http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/RSS.ashxFSP PagesFri, 02 Jul 2010 11:40:02 +0200http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=1http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=12010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=2http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=2Finanssektorens Pensionskasse 2 This document is an unofficial translation of the Danish original. In the event of any inconsistencies the Danish version shall apply. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=3http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=3Finanssektorens Pensionskasse 3 GENERAL INFORMATION Name Finanssektorens Pensionskasse Philip Heymans Allé 3, 1. 2900 Hellerup CVR NO 49 40 42 12 Registered office: Hellerup Supervisory Board Claus E. Petersen, chairman Michael Budolfsen, deputy chairman René Holm Jan Steen Jensen Allan Johannesen Pia Lærke Bente Nannestad Ane Marie Holm Nielsen Lasse Nyby Knud Pedersen Hans Erik Rasmussen Executive Board Steen Jørgensen Appointed Actuary Karin Elbæk Nielsen Company Auditors Deloitte Statsautoriseret Revisionsaktieselskab Consulting doctor Niels Horwitz, consultant physician at Bispebjerg Hospital in Copenhagen Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=4http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=4Finanssektorens Pensionskasse 4 CONTENTS Page GENERAL INFORMATION MAIN EVENTS IN 2009 Towards the future FSP An attractive pension fund Simplification of pension schemes Pensionsvalg 2009 Outsourcing to Forca strengthens FSP Pension FSP has moved to new headquarters Count-down to Solvency II Satisfactory return on investments of 8.4% FSP Markedsrente at the top FSP still at the green light level Financial crisis affects the development in membership PensionsInfo.dk is widely used RegnSelv solution calculates savings in FSP Markedsrente Acceptable result in 2009 Good corporate governance in FSP Pension MANAGEMENT AND EMPLOYEES OF THE PENSION FUND Supervisory and Executive Boards Annual General Meeting 2009 Audit Committee Good corporate governance in FSP FSP’s organisation Focus on a good workplace CUSTOMER SERVICE Top line growth Focus on good information to the customers The customers are highly satisfied with FSP Pension Quick service process maintained Health schemes and cover during sickness Competitive custody rate Extended Agreement on financial stability within the pension area Spring package 2.0: SP savings and new rules for pension savings 3 6 6 7 8 9 10 10 10 11 11 12 13 13 14 14 14 15 15 15 16 16 16 17 18 18 18 19 19 19 20 20 20 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=5http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=5Finanssektorens Pensionskasse 5 THE ACTUARIAL DEPARTMENT AND FSP'S PENSION SCHEMES From market rate to account rate Development tasks in 2009 FSP BonusKapital Payment for guarantees Use of bonus potential of payment-free pensions and extra surrender charge INVESTMENTS Positive return on investments in 2009 Return on FSP Markedsrente FSP’s property investments New property project in Aarhus Risk management, hedging and extra surrender charge Count-down to Solvency II Ethics in investments and social responsibility policies Publishing of ownership shares Investment strategy 2010 RISK MANAGEMENT AND COMPLIANCE Risks Insurance risks Financial risks Operational risks FINANCIAL STATEMENTS Group financial statements FSP expands the group Consolidated balance sheet of DKK 21.7 bn Income and expenses Profit distribution Capital base Analysis of the earnings generation Expectations for 2010 SIGNATURES OF THE EXECUTIVE AND SUPERVISORY BOARDS THE INDEPENDENT AUDITOR'S REPORT INCOME STATEMENT BALANCE SHEET EQUITY NOTES WITH ACCOUNTING POLICIES AND FIVE-YEAR SURVEY 22 22 22 23 23 24 25 25 25 26 26 27 28 28 29 29 30 30 31 31 34 35 35 35 36 36 37 37 38 39 40 41 43 44 46 47 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=6http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=6Finanssektorens Pensionskasse 6 MAIN EVENTS IN 2009  Towards the future FSP - Focus on FSP’s core competences - Simplification of pension schemes - Pension selection 2009 - Economies of scale to ensure low costs Satisfactory return on investments of 8.4% FSP Markedsrente at the top level FSP remains at green risk level Financial crisis affects the development in membership Unchanged capital base of 1.9 bn DKK Good corporate management in FSP Pension Steen Jørgensen, CEO       Claus E. Petersen, Chairman of the Supervisory Board Towards the future FSP In 2008, FSP Pension made a number of decisions in order to brace ourselves for future challenges and guarantee that we will still be able to focus on the core areas within which the pension fund makes a difference to its customers so that we can live up to our objective of giving our customers 'makes people’s life better'. In 2009, FSP Pension has taken a number of important steps towards the future FSP:     A simplification of pension schemes from seven to three departments. Pension selection 2009, offering re-selection at FSP Markedsrente. Outsourcing of administrative tasks to the service company of Forca. Move to new headquarters at Tuborg Syd and sale of the headquarters at Amaliegade. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=7http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=7Finanssektorens Pensionskasse 7 During the past year, FSP has prepared the future FSP in the light of the increasing requirements from authorities, surroundings and customers for transparency and written guidelines and controls which make heavy demands on medium-sized and small pension funds:      The customers expect transparency and alternative choices, but also low administration costs. New legislative requirements take up many administrative resources and demand continuous investments in IT systems. The pension guarantees limit the possibilities of a more long-term investment strategy with a chance of a higher rate of return over a number of years. Increased competition on the pension markets, among other things from new providers. Qualified labour is difficult to attract and maintain. An attractive pension fund FSP has for a number of years been an attractive pension fund which has maintained a high rate of satisfaction among both customers and employees and been able to match the offers of the pension companies. We have achieved this position by means of a strategy with focus partly on making a difference in the areas in which FSP can provide excellent customer service, partly on obtaining economies of scale, among other things by using outsourcing and other synergies in the administrative areas. The strategic focus on FSP's core competences has been put into words in our promise to our customers of: ”Makes people’s life better.” Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=8http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=8Finanssektorens Pensionskasse 8 Simplification of pension schemes With an overwhelming majority, the ordinary general meeting in April 2009 adopted a simplification of the pension schemes. The number of departments was reduced from seven to three schemes: FSP Traditionel, FSP Gennemsnitsrente and FSP Markedsrente. The overall aim was to simplify and coordinate the pension schemes in order to create improved transparency for both customers and advisors, and to achieve economies of scale. The three schemes will enable FSP Pension to provide improved pension advice, and administrative savings are achieved among other things within IT development. The following is a brief description of the three schemes: FSP Traditionel (FSP Traditional) is a traditional collective pension fund scheme with collective cover and few alternative options. The scheme is based on a traditional nuclear family's need for cover. The scheme is a merger of Department A and the departments B.1-B.5. FSP Gennemsnitsrente (FSP Average Annuity) is the former department FSP Pension with different alternative options enabling the customers to adjust the cover in case of disability and death and to opt out of child pension. The scheme also includes pension annuities and a possibility of endowment pension. FSP Markedsrente (FSP Market Value) also includes pension annuities and a possibility of endowment pension, and the option to adjust cover and opt out of child pension. In addition, the scheme offers more active investment possibilities. A large part of the assets has been invested in shares, and the customers can choose the risk level. In addition, the customers will avoid paying for the guarantee included in the other two schemes (with average rate of interest). In FSP Markedsrente, FSP Pension offers three risk profiles with 25%, 40% and 70% shares, respectively. These three risk profiles – FSP Vælger with low, medium or high risk – have been available since 2004 and have on an average over the six years provided a competitive return compared with traditional schemes. It is also possible for the customers themselves to invest in the just over 30 individual funds selected by FSP on the basis of previous returns and cost level. The agreement on financial stability also helps customers of FSP Markedsrente to recover the losses from the financial crisis more quickly than in FSP Traditionel and FSP Gennemsnitsrente. The reason is that the agreement forces the pension businesses to be careful with their investments regarding schemes with benefit guarantee and limits the possibilities of adding bonus. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=9http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=9Finanssektorens Pensionskasse 9 Pensionsvalg 2009 In connection with the simplification of the pension schemes, just over 11,000 customers were during the autumn offered Pensionsvalg 2009 enabling the customers to change to FSP Markedsrente with a wider investment choice – and improved possibilities of a good long-term return – and no payment for benefit guarantees. The rules regarding good advice in the financial services sector contributed to providing the customers with much information and the clarification of many aspects from several angles. More than 3,000 customers contacted FSP customer service and were advised regarding the selection. In addition, FSP held 33 meetings in the member businesses in September and October and five regional information meetings attended by more than 500 customers. The result of Pensionsvalg 2009 was that 6,000 customers made a decision, and almost 3,000 customers, primarily young customers, chose FSP Markedsrente. The distribution among the three schemes: Distribution of replies 2,778 2,322 Traditionel Gennemsnitsrente Markedsrente 1,062 A total of 6,162 customers made a choice – 4,921 did not make a choice. Customers with FSP Traditional and FSP Average Interest chose as follows: FSP Traditionel 2,907 2,322 FSP Gennemsnitsrente Traditionel 2,014 1,062 Gennemsnitsrente Markedsrente Markedsrente Did not make a choice 1,548 1,230 Did not make a choice Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=10http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=10Finanssektorens Pensionskasse 10 Outsourcing to Forca strengthens FSP Pension Outsourcing is a central element in the future FSP, and in the course of 2009, FSP