DENMARK – Danica Pension, the life and pensions arm of Danske Bank, is to raise its equity allocation to up to 25% from the current 16%.
“Danica Pension has decided to gradually increase the portion of customer funds invested in equities,” Danske said in its 2005 annual report. “The plan is to raise the equity share to 20%-25%.”
Equities have risen from 11% of the total portfolio in 2004 to 16% in last year, according to the report. The asset class returned 24.8% last year and 12.9% in 2004. Bonds have fallen to 76% of the portfolio from 81% - with returns of 11.1% and 10.3% in the last two years.
The overall return last year was 12.6%, from 10.3% in the prior year. “Given the market conditions and the chosen risk profile, the return was satisfactory,” Danske said.
And it added that, given the 2005 returns and the expectations for future returns, the rate of interest on policyholders’ savings has been fixed at 4.5% for 2006.
The division posted a 3% rise in net income to DKK1.6bn (€214m). The risk allowance was DKK1.05bn, or 0.61% of technical provisions.
Danica added that it is strengthening its sales organisation in Norway to service the market, following legislation making company pension schemes compulsory.
In August last year Danica unveiled an 8.5% return on assets in the first half of 2005.