LocalTapiola Pension’s financial statements for 2013

4.3.2014
  • The investment return, calculated at fair values, for LocalTapiola Pension in 2013 was 5.4%. 
  • The solvency ratio was at the strong level of 25.1% at the end of the year. The solvency position was 1.9. 
  • The average ten-year return for investments (1 January 2004–31 December 2013) was 5.3% and the average five-year return (1 January 2009–31 December 2013) was 7.0%.

LocalTapiola Pension's investment return at fair values stood at 5.4 per cent (9.0% in 12/2012). The fair value of investments at the end of 2013 was 10,443.1 million euro (9,935.8 million euro).

The company’s solvency ratio was 25.1 per cent (27.0%) and its solvency position (the solvency margin in relation to the solvency limit) was 1.9 (2.7). Without the equalization provision, the solvency ratio would have been 22.0 per cent (12/2012: without the temporary changes in legislation 21.9%) and the solvency position 1.7 (2.2).

2013 was a good year for equities

LocalTapiola Pension’s equity investments were the strongest asset class with a return of 14.1% (16.3% in 2012). The allocation to equity investments grew slightly during the second half of the year.

The return from fixed-income investments was 0.2% (7.4%). The gradual rise in the level of interest rates kept the return from fixed income at a lower level than in 2012. LocalTapiola Pension reduced its interest rate risk during the year. Within fixed-income investments, corporate bonds had the best return, at a rate of 2.6% at the end of the year.

LocalTapiola Pension’s allocation to alternative investments was increased during 2013. Alternative investments seek to diversify the risks in other asset classes. The return from alternative investments was good, at 5.5%.

The overall annual return on LocalTapiola Pension’s unlisted equity investments was good, at 9.8% (30.9%). LocalTapiola Pension continued as an active participant within the domestic private markets. An example of this was its participation in the acquisition of Fortum’s Finnish electricity distribution network in December 2013.

Operational efficiency allows for competitive client bonuses

LocalTapiola Pension’s overall result was 70.2 million euro (464.1 million euro). The loading profit was a surplus of 17.0 million euro (17.9 million euro). Operating expenses signified 74.9% (72.3%) of the insurance premium loading profit. The overall operating expenses increased from the previous year by 11%, primarily as a result of the merger preparations, and totalled 68.5 million euro (61.6 million euro). Altogether 29.3 million euro (27.8 million euro) or 0.48 % (0.47) of the TyEL-insured payroll will be transferred to client bonuses.

LocalTapiola Pension’s premium income increased by 2.6% for a total in 2013 of 1,602.7 million euro (1,561.6 million euro). TyEL premium income increased by 2.4% to 1,380.5 million euro (1,347.8 million euro) and YEL premium income by 3.9% to 222.2 million euro (213.7 million euro).

LocalTapiola Pension had a total of 217,775 persons (210,572) insured under TyEL at the end of 2013. The number of TyEL policies increased by 3.8% to 26,265 policies (25,314). The number of YEL insurance policies increased by approximately 1.9% for a total of 51,953 policies (50,997) at the end of the year.

LocalTapiola Pension’s share of the new sales of insurance policies remained strong. The market share of new sales of TyEL policies was 27% in terms of the number of policies. The sales of YEL policies continued to see positive development, with a 27% market share of new sales in terms of the number of policies.

A total of 12,097 (11,566) pension decisions were issued during 2013. LocalTapiola Pension’s handling of pension claims and rehabilitation applications was clearly faster than the industry average. Customers received decisions, on average, about 10 days faster than the industry average.

The number of pension recipients increased by more than 2% for a total of 125,266 individuals at the end of 2013. Altogether 1,490.4 million euro (1,384.7 million euro) was paid out in pensions and compensations; this signified an approximate 7.6% increase in the pension expenditure.

The new pension company, Elo, has launched its operations

The merger between LocalTapiola Pension and Pension Fennia was completed successfully on 1 January 2014, and the operations of Elo Mutual Pension Insurance Company commenced. Elo is a major player within the earnings-related pension insurance market. Elo’s total assets under management are over 18 billion euro, and its premium income of approximately 3 billion accounts for roughly a quarter of the private sector pension insurance market.

The cornerstones of Elo are cost-effectiveness and the provision of high-quality pension services for its customers. Elo will continue its close co-operation with both LocalTapiola and Fennia Groups. Through its strong and comprehensive network of partners, Elo can provide local services to customers anywhere in Finland.

LocalTapiola Pension's financial statements 2013 (pdf) >

Further information:

Satu Huber, Chief Executive Officer, LocalTapiola Mutual Pension Insurance Company (until 31 December 2013), tel. +358 20 703 5811

Hanna Hiidenpalo, Chief Investment Officer, LocalTapiola Mutual Pension Insurance Company (until 31 December 2013), tel. +358 20 703 5668