Norwegian pension fund company KLP has announced the best value-adjusted returns of any company competing in the public sector occupational pensions market for the fifth consecutive year.
Value-adjusted returns for calendar year 2013 were 6.7%, the same as for 2012, while book returns rose to 6.4% from 5% the year before.
The company said the most significant contributors to its results were equities, property and hold-to-maturity bonds.
However, it warned that, with increasing life expectancy, there was a need to strengthen its premium reserve, and that all life insurance companies would be using a large part of their 2013 surplus to do the same.
Sverre Thornes, chief executive at KLP, said: “It is extremely gratifying to note our results for 2013 are so good it means we are completing the strengthening of our premium reserve in order to meet the positive development of people living increasingly longer.”
KLP is strengthening its premium reserve by NOK4.5bn (€543m) for longevity, while NOK5.9bn is being transferred to the customers’ premium fund.
Meanwhile, with Storebrand and DNB Livsforsikring pulling out of the public sector occupational pensions market, 78 local authorities and 440 operations with a total of NOK60bn in premium reserves will have to switch providers.
Last year, 48 local authority customers chose to move to KLP, while agreements have also been concluded with 48 enterprises with public sector occupational pensions.
This means 100,000 new members will join KLP during 2014, with an inflow of NOK20bn in premium reserves.
The group is expecting a major inflow of new customers next year as well.
“KLP is facing the change in the market situation with continued focus on value creation through good returns, low costs and good service,” said Thornes.
Total assets for the KLP Group at end-2013 were NOK369.8bn, up from NOK331.8bn in 2012.
Its solvency margin continued a slight decline to 228.8%, down from 233.2% the year before.