Page 8 - Seafarers_pension_fund_annual_and_sustainability_report_2023
P. 8
Review of 2023
Strengthening Solvency and views serve as frameworks for developing the in- ”MEK’s investment activities
Investment Strategy Adaptations vestment plan and making consistent investment are based on the pension fund’s
decisions. The decrease in last year’s return compa-
MEK’s solvency remained at an exceptionally st- red to the industry average was anticipated as early and its board’s general views
rong level in 2023, at 185.8 percent. The average as 2022, as returns on illiquid investments respond on investment markets, in-
solvency of pension insurance companies is 126.4 with a delay to increases in interest rates. The main vestment processes, and their
percent. The balance sheet liability increased to reason for the lower return was the write-downs impact on investment returns
1,097.8 million euros, compared to 1,075.8 million made on direct real estate investments. Significant
euros the previous year. The balance sheet liabili- excess returns, on the other hand, were provided by and risks.”
ty refers to the obligation the pension insurer has forestry and real estate funds.
taken on to meet future pension payments for in- Seafarers’ Pension Fund | Annual and Sustainability Report 2023 8
sured individuals. The liability consists of the pre- The investment horizon of the pension industry
sent value of accrued but unpaid pension benefits, is long, and although the return in 2023 was lower
which the pension insurer must assess and cover than the industry average, the long-term return still
with its assets. Of the liability, 353.8 million euros meets the targeted excess return. Except for direct
are included in the solvency capital. real estate investments, MEK’s investment activities
are mainly outsourced. The investment portfolio
Moderate Growth in Investments consists of three main groups: equity investments,
real assets, and fixed income investments. Most in-
MEK’s investment return in 2023 was 4.0 per- vestments are made through investment or capital
cent. The market value of investments increased funds, and consultants and various market-availab-
and was 1,376 million euros at the end of 2023 le fund analyses are used in their selection and
(compared to 1,359 million euros in 2022). We monitoring. Selection criteria include the reputa-
continued the implementation of our long-term tion of the service provider, the competence and
investment strategy in 2023, aiming to shift the sufficiency of personnel, and the risk management
focus of investments from real estate to liquid in- methods used. Additionally, signatories to the UN-
vestments. MEK’s investment activities are based PRI are required from the operators. Diversification
on the pension fund’s and its board’s general views is MEK’s primary means of reducing risk, and it is
on investment markets, investment processes, and implemented both between asset classes and within
their impact on investment returns and risks. These them. The financial situation of MEK and the re-
sults of its investm ent activities, as well as related
risk measures, are reported to the board monthly. >
