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Positive Q1 boosts Varma value

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FINLAND - Varma Mutual Pension Insurance company has reported a positive first quarter performance of 0.3%, although its rival Eläke-Fennia produced a slightly poorer result of -0.2%.

First quarter figures from Varma showed its solvency margin has increased by €106m, to bring the total risk buffer for investments to €3.8bn at the end of March, which is equivalent to 17.5% of technical provisions and 2.6 times the solvency limit.

Matti Vuoria, president and chief executive of Varma, said the company had a "stable" start to the year despite the "challenging market situation", and only its quoted equities portfolio posted a loss of -3.4%, leading to a total first quarter result of €114m.

Overall the equities portfolio - quoted and unquoted stocks - produced a return of -2.1%, despite the unquoted equities investments posting the highest yield of 5.2%, although fixed income and real estate both performed well with returns of 0.3% and 0.5% respectively, and other investments including hedge funds and commodities yielded 2.5%.

The value of Varma's investments increased slightly following the positive results, from €24.6bn at the start of 2009 to €25.1bn by the end of March.

Vuoria said: "The Finnish earnings-related pension scheme has shown its strength in the economic crisis. The promised benefits will be paid regardless of the economic trend and the level of pensions will not be determined based on the return on investments for a single year. Partial funding and a long investment horizon support long-term aims for returns."

Meanwhile, Eläke-Fennia reported a less successful first quarter with a return of -0.2%.

Despite the negative result the return is an improvement on the -4.6% yield posted for the first half of 2008 and the 12% loss incurred over the whole year, while it confirmed its solvency level at the end of March was 13% of technical provisions, or 2.4 times the solvency limit.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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