Varma - Annual Report 2012

Year 2012 in brief

Varma's solvency strengthened clearly throughout the year and is the strongest in the earnings-related pensions sector. The overall return on investments was good, and Finnish equities in particular yielded strong returns.

The acute economic crisis of early 2012 subsided later in the year. The central banks' measures boosted investors' confidence in the markets, and share prices strengthened. Interest rates were at a record low.

We focussed on safeguarding our solvency

Varma focussed on successful investment activities in a challenging market environment, and pro-active risk management and the security of investments were highlighted. Our solvency strengthened consistently and was EUR 7.716 (6.520) million, or 28.0 (24.8) per cent of the technical provisions. The solvency capital was at a strong level: 2.4 (2.5) times higher than the solvency limit.

Varma's investment portfolio amounted to EUR 34.4 (31.9) billion. All asset classes achieved a positive return, 7.7 (-2.1) per cent overall. The share of fixed-income investments in the investment portfolio decreased, while the share of equities and other investments increased. Finnish equities yielded the highest returns. Varma is a major investor in Finland, and approximately EUR 12.8 billion of Varma's investments have been invested in different ways in Finnish society.

Read more about Varma's investments in the section Investment year 2012.


Role of operational efficiency is emphasised

Varma's operating expense efficiency was at a good level. The considerable investments made to reform the pension application processing system raised Varma's operating expenses. Varma concentrates on operational efficiency, which benefits our customers by means of client bonuses. We reserved EUR 78 (73) million, or 0.4 (0.4) per cent, of the payroll of the insured for client bonuses.

Varma's premium income stood at EUR 4,230 (3,977) million. At year-end, Varma provided insurance for approximately 539,700 (540,300) people. Our pension payments stood at EUR 4,500 (4,194) million. The number of pension recipients increased, and at year-end, Varma was paying pensions to 331,400 (330,000) people.

Occupational rehabilitation is an alternative to disability pension, and the volume of rehabilitation work continued to increase. Our rehabilitation has proven to be successful, as nearly three quarters of those who received Varma's rehabilitation services continued in working life following their rehabilitation.