Dear reader,

The year 2016 was an eventful year. The international scene witnessed several political changes, which were reflected in Finland as well. At Veritas, we continued to focus on our own strategy: we will maintain good key figures, grow profitably, ensure personnel satisfaction and, first of all, provide our customers with the best service in the field.

In the past year, the preparations for the pension reform were the largest single effort, both for us and the entire branch. The reform brought changes to the rules of pension accrual and retirement, and it also required significant modifications to the existing information systems.

The most essential task, however, was to ensure that our customers truly understand the impacts of the reform on their own pension security. Therefore, we arranged several information sessions across the country, which proved extremely popular and were often fully booked up. Our customers have mostly been interested in learning about the effects of the reform on their personal pension plans as well as about their pension benefits and future pensionable age.

My understanding is that the pension reform was necessary and its implementation was successful. The employment pension system shall correspond with the demands of the labour market. In my opinion, this is manifested in the current reform.

In addition to preparing the pension reform, we continued to develop our own customer service. For the third subsequent year, we were rated as having the most satisfied customers in the field, and we intend to continue providing services that will optimally meet the needs of our customers. We have set a tough target for ourselves: we want to be the best pension partner for small and medium-sized companies and entrepreneurs. To achieve this target, we need to continually invest in competence and operational development.

In 2016, we took our new compensation system into use. In the new system, the processing of pension matters is partially automated. Thus, we can focus on further improving our customer service, as there will be more resources available for a personal approach. In the coming years, we will increasingly invest in the digitalization of our operations. As our customers are the heart of our operations, this process will advance in parallel with the development of personal service.

The new guideline concerning the provision of well-being at work services proved that our service concept is on the right track. We have co-operated and will continue to co-operate with our customers in order to support the ability to cope at work and to prevent disability. Our task is to assist our employer customers in achieving the independent management of occupational health for their personnel.

Our strategic choices to focus on the customer and to grow jointly with our partners have led to tangible results. Our sales reached a record-high level, and the number of TyEL insured companies and employers increased considerably. The number of YEL policies saw a minor decline, but despite that, the overall premium income grew by 4.0 per cent.

Our investment operations also returned a good yield at 6.6 per cent. In the long term, our annual nominal yield is excellent, at 6.1 per cent. The inflation-adjusted real return of 4.4 per cent clearly exceeds the assumption of 3.0 per cent as estimated by the Finnish Centre for Pensions.

The result of investment operations was particularly good given the insecurity that dominated the investment market. Uncertainty in terms of the future of the European Union and the policies following the presidential elections in the United States was reflected in the equity and currency exchange rates as well as in the fixed-investment markets globally. The interest rates were at a historically low level, with even the long-term interests being in the negative for the first time in history. The growth of the global economy was modest.

Under these circumstances, we succeeded well in all investment categories. Our overall income was the best in the branch, and the value of our investment portfolio rose to a record-high of EUR 3 billion. As a result of the good key figures, our solvency was strengthened. The solvency capital rose by 10 per cent and was, at the end of the year, 29.5 per cent of the technical provisions, or 2.6 times the solvency limit.

Thanks to the strong solvency, we are well positioned for the coming years. Our duty is to invest the pension assets in a profitable and secure manner, and the strong solvency gives us latitude in terms of decision-making and risk spreading.

Our customers will benefit from our good result as well. As compared to the previous year, we can now transfer a total of 15.4 per cent more funds to customer bonuses.

Veritas has a solid corporate culture. It has helped us to successfully implement all those reforms that have had an impact on our branch, our customers, the market and society at large. Our personnel are also a highly motivated team of professionals. As their employer, we shall provide each employee with opportunities to enhance their own competence while also ensuring their well-being at work. There is a clear correlation between personnel satisfaction and high customer satisfaction.

I wish to warmly thank all our employees for their excellent input for the benefit of our customers, our company and our partners. I also wish to extend my gratitude to all the individuals who hold positions of trust in our company. The year 2016 was a good year for Veritas.

Turku, Finland, April 2017

Jan-Erik Stenman