Swiss insurers in good solvency condition for 2011: Regulator

ZURICH (Bloomberg)—Most insurers in Switzerland will pass a new solvency stress test at the end of April, according to the Swiss Financial Markets Supervisory Authority.

The results will be driven by interest rates and the capital measures the regulator required of the nine insurers that failed an initial test last year, Rene Schnieper, the regulator's board member responsible for insurance, told reporters in Zurich Tuesday.

Insurers must send their new Swiss Solvency Test reports to the authority, known as FINMA, at the end of April.

The new risk-based solvency rules introduced in Switzerland on Jan. 1 require insurers to provide a mark-to-market valuation of assets and liabilities that for the first time takes into account their investment portfolios. Low interest rates are making it hard for insurers to meet legally required minimum returns on life and pension policies, FINMA said.

Five of the six life insurers that failed to meet the 100% target received immediate help with raising solvency ratios from their parent companies, Mr. Schnieper said. He didn't comment on the other three insurers that failed the initial test.

FINMA may hone the Swiss solvency rules to better match the European Union's new Solvency II framework that is due to be introduced in 2013, said FINMA Director Patrick Raaflaub, adding that Switzerland won't adopt the Solvency II regime.

Copyright 2011 Bloomberg