Varma’s investments yielded a return of 4.7 (–0.3) per cent, i.e. EUR 2.0 billion, in January–June. The market value of the investment portfolio reached a new record of EUR 45.0 (41.2) billion.

1. Varma’s Interim Report
1 January–30 June 2017
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

2. 11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
Market value
of investments, €
45.0 bn
Return on
investments
4.7%
Solvency capital, €
11.2 bn
Strong result as economy recovers

3. Investment returns 2008−2017
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
Investments yielded a return of EUR 2.0 billion
The average nominal return on investments over ten years is approx.
4.2%, calculated in accordance with the recommendations issued by TELA.
* 1-6/2016 return on investment was -0.3 %
*

4. The value of Varma’s investments reached a new record of EUR 45 billion
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

5. Investment return trend 1–6/2017
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

6. Since 2009, the cumulative return on Varma’s investments is 78.2%, i.e. €20.1 billion
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
European sovereign
debt crisis
ECB begins quantitative
easing
Commodity prices
plummet
Post-financial-crisis recovery has been reflected in investments for some time

7. Composition of the investment result
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

8. Investments classified according to risk
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
1-6/2017 1-6/2016 1-12/2016 24 m
Return Return Return
MWR MWR MWR Vola-
€ mill. % € mill. % € mill. % € mill. % % % % tility
17,927 40 9,454 21 14,614 35 18,066 42 2.9 2.2 4.2
Loan receivables 1,446 3 1,446 3 1,345 3 1,432 3 2.1 1.9 4.2
Bonds 12,117 27 12,872 29 11,238 27 12,780 30 3.7 3.0 5.3 3.3
Public bonds 4,227 9 5,419 12 4,649 11 5,374 13 2.9 3.2 1.8
Other bonds 7,891 18 7,454 17 6,589 16 7,406 17 4.1 2.9 7.8
Other money-market instruments and deposits 4,363 10 -4,864 -11 2,031 5 3,854 9 -1.1 -0.4 -0.4
17,190 38 17,506 39 15,266 37 18,527 43 7.0 -3.1 6.4
Listed equities 13,316 30 13,633 30 11,848 29 14,793 35 7.9 -5.5 4.5 9.7
Private equity 2,815 6 2,815 6 2,592 6 2,794 7 3.6 4.0 11.2
Unlisted equities 1,058 2 1,058 2 826 2 940 2 2.9 13.5 23.7
3,654 8 3,654 8 3,855 9 3,643 9 2.5 2.6 -0.9
Direct real estates 2,839 6 2,839 6 3,154 8 2,897 7 1.9 2.6 -2.6
Real estate funds 816 2 816 2 701 2 746 2 4.5 2.9 6.8
6,218 14 7,104 16 6,808 17 7,320 17 3.8 -0.8 5.3
Hedge funds 6,259 14 6,259 14 6,505 16 7,184 17 3.6 -0.6 5.6 3.0
Commodities -19 0 70 0 315 1 137 0
Other investments -22 0 775 2 -13 0 -2 0
44,989 100 37,718 84 40,544 98 47,555 111 4.7 -0.3 4.7 5.0
Impact of derivatives 7,270 16 698 2 -4,703 -11
44,989 100 44,989 100 41,242 100 42,852 100
The modified duration for all the bonds is 4.1.
The open currency position is 21.7% of the market value of the investments.
1
Includes accrued interest
Risk positionRisk positionMarket Value Risk position
Market value
Real estate investments
Other investments
30-June-2017 30-June-2016
31-December-
2016
Total investments
Investment allocation at fair value
Market valueMarket value
Fixed-income investments
1
Equity investments

9. Investments in Finland 28%, €12.7 bn
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

10. Investment returns for Varma and the markets
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
% Varma
Finnish
equities
European
equities US equities
Euro
government
bonds
Euro
corporate
bonds
06/2017 4.7 11.4 7.0 9.3 -1.1 0.6
2016 4.7 13.3 1.7 12.0 3.3 4.7
2015 4.2 15.9 9.6 1.4 1.6 -0.7
Average nominal return
5 years 6.8 19.7 11.7 14.6 5.1 4.5
10 years 4.2 5.3 2.6 7.2 5.1 4.6
Since 1999 *
5.6 8.9 4.4 5.7 4.6 4.4
Average real return
5 years 6.1 18.8 10.9 13.9 4.4 3.8
10 years 2.7 3.7 1.1 5.6 3.5 3.1
Since 1999 *
4.0 7.2 2.7 4.1 3.0 2.8
*
Varma, as it is today, was founded in mid-1998, so comparison data earlier than 1999 is not available.
Finnish equities = OMX Helsinki Cap Index Euro government bonds = IBOXX Eurozone EUR (Total Return)
European equities = Stoxx 600 Total Return Index EUR Euro corporate bonds = IBOXX Corporate Overall Performance Index EUR (Total Return)
US equities= S&P500 Total Return Index

