Varma’s half-year returns driven by the strong performance of listed equities – investments yielded 5.9 per cent

The return on Varma’s investments in January–June was 5.9 (2.6) per cent. The value of Varma’s investments was EUR 62.1 (59.1 on 1 Jan) billion. 

“Varma’s solid 5.9 per cent return on investments in the first half of the year can be attributed to the continued strong performance of the global equity markets. The global economy has been growing steadily, but in industry-driven Northern Europe, growth was muted in the first half of the year,” states President and CEO Risto Murto.

Of Varma’s investments, listed equities performed the strongest, with a return of 11.2 (5.2) per cent. The return on fixed income investments was 1.6 (1.8) per cent, on real estate investments -2.4 (-3.3) and on hedge funds 6.1 (2.4) per cent. Of Varma’s listed equity investments, US equities performed best, returning 17.2 per cent.

“Major US tech companies have largely accounted for the growth in earnings and increase in share prices. The momentum from tech companies will, however, wane at some point, and interest rates are now falling in the US. Over the summer, the markets experienced heightened nervousness about the sustainability of growth that is driven by only a handful of industries. Significant drops in interest rates will not necessarily be seen rapidly, unless the cooling of the labour market turns into a clear increase in unemployment,” says Chief Investment Officer Markus Aho. 

Varma’s solvency ratio was 133.0 (130.4 on 1 Jan) per cent, and solvency capital was at a secure level, i.e. 1.7 times (1.6 on 1 Jan) the solvency limit.

Varma invested EUR 1.5 billion in a climate fund that takes climate impacts into consideration

Varma invested EUR 1.5 billion in a listed US ETF that takes climate impacts into consideration. The fund, tailored to Varma, invests in global companies with a track record of reducing greenhouse gases and carbon dioxide emissions. The investment supports Varma’s updated Environmental Policy.

Between January and June, Varma participated in 527 general meetings. Of these, 97 were Finnish and 430 were foreign companies. Information about Varma’s positions and votes at the general meetings is published on Varma’s website.

Varma joined two new international investor initiatives. The initiative of the PRI, the UN-supported organisation for responsible investment, draws attention to the effects of social media and smart devices on mental health and well-being. The initiative requires companies to have good practices in place for identifying addiction risks. The second joint initiative relates to antibiotic-resistant viruses and bacteria, which investors believe pose a worldwide threat to human health, economic stability and society.

Disability pension applications on the rise, the number of rejected applications also increased

The number of disability pension applications increased by 7.5 per cent compared to the same period last year. The rejection rate for these applications is growing, which resulted in 12 per cent fewer commencing disability pensions. The biggest increase in the number of rejected applications was seen in the 55–59 age group. The applications that were rejected the most were those citing mental health disorders as the reason for disability. Finding solutions to the reasons behind reduced work ability and means for recovering work ability at an early stage is important.

Partial old-age pension remains a popular pension benefit. The number of partial old-age pensions increased 118 per cent year on year. Ordinarily, the number of applications decreases in May–June, but this summer saw an increase in applications.

Growth in TyEL payroll slowed 

The TyEL payroll of Varma’s client companies grew 2.1 per cent in January–June compared to a year ago. Payroll growth slowed in the second quarter of the year, and stood at 0.6 per cent.

Varma was successful in customer acquisition in January–June. During the review period, EUR 141 (60) million in net annual TyEL contribution income is being transferred to Varma from other earnings-related pension companies. Sales of pension insurance policies to new customers amounted to EUR 44 (64) million. 

  

Additional information:   

Hanna Kaskela, Senior Vice President, Sustainability & Communications,
tel. +358 40 584 5045 or hanna.kaskela(at)varma.fi       
 
Marjut Tervola, Communications Manager, tel. +358 45 673 0120 or marjut.tervola(at)varma.fi