Denmark’s financial watchdog has issued an official order to an arm of pension fund PenSam after finding failings regarding the calculation of solvency capital requirements for various parts of the firm’s business.
The Danish Financial Supervisory Authority (Finanstilsynet, FSA), announced it had conducted a functional inspection of PenSam Forsikring – the insurance arm of the DKK171bn (€22.9bn) labour market pension fund – in the fourth quarter of 2022 and the first quarter of 2023, concerning the firm’s calculation of the solvency capital requirement.
The FSA said it had found the company had not calculated the solvency capital requirement for the expected present value of the premiums on existing insurance contracts that the company would earn after the following 12 months, or for premiums associated with expected future insurance contracts with a risk period of one year or less, and where the insurance agreement was only recognised within the following 12 months.
In the statement released yesterday, the authority also said PenSam Forsikring had not calculated option risks on non-life insurance, nor a capital requirement for counterparty risk on type two exposures – even though the company had type two exposures in the form of insurance receivables and non-insurance receivables.
“The Danish Financial Supervisory Authority has ordered the company to correct the calculation of the solvency capital requirement in these areas,” the watchdog said.
Publishing a link to the FSA’s statement on its website, PenSam said: “PenSam Forsikring takes note of the Financial Supervisory Authority’s order. The orders given have been complied with.”
The PenSam group is owned by the public-sector workers’ trade union FOA.
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