Capital and solvency requirements

By the end of 2016, PensionDanmark’s regulatory capital was DKK 3.7bn. The company’s required regulatury capital was DKK 1bn, giving solid excess solvency.

As a Danish insurance company, PensionDanmark is subject to Danish solvency rules. According to the rule set, the required regulatory capitalis calculated, based on the company’s risk evaluation and sets a requirement for the size of the capital base. This is to ensure that the company has sufficient capital in relation to the accepted risks.

During 2016, the Board of Directors executed a risk evaluation, and decided to continuously follow the FSA’s standard formula.

PensionDanmark works systematically on the company's risks and has introduced a number of initiatives to monitor and limit them.

Regulatory capital and risk

DKKm 2016 2015
Financial risks after tax 1,392 1,406
Insurance risks 689 648
Correlation -325 -351
Operational risks 106 133
Of which, covered by provisions -888 -825
Required regulatory capital 972 1,011
Regulatory capital 3,676 3,587

Transition to Solvency II 

The international Solvency II rules will take effect from January 1st 2016 alongside a new executive order on preparation of financial statements.

In 2015, PensionDanmark prepared for the transition to the new rules – e.g. by appointing the individuals responsible for four key functions (risk management, compliance, actuary and internal audit).

In all, the new rules will entail changes to solvency ratio and evaluation of insurance provisions. However, the overall effect on PensionDanmark’s excess solvency is marginal. As such, the company will remain thoroughly consolidated despite the new solvency rules.

Under the stipulations of the Solvency II rules, the individual solvency requirement is estimated at 0,9bn DKK. Excess solvency amounts to 2,5bn DKK based on the new executive order and solvency rules.