(Corrects in third paragraph to "corporate bonds" from fixed
STOCKHOLM Dec 15 Sweden's financial regulator
said on Thursday it had dropped plans to change its so-called
traffic light model for insurers after companies had argued the
proposed changes constituted an additional capital requirement.
The Financial Supervisory Authority (FSA) said in a
statement that changes in the model could have major
consequences for the companies' asset allocation and may by
extension affect the stability of Swedish capital markets.
"Some assets would have been less favourable to hold in the
model, for instance corporate bonds and mortgage bonds, and
FSA has taken it to heart," Swedbank analyst Ingrid
"We will probably see some market reactions on this - it is
positive for mortgage bonds and not so good for government
FSA said in October it wanted to revamp their model that
assess whether insurers can meet their pension payout
To help guarantee their liabilities, pension fund managers
were asked to hold a certain proportion of their assets in
low-risk instruments such as government debt, a proposal that
risked cutting bond market liquidity, analysts
Instead of introducing the new model, the FSA will ask
companies to provide complementary information about potential
risks in their operations.
(Reporting by Johan Sennero; Editing by Alistair Scrutton)