FINLAND – Finnish pension provider Varma increased its return on investments in 2012 to 7.7% from 2.1% the year before, as domestic equities outperformed other assets.

All asset classes produced positive returns over the year, it said, with equity investments ending with a 14.5% profit.

Matti Vuoria, president and chief executive, said: “Varma’s equity portfolio performed well, and Finnish equities yielded the highest returns.”

Domestic equities returned 21.3%, he said.

“Varma’s considerable domestic investments are based on our assessments of the investee companies,” he said.

The total value of investments rose to €34.4bn from €31.9bn.

Vuoria said it was becoming more and more difficult to manage the systemic risk of the financial markets, adding that macroeconomic uncertainty made this even harder.

Over 2012, Varma’s solvency capital grew by €1.2bn to finish the year at €7.7bn.

The solvency ratio rose to 28% of technical provisions, from 24.8% the year before, amounting to 2.4 times the solvency limit, down from 2.5 times at the end of 2011.

“Our goal is to maintain our strong solvency through stable returns and operational efficiency,” Vuoria said.

Fixed income investments ended the year with a 4.4% profit compared with 4.2% the year before.

Property returned 4.5%, down from 6.4%.

Other investments – mainly in hedge funds and inflation investments – produced 6%, up from 4.5%, Varma said, adding that its return on hedge-fund investments had beaten hedge-fund indices.

Looking ahead, Varma said there was still uncertainty about the future of the euro-zone and global economic recovery.

Regarding the country’s pension system, Vuoria said the company supported increasing efficiency demands and competitive requirements set for earnings-related pension companies.

“The Finnish pension system is reliable and financially sound,” he said.
“Varma handles its tasks as efficiently as possible for current and future pension recipients.”

Meanwhile, investment returns at Finnish pension insurance company Veritas bounced back from 2011’s 4.9% loss to 11.3% last year.

Jan-Erik Stenman, managing director of Veritas, said: “We did very well in our fixed income investments, where returns were as high as 11.7%.

“Given the level of interest rates, it is a remarkable result.”

Equities returned 13.9%.

Stenman said sales through Veritas’s partner channels had increased last year, and that it expected another rise in sales this year because of its intensified cooperation with Aktia Insurance, of which it owns 15%.