Varma's Interim Report 1 January - 30 September 2016: Varma’s investment result rose strongly into the positive

1. Varma’s Interim Report
1 January–30 September 2016
Varma’s investment result rose strongly into the positive
25.10.2016 | Varma's Interim Report 1 January–30 September 20161

2. Varma’s investment result rose strongly into the positive
25.10.2016 | Varma's Interim Report 1 January–30 September 20162
Market value of
investments, €
42.4 bn
Return on
investments
3.1%
Solvency capital, €
10.1 bn
Good result according to key indicators

3. The return on investments stood
at 3.1 per cent, and at the end of
September the value of
investments totalled EUR 42,440
million.
The good return on fixed income
investments and private equity
funds diversified the risk of listed
equity investments in the
investment portfolio.
Return on investments
25.10.2016 | Varma's Interim Report 1 January–30
September 2016
3
The average nominal return on investments over ten years is approx. 4.6%,
calculated in accordance with the recommendations issued by TELA.

4. Investments classified according to risk The return on fixed income
investments was 4.2%, which is
remarkable, considering the low
interest rate environment. We
increased our investments in
emerging markets.
Among equity investments (3.2%)
unlisted equities 15.4% and private
equity funds 8.1% generated the
highest returns.
The return on real estate investments
(–0.4%) was weighed down by write-
downs made in response to changes
in the renovations & market and
rental situation.
25.10.2016 | Varma's Interim Report 1 January–30 September 20164
The modified duration for all the bonds is 3.3
1 Includes accrued interest
2 The interest rate risk of fixed income investments has been reduced by using derivatives to shorten the
durations
1-9/2016 1-9/2015 1-12/2015 24 m
Return Return Return
MWR MWR MWR Vola-
€ mill. % € mill. % € mill. % € mill. % € mill. % % % % tility
15,139 36 394 1 13,292 33 12,199 30 12,268 30 4.2 -0.2 -0.4
Loan receivables 1,416 3 1,416 3 1,397 3 1,397 3 1,361 3 3.2 2.9 2.4
Bonds 11,944 28 11,304 27 10,565 26 8,835 22 8,757 21 5.7 -0.8 -0.9 3.2
Public bonds 5,037 12 3,767 9 4,438 11 3,150 8 2,653 6 4.1 -2.3 -2.5
Other bonds 6,908 16 7,537 18 6,127 15 5,685 14 6,105 15 6.8 0.4 0.4
Other money-market instruments and deposits 2 1,779 4 -12,325 -29 1,330 3 1,967 5 2,151 5 -0.5 0.5 0.5
16,851 40 15,603 37 16,836 42 17,329 43 18,465 45 3.2 1.3 8.8
Listed equities 13,348 31 12,099 29 13,037 32 13,530 33 14,938 36 1.5 -1.0 8.0 12.9
Private equity 2,654 6 2,654 6 2,658 7 2,658 7 2,617 6 8.1 9.1 7.8
Unlisted equities 850 2 850 2 1,141 3 1,141 3 909 2 15.4 9.0 21.2
3,708 9 3,708 9 3,838 9 3,838 9 3,906 9 -0.4 2.3 3.3
Direct real estates 3,033 7 3,033 7 3,315 8 3,315 8 3,313 8 -1.5 1.1 2.3
Real estate funds 675 2 675 2 522 1 522 1 593 1 4.8 10.2 9.9
6,741 16 7,054 17 6,448 16 6,769 17 6,991 17 2.5 3.4 3.5
Hedge funds 6,773 16 6,773 16 6,507 16 6,507 16 6,663 16 2.7 3.6 3.9 3.0
Commodities -19 0 293 1 -58 0 263 1 352 1
Other investments -12 0 -12 0 -1 0 -1 0 -24 0
42,440 100 26,759 63 40,413 100 40,134 99 41,630 101 3.1 1.1 4.2 5.3
Impact of derivatives 15,681 37 0 0 279 1 -336 -1
42,440 100 42,440 100 40,413 100 40,413 100 41,293 100
Risk positionRisk positionMarket Value Risk position
Market value
Market Value
Real estate investments
Other investments
30-September-2016 30-September-2015 31-December-2015
Total investments
Investment allocation at fair value
Market valueMarket value
Fixed-income investments
1
Equity investments

5. Return development since 2009: cumulative return roughly 67%, i.e. €17.4 bn
The equity markets recovered from the market upheaval early in the year: the realised financial figures
exceeded expectations
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6. Total result by quarter
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7. Value of investments
25.10.2016 | Varma's Interim Report 1 January–30 September 20167
42 440
0
10 000
20 000
30 000
40 000
2007 2008 2009 2010 2011 2012 2013 2014 2015 9/2016
€ mill.

