The third largest of Finland’s pension insurance companies, Elo, has reported a 4.5% investment loss for the first half of this year and a dip in solvency, with its leader commenting on strategic changes the troubled firm is in the process of making.

Elo Mutual Pension Insurance Company published its interim report on Friday, saying the mood in the economy had became gloomy in the first half of the year, as the risk of a recession increased.

Carl Pettersson, chief executive officer of the earnings-related pension provider, said: “The general economic environment is still characterised by uncertainty over opportunities for business growth and concerns over increasing costs; in these respects, the near-term future is difficult to foresee.”

Elo’s return on investment was minus 4.5% in the first half, and the value of its investments declined to €28.0bn from €29.4bn at the end of December 2021.

The firm’s solvency ratio dipped to 123.6% at the end of June from 128.1% six months earlier.

Elo’s January-to-September loss is slightly bigger in percentage terms that the 4.3% reported by its larger peer Varma earlier this month, and significantly narrower than the 6.2% loss revealed by Ilmarinen in its first-half financial report.

However, the solvency ratio is weaker than either of the two larger companies that are also operating within the earnings-related pension system.

Elo has only recently been released from a period of intense scrutiny by the Finnish FSA which followed concerns about how it was being managed after its solvency level went below the floor for one day at the start of the COVID-19 pandemic.

In mid-August, Elo announced it was planning a major business overhaul which could see up to one in 10 jobs lost, and initiated change negotiations under Finland’s labour-relations legislation.

Pettersen declared in the interim report that the company – which he was brought in to lead after former CEO Satu Huber left amid the fallout from the solvency breach – was “even more functional” following the changes that had been made in connection with the close FSA supervision.

“Our new strategy is also about to be completed in the autumn, and the change negotiations launched in August aim to make Elo an organisation that can implement the measures pursuant to the new strategy in an agile manner,” he said.

In its interim report, Elo said the change negotiations aimed “to further clarify Elo’s organisation and harmonise the operating and leadership culture”.

Elo was formed in 2014 from two companies, Local Tapiola and Pension Fennia, and IPE understands that big differences between the internal cultures of the two merging firms have been at the root of its problems.

Read the digital edition of IPE’s latest magazine