transferred a number of administrative tasks to the service company Forca. The transfer was made at a higher speed than originally planned. The expedited outsourcing was mainly due to the many new tasks introduced by the Danish Financial Supervisory Authority as a consequence of the financial crisis. At the beginning of 2009, Forca took over the payment of salaries and pensions to FSP's customers and employees. And in the course of spring, FSP transferred a number of tasks, including book-keeping, payments, interim financial statements and finance reports to Forca. At the end of 2009, the FSP Pension customer system was transferred to Forca, and at the same time, 20 employees moved from the departments Medlemsservice (customer service), Aktuariat (actuarial dept.), Regnskab (accounting) and Finans (finance) to Forca. The aim is that the outsourcing should reduce the average administration costs by about 7-800 DKK per year. In the course of a saving period of 40 years, this will add a total of about 50,000 DKK at current value to the pension savings. The transition to the new customer system and the implementation of the entire change project will, however, lead to an increase in FSP's costs during the years 2008-2010. FSP has moved to new headquarters The halving of the staff made the previous headquarters in Amaliegade less suitable, and in December 2009, FSP moved to new facilities at Philip Heymans Allé in Hellerup, close to Forca. FSP Pension has established joint offices with another Forca customer, Lærernes Pension. This has enabled the two pension companies to establish a better professional environment in the dayto-day work and to share a number of facilities such as conference rooms and canteen, but the two pension companies will in all other respects continue unchanged. In 2009, FSP sold its domicile in Amaliegade to a property investor. FSP has owned the property since 1996 and received a handsome return on the investment. Count-down to Solvency II The next few years we will face new challenges from authorities and the world around us, among other things as a consequence of the implementation of the new common EU regulations on solvency in the pension business. It is already foreseen that the Solvency II Directive will make many new demands, involving large costs for the development of IT systems. It is only sensible to meet these requirements in cooperation with other pension funds. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=11http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=11Finanssektorens Pensionskasse 11 Satisfactory return on investment of 8.4% In spite of the financial crisis, FSP has managed to maintain an active investment strategy with a sensible share of the assets invested in shares. The scope for action in the investment policy has among other things been obtained through the expansion of FSP's "hedging business" and the introduction of extra surrender charge mentioned in the Annual Report 2008. The investment result of the pension fund of 8.4% must be considered satisfactory compared with the possible risk level for customers with traditional savings at an average rate of interest and guaranteed size of the pension benefits. Both Danish and international equities and corporate bonds and bonds in emerging markets led to good gains, whereas traditional bonds gave a modest return. Investments in raw materials, unlisted shares and real estate led to losses – but directly owned Danish real estate had stable operating returns and a modest positive return after interest payments and current value adjustments. Returns in 2009 for traditional pension savings 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 18.6% 11.9% 8.4% 4.1% -4.3% -7.9% Equities Real estate Bonds Return on investment Solvency hedging Total The returns for the traditional pension savings in the average environment was considerably lower in 2009 than the year's returns in the market interest environment. The reason is the rules about risk management which make it necessary partly to limit the more risky investments in shares, etc. – where there is a chance of higher returns in the long term – partly to purchase hedging in order to secure the pension commitments made. The costs of covering the interest risk meant that the net return for 2009 was 4.1%. The aim of the cover is fully or partly to correspond to the changes to the market value of the pension provisions (because of changed interest rates), but the change is not included in the total return. Because of fewer investments in equities, schemes with average interest will only slowly benefit from the upturn, when the equity markets recover. Experience from the previous equity crisis in 2001 and 2002 showed that in many pension companies pension schemes with average interest received a low rate of custody interest without any appreciable bonus (to increase the pension benefits) for a period of up to five years. FSP Markedsrente at the top Customers with savings in FSP Markedsrente obtained considerably higher return and retrieved most of the losses from 2008 and the first few months of 2009 in the course of the year. The major part of the gains during the year originated from investments in mortgage bonds and shares, in particular on the emerging markets. For example, shares in the BRIK countries (Brazil, Russia, India and China) increased by more than 100%. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=12http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=12Finanssektorens Pensionskasse 12 Return for FSP Vælger funds in 2009 40% 30% 20% 10% 0% FSP Vælger - Low Risk FSP Vælger - Medium Risk FSP Vælger - High Risk 15.5% 23.2% 35.8% The FSP Vælger profiles did extremely well in the competition with other pension institutes' unitlinked funds. Within all three risk categories, FSP's profiles were in 2009 at the top once again. Return for selected Unit-Linked funds in 2009 Low risk, max 20% shares Low risk SkandiaLink PFA Unit Link FSP Vælger SEB Link Danica Balance* AP NetLink Nordea Link Topdanmark Link YTD return 17.3 % 16.5 % 15.5 % 14.8 % 14.8 % 13.4 % 12.4 % 7.9 % Medium risk, max 50 % shares Medium risk FSP Vælger SkandiaLink PFA Unit Link SEB Link Danica Balance* AP NetLink Nordea Link Topdanmark Link YTD return 23.2 % 23.0 % 22.2 % 21.8 % 20.1 % 20.0 % 19.4 % 13.2 % High risk, max 80% shares High risk FSP Vælger SkandiaLink SEB Link PFA Unit Link Danica Balance* AP NetLink Nordea Link Topdanmark Link YTD return 35.8 % 30.4 % 27.2 % 27.1 % 25.4 % 25.3 % 25.2 % 23.1 % Data supplier: Morningstar and figures from Danica Pension's homepage on 9 February 2010 (*). FSP still at the green light level Throughout 2009, FSP was at the green risk level of the Danish Financial Supervisory Authority. The pension fund has maintained the more risk-related investments in shares at about 20% of the total assets. This turned out to be a sensible decision, when the markets reverted to favourable trends from March 2009. At the end of 2009, FSP had a safety margin of about 1.1 bn DKK to the red risk scenario of the Danish Financial Supervisory Authority. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=13http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=13Finanssektorens Pensionskasse 13 Financial crisis affects the development in membership Although the financial crisis has led to falling employment in the financial services sector, FSP's customers paid 5% more in pension contributions in 2009. The reason is among other things that redundancies in some financial institutions were balanced by other FSP membership companies taking over activities from the distressed financial institutions. On the other hand, FSP saw a reduction in one-off contributions, which is a natural consequence of the extra surrender charge initiated by several pension companies in 2009. Since 2004, FSP has been implementing a project of top-line growth. In the light of the increased competition in the pension business, there has been a need to create an image towards the customers as a pension fund with highly competitive pension schemes and products, such as FSP Sundhedssikring, savings on market interest terms, and FSP Gruppeliv. The project has been a success, and during the period, FSP has achieved average growth of more than 8% in the annual pension contributions. In 2009, the customers paid pension contributions of 625 million. PensionsInfo.dk is widely used Because of the increased competition in the business, FSP Pension is doing its best to meet the customers' wishes for development of pension schemes and service offers. In the spring of 2009 FSP therefore joined the information portal of the pension business, Pensionsinfo.dk. By joining the portal, FSP supports the initiatives of the business within openness and transparency. Joining the portal was a resource-demanding task involving a good deal of IT development and technical coordination between FSP's systems and the systems of Pensionsinfo.dk. PensionsInfo.dk provides the customers with a good overview of the total pension savings, as the majority of Danish pension companies provide data for the portal. This means that the portal is of special assistance to FSP customers with savings with other pension companies. Experience shows that FSP's customers are happy with the portal and use it widely. With up to 500 hits per week, FSP customers are more frequent users than the average of users of the portal. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=14http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=14Finanssektorens Pensionskasse 14 RegnSelv solution calculates savings in FSP Markedsrente FSP’s customers have requested a solution which will enable them to calculate cover in FSP Markedsrente, and in June 2009, FSP launched a RegnSelv calculation solution which allows the customers to experiment with various alternatives. The solution has been an important tool for the customers who were in the autumn considering using Pensionsvalg 2009 to switch to FSP Markedsrente. With the RegnSelv solution, you can among other things choose different sizes of contribution, disablement cover, child pension and pension age. The solution is based on the current conditions in society, such as return and inflation. The calculation is indicative only, but it is a good basis for making a decision on cover in FSP Markedsrente. Acceptable result in 2009 All in all, 2009 gave an acceptable result for FSP Pension in the light of the continued financial crisis with much uncertainty on the financial markets. The year's positive realised result was according to the rules issued by the Danish Financial Supervisory Authority primarily spent on a partial re-establishment of bonus potential on premiumfree pensions (free-policy payments). After this, the year's net result was a profit of 0.2 million DKK. This means that FSP’s core capital at the end of 2009 is 1.9 billion DKK, which is at the same level as at the start of the year. FSP’s core capital and capital adequacy requirement FSP Bonus Capital 3,500 3,312 228 Free reserves Solvency margin 2,438 3,000 2,500 227 1,890 2,000 2,366 1,487 1,048 1,000 884 197 1,889 1,707 198 1,040 197 1,500 500 718 0 End 2007 Mid 2008 End 2008 Mid 2009 End 2009 724 645 625 652 Good corporate governance of FSP Pension As mentioned at the recent general meetings, the Supervisory Board is involved in thorough discussions of the consequences of the more rigorous legislation and considerably increased requirements regarding the work of the Supervisory Board, including the working methods and composition of the Supervisory Board, the presence of the necessary competences, and thereby also future remuneration. At the ordinary general meeting in 2010, the Supervisory Board will present proposals for changes to the composition and remuneration of the Supervisory Board to reflect the considerably increased requirements and responsibility for members of the Supervisory Board made by the legislation, including the presence of a number of professional competences. