Quoted equities boost Etera fund value in 2009
FINLAND - Better than anticipated sales of pensions and a positive performance in listed equities saw Etera Mutual Pension Insurance Company increase the value of its assets by around €300m in 2009.
Preliminary figures from the pension company revealed it achieved a 10.3% overall return on investments over the year, against the -17% recorded in 2008. This was driven primarily by gains in quoted equities and fixed income portfolios, which returned 28% and 10.6% respectively.
This compares favourably with the -40.9% return on equities posted in 2008 and the -2.1% recorded by fixed income. Mika Pesonen, chief investment officer at Etera, noted: "The year had its ups and downs, but following a rough start early in the year, our return on investments improved."
Pesonen added that risky assets had compensated for the losses in 2008, with the market value of the investment assets increasing from €4.9bn to €5.2bn.
"The successfully chosen focal areas in our interest portfolio contributed to the good results. During the beginning of the year, corporate risk was increased in our bond portfolio, which can be seen as exceptionally high returns," said Pesonen.
The figures, published ahead of the full statements in March, meanwhile showed Etera received €537m in premiums, which is 5.5% less than the €569m generated in 2008. However, offiicials said it had increased its share of new pension insurance-based policies as they accounted for 16% of the new TyEL policies and 8% of YEL policies.
Etera has around 155,500 pension recipients, making the firm one of the three biggest earnings-related pension companies in Finland with a 16% market share.
Hannu Tarkkonen, managing director of Etera, said: "Premium income developed more favourably than expected at the end of the year. In terms of sales of new insurance policies, we clearly did better than our market share would indicate."
Solvency figures for the company also improved over the year with a solvency ratio of 18.5% of technical provisions, up from 14% at the end of 2008. This is equivalent to around 2.3 times the minimum solvency requirement, however without the temporary solvency regulations introduced by the government in 2008 the figures would be 13.8% of provisions and 1.2 times the solvency limit. (See earlier IPE article: Finnish funds prepare for relaxed solvency rules)
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