Interim report 1 January–30 September 2018: We are working to become an earnings-related pension partner with increased customer focus and higher efficiency
Ilmarinen’s premiums written for January-September stood at EUR 4.0 billion. Measured in premiums written, net customer acquisition was EUR 78 million by the end of September. Pensions were paid in a total amount of EUR 4.2 billion to 450,000 pension recipients.
In January–September, investment portfolio generated a return of 3.0 per cent (1 Jan–30 Sep 2017: 5.5 per cent). At the end of September, the market value of investments stood at EUR 47.0 billion (30 Sep 2017: EUR 38.9 billion). In the long term, investments have yielded an average annual real return of 4.2 per cent.
At the end of September, solvency capital was EUR 10,044 (9,158) million and the solvency ratio was 127.0 (130.6) per cent.
The implementation of integration is moving forward as planned. Ilmarinen’s organisation is being renewed to enhance customer focus and increase efficiency. Management of work capacity risks and rehabilitation will be strengthened.
President and CEO Jouko Pölönen:
“Ilmarinen’s premiums written rose to EUR 4.0 billion during January-September. Measured in premiums written, net customer acquisition was EUR 78 million during the first nine months of the year. Our insurance portfolio will strengthen further at the turn of the year when OP Financial Group transfers its personnel’s statutory pension insurance to Ilmarinen. OP-Eläkekassa’s body of delegates decided on the transfer of the pension liabilities in July. The transfer is still subject to approval by authorities. At the end of September, the number of pension recipients was around 450,000 and we paid a total of EUR 4.2 billion in pensions in January-September. We made altogether more than 25,000 new pension decisions.
In pension insurance, we continued preparing for the launch of the national Incomes Register. As of the beginning of next year, employers will report their payroll information monthly to the Incomes Register, where it will be available in real time to employment pension companies and other parties who require the information. Separate annual or monthly notifications to employment pension companies will no longer be required. This is a major change for companies, and they are running out of time to implement it: according to a survey that we carried out in September, only half of companies’ payroll and administrative management employees were aware of the impacts of the Incomes Register on their company’s operations. On our own part, we have endeavoured to increase awareness through active communication on the changes caused by the Incomes Register and by organising training events and webinars on preparing for the Incomes Register for our customer companies.
We are working to make Ilmarinen an even more customer-focussed, efficient and attractive earnings-related pension partner. Customers expect from their pension company straightforward online insurance and pension services and support for the management of work capacity risks and rehabilitation. Based on feedback from our customers, we are strengthening our work capacity services and we have structured the management of work capacity risks and rehabilitation into a business division in its own right. We wish to offer our customers the best services, expertise and data to support work capacity management. During January-September, we carried out more than 2,000 projects to support work capacity together with our customer companies. Our customers are satisfied with our services: close to nine out of ten would recommend the coaching and consultation services provided by our work capacity experts. In September, we awarded the Happiest Entrepreneur of Finland in a competition that shines a spotlight on entrepreneurs’ work capacity and well-being. Among more than 400 nominees, the award went to Lauri Salmi, an entrepreneur in the beauty sector. A total of more than 80,000 votes were cast in the competition which was organised for the fifth time.
The escalating trade war and other political risks have increased unrest in the investment markets throughout the year. Ilmarinen’s return on investments in January–September was 3.0 per cent and investment assets grew to EUR 47.0 billion. The third quarter of the year was better than the two preceding quarters, particularly for the equity markets. The Q3 total return rose to 1.8 per cent. At 6.0 per cent, equity investments generated the best return, calculated from the start of the year. The return on real estate investments was 3.9 per cent while fixed-income investments yielded just 0.6 per cent. The long-term average real annual return was 4.2 per cent, which clearly exceeds the 3.0 per cent return assumption used by the Finnish Centre for Pensions in its calculations. The solvency ratio strengthened slightly from Q2 and stood at a good level, at 127 per cent, at the end of September.
In real estate investments, Ilmarinen expanded its international real estate investment portfolio by investing in office properties in Rotterdam in the Netherlands and in Frankfurt in Germany. The shopping centre Redi, which is partly owned by Ilmarinen, in the Kalasatama district in Helsinki, opened its doors in September. Ilmarinen’s office building was granted LEED environmental certification which takes into account energy efficiency, environmental load and commuting, among other things.
The implementation of the merger between Ilmarinen and Etera, completed at the turn of the year, has proceeded according to plan. The integration of information systems will continue in phases during the rest of this year and next year. The costs arising from the integration and the write-downs of information systems burden the loading profit, which stood at EUR 24.9 million at the end of September. The expense loading component, which measures cost-effectiveness, was 81.5 per cent. The synergy benefits created by the merger are expected to substantially improve cost-effectiveness in the coming years. Our objective is to annually save at least EUR 20 million in total expense loading, beginning in 2020. The measures resulting in synergy benefits of EUR 20 million in the overall expenses of investment operations have already been carried out.”
The figures presented in the Interim Report are unaudited. The 2017 comparison figures presented in the report are Ilmarinen’s figures from before the merger with Etera.
Ilmarinen's Interim Report 1 January–30 September 2018 (pdf)
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