Finnish pension company Ilmarinen has seen a return of -8 per cent, or -€4.9bn, over the first three quarters of this year, its interim report has revealed.
The return on its investment portfolio fell from a positive return of 10.5 per cent in the first nine months of 2021.
The market value of investments fell from €60.8bn at the end of September 2021 to €55.8bn at the end of September this year.
The long-term average return on investments was 5.7 per cent, which corresponds to a real return of 3.9 per cent.
Insurance premium income rose by as much as 12 per cent to €5bn due to the strong increase in wages and the 0.45 percentage point increase in the TyEL payment.
In total, €4.9bn were paid in pensions in the first nine months of 2022, up from €4.7bn in the same period a year prior.
The pension company’s solvency capital fell from €16.5bn to €11.8bn year-on-year, while its solvency ratio fell from 136.7 per cent at the end of September 2021 to 126.3 per cent at the end of September this year.
“The past year has been very challenging in the investment market as a result of the acceleration of inflation, the tightened monetary policy of central banks and the war of aggression started by Russia,” commented Ilmarinen CEO, Jouko Pölönen.
“Ilmarinen's investment return for January–September was -8 per cent, or €4.9bn negative. Solvency remained at a good level despite the challenging market situation, insurance premium income grew strongly and cost efficiency improved.
“Share prices fell widely in all main market areas, interest rates continued to rise and credit risk margins widened.
“In Ilmarinen's investment portfolio, the return on equity investments was -12.8 per cent and the return on fixed income investments was -5.7 per cent.
“The return on real estate investments was 4 per cent, but real estate valuations are also under downward pressure due to the rise in interest rates. The return on other investments was -3.3 per cent.
“The long-term average nominal return on investments was 5.7 per cent, which corresponds to an average real annual return of 3.9 per cent since 1997.”
Recent Stories