- The return on Veritas’ investments was excellent, at 5.5 per cent for the period of 1 January–31 March 2015.
- The good result was primarily due to listed equities, the yield of which was 14.3 per cent in the first quarter.
- Fixed-income investments also had an excellent return of 2.6 per cent.
- The company’s solvency strengthened and the solvency capital was 33.6 per cent of the technical provisions.
Equities developed especially well in Europe, and the return on the entire equity portfolio was 11.9 per cent.
“The market’s trust in the recovery of the European economy strengthened clearly in response to the launch of the quantitative easing program by the European Central Bank at the start of the year,” states Niina Bergring, Chief Investment Officer.
“In Europe, the share prices rose significantly more than in other markets and the overall interest rates fell to a record low level.The interest rates on German government bonds are currently negative, for maturities of up to eight years, and the rate on the 10-year bond is also nearing zero.”
The drop in interest rate levels brought a good yield in the fixed interest asset class.The return on Veritas’ fixed-income investments was 2.6 per cent during the first quarter of the year.
Pursuit of a higher yield means increased risk-taking
The actions of the central banks have increased the liquidity on the market, which has the effect of forcing long-term investors to shift from safe asset classes to riskier investments in the hope of returns.
“The problem for long-term investors is no longer just low yield expectations for medium-term investments, but also the fact that, from this point on, the advantages of the diversification that historically have helped to secure the portfolio are likely to be almost nonexistent.”
The yield for the rest of the year will be affected, at least, by the situation in Greece and the future liquidity measures of the US Federal Reserve Bank.The deceleration of China’s economy also continued during the first quarter of the year.
“It remains to be seen how masterfully the state can manage the deceleration in China.”
Due to the good investment yield, Veritas’ solvency strengthened to 33.6 per cent of its technical provisions.The solvency capital is 2.5 times the solvency limit.
The Annual Report for 2014 has been published and is available on our website at veritas.fi/annualreport2014.
VERITAS PENSION INSURANCE
Jan-Erik Stenman, President, tel.+358 (0)10 550 1600, +358 (0)50 343 2299
Niina Bergring, Chief Investment Officer, tel.+358 (0)10 5501 882, +358 (0)40 8221 514
Tommy Sandås, Financing Director, tel.+358 (0)10 5501 186, +358 (0)50 593 0138