Varma

Varma secures pensions

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.

Varma’s strategic focal points

In 2015 we renewed our strategy for the 2016–2020 period. In the coming years, we will be focussing on four important themes: One Varma for the customer, Promoting entrepreneurship, Responsible Varma and Courage to try new things.

The development of all our operations focuses on bringing benefits to our customers. We promote our client companies’ growth and support entrepreneurship. We develop services and look for ways to make companies’ and entrepreneurs’ daily operations easier. During the year under review, we built a corporate social responsibility programme, the implementation of which will continue in the coming years. We will communicate more systematically about our CSR activities and about what responsibility means to Varma. We will encourage Varma employees to develop our internal operating culture and propose daily innovations and experiments. Lean will be a key element of our daily work and the continuous improvement of our operations.

Varma’s core function

We take care of the statutory pension cover of private entrepreneurs and employees. We invest the assets collected as pension contributions profitably and securely for current and future pensions. We take care of the implementation of earnings-related pension provision for approximately 64,500 companies and entrepreneurs and more than 860,000 people.

Our core function – securing pensions – is based on law, and it forms the foundation for our operations. Varma’s strategy provides a framework for how we respond to changes in the operating environment and to our customers’ expectations, and how we want to stand out from our competitors. Our strategy helps us to achieve our main goals of strong solvency, good development in premiums written, high quality pension services and efficient operations.

In 2015 we succeeded well in achieving our goals: 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.

Cash flows

Pension contributions are used to pay pensions and some is set aside in funds for future pensions.

The Finnish statutory earnings-related pension scheme is partially fund-based. The majority of the pension contributions paid by employers and employees is used to pay the pensions for that year. A share of the contributions is set aside in funds for future pension payments.

By law, pension assets must be invested profitably and securely. Part of the investment returns is used to strengthen pension liabilities and part is used to maintain the solvency of the earnings-related pension company. Based on the solvency and operational efficiency of the pension company, it may grant client bonuses.

Varma’s operating expense efficiency and solvency have been extremely competitive for several years. Our high cost efficiency and strong solvency lower our customers’ pension contributions.

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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.