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Finansinspektionen (FI) is proposing changes in the method for the extrapolation of the discount rate. The changes are made following comments received from stakeholders during the first consultation. The updated proposal is now being submitted for a short consultation. The regulation is expected to enter into force at the end of the year.
The regulation regarding the discount rate regulates how insurance companies shall value long-term obligations such as pension commitments. The regulation not only affects the valuation of those obligations but also impacts indirectly on the undertakings’ risk and asset management. FI’s aim with the proposal that was presented in May was to narrow the gap between the current regulations and the pending Solvency 2 regulations, while at the same time making the regulation on the discount rate clearer.
The second consultation is limited and is a proposal for an updated method for extrapolation. FI intends to make additional changes to the original proposal from May, changes which are not subject to the current consultation. For example, FI intends to simplify the method used for calculating the credit risk adjustment. FI has made the assessment that these changes do not require any further consultation.
The consultation period is very short. Written comments to the updated proposal must be submitted no later than 27 September. FI will also hold a consultation meeting on 24 September, where FI will present the outline of the new proposal and allow stakeholders to ask questions.
