DENMARK - ATP has generated a profit of DKK17.4bn (€2.3bn) over the first nine months of this year, overshooting its target for the entire year, with all five asset classing posting positive returns.
Lars Rohde, chief executive, said: "Our target for 2010 is DKK7.6bn. Achieving a profit of DKK17.4bn after just nine months is highly satisfactory. The Danes' ATP pension is in good health."
In its third-quarter interim report, the giant Danish labour market supplementary fund announced an investment result of DKK21bn or 5.7%, which it said was largely driven by solid returns on global bonds and domestic equities.
ATP uses risk classes rather than asset classes to categorise investments. At the end of the third quarter, the interest-rate risk class had generated a return of DKK10.7bn or 6.8%.
Equities produced a return of DKK6.0bn or 13%, while credit produced DKK3.2bn or 7.8%.
The inflation risk class yielded DKK900mn or 0.9%, and commodities returned DKK300mn or 1.6%.
Reserves are up 27% since the beginning of the year at DKK82.3bn at the end of the third quarter, with funds under management totalling DKK516bn, ATP said.
Pension liabilities rose to DKK72.4bn after a sharp drop in interest rates in quarters one to three.
The group said: "ATP has hedged its interest-rate exposure using swaps and long-dated, which generated a return of not less than DKK98.1bn.
"Overall, hedging activities ended quarters one to three with a profit of DKK1.9bn less tax on pension-savings return."
Pension activities posted a loss of DKK1.2bn, with most of this due to extra provisions for the update of Danish life expectancy, and the rest down to expenses related to paying out savings from the now closed SP scheme, ATP said.
In the first three quarters, administrative expenses amounted to DKK50 per member, but this was expected to increase to DKK68 per member for the whole of 2010.
ATP said: "With the winding up of the SP scheme, a number of expenses will cease, but at the same time the group will lose economies of scale."
However, in the longer term, a new contract could boost efficiency. ATP said the minister for employment had issued a draft bill for consultation on centralising the payment of old-age pensions and a range of welfare benefits by assigning the task to ATP.
This would "support ATP's strategy for business growth and help ATP achieve economies of scale", it added.