Varma

Annual Report 2014

VARMA_tilinpaatos

Varma balance sheet and income statement at fair value

The financial statements of an earnings-related pension company are prepared in accordance with the Finnish Accounting Act, Companies Act, Insurance Companies Act, Employee Pension Insurance Companies Act and the Act on calculating the solvency limit and covering technical provisions in pension institutions. In addition, the decree of the Ministry of Social Affairs and Health concerning the financial statements and consolidated financial statements of insurance companies, as well as the calculation bases confirmed by the Ministry of Social Affairs and Health and the regulations and guidelines of the Financial Supervisory Authority are complied with. IFRS standards do not concern earnings-related pension insurance companies.

The statutory earnings-related pension scheme is partially fund-based. The technical provisions appearing in the balance sheet of an earnings-related pension insurance company amount to about a quarter of the capital value of the pensions accumulated by the closing date. Furthermore, statutory pension insurance has a guarantee scheme, according to which the earnings-related pension insurance scheme is jointly responsible for securing the benefits of the insured, should a pension institution become insolvent.

Technical provisions also include a substantial provision for future bonuses, which provides a buffer against fluctuations in results and strengthens company solvency, a provision for current bonuses which is reserved for the payment of client bonuses, and an equity-linked provision for current and future bonuses, which provides protection against fluctuations in the value of pension companies’ shares. The main components of the solvency capital, measuring the company’s solvency, are the capital and reserves, provision for future bonuses, equalisation provision and valuation differences of investments.

The operating expenses of the company are listed under a number of entries in the income statement and key figures. The effect of fair values on the company’s investments and their results are presented in the notes to the financial statements. Earnings-related pension companies need not present deferred tax liabilities as long as the calculation bases set by the Finnish Ministry of Social Affairs and Health that confirm the financial year’s profit in the income statement are in force. As a result of this, an earnings-related pension insurance company cannot make full use of the tax-free component of the dividend income or earlier tax credits connected with dividends. In an earnings-related pension insurance company, the significance of the consolidated financial statements is mainly technical.

In the notes to the financial statements the investment returns at fair values are compared to the interest credited on technical provisions, and the operating expenses by function (excluding operating expenses related to investments, to maintenance of workability and statutory charges) are compared to the loading income included in insurance contributions. The combined result from investment operations, loading profit and insurance business, corresponds to the profit in the income statement at fair values.

The financial statements, drawn up in compliance with valid regulations, include a note to the balance sheet, which presents asset items at fair values, and a note to the income statement, which presents the items of the income statement summarised and re-grouped. The total result presented in the income statement drawn up at fair values substantially deviates from the result for the financial year in the income statement, drawn up in accordance with calculation bases confirmed in advance by the Finnish Ministry of Social Affairs and Health.

In 2014, the total result of the parent company Varma stood at EUR 1,223 (1,558) million and the balance sheet total was EUR 40,601 (38,310) million.

 

Balance sheet at fair value, Parent Company
31 Dec., € million201420132012
ASSETS
Investments40,03937,71834,406
Receivables5455661,208
Equipment182636
40,60138,31035,651
LIABILITIES
Capital and reserves10710197
Valuation differences8,2136,6195,400
Equalisation provision1,1801,118
Provision for pooled claims equated with solvency capital1,147
Provision for future bonuses7531,3011,073
Total solvency capital10,2529,1407,716
Provision for current bonuses (for client bonuses)11710679
Equity-linked provision for current and future bonuses1,007720190
Equalisation provision1,108
Provision for pooled claims equated with solvency capital-1,147
Actual technical provision29,01328,15427,317
Total30,02028,87427,468
Other liabilities212190388
40,60138,31035,651
Income statement at fair value, Parent Company
1 Jan.–31 Dec., € million201420132012
Premiums written4,3444,2584,231
Claims paid-4,661-4,446-4,168
Change in technical provisions-1,040-1,289-1,219
Net investment income2,7293,1832,510
Total operating expenses-142-143-149
Taxes-7-6-4
Total result 11,2231,5581,201
1 Result at fair value before change in provision for current and future bonuses and equalisation provision.