Interim Report January-June August 2018 Varma s Interim Report 1 January 30 June 2018

Transcription

1 Interim Report January-June 2018

2 New record in the value of Varma s investments, 1.7% return in H1 Solvency capital, Market value of investments, Return on investments 11.4 bn 46.4 bn 1.7%

3 Value of Varma s investments reached a new record of EUR 46.4 billion

4 Return on investments recovered at a brisk rate in Q2 Investments yielded good returns in the second quarter. Market volatility slightly lowered the return on Varma s investments in the early part of the year. The average nominal return on investments over ten years is approx. 5.1 %, calculated in accordance with the recommendations issued by TELA. In 1-6/2017 return on investment was 4.7%.

5 Return on investments at fair values per quarter

6 Return on Varma s investments 1 Jan 30 Jun 2018

7 Following the financial crisis, Varma s cumulative return on investment 86.7%, i.e bn

8 Investments classified according to risk 30 June December / / / m Market value Market value Return Return Return Market Value Risk position Market Value Risk position MWR MWR MWR Vola- mill. % mill. % mill. % mill. % % % % tility Fixed-income investments 1 14, , , , Loan receivables 1, , , , Bonds 10, , , , Public bonds 4, , , , Other bonds 6, , , , Other money-market instruments and deposits 1, , Equity investments 19, , , , Listed equities 15, , , , Private equity 3, , , , Unlisted equities , , Real estate investments 3, , , , Direct real estates 2, , , , Real estate funds 1, , Other investments 8, , , , Hedge funds 8, , , , Commodities Other investments , Total investments 46, , , , Impact of derivatives 2, Investment allocation at fair value 46, , , , The modified duration for all the bonds is 2.2. The open currency position is 24.5% of the market value of the investments. Includes accrued interest

9 Geographical distribution of investments

10 Geographical distribution of listed equities

11 Investments in Finland 26%, 11.3 bn Investments in Finland Distribution of Finnish investments Bonds and loan receivables; 13% Finland; 26% Real estate; 26% Money-market instruments; 10% Private equity; 3% Others; 74% Listed equities; 48%

12 Investment returns for Varma and the markets % Varma Finnish equities European equities US equities Euro government bonds Euro corporate bonds 6/ Average nominal return 5 years years Since 1999 * Average real return 5 years years Since 1999 * * Varma, as it is today, was founded in mid-1998, so comparison data earlier than 1999 is not available. Finnish equities = OMX Helsinki Cap Index European equities = Stoxx 600 Total Return Index EUR US equities= S&P500 Total Return Index Euro government bonds = IBOXX Eurozone EUR (Total Return) Euro corporate bonds = IBOXX Corporate Overall Performance Index EUR (Total Return)

13 Solvency at a strong level

14 Good loading profit We handle the implementation of pension provision efficiently. Loading profit, generated through efficient operations, and strong solvency have an impact on the bonuses paid to our clients.

15 Total result by quarter

16 Key figures 6/2018 6/ Premiums written, million 2,454 2,444 4,867 Pensions paid, million ¹ 2,819 2,752 5,544 TyEL-insured 513, , ,320 YEL insurance policies 36,300 35,470 35,900 Pensioners 342, , ,600 Investments, million 46,359 44,989 45,409 Return on investment, million 779 2,012 3,343 Return on investment, % Total result, million ,051 1,524 Loading profit, million Operating expenses as % of loading component Technical provisions, million 37,087 35,601 36,696 Solvency capital, million 11,348 11,234 11,534 Solvency ratio % Solvency capital/solvency limit Average number of personnel, Parent Company Before the reduction of received clearing of pay-as-you-go (PAYG) pensions Pension assets in relation to the technical provisions under 11 of the Ministry of Social Affairs and Health s decree governing pension institutions (614/2008).

17 Latest developments for customers

18 Insured employees and entrepreneurs Pensioners 550, ,000 Pensions paid 2.8 billion

19 Latest developments for customers Best customer service in Finland For the second year running, Varma s customer service won in the Asiakkaan ääni survey s series for large customer service centres. Varma s results are based on the feedback of roughly 19,000 customers. Ready for the Incomes Register The Incomes Register is an electronic database to be introduced nationwide in 2019 that includes information about wages, pensions and benefits at the individual level. Employers report all earnings paid to employees to the Incomes Register. Varma has trained its customers and prepared for system changes. More customers In client acquisitiont, the first half year was successful, and EUR 20 million in premiums written were transferred to Varma from other earnings-related pension companies. We have developed tools for workability management, which forms the core of our customer work.

20 Current issues in pension services The new types of pension are popular among men; men make up 70% of partial old-age pension recipients and 4/5 of years-ofservice pension recipients. 18% fewer old-age pension applications were made than in the corresponding period last year due to the higher old-age pension age. The number of applications for partial old-age pension has declined: the pension was granted to 1,024 people (1,632 in corresponding period 2017) between January and June. Years-of-service pension has so far been granted to 5 applicants. Growth in disability pension applications grew by more than 9% compared to last year, some of which growth can be attributed to the activation model. 18% more rehabilitation applications were made than in the corresponding period last year. Software robotics is used in various pension processing tasks. New online services for rehabilitants: peer support service and rehabilitation partners activation tool

21 Popularity of partial early old-age pension levelled out Granted partial early old-age pensions

22 Responsibility

23 Responsible Varma ETHICAL AND TRANSPARENT BUSINESS We develop the responsibility of our business operations, e.g. in customer work and the supply chain. COST-EFFECTIVE USE OF FUNDS We take care of our customers earnings-related pension cover efficiently. OPEN AND PRO-ACTIVE COMMUNICATION We openly and pro-actively disclose information about our operations. Our use of pension assets is transparent. RESPONSIBILITY FOR VARMA EMPLOYEES We take care of Varma employees well-being at work and develop an inspiring work culture based on equality. Varma secures pensions Securing solvency We make profitable and secure investments. Strong solvency helps to secure pensions. RESPONSIBILITY IN INVESTMENT OPERATIONS Responsibility is an integral part of our investment decisions and ownership policy. High-quality implementation of pension provision Dealing with Varma is smooth, and customers receive decisions without delays. MITIGATING CLIMATE CHANGE We are reducing the CO 2 footprint of our investments and operations. Promoting workability and longer careers Our workability management and rehabilitation services prevent disability and lower disability costs.

24 Current CSR topics EcoVadis, an international corporate social responsibility assessment specialist, has awarded Varma the CSR Rating Gold recognition. In its independent assessment carried out in the summer, Varma was among the top 5 per cent of the 45,000 companies analysed. More renewable energy for properties: the Salmisaari Sports Centre and the Rajalla shopping centre in Tornio received solar power plants Among the key measures of Varma s CSR programme this year are updating the CSR programme, promoting responsible customer work, and improving responsible investment in different asset classes.

25 Current economic issues

26 Risks to Finnish economy from abroad The Finnish economy has recovered from its long economic slump. However, it is important to prepare for a gradual slowing down of the strong growth in global economy. The greatest short-term risks impacting Finland are related to the global economy. The biggest risks are the threat of a trade war and gradual tightening of central banks monetary policies. The threat of trade war has so far only impacted individual countries and companies; the real risk is the spreading of the impacts. The stimulating monetary policy of the central banks is normalising the difference between the US and Europe is clear, however.

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