Porkkalankatu 1, FI-00018 Ilmarinen • Tel. +358 10 284 11 • www.ilmarinen.fi

REPORT ON OPERATIONS AND FINANCIAL STATEMENTS 2013

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1. ECONOMIC DEVELOPMENT

The weak performance of Finland’s economy continued in 2013. The positive development follow-

ing the financial crisis remained brief when the Finnish economy once again plunged into a new

and persistent downturn in 2012. It resulted in a decline of approximately one per cent in overall

production in 2012 and, based on preliminary data, the same trend continued throughout 2013

with a further weakening of about one per cent in overall production.

A factor affecting the poor performance of the national economy and the shrinking of production

levels was the eurozone debt crisis. The ECB’s promise of support measures was successful in calm-

ing the financial markets in 2012 and fears of the euro system disintegrating were allayed. Instead,

the indebtness of eurozone nations led to tightening financial policies in almost every eurozone

country, which resulted in a slump in domestic demand and the start of a new downturn in the EU

region in 2012. The downturn continued in 2013. The eurozone’s economic growth did not receive

the expected boost from exports as the external value of the euro in relation to the dollar and yen

remained very strong.

The prolonged downturn in the eurozone made its mark on the Finnish economy in 2013 as a con-

tinuation of the weak export development that had started in 2012. Finland’s national economy also

suffered from the eurozone’s weak demand level, decreased cost-competitiveness and structural

problems in key industries. Export levels decreased by some two per cent compared with the previ-

ous year and industrial production declined some three per cent; the most significant decline in

production volumes took place in the electronics industry. The deficit in the balance of trade, how-

ever, decreased somewhat on the previous year due to a larger decline in imports compared with

exports.

The weakening of overall production by approximately one per cent in 2013 resulted primarily from

a reduction in investments; private and public final consumption expenditure remained roughly on

the previous year’s level. Bearing in mind that the development of overall production has been sub-

dued for several years, the relatively stable development of employment levels comes as a surprise.

Compared with the decline in production, employment levels declined by very little in Finland. The

number of employed people declined in 2013 by just over half a per cent compared with the previ-

ous year and unemployment levels increased by half a percentage unit from the previous year to 8.2

per cent. Finland’s rate of unemployment remained, however, clearly below the European average.

The employment rate decreased, dropping to about 67 per cent. The number of employed people in

2013 was just over 2.4 million, which is 100,000 less than before the start of the financial crisis in

2008.

Declining employment and the slowing down of the rise in the earnings level led to a slackening in

the growth of the national economy’s payroll in 2013 to just over one per cent. The growth rate of

consumer prices also slowed down to more than one per cent and the real earnings of employees

remained unchanged.

As a result of the economic downturn, the state of public finances weakened clearly over the course

of 2013. The total deficit for the state and municipalities rose to approximately EUR 10 billion, i.e.

some 5 per cent of the value of the GDP. The deficit for the entire public sector remained below this

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at 2 per cent of the GDP value because the earnings-related pension sector had a financing surplus

as in previous years. For this reason the deficit in Finland’s public finances did not exceed the 3 per

cent limit set by the Stability and Growth Pact. The EMU debt of the public sector increased to

some 55 per cent of the GDP at the end of the year and approached the critical 60 per cent limit.

The government headed by Prime Minister Jyrki Katainen agreed in August 2013 on structural

policies that are aimed at a gradual closing of the sustainability gap in the public sector. The great-

est focus was on measures that are aimed at increasing the length of careers and at raising the aver-

age retirement age. The labour markets agreed on a long-term wage solution lasting up to three

years, which will limit the pay increases based on collective agreements to less than one per cent in

2014–2015. The wage solution is expected to gradually improve the price competitiveness of Fin-

land’s export industry in relation to competitor countries. At the same time increments in earnings-

related contributions were agreed on for 2014–2016.

Share prices rose dramatically during 2013 in nearly every corner of the world. Share prices also

rose in the European countries despite the continuing downturn. The key European share indices

increased by approximately 20 per cent and the prices of Finnish equities by some 30 per cent.

2013 turned out to be a good investment year even though the return on government bonds re-

mained low due to an increase in the interest rate level.

2. DEVELOPMENTS IN THE EARNINGS-RELATED PENSION SYSTEM

For several years now, increasing the retirement age has been under discussion in Finland, mean-

ing an increase in both the average retirement age and the lower limit for retiring on old-age pen-

sion. Labour market organisations and Prime Minister Jyrki Katainen’s government have set a tar-

get for the development of the average pension age, according to which the expected retirement age

for a 25-year-old should rise to 62.4 years by 2025. The development in the retirement age expec-

tancy has, to date, been positive and even faster than expected. In 2012, the expectancy rose to 60.9

years and remained on the same level in 2013. The expectancy has risen from the year 2000 by

more than two years. This fast growth rate is not expected to continue in the coming years, howev-

er, which is why it seems unlikely that the retirement age target set for 2025 will be reached. This is

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why it is considered necessary to change old-age pension age limits and reform the earnings-related

pension system. The objective of the reform is lengthening careers and increasing the available

workforce.

In their agreement on extending careers, signed in 2012, the labour market organisations agreed on

a pension reform that is set to come into force at the beginning of 2017. The target is also important

for Finland’s government, which made the career-extending pension reform a central part of its

structural policy goals in August 2013. The government hopes that the reform will improve the

balance of public finances and thus play a part in closing the large sustainability gap of the public

sector.

Labour market organisations agreed on dispensing with the early old-age pension and increasing

the age limit for part-time pensions in the 2012 agreement on extending careers. These changes will

come into effect once the transition periods end in 2014. The organisations also agreed that the

average earnings-related pension contributions would be raised by 0.4 percentage units per year in

2015 and 2016. The earnings-related pension contributions for 2014–2016 were re-confirmed in

connection with the comprehensive wage solution agreed on by the labour market organisations in

autumn 2013. The increment will be split evenly between the employer and employee.

Negotiations between the trade union federations concerning the 2017 pension reform began at the

end of 2013. The goal is to reach a negotiated solution by the autumn of 2014, whereupon legisla-

tive preparatory work could begin.

Assessing the sustainability of the earnings-related pension system

The international assessment of the Finnish earnings-related pension system commissioned by the

Finnish Centre for Pensions was published in Helsinki on 7 January 2013. The assessment was

carried out by the esteemed pension economists Professor Nicholas Barr of the London School of

Economics and Professor Keith Ambachtsheer of the University of Toronto. Barr studied the pen-

sion system and its sustainability while Ambachtsheer focussed on the economic efficiency of the

present decentralised implementation system.

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The overall views of both professors concerning the Finnish pension system were very positive. A

coherent and comprehensive system improves the functionality of the labour markets when the

employee’s pension security is not tied to the employer. The assessment, however, points out that

Finland would be wise to prepare for the gradual increase in the age limits of the pension system

and to think about ways to improve the cost efficiency of its pension institutions. Professor Am-

bachtsheer also suggested strongly increasing the share weight in investment operations.

The Finnish Centre for Pensions simultaneously carried out an international comparison of pension

cover implementation costs in certain European countries. According to the comparison, the Finn-

ish system is relatively cost-efficient due to its unusually broad coverage in comparison with the

systems of other developed welfare states.

The Finnish Centre for Pensions published its latest long-term calculation on the development of

the earnings-related pension system. The assumed increase in the life expectancy of Finns is slight-

ly more conservative than before in this newest calculation and, at the same time, the assumption

concerning the development of employment rates has become more positive. Due to these changes,

the future pension expenditure has slightly declined from previous estimates and, correspondingly,

the payroll has risen somewhat. According to the new estimate, a sustainable level of earnings-

related pension contributions would be some 25 per cent of wages and salaries. If the contribution

were raised to this level in the near future, no new increments would be necessary until the 2050s.

Labour market organisations have agreed on increasing the average contribution level to 24.4 per

cent of wages and salaries in 2016. In light of the new estimate, this level is fairly close to the long-

term sustainable level. In other words, the assessment concerning the pressure to increase contri-

butions in the earnings-related pension system has taken a positive direction.

Background studies for the pension reform

A group of high-level experts led by Jukka Pekkarinen, Director General of the Economics Depart-

ment at the Ministry of Finance, was appointed in 2012 to investigate the sustainability and change

requirements of the earnings-related pension system in view of future pension negotiations. The

working group completed its work in November 2013. It discussed whether the present incentives

of the earnings-related pension system – accelerated accrual and the life expectancy coefficient –

will be sufficient for achieving the retirement age target set by the government and labour market

organisations.

A key finding of the report is that the decisions made in the 2005 pension reform do not seem to be

sufficient for achieving the retirement age increase goal set for 2025. Pekkarinen’s group bases its

assessment on research results, according to which the increase in retirement age that has

taken place so far provides an overly optimistic picture of the development. According to the

report, the reason for the perceived positive development is the gradual closing of the early

old-age pension channels and not the moving forward of the actual retirement age.

In addition the report delves into the impacts of alternative methods for adapting the pension sys-

tem on the sufficiency, allocation and funding of pensions, as well as on employment levels and the

public sector sustainability gap. The model presented in the report and developed by researchers at

the Research Institute of the Finnish Economy (ETLA) recommends that the retirement age be tied

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to life expectancy. The group of experts were not meant to present any recommendations for ac-

tions. The options presented in the report can be seen to favour the gradual increasing of the lower

limit for the old-age retirement age.

Solvency reform and other earnings-related pension sector regulation

At the beginning of 2013 an amendment to legislation concerning the solvency regulation of earn-

ings-related pension institutions came into force which combined the solvency capital intended to

cover investment risks and the equalisation provision created for insurance risks, into a new type of

solvency capital. The amendment increases the efficiency of the use of capital in pension institu-

tions. The amendment did not have a great impact on the solvency of pension companies. The

working group set up by the Ministry of Social Affairs and Health will continue its work on the

overall reform of the solvency framework. The aim of the overall reform is to take investment risks

into account better in the solvency requirements and the development of risk management in pen-

sion institutions.

The Ministry of Social Affairs and Health has long been preparing legislative projects that are

geared towards increasing competition in the earnings-related pension sector. The aim of the re-

form is to increase the competitiveness of the earnings-related pension sector by making the provi-

sions concerning the determination of insurance contributions more liberal in the sense that each

pension insurance company could independently prepare the calculation bases for both the expense

loading contained in the insurance contribution and for clients bonuses. Another aim is to more

precisely regulate the well-being at work services provided to customers of earnings-related pen-

sion companies. These reform projects did not yet become passed as bills during 2013. The Ministry

also began preparations for reforming the administrative regulations concerning earnings-related

pension institutions.

3. ILMARINEN’S RESULT AND SOLVENCY

Despite the weak performance of the real economy, 2013 was a good investment year for Ilmarinen.

Stock prices increased dramatically everywhere during the year. Due to a strong stock market year,

Ilmarinen’s annual return on investments increased to 9.8 per cent, as a result of which the compa-

ny’s solvency was clearly strengthened. The real return on investments equalled 8.1 per cent, i.e. 4.1

percentage units higher than the long-term average.

Ilmarinen succeeded well in the competition for pension customers. An increase in the customer

base and premiums written during the year spoke of customers’ confidence in the company. The

loading profit, which describes the efficiency of operations, improved clearly on the previous year

and the ratio of operating expenses to expense loading components fell to 75 (80) per cent.

The net return on Ilmarinen’s investments, calculated at current value, was 9.8 per cent in 2013

(7.5 per cent in 2012). Solvency capital, i.e. the difference between the company’s assets and liabili-

ties measured at current value, increased to EUR 7,122.6 million. At the end of 2013, solvency capi-

tal amounted to 28.0 (23.9) per cent of technical provisions used in the calculation of solvency. In

2012, the solvency capital was EUR 5,752.4 million.

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The solvency capital is intended to cover the risks inherent in insurance and investment operations.

The monitoring limits for the solvency capital of pension insurance companies are determined by

the level of risk inherent in the company’s investments, which is estimated by dividing the invest-

ments into classes according to risk and by calculating the solvency limit based on the classifica-

tion. The classification is made on the basis of the actual risk of the investment. The solvency limit

also takes into account the insurance risk. Due to the legislative amendment, Ilmarinen’s solvency

limit increased by approximately 0.6 percentage units. Ilmarinen’s solvency capital at the end of the

financial period was 1.9 times the solvency limit. A year previously the corresponding figure, i.e. the

ratio of the then solvency capital to the solvency limit was 2.2 (without the temporary item accord-

ing to the temporary legislation, the solvency position would have been 1.7).

Investment income at current value was EUR 1,468.6 million (EUR 911.2 million), when taking into

account the interest credited on technical provisions, EUR 979.9 (813.9) million, and the EUR

466.7 million increase (EUR 323.2 million) in the equity linked buffer. The equity linked buffer ties,

for ten per cent, the technical provisions to the average return on listed equities of pension funds

and thus transfers the equity risk to be covered by the entire earnings-related pension system.

The underwriting result under the company’s own responsibility was EUR -14.8 (-7.0) million and

its loading profit amounted to EUR 35.1 (27.0) million. The underwriting result is the difference

between contribution components intended to cover insurance risks and claims incurred. The un-

derwriting result will be transferred to the equalisation provision according to the criteria pre-

scribed by the Ministry of Social Affairs and Health. The loading profit shows the amount by which

the expense loading components and other similar income exceed the operating expenses to be

covered by them. The loading profit will be transferred to the solvency capital to the extent where it

is not used for client bonuses.

Ilmarinen’s total financial result in 2013 at current value thus stood at EUR 1,489.0 (931.2) million.

The amount allocated for discounts on TyEL insurance contributions, i.e. client bonuses, is deter-

mined based on the company’s solvency capital and loading profit. The solvency capital does not, in

this case, take into account the portion set aside for insurance risks. EUR 86.0 (62.0) million will

be allocated for client bonuses from the result for 2013. The transfer is 0.51 (0.37) per cent of the

insured payroll and EUR 163 (117) per employee insured with Ilmarinen.

The above information concerning the result and solvency are based on the key figures calculated at

current value presented in the notes to the financial statements. They show the company’s financial

result and position more clearly than the profit and loss account and balance sheet. The valuation

of investments in official accounting is based on acquisition cost and the amount of profit in the

profit and loss account is determined by the calculation base approved in advance by the Ministry

of Social Affairs and Health. The difference between the book profit and the result in the profit and

loss account is entered as technical provisions, excluding the change in depreciation difference. In

2013, the result in the profit and loss account was EUR 3.8 (3.0) million.

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The following calculation shows the connection of the result in the profit and loss account to the total financial result at current value:

EUR million 2013 2012

Result in the profit and loss account 3.8 3.0

Change in technical provisions

Change in equalisation provision -14.8 -10.9

Change in provision for future bonuses 285.3 59.8

Transfer to client bonuses 86.0 62.0

Change in depreciation difference 0.3 0.2 Change in the difference between current value and book value, i.e. valuation gain/loss 1,128.4 817.1

Profit at current value 1,489.0 931.2

4. INSURANCE PORTFOLIO AND PREMIUMS WRITTEN

Ilmarinen was successful in customer acquisition together with its partner OP-Pohjola Group. The

transfer of insurance policies between Ilmarinen and other pension insurance companies was net

positive for Ilmarinen as in previous years.

The majority of employers that have insured their employees with Ilmarinen have signed an insur-

ance contract with the company. Employers only employing temporary employees can, however,

pay their employer contributions to a pension insurance company without signing an actual insur-

ance contract.

Ilmarinen’s insurance portfolio grew during the operating year. The number of TyEL insurance

policies at the end of 2013 stood at 38,237, up by 2.1 per cent. In addition to employers with insur-

ance contracts with Ilmarinen, 3,999 (3,666) temporary employers paid TyEL contributions to the

company.

At the end of the year, 529,000 (529,000) insured were covered by Ilmarinen’s TyEL insurance

policies. In other words the number of insured remained steady despite the decrease in the total

number of wage earners in the economy. The average size of TyEL insurance policies in 2013 was 14

(14).

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The TyEL payroll insured at Ilmarinen was EUR 16,843.0 (16,694.2) million, up 0.9 per cent from

the payroll insured in the previous year. The market share calculated from the insured TyEL payroll

amount is estimated to have remained almost unchanged in 2013.

At the end of the year, Ilmarinen had 60,612 (58,776) YEL insurance policies, which is 3.1 per cent

more than a year earlier. Due to growth over a number of years, the 60,000 insurance policy mark

was exceeded in 2013. The average annual reported income for YEL insurance policies was EUR

23,722 (23,302), an increase of about 1.8 per cent on the previous year.

In 2013, Ilmarinen's premiums written stood at EUR 4,086.9 (4,019.3) million, up 1.7 per cent

from 2012. Premiums written grew primarily due to the increase in the national economy’s payroll

amount.

EUR 3,784.9 (3,732.8) million in TyEL insurance contributions were received, i.e. TyEL premiums

written increased 1.4 per cent compared to the previous year. In 2013, discounts in TyEL contribu-

tions, i.e. client bonuses, totalled EUR 62.4 million, compared with EUR 54.8 million in the previ-

ous year.

YEL premiums written stood at EUR 302.0 (286.5) million, an increase of 5.4 per cent.

Credit losses on unpaid TyEL insurance contributions amounted to EUR 16.1 (12.7) million. Credit

losses grew as a result of the economic situation. They made up 0.4 per cent of premiums written,

which can still be considered low. In order to ensure the timeliness of TyEL insurance contribution

payments, Ilmarinen has developed its payment methods and the supervision of insurance contri-

butions. These measures will be used to decrease the amount of hidden insurance contribution

debt, which helps employers to manage their payment problems and decreases Ilmarinen’s credit

loss risk.

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Credit losses on unpaid YEL insurance contributions amounted to EUR 2.6 (2.5) million. Ilmarinen

will not, however, incur losses on the YEL credit losses due to the fact that the State’s share in the

financing system for YEL pensions compensates for insurance contributions not received from poli-

cyholders.

A total of 4,041 new TyEL insurance policies were sold. This will increase the annual TyEL premi-

ums written by EUR 70.7 million during 2014. Ilmarinen’s performance in transfers of TyEL insur-

ance from other pension insurance companies was excellent: Its TyEL insurance portfolio increased

by 962 policies and premiums written by EUR 57.1 million.

A total of 6,731 new YEL insurance policies were sold. This will increase the YEL premiums written

by EUR 25.7 million. Ilmarinen’s performance in the transfer of YEL insurance policies was also

excellent, the transfer resulting in 1,195 new policies and a gain of EUR 6.7 million.

5. CONTRIBUTION LEVEL

The average TyEL contribution for 2013 was 22.8 per cent of an employee’s salary or wage, i.e. the

same as in the previous year. This results from the 0.4 percentage unit contribution discount for

2013 decided on in autumn 2012. The share of contribution for employees aged under 53 was 5.15

per cent and 6.50 per cent for those aged 53 and over. The average contribution for employers was

17.35 per cent of payroll. The employer contribution level varies depending on the insurance policy

as well as the client bonuses paid by the pension insurance company. Ilmarinen’s client bonuses

were on average 2.1 (1.9) per cent of the employer contribution.

The average confirmed TyEL contribution for 2014 is 23.6 per cent of an employee’s salary or wage,

i.e. 0.8 percentage units higher than in 2013. The basic percentage will increase by 0.4 percentage

units according to the Social Agreement concluded by the social parties in early 2009. In addition,

the insurance contribution will increase due to the ending of the one-time 0.4 percentage unit dis-

count given in 2013. The average employer contribution will also increase by 0.4 percentage units.

In 2014, the contribution for employees aged under 53 was 5.55 per cent and 7.05 per cent for those

aged 53 and over.

The YEL contribution for 2013 was 22.5 per cent of confirmed earned income. The YEL contribu-

tion for self-employed persons who had turned 53 before the start of the financial year was, howev-

er, 23.85 per cent. In 2014, the contribution for employees aged under 53 is 23.3 per cent and 24.8

per cent for those aged 53 and over.

6. PENSIONS AND ACTIVITIES BOOSTING WORKING CAPACI-TY

In 2013, new pension decisions made at Ilmarinen totalled 23,365, i.e. 4.4 per cent more than in

the previous year. In 2013, Ilmarinen paid a total of EUR 4,146.1 (3,848.4) million in pensions. Pension expenditure grew 7.7 per cent from the previous year, and continued to grow quickly, just

as in previous years.

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Pension expenditure according to type in 2013

EUR million TyEL YEL Total %

Old-age pensions 2,841.6 218.9 3,060.5 73.8 Early old-age pensions 255.8 22.5 278.3 6.7 Part-time pensions 25.9 5.5 31.4 0.8 Disability pensions 434.1 28.5 462.6 11.2 Unemployment pensions 1.2 0.0 1.2 0.0 Survivors’ pensions 283.5 28.6 312.1 7.5 Total 3,842.1 304.0 4,146.1 100.0

The majority of the EUR 4.1 billion in pension expenditure, i.e. some 80 per cent, consisted of old-

age pensions. Disability pensions made up approximately 11% of the pension expenditure and

survivors’ pensions just over 7 per cent.

Ilmarinen’s pension premiums written equalled just over EUR 4.09 billion. Pension expenditure

excluding pension management costs was approximately EUR 4.15 billion and thus some EUR 60

million more than premiums written.

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Number of pension recipients on 31 December 2013

Pensions in accordance with basic protection

Type of pension TyEL YEL Total %

Old-age pensions 189,428 25,078 214,506 68.3% Early old-age pensions 15,754 3,449 19,203 6.1% Part-time pensions 2,496 600 3,096 1.0% Disability pensions 30,516 3,251 33,767 10.8% Unemployment pensions 36 2 38 0.0% Survivors’ pensions 36,372 6,980 43,352 13.8% Total 274,602 39,360 313,962 100.0%

At year-end the number of pension recipients was 313,962, which is 2 per cent more than a year

earlier, when they numbered 307,934. At the end of the year, 274,602 (269,599) pension recipients

received TyEL pensions and 39,360 (38,335) received YEL pensions.

Pension decisions in 2013

2013 2012 Change %

New pension decisions Old-age pensions 10,088 9,415 7.1 Early old-age pensions 626 655 -4.4 Part-time pensions 880 606 45.2 Disability pensions 6,333 6,520 -2.9 Unemployment pensions 9 21 Survivors’ pensions 3,054 3,096 -1.4 Right to rehabilitation 2,375 2,067 14.9

Total new pension decisions 23,365 22,380 4.4 Total pension decisions 42,733 41,051 4.1

Retirement in Ilmarinen’s client base continued as expected. During 2013, Ilmarinen made a total

of 42,733 pension decisions, or 4.1 per cent more than during the previous year. The number of new

pension decisions increased by 4.4 per cent in 2013 and a total number of 23,365 were granted,

including decisions concerning the right to rehabilitation. The number of disability pensions de-

clined slightly from the previous year but the number of old-age pensions continued to increase

clearly (+7.1%) as did decisions concerning rehabilitation (+14.9%).

Ilmarinen measures the quality of the processing of pension applications by ensuring that no inter-

ruptions occur in the applicant’s income, as well as based on the permanence of decisions in appeal

instances. Of all new insurance decisions, 94 per cent were granted during the month in which re-

tirement began. Of the negative decisions sent to the Pension Appeal Court (Työeläkeasioiden

muutoksenhakulautakunta TELK), 14.0 per cent were amended against Ilmarinen’s position. The

share of amended decisions was slightly higher than the average share of amendment decisions

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made by the Pension Appeal Court. 18.2 per cent of the decisions sent to the Insurance Court were

amended against Ilmarinen’s position.

In 2013, Ilmarinen had faster processing times for pension applications in all pension types than in

the peer group. Especially the handling of disability pension applications became faster: the aver-

age processing time decreased to 58 days (72 days in 2012).

Ilmarinen offers its customers receiving negative disability pension decisions a guidance service on

issues such as securing a livelihood and continuing in working life. The service is provided by reha-

bilitation research institutes and work clinics throughout Finland that have concluded co-operation

agreements. Feedback received from customers, employers and service providers on the service has

been positive.

In 2013, the mailing of pension records was changed so that they will now be sent to people under

the age of 60 every three years. In 2013, the pension record was sent to people born between Janu-

ary and April as well as everyone over the age of 60. Ilmarinen was responsible for mailing pension

records to approximately 235,000 insured persons. During July–November, around 230,000 pen-

sion records were mailed and around 40,000 (39,763) insured persons retrieved their pension rec-

ords from the online service.

A total of some 12,000 (12,000) individual pension insurance policies were reviewed in response to

customers’ queries (preliminary pension calculation). Customers carried out 75,000 corresponding

preliminary calculations on the online service.

For Ilmarinen’s well-being at work services, 2013 was an extremely active year, just like the previ-

ous one. Ilmarinen organised 41 seminars on well-being at work for its client companies through-

out Finland, attracting around 1,800 participants. During the year, Ilmarinen also had 1,200 dis-

tinct coaching or other well-being-at-work projects underway in co-operation with clients. Co-

operation with clients is systematic and goal-oriented and the projects are always targeted at jointly

identified challenges related to well-being at work. As a general rule, co-operation is based on writ-

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ten agreements and the results produced by the services are monitored through indicators agreed

on together with clients and customer surveys, for example.

This monitoring shows that the services have improved well-being at work and reduced disability

risk in client companies.

Ilmarinen also supports the management of disability risks in its client companies through voca-

tional rehabilitation. This service includes training provided to supervisors and advisory services as

well as expert support for both supervisors and employees during the rehabilitation planning

phase. The popularity of vocational rehabilitation continued to rise; in 2013 the increase was over

10 per cent. More than 2,400 new applications for the right to rehabilitation were processed. Dur-

ing the actual rehabilitation period, the company pays benefits pursuant to earnings-related pen-

sion legislation, which support the individual’s income during the rehabilitation and compensate

for the costs resulting from the training. Close to 4,868 benefit decisions related to rehabilitation

were made in 2013, which was a 14 per cent increase on the previous year.

7. UNDERWRITING BUSINESS AND TECHNICAL PROVISIONS

At the end of 2013, Ilmarinen’s technical provisions totalled EUR 27,188.9 (25,585.9) million. The

provision for future bonuses, which serves as a buffer for investment losses, increased by net EUR

285.3 million and stood at EUR 762.9 (477.6) million at the end of the year. The equity linked buff-

er increased due to the rise in share prices by EUR 466.7 million and stood at EUR 634.0 (167.3)

million at the end of the year. Otherwise, the increase in technical provisions was 3.4 per cent.

The underwriting result under the company’s own responsibility was EUR -14.8 (-7.0) million. The

equalisation provision decreased by EUR 14.8 million to EUR 971.2 million.

Interest is credited on technical provisions on return on investments in compliance with the tech-

nical bases. The majority of the return requirement on technical provisions of pension insurance

companies is determined on the basis of the average solvency of pension institutions, and the re-

mainder, 10 per cent, is tied to the average return on the listed equities owned by the pension insti-

tutions. The share of the return requirement determined on the basis of the average solvency of

pension institutions is calculated by adding the pension liability supplementary coefficient, given in

the technical bases, to the three per cent discount rate. The interest credited on technical provisions

totalled 5.5 per cent in 2013, of which the return tied to the equity linked buffer equalled 1.8 per

cent. A 3.7 per cent return was credited on the remaining technical provisions.

The technical interest rate used to calculate insurance contributions was 4.0 per cent in the first

half of the year and 4.75 per cent in the second half.

Assets that cover technical provisions stood at EUR 32,643.3 (29,936.8) million at the end of the

reporting year.

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Table: Breakdown of technical provisions

EUR million 2013 2012

Provision for unearned premiums Future pensions 13,136.8 13,088.5 Provision for future bonuses 762.9 477.6 Provision for current bonuses 86.0 62.4 Equity linked buffer 634.0 167.3 Total 14,619.7 13,795.8

Provision for claims outstanding

New pensions awarded 11,598.0 10,804.0 Equalisation provision 971.2 986.0 Total 12,569.2 11,790.0

Total technical provisions 27,188.9 25,585.9

8. INVESTMENT OPERATIONS

A long-term approach is essential in investing pension assets. The objective of Ilmarinen’s invest-

ment operations is the highest possible return on investments in the long term. However, the aver-

age risk of the investments should not be too high in relation to the company’s risk bearing ability.

The average long-term expected return on Ilmarinen’s investment assets is six per cent, and the

expected standard deviation of the return is eight per cent.

In 2013, Ilmarinen’s key investment theses were developed further, thus strengthening the value

platform of the entire organisation’s investment operations. During the year, an investment strate-

gy extending to 2020 was also drawn up, which will steer investment operations in the long term.

Key changes brought about by the strategy include a decreasing proportion of fixed-income invest-

ments and a growing allocation share of real estate and infrastructure investments.

The eurozone government bond crisis simmered down and confidence in the financial markets rose

during the reporting year. At the same time, the large central banks continued their stimulating

monetary policies, which played a role in improving market liquidity. Subsequently, share prices

rose powerfully in Europe, the US and Japan. The Helsinki Stock Exchange also experienced this

strong increase in share prices. The upward direction of interest rate levels had somewhat of a

weakening effect on the return on bonds.

Ilmarinen’s investments in 2013 focussed successfully on the high-yield equity markets while limit-

ing the exposure to growing interest rates. In its entirety, 2013 was an excellent year for investors.

At the end of 2013, Ilmarinen’s total investments calculated at current value were EUR 32,270.2

(29,520.4) million. The return on investments at current value was 9.8 per cent. With an inflation

rate of 1.6 per cent during the year, the real return on Ilmarinen’s investments in 2013 was 8.1 per

cent. In the previous year, the return on the investment portfolio was 7.5 per cent, i.e. 5.0 in real

terms. Calculated at current value, the average annual return over the last five years has been 7.8

per cent, which corresponds to an average annual return of 5.8 per cent in real terms.

15

Calculated from 1997, the average annual return at current value for Ilmarinen’s investments has

been 5.9 per cent per annum. This corresponds to an annual real yield of 4.0 per cent.

The following breakdown of the company’s asset allocation follows the classification according to

current value. The notes to the financial statements include this basic breakdown as well as the

investment risk breakdown and a table portraying the classification of investment returns accord-

ing to investment class.

Bonds, fixed income funds and other money market instruments formed 38.8 (36.3) per cent of the

total value of Ilmarinen’s investment assets. Their total market value, taking into account market

value derivatives, was EUR 12,524.8 (10,702.2) million and return at current value was 4.6 (7.9) per

cent. A total of EUR 4,444.2 (4,013.1) or 35.5 (37.5) per cent was invested in bonds issued by gov-

ernments or other similar issuers. Ilmarinen had EUR 688.8 (1,976.6) million or about 5.5 (18.5)

per cent in money market investments, yielding 0.0 (1.9) per cent. The remaining 59.0 per cent

were corporate bonds, most of which had a high credit rating. The return on bonds with credit risk

was 5.3 per cent. At the end of the year, the modified duration of the bond portfolio was 0.2 (0.7)

years.

16

Ilmarinen’s corporate credit portfolio decreased in 2013 by almost 23.9 per cent, because compa-

nies’ interest towards TyEL relending continued to decline substantially due to the low investment

activity of companies. At the end of the year, loan receivables made up 5.5 (8.0) per cent of invest-

ment assets. New loans amounting to EUR 99.4 (218.3) million were drawn down during 2013. At

the end of the year, the total loan portfolio was EUR 1,789.1 (2,352.0) million including accrued

interest. The return on loan receivables was 4.0 (3.4) per cent.

Corporate credit portfolio, EUR million

EUR million 2003 2008 2013 Return %

Premium loans 925.2 1,391.3 782.7 5.0 Lending other than premium loans 477.7 1,304.3 1,006.4 3.0 Total (includes accumulated interest) 1,403.0 2,695.6 1,789.1 4.0 Share of total portfolio, % 9 13 6

The above-mentioned investments together make up the fixed-income investment class. The in-

vestment portfolio share of all of these investments was 44.4 (44.2) per cent and their returns were

4.5 (6.9) per cent.

Listed and unlisted equities and shares as well as private equity investments made up 39.8 (38.4)

per cent of all investments. Their value increased to EUR 12,843.0 (11,328.7) million in 2013 as a

result of rising share prices and share acquisitions. Of this, domestic equities made up about 33.6

(35.3) per cent, or EUR 4,317.0 (4,000.7) million. Domestic equities made up 32.2 (35.3) per cent

of investments in listed equities and shares. The return on equities, calculated at current value, was

20.9 (9.5) per cent.

Equity, currency and interest derivatives are used both for hedging and for altering the risk level of

the investment portfolio. As a result of the use of derivatives, the amount of equities and shares

according to risk was EUR 13,847.8 million, i.e. 42.9 per cent of investments. The effect of interest

derivatives is included in the modified duration of the bond portfolio reported above.

Real estate investments at the end of 2013 stood at EUR 3,644.1 (3,465.7) million, a 5.1 per cent

change from the previous year. The share of real estate investments was 11.3 (11.7) per cent, of

which indirect investments made up 1.7 percentage units. The value of directly-owned properties

17

was EUR 3,101.3 (2,942.9) million. The occupancy rate of real estate owned by Ilmarinen remained

at the previous year’s level and was 88.4 (88.4) per cent at year-end.

The total return on the company’s real estate investments was 4.8 (5.1) per cent. The return on

direct real estate investments was 5.0 (5.6) per cent. The net return on direct real estate invest-

ments before changes in value was 5.0 per cent. The return on indirect real estate investments was

3.2 (2.2) per cent. The commercial real estate vacancy rate remained relatively high.

Some 4.6 (5.7) per cent of the market value of investment assets consisted of commodity invest-

ments, investments in absolute return funds and other investments. Of this, absolute return funds

accounted for EUR 409.4 million and generated an average return of 5.6 per cent on capital em-

ployed.

According to the responsible investment principles included in Ilmarinen’s ownership policy, Il-

marinen will start an engagement process with a company that fails to fulfil the criteria set forth in

the policy. If the engagement process does not lead to the desired end result, the investment is sold.

Additionally, Ilmarinen refrains from acquiring investments whose operations do not fulfil the re-

quired criteria. During 2013, Ilmarinen was involved in several hundred engagement processes.

9. RISK MANAGEMENT

The objective of Ilmarinen’s risk management is to prevent the realisation of risks threatening the

company’s operations, minimise the financial and other damage caused by realised risks and to

ensure the continuity of operations. Another objective is for the company to be able to utilise the

opportunities offered by controlled risk-taking in business operations, especially in investment

activities. The most essential goal is to secure Ilmarinen’s statutory operations and the rights of the

insured, pensioners and policyholders in all situations.

Ilmarinen has a risk management plan that covers the entire operations of the company and is

based on the Board of Directors’ risk management plan. A Risk Management Committee is in place

for the company-level monitoring, assessment and development of risk management, made up of

organisational unit representatives. The Committee regularly prepares an assessment of the risks

facing the company and submits it for approval to the Executive Group and updates the risk man-

18

agement plan annually. The risk assessments are handled by the Board’s Audit Committee and the

Board of Directors. The Board of Directors approved the risk management plan on 20 May 2013.

Risk management within the company, including monitoring of investment risks, and reporting to

the Board of Directors fall under the responsibility of the Senior Vice President in charge of the

company’s actuarial services and risk management. This ensures the independence of investment

activity reporting and risk monitoring from risk-taking functions.

Risk-taking in investment operations is steered by the investment plan approved by the Board of

Directors and the related risk tolerance analysis and investment authorisations and other principles

determined by the Board of Directors. The risk level and change requirements for the basic alloca-

tion are monitored by an Asset Management Group, comprised of representatives of investment

operations, the actuarial and risk management function and the finance function. The risk man-

agement function also produces scenario and stress tests for monitoring and assessment. In in-

vestment operations risk monitoring and management are continuous.

Work to develop company-level risk management continued according to the approved overall

plan. In 2013, work to develop company-level risk monitoring and reporting procedures was con-

tinued and investments were made in supporting the development of business risk management

processes. In business continuity management, Ilmarinen’s current and target levels were defined

according to area. The company’s Risk Management Committee revised Ilmarinen’s risk manage-

ment development programme from the perspective of strengthening the risk management culture

and monitoring of project risks, for example. Long-term scenario analyses, in particular, were de-

veloped in strategic investment risk management.

