The Russia-Ukraine war appears to have hit some Finnish companies hard, according to the chief executive officer of Finnish mutual pensions insurance company Elo, describing the situation as “extremely concerning” in the firm’s interim report.

As the first two of the four pensions insurers in Finland’s earnings-related pension system to report financial returns for this year’s first quarter, Elo posted a 1.9% loss and Veritas a -3.5% return, with larger competitors Varma and Ilmarinen due to reveal their figures tomorrow.

Carl Pettersson, CEO of Elo, said that after an optimistic start to the year, the mood in the economy as well as the financial markets had quickly become gloomy.

“Unfortunately, it seems that the war also hit several Finnish companies hard,” he said.

“Even though Finland’s dependence on trade with Russia has continuously decreased, we have both large and smaller companies with a big share of their turnover or procurement coming from Russia,” Pettersson said, adding: “The situation is extremely concerning,”

Also attributing the negative impact on financial markets to accelerating inflation and a global tightening of monetary policy, Elo reported a fall in total assets to €28.8bn, dipping from the €29.4bn it reported at the end of 2021.

Elo’s solvency level fell to 126.1% at the end of March from 128.1% at the end of 2021.

Hanna Hiidenpalo, Elo’s chief investment officer, said the pension provider had started reining in its listed equity allocation at the end of January.

“We also made some changes in the geographical allocation by decreasing the weight of European equities and increasing the weight of US equities,” she said, adding however that no significant change had taken place in the allocation to Finnish equities during the first quarter.

Meanwhile Veritas’ CIO Kari Vatanen said in his firm’s financial report published today that in traditional asset classes, negative returns had been unavoidable in the first quarter.

“However, alternative and illiquid investments with slower reaction times have still been generating positive returns,” he said.

The outlook in the investment market in the coming months was bleak, said Vatanan.

“We are in for high inflation, tightening monetary policy and declining growth,” he said, but struck a more positive note regarding the Finnish pension system, saying there was no cause for concern there.

“The high returns generated last year have ensured that we are well-equipped to tackle this year,” he said.

Veritas saw total assets dip to €4.2bn by the end of March from the €4.4bn reported at the end of last year, and reported a solvency level of 127.9%, down from 131.9% at the end of December.

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