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=15http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=15Finanssektorens Pensionskasse 15 MANAGEMENT AND EMPLOYEES OF THE PENSION FUND Supervisory and Executive Boards In 2009, the Supervisory Board of FSP has held eight Board meetings and one Board seminar in October. In 2009, FSP’s Supervisory Board had three new members. Lasse Nyby, Managing Director, Spar Nord, was appointed new member of the Supervisory Board by the Danish Financial Supervisory Authority when Birgitte Hagen, Fionia Bank, wanted to resign in connection with the ordinary general meeting in 2009. At the general meeting, Allan Johannesen, Deputy Chief Executive, Sparekassen Lolland, was elected new member of the Supervisory Board as the independent accounting expert who must according to new legislation be included in the Supervisory Board of a pension fund. Bente Nannestad, Commercial advisor, Nordea, became a member of the Supervisory Board of FSP on 1 September 2009 in her capacity as substitute for Tina Rønfeldt, who wanted to resign because of a change of jobs. New members of the Supervisory Board Lasse Nyby, Man. Dir. of Spar Nord Bente Nannestad, Commercial advisor, Nordea Allan Johannesen, Deputy Chief Executive of SPARLOLLAND The remaining Board is unchanged compared with the general meeting in 2008. The Executive Board of the pension fund consists of Steen Jørgensen, who has been CEO since the turn of the year 1992/1993. Annual General Meeting 2009 At FSP’s Annual General Meeting on 29 April 2009, Pia Lærke, Fionia Bank, was re-elected to FSP's Supervisory Board for a three-year period. Furthermore, Allan Johannesen, Deputy Chief Executive, was as mentioned above elected new member of the Board. Marianne Pedersen, Danske Bank, was elected new substitute for the Supervisory Board for René Holm. Synnøve Andersen, Fionia Bank, was re-elected substitute for Pia Lærke. Furthermore, Jens Lind was elected substitute for Allan Johannesen. Deloitte was reappointed auditor for FSP with Kasper Bruhn Udam, State Authorised Public Accountant, and Lone Møller Olsen, State Authorised Public Accountant. At the subsequent first Board meeting, Michael Budolfsen, Vice-Chairman of the Financial Services Union, was re-elected Deputy Chairman of the Supervisory Board of FSP. The Chairman, Claus E. Petersen, Director, Den Jyske Sparekasse, was not up for election. After 32 years on the Supervisory Board of FSP, Børge Hansen had decided to resign from his work for FSP. Børge Hansen is the member who has been elected to the Supervisory Board of FSP for the longest period of time. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=16http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=16Finanssektorens Pensionskasse 16 Audit Committee At the first Supervisory Board meeting in continuation of the general meeting, FSP established the statutory Audit Committee with Allan Johannesen as Chairman and Claus E. Petersen and Michael Budolfsen as members. The committee must among other things monitor the process of the pension fund regarding presentation of financial statements, risk management and the internal controls, the statutory auditing of the financial statements, and check the independence of the company auditors. In addition, the Audit Committee is to make recommendation to the Supervisory Board regarding proposal for the general meeting for the appointment of auditor. Good corporate governance in FSP In 2009 the Supervisory Board continued its work with the recommendations of Pensionsmarkedsrådet (the Danish Pension Market Council) in the report on good and efficient corporate governance. It is the Supervisory Board's task to approve the overall strategies of FSP Pension and to determine the segregation of duties between the Supervisory Board and the Executive Board, including the preparation of the required written guidelines. Furthermore, the Supervisory Board must consider the risk management, the control procedures and the ongoing reporting that match the size and complexity of the business. At its annual seminar, the Supervisory Board has discussed in detail how FSP can in future organise the work in the Supervisory Board in the light of the recent years' considerably tightened legislation and increased requirements regarding the work of the Supervisory Board which has had considerable consequences for the responsibilities and duties of the Supervisory Board. As a result of this, the Board of Directors will at the Annual General Meeting in 2010 present a proposal to change the composition and future remuneration of the Supervisory Board. FSP’s Supervisory Board emphasises the importance of a broad and open dialogue with all groups of stakeholders and in this connection it will annually approve a policy for communication with the customers in accordance with the guidelines of the Danish Financial Supervisory Authority regarding §71 of the act on financial activities and recommendations on good and efficient corporate governance in labour market pension companies. FSP’s organisation By the end of 2009, FSP had 47 employees (full-time and part-time). On average there were 45 full-time positions in 2009 (by ATP contributions). The average age of the employees was 42 years at the end of 2009. As a consequence of the outsourcing of tasks and the transfer of employees to the administration company Forca as at 1 January 2010, the FSP staff had by the start of 2010 been reduced to 24 employees. Organisational chart for FSP Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=17http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=17Finanssektorens Pensionskasse 17 Focus on a good workplace It is FSP's objective to maintain a good workplace for the employees of the pension fund, and to offer them good development opportunities and post-education. FSP has thus in the HR strategy identified a number of focus areas and initiatives to support FSP's business objectives and ensure a continued high level of customer and employee satisfaction. At the same time, the initiatives contribute to FSP's continued ability to attract and maintain skilled and competent managers and employees. In 2009, FSP had special focus on the changes caused by the transfer of a number of administrative tasks to the service company Forca as at 1 January 2010. It has among other things been done by implementing a planned and managed process focussing on the effects of the business changes for the organisation, and by involving the employees in the changes. Thus the employees have had good opportunities to form an opinion on the changes and to accept them. Furthermore, an effort has been made to familiarise the employees with aims of and strategy for the changes, among other things through employee events and meetings with managers and employees from Forca. Furthermore, an event has been held with Lærernes Pension, with whom FSP is sharing its domicile from January 2010. In 2008, the Supervisory Board decided to grant the FSP employees a retention bonus according to established performance criteria to contribute to supporting a successful transition to Forca. The retention bonus will be paid in 2010 if the pre-defined criteria for payment have been met at the time of payment. These initiatives have contributed to a transfer to Forca according to schedule of 20 employees from customer service, Actuarial Department, Accounting and Finance at the change of the year. Both in 2008 and in 2009, FSP has managed to retain the employees. The staff turnover in 2009 was 9%, which is considerably lower than the target of 15%. At the most recent survey in the autumn of 2009, employee satisfaction was 5.8 on a scale of 1-7, 7 being the highest level of satisfaction. The aim was to achieve employee satisfaction of 5.6. By achieving 5.8, FSP managed to maintain a high level of satisfaction, which is highly satisfactory in the light of the major changes experienced by the employees in 2009. In the future FSP with 24 employees, new processes and business procedures have been created. FSP will continue to make an effort to retain and attract employees and to strengthen the cooperation with Lærernes Pension and Forca. Throughout 2009, FSP has established a sound basis for this future cooperation. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=18http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=18Finanssektorens Pensionskasse 18 CUSTOMER SERVICE Top line growth Although the financial crisis has caused a loss of jobs in the financial services sector in 2009, FSP maintained the number of customers, which had by the end of 2009 increased to 17,162. Add to this about 5,200 customers who only have the health insurance, FSP Sundhedssikring. Customer development 1990-2009 – incl. FSP Sundhedssikring 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 22,377 17,162 In 2009 FSP Pension had 246 new customers (gross), whereas the year's net addition was 62 customers. In 2009 240 customers chose retirement, and at the end of the year, FSP had a total of 2,653 pensioners. Focus on good information to the customers In 2009 FSP issued relevant information to its customers about the development in the Pension Fund on an ongoing basis. The printed newsletter was replaced by an electronic newsletter, saving costs of printing and postage. The newsletter is forwarded by e-mail to the customers who have registered. In addition, FSP provides the news on its website. In connection with Pensionsvalg 2009, FSP prepared a brochure, and instructions and answers to questions from the customers were available on the website. During the first six months of 2010, FSP will launch a new customer portal and a new portal for web-based filing by employers. Both portals provide improvements in several areas. Among other things, the design is more contemporary and up-to-date, providing the users with a better overview. You can log onto the future customers' portal by means of digital signature or Net-ID. Most users know these access codes, which are easy to remember when you use them frequently. Moreover they are based on a well-known security system. The portals are developed on an ongoing basis, and even more possibilities of self-service will be implemented in future. