PFA: Stable growth and a return of DKK 39.2 billion in 2021
In 2021, PFA continued its stable development with an increase in total payments amounting to DKK 3.1 billion, hitting DKK 43.8 billion for the year. At the end of the year, the total customer funds amounted to a historically high DKK 647 billion and the total return amounted to DKK 39.2 billion.
The operating income in 2021 amounted to DKK 906 million, and of this, DKK 792 million is allocated to customers via CustomerCapital, which is PFA’s model for profit and risk sharing with its customers. In addition, a positive investment return was generated on the total CustomerCapital amounting to DKK 226 million, which means that a total of DKK 1,018 million is allocated to customers.
“Once again in 2021, PFA continues its stable growth. We are pleased to note that we can welcome 412 new corporate and organisational customers (net) and show a growth in the total payments amounting to 7.6 per cent in a highly competitive market. This is a high figure which has also contributed to a strong increase in the total customer funds, which have now reached DKK 647 billion compared to DKK 601 billion in 2020,” says Allan Pollack, PFA’s Group CEO, and continues:
“The fact that we can still retain and attract customers in 2021 is an expression of the general level of satisfaction that people have with our overall value offers and the good dialogue we have with our customers. The satisfaction score for our personal consultations is at 9.2 on a 10-point scale combined with our digital self-service platforms, My PFA and Our PFA, which have seen even more improvements in 2021. We have also continued to develop and increase our focus on our many customer benefits such as, for example, our rental housing and offers to seniors. These have been well received by our customers.”
PFA Pension is now leaving 2021 with a continued strong solvency ratio of 271 per cent compared to 278 per cent in 2020.
PFA’s important partnership with Letpension has also turned out very positively in 2021. In 2021, Letpension has grown its payments by 20 per cent and, at the end of the year, its customers had DKK 23.9 billion under management in PFA and received annual payments at the amount of DKK 5.8 billion.
Return for customers of up to 20.6 per cent
The equity markets in particular saw very strong increases in 2021, and PFA generated a return totalling DKK 39.2 billion. For customers in PFA Plus, the return reached up to 20.0 per cent and those in PFA Climate Plus saw a return of up to 20.6 per cent.
Profile C with 15 years until retirement in both PFA Plus and PFA Climate Plus generated a return of 15.3 per cent, which put us among the best commercial pension companies.
“In 2021, we generated a return totalling DKK 39 billion compared to DKK 31 billion in 2020. Strong levels of growth and lax monetary and fiscal policies have taken the equity markets to new highs, and generally, most companies have skilfully navigated the challenges presented by the COVID-19 pandemic and emerged in a strong position. This has especially rewarded the customers who have accepted a high-risk profile with a return exceeding 20 per cent, but in general, many customers have seen strong growth in their pension savings,” says Allan Pollack.
75 per cent of PFA’s customers in PFA Plus and PFA Climate Plus have selected either profile C or D and have thus benefitted from having allocated their savings to profiles with higher risk.
In 2021, PFA’s portfolio of alternative investments generated a return of 16.3 per cent and, at the end of the year, the portfolio amounted to DKK 57 billion. That figure includes a realised and unfortunate loss on an investment in the airplane leasing company, Nordic Aviation Capital, which was extremely impacted by the global corona pandemic. The total loss amounted to DKK 3 billion, and over the past two years, PFA has written down the value of this investment on an ongoing basis. There will be no additional losses from that investment, as it is no longer part of PFA’s portfolio.
Since 2020, PFA has also made some adjustments to its investment strategy. Among other things, the risk has been dialled up and a tool has been introduced which makes it possible to work more flexibly with adjusting risk up and down swiftly. In addition, late in the summer of 2021 significant changes were implemented to the equity portfolio and the composition of assets in PFA’s high-risk and low-risk funds which generate the return for PFA Plus. The adjustments have begun to have an impact on the return, and the effects are expected to materialise further in the coming years.
New executive order on health and accident insurance
In 2022, the new Danish executive order on health and accident insurance will take effect. It is based on a desire for a clearer accounting and business-related separation between the life insurance business and the health and accident insurance business and to achieve a better balance between each of their separate results. The executive order is thus in line with PFA’s recovery plan for the area, where we will also adjust the business by collecting the pension contracts in life insurance while individual products, when it comes to non-life insurance products, be collected under health and accident.
A significant increase in stress diagnoses has a negative impact on the health and accident insurance results
The results from health and accident insurance in 2021 amounted to a loss of DKK 490 million compared to a loss of DKK 841 million the year before. This development is due to several factors. The recovery plan aimed at creating permanent improvements has an effect, both in terms of helping injured customers to avoid long-term illnesses and helping customers suffering from long-term illnesses return to work. Moreover, a considerable positive effect has been seen from the increase in prices of health and accident insurance.
In addition, lower expenses for provisions for future losses and an expansion of the volatility adjustment (VA) contribute positively to the yield curve. The split into health and accident insurance and life insurance also makes a positive contribution to the health and accident insurance result amounting to DKK 400 million.
PFA is still seeing a surging number of reported claims corresponding to a decrease of operating income compared to 2020 of approximately DKK 200 million, which is a worrying trend. The high number of claims seems to be becoming a more permanent challenge. The increase in claims is mainly driven by a higher number of claims related to mental illnesses and more claims filed by people in the 60+ age group.
“More and more people in Denmark are suffering from stress and other mental illnesses. We have seen this development accelerate during the corona pandemic - for example, in 2021 we saw a 21 per cent increase in the number of claims submitted, which is more than 1,050 people. This is very high and an expression of how this is a societal challenge we are facing, and politicians, the labour market and we as a pension company will need to take action to address it. We work with an important societal task, and we will continue to focus strongly on this while also ensuring that there must be balance in this area,” says Allan Pollack.
In 2021, PFA helped more than 900 customers return to the labour market after having been absent for either a long or short period of time. The reactivation is due to a proactive effort where PFA assists its customers in avoiding long-term sickness absence or by reducing the period of their sickness absence by reaching out to them before, during and after their sickness absence. PFA’s proactive efforts proved to be particularly successful in helping customers who are absent on sick leave return to work, and the number of reactivations has increased by 54 per cent in the 2018-2021 period.
|Total customer funds amount to||DKK 647 billion||DKK 601 billion|
|Result before tax (excluding minority interest share)||DKK 190 million||DKK 232 million|
|Result for the year||DKK 113 million||DKK 180 million|
|Result on insurance business||DKK 906 million||DKK 1,274 million|
|PFA CustomerCapital’s share of the insurance result||DKK 792 million||DKK 1,107 million|
|Total payments||DKK 43.8 billion||DKK 40.7 billion|
|Regular payments||DKK 26.0 billion||DKK 24.4 billion|
|Results, health and accident insurance||(DKK 490 million)||(DKK 841 million)|
|Expenses per insured||DKK 909||DKK 703|
|Total return on investments||DKK 39.2 billion||DKK 31.0 billion|
|Return in PFA Plus, before tax and including CustomerCapital, between||3.4 and 20.0 per cent||1.8 and 6.8 per cent|
|Return in PFA Climate Plus, before tax and including CustomerCapital, between||2.2 and 20.6 per cent||*|
|Return on average interest rate products including accumulated value adjustments||3.8 per cent||3.3 per cent|
* PFA Climate Plus was launched mid-2020 and thus no figures for all of 2020 can be shown.
Oliver William Gunnar, Head of Press, (+45) 28 56 23 22 / firstname.lastname@example.org