Interim Report 1 January–31 March 2019: Return on investments 4.6%, updated strategy aims to make Ilmarinen most attractive working life partner
Premiums written for January–March stood at EUR 1.5 billion. Measured in premiums written, the customer base grew by EUR 60 million. Pensions were paid in a total amount of EUR 1.5 billion to 460,000 pension recipients.
In January–March, the return on Ilmarinen’s investment portfolio was 4.6 per cent (–0.1 per cent in Q1 2018), i.e. EUR 2.1 billion. At the end of March, the market value of investments stood at EUR 47.4 billion (31 Dec 2018: EUR 46.0 billion).
The long-term average nominal return 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 March, solvency capital was EUR 9,625 (8,918) million and the solvency ratio was 124.8 (123.7) per cent.
Ilmarinen’s updated strategy, which was adopted in April, outlines our objective to be the most attractive working life partner – responsibly, for you. The strategy emphasises responsibility, customer experience and personnel experience.
President and CEO Jouko Pölönen:
“Premiums written for January–March stood at EUR 1.5 billion. Measured in premiums written, customer acquisition was EUR 116 million in Q1 of 2019. The customer base grew by EUR 60 million during the first quarter. We paid a total of EUR 1.5 billion in pensions to 460,000 pension recipients. In January–March, we made a total of close to 10,000 new pension decisions.
In pension insurance, we transferred to the national Incomes Register at the turn of the year. Employers report their payroll information monthly to the Incomes Register, where it will be available in real time to employment pension insurance companies and other parties who require the information. Separate annual or monthly notifications to employment pension insurance companies are no longer required. The integration of Ilmarinen’s systems with the Incomes Register was successful. The majority of our customers transferred successfully to the Incomes Register at the start of the year. Some customers had problems in reporting their income data early on, which resulted in a build-up of a temporary backlog in our customer service. In order to ensure a smooth transition, we contacted the customers who submitted a deficient notification and enhanced our customer communication and guidance.
The completion of the integration moved forward as planned during the beginning of the year. At the start of the year, all of our TyEL customers began to use the same online services. We adopted a new customer information system. The synergies are also beginning to show as an improvement in cost-effectiveness: loading profit rose to EUR 13.1 million and the ratio of operating expenses to expense loading components measuring operational efficiency improved year-on-year by 7 percentage points to 71.5 per cent.
A course correction occurred on the investment markets following the extensive stock price plummet at the end of last year and the equity market yielded excellent returns. In January–March, Ilmarinen’s return on investments equalled 4.6 per cent, or EUR 2.1 billion. Investment assets grew to EUR 47.4 billion. Equity investments returned 8.8 per cent and fixed income investments 2.0 per cent. The long-term average annual return is 5.7 per cent, which corresponds with a real return of 4.1 per cent. The solvency ratio strengthened during the early part of the year by 1.1 percentage points to 124.8 per cent.
Ilmarinen’s updated strategy was adopted in April. Our basic task is to ensure the earnings-related pension cover of our customers. Our vision is to be the most attractive working life partner – responsibly, for you. In the strategy, our long-term goals are to be one of Finland’s best places to work, offer the best customer experience in the sector and grow profitably and faster than the market. In terms of the ratio of operating expenses to expense loading components and solvency, our goal is to be better than the sector average. To reach our goals, we will succeed together and reinvent ourselves courageously, we will operate with a focus on customers and promote work ability, grow profitably together with our customers, digitalise customer paths and processes and invest profitably, securely and responsibly. Our strategy emphasises responsibility, customer focus and personnel experience. Our values will remain unchanged and, based on them, we will work towards our goals openly and responsibly and achieve success through teamwork.
Another issue linked to the strategy implementation is an organisational change aimed at making Ilmarinen more customer-oriented, increasing the agility of our operating models and creating a flatter organisation while enhancing efficiency. We are also modernising our development operating model and transitioning from system development to customer-oriented business and process development. Due to the reorganisation of the company, we started up co-determination negotiations concerning the entire personnel and management, which are due for completion during the second quarter.
In March, the Finnish Centre for Pensions released a long-term calculation concerning the sustainability of the pension system, according to which the outlook for financing pensions will be stable in upcoming decades. The pension contribution can be kept below 25 per cent up until the 2050s. However, in the long term, a decline in the birth rate will cause significant pressure to raise the contribution, which we need to prepare for well in advance.“
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.
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, +358 050 583 8599
Specialist of the Month: Gerald Esono
At Ilmarinen, we take care of the pension security of more than a million Finns. For almost 60 years we have worked together with employers to create a better working life and promote work ability. But who are the people doing this work? Read on to see what our Specialist of the Month Gerald Esono has to say about his work.
Ilmarinen’s Interim Report 1 January to 31 March 2021: Return on investments was 4.8 per cent, solvency and net customer acquisition strengthened
The return on Ilmarinen’s investment portfolio was +4.8% (-7.5%) or EUR 2.5 billion thanks to the positive performance of the equity markets. The market value of investments grew to EUR 55.4 (53.3) billion. The long-term average return on investments was 6.0 per cent. This corresponds to an annual real return of 4.5 per cent.
Ilmarinen became a seed investor in a new Low Carbon Fund with 170 million euros
Ilmarinen has become a seed investor in AXA IM’s new mutual fund, the AXA WF US High Yield Low Carbon Bonds Fund, with 170 million euros. The fund is one of the first of its kind globally. The fund’s investment approach is fully ESG integrated and particularly focused on the carbon and water intensity scores of issuers. The investment is part of Ilmarinen’s overall responsible investment strategy.
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