Finland’s Elo reports investment returns of -4.9%

Written by Adam Cadle

27/10/2022

Finnish pension insurance company, Elo, has reported negative returns on its investments of -4.9% for the first nine months of 2022.

By comparison, Elo’s investment returns for the same period in 2021 were positive at 9.4%.

The pension insurance company noted that global growth slowed further during the third quarter, with its return being negative due to the “generally weakened economic situation”.

Its fixed income investments returned -3.2% in Q1-Q3, down from 1% the previous year, its equity investments returned -10.1%, down from 18.1%, and its property investments returned 5.3%, up from 3.5%.

“Considering the allocation of the investment assets, the dependence between the stock and fixed-income markets is of central importance,” commented Elo deputy managing director, Hanna Hiidenpalo.

“If the central banks succeed in curbing inflation, the benefit obtained by spreading the investments increases. Thanks to the historically sharp rise in interest rates, the yield prospects for fixed-income investments are better than they have been for several years.”

The market value of its investments amounted to €28bn at the end of September 2022, down from €28.3bn a year prior.

The result of Elo’s investment activities at fair value was -€1.45bn, down from €999.7m the previous year.

Its solvency ratio also fell, from 126.9% at the end of September 2021 to 122.2%, while the solvency capital was 1.5 times the solvency limit.

Premium income amounted to €3.3bn, and pensions and other benefits were paid out to approximately the same amount.

Elo carried out restructuring negotiations during the reporting period, which aimed to clarify and make the company’s organisation more efficient, and respond to changes in the business environment and customer behaviour.

“As a result of the restructuring negotiations, the duties were reduced by 44 in Elo and in addition changes were made to the organisational structure, staff duties and job descriptions,” Elo CEO Carl Pettersson said.

“Despite difficult decisions, we were able to carry out the restructuring negotiations in an exceptionally open and constructive spirit.

“We enter the new strategy period with ambitious objectives. To achieve that, we need to be the most customer-oriented company and have a strong service capability.

“Our staff experience is at an excellent level. We are pioneers in services to support the ability to work and ensure that the occupational pension company has sufficient solvency.”

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