Varma’s January–March 2022 result: Solvency remained strong in an unstable market

Varma Pension Insurance Company’s solvency remained strong in the first quarter of the year. Unlisted investments yielded positive returns, while the overall return was negative due to the fall in share prices during the first quarter.

The return on Varma’s investments in January–March was -1.9 (6.0) per cent. The value of investments was EUR 57.6 (59.0 on 1 Jan) billion at the end of March.

“The war in Ukraine is a deep societal and humanitarian crisis, which so far has had quite limited impacts on the investment markets, considering the devastation the war has caused,” says Varma’s President and CEO Risto Murto.

Of Varma’s investments, the best returns were generated by private equities, 5.5 (16.0) per cent, unlisted equities 5.2 (5.2) per cent, real estate funds 3.4 (1.1) per cent and hedge funds 2.1 (4.5) per cent. Of the main asset classes, equity investments yielded -3.5 (10.8) per cent, fixed income investments -2.7 (-0.3) per cent, real estate investments 2.0 (0.9) and other investments 2.2 (4.4) per cent.

“The large weight of U.S. investments helped offset the fall in share prices in the first quarter. The U.S. equity markets in particular have made a rapid recovery and already clearly surpassed the pre-war share price level. Otherwise, the sentiment on the capital markets has been relatively calm since the war started,” says Varma’s CIO, Reima Rytsölä.

Varma’s solvency capital remained strong, at EUR 15.8 (16.9 on 1 Jan) billion, i.e. 1.8 (2.0 on 1 Jan) times the solvency limit.

“Despite the strong recovery of share prices, the rest of the year does not look rosy from an investor’s point of view. The war and the economic sanctions imposed on Russia further drove up inflation, which is the last thing the markets needed. There is an urgent need, however, for central banks to tighten their monetary policy, even though the risk of stagflation, i.e. a combination of high inflation and economic stagnation, exists,” Rytsölä estimates.

“In the short term, high energy prices and accelerating inflation also pose a central risk to economic growth in Europe. The future outlook will depend on how much inflation spreads outside the energy markets and the outcome of Russia’s attack on Ukraine,” states Murto.

IT cost analysis indicates that Varma’s cost level is competitive

According to a cost analysis commissioned by Varma in February and March 2022, the company’s IT costs are significantly lower than peer companies in northern and western Europe.

Varma’s costs accounted for 0.85 per cent of its premiums written, while the peer group’s median IT costs were 1.17 of their premiums written. Infrastructure’s share of the costs proved to be particularly efficient and were almost 50% less than those of the peer group. Varma commissioned the analysis on its IT costs in 2021 from an international consulting company.

“The comparison confirms that Varma’s work on the IT system and the collaboration between Finnish pension companies have been beneficial. A significant proportion of the sector’s basic systems is shared, which means their costs are also divided among the companies,” says Murto.

The peer group in the analysis consisted of 18 pension, non-life and life insurance companies as well as financial institutions from the Nordic countries, the Benelux countries, France, Germany and Italy that are of about the same size as Varma in terms of premiums written.

The total payroll of Varma’s client companies grew nearly 7 per cent, and the YEL income of new entrepreneurs rose

The TyEL payroll of Varma’s client companies grew 7 per cent in January–March compared to the same period last year. The most positive development in the payroll was seen in employment activities, especially in temporary staffing and in business and development services, such as business management consulting.

The level of confirmed income in new entrepreneurs’ pension insurance also increased in the first quarter of the year compared with the comparison period. The confirmed YEL income of a new entrepreneur is increasingly often at least EUR 20,000.

There was a 7 per cent uptick in the number of new disability and partial disability pension applications in the first quarter of the year compared with the first quarter of last year. Of the different types of pension, partial early old-age pension held its popularity. Nearly one in four people retiring on old-age pension in January–March had first retired on partial early old-age pension.

New Sustainability Programme and Climate Policy for Varma’s Investments under preparation

In February, Varma was recognised as one of Finland’s Most Inspiring Workplaces in Eezy Flow’s survey for the fourth time. The result of Varma’s personnel survey clearly exceeds the average level of Finnish specialist organisations.

In March, Varma published for the first time a calculation of its value chain emissions as part of its Annual and Sustainability Report. The calculation showed that approximately 98 per cent of Varma’s greenhouse gas emissions are caused by the value chain, or scope 3 emissions, the majority of which are caused by investment activities. Other significant indirect emissions are generated by, for instance, purchased IT services, property renovations and new construction.

Varma is preparing a new Sustainability Programme and an updated Climate Policy for Varma’s Investments, both scheduled for publication in the second quarter of the year. The Sustainability Programme and the Climate Policy, along with their targets, will guide Varma’s sustainable business and investment activities to a new level and also encourage Varma’s stakeholders to operate more responsibly.

Varma Mutual Pension Insurance Company is a responsible and solvent investor of pension funds. The company is responsible for the statutory earnings-related pension cover of some 909,000 people in the private sector. Premiums written totalled EUR 5.6 billion in 2021 and pension payments stood at EUR 6.2 billion. The company’s investment portfolio amounted to EUR 57.6 billion at the end of March 2022.

Media contacts:

Katri Viippola, Senior Vice-President, HR and Communications +358 400 129 500 or katri.viippola(at)   

Suvi Vesterinen, Communications Manager, tel. +358 40 555 8029 or suvi.p.vesterinen(at) 


Interim report presentation

Varma Interim Report 1 January–31 March 2022

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