The positive trend continued and Elo’s investments generated a good return in January–September
The positive mood in the investment market continued during the third quarter. The investments of employment pension company Elo generated a return of 6.1 per cent in January–September. The market value of Elo’s investments was EUR 22.9 billion at the end of September. Solvency strengthened and the solvency ratio was 126.3 per cent.
“Elo’s year has been excellent. The favourable development of the return on investments continued, our customers have received decisions on their pension applications faster than the industry average also this year and transfers of employment pension insurance policies between employment pension companies has been good as a whole in 2017,” says Elo’s CEO Satu Huber, commenting on the year so far.
Elo issued a total of approximately 20,400 pension decisions during the first nine months of the year. The partial early old-age pension, which was introduced at the beginning of the year, continued to be popular and, by the end of September, these pensions were issued to 2,023 customers.
Elo’s online services were reformed in early autumn 2017. The company’s employment pension insurance services and employees’ rehabilitation and pension information are now available through a single online service. The development work will continue, and working capacity management tools will be added next to the online service by the end of 2017.
“The expanded online service makes it easier to track the effectiveness of working capacity management measures and rehabilitation. It will also help the largest companies to note how their employees remaining capable for work has a positive impact on employment pension premiums,” Huber says.
The return on the listed equities was 11.8 per cent
The return on Elo´s investments was 6.1 per cent (3.7 per cent) in January–September. At the end of September, the market value of Elo’s investments was EUR 22.9 billion (EUR 21.3 billion). Of the main asset classes, equities generated a return of 10.6 per cent (4.0 per cent), fixed income investments -1.4 per cent (4.2 per cent) and real estate investments 3.9 per cent (4.9 per cent). The return on the listed equities was 11.8 per cent (3.4 per cent) from the beginning of the year.
The euro continued to weaken against the US dollar. The share of Elo’s open currency risk and the US dollar in particular has been kept moderate.
“The equity market in particular has continued its positive development. Valuation has remained high, but companies’ profit growth has also been strong. The continued strong listing activity in Finland has been pleasing,” says Elo’s Chief Investment Officer Hanna Hiidenpalo.
In all, the returns on Elo’s investments did well against the benchmark indices set for them. Real estate investments continued to yield a stable return during the period under review, and interest in them remained high in the investment market. During the last 12 months, the return on Elo’s investments was 7.9 per cent.
Growth of the economy has accelerated
Economic growth continued to be relatively favourable in all main economic areas. Economic growth has strengthened in the euro zone in particular, and the growth rate is expected to be slightly over two per cent in 2017. Global growth expectations have increased slightly and the full-year estimate is 3.4 per cent.
“Due to the moderate inflation rate outlook, the June concerns of a tightening of fiscal policies in the market subsided as the autumn progressed. The exceptionally stimulating monetary policy has been kept unchanged in major economic areas,” says Hiidenpalo
Favourable economic outlook for the remainder of the year
The outlook for the remainder of the year continues to be favourable, even though there are indications of global economic growth having reached its cyclical peak. In the United States, the concern is the economic policy and the Federal Reserve’s intentions of a rate hike and selling securities from its balance sheet. In Europe, the Brexit negotiations are causing long-term uncertainty. The European Central Bank will also probably announce its measures to reduce its balance sheet towards the end of the year.
“With the favourable global economic outlook, Finland’s economic development also seems quite positive for the next few quarters, with both private consumption and exports currently being good,” Hiidenpalo says.
Elo Interim Report 1 January − 30 September 2017 (pdf) >
Elo Interim Report presentation 1 January − 30 September 2017 (pdf) >
CEO Satu Huber, tel. +358 20 703 5811
CIO Hanna Hiidenpalo, tel. +358 20 703 5668
CFO Sarianne Kirvesmäki, tel. +358 20 703 5134