Ilmarinen's financial statements 2008

Ilmarinen gained many new customers – financial crisis depressed result

• Premiums written increased by nearly 18 per cent to EUR 3.3 billion. The number of insured employees and entrepreneurs rose by 65,000.
• Ilmarinen paid EUR 2.7 billion in pensions to nearly 274,000 pensioners. Ilmarinen is responsible for the employee pension cover of over 800,000 people.
• The overall result was EUR -4,338.1 million.
• Return on investments was -17.7 per cent.

Ilmarinen’s insurance portfolio developed excellently last year. This also helped improve the company’s market position markedly. The total number of employees and self employed persons insured at Ilmarinen exceeded half a million, making Ilmarinen the largest employment pension company measured by the number of insured.

“The growth is a strong sign of confidence from our customers towards our expertise, services and competitiveness. Expertise, customer-orientation and cost-efficiency are the operational stabilisers that we will continue developing in the future as well,” CEO Harri Sailas says.

The number of employees and self employed persons insured with Ilmarinen grew by 65,000 last year and was 533,000 at year end (468,000 in 2007). There was approximately 480,000 TyEL insured and 52,814 (51,289) YEL insurances. As an insurer of self employed persons, Ilmarinen has been the market leader since the law entered into force. Ilmarinen had 52,814 (51,289) YEL (Self-Employed Persons' Pension Act) insurances at the end of the year. Overall, the company's premiums written increased by 17.7 per cent last year to EUR 3,264.4 (2,772.5) million.

Solvency on a solid basis

At the end of 2008, Ilmarinen's total investments calculated at fair value were EUR 20,871.7 (23,663.6) million. As a result of the crisis in the financial markets, the return of investments calculated based on fair values was negative, -17.7 per cent, compared to +5.7 per cent last year. The average annual income at fair value for Ilmarinen’s investments has been 5.0 per cent per annum calculated for the past 12 years, which corresponds with annual real income of 3.2 per cent. The investment reform in 1997 enabled taking a more extensive share risk.

Ilmarinen had most investments in bonds. At the end of the year it had 42 (38) per cent of the company’s investment assets in bonds. The best return among different investments came from real estate, which represented 12 (9) per cent of the investment portfolio. The total yield of the real estate investments was 6.1 (9.5) per cent. The biggest reduction in value was seen in shares, that represented 33 (47) per cent of the portfolio.  The yield from these investments, calculated at fair value, settled at -36.9 (9.1) per cent

The share of Finnish investments in Ilmarinen’s portfolio has remained strong. The portion of Finnish shares in listed share investments was 40.2 (38.9) per cent and Ilmarinen has even acquired more shares in Finnish companies.

 According to Sailas, Ilmarinen will continue to be a responsible long-term investor in Finnish companies. ”We truly believe in shares, and we will not decrease their portion in our investment portfolio considerably,” he explains. We are the biggest private owner of Finnish companies. ”We also provide considerable financing for Finnish companies. For instance, the share of relending increased strongly in late 2008.”

The amount of loans granted by Ilmarinen to corporations was more than doubled last year. At the end of the year, the loan portfolio amounted to EUR 2,695.6 (1,239.3) million and the portion of loans in total investments was 13 (5) per cent.

Solvency capital, i.e. the difference between the company's assets and liabilities measured at fair value, decreased to EUR 2,673.0 (6,068.8) million, so it represented 14.0 (32.5) per cent of the technical provisions used in the calculation of solvency.  The amount of solvency capital and related indicators are not, however, fully comparable to the previous year, because solvency legislation was revised in late 2008.

According to Harri Sailas the company’s solvency is on a solid basis even though last year was one of the most difficult years ever in the history of the financial markets. “The Finnish model for employee pensions has fared well,” Sailas says. ”Its genius lies in the fact that a plunge in share prices does not affect individual pensions. The risk is delayed and distributed to thousands of companies and hundreds of thousands of employees through pension payments.”

Ilmarinen's overall result in 2008 was EUR -4,338.1 (344.6) million. The result of the underwriting business under the company's own responsibility was EUR 76.4 (9.0) million.

Operational efficiency improved

The loading profit improved considerably and was EUR 34.7 (14.0) million. The expense loading actually decreased despite a clear increase in the customer base. Operating expenses financed with the expense loadings contained in the insurance premium actually decreased despite the clear increase in the number of customers. The ratio of operating expenses to the expense loading components available for them improved from 86 pre cent to 71 per cent.

Ilmarinen’s customers benefit from the improved operational efficiency. Of the 2008 result, Ilmarinen will transfer EUR 31 (74) million to client bonuses, which is 0.2 (0.6) per cent of the insured payroll. This is roughly the same amount as what the company has been able to save in customers’ money through efficient operations.

Ilmarinen had 273,605 (262,971) pension recipients at the end of last year. Ilmarinen made a total of slightly less than 20,383 new pension decisions during 2008 and the company disbursed a total of EUR 2,703.3 (2,398.4) million in pensions.

For more information, please contact:

• Harri Sailas, President and CEO, tel. 010 284 3000
• Jaakko Tuomikoski, Deputy CEO, tel. 010 284 3447, 050 66398
• Timo Ritakallio, Deputy CEO, tel. 010 284 3838, 0500 536 346
• Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. 010 284 3590, 040 757 4992

E-mail: firstname.lastname@ilmarinen.fi

Attachments:

Report on operations and proposal of the Board of Directors on use of the profit (pdf)

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

Annual Report, Annual General Meeting and interim financial report

The 2008 Annual Report in Finnish will be available on the Internet in week 11. The printed version of the Annual Report in Finnish will be published in week 12. The Annual Report in English will be released on the Internet in week 13, and the Internet version of the summary in Swedish in week 15.

Ilmarinen's Annual General Meeting will be held at 10:00 a.m. on 01.04.09 at Ilmarinen's headquarters, Porkkalankatu 1,Helsinki.