Seeking the hidden volatility
The twin changes of the introduction of risk based solvency regulations and a demutualisation saw Swedish insurer, SPP, make a significant impact on the balance sheet of parent company Handelsbanken. Life & Pensions looks at how it managed to derisk its portfolio and its future exposure. Aaron Woolner reports
The first of January 2006 was a key moment for the Swedish insurance industry as it marked the introduction of a new risk-based solvency regulation - the so-called traffic light regime. The move away from a fixed discount rate to one which changed in line with the vagaries of the market has proved troublesome for companies across the continent - but SPP made things even more difficult for themselves by choosing the same day to demutualise.
Prior to this, SPP had been that unique Swedish
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