Equities, alternatives bolster returns at Denmark's PFA

Denmark’s largest commercial pensions firm PFA has reported a big fall in investment returns for the first three quarters of this year but said holdings in equities, alternatives and property supported profits in the face of big market swings.

Reporting interim figures, PFA said its investment return for January to September was DKK7.4bn (€992m).

This time last year, it posted an investment return of DKK34.7bn.

Allan Polack, group chief executive, said: “In the first nine months of the year, returns were driven in particular by shares, alternative investments, property and a stronger US dollar.

“Despite the high degree of turbulence on the financial markets, due especially to uncertainty surrounding China’s growth and extremely low interest rates, we at PFA have had a good exposure to those parts of the equities market that have been robust.”

The overall return on unit-link pensions was 3% in January to September, down from 8.2% in the corresponding period in 2014.

With-profits pensions, on the other hand, returned an average of 1.5% in the nine-month period, compared with 11.2% in the same period last year.

PFA’s overall profit in the period was DKK235m before tax compared with DKK991m in the same phase of last year, with the result having been dragged down by a wide loss on its health and accident insurance business of DKK644m.

PFA’s pensions business made a DKK784m profit, little changed from the DKK807m reported for the first nine months of 2014.

Polack explained that the claims trend within the insurance business continued at a high level during the third quarter.

Solvency coverage increased to 300% at the end of September from 278% at the end of 2014.

Total contributions grew to DKK21.3bn in the first three quarters of the year, up 18% from DKK18.1bn in the same period a year earlier.

Regular contributions increased 6% to DKK12.5bn from DKK13.2bn, according to the interim data.

PFA’s total group assets tipped slightly lower at the end of September to DKK550bn from DKK552bn at the end of December 2014.