FINLAND - Three of Finland's mutual pension insurance companies have posted positive first half results, but Tapiola Pension yielded the highest return of 4.9%.

Tapiola Pension, part of Tapiola Group, produced an overall result of €176.2m in the first six months of 2009, compared to -€421.1m in the same period in 2008, as equity investments returned 14.4%.

The company's total investment return was 4.9%, against -3.7% a year earlier, as while its bond allocation returned 3.7% its property investments yielded "zero due to the losses from the real estate funds".

The value of the pension company's investments rose from €7.29bn to €7.88bn in the first half as a result of the positive performance, while its solvency ratio also improved to 18.5% of technical provisions and a solvency position of 2.9 times the legal requirement.

However Satu Huber, managing director of Tapiola Pension, warned that despite the positive result "the future looks extremely challenging" as the economic recovery is likely to be slow.

"The weakened economic position of companies has begun to show in the premium income from Tapiola Pension's pension insurance policies and in the total payroll figures notified by customers. The total payrolls used as the basis for advance premiums have been decreased somewhat during the early part of the year, and it is predicted the growth of premium income will halt during the course of this year," added Huber.

Tapiola also revealed it had increased its allocation to equities form 14% to 22% over the six months, which led to the best investment return of 14.4%. But Hanna Hiidenpalo, investment director at Tapiola Pension, warned there are still "reservations about the permanence of the rise in share prices. For this reason, some of the equity risk has been hedged towards the end of the review period".

The figures also showed that while real estate investments remained static, the pension firm had "selectively increased" its allocation to high-risk corporate bonds within its fixed income portfolio, while the proportion of money market investments and government bonds was reduced.

Elsewhere, Eläke-Fennia revealed it had generated a return of 3.7% in the first half, and an increase in its solvency levels to 14.1% of technical provisions and 2.5 times the legal requirement, as the value of the pension assets rose from €5.64bn at the end of 2008 to €5.9bn at the end of June 2009.

At the end of the second quarter, the asset allocation of the scheme was 46.5% in bonds, 23.5% in equities, 12.9% in property, 8% in loans and 9.1% in other financial market instruments and deposits.

The best returns came from the equity portfolio, which returned 13.4%, despite a -9% yield on private equity, while the fixed income investments - including bonds and loans - returned 1.8% and property and hedge fund assets produced 1.9% and 6.8% respectively.

And Veritas Pension Insurance Company also produced a positive 3.3% return in the first half, causing the asset value to rise to €1.7bn with a solvency ratio of 3.1 times, or 17.3% of technical provisions.

Equity investments again produced the highest return with an overall yield of 8.3%, of which a 24.3% return on quoted equities offset losses in private and unquoted equity investments, while fixed income yielded 2%, property 3.1% and hedge funds -0.6%.

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