FINLAND - Pension Fennia and Etera have announced results for the first half of the year, with Pension Fennia's chief investment officer saying the economic outlook looks "exceptionally unstable".

Investments grew by 3.2% between January and June for Fennia, with equities performing best, returning 4.4%, down 9 percentage points over the same period last year.

Lasse Heiniö, the company's managing director, said the results were good despite fluctuations seen in the market over the last few months.

Chief investment officer Eeva Grannenfelt said: "The positive development that prevailed in the investment market in spring turned into uncertainty during the summer.

"The economic outlook for the near future is still exceptionally unstable. Our yield expectations for the investments in the latter half of the year are slightly positive, although the next few months are likely to be unstable on the market."

Fennia's assets increased to €6.4bn at the end of June, up by almost 8% over the same time last year.

Grannenfelt highlighted the fund's equity performance over the period, an area Fennia has increased its exposure to in the last 12 months.

At the end of June last year, it invested 23.5% of assets in shares. By December, its equity allocation was increased to 29.2% and now has reached roughly 37% of total investments.

The group's strongest returns came from listed equities, which grew by almost 5% over the first six months of the year.

At the same time, the company reduced its stake in bonds and money market instruments, with now only 39% being invested in the former, down from 46.5% a year ago.

Fennia, however, has increased its exposure to fixed-income funds, up by almost 7 percentage points since June 2009.

The market downturn has also affected premium income, which was predicted to be down by 3.3% at €1bn for the entire year.

Etera experienced a similar six months, with investments growing by 2.6% by the end of June.

However, the company saw premium payments increase by 4% over the same time last year.

Hannu Tarkkonen, chief executive at Etera, attributed this to a strengthening construction industry, which was one of the group's biggest markets.

He was optimistic premiums would continue to grow throughout the remainder of the year.

The pension insurer also saw continued growth in TyEL and YEL policies, with the former growing by 17% and the latter holding steady at 7%, a slight decrease over 2009.

Additionally, Etera's solvency ratio increased to almost 20%, up by 1.4 percentage points at the end of December.

Chief investment officer Jari Puhakka, who joined as investment director in May, said the group successfully hedged against a fall in equity.

It holds 31% of its portfolio in equity and 14% in real estate, while more than 52% of its €5.3bn in assets is held in bonds.

Remaining assets are invested in commodities and hedge funds.