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=19http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=19Finanssektorens Pensionskasse 19 The customers are highly satisfied with FSP Pension As a consequence of Pensionsvalg 2009, FSP chose to move the annual customer survey to the beginning of 2010. For the third consecutive year, the result was that FSP Pension is still keeping its promise to its customers of better means, better lives. ”On the whole, I am satisfied being a customer with FSP Pension” Scale 1. I strongly disagree 2. I disagree 3. I predominantly disagree 4. I neither agree nor disagree 5. I predominantly agree 6. I agree 7. I strongly agree The level is not satisfactory. Improvements should be made. The level is satisfactory. There is, however, room for improvement. The level is highly satisfactory. The customer survey still shows that the longer you have been a customer, the more satisfied you are. FSP Sundhedssikring is at the top among the offers assessed by the 1,000 customers participating, and the customers also emphasize the fact that FSP has a good reputation. The survey is described in detail on the FSP website: www.fsp.dk Quick service process maintained In 2009, FSP maintained the quick service process in spite of large pressure of work in connection with Pensionsvalg 2009 and the preparations for the outsourcing to Forca. In some areas, such as FSP Sundhedssikring and registration of new pension receivers, FSP Medlemsservice did, however, have a slightly longer service process during the period September-November. Also in 2009, more than 90% of the cases were processed within 14 days or less. Health schemes and cover during sickness FSP offers several schemes insuring the customers and their relatives in case of sickness and death. The tax-free payment under Cover for some critical diseases was increased as at 1 January 2009 from DKK 140,000 to DKK 150,000. The coverage amount will be maintained in 2010. Employees in the financial services sectors are good lives, which means that FSP can continue to offer an attractive price and coverage for FSP Gruppeliv in 2010. FSP Sundhedssikring gives quick access to treatment at private hospitals and clinics and was used more often, among other things because of the labour conflict in hospitals in spring. In 2009, FSP adjusted its coverage, adding a limit of a maximum of 12 treatments per year with physiotherapists, chiropractors, acupuncturists and zone therapists. This corresponds to the terms of similar schemes with other companies and is to contribute to ensuring a continued extremely competitive price. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=20http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=20Finanssektorens Pensionskasse 20 Competitive custody rate Because of the Agreement on financial stability in the pension business regarding focus on consolidation and with a maximum limit for bonuses, FSP's Supervisory Board fixed the custody rate for 2009 at 3.0% for FSP Traditionel and FSP Gennemsnitsrente at the end of the year. From this must be deducted payment for benefit guarantees of 0.9%, 0.45% and 0.15%, respectively, depending on the technical base rate. Thus the majority of the pension payments will not be adjusted at the change of the year. FSP’s custody rate for traditional pension savings remains extremely competitive in the course of the past 10-15 years. Deposit interest rates 2000-2010 % p.a. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 FSP Pension 8.00 9.00 4.50 4.50 4.50 5.50 5.50 6.00 3,00* 3.00 AP Pension 6.00 10.50 5.00 4.50 4.50 4.50 5.00 5.80 6.00 4.00 Nordea Pension 6.33 9.50 5.00 4.50 4.50 4.50 4.58 5.50 6.00 1.88 SEB Pension** 5.25 8.50 5.00 4.50 4.50 5.00 5.00 5.50 5.75 2.00 PFA Pension 6.00 8.50 4.50 4.50 4.50 4.50 4.50 4.50 5.33 3.00 Topdanmark** 4.50 8.50 5.00 4.50 4.50 4.80 5.00 5.50 5.00 2.00 Danica Pension 4.50 8.50 5.00 4.50 4.50 4.50 4.50 4.50 5.50 1.69 * DKK 100 increased to 2010*** 168.15 171.88 4.00 166.22 2.75 164.28 2.75 162.49 3.00 161.64 2.25 159.16 2.76 The agreement on financial stability in the pension fund area puts a maximum limit to the deposit interest rate. FSP fixes deposit interest rate arrear yearly, so we have observed the agreement on financial stability already in 2008. ** The return on old schemes with guarantee may vary. *** Deposit interest rates for 2010 are provisional and may be changed. Extended Agreement on financial stability within the pension area In October 2009, the Danish Ministry of Economic and Business Affairs and the trade organisation the Danish Insurance Association agreed to extend the agreement on financial stability within the pension area. The extended agreement means that the pension companies must still be careful and consolidate themselves. This means that also in 2010 there will be a maximum limit for the bonus policy and limits to increases in the share risk. This means that in 2010 the FSP custody rate can be expected to remain at the same level as in 2008 and 2009. Spring package 2.0: SP savings and new rules for pension savings In May 2009 the Danish parliament adopted the Government's "Spring package 2.0" giving people the possibility of requesting release of the special pension savings – the SP savings – with reduced taxation. Subsequently, the Government has chosen to implement compulsory release of the SP savings at the end of April 2010. In addition, the tax package includes new rules for pension savings. In cooperation with Forca, FSP is now adapting the pension schemes to the new rules which include among other things an annual ceiling of DKK 100,000 for contributions to pension annuities and term insurance policies. On the basis of the negotiations about the Government's tax reform – Spring package 2.0 – FSP and most other pension companies were of the opinion that we were covered by the transitional stipulation in the act (L200) so that contributions to pension annuities in FSP Pension were not covered by the new ceiling until the end of the collective agreement period. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=21http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=21Finanssektorens Pensionskasse 21 However, in relation to Pensionsvalg we received a number of questions with reference to a letter from the Ministry of Taxation to FA in June 2009. We would therefore like to be completely certain that the information we give to customers and member companies is correct, and therefore the Supervisory Board of FSP has decided to ask the taxation authorities for binding advance information. When this has been clarified, we will provide final confirmation of the consequences of the tax reform for contributions to pension annuities with FSP. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=22http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=22Finanssektorens Pensionskasse 22 THE ACTUARIAL SCHEMES DEPARTMENT AND FSP’S PENSION From market rate to account rate FSP Pension supports the initiatives of the Danish Insurance Association to create more openness and transparency in the insurance and pension business. For FSP the connection between market return on investments and the distributed custody rate to the customers is as follows: From market rate to account rate 2009 The year's market return, gross 1) Investment costs 2008 2007 3.5% 0.2% 2006 5.8% 0.2% Definitions 1.The year's market return obtained on the financial markets (equities, bonds, real estate etc.). 2.The year's pension return tax imposed on the pension savings by the state. 3.Risk return shows the payment to be received by equity and other parts of the capital base. 4.3% -10.8% 0.2% 0.3% The year's market return, net Pension return tax 2) Risk result Cost result Risk return, after tax 3) Change to market value adjustment Change to collective bonus potential Result of health and accident insurance Guarantee payment 4.1% -11.1% 3.3% 5.6% -0.7% 1.8% -0.4% -0.8% -0.2% 0.1% 0.0% 0.0% 0.0% -0.1% 0.0% 0.0% 0.9% 6.2% 1.9% -1.6% -1.5% 5.6% 1.0% 2.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.4% 0.2% 0.3% Account rate 3.0% 3.0% 6.0% 5.5% The survey shows the principle of average rate where good and poor investment years are balanced with the equity as a buffer. Development tasks in 2009 In 2009, the Actuarial Department performed a number of large tasks in connection with the decision of the general meeting to simplify the pension schemes and subsequently arrange Pensionsvalg 2009. In addition, the department has carried out extensive work preparing the transfer of jobs to the service company Forca. As a consequence of the simplification of the pension schemes, Department A and departments B.1-B.5 were merged to one scheme, FSP Traditionel. The merger led to a harmonisation of the previous schemes with a number of minor changes. Pensioners were not affected by the changes. Department FSP Pension was divided into two departments, FSP Gennemsnitsrente and FSP Markedsrente. Savings from FSP WebLink were placed in department FSP Markedsrente. In connection with Pensionsvalg 2009, the Actuarial Department carried out calculations and data processing for the many re-selection offers for the customers. The department also had a data calculator for the re-selection developed with external assistance. The calculations are indicative, whereas the final calculations will be made by the service company Forca in 2010. More than 11,000 customers were offered to change from FSP Traditionel or FSP Gennemsnitsrente to FSP Markedsrente. More than half of the customers made a decision as explained on page 9. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=23http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=23Finanssektorens Pensionskasse 23 The third, large job for the Actuarial Department was to describe rules and technology behind FSP's pension schemes for the conversion to Forca's systems. FSP’s schemes are more flexible and include more possibilities than the other pension schemes administered by Forca. Therefore, Forca has had to develop the existing systems so that they can handle the FSP schemes. As at 1 January 2010, Forca took over all day-to-day tasks regarding actuary calculations. The result is that today the FSP Actuarial Department is only focussing on further development, analyses and checking Forca's calculations. FSP is still in charge of the statutory reports to the authorities. FSP BonusKapital Effective as from 2006, FSP introduced FSP BonusKapital in order to illustrate the customers' ownership of the Pension Fund. Thereby, the proportion of the custody rate exceeding 4.5% is accrued as so-called "special bonus provisions" – or FSP BonusKapital as we have chosen to call it. This part of the customer's savings is not guaranteed, but it carries interest in line with the equity at the year's market return plus the so-called "risk return". Historically, equity has achieved better return than the annual custody rate, and of course this benefits the customers. In practice, FSP BonusKapital is paid as increased pension benefits when the individual customer retires and starts receiving his or her pension benefits. The custody rate for 2009 has been fixed at 3.0% after tax according to the Agreement on financial stability within the pension area, meaning that no BonusKapital will accrue for 2009. The total core capital is about DKK 1.9 bn, and at the end of 2009, FSP's customers own a total of DKK 197 million of the core capital of the Pension Fund directly. FSP Pension will continue to add FSP BonusKapital in the coming years when this is justified by the custody rate. FSP BonusKapital is not to be included in the guaranteed pension provisions. This gives FSP more freedom to invest actively and achieve improved long-term return. Payment for guarantees Since 2005, customers with performance guarantee attached to their pension scheme have paid for the security of such guarantee regarding their future pension benefits. The payment is to outbalance the increased provisions required to meet the customers' guarantees and the financial instruments acquired in order to cover the guarantees. Payment for guarantees applies only to customers of FSP's traditional schemes with average rate. From 1 January 2007, all new customers are registered in FSP Markedsrente where there are no benefit guarantees for the savings and accordingly no payments for guarantees. Payment for guarantees is allocated on the basis of the size of the base interest rate. This means that the costs are higher for the high guarantees as they require larger provisions and a larger amount of financial instruments for interest hedging. In addition, the financial crisis has made it more expensive to insure the investments against fluctuations in exchange and interest rates. The guarantee payment is deducted before the custody interest accrues to each customer's account. