100 years of legacy

The life annuity institution was not a new invention when Hereditas was established over a hundred years ago in 1905. A unique concept involving a hereditary annuity was launched for the first and only time, however. This fundamental idea was inherent in the name Hereditas, which means inheritance in Latin.

Beginning in 1857, there were as many as five life annuity institutions, solely in Finland. They can, with good reason, be seen as the precursors of the Finnish life insurance system, and to a certain extent the forerunners of the pension insurance system. As regards their latter activities, these institutions took on characteristics that were more reminiscent of savings institutions.

The first documented origins of the idea of a hereditary annuity go as far back as the Romans of A.D. 200. A peculiar form of hereditary annuity was introduced in the mid-seventeenth century and was originally a hybrid of wager and life insurance policy. A group of citizens of a similar age established a fund, the yield of which was divided on a yearly basis between the surviving members. Those who lived the longest could count on large earnings, while those who passed away at an earlier age received a more modest dividend, and their heirs were left without a share.

The concept of a hereditary annuity also reached the Nordic countries and served as a model for the first life annuity institution in Finland. Lifränteanstalten was based in the city of Åbo and managed to reach the mature age of 112 years before it was dissolved at the end of the 1960s. At this point, most of the partners had passed away, while inflation had made serious inroads into the unprotected capital.

In contrast to the five other hereditary annuity institutions founded, newcomer Hereditas has thrived and gone from strength to strength through the years. The basic idea of the institution has proven more exceptional than anyone realised at its inception; a form of saving that enables an interrupted annuity for the first depositor, and after his or her demise a hereditary annuity that is passed on from generation to generation.

Thus a principle of continuity is built into Hereditas’ operational activities. As deposited capital cannot be withdrawn, embezzled or distrained, the remaining assets have become a nest egg with an increasingly golden shimmer.

However, without successful and interest-accruing management of deposited funds, Hereditas would never have withstood the tumultuous societal changes and crises that Finland has undergone during the past hundred years. These included the experience of being a subjugated province in the Russian Empire as well as being an independent nation severely ravaged by war. Two world wars with runaway inflation and economic recession would have had a highly adverse impact on Hereditas, were it not for deposits that were stably invested in real estate and listed stocks.

”The management of Hereditas has always consisted of people with sound financial instincts and a sense of responsibility for its legacy.”

The unique idea of a hereditary annuity was created by Consul Gösta Sundman, who was something of an innovative renaissance man of his time. When he passed away at the age of 59 in 1914, he was succeeded by new long-standing leaders with the ability to build up the capital of the institution. One of these, M.A. and pharmacist Gösta Salingre was among the 30 original founders. Having already been a member of the first board, he served as Chairman from 1927 until he passed away in 1943. The first property and industrial stock were acquired during this period, protecting the annuity capital from inflation and enabling future revaluation of stock.

Counsellor of Commerce Ane Gyllenberg was a contemporary to Salingre and his successor as chairman. During the post-war era until 1968 he continued to skillfully expand the capital that subsequent directors would so successfully manage and build upon.

A continuum through the last few decades has been investment in growth shares alongside so-called ’secure’ shares. Nokia became the most prestigious and successful of these investment assets. Having risen a hundred fold in value, part of the Nokia holdings were converted into so-called yield stock. These successful investments have in turn given Hereditas depositors sharply increased annuities without additional new deposits.

The board’s aspiration to adapt capital management to the current market situation has, under the directorship of Johan Bardy, led to new investments in real estate holdings at the beginning of 2003. On the same street where Hereditas first acquired a residential building in 1931, it now bought a property at Stora Robertsgatan 11-Annegatan 5 in the block known as Fasaani. The house dates back to 1886 and was designed by the architects G. Nyström and Th. Höjer, and is one of the few buildings in the area classified as historically valuable. The property consists altogether of 19 residential apartments, an office, five commercial premises, as well as a kindergarten.

Hereditas has also been characterized by long-term continuity in terms of its operational management. Since 1915 the institution has only had four managing directors: Uno Westerholm 1915-32, John Palmgren 1932-55, Kaj Gylling 1956-2000, Patrik Lerche 2000-2016 and Henrik von Knorring from 2016.

The offices of the life annuity institution have been located in the newly acquired premises mentioned above since spring 2004.

By year-end 2015 the Institution became a limited-liability company. The business continues as before.