Ilmarinen’s interim report 1 January–30 June 2019: Strong H1 for investment operations, cost-effectiveness improved and growth continued
Ilmarinen’s total result in January–June grew to EUR 931 million (EUR -502 million in 1 Jan–30 Jun 2018), thanks to strong investment returns. Operating expenses decreased, loading profit improved to EUR 27 (20) million and the ratio of operating expenses to expense loading components stood at 71 (78) per cent.
Premiums written for January–June stood at EUR 2.9 billion (EUR 2.7 billion). Measured in premiums written, the customer base grew by EUR 109 million (EUR 44 million). A total of EUR 3.0 billion (EUR 2.8 billion) in pensions was paid to 459,000 pension recipients.
In January–June, the return on Ilmarinen’s investment portfolio was 6.0 per cent (1.1 per cent in 1 Jan–30 Jun 2018), i.e. EUR 2.7 billion (EUR 0.5 billion). At the end of June, the market value of investments stood at EUR 47.8 billion (EUR 46.0 billion on 31 Dec 2018). The long-term average nominal return on investments was 5.7 per cent, corresponding to a 4.1 per cent annual real return.
Solvency strengthened compared to the situation at the turn of the year. At the end of June, solvency capital was EUR 9,772 (8,918) million, and the solvency ratio was 124.9 (123.7) per cent.
Ilmarinen’s organisation was renewed and given a flatter hierarchy. The goal of the reorganisation is to make Ilmarinen more customer-oriented and operating models more agile, and to enhance the company’s efficiency.
President and CEO Jouko Pölönen:
“The first half of 2019 was very strong for Ilmarinen. The return on investments was 6.0 per cent, and Ilmarinen’s investment assets reached a record of close to EUR 48 billion, thanks to a strong equity market and fall in interest rates. Operating expenses decreased, cost-effectiveness improved and growth continued.
Premiums written during the first six months amounted to EUR 2.9 billion. Customer acquisition was successful and, measured in premiums written, the customer base grew by EUR 109 million. We paid a total of EUR 3.0 billion in pensions to 459,000 pension recipients. Our client companies switched to using the Incomes Register for their payroll notifications, and the backlog in customer service during the transition phase early in the year was resolved. Our customer service robot Ilmari was also introduced to provide customers with guidance in matters related to the Incomes Register. Since June, Ilmari has also fielded questions related to pensions on our website.
Investment returns developed well during the first half of the year. The most important factor was the surge in stock prices, which was bolstered by a global change in monetary policy and a drop in interest rates in both the US and Europe. In January–June, Ilmarinen’s return on investments amounted to 6.0 per cent, or EUR 2.7 billion. Investment assets grew to EUR 47.8 billion. The return on equity investments was 10.9 per cent and on fixed-income investments 2.8 per cent. The long-term average annual return is 5.7 per cent, which corresponds to a real return of 4.1 per cent. The solvency ratio strengthened during the early part of the year to 124.9 per cent.
Synergies from last year’s merger are evident as an improvement in cost-effectiveness: loading profit rose to EUR 27 million and the ratio of operating expenses to expense loading components measuring cost-effectiveness improved year-on-year by 7 percentage points, to 71 per cent. Ilmarinen’s total result grew to EUR 931 million, thanks to strong investment returns.
Our strategy, which was approved in April, emphasises responsibility, the customer experience and personnel experience. Our basic task is to ensure the earnings-related pension cover of our customers – altogether 1.2 million people. We want to take care of our task with even greater customer focus and efficiency. Our goal is to be the most attractive working life partner – responsibly, for you.
In a broad survey of 10,000 Finnish consumers, Ilmarinen was ranked as Finland’s most responsible pension company. We want to be a forerunner in responsible investment also globally, and we took part in developing new ETF funds that invest in the sustainability benchmark index on the US and European markets. We invested a total of approximately EUR 2 billion in them.
In line with our strategy, we develop digital and scalable services to promote work ability, and we offer our customers data, expertise and best practices related to managing the work-ability risk. In the first half of the year, we implemented a total of 1,445 work-ability projects together with our client companies and co-operation partners. Ilmarinen’s contribution in these projects amounted to close to EUR 2 million. At the same time, we paid out EUR 250 million in disability pensions. The focus should be on prevention: by preventing disability we can lengthen careers and lower the costs of disability for employees, companies and society. Maintaining work ability also plays an important role in improving the employment rate. The Finnish Government, which took office in June, has set an employment target of 75 per cent, which will require investments in competence development and employing people with partial work ability. The Government’s programme also includes changes to pensions for the self-employed and survivors’ pensions, as well as an increase in small pensions.
The implementation of our strategy also includes an organisational change, the goal of which is to make Ilmarinen more customer-oriented and operating models more agile, and to enhance the company’s efficiency. We introduced a process management model alongside our traditional line management, we renewed our operating model for development and we created a flatter organisation by combining middle management tasks. Between April and June, co-determination negotiations related to the reorganisation were carried out and the renewed organisation started up on 1 July. As part of the reorganisation, 70 old jobs were discontinued, but at the same time, 60 new jobs were created and mostly filled from inside the company. I would like to thank the entire personnel for the positive spirit of co-operation in the negotiations. The organisational change naturally caused some feelings of uncertainty among personnel, but the level of energy at work has nevertheless remained high. We will continue to reinvent our operating practices as well as our corporate culture, aiming to be among the best places to work in Finland.
The figures presented in the Interim Report are unaudited. The result comparison figures are the figures for the corresponding period of 2018. Unless otherwise indicated, the comparison figures for the balance sheet and other cross-sectional items are the figures for the end of 2018.
Work-ability project themes updated in attachments on 15.8.2019.
For more information, please contact:
- Jouko Pölönen, President and CEO, tel. +358 50 1282
- Mikko Mursula, Deputy CEO, Chief Investment Officer, tel. +358 50 380 3016
- Jaakko Kiander, Chief Communications Officer, +358 50 583 8599
Ilmarinen’s return on investments 3.3 per cent – employment weakening
The return on Ilmarinen’s investments in January–September was 3.3 per cent. Measures to improve cost-effectiveness continued. “Last year, we became the most cost-effective company in the industry, measured by the ratio of operating expenses to expense loading components. This year our operating expenses, which are necessary for providing pension security, have decreased further, and we are lowering the price of administrative costs for our customers by 20 per cent,” states President and CEO Jouko Pölönen.
Ilmarinen’s Interim Report 1 January to 30 June 2023: Return on investments rose to 3.7 per cent, solvency strengthened and cost-effectiveness continued to improve
The return on Ilmarinen’s investment portfolio was 3.7 (-6.2) per cent, i.e. EUR 2.1 billion. The market value of investments grew to EUR 58.2 (56.3) billion. The long-term average return on investments was 5.8 per cent as of 1997. This corresponds to an annual real return of 3.8 per cent.
Ilmarinen’s Interim Report 1 January to 31 March 2023: Positive return on investments, premiums written grew and cost-effectiveness improved
The return on Ilmarinen’s investment portfolio was +2.2 (-2.2) per cent, i.e. EUR 1.3 billion, as a result of rising stock prices. The market value of investments grew to EUR 57.5 (56.3) billion. The long-term average return on investments from 1997 onwards was 5.8 per cent. This corresponds to an annual real return of 3.8 per cent.