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Elo’s 2015 financial statements: Efficient operations and completion of major IT system projects

  • During its second year of operation, Elo completed all major IT system projects related to the merger. Operational efficiency remained strong with loading profit at an excellent level despite costs related to the merger.
  • The return on investments in 2015 was 5.0 per cent. The market value of investments increased to EUR 20.5 billion.
  • Solvency remained at a comfortable level. Solvency ratio was at 24.1 per cent and solvency capital exceeded the solvency limit by a factor of 2.0.

“Elo’s second year of operation was a success in many ways. Our operations were cost-effective regardless of the major IT system projects taking place. In 2015, Elo’s operating expenses were 71.4 per cent of the loading income. This guarantees competitive premium discounts for our customers. For 2015, we will transfer EUR 58.2 million to client bonuses, in other words 0.52 per cent of the TyEL payroll. Once the benefits of the merger start to take effect we will be even more competitive,” says Satu Huber, who became the Chief Executive Officer of Elo last June.

Elo retained its position as Finland’s preferred employment pension company: one in three companies and over 40% of self-employed persons in Finland have chosen Elo to manage their employment pensions. At the end of 2015 Elo was responsible for the pension insurance of about 85,000 self-employed persons and for the employment pension insurance taken out by 46,000 employers. In total, almost 500,000 employees and self-employed persons are insured with Elo. In order to guarantee a good customer experience Elo carries out close cooperation with its partners, LocalTapiola and Fennia.

Elo pays out pensions to some 216,800 pensioners every month. The total amount of monthly pensions is about EUR 238 million. In 2015, Elo’s total annual pension and claims expenditure was EUR 3,147 million. Around 22,700 pension decisions were issued during the year. As a result of improvements to the processing of pension applications, Elo managed to provide pension applicants with a decision much quicker than other pension companies.

During 2015, the wellbeing at work activities of employment pension companies’ were inspected by the Financial Supervisory Authority. More detailed guidelines for managing disability risks were released at the beginning of March 2016. “At Elo we are pleased that employment pension companies now have detailed common guidelines on the management of disability risks. Preventative measures addressing disability related expenditure are important for the financing of the entire employment pension system,” says Satu Huber.

“During 2015 we created a new online service to promote workplace wellbeing. The service will help us to provide better support to improve the workplace wellbeing of a large group of small and medium-sized client companies,” Huber adds.  

Successful year for investments relative to wider markets

The considerable uncertainty surrounding economic growth expectations during 2015 was reflected in investment market returns, which remained modest worldwide. “Despite the uncertainty in the real economy and the investment markets we were able to secure our solvency and we achieved a stable return on our pension assets,” says Huber.

The overall return on Elo’s investments was 5.0 per cent and the market value of investments increased to EUR 20.5 billion. “Returns remained positive in almost all the asset classes, and were at good levels in relation to wider market returns. The regional and also industry- and company-specific weightings were successful considering the prevailing market conditions,” says Hanna Hiidenpalo, Director and Chief Investment Officer at Elo. “Our investment performance was strong during first half of the year. Market uncertainty clearly increased during the late summer and autumn, but this was followed by good performance seen earlier in the year.”

Equities were the best performing asset class with a return of 13.0 per cent. Elo’s listed equities returned 11.1 per cent. Unlisted equities returned 26.2 per cent and private equity investments 20.4 per cent.

“As a consequence of the weakened fixed income return expectations, government bond flows continued to be directed outside of the euro area, especially to the USA. We reduced our credit investments already back in the spring,” says Hiidenpalo. Elo’s fixed income investments achieved zero return in 2015.

The real estate investment markets remained active and Elo’s real estate investments achieved 6.9 per cent return. Domestic returns were at the previous year’s level and international investments produced excellent returns. Direct real estate investments returned 5.3 per cent and real estate investment funds 13.1 per cent.

The five-year average nominal return on Elo’s investments was 4.5 per cent, and the ten-year average 4.8 per cent.

Further challenging times expected

The outlook for the global economy in 2016 is in many ways contradictory. Investment markets started the year with exceptional uncertainty. The main causes were the weakened outlook for China, a major driving force of the global economy, and the oil price decline. 

“The US Federal Reserve raised the federal funds rate at the end of last year on the basis of slightly improved economic outlook. Nevertheless, monetary policy, both globally and in the euro area, is likely to remain expansionary and supportive for investment markets if economic growth does not live up to expectations. However, 2016 may already offer interesting investment opportunities for long-term investors, for example in equities and corporate bonds” says Hanna Hiidenpalo, Director and Chief Investment Officer.

Elo’s financial statements presentation 2015, (PDF) >


Satu Huber, Chief Executive Officer, tel. +358 20 703 5811
Hanna Hiidenpalo, Director and Chief Investment Officer, tel. +358 20 703 5668
Sarianne Kirvesmäki, Director, Finance, tel. +358 20 703 5134

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