Ilmarinen’s confidence in shares rewarded by good returns

- Return on investments at market value was 6.6 per cent in the January to June period.
- The company’s solvency was significantly strengthened and at the end of June stood at 18.2 per cent of technical provisions.
- Ilmarinen’s premium income remained at its previous level, but it is expected to start slowly decreasing during the latter part of the year.
- The number of pension applications increased by 25 per cent.

Ilmarinen continued to have confidence in shares even during the turmoil of the financial crisis. “Our forbearance was rewarded when the return on investments during the second quarter was the best ever in Ilmarinen’s history. Our good solvency allowed us to maintain our equity allocation. This also gave support to Finnish companies as our shareholding acted as an anchor for them during difficult times. Now we are benefiting from this risk-taking,” says CEO Harri Sailas.

The return on Ilmarinen’s investment portfolio at market value was 6.6 per cent during the first half of the year, compared with a 4.9 per cent negative return during the first half of 2008. At the end of June, the market value of investment assets totalled EUR 22.9 billion (12/2008: 20.9).

“A large part of the impairments taking place during the financial crisis have been restored. We are rapidly returning to the growth track of four per cent that has normally been the basis for forecasting the trend in future pension contributions,” Sailas assesses.From the beginning of 1997, the average annual return of Ilmarinen’s investments has been 5.4 per cent, or 3.6 per cent in real terms.

“We should bear in mind that this is specifically a question of changes in the value of investments. They should not give the pensioners any reason to fear or cheer. The pensions will not be capped in the Finnish system when the value of investments plummets nor are they increased during better times. This forms the basis of the reliability and predictability of employment pensions.”

Solvency was strengthened - the recession is reflected in the number of pension applications

Listed equities generated the best return during January-June, 12.7 per cent.In all, the return on Ilmarinen’s equity investments stood at 8.8 per cent during the first half of the year. Bonds also yielded a good return, 10.4 per cent. Shares and participations accounted for 23 per cent of investments, fixed income investments without loan receivables for 48, real estate 11 and loan receivables 14 per cent. Ilmarinen’s hedge fund investments accounted for 2 per cent.

In January–June, the net income from Ilmarinen’s investments amounted to EUR 1,413 million compared to a loss of EUR 1,255 million in the previous year. The interest credited to technical provisions amounted to EUR 532 million. The investment result, calculated as the difference between the net income and the interest credited, amounted to EUR 881 million.

Ilmarinen’s solvency has strengthened considerably. At the end of June, the solvency rate was 18.2 per cent, and the solvency capital was 2.9-fold in relation to the solvency border. At the end of 2008, the figures were 14.0 per cent and 2.0. The ratio of operating expenses to the expense loading components available for them continued to be good, 77 per cent.

The recession also put an end to the long period of excellent growth of Ilmarinen’s customer base. This was reflected in the premium income that is estimated to decrease this year by 0.8 per cent from the previous year, amounting to EUR 3.2 billion. At the end of June, approximately 474,000 employees were insured by Ilmarinen under a TyEL policy and approximately 52,000 self-employed persons under a YEL policy, a total of 526,000 people insured, a decrease of more than 6,000 from the previous year.

The poor employment situation and the baby boomer generation reaching its retirement age are reflected in the number of pension applications. During January–June, Ilmarinen received about 13,500 applications, an increase of 25 per cent from the previous year.In June, there were 277,000 pension recipients, and in December–June, the company paid pensions amounting to a total of EUR 1.5 billion.

For more information, please contact:

- Harri Sailas, President and CEO, tel. 010 284 3000
- Jaakko Tuomikoski, Deputy CEO, tel. 010 284 3447, 050 66 398
- Timo Ritakallio, Deputy CEO, tel. 010 284 3838, 0500 536 346
- Päivi Sihvola, Communications and HR Manager, tel. 010 284 3590, 040 757 4992

E-mail:firstname.lastname@ilmarinen.fi

Attachments:

- Overview of Ilmarinen’s operations and financial performance 1 January to 30 June 2009 (pdf)
- Key figures and tables (pdf)