Varma

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International diversification of real estate investments was continued

Varma’s real estate investment portfolio amounted to EUR 3.9 (3.8) billion at the end of 2015, and the total return stood at 3.3% (3.8%).

Direct real estate investments, %

Varma continued to increase the international diversification of its real estate investments in 2015. New investment commitments in international real-estate funds totalled EUR 363 million. The biggest single investment was the acquisition of a holding in the Skärholmen Centrum shopping centre in Stockholm, Sweden. At year-end, the value of Varma’s international and Finnish real estate fund investments amounted to EUR 593 (466) million and the return was 9.9% (8.0%).

The weighting of domestic, directly-owned real estate investments was decreased. In 2015, Varma divested a total of EUR 28 million in direct real estate investments. The weighting of equity-type domestic real-estate investments was reduced over the year as Varma divested half of its holding in Certeum Oy and its entire holding in SATO Corporation for a grand total of EUR 328 million.

In 2015, the value of transactions in the Finnish real estate market increased by more than 30% from 2014, but the challenges in the rental market were reflected in the vacancy rates, returns and values of the direct real estate portfolio. At year-end, the vacancy rate for the business premises owned directly by Varma stood at 7.2%.

New rental flats in the Helsinki Metropolitan Area and growth centres

Investments in 2015 totalled EUR 73 million, and they were focussed on development, maintenance construction and renovations of existing properties, and housing construction. At the end of 2015, Varma had a total of 130 new rental flats under construction in the Helsinki Metropolitan area. Several other housing construction and development projects were also under planning. In Finland, investments are focussed on the Helsinki Metropolitan area and the largest growth centres.

In 2015, the impact of fair valuation of real estate under Varma’s direct ownership totalled EUR -88 million. The market value of the real estate owned directly by Varma stood at EUR 3.3 (3.4) billion at the end of the year. The return on capital employed in direct real estate investments was 2.3% (3.2%). The value of and total return on the portfolio were influenced by fair valuations, the divestment of properties and investments carried out.

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The year in brief

In 2015, Varma’s return on investments stood at 4.2 per cent. The value of investments increased to EUR 41.3 billion. Premiums written increased clearly, and operating expense efficiency also showed positive development. Solvency capital was strong at EUR 10.0 billion.
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President & CEO review

2015 was a good year for Varma, and we succeeded well according to all key indicators: we maintained our strong solvency position, our premium income increased, we processed pension applications faster than before and our operational efficiency is at a competitive level.
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Lower earnings-related pension contributions for customers

Varma is a solvent company. That means the best client bonuses in the sector and lower pension contributions for our customers. Our modern digital services provide our customers with a comprehensive set of tools that enable them to take care of their pension matters easily.
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Varma for entrepreneurs

Varma is a solvent company and thus a safe choice. Varma’s extensive services, provided through various channels, make attending to insurance matters easy.
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Pension cover

The number of pensioners and the euro amount of pensions paid is constantly rising at Varma. Our task is to pay pensions correctly and on time to an increasing number of pensioners.
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Workability and good working life

Workability management promotes companies’ competitiveness and productivity and the societal goal of longer careers. Our workability services improve employee well-being and working life at our client companies.
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Varma’s targets and strategy

Varma's core task is to secure pensions. Our main goals of strong solvency, good development in premiums written, high quality pension services and efficient operations, also stem from this.
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Operating environment

The economic year 2015 ended in a climate of turbulence. Uncertainty in the global economy is again on the rise.
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Solvency

Varma’s strong solvency secures pensions. Thanks to its high solvency, Varma has been paying very competitive client bonuses for several years now.
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Fixed income investments

The return on fixed-income investments remained slightly negative, at -0.4 per cent. They accounted for 30 (32) per cent of investments and had a market value of EUR 12.3 (12.8) billion.
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Equity investments

Equity investments performed the best of all asset classes. They accounted for 45 (41) per cent of Varma’s investments and yielded a return of 8.8 (9.1) per cent.
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Real estate investments

Varma’s real estate investment portfolio amounted to EUR 3.9 (3.8) billion at the end of 2015, and the total return stood at 3.3 (3.8) per cent.
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Other investments

Other investments accounted for 17 (20) per cent of Varma’s portfolio.
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Varma’s investment principles

With EUR 41.3 billion in investment assets, Varma is Finland’s largest private investor. We invest the assets to secure present and future pensions.
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Targets and measures

On the basis of the materiality assessment, we defined Varma’s CSR targets, indicators and measures.
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Personnel

Varma’s success is based on competent personnel efficiently handling our customers’ pension cover. Customer focus is at the core of Varma’s expert work and operational development. Service that is appreciated by our customers is the result of broad competence and co-operation.
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Responsible investment

Responsibility is an integral part of our investment operations and ownership practices. In 2015, we looked into the responsibility of our hedge funds and decided to determine the carbon footprint of our investments.