Interim Report 1 January–31 March 2016

1. Varma’s Interim Report
1 January–31 March 2016
26 April 2016

2. Strong solvency protected against market fluctuations
26 April 2016 | Varma’s Interim Report 1 January–31 March 2016
-1.4%
Return on
investments
41.1 bn
Market value
of investments, €
9.1 bn
Solvency
capital, €
860,000
Finnish pensions
insured
2

3. Return on investments
2007–3/2016
• Strong market movements, which
began at the beginning of the year,
affected the return on investments
• Varma actively managed its portfolio to
dampen the effects of the
unprecedented gloomy start of the year
• The investment markets were weighed
down by concerns over the weakening
of China’s economic growth and the
substantial decline in the prices of
energy and other raw materials
• The weaker market sentiment was
further depressed by falling oil prices,
caused by oil producing countries’
overproduction
The average nominal return on investments over ten years is approx.
4.3%, calculated in accordance with the recommendations issued by TELA.

4. The share of fixed-income investments in the portfolio increased
26 April 2016 | Varma’s Interim Report 1 January–31 March 20164

5. Investments classified according to risk
26 April 2016 | Varma’s Interim Report 1 January–31 March 20165
1-3/2016 1-12/2015 24 m
Return Return
MWR MWR Vola-
€ mill. % € mill. % % % tility
14,553 35 12,268 30 0.2 -0.4
Loan receivables 1,353 3 1,361 3 0.8 2.4
Bonds 10,327 25 8,757 21 0.3 -0.9 2.3
Public bonds 3,805 9 2,653 6 1.1 -2.5
Other bonds 6,522 16 6,105 15 -0.3 0.4
Other money-market instruments and deposits 2,873 7 2,151 5 -0.1 0.5
15,757 38 18,465 45 -3.1 8.8
Listed equities 12,420 30 14,938 36 -5.0 8.0 12.6
Private equity 2,569 6 2,617 6 2.5 7.8
Unlisted equities 767 2 909 2 8.2 21.2
3,775 9 3,906 9 1.2 3.3
Direct real estates 3,143 8 3,313 8 1.2 2.3
Real estate funds 631 2 593 1 1.4 9.9
6,460 16 6,991 17 -2.1 3.5
Hedge funds 6,243 15 6,663 16 -2.0 3.9 2.7
Commodities 230 1 352 1
Other investments -13 0 -24 0
40,544 99 41,630 101 -1.4 4.2 5.1
Impact of derivatives 540 1 -336 -1
41,084 100 41,293 100
The modified duration for all the bonds is 3.8
1)
Includes accrued interest
Real estate investments
Other investments
Total investments
Investment allocation at fair value
31-March-2016 31-December-2015
Risk position Risk position
Market valueMarket value
Fixed-income investments 1)
Equity investments

6. Cumulative return since 2009 roughly 60.2% (€15.6 billion)
26 April 2016 | Varma’s Interim Report 1 January–31 March 20166

7. Investment returns for Varma and the markets
26 April 2016 | Varma’s Interim Report 1 January–31 March 20167
% Varma
Finnish
equities
European
equities US equities
Euro
government
bonds
Euro
corporate
bonds
3/2016 -1.4 -3.3 -7.2 1.3 3.4 2.4
2015 4.2 15.9 9.6 1.4 1.6 -0.7
Average nominal return
5 years 4.4 6.9 7.2 11.6 7.1 5.4
10 years 4.3 5.0 3.0 7.0 5.2 4.4
Since 1999 *
5.4 7.9 3.7 5.0 5.0 4.6
Average real return
5 years 3.3 5.7 6.0 10.3 5.9 4.2
10 years 2.5 3.3 1.3 5.2 3.5 2.7
Since 1999 *
3.7 6.2 2.0 3.3 3.3 2.9
*
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

8. Investment return and interest credited on technical provisions influence the total
result
26 April 2016 | Varma’s Interim Report 1 January–31 March 20168

9. Total result
26 April 2016 | Varma’s Interim Report 1 January–31 March 20169

10. Strong solvency served as risk buffer
26 April 2016 | Varma’s Interim Report 1 January–31 March 201610

11. Solvency remains strong
• Owing to the major equity market
movements, Varma’s solvency
weakened during the first quarter
but remained at a high level, at 28.6
(31.4 on 1 Jan 2016) per cent.
• The solvency capital, which serves as
a risk buffer for investment
operations, was EUR 9,110 (9,956 on
1 Jan 2016) million at the end of
March.
26 April 2016 | Varma’s Interim Report 1 January–31 March 201611

12. Loading profit
• Varma handles pension cover cost-
effectively
• We used 74 per cent of the expense
loading included in the insurance
contributions for operating expenses
26 April 2016 | Varma’s Interim Report 1 January–31 March 201612

13. Current issues
26 April 2016 | Varma’s Interim Report 1 January–31 March 201613

14. Current issues
A historical turn: the number of rehabilitees exceeded the number
of new disability pension recipients
• Years of investments in proactive rehabilitation is reflected in
the lower disability costs and number of rehabilitees returning
to working life
• Rehabilitation promotes the pension reform’s target of longer
careers
As regards the social welfare and healthcare reform, it is
important that the focus of occupational healthcare is on
extending careers and promoting workability.
• Rehabilitation to be linked to chains of care, which enables a
faster return to working life
The Finnish Financial Supervisory Authority issued new guidelines
concerning the financing of well-being at work projects
26 April 2016 | Varma’s Interim Report 1 January–31 March 201614
2010 2015
The number of new disability
pensions is down 22 per cent.
The number of rehabilitees is up 50
per cent.