Successful implementation of new rules for public-sector occupational pensions
KLP achieved a return on customers’ funds of 1.8 per cent in the fourth quarter, and 8.5 per cent for the whole of 2019. Book returns ended at 4.5 per cent. Solid returns from investments in equities and a rise in the value of bonds and real estate contributed to the good result.
“We are delighted to be able to present a historically good result for KLP. With such a good return, we can pass on over NOK 10 billion to the companies, municipalities, counties and health enterprises that are members with us. The result also allows for further strengthening of our financial position. We are thus well equipped to operate in turbulent financial markets without our customers noticing it,” says CEO Sverre Thornes of KLP.
KLP achieved a profit for its public-sector occupational pension customers of NOK 10.9 billion for 2019. The company is using the good results from public-sector occupational pensions to transfer NOK 10.8 billion to the customers’ premium funds and NOK 0.1 billion to buffer provisions.
Situation in the pension market
KLP has seen stable underlying growth in the premium reserve. The municipal and regional reform has so far had only a moderate effect on KLP’s customer base. At 1 January 2020, KLP had an inflow of NOK 3.5 billion and an outflow of NOK 7.4 billion. Øygarden municipality chose KLP as its provider of public-sector occupational pensions from the new year. Here KLP won the first contract for an insurance-based pension solution to be put out to tender for seven years.
Over Christmas, a million rights holders were moved into a new system that complies with the new rules for public-sector occupational pensions which took effect from 1 January 2020. The new scheme is technically demanding to put in place and increases the complexity for our customers and members. KLP is continuing to invest heavily in solutions to guide both employers and their employees, making it as easy as possible for them to handle their pensions. Advanced systems also provide a foundation for further streamlining of our own operations.
Good growth in green loans
Awareness of KLP’s green loan product to municipalities and their enterprises is growing, and loan applications totalling NOK 3 billion were received in 2019. From the third to the fourth quarter, loan agreements for green loans increased by around NOK 100 million, and KLP has now signed green loan agreements for NOK 700 million. These are split 60 per cent to the water and waste sector and 40 per cent to climate-friendly new building projects.
KLP refers also to the company’s interim report for the fourth quarter at klp.no
Key figures after the fourth quarter of 2019
Value-adjusted return on capital: 8.5 per cent
Book return on capital: 4.5 per cent
Premium income (excl. added reserves): NOK 40.2 billion
Pensions and other benefits paid (excl. transferred reserves): NOK 19.8 billion
Total assets, KLP Group: NOK 763 billion
For more information, contact:
Chief Executive Sverre Thornes: tel. +47 977 44 007
Group Chief Financial Officer/Executive Vice President, Finance Aage Schaanning: tel. +47 905 24 312
Finance Director Oliver Siem: tel. +47 934 31 820
Information Director Sissel Bjaanæs: tel. +47 932 56 350
Terms and concepts
Returns on the customer funds that are allocated to the insurance customers annually. Comprises financial income from management of the customer assets in life insurance excluding the change in net unrealised added values from equity and bond investments.
All returns that have been achieved through management of the customer funds, including unrealised values.
Returns on customer assets beyond the returns the insurer has guaranteed its customers.