Finland’s Elo returns 2.8% in H1 2023

Written by Adam Cadle

23/08/2023

Finnish pension insurance company, Elo, returned 2.8% on its investments in the first half of 2023, its half-year report has revealed.

This represents an improvement of 7.3 percentage points from its return of -4.5% in H1 2022.

In monetary terms, Elo’s investment result at current values was €34.1m in H1 2023, up from losses of €1.14bn in the first half of last year.

The market value of its investments also increased year-on-year, from €28bn to €29bn.

Elo’s report noted that investment market returns were better than expected in H1 2023 due to positive economic development.

Its return on equities was 4.3%, up from -8.2%, while the pension company’s return on listed equities recovered strongly, improving from -17.2% in H1 2022 to 6.7% in H1 2023.

Among the listed equities, the US stock market performed the best, driven by growth companies, according to Elo.

Elo also reported improvements in its fixed income return, which rose from -3.5% in H1 2022 to 2.2% in H1 2023.

However, the pension company did not see improved returns across all asset classes, with its return on capital investments falling from 11.2% to 1.7% and its return on real estate decreasing from 3.4% to 0.2%.

Furthermore, Elo’s solvency ratio declined over the same period, from 123.6% to 121%, and its solvency capital remained 1.5 times the solvency limit.

“We have nicely reduced our operating expenses, and thus improved our cost efficiency,” said Elo CEO, Carl Pettersson.

“Thanks to the increased efficiency, we pay €7m back to our customers as treatment fee refunds.

“The implementation of our new strategy continued and we progressed according to the action plan by developing service processes and management.”

Elo vice president, Hanna Hiidenpalo, added: “The yield development in the stock and interest markets reflects investors' expectations of a gradual slowdown in inflation without a significant decline in economic growth. This would probably mean a turn in the central banks' monetary policy.

“Both the housing trade and construction have weakened and we cannot see a clear turn for the better in construction without a recovery in real incomes or a drop in interest rates.

“Finnish companies' expectations of the future operating environment have weakened, but employment has remained at a good level.”

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