Sweden’s largest pensions firm Alecta today reported its first set of financial results since the crisis over US bank stock losses erupted last month, posting positive investment returns for the first quarter but a weaker overall financial position.
The Stockholm-based pensions firm reported that its overall return on total assets amounted to 3.2% between January and March.
A spokesman for Alecta confirmed to IPE that the large losses already announced on three US niche banks – Silicon Valley Bank, Signature Bank, and First Republic Bank – were included in the Q1 results.
Those losses – amounting to SEK19.6bn (€1.73bn) – created a crisis of confidence in the company, prompting the firm’s chief executive officer to announce rapid organisational changes, and subsequently his own sacking.
In its commentary on the three-month returns, Alecta said: “The change in the value of the investment assets in combination with the changes in interest rates has meant that the financial position deteriorated somewhat during the quarter, but is still assessed as very good.”
The firm said “developments in the financial markets” had meant that the value of its investments increased during the quarter by SEK39bn, amounting at the end of the quarter to SEK1.19trn.
“The fixed income market has been less volatile with rising short-term interest rates and slightly falling long-term interest rates, which has meant a positive return for Alecta’s interest holdings during the year,” it said.
During the quarter, equities returned 5.6%, fixed income produced a 2.2% gain and alternative investments returned 0.4%, it reported.
For the defined benefit pension side of Alecta’s business alone, the quarterly return was 3.1%, with the consolidation level standing at 169%, and the solvency ratio at 203%.
At the end of December, these latter two figures were 172% and 218%, respectively.
Alecta Optimal Pension meanwhile – Alecta’s defined contribution product and the traditional insurance default option in Sweden’s ITP occupational pension scheme – returned 3.9%, based on a 60% equities profile, the firm reported.
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