Varma's Financial Statements 1 January 31 March April 2018 Varma s Interim Report 1 January 31 March 2018

Transcription

1 Varma's Financial Statements 1 January 31 March

2 Strong solvency and diversification offered protection in market turmoil Solvency capital, 11.1 bn Market value of investments, 45.7 bn Return on investments -0,4% 2

3 Value of investments EUR 45.7 billion 3

4 Investment returns Market volatility increased in the early part of the year, slightly lowering the return on Varma s investments. The average nominal return on investments over ten years is approx. 4.8 %, calculated in accordance with the recommendations issued by TELA. In 1-3/2017 return on investment was 2.7%. 4

5 Since the financial crisis, Varma s investments have yielded 82.9%, i.e. EUR 21.3 billion 5

6 Investments classified according to risk 31-March 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 13, , , , Loan receivables 1, , , , Bonds 9, , , , Public bonds 4, , , , Other bonds 5, , , , Other money-market instruments and deposits 1, , , Equity investments 20, , , , Listed equities 16, , , , Private equity 3, , , , Unlisted equities , , Real estate investments 3, , , , Direct real estates 2, , , , Real estate funds Other investments 7, , , , Hedge funds 7, , , , Commodities Other investments 9 0 1, Total investments 45, , , , Impact of derivatives 2, Investment allocation at fair value 45, , , , The modified duration for all the bonds is 1.8. The open currency position is 28.5% of the market value of the investments. Includes accrued interest 6

7 Investment returns for Varma and the markets % Varma Finnish equities European equities US equities Euro government bonds Euro corporate bonds 3/ 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) 7

8 Total result by quarter 8

9 Investment allocation 9

10 Investments in Finland 27%, 11.4 bn 10

11 Geographical distribution of investments 11

12 Geographical distribution of listed equities 12

13 Strong solvency offered protection against market fluctuations 13

14 Solvency remained strong 14

15 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

16 Latest developments for customers 16

17 Insured employees and entrepreneurs 544,000 Pensioners 342,000 Pensions paid 1.33 bn 17

18 Old-age pension applications down 25% from previous year Pension applications are processed faster with the help of robotics Compared to the corresponding period last year Old-age pension applications fell 25% due to the rise in the retirement age. The popularity of partial old-age pension levelled off after the peak in A few years-of-service pension applications were received. Rehabilitation applications were up 22%. The number of new disability pension applications increased, a few dozen of which are estimated to have been submitted due to the so-called active model for unemployment security. Pension applications were processed faster than the previous year and the average in the sector. Software robotics and automation are used in the processing of applications. 18

19 We are preparing 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. Co-operation The Incomes Register is a key project of the Finnish Government. Its success is also strategically important for Varma. Varma's experts have been actively involved in the different planning groups of the project. System changes Varma has planned and tested the system changes required by the Incomes Register. At the same time, systems and related processes will be revamped. New operating models Varma's experts are training customers and its own personnel in preparation for the change. Events and webinars are being arranged throughout the year. 19

20 CSR Topics 20

21 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. 21

22 Responsibility in Q1/2018 Strength in numbers Responsibility reporting CSR actions in 2018 Varma joined the following investor initiatives PRI Oil and Gas Engagement Access to Medicine index TCFD (Task Force on Climate-Related Financial Disclosures) We published a GRI-standard-compliant CSR Report for The Report of the Board of Directors also included an account of nonfinancial information. This year s areas of development responsible customer work further development of responsible investment in different asset classes equality and non-discrimination at Varma updating the CSR programme 22

23 Current economic issues 23

24 Current economic issues Strong economic growth continued, but uncertainty increased in Q1 The escalating trade war and strong stimulus in the US caused concerns Finland s E.g. trade war economic growth is expected to continue Rising employment rate is vital 24

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