The first quarter in Ilmarinen: Return on investments was 0.2 per cent, solvency was strong, and cost-effectiveness improved

“Ilmarinen’s return on investments was 0.2 per cent, solvency remained strong, and cost-effectiveness was further improved with premiums written growing by 3 per cent and operating expenses financed using loading income falling by 2 per cent. Investment assets were EUR 63.1 billion and solvency capital was EUR 13.7 billion. Strong solvency makes it possible to invest pension assets in the long term in a very fluctuating market situation undermined by the trade war,” says Jouko Pölönen, the President and CEO of Ilmarinen.

Return on investments was 0.2 per cent

The market value of Ilmarinen’s investments was EUR 63.1 billion at the end of March (EUR 63.3 billion at the end of 2024). In January–March, the return on investments was 0.2 (3.2) per cent, or EUR 0.1 (1.9) billion.

“The policies of the new US administration spread anxiety in the market in the first quarter of the year. As trade-related and geopolitical tensions increased, the global stock market began to decline along with US stocks. Interest rates also began to decline as the fear of recession increased. The return in the interest rate and credit risk markets exceeded the return on the global equity index,” Mikko Mursula, Ilmarinen’s Deputy CEO, Investments, describes the beginning of the year.

The return on fixed income investments was 1.3 per cent (0.9) and the return on equity investments was negative 0.6 per cent (6.0). The return on real estate investments was 0.2 (0.5) per cent and the return on other investments 1.6 (0.5) per cent. The long-term average return on investments since 1997 was 5.8 per cent. This corresponds to an annual real return of 3.9 per cent.

Solvency remained strong

Ilmarinen’s solvency capital was EUR 13.7 billion (EUR 13.9 billion at the end of 2024), and the solvency ratio was 127.1 per cent (127.5 per cent at the end of 2024).

“Strong solvency enables the long-term investment of pension assets in an unstable market situation undermined by the trade war,” Pölönen emphasises.

Premiums written grew by 3 per cent

Ilmarinen’s premiums written grew by 3 per cent, reaching EUR 1,749 (1,690) million. The growth in premiums written was due to the increase in clients’ payroll. The payroll and confirmed income for employees insured with Ilmarinen grew by 3 per cent to EUR 7,116 (6,915) million.

In Finland, employment has been on the decline for the past two years. The number of employees in the companies belonging to Ilmarinen’s business cycle index fell by 1.9 per cent year-on-year during January–March. In March, the decline was 2.2 per cent. Of the industries monitored, the decrease was the greatest in labour hire, accommodation and food service activities and construction.

Cost-effectiveness was further improved

In January–March, the operating expenses financed using loading income decreased by 2 per cent to EUR 24.0 million, which was 0.34 per cent of the payroll.

“We have been determined to improve our productivity. The leap in productivity was driven by the very successful merger with the pension company Etera in 2018 and the realisation of the synergies it brought. We have digitalised our service processes efficiently and built a culture of continuous improvement. Our clients’ premiums written directly benefit from our cost-effectiveness,” says Pölönen.

The number of pension decisions increased 

At the end of March, Ilmarinen had a total of 453,338 (454,169) pension recipients. From the beginning of the year, a total of EUR 1,951 (1,885) million in pensions were paid to them, an increase of 3 per cent on the previous year.

In January–March, a total of 12,109 (9,701) new pension decisions were made, which was 25 per cent more than in the previous year. At the beginning of the year, the number of decisions was increased especially by the exceptionally high number of pensions accrued from working while on a pension.

The investment horizon for pension assets is long

Since the end of the first quarter of the year, movements in the market have continued to increase. For instance, the stock market has seen exceptionally large daily movements in both directions.

“The most severe policies related to the US trade policy have increased the risk of a global recession. As a result, short-term interest rates have continued to decline, and stock markets have declined since their highest levels of the year. Additionally, the increase in general distrust toward the US economy and policies has weakened the dollar against the euro,” says Mursula.

“Good historical returns and the long investment horizon of the Finnish pension scheme ensure that the system can withstand even significant temporary fluctuations in exchange rates,” Mursula continues.

An agreement by the social partners for the next pension reform was finalised in January. The pension reform will ensure the financial sustainability of the earnings-related pension scheme and ensure an adequate level of benefits in the long term. The legislative drafting of the pension reform is currently under way.

“We hope that the amendments to earnings-related pension legislation will enter into force as soon as possible. However, the risk level of investments should be increased in stages,” Pölönen says.

Development in Ilmarinen during January–March 2025 in brief:

• The return on Ilmarinen’s investment portfolio was 0.2 (3.2) per cent, or EUR 0.1 billion. The market value of investments was EUR 63.1 (63.3) billion. The long-term average return on investments since 1997 was 5.8 per cent, which corresponds to an annual real return of 3.9 per cent.
• The total result was EUR -164 (778) million.
• Premiums written increased by 3 per cent to EUR 1,749 (1,690) million. Pensions paid increased by 3 per cent to EUR 1,951 (1,885) million.
• Net client acquisition amounted to EUR -9 (29) million, and rolling client retention for the previous 12 months was 96.3 (96.3) per cent.
• Operating expenses financed using loading income decreased by 2 per cent to EUR 24.0 (24.4) million, amounting to 0.34 (0.35) per cent of the Employees Pensions Act payroll and YEL income of the insured.
• The solvency capital was EUR 13.7 (13.9) billion, and the solvency ratio was 127.1 (127.5) per cent.
• Prospects: Ilmarinen’s premiums written are expected to increase as payroll increases.

 

Additional information:

• Jouko Pölönen, President and CEO, tel. +358 50 1282, jouko.polonen@ilmarinen.fi
• Mikko Mursula, Deputy CEO, Investments, tel. +358 50 380 3016, mikko.mursula@ilmarinen.fi
• Sami Ärilä, Executive Vice President, People and Communications, tel. +358 400 271 066, sami.arila@ilmarinen.fi 

Read more:

• Ilmarinen’s interim report 1 January–31 March 2025 (PDF) (in Finnish)
• Interim report picture supplement (PDF) (in Finnish)
• Ilmarinen’s business cycle index:  Länsi-Suomessa teollisuus piristymässä, kokonaiskuva on heikko (in Finnish)
• Ilmarinen’s career index Työuraindeksi tarjoaa uutta tietoa työnteosta (in Finnish)