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Nordic roundup: Ilmarinen, PensionDanmark

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EUROPE - Investments left Finland’s giant pension insurer Ilmarinen with a 4% loss last year, as anxiety surrounding the euro-zone debt crisis took its toll on equity returns.

The 4% loss on investments in 2011 compares with the 10.8% profit the company made in 2010.

In a statement on its annual results, Ilmarinen said: “The culmination of the euro-zone sovereign debt crisis and the threat of a new downturn caused nervousness in the market throughout 2011, which led to a drop in share prices and in returns on fixed income investments.”
 
2011 had been a difficult year for pension funds, it said.

However, Ilmarinen said it fared well in the competition for customers, with premiums written increasing by 10.1% to €3.7bn, up from €3.4bn the previous year.

Harri Sailas, president and chief executive, said: “Our sales performance bears testimony to our strong focus on high-quality customer service and seamless co-operation with our partners.”

Total investment assets rose to €27.5bn at the end of 2011, down from €28.1bn a year before.

The company’s solvency position stood at 2.5 times the solvency limit, down slightly from 2.6 times the previous year.

Within investment, the fixed income class - which accounts for 43.6% of the entire portfolio - made a loss of 0.4%, after a profit of 2% in 2010.

Listed and unlisted equities and shares, as well as private equity investments - which make up 38.8% of investments - produced a loss of 13.6%, against a year-earlier profit of 20.6%.

Property investments returned 6.4%, against 9% in 2010, with direct real-estate investments making a 5.9% return and indirect real-estate investments producing 8.9%.

Looking ahead, Ilmarinen said the investment environment was likely to remain challenging far into the future because of the EU debt crisis and the weak outlook for economic growth.

“Despite the negative investment result in 2011, the company’s solvency still allows for the implementation of the long-term investment strategy at the previously planned risk level,” it said.

Meanwhile, PensionDanmark declared itself “very satisfied” with the investment return it reaped for the typical member, which slid to 8.2% in 2011 from 10.1% the year before.

Torben Möger Pedersen, managing director of the labour-market pension fund, said: “We are very satisfied to be able to give members one of the market’s highest returns in 2011 because it has been a particularly challenging year to invest in.”

The fund produced a profit of DKK10.48bn (€1.4bn) in 2011, up from 10.17bn in 2010.

This equates to an attributable pre-tax return of 8.2% for members under 41 and as much as 11.7% for members aged 65.

Möger Pedersen said PensionDanmark was growing strongly.

“This was apparent in 2011, with the rise in contributions and the high investment profit leading to total assets rising by DKK16bn to DKK122bn altogether,” he said.

Regular contributions were up 3.7% at DKK9.6bn, with the rise mainly due to the higher number of actively contributing members compared with 2010, PensionDanmark said.

Membership numbers climbed by more than 22,500 to 618,000, Möger Pedersen said.

“That gives us a whole range of economies of scale, which benefit customers in the form of very low costs,” he said.

Costs per member insured fell to DKK352 from DKK362.

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