Finnish pension insurance firms Ilmarinen and Etera Mutual Pension Insurance Co. are set to merge, creating a €44 billion ($49.3 billion) company.
The merger, effective Jan. 1, will create a "solvent and cost-effective earnings-related pension company with the most competitive client benefits in the sector," said a joint news release from the two firms Thursday. By merging, the hope is to offer more diverse and higher quality services. Ilmarinen brings about €36 billion in assets under management to the merger.
The merger has been approved by the boards of each firm, and implementation requires approval at both companies' general meetings and from relevant authorities.
"The merged company will embody solid expertise in insurance for companies of all sizes and self-employed persons, as well as special expertise in a number of sectors," said Mikko Helander, chairman of Ilmarinen's board of directors, in the news release. "Furthermore, thanks to the merger, the cost-effectiveness of the entire earnings-related pension insurance system will improve significantly and the sector's solvency will strengthen overall. The transaction will thus benefit both policyholders and the insured alike."
The merged firm will manage the pension benefits of more than 1.1 million Finns and will become the country's largest private-sector earnings-related pension insurer by participants and premiums.
The firms expect to achieve direct and indirect annual cost savings of at least €20 million in investment operations.
"The merger is a chance for us to modernize and improve services on the basis of the best practices and expertise of both companies," said Timo Ritakallio, president and CEO at Ilmarinen.
Mr. Ritakallio will continue in that role following the merger. Stefan Bjorkman, managing director at Etera, will become Mr. Ritakallio's deputy. Sini Kivihuhta, currently deputy CEO at Ilmarinen, will continue in her position. The release said further details will be released at a later date.
Mr. Bjorkman declined to comment ahead of approvals and the outcome of the general meetings. Mr. Ritakallio was not available to comment.