Varma

The year in brief

In 2015, Varma’s return on investments stood at 4.2%. 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.

Exceptionally large movements were experienced in the capital markets in both equities and fixed income investments in 2015. Despite volatility in the markets, Varma’s equity investments produced good returns.

Of Varma’s investments, equity investments generated the highest returns, at 8.8% (9.1%), and Finnish equities in particular performed strongly, yielding 19.4% (6.7%). Broad diversification of investments muted the risks caused by strong market movements, and returns were generated consistently by the different asset classes. Other investments yielded a return of 3.5% (8.4%), and real estate investments 3.3% (3.8%). The return on fixed-income investments remained slightly negative, at -0.4% (5.8%).

Read more about market developments and asset classes in the section Investments.

Solvency and operating expense efficiency benefit our customers

Varma's solvency capital stood at EUR 9,956 million (10,252) at year-end. Varma’s solvency ratio, i.e. solvency capital in relation to technical provisions, was at 31.4% (34.0%). Solvency capital was at a strong level: 1.9 (2.2) times higher than the solvency limit.

Strong solvency and good operating expense efficiency benefit our customers. EUR 115 (117) million was set aside for client bonuses, equalling around 0.6% (0.7%) of the estimated TyEL payroll of the insured.

We secure pensions for more than 860,000 people

The number of Varma’s pension recipients increased in 2015. Varma paid out EUR 5.2 billion in TyEL and YEL pensions to 337,100 (334,500) pension recipients.

At the end of the year, 524,340 (527,140) individuals were insured by Varma. At year-end, the number of valid insurance policies totalled 64,530 (66,140), covering 37,380 (38,937) self-employed persons and 486,960 (488,190) employees.

The TyEL payroll of those insured by Varma totalled about EUR 18.4 (17.8) billion in 2015. The payroll is estimated to have grown by around 3.0%.

Vocational rehabilitation helps prevent disability pensions. The volume of rehabilitation provided by Varma continued to increase. Rehabilitation produces excellent results. We spent EUR 34 million on rehabilitation – which translates to estimated savings in pension expenditure of EUR 372 million. In 2015, about 73% of those who received Varma’s rehabilitation returned to the job market either in full or partly.

Key figures

20152014
Premiums written, € million4,576.44,343.6
Pension payments to pensioners, € million 1)5,183.05,010.1
TyEL insured 31 December486,960488,200
YEL policies37,38038,940
Pensioners337,100334,500
Investments, € million41,293.340,038.8
Investment income, € million1,679.32,698.9
Return on invested capital, %4.27.1
Total result, € million-164.01,223.0
Loading profit, € million36.133.4
Operating expenses as % of loading profit74.075.0
Transfer to client bonuses, € million115.0117.0
% of TyEL payroll0.60.7
Technical provisions, € million31,865.632,069.7
Solvency capital, € million9,956.110,252.5
Solvency capital/technical provisions, % 2) 31.434.0
Solvency capital/solvency limit1.92.2
Parent company staff 31 December534561
1)Before the reduction of received clearing of pay-as-you-go (PAYG) pensions
2)Ratio calculated as a percentage of the technical provisions used in calculating the solvency limit

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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.