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BERN, Switzerland (Bloomberg)—Two of Switzerland’s 133 insurers need to take urgent measures to comply with a solvency test being introduced in January, the country’s market regulator said. Seven others were placed on a watch list.
The two must increase their capital or reduce their risks to remain in business, Alain Bichsel, spokesman for the Swiss Financial Market Supervisory Authority, said Wednesday in a telephone interview from Bern, Switzerland, without identifying the nine firms involved. Six of the companies are life insurers suffering as low interest rates make it harder to meet minimum returns on policies, Mr. Bichsel said.
The new solvency test will require Swiss insurers to provide mark-to-market valuations for assets and liabilities including investment portfolios. The nine insurers have fallen below the targeted solvency ratio of 100%, although they all have ratios of more than 60%, based on initial filings, the regulator said.
“Today’s news is reassuring for the Swiss sector, as no composite seems to be in trouble in Switzerland,” Fabrizio Croce, a Zurich-based analyst with Kepler Capital Markets, said in an e-mailed note to investors. Composite firms are those that offer a wide range of insurance services.
Switzerland’s largest insurers, including the biggest life company, Swiss Life Holding A.G., have said previously that their solvency levels under the new test would be higher than 100%.
More than half the country’s insurers have adopted FINMA’s standard model to calculate their solvency levels, Mr. Bichsel said. The rest are working with provisionally approved internal models that will need regulatory approval next year.
Handelszeitung reported earlier Wednesday that nine insurers would fail the planned Swiss solvency test, citing Mr. Bichsel.
Copyright 2010 Bloomberg
BERN, Switzerland—Switzerland’s insurance supervisory regime is “fundamentally solid,” but several areas need attention to ensure that systemic risk is kept in check, concluded a working paper released Monday by the Swiss Financial Market Supervisory Authority.