FINLAND - Ilmarinen Mutual Insurance Pension Company has reported an annual return on investments of -17.5% in 2008, but has warned it will not look to fill the gap by "panicking and selling shares".

In its preliminary financial statements for 2008 Ilmarinen, which had €23.4bn assets under management in October 2008, revealed its solvency margin had more than halved in the last year from 32.5% of technical provisions to 14.6%, although it said its solvency position is 2.1 times the required solvency limit.

Harri Sailas, chief executive of Ilmarinen, claimed although the market situation has been "historically difficult and the investment income of employment pension funds around the world are "clearly in the red", the solvency of Ilmarinen has a "solid base.

And while the annual return of -17.5% is significantly lower than the 5.7% return in 2007, he argued the investment results of the company should be assessed over a long time span.

"Now one needs to keep one's head. The worst thing to do would be to destroy future investment income by panicking and selling shares, the value of which may rise in the near future. What looks like a loss in the investment market today, might be a key to success tomorrow," said Sailas.

The pension firm also revealed it actually increased the proportion of Finnish investments in its portfolio over the year, rather than reducing the domestic bias, and said it had financed a number of struggling Finnish companies with loans totalling almost €2.7bn at the end of 2008.

Sailas said: "Our objective is to continue to be a long-term, responsible owner of Finnish companies. Ilmarinen has also financed Finnish companies with considerable sums, as their financing situations tightened during the autumn."

Although the official financial statements for the company will not be published until 24 February 2009, Ilmarinen suggested it had increased its premiums over the year by 18% to exceed €3.2bn, while it plans to allocate €32m for client bonuses, which Sailas claimed is "pretty much equal to the money that our efficient operations have saved for our customers".

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