Financial information & investments

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Efficiency at record level, the last quarter pushed investment return into the negative

The unstable performance of global equity markets in the final quarter of the year pushed Varma’s investment returns for the full year into negative territory. At year-end, the market value of Varma’s investments stood at EUR 44.0 (45.4) billion. Efficiency improved further to an all-time record high. Varma used 60% (67%) of the insurance contributions meant for operating expenses.

News release
Financial Statement presentation (pdf)
Report of the Board of Directors (pdf)

Varma’s investments

Varma invests the assets collected as pension contributions profitably and securely for current and future pensions. At year-end, the market value of Varma’s investments stood at EUR 44.0 billion, of which 26%, i.e. EUR 10.9 billion, is invested in Finnish society. We mainly invest in fixed income, equities, real estate, and hedge funds.

Read more about our investment principles (pdf)

Solvency

The solvency capital, which serves as a risk buffer for investment operations, was EUR 9,619 million at the end of the year 2018, and 127.5% in relation to the technical provisions. Varma’s solvency capital was on a sustainable level, i.e. 1.6 times the solvency limit. More information is available in our news release.

Strong solvency upholds confidence in pension provision. Better investment returns mitigate the pressure to increase pension contributions. Varma’s strong solvency benefits our clients through lower insurance contributions.

In good investment years, investment returns are used to increase the solvency capital, while in lean investment years, the solvency capital shrinks. Good solvency enables Varma to aim for higher returns by making higher-risk investments. As a rule of thumb, one percentage point more in investment returns in the long term means a two-percentage-point drop in pension contributions.

Varma's climate policy

Varma has determined the carbon footprint of its investments and has published its climate policy, which details how the company will achieve a lower-carbon portfolio.

Read more

Responsible investment

Varma invests in a responsible manner. We incorporate responsibility system-atically in all our investment operations.

We require that our investees comply with international agreements and standards, the most important of which are:

  • The UN Global Compact initiative on corporate responsibility
  • The OECD guidelines for multinational enterprises
  • The ILO labour conventions

The topics covered by Varma's principles for responsible investment include mitigating climate change, which is one of Varma's CSR targets. Because this topic is so important and topical, we have drawn up a separate climate policy. Responsibility in also included in our ownership policy.

Varma has signed the UN Principles for Responsible Investment (PRI) and published a PRI responsible investment report:

Varma has also signed the CDP (formerly Carbon Disclosure Project), and joined the PRI-supported Montréal Pledge initiative.

Varma’s Principles for Responsible Investment (pdf)

Varma’s responsible investment policy

Carbon footprint of Varma’s investments

Share ownership policy (pdf)

Varma’s corporate social responsibility

Share ownership policy

We have published our updated share ownership policy, which describes the expectations Varma has of companies in which it is a major shareholder.

Read more:

Varma's share ownership policy (pdf)

Varma's memberships in shareholders' nomination boards of listed companies (pdf)

News release: Varma brings good governance and responsibility to the core of its ownership steering

Shareholder meetings of Finnish listed companies and Varma's voting 2018 (pdf)

Corporate social responsibility

Varma's operations are based on work performed in Finland. Earnings-related pension is the main source of income for most pensioners. We have a strong commitment to social and economic responsibility, and as a significant Finnish real estate investor we also take responsibility for the environment.

Earnings-related pension provision forms an integral part of Finnish social security, combining both economic and social targets. Varma's economic responsibility involves ensuring the company's own profitability, and at the same time the competitiveness of the earnings-related pension scheme, in a sustainable manner. First and foremost, economic responsibility involves managing pension assets – the company must produce strong returns in the long term on the pension assets entrusted to its care.

For Varma, social responsibility means taking care of the sustainability of earnings-related pension provision. It means responsible investments, efficient earnings-related pension provision and flexible services for our customers. We want to be a pioneer in workability management. It is important for us to develop well-being at work and rehabilitation schemes. It is how we carry our responsibility for the well-being of our client companies' personnel and for the quality of Finnish working life.

Read more:

Financial, social and environmental responsibility (pdf)

Responsible investment

Previous financial information

Read more

Annual Reports

Read more

Current issues

Varma’s Annual and CSR Report also includes disclosures on climate-related risks in accordance with the TCFD
News
28.03.2019
Varma and S-Bank join international tobacco-free initiative that aims to get investors to withdraw their investments from the tobacco industry
News
15.03.2019
Efficiency at record level, the last quarter pushed investment return into the negative
News
15.02.2019
Varma has updated its investment blacklist – industries excluded for ethical and climate reasons
News
31.01.2019
Pension funds have been divesting investments in fossil energy – Varma requires investees to make plans for reducing emissions
News
18.12.2018
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