Pension Fennia Biannual Review of Operations 1 January – 30 June 2013: Investment income of 1.9 per cent

27.8.2013

In the first half of the year, Pension Fennia’s investment activities showed a yield of 1.9 per cent (as compared to 3.6% for 1-6/2012). The best yield was gained from listed equities, at 4.7 per cent (4.8%), as well as from real estate investment funds and joint investment companies, at 4.7 per cent (2.8%).

“The positive development in the investment markets during the first quarter turned downhill at the end of the spring, particularly due to worse than anticipated economic figures within the emerging markets and uncertainty about the continuation of support measures from the central banks. The predictability of the markets will likely remain weak for the end of the year,” says Eeva Grannenfelt, Director and Chief Investment Officer at Pension Fennia.

Calculated from the start-up of operations in 1999, the average nominal yield for Pension Fennia’s investments was 4.9 per cent and the real yield was 3.0 per cent. The average nominal yield for investments over a period of five years was 4.3 per cent and the real yield was 2.6 per cent. The average nominal yield for investments over a period of ten years was 5.1 per cent and the real yield was 3.2 per cent.

The company’s solvency capital totalled €1,342 million (solvency margin including EMU buffer €1,119 million on 30 June 2012). The solvency capital before the equalization amount was €1,122 million (€868 million). The solvency ratio stood at 20.9 per cent (18.6%) of the technical provisions and was 2.2 times (2.4) the solvency limit.

Efficient activities

Pension Fennia’s operational efficiency was at a good level. Pension Fennia spent 80% (74% for 1-6/2012) of the expense loading of the insurance premium on operating costs.

The premium income for the period of 1 January – 30 June 2013 stood at €664 million (€670 million). The total premium income for the year 2013 is estimated to be €1,340 million, which is 1.1% less than the previous year.

The three transfer rounds of employment pension policies in 2013 reduced Pension Fennia’s premium income by a total of €23.9 million. The net reduction of TyEL policies in the three transfer rounds was 348 and the net decrease of YEL policies was 418. A total of 992 TyEL policies and 1,640 YEL policies were acquired through new customer prospecting.

Pension Fennia prepares for the merger

Pension Fennia and LähiTapiola Mutual Pension Insurance Company will form a new employment pension company as of 1 January 2014 under the name Elo Mutual Pension Insurance Company. The General Meetings of the companies approved the plan for the merger on 19 June 2013. The Financial Supervisory Authority granted permission for the merger at the end of the June.

Elo will be a dynamic insurer within the employment pension field. By virtue of a premium income totalling approximately €3 billion, Elo will hold approximately a 24% share of the market at the launch of its operations. The company’s investment assets will be more than €17 billion. Elo will serve as the employment pension partner to both Fennia and LähiTapiola.

"On the basis of the financial statement information for 2012, two of the most efficient pension companies in the industry are now joining forces. In accordance with assessments done during the spring, the synergetic benefits of the merger will be noteworthy following the transitional phase of the merger. For the customers, the merger signifies even more comprehensive services and more competitive premium discounts. Elo will focus particularly on the convenience of its services as well as on corporate finance and occupational well-being services,” states Lasse Heiniö, Managing Director of Pension Fennia.

The figures presented are those of the parent company and have not been audited.

Pension Fennia’s biannual review 1.1.–30.6.2013 (pdf)
Pension Fennia’s biannual review slides (pdf)

For further information, please contact:
Lasse Heiniö, Managing Director, tel. +358 10 503 7204
Eeva Grannenfelt, Director, Chief Investment Officer, tel. +358 50 544 6355