Tiedote 25.4.2014

RETURN ON INVESTMENTS 1.3 PER CENT IN FIRST QUARTER

The return on Ilmarinen’s investment portfolio during the first quarter of 2014 was 1.3 per cent, i.e. approximately EUR 426 million (2.0 per cent, i.e. some EUR 600 million on 31 March 2013). The market value of Ilmarinen’s investments rose to EUR 33.0 (30.4) billion at the end of March.

Ilmarinen’s Interim Report 1 January to 31 March 2014

“The early part of the year was defined by increased uncertainty and fluctuating share prices. This made for a challenging investment environment,” explains Timo Ritakallio, Deputy CEO.

According to Ritakallio, the instability resulted from, for example, the escalation of the situation in Ukraine, the uncertain economic outlook in China, news of a weakening US growth rate and negative economic news in Finland.

“Despite the uncertain investment environment, we succeeded in attaining a satisfactory investment return in the first quarter,” he assesses.

Equity investments generated returns of 1.5 (4.1) per cent, fixed-income investments 1.3 (1.1) per cent, and direct real estate investments 1.2 (1.2) per cent.

Ritakallio considers it a possibility that 2014 will turn into a fairly good, if not better, year in terms of return on pension assets.

Russia-related risks low

Ilmarinen’s investments in Russia and Ukraine are small, just under 0.3 per cent of the entire investment portfolio.

“Over the past couple of years, we have decreased our investments in Russia, as a result of which our portfolio’s Russia-related risk level was already low at the start of the crisis in Ukraine,” Ritakallio clarifies.

He is, however, concerned about the effects of the crisis on Finland’s economy and on Finnish listed companies.

“The crisis will create difficulties especially for Finnish companies operating in Russia as well as for companies engaged in exports to the country. This negative development will be reflected in the companies’ share prices and therefore also in Ilmarinen’s investment portfolio,” Ritakallio forecasts.

According to him, the flow of tourists from Russia to Finland will probably continue to decrease, which will have a negative effect on many retail businesses and tourism.

Long-term return at a good level

Ritakallio points out that the present uncertain economic situation does not endanger long-term pension returns. Ilmarinen’s long-term investment return remained on a good level, the real return on investments since 1997 equalling 4.0 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.

Ilmarinen’s solvency was at a good level. At the end of March, Ilmarinen’s solvency capital equalled EUR 7.2 (5.9) billion. This was 28.2 (24.2) per cent of the technical provisions and 1.9 times (1.7) the solvency limit.

(The figures in this release are unaudited.)

Attachment (pdf)

For more information, please contact:

Timo Ritakallio, Deputy CEO, Chief Investment Officer, tel. +358 10 284 3838, +358 500 536 346
Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. +358 10 284 3590, +358 040 757 4992