Tiedote 29.8.2013

A GOOD FIRST HALF-YEAR: INVESTMENT RETURN AT 3.0 PER CENT

The return on Ilmarinen’s investment portfolio in the first half of 2013 was 3.0 per cent, i.e. EUR 892 million (3.3 per cent, i.e. EUR 901 million on 30 June 2012). At the end of June, the market value of investment assets totalled EUR 30.6 (28.7) billion.

Interim Report 1 January to 30 June 2013

“Investment returns in April–June were also clearly positive for Ilmarinen and, considering the circumstances, we are pleased with the end result. The past quarter was a difficult one for investors, but Ilmarinen’s investment strategy seems to be working in highly volatile markets,” says President and CEO Harri Sailas.

Share prices experienced a strong rise during spring. In June, however, markets were concerned both with the anticipation of an end to the US stimulus measures and fears of weakening growth prospects in China.

 “This dragged share prices down and led to a hike in interest rates, which negatively affected the return on the portfolio,” says Sailas, describing the situation.

Long-term real return 3.7 per cent

Sailas stresses that Ilmarinen’s long-term investment return since the start of 1997 is still at a good level, with the real return standing at 3.7 per cent. The Finnish Centre for Pensions uses a 3.5 per cent expected real return rate to estimate the future development of earnings-related pension insurance contributions.

“We invest with a long-term horizon. Instead of looking at a single quarter, we look ten years ahead”, Sailas points out.

Ilmarinen’s solvency remained strong. At the end of June, Ilmarinen’s solvency capital was EUR 6.0 (5.3) billion, which is 24.3 (22.7) per cent of the technical provisions and 1.8 (2.3) times the solvency limit.

“Good solvency in volatile markets puts Ilmarinen in a position to assume sufficient risk to achieve higher investment returns”, Sailas says.

Good return on equities

Ilmarinen’s equity investments returned 6.3 (3.5) per cent, with returns on listed equities standing at 5.1 (2.9) per cent. US and Japanese listed equities generated particularly high returns, while emerging market equities performed the weakest.

Deputy CEO and CIO Timo Ritakallio considers the return of 1.6 (2.8) per cent on fixed income investments a fairly good achievement, considering the market situation. The return on direct real estate investments was 2.4 (2.9) per cent.

The corporate credit portfolio continued to decline and demand for premium loans remained very low.

“From our perspective, it seems that companies’ investment appetite  is currently at a low level,” Ritakallio says.

As for the future, Ritakallio states that Ilmarinen believes equity investments will continue to generate good returns. Real estate investments will be increased in both Finland and abroad. In particular, the company wishes to increase the number of infrastructure investments in its portfolio.

“Our challenge has been to find objects in Finland that meet our return requirements. We have to keep in mind that pension assets are invested merely with an eye to the return and sustainability,” Ritakallio points out.

Sales at a good level

In the first half of the year, Ilmarinen once again fared well in the competition for customers between pension insurance companies. The sales figures for January–June increase the premiums written by some EUR 114 (125) million.

The number of customers at Ilmarinen was on the rise in the first half of the year. At the end of June, Ilmarinen handled some 37,600 (36,700) earnings-related pension insurance policies and around 59,900 (57,800) pension policies for the self-employed. Since June, the number of self-employed customers has continued to rise, exceeding the 60,000 mark during the early days of July. At the end of June, a total of nearly 570,000 (560,000) persons were insured with Ilmarinen.

The number of pension recipients continued to rise steadily. Ilmarinen paid out pensions to 310,000 (305,000) pensioners in June.

Operational efficiency is estimated to be around 79 (83) per cent in 2013.

The figures in this release are unaudited.

Attachment (pdf)

For more information, please contact:

Harri Sailas, President and CEO, tel. +358 10 284 3000
Timo Ritakallio, Deputy CEO, Chief Investment Officer, tel. +358 10 284 3838, +358 500 536 346
Jaakko Kiander, Senior Vice President, Finance and Pension Policy, tel. +358 10 284 2599, +358 50 583 8599
Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. +358 10 284 3590, +358 040 757 4992