Ilmarinen reveals 'strong' investment returns; hits climate target ahead of schedule

Written by Sophie Smith

17/02/2025

Finnish pension insurance company, Ilmarinen, achieved an investment return of 8.6% in 2024, alongside a "significant" cut in the carbon intensity of its pension investments, its latest update has revealed.

The provider's latest financial statement showed that the market value of its investments increased to €63.3bn, as investments yielded a return of €5bn.

In particular, Ilmarinen's equity investments yielded 14.1%, while fixed income investments returned 4.4%.

The group noted that global equity market returns were generally positive, although there were large regional and sector-specific differences, as whilst the equity market return in the United States was 25%, this was 9% in Europe.

In Finland in particular, the equity market return remained at 0%, as short-term interest rates fell in line with central bank interest rate cuts.

However, despite the decline in short-term policy rates, long-term government bond interest rates rose moderately during the year, according to Ilmarinen.

The update also revealed that while the return on real estate investments was -0.9%, the return on other investments 6.7%, meaning that the long-term average return on investments since 1997 has been 5.8%.

Solvency capital also strengthened further to €13.9bn and the solvency ratio increased to 127.5%.

"The year was excellent overall. With a strong investment year," Ilmarinen CEO Jouko Pölönen, stated.

"Despite the decline in employment, our premium income grew by 2% and maintenance expenses decreased by 2%.

"Strong solvency and improved efficiency are directly reflected in lower prices for our customers."

The group suggested that the recent pension reforms agreed in Finland could also represent an opportunity to increase equity investments further in the future, explaining that higher investment returns for pension assets are being sought by increasing the opportunities for earnings-related pension institutions to take risks in investing pension assets.

"It is good that the reform makes it possible to increase the weight of stocks in the investment portfolio," Pölönen said.

"In the long term, stocks yield better returns than fixed income or real estate investments."

The group also reported on sustainability in accordance with the European Sustainability Reporting Standard (ESRS) for the first time as part of its latest annual report.

This revealed that the fund has reached its goal of a 50% decrease in carbon intensity by 2030 ahead of schedule, as the carbon intensity of Ilmarinen's direct listed equity investments decreased by 62% since 2020, and the carbon intensity of direct listed corporate bond investments by 51%.

Ilmarinen executive vice president and chief investment officer, Mikko Mursula, said: "At the core of Ilmarinen's strategy is to invest productively, securely and responsibly.

"We have achieved a significant part of the climate goals we set ahead of schedule. Our goal is to update Ilmarinen's climate plans in 2025. At the same time, we will set new climate goals."

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