Risk management is described in more detail in the notes to the financial statements.

10. PERSONNEL

An average of 604 persons worked for Ilmarinen Group in 2013 compared to 612 in 2012. The aver-

age number of employees in the parent company Ilmarinen was 535 (542). This figure includes 68

(78) part-time employees, whose work contribution has been adjusted to correspond with the aver-

age working hours of full-time employees. 55 (50) persons were on family leave or other unpaid

leave during the year. At the end of the year, the parent company Ilmarinen employed 581 (584)

persons, of whom 562 (561) were permanent employees.

Ilmarinen has set goals for its personnel costs, and they are covered by the expense loading compo-

nent. The target for 2013 was for the number of personnel measured in average person years to

decline in a controlled manner, i.e. at an annual rate of two per cent per year. The target corre-

sponding to a decline of two per cent was 452 and the realised total 453.

Special attention was paid in 2013 to ensuring that the service promises of the support functions

correspond with the needs of the business and that their resources and operating models serve their

purpose. In connection with this, Ilmarinen established a separate planning and development busi-

ness and consolidated all of its secretarial and assistant services into one department.

19

The productivity of the personnel can be measured by making the number of person years propor-

tional to the number of insured. When person years financed by the insurance contribution’s ex-

pense loading component for every one thousand insured are used as an indicator, the figure for

2013 was 0.494 (0.512). Work productivity measured in this manner increased during the reporting

year by 3.5 per cent.

Personnel costs covered by investment operations are monitored separately by the company. Hold-

ing the key functions in the company’s own hands instead of outsourcing them is an important as-

pect of investment operations. For this reason, the number of personnel increased slightly and

equalled, on average, 87 person years (85). For example, the Helsinki area real estate services were

transferred from an external service provider to Ilmarinen.

According to the personnel, supervisory work remained on the same excellent level as in previous

years – the total score given to the entire company’s supervisors by their subordinates was 4.05 on

a scale of 1 to 5. Assessments of leadership once again measured whether supervisors had abided by

the leadership principles launched at the beginning of 2012. Supervisors received especially good

feedback for supporting success (4.33) as well as for encouraging thinking outside the box and for

being present (4.13).

As supervisors are not alone responsible for creating a good work community, work community

principles that apply to the entire personnel were launched in late 2012 in order to back up the

leadership principles. The success of their implementation was measured through a personnel sur-

vey in autumn 2013. According to the results the jointly agreed principles are successfully imple-

mented with a score of 3.92 on a scale of 1 to 5. Respondents gave the best scores to statements

measuring customer-orientation and support to co-workers (4.04). The weakest point according to

the respondents was the principle “I am not afraid to ask, I question things in a positive manner”.

However, it also received a good score of 3.67.

In recent years, Ilmarinen has continuously focussed its efforts on making remuneration more en-

couraging, more fair, more objective and more transparent. This work continued during the report-

ing year: the descriptions of all of Ilmarinen’s remuneration systems were harmonised and defined

in more detail. Key elements were, for example, the further clarification of responsibilities and roles

related to remuneration and the systematisation of the assessment and development of the remu-

neration systems.

The entire personnel is covered by a short-term remuneration system. The goals for performance-

based rewards have been set high in order for them to encourage excellent performance.

The rewarding of personnel in the long term takes place through a profit-sharing bonus channelled

through the personnel fund. Ilmarinen’s Board of Directors annually decides on the amount of

profit sharing bonuses transferred to the fund. Ilmarinen’s personnel fund started operating at the

beginning of 2011 and, according to the Board’s decision, the second profit sharing bonus was paid

into the fund in 2013. The criteria have been distilled from Ilmarinen’s strategic targets.

The fund includes the entire personnel, except for those covered by the long-term remuneration

system for management. The fund is managed by a council and a board elected by the personnel.

20

The first bonuses earned under the management’s long-term remuneration system were paid out in

2013. The first earnings period covered the years 2010–2012. The payment of the bonuses earned

during that period has been spread out over four years and they will continue to be paid in 2014–

2016. The second earnings period covers the years 2013–2015.

11. INFORMATION TECHNOLOGY

In renewing the pension processing system, based on a bidding round and on a comparison of pos-

sible solutions, it was decided that Ilmarinen would take part in the joint project of the pension

companies that aims at implementing a new pensions processing system prior to the legislative

amendments set to take force in 2017. The agreement negotiations were concluded in June and

work on the new information technology deliveries was begun immediately. The system is the most

comprehensive IT system renewal in Ilmarinen’s recent history.

An overall renewal of the financial administration’s IT systems was initiated in the autumn with the

central areas being accounting and cost accounting IT system solutions. Process development tar-

gets and principles steering decision-making derived from the investment strategy were defined to

serve as a basis for the development of investment operations’ future IT services, and a look was

taken into the service and software offering on the international markets with a view to the follow-

ing stages. In the early part of the year a bidding round was set into motion for selecting a system

and supplier for the customer and service data management system.

Negotiations for the continuation of operating service co-operation were held between OP-Pohjola

Group, Ilmarinen and Tieto during early 2013 and an agreement was signed at the end of May that

will result in significant service and pricing reforms. An agreement containing similar changes in

the management of the present system was concluded between Ilmarinen and Tieto at the end of

the year. As in previous years, the production activities for information technology functioned as

planned both in terms of customer services and Ilmarinen’s own operations.

12. OPERATING EXPENSES

Ilmarinen’s cost-effectiveness improved clearly compared to the previous year. The operating ex-

penses financed using the loading profit remained nearly on a par with the previous year. The ratio

of the above-mentioned operating expenses to the expense loading components available for them

decreased and was 75 (80) per cent. The halting of the rise in expenses was partly due to the in-

creased efficiency of operations and partly due to the increased capitalisation of development ex-

penditure compared with the previous year. The efficiency of operations benefits Ilmarinen’s cus-

tomers in the form of client bonuses and rebates.

Ilmarinen’s total operating expenses were EUR 143.4 (144.0) million, down -0.4 per cent from the

previous year. The loading profit was EUR 35.1 (27.0) million.

21

The statutory charges, EUR 11.4 million, are financed through a separate part of the insurance con-

tributions allocated to statutory charges. These charges include the share of the costs of the Finnish

Centre for Pensions, the supervision charge of the Financial Supervisory Authority and the judicial

administration charge.

Operating expenses for investment activities were EUR 22.0 (20.9) million, or 0.07 per cent of the

total investment amount. They are financed using the return on investments. Activities were con-

ducted together with clients to maintain well-being at work and working capacity. The costs of

maintaining working capacity that are financed from the administration part of disability risk con-

tained in the insurance contribution were EUR 4.3 (5.1) million.

13. CORPORATE GOVERNANCE AND ORGANISATION

Since 17 April 2012, Matti Lievonen, President and CEO, Neste Oyj, has functioned as the Chairman

of Ilmarinen’s Supervisory Board and Kirsi Kaasinen, Vice Chairman of the Board of the Finnish

Association of Graduate Engineers TEK, has functioned as the Deputy Chairman. Chairman of

KONE Corporation’s Board of Directors, Antti Herlin, is the second Deputy Chairman. Kaasinen is

the primary Deputy Chairman.

The composition of Ilmarinen’s Board of Directors 2013 remained the same in 2013 as in the previ-

ous year. The term of office of the Board expired on 31 December 2013.

In its meeting on 11 November 2013, the Supervisory Board elected new members and deputy

members to the Board of Directors for the next four years, i.e. for the term of office starting on 1

January 2014 and ending on 31 December 2017. The Board’s new members are Minna Helle, Direc-

tor, Negotiations and Social Policy at Finnish Confederation of Professionals STTK, Olli Lehtilä,

Managing Director at Helsinki OP Bank and Heikki Malinen, President & CEO, Itella. The Supervi-

sory Board named Minna Korkeaoja, Executive Vice President of Finance, Services, Communica-

tions & Corporate Responsibility, Pohjolan Voima Oy as a new deputy member. Members George

Berner, Leila Kostiainen and Heikki Vitie and deputy member Timo Parmasuo left the Board. Oth-

erwise, the Board of Directors’ composition remains as before. The deputy members of the Board of

Directors are always invited to the Board meetings but they only have voting rights when the corre-

sponding member is not present.

The Board of Directors elected Jussi Pesonen, President and CEO of UPM-Kymmene Corporation,

as its Chairman in its meeting on 23 January 2013. The Board elected Jyri Häkämies, Director Gen-

eral of the Confederation of Finnish Industries EK and Lauri Lyly, President of the Central Organi-

sation of Finnish Trade Unions (SAK) as its Deputy Chairmen. Lauri Lyly is the primary Deputy

Chairman. The Chairman and Deputy Chairmen also function as the Board’s Nomination and

Compensation Committee.

The members of the Audit Committee, re-elected on 23 January 2013, are Kristian Pullola (Chair-

man), Leila Kostiainen and Hannu Rautiainen.

22

The work of the Board and its committees and the division of labour between them has been devel-

oped further and their effectiveness boosted during 2013 based on the needs of the Board and the

requirements of good corporate governance.

In its meeting in December, the Board of Directors decided to rename the Audit Committee the

“Audit and Risk Management Committee” and affirmed the number of members to be four instead

of three as of 2014. In future, one member will represent employee organisations and one member

employer organisations. In addition, the Board of Directors approved the updates to the work plans

and charters of the Board and the new Audit and Risk Management Committee so that they corre-

spond to the new division of labour. These change will come into effect in 2014.

In its meeting on 11 November 2013, Ilmarinen’s Supervisory Board also elected the members of

the Election Committee. The term of the Election Committee began immediately and will end fol-

lowing the final Supervisory Board meeting in 2014.

Matti Lievonen functioned as the Chairman of the Election Committee in 2013 and Esa Vilkuna as

the Deputy Chairman. The other Election Board members were Sture Fjäder, Antti Herlin, Leila

Kostiainen and Jussi Pesonen.

Half of the Election Committee’s six members are elected from among the individuals nominated

by the Supervisory Board representatives of the policyholders and half from among the individuals

nominated by the Supervisory Board representatives of the insured. The Supervisory Board re-

elected, in its meeting on 11 November 2013, its existing members. General Secretary Leila

Kostiainen’s membership in Ilmarinen’s Board of Directors ended on 31 December 2013 and Minna

Helle, Director, Negotiations and Social Policy, was elected by the Supervisory Board as the new

member of the Election Committee as of 1 January 2014.

Ilmarinen has an internal auditor and Compliance Officer who report to the President and CEO and

the Board of Directors.

Ilmarinen’s auditor is Ernst & Young Oy, Authorized Public Accountant Firm, with Tomi Englund,

APA, as the principal auditor.

14. GROUP

In addition to the Ilmarinen parent company, Ilmarinen Group mainly includes real estate compa-

nies, which came to a total of 167 at the end of 2013. Based on voting rights, TietoIlmarinen belongs

to Ilmarinen Group as Ilmarinen’s ownership of TietoIlmarinen’s shares gives it control of 70 per

cent of the votes, although Ilmarinen only owns 30 per cent of the share capital. The number of

subsidiaries on 31 December 2013 was 168. Garantia Insurance Company Ltd, Kruunuvuoren Sa-

tama Oy, Russia Invest B.V. and Technopolis Holding 2 AS are Ilmarinen’s associated companies.

Ilmarinen owns Suomi Mutual Life Assurance Company’s guarantee capital in its entirety. As the

guarantee shares do not give the right to vote, the company cannot be consolidated with the Group

as an associated undertaking, instead it is considered a participating interest.

23

15. EVENTS AFTER THE FINANCIAL YEAR

Ilmarinen ended its co-operation with Pohjantähti Mutual Insurance Company in January 2014.

The reason behind this change was the decision to consolidate the sales of earnings-related pension

insurance entirely in one sales channel, i.e. the OP-Pohjola Group.

On 6 February 2014, OP-Pohjola Group made a public tender offer for the shares of Pohjola Bank.

In its meeting on 12 February 2014, Ilmarinen’s Board of Directors voted to accept the offer and sell

Ilmarinen’s 10 per cent holding in Pohjola Bank’s shares.

16. FUTURE PROSPECTS

The outlook for growth in the Finnish economy appears weak also for 2014. This is why it seems

likely that employment development will continue to be poor. The poor employment development

and low increases in salaries will result in slower payroll growth than in previous years. The growth

of earnings-related pension companies’ premiums written will accelerate somewhat, however,

thanks to the 0.8 percentage unit increase made in contributions.

The investment environment remains challenging even though recovery expectations have begun to

surface in the global economy. The substantial increase in share prices in 2013 has created strong

expectations for companies’ performance in 2014. For the valuation levels of equities and shares to

remain stable, performance expectations must be realised.

Pension negotiations will be held in 2014 and it is expected that the labour market organisations

will come to an agreement on the contents of the pension reform designed for 2017.

Elo Mutual Pension Insurance Company, created through Pension Fennia’s and mutual pension

company LähiTapiola’s merger, started up its operations on 1 January 2014. The number of earn-

ings-related pension companies declined from seven to six as a result but, at the same time, the

number of large pension companies grew from two to three. The starting up of Elo’s operations will

be likely to increase competition in the earnings-related pension sector. Ilmarinen is confident in

its attitude towards the added competition.

In this challenging environment, Ilmarinen wishes to ensure its competitiveness. The company’s

key competitive assets, alongside the continuous development of its own operations, include the

partnership with the OP-Pohjola Group which has a nationwide service network and an extensive

selection of financial services. Ilmarinen will systematically pursue its adopted strategy. Ilmarinen’s

objectives according to the strategy are to increase its premiums written through new customer

accounts, to improve its cost efficiency and to achieve success as an investor of pension assets.

24

NOTES TO THE FINANCIAL STATEMENTS

Accounting principles

Ilmarinen’s financial statements are prepared in accordance with the Accounting Act, the Companies Act, the Insurance Companies Act, and the Act on Employment Pension Insurance Companies. Ilmarinen’s financial statements also comply with the act on the calculation of a pension provider’s solvency limit and on the cov-ering of the technical provision, the Ministry of Social Affairs and Health’s decree on the financial statements of insurance companies and related consolidated financial statements, the accounting decree, the calculation principles and regulations approved by the Ministry of Social Affairs and Health, and with the regulations and guidelines of the Financial Supervisory Authority.

Consolidated financial statements

The consolidated financial statements cover the parent company and all subsidiaries in which the parent company, directly or indirectly, controls more than one-half of the voting rights. With the exception of the subsidiary that provides IT services for Ilmarinen, the company’s subsidiaries are real estate companies. The consolidated financial statements are drawn up by combining the income statements, balance sheets and notes of the parent company with those of its subsidiaries and eliminating inter-company receivables and payables, revenues and expenses, profit distributions and equity ownerships. Subsidiaries acquired during the year are consolidated as of their acquisition date, and companies sold during the year are consolidated up to their date of sale. Minority interests are segregated from net income and from capital and reserves. Inter-company equity ownership is eliminated, based on the purchase method. The resulting consolidation goodwill is allocated to the assets of subsidiaries and expensed in accordance with their respective amortisa-tion schedules. Impairments, related reversals and write-ups relating to real estate subsidiary shares have been reversed in the consolidated financial statements. In the consolidated balance sheet, the corresponding entries are allo-cated to the real estate holdings of subsidiaries at current value. Associated undertakings, i.e. undertakings in which the Ilmarinen Group holds 20 per cent to 50 per cent of the voting rights, are included in the consolidated financial statements using the equity method. Ownership interests of 20–50 per cent in housing companies and real estate companies are not consolidated, however. The effect of this on consolidated net income and distributable reserves is not significant. The consolidated income statement includes the Group’s equity in the income of associated companies. In the consolidated balance sheet, the Group’s share of an associated undertaking’s cumulative income since acquisition is added to or deducted from the cost of the associated undertaking.

Book value of investments

Buildings and structures are shown in the balance sheet at the lower of cost less scheduled depreciation or current value. The acquisition cost includes purchase-related variable costs. Shares in real estate entities and land and water areas are shown in the balance sheet at the lower of cost or current value. The values of some real estate investments have been written up in previous years. Scheduled depreciation is also deducted from the written-up portion of buildings, if recognised as income. Other shares and equity interests classified as investment assets are shown in the balance sheet at the lower of cost or current value. The book value of some shares has been written up in previous years. Debt securities are reported at the lower of acquisition cost or current value. However, any changes in value caused by fluctuations in interest rates are not recognised. The difference between the amount repayable at maturity and the acquisition cost of debt securities is recognised as interest income or deducted from interest income over the remaining life of instruments. The offsetting entry is an increase or a decrease in the cost of the instrument in question.

25

The acquisition cost is based on asset class averages. Shares and equity interests regarded as fixed assets are reported in the balance sheet at cost less permanent value impairments. The cost basis of assets is calculated using the FIFO method. Investments regarded as receivables are reported in the balance sheet at the lower of nominal value or cur-rent value. Previously recorded impairments on investments are reversed through the income statement in cases where the current value of investments has risen. Equity, fixed-income, credit risk, raw material and currency derivatives were used during the accounting period. Hedging accounting is not applied to bookkeeping, although some derivative transactions function as effective hedging. Some of the currency derivatives that constituted effective hedges at the balance sheet date are treated as risk-mitigating hedges for solvency and coverage calculation purposes. Derivative financial instruments are recognised in the balance sheet at the lower of cost or current value, separately for each in-strument or as instrument entities if the individual instruments have been defined to belong to the same derivative strategy. Any income/losses on closed and mature derivatives and on derivatives whose change in value has been paid or received during the maturity (e.g. futures), have been recognized in full. Liabilities resulting from derivative contracts and securities given as collateral in derivatives trading and received securities not included in the balance sheet have been listed in the notes to the financial statements. In a transfer according to the Act on Financial Collateral Arrangements, the security received in cash is rec-ognised as a liability and the cash provided as security is recognised as an asset. Information concerning the securities borrowed and the assets pledged as security for lending is presented in the notes to the financial statements. Short-sold securities are entered in the balance sheet as current liabili-ties in the amount of the higher of the sales price or the market price on the balance sheet date.

Book value of non-investment assets

Intangible assets and equipment are reported in the balance sheet at cost less accumulated scheduled depre-ciation and amortisation. The acquisition cost includes purchase- and manufacturing-related variable costs. Contribution receivables and other receivables are recognised in the balance sheet at the lower of nominal value or their likely realisable value.

Scheduled depreciation

Depreciation follows a predefined depreciation schedule. Scheduled depreciation on buildings and structures is calculated on the cost of individual buildings and on recognised write-ups. Depreciation is based on the estimated useful life of buildings and the straight-line method. Depreciation periods for new buildings and structures are as follows: Residential and office buildings 50 years Hotels, commercial and industrial properties 40 years Building components 10 years Other assets Business Taxation Act Write-ups same as buildings A 20% salvage value has been fixed for some buildings and structures. Scheduled amortisation on intangible assets and equipment has been calculated on the mean cost of specified groups of assets. Amortisation is based on the estimated useful life of asset groups and the straight-line method. The amortisation periods are as follows: Intangible rights (user licences for software) 5–10 years

26

Other capitalised expenditures 5 years Vehicles and computer hardware 5 years Other equipment 10 years

Write-ups of investments

The book values of land and water areas, buildings and securities can be written up. Write-ups of assets clas-sified as investments are recognised in the income statement, and write-ups of items classified as fixed assets are entered in the revaluation reserve. If a write-up proves unfounded, a related loss is recognised in the in-come statement or the revaluation reserve is adjusted accordingly. Write-ups on buildings are expensed in accordance with the applicable depreciation schedule.

Current value of investments and measurement differences

The notes to the financial statements itemise the remaining cost basis, book value and current value of in-vestments and derivatives reported in the balance sheet. The difference between the first two values above consists of write-ups of investments. The difference between the last two values above indicates measure-ment differences that are unrecognised in the balance sheet. The current value of real estate investments has been defined on a property-by-property basis, primarily utilising the income approach. The market value method, based on regional market price statistics, has also been used to supplement this approach. Valuations also consider the purpose and condition, together with existing lease agreements and the current level of market rents. External real estate valuers and the compa-ny’s own experts participate in the annual determination of the current value of real estate investments. The year’s last bid quotation, or in the absence of this the last trading price, is used as the current value of listed shares. The last available fund unit value reported by the management company is taken as the market value of investment fund units. Private equity funds are valued at the management company’s estimate of current value or, if unavailable, at acquisition cost. The current value of other shares and equity interests is their remaining cost basis, likely realisable value, or net asset value. The current value of debt securities is primarily based on market prices. If no market price is available or the investment’s current value cannot be reliably determined, valuations by external parties are used or the cur-rent value is calculated using commonly accepted calculation models for market prices or the purchase price is used as the current value. The current value of derivative financial instruments is generally the market price or the likely realisable value estimated by the counterparty. A more detailed description of the method of determining the current value of derivatives is presented in the notes to the financial statements in the section “Off-balance-sheet guarantee engagements and liabilities”. Receivables are valued at the lower of nominal value or net realisable value.

Technical provisions

The liability resulting from insurance contracts is reported in the balance sheet under technical provisions. It consists of provisions for unearned premiums and claims outstanding. The provision for unearned premiums relates to the company’s future liability for pension contingencies, and the provision for claims outstanding relates to its liability for pensions already being paid out. The technical provisions have been calculated using the calculation principles approved by the Ministry of Social Affairs and Health. The provision for unearned premiums comprises a provision for future bonuses, which is counted in the sol-vency capital, and a provision for current bonuses, which includes the amount intended for distribution as contribution discounts to policyholders.

27

The provision for unearned premiums also contains an equity linked buffer, which depends on the average return of the share investments of pension institutions. Ten per cent of the provision for claims outstanding and provision for unearned premiums is tied to the return on shares. The provisions for claims outstanding incorporates an equalisation provision that has accumulated from the technical underwriting result, which is part of the solvency capital.

Profit for the period

The calculation principles confirmed by the Ministry of Social Affairs and Health in advance define the earn-ings-related pension insurance company’s profit for the financial year in the profit and loss account. The calculation principles specify the allocation of book profit/loss between changes in the equalisation provi-sion, provisions for future and current bonuses, and reported net income.

Solvency capital

Legislation determines solvency requirements for earnings-related pension companies, the implementation of which is supervised by the Financial Supervisory Authority. The company prepares for insurance and in-vestment risks through it solvency capital. Solvency capital refers to the difference between assets and liabili-ties at current value. Technical provisions do not, in this context, include provision for future bonuses that has accrued from investment income at book value, nor does it include the equalisation provision that has accrued from the underwriting result. The solvency capital must meet the requirements laid down in the Act on Employment Pension Insurance Companies. The solvency capital is presented in the notes to the financial statements.

Deferred tax liabilities and assets

Taxes for the accounting period and previous accounting periods are recognised in the income statement on an accrual basis. Discretionary provisions and accelerated depreciation and amortisation are included in capital and reserves in the consolidated balance sheet, after deduction for minority interest; changes in these items are included in the reported consolidated net income for the accounting period. Ilmarinen does not include deferred tax liabilities and assets in the parent company’s balance sheet or in the consolidated balance sheet, and does not deduct deferred tax liabilities from the company’s solvency capital because the realisation of these liabilities and receivables cannot be considered likely in relation to the finan-cial statements or consolidated financial statements of an insurance company engaged in the statutory earn-ings-based pension insurance business.

Foreign currency-denominated items

Transactions in foreign currencies have been recognised at the rate quoted on the day of the transaction. Receivables and liabilities denominated in foreign currencies that are not settled at the end of the accounting period and the current values of investments are translated into Finnish currency using the reference ex-change rates published by the European Central Bank on the balance sheet date. Foreign exchange gains or losses arising during the accounting period and at year-end are recognised as adjustments to related income and charges, or as investment income and charges if such gains or losses pertain to financing transactions.

Function-specific operating expenses and depreciation and amortisation expenses

Operating expenses and depreciation and amortisation expenses on equipment and capitalised expenditures are reported as function-specific items in the income statement. Expenses related to claims administration and the maintenance of employees’ capacity for work are included in claims paid, and expenses related to investment management are treated as investment expenses. Expenses related to the origination and admin-

28

istration of policies and administrative overhead charges are presented as operating expenses. The statutory fees are included in administration costs. Expenses incurred in other activities are defined as other expenses. Scheduled depreciation on buildings is reported as an investment expense.

Staff pension arrangements

The pension insurance of personnel and members of the Board of Directors and the Supervisory Board is covered through TyEL insurance. It has been supplemented with voluntary additional insurances. The man-agement’s pension arrangements are explained in the notes. Pensions paid during the year under review have been paid on an accrual basis.

Key figures and analyses

All key figures and analyses concerning the company’s financial performance are calculated and presented in accordance with regulations issued by the Financial Supervisory Authority regarding notes to the financial statements. In the case of investment operations and solvency, key figures and analyses are given at current values. The ratio of net income from investments at current value to capital employed is calculated separately for each type and also on the total investment portfolio, taking into account the weighting of cash flows on a daily or monthly basis. The modified Dietz formula is used for calculation purposes, where the capital em-ployed is calculated by taking the market value at the start of the period and adding to it each period’s cash flows, weighted by the relative time remaining from the transaction date or middle of the transaction month to the end of the period.

29

Porkkalankatu 1, 00018 Ilmarinen • Puh. 010 284 11 • www.ilmarinen.fi

FINANCIAL STATEMENTS PARENT COMPANY

2013

30

Financial statements, Parent Company Ilmarinen 2013

PROFIT AND LOSS ACCOUNT, PARENT COMPANY 2013 2012

PROFIT AND LOSS ACCOUNT

Premiums written 4,086,880,919.11 4,019,292,516.83Investment income 7,196,617,328.22 9,488,565,342.91

Claims incurred

Claims paid -4,181,000,393.07 -3,881,809,313.37Change in provision for claims outstanding

Total change -779,103,312.00 -625,306,393.00Porfolio transfers 1,977.00 -779,101,335.00 -4,960,101,728.07 40,618,466.00 -584,687,927.00 -4,466,497,240.37

Total change -823,904,418.00 -755,109,064.00Porfolio transfers 4,428.46 -823,899,989.54 66,108,809.83 -689,000,254.17

Operating expenses -85,252,751.44 -88,070,306.81Investment charges -5,402,636,893.63 -8,255,155,582.13

Balance on technical account 11,606,884.65 9,134,476.26

NON-TECHNICAL ACCOUNT

Balance on technical account 11,606,884.65 9,134,476.26Other income 501,961.69 565,725.17Other expenses -646,743.57 -974,049.57Income taxes on ordinary activities -7,385,256.71 -5,473,638.41

Profit/loss on ordinary activities 4,076,846.06 3,252,513.45

Appropriations

Change in depreciation difference -303,208.72 -234,051.11

Profit/loss for the financial year 3,773,637.34 3,018,462.34

31

Financial statements, Parent Company Ilmarinen 2013

BALANCE SHEET, PARENT COMPANY 31 DEC 2013 2013 2012

ASSETS

Intangible assets

Intangible rights 12,659,321.71 5,437,885.99Prepayments 16,232,822.07 28,892,143.78 8,330,053.53 13,767,939.52

Investments

Real estateReal estate and real estate shares 1,346,321,105.24 1,295,471,192.82Loans to group companies 955,058,396.89 911,912,748.91Loans to participating interests 29,554,657.55 2,330,934,159.68 13,229,483.87 2,220,613,425.60

Investments in group companies andparticipating interests

Shares and participations in group companies 155,531.01 155,531.01Shares and participations in participating interests 66,845,645.41 45,102,258.31Loans to participating interests 175,977,785.33 242,978,961.75 184,615,393.33 229,873,182.65

Other investmentsShares and participations 12,415,235,232.65 11,605,459,794.44Money market instruments 10,855,199,037.23 8,522,235,046.75Loans quaranteed by mortgages 616,775,991.61 699,886,208.71Other loans 983,561,459.83 24,870,771,721.32 27,444,684,842.75 1,449,187,762.33 22,276,768,812.23 24,727,255,420.48

Receivables

Direct insurance operationsPolicyholders 155,445,696.36 170,582,201.70

Other receivables 2,370,838,664.84 2,526,284,361.20 2,727,994,014.82 2,898,576,216.52

Other assets

Tangible assetsFurniture and fixtures 1,186,067.22 1,004,970.21Other tangible assets 1,761,367.44 2,947,434.66 1,748,632.58 2,753,602.79

Cash at bank and in hand 367,830,736.99 370,778,171.65 905,547,896.10 908,301,498.89

Prepayments and accrued income

Accrued interests and rent 175,835,867.29 167,931,447.15Other prepayments and accrued income 126,955,313.39 302,791,180.68 50,139,874.24 218,071,321.39

Total assets 30,673,430,700.06 28,765,972,396.80

32

Financial statements, Parent Company Ilmarinen 2013

BALANCE SHEET, PARENT COMPANY 31 DEC 2013 2013 2012

LIABILITIES

Capital and reserves

Initial fund 22,994,653.31 22,994,653.31Other reserves

Funds and reserves under the Articles of Association 63,241,665.17 60,241,452.83Profit/loss for the financial year 3,773,637.34 90,009,955.82 3,018,462.34 86,254,568.48

Accumulated appropriations

Depreciation difference 3,027,008.88 2,723,800.16

Technical provisions

Provision for unearned premiums 14,619,733,360.00 13,795,828,942.00Provision for claims outstanding 12,569,152,148.00 27,188,885,508.00 11,790,048,836.00 25,585,877,778.00

Liabilities

Direct insurance operations 23,625,327.23 21,518,432.38Other liabilities 2,727,347,238.41 2,750,972,565.64 2,688,281,121.55 2,709,799,553.93

Accruals and deferred income 640,535,661.72 381,316,696.23

Total liabilities 30,673,430,700.06 28,765,972,396.80

33

Financial statements, Parent Company Ilmarinen 2013

CASH FLOW STATEMENT

Cash flow from operations

Profit /loss on ordinary activities / profit /loss before exceptional items 4,076,846.06 3,252,513.45

AdjustmentsChange in technical provisions 1,603,007,730.00 1,380,415,457.00Impairments and revaluationson investments 687,211,113.05 447,386,030.03Planned depreciations 13,955,807.63 12,636,943.35Other adjustments -1,451,950,766.65 -832,974,807.52

Cash flow before change in working capital 856,300,730.09 1,010,716,136.31

Change in working capitalShort-term non-interest-bearing receivablesincrease (-) / decrease (+) 287,571,996.03 -724,452,122.76Short-term non-interest-bearing liabilitiesincrease (-) / decrease (+) 300,391,977.20 24,973,399.86

Cash flow from operations before financial items and taxes 1,444,264,703.32 311,237,413.41

Direct taxes paid -7,385,256.71 -5,473,638.41

Cash flow before exceptional items 1,436,879,446.61 305,763,775.00Cash flow from operations 1,436,879,446.61 305,763,775.00

Cash flow from investments

Asset purchase (exl. financial assets) -20,633,944,669.30 -16,325,455,775.31Capital gains on investments (exl. financial assets) 18,677,356,112.45 16,679,873,775.49Investments and capital gains (net) onintangible, tangible and other assets -17,989,798.87 -1,701,598.67

Cash flow from investments -1,974,578,355.72 352,716,401.51

Cash flow from financing

Interests paid on quarantee capital and other profit distribution -18,250.00 -31,817.07

Cash flow from financing -18,250.00 -31,817.07

Change in financial resources -537,717,159.11 658,448,359.44

Financial resources at the start of the financial year 905,547,896.10 247,099,536.66Financial resources at the end of the financial year 367,830,736.99 905,547,896.10

2013 2012

34

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF PREMIUMS WRITTEN 2013 2012

Direct insuranceTyEL basic coverage

Employer contribution 2,893,712,747.31 2,850,238,524.68Employee contribution 914,574,641.00 3,808,287,388.31 909,831,424.00 3,760,069,948.68

TyEL supplementary coverage 2,793,510.15 3,308,500.14YEL minimum coverage 301,979,699.78 4,113,060,598.24 286,461,994.27 4,049,840,443.09

Transition contribution to the State Pension Fund -25,595,748.13 -29,889,257.26Reinsurance 7,458.00 8,046.00Premiums written before reinsurers' share 4,087,472,308.11 4,019,959,231.83Reinsurers' share -591,389.00 -666,715.00Premiums written 4,086,880,919.11 4,019,292,516.83

Items deducted from premiums writtenCredit loss on outstandig premiums

TyEL -16,145,349.61 -12,683,888.70YEL -2,584,824.50 -18,730,174.11 -2,548,460.11 -15,232,348.81

SPECIFICATION OF CLAIMS PAID 2013 2012

Direct insurancePaid to pensioners

TyEL basic coverage 3,717,877,630.36 3,472,701,681.62TEL supplementary coverage 61,086,135.79 60,629,042.32YEL minimum coverage 333,262,547.20 311,912,278.80YEL supplementary coverage 1,632,708.98 4,113,859,022.33 1,536,072.90 3,846,779,075.64

Payments to/refunds from the provision for clearing PAYG pensionsTyEL pensions 220,894,778.07 153,390,995.64YEL pensions -9,441,480.23 -15,525,446.61

Share of the unemployment insurance fund insurance contrbutionand division of the costs of pension components accruedon the basis of unsalaried periods -157,512,024.87 -127,421,666.17YEL government share -21,430,049.98 -8,633,193.23State compensation pursuant to VEKL -270,282.64 32,240,940.35 4,146,099,962.68 -187,013.72 1,623,675.91 3,848,402,751.55

Reinsurance - 7,089.00Claims handling expenses 31,127,911.77 28,914,390.07Working capacity maintenance costs 4,348,797.62 5,136,680.75Claims before reinsures' share 4,181,576,672.07 3,882,460,911.37Reinsures' share -576,279.00 -651,598.00Total claims paid 4,181,000,393.07 3,881,809,313.37

35

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF NET INVESTMENT INCOME 2013 2012

Investment income

Income from group companies

Dividend income 390,150.00 390,150.00 413,100.00 413,100.00Income from participating interests

Dividend income 661,353.83 648,762.63Interest income 5,745,949.62 6,407,303.45 6,004,013.92 6,652,776.55

Income from investments in real estate

Interest incomeFrom group companies 22,435,240.96 25,176,654.32From other than group companies 1,948,487.74 24,383,728.70 2,608,303.85 27,784,958.17

Other incomeFrom group companies 1,480,448.60 1,448,337.57From other than group companies 207,509,572.59 208,990,021.19 233,373,749.89 199,963,095.25 201,411,432.82 229,196,390.99

Income from other investments

Dividend income from other than group companies 283,040,481.52 307,189,285.85Interest income from group companies 404,056.56 641,251.86Interest income from other than group companies 412,197,660.29 325,310,695.90Other income from other than group companies 929,637,660.69 1,625,279,859.06 936,193,061.57 1,569,334,295.18

Total 1,865,451,062.40 1,805,596,562.72Value readjustments 198,481,112.43 322,949,387.56Capital gains 5,132,685,153.39 7,360,019,392.63Total 7,196,617,328.22 9,488,565,342.91

Investment charges

Charges on real estate investments -125,670,841.66 -125,223,226.43Charges on other investments -660,998,266.73 -781,092,275.74Interest charges and other charges on liabilities

To group companies -871,945.46 -1,015,556.91To other than group companies -44,770,439.38 -45,642,384.84 -44,796,329.38 -45,811,886.29

Total -832,311,493.23 -952,127,388.46Value adjustments and depreciation

Value adjustments -885,692,225.48 -770,335,417.59Planned depreciation on buildings -11,284,044.89 -896,976,270.37 -11,121,829.38 -781,457,246.97

Capital loss -3,673,349,130.03 -6,521,570,946.70Total -5,402,636,893.63 -8,255,155,582.13

Net investment income before revaluations

and their adjustments 1,793,980,434.59 1,233,409,760.78

Net investment income in the profit and loss account 1,793,980,434.59 1,233,409,760.78

36

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF OPERATING EXPENSES

Total operating expenses by activity

Claims paid

Claims handling expenses 31,127,911.77 28,914,390.07Working capacity maintenance costs 4,348,797.62 35,476,709.39 5,136,680.75 34,051,070.82

Operating expenses

Acquisition costs:Commissions, direct insurance 1,135,744.06 1,026,685.29Other policy acquisition costs 15,729,454.18 16,865,198.24 20,462,288.72 21,488,974.01

Portfolio administration expenses 41,252,028.70 41,656,049.17Administrative expenses;

Statutory charges:Cost compoment of the Finnish Pension Centre 9,811,899.23 7,875,734.74Judicial administration charge 1,029,820.29 835,872.80Supervision charge of the Insurance Supervisory Authory 587,432.91 11,429,152.43 586,739.87 9,298,347.41

Other administrative expenses 15,706,372.07 15,626,936.22Operating expenses total 85,252,751.44 88,070,306.81Investment charges

Costs on real estate investment 2,261,886.90 2,526,301.15Other 19,747,692.83 22,009,579.73 18,423,641.50 20,949,942.65

Other expenses 646,743.57 974,049.57

Total operating expenses 143,385,784.13 144,045,369.85

2013 2012

37

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF STAFF EXPENSES AND MEMBERS OF CORPORATE ORGANS 2013 2012

Staff expenses

Salaries and bonuses 35,988,530.69 34,458,202.44Pension expenditure 7,371,023.37 6,992,999.59Other social security expenses 1,957,473.07 1,817,414.31Change in reserves*) 2,628,723.34 4,280,593.01

Total 47,945,750.47 47,549,209.35

*) The change in reserves 2012 includes an adjustment for 2010―2011.

