Return on investments
Suva is responsible for ensuring that the investment income it receives is sufficient to fulfil all legal requirements.
Short and succinct
Suva has a long track record of achieving, and even surpassing, legal investment return requirements. This has many financial benefits for its insurees:
- Suva has not had to levy any contributions towards financing the cost-of-living allowance for many years now, saving insurees a total of CHF 200 million a year.
- Surpluses have been refunded back to insurees in the form of lower premiums on multiple occasions.
Annual return on investments since 2000
Returns on capital investments over the past 20 years have been considerably above the required yield. This is because, as a public sector insurer, Suva can invest its funds long-term and operate countercyclically as a result.
A good trading year in 2021 meant that Suva was able to achieve an investment performance of 7.5%.
Developments in our investments throughout the 2021 business year were influenced first and foremost by an extraordinary trading year. Suva achieved an overall performance of 7.5%. The average for the last ten years stands at 5.2%. Suva’s non-current assets increased in value by CHF 3.9 billion from CHF 55.7 billion to CHF 59.5 billion in 2021.
Thanks to the positive stock market environment, equity investments and their alternative form of private equity made the largest contribution to this investment performance. Direct investment in real estate and investment in real estate funds also made a significant contribution to the positive result. Bonds and credit investments only contributed minimally to the performance. There was a mixed picture here as the slight increase in the interest rate led to negative returns on liquid bonds but, at the same time, had a positive effect on private loans. Money market investments continued to be affected by negative interest rates.
In the 2021 investment year, the outcome was slightly below the Credit Suisse Swiss Pension Fund Index but above the Pictet LPP 25 Index.
Suva’s performance from a long-term perspective
Over the past few years, Suva has, on average, either reached or even surpassed the legal investment return requirement. As a result, a contributions levy was not required since this is only necessary when returns from capital investments are not sufficient to cover the cost-of-living allowance on pensions. For years in which this occurs, higher premiums are also required as a result. Capital yields have however generated sufficient returns from which to fund the cost-of-living allowance since 2016.
Suva is financially independent; its investment strategy is predicated on fulfilling statutory financial targets. Thanks to guaranteed income from premiums, Suva is able to follow a long-term investment strategy, apportioning a significant amount of its capital between shares, real estate and alternative investments. In doing so, Suva considers environmental, social and responsible governance factors as well as financial aspects. Suva’s investment strategy most closely resembles that of a pension fund. A comparison over the long-term reveals that returns were above the Credit Suisse Swiss Pension Fund Index and the Pictet LPP 25 Index.
Investments are earmarked for specific purposes and, on the one hand, cover provisions for pensions, future treatment costs and daily allowances as well as other legal insurance benefits for accidents and occupational diseases. On the other hand, Suva must accumulate adequate capital reserves to mitigate against technical and investment risks. Whenever financial targets are achieved by way of investment returns and the reserves surpass the maximum pre-set level in the process, the surplus is refunded to the insurees in the form of lower premiums.