DENMARK - Denmark's ATP, which runs the country's huge supplementary labour-market pension fund, saw group profit slip to DKK3.8bn (€453m) in the first quarter, while the value of its pension liabilities dropped by DKK21.6bn thanks to interest rate rises in the period.

The pensions institution reported a pre-tax market return on its investment portfolio of DKK6.7bn, which equated to a return of 1.7% - driven in particular by index-linked bonds and oil prices.

ATP chief executive Lars Rohde said results for Q1 were satisfactory.

"During a period of wide fluctuations in financial markets, our risk diversification strategy has proved to be appropriate," he said. "Our Q1 results are bolstered, in particular, by our inflation-proof investments and rising oil prices."

Group profit was down significantly when viewed year on year, with profit of DKK10.5bn having been reported for the first quarter of last year.

But ATP said this year's Q1 results fully met the required rate of return, since its performance target for 2011 was DKK12bn.

Hedging activities finished the three-month period with a loss of DKK1.7bn.

ATP pointed out that it hedges pension liabilities against fluctuations in interest rates, adding that, due to interest-rate rises in the first quarter, the value of its pension liabilities had decreased by DKK21.6bn.

On the other hand, the declining term to maturity added DKK3.1bn to pension liabilities, it said.

Within asset groups - which ATP terms 'risk classes' - commodities shone, generating a return of DKK2.8bn, or 13.4%.

The portfolio is composed exclusively of oil-related risk, and the return is driven by rising oil prices during Q1.

The inflation risk class produced DKK3.7bn, or 3.4%, it reported, boosted by index-linked bonds, due mainly to an increase in expected inflation in Europe.