DENMARK - Danica Pension doubled its profit in the first quarter, as unit-link products produced returns of between 4% and 11%.

Pension contribution levels rose slightly in Denmark and markedly in Norway, but shrank in Sweden, the Danske Bank subsidiary said in its interim report.

Pre-tax profit rose to DKK206m (€27.7m) in the first three months of 2012 from DKK101m in the same period last year.

Unit-link products Danica Balance and Danica Link produced investment returns ranging between 4.1% and 11.3%, depending on the individual plan profile.

The traditional with-profits pension product, Danica Traditionel, ended the quarter with a 1.9% investment return, after generating no return at all in the first quarter of 2011.

Per Klitgård, managing director at Danica Pension, said: “In particular, the unit link products Danica Balance and Danica Link produced solid returns. Apart from a strong performance regarding both returns and price, we have also spread risk further and optimised our investment universe with alternative investments in the portfolio.”

Pension contributions continued to increase in Denmark and Norway in the first quarter, Danica Pension said.

“In Denmark and Norway, things look good,” Klitgård said. “In Denmark, we had an increase of 2%, so contributions are now DKK5bn. In Norway, the rise was significant, at more than 70%.”

However, in Sweden, contributions fell by 29%. The company said this should be seen in light of an extraordinarily strong increase in 2011.

Overall, pension contributions at Danica Pension grew to DKK6.9bn in the first quarter from DKK7.1bn in the same quarter of 2011.

The more stable conditions on financial markets in the first quarter contributed to the strengthening of the Danica Traditionel product, the company said.

The collective bonus potential was increased to DKK800m at the end of the period from DKK500m at the beginning of the year.

Assets under management rose to DKK311bn from DKK291bn.

In other news, PFA, Denmark’s second largest pension fund, bought an office building in Copenhagen for DKK515m in an investment with a starting yield of 5%.

The property in Weidekampsgade on the island of Amager was sold by HK, the trade union for commercial and clerical workers.

The union uses the building as its headquarters and is the sole occupant.

Michael Willumsen, director at PFA Ejendomme, the pension fund’s real estate arm, said: “The property fits in well with our real estate portfolio of well-maintained, newer office properties in good locations.”

The building was let in its entirety to HK on a 12-year lease.

“The property has a starting yield of more than 5%, and we see it as a good real estate investment,” Willumsen said.

HK had the building erected 10 years ago.

Kim Simonsen, chairman of the union, said: “In general, we don’t believe in tying up our assets in bricks and mortar. We now have the opportunity to sell the property for a good price, and the deal is economically advantageous for HK, and therefore its members.”

He said HK earned around DKK175m from the deal.

The building has 20,000 square metres of space and is located about 500 metres from the city’s main railway station, and 10 minutes’ drive from the airport.

PFA described the surrounding area as attractive, with other new office buildings in the vicinity.