11. Solvency very strong
• Solvency capital was EUR
11.2 billion at the end of June
(10.2 bn on 1 Jan), and 133.3
per cent in relation to the
technical provisions (130.9%
on 1 Jan).
• Solvency capital was on a
sustainable level, i.e. 1.7 (2.0)
times the solvency limit.
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
The figures are in line with the legislation in effect at the time.

12. Key figures
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
6/2017 6/2016 2016
Premiums written, € million 2,444 2,324 4,675
Pensions paid, € million ¹) 2,752 2,680 5,345
TyEL-insured 500,030 489,970 493,890
YEL insurance policies 35,470 36,450 36,000
Pensioners 342,480 337,260 340,100
Investments, € million 44,989 41,242 42,852
Return on investment, € million 2,012 -143 1,953
Return on investment, % 4.7 -0.3 4.7
Total result, € million 1,051 -733 457
Loading profit, € million 16 17 39
Operating expenses as % of loading component 75 75 72
Technical provisions, € million 35,601 33,392 33,501
Solvency capital, € million 11,234 9,136 10,199
Solvency ratio % 2)
133.3 128.3 130.9
Solvency capital/solvency limit 1.7 2.0 1.9
Average number of personnel, Parent Company 526 545 540
1)
2)
Before the reduction of received clearing of pay-as-you-go (PAYG) pensions
Pension assets in relation to the technical provisions under §11 of the Ministry of Social Affairs and Health’s decree
governing pension institutions (614/2008). All years are presented in the new format.

13. 536,000342,000
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
Insured employees and
entrepreneurs
Pensioners
Latest developments for customers
€2.8 bn
Pensions paid

14. Latest developments for customers
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017
• Development of digital services continues. A
software robot was taken into use in pension
services, freeing up personnel to focus on
more demanding expert and customer work.
• Varma made 13,300 new pension decisions –
up 17%.
• Cost-effectiveness at a good level. Varma
used 75%, or €50 million, of the assets
reserved to cover operating expenses for
that purpose.
• The result of the TyEL transfer round that
ended in June was EUR 2.3 million.
• We published new workability management
contracts between 1 April and 30 June 2017.

15. Responsibility
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

16. Varma’s CSR focus areas
Responsibility for Varma employees Cost-effective use of funds
Open and pro-active
communication
Ethical and transparent
business
Responsibility
in investment operations
Mitigating climate
change
Securing
solvency
High-quality implementation
of pension provision
Promoting workability
and longer careers
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

17. CSR actions in the first half of 2017
• Varma will 7 build solar power
systems at several of its properties
around Finland, including its head
office
• Charging of electric and hybrid cars
possible at 250 spaces in the
company’s Salmisaari parking facility
5,000 new solar panels, 250
charging stations for green cars
• Varma in top 6 in WWF survey on how
well equity portfolios are aligned with
the Paris Climate Agreement
• Varma has excluded investments in
coal mines and in energy companies
who rely on coal for more than 1/3 of
their electricity production
European leader in sustainable
equities
Responsibility reflected in share
ownership policy
• Our share ownership policy
transparently outlines our principles
and expectations as a shareholder
• Responsibility included as a new part
of the policy: we require companies,
e.g., to comply with international
norms and to report on the impacts of
climate change on their business
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

18. Current economic issues
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017

19. Current economic issues
• The global economy appears to be
recovering on a large scale.
• Finland has finally made it on board the
global economic recovery. Growth is strong
and steady and is boosted by exports, private
consumption and investments.
• We still need to see stronger growth in
employment. The strengthened economic
growth has not yet significantly improved the
labour market situation.
11.8.2017 | Varma’s Interim Report 1 January–30 June 2017