Rising interest rates and falling equity markets influence KLP’s results

Skrevet av: | 07.11.22

KLP maintains good financial strength in the face of a demanding market so far this year.

“The war in Ukraine, the energy crisis, increased international tensions, inflation on the up, with rising interest rates - all have produced some big movements in the financial markets. KLP has solid financial buffers which safeguard customers’ pension capital in periods of negative market movements. High interest rates are good for the management of pension capital going forward,” says KLP’s CEO, Sverre Thornes.

KLP achieved an investment result (the return in excess of that guaranteed by the Company to its customers) of NOK -27.3 (9.3) billion in the year to date. The return on the common portfolio is minus 2.6 per cent for the year to date.

“Because we have built up a very good financial strength over the years with strong results, we can now withstand the turmoil without affecting our customers and owners’ finances. Our management approach has also helped to mitigate the negative results and lays the foundation for good returns in the future,” says Thornes.

The quarter in brief

  • After the third quarter of 2022, the return was minus 2.6 per cent.
  • Good risk result of NOK 963 million so far this year
  • The Company has strong financial buffers, and capital adequacy is excellent at 341 per cent.

KLP’s total assets have increased by NOK 14.0 billion in the year to date, but decreased by NOK 6.8 billion in the third quarter, and now amount to NOK 720.8 billion. The premium reserve increased by NOK 25.4 billion to NOK 511.7 billion at 30 September.

New climate-friendly investments
In the third quarter, climate-friendly investments increased by more than NOK 2.6 billion. At the end of the quarter, the value of KLP’s climate-friendly investments was almost NOK 59.6 billion.

“The transition of energy production towards renewables is essential to reduce greenhouse gas emissions and to reach the 1.5 degree target in the Paris Agreement. It is important for us to continue our efforts to reduce greenhouse gas emissions even at a time of many other crises,” says KLP’s CEO, Sverre Thornes.

Results in the subsidiaries
The underlying trend in KLP’s subsidiaries is good, but higher interest rates and a weak equity market have also had a negative impact on their results.

Read the report.