The ATP Group Annual Report 2012

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Management's Review Business Model Risk Pension Hedging and investment Hedging Investment Administration Social Responsibility The ATP Group Financial StatementsATP's returns relative to the returns of life-insurance companiesand industry-wide pension funds in the period 2002-2011Per cent302520151050(5)2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Average2002-2011ATPLife-insurance companiesand industry-widepension fundsATP, average 2002-2011Life-insurance companiesand industry-widepension funds,average 2002-2011Investment-activity results are calculated as the return onthe investment portfolio less expenses and tax on pensionsavingsreturns. In 2012, the return on the investment portfoliowas DKK 12.0bn.Market return significantly outperformed the industryaverageEvery year, the Danish Financial Supervisory Authority (FSA)publishes return ratios for life-insurance companies and industry-widepension funds. The ratios applied by the DanishFSA measure only returns on assets, including the assetsof ATP's hedging portfolio, while no allowance is madefor changes in the market value of ATP's pension liabilities.In 2011, the latest year for which the Danish FSA has publishedreturn data, ATP achieved a market return that was afull 17.1 percentage points higher than the overall industry oflife-insurance companies and industry-wide pension funds.This should be seen in the context of plummeting interestrates in 2011 and ATP's strategy of hedging the interest-raterisk of its pension liabilities, among other factors.Over 5-year and 10-year horizons, ATP significantly outperformsthe industry average, achieving an average additionalmarket return of, respectively, 7.0 percentage points p.a.and 4.2 percentage points p.a. After tax and expenses, overthe 10-year horizon, ATP's average additional return relativeto the industry is 3.9 percentage points p.a. Achieving high,stable returns is key to the size of future pensions.ATP’s additional return is driven by three factors: firstly,use of bonds and interest-rate swaps to hedge the interestraterisk of its pension liabilities generated quite a substantialpositive return due to the drop in interest rates over theperiod; secondly, positive gains were achieved from extensiveuse of risk diversification; thirdly, ATP's equity portfolioconsisted substantially of listed domestic equities whereATP's domestic equities outperformed the domestic equitymarket, and the domestic equity market outperformed equitiesfrom a number of benchmark markets during the 10-year period.The ATP Group – Annual Report 201236
Management's Review B u s in e s s M o d e l R i s k Pe n s i o n H e d gin g an d Inve s tm e nt Hedging Inve s tm e nt Admini s tr a ti o n S o c i al R e s p o n s ib ili t y T h e AT P G r o up Fin an c i al S ta te m e nt sHedgingFacts Not about quite pensions as young anymoreHalf Take of a the look population your pension accounts provisions – for and 88 don't per forget centof your all pension state old-age contributions pension. Compare in Denmark.your expected retirementincome with your current income. If the gap betweenthe two seems too wide, you have three options: you cansave more for retirement, reduce your debt or stay in the labourmarket for a little longer. The aim is to make ends meet.»
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The ATP Group Annual Report 2012

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