ATP Group generates record H1 return of 17.9%

Denmark’s ATP Group had a record return of 17.9 per cent in the first half of 2021, it has revealed.

Publishing its interim results, over the first half ATP Group generated DKK 26.9bn in profit, amounting to 17.9 per cent in bonus potential. The largest positive contributions were from investments in both listed equity and private equity and from inflation-related instruments, while the returns from investments in government and mortgage bonds were negative.

“The way we have structured our portfolio with a great deal of risk diversification, strict risk management and active risk taking has once again proven its worth. I am very satisfied that we have stayed true to our concept and once again provided record results from our investments,” ATP CEO, Bo Foged, said.

“At the same time, we have actively contributed to solving very important societal tasks in our administration activities. For example, we have completed the corona-related contact tracing work in record time and paid out over DKK 80bn of the frozen holiday pay, even as we have also been getting ready to process the new applications for early pension. These are results that make me really proud on behalf of our employees.”

The total returns for H1 mean that ATP has, since 2010, generated returns from the bonus potential of DKK 196bn, of which almost DKK 100bn have been created in the past 2.5 years. Over the past five years, ATP has on averaged generated annual returns of 22.6 per cent relative to the bonus potential.

Hedging of the guaranteed pensions is designed to ensure that members receive the pensions promised, regardless of whether interest rates rise or fall. Due to the rising interest rates on long-term Danish and European government bonds, the value of the guaranteed pensions in H1 and the hedging portfolio decreased proportionally. Overall, the hedging results were negative by DKK 2.8bn, driven by yield curve break. The result corresponded to 0.4 per cent of the guaranteed pensions, and the hedging thus functioned as intended.

“Together with the state pension, ATP is the foundation of people in Denmark’s basic financial security as pensioners. Therefore, it is very critical that our guarantees can be met, so that residents of Denmark can count on their lifelong pension from ATP. Even though interest rates rose in H1, everyone can count on the fact that we will keep our promises to the over 5.3 million members with savings in ATP,” Foged said.

In the past year, the life expectancy of Danes increased at a slightly slower pace than ATP’s estimates projected. ATP cannot specifically conclude what the cause is, but the development means that there will now be DKK 4.8bn transferred from the guaranteed benefits to the bonus potential. 66-year-old members are currently expected to live to an average of 87 years.

ATP’s reserves (the bonus potential) at the start of H1 2021 had grown to a whole DKK 171.7bn, the highest ever, and the guaranteed pensions amounted to DKK 753.2bn. The total assets were therefore at DKK 925bn, and the bonus rate ended up being 22.8 per cent.

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