President and CEO’s 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. The return on our investments was 4.2%, or EUR 1.7 billion, and our solvency capital amounted to around EUR 10 billion. Varma is in a strong financial position, and we are very capable of bearing the investment market risk.
We were successful in client acquisitions, and our premium income rose to EUR 4.6 billion. We take care of our customers’ earnings-related pension provision cost-effectively: we spent 74 per cent of the amount reserved for administrative costs. Strong solvency and cost-effective operations benefit our customers through high client bonuses. We will pay a total of EUR 115 million as client bonuses for 2015.
We introduced a new pension processing system that makes it easier and faster to serve our private customers. Since the decision has an impact on the applicant’s income, it is vital that the pensioner receives the correct pension as quickly as possible. A pension decision is an important and usually an historic event in anyone’s life.
We are preparing for the implementation of the pension reform, due to take effect at the beginning of 2017, together with our customers. The reform targets, among other things, longer careers. Varma has been actively involved in developing activities to maintain the workability of its client companies’ employees so that they can cope better and longer at work. The number of new disability pensions at Varma has decreased 22 per cent over the past five years. This decline is largely the result of early intervention practices, achieved through legislation, vocational rehabilitation and workability management practices at workplaces.
In 2015 we revised our strategy, which is now built around the following key themes: one Varma for the customer, promoting entrepreneurship, responsible Varma and courage to try new things. Our operations focus on bringing benefits to our customers, and we also pay special attention to corporate social responsibility. In future, we will regularly report on the results of our new CSR programme.
The financial situation continues to be challenging, and Finland needs growth. For an investor, the low interest rates pose a major challenge. For Finnish industry, a significant shift took place in 2015, as the boost from Asia’s economy clearly weakened. At the same time, energy and raw material prices plummeted. These changes have an influence especially on the growth opportunities of Finland’s heavy industry. We need plenty of hard work and luck to get back onto a growth path. In the coming years, growth in Finland will be generated in particular by entrepreneur-driven companies and private service companies. Crucial for growth is companies’ ability to grow profitably and hire new employees.
Varma employees did good work in 2015, and I would like to express my gratitude to our entire personnel. I also would like to thank our customers for their trust in us – we will continue our efforts to earn it in 2016, too.
President and CEO