Salaries, bonuses and fringe benefits paid to management

Managing director 617,145.87 612,496.83Deputy managing director 469,341.04 445,710.60Board members and deputy members 397,863.72 391,595.10Members of Supervisory Board and deputy members 107,586.13 116,089.73

Total 1,591,936.76 1,565,892.26

Pension commitments for the benefit of the executive management

The retirement age of Ilmarinen’s President and CEO and Deputy CEO is 62 years. On 19 December 2012, the Board of Directors and the President

and CEO agreed that the President and CEO’s employment relationship will continue until the spring of 2015, when the President and CEO turns 63.

The President and CEO and his Deputy are covered by voluntary defined-benefit supplementary pension insurance. The amount of voluntary defined-benefit supplementary pension insurance in 2013 for President and CEO was EUR 634,127.33 and for Deputy EUR 129,572.49. The total pension, which consists of the earnings-related pension and supplementary pension, is 60 per cent of the salary on which the supplementary pension is based. The salary on which the supplementary pension is based is calculated according to the annual earnings for the past five full years in the present employment relationship. The President and CEO’s supplementary pension accrual ended when he turned 62 on 12 December 2013, after which the supplementary

pension does not cause any cost for his part. Statutory earnings-related pension contributions have been paid on the remuneration paid to the membersof the Board of Directors and Supervisory Board.

Average staff number during the financial period 535 542

Auditor's fee

Auditing 224,341.71 209,814.02 Tax advice 14,133.08 21,350.04 Other services 6,242.91 75,193.56

38

Notes to the accounts, Parent Company Ilmarinen 2013

INVESTMENTS

FAIR VALUE OF INVESTMENTS AND DIFFERENCE

BETWEEN CURRENT AND BOOK VALUE

Remaining Remaining

acquisition cost Book value Current value acquisition cost Book value Current value

Investments in real estateReal estate 434,404,776.07 434,431,231.80 655,779,307.96 425,361,278.50 425,387,734.23 642,198,166.59Shares ingroup companies 819,388,366.96 823,593,065.12 1,364,645,969.28 815,606,393.25 819,811,091.41 1,318,042,892.78Shares inparticipating interests 82,995,440.94 82,995,440.94 92,101,518.05 43,949,374.50 43,949,374.50 53,051,007.41Other shares in real estate 5,301,367.38 5,301,367.38 6,364,236.94 6,322,992.68 6,322,992.68 7,804,530.67Loans togroup companies 955,058,396.89 955,058,396.89 955,058,396.89 911,912,748.91 911,912,748.91 911,912,748.91Loans toparticipating interests 29,554,657.55 29,554,657.55 29,554,657.55 13,229,483.87 13,229,483.87 13,229,483.87

Investments in group companiesShares and participations 155,531.01 155,531.01 155,531.01 155,531.01 155,531.01 155,531.01

Investments in participating interestsShares and participations 66,845,645.41 66,845,645.41 72,860,008.81 45,102,258.31 45,102,258.31 45,863,338.61Loan receivables 175,977,785.33 175,977,785.33 175,977,785.33 184,615,393.33 184,615,393.33 184,615,393.33

Other investmentsShares and participations 12,414,911,732.19 12,415,235,232.65 15,506,657,246.51 11,605,136,293.98 11,605,459,794.44 13,584,763,842.45Money market instruments 10,855,199,037.23 10,855,199,037.23 11,009,055,731.74 8,522,235,046.75 8,522,235,046.75 8,780,701,568.94Loans guaranteed by mortgages 616,775,991.61 616,775,991.61 616,775,991.61 699,886,208.71 699,886,208.71 699,886,208.71Other loan receivables 983,561,459.83 983,561,459.83 983,561,459.83 1,449,187,762.33 1,449,187,762.33 1,449,187,762.33

27,440,130,188.40 27,444,684,842.75 31,468,547,841.51 24,722,700,766.13 24,727,255,420.48 27,691,412,475.61

Remaining acquisition cost of money market instruments includes:

the difference between the nominal value andacquisition cost, released to interest income (+)or charged to interest income (-) -62,058,058.12 -51,008,925.25

Book value comprisesRevaluations entered as income 4,554,654.35 4,554,654.35

Difference between current and book value 4,023,862,998.76 2,964,157,055.13

31 Dec 2013 31 Dec 2012

39

Notes to the accounts, Parent Company

Ilmarinen 2013

INVESTMENTS

FAIR VALUE OF DERIVATIVES AND VALUATION DIFFERENCE

Book value Current value Book value Current value

Fair value of non-hedging derivatives and valuation difference

Other receivablesPrice diffefence of derivatives 95,124,220.98 0.00 20,833,263.96 0.00Prepayments for option contracts 1,404,393,433.79 1,841,448,334.48 1,432,168,165.79 2,109,849,420.59

Other deptsPrice difference of derivatives -147,202,953.13 0.00 -47,181,080.54 0.00Prepayments for option contracts -266,048,380.77 -200,637,307.33 -315,458,885.44 -232,961,266.40

Other prepayments and debtsFuture and forward contracts and total return swaps -469,313,877.49 276,450,881.28 -311,905,701.01 133,422,925.24

616,952,443.38 1,917,261,908.43 778,455,762.76 2,010,311,079.43

Valuation difference, total 1,300,309,465.05 1,231,855,316.67

CURRENT VALUE OF SHORT SELLING AND VALUATION GAIN/LOSS

Current value of short selling and valuation gain/loss Book value Current value Book value Current value

Other debtsLiabilities on sold stock loans -46,895,708.16 -46,641,134.01 -25,824,365.61 -25,824,365.61

Valuation difference, total 254,574.15 0.00

31 Dec 2013 31 Dec 2012

31 Dec 2013 31 Dec 2012

40

Notes to the accounts, Parent Company Ilmarinen 2013

REAL ESTATE INVESTMENTS

Changes in real estate investments:

Real estate and Loans to Loans to

real estate shares group participating

companies interests

Acquisition cost Jan 1 1,573,486,922.54 911,912,748.91 13,501,611.94Additions 86,683,757.56 92,018,919.90 18,910,527.35Deductions -29,865,311.06 -42,828,090.93 -2,585,353.67Transfers between items 6,045,180.99 -6,045,180.99 -

Acquisition cost Dec 31 1,636,350,550.03 955,058,396.89 29,826,785.62

Accumulated depreciation and amortisation 1 Jan -130,278,964.66Depreciation and amortisation for the financial year -11,284,044.89

Accumulated depreciation and amortisation 31 Dec -141,563,009.55

Depreciations Jan 1 -163,741,073.80 -272,128.07Value adjustments for the financial year -11,719,245.77 -Value readjustments 10,989,575.59 -

Depreciations Dec 31 -164,470,743.98 -272,128.07

Revaluations Jan 1 16,004,308.74Revaluations Dec 31 16,004,308.74

Book value Dec 31 1,346,321,105.24 955,058,396.89 29,554,657.55

Owner-occupied properties and shares in real estate

Remaining acquisition cost 61,253,448.95Book value 61,253,448.95Current value 83,697,381.43

2013

41

Notes to the accounts, Parent Company Ilmarinen 2013

INVESTMENTS IN GROUP COMPANIES

AND PARTICIPATING INTERESTS

Changes:

Shares and Shares and

participations in participations in

group companies participating interests

Acquisition cost Jan 1 155,531.01 45,102,258.31Additions - 21,743,387.10

Book value Dec 31 155,531.01 66,845,645.41

Book value Dec 31 155,531.01 66,845,645.41

2013

42

Notes to the accounts, Parent Company Ilmarinen 2013

SHARES AND PARTICIPATIONS, 31 DEC 2013

Number of shares Percentage of Book value, EUR Current value, EUR

shares/votes

SHARES IN GROUP COMPANIES

TietoIlmarinen Oy 1,530 30.00 / 70.00 155,531.01 155,531.01Total 155,531.01 155,531.01

PARTICIPATING INTERESTS

3 100.00 / 0.00 512,636.80 512,636.80Kruunuvuoren Satama Oy 330 33.00 / 33.00 37,200,001.10 43,189,116.30Russia Invest B.V. 54,450 27.23 / 27.23 11,240,304.00 11,240,304.00Technopolis Holding 2 AS 147 49.00 / 49.00 10,557,533.10 10,582,781.30Garantia Insurance Company 15,777 26.30 / 26.30 7,335,170.41 7,335,170.41Total 66,845,645.41 72,860,008.81

OTHER INVESTMENTS

Shares and participations

Domestic companies, listed

Affecto Plc 633,269 2.84 2,568,103.16 2,868,708.57Ahlstrom Corporation 382,674 0.82 3,145,580.28 3,145,580.28Alma Media Corporation 1,100,000 1.46 3,289,000.00 3,289,000.00Amer Sports Corporation 2,412,565 2.04 23,175,927.97 36,477,982.80Apetit Plc 53,800 0.85 623,279.32 1,032,960.00Aspo Plc 1,200,676 3.88 7,240,076.28 7,240,076.28Atria Plc 90,000 0.32 / 0.08 693,000.00 693,000.00Basware Corporation 1,461,658 11.30 26,473,258.72 35,664,455.20Biotie Therapies Oyj 16,732,271 3.70 4,685,035.88 4,685,035.88CapMan Plc 7,178,500 8.42 / 5.24 8,111,705.00 8,111,705.00Cargotec Corporation 961,953 1.50 / 0.64 21,162,414.73 26,059,306.77Caverion Corporation 4,056,215 3.23 16,256,516.34 36,100,313.50Citycon Corporation 39,615,389 8.98 90,724,029.45 101,019,241.95Comptel Corporation 2,236,368 2.08 1,051,092.96 1,051,092.96Cramo Plc 346,931 0.81 5,328,860.16 5,328,860.16Digia Plc 1,994,529 9.55 5,602,600.93 7,798,608.39Efore Plc 1,578,048 2.83 994,170.24 994,170.24Elisa Corporation 2,649,335 1.58 39,512,657.12 51,026,192.10Exel Composites Plc 689,400 5.79 1,958,163.74 3,964,050.00F- Secure Corporation 8,242,031 5.19 15,412,597.97 15,412,597.97Finnair Plc 2,675,564 2.09 7,357,801.00 7,357,801.00Finnlines Plc 5,449,033 10.58 40,867,747.50 40,867,747.50Fiskars Corporation 1,525,871 1.86 19,138,936.81 29,830,778.05Fortum Corporation 7,351,961 0.83 122,263,111.43 122,263,111.43HKScan Corporation 218,298 0.40 / 0.14 820,800.48 820,800.48Huhtamäki Oyj 3,266,286 3.04 42,166,221.58 60,883,571.04Ilkka-Yhtymä Oyj 606,397 2.36 / 2.37 1,768,759.85 1,912,487.76Incap Corporation 8,307,692 7.61 830,769.20 830,769.20Kemira Oyj 3,840,451 2.47 43,977,457.91 46,699,884.16Kesko Corporation 1,001,587 1.00 / 0.94 25,890,269.81 26,812,483.99Kone Corporation 5,978,918 1.14 / 0.49 134,650,766.12 196,048,721.22Konecranes Plc 222,225 0.35 5,197,355.43 5,746,738.50Lassila & Tikanoja Plc 1,362,803 3.51 14,880,809.42 20,660,093.48Lemminkäinen Corporation 270,369 1.38 4,096,090.35 4,096,090.35Marimekko Corporation 215,419 2.66 2,121,877.15 2,121,877.15Martela Oyj 335,400 8.07 / 2.14 1,110,174.00 1,110,174.00Metso Corporation (1 4,450,126 2.96 90,158,505.65 94,253,668.68Metsä Board Corporation 14,217,625 4.33 / 8.04 44,431,282.70 44,431,282.70Munksjö Oyj 2,353,646 4.61 12,356,641.50 12,356,641.50Neste Oil Corporation 5,765,849 2.25 68,346,492.12 82,855,250.13Nokia Corporation 60,394,549 1.61 184,070,131.64 351,194,302.44Nokian Tyres plc 3,218,947 2.42 102,736,323.64 112,244,681.89Okmetic Oyj 1,549,985 8.97 6,461,713.13 7,439,928.00Olvi plc 649,518 3.13 / 0.71 8,514,567.03 18,543,738.90Oral Hammaslääkärit Plc 450,000 5.11 1,669,248.52 2,205,000.00Oriola-KD Corporation 6,430,792 4.25 / 5.09 12,009,320.31 16,447,804.72Orion Corporation 1,974,695 1.40 / 4.15 20,209,203.17 40,167,388.70Outokumpu Oyj 23,153,368 1.11 9,416,474.77 9,416,474.77Outotec Oyj 9,636,448 5.26 70,526,735.61 73,333,369.28PKC Group Oyj 2,621,431 10.97 28,298,309.98 63,412,415.89Pohjola Bank plc 31,955,142 10.00 / 5.42 239,900,650.25 467,184,176.04Ponsse Plc 392,666 1.40 3,288,005.71 3,848,126.80Pöyry Plc 4,690,977 7.85 19,101,658.34 19,101,658.34Raisio Plc 4,252,178 2.57 / 0.53 10,515,614.73 18,496,974.30Ramirent Plc 4,145,154 3.81 28,604,618.78 37,886,707.56Rapala VMC Corporation 408,899 1.04 2,118,096.82 2,118,096.82Rautaruukki Corporation 4,295,489 3.06 27,315,219.89 28,951,595.86Sampo plc 4,241,614 0.76 / 0.75 88,968,293.95 151,383,203.66Sanitec Corporation 2,000,000 2.00 13,571,086.91 15,238,568.25Sanoma Corporation 4,732,220 2.91 30,191,563.60 30,191,563.60Scanfil plc 580,000 1.00 771,400.00 771,400.00Sievi Capital Oyj 580,000 0.96 638,000.00 638,000.00Siili Solutions Plc 71,000 4.12 497,000.00 908,090.00SRV Group Plc 308,003 0.84 1,247,412.15 1,247,412.15Stockmann plc 860,269 1.19 / 0.74 9,501,198.52 9,501,198.52Stora Enso Oyj 7,728,929 0.98 / 1.64 50,286,399.08 56,242,827.46Suominen Corporation 26,422,103 10.66 12,418,388.41 12,418,388.41Talentum Oyj 4,308,383 9.73 4,437,634.49 4,437,634.49Technopolis Plc 11,089,647 10.44 36,830,568.03 48,239,964.45Teleste Corporation 953,854 5.07 4,053,879.50 4,053,879.50Tieto Corporation 1,857,871 2.54 26,250,061.87 30,543,399.24Tikkurila Oyj 4,519,940 10.25 69,302,608.30 89,946,806.00Tulikivi Corporation 3,720,562 6.21 / 2.81 1,227,785.46 1,227,785.46UPM-Kymmene Corporation 10,369,552 1.96 100,385,657.76 127,338,098.56Uponor Corporation 922,052 1.26 10,380,163.17 13,111,579.44Vacon Plc 948,968 6.20 27,491,078.17 55,467,179.60Vaisala Corporation 635,000 3.49 / 0.77 14,738,350.00 14,738,350.00Valmet Corporation (1 4,450,126 2.97 41,859,176.54 43,789,239.84Wärtsilä Corporation 3,128,914 1.59 77,870,952.61 111,921,253.78YIT Corporation 1,457,115 1.15 12,984,548.53 14,804,288.40Other 935,000 319,629.36 319,629.36Total 2,371,418,668.99 3,264,395,090.85

1) As a result of the demerger (31 Dec), the current value on Metso’s final trading date (30 Dec) has been divided up between

Metso and Valmet according to the preliminary demerger plan in proportion with net assets.

Domestic companies, non-listed

Aloitusrahasto Vera Oy 1,500 2.83 2,589,000.00 2,589,000.00Arek Oy 2,779,199 19.85 2,783,346.18 2,783,345.56DNA Ltd 424,689 4.42 40,342,820.23 40,342,820.23Ekokem Oy Ab 490,700 13.94 19,635,342.84 19,635,342.84Enfo Oyj 11,202 1.90 766,365.34 895,039.80Faron Pharmaceuticals Oy 48,161 3.31 1,192,552.42 1,192,552.42Fingrid Oyj 661 19.88 / 17.15 135,726,627.55 221,953,472.70GreenStream Network Plc 1,200,000 19.87 600,000.00 600,000.00Holiday Club Resorts Oy 195,121 6.79 3,999,980.50 3,999,980.50Keliber Oy 47,415 12.97 1,249,999.99 1,249,999.99Mediverkko Yhtymä Oy 600,000 5.21 2,961,693.43 2,961,693.60Mendor Ltd 16,579,297 13.18 1,378,565.10 1,411,086.32Osuuskunta KPY 761,900 13.73 12,115,578.15 12,116,495.70PHP Holding Oy 3,568 1.76 / 0.22 3,696,242.35 3,696,916.06Northern Power Company Ltd. 1,500,000 4.00 70,680,000.00 70,680,000.00Porasto Oy 2,080 12.82 556,312.36 556,312.36PRT-Forest Oy 6,000 10.02 3,616,335.60 3,616,335.60SATO Corporation 8,195,895 16.07 31,080,288.14 119,742,025.95SSP Yhtiöt Oy 1,093 1.14 602,096.92 602,096.92

43

Notes to the accounts, Parent Company Ilmarinen 2013

Tornator Oy 844,000 16.88 44,557,428.00 80,506,417.00VVO-group plc 1,332,330 18.00 36,230,733.92 246,081,351.00Other 8,872,834 3,349,840.13 3,349,840.13Total 419,711,149.15 840,562,124.68

OTHER INVESTMENTS

Foreign companies, listed

Netherlands

Aegon N.V. 1,050,000 0.05 5,760,799.69 7,205,100.00Akzo Nobel N.V. 127,431 0.05 5,540,736.39 7,179,462.54Corio N.V. 51,576 0.05 1,679,830.32 1,679,830.32Eurocommercial Properties N.V. 195,584 0.46 5,298,873.20 5,914,460.16European Aeronautic Defence and Space Company EADS N.V. 326,000 0.04 13,653,175.26 18,194,060.00ING Groep N.V. 1,730,000 0.05 17,421,100.00 17,421,100.00Koninklijke Philips N.V. 317,000 0.03 7,685,128.66 8,446,465.00Unilever N.V. 165,000 0.01 4,242,726.96 4,830,375.00Australia

PanAust Limited 1,800,000 0.29 2,094,923.17 2,094,923.17Belgium

Belgacom SA 58,500 0.02 1,258,042.50 1,258,042.50KBC Group N.V. 87,500 0.02 1,710,100.39 3,599,312.50Bermuda

Höegh LNG Holdings Ltd 515,000 0.74 2,943,560.92 2,943,560.92Seadrill Ltd 442,566 0.09 13,028,117.83 13,102,874.76Spain

Banco Bilbao Vizcaya Argentaria, S.A. 2,062,574 0.04 14,054,792.37 18,398,160.08Banco Santander S.A. 3,503,845 0.03 22,774,992.50 22,774,992.50Gas Natural SDG, S.A. 96,570 0.01 1,115,736.31 1,796,202.00Iberdrola, S.A. 1,630,921 0.03 6,720,030.72 7,547,902.39Repsol S.A. 235,229 0.02 4,089,692.24 4,290,576.96Telefónica, S.A. 1,531,500 0.03 16,543,476.46 18,071,700.00Great Britain

Amlin Plc 480,000 0.10 1,795,366.90 2,633,465.28Anglo American Plc 754,100 0.05 11,939,690.54 11,939,690.54AstraZeneca Plc 403,500 0.03 14,836,221.79 17,439,711.71Aviva Plc 880,000 0.03 3,519,774.52 4,745,687.90BAE Systems Plc 1,058,407 0.03 5,516,107.02 5,516,107.02Barclays Plc 6,331,250 0.04 18,392,164.09 20,644,720.08BG Group Plc 1,611,523 0.05 21,460,410.94 25,080,377.75BHP Billiton Plc 1,195,000 0.02 26,746,671.46 26,746,671.46BP Plc 7,265,700 0.04 42,533,583.84 42,533,583.84British American Tobacco Plc 155,000 0.01 6,016,312.82 6,016,312.82British Land Company Plc, The 1,250,000 0.12 7,708,493.30 9,430,850.43BT Group Plc 3,034,500 0.04 5,754,242.68 13,794,836.27Centrica Plc 2,063,000 0.04 6,804,678.10 8,591,502.94Compass Group Plc 567,758 0.03 2,199,513.77 6,588,771.32GlaxoSmithKline Plc 1,679,000 0.03 28,819,382.52 32,454,222.14Hammerson Plc 1,155,000 0.16 6,161,493.00 6,954,659.95HSBC Holdings Plc 7,340,000 0.04 46,865,983.05 58,309,727.72Land Securities Group Plc 1,210,390 0.15 10,718,184.27 13,988,374.30Lloyds Banking Group Plc 10,494,278 0.01 6,169,612.67 9,900,143.52National Grid Plc 1,311,474 0.04 9,847,589.45 12,395,843.97Prudential Plc 560,000 0.02 3,527,251.72 8,994,122.59Rio Tinto Plc 475,700 0.03 16,640,265.86 19,431,406.38Rolls-Royce Holdings Plc 623,015 0.03 3,308,674.17 9,512,991.42Royal Dutch Shell Plc 2,519,600 0.04 61,832,125.93 65,270,238.00SABMiller Plc 841,282 0.05 31,149,395.29 31,251,653.52SSE Plc 369,600 0.04 6,064,685.14 6,064,685.14Standard Chartered Plc 350,000 0.01 5,709,487.83 5,709,487.83Tesco Plc 2,573,350 0.03 10,320,253.96 10,320,253.96Tullow Oil Plc 450,332 0.05 4,618,374.24 4,618,374.24Unilever Plc 327,000 0.03 7,681,791.12 9,735,084.56Wm Morrison Supermarkets Plc 502,563 0.02 1,572,732.24 1,572,732.24Vodafone Group Plc 18,821,000 0.04 35,820,036.68 53,503,382.51Other 59,414,540 588,470.97 595,588.79Italy

Assicurazioni Generali S.p.A. 270,000 0.02 4,614,300.00 4,614,300.00Enel S.p.A. 2,171,960 0.02 6,893,801.04 6,893,801.04Eni S.p.A. 968,218 0.03 16,934,132.82 16,934,132.82Intesa Sanpaolo S.p.A. 4,700,000 0.03 8,431,800.00 8,431,800.00Mediobanca S.p.A. 300,000 0.03 1,495,640.10 1,893,000.00Snam S.p.A. 611,563 0.02 2,123,510.48 2,485,392.03Telecom Italia S.p.A. 4,334,000 0.02 / 0.03 3,121,132.00 3,121,132.00UniCredit S.p.A. 2,275,000 0.04 7,393,888.97 12,239,500.00Other 14,379 223,593.45 223,593.45Austria

Erste Group Bank AG 170,000 0.04 4,114,720.84 4,306,100.00OMV AG 52,316 0.02 1,436,939.47 1,820,073.64Jersey

Experian Plc 338,234 0.03 4,263,019.97 4,511,409.48Glencore Xstrata Plc 3,810,846 0.03 14,293,529.38 14,293,529.38Shire Plc 152,000 0.03 3,822,494.15 5,197,936.91WPP Plc 550,000 0.04 4,545,827.19 9,097,397.15Luxemburg

ArcelorMittal S.A. 59,861 0.00 775,798.56 775,798.56Millicom International Cellular S.A. 26,427 0.03 / 0.00 1,682,567.70 1,909,142.01Subsea 7 S.A. 331,833 0.09 4,606,697.51 4,606,697.51Tenaris S.A. 181,603 0.02 2,398,015.42 2,882,039.61Norway

Aker Solutions ASA 149,180 0.05 1,913,587.90 1,933,649.65DNB ASA 1,282,146 0.08 12,609,840.59 16,603,660.39Norsk Hydro ASA 443,567 0.02 1,435,771.70 1,435,771.70Norwegian Property ASA 8,225,409 1.50 7,150,391.42 7,150,391.42Orkla ASA 363,719 0.04 2,057,145.61 2,057,145.61Statoil ASA 1,433,901.00 0.04 25,187,140.61 25,187,141Storebrand ASA 2,350,000 0.52 7,691,080.69 10,641,456.42Telenor ASA 857,678 0.06 12,889,139.90 14,829,635.15Yara International ASA 400,000 0.14 12,483,558.53 12,483,558.53Other 948,222 306,134.09 306,134.09Portugal

EDP - Energias de Portugal, S.A. 671,000 0.02 1,727,064.93 1,785,531.00Galp Energia, SGPS, S.A. 135,337 0.02 1,610,510.30 1,610,510.30France

Air Liquide SA 120,488 0.04 10,232,354.75 12,386,166.40Alcatel-Lucent SA 27,933,101 1.00 59,507,836.57 91,006,043.06Alstom SA 426,400 0.14 10,927,414.54 11,288,940.00AXA SA 1,365,000 0.06 18,167,567.77 27,586,650.00BNP Paribas SA 435,000 0.03 18,867,212.11 24,625,350.00Carrefour SA 205,000 0.03 3,783,940.16 5,906,050.00Compagnie de Saint-Gobain SA 157,389 0.03 5,213,625.43 6,291,625.28Compagnie Générale des Etablissements Michelin 99,326 0.05 6,163,838.37 7,672,933.50Electricité de France SA 85,000 0.00 2,183,225.00 2,183,225.00Essilor International SA 48,000 0.02 3,709,440.00 3,709,440.00GDF SUEZ SA 772,132 0.03 13,180,293.24 13,180,293.24Klépierre SA 320,000 0.16 8,150,219.18 10,753,600.00Lafarge SA 107,500 0.04 3,487,688.71 5,855,525.00Lagardere SCA 338,116 0.26 7,657,723.59 9,105,463.88L'Oréal SA 90,000 0.01 10,392,200.61 11,493,000.00LVMH Moët Hennessy Louis Vuitton SA 85,000 0.02 11,271,000.00 11,271,000.00Orange SA 802,000 0.03 7,198,318.01 7,218,000.00Renault SA 51,500 0.02 3,010,175.00 3,010,175.00Sanofi SA 460,000 0.03 22,356,510.33 35,475,200.00Schneider Electric SA 312,548 0.06 16,561,971.50 19,815,543.20Société Générale SA 543,123 0.07 14,086,321.82 22,930,653.06Total SA 826,045 0.03 34,059,393.74 36,783,783.85Unibail-Rodamco SE 82,242 0.08 11,689,481.49 15,317,572.50Vinci SA 125,625 0.02 5,139,021.44 5,994,825.00Vivendi SA 461,169 0.03 6,789,231.51 8,806,022.06Other 162,206 129,629.50 129,629.50

44

Notes to the accounts, Parent Company Ilmarinen 2013

Sweden

AB Electrolux 255,990 0.08 / 0.07 4,866,037.86 4,866,037.86AB Industrivärden 103,279 0.03 / 0.00 1,424,602.25 1,424,602.25AB SKF 443,861 0.10 / 0.06 8,452,252.57 8,452,252.57AB Volvo 730,434 0.03 / 0.01 6,958,791.48 6,958,791.48Alfa Laval AB 94,305 0.02 1,600,487.81 1,755,358.28ASSA ABLOY AB 373,018 0.10 / 0.07 13,196,566.32 14,307,493.58Atlas Copco AB 1,294,630 0.11 / 0.10 24,906,533.73 25,253,631.97Atrium Ljungberg AB 1,905,000 1.43 / 1.13 17,993,364.08 18,772,392.23Autoliv Inc. 143,500 0.15 9,497,780.14 9,573,037.89BillerudKorsnäs AB 240,000 0.12 2,097,621.88 2,201,126.53Boliden AB 454,884 0.17 5,052,498.06 5,052,498.06Castellum AB 250,000 0.15 2,290,231.49 2,821,957.08Elekta AB 223,231 0.06 / 0.04 2,478,216.62 2,478,216.62Endomines AB 3,400,000 3.89 1,535,144.65 1,535,144.65Fabege AB 1,100,000 0.67 7,689,245.10 9,535,957.38Getinge AB 222,523 0.09 / 0.10 5,429,534.48 5,525,963.13H & M Hennes & Mauritz AB 887,698 0.05 / 0.03 23,545,184.05 29,659,740.61Hexagon AB 197,700 0.06 / 0.04 3,836,909.09 4,536,850.24Hufvudstaden AB 300,000 0.14 / 0.03 2,040,368.45 2,912,259.71Intrum Justitia AB 1,350,000 1.69 11,459,374.25 27,429,422.85Investor AB 699,499 0.09 / 0.02 15,841,952.76 17,465,564.09Kungsleden AB 913,964 0.67 3,789,483.79 4,446,484.23Lundin Petroleum AB 235,176 0.07 3,323,592.15 3,323,592.15Nordea Bank AB EUR 3,220,016 0.08 23,611,928.69 31,266,355.36Nordea Bank AB SEK 15,463,810 0.38 123,687,436.86 150,988,200.27Sandvik AB 3,244,132 0.26 33,195,309.43 33,195,309.43Scania AB 571,822 0.07 / 0.01 8,126,377.37 8,126,377.37Securitas AB 784,620 0.21 / 0.15 5,904,962.93 6,049,095.96Skandinaviska Enskilda Banken AB 902,084 0.04 7,193,418.41 8,624,636.23Skanska AB 333,228 0.08 / 0.06 4,196,643.93 4,942,506.48Sotkamo Silver AB 1,200,000 8.48 1,608,000.00 1,608,000.00SSAB AB 160,000 0.05 / 0.06 787,366.56 890,203.29Swedbank AB 567,717 0.05 9,358,715.27 11,592,600.30Swedish Match AB 380,665 0.19 8,877,356.50 8,877,356.50Svenska Cellulosa Aktiebolaget SCA 470,820 0.07 / 0.03 8,491,023.58 10,512,150.90Svenska Handelsbanken AB 353,863 0.06 10,902,986.47 12,618,135.22Telefonaktiebolaget LM Ericsson 4,050,938 0.12 / 0.07 33,432,067.09 35,872,276.65TeliaSonera AB 15,650,537 0.26 82,471,652.49 94,413,049.28Tribona AB 900,000 2.31 3,396,693.98 3,962,027.75Other 53,042 545,713.29 569,441.61Germany

Adidas AG 155,000 0.07 10,225,430.28 14,353,000.00Allianz SE 236,500 0.05 19,928,448.52 30,839,600.00BASF SE 432,200 0.05 26,092,984.93 33,581,940.00Bayer AG 295,000 0.04 14,260,775.05 30,119,500.00Bayerische Motoren Werke AG 105,100 0.02 3,480,514.50 8,981,846.00Beiersdorf AG 41,555 0.02 2,527,336.86 3,061,772.40Commerzbank AG 980,678 0.09 11,464,125.82 11,464,125.82Continental AG 28,000 0.01 2,093,421.40 4,464,600.00Daimler AG 334,400 0.03 11,535,684.12 21,100,640.00Deutsche Annington Immobilien SE 75,000 0.03 1,237,500.00 1,350,000.00Deutsche Bank AG 755,000 0.07 24,347,898.51 26,198,500.00Deutsche Börse AG 71,500 0.04 3,894,173.76 4,296,435.00Deutsche Lufthansa AG 909,236 0.20 13,120,196.06 14,067,699.39Deutsche Post AG 487,500 0.04 6,227,788.89 12,969,937.50Deutsche Telekom AG 1,140,000 0.03 9,999,334.21 14,204,400.00Deutsche Wohnen AG 711,510 0.25 8,125,707.60 9,902,755.80E.ON SE 606,700 0.03 8,157,081.50 8,157,081.50Fresenius Medical Care AG & Co. KGaA 40,000 0.01 2,066,000.00 2,066,000.00Fresenius SE & Co. KGaA 22,000 0.01 2,063,925.31 2,459,600.00HeidelbergCement AG 20,600 0.01 820,457.77 1,140,622.00Lanxess AG 45,000 0.05 2,183,175.00 2,183,175.00LEG Immobilien AG 100,000 0.19 4,290,000.00 4,290,000.00Linde AG 204,400 0.11 25,842,319.97 31,119,900.00Merck KGaA 8,200 0.00 / 0.01 1,011,401.41 1,065,590.00Metro AG 418,000 0.13 11,572,498.33 14,751,220.00Münchener Rückversicherungs-Gesellschaft AG 57,500 0.03 6,042,662.91 9,231,625.00OSRAM Licht AG 34,929 0.03 756,358.52 1,432,089.00Porsche Automobil Holding SE 37,975 0.02 / 0.00 2,751,429.41 2,869,770.75RWE AG 146,026 0.02 / 0.03 3,893,053.16 3,893,053.16SAP AG 600,000 0.05 28,132,368.26 37,518,000.00Siemens AG 292,597 0.03 20,807,857.61 29,116,327.47ThyssenKrupp AG 235,850 0.04 4,015,480.13 4,176,903.50Volkswagen AG 5,882 0.00 786,630.84 1,158,165.80Switzerland

ABB AG 1,159,000 0.05 17,549,657.72 22,167,904.86Compagnie Financière Richemont SA 175,000 0.03 9,138,398.68 12,644,591.07Credit Suisse Group AG 639,024 0.04 14,195,327.86 14,195,327.86Galenica AG 8,400 0.13 6,141,251.22 6,141,251.22Holcim Ltd 29,625 0.01 1,486,380.33 1,610,841.28Nestlé SA 942,190 0.03 42,067,570.16 50,118,122.35Novartis AG 852,800 0.03 33,607,376.92 49,461,844.25Roche Holding AG 248,700 0.03 / 0.00 27,664,955.78 50,485,532.75SGS SA 1,450 0.02 1,835,573.49 2,420,210.17Swatch Group AG, The 15,000 0.01 6,579,852.82 7,196,969.70Swiss Re AG 145,800 0.04 6,217,979.91 9,739,002.93Swisscom AG 8,900 0.02 2,945,005.42 3,412,536.66Syngenta AG 62,114 0.07 14,037,668.47 17,967,319.49Transocean Ltd 138,550 0.04 4,892,589.20 4,892,589.20UBS AG 1,245,000 0.03 14,479,235.73 17,159,824.05Zurich Insurance Group AG 82,500 0.06 14,629,832.08 17,358,870.97Denmark

A.P. Møller - Mærsk A/S 6,259 0.14 / 0.02 41,158,132.11 49,188,844.80Carlsberg A/S 43,812 0.03 / 0.01 3,333,182.65 3,524,084.03Coloplast A/S 19,869 0.01 766,412.26 955,985.70Danske Bank A/S 1,287,555 0.13 17,863,828.99 21,455,510.10DSV A/S 79,870 0.04 1,534,706.85 1,903,782.66Novo Nordisk A/S 517,403 0.02 63,836,047.51 68,912,616.53Novozymes A/S 214,100 0.07 / 0.03 4,720,922.36 6,569,985.12TDC A/S 384,127 0.05 2,148,361.54 2,708,709.96William Demant Holding A/S 13,042 0.02 864,391.21 920,543.88Russia

