Ilmarinen invested in Finland

In 2009, Ilmarinen recovered admirably from the financial crisis that erupted a year ago. Return on investments stood at 15.8 per cent, the best of all authorised pension companies. Throughout the year, the company continued its long-term investment strategy which essentially focuses on Finnish business and industry.

“Pension investment operations are carried out over a long time period which includes both ups and downs. What counts most is that we have been successful in securing pension assets in the long term,” stresses Ilmarinen’s President and CEO Harri Sailas.

At the end of 2009, Ilmarinen’s investments calculated at current value totalled EUR 25,180 (20,872) million. Net return on investments, calculated at current value, was 15.8 per cent, while having been negative, -17.7 per cent, in the previous year. In real terms, last year’s result is an all-time high for the company.

Ilmarinen’s returns were on a good level even when considered in the long term. Real return on investments has been 4.1 per cent per annum for the past 13 years. The average return has thus again risen above the 4 per cent real return mark used by the Finnish Centre for Pensions as a basic option when making contribution-level forecasts.

Ilmarinen’s unflinching belief in equities and shares was strengthened over the course of the year: investments in equities and shares, which accounted for 35 (30) per cent at market value, yielded the best returns last year of all investments. The return on listed shares rose to 34.8 (-42.2) per cent. Bonds also generated record returns at 17.1 per cent.

Strong focus on Finnish business and industry

Domestic equities and shares made up 40.9 (39.5) per cent of Ilmarinen’s investments in listed equities and shares. Even amidst the turbulence of the financial crisis, Ilmarinen wished to remain true to its focus on Finland.

“We were able to hold on to our Finnish equities and shares, even though the situation remained uncertain until late into the spring. I believe that this ultimately also benefited the Finnish national economy as a whole. Holding on to this portfolio was possible due to a strong solvency at the onset of the crisis and the temporary solvency act which gave us more scope,” Sailas says.

Sailas affirms Ilmarinen’s intention to be a responsible long-term investor and financier for Finnish companies also in the future. In 2009, Ilmarinen participated in Finnish companies’ share issues, hybrid loans and bonds with close to EUR 380 million. Early in the year, premium lending to companies also remained at a higher level than normal.

Insurance portfolio developed favourably

Along with economic uncertainty, markets were characterised by the incorporation of public services in 2009. This brought tens of thousands of people under the scope of private earnings-related pension schemes. In addition, many employers dissolved their pension funds. Ilmarinen’s performance in this critical period varied: its results were excellent in insuring state enterprises and moderate in fund accounts, but poor in universities’ competitive bidding.

“We can still be satisfied with our overall performance. What makes me happy is that in public tenders, the quality and contents of Ilmarinen’s service offering were typically assessed to be the best,” Sailas sums up.

As the economic downturn resulted in unemployment, the number of employees and self-employed persons insured with Ilmarinen decreased slightly. At year end, the number of insured was approximately 524,000 (533,000). The number of TyEL insured was about 472,000 (480,000) and the number of YEL insurance policies 52,200 (52,800). The company’s premiums written decreased by 2.5 per cent to EUR 3,184 (3,264) million last year.

Ilmarinen had 283 000 (273,600) pension recipients at the end of last year. Ilmarinen made a total of 22,495 new pension decisions during 2009 and disbursed a total of EUR 3,059 (2,703) million in pensions.

Solvency strengthened considerably

Solvency capital, i.e. the difference between the company’s assets and liabilities measured at current value, increased to EUR 4,877 (2,673) million, which was 24.0 (14.0) per cent of the technical provisions. Ilmarinen’s solvency capital at the end of the year was 2.7 (2.0) times the solvency border.

Without the temporary relief provided (for) by solvency regulations, the solvency ratio would have equalled 19.1 (9.5) per cent and the solvency position 2.2 (1.3).

Ilmarinen’s total financial result, i.e. underwriting result, investment result and loading profit, amounted to EUR 2,180 (-4,338) million. The loading profit, which describes operational efficiency, remained on a good level at EUR 28 (35) million. The ratio of operating expenses to the expense loading components available for them was 76 per cent.

Customers benefit from a good result

Buoyed up by cost-efficient operations and an outstanding investment result, client bonuses have returned to their previous good level. Ilmarinen will transfer EUR 52 (31) million of the 2009 result to client bonuses, which is approximately 0.4 (0.2) per cent of the insured payroll.

For more information, please contact:

Harri Sailas, President and CEO, tel. +358 10 284 3000
Jaakko Tuomikoski, Deputy CEO, tel. +358 10 284 3447, 050 66398
Timo Ritakallio, Deputy CEO, tel. +358 10 284 3838, 0500 536 346
Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. +358 10 284 3590, 040 757 4992
E-mail: firstname.lastname@ilmarinen.fi

Attachments:

Report of the Board of Directors and proposal of the Board of Directors for the disposal of profit (pdf)
Slides pertaining to the financial statements (pdf)

The figures in the financial statements press release and attachments are unaudited.

Annual Report, Annual General Meeting and interim financial report

The 2009 Annual Report in Finnish will be available online in week 12 and in print in week 13. The online version of the Annual Report in English will be published in week 13 and the online version of the summary in Swedish in week 14.

Ilmarinen’s Annual General Meeting will be held at 10:00 a.m. on 14 April 2010 at Ilmarinen’s headquarters, Porkkalankatu 1, Helsinki.

Ilmarinen publishes data on its result on a quarterly basis. The development of investment activities and solvency is monitored in between the full-year and half-year results.