Danish commercial pension fund AP Pension has agreed to buy Skandia’s Danish business in a deal that will increase its customer base by a third and almost double the annual contributions it takes in.

For its part, Skandia said the sale would allow it to focus on its Swedish business. 

Niels Dengsø Jensen, chairman of AP Pension, said: “I am incredibly proud that we can show, with this purchase, that as a customer-owned company we have the financial strength to take this important step for our own and Skandia’s many customers.”

AP Pension chief executive Bo Normann Rasmussen added that the deal would create a stronger foundation for the company as well as a number of synergies. 

According to figures for the end of 2017, AP Pension had 317,000 customers while Skandia Denmark had 92,675.

AP Pension received DKK7.4bn (€995m) in gross contributions in 2017, and Skandia Denmark took in DKK6.2bn.

The merger will see AP Pension grow its asset base by around a third, adding Skandia Denmark’s DKK32.4bn to its DKK99.9bn. This would make it the eighth largest pension provider in Denmark once the transaction is complete, according to data from this year’s IPE Top 1000 Pension Funds report.

Frans Lindelöw, group head of Skandia – which runs more than SEK600bn (€57.8bn) in total assets across its operations – said the sale was part of its plan to focus on its home market.

“We sold our banking business in Norway previously as part of this strategic process, and now we think the time is right to sell Skandia in Denmark too,” he said.

Lindelöw said Skandia had built up a solid business in Denmark, providing pensions and health insurance primarily aimed at small and medium-sized businesses.

“We view AP Pension as a very well-suited buyer, which has the potential to continue creating value for Skandia’s customers in Denmark,” he added.

The deal is subject to regulatory approval and is expected to be finalised by the end of 2018. The purchase price has not been made public.

The number of pension providers in Denmark has been consolidating for many years in response to competitive pressure on costs and an increasing regulatory burden.

IPE’s Top 1000 Pension Funds report for 2018 will be published with the September edition of the magazine. To see last year’s report, click here.