IDGC North-West 1,597,977,036 1.67 996,490.65 996,490.65Russian Grids OAO 78,155,602 0.05 1,218,436.26 1,218,436.26United States

Apple Inc. 38,866 0.00 12,781,319.32 15,805,112.12Aruba Networks, Inc. 1,100,000 1.01 14,269,451.09 14,269,451.09Corning Inc. 1,167,396 0.08 13,466,255.88 15,067,543.18CST Brands, Inc. 66,666 0.09 1,624,740.31 1,775,052.95Equity Residential 750,000 0.21 28,203,175.98 28,203,175.98Unisys Corporation 392,660 0.89 6,584,937.39 9,558,114.86Valero Energy Corporation 600,000 0.11 17,856,558.41 21,927,343.92

2,403,946,720.57 2,925,007,928.66

United States

Luxemburg

Aki Partners S.C.S 6,383,846,941 18.18 63,838,469.41 63,838,469.41Lakeside Network Investments S.à r.l. 83,712,075 10.00 837,120.75 837,120.75United States

Other 68,255 73,121.59 73,121.5964,748,711.75 64,748,711.75

State Amount Book value, EUR Käypä arvo, EUR

Fixed-income funds

Apollo Offshore Credit Fund A-Initial Series Cayman Islands 12,928 7,834,973.56 7,834,973.56Apollo Offshore Credit Fund Ltd A-02-07 Cayman Islands 15,001 7,517,986.02 7,517,986.02AXA IM US Short Duration High Yield $ A-class Luxemburg 547,958 45,842,214.14 66,938,205.74AXA WF US High Yield Bonds USD 1 CAP Luxemburg 786,492 59,404,844.18 111,486,682.71BlackRock Eur Instl Cash Series Ireland 260,021,187 260,021,186.52 260,021,186.52

45

Notes to the accounts, Parent Company Ilmarinen 2013

Fidelity Funds - US High Yield Luxemburg 4,374,491 36,344,830.60 39,078,912.43Goldman Sach Global High Yield Portfolio Class I Luxemburg 24,472,989 190,055,623.44 190,055,623.44GS Euro Liquid Reserves Fund (inst.Dist) Ireland 455,235,539 455,235,538.57 455,235,538.57JPM Euro Liquidity Institutional (flex dist.) Luxemburg 415,820,592 415,820,592.48 415,820,592.48McDonnell Loan Opportunity Fund (Offshore) class A Cayman Islands 3,426,383 526,865.29 526,865.29McDonnell Loan Opportunity Fund (Offshore) class B Cayman Islands 5,139,574 801,987.62 801,987.62Morgan Stanley Institutional Liquidity Euro Fund Luxemburg 288,209,440 288,209,439.79 288,209,439.79New Amsterdam Capital European Credit Fund Cl. SC Cayman Islands 163,453 3,015,514.36 3,015,514.36New Amsterdam Capital European Credit Fund Class D Cayman Islands 169,305 1,844,763.27 1,844,763.27OP-High Yield Fund A Finland 176,233 19,998,132.80 29,392,087.30OP-Likvidi A Finland 974,492 100,000,000.00 100,382,386.03T.Rowe Global High Yield Bond Fund Luxemburg 3,172,336 31,419,338.81 59,439,603.13Other 0.00 70.83Total 1,923,893,831.45 2,037,602,419.09

Equity funds

Aberdeen Global Asian Smaller Companies Fund A2 Luxemburg 1,759,511 21,458,434.12 55,903,342.29Aberdeen Global China Equity Luxemburg 5,610,492 48,625,279.76 96,578,082.67Aberdeen Global Sicav Asia Pacific Equity A2/C Luxemburg 1,470,648 38,680,351.48 74,825,494.93Accendo Capital SICAV Luxemburg 14,960 13,344,496.87 13,344,496.87Alfred Berg Small Cap Finland B (kasvu) rahasto Finland 20,005 4,355,157.88 12,202,811.30Amundi Asian Growth Institutional Fund Class VII Luxemburg 4,543 3,466,140.66 4,618,409.34Amundi EQ Latin America Luxemburg 30,686 31,828,505.13 31,828,505.13AXA Rosenberg Japan Small Cap Alpha Fund Ireland 2,513,364 29,775,517.00 29,775,517.00BlackRock Emerging Markets Index Sub-Fund Ireland 24,227,384 215,272,546.36 215,272,546.36Bosera China Fund Plc Class 1 Ireland 97,863 5,908,402.35 5,908,402.35Carnegie Global Health Care Fund Luxemburg 240,612 24,691,760.14 47,458,310.90Carnegie Medical Luxemburg 1,060,816 36,181,867.51 72,878,091.81China AMC CSI 300 Index ETF Hong Kong 5,112,771 14,057,693.75 14,057,693.75CIP Emerging Markets Equity Fund I Luxemburg 616,671 34,393,985.87 47,259,806.55DB X-tracker Asia x-JP Luxemburg 215,000 5,217,024.96 5,316,148.21DB X-trackers EURO STOXX 50 UCITS Luxemburg 1,781,600 50,023,643.56 56,298,560.00DB X-trackers MCSI Europe Small Cap Index Ucit ETF Luxemburg 2,428,649 47,256,361.68 67,589,301.67DB X-trackers MCSI Pan-Euro Index Ucits ETF Luxemburg 1,920,000 25,083,362.30 29,913,600.00DB X-Trackers MSCI Brazil Luxemburg 1,688,031 56,447,756.64 56,447,756.64East Capital Balkan Fund Sweden 6,561,599 8,562,053.51 8,562,053.51East Capital Bering Balkan Fund USD Cayman Islands 525,323 2,917,826.25 2,917,826.25East Capital Bering Russia Fund class A Cayman Islands 493,291 7,028,137.19 7,028,137.19East Capital Bering Ukraine Fund class A Master Cayman Islands 346,576 1,610,871.05 1,610,871.05East Capital Bering Ukraine Fund Class A Oct 2013 Cayman Islands 378,132 1,923,204.37 1,923,204.37East Capital Bering Ukraine Fund Class R Cayman Islands 676,262 2,893,150.71 2,893,150.71East Capital China A-Shares Fund Luxemburg 40,000 28,772,967.88 28,772,967.88Evli Greater Russia B Finland 136,583 22,302,832.15 22,302,832.15FC Global Climate Opportunities Luxemburg 103,039 4,999,984.69 5,647,567.59FIM Brazil Finland 563,647 10,376,745.56 10,376,745.56FIM Bric+ Finland 651,847 7,000,000.00 7,228,984.43FIM Bric+ Small Cap Finland 1,330,297 9,644,652.34 9,644,652.34FIM Fenno Finland 74,818 4,500,000.00 12,900,134.13FIM Rohto Finland 252,166 2,500,000.00 2,806,603.41Fondita Equity Spice Finland 91,991 9,000,000.00 10,910,105.33Fourton Fokus Suomi Finland 40,418 5,000,000.00 5,321,422.16Fourton Hannibal Finland 48,972 5,000,000.00 5,889,341.95Fourton Odysseus A Finland 210,004 40,000,000.00 50,401,017.53Fourton Stamina A Finland 209,378 29,559,684.09 51,534,150.43Health Care Select Sector SPDR ETF Fund United States 1,465,217 55,458,354.42 58,891,290.20Industrial Select Sector SPDR ETF Fund United States 687,400 21,768,062.94 26,048,527.30Investec GS Asian Equity Luxemburg 3,064,333 45,000,000.00 49,727,924.83Investec GSF Asia Pacific Equity Fund I Luxemburg 2,352,941 37,006,231.68 37,006,231.68Investec Pan Africa Fund I S6 USD Guernsey 2,259,366 29,608,804.51 33,598,061.43iShares China Large-Cap ETF United States 2,650,600 73,707,860.20 73,707,860.20iShares MSCI Emerging Markets ETF United States 6,146,900 186,265,644.99 186,265,644.99iShares MSCI South Korea Capped ETF United States 967,600 42,736,394.02 45,345,506.49KJK Fund Baltic States B1 C Luxemburg 5,139 2,210,076.67 8,799,366.38KJK Fund II, SICAV-SIF, Balkan A Luxemburg 10,000 10,000,000.00 11,580,300.00Montanaro European Smaller Companies, Accum. Class Ireland 22,149,728 63,478,649.60 85,365,050.55MSCI Europe value ETF Ireland 404,275 59,618,606.52 72,963,552.00OP Kehittyvä Aasia Finland 568,083 68,079,552.59 75,549,391.87OP-Latinalainen Amerikka A Finland 763,313 81,666,862.35 81,666,862.35OP-Suomi Arvo A Finland 43,286 3,293,234.30 8,488,888.49OP-Suomi Pienyhtiöt A Finland 70,600 12,658,030.77 18,734,398.94Osmosis MoRE World Resource Efficiency Fund plc Ireland 561,622 4,618,026.72 5,163,780.92PAM USA Fund I Finland 1,031,244 101,565,476.94 132,376,981.50Parvest Equity Latin America I Luxemburg 117 20,157,567.01 34,841,220.45PF (Lux) Small Cap Europe-Z Luxemburg 84,723 32,759,330.79 80,437,241.36PowerShares Global Clean Energy Portfolio United States 1,125,000 9,014,030.89 9,014,030.89PowerShares QQQ Trust United States 590,000 36,950,420.71 37,626,350.52Prosperity New Russian Generation, A share Guernsey 14,864,250 2,910,120.73 2,910,120.73Prosperity New Russian Generation, B share Guernsey 14,864,250 2,802,338.48 2,802,338.48Prosperity Quest Fund Unlisted Limited, Class C Channel Islands 220,352 16,477,401.33 17,190,706.02Prosperity Russia Domestic Fund A Guernsey 21,750,000 11,152,023.29 13,878,616.49Prosperity Voskhod Fund Limited Guernsey 41,282,963 32,491,413.07 33,227,531.67Relational Investors XX L.P. United States 75,000,000 47,510,452.30 94,744,369.54Russel Japan Equity Fund A Accum Ireland 629,766 80,871,535.00 88,960,715.10Russell Emerging Equity Fund A Ireland 771,509 147,340,817.02 208,264,414.14Seligson & Co Global Top 25 Pharmaceuticals Finland 602,225 10,000,000.00 10,627,456.53Seligson & Co Russian Prosperity Fund Euro K Finland 521,416 41,917,080.71 44,275,587.04SPDR S&P 500 ETF Trust United States 5,561,864 572,788,012.86 745,332,525.44SSGA Emerging Markets Select Equity Fund Luxemburg 5,450,447 50,169,727.20 50,169,727.20Taaleritehdas ArvoRein Finland 123,267 15,000,000.00 19,631,152.35Taaleritehdas Lyydian Leijona Osake Kasvu Finland 101,681 9,905,970.83 9,905,970.83Timber Capital Forest Fund (A shares) Guernsey 10,637,909 64,909,938.63 68,728,713.79Timber Capital Forest Fund II (Ordinary shares) Guernsey 128,218 828,382.55 828,382.55Topix ETF Japan 14,306,446 122,566,378.06 131,181,964.08UBS Global Innovators I-A2-Acc Luxemburg 71,213 7,747,922.50 7,747,922.50Total 3,144,671,130.99 3,909,755,323.56

Real estate funds

Aberdeen Indirect Property Partners Asia Luxemburg 27,720,534 17,618,247.64 17,618,247.64Aberdeen Real Estate Fund Finland L.P. Great Britain 50,661,061 50,661,061.28 51,225,476.16AEW Value Investors Asia, LP Cayman Islands 2,288,570 1,425,793.55 1,425,793.55Alternative Property Income Venture Luxemburg 24,244,926 24,244,926.00 24,408,409.54ARCH Capital - TRG Asian Partners, LP. Cayman Islands 24,378,557 18,613,808.72 18,613,808.72CapMan Hotels RE Ky Finland 45,011,909 44,992,464.07 44,992,464.07Capman Re II KY Finland 14,132,567 14,132,567.00 16,507,841.67Carlyle Europe Real Estate Partners III, L.P. United States 35,368,110 30,626,802.65 30,626,802.65Curzon Capital Partners III, LP. Great Britain 38,348,037 38,348,037.00 47,183,999.95ECE European Prime Shopping Centre Fund Luxemburg 33,842,001 33,842,001.04 39,521,839.44European Office Income Venture Luxemburg 14,959,092 4,878,683.31 4,878,683.31European Property Investors Special Opportunities Great Britain 35,003,171 34,296,001.94 34,296,001.94European Property Investors, LP Great Britain 9,731,658 5,394,997.40 5,394,997.40European Retail Income Venture Luxemburg 24,862,103 9,211,011.30 9,211,011.30Fosca II Luxemburg 20,000,000 19,809,880.00 19,809,880.00Franklin Templeton Asian Real Estate Fund Luxemburg 37,826,833 26,346,866.65 27,455,105.57Frogmore Real Estate Partners, L.P Great Britain 26,970,485 10,766,098.80 10,766,098.80Goodman European Logistics Fund Luxemburg 30,000,000 15,000,000.00 15,000,000.00Partners Group Real Estate Secondary 2009, LP Great Britain 36,777,466 36,777,465.75 41,814,029.35Pradera European Retail Fund Luxemburg 17,124,818 11,283,611.08 11,283,611.08Real Estate Fund Finland I Ky Finland 8,489,900 4,893,638.01 4,893,638.01Rockspring German Retail Box Fund Great Britain 25,000,000 16,575,225.00 16,575,225.00Sierra Portugal Fund Luxemburg 35,237,205 16,196,006.06 16,196,006.06The Archstone German Fund Luxemburg 30,000,000 30,000,000.00 30,029,010.00VTBC-Ashmore Real Estate Partners I, L.P. Great Britain 3,129,522 3,093,998.80 3,093,998.80Other 0.00 0.00Total 519,029,193.05 542,821,980.01

Private equity funds *)

Advent Private Equity Fund III D Great Britain 2,769,422 797,438.64 797,438.64Alpha Private Equity Fund IV Jersey 3,085,721 808,357.12 808,357.12Alpha Private Equity Fund V Jersey 9,059,255 6,927,258.62 6,927,258.62Antin Infrastructure Partners FCPR Ranska 36,632,763 36,632,762.81 39,736,986.50Apax Europe V - D, L.P. Great Britain 11,962,987 2,212,542.46 2,212,542.46

46

Notes to the accounts, Parent Company Ilmarinen 2013

Apax Europe VI - A, L.P. Great Britain 14,308,163 14,308,162.97 16,425,971.40Apax Europe VII -B, L.P. Great Britain 63,975,139 63,975,139.34 71,323,515.77Apax VIII Guernsey 24,329,124 24,329,124.22 25,023,063.83Apollo Overseas Partners VII, L.P. Cayman Islands 31,069,637 23,261,189.05 30,823,035.55Apollo Overseas Partners VIII United States 1,597,511 1,158,372.03 1,158,372.03Arcadia II Germany 8,222,852 4,940,930.71 4,940,930.71Arcus European Infrastructure Fund 1 L.P. Great Britain 36,452,629 26,899,998.71 26,899,998.71Atlas Venture VI United States 2,550,811 717,715.47 717,715.47Axa Secondary Fund IV L.P. Jersey 26,737,725 19,866,576.95 32,002,387.12Baltic Investment Fund III L.P Jersey 728,488 698,850.92 698,850.92BC European Capital IX, LP Guernsey 33,625,547 33,625,547.00 39,209,741.59BC European Capital VIII Great Britain 14,175,920 12,582,319.78 12,582,319.78Bluedrip L.P. Luxemburg 15,000,000 15,000,000.00 15,000,000.00Bridgepoint Europe II B Great Britain 5,304,702 1,773,505.04 1,773,505.04Bridgepoint Europe III Great Britain 17,275,223 12,945,032.95 12,945,032.95Bridgepoint Europe IV Great Britain 34,812,159 34,812,159.41 41,379,612.53CapMan Buyout Fund IX Guernsey 38,522,611 38,522,610.50 45,836,397.76CapMan Buyout VIII Fund A L.P. Guernsey 9,320,363 9,320,363.32 13,386,539.58CapMan Mezzanine V Fund FCP-SIF Luxemburg 4,886,932 4,886,931.78 6,932,161.60CapMan Public Market Fund FCP-SIF Class A Luxemburg 14,523,547 14,523,547.05 41,537,940.03CapMan Russia II Guernsey 1,425,618 1,191,143.59 1,191,143.59Capman Technology Fund 2007 L.P. Guernsey 1,157,828 1,122,649.94 1,122,649.94CCM Co-Invest LP Jersey 3,075,517 3,662,855.95 4,490,228.99Chiron Guernsey Holdings, LP INC Guernsey 15,000,000 11,007,558.52 17,235,011.96Cidron Childsafe Limited Jersey 10,000,000 10,000,000.00 17,892,620.00Coller International Partners V Cayman Islands 15,581,195 11,269,515.09 22,936,973.82Consumer Equity Investments Limited Ireland 1,400,000,000 12,576,008.84 12,576,008.84CVC Europe V Cayman Islands 23,257,609 23,257,608.92 24,977,532.36Darwin Private Equity I Great Britain 10,094,290 10,711,885.64 10,711,885.64Dasos Timberland Fund I Luxemburg 15,934,200 15,147,274.00 15,147,274.00Dasos Timberland Fund II Luxemburg 3,190,289 2,980,176.61 2,980,176.61Doughty Hanson & Co IV, Limited Partnership 4 Great Britain 14,236,791 9,285,804.56 9,285,804.56Doughty Hanson V Great Britain 24,799,010 21,898,492.99 21,898,492.99EPE Overseas Co-Investors L.P. Cayman Islands 8,941,143 7,001,642.21 9,608,820.96EQT Infrastucture II, LP. Great Britain 13,290,215 13,290,214.91 15,133,753.78EQT VI Fund Great Britain 19,800,460 15,864,702.87 15,864,702.87European Mid Market Secondary Fund II LP Great Britain 10,250,000 10,250,000.00 14,444,002.75European Mid-Market Secondary Fund I Great Britain 34,275,000 34,275,000.00 42,472,106.18European Strategic Partners Great Britain 11,045,667 2,705,404.15 2,705,404.15HarbourVest Partners VI-Buyout Partnership Fund LP United States 2,234,765 999,274.25 999,274.25HarbourVest Partners VI-Partnership Fund L.P. United States 9,058,081 2,837,975.40 2,837,975.40HG Capital 5 Great Britain 5,530,419 7,414,293.36 8,189,278.93Hg Capital Edge Co-Invest LP Guernsey 7,200,000 8,624,820.32 8,636,200.07HgCapital 6 Great Britain 20,165,345 22,557,249.75 22,557,249.75HgCapital 7 Great Britain 5,607,274 6,631,118.77 6,725,769.50Ilmarisen Suomi-Rahasto I Ky Finland 7,205,135 7,143,034.22 7,143,034.22Industri Kapital 2000 L.P. I Jersey 3,783,872 1,351,667.29 1,351,667.29Intera Fund I Ky Finland 6,451,033 5,773,197.18 5,773,197.18Isis IV L.P. Great Britain 8,289,299 8,227,583.87 8,227,583.87Kasvurahastojen Rahasto Ky Finland 6,812,175 6,205,060.31 6,205,060.31KKR 2006 Fund L.P. United States 30,769,758 21,741,329.56 21,741,329.56KKR Asian Fund II L.P. Cayman Islands 2,120,572 1,537,649.19 1,537,649.19KKR Asian Fund L.P. Cayman Islands 24,218,459 17,964,712.00 24,614,812.15KKR E2 Investors L.P. Cayman Islands 1,150,174 1,150,174.00 2,178,735.50KKR European Fund II, LP Canada 16,608,183 13,622,862.11 13,622,862.11KKR European Fund III Cayman Islands 33,883,437 33,883,437.00 38,713,249.88Lifeline Ventures Fund I Ky Finland 1,909,059 1,811,800.38 1,811,800.38MB Equity Fund IV Ky Finland 6,911,288 6,911,287.60 8,620,214.04Midinvest Fund II Ky Finland 631,756 600,559.00 600,559.00Montagu IV Co-Invest 1 LP Great Britain 9,237,137 9,237,136.56 10,982,465.80Montagu IV LP Great Britain 18,280,411 18,280,411.91 18,710,476.31Mount Kellett Capital Partners (Cayman), L.P. Cayman Islands 24,855,805 18,452,686.18 30,939,791.30Nordic Capital Fund VIII Jersey 12,452,985 11,517,018.61 11,517,018.61Nordic Capital V Jersey 8,627,562 6,495,751.79 6,495,751.79Nordic Capital VI Jersey 31,104,066 31,104,066.45 33,490,214.91Nordic Capital VII Jersey 60,794,365 60,794,365.07 78,470,813.07PAI Europe V FCPR France 17,779,900 17,779,900.00 22,221,265.68PAI Europe V LP Great Britain 3,267,875 1,537,398.11 1,537,398.11Partners Group European Mezzanine 2008 Great Britain 37,594,870 37,594,870.01 38,176,838.60Permira Europe II LP2 Guernsey 3,972,686 698,807.39 698,807.39Permira Europe III LP Guernsey 11,349,945 7,213,945.59 7,213,945.59Permira IV LP Guernsey 50,928,441 50,928,440.65 57,881,038.58Redtop Co-Invest LP Jersey 9,793,032 12,071,534.26 17,246,355.43Salto LP Fund Guernsey 10,000,000 10,000,000.00 10,000,000.00Selected Mezzanine Funds I Ky Finland 13,781,226 13,781,225.69 14,694,424.83Selected Private Equity Funds I Ky Finland 3,412,979 3,317,822.17 3,317,822.17Sentica Buyout III Ky Finland 14,314,414 14,314,414.16 19,903,577.37Sentica Kasvurahasto II Ky Finland 3,520,060 1,634,867.11 1,634,867.11Silver Lake Partners III L.P. United States 38,096,994 28,122,196.21 29,497,918.75Silver Lake Partners IV United States 9,034,150 6,550,757.74 6,550,757.74SLP Denali Co-Invest L.P. United States 15,072,857 10,929,488.07 10,929,488.07Sponsor Fund III Ky Finland 16,125,210 16,125,209.86 19,410,850.37The Fifth Cinven Fund Guernsey 30,676,149 29,161,606.56 29,161,606.56The Fourth Cinven Fund Limited Partnership Great Britain 37,718,139 37,718,138.72 43,186,853.93The Third Cinven Fund Limited Partnership Great Britain 7,380,490 1,863,861.58 1,863,861.58Towerbrook III Cayman Islands 30,008,863 22,476,911.78 23,350,424.84Vaaka Partners Buyout I (B,C,D,E,F) Ky Finland 5,394,641 5,394,640.95 5,906,344.22Vaaka Partners Buyout I Ky Finland 2,949,609 2,949,609.38 3,263,002.43Vaaka Partners Buyout II Ky Finland 1,875,952 1,521,462.71 1,521,462.71Valhalla Co-Invest L.P. Cayman Islands 81,000,000 10,050,138.52 14,528,279.33Verdane ETF II SPV Ky Finland 1,090,797 1,090,797.00 3,933,090.02Verdane ETF III SPV K/S Denmark 880,162 880,162.00 1,259,398.28Veronis Suhler Stevenson Communications PartnersIV United States 10,800,148 4,696,619.51 4,696,619.51Other 3,993,456.85 13,299,605.69Total 1,310,293,180.35 1,543,334,208.96

Other funds

Bluecrest Capital International F EUR Cayman Islands 66,412 20,018,530.92 20,315,317.31Brevan Howard Fund B Class Limited Cayman Islands 150,946 19,400,533.17 34,189,378.06CFM STRATUS Feeder Limited Class D British Virgin Islands 12,963 19,843,814.87 19,843,814.87Citadel Kensington Global Strategies LTD Bermuda 42,158 29,932,643.90 48,033,950.78D.E Shaw Composite International Fund s. New Issue Cayman Islands 1,946 23,154,547.61 37,177,614.76Davidson Kempner Int. Ltd. - Class C Tranche 4 British Virgin Islands 252,628 18,420,736.02 28,196,804.77HBK Offshore Fund Ltd class C Cayman Islands 199,943 19,034,574.69 24,584,729.90Man Absolute Return Strategies I Ltd: Class ARS1|2 Cayman Islands 13,422 3,526,873.09 3,956,290.43Marshall Wace Market Neutral TOPS B Fund Ireland 288,556 30,000,000.00 32,348,474.21Och Ziff Europe Overseas Fund Ltd Cayman Islands 20,433 18,589,418.46 26,936,448.97Och-Ziff Asia Overseas Fund, Ltd Cayman Islands 13,352 10,188,965.33 13,428,051.61Palmetto Fund, Ltd. Class D 01Apr2011 Bermuda 1,126 829,212.96 1,022,830.97Palmetto Fund, Ltd. Class D 01Feb2010 Bermuda 1,704 1,207,115.17 1,311,906.63Palmetto Fund, Ltd. Class D 01Jan2008 Bermuda 23,329 13,221,861.53 17,962,149.66Palmetto Fund, Ltd. Class D 01Jul2011 Bermuda 1,791 1,288,454.33 1,614,440.29Paulson Credit Opportunities Ltd. Class C Cayman Islands 32,000 2,676,831.39 39,992,206.67QVT CSI Offshore A1137 Cayman Islands 762 569,866.99 569,866.99QVT Offshore Class 1-NI 1075 Cayman Islands 18,731 14,070,630.41 14,713,915.48QVT SLV Offshore Ltd. B1146 Cayman Islands 2,652 1,184,345.62 1,609,810.75Shepherd Investments International, Ltd. Class BQ British Virgin Islands 2,260 2,206,272.33 2,292,460.48Ursus International Ltd. B/1 Cayman Islands 5,156 5,145,709.79 5,145,709.79Vicis Capital Fund (International) Cayman Islands 29,148 1,987,147.57 1,987,147.57Other 1,024,560.20 1,196,137.03Total 257,522,646.35 378,429,457.98

Total 12,415,235,232.65 15,506,657,245.54

*) Real estate funs are not included

The book value of shares and holdings listed here exceed EUR 0.5 million.Loaned shares have not been deducted.

47

Notes to the accounts, Parent Company Ilmarinen 2013

OPEN SECUTIRITIES AGREEMENTS 2013 2012

Securities borrowed

Number 5,736,000.00 1,080,000.00Current value 63,751,049.70 21,193,195.04

Borrowed equities are listed shares.All loans have a maturity under one year and can be halted any time.The current value of the assets pledged as security for lending is presented in the notes to the balance sheet under Securities and financial commitments.

LOAN RECEIVABLES 2013 2012

Other loans itemised by guarantee

Bank guarantee 226,759,409.36 466,323,925.23Guarantee insurance 132,125,212.93 183,458,697.08Other 196,945,401.83 253,633,541.70

Secured loans, remaining acquisition cost 555,830,024.12 903,416,164.01

Unsecured loans, remaining acquistion cost 427,704,934.17 545,771,598.32

Remaining acquisition cost, total 983,534,958.29 1,449,187,762.33

Total premium loan receivables itemised by balance sheet item

Loans guaranteed by mortgages 383,118,619.07 465,377,388.62Other loans 392,009,236.36 689,374,475.50

Remaining acquisition cost, total 775,127,885.43 1,154,751,864.12

Inner circle loans

Loans granted to group companies 142,867,819.28 149,144,268.71

Loans granted to associated companies 176,087,785.33 184,615,393.33

The loan period is 10−29 years and the loans are both loans repayable in instalments within the loan period and single payment loans repayable at the expiry of the loan period.The interest is mainly tied either to the fixed or variable TyEL referance rate.

48

Notes to the accounts, Parent Company Ilmarinen 2013

CHANGES IN INTANGIBLE AND TANGIBLE ASSETS

Intangible rights Prepayments Furniture and fixtures Other tangible assets Total

Acquisition cost Jan 1 8,339,666.73 8,330,053.53 5,859,181.45 1,748,632.58 24,277,534.29Additions 9,948,905.74 15,389,778.96 470,110.06 12,734.86 25,821,529.62Deductions -344,720.33 -7,487,010.42 - - -7,831,730.75

Acquisition cost Dec 31 17,943,852.14 16,232,822.07 6,329,291.51 1,761,367.44 42,267,333.16

Accumulated depreciation and amortisation Jan 1 -2,901,780.74 -4,854,211.24 -7,755,991.98Depreciation and amortisation for the financial year -2,382,749.69 -289,013.05 -2,671,762.74

Accumulated depreciation and amortisation Dec 1 -5,284,530.43 -5,143,224.29 -10,427,754.72

Book value Dec 31 12,659,321.71 16,232,822.07 1,186,067.22 1,761,367.44 31,839,578.44

RECEIVABLES 2013 2012

Other receivablesFrom group companies 18,306,125.01 17,973,855.01From participating interests 1,560.82 1,710.09

2013

49

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF CAPITAL AND RESERVES

Capital and reservesInitial fund 22,994,653.31 22,994,653.31Other reserves

Reserves under the Articles of AssociationJan 1 60,241,452.83 54,487,589.62Transfer from unused donation funds 31,750.00 18,182.93Transfer from previous year's profit 2,968,462.34 63,241,665.17 5,735,680.28 60,241,452.83

Profit/loss brought forwardJan 1 3,018,462.34 5,785,680.28Transfer to donations -50,000.00 -50,000.00Transfer to reserves under the Articles of Association -2,968,462.34 - -5,735,680.28 -

Profit/loss for the financial year 3,773,637.34 3,018,462.3490,009,955.82 86,254,568.48

Breakdown of capital and reserves after proposed distribution of profits:Policyholders' share 90,009,955.82 86,254,568.48

Distributable profits:

Profit/loss for the financial year 3,773,637.34 3,018,462.34+ Other funds

Reserves under the Articles of Association 63,241,665.17 60,241,452.83

Distributable profits, total 67,015,302.51 63,259,915.17

2013 2012

50

Notes to the accounts, Parent Company Ilmarinen 2013

SPECIFICATION OF TECHNICAL PROVISIONS 2013 2012

Provision for unearned premiums

Future pensions 13,136,854,536.00 13,088,514,328.00Provision for future bonuses 762,899,692.00 477,589,703.00Provision for current bonuses 86,009,621.00 62,412,634.00Supplementary insurance liability tied to income from shares 633,969,511.00 167,312,277.00Total 14,619,733,360.00 13,795,828,942.00

Provision for claims outstanding

New pension awarded 11,597,966,152.00 10,804,024,236.00Equalisation provision 971,185,996.00 986,024,600.00Total 12,569,152,148.00 11,790,048,836.00

Total technical provisions 27,188,885,508.00 25,585,877,778.00

SPECIFICATION OF LIABILITIES 2013 2012

Liabilities to group companies and participating interestsOther liabilities

To group companies 20,484,262.15 21,343,849.85To participating interests 453,503.29 -

51

Notes to the accounts, Parent Company Ilmarinen 2013

SECURITIES AND FINANCIAL COMMITMENTS 2013 2012

As security for own debts

Mortgaged as security for rents 273,809.00 273,809.00

Assets pledged as security for derivative contractsSecurities 337,021,099.55 508,159,777.79Cash 1) 14,450,934.92 41,622,723.02

Assets pledged as security for equity lendingCash 1) 71,609,227.22 23,001,296.05

1) The cash collaterals, EUR 86,060,162.14, provided as security in the transfer according to the Act of Financial Collateral Arrangements are included in the balance sheet item Other liabilities.

The cash assets, EUR 1,606,593,681.94, pledged as security in the transfer according to the Act on Financial Collateral Arrangements, are included in the balance sheet item Other liabilities.

Off-balance-sheet commitments and liabilities

Investment commitments

Private equity funds 1,767,983,109.95 1,585,725,918.34Other 49,328,408.33 51,833,210.96

Derivative contracts

Non-hedgingInterest derivatives

Future and forward contractsOpen, underlying instrument -1,084,914,138.43 -965,246,768.22

fair value 0.00 0.00Option contracts

Open, bought, underlying instrument 29,830,373,036.80 14,393,533,856.00fair value 681,871,487.12 276,150,370.39

Open, written, underlying instrument -24,073,520,122.62 -15,865,660,533.58fair value -329,642,455.92 -225,816,639.79

Interest rate and credit default swapsOpen, underlying instrument -1,369,930,276.64 -5,004,690,396.81

fair value 201,312,404.21 44,779,090.63Currency derivatives

Forward contractsOpen, underlying instrument 3,835,125,128.48 4,587,121,905.75

fair value 31,768,385.01 5,911,683.72Closed, fair value 1,859,739.14 4,121,342.67

Option contractsOpen, bought, underlying instrument 15,595,122,340.59 17,177,243,425.63

fair value 1,073,401,623.53 1,429,717,017.20Open, written, underlying instrument -3,528,503,226.74 -5,239,139,912.19

fair value -107,714,767.39 -222,580,073.59Currency swaps

Open, underlying instrument 0.00 0.00fair value 0.00 0.00

Equity derivativesFuture and forward contracts

Open, underlying instrument 80,737,377.14 -1,782,822,338.46fair value -2,074,034.91 416,454.78

Option contractsOpen, bought, underlying instrument 5,775,989,869.33 16,347,725,004.13

fair value 358,714,975.80 613,962,552.43Open, written, underlying instrument -1,364,811,216.34 -911,203,972.11

fair value -67,714,939.94 -29,396,242.81Total returns swaps

Open, underlying instrument -78,422,784.20 -536,276,923.59fair value -2,208,241.90 983,340.30

Other derivativesFuture and forward contracts

Open, underlying instrument 190,781,947.39 53,249,981.59fair value 45,471,454.79 80,596,983.13

Option contractsOpen, bought, underlying instrument 248,853,537.45 241,857,726.18

fair value 31,895,103.96 34,851,170.36Open, written, underlying instrument 0.00 0.00

fair value 0.00 0.00Total returns swaps

Open, underlying instrument 44,245,368.76 56,780,184.29fair value 321,174.93 -3,385,969.99

Profits on closed and mature derivatives have been recognised in full in profit and loss account.

At the 2013 balance sheet date, derivatives taken out to hedge future acquisition costs for electricity for Ilmarinen’s

own properties were open to the current value of EUR -1,349,750. Derivatives were taken out based on some 70,000 MWh of electricity consumption for 2013, which corresponds to approx. 8 MW in average output. Derivatives have been taken outin a staggered manner for future years.

52

Notes to the accounts, Parent Company Ilmarinen 2013

Valuation principles

The fair values of listed derivatives are calculated using the price quoted on the stock exchange.Bilateral OTC derivatives are valued based on the counterparty’s valuation if market conditions

do not prevent the valuation at market value of the derivatives transactions in question.Bilateral OTC derivatives transactions are valued a the theoretical model price ifmarket conditions prevent the valuation at market value of the transaction in question.The European Market Infrastructure Regulation (EMIR) and the related technical standards define in more detail when market conditions prevent valuation at market value.Non-centrally-cleared derivatives are valued at the value received from the central counterparty.

Amount of joint and several liability

The company belongs to a tax liability group represented by OKO Bank Group Central Cooperative. Group members are collectively responsible for the value-added tax payable by the Group.

