SWEDEN - Swedish pension provider Alecta returned 3.4% for the first quarter of 2010, marking a significant improvement on its negative performance for the same period last year, but also below its five-year average.

The SEK450bn (€47bn) Alecta suffered a negative investment return of -2.7% in Q1 2009, although subsequent performance saw it achieve total returns of 12.8% for the 12 months ending December 2009.

The pension provider's updated average five-year performance was 6.4%, which according to Alecta is 0.5% above that for Swedish pensions industry as a whole.

Alecta Optimal Pension, the company's premium-based occupational pension product, returned 4% for the quarter as its higher equity allocation benefited performance. This product's long-term equity strategic equity allocation is 60% but during the first quarter it was above that level.

Alecta's solvency level remained at its 2009 year-end level of 163%, and its collective funding ratio for defined benefit insurance contracts was strengthened to 143%, from 141% at year-end. The figure is well within the regulatory set limits of 125-155%.

In 2009 Alecta began a cost-cutting exercise and its management expense ratio fell to 0.22% from 0.24% since the end of 2009.

Staffan Grefbäck, chief executive at Alecta, said the effect of the cost cutting programme was becoming apparent and the pension provider planned to lower its costs further throughout 2010.