Thanks to a long-term investment strategy and major capital investment in real estate and shares, Suva receives sufficient return for pension payments.

Suva’s investment strategy

  • With its capital investments, Suva generates returns in line with the market and ensures pensions for the long term.
  • The investment strategy is based on longevity and broad diversification.
  • In addition to the financial aspects, Suva also takes into account ecological, ethical and social minimum standards in its capital investments.

The purpose of financial investments

Each year, despite major prevention efforts, a large number of occupational and leisure-time accidents occur which lead to disability or even death. In some 1,900 cases, accident victims receive a disability pension or widows/widowers or orphans receive a survivor’s pension. In the year a pension is awarded, Suva defers funds for future pension payments as pension actuarial reserves. This capital constitutes the largest share of fixed assets.
Provisions for short-term insurance benefits, such as treatment costs and daily allowances, as well as reserves make up the remaining assets.

Long-term investment horizon

The investment strategy is based on longevity and broad diversification. It has a balanced investment portfolio. About half of the assets are invested in fixed-interest securities such as bonds, loans and mortgages. Shares make up at least 20 per cent. The remainder is invested in real estate and alternative investments. These include hedge funds, private equity, precious metals and raw materials. With this strategy, Suva achieves adequate return on the long-term average. Low-risk, fixed-interest capital investments alone would not meet the return requirements.
To compensate for significant fluctuations in value on capital investments, in good years Suva increases fluctuation reserves. In bad years it releases them again.

Three things make this investment strategy possible:

  • The legal mandate and the resulting stable number of insurance carriers enables a long-term mindset.
  • Premium income covers current payments for pensions and short-term benefits. Thus, there is little risk of having to dispose of long-term capital investments at low prices.
  • The underlying liabilities – pension payments – are long-term in nature.

Yield and performance

Suva’s investment strategy can best be compared to that of a pension fund. Thanks to its balanced investment portfolio, Suva is able to survive even the most difficult times. Since 1918, a portfolio with a comparable distribution of assets would have achieved an annual yield of 5.7 %. The realised performance since 2000 exceeds similar pension fund indices, e.g. the BVG-25-Index and the CS Pension Fund Index.
Performance details can be found in the press release  (available in German, French and Italian).

The positive performance of CHF 100 invested in accordance with Suva’s investment strategy (blue curve) would have defied all of the financial crises (bars in the negative zone) since 1918.

Suva is a healthy company. Have a look at the latest figures from the Annual Report.

Suva’s Annual Report

Responsible investor

In addition to the financial aspects, Suva also takes into account ecological, ethical and social issues. The normative basis for this is Swiss legislation as well as the ten basic principles of the UN Global Compact . These follow the Universal Declaration of Human Rights and the Declaration on Fundamental Principles and Rights at Work of the International Labour Organization. They also take into account the principles of the Rio Declaration on Environment and Development as well as the UN Convention against Corruption .

Suva strongly believes that the effects of a responsible investment strategy can be enhanced when different market actors pursue the same goals together.
Suva signed the United Nations Principles for Responsible Investment (UNPRI)  in 2014. Its UNPRI membership obliges Suva to prepare a detailed report on its own activities with regard to ecological, ethical and social issues.
United Nations Principles of Responsible Investment
Since 2014, Suva has been involved in the Swiss Sustainable Finance (SSF)  initiative as a founding member. Its goal is to strengthen sustainability in the Swiss financial centre. The initiative is a platform that brings together a variety of actors such as investors, schools and universities.
Swiss Sustainable Finance
In 2015, together with the larger Swiss pension funds, compensation funds and insurance companies, Suva founded the Swiss association for responsible investments (SVVK-ASIR) . The association supports its members in the application of ESG  (environmental, social, governance) criteria. In this way, Suva observes its fiduciary duties as efficiently as possible.
Swiss association for responsible investments

Suva’s voting record

Suva and its pension fund foundation make active use of their voting rights when it comes to Swiss shares. Information on their voting record is available here in the language of the respective general meeting.

 

 

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