Finnish pension company Elo has announced that its investments returned -1.9 per cent in the first three months of 2022, 5 percentage points below the 3.9 per cent return recorded at the end of December 2021.

The market value of its investments was €28.8bn at the end of Q1, up slightly from €26.8bn at the end of Q4 2021, while its solvency ratio had risen from 125 per cent to 126.1 per cent.

The firm noted that the stock market fell “sharply” in the first part of this year, with the sharpest decline being after Russia invaded Ukraine, resulting in equity investment returns of -3.3 per cent.

Elo’s fixed-income investments returned -1.7 per cent in Q1, with the firm stating that the interest rate sensitivity of its investments had already been “significantly” reduced in 2021, meaning that the negative impact of rising market interest rates on earnings was “moderate”.

Returns on real estate investments was positive at 1.3 per cent, up from the 0.9 per cent recorded at the end of 2021.

Elo noted that it has no direct equity investments, corporate loan or real estate investments in Russia, while the share of Elo’s government bond investments in Russia was “very small” at the beginning of the year.

“After the beginning of the optimistic year, the mood in both the economy and the investment market quickly darkened, not to mention the situation in Ukraine,” commented Elo CEO, Carl Pettersson.

“Unfortunately, the war also has a special impact on several Finnish companies.

"Although Finland's economic dependence on trade with Russia has been steadily declining, we have both large and smaller companies, much of whose turnover or purchases come from Russia. The situation is very worrying.

“Elo's return on investments was negative in several asset classes after a strong previous year. However, our solvency remained good.”

Elo's premium income during Q1 was €989m, up from €983.1m.

The firm managed 51,800 TyEL insurance policies for employees and 84,200 YEL insurance for self-employed workers, while the total number of insured employees and self-employed workers was almost half a million.

At the end of March, Elo had approximately 244,200 pensioners and pensions worth a total of €944.9m were paid out in January-March.

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