Norway’s largest municipal pension fund Oslo Pensjonsforsiking (OPF) produced a 2.8% value-adjusted return on customer funds in the first three months of this year.
This was driven by gains from infrastructure and equities, which generated 8.1% and 7.0% respectively. All asset classes produced positive returns, the fund reported.
The Q1 portfolio return compared to a 0.3% return in first quarter of 2016.
Åmund Lunde, OPF’s chief executive, said: “It is quite possible to create a good return for customers – also in the form of defined benefit pensions, but it requires good solidity and long-term management.”
OPF said in its interim report that in 2016, it had finished a three-year build up of reserves to provide for lower mortality rates, having put aside NOK246m (€26.3m) in that period.
The conclusion of this provisioning process had improved results in the pensions insurance division by NOK20-21m each quarter in a year-on-year comparison.
The company’s solvency capital rose 4% in absolute terms in the first quarter, but ticked lower as a ratio to 482% in the first quarter from 490% at the end of 2016, after the capital requirement increased by 6% since the end of last year.
Total group assets increased to NOK85.8bn at the end of March.
Sweden’s AMF warns on interest rate impact
In other Nordic news, Sweden’s second largest pension fund AMF posted a 2.5% return in the first quarter on the back of buoyancy in domestic and foreign equity markets.
In the same period last year, AMF’s investments lost 0.7%.
Javiera Ragnartz, CIO at AMF, said: “The period was marked by improved growth in the world economy and good economic development at home, which contributed to strong development for Swedish as well as foreign equities.
“At the same time, low interest rates continue to pose challenges because uncertainty about long-term economic development persists, and there are a number of political risks which could affect the markets in the future.”
AMF’s solvency ratio dipped to 193% at the end of March from 199% at the end of December.
The group’s total assets under management rose to SEK582bn (€60.4bn) from SEK563bn at the end of December.