Figures provided by Alecta today show the Swedish pension firm’s recent losses on US niche banks – which cost the chief executive officer his job – in fact reduced overall returns in the first quarter by a third and knocked three points off the provider’s solvency ratio.
Yesterday, the SEK1.19trn (€105bn) occupational provider – Sweden’s largest – reported its results for the first three months of this year, including a 3.1% return for the defined benefit (DB) business and a 3.9% for its defined contribution product, Alecta Optimal Pension, based on a 60% equities profile.
On the DB side, Alecta reported a consolidation level of 169%, and a solvency ratio of 203% – both down from their levels at the end of December 2022 of 172% and 218%, respectively.
Asked by IPE about the extent to which those investment returns had been affected by the losses the firm had booked on three US niche banks in the quarter, a spokesman said the Q1 return on DB had been negatively hit to the tune of -1.3 percentage points and for the Alecta Optimal Pension return, the impact had been -2.1 percentage points.
As for the DB collective consolidation, the bank losses had reduced this by two percentage points, he said, with the group solvency ratio having been lowered by three percentage points.
In March, as a banking crisis emerged, Alecta revealed it had suffered losses amounting to SEK19.6bn on three US niche banks – Silicon Valley Bank, Signature Bank and First Republic Bank.
The news sapped confidence in the company, leading to the sacking of Magnus Billing, Alecta’s CEO.
Alecta’s supervisory board – a panel mainly of representatives from the labour-market parties behind the collective agreement on which the firm’s pension scheme is based – is holding its annual general meeting (AGM) in Stockholm today.
Unusually, this year Alecta has hired a large venue for the AGM in anticipation that many more of its customers than normal may choose to attend, given the furore around the losses. A media briefing will also take place this afternoon relating to the meeting.