8. % Varma
Finnish
equities
European
equities US equities
Euro
government
bonds
Euro
corporate
bonds
9/2016 3.1 8.8 -3.8 7.8 6.4 6.0
2015 4.2 15.9 9.6 1.4 1.6 -0.7
Average nominal return
5 years 6.7 16.8 11.9 16.4 6.7 6.1
10 years 4.6 6.7 3.0 7.2 5.3 4.6
Since 1999 *
5.5 8.4 3.8 5.2 5.0 4.6
Average real return
5 years 5.6 15.7 10.7 15.2 5.6 5.0
10 years 3.0 5.0 1.4 5.5 3.6 2.9
Since 1999 *
3.8 6.7 2.2 3.5 3.4 3.0
*
Varma, as it is today, was founded in mid-1998, so comparison data earlier than 1999 is not available.
Finnish equities = OMX Helsinki Cap Index Euro government bonds = IBOXX Eurozone EUR (Total Return)
European equities = Stoxx 600 Total Return Index EUR Euro corporate bonds = IBOXX Corporate Overall Performance Index EUR (Total Return)
US equities= S&P500 Total Return Index
Investment returns for Varma and the markets
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Real return since
1 Jan 2016: 2.5%

9. Investments in Finland 28%, 11.5 bn €
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10. Geographical distribution of investments
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11. Geographical distribution of listed equities
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12. Solvency and efficiency
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13. Solvency capital strengthened to EUR 10.1 billion
Solvency remained at a high level, at 31 per cent
25.10.2016 | Varma's Interim Report 1 January–30 September 201613

14. Solvency Solvency capital grew
• EUR 10,101 million
• 31.0 per cent of the
technical provisions
• 2.2 times the solvency limit
25.10.2016 | Varma's Interim Report 1 January–30 September 201614

15. We handle pension cover cost-
effectively.
We used 75 per cent of the expense
loading included in the insurance
contributions for operating expenses.
The loading profit was EUR 26
million.
Earnings-related pension insurance
companies have agreed that the
expense loading included in
insurance contributions, determined
by the common calculation principles,
will be cut by roughly 7 per cent at
the start of 2017.
Loading profit
25.10.2016 | Varma's Interim Report
1 January–30 September 2016
15

16. Current issues in customer work
The processing of pension applications is now considerably faster
The sales result in 2016 was strong
25.10.2016 | Varma's Interim Report 1 January–30 September 201616

17. 17,500 new pension decisions
Electronic pension
application
• The accuracy of the information provided is
verified immediately when filling in the
pension application
• The information is transferred directly to the
pension processing system
• Over 50% of applications are received
electronically
• The development work applied
Lean methodology
Efficient processes
• More automation
New pension processing
system
17
The processing times for making pension decisions was reduced by 10 days in January–September
25.10.2016 | Varma's Interim Report 1 January–30 September 2016

18. The customer receives a
pension decision quickly
• A decision on old-age pension is
given within a month, even within a
few days if all the information is
available.
• Varma’s processing time for
disability pension applications is
one month faster than the
competitors’.
• Earnings-related pension decisions
are given within a week.
18
60 60
46
40
47
53
2014 2015 2016
Pension application processing in days
Varma Other
25.10.2016 | Varma's Interim Report
1 January–30 September 2016

19. Major improvement in processing times for rehabilitation decisions
25.10.2016 | Varma's Interim Report 1 January–30 September 201619
26
22
17
14
0
5
10
15
20
25
30
IV/2015 I/2016 II/2016 III/2016
Rehabilitation decision: processing time (days) by quarter
The processing times are currently 10–11 days – last year the average was 36 days

20. Account transfers: Varma’s TyEL premiums written in 2012–2016
25.10.2016 | Varma's Interim Report 1 January–30 September 201620
Quality customer work & service have boosted sales – growth seen especially in mid-sized companies
Challenges in YEL sales – we are reinforcing our services for entrepreneurs

21. Responsibility
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22. Varma’s CSR focus areas
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23. CSR actions in 2016
Mitigating climate change
• Climate policy for investments
published in spring: targeting a 2-
degree portfolio.
• Sustainable development equity
portfolio being built.
• Use of solar energy launched in some
properties – study on the Salmisaari
office also under way.
• Ownership policy updated.
• We published our updated Code of
Conduct, insider guidelines and
sponsorship policies.
• We published more information on
transactions that must be reported to the
Financial Supervisory Authority, including
the distribution of resources used for
client companies’ workability projects.
• We are working on our first GRI report.
Increasing transparency
• We offered a trainee position to a
Somalian asylum seeker as part of the
Hanken integration programme.
• We are seeking means of supporting the
workability of entrepreneurs’ together with
Demos Helsinki.
Supporting diversity and
entrepreneurship
23 25.10.2016 | Varma's Interim Report 1 January–30 September 2016
Varma’s office was granted the Green Office logo