Quarterly announcement Q1-Q3 2018
30 October 2018
ATP achieves a return of DKK 6.9bn in the first three quarters of 2018
The first three quarters of the year were characterised by interest rate increases in the USA and by various trends in the global equity markets. The investment portfolio generated a return of DKK 6.9bn, corresponding to 5.8 per cent relative to the bonus potential.
"Our balanced investment portfolio has generated a stable return in a difficult period, and we are pleased with the contribution from the illiquid part of our portfolio. The return was mainly driven by private equity, real estate, infrastructure and listed Danish equities, whereas investments in US government bonds contributed negatively to the return. We continue to take risks based on a disciplined approach to both portfolio construction and risk management as a way of ensuring that we create satisfactory long-term results despite the low and uncertain return environment," ATP CEO Christian Hyldahl says.
The previous five years have realised average investment portfolio returns of 3.8 per cent per quarter. Investment portfolio returns have been positive in 17 out of the last 20 quarters.
Hedging protects pension guarantees
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 moderate declines in yields on Danish and European long-dated government bonds, the value of guaranteed pensions increased in the first three quarters. Similarly, the hedging portfolio produced a positive return. All in all, hedging activity results were negative by DKK 2.0bn, corresponding to less than 0.3 per cent of the guaranteed pensions. The hedging strategy was thus successful.
Profit for the period
The result for the first three quarters of the year before the life expectancy update totalled DKK 4.4bn. The long-term forecast of life expectancy was adjusted by DKK 20bn at the end of H1. Hence, the result for the first three quarters ended at DKK -15.6bn. The bonus potential – ATP’s reserves – was DKK 102bn at the end of Q3 2018, corresponding to a surplus of 15.1 per cent relative to the guaranteed pensions of DKK 677bn. ATP’s net assets amounted to DKK 779bn in total.
For further information, please contact:
Stephan Ghisler-Solvang, Head of Press, +45 6122 9392, stg@atp.dk
Facts about ATP:
ATP is a mandatory pension scheme with 5,173,000 members. At the end of Q3 2018, 1,055,000 pensioners were receiving ATP Livslang Pension. In Q1-Q3, ATP paid out DKK 12.6bn in pension and lump-sum benefits. For around 40 per cent of Danish old-age pensioners, the ATP pension is their only source of pension income besides the state-funded old-age pension. The full annual ATP Livslang Pension for a 65-year-old is DKK 23,600, equivalent to 32 per cent of the basic amount of the state-funded old-age pension.
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