New record in the value of Varma’s investments, 1.7% return in H1.

1. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Interim Report January-June 2018

2. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
New record in the value of Varma’s investments, 1.7% return in H1
Return on
investments
Solvency capital, € Market value
of investments, €
11.4 bn 46.4 bn 1.7%

3. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Value of Varma’s investments reached a new record of EUR 46.4 billion

4. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Return on investments recovered at a brisk rate in Q2
Investments yielded good
returns in the second quarter.
Market volatility slightly lowered
the return on Varma’s
investments in the early part of
the year.
The average nominal return on investments over ten years is approx. 5.1 %, calculated in accordance with the recommendations issued by TELA.
In 1-6/2017 return on investment was 4.7%.

5. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Return on investments at fair values per quarter

6. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Return on Varma’s investments 1 Jan–30 Jun 2018

7. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Following the financial crisis, Varma’s cumulative return on investment 86.7%, i.e. € 22.2 bn

8. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Investments classified according to risk
1-6/2018 1-6/2017 1-12/2017 24 m
Return Return Return
MWR MWR MWR Vola-
€ mill. % € mill. % € mill. % € mill. % % % % tility
14,348 31 10,563 23 13,481 30 12,579 28 -1.5 2.9 3.7
Loan receivables 1,593 3 1,593 3 1,453 3 1,453 3 1.6 2.1 2.2
Bonds 10,876 23 9,037 19 10,028 22 10,510 23 -2.2 3.7 5.4 2.3
Public bonds 4,228 9 2,483 5 4,153 9 4,285 9 -4.0 2.9 4.0
Other bonds 6,648 14 6,554 14 5,874 13 6,224 14 -1.0 4.1 6.2
Other money-market instruments and deposits 1,879 4 -67 0 2,001 4 617 1 0.2 -1.1 -1.9
19,742 43 19,848 43 20,427 45 20,687 46 3.3 7.0 11.4
Listed equities 15,796 34 15,902 34 16,492 36 16,753 37 2.6 7.9 11.6 6.2
Private equity 3,409 7 3,409 7 2,767 6 2,767 6 7.8 3.6 7.9
Unlisted equities 538 1 538 1 1,167 3 1,167 3 1.2 2.9 18.5
3,811 8 3,811 8 3,602 8 3,602 8 2.7 2.5 4.9
Direct real estates 2,804 6 2,804 6 2,797 6 2,797 6 1.9 1.9 2.9
Real estate funds 1,007 2 1,007 2 805 2 805 2 5.4 4.5 12.0
8,458 18 9,917 21 7,900 17 8,907 20 2.4 3.8 9.3
Hedge funds 8,488 18 8,488 18 7,886 17 7,886 17 3.4 3.6 8.5 1.4
Commodities 9 0 168 0 11 0 179 0
Other investments -40 0 1,262 3 3 0 842 2
46,359 100 44,140 95 45,409 100 45,775 101 1.7 4.7 7.8 2.4
Impact of derivatives 2,219 5 -365 -1
46,359 100 46,359 100 45,409 100 45,409 100
The modified duration for all the bonds is 2.2.
The open currency position is 24.5% of the market value of the investments.
1
Includes accrued interest
Investment allocation at fair value
Other investments
Total investments
Equity investments
Real estate investments
Fixed-income investments 1
Market Value Risk position Market Value Risk position
31 December 2017
Market value Market value
30 June 2018

9. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Geographical distribution of investments

10. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Geographical distribution of listed equities

11. Investments in Finland 26%, €11.3 bn
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Investments in Finland Distribution of Finnish investments
Finland; 26%
Others; 74%
Bonds and loan
receivables; 13%
Money-market
instruments; 10%
Listed equities; 48%
Private equity; 3%
Real estate; 26%

12. Investment returns for Varma and the markets
% Varma Finnish equities
European
equities US equities
Euro
government
bonds
Euro
corporate
bonds
6/2018 1.7 9.6 -0.3 2.6 0.5 -0.7
2017 7.8 11.5 10.6 21.8 0.1 2.4
2016 4.7 13.3 1.7 12.0 3.3 4.7
Average nominal return
5 years 6.2 17.2 8.9 13.4 4.0 3.2
10 years 5.1 9.0 5.8 10.2 5.0 4.8
Since 1999 *
5.6 9.0 4.3 6.2 4.5 4.2
Average real return
5 years 5.6 16.5 8.2 12.7 3.4 2.6
10 years 3.9 7.7 4.6 8.9 3.8 3.6
Since 1999 *
3.9 7.3 2.7 4.5 2.8 2.6
*
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
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018

13. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Solvency at a strong level

14. Good loading profit
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
We handle the
implementation of pension
provision efficiently.
Loading profit, generated
through efficient operations,
and strong solvency have an
impact on the bonuses paid
to our clients.

15. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Total result by quarter

16. Key figures
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
6/2018 6/2017 2017
Premiums written, € million 2,454 2,444 4,867
Pensions paid, € million ¹ 2,819 2,752 5,544
TyEL-insured 513,830 500,030 501,320
YEL insurance policies 36,300 35,470 35,900
Pensioners 342,000 342,480 342,600
Investments, € million 46,359 44,989 45,409
Return on investment, € million 779 2,012 3,343
Return on investment, % 1.7 4.7 7.8
Total result, € million -186 1,051 1,524
Loading profit, € million 24 16 45
Operating expenses as % of loading component 66 75 67
Technical provisions, € million 37,087 35,601 36,696
Solvency capital, € million 11,348 11,234 11,534
Solvency ratio % 2
132.4 133.3 133.5
Solvency capital/solvency limit 1.8 1.7 1.7
Average number of personnel, Parent Company 533 526 524
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).

17. Latest developments for customers
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018

18. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Insured employees and
entrepreneurs
Pensioners Pensions paid
€2.8billion550,000 340,000

19. Latest developments for customers
Ready for the Incomes Register
In client acquisitiont, the first half year was
successful, and EUR 20 million in premiums
written were transferred to Varma from other
earnings-related pension companies. We have
developed tools for workability management,
which forms the core of our customer work.
More customers
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Best customer service in Finland
For the second year running, Varma’s customer
service won in the Asiakkaan ääni survey’s
series for large customer service centres.
Varma’s results are based on the feedback of
roughly 19,000 customers.
The Incomes Register is an electronic database
to be introduced nationwide in 2019 that
includes information about wages, pensions
and benefits at the individual level. Employers
report all earnings paid to employees to the
Incomes Register. Varma has trained its
customers and prepared for system changes.

20. Current issues in pension services
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
The new types of pension are
popular among men; men make up
70% of partial old-age pension
recipients and 4/5 of years-of-
service pension recipients.
• 18% fewer old-age pension applications were made than in the
corresponding period last year due to the higher old-age pension age.
• The number of applications for partial old-age pension has declined:
the pension was granted to 1,024 people (1,632 in corresponding
period 2017) between January and June.
• Years-of-service pension has so far been granted to 5 applicants.
• Growth in disability pension applications grew by more than 9%
compared to last year, some of which growth can be attributed to the
activation model.
• 18% more rehabilitation applications were made than in the
corresponding period last year.
• Software robotics is used in various pension processing tasks.
• New online services for rehabilitants: peer support service and
rehabilitation partners’ activation tool

21. Popularity of partial early old-age pension levelled out
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Granted partial early old-age pensions

22. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Responsibility

23. 17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
Responsible Varma
OPEN AND PRO-ACTIVE
COMMUNICATION
We openly and
pro-actively disclose information about
our operations.
Our use of pension assets is transparent.
COST-EFFECTIVE
USE OF FUNDS
We take care of our customers’
earnings-related pension cover
efficiently.
ETHICAL AND TRANSPARENT
BUSINESS
We develop the responsibility of our
business operations, e.g. in
customer work and the supply
chain.
MITIGATING CLIMATE CHANGE
We are reducing the CO2 footprint of our
investments and
operations.
RESPONSIBILITY FOR
VARMA EMPLOYEES
We take care of Varma employees’
well-being at work and develop an
inspiring work culture based on
equality.
RESPONSIBILITY
IN INVESTMENT OPERATIONS
Responsibility is an integral part
of our investment decisions and
ownership policy.
Varma secures pensions
Promoting workability
and longer careers
Our workability management and
rehabilitation services prevent disability
and lower disability costs.
Securing
solvency
We make profitable and secure
investments. Strong solvency helps to
secure pensions.
High-quality implementation
of pension provision
Dealing with Varma is smooth,
and customers receive decisions
without delays.

24. Current CSR topics
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
• EcoVadis, an international corporate social responsibility
assessment specialist, has awarded Varma the CSR Rating Gold
recognition. In its independent assessment carried out in the
summer, Varma was among the top 5 per cent of the 45,000
companies analysed.
• More renewable energy for properties: the Salmisaari Sports
Centre and the Rajalla shopping centre in Tornio received solar
power plants
• Among the key measures of Varma’s CSR programme this year
are updating the CSR programme, promoting responsible
customer work, and improving responsible investment in
different asset classes.

25. Current economic issues
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018

26. Risks to Finnish economy from abroad
17 August 2018 | Varma’s Interim Report 1 January–30 June 2018
• The Finnish economy has recovered from its long economic
slump. However, it is important to prepare for a gradual
slowing down of the strong growth in global economy.
• The greatest short-term risks impacting Finland are related to
the global economy. The biggest risks are the threat of a
trade war and gradual tightening of central banks’ monetary
policies.
• The threat of trade war has so far only impacted individual
countries and companies; the real risk is the spreading of the
impacts.
• The stimulating monetary policy of the central banks is
normalising – the difference between the US and Europe is
clear, however.