EUROPE – Norwegian pension fund company KLP posted a 6.7% return for 2012 and said it had won 14 new council clients.
Value-adjusted and book returns for 2012 were 6.7% and 5%, respectively.
In 2011, KLP reported returns of 3.2% and 4.5%, respectively.
KLP said that, for the fourth year in a row, it had achieved the highest value-adjusted return among companies competing in the public sector occupational pensions market.
Key contributors to the annual return were shares, short-term bonds and property, it said.
Sverre Thornes, group chief executive, said: “Despite the sometimes uneasy financial markets and low interest rates, KLP can point to an extremely good return for 2012.”
Solvency and a long-term approach were the most important things for KLP’s customers and owners, he said, and added that this gave the fund a good basis as it moved ahead.
A large portion of the 2012 surplus would go on setting aside increased reserves for longevity, as would be the case with all life insurance companies, KLP said.
The 2012 result will allow KLP to transfer NOK2.3bn (€308m) to the customers’ premium fund and increase reserves for longevity by NOK3bn, it said.
In last autumn’s competitive tendering rounds, KLP gained 14 new local authority customers, which will come on board this year.
On top of this, the three KLP municipalities that went out to tender opted to stay with the company, it said.
From the start of this year, KLP said it would therefore gain a net inflow of customer assets of almost NOK6bn and 28,000 new scheme members.
“This is KLP’s best transfer result for several decades,” Thornes said. “We see this as recognition of KLP as a competitive and cost-effective pension provider.”
Total assets at the KLP Group rose to NOK331.8bn at the end of 2012 from NOK291.8bn.
Its solvency margin stood at 233.2%, down from 243.5%.
In other news, the total return at Swedish pensions group AMF leapt to 8% in 2012 from 2.4% the year before, and the company said its high solvency ratio would allow it to seek higher-yielding investments.
The solvency level rose to 190% at the end of last year from 183% 12 months before.
This was the highest in the market, AMF said, and gave it more room for manoeuvre in actively seeking investments with the potential to give higher returns for pension savers.
Peder Hasslev, head of investment, said: “Since the autumn of 2012, the financial markets have been marked by renewed optimism.”
But AMF still fundamentally sees low growth in the Western world, he said.
“Therefore, we are striving for a better long-term balance between asset classes,” he said, adding that this was made possible by the strong solvency ratio, which rose to 202% in January this year.
Total assets rose to SEK405bn (€48m) at the end of December 2012 from SEK372bn 12 months before.