FINLAND - Etera Mutual Pension Insurance Company and Veritas have reported their pension funds suffered small losses in the first quarter of 2009 of -1.4% and -1.3% respectively.

Quarterly figures from the two pension funds showed despite continuing to reduce equity allocations, the fall in asset values produced a negative result.

Etera revealed the value of its investment assets dropped slightly from €4.9bn in December 2008 to €4.8bn at the end of March, as quoted shares delivered the biggest loss in its portfolio and returned a disappointing -7.1%.

However, Etera suggested while the beginning of the year had been "difficult", by the end of March investment returns had started to improve and claimed there were "positive" signs for April.

Overall, its equity portfolio produced a return of -5.9% as the -1.3% yield on private equity was partially offset by the positive 0.9% return on unlisted stocks, and fixed income investments also performed poorly with an overall return of -0.2%.

The property portfolio produced the best return of 0.9%, driven primarily by a 1% return on direct real estate and a 0.5% yield on indirect investments, while absolute return strategies produced -1.8%.

By the end of March, Etera's investment strategy comprised 63% in fixed income and equities made up just 15% of the total assets, while real estate investments equate to 18% of the portfolio and the remainder is in other investments.

However, despite the negative return Etera confirmed its solvency level remains stable at 11.7% of technical provisions, equivalent to twice the legal solvency requirement.

Elsewhere, Veritas produced a quarterly return of -1.3%, as volatility in the stock markets resulted in its equity portfolio yielding -7.8%, although unquoted equities posted the biggest loss to the portfolio of 14.5%.

This was closely followed by private equity assets which returned -10%, while listed equity holdings yielded -5.6%. Property and hedge fund investments helped offset the losses with positive returns of 1.4% and 0.1% respectively, although the overall loss on the fixed income portfolio of 0.3% continued to weigh down the fund.

Veritas confirmed it had continued to reduce its equity allocations, with the share of the overall portfolio dropping to 9.8% at the end of March, although gains from the positive performances of the hedge fund assets were minimised as the company only has "moderate exposure" to the asset class.

Despite this, the firm revealed the value of the investment portfolio had slightly increased over the three months from €1.64bn in December to €1.65bn at the end of March, while its solvency level remained "satisfactory" at 15.8% of technical provisions, and 2.7 times the legal minimum.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Topics