Financial statements 2013: SAILAS: EXCELLENT YEAR ALL ROUND
In 2013, Ilmarinen’s performance in the competition for customers between pension insurance companies was, once again, excellent. Sales were successful, and the company’s premiums written amounted to EUR 4.1 billion (EUR 4.0 billion in 2012).
Ilmarinen’s insurance portfolio continued to grow in 2013. Ilmarinen now has more self-employed customers than ever before: as a result of growth over a number of years, the 60,000 insurance policy mark was exceeded in summer 2013. The company also showed good performance in the sales of employees’ pension insurance policies (TyEL).
“Customers’ confidence in Ilmarinen remained strong and customer retention remained at a very good level. In addition, we gained many new clients last year. We are extremely satisfied with the sales result,” says President and CEO Harri Sailas.
Investment returns rose to nearly ten per cent
In 2013, Ilmarinen’s pension assets yielded 9.8 (7.5) per cent and the market value of investments rose to EUR 32.3 (29.5) billion.
“The year took a number of ups and downs from the investor’s point of view but we were very successful in selecting investments and in the timing of our investment operations. Our long-term investment strategy also works well. The company’s performance in comparison with general market development and the other earnings-related pension companies was excellent,” says Timo Ritakallio, Deputy CEO and CIO.
2013 was also a positive year from the perspective of long-term pension returns. Real return since 1997 reached 4.0 per cent. Following the financial crisis, from the beginning of 2009, the average real return on Ilmarinen’s pension assets has been as high as 5.8 per cent. The Finnish Centre for Pensions uses a 3.5 per cent expected return rate to estimate the future level of earnings-related pension insurance contributions.
Ilmarinen’s solvency strengthened. At the end of 2013, solvency capital was EUR 7.1 (5.8) billion i.e. 28.0 (23.9) per cent of the technical provisions. The solvency position was 1.9 (2.2) times the solvency limit.
The ratio of operating expenses to the expense loading components available for them, measuring cost-efficiency, returned to the good level of previous years and was 75 (80) per cent. Ilmarinen’s customers benefit from both successful investment operations and high cost efficiency in the form of competitive client bonuses, which rose to EUR 86 (62) million.
Responsible for the pension cover of more than 900,000 Finns
The number of persons insured with Ilmarinen increased slightly from the previous year, and stood at approximately 590,000 (588,000) at the end of the year. The employees’ share of this was 529,000 (529,000) and that of entrepreneurs was 60,600 (58,800).
“Ilmarinen handles the pension cover for approximately every third Finn working in the private sector. Although the number of wage earners declined slightly in Finland in 2013 following the downturn, the number of employees insured at Ilmarinen remained the same,” says Sailas.
The number of both pension recipients and the amount of pensions paid increased. At the end of the year, Ilmarinen paid out pensions to 314,000 (308,000) people in a total amount of EUR 4.1 (3.8) billion. The company made altogether approximately 23,400 (22,400) new pension decisions. As in previous years, Ilmarinen processed the pension decisions faster than the industry average.
Continued growth in pension assets
In 2013, the pension expenditure paid by Ilmarinen was, for the first time, larger than the pension premiums written. The difference was some EUR 60 million as earnings-related pension contributions were not incremented and payroll development was very slow. Simultaneously Ilmarinen’s pension assets increased by some EUR 3 billion. Future expectations indicate that pension expenditure is permanently larger than premiums written. The difference will be covered by the return on pension funds, as estimated by the Finnish Centre for Pensions. The difference is, however, expected to be so small that it will not jeopardise the growth of pension funds for a long time to come.
“Pension assets are therefore not shrinking, but continuing to grow. The funding of pensions is secure, also in the long term,” says Sailas.
Companies invested in well-being at work despite the tough financial situation
Demand for Ilmarinen’s well-being at work services was good in 2013. Many companies thought about measures for supporting the personnel’s work ability, motivation and good work flow as well as their effect on the efficient carrying out of work. According to research, the timely and goal-oriented development of well-being at work also has a positive effect on a company’s business result.
“Last year, many companies considered increasing the effectiveness of operations in a challenging market situation. Although 2013 was financially difficult for many companies, the importance of well-being at work was not forgotten. In my opinion, it is really good to see that companies more and more often wish to boost their operations by developing their personnel and making work flow even more smoothly than before,” Sailas says.
For further information, please contact:
Harri Sailas, President and CEO, tel. +358 10 284 3000 Timo Ritakallio, Deputy CEO, CIO, tel. +358 10 284 3838, +358 500 536 346 Jaakko Kiander, Senior Vice President, Finance and Pension Policy, tel. +358 10 284 2599, +358 40 757 8599 Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. +358 10 284 3590, +358 40 757 4992
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