Annual Report 2014


The year in brief

In 2014, Varma’s return on investments stood at 7.1 per cent. The value of investments increased to EUR 40.0 billion and solvency capital to EUR 10.3 billion. Premiums written and operating expense efficiency also showed positive development.

Share prices strengthened, and interest rates continued to fall from the already low level of the start of the year. Varma’s investment result developed strongly during the first half of the year, but uncertainty in the investment markets caused the result to fluctuate considerably during the second half. The last quarter in particular was very turbulent. 

The return on Varma’s investments was 7.1 (9.0) per cent, and the value of investments stood at EUR 40.0 (37.7) billion at year-end. In the broadly diversified portfolio, returns were generated consistently by the different asset classes.

Equity investments generated the highest returns, at 9.1 (21.8) per cent. Due to the decline in interest rates, the return on fixed-income investments was also good at 5.5 (1.2) per cent. Read more about market developments and asset classes in the section Investment year 2014.

Solvency and operating expense efficiency improved client bonuses 

As a result of the good return development, solvency capital was EUR 10.3 (9.1) billion at the end of the year, i.e. 34.0 (31.6) per cent of the technical provisions. Our record-strong solvency and operating expense efficiency benefit our customers: EUR 117 (105) million was set aside for client bonuses, equalling 0.7 (0.6) per cent of the TyEL payroll. 

We secure pensions for more than 860,000 people 

At the end of the year, 527,000 (531,000) people were insured by Varma, and the company had 334,500 (333,700) pension recipients. 

Premiums written increased 2 per cent to EUR 4.3 billion. EUR 5.0 (4.8) billion in pensions were paid out, i.e. nearly 5 per cent more than in the previous year. 

Varma’s rehabilitation activities have proven to be successful. Around 72 per cent of the rehabilitants return to working life.

Key figures 2014

Premiums written, € million4,343.64,258.0
Pension payments to pensioners, € million 15,010.14,786.7
TyEL insured 31 December488,200491,400
YEL policies38,94039,810
Investments, € million40,038.837,718.1
Investment income, € million2,698.93,160.1
Return on invested capital, %7.19.0
Total result, € million1,223.01,558.5
Loading profit, € million33.432.0
Operating expenses as % of loading profit75.076.0
Transfer to client bonuses, € million117.0105.0
% of TyEL payroll0.70.6
Technical provisions, € million32,069.731,399.1
Solvency capital, € million10,252.59,139.7
Solvency capital/technical provisions, % 2 34.031.6
Solvency capital/solvency limit2.22.2
Parent company staff 31 December561558
1Before the reduction of received clearing of pay-as-you-go (PAYG) pensions
2Ratio calculated as a percentage of the technical provisions used in calculating the solvency limit