DENMARK - Profits slipped in 2010 for major Danish commercial pensions provider Danica Pension, after taking account of historical risk allowances.

However, the group said it managed to trim its expense ratio to the lowest level ever.

Premiums were up by almost a fifth, with foreign business contributing the lion's share in terms of growth, the group said in its annual results.

Group pre-tax profit fell to DKK2.3bn (€308m) in 2010 from DKK3.1billion in 2009. Danica Pension said the risk allowance for 2010 had been booked, as well as the rest of the amount relating to 2008.

This historical allowance had previously been allocated to a "shadow account", it said, adding that this account had now been reset to zero.

Jørgen Klejnstrup, chief executive, said: "We have seen a significant 18% increase in premiums received, mainly originating from our subsidiaries outside Denmark.

"Expenses continue to decline, and our customers benefited from this fact in 2010, as we lowered our prices by a total of DKK100m."

Premium income for the year was up 18% to DKK24.1bn. Within this figure, premiums in Sweden rose by 86%, or DKK2.7bn, to DKK5.8bn, while in Norway they climbed 132% or DKK0.8bn to DKK1.4bn. In Denmark, premiums were up 2% to DKK16.9bn.

Premiums for market-link products Danica Balance and Danica Link now exceed those for the with-profits Danica Traditionel pension product.

The group has developed several online services for both retail and corporate customers, and at the same time, measures had been taken to improve the efficiency of Danica Pension's operations, it said.

The group's expense level was now historically low, it said, with the ratio of expenses to premiums down from in 2010 to 5% from 6% in 2009.

"In 2011, we will further reduce costs by making our entire business digital," Klejnstrup said. "We also wish to offer even more self-service solutions as a supplement to our personal advisory services."

Danica Pension said it had capital strength of DKK15.8bn, down from DKK17.1bn in 2009.

Addressing current consumer concerns in the Danish pensions market about guarantees, and whether they will be kept, Klejnstrup said: "Our considerable financial strength is a guarantee to our customers that we will always keep our promises - no matter if a guarantee covers one year or 50 years."

He said Danica Pension was the only pension fund in Denmark to be rated by Standard & Poor's. For the past six years, this rating had been A or higher.