Regulatory Alerts2026-05-22
Report on Order to Nordea Pension, Livsforsikringsselskab A/S Regarding Co-investment and Joint Interest Rate Hedging
The Danish Financial Supervisory Authority ordered Nordea Pension, Livsforsikringsselskab A/S to supplement its ongoing monitoring of co-investment and joint interest rate hedging with controllable limits. These limits must establish precise criteria for adjusting investment groups and hedging strategies to prevent arbitrary, qualitative decisions that could lead to unfair redistribution among policyholders. Although no actual harm or inequity was found, the mandate ensures future adjustments are systematically governed to safeguard policyholder and beneficiary interests.
Decision 22-05-2026 As part of ongoing supervision, the Danish Financial Supervisory Authority (Finanstilsynet) on 19 May 2026 ordered Nordea Pension, Livsforsikringsselskab A/S (Nordea Pension) to supplement its ongoing monitoring of co-investment and joint interest rate hedging with controllable limits. These limits must determine when adjustments to co-investment and any joint interest rate hedging are to be made to ensure that the interests of policyholders and beneficiaries are safeguarded as effectively as possible*.
Summary
During a functional inspection of Nordea Pension, the Danish Financial Supervisory Authority requested the company to submit a report regarding co-investment and joint interest rate hedging in the average interest rate. The background was that the company had, from an investment and hedging perspective, merged several contribution interest rate groups.
The Danish Financial Supervisory Authority assessed that the company’s ongoing monitoring focused on policyholders’ interests, both regarding investment and contribution aspects in the form of possible redistribution between contribution interest rate groups as a result of co-investment and joint interest rate hedging. The Danish Financial Supervisory Authority simultaneously assessed that the company had not documented that this monitoring was based on controllable limits for when changes are to be made.
This approach entails a risk that changes occur arbitrarily and are based on qualitative assessments. There is consequently a risk that policyholders’ interests are not safeguarded as effectively as possible. There is also a risk of unfair redistribution among customers. The Danish Financial Supervisory Authority has not found that the deficiency has led to policyholders’ interests not being safeguarded as effectively as possible, or that an unfair redistribution has occurred.
The Danish Financial Supervisory Authority therefore assessed that the monitoring must be supplemented with concrete frameworks for when changes to the investment groups are to be made in order to mitigate the aforementioned risks.
*Insurance Business Act § 175, Management Order Appendix 2, point 5, and § 8, para. 1, no. 1
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