Varma

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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.

 

Risto Murto
President and CEO

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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.
  • #pensioncover
  • #finance

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.