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Danica profit up sharply in first half as guarantee-related capital needs shrink

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Danica Pension reported a steep rise in its pre-tax profits for the first half of this year to DKK915m (€123m) from DKK82m, benefiting this year from having to use less funds to back its pension guarantees.

The significant increase in pre-tax profits stemmed from the fact only DKK82m was transferred in the six months to the end of June, compared with DKK645m in the same period in 2013, it said in its interim report.

This was because it had been possible to recognise a greater share of the risk premium from the traditional with-profits business in the first half of 2014 than had been the case in the first half of 2013, it said.

Another factor behind the increase in pre-tax profit was growth in the investment return on equity, with this return rising to DKK238m from DKK69m. 

Contributions in the core Danish market increased by more than 9% to DKK10.3bn.

Per Klitgård, chief executive of the Danske-Bank subsidiary, said: “This reflects an increase both in corporate and private customers.”

He said the subsidiary’s cooperation with Danske Bank was developing very satisfactorily, with contributions through the bank rising by 43% between the first half 2013 and the latest reporting period.

The total return on customer funds in the traditional with-profits business segment climbed to 6.7% at the end of June, up from the 1.2% loss reported for the same period last year.

The return on unit-link pensions, meanwhile, was 5.7% on average in the first half.

Contributions overall rose to DKK14.4bn from DKK14bn, while total assets increased to DKK344m from DKK321m by the end of June 2014.

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