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DNB will adjust the method for extrapolating the interest rate curve using an Ultimate Forward Rate (UFR), which is set at 4.2 per cent, to be reached in 40 years from the point of 20 years. This will result in a more stable interest rate for long maturities, reducing the degree of fluctuation in insurers’ solvency positions. In making this adjustment, DNB anticipates Solvency II for insurers.
DNB plans to implement this adjustment for the interest rate curve used by insurers in determining their solvency position at the end of the second quarter of 2012. DNB unreservedly expects insurers to exercise restraint in paying out dividends and to take measures to reinforce their capital position.
For pension funds, the method for determining the interest rate curve remains unchanged at 30 June. The Ministry of Social Affairs and Employment is consulting with the pension sector and DNB on the possibility of bringing forward, in a balanced manner, components of the new supervisory framework for pension funds, according to the timeline announced by the ministry.