FINLAND - Ilmarinen Mutual Insurance Company has reported a positive first quarter return of 0.2%, as fixed income investments performed well.

The results follow poor performance in 2008, when the pension provider produced an annual return of -17.7% and saw an overall loss €4.34bn, and the first quarter performance in 2009 also compares favourably to the -4% return in the same period last year. (See earlier IPE article: Real estate helps limit Ilmarinen losses)

Figures showed the value of the pension fund increased from €20.87bn at the end of December to €21.79bn at the end of March 2009, as fixed income investments reported a return of 3.7%, with bond investments driving the positive result with a yield of 4.9% while loans and other money market instruments recorded results of 1.1% and 0.6% respectively. 

Overall, the equity portfolio saw a negative return of 5.2%, but unlisted equities performed well within this to yield 1%, although listed equities returned -5.2% and private equity investments reported a return of -7.6%.

Real estate also produced a total return of -0.7% as the positive performance of direct real estate investments, which returned 1.3%, was offset by the -8.5% yield from real estate funds and joint investments - the worst performer this time in Ilmarinen's portfolio.

The unaudited figures also showed other investments performed poorly with a return of -6.9%, although hedge fund investments did produce a return of 1.6%, the second highest return in the portfolio.

Ilmarinen said positive performance in the first three months of the year had helped to improve its solvency position by 0.5 percentage points as solvency capital reached €2.8bn, which is equivalent to 14.5% of technical provisions and 2.3 times the minimum solvency requirement.

Timo Ritakallio, deputy chief executive of Ilmarinen, said: "It seems that the worst is over on the investment markets and the value of shares has stopped decreasing. This is true from Ilmarinen's viewpoint because our investment portfolio is highly diversified."

That said, Ritakallio admitted it might take more time for a more permanent improvement in the economic situation, even though the rise in share prices over the past few weeks could mean prices "bottomed out" in early March.

"One should, however, be realistic and remember that the international recession is much longer and deeper than was expected a few months ago. Several setbacks are probably still to come in the future months," said Ritakallio.

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