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=24http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=24Finanssektorens Pensionskasse 24 For 2009, the Supervisory Board of FSP has maintained the rates from 2008:    Base interest rate of 1.75% - 0.15% of the savings. Base interest rate of 2.75% - 0.45% of the savings. Base interest rate of 4.50% - 0.90% of the savings. 1.0% 0.8% 0.6% 0.45% 0.90% 0.4% 0.2% 0.0% Customers registered after 1 July 1999 Other customers Customers in Dept. B2 0.15% Many customers have several base interest rates on their pension scheme, and this means that FSP deducts an average of the above payments from the custody rate of 3.00% in 2009.     All customers included after 1 July 1999 have a base interest rate of 1.75% and will receive a return of 2.85% in 2009. Customers in Department B.2 will receive a return on their savings of between 2.10% and 2.85% in 2009. Customers in other departments will receive a return on their savings of between 2.55% and 2.85% in 2009. The Supervisory Board will determine both the guarantee payment and the year's custody rate for 2010 finally at the end of the year. Use of bonus potential of premium-free pensions and extra surrender charge As a consequence of the financial crisis, FSP decided in the autumn of 2008 to activate the possibility of using bonus potential of premium-free pensions (premium-free policy payments) for partial cover of the losses on investments. The use has continued in 2009. It contributes to maintaining the scope of freedom in the investments and is possible according to the rules of the Executive Order on the Contribution Principle and FSP's technical basis. The use of bonus potential of premium-free pensions means in practice that the customers contribute to covering losses together with the equity. This happens in the form of provisions for the future bonus accrual for policies with average rate of interest. When FSP again sees positive financial performance in future, the profits will first of all be applied for reconstruction of the bonus potential for premium-free pensions according to §7 of the Executive Order on the Contribution Principle. In connection with the use of bonus potentials of the premium-free pensions, FSP has activated a so-called extra surrender charge. The extra surrender charge is to protect FSP's equity, because the value of the customers' investment assets (shares, bonds, properties, etc.) is at present lower than the value of the customers' accounts. For customers remaining in FSP, the extra surrender charge has no significance, but customers leaving FSP or changing their scheme will see a deduction of a percentage of the savings. Extra surrender charge has not been introduced for savings in FSP Markedsrente, as these savings do not carry average rate of interest. Earnings in 2009 were not sufficient to re-establish bonus potentials for premium-free pensions, and therefore an extra surrender charge is still necessary. The extra surrender charge varies from one month to the next and in December 2009, it was calculated at 5%. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=25http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=25Finanssektorens Pensionskasse 25 INVESTMENTS Positive return on investments in 2009 The result of the year's investments was a positive return of DKK 1.6 bn – corresponding to 8.4% before hedging and 4.1% after hedging. The positive investment result is very much due to a handsome return on shares and mortgage bonds. Danish properties gave a modest positive return, whereas investments in raw materials, unlisted securities and real estate abroad reduced the returns. The investment year was characterised by the fact that from the turn of the year, shares continued their downward trend from 2008 and reached a capital loss of about 25% from the turn of the year to the end of March. Subsequently, the mood turned and shares increased by about 50% during the summer and autumn, so that we obtained a handsome net capital gain compared with the level at the start of the year. At the end of 2009, just over 20% of FSP's assets were invested in shares. From the start of 2009, FSP focussed on high-yield bonds (corporate bonds) and emerging market bonds, as these types of bonds are expected to give good returns. FSP’s return in 2009 by asset categories 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -6.9% -6.7% -7.9% 7.5% 3.4% 0.9% 18.5% 8.4% 34.6% 25.1% 33.1% 48.0% Return on FSP Markedsrente FSP offers three risk profiles in FSP Markedsrente. FSP combines the investments on the basis of low, medium or high risk. Four out of five customers of FSP Markedsrente have placed their saving in FSP Vælger – Medium Risk, which has over the past few years yielded a better return than the average rate scheme. 5 % of the customers have placed their savings in FSP Vælger – High Risk, whereas about 15% of the customers choose to manage their investments themselves. Only very few customers have chosen FSP Vælger – Low Risk. After Pensionsvalg 2009, almost 9% of the total assets of the customers have been placed in FSP Markedsrente. This corresponds to DKK 1.6 bn, i.e. a growth of DKK 1.4 bn compared with 2008. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=26http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=26Finanssektorens Pensionskasse 26 5 years' return FSP Vælger profiles 2005-2009 40% 30% 20% 10% 0% -10% -20% -30% -33.3% -10.2% -11.1% -17.8% 13.5% 17.5% 5.6% 13.4% 8.3% 5.5% 15.5% 6.1% 3.3% 2.9% 3.0% 4.1% 2.8% 5.8% 6.9% 4.5% 28.0% 23.2% 10.6% 35.8% -40% 2005 FSP Traditional 2006 2007 2008 FSP Vælger - Medium Risk 2009 5-year average FSP Vælger - Low Risk FSP Vælger - High Risk In the course of 2010 FSP will be introducing a type of security in FSP Markedsrente which can be acquired against a premium. The new offer, FSP Livscyklus, offers a chance to maintain a certain amount of shares. FSP Livscyklus gradually reduces the risk of shares when the date for retirement approaches. FSP’s property investments Real estate accounts for up to 15% of FSP's shares. International funds are often geared, strengthening the effect of changes in market conditions. The values were therefore reduced a good deal in relation to the falling prices in Europe, England and the USA. The international property funds invest primarily in offices, retailing and logistics. The directly owned properties in Denmark, on the other hand, made a small profit in 2009, and the values have only been reduced slightly. The reason is that already at the end of 2008, FSP carried out depreciation because of the financial crisis, just as the properties in question are residential properties which provide a stable return. In 2009, FSP sold its domicile property in Amaliegade at a price which was well above the book value. FSP bought the property in 1996 and moved into it in 1997. The Pension Fund has renovated the property, which has thus been an investment with a nice return. New property project in Aarhus In the northern part of Aarhus, close to Risskov and close to the centre of the town, FSP is erecting a new, exciting complex with 32 terraced houses. The houses are designed by the architects Arkitema with whom FSP has previously been cooperating about the buildings Slotshusene in Hørsholm. The terraced houses are two-storey buildings and a couple of the houses will have a sea-view. From September 2010 a test house is available, and the houses will be ready to be taken into use from the end of 2010. Interest is already being expressed in the houses which are expected in particular to attract families. FSP’s properties are almost fully let. The slow residential market did, however, mean that it took a bit longer than expected to let the new residential property at Klosterbakken in Odense and to relet some of FSP's residential properties in the capital area where there has been a large number of flats to let. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=27http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=27Finanssektorens Pensionskasse 27 FSP’s property administrator, Dan-Ejendomme, and selected collaborators are in charge of an ongoing follow-up of vacancies, which are advertised at www.findbolig.nu. FSP has a good cooperation with Dan-Ejendomme, and the tenants of FSP's properties can find information about their house/flat and property at Dan-Ejendomme’s extranet, NetService. Draft for the new terraced houses in Risskov near Aarhus. Risk management, hedging and extra surrender charge During the financial crisis, FSP has carried out active risk management in order to protect the assets of the Pension Fund. The initiatives have included close follow-up of the investments in shares, hedging of interest risk and introduction of extra surrender charge if the customers move their pension savings to other schemes. Furthermore, FSP activated bonus potentials of premiumfree pensions as part of the efforts to secure the future of the Pension Fund. At the end of 2008, FSP chose to expand the cover against the risk of a fall in interest rates to cover the entire interest sensitivity for FSP's pension provisions. Without cover, FSP would have been at the red light level of the Danish Financial Supervisory Authority during the fourth quarter of 2008. That would have forced the Pension Fund to reduce the active investments in shares even more, and FSP would in that case not have been able to join the revival in the markets from March 2009. The hedging gave FSP a gain of about DKK 1.1 bn in 2008, whereas the insurance cost FSP DKK 830 million in 2009. Thus the initiative has secured the future of the Pension Fund and has given FSP a net profit of DKK 270 million. Just like many other companies in the pension business, FSP activated an extra surrender charge in average interest schemes in 2008 in order to protect the assets of the Pension Fund. The extra surrender charge becomes effective if customers choose to move their savings to other schemes. The extra surrender charge is adjusted on a monthly