Oslo pension fund beats upcoming solvency demand by 'wide margin'

Oslo Pensjonsforsikring (OPF), the pension fund for the municipality of the Norwegian capital, reported a lower year-on-year return for January to September but said it was already beating the new solvency requirements set to become law next year by a wide margin.

The public sector pension fund said in its interim report that, following a 0.8% loss suffered between July and September, the value-adjusted return on customers’ savings was 2.7% in the nine months to the end of September, down from 5.1% in the same period last year.

OPF said: “The fall is partly due to weaker equities markets and party down to the fact corporate bond prices fell.”

Solvency capital coverage grew to 170% in the third quarter, up from 152% in the second.

“Oslo Pensjonsforsikring AS fulfils the new steeper capital requirements that are coming into force in the new year by a good margin,” the pension fund said.

Taking into account the more lenient transition regulations the authorities introduced, the coverage ratio was 359%, it said, but added that, even disregarding the proposed transition leeway, its solvency level was well above the limit.

“The good level of solidity means OPF will continue with the investment strategy that has produced a good return on customers’ assets for many years,” the pension fund said.

It said the chief elements in the strategy were to ensure a stable and high level of return by spreading risk between different asset classes, and to have a long-term investment perspective.

Group profit for the third quarter of 2015 alone was NOK141m (€15m) compared with NOK174m in the same quarter last year.

In the year so far, however, the result was NOK824m, up from NOK498m. 

The group quarterly profit had been reduced by NOK21m because of the decision to move NOK246m of the customer premium fund to reserves over three years, to take account of lower mortality levels ascertained between 2012 and 2013.

Between the end of September 2015 and the end of December 2014, OPF’s asset allocation edged towards equities and away from fixed income.

Fixed income investments made up 49.9% of group assets at the end of September, down from 52% at the end of last year, while equities portfolios gained slightly to 25.2% from 24.9%, according to the interim data.

Total group assets rose to NOK77.0bn at the end of September from NOK74.6bn at the end of December.