FSP returns hit across all classes

DENMARK - FSP Pension, the Danish pension provider, saw its assets reduce by DKK1.4bn (€180m) last year, after suffering even higher losses on its investments.

The group’s investment portfolio actually lost DKK2.4bn or 18% as FSP acknowledged 2008 was one of the worst investment years in its history and investors saw losses on virtually all asset classes, reducing total assets to DKK20.7bn.

Its equity portfolio fell 42.4%, while property dropped 13.5% and bonds lost4.3%, but cover reserve capital rose 6.9% in value.

“The strategy of building FSP’s reserves in good investment years and using reserves as a buffer in years with negative returns on investment was applied in 2008,” said Steen Jørgensen, director at FSP Pension.

“Meanwhile, FSP’s conservative accounting principles meant we could spend DKK1.2bn of the so-called bonus potential to cover part of the negative investment performance,” he added.

FSP’s basic capital, which consists of equities and customer FSP bonus capital, decreased in value from DKK3.3bn at the beginning of the year to DKK1.9bn by the end of 2008.
“FSP maintained a close control of the institution’s risks throughout 2008,” continued Jørgensen.

“This positioned FSP over the year in a ‘green risk’ scenario with the Financial Supervisory Authority and thereby maintained a high degree of freedom,” he said.

That said, FSP had a margin of just DKK900m above the Danish financial supervisor’s ‘red risk’ scenario by the end of the year.

Despite the negative result in 2008, FSP Pension claims it performed well despite increased competition in the pension industry.

Pension premiums increased by 8.5% to a total of DKK632m while FSP Pension also gained 651 new customers during the year to give it a total of 17,100 customers by the end of the year.

FSP Pension also focused on lowering its administration costs last year and signed an agreement in spring of last year with Força who will administer FSP Pensions from 2010 - a move which should lower management costs, according to the firm.

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