Folksam, one of Sweden’s largest occupational pension providers, reported returns of 6.5% and 7.2% for the first half, and said its solvency had reached a historically high level by the end of June – which it said was crucial if it was to have an influence on sustainability matters.
Reporting results for January to June 2021, the pensions and insurance group posted a 6.5% total return for its life and pensions arm Folksam Life and a 7.2% investment return for its municipal pensions subsidiary KPA Pension.
The solvency ratio for the life and pensions business increased to 185% by the end of June from 171% at the end of December, while KPA Pension’s solvency ratio rose to 191% from 172% over the same six months, according to the interim report.
Ylva Wessén, president and chief executive officer of Folksam, said: “A strong financial position is a prerequisite for our continued ability to influence, and therefore we are proud to report that Folksam Life’s solvency ratio and Folksam General’s consolidation capital reached historic highs during the second quarter.”
In the report, she said Folksam’s vision guided it to push for a sustainable transformation of society, as well as creating financial security for customers.
Wessén said the company had made several profitable investments during the reporting period which also had the aim of accelerating climate change reversal efforts, citing green bond investments, as well as its new investments in Swedish lithium-ion battery maker Northvolt and Volvo Cars.
She also cited the firm’s move, announced at the end of June, to increase its stake in the steel company SSAB to 5.2% of the votes and 2.1% of the capital over the course of the second quarter – even though SSAB was currently one of the biggest emitters in the Nordic region.
SSAB was “on a major transformation journey towards fossil-free steel production”, the Folksam CEO said.
“This is a long-term investment for Folksam, where we have the opportunity to support real, positive change in SSAB, while the investment is expected to eventually have good potential to provide attractive returns to Folksam’s customers,” Wessén said.
Even though the investment in SSAB increased Folksam’s carbon footprint by 5%, she said the pension firm’s target of reducing the carbon footprint of equities, corporate bonds and real estate by 29% by 2025 remained fixed.
The pension and insurance group, and KPA Pension, announced their 2025 climate goals in April, with the group saying it was aiming to persuade half its highest-emitting investees to adopt science-based climate targets, and had goals for promoting the availability of green investments.