basis, and in December 2009 it was calculated at 5%. The extra surrender charge was required in order to meet the large losses in 2008, and the extra surrender charge will be maintained until the losses have been recovered. FSP’s total investment returns in 2008 were negative at DKK 2.4 bn. In 2009, the return on investment was positive at DKK 0.8 bn after hedging. With the expectations of moderate returns during the coming years, it will probably be several years before FSP has recovered the loss. The coming years' earnings must thus first of all be used to re-establish the bonus potentials for premium-free pensions and re-establish the reserves of the Pension Funds – in accordance with Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=28http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=28Finanssektorens Pensionskasse 28 the Agreement on financial stability in the pension area between the Government and our trade organisation. Count-down to Solvency II In addition to the costs of the continued development of FSP's pension offers, the Pension Fund is also facing costs of meeting new statutory requirements. There is special focus on the consequences of the EU Directive Solvency II on requirements regarding the capital adequacy of pension businesses. In 2010, FSP will according to a request from the Danish Financial Supervisory Authority to the entire pension business implement a so-called Gap analysis to show where the Pension Fund should act to observe Solvency II. The pension business expects the Danish Financial Supervisory Authority to introduce new requirements gradually until the full implementation of Solvency II in 2012 as illustrated in the figure below. Announcement from the Supervisory Authority concerning; gap analysis, schedule, budget and internal models. Solvency II - Individual solvency requirement ver. 2 - Individual solvency requirement - The article 71 guide - Market values - The flexible equity cap – risk levels The financial crisis has also led to tighter statutory requirements which are first of all caused by the bank packages by which the authorities have supported the banking sector. Thus the pension sector is covered by the common framework act – the Financial Activities Act. Ethics in investments and social responsibility policies As prescribed by the Act on financial activities, FSP invests with the primary purpose of securing the best possible return for its customers considering the chosen risk profile. When deciding on investments, FSP will – as part of the general analysis of the company's financial situation – consider whether the company is open about its operations, including the ethical responsibility. FSP has chosen to join the "Network for good corporate ethics and non-financial reporting” (NVIR) and therefore observes NVIR's recommendations. This means that FSP has chosen not to adopt separate policies for social responsibility (CSR), cf. §132 of the Danish Executive Order on the Preparation of Financial Statements, but they will be prepared in 2010 as a consequence of new statutory requirements. NVIR comprises a gross list of recommendations about ethical issues within these six areas: market conditions, environment, employees, human rights, social responsibility and governance. FSP uses NVIR principles in the dialogue with the managers handling investments for FSP. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=29http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=29Finanssektorens Pensionskasse 29 An adjustment of ethics and policies during 2010 will lead to implementation of the guidelines with FSP's managers. FSP’s property administrator, Dan-Ejendomme, has introduced ethical guidelines to be observed by the janitors of the individual properties. In 2009, Dan-Ejendomme concluded an agreement with DONG Energy to purchase climate-friendly power from the wind turbines Horns Rev 2 at Jutland's west coast. Initially for the property's common consumption, and in the long term the residents will also get a chance to buy climate-friendly electricity. Publishing of ownership shares According to the same §98 of the above Executive Order, FSP must also indicate whether there is public access to information about the size of the capital shares of the Pension Fund in companies. Among other things for administrative reasons, FSP does not publish a list of all companies in which the Pension Fund has capital shares, or the size of such capital shares. Investment strategy 2010 For 2010, FSP budgets a rate of return of 5.4% before tax on the basis of the asset distribution shown below and the return assumptions used by the pension business. The risk in the investment strategy stays at the level of 2009. Thus the investment strategy for 2010 suggests that total investments in bonds will amount to 57% of the assets, investment in Danish, international and unlisted shares will amount to 21%, property investments are expected to remain at 15%, whereas the remaining 7% will be other investments. FSP expects the macro-economic progress to be slow with moderate returns on shares in 2010, but still with a long-term positive return. The interest rate for traditional bonds is expected to remain low. FSP makes an ongoing assessment of the market potential and possible asset types with good investment opportunities. In addition to the types of assets shown in the following, FSP invests in raw material through financial instruments. Investment strategy 2010 Other assets 5.5% Real estate 15.0% Danish bonds 35.0% Hedge funds 1.5% International equities 12.0% Danish equities 3.0% Private equities 6.0% High yield + Emerging structural bonds market bonds 8.0% 5.0% Foreign bonds 9.0% Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=30http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=30Finanssektorens Pensionskasse 30 RISK MANAGEMENT AND COMPLIANCE Risks General comments In its order on financial reports for insurance companies and pension funds, the Danish Financial Supervisory Authority has set up a number of information requirements regarding risk management. In the light of this, FSP has chosen to gather all material aspects regarding risks in this section in which we describe the types of risk assumed by FSP and the control models and tools we have chosen. FSP’s risks primarily relate to the pension commitments made to the customers and the financial risks of the investments. FSP finds it extremely important to monitor and control these risks and the interplay among them on the basis of the risk tolerance determined by the Supervisory Board. FSP is to report risk scenarios to the Danish Financial Supervisory Authority – the so-called traffic lights – and the individual capital adequacy requirements, including a calculation of the effect of the material risk factors for the Pension Fund. The risks are illustrated in a special form for sensitivity information calculated according to the guidelines issued by the Financial Supervisory Authority and illustrated below. In addition, FSP implements internal model calculations for the risk tolerance and the safety level determined by the Supervisory Board for FSP's investments. FSP has established a legal Compliance function with the aim of controlling and supervising the operation of the Pension Fund's activities, including the compliance with the rules of the §71 guidelines issued by the Danish Financial Supervisory Authority. During the first quarter of 2010, FSP will be implementing a gap analysis which will show how the requirements in the legislation on capital adequacy, Solvency II, can be met. The EU rules will become effective from 2012. Survey of FSP's risks External risks Control risks Legal risks Insurance risks The company's overall risk profile Financial risks Strategic and organisational Operational risks Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=31http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=31Finanssektorens Pensionskasse 31 Insurance risks Pension provisions The calculation of the pension provisions at market value must consider the risks in the business area. Partly the current level of interest rate and the Pension Fund's investments in relation to the base rate applied, partly the development in the so-called death and disability intensities among the customers. The pension provisions amount to DKK 16,679 million and have been specified in note 15 to the financial statements. Favourable risk process for people in employment Employees in the financial services sector represent a favourable risk group, and consequently, FSP has in 2009 been able to add DKK 56.8 million as risk bonus, corresponding to 0.33% of the customers' accounts. In 2009 there was a risk deficit of DKK 27.8 million after accrual of risk bonus of DKK 56.8 million. The risk deficit can be divided into a profit from disability cover of DKK 13.6 million and a deficit from death coverage of DKK 25.4 million and costs of the bonus-financed cover of certain critical diseases of DKK 16.0 million. Previously there has been a risk profit, but because of customers within a higher age group, the introduction of temporary disability pension, and accidental fluctuations, this has not been the case in 2009. Reassurance In 2006, FSP introduced a reassurance scheme which has been renewed annually. The scheme is part of an active risk control, and the scheme is to insure FSP's equity against large claims on disability and death insurance, respectively. FSP's equity and favourable risk group is of such a size and strength that it is not necessary to cover a larger part of the non-life expenses by reassurance. Disputes in 2009 FSP emphasises a competent and customer-friendly case processing, and this appears among other things from very few disputes with the customers. In 2009 FSP won two legal disputes with two suppliers. In addition, FSP has a pending legal action before the Insurance Appeals Board. Financial risks Risk analysis for investments As a pension fund with considerable assets, FSP has good possibilities of implementing the required risk spreading which will enable long-term investments in order to obtain good returns. But investing in the financial markets will always involve risks. Such risks cannot be eliminated, but must be controlled and monitored closely, and this is typically done by fixing frameworks and benchmarks – both for the individual types of assets and for the relations among them. FSP also invests in assets which may protect the equity through a partial covering of the liabilities. