Collective funding ratio
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.
What is collective 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.
Funding policy for defined benefit insurance commitment
The funding ratio is normally allowed to vary between 125 and 175 percent. The following limits apply to the allocation of surpluses:
- 125 percent – lower limit for upward adjustment of pensions in payment
- 135 percent – lower limit for upward adjustment of paid-up policies
- 150 percent – lower limit for reductions in policyholder’s premiums
- 175 percent – lower limit for other refunds to policyholders