Value of Varma’s investments close to the level at the start of the year – strong solvency safeguards against unusual market volatility

The return on Varma’s investments in January–March was 0.0 (3.6) per cent. The value of Varma’s investments was EUR 64.0 (64.4 on 1 Jan) billion. 

 “The investment markets have been volatile in the first quarter of the year. Unusually, the European equity markets outperformed the US market in the first quarter of the year. This helped improve Varma’s first-quarter returns. Diversification paid off once again,” says Varma’s President & CEO Risto Murto. 

 “Finland’s economy has shown early signs of recovery. It would be truly unfortunate if the recovery were interrupted by the recently begun trade war. Over the past almost five years, the Finnish economy has faced exceptional headwinds from the global economic environment,” Murto adds.

The return on Varma’s equity investments was -1.0 (5.3) per cent. The return on Finnish equity investments in January–March was 7.0 per cent. Hedge funds yielded 1.4 (3.9) per cent, fixed income investments 1.0 (1.0) per cent, and private equities -0.8 (3.0) per cent. The return on real estate investments was 0.8 (-0.7) per cent.

“In the USA, share prices clearly dropped from the peak figures already in March. President Trump’s talk of tariffs has significantly increased the risk of recession in the USA. Germany’s decision at the beginning of the year on a large-scale investment package held psychological significance for Europe and raised optimism about an acceleration in growth. However, markets around the world are now nervous about tariffs and their impacts,” says CIO Markus Aho.

So far, the market volatility has had no major impact on Varma’s solvency. Varma’s solvency ratio at the end of March was 134.0 (134.6 on 1 Jan) per cent, and solvency capital was EUR 16.5 (16.8 on 1 Jan) billion.

“Varma was well placed to face the crisis in the markets thanks to the almost record-high solvency. In terms of risk management, the situation is not exceptional despite the rapid decline in share prices over the course of the spring,” Aho says.

In-use electricity and heat of Varma’s residential real estate investments will be CO2-free in 2025

The preparation of a new Sustainability Programme has been started at Varma. The programme, which will be ready in October, builds on the Sustainability Programme for 2022–2025.

Varma’s key responsibility commitments in investment activities include considering and assessing climate change risks and promoting biodiversity. In March, we published a Review of Responsible Investment in 2024, in which we report on our responsible investment principles and successes as regards our key goals last year.

The purchased in-use energy of Varma’s residential real estate investments will be CO2-free in 2025. Varma’s apartments will be heated either using geothermal heating produced on site or with district heating certified with a guarantee of origin, which is generated using renewable energy sources or waste heat. Purchased electricity is generated using wind power. Varma has some 4,600 residential units around Finland, with the majority located in the largest cities.

Challenges of YEL income for entrepreneurs identified

Varma is continuing its income reviews this year in accordance with its obligations under the Self-Employed Persons’ Pensions Act (YEL). Varma is reviewing the YEL income of entrepreneurs whose income is over EUR 25,000 and whose income has not been reviewed in the previous two years. The income of 12,000 entrepreneurs is scheduled for a review by Varma.

Varma has identified the challenges of YEL insurance and the need for its development.

“We welcome the fact that the Finnish government commissioned an assessment of entrepreneurs’ pension cover. YEL, the self-employed persons’ pension scheme, is clearly in need of reform, and the assessment is important,” says Murto.

According to the Finnish government, the amendments to the Self-Employed Persons’ Pensions Act will take effect in 2029.

The increase in client companies’ payroll was reasonable

The TyEL payroll of Varma’s client companies grew 2.6 per cent in January–March compared to a year ago.

Varma was successful in customer acquisition in January–March. In the transfer rounds between earnings-related pension insurance companies at the start of the year, EUR 68 (129) million in net annual premiums written is being transferred to Varma. Furthermore, sales of pension insurance policies to new customers during the reporting period amounted to EUR 27 (23) million.

Further information: 

Hanna Kaskela, Senior Vice President, Sustainability & Communications, tel. +358 40 584 5045 or hanna.kaskela(at)varma.fi        

Marjut Tervola, Communications Manager, tel. +358 45 673 0120 or marjut.tervola(at)varma.fi