Veritas Interim Report: Strong first half- for Veritas – the return on investments stood at 2.4 per cent

25 August 2023

Veritas publishes on its website:

The investments of Pension Insurance Company Veritas returned 2.4 per cent in January–June. At the end of June, the solvency ratio was 122.3 per cent and the solvency capital was 1.6 times the solvency limit. Strong development in customer acquisition continued during the second quarter of the year.

”Good service has brought us many new customers in recent years, and with this growth, we have been able to increase the efficiency of our activities. This is good news for our customers, as improved efficiency is directly reflected in the pension insurance contributions,” states Carl Haglund, CEO of Veritas.

Veritas’ premiums written are expected to grow by over 7 per cent in the current year. The payroll of companies insured by Veritas is estimated to increase by approximately the same percentage.

”The development in the payroll has continued to be strong but, in general, the economic outlook appears bleak. Employment expectations have weakened,” says Haglund.

However, many sectors still suffer from a shortage of skilled labour. No alleviation of the situation is in sight since the share of the working-age population has declined and will continue to decline in the coming decades.

“We will not be able to manage without employment-based immigration. We should all do our utmost to encourage skilled foreign employees to come to Finland. Objecting to immigration is like shooting oneself in the foot.”

Equity investments provided the highest return

The return on Veritas’ investments was 2.4 per cent for the period of January–June. The value of investments at the end of June was EUR 4.3 billion.

The return on fixed-income investments was 3.5 per cent, equity investments 4.8 per cent, real estate -3.3 per cent and other investments 0.6 per cent.

“The year has started better than expected in the international equity markets, but the development in the Finnish equity market has been very poor. The general index of the Helsinki Stock Exchange has declined approximately 10 per cent from the beginning of the year,” says Kari Vatanen, Chief Investment Officer at Veritas.

According to Vatanen, the performance of the Helsinki Stock Exchange has clearly fallen behind its peers. In the United States, for example, equity markets have been boosted by the strong performance of high-tech companies, but the service sector has also developed positively along with increasing consumer confidence.

”The weak development of the Helsinki Stock Exchange can be explained by its sectoral structure. Lack of large and international high-tech companies and high exposure to the manufacturing industry. The manufacturing industry has not performed well elsewhere in the world either, but in Finland, the performance has been especially weak.”

The return requirements in real estate have increased

The real estate market is also experiencing exceptional times and, at present, the outlook for the early autumn is weak. The return requirements in the real estate market have increased, which reduces the value of properties.

“At the end of June, we marked down our direct real estate investments. We wanted the value of the properties to reflect the actual market price in a changed market environment,” says Vatanen.

Vatanen also sees positive signs in the economy. Inflation is declining, the central bank rates are about to reach their peak and the service industry is doing well.

“The United States may possibly survive the tighter monetary policy without a recession, but I think it is too early to call off recession predictions for Finland just yet. Business confidence continued to decline in July in all industries other than the service industry.”

Source: Veritas
Multiple reports with cicle diagram and text

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