Finnish returns: Fennia Life, Veritas, Etera
FINLAND – Finnish pensions insurer Fennia Life saw its return on investments fall in the first half of the year and said some client companies were struggling with low demand.
In its interim report, the company reported an investment return of 1.3% for January to June 2013, down from 4.1% for the same period last year.
Premium income slipped to €49m from €51m, and Fennia Life’s solvency ratio fell to 20.8% at the end of June from 21.8% at the end of December.
Seppo Rinta, chief executive, said: “Fennia Life maintained its premium income level, although some of the client companies experienced significant problems with demand.”
In spite of the uncertainty in the investment market, the company’s financial position and profitability remained on track, Rinta said.
Total investment assets fell to €659m from €679m, and the company’s operating profit increased to €16m from €12m.
Meanwhile, pensions insurance company Veritas has its eye on higher-yielding equities in the expected economic upturn, after reporting a fall in first-half investment returns.
In the January to June period, Veritas generated a 1.4% return on investments, down from 3.8% the year previous, according to its interim report.
Veritas said that, although shares produced good returns, the economic turmoil that marked the first half was likely to return in the autumn.
However, expectations were also high that economic growth was slowly but surely recovering, it said.
Veritas head of investments Veronica Törnwall said: “Companies are showing stronger balance sheets and in some cases giving a very good dividend yield.
“The potential is there, especially in Europe, where valuations are low but yield expectations are high.”
Equities produced a higher return than other asset classes, generating 3.9% – nearly on par with the 4% reported for the 2012 first half.
Premium income was little changed at €227.4m compared with €227.6m.
Veritas made a loss on its fixed income investments of 0.8% in the first half, compared with a 4.3% profit in the first half of last year.
Real estate returned 3% after 3.1% in the same period a year ago.
Lastly, pensions insurer Etera blamed its own cautious stance on equities and poor emerging market bond performance for a slim investment loss in the first half.
For the January to June period, the company posted an overall investment loss of 0.7%, compared with the 5.9% return booked in the same period in 2012.
Fixed income investments gave a 0.5% return compared with 5.2% in the same period a year before, and equities made a 3% loss, after an 8.8% return last year, according to its interim report.
The category of ‘other investments’ made a loss of 6.8% compared with a 16.1% return.
Etera’s investment director Jari Puhakka said: “The return on investment was affected by our cautious approach to economic developments.
“Precautions against equity risk and worse-than-expected developments for emerging market loans worsened first-half results.”
Etera’s solvency ratio fell to 18% at the end of June from 20.4% at the end of December.