VAT deduction refund liabilities 5,511,650.00 4,506,300.00

Leasing and rent liabilities

Due in the next year 988,086.57 950,908.28Due in subsequent years 1,302,672.60 413,993.85

Other financial commitments 3,120,000.00 2,920,000.00

53

Notes to the accounts, Parent Company Ilmarinen 2013

SOLVENCY CAPITAL 2013 2012

Capital and reserves after proposed distribution of profits 89,959,955.82 86,204,568.48

Accumulated appropriations 3,027,008.88 2,723,800.16

Provision for future bonuses 762,899,692.00 477,589,703.00

Difference between current value and book value of assets 5,324,427,037.96 4,196,012,371.80

Equalisation provision 971,185,996.00

Intangible assets -28,892,143.78 -13,767,939.52

Amount of provision for pooled claims treated egual to solvency capital 1,003,613,530.89

7,122,607,546.88 5,752,376,034.81Minimum solvency capitalrequired under the Employee Pension Insurance Companies Act (TVYL), sector 17 1,224,719,628.84 481,734,494.82

In accordance with 16 § of the Act on Employment Pension Insurance Companies, the solvencycapital excluding the amount of provision for pooled claims treated equal to working capital is 4,748,762,503.92

The minimum amount of solvency capital for employment pension insurance companies excluding the temporary relief for 2008―2010 in accordance with the Act 853/2008 1,851,569,073.46

54

Key figures and analyses Ilmarinen 2013

KEY FIGURES IN BRIEF 2013 2012 2011 2010 2009

Premiums written, EUR mill. 4,086.9 4,019.3 3,725.5 3,383.2 3,184.1Pensions and other payments made, EUR mill. 1) 4,145.5 3,847.8 3,567.3 3,266.3 3,056.7Net return on investments at fair value, EUR mill. 2,915.3 2,048.4 -1,153.0 2,738.8 3,410.4ROCE, % 9.8 7.5 -4.0 10.8 15.8Turnover, EUR mill. 5,900.7 5,269.2 3,210.3 4,597.9 5,156.3Total operating expenses, EUR mill. 143.4 144.0 130.9 128.0 121.4Total operating expenses, % of turnover 2.4 2.7 4.1 2.8 2.4Operating expenses covered by loading profit 105.6 108.7 95.9 92.1 87.5

0.6 0.6 0.6 0.6 0.6Total profit, EUR mill. 1,489.0 931.2 -1,791.9 1,706.2 2,180.4Technical provisions, EUR mill. 27,188.9 25,585.9 24,205.5 24,657.4 22,609.7Solvency capital, EUR mill. 2) 7,122.6 5,752.4 4,808.7 6,578.2 4,876.9

28.0 23.9 21.1 29.7 24.01.94 2.16 2.54 2.60 2.73

Equalisation provision, EUR mill. 971.2 986.0 996.9 1,067.9 971.4Pension assets, EUR mill. 4) 32,513.3 29,781.9 27,584.3 28,664.1 25,084.2Transfer to client bonuses, % of TyEL payroll 0.51 0.37 0.35 0.48 0.37TyEL payroll, EUR mill. 16,843.0 16,694.2 15,923.8 14,702.0 14,041.0YEL payroll, EUR mill. 1,433.1 1,366.9 1,268.7 1,142.8 1,088.3TyEL policies 5) 38,237 37,462 36,511 36,767 35,840Employees insured under TyEL 529,000 529,000 515,000 501,000 472,000YEL policies 60,612 58,776 56,717 53,660 52,243Pensioners 313,962 307,934 302,093 295,827 282,982

1) Claims paid in Profit and Loss account exluding costs for claims handling and working capacity maintenance2) Until 2012 solvency capital computed according to the regulations in force at the time (the same principle also concerns other solvency key figures)3) The ratio was calculated as a percentage of the technical provisions used in calculating the solvency border4) Technical provisions + differences between current and book values5) Insurance policies of employers that have concluded insurance contracts

55

Key figures and analyses Ilmarinen 2013

PERFORMANCE ANALYSIS 2013 2012 2011 2010 2009EUR mill. EUR mill. EUR mill. EUR mill. EUR mill.

Source of profits

Technical underwriting result -14.8 -7.0 -69.4 96.4 -22.5Return on investments at fair value 1,468.6 911.2 -1,756.2 1,578.1 2,175.2 + Net return on investments at fair value 2,915.3 2,048.4 -1,153.0 2,738.8 3,410.4 - Return requirement on technical provisions -1,446.7 -1,137.1 -603.2 -1,160.7 -1,235.3Loading profit 35.1 27.0 33.7 31.6 27.7Total result 1,489.0 931.2 -1,791.9 1,706.2 2,180.4

Distribution of profits

Increase/decrease solvency (+/-) 1,403.0 869.2 -1,846.9 1,635.2 2,128.4 Equalisation provision (+/-) -14.8 -10.9 -71.0 96.6 -22.5 Solvency capital (+/-) 285.3 59.8 -1,153.9 6.9 685.0 Change in provision for future bonuses 1,128.4 817.1 -627.8 1,532.2 1,462.5 Change in difference between current and book values 0.3 0.2 0.1 -5.4 -0.5 Change in accumulated appropriations 3.8 3.0 5.8 4.9 3.9Profit for the financial year 86.0 62.0 55.0 71.0 52.0Total 1,489.0 931.2 -1,791.9 1,706.2 2,180.4

56

Key figures and analyses Ilmarinen 2013

SOLVENCY 2013 2012 2011 2010 2009

Solvency capital and limits

(% of the technical provision used in calculating the solvency border)

% % % % %

Solvency border 14.4 11.1 8.3 11.4 8.8Maximum solvency capital 1) 57.8 44.3 33.1 45.6 35.2Solvency capital before equalisation provision 2) 24.2Solvency capital (solvency ratio) 1) 28.0 23.9 21.1 29.7 24.0

1) Until 2012 maximum solvency capital2) Reported since 20133) Until 2012 solvency capital computed according to the regulations in force at the time (the same principle also concerns other solvency key figures)

24.0 29.7

21.1 23.9 28.0

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

% o

f tec

hnic

al p

rovi

sion

s

Provision for pooled claims treated equal to solvency capitalSolvency capital (solvency ratio) 3)Solvency borderMaximum solvency capital 1)

57

Key figures and analyses Ilmarinen 2013

BREAKDOWN OF INVESTMENTS (CURRENT VALUE) Basic breakdown Risk breakdown

31 Dec 2012 31 Dec 2011 31 Dec 2010 31 Dec 2009

EUR mill. % EUR mill. % EUR mill. % ⁹⁾ % ⁹⁾ ¹⁰⁾ % ⁹⁾ ¹⁰⁾ % ⁹⁾ ¹⁰⁾ % ⁹⁾ ¹⁰⁾Fixed-income investments total 14,313.9 44.4 13,054.2 44.2 13,398.6 41.5 45.9 43.6 41.1 52.3Loan receivables 1) 1,789.1 5.5 2,352.0 8.0 1,789.1 5.5 8.0 10.2 11.2 12.8Bonds 11,836.7 36.7 8,725.6 29.6 6,575.0 20.4 9.4 31.6 44.7 34.0Other money market instruments and deposits 1) 2) 688.1 2.1 1,976.6 6.7 5,034.5 15.6 28.5 1.8 -14.8 5.5Equities and shares total 12,843.0 39.8 11,328.7 38.4 13,847.8 42.9 36.7 38.8 42.2 32.9Listed equities and shares 3) 10,323.3 32.0 9,168.3 31.1 11,328.1 35.1 29.4 32.6 37.4 29.4Private equity investments 4) 1,458.3 4.5 1,353.8 4.6 1,458.3 4.5 4.6 4.0 3.3 2.2Unlisted equities and shares 5) 1,061.4 3.3 806.6 2.7 1,061.4 3.3 2.7 2.2 1.4 1.3Real estate investments total 3,644.1 11.3 3,465.7 11.7 3,644.1 11.3 11.7 11.8 10.8 10.2Direct real estate investments 3,101.3 9.6 2,942.9 10.0 3,101.3 9.6 10.0 10.0 9.3 8.9Real estate funds and joint investments 542.8 1.7 522.8 1.8 542.8 1.7 1.8 1.8 1.4 1.4Other investments total 1,469.2 4.6 1,671.7 5.7 1,612.7 5.0 5.7 5.8 6.0 4.6Hedge fund investments 6) 409.4 1.3 349.9 1.2 409.4 1.3 1.2 1.3 2.2 2.2Commodity investments 7.8 0.0 -1.1 0.0 -29.8 -0.1 0.1 0.0 0.2 0.1Other investments 7) 1,052.0 3.3 1,322.8 4.5 1,233.1 3.8 4.4 4.6 3.6 2.2Investments total 32,270.2 100.0 29,520.4 100.0 32,503.1 100.7 100.0 100.0 100.0 100.0Effect of derivatives 8) -232.9 -0.7Investment return at current value total 32,270.2 100.0 29,520.4 100.0 32,270.2 100.0 100.0 100.0 100.0 100.0

Motified duration of bonds 0.2 0.7 0.2 3.1 3.2

1) Includes accrued interest2) Includes cash at bank and in hand and consideration receivables and debt3) Also includes mixed funds unless they can be allocated elsewhere4) Includes private equity funds, mezzanine funds and infrastructure investments5) Also includes unlisted real estate investment companies6)

Includes all types of hedge fund units regardless of the fund’s strategy7) Includes items that cannot be allocated to other investment classes8) Includes the effect of derivatives on the difference between risk and basic breakdown9)

The relative share is calculated using the total of the “Total investment at current value” line as the divisor10) Calculated based on the guidelines given by the return calculation group of the Finnish Pension Alliance TELA, in force at any given time

31 Dec 2013 31 Dec 2012 31 Dec 2013

58

Key figures and analyses Ilmarinen 2013

NET ROCE ON INVESTMENTS

Market Capital ROCE, % ROCE, %¹⁰⁾ ROCE, %¹⁰⁾ ROCE, %¹⁰⁾ ROCE, %¹⁰⁾value ⁸⁾ employed 9)

31 Dec 2012 31 Dec 2011 31 Dec 2010 31 Dec 2009Return EUR/ROCE EUR mill. EUR mill. % % % % %Fixed-income investments total 625.3 13,870 4.5 6.9 -0.4 2.0 12.6Loan receivables 1) 83.1 2,079 4.0 3.4 3.3 3.9 4.0Bonds 542.7 10,334 5.3 8.3 -1.1 1.5 17.1Other money market instruments and deposits 1) 2) -0.5 1,456 0.0 1.9 -10.9 -2.1 1.4Equities and shares total 2,249.50 10,760 20.9 9.5 -13.6 20.6 28.3Listed equities and shares 3) 1,882.80 8,583 21.9 9.1 -17.6 20.6 34.8Private equity investments 4) 133.9 1,362 9.8 15.4 12.6 20.0 -18.3Unlisted equities and shares 5) 232.8 814 28.6 5.4 27.0 21.2 1.5Real estate investments total 165 3,459 4.8 5.1 6.4 9.0 -0.6Direct real estate investments 148 2,931 5.0 5.6 5.9 9.4 5.0Real estate funds and joint investments 17 528 3.2 2.2 8.9 6.1 -27.1Other investments total -95.7 1,650 -5.8 5.1 31.9 32.2 13.5Hedge fund investments 6) 20.7 369 5.6 7.7 1.1 7.0 11.8Commodity investments 8.9 -2Other investments 7) -125.2 1,282 -9.8Investments total 2,944.1 29,738 9.9 7.6 -4.0 10.8 15.8Unallocated income, costs and operating expenses -28.8Investment return at current value total 2,915.3 29,738 9.8 7.5 -4.0 10.8 15.8

1) Includes accrued interest2) Includes cash at bank and in hand and consideration receivables and debt3) Also includes mixed funds unless they can be allocated elsewhere4) Includes private equity funds, mezzanine funds and infrastructure investments5) Also includes unlisted real estate investment companies6)

Includes all types of hedge fund units regardless of the fund’s strategy7) Includes items that cannot be allocated to other investment classes8) Change in market value between the beginnig and end of the reporting period less cash flows during the period. Cash flow means the difference between purchases/costs and sales/revenues9) Capital employed = market value at the beginning of the reporting period + daily/monthly time-weighted cash flows10) Calculated based on the guidelines given by the return calculation group of the Finnish Pension Alliance TELA, in force at any given time

31 Dec 2013

59

Key figures and analyses Ilmarinen 2013

LOADING PROFIT 2013 2012 2011 2010 2009EUR mill. EUR mill. EUR mill. EUR mill. EUR mill

Expense loading components 131.5 126.6 122.6 117.5 109.0Premium components available to be used to cover operating expenses resulting from claims settlements 7.1 6.8 6.2 5.6 5.3Other income 2.2 2.2 0.8 0.5 0.9Total loading profit 140.7 135.6 129.6 123.7 115.2Activity-based operating expenses 1) -105.6 -108.7 -95.9 -92.1 -87.5Other expenses 0.0 0.0 0.0 0.0 0.0Total operating expenses -105.6 -108.7 -95.9 -92.1 -87.5

Loading profit, total 35.1 27.0 33.7 31.6 27.7

Operating expenses as a percentage of loading profit 75.0 % 80.1 % 74.0 % 74.5 % 75.9 %

1) Excluding operating expenses from investment activities and activities to maintain ability to work and statutory charges

MAINTENANCE OF WORK CAPACITY 2013 2012 2011 2010 2009EUR mill. EUR mill. EUR mill EUR mill. EUR mill.

Premiums written; disability risk administrative cost component 5.0 5.0 4.8 4.4 3.7Claims incurred; maintenance of work capacity expenses -4.3 -5.1 -5.2 -7.4 -6.9

0.7 -0.1 -0.4 -3.0 -3.2

Maintenance of work capacity expenses / Disability risk administrative cost component, % 86.9 % 102.6 % 109.0 % 167.6 % 188.0 %

60

RISK MANAGEMENT AT ILMARINEN

1. Risk management as a part of company management and internal control

Risk management is part of Ilmarinen’s normal management and internal control. Risk management is made

up of all of those procedures and practices used to identify and assess risks threatening the company’s opera-

tions and objectives and carry out the measures required by the assessment in order to manage risks.

Ilmarinen takes risks in its operations based on considered risk-return analysis in order to achieve, among

other things, better results in, for example, returns on investment operations securing pension payments.

The purpose of risk management is to ensure that the risks that are taken are in proportion with Ilmarinen’s

risk-bearing capacity and risk appetite. If risks cannot be seen to bring any strategic benefits, they are avoid-

ed as far as is financially reasonable.

Risk management is implemented through Ilmarinen’s management and supervisory system and is based on

the company’s principles that enhance management and accountability. This makes risk management part of

the company’s operating practices, decision-making and processes, increasing the probability of achieving its

goals and supporting compliance with legislation, regulations and international standards.

The greater the potential risks involved in the processes or decisions to be made, the more specified the form

of the processes, decision-making authorisations and procedures, and their monitoring. The roles and re-

sponsibilities defined within the operating processes, the appropriate differentiation of duties, access rights,

the verification of the accuracy of information, back-up arrangements and documentation of information

systems and processes are essential means of risk management.

2. Organisation of risk management and responsibilities

General framework for risk management at Ilmarinen

Risk management is not a distinct function, unrelated to the other operations and processes within the or-

ganisation, rather, at Ilmarinen, it is part of the management’s field of responsibility and part of all of the

organisation’s processes, such as strategic planning and the processes involved in projects and change man-

agement. Risk management is also part of the company’s operating principles, values and culture. Il-

marinen’s risk management plan, supplemented by the investment plan in the area of investment operations,

defines the framework for risk management.

Responsibilities in risk management

The overall responsibility for ensuring that Ilmarinen has a functioning control and risk management system

in place lies with the Board of Directors and the President and CEO. The Board of Directors reviews and ap-

proves Ilmarinen’s risk management plan and investment plan annually. The Board of Directors has an Audit

and Risk Management Committee which assists the whole Board of Directors in supervision tasks that con-

cern the company’s financial reporting, risks and internal control system and the work of the internal audit

unit and external auditors. The Supervisory Board is responsible for supervising the corporate governance

61

actions undertaken by the company’s Board of Directors and President and CEO. Supervision of decision-

making on pensions and investment operations is carried out on behalf of the Supervisory Board by supervi-

sors appointed by the Supervisory Board from among its members.

Ilmarinen’s core and support functions have the primary responsibility for the risks involved in their fields of

responsibility and in the decisions they make as well as for their management. Thereby the owners of these

risks are responsible for the implementation of the risk management process in their own fields of responsi-

bility in accordance with the defined framework. In practice, this means identifying and assessing the risks

related to the company’s goals and operations and taking action to manage these risks. In addition, material-

ised operational risks and near misses are reported in accordance with the principles defined within the

company.

The company’s independent risk management function is responsible for developing the company’s risk

management principles and framework. The risk management function monitors and supports the imple-

mentation and maintenance of effective risk management procedures and practices in the operations owning

the risks and assists these in risk reporting. The risk management function also monitors and assesses the

company’s risk situation and reports on it regularly to the company’s management and Board of Directors.

Ilmarinen’s Risk Management Committee, chaired by the head of Risk Management, co-ordinates the im-

plementation of risk management in the company.

Ilmarinen has an independent Compliance function that supports business operations in order to secure the

functionality and sufficiency of reliable governance and internal control. The Compliance function means the

assurance and monitoring of the legality of operations and compliance with external and internal rules relat-

ed to the operations. The aim of the Compliance function is to ensure the internal and external trust in the

company’s operations by strengthening the operating culture, both in terms of internal and external regula-

tion and abiding by good market practices.

The Compliance function’s task is to monitor and ensure that all of Ilmarinen’s operations conform with leg-

islation, guidelines and regulations given by authorities, good insurance practices, procedures and guidelines

approved by the Board of Directors as well as guidelines concerning internal practices. The Compliance func-

tion monitors and ensures compliance with regulations by, among other things, evaluating internal processes

and approaches and providing the management and business function with necessary improvement sugges-

tions.

Ilmarinen’s Internal Audit supports the company’s Board of Directors and President and CEO in their super-

visory tasks. The Internal Audit’s tasks are to assess the appropriateness, effectiveness, efficiency and ade-

quacy of risk management, internal control and management and administrative procedures in Ilmarinen’s

operations and processes and to make recommendations to improve them. In addition to the Internal Audit,

external auditors evaluate the effectiveness of the internal control system and the adequacy of risk manage-

ment. The external auditors also evaluate the effectiveness of internal auditing and the relevance of its results

to their own work.

62

3. Risks and their classification

Risks that put Ilmarinen’s successful operations in jeopardy can be any factors which

adversely affect the company’s possibilities to flawlessly perform its statutory task;

adversely affect the company’s possibilities to achieve its short or long term goals or

otherwise threaten the continuity of the company’s operations.

On the other hand, they can be events that hinder or interfere with the company’s operations or they can

materialise as business opportunities which would be worth capturing but which remain untapped.

To boost risk management, risks are classified at Ilmarinen according to the risk classes specified in the sol-

vency frameworks for the financial sector (Basel II, Solvency II).

Strategically significant risks essentially threaten the achievement of the company’s strategic goals and often,

at the same time, the company’s result or solvency. Like minor risks, strategically significant risks can be

divided into business, financial, reputation or operational risks. This division is illustrated in the figure be-

low.

Business risk refers to the probability of loss inherent in changes occurring in the competitive situation and

in the industry as well as the failure of business decisions or their implementation.

Financial risks include market, credit, liquidity and underwriting risks as well as the risk of not adequately

meeting the requirements and targets set for asset/liability matching (Asset Liability Management, i.e. ALM

risk).

Operational risks refer to the probability of loss inherent in inadequate or failed internal processes, human

resources and systems or external events.

The possible effects of the risks cannot always be measured explicitly in money, as they can also, if they mate-

rialise, indirectly affect Ilmarinen’s reputation. Reputation risk is the possible deterioration of the company’s

reputation among the various stakeholders leading to a loss of business and to a negative result.

ALM risk

Operational risk Business

risk Market risk

Credit risk

Liquity risk

Under- writing risk

Financial risks

63

4. Underwriting risks and their management

Insurance contributions and technical provisions

Underwriting risks are related to the adequacy of insurance contributions and technical provisions. The cal-

culation of both is determined by the company’s calculation bases, which are confirmed by the Ministry of

Social Affairs and Health (STM). The aim of risk management in the underwriting business is to ensure that

the calculation bases meet the sustainability criteria required by law, which is the responsibility of the com-

pany’s actuary.

Under the Employees Pensions Act (TyEL), the Ministry of Social Affairs and Health may not confirm differ-

ences in the pension insurance terms and conditions or calculation bases which would impede the implemen-

tation of TyEL or the handling of business under the joint responsibility of pension institutions, unless it has

a special reason for doing so. Furthermore, the law requires that pension institutions co-operate to achieve

this goal. As a consequence of the above, the bases for calculating insurance contributions and technical pro-

visions are the same for all pension insurance companies, excluding certain exceptions.

The insurance contributions and the technical provisions include a component corresponding to the business

under the company’s own responsibility and a component corresponding to the business under the joint re-

sponsibility of pension institutions (pay-as-you-go business), which means that also risks can be classified

accordingly. The classification can also be based on the type of insurance to be applied. 99 per cent of Il-

marinen’s technical provisions are governed under TyEL, hence the risks are almost entirely related to TyEL

activities. In practice, insurance under the Self-employed Persons’ Pensions Act (YEL) is ultimately the re-

sponsibility of the State, which means that the risks faced by individual companies are negligible. This is why

only TyEL insurance and related risks are examined in the following.

TyEL business under the company’s own responsibility consists of old-age, disability and unemployment

pension business as well as a contribution loss component relating to unpaid contributions. An essential

factor in risk management is taking into account the uncertainty relating to life expectancy, pension inci-

dence and the amount of claims. From a financial viewpoint, the most significant risks concern the uncer-

tainty related to mortality and incidence of disability pensions.

The mortality expectancy applied in the calculation bases depends on age, gender and birth year class. This

dependency has proved to be necessary due to the trend of longer average life spans. The working group set

up by the Finnish Pension Alliance TELA monitors the development of the average life span for those covered

by the statutory earnings-related pension system and makes proposals to change the calculation bases if

needed. A change in the mortality base makes it necessary to change the bases for the calculation of the tech-

nical provisions, the costs of which are the joint responsibility of pension institutions. Therefore a change in

the bases does not involve any company-specific risks.

The risks in the disability pension business are related to the incidence of disability pensions, the amount of

the granted pensions and the termination of the valid disability pensions. Disability pensions are funded

when the pension commences. The cost from starting disability pensions is covered by the disability pension

component included in the insurance contribution, which is dependent on age and, in the case of larger em-

64

ployers, also on the employer’s contribution category. The cost is calculated until the age of retirement, also

taking into account the expected termination of disability pensions. The disability pension component of the

insurance contribution is confirmed annually and its adequacy is monitored by a working group set up by the

Finnish Pension Alliance TELA. In 2014, it is on average 0.9% of an employee’s salary. The disability pension

business involves a company-specific risk that the company’s disability pension expenditure deviates from

what was expected when determining the calculation bases. This risk is increased by the long delay between

the commencement of the company’s responsibility and the beginning of the pension. That is why Ilmarinen

regularly monitors the development of the disability pension business and the incidence of pensions.

Following the earnings-related pension reform carried out in 2005, the last unemployment pensions were

granted in 2012 and the payment of the last pensions will end by the end of 2014, in which case the insurance

contribution is not charged and the remaining pension expenditure is very low, meaning that the disability

pension business risk has all but dissolved.

The risk inherent in contribution loss is related to a higher than expected amount of unpaid contributions.

The contribution loss component of the insurance contribution has been dimensioned to correspond to the

insurance portfolio structure to take into account the larger contribution loss risk of smaller employers. In

Ilmarinen’s insurance portfolio, contribution losses have been lower than the average.

Equalisation provision

The calculation bases for the TyEL insurance contribution must be confirmed in advance for the following

calendar year. It is not possible to dimension the contribution in advance to correspond exactly to the follow-

ing year’s expenditure, which means that the underwriting result fluctuates from year to year and is either

positive or negative. The equalisation provision contained in technical provisions serves as a buffer against

fluctuations in the underwriting result. A positive underwriting result adds to the equalisation provision and

a negative one reduces it. As of the beginning of 2013, the equalisation provision is considered part of the

company’s solvency capital in solvency calculation.

The equalisation provision has a lower limit and an upper limit. If a company’s equalisation provision falls

short of its lower limit, it must be supplemented from the rest of the solvency capital. If the equalisation pro-

vision of a company exceeds its upper limit in two consecutive years, the excess will be dissolved within a

certain time frame through client bonuses paid to policyholders. As a general rule, the equalisation provi-

sions of pension insurance companies are on a high level, so the contribution has been kept lower than the

expected expenditure in order to reduce the equalisation provisions.

At the end of 2013, Ilmarinen’s TyEL insurance equalisation provision amounted to EUR 961.3 million, or

5.7558 per cent of the payroll, and 73 per cent of the equalisation provision upper limit. Taking into account

other insurance categories, the company’s equalisation provision totalled EUR 971.2 million. Around two

thirds of the equalisation provision is related to the disability pension business and the remaining one third

essentially to the contribution loss.

65

Risks inherent in the company’s insurance portfolio structure

When preparing the calculation bases, the insurance contribution and technical provisions are dimensioned

according to the companies’ average insurance portfolio. In addition, TyEL contains a provision according to

which, in the case that technical provision calculation bases prove to be insufficient for all pension institu-

tions, the increase in technical provisions resulting from changing the calculation bases shall be covered in

such a way that it does not entail a risk for an individual pension institution. The insufficiency can, however,

only concern one individual pension insurance company. The underwriting business under the company’s

own responsibility thus involves the risk that its insurance portfolio structure deviates from the industry

average in an adverse direction.

The old-age pension business involves the risk that the average life span and thus the pension span in the

company’s insurance portfolio are longer than expected when determining the calculation bases. In the old-

age pension business, random fluctuations are minor, and significant, systematic differences in insurance

portfolios are unlikely where companies with nation-wide operations are concerned.

There may be systematic company-specific differences in disability pension incidence when, for example, the

company’s operations are limited to a narrow geographical area or if the sector distribution of the insurance

portfolio deviates from the average. The unemployment pension business involved a similar company-

specific risk, but as this type of pension is gradually being phased out, this risk has all but disappeared.

It is against the law to use risk selection as a means of risk management in earnings-related pension insur-

ance business, in other words, insurance must be granted to a company having an obligation to take out in-

surance. This increases the risks inherent in contribution loss, in particular.

If the result of an individual pension insurance company is systematically lower than that of the others, the

company’s equalisation provision decreases but the contribution is not increased. If the equalisation provi-

sion has declined below its lower limit, it can be supplemented from the rest of the solvency capital, in which

case it decreases future client bonuses. The primary bearer of the risk is thus the pension insurance company

in question.

Ilmarinen’s insurance portfolio’s age and distribution structure do not deviate from the sector average. Il-

marinen’s equalisation provision is sufficient in relation to the company’s size and at the average level in the

sector. Thus, Ilmarinen does not face the risk of a deviating insurance portfolio.

Risks inherent in jointly financed pensions

The pension institutions are jointly responsible for the unfunded pension expenditure (pooled pension ex-

penditure), of which the share of the pensions being paid out is financed by an annually collected pooled

component contained in the TyEL contribution. The provision for pooled claims included in the technical

provisions of each pension institution serves as a buffer for the underwriting business under the joint re-

sponsibility of the pension institutions.

66

The pay-as-you-go pensions are pooled annually between all of the pension institutions according to the size

of their operations, determined by the insured payroll. The responsibility of the pension institution is limited

to the pooled premiums written and the provision for pooled claims contained in the insurance contribution.

Jointly financed pensions do not pose any risks to individual pension institutions.

A common risk to the pension institutions is created by a deterioration in the ratio between the jointly fi-

nanced pension expenditure and the total payroll of the private sector, with respect to the assumptions used

in determining the insurance contribution. In 2010, a life expectancy coefficient was added to the pension

system. It reduces commencing old-age pensions in proportion to the increase in average life expectancy.

This mechanism largely eliminates the risk related to the pay-as-you-go pension expenditure caused by the

increase in life expectancy.

Factors that may lead to the materialisation of the risk inherent in an increased ratio of the pay-as-you-go

pension expenditure and payroll are an unexpected increase in index increments in relation to real earnings,

due to increased inflation or the work contribution proving to be smaller than expected due to demographic

factors or unemployment. The law requires that the pooled component of the contribution is calculated so

that it is sufficient with respect to the jointly financed expenses. The bearers of the risk inherent in an in-

creased pooled component are thus the future contribution payers together – insured and policyholders in

equal proportions – and the risk does not concern individual companies or other pension institutions.

Provision for future and current bonuses

The technical provisions also include a provision for future bonuses, a provision for current bonuses and an

equity linked provision for future and current bonuses.

The provision for future bonuses is accrued or reduced annually in the financial statements by the book re-

sult of investment operations, which is obtained by deducting the return requirement on technical provisions

from the net accounting income. That means that it does not include changes in valuation gains or losses

other than those entered in the accounts. The provision for future bonuses is included in the solvency capital.

The provision for current bonuses includes the client bonuses that will be distributed in the following year as

discounts on the insurance contribution.

In the beginning of 2007, the solvency regulations were amended so that part of the pension institutions’

equity risk was passed on to the pension system. This was done by linking part of the return requirement on

technical provisions to the development of equity returns. That way, the technical provisions also partly serve

as a buffer against fluctuations in the investment result. The equity linked portion is ten per cent of the tech-

nical provisions used in solvency calculation.

The linking is done through a specific technical provision item, the equity linked buffer, the annual change of

which corresponds to the development of equity returns. This component of technical provisions develops in

the same way in all pension institutions and can increase their technical provisions by a maximum of 5 per

cent or reduce them by a maximum of 10 per cent.

67

Return requirement on technical provisions

In the long term, technical provisions must deliver at least a return which equals the weighted average of the

technical interest rate specified in the TyEL calculation bases and the return on equity investments, the latter

having a 10 per cent weight. The technical provisions for the pensions under the company’s responsibility are

credited annually with a 3 per cent discount rate and a return according to the pension liability supplemen-

tary factor, and the provision for pooled claims according to a return based on the technical rate of interest

and the equalisation provision according to a return based on the discount rate. In addition, the development

of the equity linked buffer is tied to the average return on equity of pension institutions.

The pension liability supplementary factor, which portrays the long-term return on investments, is based on

the pension institutions’ average solvency ratio (solvency capital in relation to technical provisions, from

which the provision for future bonuses is deducted for the purposes of this calculation). In the solvency ratio

that forms the basis for the supplementary factor, the equalisation provision is, exceptionally, included in the

technical provisions instead of the solvency capital. The return according to the supplementary factor is used

to increase the funded old-age pensions. If the equity linked buffer exceeds 5 per cent of the technical provi-

sions used in the calculation, the exceeding amount is also used to increase funded old-age pensions.

The technical interest rate is also based on the pension institutions’ average solvency ratio. The technical

interest rate is used as the interest rate for insurance contributions, the payments related to the clearing sys-

tem between the pension institutions and the Finnish Centre for Pensions and for certain technical provision

items.

In 2013, the total return requirement calculated on Ilmarinen’s technical provisions was 5.5 per cent, of

which the return tied to the equity linked buffer was 1.8 per cent. A 3.7 per cent return was credited on the

remaining technical provisions.

Structure and duration of technical provisions

Ilmarinen’s actual pension liability (technical provisions excluding provision for future bonuses and equity

linked buffer) is expected to increase by about 4 per cent annually during the next few years. About 70 per

cent of the technical provisions are of a duration of more than 10 years and about 40 per cent of a duration of

more than 20 years. The technical provisions must be covered at all times with assets according to the regula-

tions. The financial statements for 2013 showed a total of EUR 32,643 million of such assets suitable for cov-

ering the technical provisions, which exceeded the amount of technical provisions to be covered by around 20

per cent.

68

The structure of Ilmarinen’s TyEL insurance technical provisions in the financial statements was as follows:

Financial statements 31 Dec 2013

Financial statements 31 Dec 2012

EUR mill. % EUR mill. % Future old-age pension liability 12,667 50 12,568 51 Future disability pension liability 353 1 398 2 Current old-age pension liability 7,148 28 6,285 26 Current disability pension liability 1,382 6 1,416 6 Current unemployment pension liability 0 0 1 0 Equalisation provision 961 4 967 4 Provision for pooled claims 2,877 11 2,920 12 Total (TyEL, other than provision for future

and current bonuses)

25,388 100 24,555 100

Provision for future bonuses 763 478 Provision for current bonuses 86 62 Equity linked buffer 634 167 Total TyEL insurance 26,871 25,262 Other than TyEL insurance technical provi-sions

318 324

Total technical provisions 27,189 25,586

5. Investment risk management and financial risks

Objectives of investment operations

In the long term, investments must generate a return equalling at least the return to be credited on technical

provisions. The risk faced by Ilmarinen in its investment operations is that if its long-term investment re-

turns were to lag behind the average return of all pension institutions, this would weaken its solvency. As far

as the equity-linked technical provisions are concerned, the company can reduce the risk by investing a cor-

responding share of its investment assets in equity, whereby the risk faced by the company is limited to the

deviation of its own return on equity from the average return of pension institutions.

Solvency management’s relation to investment planning and risk management

The objective of solvency management is to ensure that Ilmarinen is able to carry out its investment strategy

while taking into account the effect of uncertainty on assumptions and set goals. Ilmarinen’s solvency man-

agement is based on continuous assessment of risks and the overall solvency requirement as well as risk

management.

The investment portfolio’s risk profile may change rapidly as a result of changes in economic circumstances,

for example, which is why the risk level of the portfolio must constantly be compared with Ilmarinen’s risk

tolerance. The effects of change factors on Ilmarinen’s investment portfolio are estimated in short-term risk

calculations as well as through complementary stress tests and long-term scenarios.

69

The statutory lower limit for solvency capital, solvency limit and other control limits depend on the extent of

the company’s risk-taking in investment operations and take into account the different investment asset

structures of pension institutions. Riskier investments require greater solvency capital.

The basic quantity of the solvency requirements is the solvency capital’s solvency limit. The theoretical base

for its dimensioning has been determined in such a way that, within one year, the likelihood of a loss higher

than the solvency limit taking place in the company’s investment and insurance risks is at maximum 2.5 per

cent. However, the solvency limit is always at least 5 per cent of the technical provisions used in solvency

calculation. The riskier the investment allocation of the pension institution, the higher the solvency limit. For

calculating the solvency limit, the investments are divided into five main groups that each have several sub-

classes. The aim is that the main groups and sub-classes form entities with essentially the same return and

risk characteristics. In addition, the calculations take into account correlations between the investments as

well as between investment risks and insurance risks. The lower limit for solvency capital is one third of the

solvency limit.

Solvency capital and risk appetite

Ilmarinen must maintain its ability to pay current and future pensions under its responsibility, which is why

investment operations must be profitable and sustainable. Profitable investing necessitates exposure to in-

vestment risks, which are restricted by the sustainability requirement.

When defining its investment strategy, Ilmarinen must achieve a balance between several simultaneous

goals. Goals have been set for the long-term real return as well as the mid-term solvency development and it

is, of course, necessary to continuously remain sufficiently solvent. In strategic allocation selection, the aim is

to discover a strategy that best meets Ilmarinen’s goals and simultaneously fulfils the company’s solvency

requirements with sufficient certainty. The definition of the risk appetite depicting this level of certainty is

the most significant decision concerning investment operations. That risk taking is based on current invest-

ment opportunities, in other words the market-dependent risk-return ratio of the investment risk, is a pre-

requisite for successful investment operations. The company’s Board decides on strategic allocation at least

once a year in connection with investment planning.

The financial risks inherent in investment operations are limited by the statutory solvency regulations and

Ilmarinen’s internal limit framework, which contribute to ensuring a sufficient level of diversification and

liquidity of the investment portfolio. In practice, however, the investment risk management process is about

continuously identifying and analysing financial risks and making decisions on specific risk management

measures.

The company’s solvency capital, which is the difference between the company’s assets and liabilities, serves

as a buffer against investment risks. The most important items in the solvency capital are the company’s cap-

ital and reserves, equalisation provision, provision for future bonuses and the valuation gains/losses on in-

vestments. The solvency capital other than the equalisation provision is meant primarily for covering losses

on investments. If investment income exceeds the interest to be credited on technical provisions, the differ-

70

ence is added to the solvency capital. In the opposite scenario, the necessary amount is deducted from the

solvency capital.

Ilmarinen’s solvency capital at the end of 2013 was EUR 7,123 (5,752) million and its solvency limit was 14.4

(11.1) per cent of the technical provisions used in solvency calculation. Ilmarinen’s solvency ratio, i.e. the

ratio of the solvency capital to the technical provisions stood at 28.0 (23.9) per cent. Ilmarinen’s solvency

position, i.e. the ratio of the solvency capital to the solvency limit was thus 1.94 (2.16). The solvency ratio

describes the company’s risk-bearing ability and the solvency position portrays the risk taken by the compa-

ny in relation to its risk-bearing ability.

