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Varma separates investment and supervision

FINLAND – Varma, Finland’s largest private sector pension insurer, has separated its investment and supervisory functions and replaced its risk management committee.

“The function that prepares and implements investment decisions (Investment Operations) and the supervisory and reporting function (Financial Administration and Actuaries) have been separated,” Varma stated.

It said the supervisory function measures investment risks and makes scenario and sensitivity analysis related to solvency. It also supervises compliance with risk limits.

Varma also replaced the Risk Management Committee with the Risk Supervision Committee during 2004.

It made a return on investment of 8% in 2004, taking its market value to more than €21.2bn.

Its €10.6bn bond portfolio returned 5% in 2004, while its €4.7bn in equities yielded 17.9%. The bond allocation at the end of the year fell to 52.9% - from 56% in 2003 and 60.8% in 2002. Equities’ share has risen to 25.8% from 24.1% and 17% in the two prior years.

The group is a joint owner with other pension institutions in a company called Arek which is working on a database project set to be introduced in 2007 that will hold details of all earnings that affect earnings-related pensions.

Varma paid pensions to 286,000 people at the end of 2004, a total of €2.6bn.

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