SWEDEN Law and Practice Contributed by: Viveka Classon, Karin Rättzén and Sara Stålebring, Advokatfirman Vinge KB
4. Transaction Activity 4.1 M&A Activities Relating to Insurance Companies Acquisition of a Qualified Holding of Shares in an Insurance or Reinsurance Undertaking A direct or indirect acquisition of shares in an insur- ance undertaking, which results in the acquirer’s total holding becoming a qualified holding, requires author- isation from the Swedish FSA. A qualified holding is a direct or indirect holding in a company which rep- resents 10% or more of the capital or voting rights, or which otherwise makes it possible to exercise a significant influence over the management of the com- pany. The same requirements apply to acquisitions that increase a qualifying holding to the point where it amounts to or exceeds 20%, 30% or 50% of the share capital or the voting rights, or such that the insur- ance undertaking becomes a subsidiary. Authorisation must be sought prior to the acquisition of shares. If an acquirer has already obtained authorisation from the Swedish FSA for a specific threshold, but intends to increase its total holding to meet or exceed a new threshold, prior authorisation from the Swedish FSA is required. Similarly, if the acquirer decides to dis- pose of a qualified holding or a significant portion thereof, causing the remaining holding to fall below any threshold, the acquirer must notify the Swedish FSA in writing. According to the Swedish Foreign Direct Investment Act ( Lag (2023:560) om granskning av utländska direk - tinvesteringar ) (the SFDI) implemented under Regula- tion EU 2019/45 for the screening of foreign direct investment (FDI) in the Union, an acquisition of shares in an insurance undertaking may, under certain cir- cumstances, require authorisation under the SFDI. Transfer of Insurance Portfolios A (re)insurer authorised under the IBA or the FIAA may, wholly or partially, transfer a portfolio of (re)insurance to a (re)insurer authorised to conduct insurance or reinsurance business in Sweden or in another EEA country. Such transfers are subject to procedural rules and approval by the Swedish FSA.
Trends in M&A in the Insurance Area Due to increased legislation and requirements on insurance undertakings, a trend within the insurance M&A market is for smaller insurance undertakings to consolidate, most often through portfolio trans- fers, into larger Swedish insurance undertakings. A further trend in the Swedish insurance market is for the consolidation of smaller insurance intermediar- ies to create larger intermediary companies, many of which are owned by private equity firms. We have also seen examples lately of major insurance undertakings acquiring fintech insurance intermediaries. 5. Distribution 5.1 Distribution of Insurance and Reinsurance Products Regulatory Requirements for Insurance Distribution The distribution of insurance and reinsurance prod- ucts is regulated by the IDA which brings into effect the IDD, implementing and delegated acts under the IDD, regulations and guidelines issued by the Swedish FSA and guidelines issued by EIOPA. The IDA applies to those who: 1) advise on or pro- pose insurance contracts or carry out other work preparatory to the conclusion of insurance contracts; 2) conclude insurance contracts; and 3) assist in the administration or performance of insurance contracts. An insurance intermediary must be duly authorised by the Swedish FSA pursuant to the IDA or registered with the Swedish Companies Registration Office as a tied insurance intermediary for an insurance undertak- ing under a distribution agreement. The distribution agreement must ensure that the insurance undertak- ing is liable for any pure economic loss resulting from the tied distributor’s liability to customers as a result of the tied distributor’s intentional or negligent breach of its obligations under the IDA. The insurance undertak- ing must also ensure that the management of the tied distributor has sufficient knowledge and experience to conduct insurance distribution. The distribution of insurance-based investment products or occupational pensions exposed to market fluctuations requires a licence from the Swedish FSA.
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