Authorisations, supervising and reporting in investment operations

Ilmarinen’s Board of Directors confirms the authorisations for operational investment activities annually in

conjunction with the investment plan. The management, within the framework of its investment authorisa-

tions, may deviate from the weightings for the asset classes specified under strategic allocation. The extent of

the risk related to investment operations is monitored by the Asset Management Group, whose members

represent the Investments division and the Finance, Actuarial Services and Risk Management division. In its

monitoring, the group takes into account the requirements set for the underwriting business and proposes

adjustments to the risk level of the investment plan or to the investment authorisations, if necessary.

The chosen operative risk level and the company’s solvency situation are evaluated at the weekly Investment

Committee meetings, in which the Risk Management division is also represented. Compliance with the limits

for investment risk-taking and the achievement of investment targets are reported to the Board of Directors

monthly by the Risk Management division, which is independent of the function taking the investment risk.

The correctness of the reported information is ensured through sufficiently frequent real-time reporting,

regular matching routines and the organisational separation of decision-making on investments and report-

ing.

Risk assessment and risk management methods

Market risks

Market risk arises as a consequence of the daily changes in prices and values on the financial market. The

market risks directed at Ilmarinen’s investment assets are equity, interest-rate, interest-rate-differential, real

estate, currency, commodity and volatility risks. Market risks are limited by setting limits on maximum loss-

es occurring with a certain likelihood (Value at Risk, VaR). Further aspects to be taken into account in in-

vestment risk management are the ever-present possibility of new risk factors emerging and the narrow per-

spective of the risk calculation based on historical time series data. For these reasons, financial risk analysis

must be continually supplemented by stress tests and scenario analyses to support decisions concerning the

investment portfolio composition.

71

The table below illustrates the effects of market changes on Ilmarinen’s solvency:

Change in share prices

Current value of real estate

-10% -10% Effect - on solvency capital (EUR mill.) -867.6 -358.0 - on solvency position -0.15 -0.11 - on return percentage (percentage units)

-3.9 -1.2

- on solvency ratio (percentage units) -3.4 -1.4

If the investments on 31 December 2013 are taken as the starting point, there was a 2.5 per cent likelihood

that the value of the investments could drop by at least EUR 1,606 million within one month. This Value at

Risk was 5.0 per cent of the amount of investments and 22.5 per cent of the solvency capital at the end of the

year. If such a risk had actually materialised, the solvency capital would have dropped to 23.0 per cent of the

technical provisions.

Credit risk

Credit risks related to Ilmarinen’s operations result from direct lending and counterparty risks from bonds

and OTC derivatives.

The primary instruments of managing credit risks in direct lending are company analyses and lending in

proportion to the company’s future solvency. The risks are also managed through collateral arrangements.

Counterparty risks relating to bonds are managed through analyses of the issuers’ credit ratings and by re-

stricting both the total amount of investments in bonds of specific credit ratings and the percentage of bonds

issued by a single issuer.

The counterparty risks of OTC derivatives are managed both in accordance with risk reporting under regula-

tions issued by the authorities and through more detailed counterparty-specific market risk simulations.

Counterparty risks relating to non-standard derivatives are also managed by using international standard

agreements approved by the International Swaps and Derivatives Association (ISDA) with all parties.

Liquidity risks

Liquidity risks in relation to Ilmarinen’s liabilities are easily managed, as pension expenditure can be fore-

casted quite accurately, more than 70 per cent of the assets consist of liquid investments in securities and

taking on debt is not allowed. Short-term liquidity risks based on the poor convertibility of investment in-

struments are managed by making the company’s own investments proportional to their average daily turno-

ver in the market by investment object.

72

Investment portfolio allocation by asset class

The breakdown of Ilmarinen’s investments into main asset classes on 31 December 2013 and the income

from these investments are presented in the notes to the accounts under “Key figures and analyses”. The

table below follows the method agreed together with the pension institutions on describing investment re-

turns and risks.

The modified duration of bonds on 31 December 2013 was 0.2 (0.7) years.

Basic break-down at

current value, EUR mill.

Risk break-down at

current value, EUR mill.

ROCE

Volatility, %

Fixed income investments 14,314 13,399 4.5 Loan receivables 1,789 1,789 4.0 Bonds 11,837 6,575 5.3 2.2 - Public corporation bonds 4,444 2,648 0.5 - Other bonds 7,392 3,927 8.9 Other money market instru-ments 688 5,035 0.0 Equities and shares 12,843 13,848 20.9

Listed equities and shares 10,323 11,328 21.9 11.4 Private equity 1,458 1,458 9.8 Unlisted equities and shares 1,061 1,061 28.6 Real estate investments 3,644 3,644 4.8

Direct real estate investments 3,101 3,101 5.0 Real estate funds and joint investments 543 543 3.2 Other investments 1,469 1,613 -5.8

Hedge fund investments 409 409 5.6 6.9 Commodity investments 8 -30 - Other investments 1,052 1,233 - Investments total, % 100.7

Effect of derivatives, % -0.7

Total investment at current

value, % 100.0 100.0

Total investment at current

value, EUR mill. 32,270 32,270 3.6

Net investment return at cur-

rent value, % 9.8

73

Breakdown of Ilmarinen’s investments into solvency groups pursuant to the Solvency Act Group Expected return Volatility Investments, % % % 31 Dec 2013 I 3.5 0.8 14.5 II 6.1 9.0 11.2 III 7.0 10.1 11.1 IV 8.7 20.3 42.4 V 5.5 9.2 20.8

Breakdown of investments in listed equities and shares

Breakdown of credit rating of bonds including fixed-income funds

Share, % Share, % 2013 2012 2013 2012 Finland 32 35 AAA 32 42 Europe 35 30 AA 8 6 USA 12 11 A 18 15 Japan 4 3 BBB or worse 35* 32* Other 17 20 Not rated 6 5 * the share of fixed-income funds is 6 (6) percentage units

Breakdown of loan portfolio by collateral EUR million 2013 2012 Loans with real security 963.6 1,103.8 Loans with guarantee 385.0 684.1 Loans to guarantor corporations 2.6 3.2 Unsecured 425.1 542.5 Interest receivables 12.8 18.3 Total 1,789.1 2,352.0

The structure of real estate investments

Share, %

2013 2012 Residential 19 19 Office 32 32 Commercial 11 10 Hotel 8 9 Warehouse 7 8 Other 8 8 Indirect investments 15 15

74

The occupancy rate of the real estate portfolio (locations under renovation excluded) was 88.4 per cent

(88.8%).

6. Operational risks

Operational risks refer to the probability of loss inherent in inadequate or failed internal processes, human

resources and systems or external events. Operational risks include legal risks and compliance risk related to

compliance with regulations, but not business risks. Operational risks are related to all operations and it is

not possible to hedge against them fully. These risks are limited as far as is financially reasonable.

Identifying risks is at the core of managing operational risks. This includes both identifying and assessing

risks as well as ensuring the sufficiency of control and management measures. The key operational risks of

Ilmarinen’s operations are identified annually on a regular basis according to the company’s risk identifica-

tion plan. The most serious operational risks in terms of the company’s basic task are errors and disturbances

that could prevent the correct calculation or timely payment of pensions. They also include disturbances in

the operational information systems and the service provision of online services that are growing in im-

portance, which compromise their performance, management or security.

The majority of operational risks are managed as part of the management of the business units’ normal oper-

ations, under the responsibility of the head of each unit. The objective is for the operations of each unit to be

carefully performed, maintain a high quality, and be economical and efficient. The management of significant

operational risks has been taken care of by ensuring the personnel’s expertise and employing a range of

means relating to information technology and operating practices, such as backup systems and backup com-

munication connections, documenting of processes as well as the use of benchmark data and monitoring

systems.

In order to ensure disturbance-free operations under both normal and exceptional conditions, the company

has drawn up plans for ensuring the continuity of operations and for controlling operations in exceptional

circumstances, and they are monitored and maintained every year to keep them up-to-date.

7. Most important strategic risks

The most important strategic risks related to Ilmarinen’s operations are identified and assessed by the com-

pany’s Executive Group biannually. Ilmarinen’s business risks are identified and assessed as part of this

mapping out of the most important strategic risks. Responsible persons have been assigned from the Execu-

tive Group for each identified risk, and it is their duty to ensure the sufficiency of risk management means

and the implementation of necessary development measures.

According to the assessments made, strategically significant risks can materialise in particular in connection

with the following events or activities relating to Ilmarinen’s operations:

significant changes in the operating environment

development of service and operating models

partnerships

investments

75

set-up and maintenance of information systems serving the business processes.

8. Reputation effects resulting from risks

The possible effects of the risks cannot always be measured explicitly in money, as they can also, if they mate-

rialise, indirectly affect Ilmarinen’s reputation. The materialisation of a risk in a risk category can lead to a

weakening of Ilmarinen’s reputation among various stakeholder groups and thus result in business losses. In

the worst-case scenario, it can essentially weaken the company’s possibilities to operate independently.

In connection with the risk identification, the potential reputation effects of risks are also assessed. Proactive

communications and decision-making procedures, among other things, are used to prevent the materialisa-

tion of reputation risks at Ilmarinen. If such a risk does materialise, communications will help limit its im-

pact on the company’s operations. Ilmarinen has a crisis communications plan in place to support its opera-

tions.

9. Continuous development of risk management

Risk management is being developed continuously, just like the rest of the organisation. Risks are assessed

and managed on the organisation’s strategic, operational and project levels. The purpose of risk management

is to promote the achievement of goals. This provides the backdrop for the development of both procedures

and corporate culture. Risk management also involves continuous interaction with external and internal

stakeholders.

It is important for Ilmarinen that the level of risk management procedures is in line with the significance of

the operations concerned and the decisions made within them. This is meant to ensure that Ilmarinen’s risks

are on an optimal level in view of the criteria defined by the company. Risk management leads to Ilmarinen

having an up-to-date, accurate and all-encompassing picture of the company’s risks, which are in line with

the company’s risk-bearing capacity and risk appetite.

76

Porkkalankatu 1, 00018 Ilmarinen • Puh. 010 284 11 • www.ilmarinen.fi

FINANCIAL STATEMENTS GROUP

2013

77

Financial statements, Group Ilmarinen 2013

PROFIT AND LOSS ACCOUNT, GROUP

TECHNICAL ACCOUNT

Premiums written 4,086,880,919.11 4,019,292,516.83Investment income 7,177,064,233.70 9,466,938,145.31

Claims incurredClaims paid -4,181,107,223.62 -3,881,442,103.70Change in provision for claims outstanding

Total change -779,103,312.00 -625,306,393.00Porfolio transfers 1,977.00 -779,101,335.00 -4,960,208,558.62 40,618,466.00 -584,687,927.00 -4,466,130,030.70

Change in provision for unearned premiumsTotal change -823,904,418.00 -755,109,064.00Porfolio transfers 4,428.46 -823,899,989.54 66,108,809.83 -689,000,254.17

Operating expenses -84,707,352.93 -87,258,819.27Investment charges -5,397,770,383.69 -8,236,126,699.20

Balance on technical account -2,641,131.97 7,714,858.80

NON-TECHNICAL ACCOUNT

Balance on technical account -2,641,131.97 7,714,858.80Other income 1,528,958.93 1,124,648.32Other expenses -644,600.69 -959,437.72Income taxes on ordinary activities -7,764,207.59 -5,889,451.70

Profit/loss on ordinary activities -9,520,981.32 1,990,617.70

Appropriations -110,371.68 1,607,439.14

Profit/loss for the financial year -9,631,353.00 3,598,056.85

2013 2012

78

Financial statements, Group Ilmarinen 2013

BALANCE SHEET, GROUP 31 DEC 2013

ASSETS

Intangible assets

Intangible rights 12,659,321.71 5,437,885.99Prepayments 13,865,455.59 26,524,777.30 6,438,256.06 11,876,142.05

Investments

Real estateReal estate and real estate shares 2,236,764,327.25 2,156,617,019.55Loans to group companies 29,554,657.55 2,266,318,984.80 13,229,483.87 2,169,846,503.42

Investments in group companies

and participating interests

Shares and participations in participating interests 68,333,652.99 45,205,979.92Loans to participating interests 175,977,785.33 244,311,438.32 184,615,393.33 229,821,373.25

Other investments

Shares and participations 12,415,242,099.65 11,605,466,661.44Money market instruments 10,855,199,037.23 8,522,235,046.75Loans quaranteed by mortgages 616,775,991.61 699,886,208.71Other loans 983,561,459.83 24,870,778,588.32 27,381,409,011.44 1,449,187,762.33 22,276,775,679.23 24,676,443,555.90

Receivables

Direct insurance operationsPolicyholders 155,445,696.36 170,582,201.70

Other receivables 2,353,139,469.59 2,508,585,165.95 2,710,376,313.98 2,880,958,515.68

Other assets

Tangible assetsFurniture and fixtures 1,186,950.56 1,006,706.29Other tangible assets 1,761,367.44 2,948,318.00 1,748,632.58 2,755,338.87

Cash at bank and in hand 373,201,309.70 376,149,627.70 910,879,152.37 913,634,491.24

Prepayments and accrued income

Accrued interests and rent 176,170,871.06 168,807,588.57Other prepayments and accrued income 126,627,762.63 302,798,633.69 49,479,544.11 218,287,132.68

Total assets 30,595,467,216.08 28,701,199,837.55

2013 2012

79

Financial statements, Group Ilmarinen 2013

BALANCE SHEET, GROUP 31 DEC 2013

LIABILITIES

Capital and reserves

Initial fund 22,994,653.31 22,994,653.31Other reserves

Funds and reserves under the Articles of Association 63,241,665.17 60,241,452.83Other reserves 584,855.10 63,826,520.27 584,855.10 60,826,307.93

Profit/loss brought forward -58,231,980.53 -58,811,575.06Profit/loss for the financial year -9,631,353.00 18,957,840.05 3,598,056.85 28,607,443.03

Accumulated appropriations 14,936,413.43 15,453,812.58

Technical provisions

Provision for unearned premiums 14,619,733,360.00 13,795,828,942.00Provision for claims outstanding 12,569,152,148.00 27,188,885,508.00 11,790,048,836.00 25,585,877,778.00

Liabilities

Direct insurance operations 23,625,327.23 21,518,432.38Other liabilities 2,707,262,005.45 2,730,887,332.68 2,667,910,681.59 2,689,429,113.97

Accruals and deferred income 641,800,121.92 381,831,689.97

Total liabilities 30,595,467,216.08 28,701,199,837.55

2013 2012

80

Financial statements, Group Ilmarinen 2013

CASH FLOW STATEMENT, GROUP 2013 2012

Cash flow from operations

Profit /loss on ordinary activities /profit /loss before exceptional items -9,520,981.31 1,990,617.70

AdjustmentsChange in technical provisions 1,603,007,730.00 1,380,415,457.00Impairments and revaluations on investments 688,353,800.18 439,607,681.24Planned depreciations 64,899,923.36 63,771,093.63Other adjustments -1,451,417,524.91 -832,732,643.33

Cash flow before change in working capital 895,322,947.32 1,053,052,206.24

Change in working capitalShort-term non-interest-bearing receivablesincrease (-) / decrease (+) 287,861,848.72 -741,412,588.91Short-term non-interest-bearing liabilitiesincrease (-) / decrease (+) 301,426,650.66 26,497,191.90

Cash flow from operations before financial items and taxes 1,484,611,446.70 338,136,809.23

Direct taxes paid -7,764,207.59 -5,889,451.70

Cash flow before exceptional itemsCash flow before exceptional items 1,476,847,239.11 332,247,357.53Liiketoiminnan rahavirta 1,476,847,239.11 332,247,357.53

Cash flow from investments

Asset purchase (exl. financial assets) -20,631,768,520.42 -16,333,177,816.24Capital gains on investments (exl. financial assets) 18,634,775,918.49 16,664,815,723.70Investments and capital gains (net) onintangible, tangible and other assets -17,514,229.86 -1,373,403.70

Cash flow from investments -2,014,506,831.78 330,264,503.76

Cash flow from financing

Interests paid on quarantee capital and other profit distribution -18,250.00 -31,817.06Cash flow from financing -18,250.00 -31,817.06

Change in financial resources -537,677,842.67 662,480,044.23

Financial resources at the start of the financial year 910,879,152.37 248,399,108.14Financial resources at the end of the financial year 373,201,309.70 910,879,152.3781

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF PREMIUMS WRITTEN, GROUP

Direct insuranceTyEL basic coverage

Employer contribution 2,893,712,747.31 2,850,238,524.68Employee contribution 914,574,641.00 3,808,287,388.31 909,831,424.00 3,760,069,948.68

TyEL supplementary coverage 2,793,510.15 3,308,500.14YEL minimum coverage 301,979,699.78 4,113,060,598.24 286,461,994.27 4,049,840,443.09

Transition contribution to the State Pension Fund -25,595,748.13 -29,889,257.26Reinsurance 7,458.00 8,046.00Premiums written before reinsurers' share 4,087,472,308.11 4,019,959,231.83Reinsurers' share -591,389.00 -666,715.00Premiums written 4,086,880,919.11 4,019,292,516.83

Items deducted from premiums writtenCredit loss on outstandig premiums

TyEL -16,145,349.61 -12,683,888.70YEL -2,584,824.50 -18,730,174.11 -2,548,460.11 -15,232,348.81

SPECIFICATION OF CLAIMS PAID, GROUP

Direct insurancePaid to pensioners

TyEL basic coverage 3,717,877,630.36 3,472,701,681.62TEL supplementary coverage 61,086,135.79 60,629,042.32YEL minimum coverage 333,262,547.20 311,912,278.80YEL supplementary coverage 1,632,708.98 4,113,859,022.33 1,536,072.90 3,846,779,075.64

Payments to/refunds from the provision for clearing PAYG pensionsTyEL pensions 220,894,778.07 153,390,995.64YEL pensions -9,441,480.23 -15,525,446.61

Share of the unemployment insurance fund insurance contrbutionand division of the costs of pension components accruedon the basis of unsalaried periods -157,512,024.87 -127,421,666.17YEL government share -21,430,049.98 -8,633,193.23State compensation pursuant to VEKL -270,282.64 32,240,940.35 4,146,099,962.68 -187,013.72 1,623,675.91 3,848,402,751.55

Reinsurance - 7,089.00Claims handling expenses 31,234,742.32 28,547,180.40Working capacity maintenance costs 4,348,797.62 5,136,680.75Claims before reinsures' share 4,181,683,502.62 3,882,093,701.70Reinsures' share -576,279.00 -651,598.00Total claims paid 4,181,107,223.62 3,881,442,103.70

2013 2012

2013 2012

82

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF NET INVESTMENT INCOME, GROUP

Investment income

Income from participating interests

Share of profit/loss of associated companies 2,015,365.98 1,243,248.31Dividend income from other participating interests 30,273.83 333,222.63Interest income from other participating interests 5,745,949.62 7,791,589.43 6,004,013.92 7,580,484.86

Income from investments in real estate

Interest income from other than group companies 2,351,125.15 3,004,505.75Other income from other than group companies 212,328,033.12 214,679,158.27 205,794,374.60 208,798,880.35

Income from other investments

Dividend income from other than group companies 283,046,670.82 307,194,512.15Interest income from other than group companies 412,197,660.29 325,310,695.90Other income from other than group companies 929,637,660.69 1,624,881,991.80 936,193,061.57 1,568,698,269.62

Total 1,847,352,739.50 1,785,077,634.83Value readjustments 197,180,631.67 321,667,468.75Capital gains 5,132,530,862.53 7,360,193,041.73Total 7,177,064,233.70 9,466,938,145.31

Investment charges

Charges on real estate investments -70,979,410.21 -65,200,025.18Charges on other investments -660,903,911.86 -781,003,033.49Interest charges and other charges on liabilities

To other than group companies -44,776,191.85 -44,776,191.85 -44,823,876.46 -44,823,876.46Total -776,659,513.92 -891,026,935.13Value adjustments and depreciation

Value adjustments -885,534,431.85 -761,275,149.99Planned depreciation on buildings -62,227,307.89 -947,761,739.74 -62,253,667.38 -823,528,817.37

Capital loss -3,673,349,130.03 -6,521,570,946.70Total -5,397,770,383.69 -8,236,126,699.20

Net investment income before revaluations

and their adjustments 1,779,293,850.01 1,230,811,446.11

Net investment income in the profit and loss account 1,779,293,850.01 1,230,811,446.11

2013 2012

83

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF OPERATING EXPENSES, GROUP

Total operating expenses by activity

Claims paid

Claims handling expenses 31,234,742.32 28,547,180.40Working capacity maintenance costs 4,348,797.62 35,583,539.94 5,136,680.75 33,683,861.15

Operating expenses

Acquisition costs:Commissions, direct insurance 1,135,744.06 1,026,685.29Other policy acquisition costs 15,644,616.77 16,780,360.83 20,335,850.83 21,362,536.12

Portfolio administration expenses 40,820,039.20 41,010,075.89Administrative expenses;

Statutory charges:Cost compoment of the Finnish Pension Centre 9,811,899.23 7,875,734.74Judicial administration charge 1,029,820.29 835,872.80Supervision charge of the Insurance Supervisory Authory 587,432.91 11,429,152.43 586,739.87 9,298,347.41

Other administrative expenses 15,677,800.47 15,587,859.84Operating expenses total 84,707,352.93 87,258,819.27Investment charges

Costs on real estate investment 2,116,275.18 2,387,406.91Other 19,653,337.96 21,769,613.14 18,334,399.25 20,721,806.16

Other expenses 644,600.69 959,437.72

Total operating expenses 142,705,106.70 142,623,924.30

2013 2012

84

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF STAFF EXPENSES AND MEMBERS OF CORPORATE ORGANS, GROUP 2013 2012

Staff expenses

Salaries and bonuses 40,452,507.69 39,139,337.84Pension expenditure 8,225,965.89 7,929,150.08Other social security expenses 2,203,412.97 2,069,078.65Change in reserves*) 2,672,506.74 4,263,130.82

Total 53,554,393.29 53,400,697.39

*) The change in reserves 2012 includes an adjustment for 2010―2011.

Salaries, bonuses and fringe benefits paid to management

Managing directors 748,412.34 727,239.08Deputy managing director 469,341.04 445,710.60Board members and deputy members 397,863.72 391,595.10Members of Supervisory Board and deputy members 107,586.13 116,089.73

Total 1,723,203.23 1,680,634.51

Pension commitments for the benefit of the executive management

The retirement age of Ilmarinen’s President and CEO and Deputy CEO is 62 years. On 19 December 2012, the Board of Directors and the President

and CEO agreed that the President and CEO’s employment relationship will continue until the spring of 2015, when the President and CEO turns 63.

The President and CEO and his Deputy are covered by voluntary defined-benefit supplementary pension insurance. The amount of voluntary defined-benefit supplementary pension insurance in 2013 for President and CEO was EUR 634,127.33 and for Deputy EUR 129,572.49. The total pension, which consists of the earnings-related pension and supplementary pension, is 60 per cent of the salary on which the supplementary pension is based. The salary on which the supplementary pension is based is calculated according to the annual earnings for the past five full years in the present employment relationship. The President and CEO’s supplementary pension accrual ended when he turned 62 on 12 December 2013, after which the supplementary

pension does not cause any cost for his part. Statutory earnings-related pension contributions have been paid on the remuneration paid to the membersof the Board of Directors and Supervisory Board.

Average staff number during the financial periodAverage staff number during the financial period 604 612

Auditor's fee

Auditing 267,775.72 248,317.74 Tax advice 14,133.08 21,350.04 Other services 7,263.91 78,692.9185

Notes to the accounts, Group Ilmarinen 2013

INVESTMENTS, GROUP

CURRENT VALUE OF INVESTMENTS AND DIFFERENCE

BETWEEN CURRENT AND BOOK VALUE, GROUP

Remaining Remaining

acquisition cost Book value Current value acquisition cost Book value Current value

Investments in real estateReal estate 2,131,558,077.58 2,142,384,300.77 2,979,407,689.09 2,089,834,214.48 2,100,660,437.67 2,875,757,226.82Shares in participating interests 85,582,351.79 85,582,351.79 94,688,428.90 44,857,897.51 44,857,897.51 53,959,530.42Other shares in real estate 8,797,674.68 8,797,674.68 9,860,544.24 11,098,684.37 11,098,684.37 12,580,222.36Loans to participating interests 29,554,657.55 29,554,657.55 29,554,657.55 13,229,483.87 13,229,483.87 13,229,483.87

Investments in participating interestsShares and participations in associated companies 67,821,016.19 67,821,016.19 73,835,379.59 44,693,343.12 44,693,343.12 45,454,423.42Shares and participations in other participating interests 512,636.80 512,636.80 512,636.80 512,636.80 512,636.80Loan receivables 175,977,785.33 175,977,785.33 175,977,785.33 184,615,393.33 184,615,393.33 512,636.80

Other investmentsShares and participations 12,414,918,599.19 12,415,242,099.65 15,506,664,112.54 11,605,143,160.98 11,605,466,661.44 13,584,770,709.45Money market instruments 10,855,199,037.23 10,855,199,037.23 11,009,055,731.74 8,522,235,046.75 8,522,235,046.75 8,780,701,568.94Loans guaranteed by mortgages 616,775,991.61 616,775,991.61 616,775,991.61 699,886,208.71 699,886,208.71 699,886,208.71Other loan receivables 983,561,459.83 983,561,459.83 983,561,459.83 1,449,187,762.33 1,449,187,762.33 1,449,187,762.33

27,370,259,287.78 27,381,409,011.43 31,479,894,417.22 24,665,293,832.25 24,676,443,555.90 27,700,655,166.45

Remaining acquisition cost of money market instruments includes:

the difference between the nominal value andacquisition cost, released to interest income (+)or charged to interest income (-) -62,058,058.12 -51,008,925.25

Book value comprisesRevaluations entered as income 349,956.19 349,956.19Other revaluations 10,799,767.46 11,149,723.65 10,799,767.46 11,149,723.65

Difference between current and book value 4,098,485,405.79 3,024,211,610.55

31 Dec 2013 31 Dec 2012

86

Notes to the accounts, Group Ilmarinen 2013

INVESTMENTS, GROUP

CURRENT VALUE OF DERIVATIVES AND VALUATION DIFFERENCE

Book value Current value Book value Current value

Fair value of non-hedging derivatives and valuation difference

Other receivablesPrice diffefence of derivatives 95,124,220.98 0.00 20,833,263.96 0.00Prepayments for option contracts 1,404,393,433.79 1,841,448,334.48 1,432,168,165.79 2,109,849,420.59

Other debtsPrice diffefence of derivatives -147,202,953.13 0.00 -47,181,080.54 0.00Prepayments for option contracts -266,048,380.77 -200,637,307.33 -315,458,885.44 -232,961,266.40

Other prepayments and debtsFuture and forward contracts and total return swaps -469,313,877.49 276,450,881.28 -311,905,701.01 133,422,925.24

616,952,443.38 1,917,261,908.43 778,455,762.76 2,010,311,079.43

Valuation difference, total 1,300,309,465.05 1,231,855,316.67

CURRENT VALUE OF SHORT SELLING AND VALUATIONN GAIN/LOSS

Current value of short selling and valuation gain/loss Book value Current value Book value Current value

Other debtsLiabilities on sold stock loans -46,895,708.16 -46,641,134.01 -25,824,365.61 -25,824,365.61

Valuation difference, total 254,574.15 0.00

31 Dec 2013 31 Dec 2012

31 Dec 2013 31 Dec 2012

87

Notes to the accounts, Group Ilmarinen 2013

REAL ESTATE INVESTMENTS, GROUP

Changes in real estate investments:

Loans

Real estate and to participating

real estate shares interests

Acquisition cost Jan 1 2,727,870,676.45 13,229,483.87Additions 289,862,401.64 18,910,527.35Deductions -149,375,704.74 -2,585,353.67Transfers between items - -

Acquisition cost Dec 31 2,868,357,373.35 29,554,657.55

Accumulated depreciation and amortisation Jan 1 -530,771,046.24Accumulated depreciation and amortisation 896,660.03on deductions and transfersDepreciation and amortisation for the financial year -59,363,691.95

Accumulated depreciation and amortisation Dec 31 -589,238,078.16

Depreciations Jan 1 -63,081,988.63Impairments on deductions and transfers -Value adjustments for the financial year -11,561,452.14Value readjustments 9,689,094.83

Depreciations Dec 31 -64,954,345.94

Revaluations Jan 1 22,599,378.04Transfers between items -

Revaluations Dec 31 22,599,378.04

Book value Dec 31 2,236,764,327.24 29,554,657.55

Owner-occupied properties and shares in real estate

Remaining acquisition cost 78,322,190.80Book value 78,322,190.80Current value 106,245,678.17

2013

88

Notes to the accounts, Group Ilmarinen 2013

INVESTMENTS IN GROUP COMPANIES AND PARTICIPATING INTERESTS, GROUP

2013Changes

Shares and

participations in

participating interests

Acquisition cost Jan 1 45,205,979.91Additions 23,127,673.08

Acquisition cost Dec 31 68,333,652.99

Book value Dec 31 68,333,652.99

Remaining negative consolidation difference Dec 31 -22,611.58

89

Notes to the accounts, Group Ilmarinen 2013

SHARES AND PARTICIPATIONS, GROUP, 31 DEC 2013

Number of shares Percentage of shares Book value, EUR Current value, EUR

/ votes, %

SHARES AND PARTICIPATIONS IN PARTICIPATING INTERESTS

Suomi Mutual Life Assurance Company 3 100.00 / 0.00 512,636.80 512,636.80Kruunuvuoren Satama Oy 330 33.00 / 33.00 38,619,847.15 44,608,962.35Russia Invest B.V. 54,450 27.23 / 27.23 11,129,270.60 11,129,270.60Technopolis Holding 2 AS 147 49.00 / 49.00 10,552,414.70 10,577,662.90Garantia Insurance Company 15,777 26.30 / 26.30 7,519,483.74 7,519,333.74Total 68,333,652.99 74,347,866.39

OTHER INVESTMENTS

Shares and participations

Domestic companies, listed

Affecto Plc 633,269 2.84 2,568,103.16 2,868,708.57Ahlstrom Corporation 382,674 0.82 3,145,580.28 3,145,580.28Alma Media Corporation 1,100,000 1.46 3,289,000.00 3,289,000.00Amer Sports Corporation 2,412,565 2.04 23,175,927.97 36,477,982.80Apetit Plc 53,800 0.85 623,279.32 1,032,960.00Aspo Plc 1,200,676 3.88 7,240,076.28 7,240,076.28Atria Plc 90,000 0.32 / 0.08 693,000.00 693,000.00Basware Corporation 1,461,658 11.30 26,473,258.72 35,664,455.20Biotie Therapies Oyj 16,732,271 3.70 4,685,035.88 4,685,035.88CapMan Plc 7,178,500 8.42 / 5.24 8,111,705.00 8,111,705.00Cargotec Corporation 961,953 1.50 / 0.64 21,162,414.73 26,059,306.77Caverion Corporation 4,056,215 3.23 16,256,516.34 36,100,313.50Citycon Corporation 39,615,389 8.98 90,724,029.45 101,019,241.95Comptel Corporation 2,236,368 2.08 1,051,092.96 1,051,092.96Cramo Plc 346,931 0.81 5,328,860.16 5,328,860.16Digia Plc 1,994,529 9.55 5,602,600.93 7,798,608.39Efore Plc 1,578,048 2.83 994,170.24 994,170.24Elisa Corporation 2,649,335 1.58 39,512,657.12 51,026,192.10Exel Composites Plc 689,400 5.79 1,958,163.74 3,964,050.00F- Secure Corporation 8,242,031 5.19 15,412,597.97 15,412,597.97Finnair Plc 2,675,564 2.09 7,357,801.00 7,357,801.00Finnlines Plc 5,449,033 10.58 40,867,747.50 40,867,747.50Fiskars Corporation 1,525,871 1.86 19,138,936.81 29,830,778.05Fortum Corporation 7,351,961 0.83 122,263,111.43 122,263,111.43HKScan Corporation 218,298 0.40 / 0.14 820,800.48 820,800.48Huhtamäki Oyj 3,266,286 3.04 42,166,221.58 60,883,571.04Ilkka-Yhtymä Oyj 606,397 2.36 / 2.37 1,768,759.85 1,912,487.76Incap Corporation 8,307,692 7.61 830,769.20 830,769.20Kemira Oyj 3,840,451 2.47 43,977,457.91 46,699,884.16Kesko Corporation 1,001,587 1.00 / 0.94 25,890,269.81 26,812,483.99Kone Corporation 5,978,918 1.14 / 0.49 134,650,766.12 196,048,721.22Konecranes Plc 222,225 0.35 5,197,355.43 5,746,738.50Lassila & Tikanoja Plc 1,362,803 3.51 14,880,809.42 20,660,093.48Lemminkäinen Corporation 270,369 1.38 4,096,090.35 4,096,090.35Marimekko Corporation 215,419 2.66 2,121,877.15 2,121,877.15Martela Oyj 335,400 8.07 / 2.14 1,110,174.00 1,110,174.00Metso Corporation (1 4,450,126 2.96 90,158,505.65 94,253,668.68Metsä Board Corporation 14,217,625 4.33 / 8.04 44,431,282.70 44,431,282.70Munksjö Oyj 2,353,646 4.61 12,356,641.50 12,356,641.50Neste Oil Corporation 5,765,849 2.25 68,346,492.12 82,855,250.13Nokia Corporation 60,394,549 1.61 184,070,131.64 351,194,302.44Nokian Tyres plc 3,218,947 2.42 102,736,323.64 112,244,681.89Okmetic Oyj 1,549,985 8.97 6,461,713.13 7,439,928.00Olvi plc 649,518 3.13 / 0.71 8,514,567.03 18,543,738.90Oral Hammaslääkärit Plc 450,000 5.11 1,669,248.52 2,205,000.00Oriola-KD Corporation 6,430,792 4.25 / 5.09 12,009,320.31 16,447,804.72Orion Corporation 1,974,695 1.40 / 4.15 20,209,203.17 40,167,388.70Outokumpu Oyj 23,153,368 1.11 9,416,474.77 9,416,474.77Outotec Oyj 9,636,448 5.26 70,526,735.61 73,333,369.28PKC Group Oyj 2,621,431 10.97 28,298,309.98 63,412,415.89Pohjola Bank plc 31,955,142 10.00 / 5.42 239,900,650.25 467,184,176.04Ponsse Plc 392,666 1.40 3,288,005.71 3,848,126.80Pöyry Plc 4,690,977 7.85 19,101,658.34 19,101,658.34Raisio Plc 4,252,178 2.57 / 0.53 10,515,614.73 18,496,974.30Ramirent Plc 4,145,154 3.81 28,604,618.78 37,886,707.56Rapala VMC Corporation 408,899 1.04 2,118,096.82 2,118,096.82Rautaruukki Corporation 4,295,489 3.06 27,315,219.89 28,951,595.86Sampo plc 4,241,614 0.76 / 0.75 88,968,293.95 151,383,203.66Sanitec Corporation 2,000,000 2.00 13,571,086.91 15,238,568.25Sanoma Corporation 4,732,220 2.91 30,191,563.60 30,191,563.60Scanfil plc 580,000 1.00 771,400.00 771,400.00Sievi Capital Oyj 580,000 0.96 638,000.00 638,000.00Siili Solutions Plc 71,000 4.12 497,000.00 908,090.00SRV Group Plc 308,003 0.84 1,247,412.15 1,247,412.15Stockmann plc 860,269 1.19 / 0.74 9,501,198.52 9,501,198.52Stora Enso Oyj 7,728,929 0.98 / 1.64 50,286,399.08 56,242,827.46Suominen Corporation 26,422,103 10.66 12,418,388.41 12,418,388.41Talentum Oyj 4,308,383 9.73 4,437,634.49 4,437,634.49Technopolis Plc 11,089,647 10.44 36,830,568.03 48,239,964.45Teleste Corporation 953,854 5.07 4,053,879.50 4,053,879.50Tieto Corporation 1,857,871 2.54 26,250,061.87 30,543,399.24Tikkurila Oyj 4,519,940 10.25 69,302,608.30 89,946,806.00Tulikivi Corporation 3,720,562 6.21 / 2.81 1,227,785.46 1,227,785.46UPM-Kymmene Corporation 10,369,552 1.96 100,385,657.76 127,338,098.56Uponor Corporation 922,052 1.26 10,380,163.17 13,111,579.44Vacon Plc 948,968 6.20 27,491,078.17 55,467,179.60Vaisala Corporation 635,000 3.49 / 0.77 14,738,350.00 14,738,350.00Valmet Corporation (1 4,450,126 2.97 41,859,176.54 43,789,239.84Wärtsilä Corporation 3,128,914 1.59 77,870,952.61 111,921,253.78YIT Corporation 1,457,115 1.15 12,984,548.53 14,804,288.40Other 935,000 319,629.36 319,629.36Total 2,371,418,668.99 3,264,395,090.85

1) As a result of the demerger (31 Dec), the current value on Metso’s final trading date (30 Dec) has been divided up between

Metso and Valmet according to the preliminary demerger plan in proportion with net assets.

