Denmark’s second-biggest commercial pension provider, Danica Pension, saw its corporate profits fall 27% in the first half compared with the same period last year because of turmoil on the financial markets.
Group total profit before tax dipped to DKK831m (€111m) in the first six months of this year from DKK1.14bn in January to June 2015, the Danske Bank subsidiary said in its interim report.
Per Klitgård, Danica’s chief executive, said: “The performance is as expected and is satisfactory in view of the financial market turmoil, which negatively impacted the performance.”
The first half produced negative equity returns and positive returns on the bond portfolio as a result of the lower level of interest rates, according to the report.
The overall return on customer funds for unit-link products was a loss of 1.9%, down from a 5.5% profit in the first half 2015, while the return on customer funds for traditional with-profits pensions was 6.8%, up from a 0.3% loss in the same period last year, Danica said.
The return on the company’s key unit-link product Danica Balance was 1.7% for the six-month period for customers with 15 years to retirement, which it described as satisfactory relative to market developments.
The product had a 5% return on alternatives including direct investments and 4.4% on bonds, and a loss of 3.2% on equities.
Total group assets increased to DKK410bn by the end of June from DKK465bn a year earlier.
Direct investments in particular helped returns in the first half, Danica said.
Between January and June, it said it made several direct investments in Danish companies, including Sitecore, Netcompany, Tandlægerne.dk and Ferrosan Medical Devices.
“These investments are to provide high long-term returns for our customers,” the company said.
Total group premiums rose to DKK15.9bn in the first half, up 3% year on year.
Within this, premiums in Denmark rose by 7% to DKK10.5bn, while premiums in Norway were up 18% at DKK1.1bn.
The company explained a 10% fall in Swedish premiums by saying premium income here in the first half of 2015 had been extraordinarily high.