Ilmarinen reported a 2% loss on its investment portfolio in the first half of this year, and the Finnish pensions insurance company warned full-year contribution inflows would be much lower than last year because of effects of the COVID-19 pandemic.

Releasing its January-to-June financial report, Ilmarinen said premiums written fell to €2.7bn from €2.9bn in the same period last year, as a result of an increase in temporary layoffs and a temporary discount to the statutory TyEL contributions from employers.

Commenting on the outlook for the full year, the pension provider said: “Owing to growing unemployment and the temporary discount on employers’ TyEL contributions, premiums written will fall considerably year-on-year.”

Investment returns ended the first half in the red for the Helsinki-based institution, despite having rebounded between April and June.

Jouko Pölönen, Ilmarinen’s chief executive officer, said: “In the second quarter, Ilmarinen’s investment portfolio yielded 5.9% and solvency strengthened to 124% as the equity markets recovered rapidly from the dramatic stock price plummet caused by the corona pandemic earlier in the year.”

Equity investments ended the six-month period with a -4.2% return and fixed income investments finished with a -2.9% return, he said, while alternative assets turned out to be the best performers generating a positive result of 10.6%, and real estate returned 1.8%.

The total result for the pension fund – which is the largest of the four mutual pension insurance companies in Finland’s earnings-related pension scheme – was -€1.1bn, compared with the €931m profit registered at last year’s halfway point.

Total assets fell to €48.8bn at the end of June from €50.5bn the end of last year.

Pölönen said “strong development” in cost-effectiveness had continued in the first half and operating expenses financed using loading income declined by €7m from the corresponding period last year.

Commenting on the pandemic, Pölönen said Finland had been successful in limiting human suffering during the first wave of the pandemic, but acknowledged that the virus continued to spread globally, with a “worrying growth trend” in infection figures in some European countries.

“A key factor in terms of future development is how well a resurgence of the virus can be prevented without extensive lockdown measures, which would exacerbate the economic crisis and unemployment,” said Pölönen.

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