Press release 16 December 2016

Position of Finnish life and non-life insurance sectors as at 30 September 2016: Solvency good, no surprises in stress test results

The solvency of the Finnish life and non-life insurance sectors is currently good. The solvency ratio of the life insurance sector was 173% and that of the non-life insurance sector 226%. Life insurance companies held 93% of their own funds in the form of highest-quality capital, and non-life insurance companies 98%. 

The solvency ratio must be above 100%, but in practice a company’s assessment of overall solvency needs requires setting its target above 100%.

Year to date, the return on investment in the life insurance sector was 5.2% and in the non-life insurance sector 3.8%. However, reinvestment risk continues to rise as bonds with a high yield mature.

The sluggish economic growth and uncertain operating environment eroded life insurance companies’ premium income, which fell 32% below the corresponding period in the previous year. The growth of premium income has also stalled in the non-life insurance sector. By contrast, the combined ratio for non-life insurance was at a record high.

The sectors’ solvency ratios are not comparable with the previous year’s figures, as the calculation method has changed, in line with Solvency II, towards a more market-consistent and risk-based approach.

Every company's assets higher than liabilities also in the stress scenarios
The Financial Supervisory Authority expanded the stress test of the European Insurance and Occupational Pensions Authority (EIOPA) into a national stress test covering all Finnish life and non-life insurance companies within the scope of Solvency II regulation. The stress test examined the vulnerability of companies to a scenario of prolonged low interest rates as well as declining interest rates and asset values (the so-called ‘Double Hit’).

The results did not show any unexpected factors affecting companies’ risk-bearing capacity. For life insurance companies in particular, the prolonged low level of interest rates turned out to be a more strenuous scenario than the Double Hit.

Every company’s assets exceeded their liabilities also after the stress scenarios.

‘Insurance companies are well advised to pay even more attention, in their own risk and solvency calculations, on one hand to the resilience of their business models, and on the other hand to the challenges created by the external operating environment,’ says Anneli Tuominen, Director General.

EIOPA announced the results of its test concerning European insurance companies on 15 December 2016.

Read the EIOPA press release (pdf)

To request an interview with

Anneli Tuominen, Director General, please contact FIN-FSA Communications, tel. +358 50 385 5154 (weekdays 9.00–16.00).


Solvency of life and non-life insurance companies (excel, in Finnish)