The Financial Supervisory Authority of Norway has published an on-site inspection report for Havtrygd Gjensidig Forsikring covering governance and control, risk exposure and capitalisation. The supervisor highlights material weaknesses in the firm’s control framework and sets expectations for the board to strengthen oversight, including around foreign expansion planning, Solvency II reporting and currency risk management. Key points include the need to quantify and forecast the effects of the insurer’s planned foreign expansion, document the board’s assessments and targets, and establish an implementation plan. Board reporting on underwriting performance is expected to be improved after Finanstilsynet found inconsistencies in reported loss ratios and that IBNR and unallocated loss adjustment expenses were not reflected in management reporting. The report also challenges the current split of responsibilities in the second line, noting inherent conflicts where the head of risk management is also the chief financial officer and acts as a first-line actuary, and it questions who independently controls Solvency II reporting and capital requirement calculations. Finanstilsynet also calls for more complete documentation of technical provisions methodologies, an ORSA process based on more up-to-date capital requirement calculations, revised contingency planning for capitalisation, more specific derivatives guidelines, and a board-set risk appetite and risk tolerance limits for currency risk, including consideration of currency effects linked to the minimum capital requirement being denominated in EUR. Finanstilsynet requests a copy of the minutes from the board meeting at which the inspection report is considered and asks the firm to send the letter to its auditor. It also asks the board to submit the consolidated documentation for calculating technical provisions and the enhanced IBNR modelling once finalised.
Norwegian Finanstilsynet 2025-02-11
Financial Supervisory Authority of Norway flags serious governance and Solvency II control weaknesses at Havtrygd Gjensidig Forsikring
Norway's Financial Supervisory Authority's report on Havtrygd Gjensidig Forsikring identifies significant weaknesses in governance, risk management, and capitalisation. It calls for improved oversight in foreign expansion planning, Solvency II reporting, and currency risk management, highlighting conflicts in the control framework. Finanstilsynet requests enhanced documentation and board reporting, including technical provisions methodologies and IBNR modelling.