PFA Pension, forsikringsaktieselskab Sundkrogsgade 4 Annual report 2007 DK - 2100 Copenhagen O PFA Pension Telephone (+45) 39 17 50 00 Fax (+45) 39 17 59 50 www.pfa.dk [email protected] CVR: 13594376 Text: Communication & Marketing Design: Kunde & Co Production: Boje & Mobeck Based on understanding Annual report 2007 PFA Pension Please note that this is a translation of the Danish Annual Report 2007 Based on understanding 5-year summary Key fi gures (DKKm) 2003 2004 2005 2006 2007 Income statement Premiums 10,496 10,670 11,569 12,955 14,182 Insurance benefi ts (8,554) (7,814) (8,134) (10,584) (11,565) Investment return 9,419 17,361 25,640 6,414 2,037 Total net operating expenses (771) (721) (781) (787) (818) Profi t/(loss) of reinsurance (1) (56) 70 (41) 22 Balance on the technical account 179 190 (352) 54 197 Balance on the technical account, non-life insurance (37) (76) (76) (7) (175) Net profi t/(loss) for the year 277 324 0 120 (212) Balance sheet Total provisions for insurance and investment policies 156,924 173,669 198,265 205,344 208,980 Total equity 4,000 4,324 4,324 4,433 4,211 CustomerCapital 6,315 7,342 8,636 9,305 9,769 Capital base 10,563 11,706 12,212 13,114 12,710 Total assets 164,283 181,364 206,435 213,434 215,410 Deposit interest rate *) 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % *) after pension yield tax Financial ratios 2003 2004 2005 2006 2007 Yield ratio Yield before pension yield tax 6.1 % 10.9 % 14.2 % 3.1 % 0.9 % Yield before pension yield tax of Equity and CustomerCapital - - - 3.5 % 1.1 % Yield before pension yield tax of customer funds 6.1 % 10.9 % 14.2 % 3.1 % 0.9 % Yield after pension yield tax 5.4 % 9.4 % 12.3 % 2.7 % 0.8 % Customers’ cost ratios 1) Expense ratio on premiums 7.2 % 6.5 % 6.4 % 4.2 % 3.9 % Expense ratio on provisions 0.54 % 0.48 % 0.48 % 0.33 % 0.32 % Expenses per insured DKK 1,285 DKK 1,200 DKK 1,253 DKK 896 DKK 894 Balance on the cost account (0.13 %) (0.14 %) (0.15 %) 0.00 % 0.00 % Claims experience ratio 0.14 % (0.11 %) 0.24 % 0.00 % 0.00 % Company’s cost ratios Expense ratio on premiums 7.3 % 6.7 % 6.7 % 6.1 % 5.8 % Expense ratio on provisions 0.56 % 0.49 % 0.50 % 0.48 % 0.47 % Expenses per insured DKK 1,319 DKK 1,239 DKK 1,315 DKK 1,298 DKK 1,322 Balance on the cost account (0.14 %) (0.15 %) (0.18 %) (0.15 %) (0.15 %) Claims experience ratio 0.15 % (0.10 %) 0.24 % (0.08 %) (0.05 %) Consolidation ratios Bonus ratio 3.2 % 4.0 % 6.2 % 8.4 % 7.3 % CustomerCapital ratio 4.5 % 5.0 % 5.5 % 5.6 % 5.6 % Equity ratio 4.2 % 4.1 % 3.9 % 3.8 % 2.9 % Excess solvency ratio 2.7 % 3.0 % 2.7 % 3.1 % 3.1 % Solvency ratio 156 % 163 % 154 % 163 % 175 % Return ratios Return on equity before tax 9.7 % 11.8 % 4.3 % 4.5 % 1.7 % Return on equity after tax 7.2 % 7.8 % 0.0 % 2.7 % (4.9 %) Pre-tax return on customers’ funds excl. CustomerCapital after expenses 2) 5.2 % 9.9 % 14.5 % 2.5 % 0.4 % Pre-tax return on subordinate loan capital 6.8 % 6.4 % 6.4 % 7.1 % 8.2 % Pre-tax return on CustomerCapital 10.5 % 17.2 % 17.6 % 4.6 % 1.6 % Pre-tax return on customers’ funds incl. CustomerCapital after expenses 2) 5.4 % 10.2 % 14.6 % 2.6 % 0.4 % 1) The customers’ cost ratios refl ect the customers’ actually paid expenses 2) Change in accounting policies in 2005 is included in the return on customers’ funds in the transaction year 2 ANNUAL REPORT • 2007 • PFA PENSION Contents Management’s review Summary .........................................................................................................................................4 The outside world – from growth on the way towards a slowdown .....................................................8 Sales – increased customer focus ......................................................................................................9 Premium payments – third successive year of growth ......................................................................10 Benefi t disbursements – 58,000 are receiving current benefi ts .........................................................12 Health and preventive care .............................................................................................................16 Counselling leads to increased value ...............................................................................................17 Effi cient administration – shorter processing times ..........................................................................20 Employer branding – developing managers and employees ..............................................................22 Expenses – low level of expenses means increased value .................................................................26 Investments – warning signals were fl ashing during 2007 ................................................................28 Corporate Social