Elo recovery plan approved by FIN-FSA after falling below solvency limit

Finnish mutual pension insurance company, Elo, has revealed it has submitted a recovery plan that has been approved by the Finnish Financial Supervisory Authority (FIN-FSA) after its solvency ratio fell below the limit.

Publishing its half year results, Elo revealed it made a loss of -4.1 per cent in the six months to the end of June. During the height of the crisis in March, Elo’s solvency ratio weakened to a level below the limit, falling 0.01 below the 1.0 threshold for a period of one day. As a result, in the second quarter it submitted a recovery plan to FIN-FSA which was approved on 16 June 2020.

At the end of June, the market value of Elo’s investments was €24bn with the second quarter seeing improvements. In the second quarter, return on investments was positive at 5.9 per cent. The solvency ratio was 119.4 per cent and solvency capital was 1.4 times the solvency limit.

At the end of June, the average 10-year nominal return of Elo’s investments was 5.1 per cent and the average 10-year real return was 3.9 per cent. The average 5-year nominal return was 3.9 per cent and the average 5-year real return was 3.3 per cent. The result of investment operations at fair values was -€1,070.1m.

“The record-steep decline in the listed securities market in March was followed by a fast rise, driven by exceptionally intensive stimulus measures. After the temporary drop caused by the coronavirus shock, Elo’s solvency strengthened significantly due to the general market rise,” Elo CEO, Satu Huber, said.

“The key thing now is that the epidemic is brought under control and we can keep Finland functional and the wheels of economy turning. Only this will enable us to reduce the future economic and social costs of the pandemic,” she added. “At Elo, we have prepared ourselves for the second wave of the coronavirus pandemic and are working hard to take its effects into account in our operations.”

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