Private equity pushes Ilmarinen returns to 5.7%
FINLAND - Ilmarinen achieved a net return of 5.7% on investments in 2007, driven by strong performances from private equity and hedge funds.
The 2007 annual report for the pension insurance company revealed net income from investment was €1.3bn, a fall of almost €500m on the previous year, while the scheme reported a net return of 5.7% compared to 8.5% in 2006.
However, the results showed the company's solvency capital - the difference between its assets and liabilities - remained high at €6.1bn, an increase of almost €200m on 2006.
The firm's overall result was a return of €344.6m, driven by results from its allocation to alternatives as the hedge fund investments returned, on average, 18.6%, while private equity achieved returns of 42.5%.
In addition, the report revealed the total value of the fund's investments had increased to €23.7bn, while the number of members increased 31,000 to 468,000, bringing Ilmarinen's market share of the TyEL (The Employees' Pensions Act) to 30.2%.
Harri Sailas, chief executive of Ilmarinen, said the increase in sales had improved the company's market position and noted investments had generated a good result under "difficult market conditions".
Sailas added: "The investment climate was nervous, which led to sharp falls in the stock markets especially during the last quarter of the year. Considering this fact, the full-year investment return can be considered an achievement."
Illmarinen currently invests 47% of its assets in equities, which includes an allocation to private equity, hedge funds and commodities, while 9.2% is allocated to real estate.
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