January–June 2019 was the most profitable first half of the year for Varma in 20 years.
“Returns were good in the first half of the year, despite the clear increase in uncertainty in the real economy,” says Varma’s President and CEO, Risto Murto.
The return on investments in January–June was 6.9% (1.7%), and the market value of the investments stood at EUR 46.5 (46.4) billion. The investment returns reinforced the solvency capital, which rose to EUR 11.0 billion (EUR 9.6 bn on 1 Jan).
Of Varma’s investments, equity investments generated the highest returns, at 12.5% (3.3%), with listed equities yielding 15.3% (2.6%). Fixed income investments also yielded positive returns in the first half of the year, at 3.5% (–1.5%). The return on private equity investments was 4.5% (7.8%) per cent, on hedge-fund investments 3.1% (3.4%) per cent and on real estate investments 1.9% (2.7%) per cent.
“After a strong first quarter, the return development was more moderate in the second quarter. All asset classes nevertheless generated positive returns. A key factor for the good return development was a change in direction by the central banks towards lighter monetary policy,” says Varma’s Deputy CEO, Chief Investment Officer, Reima Rytsölä.
“The US–China trade war that has lasted more than a year is escalating, and it is affecting the real economy. For Finland, the threat is that the tense situation will have long-lasting impacts. An escalating trade war and decelerating global industrial production will inevitably come down on Finland’s economic growth. At the same time, the revitalising power of a low-interest economy will weaken,” says Murto.
Partial old-age pension applications increased more than 25 %
Varma made 11,061 new pension decisions during the first half of the year, i.e. 3.9% more than one year ago. Of the different types of pension, the popularity of partial old-age pension grew again. There were more than a quarter more applications for partial old-age pension than in the comparison period, and the pension was granted to 1,273 (1,006) people.
Growth in the number of disability pension applications continued. Altogether 6,711 (6,159) applications were received in January–June, i.e. 9% more than one year ago. The number of disability pension applications took an upward turn last year after a long period of decline.
In the first half of the year, an additional net amount of EUR 21 million in TyEL premiums written was transferred to Varma from other pension companies. The core of customer work is work ability management, for which Varma is constantly developing tools; the latest ones being the new questionnaire tools for the early identification of work ability risks. With efficiency remaining good in the first half of the year, Varma is the most efficient company in the earnings-related pension sector. Of the amount reserved for operating expenses, Varma used 67%.
Varma joins initiative to promote decent work
Varma has joined the Workforce Disclosure Initiative, an international initiative to promote decent work. It aims to improve employees’ conditions in companies’ operations and supply chains.
At the end of June, Varma provided insurance for 558,000 (560,000 on 1 Jan.) employees and self-employed persons and for 343,000 (343,000 on 1 Jan.) pension recipients.
Varma Mutual Pension Insurance Company is a responsible and solvent investor. The company is responsible for the statutory earnings-related pension cover of some 900,000 people in the private sector. Premiums written totalled EUR 5.1 billion in 2018 and pension payments stood at EUR 5.7 billion. Varma’s investment portfolio amounted to EUR 46.5 billion at the end of June 2019.
Further information:
Katri Viippola, SVP, Communications, HR and CSR, tel. +358 400 129 500
Marjut Tervola, Communications Manager, tel. +358 45 673 0120
Attachments:
Half-year report presentation (pdf)
Half-year report 1 January–30 June 2019 (pdf)