ILMARINEN’S INVESTMENT RETURN REACHES 6.8 PER CENT
Ilmarinen has published preliminary information on its 2014 financial statements. Investment returns came to 6.8 (9.8) per cent. Among the asset classes, the best returns were generated by equity investments. The market value of investments rose to EUR 34.2 (32.3) billion. Solvency remained strong.
Ilmarinen’s President and CEO Harri Sailas is happy with the past year.
“All in all, 2014 was a very good year for Ilmarinen despite the still challenging environment. Particularly the unusual market turbulence in the final quarter required investors to keep a cool head,” says Sailas.
Ilmarinen’s equity investments generated a return of 10.9 (20.9) per cent. The return on fixed income investments was 2.4 (4.5) per cent. Direct real estate investments yielded slightly less than predicted at 4.9 (5.0) per cent.
“The significance of a globally diversified portfolio for securing the return on pension assets is accentuated in an uncertain investment environment. For example, in equities and shares, the best returns came from China and the United States,” says Sailas.
Long-term real return equals 4.1 per cent
According to Sailas, 2014 was also an excellent year from the perspective of long-term pension returns. Ilmarinen’s real return on investments since 1997 has equalled an average of 4.1 per cent per year. A 3.5 per cent expected real return is used to estimate the development of earnings-related pension insurance contributions.
Ilmarinen’s solvency remained strong. At the end of 2014, the solvency capital amounted to EUR 7.9 (7.1) billion, which was 29.8 (28.0) per cent of the technical provisions. The solvency position was 2.0 (1.9) times the solvency limit.
Sailas describes Ilmarinen’s long-term performance on the pension insurance markets as very good.
“For years we have grown faster than the markets. Systematic customer work has strengthened customers’ trust in us,” he says.
Client bonuses increased to 93 (86) million.
“ECB’s stimulus measures are a step in the right direction”
Timo Ritakallio, Deputy CEO in charge of Ilmarinen’s investments activities, predicts a varied investment year in 2015.
“The year has gotten off to a good start but strong fluctuations in share prices on the equity markets and a low interest rate level are likely to define this year as well. This will, of course, require added vigilance on the part of pension investors, but also perseverance,” he says.
Ritakallio also estimates that especially domestic real estate investments will be weighed down by the long-standing weak development of the economy. He believes that, overall, market uncertainty will increase.
“Naturally Finland’s weak economic outlook may have a negative impact on pension returns. Ilmarinen will, however, continue to be an important domestic investor, for example, as an anchor investor in many listed companies. We are also a major infrastructure investor in Finland,” Ritakallio says.
He considers the stimulus measures of the European Central Bank a step in the right direction and believes that they will maintain interest rates at a low level for quite some time.
“The ECB’s measures will help to create the conditions needed for the recovery of economic growth in Europe and for European shares to continue to rise,” says Ritakallio.
The figures in this release are preliminary. Ilmarinen will publish its official financial statements on 27 February 2015.
Attachments: Finacial Statments 2014 Preliminary information
For further information:
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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