Domestic companies, non-listed

Aloitusrahasto Vera Oy 1,500 2.83 2,589,000.00 2,589,000.00Arek Oy 2,779,199 19.85 2,783,346.18 2,783,345.56DNA Ltd 424,689 4.42 40,342,820.23 40,342,820.23Ekokem Oy Ab 490,700 13.94 19,635,342.84 19,635,342.84Enfo Oyj 11,202 1.90 766,365.34 895,039.80Faron Pharmaceuticals Oy 48,161 3.31 1,192,552.42 1,192,552.42

90

Notes to the accounts, Group Ilmarinen 2013

Fingrid Oyj 661 19.88 / 17.15 135,726,627.55 221,953,472.70GreenStream Network Plc 1,200,000 19.87 600,000.00 600,000.00Holiday Club Resorts Oy 195,121 6.79 3,999,980.50 3,999,980.50Keliber Oy 47,415 12.97 1,249,999.99 1,249,999.99Mediverkko Yhtymä Oy 600,000 5.21 2,961,693.43 2,961,693.60Mendor Ltd 16,579,297 13.18 1,378,565.10 1,411,086.32Osuuskunta KPY 761,900 13.73 12,115,578.15 12,116,495.70PHP Holding Oy 3,568 1.76 / 0.22 3,696,242.35 3,696,916.06Northern Power Company Ltd. 1,500,000 4.00 70,680,000.00 70,680,000.00Porasto Oy 2,080 12.82 556,312.36 556,312.36PRT-Forest Oy 6,000 10.02 3,616,335.60 3,616,335.60SATO Corporation 8,195,895 16.07 31,080,288.14 119,742,025.95SSP Yhtiöt Oy 1,093 1.14 602,096.92 602,096.92Tornator Oy 844,000 16.88 44,557,428.00 80,506,417.00VVO-group plc 1,332,330 18.00 36,230,733.92 246,081,351.00Other 8,872,834 3,356,707.13 3,356,707.13Total 419,718,016.15 840,568,991.68

OTHER INVESTMENTS

Foreign companies, listed

Netherlands

Aegon N.V. 1,050,000 0.05 5,760,799.69 7,205,100.00Akzo Nobel N.V. 127,431 0.05 5,540,736.39 7,179,462.54Corio N.V. 51,576 0.05 1,679,830.32 1,679,830.32Eurocommercial Properties N.V. 195,584 0.46 5,298,873.20 5,914,460.16European Aeronautic Defence and Space Company EADS N.V. 326,000 0.04 13,653,175.26 18,194,060.00ING Groep N.V. 1,730,000 0.05 17,421,100.00 17,421,100.00Koninklijke Philips N.V. 317,000 0.03 7,685,128.66 8,446,465.00Unilever N.V. 165,000 0.01 4,242,726.96 4,830,375.00Australi

PanAust Limited 1,800,000 0.29 2,094,923.17 2,094,923.17Belgium

Belgacom SA 58,500 0.02 1,258,042.50 1,258,042.50KBC Group N.V. 87,500 0.02 1,710,100.39 3,599,312.50Bermuda

Höegh LNG Holdings Ltd 515,000 0.74 2,943,560.92 2,943,560.92Seadrill Ltd 442,566 0.09 13,028,117.83 13,102,874.76Spain

Banco Bilbao Vizcaya Argentaria, S.A. 2,062,574 0.04 14,054,792.37 18,398,160.08Banco Santander S.A. 3,503,845 0.03 22,774,992.50 22,774,992.50Gas Natural SDG, S.A. 96,570 0.01 1,115,736.31 1,796,202.00Iberdrola, S.A. 1,630,921 0.03 6,720,030.72 7,547,902.39Repsol S.A. 235,229 0.02 4,089,692.24 4,290,576.96Telefónica, S.A. 1,531,500 0.03 16,543,476.46 18,071,700.00Great Britain

Amlin Plc 480,000 0.10 1,795,366.90 2,633,465.28Anglo American Plc 754,100 0.05 11,939,690.54 11,939,690.54AstraZeneca Plc 403,500 0.03 14,836,221.79 17,439,711.71Aviva Plc 880,000 0.03 3,519,774.52 4,745,687.90BAE Systems Plc 1,058,407 0.03 5,516,107.02 5,516,107.02Barclays Plc 6,331,250 0.04 18,392,164.09 20,644,720.08BG Group Plc 1,611,523 0.05 21,460,410.94 25,080,377.75BHP Billiton Plc 1,195,000 0.02 26,746,671.46 26,746,671.46BP Plc 7,265,700 0.04 42,533,583.84 42,533,583.84British American Tobacco Plc 155,000 0.01 6,016,312.82 6,016,312.82British Land Company Plc, The 1,250,000 0.12 7,708,493.30 9,430,850.43BT Group Plc 3,034,500 0.04 5,754,242.68 13,794,836.27Centrica Plc 2,063,000 0.04 6,804,678.10 8,591,502.94Compass Group Plc 567,758 0.03 2,199,513.77 6,588,771.32GlaxoSmithKline Plc 1,679,000 0.03 28,819,382.52 32,454,222.14Hammerson Plc 1,155,000 0.16 6,161,493.00 6,954,659.95HSBC Holdings Plc 7,340,000 0.04 46,865,983.05 58,309,727.72Land Securities Group Plc 1,210,390 0.15 10,718,184.27 13,988,374.30Lloyds Banking Group Plc 10,494,278 0.01 6,169,612.67 9,900,143.52National Grid Plc 1,311,474 0.04 9,847,589.45 12,395,843.97Prudential Plc 560,000 0.02 3,527,251.72 8,994,122.59Rio Tinto Plc 475,700 0.03 16,640,265.86 19,431,406.38Rolls-Royce Holdings Plc 623,015 0.03 3,308,674.17 9,512,991.42Royal Dutch Shell Plc 2,519,600 0.04 61,832,125.93 65,270,238.00SABMiller Plc 841,282 0.05 31,149,395.29 31,251,653.52SSE Plc 369,600 0.04 6,064,685.14 6,064,685.14Standard Chartered Plc 350,000 0.01 5,709,487.83 5,709,487.83Tesco Plc 2,573,350 0.03 10,320,253.96 10,320,253.96Tullow Oil Plc 450,332 0.05 4,618,374.24 4,618,374.24Unilever Plc 327,000 0.03 7,681,791.12 9,735,084.56Wm Morrison Supermarkets Plc 502,563 0.02 1,572,732.24 1,572,732.24Vodafone Group Plc 18,821,000 0.04 35,820,036.68 53,503,382.51Other 59,414,540 588,470.97 595,588.79Italy

Assicurazioni Generali S.p.A. 270,000 0.02 4,614,300.00 4,614,300.00Enel S.p.A. 2,171,960 0.02 6,893,801.04 6,893,801.04Eni S.p.A. 968,218 0.03 16,934,132.82 16,934,132.82Intesa Sanpaolo S.p.A. 4,700,000 0.03 8,431,800.00 8,431,800.00Mediobanca S.p.A. 300,000 0.03 1,495,640.10 1,893,000.00Snam S.p.A. 611,563 0.02 2,123,510.48 2,485,392.03Telecom Italia S.p.A. 4,334,000 0.02 / 0.03 3,121,132.00 3,121,132.00UniCredit S.p.A. 2,275,000 0.04 7,393,888.97 12,239,500.00Other 14,379 223,593.45 223,593.45Austia

Erste Group Bank AG 170,000 0.04 4,114,720.84 4,306,100.00OMV AG 52,316 0.02 1,436,939.47 1,820,073.64Jersey

Experian Plc 338,234 0.03 4,263,019.97 4,511,409.48Glencore Xstrata Plc 3,810,846 0.03 14,293,529.38 14,293,529.38Shire Plc 152,000 0.03 3,822,494.15 5,197,936.91WPP Plc 550,000 0.04 4,545,827.19 9,097,397.15Luxemburg

ArcelorMittal S.A. 59,861 0.00 775,798.56 775,798.56Millicom International Cellular S.A. 26,427 0.03 / 0.00 1,682,567.70 1,909,142.01Subsea 7 S.A. 331,833 0.09 4,606,697.51 4,606,697.51Tenaris S.A. 181,603 0.02 2,398,015.42 2,882,039.61Norway

Aker Solutions ASA 149,180 0.05 1,913,587.90 1,933,649.65DNB ASA 1,282,146 0.08 12,609,840.59 16,603,660.39Norsk Hydro ASA 443,567 0.02 1,435,771.70 1,435,771.70Norwegian Property ASA 8,225,409 1.50 7,150,391.42 7,150,391.42Orkla ASA 363,719 0.04 2,057,145.61 2,057,145.61Statoil ASA 1,433,901.00 0.04 25,187,140.61 25,187,141Storebrand ASA 2,350,000 0.52 7,691,080.69 10,641,456.42Telenor ASA 857,678 0.06 12,889,139.90 14,829,635.15Yara International ASA 400,000 0.14 12,483,558.53 12,483,558.53Other 948,222 306,134.09 306,134.0991

Notes to the accounts, Group Ilmarinen 2013

Portugal

EDP - Energias de Portugal, S.A. 671,000 0.02 1,727,064.93 1,785,531.00Galp Energia, SGPS, S.A. 135,337 0.02 1,610,510.30 1,610,510.30France

Air Liquide SA 120,488 0.04 10,232,354.75 12,386,166.40Alcatel-Lucent SA 27,933,101 1.00 59,507,836.57 91,006,043.06Alstom SA 426,400 0.14 10,927,414.54 11,288,940.00AXA SA 1,365,000 0.06 18,167,567.77 27,586,650.00BNP Paribas SA 435,000 0.03 18,867,212.11 24,625,350.00Carrefour SA 205,000 0.03 3,783,940.16 5,906,050.00Compagnie de Saint-Gobain SA 157,389 0.03 5,213,625.43 6,291,625.28Compagnie Générale des Etablissements Michelin 99,326 0.05 6,163,838.37 7,672,933.50Electricité de France SA 85,000 0.00 2,183,225.00 2,183,225.00Essilor International SA 48,000 0.02 3,709,440.00 3,709,440.00GDF SUEZ SA 772,132 0.03 13,180,293.24 13,180,293.24Klépierre SA 320,000 0.16 8,150,219.18 10,753,600.00Lafarge SA 107,500 0.04 3,487,688.71 5,855,525.00Lagardere SCA 338,116 0.26 7,657,723.59 9,105,463.88L'Oréal SA 90,000 0.01 10,392,200.61 11,493,000.00LVMH Moët Hennessy Louis Vuitton SA 85,000 0.02 11,271,000.00 11,271,000.00Orange SA 802,000 0.03 7,198,318.01 7,218,000.00Renault SA 51,500 0.02 3,010,175.00 3,010,175.00Sanofi SA 460,000 0.03 22,356,510.33 35,475,200.00Schneider Electric SA 312,548 0.06 16,561,971.50 19,815,543.20Société Générale SA 543,123 0.07 14,086,321.82 22,930,653.06Total SA 826,045 0.03 34,059,393.74 36,783,783.85Unibail-Rodamco SE 82,242 0.08 11,689,481.49 15,317,572.50Vinci SA 125,625 0.02 5,139,021.44 5,994,825.00Vivendi SA 461,169 0.03 6,789,231.51 8,806,022.06Other 162,206 129,629.50 129,629.50Sweden

AB Electrolux 255,990 0.08 / 0.07 4,866,037.86 4,866,037.86AB Industrivärden 103,279 0.03 / 0.00 1,424,602.25 1,424,602.25AB SKF 443,861 0.10 / 0.06 8,452,252.57 8,452,252.57AB Volvo 730,434 0.03 / 0.01 6,958,791.48 6,958,791.48Alfa Laval AB 94,305 0.02 1,600,487.81 1,755,358.28ASSA ABLOY AB 373,018 0.10 / 0.07 13,196,566.32 14,307,493.58Atlas Copco AB 1,294,630 0.11 / 0.10 24,906,533.73 25,253,631.97Atrium Ljungberg AB 1,905,000 1.43 / 1.13 17,993,364.08 18,772,392.23Autoliv Inc. 143,500 0.15 9,497,780.14 9,573,037.89BillerudKorsnäs AB 240,000 0.12 2,097,621.88 2,201,126.53Boliden AB 454,884 0.17 5,052,498.06 5,052,498.06Castellum AB 250,000 0.15 2,290,231.49 2,821,957.08Elekta AB 223,231 0,06 / 0,04 2,478,216.62 2,478,216.62Endomines AB 3,400,000 3.89 1,535,144.65 1,535,144.65Fabege AB 1,100,000 0.67 7,689,245.10 9,535,957.38Getinge AB 222,523 0.09 / 0.10 5,429,534.48 5,525,963.13H & M Hennes & Mauritz AB 887,698 0.05 / 0.03 23,545,184.05 29,659,740.61Hexagon AB 197,700 0.06 / 0.04 3,836,909.09 4,536,850.24Hufvudstaden AB 300,000 0.14 / 0.03 2,040,368.45 2,912,259.71Intrum Justitia AB 1,350,000 1.69 11,459,374.25 27,429,422.85Investor AB 699,499 0.09 / 0.02 15,841,952.76 17,465,564.09Kungsleden AB 913,964 0.67 3,789,483.79 4,446,484.23Lundin Petroleum AB 235,176 0.07 3,323,592.15 3,323,592.15Nordea Bank AB EUR 3,220,016 0.08 23,611,928.69 31,266,355.36Nordea Bank AB SEK 15,463,810 0.38 123,687,436.86 150,988,200.27Sandvik AB 3,244,132 0.26 33,195,309.43 33,195,309.43Scania AB 571,822 0.07 / 0.01 8,126,377.37 8,126,377.37Securitas AB 784,620 0.21 / 0.15 5,904,962.93 6,049,095.96Skandinaviska Enskilda Banken AB 902,084 0.04 7,193,418.41 8,624,636.23Skanska AB 333,228 0.08 / 0.06 4,196,643.93 4,942,506.48Sotkamo Silver AB 1,200,000 8.48 1,608,000.00 1,608,000.00SSAB AB 160,000 0.05 / 0.06 787,366.56 890,203.29Swedbank AB 567,717 0.05 9,358,715.27 11,592,600.30Swedish Match AB 380,665 0.19 8,877,356.50 8,877,356.50Svenska Cellulosa Aktiebolaget SCA 470,820 0.07 / 0.03 8,491,023.58 10,512,150.90Svenska Handelsbanken AB 353,863 0.06 10,902,986.47 12,618,135.22Telefonaktiebolaget LM Ericsson 4,050,938 0.12 / 0.07 33,432,067.09 35,872,276.65TeliaSonera AB 15,650,537 0.26 82,471,652.49 94,413,049.28Tribona AB 900,000 2.31 3,396,693.98 3,962,027.75Other 53,042 545,713.29 569,441.61Germany

Adidas AG 155,000 0.07 10,225,430.28 14,353,000.00Allianz SE 236,500 0.05 19,928,448.52 30,839,600.00BASF SE 432,200 0.05 26,092,984.93 33,581,940.00Bayer AG 295,000 0.04 14,260,775.05 30,119,500.00Bayerische Motoren Werke AG 105,100 0.02 3,480,514.50 8,981,846.00Beiersdorf AG 41,555 0.02 2,527,336.86 3,061,772.40Commerzbank AG 980,678 0.09 11,464,125.82 11,464,125.82Continental AG 28,000 0.01 2,093,421.40 4,464,600.00Daimler AG 334,400 0.03 11,535,684.12 21,100,640.00Deutsche Annington Immobilien SE 75,000 0.03 1,237,500.00 1,350,000.00Deutsche Bank AG 755,000 0.07 24,347,898.51 26,198,500.00Deutsche Börse AG 71,500 0.04 3,894,173.76 4,296,435.00Deutsche Lufthansa AG 909,236 0.20 13,120,196.06 14,067,699.39Deutsche Post AG 487,500 0.04 6,227,788.89 12,969,937.50Deutsche Telekom AG 1,140,000 0.03 9,999,334.21 14,204,400.00Deutsche Wohnen AG 711,510 0.25 8,125,707.60 9,902,755.80E.ON SE 606,700 0.03 8,157,081.50 8,157,081.50Fresenius Medical Care AG & Co. KGaA 40,000 0.01 2,066,000.00 2,066,000.00Fresenius SE & Co. KGaA 22,000 0.01 2,063,925.31 2,459,600.00HeidelbergCement AG 20,600 0.01 820,457.77 1,140,622.00Lanxess AG 45,000 0.05 2,183,175.00 2,183,175.00LEG Immobilien AG 100,000 0.19 4,290,000.00 4,290,000.00Linde AG 204,400 0.11 25,842,319.97 31,119,900.00Merck KGaA 8,200 0.00 / 0.01 1,011,401.41 1,065,590.00Metro AG 418,000 0.13 11,572,498.33 14,751,220.00Münchener Rückversicherungs-Gesellschaft AG 57,500 0.03 6,042,662.91 9,231,625.00OSRAM Licht AG 34,929 0.03 756,358.52 1,432,089.00Porsche Automobil Holding SE 37,975 0.02 / 0.00 2,751,429.41 2,869,770.75RWE AG 146,026 0.02 / 0.03 3,893,053.16 3,893,053.16SAP AG 600,000 0.05 28,132,368.26 37,518,000.00Siemens AG 292,597 0.03 20,807,857.61 29,116,327.47ThyssenKrupp AG 235,850 0.04 4,015,480.13 4,176,903.50Volkswagen AG 5,882 0.00 786,630.84 1,158,165.80Switzerland

ABB AG 1,159,000 0.05 17,549,657.72 22,167,904.86Compagnie Financière Richemont SA 175,000 0.03 9,138,398.68 12,644,591.07Credit Suisse Group AG 639,024 0.04 14,195,327.86 14,195,327.86Galenica AG 8,400 0.13 6,141,251.22 6,141,251.22Holcim Ltd 29,625 0.01 1,486,380.33 1,610,841.28Nestlé SA 942,190 0.03 42,067,570.16 50,118,122.35Novartis AG 852,800 0.03 33,607,376.92 49,461,844.25Roche Holding AG 248,700 0.03 / 0.00 27,664,955.78 50,485,532.7592

Notes to the accounts, Group Ilmarinen 2013

SGS SA 1,450 0.02 1,835,573.49 2,420,210.17Swatch Group AG, The 15,000 0.01 6,579,852.82 7,196,969.70Swiss Re AG 145,800 0.04 6,217,979.91 9,739,002.93Swisscom AG 8,900 0.02 2,945,005.42 3,412,536.66Syngenta AG 62,114 0.07 14,037,668.47 17,967,319.49Transocean Ltd 138,550 0.04 4,892,589.20 4,892,589.20UBS AG 1,245,000 0.03 14,479,235.73 17,159,824.05Zurich Insurance Group AG 82,500 0.06 14,629,832.08 17,358,870.97Denmark

A.P. Møller - Mærsk A/S 6,259 0.14 / 0.02 41,158,132.11 49,188,844.80Carlsberg A/S 43,812 0.03 / 0.01 3,333,182.65 3,524,084.03Coloplast A/S 19,869 0.01 766,412.26 955,985.70Danske Bank A/S 1,287,555 0.13 17,863,828.99 21,455,510.10DSV A/S 79,870 0.04 1,534,706.85 1,903,782.66Novo Nordisk A/S 517,403 0.02 63,836,047.51 68,912,616.53Novozymes A/S 214,100 0.07 / 0.03 4,720,922.36 6,569,985.12TDC A/S 384,127 0.05 2,148,361.54 2,708,709.96William Demant Holding A/S 13,042 0.02 864,391.21 920,543.88Russia

IDGC North-West 1,597,977,036 1.67 996,490.65 996,490.65Russian Grids OAO 78,155,602 0.05 1,218,436.26 1,218,436.26United States

Apple Inc. 38,866 0.00 12,781,319.32 15,805,112.12Aruba Networks, Inc. 1,100,000 1.01 14,269,451.09 14,269,451.09Corning Inc. 1,167,396 0.08 13,466,255.88 15,067,543.18CST Brands, Inc. 66,666 0.09 1,624,740.31 1,775,052.95Equity Residential 750,000 0.21 28,203,175.98 28,203,175.98Unisys Corporation 392,660 0.89 6,584,937.39 9,558,114.86Valero Energy Corporation 600,000 0.11 17,856,558.41 21,927,343.92

2,403,946,720.57 2,925,007,928.66

Foreign companies, non-listed

Luxemburg

Aki Partners S.C.S 6,383,846,941 18.18 63,838,469.41 63,838,469.41Lakeside Network Investments S.à r.l. 83,712,075 10.00 837,120.75 837,120.75United States

Other 68,255 73,121.59 73,121.5964,748,711.75 64,748,711.75

State Amount Book value, EUR Current value, EUR

Fixed-income funds

Apollo Offshore Credit Fund A-Initial Series Cayman Islands 12,928 7,834,973.56 7,834,973.56Apollo Offshore Credit Fund Ltd A-02-07 Cayman Islands 15,001 7,517,986.02 7,517,986.02AXA IM US Short Duration High Yield $ A-class Luxemburg 547,958 45,842,214.14 66,938,205.74AXA WF US High Yield Bonds USD 1 CAP Luxemburg 786,492 59,404,844.18 111,486,682.71BlackRock Eur Instl Cash Series Ireland 260,021,187 260,021,186.52 260,021,186.52Fidelity Funds - US High Yield Luxemburg 4,374,491 36,344,830.60 39,078,912.43Goldman Sach Global High Yield Portfolio Class I Luxemburg 24,472,989 190,055,623.44 190,055,623.44GS Euro Liquid Reserves Fund (inst.Dist) Ireland 455,235,539 455,235,538.57 455,235,538.57JPM Euro Liquidity Institutional (flex dist.) Luxemburg 415,820,592 415,820,592.48 415,820,592.48McDonnell Loan Opportunity Fund (Offshore) class A Cayman Islands 3,426,383 526,865.29 526,865.29McDonnell Loan Opportunity Fund (Offshore) class B Cayman Islands 5,139,574 801,987.62 801,987.62Morgan Stanley Institutional Liquidity Euro Fund Luxemburg 288,209,440 288,209,439.79 288,209,439.79New Amsterdam Capital European Credit Fund Cl. SC Cayman Islands 163,453 3,015,514.36 3,015,514.36New Amsterdam Capital European Credit Fund Class D Cayman Islands 169,305 1,844,763.27 1,844,763.27OP-High Yield Fund A Finland 176,233 19,998,132.80 29,392,087.30OP-Likvidi A Finland 974,492 100,000,000.00 100,382,386.03T.Rowe Global High Yield Bond Fund Luxemburg 3,172,336 31,419,338.81 59,439,603.13Other 0.00 70.83Total 1,923,893,831.45 2,037,602,419.09

Equity funds

Aberdeen Global Asian Smaller Companies Fund A2 Luxemburg 1,759,511 21,458,434.12 55,903,342.29Aberdeen Global China Equity Luxemburg 5,610,492 48,625,279.76 96,578,082.67Aberdeen Global Sicav Asia Pacific Equity A2/C Luxemburg 1,470,648 38,680,351.48 74,825,494.93Accendo Capital SICAV Luxemburg 14,960 13,344,496.87 13,344,496.87Alfred Berg Small Cap Finland B (kasvu) rahasto Finland 20,005 4,355,157.88 12,202,811.30Amundi Asian Growth Institutional Fund Class VII Luxemburg 4,543 3,466,140.66 4,618,409.34Amundi EQ Latin America Luxemburg 30,686 31,828,505.13 31,828,505.13AXA Rosenberg Japan Small Cap Alpha Fund Ireland 2,513,364 29,775,517.00 29,775,517.00BlackRock Emerging Markets Index Sub-Fund Ireland 24,227,384 215,272,546.36 215,272,546.36Bosera China Fund Plc Class 1 Ireland 97,863 5,908,402.35 5,908,402.35Carnegie Global Health Care Fund Luxemburg 240,612 24,691,760.14 47,458,310.90Carnegie Medical Luxemburg 1,060,816 36,181,867.51 72,878,091.81China AMC CSI 300 Index ETF Hong Kong 5,112,771 14,057,693.75 14,057,693.75CIP Emerging Markets Equity Fund I Luxemburg 616,671 34,393,985.87 47,259,806.55DB X-tracker Asia x-JP Luxemburg 215,000 5,217,024.96 5,316,148.21DB X-trackers EURO STOXX 50 UCITS Luxemburg 1,781,600 50,023,643.56 56,298,560.00DB X-trackers MCSI Europe Small Cap Index Ucit ETF Luxemburg 2,428,649 47,256,361.68 67,589,301.67DB X-trackers MCSI Pan-Euro Index Ucits ETF Luxemburg 1,920,000 25,083,362.30 29,913,600.00DB X-Trackers MSCI Brazil Luxemburg 1,688,031 56,447,756.64 56,447,756.64East Capital Balkan Fund Sweden 6,561,599 8,562,053.51 8,562,053.51East Capital Bering Balkan Fund USD Cayman Islands 525,323 2,917,826.25 2,917,826.25East Capital Bering Russia Fund class A Cayman Islands 493,291 7,028,137.19 7,028,137.19East Capital Bering Ukraine Fund class A Master Cayman Islands 346,576 1,610,871.05 1,610,871.05East Capital Bering Ukraine Fund Class A Oct 2013 Cayman Islands 378,132 1,923,204.37 1,923,204.37East Capital Bering Ukraine Fund Class R Cayman Islands 676,262 2,893,150.71 2,893,150.71East Capital China A-Shares Fund Luxemburg 40,000 28,772,967.88 28,772,967.88Evli Greater Russia B Finland 136,583 22,302,832.15 22,302,832.15FC Global Climate Opportunities Luxemburg 103,039 4,999,984.69 5,647,567.59FIM Brazil Finland 563,647 10,376,745.56 10,376,745.56FIM Bric+ Finland 651,847 7,000,000.00 7,228,984.43FIM Bric+ Small Cap Finland 1,330,297 9,644,652.34 9,644,652.34FIM Fenno Finland 74,818 4,500,000.00 12,900,134.13FIM Rohto Finland 252,166 2,500,000.00 2,806,603.41Fondita Equity Spice Finland 91,991 9,000,000.00 10,910,105.33Fourton Fokus Suomi Finland 40,418 5,000,000.00 5,321,422.16Fourton Hannibal Finland 48,972 5,000,000.00 5,889,341.95Fourton Odysseus A Finland 210,004 40,000,000.00 50,401,017.53Fourton Stamina A Finland 209,378 29,559,684.09 51,534,150.43Health Care Select Sector SPDR ETF Fund United States 1,465,217 55,458,354.42 58,891,290.20Industrial Select Sector SPDR ETF Fund United States 687,400 21,768,062.94 26,048,527.30Investec GS Asian Equity Luxemburg 3,064,333 45,000,000.00 49,727,924.83Investec GSF Asia Pacific Equity Fund I Luxemburg 2,352,941 37,006,231.68 37,006,231.68Investec Pan Africa Fund I S6 USD Guernsey 2,259,366 29,608,804.51 33,598,061.43iShares China Large-Cap ETF United States 2,650,600 73,707,860.20 73,707,860.20iShares MSCI Emerging Markets ETF United States 6,146,900 186,265,644.99 186,265,644.99iShares MSCI South Korea Capped ETF United States 967,600 42,736,394.02 45,345,506.49KJK Fund Baltic States B1 C Luxemburg 5,139 2,210,076.67 8,799,366.38KJK Fund II, SICAV-SIF, Balkan A Luxemburg 10,000 10,000,000.00 11,580,300.00Montanaro European Smaller Companies, Accum. Class Ireland 22,149,728 63,478,649.60 85,365,050.55MSCI Europe value ETF Ireland 404,275 59,618,606.52 72,963,552.00OP Kehittyvä Aasia Finland 568,083 68,079,552.59 75,549,391.8793

Notes to the accounts, Group Ilmarinen 2013

OP-Latinalainen Amerikka A Finland 763,313 81,666,862.35 81,666,862.35OP-Suomi Arvo A Finland 43,286 3,293,234.30 8,488,888.49OP-Suomi Pienyhtiöt A Finland 70,600 12,658,030.77 18,734,398.94Osmosis MoRE World Resource Efficiency Fund plc Ireland 561,622 4,618,026.72 5,163,780.92PAM USA Fund I Finland 1,031,244 101,565,476.94 132,376,981.50Parvest Equity Latin America I Luxemburg 117 20,157,567.01 34,841,220.45PF (Lux) Small Cap Europe-Z Luxemburg 84,723 32,759,330.79 80,437,241.36PowerShares Global Clean Energy Portfolio United States 1,125,000 9,014,030.89 9,014,030.89PowerShares QQQ Trust United States 590,000 36,950,420.71 37,626,350.52Prosperity New Russian Generation, A share Guernsey 14,864,250 2,910,120.73 2,910,120.73Prosperity New Russian Generation, B share Guernsey 14,864,250 2,802,338.48 2,802,338.48Prosperity Quest Fund Unlisted Limited, Class C Canaly Islands 220,352 16,477,401.33 17,190,706.02Prosperity Russia Domestic Fund A Guernsey 21,750,000 11,152,023.29 13,878,616.49Prosperity Voskhod Fund Limited Guernsey 41,282,963 32,491,413.07 33,227,531.67Relational Investors XX L.P. United States 75,000,000 47,510,452.30 94,744,369.54Russel Japan Equity Fund A Accum Ireland 629,766 80,871,535.00 88,960,715.10Russell Emerging Equity Fund A Ireland 771,509 147,340,817.02 208,264,414.14Seligson & Co Global Top 25 Pharmaceuticals Finland 602,225 10,000,000.00 10,627,456.53Seligson & Co Russian Prosperity Fund Euro K Finland 521,416 41,917,080.71 44,275,587.04SPDR S&P 500 ETF Trust United States 5,561,864 572,788,012.86 745,332,525.44SSGA Emerging Markets Select Equity Fund Luxemburg 5,450,447 50,169,727.20 50,169,727.20Taaleritehdas ArvoRein Finland 123,267 15,000,000.00 19,631,152.35Taaleritehdas Lyydian Leijona Osake Kasvu Finland 101,681 9,905,970.83 9,905,970.83Timber Capital Forest Fund (A shares) Guernsey 10,637,909 64,909,938.63 68,728,713.79Timber Capital Forest Fund II (Ordinary shares) Guernsey 128,218 828,382.55 828,382.55Topix ETF Japan 14,306,446 122,566,378.06 131,181,964.08UBS Global Innovators I-A2-Acc Luxemburg 71,213 7,747,922.50 7,747,922.50Total 3,144,671,130.99 3,909,755,323.56

Real estate funds

Aberdeen Indirect Property Partners Asia Luxemburg 27,720,534 17,618,247.64 17,618,247.64Aberdeen Real Estate Fund Finland L.P. Great Britain 50,661,061 50,661,061.28 51,225,476.16AEW Value Investors Asia, LP Cayman Islands 2,288,570 1,425,793.55 1,425,793.55Alternative Property Income Venture Luxemburg 24,244,926 24,244,926.00 24,408,409.54ARCH Capital - TRG Asian Partners, LP. Cayman Islands 24,378,557 18,613,808.72 18,613,808.72CapMan Hotels RE Ky Finland 45,011,909 44,992,464.07 44,992,464.07Capman Re II KY Finland 14,132,567 14,132,567.00 16,507,841.67Carlyle Europe Real Estate Partners III, L.P. United States 35,368,110 30,626,802.65 30,626,802.65Curzon Capital Partners III, LP. Great Britain 38,348,037 38,348,037.00 47,183,999.95ECE European Prime Shopping Centre Fund Luxemburg 33,842,001 33,842,001.04 39,521,839.44European Office Income Venture Luxemburg 14,959,092 4,878,683.31 4,878,683.31European Property Investors Special Opportunities Great Britain 35,003,171 34,296,001.94 34,296,001.94European Property Investors, LP Great Britain 9,731,658 5,394,997.40 5,394,997.40European Retail Income Venture Luxemburg 24,862,103 9,211,011.30 9,211,011.30Fosca II Luxemburg 20,000,000 19,809,880.00 19,809,880.00Franklin Templeton Asian Real Estate Fund Luxemburg 37,826,833 26,346,866.65 27,455,105.57Frogmore Real Estate Partners, L.P Great Britain 26,970,485 10,766,098.80 10,766,098.80Goodman European Logistics Fund Luxemburg 30,000,000 15,000,000.00 15,000,000.00Partners Group Real Estate Secondary 2009, LP Great Britain 36,777,466 36,777,465.75 41,814,029.35Pradera European Retail Fund Luxemburg 17,124,818 11,283,611.08 11,283,611.08Real Estate Fund Finland I Ky Finland 8,489,900 4,893,638.01 4,893,638.01Rockspring German Retail Box Fund Great Britain 25,000,000 16,575,225.00 16,575,225.00Sierra Portugal Fund Luxemburg 35,237,205 16,196,006.06 16,196,006.06The Archstone German Fund Luxemburg 30,000,000 30,000,000.00 30,029,010.00VTBC-Ashmore Real Estate Partners I, L.P. Great Britain 3,129,522 3,093,998.80 3,093,998.80Other 0.00 0.00Total 519,029,193.05 542,821,980.01

Private equity funds *)

