Tiedote 27.2.2015

RITAKALLIO: GOOD YEAR BEHIND US – TARGETING BEST CUSTOMER EXPERIENCE IN THE SECTOR

For Ilmarinen, 2014 was a good year overall. Investments brought in a good return in relation to market conditions and the number of customer companies continued to grow.

Due to transfers, Ilmarinen’s insurance portfolio grew by some 400 employer TyEL insurance policies and some 800 self-employed YEL insurance policies. Sales came to a total of EUR 290 million. In 2014, Ilmarinen’s premiums written amounted to just under EUR 4.2 billion.

“We are delighted that so many self-emplyed persons and companies chose us as their pension insurer. Our goal is, after all, to offer the best customer experience in the sector. We have harnessed our entire personnel to serve our customers in a way that guarantees them the solutions they need – quickly and easily,” says President and CEO Timo Ritakallio.

During 2014, Ilmarinen continued developing digital services and revamped its website.

“Sixty-year-olds still an integral part of working life”

For Ilmarinen’s well-being at work services, 2014 was a year of record-high activity. Together with its customers, Ilmarinen participated in some 1,800 projects supporting the development of the quality of working life. In addition close to 40 well-being at work seminars were organised around Finland for client companies, with more than 2,000 people taking part. According to Ritakallio, investments in the quality of working life have not been forgotten – to the contrary.

“Companies more and more often wish to develop their operations by engaging their personnel and making work flow more smoothly. Successful companies understand that thriving employees are the company’s single most important source of competitiveness,” Ritakallio says.

Ritakallio stresses, however, that Finnish working life still needs to change.

“Finnish working life needs more energy, more creativity and more boldness. We also need to make better use of the work input of older people than we do currently. People who have turned 60 are, nowadays, mostly in good shape, active and highly qualified. Ensuring that they remain an integral part of working life also supports the implementation of the pension reform’s objectives,” Ritakallio says.

Pension cover for close to 900,000 Finns

At the end of 2014, some 573,000 (590,000) people were insured with Ilmarinen. The employees’ share of this was 511,000 (529,000) and that of self-emplyed persons was around 61,900 (60,600).

The number of both pension recipients and the amount of pensions paid increased. At the end of the year, Ilmarinen paid out pensions to 318,900 (314,000) people and made a total of approximately 22,400 (23,400) new pension decisions. As in previous years, Ilmarinen processed the pension decisions faster than the industry average.The number of new disability pensions declined from the previous year while a growing number of people made use of vocational rehabilitation.

Ilmarinen paid EUR 4.4 billion (4.1 billion) in pensions. The sum is more than EUR 180 million larger than the revenues collected by the company in insurance contributions. The difference results from the fact that pension expenditure has grown faster than premiums written in recent years. The key reason for this development is the retirement of baby-boomers.

“This trend has not come as a surprise; we have been preparing for it for a long time by increasing our pension funds. In the future, the difference between pension expenditure and premiums written will be covered by the investment return on the pension funds,” Ritakallio explains.

Return on investments reaches 6.8 per cent – pension assets grew by close to two billion

In 2014, Ilmarinen’s pension assets yielded 6.8 (9.8) per cent and the market value of investments rose by just under two billion euros to EUR 34.2 (32.3) billion.

Following the financial crisis, i.e. over the past six years, the nominal return on Ilmarinen’s pension assets has been an average 7.6 per cent annually and in real terms 5.9 per cent annually.

“This shows that the diversification of the portfolio across different asset classes and also geographically has proven to be an extremely successful investment strategy,” Ritakallio says.

2014 was also an excellent year from the perspective of long-term returns. Ilmarinen’s real return on investments since 1997 has equalled an average of 4.1 per cent per year. The Finnish Centre for Pensions uses a 3.5 per cent expected real return rate to estimate the development of earnings-related pension insurance contributions.

Ilmarinen’s solvency remained strong. At the end of 2014, solvency capital was EUR 7.9 (7.1) billion i.e. 29.8 (28.0) per cent of the technical provisions. The solvency position was 2.0 (1.9) times the solvency limit.

The ratio of operating expenses to the expense loading components available for them, measuring cost-efficiency, was 76 (75) per cent.

“For us, operating as efficiently as possible is important. Cost-efficiency is a key competitive factor in the earnings-related pension sector, which is why we wish to continuously improve our operations,” says Ritakallio.

Thanks to good solvency and cost-efficiency, client bonuses rose to a record-high level at EUR 93 (86) million.

Financial Statements 2014
Report on Operations and Financial Statements 2014

For more information, please contact:
Timo Ritakallio, President and CEO, tel. +358 10 284 3838, +358 500 536 346
Jaakko Kiander, Senior Vice President, Finance and Pension Policy, tel. +358 10 284 2599, +358 50 583 8599
Päivi Sihvola, Senior Vice President, Corporate Communications and Human Resources, tel. +358 10 284 3590, +358 040 757 4992