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=32http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=32Finanssektorens Pensionskasse 32 In the light of the continued uncertainty on the financial markets, FSP has reduced the risk tolerance for 2009. For 2010, FSP budgets with a total return of 5.4% before tax on the basis of the general business assumptions regarding returns for the individual types of assets. In the figure below, these assumptions have been added to the calculation for 2005-2009 for the purpose of comparison. Efficient return and risk profile 2009 (using return assumptions for 2010) 6.5% 6.0% 2007 2009 5.5% 2008 Return 2005 2006 2010 5.0% 4.5% 4.0% 2% 3% 4% 5% 6% Risk 7% 8% 9% 10% 11% Risk scenarios of the Danish Financial Supervisory Authority As part of the risk management, FSP must in the risk scenarios of the Danish Financial Supervisory Authority calculate and continually report the effect of these essential financial risk factors: interest risk, share price risk, foreign exchange risk and raw material risk, together with counterparty/credit risk. The form appears from note 23. Financial instruments FSP uses a number of financial instruments. In 2009, interest swaps and interest swaptions in Euro have been used to hedge interest sensitivity on pension provisions. Liquid futures on share index, typically with three months' maturity have been used for the adjustment of the Pension Fund's share risk in 2009. The Pension Fund hedges foreign exchange risks related to USD, GBP, and JPY. This is done through three months' forward exchange transactions which continue and are settled quarterly. The above financial instruments entail a counterparty risk on the related contractual counterparties – depending on market custom – and this risk is managed within fixed limits. FSP implements compliance towards external fund managers through an annual follow-up on the handling of counterparty risks regarding the trading partners used on behalf of FSP. Procedures and rules have been tightened considerably in order to approve counterparties with FSP's fund managers during 2009. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=33http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=33Finanssektorens Pensionskasse 33 Correlation between assets and liabilities FSP has divided the investment assets into a hedging portfolio and an investment portfolio. The division ensures that the hedging will be as precise as possible and independent of the placing of the investments as such. The hedging portfolio is thus to cover FSP's interest sensitivity for the pension commitments of the Pension Fund and create a guarantee that FSP can meet the pension commitments made. The hedging is made by means of interest swaps and swaptions in EURO and aims at neutralising the movements in the interest level which will in themselves affect the pension commitments. FSP’s behaviour regarding hedging has so far mainly been static, but in connection with the reselection in the autumn of 2009, FSP changed its strategy to a more dynamic hedging so that the hedging percentage may vary according to the market conditions. The risk management also includes a follow-up on the fact that the value of interest swaps and swaptions are calculated in Euro, whereas the value of FSP's pension commitments are calculated on the basis of krone interest (the discount rate). This does not imply an actual exchange risk, but there is a risk that the swap interest in Euro may develop differently from the krone interest. The reason for this risk is that the current positive interest difference between krone and Euro interest is narrowed or becomes negative. In 2009, the interest spread between krone and Euro interest has narrowed because of a narrowing of the spread between mortgage bonds and treasury bonds in Denmark, cf. the figure below. In addition, the spread between krone and Euro interest throughout the year is affected by the development in interest rates between Denmark and the Euro countries. The latter effect has, however, been relatively neutral in 2009. The interest level in kroner is included in the Pension Fund's calculation of the value of the provisions. Development in the option adjusted spread 2009 110 100 90 80 70 60 50 40 30 20 10 40 35 30 25 20 15 10 55 50 45 Development in the Danish‐German yield spread 2009 The figures show the development in the OAS spread for the bonds in Nykredit Realkreditindeks and the development in country spread as the spread between krone and Euro interest. Calculation of individual capital adequacy requirement In 2009, the Danish Financial Supervisory Authority increased its focus on the pension funds' calculation of individual capital adequacy requirements as a preparation for Solvency II. FSP must for the individual capital adequacy requirement identify and assess the individual risks or groups of risks individually, and the sum of the individual risk groups will thus amount to FSP's individual capital adequacy requirement. The extended agreement on financial stability means that FSP will continue to prepare quarterly reports regarding the individual capital adequacy requirement compared with every six months as was previously the case. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=34http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=34Finanssektorens Pensionskasse 34 Valuation of assets Measuring the value of assets has always involved some uncertainty. This has appeared from FSP's accounting policy during previous years. In case of shortage of liquidity on the market, models may therefore be included in the value assessment to a larger extent. For unlisted share investments, FSP and our collaborators use several models and bases for comparison in order to find a fair market value to be used in the accounts. As the portfolio administrator, Nykredit Portefølje Administration has an important role in fixing the value of the assets. Furthermore, FSP has changed custodian bank to Bank of New York Mellon which has a number of good systems contributing to making model calculations and administration more efficient. Operational risks Business Compliance The assessment of the risk areas also includes operational conditions, including FSP's written guidelines and the IT systems. An IT audit is carried out in FSP annually, just as separate statements regarding IT security have been obtained from FSP's external collaborators. Under §71 of the Act on financial activities, the Supervisory Board is to set up a large number of written guidelines, including business procedures, and reassuring control and security procedures, just as it is the responsibility of the day-to-day management to guarantee the required separation of functions in the organisation. Furthermore, FSP has through a number of initiatives tried to avoid risks and mistakes in the operations. The initiatives include well-defined business procedures and controlling with a separation of functions between the departments. The transition to Forca means that Forca's task solution is defined in an SLA (Service delivery agreement), and in future FSP will have to focus on controlling Forca's work. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=35http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=35Finanssektorens Pensionskasse 35 Financial statements Group financial statements The result for the FSP group for 2009 was a small profit of DKK 0.2 million after a re-establishment of bonus potential for premium-free pensions of DKK 239.8 million. The Supervisory Board considers the net result for 2009 to be acceptable in the light of the effects of the financial crisis and the Pension Fund's considerable share of customers with traditional savings at average rate with guaranteed benefits. Main figures from the financial statement Million DKK Net result Total assets Equity Pension provisions Customers 2009 0.2 21,684.0 1,692.7 16,683.1 17,162 2008 -1,391.2 20,737.7 1,692.5 17,418.3 17,100 2007 -213.2 23,060.4 3,083.7 17,944.6 16,693 2006 415.8 21,621.7 3,296.3 17,311.3 16,410 2005 1,084.1 20,419.3 2,880.5 16,536.9 15,911 FSP expands the group FSP Pension continues to focus on achieving economies of scale in the administration and to reduce the dependency on individuals for a number of highly specialised tasks which has increased considerably during recent years along with the still tighter public adjustment of the pension business. FSP has therefore outsourced a number of administrative tasks and has in that connection established a group structure which has, as part of the strategy for the creation of the future FSP, in 2009 been expanded with the addition of two property companies. Finanssektorens Pensionskasse (FSP) FSP It ApS FSP Invest F.M.B.A. FSP Ejendomsholding ApS FSP Ejendomme og Projekter ApS Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=36http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=36Finanssektorens Pensionskasse 36 Consolidated balance sheet of DKK 21.7 bn FSP’s total balance sheet amounted to DKK 21.7 bn at the end of 2009 compared with DKK 20.7 bn at the end of 2008. Investment assets amounted to DKK 18.9 bn of the total balance sheet. In terms of liabilities, the total provisions amounted to DKK 16.7 bn – both figures calculated without the unit-linked scheme, FSP Markedsrente. The development of the consolidated FSP balance sheet since 1990 appears from the figure below. Development of the FSP balance sheet 1990-2009 Million DKK 25,000 20,000 15,000 10,000 5,000 0 Income and expenses The total gross membership contribution amounted to DKK 625 million in 2009, compared with a gross contribution in 2008 of DKK 632 million. The result of the investment activities was DKK 817 million in 2009 compared with DKK -2,401 million in 2008. The number of pension receivers continues to grow, so the pension payments increased to DKK 569 million in 2009 compared with DKK 556 million in 2008. Before set-off of repayment to bonus potential for premium-free pensions and the effect of the pension selection, the provisions for future pensions increased in 2009 by DKK 425 million compared with DKK 553 million in 2008. The reduction is primarily due to the effect of the pension selection, as falling interest levels in 2009 have led to a strengthening of the provisions at market value. In accordance with the agreement on financial stability in the pension business, bonus was only added for the customers to a limited extent in 2009 (interest, risk and cost bonus). The amount was DKK 19 million compared with DKK 49 million in 2008. The operating costs of the Pension Fund in 2009 amounted to DKK 36.9 million compared with DKK 39.8 million in 2008. This reduction includes partly a reduction of the costs of administration, partly an increase caused by the continued modernisation of FSP's pension scheme, including the preparations for transferring a material part of the administration to the service company Forca, and the still tighter statutory requirements which have through group re-invoicing on a costcovering basis been referred to FSP IT. