In January–September, Varma’s investments yielded a strong 8.8% investment return. Return on investments was EUR 3.9 billion, and the market value of investments rose to EUR 47.4 billion.
January–September was the most profitable first three quarters of the year for Varma since the financial crisis ten years ago.
“It has been a good year on the investment markets. From the perspective of a pension investor, the past ten years have been an exceptionally long period of upward momentum, which has substantially increased the pension assets of Finns,” states Varma’s President and CEO Risto Murto.
The nine-month return on investments was 8.8% (3.5%), and the market value of the investments stood at EUR 47.4 (46.9) billion. Solvency capital strengthened to EUR 11.3 billion (9.6 on 1 Jan). Equities generated especially good returns, at 16.3% (6.6%), of which listed equities yielded 18.0% (5.5%). Fixed income investments also performed favourably, yielding 4.2% (–1.2%). The return on private equity investments was 11.9% (12.2%), on hedge investments 3.6% (4.9%) and on real estate investments 2.6% (4.0%).
“Although uncertainty surrounding economic growth and the political environment has increased, the development of equities, considered a risky asset class, has been favourable, and the investment market has been calm. The central banks have introduced measures in a bid to boost slowing economic growth through monetary policy,” says Varma’s CIO Reima Rytsölä.
“Finland’s economic outlook is weighed down by trade wars and a global industrial recession. These have not significantly taken hold in Finland, but the risk of an economic slowdown is obvious. The trade war in particular threatens to have long-term repercussions on the operating environment of Finnish companies, even if deals are reached in trade negotiations by the end of the year,” says Murto.
PRI included Varma in the PRI Leaders’ Group
In an international assessment, the UN-supported Principles for Responsible Investment (PRI) included Varma in the PRI Leaders’ Group for its responsible investment work. The PRI identified investors with excellent responsible investment practices when selecting external asset managers and monitoring their operations.
A sustainable exchange-traded fund (ETF) developed by Varma was listed on the London Stock Exchange. The ETF was created jointly with the asset management company LGIM and the index investment company Foxberry. The ETF tracks the performance of European equities, taking sustainability criteria broadly into account.
Varma took part in the Global Real Estate Sustainability Benchmark (GRESB) assessment of real estate sustainability performance for the first time. With 68 points, the company scored two out of five stars. GRESB assesses the sustainability of the entire direct real estate portfolio.
Varma remains the most efficient company in the earnings-related pension sector
By the end of September, 16,700 new pension decisions were issued, which is 1.3% less than in the corresponding period last year. Of the different types of pension, the popularity of partial old-age pension grew again. There were 1,746 (1,448) applications for partial old-age pension, 21% more than the same period last year.
Growth in the number of disability pension applications continued, after reaching a turning point in the number of applications last year. Altogether 9,506 (8,826) applications were received in January–September, i.e. 8% more than one year ago.
The total amount of pensions paid out by Varma in January–September was EUR 4.3 (4.1) billion.
In January–September, EUR 41 million in TyEL premiums written were transferred to Varma from other earnings-related pension companies. Work-ability management services were revamped with the addition of new digital services, and by taking working life changes into account better than before. Varma’s efficiency remained good, and the company is the most efficient in the earnings-related pension sector. Varma used 66% of the expense loading to cover operating expenses.
At the end of September, Varma provided insurance for 557,000 (560,000 on 1 Jan) employees and self-employed persons and had 343,000 (343,000 on 1 Jan) pension recipients.
Varma has renewed its strategy for 2020–2025. Varma’s core task is to secure pensions. Varma provides its customers with the best client bonuses and services in the earnings-related pension insurance sector.
“As an earnings-related pension company, we have a clear basic mission: As part of the Finnish social security system, we look after the statutory pension cover of employees and the self-employed who are insured by Varma. We want to offer companies a competitive option for arranging pension cover for their employees in a way that also supports longer careers,” says Murto.
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 47.4 billion at the end of September 2019.
Katri Viippola, SVP, HR, Communications and Corporate Social Responsibility, tel. +358 400 129 500
Marjut Tervola, Communications Manager, tel. +358 45 673 0120
Interim report presentation (pdf)
Interim Report 1 January‒30 September 2019 (pdf)