Varma, Ilmarinen see solvency capital shrink but stay above limits

first_imgThe two mainstays of Finland’s earnings-related pension system – Ilmarinen and Varma – have expressed satisfaction with solvency levels in first quarter results although more than a quarter or more of their solvency capital was wiped out against the backdrop of the coronavirus pandemic.Helsinki-based Varma’s investments fell 10.0% in the three-month period after share prices shrank in March amid the COVID-19 shock, the pension insurance company reported.In its interim results statement, CIO Reima Rytsölä said: “The equity market plunged in March at an unheard-of rate, and there were moments when liquidity disappeared almost entirely from the capital markets.”Meanwhile Ilmarinen – the other of the two main providers in Finland’s partially-funded earnings-related pension system – reported a 7.5% loss on investments in the period. Jouko Pölönen, Ilmarinen’s president and chief executive, said: “With the coronavirus crisis, stock prices took a sharp plunge on all markets, which pushed the return on equity investments down to -12.8%.“The return on fixed income investments also was clearly negative, at -6.9%, due to the widening of credit risk margins,” he said. Jouko Pölönen, Ilmarinen president and chief executiveVarma’s solvency capital diminished by more than 30% to €7.9bn at the end of March from €11.6bn on 1 January, and was 1.6 times the solvency limit, the firm reported.Chief executive Risto Murto said: “Despite the economy coming to a grinding halt, Varma’s solvency remained at a good level.”This showed the risk buffers used to secure the pension system were working as they were supposed to, he said.Ilmarinen’s solvency capital shrank by around 25% to €8.1bn at the end of March from €10.8bn at the end of 2019.But Pölönen said that at 120.7%, his firm’s solvency ratio was still clearly higher than regulatory requirements.Solvency buffers built up through long-term funding and investing protected pension assets during market volatility, he said.However, he said, “when it comes to the whole pension system […] it is important to ensure that the sudden slump in the stock market does not lead to a situation where pension companies would be forced to sell their equity investments at low prices to reduce risk.”The market value of Varma’s investments slipped to €43.6bn at the end of the quarter from €48.7bn at the beginning of this year, according to the interim results.Among asset classes, listed equities ended the quarter with a 21.1% loss, though Varma’s equity investments overall registered a loss of 14.6%, the firm reported.Fixed income fell 3.6% and real estate returned 1.3%. Hedge fund investments, meanwhile, left Varma with a 12.7% loss at the end of the three-month period, it said.By reducing equity weights in the overall portfolio, Rytsölä said the pensions insurer had lowered its risk level to secure solvency in the “extraordinary conditions” during the quarter.“The equity market has clearly recovered since the end of March. Time will tell, however, whether the equity market will experience a second wave of decline,” he said.“The central banks’ stimulus measures have slowed the expansion of the economic crisis into a financial crisis”Varma chief executive Risto MurtoMurto said that in terms of economic recovery, the main factor would now be how fast restrictions could be lifted.“The central banks’ stimulus measures, in particular, have been rapid and substantial, which has slowed the expansion of the economic crisis into a financial crisis,” said Murto.Ilmarinen’s total investments contracted to €46.4bn at the end of the first quarter from €50.5bn at the start.The firm said the Finnish economy was expected to slide into a deep recession, as a result of which unemployment was seen rising and the payroll and premiums written were expected to decline substantially.Pölönen said: “The impacts of the crisis will be felt in the pension system in the form of lower investment returns and premiums written due to falling employment rates and the flexibility granted for the payment of earnings-related pension contributions.”last_img read more

Report: Fire Erupts at SHI Geoje Yard

first_imgA fire erupted at Samsung Heavy Industries (SHI) shipyard in Geoje, South Korea, on May 17, Yonhap News Agency reports. The fire was brought under control and there were no casualties, Yonhap cited firefighters as saying.The blaze reportedly started in air condition equipment at the shipyard at around 10:00 a.m. local time.As informed, the cause of the fire is under investigation.World Maritime News contacted SHI for more information on the matter, however, the company is yet to reply.Earlier this month, six workers died while some 25 workers sustained injuries at the same shipyard after two cranes collided.Following the latest incident, the country’s Ministry of Employment and Labor ordered SHI to partially halt operations near the site in order to enhance safety.Korean government also closed the yard after the crane collapse.World Maritime News Stafflast_img read more