Bank fined for miscalculating its capital need

  • 15 May 2020

ORX News story of the month: April 2020

Each month, we share a free operational risk loss event story from ORX News. The story is handpicked by the team as one of the most interesting stories reported by the service in the previous month. This story was published by the service in April 2020.

Skandia Liv fined for miscalculating its capital need

In April, the Swedish financial regulator Finansinspektionen (FI) fined insurance company Skandia Liv $3.5m for miscalculating its capital need, which lead to the incorrect assessment of customer protection and the company’s solvency.

FI’s investigation focused on the period between the last quarter of 2016 and the third quarter of 2019 and found that Skandia Liv had used an inaccurate assumption of lapse risk. This meant that it had not calculated correctly and realistically its commitments and capital set aside, which impeded the fair assessment of protection for customers and the company’s solvency. Furthermore, the documentation for the calculation of commitments demonstrated deficiencies that further impeded the assessment.

FI considered Skandia Liv’s failure over an extended period to be serious but considered the measures the company had taken to rectify the deficiencies. Therefore, Skanda Liv received a warning in addition to the administrative fine of $3.5m.

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Op risk losses categorised for easy analysis

Every single ORX News story is categorised to help you get the most from the data. The categories include the business line, event type, scenario category. All of this information makes it easier for you to use and analyse the loss events.

Extract of the data for this story from ORX News:

Business line: Life & Pensions
Event type: Clients, Products & Business Practices
Loss amount: USD 3,471,300.00
Country: Sweden
Scenario category: Improper Business Practice

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