Strong end to the year boosts investments returns to 9.8 per cent
Preliminary information on Ilmarinen’s Financial Statements 2013: Ilmarinen’s return on investment for 2013 rose to 9.8 per cent (7.5 per cent in 2012). The extremely positive return on investment resulted especially from the favourable value development in equities and shares. The market value of the investments rose to EUR 32.3 (29.5) billion.
Ilmarinen’s President and CEO Harri Sailas is extremely happy with the return on investment.
“All in all the year turned out to be a positive one and we were successful in nearly every type of investment class. A return of close to ten per cent indicates that we did well also in contrast to the general market development,” Sailas explains.
Of all the investment classes, the highest performers were equity investments at 22.0 (9.1) per cent and private equity investments at 10.2 (15.4) per cent. The return on Ilmarinen’s internal hedge fund (Ilmarinen Alfa) was also good at 7.0 per cent. The return on direct real estate investments stood at 5.0 (5.6) per cent, which resulted from a higher than normal vacancy rate in business premises in particular. The return on fixed-income investments was good in relation to the market situation at 4.5 (6.9) per cent.
Long-term real return rose to 4 per cent
Sailas stresses that 2013 was also a positive year from the perspective of long-term pension returns. Ilmarinen’s real return on investments since 1997 has equalled an average of 4.0 per cent per year. A 3.5 per cent expected real return is used to estimate the development of earnings-related pension insurance contributions.
“The pension assets situation is good and the return on pension investments has sprung back to its pre-financial crisis level. There is, therefore, no need to become overly concerned based on individual weak years; Finnish pensions will remain secure in the future.”
Following the financial crisis, from the beginning of 2009, the average real return on Ilmarinen’s pension assets has been 5.8 per cent.
Ilmarinen’s solvency strengthened. At the end of 2013, the solvency capital amounted to EUR 7.2 (5.8) billion, which was 28.1 (23.9) per cent of the technical provisions. The solvency position was 1.9 (2.2) times the solvency limit.
In 2013, Ilmarinen’s performance in the competition for customers between earnings-related pension insurance companies was excellent.
“Our customers’ confidence in Ilmarinen has been strong and we are happy to say that we have also gained many new customers. Systematic and customer-oriented development of our services and operating methods are reflected in our sales performance,” says Sailas.
Client bonuses, EUR 86 (62) million rose clearly to EUR x (x) million.
2013 – a varied investment year
2013 was a positive year for investors but simultaneously a challenging one.
“In both the equity and fixed-income markets, 2013 was anything but stable. The year took off on a positive note but in early summer share prices declined. The strong second half of the year stabilised the situation, however. We were successful in our investment decisions throughout the year,” says Deputy CEO and Chief Investment Officer Timo Ritakallio.
Ritakallio predicts that 2014 will be an interesting year in terms of the economy.
“It looks as though the global economy will continue to recover. The risk of economic fluctuations, however, persists,” he points out.
According to Ritakallio’s assessment, in order for share prices to continue their positive development, companies’ results now need to meet the expectations set for them by the markets. He also predicts that a gradual increase in long-term interest rates will continue this year.
The figures in this release are preliminary. Ilmarinen will publish its official financial statements on 27 February 2014.
For further information, please contact:
Harri Sailas, President and CEO, tel. +358 10 284 3000
Timo Ritakallio, Deputy CEO, Chief Investment Officer, 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 3590, +358 40 757 4992
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