Elo’s result 2024: Return on investments increased to 8.5 per cent and cost efficiency continued to improve

Elo's investments performed excellently in the volatile operating environment, with the best returns coming from listed equities. The total return on real estate investments remained positive despite the market situation.

The figures are unaudited and the comparison figures in brackets are figures for 31 December 2023.

Key figures January–December 2024

• The net return on investment was 8.5 (6.0) per cent, or EUR 2.6 billion. Fourth quarter return was 1.5 (3.3) per cent.
• The market value of the investments was EUR 32.4 (30.0) billion. The ten-year average return on investments was 5.7 per cent. This corresponds to a real return of 3.6 per cent.
• The solvency ratio increased to 123.0 (121.3) per cent and the solvency position was 1.4 (1.5).
• Cost efficiency improved, and operating expenses covered by administrative cost decreased by 4.7 percent, reaching a record low level.

−We did very well in terms of investment returns. Our solvency was strengthened by an increase in our solvency capital of EUR 758 million from the end of 2023. I’m also pleased with our improved cost efficiency. Despite the significant growth in our new sales market share, our insurance premium revenue decreased, summarises Elo’s CEO Carl Pettersson.

Elo’s return on investments was 8.5 (6.0) per cent and all asset classes showed positive returns. The best performers were listed equity investments, which returned 14.0 (12.4) per cent, and hedge fund investments with a return of 13.1 (4.8) per cent.

The divergence of inflation and economic development in Europe, China and the United States was a key theme in the investment markets in 2024. In early spring, the investment market was boosted by the US tech giants’ excellent earnings growth and the reversal of the inflation trend. In the Middle East, the situation deteriorated gradually, and the crisis expanded during the year. Central banks began to lower their key interest rates. 

All equity investments returned 11.2 (8.6) per cent. The share of the listed shares in Elo’s investment portfolio increased during the year and they accounted for 32.7 per cent of the investment portfolio.

The return on fixed income investments was 5.2 (6.7) per cent. The performance of fixed income investments was negative in the early part of the year. The expectations of lowering key interest rates strengthened which supported the positive performance of fixed income investments towards the end of the year. Elo reduced the amount of its interest rate risk and fixed income investments involving credit risk in the fourth quarter. The strengthening of the US dollar had a significant impact on the total return on Elo’s investments.

The challenging situation in the real estate investment market continued. The risk level of Elo’s real estate investments was kept moderate, and the market situation was utilised by making selective investments at a reasonable cost level. With these measures, the portfolio utilisation rates remained good in a difficult economic situation, and the total return on real estate remained positive despite write-downs. Real estate investments returned 2.2 (-2.4) per cent. Write-downs of approximately EUR 26 million were made to the valuations of directly owned real estate in 2024.

Elo became the market leader in the sale of new YEL and TyEL insurance policies

Customers will continue to benefit from Elo’s improved cost efficiency. 

- Thanks to the improved efficiency of our operations and the cost savings we’ve achieved, our customers will pay a significantly lower management fee in 2025 and 2026, Pettersson explains. 

At the end of 2024, Elo was managing 83,866 (83,487) YEL insurance policies and 45,328 (46,395) TyEL insurance policies taken out by employers. The total number of insured employees and entrepreneurs was 468,697 (493,173) people. The market share of new sales increased significantly in TyEL and YEL insurance policies. The market share of new sales of TyEL insurance was 39.1 (36.4) percent and that of YEL insurance was 39.6 (35.9) percent. 

The pension legislation for self-employed persons was amended at the beginning of 2023, and as a result, Elo revised the earned incomes of almost 13,400 entrepreneurs during the year. The average earned income increased by EUR 4,000. The earned income of 37,400 entrepreneurs has been revised since 2023. For some customers, increasing their earned income took place at a difficult time as the economic situation was tightening. Dialogue between the customer and the pension company is particularly important in such circumstances.  

Finland’s weak economic situation was reflected in the increasing credit losses for corporate customers

The Finnish economy turned to growth in early 2024, but at an annual level, GDP growth was slightly negative. Growth was sustained by public consumption and public investment. Inflation slowed down in Finland in the early part of the year, but the VAT increase that came into force in September accelerated inflation on a broad basis. Households’ real disposable income grew only slightly and, as a result, consumption growth remained modest. Housing construction and corporate investments contracted. 

The weak economic situation in Finland was reflected in Elo's increasing credit losses due to its customers. Credit losses from insurance contributions amounted to EUR 30.3 (25.0) million in 2024. 

Outlook

The economic outlook for early 2025 is uncertain. The US administration’s tax and spending policies, trade policy and tariffs, defence policy and geopolitical decisions affect the global economic and market environment. The end of the war between Ukraine and Russia would also have a strong impact on the European economy. On the other hand, trade and geopolitical threats affecting the EU may accelerate EU reforms and contribute to the autonomy of its economic growth.

In cyclical terms, the further deceleration of inflation, the easing of the ECB’s monetary policy, the recovery of real household incomes and the continued stable labour market situation are expected to boost growth in Finland. The recovery of Finland’s exports is supported by the growth of global trade and the favourable development of export prices.

The labour market organisations achieved a negotiated result on the reform of the the earnings-related pension system in January 2025. The Finnish government approved the result of the negotiations and, according to an assessment carried out by the Ministry of Finance, the solution will strengthen public finances by 0.57% of GDP in the long term. As a result of the reform, pension companies will be able to increase the weight of shares of investments, which in the long term will improve the expected return on investments and reduce the pressure to raise the amount of contributions. Elo is assessing the effects of the pension reform and planning any necessary measures.

Elo's year 2025 has started well. Investment returns have developed positively, and new insurance sales have started slightly better than last year. In line with its strategy, Elo wants to increase its market share in TyEL insurance policies and maintain its position as the market leader in YEL insurance policies. Elo continues to invest in the development of work ability services and creates added value for customers to reduce work ability risks. According to its strategy, Elo ensures sufficient solvency in all market situations.

For more information:
CEO Carl Pettersson, interview requests Miia Pullinen/Communications, tel. +358 40 588 3637

Presentation of financial statements 2024 >
Key figures 2024 >