we received the opinion letter, work began on compiling our responses. This is therefore a work in progress,” he said.
“We will submit our answers to the FSA within the set time frame – we have until 6 September to submit answers,” the spokesman said.
The FI’s final decision and any action it takes could theoretically jeopardise Alecta’s position as default provider for traditional pensions in Sweden’s huge ITP occupational pension system.
The firm won a new five-year contract to supply the default option in March 2023, soon after revelations of the US bank losses.
Collectum, the body responsible for choosing providers for the ITP scheme, whose committee can reconsider contract awards, said last year it would follow the FI investigation process into Alecta closely, but take no measures until its outcome.
Skandia has recently called for an independent review of the ITP system, including an appraisal of the risks involved in having only one default option.
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