FINLAND - Finnish pension insurance companies improved their solvency levels in 2009 as a result of good investment returns that were boosted by equities.
Solvency levels increased to 23.3% from 15.3% at end of 2008 but this is still short of the levels of 29.7% at the end of 2007.
On average the Finnish pension sector returned 10.1% to 15.8% in 2009, according to the regulator, Finanssivalvonta (FIN-FSA). Total assets in the sector grew by €10.6bn to €77.9bn at the end of 2009. (See earlier IPE article: Finnish pension funds return 19% on equities growth)
The report from the regulator also stated that the temporary capital adequacy regulations put in place by the Finnish government as a result of the crisis has had the desired effect of boosting solvency levels.
The FIN-FSA said the temporary measure stopped the forced selling of equities at a time when prices were at their lowest, which would have had a detrimental effect on performance and solvency levels.
Equities returned between 20-30% for the pension insurance companies in 2009, according to the report. However the temporary regulations have now been extended to the end of 2012. (See earlier IPE article: Finland plans to extend solvency measures to 2012)
Solvency levels at other pension providers, such as funds and foundations, were higher than those of the pension insurers, standing at 35.4% and 36.1% respectively. According to the report, funds and foundations were able to maintain their risk levels higher than pension insurers.
The report also noted that during 2009, seven company pension funds or foundations decided to stop operating and outsourced all arrangement to pension insurance companies, and this trend is continuing in 2010. (See earlier IPE article: Outsourcing trend drives Varma growth)