FINLAND - The start of this investment year has continued with the same positive spirit as 2009 for Finnish pension insurer Ilmarinen, as it returned 5% in the first three months of the year.

Timo Ritakallio, deputy CEO of investments, noted the company has only now recovered the losses created by the financial crises, even though its return in the first quarter of this year was significantly better than the meager 0.2% gained for the same time period last year.

He added Ilmarinen's average annual return was 6.1% or in real terms 4.4% per year, albeit this is above the 4% target return used for calculating future pension payments.

The equity rally combined with narrowing credit margins in fixed income boosted the firm's first quarter performance. All other asset classes also outperformed during the period to raise total assets at the end of March to €26.3bn.

Ilmarinen's solvency ratio has also improved on the back of positive return and the company's operating capital stood at €5.8bn by the end of Q1 2010, which is worth 28.3% of its liabilities or equivalent to three times the minimum solvency requirements.

Despite the many signs of a strengthening economy, Ritakallio warned of treacherous "spring ice". He argued the depth of the recession would mean full recovery from the crisis would require time, and could entail new setbacks.

He added the operational environment continues to be demanding and noted the recovery has only just begun. In particular, Ritakallio believes there is a risk that the low interest rate environment could mean the value of equities increase too fast in relation to the real economy,  which is clearly recovering at a slower pace.

Ilmarinen is one of the first to disclose its returns so gives an indicator as to how other providers in the pensions industry may have fared so far this year.

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