The insurance companies report their funding ratio to the Swedish Financial Supervisory Authority. Within the insurance industry a funding ratio of 100 percent indicates normal funding.
Collective funding is a buffer for Alecta’s insurance commitments to protect against fluctuations in investment return and insurance risks. It is the difference between Alecta’s assets and the company’s insurance commitments to policyholders and insured individuals.
The collective solvency is normally allowed to vary between 125 and 155 percent, with the target 140 percent. If the level of collective solvency is less than 125 percent or exceeds 155 percent, measures are to be taken in order to create conditions for restoring the level of collective solvency to the normal interval.