Tiedote 23.8.2012

Ilmarinen’s Interim Report 1 January to 30 June 2012: MODERATE INVESTMENT RETURN IN FIRST HALF OF 2012; LONG-TERM RETURN STILL AT A GOOD LEVEL

The return on Ilmarinen’s investment portfolio in the first half of 2012 was 3.3 per cent, i.e. EUR 901 million (0.1 per cent, i.e. EUR 24 million in the comparison period). At the end of June, the market value of investment assets totalled EUR 28.7 (28.8) billion.

“The second quarter presented investors with a number of difficulties, as the markets were quite turbulent. Despite the challenging operating environment, we reached a reasonable end result,” says Ilmarinen’s President and CEO, Harri Sailas.

Sailas points out that under the circumstances Ilmarinen’s long-term investment returns since the start of 1997 are still at a good level, with the real return standing at 3.6 per cent at the end of June. 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 remained at a good level. At the end of June, Ilmarinen’s solvency capital was EUR 5.3 (6.2) billion, which is 22.7 (27.3) per cent of the technical provisions and 2.3 (2.1) times the solvency border. Excluding the temporary legislation concerning the solvency of pension institutions, the solvency ratio would have been 17.8 per cent and the solvency position 1.8.

“Our strong solvency allows Ilmarinen to realise a long-term investment strategy,” says Sailas.

“We are adjusting to ongoing uncertainty”

Private equity investments generated the best returns, at 8.6 (7.0) per cent. The return on fixed-income investments was also good, at 2.8 (1.1) per cent, and real-estate investments generated a steady return of 2.6 (2.6) per cent.

Although the return on listed equities was negative in the second quarter of the year, the return for the six-month reporting period was 2.9 (-4.4) per cent. Timo Ritakallio, Deputy CEO and head of investments, highlights that changes in the equity markets happen quickly.

“Since the end of June, share prices have been developing favourably again for a change,” he points out.

Changes are now being made to Ilmarinen’s investment portfolio to make the best use of global economic growth areas.

“We are increasingly seeking returns from emerging markets, which are expected to generate higher returns than traditional markets. Ilmarinen remains, however, a very significant holder of Finnish shares,” Ritakallio stresses.

He estimates that despite the volatility in the investment markets, it is possible that Ilmarinen will achieve at least a reasonable return this year.

“Of course there are a lot of factors leading to uncertainty, such as the continuation of the debt crisis in Europe, which will weaken the investment outlook for the end of 2012.

“Investors will just have to adjust to the uncertain operating environment and learn to function under continuously fluctuating market conditions. Ilmarinen’s investment portfolio has been set up with a certain amount of flexibility that allows us to change the weight of asset classes as swiftly as possible,” says Ritakallio.

Sales and retaining customers excellent

In the first half of the year, Ilmarinen fared very well in the competition for customers between pension insurance companies. The sales figures for January–June boost the premiums written by some EUR 125 million. Ilmarinen retained more customers in the first half of 2012 than in the corresponding period of 2011.

“Behind our good sales result is our highly efficient sales organisation and excellent co-operation with our sales partners. Good sales figures and improved retention of customers clearly show that our customers trust Ilmarinen. We are especially pleased about that,” Sailas says.

The number of customers at Ilmarinen was on the rise in the first half of 2012. At the end of June, Ilmarinen handled some 36,700 earnings-related pension insurance policies and around 57,800 pension policies for the self-employed. The number of people insured with Ilmarinen totals approximately 560,000.

The number of pension recipients is growing steadily. Ilmarinen paid out pensions to 305,000 recipients in June.

Operational efficiency is estimated to be around 83 (74) per cent in 2012.

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, Head of Investments 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 2530, +358 50 448 1182

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