Varma solvency capital rises 'higher than ever' as investment returns hit 13.5%

Finnish pension provider, Varma, has reported returns of 13.5 per cent from January to September 2021, equal to €6.7bn in returns.

The investment income has seen Varma’s solvency capital rise higher “than ever before”, to €15.7bn, which marks an improvement on the €11.5bn recorded at the beginning of the year, and is 1.9 times the solvency limit.

The value of Varma’s investments, according to its interim financial results, has also increased to €56.6bn as of the end of the September as a result of the investment performance.

Equity investments in total returned 23.1 per cent during the period, with the best performers found to be private equity investments, which delivered returns of 39.9 per cent.

Listed shares, meanwhile, delivered returns of 17.6 per cent and hedge fund investments generated returns of 11.6 per cent.

Commenting on the results, Varma CEO, Risto Murto, said: “So far, the year has been good for the pension system. Both investment income and employment development have surprised positively, although the very rapid acceleration of the economy is now probably behind us.

“The positive development of the situation of the Finnish economy and companies was reflected in Varma, among other things, in the relief of customers' payment difficulties and the increase in the salary amount.”

Varma executive vice president responsible for investments, Reima Rytsölä, added: “Although the rise in the listed stock market leveled off, the strong earnings trend of our investments continued in the third quarter. All asset classes brought steady returns, and private equity returns exceptionally well.

“The lifting of interest rate restrictions globally supports economic growth. On the other hand, production bottlenecks and rising energy prices are slowing growth globally.

“Inflation is accelerating and the market is monitoring whether this is a temporary phenomenon and how central banks are adjusting their monetary policy in an environment of rising prices.”

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