The pensions subsidiary of Danske Bank reported strong growth in pension contributions, or premiums, in the first quarter, though its health and accident insurance operation continued to make a loss.

In its interim report, Danica Pension announced premiums in its Danish business rose to DKK8.33m (€1.12m) in the January-to-March period, up 5.8% from the same quarter last year, with premiums for the firm as a whole staging growth of 8.3% over the 12-month phase.

Ole Krogh Petersen, Danica Pension’s chief executive officer, said: “We are happy to note that the premium growth we saw in 2020 has continued in 2021 with good, profitable growth.”

He said the firm held a strong position in a highly-competitive market, “winning agreements by offering good, proactive advisory services, competitive long-term net returns and strong healthcare solutions”.

Danica Pension said its health and accident insurance business ended the quarter with a loss that was on a par with the same period a year before, at DKK290m.

Krogh Petersen said: “The loss on our health and accident business remains unsatisfactory, but we are on the right track, as we are seeing the effects of the initiatives we have launched over the past couple of years, particularly healthcare and prevention measures, which have resulted in fewer claims.”

Earlier this year, Danica rival AP Pension described the competition in Denmark’s corporate pension market as fierce, and its CEO said the firm was constantly finding that the price of the insurance package was decisive in the battle for customers.

In December, the Danish Consumer and Competition Authority said in a report on pension companies that the fee model used by the commercial pension providers was preventing new players from asserting themselves in the market.

It also said some of the profit on the investment fees commercial firms charged scheme members was used to offer corporate clients insurance as a loss-leading sweetener.

Asked whether Danica Pension did offer insurance coverage to corporate customers as a kind of loss leader in this way, a spokesman for the company said: “We reject that any kind of redistribution or cross-subsidisation takes place in Danica Pension.”

“Our losses in the sickness and accident business are only covered by our equity and not by other customers,” he said.

Investment returns, meanwhile, came in at 4.1% in the first quarter for customers with the market-rate product Danica Balance Mix and a medium risk profile and 20 years to retirement, according to the interim report released this morning.

This compares to a 9.5% full-year return for 2020, and is far higher than the deep 15.4% loss suffered by such customers in the first quarter of last year, when the onset of the pandemic crushed markets.

The first quarter result for average-rate pensions, Danica Pension Traditionel, was a 2.2% loss, compared to -2.0% in the same period a year ago, according to the results statement.

The pension provider’s total pension assets increased only marginally over the quarter, to DKK466bn at the end of March from DKK465bn at the end of December 2020.

Looking for IPE’s latest magazine? Read the digital edition here.