January–March 2021 result: Varma’s investments returned 6.0 percent, i.e. EUR 3.0 billion, in the first quarter of 2021

In January–March 2021, Varma recorded the best quarterly investment result in the company’s history. The return on investments in January–March was 6.0 percent, i.e. EUR 3.0 billion, and the total value of investments grew to EUR 52.9 billion.

“Varma had the strongest first quarter in the company’s history, boosted by the accelerated growth of the global economy. Finland could enjoy a growth spurt riding on the wave of the extremely strong economic growth in the U.S.,” says Varma’s President and CEO Risto Murto.

The return on Varma’s investments was 6.0 percent (Q1/2020: -10.0 percent), i.e. EUR 3.0 (-4.9) billion, and the total value of investments grew to EUR 52.9 billion (EUR 50.2 billion on 1 Jan). The investment result was affected in particular by the strong performance of both listed and private equities, as well as hedge funds. Equity investments yielded a return of 10.8 (-14.6) percent, of which private equities accounted for 16.0 (5.6) percent and listed equities for 9.2 (-21.1) percent. Other investments returned 4.4 (-13.9) percent, of which hedge funds accounted for 4.5 (-12.7) percent. The return on real estate investments was 0.9 (1.3) percent, and on fixed income investments it was -0.3 (-3.6) percent.

“Starting from the beginning of last November, we have witnessed an exceptionally strong period in the equity markets. It has been supported by the global economy’s recovery and strong fiscal and monetary policy stimulus, and not even the rising long-term interest rates have ruffled the equity market,” says Varma’s CIO Reima Rytsölä.

Solvency capital reached a new record-high level, EUR 13.5 (11.5 on 1 Jan 2021) billion, thanks to good investment returns. The solvency ratio was 133.5 percent (129.3 percent on 1 Jan).

First coronavirus cases in disability pension applications – applications are expected to increase

The repercussions of the coronavirus pandemic have been seen in the earnings-related pension company’s operations, for instance, in disability pension applications: In the first quarter, Varma processed six disability pension applications in which the long-term effects of the Covid-19 virus were the main reason for disability. One of these applicants was granted permanent disability pension.

“We can expect to see a significant increase in the number of disability pension applications from people who contracted the virus. It has only been over a year since the outbreak of the epidemic, and disability pension is usually applied for after having received sickness allowance for one year, if the disability is prolonged,” Murto points out.

The pandemic has made the operations of Varma’s small and mid-sized client companies, in particular, more difficult. Companies operating especially in the accommodation, restaurant and event industries have had to resort to furloughs and layoffs, and the restrictions have caused repayment struggles.

Varma’s sustainability practices were deemed excellent in international comparison

EcoVadis, an international corporate sustainability assessment platform, awarded Varma the Platinum EcoVadis Medal. Varma’s sustainability practices were rated as excellent, and it ranked in the top 1 percent of the 75,000 companies analysed.

In March, Varma was recognised as one of Finland’s Most Inspiring Workplaces for the third time in a row in Eezy Spirit’s employee experience survey. In spite of a challenging year, Varma achieved its best result ever in the survey.

In the first quarter, Varma donated 50,000 euros to the Deaconess Institute’s Vamos youth service to promote efforts to find employment for young people at risk of exclusion.

Varma is renewing its financial support for clients’ work ability projects

Varma is renewing its financial support for clients’ work ability projects. A new forecasting model for analysing the customer base’s disability risk will be used to target Varma’s financial support. The data-based forecast model enables more precise targeting of support and thus improves its effectiveness. The new operating model will be adopted gradually starting this autumn.

The co-determination negotiations that were initiated at Varma in the first quarter with the goal of reorganising the insurance services and customer accounts functions were concluded in March. As a consequence of the reorganisation, the employment relationships of 12 people will end. The negotiations involved 127 employees.

At the end of March, 538,000 (543,000 on 31 Dec 2020) employees and self-employed persons were insured by Varma, and 347,000 (347,000 on 31 Dec 2020) people were receiving pensions from Varma.

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 4.9 billion in 2020 and pension payments stood at EUR 6.0 billion. The company’s investment portfolio amounted to EUR 52.9 billion at the end of March 2021.

Additional information: 

Katri Viippola, Senior Vice President, HR, Communications and Corporate Social Responsibility, tel. +358 400 129 500 or katri.viippola(at)varma.fi   

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

Attachments:

Interim report presentation

Interim report 1 January–31 March 2021

You might also be interested in these