Advent Private Equity Fund III D Great Britain 2,769,422 797,438.64 797,438.64Alpha Private Equity Fund IV Jersey 3,085,721 808,357.12 808,357.12Alpha Private Equity Fund V Jersey 9,059,255 6,927,258.62 6,927,258.62Antin Infrastructure Partners FCPR France 36,632,763 36,632,762.81 39,736,986.50Apax Europe V - D, L.P. Great Britain 11,962,987 2,212,542.46 2,212,542.46Apax Europe VI - A, L.P. Great Britain 14,308,163 14,308,162.97 16,425,971.40Apax Europe VII -B, L.P. Great Britain 63,975,139 63,975,139.34 71,323,515.77Apax VIII Guernsey 24,329,124 24,329,124.22 25,023,063.83Apollo Overseas Partners VII, L.P. Cayman Islands 31,069,637 23,261,189.05 30,823,035.55Apollo Overseas Partners VIII United States 1,597,511 1,158,372.03 1,158,372.03Arcadia II Germany 8,222,852 4,940,930.71 4,940,930.71Arcus European Infrastructure Fund 1 L.P. Great Britain 36,452,629 26,899,998.71 26,899,998.71Atlas Venture VI United States 2,550,811 717,715.47 717,715.47Axa Secondary Fund IV L.P. Jersey 26,737,725 19,866,576.95 32,002,387.12Baltic Investment Fund III L.P Jersey 728,488 698,850.92 698,850.92BC European Capital IX, LP Guernsey 33,625,547 33,625,547.00 39,209,741.59BC European Capital VIII Great Britain 14,175,920 12,582,319.78 12,582,319.78Bluedrip L.P. Luxemburg 15,000,000 15,000,000.00 15,000,000.00Bridgepoint Europe II B Great Britain 5,304,702 1,773,505.04 1,773,505.04Bridgepoint Europe III Great Britain 17,275,223 12,945,032.95 12,945,032.95Bridgepoint Europe IV Great Britain 34,812,159 34,812,159.41 41,379,612.53CapMan Buyout Fund IX Guernsey 38,522,611 38,522,610.50 45,836,397.76CapMan Buyout VIII Fund A L.P. Guernsey 9,320,363 9,320,363.32 13,386,539.58CapMan Mezzanine V Fund FCP-SIF Luxemburg 4,886,932 4,886,931.78 6,932,161.60CapMan Public Market Fund FCP-SIF Class A Luxemburg 14,523,547 14,523,547.05 41,537,940.03CapMan Russia II Guernsey 1,425,618 1,191,143.59 1,191,143.59Capman Technology Fund 2007 L.P. Guernsey 1,157,828 1,122,649.94 1,122,649.94CCM Co-Invest LP Jersey 3,075,517 3,662,855.95 4,490,228.99Chiron Guernsey Holdings, LP INC Guernsey 15,000,000 11,007,558.52 17,235,011.96Cidron Childsafe Limited Jersey 10,000,000 10,000,000.00 17,892,620.00Coller International Partners V Cayman Islands 15,581,195 11,269,515.09 22,936,973.82Consumer Equity Investments Limited Ireland 1,400,000,000 12,576,008.84 12,576,008.84CVC Europe V Cayman Islands 23,257,609 23,257,608.92 24,977,532.36Darwin Private Equity I Great Britain 10,094,290 10,711,885.64 10,711,885.64Dasos Timberland Fund I Luxemburg 15,934,200 15,147,274.00 15,147,274.00Dasos Timberland Fund II Luxemburg 3,190,289 2,980,176.61 2,980,176.61Doughty Hanson & Co IV, Limited Partnership 4 Great Britain 14,236,791 9,285,804.56 9,285,804.56Doughty Hanson V Great Britain 24,799,010 21,898,492.99 21,898,492.99EPE Overseas Co-Investors L.P. Cayman Islands 8,941,143 7,001,642.21 9,608,820.96EQT Infrastucture II, LP. Great Britain 13,290,215 13,290,214.91 15,133,753.78EQT VI Fund Great Britain 19,800,460 15,864,702.87 15,864,702.87European Mid Market Secondary Fund II LP Great Britain 10,250,000 10,250,000.00 14,444,002.75European Mid-Market Secondary Fund I Great Britain 34,275,000 34,275,000.00 42,472,106.18European Strategic Partners Great Britain 11,045,667 2,705,404.15 2,705,404.15HarbourVest Partners VI-Buyout Partnership Fund LP United States 2,234,765 999,274.25 999,274.25HarbourVest Partners VI-Partnership Fund L.P. United States 9,058,081 2,837,975.40 2,837,975.40HG Capital 5 Great Britain 5,530,419 7,414,293.36 8,189,278.93Hg Capital Edge Co-Invest LP Guernsey 7,200,000 8,624,820.32 8,636,200.07HgCapital 6 Great Britain 20,165,345 22,557,249.75 22,557,249.75HgCapital 7 Great Britain 5,607,274 6,631,118.77 6,725,769.50Ilmarisen Suomi-Rahasto I Ky Finland 7,205,135 7,143,034.22 7,143,034.22Industri Kapital 2000 L.P. I Jersey 3,783,872 1,351,667.29 1,351,667.29Intera Fund I Ky Finland 6,451,033 5,773,197.18 5,773,197.18Isis IV L.P. Great Britain 8,289,299 8,227,583.87 8,227,583.87Kasvurahastojen Rahasto Ky Finland 6,812,175 6,205,060.31 6,205,060.3194

Notes to the accounts, Group Ilmarinen 2013

KKR 2006 Fund L.P. United States 30,769,758 21,741,329.56 21,741,329.56KKR Asian Fund II L.P. Cayman Islands 2,120,572 1,537,649.19 1,537,649.19KKR Asian Fund L.P. Cayman Islands 24,218,459 17,964,712.00 24,614,812.15KKR E2 Investors L.P. Cayman Islands 1,150,174 1,150,174.00 2,178,735.50KKR European Fund II, LP Canada 16,608,183 13,622,862.11 13,622,862.11KKR European Fund III Cayman Islands 33,883,437 33,883,437.00 38,713,249.88Lifeline Ventures Fund I Ky Finland 1,909,059 1,811,800.38 1,811,800.38MB Equity Fund IV Ky Finland 6,911,288 6,911,287.60 8,620,214.04Midinvest Fund II Ky Finland 631,756 600,559.00 600,559.00Montagu IV Co-Invest 1 LP Great Britain 9,237,137 9,237,136.56 10,982,465.80Montagu IV LP Great Britain 18,280,411 18,280,411.91 18,710,476.31Mount Kellett Capital Partners (Cayman), L.P. Cayman Islands 24,855,805 18,452,686.18 30,939,791.30Nordic Capital Fund VIII Jersey 12,452,985 11,517,018.61 11,517,018.61Nordic Capital V Jersey 8,627,562 6,495,751.79 6,495,751.79Nordic Capital VI Jersey 31,104,066 31,104,066.45 33,490,214.91Nordic Capital VII Jersey 60,794,365 60,794,365.07 78,470,813.07PAI Europe V FCPR France 17,779,900 17,779,900.00 22,221,265.68PAI Europe V LP Great Britain 3,267,875 1,537,398.11 1,537,398.11Partners Group European Mezzanine 2008 Great Britain 37,594,870 37,594,870.01 38,176,838.60Permira Europe II LP2 Guernsey 3,972,686 698,807.39 698,807.39Permira Europe III LP Guernsey 11,349,945 7,213,945.59 7,213,945.59Permira IV LP Guernsey 50,928,441 50,928,440.65 57,881,038.58Redtop Co-Invest LP Jersey 9,793,032 12,071,534.26 17,246,355.43Salto LP Fund Guernsey 10,000,000 10,000,000.00 10,000,000.00Selected Mezzanine Funds I Ky Finland 13,781,226 13,781,225.69 14,694,424.83Selected Private Equity Funds I Ky Finland 3,412,979 3,317,822.17 3,317,822.17Sentica Buyout III Ky Finland 14,314,414 14,314,414.16 19,903,577.37Sentica Kasvurahasto II Ky Finland 3,520,060 1,634,867.11 1,634,867.11Silver Lake Partners III L.P. United States 38,096,994 28,122,196.21 29,497,918.75Silver Lake Partners IV United States 9,034,150 6,550,757.74 6,550,757.74SLP Denali Co-Invest L.P. United States 15,072,857 10,929,488.07 10,929,488.07Sponsor Fund III Ky Finland 16,125,210 16,125,209.86 19,410,850.37The Fifth Cinven Fund Guernsey 30,676,149 29,161,606.56 29,161,606.56The Fourth Cinven Fund Limited Partnership Great Britain 37,718,139 37,718,138.72 43,186,853.93The Third Cinven Fund Limited Partnership Great Britain 7,380,490 1,863,861.58 1,863,861.58Towerbrook III Cayman Islands 30,008,863 22,476,911.78 23,350,424.84Vaaka Partners Buyout I (B,C,D,E,F) Ky Finland 5,394,641 5,394,640.95 5,906,344.22Vaaka Partners Buyout I Ky Finland 2,949,609 2,949,609.38 3,263,002.43Vaaka Partners Buyout II Ky Finland 1,875,952 1,521,462.71 1,521,462.71Valhalla Co-Invest L.P. Cayman Islands 81,000,000 10,050,138.52 14,528,279.33Verdane ETF II SPV Ky Finland 1,090,797 1,090,797.00 3,933,090.02Verdane ETF III SPV K/S Denmark 880,162 880,162.00 1,259,398.28Veronis Suhler Stevenson Communications PartnersIV United States 10,800,148 4,696,619.51 4,696,619.51Other 3,993,456.85 13,299,605.69Total 1,310,293,180.35 1,543,334,208.96

Other funds

Bluecrest Capital International F EUR Cayman Islands 66,412 20,018,530.92 20,315,317.31Brevan Howard Fund B Class Limited Cayman Islands 150,946 19,400,533.17 34,189,378.06CFM STRATUS Feeder Limited Class D British Virgin Islands 12,963 19,843,814.87 19,843,814.87Citadel Kensington Global Strategies LTD Bermuda 42,158 29,932,643.90 48,033,950.78D.E Shaw Composite International Fund s. New Issue Cayman Islands 1,946 23,154,547.61 37,177,614.76Davidson Kempner Int. Ltd. - Class C Tranche 4 British Virgin Islands 252,628 18,420,736.02 28,196,804.77HBK Offshore Fund Ltd class C Cayman Islands 199,943 19,034,574.69 24,584,729.90Man Absolute Return Strategies I Ltd: Class ARS1|2 Cayman Islands 13,422 3,526,873.09 3,956,290.43Marshall Wace Market Neutral TOPS B Fund Ireland 288,556 30,000,000.00 32,348,474.21Och Ziff Europe Overseas Fund Ltd Cayman Islands 20,433 18,589,418.46 26,936,448.97Och-Ziff Asia Overseas Fund, Ltd Cayman Islands 13,352 10,188,965.33 13,428,051.61Palmetto Fund, Ltd. Class D 01Apr2011 Bermuda 1,126 829,212.96 1,022,830.97Palmetto Fund, Ltd. Class D 01Feb2010 Bermuda 1,704 1,207,115.17 1,311,906.63Palmetto Fund, Ltd. Class D 01Jan2008 Bermuda 23,329 13,221,861.53 17,962,149.66Palmetto Fund, Ltd. Class D 01Jul2011 Bermuda 1,791 1,288,454.33 1,614,440.29Paulson Credit Opportunities Ltd. Class C Cayman Islands 32,000 2,676,831.39 39,992,206.67QVT CSI Offshore A1137 Cayman Islands 762 569,866.99 569,866.99QVT Offshore Class 1-NI 1075 Cayman Islands 18,731 14,070,630.41 14,713,915.48QVT SLV Offshore Ltd. B1146 Cayman Islands 2,652 1,184,345.62 1,609,810.75Shepherd Investments International, Ltd. Class BQ British Virgin Islands 2,260 2,206,272.33 2,292,460.48Ursus International Ltd. B/1 Cayman Islands 5,156 5,145,709.79 5,145,709.79Vicis Capital Fund (International) Cayman Islands 29,148 1,987,147.57 1,987,147.57Other 1,024,560.20 1,196,137.03Total 257,522,646.35 378,429,457.98

Total 12,415,242,099.65 15,506,664,112.54

*) Real estate funs are not included

The book value of shares and holdings listed here exceed EUR 0.5 million.Loaned shares have not been deducted.

95

Notes to the accounts, Group Ilmarinen 2013

OPEN SECURITIES AGREEMENTS, GROUP 2013 2012

Securies borrowed

Number 5,736,000.00 1,080,000.00Curret value 63,751,049.70 21,193,195.04

Borrowed equities are listed shares.All loans have a maturity under one year and can be halted any time.The current value of the assets pledged as security for lending is presented in the notes to the balance sheet under Securities and financial commitments.

LOAN RECEIVABLES, GROUP 2013 2012

Other loans itemised by guarantee

Bank guarantee 226,759,409.36 466,323,925.23Guarantee insurance 132,125,212.93 183,458,697.08Other 196,945,401.83 253,633,541.70

Secured loans, remaining acquisition cost 555,830,024.12 903,416,164.01

Unsecured loans, remaining acquistion cost 427,704,934.17 545,771,598.32

Remaining acquisition cost, total 983,534,958.29 1,449,187,762.33

Total premium loan receivables itemised by balance sheet item

Loans guaranteed by mortgages 383,118,619.07 465,377,388.62Other loans 392,009,236.36 689,374,475.50

Remaining acquisition cost, total 775,127,885.43 1,154,751,864.12

Inner circle loans

Loans granted to associated companies 176,087,785.33 184,615,393.33

The loan period is 10−29 years and the loans are both loans repayable in instalments within the loan period and single payment loans repayable at the expiry of the loan period.The interest is mainly tied either to the fixed or variable TyEL referance rate.

96

Notes to the accounts, Group Ilmarinen 2013

CHANGES IN INTANGIBLE AND TANGIBLE ASSETS, GROUP

Intangible rights Prepayments

Furniture and

fixtures Other tangible assets Total

Acquisition cost Jan 1 8,339,666.73 6,438,256.06 6,112,784.18 1,748,632.58 22,639,339.55Additions 9,948,905.74 14,015,769.60 470,110.06 12,734.86 24,447,520.26Deductions -344,720.33 -6,588,570.07 - - -6,933,290.40

Acquisition cost Dec 31 17,943,852.14 13,865,455.59 6,582,894.24 1,761,367.44 40,153,569.41

Accumulated depreciation and amortisation Jan 1 -2,901,780.74 -5,106,077.90 -8,007,858.64Depreciation and amortisation for the financial year -2,382,749.69 -289,865.78 -2,672,615.47

Accumulated depreciation and amortisation Dec 31 -5,284,530.43 -5,395,943.68 -10,680,474.11

Book value Dec 31 12,659,321.71 13,865,455.59 1,186,950.56 1,761,367.44 29,473,095.30

SPECIFICATION OFRECEIVABLES 2013 2012

Other receivablesFrom participating interests 1,560.82 1,710.09

2013

97

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF CAPITAL AND RESERVES, GROUP

Capital and reservesInitial fund 22,994,653.31 22,994,653.31Other reserves

Reserves under the Articles of AssociationJan 1 60,241,452.83 54,487,589.62Transfer from unused donation funds 31,750.00 18,182.93Transfer from previous year's profit 2,968,462.34 63,241,665.17 5,735,680.28 60,241,452.83

Other reservesJan 1 584,855.10 584,855.10

Profit/loss brought forwardJan 1 -55,213,518.19 -53,025,894.78Transfer to donations -50,000.00 -50,000.00Transfer to reserves under the Articles of Association -2,968,462.34 -58,231,980.53 -5,735,680.28 -58,811,575.06

Profit/loss for the financial year -9,631,353.00 3,598,056.8518,957,840.05 28,607,443.03

Breakdown of capital and reserves after proposed distribution of profits:Policyholders' share 18,957,840.05 28,607,443.03

Distributable profits:

Profit/loss for the financial year -9,631,353.00 3,598,056.85+ Other funds

Reserves under the Articles of Association 63,241,665.17 60,241,452.83

Distributable profits, total 53,610,312.17 63,839,509.68

2013 2012

98

Notes to the accounts, Group Ilmarinen 2013

SPECIFICATION OF TECHNICAL PROVISIONS, GROUP 2013 2012

Provision for unearned premiums

Future pensions 13,136,854,536.00 13,088,514,328.00Provision for future bonuses 762,899,692.00 477,589,703.00Provision for current bonuses 86,009,621.00 62,412,634.00Supplementary insurance liability tied to income from shares 633,969,511.00 167,312,277.00Total 14,619,733,360.00 13,795,828,942.00

Provision for claims outstanding

New pension awarded 11,597,966,152.00 10,804,024,236.00Equalisation provision 971,185,996.00 986,024,600.00Total 12,569,152,148.00 11,790,048,836.00

Total technical provisions 27,188,885,508.00 25,585,877,778.00

SPECIFICATION OF LIABILITIES, GROUP 2013 2012

Liabilities to group companies and participating interestsOther liabilities 453,503.29 -

99

Notes to the accounts, Group Ilmarinen 2013

SECURITIES AND FINANCIAL COMMITMENTS, GROUP 2013 2012

As security for own debts

Mortgaged as security for rents 10,581,582.56 10,581,582.56

Assets pledged as security for derivative contractsSecurities 337,021,099.55 508,159,777.79Cash 1) 14,450,934.92 41,622,723.02

Assets pledged as security for equity lendingCash 1) 71,609,227.22 23,001,296.05

1) The cash collaterals, EUR 86,060,162.14, provided as security in the transfer according to theAct of Financial Collateral Arrangements are included in the balance sheet item Other liabilities.

The cash assets, EUR 1,606,593,681.94, pledged as security in the transfer according to theAct on Financial Collateral Arrangements, are included in the balance sheet item Other liabilities.

Off-balance-sheet commitments and liabilities

Investment commitments

Private equity funds 1,767,983,109.95 1,585,725,918.34Other 49,328,408.33 51,833,210.96

Derivative contracts

Non-hedgingInterest derivatives

Future and forward contractsOpen, underlying instrument -1,084,914,138.43 -965,246,768.22

fair value 0.00 0.00Option contracts

Open, bought, underlying instrument 29,830,373,036.80 14,393,533,856.00fair value 681,871,487.12 276,150,370.39

Open, written, underlying instrument -24,073,520,122.62 -15,865,660,533.58fair value -329,642,455.92 -225,816,639.79

Interest rate and credit default swapsOpen, underlying instrument -1,369,930,276.64 -5,004,690,396.81

fair value 201,312,404.21 44,779,090.63Currency derivatives

Forward contractsOpen, underlying instrument 3,835,125,128.48 4,587,121,905.75

fair value 31,768,385.01 5,911,683.72Closed, fair value 1,859,739.14 4,121,342.67

Option contractsOpen, bought, underlying instrument 15,595,122,340.59 17,177,243,425.63

fair value 1,073,401,623.53 1,429,717,017.20Open, written, underlying instrument -3,528,503,226.74 -5,239,139,912.19

fair value -107,714,767.39 -222,580,073.59Currency swaps

Open, underlying instrument 0.00 0.00fair value 0.00 0.00

Equity derivativesFuture and forward contracts

Open, underlying instrument 80,737,377.14 -1,782,822,338.46fair value -2,074,034.91 416,454.78

Option contractsOpen, bought, underlying instrument 5,775,989,869.33 16,347,725,004.13

fair value 358,714,975.80 613,962,552.43Open, written, underlying instrument -1,364,811,216.34 -911,203,972.11

fair value -67,714,939.94 -29,396,242.81Total returns swaps

Open, underlying instrument -78,422,784.20 -536,276,923.59fair value -2,208,241.90 983,340.30

Other derivativesFuture and forward contracts

Open, underlying instrument 190,781,947.39 53,249,981.59fair value 45,471,454.79 80,596,983.13

Option contractsOpen, bought, underlying instrument 248,853,537.45 241,857,726.18

fair value 31,895,103.96 34,851,170.36Open, written, underlying instrument 0.00 0.00

fair value 0.00 0.00Total returns swaps

Open, underlying instrument 44,245,368.76 56,780,184.29fair value 321,174.93 -3,385,969.99

Profits on closed and mature derivatives have been recognised in full in profit and loss account.

At the 2013 balance sheet date, derivatives taken out to hedge future acquisition costs for electricity for Ilmarinen’s own properties were open to the current value

of EUR -1,349,750. Derivatives were taken out based on some 70,000 MWh ofelectricity consumption for 2013, which corresponds to approx. 8 MW in average output. Derivatives have been taken out in a staggered manner for future years.

100

Notes to the accounts, Group Ilmarinen 2013

Valuation principles

The fair values of listed derivatives are calculated using the price quoted on the stock exchange.Bilateral OTC derivatives are valued based on the counterparty’s valuation if market conditions

do not prevent the valuation at market value of the derivatives transactions in question.Bilateral OTC derivatives transactions are valued a the theoretical model price ifmarket conditions prevent the valuation at market value of the transaction in question.The European Market Infrastructure Regulation (EMIR) and the related technical standards define in more detail when market conditions prevent valuation at market value.Non-centrally-cleared derivatives are valued at the value received from the central counterparty.

Amount of joint and several liability

The company belongs to a tax liability group represented by OKO Bank Group Central Cooperative. Group members are collectively responsible for the value-added tax payable by the Group.

VAT deduction refund liabilities 49,595,997.00 35,415,859.00

Leasing and rent liabilities

Due in the next year 1,489,883.83 1,456,449.39Due in subsequent years 1,607,375.50 741,046.98

Other financial commitments 6,220,000.00 5,939,634.00

101

Notes to the accounts, Group Ilmarinen 2013

SUBSIDIARIES AND ASSOCIATED COMPANIES CONSOLIDATED IN THE CONSOLIDATED FINANCIAL STATEMENTS 31 DEC 2013

ILMARINEN'S SUBSIDIARIES Domicile Participating interest

%

1 Kiinteistö Oy Aleksanterinkatu 13 Helsinki 100.002 Antilooppi Oy Helsinki 100.003 Kiinteistö Oy Autoprint Helsinki 61.654 Elielin Pysäköinti Oy Helsinki 100.005 Asunto Oy Espoon Itsehallintotie 1 Espoo 100.006 Kiinteistö Oy Espoon Karaportti 3 Helsinki 100.007 Kiinteistö Oy Espoon Keilarannantorni Espoo 100.008 Kiinteistö Oy Espoon Keilaranta 19 Espoo 100.009 Kiinteistö Oy Espoon Kutojankulma 2 Helsinki 100.00

10 Kiinteistö Oy Espoon Kutojantie 4 Espoo 100.0011 Asunto Oy Espoon Markkinakatu 2 Helsinki 100.0012 Asunto Oy Espoon Merivalkama 18 Espoo 100.0013 Asunto Oy Espoon Neulaspolku 1 Helsinki 100.0014 Asunto Oy Espoon Postipuuntalo Espoo 100.0015 Asunto Oy Espoon Puntaritie 2 Espoo 100.0016 Asunto Oy Espoon Puntaritie 5 Espoo 100.0017 Kiinteistö Oy Espoon Siikajärventie 88-90 Helsinki 100.0018 Kiinteistö Oy Espoon Trillakatu 5 Helsinki 100.0019 Kiinteistö Oy Haminan Sibeliuskatu 27 Helsinki 100.0020 Kiinteistö Oy Helsingin Aleksanterinkatu 17 Helsinki 92.7621 Kiinteistö Oy Helsingin Ankkurikatu 5 Helsinki 100.0022 Kiinteistö Oy Helsingin Armfeltintie 8 Helsinki 100.0023 Kiinteistö Oy Helsingin Bulevardi 26 Helsinki 100.0024 Asunto Oy Helsingin Eerikinkatu 41 Helsinki 100.0025 Kiinteistö Oy Helsingin Elimäenkatu 28 Helsinki 100.0026 Kiinteistö Oy Helsingin Elimäenkatu 30 Helsinki 100.0027 Asunto Oy Helsingin Gyldenintie 5-7 Helsinki 100.0028 Asunto Oy Helsingin Hanuripolku 4-6 Helsinki 100.0029 Asunto Oy Helsingin Hellemäenpolku 10 Helsinki 100.0030 Asunto Oy Helsingin Hiomotie 42 Helsinki 100.0031 Asunto Oy Helsingin Hiomotie 44 Helsinki 100.0032 Asunto Oy Helsingin Hiomotie 46 Helsinki 100.0033 Asunto Oy Helsingin Hiomotie 48 Helsinki 100.0034 Asunto Oy Helsingin Hitsaajankatu 15 Helsinki 100.0035 Asunto Oy Helsingin Kap Hornin katu 8 Helsinki 100.0036 Asunto Oy Helsingin Kaustisenpolku 3 Helsinki 100.0037 Asunto Oy Helsingin Kiviparintie 2 Helsinki 100.0038 Asunto Oy Helsingin Laivalahdenportti 3 Helsinki 93.9239 Asunto Oy Helsingin Leikosaarentie 26 Helsinki 100.0040 Kiinteistö Oy Helsingin Lepakko Helsinki 100.0041 Asunto Oy Helsingin Länsisatamankatu 2 Helsinki 100.0042 Asunto Oy Helsingin Merikaapeli Helsinki 100.0043 Kiinteistö Oy Helsingin Merkurius Helsinki 100.0044 Kiinteistö Oy Helsingin Mikonkatu 9 Helsinki 100.0045 Asunto Oy Helsingin Neitsytsaarentie Helsinki 100.0046 Asunto Oy Helsingin Näyttelijäntie 13 Helsinki 100.0047 Asunto Oy Helsingin Palikkapolku 1 Helsinki 100.0048 Asunto Oy Helsingin Piispantalot Helsinki 100.0049 Kiinteistö Oy Helsingin Punanotkonkatu 2 Helsinki 100.0050 Kiinteistö Oy Helsingin Pääpostitalo Helsinki 100.0051 Kiinteistö Oy Helsingin Satamakaari 22 Helsinki 100.0052 Kiinteistö Oy Helsingin Satamakaari 24 Helsinki 100.0053 Kiinteistö Oy Helsingin Takkatie 1 Helsinki 100.0054 Asunto Oy Helsingin Tulvaniitynpolku 3 Helsinki 100.0055 Asunto Oy Helsingin Ulappasaarentie 4 Helsinki 100.0056 Kiinteistö Oy Helsingin Valimotie 21 Helsinki 100.0057 Asunto Oy Helsingin Vanha Viertotie 9 Helsinki 100.0058 Kiinteistö Oy Helsingin Viikintori 3 Helsinki 100.0059 Asunto Oy Helsingin Viulutie 9 Helsinki 100.0060 Kiinteistö Oy Helsingin Väinämöisenlinna Helsinki 100.0061 Kiinteistö Oy HTC Pinta Helsinki 100.0062 Kiinteistö Oy Huittisten Lauttakylänkatu 12 Helsinki 100.0063 Asunto Oy Hyvinkään Kankurinkatu 5 Hyvinkää 100.0064 Asunto Oy Hämeenlinnan Hallituskatu 14 Helsinki 100.0065 Asunto Oy Hämeenlinnan Kummilantie 6 Hämeelinna 100.0066 Asunto Oy Hämeenlinnan Pikkujärventie 9 Hämeenlinna 100.0067 Kiinteistö Oy Ilmarisen Talo 113 Helsinki 100.0068 Asunto Oy Imatran Poutakuja 5 Imatra 100.0069 Kiinteistö Oy Iso-Ylläksentie 42 Helsinki 100.0070 Kiinteistö Oy Julininkulma Turku 79.0971 Kiinteistö Oy Jyväskylän Kauppakatu 39 Jyväskylä 100.0072 Asunto Oy Jyväskylän Keskisentie 1 Jyväskylä 100.0073 Kiinteistö Oy Jyväskylän Kiilatie 1 Helsinki 100.0074 Asunto Oy Jyväskylän Kilpisenkatu 14 Jyväskylä 100.0075 Asunto Oy Jyväskylän Suuruspääntie 12 Jyväskylä 100.0076 Kiinteistö Oy Jämsän Keskuskatu 23 Helsinki 100.0077 Asunto Oy Järvenpään Sahankaari 1-3 Järvenpää 100.0078 Kiinteistö Oy Kangasalan Mäkirinteentie 1 Helsinki 100.0079 Kiinteistö Oy Kaskisten Bladintie 35 Helsinki 100.0080 Kiinteistö Oy Kemin Rytikatu 3 Helsinki 100.0081 Kiinteistö Oy Keravan Alikeravantie 34 Helsinki 100.0082 Kiinteistö Oy Keravan Isoahjo Helsinki 100.0083 Kiinteistö Oy Kolarin Lomarova III Kolari 100.0084 Asunto Oy Kotkan Korkeavuorenkatu 15 Kotka 100.0085 Kiinteistö Oy Kotkan Metsäkulmankatu 21 Kotka 100.0086 Kiinteistö Oy Kotkan Siikasaarentie 78 Helsinki 100.0087 Kiinteistö Oy Kouvolan Kaupinkuja 3 Helsinki 100.00

102

Notes to the accounts, Group Ilmarinen 2013

ILMARINEN'S SUBSIDIARIES Domicile Participating interest

%

88 Asunto Oy Kuopion Haapaniemenkatu 13 Kuopio 100.0089 Kiinteistö Oy Kuopion Leväsentie 23 Helsinki 100.0090 Kiinteistö Oy Kuopion Puijonkatu 29 Helsinki 100.0091 Kiinteistö Oy Kuopion Telkkistentie 2 Kuopio 100.0092 Asunto Oy Kuopion Tulliportinkatu 30 Kuopio 100.0093 Asunto Oy Kuopion Vuorikatu 22 Kuopio 100.0094 Kiinteistö Oy Kutomotie 9 Helsinki 100.0095 Kämp Galleria Oy Helsinki 100.0096 Kämp-Kiinteistöt Oy Helsinki 100.0097 Asunto Oy Lahden Kauppakatu 38 Lahti 100.0098 Asunto Oy Lahden Saimaankatu 60 a Lahti 100.0099 Kiinteistö Oy Lappeenrannan Kauppatori Lappeenranta 78.79

100 Asunto Oy Lappeenrannan Kievarinkatu 1 Lappeenranta 100.00101 Asunto Oy Lappeenrannan Pikisaarenkatu 42 Lappeenranta 100.00102 Asunto Oy Lappeenrannan Valto Käkelän katu 4-6 Lappeenranta 100.00103 Kiinteistö Oy Lielahden Kauppapuisto 1 Tampere 100.00104 Kiinteistö Oy Lielahden Kauppapuisto 2 Tampere 100.00105 Kiinteistö Oy Lohjan Ojamonharjuntie 86 Helsinki 100.00106 Kiinteistö Oy Luumäen Suoanttilantie 101 Helsinki 100.00107 Asunto Oy Naantalin Palomäenkatu 5 Naantali 100.00108 Kiinteistö Oy Nokian Kivimiehenkatu 4 Helsinki 100.00109 Kiinteistö Oy Nummelan Ratastie 3 Helsinki 100.00110 Kiinteistö Oy Oulun Isopurjeentie 3 Oulu 100.00111 Kiinteistö Oy Oulun Jääsalontie 12 Helsinki 100.00112 Kiinteistö Oy Oulun Kauppurienkatu 9 Helsinki 100.00113 Asunto Oy Oulun Kurrenkuja 4-6 Oulu 100.00114 Asunto Oy Oulun Nahkatehtaankatu 14 Oulu 100.00115 Kiinteistö Oy Oulun Pekurinkulma Helsinki 100.00116 Asunto Oy Oulun Peltolankaari 1 Oulu 100.00117 Asunto Oy Oulun Saaristonkatu 2 Oulu 100.00118 Oy Grönqvist F.W. Ab Helsinki 88.20119 Kiinteistö Oy Paraisten Liikekeskus Parainen 71.92120 Kiinteistö Oy Porin Itäkeskuksenkaari 2 Helsinki 100.00121 Asunto Oy Rauman Ahteentie 3 Rauma 100.00122 Asunto Oy Rovaniemen Rovakatu 14 Rovaniemi 100.00123 Kiinteistö Oy Salomonkatu 7-9 Helsinki 79.34124 Kiinteistö Oy Sörnäistenkatu 1 Helsinki 100.00125 Asunto Oy Tampereen Ankkarinraitti 4 Tampere 100.00126 Asunto Oy Tampereen Iidesranta 14 Tampere 100.00127 Asunto Oy Tampereen Iidesranta 16 Tampere 100.00128 Asunto Oy Tampereen Kalevan puistotie 14 Tampere 100.00129 Asunto Oy Tampereen Lapinkaari 8 Tampere 100.00130 Kiinteistö Oy Tampereen Lokomonkatu 27 Helsinki 100.00131 Kiinteistö Oy Tampereen Sellukatu 30 Tampere 100.00132 Asunto Oy Tampereen Tapettikatu 5 Tampere 100.00133 Kiinteistö Oy Tampereen Turvesuonkatu 10 Tampere 100.00134 Kiinteistö Oy Teuvan Tuokkolantie 14 Teuva 100.00135 TietoIlmarinen Helsinki 30.00136 Kiinteistö Oy Toijalan Karantie 2 Helsinki 100.00137 Asunto Oy Turun Ahterikatu 12 Turku 100.00138 Asunto Oy Turun Laivurinkatu 4 Turku 100.00139 Asunto Oy Turun Reelinkikatu 7 Turku 100.00140 Kiinteistö Oy Tuusulan Huurrekuja 2 Helsinki 100.00141 Kiinteistö Oy Vaasan Mäkikaivontie 22 Vaasa 100.00142 Asunto Oy Vaasan Pitkäkatu 32 Vaasa 100.00143 Kiinteistö Oy Vaasan Tehokatu 10 Vaasa 100.00144 Kiinteistö Oy Vainikkalan Huolintatie 13 Helsinki 100.00145 Kiinteistö Oy Valkeakosken Hakalantie 1 Helsinki 100.00146 Kiinteistö Oy Vantaan Ainontie 1 Helsinki 100.00147 Kiinteistö Oy Vantaan Ainontie 5 Helsinki 100.00148 Kiinteistö Oy Vantaan Asolantie 14 Helsinki 100.00149 Asunto Oy Vantaan Helmikuja 2 Vantaa 100.00150 Asunto Oy Vantaan Helmikuja 4 Vantaa 100.00151 Kiinteistö Oy Vantaan Jönsaksentie 4 Helsinki 100.00152 Asunto Oy Vantaan Kranssi Vantaa 100.00153 Asunto Oy Vantaan Lautamiehentie 11 Vantaa 100.00154 Asunto Oy Vantaan Lautamiehentie 9 Vantaa 100.00155 Kiinteistö Oy Vantaan Myllykivenkuja 6 Vantaa 100.00156 Asunto Oy Vantaan Paakari Vantaa 100.00157 Asunto Oy Vantaan Pakkalanrinne 2 Helsinki 100.00158 Kiinteistö Oy Vantaan Pakkalanrinne 4 Helsinki 100.00159 Kiinteistö Oy Vantaan Pakkalantie 27 Vantaa 100.00160 Kiinteistö Oy Vantaan Rälssitie 9 Helsinki 100.00161 Asunto Oy Vantaan Solkikuja 4 Vantaa 100.00162 Kiinteistö Oy Vantaan Tietotie 11 Helsinki 100.00163 Kiinteistö Oy Vantaan Tikkurilantie 5 Helsinki 100.00164 Asunto Oy Vantaan Tädyketie 4 Vantaa 100.00165 Asunto Oy Vantaan Valtuustokatu 6 Vantaa 100.00166 Kiinteistö Oy Vantaan Öljykuja 2 Helsinki 100.00167 Kiinteistö Oy Värtsilän Teollisuustie 5 Helsinki 100.00168 Kiinteistö Oy Äänekosken Kauppakatu 5 Helsinki 100.00

1) Ilmarinen Mutual Pension Insurance Company's sahare of the vote 70.00

ILMARINEN'S ACCOCIATED COMPANIES

Kruunuvuoren Satama Oy Helsinki, Finland 33.00Russia Invest B.V. Amsterdam, Netherlands 27.23Technopolis Holding 2 AS Oslo, Norway 49.00Garantia Insurance Company Helsinki, Finland 26.30

103

Proposal of the Board of Directors for the disposal of profit

The parent company’s distributable capital and reserves in the financial statements for 31 December 2013

amount to EUR 67,015,302.51, of which the profit for the financial year is EUR 3,773,637.34.

The Board of Directors proposes that EUR 50,000.00 be reserved for use by the Board of Directors as dona-

tions for purposes of general interest and the remainder of the profit, EUR 3,723,637.34, be transferred into

the contingency fund.

Helsinki, 26 February 2014

Jussi Pesonen

Lauri Lyly Jyri Häkämies Sture Fjäder

Kim Gran Matti Halmesmäki Minna Helle

Olli Lehtilä Hannu Leinonen Leena Niemistö

Kristian Pullola Heikki Malinen Harri Sailas

President and CEO

104

AUDITOR’S REPORT

To the Annual General Meeting of Ilmarinen Mutual Pension Insurance Company

We have audited the accounting records, the financial statements, the Report on Operations, and the administration

of Ilmarinen Mutual Pension Insurance Company for the financial period 1.1.−31.12.2013. The financial statements

comprise the consolidated balance sheet, income statement and cash flow statement and notes to the consolidated

financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes

to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of financial statements and the

Report on Operations that give a true and fair view in accordance with the laws and regulations governing the

preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is

responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing

Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs

have been arranged in a reliable manner.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and

on the Report on Operations based on our audit. The Auditing Act requires that we comply with the requirements of

professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing

practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements and the report of the Board of Directors are free from material misstatement, and whether the members of

the Supervisory Board as well as of the Board of Directors of the parent company or the Managing Director are guilty

of an act or negligence which may result in liability in damages towards the company or have violated the Limited

Liability Companies Act, the Employee Pension Insurance Companies Act, the Insurance Companies Act or the articles

of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements and the Report on Operations. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the entity’s preparation of financial statements and Report on

Operations that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates

made by management, as well as evaluating the overall presentation of the financial statements and the Report on

Operations.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the financial statements and the Report on Operations give a true and fair view of both the

consolidated and the parent company’s financial performance and financial position in accordance with the laws and

regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland.

The information in the Report on Operations is consistent with the information in the financial statements.

Helsinki 12 March, 2014

Ernst & Young Oy, Authorized Public Accountant Firm

Tomi Englund, Authorized Public Accountant 105