The value of Varma’s investments rose to EUR 45 billion
Varma’s investments yielded a return of 4.7 (–0.3) per cent, i.e. EUR 2.0 billion, in January–June. The market value of the investment portfolio reached a new record of EUR 45.0 (41.2) billion.
“Varma has been having a good year, and we are pleased with the strong result in the first half of 2017. As a pension investor, we have seen the post-financial-crisis recovery in the markets for a long time now, but so far it has mainly only affected the investment markets. The upswing has finally also reached Finland’s economy,” says Varma’s CEO, Risto Murto.
“Growth in the first half of the year was brisk, and there were many drivers, such as exports, private consumption and investments. Stronger growth in employment is still needed for a perfect performance. Hopefully we will see that next,” adds Murto.
Solvency capital strengthened to its highest level in Varma’s history, reaching EUR 11.2 billion (10.2 on 1 Jan.), i.e. 133.3 per cent (130.9 on 1 Jan.) in relation to the technical provisions.
Consistent returns on the entire portfolio
Equities yielded the highest returns in the investment portfolio, at 7.0 (–3.1) per cent, with listed equities performing especially well, at 7.9 (–5.0) per cent. The return on fixed-income investments was 2.9 (2.2) per cent.
“We succeeded in achieving consistent returns in all asset classes. In addition to equities, the return on fixed income investments was excellent, bearing in mind the level of market interest rates,” says Varma’s CIO, Reima Rytsölä.
The return on real estate investments was 2.5 (2.6) per cent, of which real estate investment funds generated the highest returns, at 4.5 (2.9) per cent. The return on hedge fund investments was 3.6 (–0.6) per cent.
European economic growth surprisingly strong
“Economic growth in the eurozone has been a positive surprise in the markets. The US, however, falls somewhat short of the most optimistic growth forecasts, and political uncertainty has increased as the Trump administration’s ability to enact new decisions has proved to be weak,” says Rytsölä.
“At the same time, inflationary pressures have been conspicuous in their absence, and monetary policy stimulus measures have continued to be very effective,” he adds.
The average nominal investment return over five years was 6.8 per cent, and over ten years 4.2 per cent. The corresponding real returns were 6.1 and 2.7 per cent.
Varma’s investment portfolio well aligned with the Paris Climate Agreement
Varma placed in the top six European investors in an assessment commissioned by the WWF. The WWF compared how aligned Europe’s largest investors are with the Paris Agreement’s 2-degree climate target.
Number of new pension decisions increased – development of digital services continues
Varma receives most of its pension applications online.
“Our customers are increasingly taking care of their matters online. We have taken into use a software robot for the first time in our pension services. The robot frees up our personnel so that they can focus on more demanding expert and customer work,” says Murto.
Varma made 17 per cent more new pension decisions during the period under review than in the corresponding period last year (13,300 decisions). A total of 25,822 pension decisions were made in January–June. The new partial early old-age pension was granted to 1,636 people in the first half of the year. At the end of June, 536,000 employees and self-employed persons were insured by Varma.
Varma Mutual Pension Insurance Company is the largest earnings-related pension insurer and private investor in Finland. The company is responsible for the statutory earnings-related pension cover of some 878,000 people in the private sector. Premiums written totalled EUR 4.7 billion in 2016 and pension payments stood at EUR 5.3 billion. Varma’s investment portfolio amounted to EUR 45.0 billion at the end of June 2017.
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