Responsibility, CSR ................................................................................................35 Provisions and profi t for the year ....................................................................................................37 Capital strength and solvency .........................................................................................................39 Group structure ..............................................................................................................................40 Expectations for 2008 ....................................................................................................................41 The Executive and Supervisory Boards .............................................................................................42 Financial statements Financial statements and reports – Statement of the Executive and Supervisory Boards on the annual report as well as internal and independent auditors’ reports ......................................44 Income statement ..........................................................................................................................47 Balance sheet ................................................................................................................................48 Statement of changes in equity and capital structure .......................................................................50 Notes, including accounting policies ................................................................................................51 The Executive and Supervisory Boards’ assignments outside the PFA Group ......................................66 Executive employees ......................................................................................................................67 ANNUAL REPORT • 2007 • PFA PENSION 3 Summary Additional value to the customers pension due to age, disability or death while approx. In PFA, the philosophy is to create as much value to 15,500 customers used their healthcare insurance the customers as possible. Our ownership structure during the year. We approved twice as many treatments plays an important role in fulfi lling this vision. We are within the health area as in 2006. PFA holds approx. customer-owned and have established a unique model 105,000 healthcare insurance contracts while approx. for creating additional value, for instance by way of 350,000 employees have coverage in the event of keeping the customers’ contribution to shareholders’ disability included in their corporate benefi t plan. equity – the entrepreneurial profi t – at a minimum, and the customers’ costs of insurance coverage and Focus on healthcare reduces sickness absence on administration are relatively low. In combination with workplaces competitive investment returns – among the highest PFA focuses on health and preventive measures within the industry since 2002 – PFA’s value creation to with the objective to reduce absence rates as one of the customers is outstanding. the primary motives. We introduced a new product – PFA Preventive Care – which targets persons with PFA focuses on CustomerCapital, which is a unique PFA feature, symptoms that may lead to sickness absence. health and preventive provides customers with an additionally high ratio of healthcare and the value which we create together. The provision of Customer counselling recently introduced value from CustomerCapital will become of greater In 2007, we increased our counselling efforts to a new product importance in the years to come. both decision makers and individuals. Also, tripartite which targets minor dialogue and early intervention in connection with conditions and Pension is much more than just numbers and fi gures. long-term illness have proved to be very successful injuries in the neck, Fair and fast treatment in connection with claims is initiatives. back and lower back also an advantage which our customers benefi t from. as well as legs. We have an increasing focus on the value of preventive The counselling of individuals was increased by 20 per measures, and on how PFA can contribute to reducing cent. The personal pension consultations resulted in an sickness absence on workplaces. Sound and useful increase in premium payments of 21 per cent, and an advice from an insurance specialist or online access to increase of 31 per cent in single premiums compared to your corporate pension scheme are just some of the the previous year. Voluntary pension contributions in advantages which our customers can benefi t from. connection with the consultations have doubled since 2005, while the increase in single premiums is getting These are some of the reasons why we continue to close to a doubling. work on improving communication with our