Advance Information on Tapiola Pension's Financial Statements for 2010
PRESS RELEASE
19.1.2011
- Tapiola Pension’s investment year 2010 was a successful one and
the company’s solvency strengthened further
- Tapiola Pension’s investment return was 10.8 per cent (13.5 % in 2009).
- The total amount of assets rose to EUR 9,362.5 million (EUR 8,473.4 million).
- The solvency margin which indicates financial solidity was 29.7 per cent of technical provisions (23.7) and 3.0 (3.0) times the solvency limit.
- For customers, the strengthened solvency means even higher bonuses. The bonuses are expected to increase to 0.44 per cent (0.3 %) of total payroll.
According to preliminary financial statement figures for 2010, the return on Tapiola Pension’s investment portfolio at current value was 10.8 per cent (13.5 % in 2009). According to Managing Director Satu Huber, the excellent result demonstrates the strength of the independent and systematic investment operations.
“Particularly notable in our result is the return on fixed income investments, which exceeded six per cent. It is an excellent achievement in an investment year characterised by the problems of some euro countries”, emphasises Huber. The level of Tapiola Pension’s return on both equity and fixed income investments outperformed the market indices.
Return on equities clearly outperformed market development
Tapiola Pension’s publicly listed equity investments generated a return of 23.1 per cent, of which investments in Finnish equities returned 33.4 per cent. Nordic equities returned as high as 37.5 per cent. During the same period, the Stoxx600 index describing the European equity markets yielded 11.6 per cent. The return on Tapiola Pension’s investments was also significantly increased by an active currency hedging strategy.
The proportion of equity investments in the company’s investment portfolio remained high throughout the year. Their share was further increased during 2010 from 28.5 per cent to 34.6 per cent. The majority of the stock purchases were made in the early part of the year. “We focused our purchases particularly on shares of well-established global companies. We also increased the proportion of emerging markets during the year”, says Hanna Hiidenpalo, Investment Director.
Focus on bonds in fixed income investments
The 6.4 per cent return from fixed income investments clearly outperforms, for example, the 2.1 per cent return of the iBoxx index, which describes the European bond market. The return was higher than the benchmark index due to successful allocation decisions and management of the interest rate risk. “In fixed income investments, the focus was on the corporate bonds of companies with a good financial standing. Overweight on corporate bonds and a significant underweight on European peripheral government bonds had the biggest impact on the difference in returns compared with the European interest rate markets”, says Hiidenpalo.
Solvency strengthened further thanks to good investment returns
Tapiola Pension’s return on investments over ten years exceeds the four per cent real return target defined in the pension system: for 2001 2010, the nominal return was 5.9 per cent and real return 4.3 per cent.
The solvency margin was 29.7 per cent of technical provisions (23.7 %) and 3.0 (3.0) times the solvency limit. Without the temporary changes in legislation, the solvency ratio would have been 24.5 per cent (18.8 %) and the solvency position 2.5 (2.4).
Hanna Hiidenpalo estimates that the positive short-term market outlook of the industrial countries and the long-term structural problems will create interesting situations on the equity markets this year. “During the first half of 2011, the economy’s recovery may strengthen. The attractiveness of the equity markets is increased by their fairly high/moderate valuation, particularly in comparison with the low interest rate level. The further the year progresses, the more will industrial countries’ structural problems begin to weigh down growth opportunities. Political risks will also maintain uncertainty and increase the possibility of sharp corrective moves”, estimates Hiidenpalo.
Tapiola Pension was chosen Finland’s best pension fund investor in 2010
Tapiola Pension’s own systematic investment process also received international recognition. The Investment and Pensions Europe (IPE) organisation, which evaluates the European pension fund investment markets, chose Tapiola Pension as Finland’s best pension fund investor in 2010. Tapiola Pension was the only Finnish pension investor to be recognised in this IPE European Pension Fund Awards competition.
In 2009, the company was rated the best investment organisation in Europe in the same competition.
The financial figures in this press release are preliminary. Further information on Tapiola Pension’s year 2010 will be presented to the media on Wednesday 16 February 2011 at 9:00 am, when preliminary financial statement data of Tapiola Group companies is published. Audited financial results of the companies will be published on 23 March 2011.
Additional Information:
Managing Director
Satu Huber
(09) 453 2619
Investment Director
Hanna Hiidenpalo
(09) 453 3310