Norway’s Oslo Pensjonsforsikring (OPF) posted a 7.9% value-adjusted return on customer funds last year, with listed equities coming out as the strongest performer, after generating 17.4%.
The pension fund, which manages pensions for the municipality of Oslo and other local public sector employers, also reported in its 2020 results that its capital adequacy ratio for the group had increased to 471% by the end of December 2020, from 394% the year before, calculated without transitional rules.
In absolute terms, OPF’s group solvency capital had grown to NOK9.65bn (€944m) by the end of the year – more than four times the regulatory requirement of NOK2.05bn, according to the annual figures released.
Åmund Lunde, OPF’s chief executive officer, said: “A solid buffer means that in periods of sharp falls in the stock market, we can keep our positions and see the upswing afterwards.”
He said OPF’s customers had shown his team confidence by giving them the opportunity for many years to build up a strong capital buffer.
“This meant that we came out of 2020 well,” he said.
Among returns for other large allocations besides listed equities, amortised cost loans and bonds produced a 3.4% return in 2020 for OPF, investment-grade loans and bonds ended the year with a 4.5% gain, and real estate and infrastructure made a 5.8% return.
The 7.9% overall return amounts to NOK7.28bn in total financial income for OPF’s customers, the pension fund said, and compares with a 10.3% return in 2019.
“In 2020, we experienced the weakest and the two best quarterly results seen during the last 15 years,” Lunde said.
In the first quarter of last year, when stock markets around the world crashed in response to the coronavirus crisis, OPF was left with its first negative quarterly return with a 4.6% value-adjusted loss.
That was followed by a positive return of 5.6% in the second quarter, 2.7% in the third, and, as revealed in the full-year report, 4.2% return for the fourth quarter.
Total assets rose to NOK112bn at the end of 2020 from NOK105bn a year before.