PFA generates solid result in a challenging H1 2020
The uncertainty on the financial markets due to COVID-19 influenced the customers’ return in the first half of the year. Despite this, PFA got solidly through the first half of the year with an increase in ongoing contributions of 7 % and a significantly improved result in the health and accident area with a deficit that is DKK 601 million smaller compared to the same period in 2019.
Operating profit is at DKK 401 million, of which DKK 351 million was transferred to customers via PFA CustomerCapital - PFA’s model for sharing the profit with customers.
“We have been through a very challenging time in the first half of the year because of the COVID-19 pandemic. Throughout the entire crisis, PFA has had tireless focus on being there for customers and maintaining normal operations, while also commencing the implementation of our new strategy, Commercial Responsibility 2023. This has been a success, and it is satisfying to see a continued increase in the ongoing contributions of 7 % and an operating profit of DKK 401 million allowing us to transfer DKK 351 million to customers through CustomerCapital,” says PFA’s Group CEO, Allan Polack.
Turnaround of the development in the health-accident area
In the first half of the year, PFA has improved the negative development in the result in the health-accident area. The health and accident result stands at DKK -481 million against DKK -1,082 million in the same period last year. Despite the continued negative result, it is an improvement of DKK 601 million. The improvement is driven by the considerable effect of a continuous restoration plan and by an increase in the number of customers who have been helped back to work after a period of illness. At the same time, in 2019, the result in the health and accident area was particularly affected by a negative financial result due to the transition to a new Volatility Adjustment.
“Over a period, PFA has implemented an ambitious restoration plan to turn around the development in the result in the health and accident area. It is positive that we are beginning to see the effect of the efforts we are making. Additionally, in the first half of the year, there has been an increase in the number of customers who have been helped back to work after a period of illness, which is a welcome development in several ways. But even though we have a significant positive development, the result continues to be negative. Therefore, we will continue with our restoration plan to create a lasting, balanced result. Of course, the fact that the Volatility Adjustment is not substantially pulling the deficit down also makes a positive difference,” says Allan Polack.
During the period, PFA has paid out DKK 929 million to 47,680 customers on sick leave through health and accident insurance plans. PFA also continues to experience an increasing number of claims. Added to this, the result continues to be negatively affected by competition on the market for company pension plans.
Return challenged by COVID-19
In the first half of the year, the customers’ return was challenged by COVID-19. Particularly in March, this created a significantly negative affect on the financial markets. However, the financial markets recovered somewhat during Q2 of 2020, just as PFA’s solid portfolios contributed to reducing the negative investment return to customers. The return to customers was at DKK -1.8 billion after the first half of the year, which is a clear improvement compared to the first quarter where the return stood at DKK -33.0 billion.
“The first half of the year has been one of tremendous turbulence on the financial markets with huge fluctuations both in a negative and positive direction. We have invested significant energy into limiting the negative return for customers as the COVID-19 pandemic seriously shook the markets. Since then we have been part of the upturn so the losses have more or less been recovered. Having a negative return is never satisfactory. On the other hand, it has been an extreme situation and we must also be pleased that the financial markets recovered quickly. In such a situation, it is important to keep in mind that a pension is long-term savings and if you look exclusively at the return for the past 12 months, then it is positive,” says Allan Polack.
Launch of PFA Climate Plus launched
In the first half of the year, PFA developed and launched the biggest new product in more than 10 years. PFA Climate Plus is a climate-positive lifecycle product. Customers can choose to place up to 100 % of their pension savings in extra climate-friendly investments. From its launch, PFA Climate Plus emits 60 % less CO2 than the average of the shares in the world, and the goal is to be CO2-neutral by no later than 2025 and CO2-negative in 2030. This means that Climate Plus will remove more CO2 from the atmosphere than what it emits.
“Climate change is a historic, global challenge that requires immediate action from politicians, the corporate sector, organisations and citizens if we are to slow down the development. At PFA, we are aware of the role we play in managing pension funds of approximately DKK 565 billion for our 1.3 million customers. With PFA Climate Plus, we make it easy for customers to choose how much of their savings should be placed in extra climate-focused investments, so that the customers who want to can do something extra for the climate by means of their pension savings. In the first half of the year, PFA continued the work as an active investor and, for example, participates in a consortium of strong investors who are working on erecting a wind farm island in the North Sea,” says Allan Polack.
PFA Climate Plus was developed and launched to customers during the COVID-19 crisis, and Allan Polack is very satisfied that this was possible
“It’s a big thing to develop and launch a new lifecycle product. It does not happen often, and, for PFA, it is the biggest product launch in more than 10 years. The fact that we were able to do so during the COVID-19 crisis is impressive.”
For additional information please contact
Head of External Communications, Kristian Lund Pedersen, email@example.com, (+45) 61 22 22 31.
Facts about the accounts for the 1st half of 2020
• Insurance result of DKK 401 million (DKK -556 million)*
• PFA CustomerCapital’s share of the insurance result is DKK 351 million (DKK -478 million)*
• The result for the period is DKK 6 million after tax (DKK -31 million)*
• The total contributions amount to DKK 20.1 billion (DKK 19.7 billion)*
• Ongoing contributions amount to DKK 12.4 billion (DKK 11,6 billion)*
• The result of health and accident insurance come to DKK -481 million (DKK -1,082 million)*
• Expenses per insured amount to DKK 333 (DKK 328)*
• The total return on investments is DKK -1.8 billion (DKK 39.8 billion)*
• Pre-tax market rate returns of between -5.3 and -1.2 % incl. CustomerCapital (4.5 to 11.5 %)*
• Return on average interest rate products is 0.8 % (0.0 %)*
• The total customer funds amount to DKK 565 billion (DKK 534 billion)*
*figures for H1 2019