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=37http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=37Finanssektorens Pensionskasse 37 FSP IT has in 2009 spent many resources ensuring the transfer of FSP's customer service, etc., to Forca, including the basic agreements in the form of the so-called SLAs – service delivery agreements. The process involved assistance from external consultants. Deloitte supported FSP with project management, and ZenIT supplied IT consultants. The growth in costs had been budgeted and amounts to an investment in future reductions in administration costs. The health and accident result in 2009 was a deficit of DKK 0.3 million compared with a deficit in 2008 of DKK 2.0 million. The main reason for the deficit was the higher average age among FSP customers which led to a larger increase than expected in the health and accident business. Profit distribution According to guidelines from the Danish Financial Supervisory Authority, FSP must announce that the interest bonus rates have also for 2009 been fixed in arrears for the year, and that FSP has at the calculation aimed partly at observing the agreement on financial stability in the pension areas, partly a calm and stable development, which is in accordance with §§20 and 21 of the Financial Activities Act. On the basis of the rules issued by the Danish Financial Supervisory Authority (the Executive Order on Pension Contributions), the actuary has calculated that the year's realised result is DKK 377 million. The year's result means that DKK 190 million is added to the shadow account for equity in 2009, as it has been stated in the equity statement. As it appears from the equity statement, the year's net profit of DKK 0.2 million has been transferred to the equity. In accordance with the Executive Order on Pension Contributions, FSP has reported to the Danish Financial Supervisory Authority that the equity carries interest of return ratio 1 (return before pension return tax) plus so-called risk interest which has in FSP been fixed at 3.0 percentage points for 2009. The risk interest for 2010 has also been fixed at 3.0 percentage points. Furthermore, the result of the health and accident business has been transferred to equity, just as the establishment of new customers is covered by the equity. The return on FSP's equity (including the equity shadow account) can for 2009 in accordance with the contribution principles be calculated at DKK 102 million plus an additional DKK 88 million as it appears from the equity statement. After transfer to the shadow account, the equity is thus at the end of 2009 DKK 1,651 million in arrears in relation to the insurance volume. This appears from the shadow account which will, in addition to the above allocation of contributions, cover the previous years' lack of return on equity when the realised result allows this. Equity shadow account (million DKK) Shadow account, start of the year + Transferred from/to equity + Return on shadow account Shadow account, end of the year 2009 1,460.7 101.6 88.4 1,650.7 2008 356.4 1,133.7 (29.5) 1,460.7 2007 8.5 347.5 0.4 356.4 2006 171.3 (177.1) 14.3 8.5 2005 847.1 (807.4) 131.7 171.3 Capital base The core capital of the pension fund, consisting of equity and FSP BonusKapital, amounts to DKK 1,889 million, corresponding to 10.2% of the provisions for pension agreements, etc., of DKK 18,453. FSP's core capital appears from the figure on page 14. According to the capital requirements for non-occupational pension funds, the solvency margin must at the end of 2009 amount to DKK 652 million corresponding to 3.5% of the pension provisions. Thus, FSP's core capital covers the capital adequacy requirement 2.9 times. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=38http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=38Finanssektorens Pensionskasse 38 Analysis of the earnings generation The earnings generation in a pension fund can be divided into four main areas: 1. The difference between the insurance-technical interest (the base rate plus interest bonus) added to the customers' accounts and the actual return on investment after pension return tax and investments costs – referred to as the interest profit/loss. 2. The risk performance of the pension fund calculated by the Pension Fund's actuary according to the technical basis as the difference between the risk premiums included in customer contributions and the actual risk costs plus distributed risk bonus. 3. The difference between the cost contributions included in customer contributions and the actual administration costs – referred to as the administration profit/loss. 4. Other items such as change to special bonus provisions, changes to value assessment at market value, technical result of health and accident insurance, and the reassurance profit/loss. Earnings generation Million DKK Return on investments, net Basic interest Interest bonus Interest profit/loss Risk premiums Risk costs Risk bonus Risk profit/loss Cost addition Cost bonus Administration costs Administration profit/loss Subtotal Special bonus provisions Strengthening to market value Applied bonus potential for premium-free policy payments Other Profit/loss from reinsurance Underlying schemes taken over/released Adjustment of headquarters property Profit/loss on health and accident insurance The year's total profit/loss 2009 699,2 -520,0 105,5 284,7 41,3 -12,3 -56,8 -27,8 26,6 7,1 -36,9 -3,2 253,7 0,5 -23,7 -239,8 -3,1 12,9 0,0 0,0 -0,3 0,2 2008 -2.064,2 -501,4 86,3 -2.479,2 51,0 37,7 -68,8 19,9 24,6 5,9 -39,8 -9,3 -2.468,6 30,7 -164,5 1.198,5 0,0 14,6 0,0 0,0 -2,0 -1.391,2 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=39http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=39Finanssektorens Pensionskasse 39 The interest profit/loss The interest profit/loss shows a profit of DKK 285 million. The reason is that the custody rate was lower than the return on investments. In 2009, the return on investments was 4.1% and 3.5% before and after pension return tax, respectively, whereas the custody rate was 3.0% before tax and 3.0% after tax, respectively. The risk profit/loss The risk profit/loss shows a deficit of DKK 27.8 million after adding risk bonus. The risk result in percent of the pension provisions amounted to -0.16% in 2009 compared with 0.12% in 2008. Administration profit/loss The administration profit/loss shows a deficit of DKK 3.2 million. The administration result in percent of the pension provisions amounted to -0.04% in 2009 compared with -0.06% in 2008. Cost percentage of premiums has been calculated at 6.0%, whereas cost percentage of provisions amounted to 0.2%, which is the percentage of the year's total return on assets which is used to cover the operating costs in the Pension Fund. The profit/loss on health and accident insurance The insurance-technical profit/loss on health and accident insurance (critical illness) was in 2009 a loss of DKK 0.3 million. Profit/loss on reassurance The result of reassurance amounts to DKK 12.9 million compared with DKK 14.6 million in 2008. The item relates to the result after adjustment of the value of the underlying policies in other insurance companies. Expectations for 2010 In 2010, FSP will continue its activities to improve the service towards the customers even more and strengthen FSP's position in the financial services sector. FSP will also continue the business cooperation with FSP's member companies which takes place on normal market terms. The pension fund expects a small profit in 2010 based on the established investment strategy and repayment to bonus potential for premium-free pensions. Also in 2010, FSP Pension expects to pay a custody rate of interest in accordance with the extended agreement on financial stability. FSP budgets a return on investments of 5.4% before tax. The expectation is based on the social assumptions issued by Forsikring & Pension and the economic assessments obtained by the Financial Department from economic observers and advisors. The financial crisis must be expected to lead to a reduction in the number of employees in FSP's member companies during the years to come, just as it has caused some of FSP's member companies to merge or to need help from authorities through the company ”Finansiel Stabilitet” (financial stability). In 2010, FSP Pension will maintain its strategy with focus on obtaining top line growth, among other things through growth in the number of customers even though the market conditions have become more difficult. FSP will both focus on existing customers and try to attract new member companies. The aim is to create additional potential for economies of scale. In general, FSP will focus on limiting the increase in costs expected to follow from the increasing requirements from the Danish Financial Supervisory Authority, a continued development of the pension scheme, and a strengthening of FSP's customer service. No events have occurred after the date of the balance sheet which will materially affect the evaluation of FSP and which have not been expressed in the report or in a note to the present annual report. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=40http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=40Finanssektorens Pensionskasse 40 SIGNATURES OF THE EXECUTIVE AND SUPERVISORY BOARDS The Supervisory and Executive Boards have today discussed and approved the annual report for 2009 for Finanssektorens Pensionskasse. The annual report has been prepared in accordance with legislation covering insurance companies, including the executive orders issued by the Danish Financial Supervisory Authority. We consider the applied accounting policies appropriate for the annual report to present a fair view of the group's and the parent company's assets, liabilities, equity and financial position as at 31 December 2009, and of the result of the group's and the parent company's activities and the group's cash flow for the financial year 1 January – 31 December 2009. It is furthermore our opinion that the management's report includes a correct review of the development in the group's and the parent company's activities and financial situation and a description of the most important risks and uncertain factors which may affect the group and the parent company. We recommend the annual report for approval by the Annual General Meeting. Copenhagen 17 March 2010 Executive Board Steen Jørgensen Supervisory Board Claus E. Petersen Chairman Michael Budolfsen Vice-Chairman René Holm Jan Steen Jensen Allan Johannesen Pia Lærke Bente Nannestad Ane Marie Holm Nielsen Lasse Nyby Knud Pedersen Hans Erik Rasmussen Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=41http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=41Finanssektorens Pensionskasse 41 Independent auditor's report To the customers of Finanssektorens Pensionskasse We have audited the consolidated financial statements and parent financial statements of Finanssektorens Pensionskasse for the financial year 1 January to 31 December 2009, which comprise the accounting policies, income statement, balance sheet, statement of changes in equity and notes and the management report for the Group as well as the Parent and the consolidated cash flow statement. The consolidated financial statements, parent financial statements and management report have been prepared in accordance with the Danish Financial Buisness Act. Management's responsibility for the consolidated financial statements, parent financial statements and management report Management is responsible for the preparation and fair presentation of consolidated financial statements and parent financial statements in accordance with the Danish Financial Buisness Act and for the preparation of a management report that contains a fair review in accordance with the Danish Financial Buisness Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and presentation of consolidated financial statements, parent financial statements and a management report that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditor's responsibility and basis of opinion Our responsibility is to express an opinion on these consolidated financial statements and parent financial statements and this management report based on our audit. We conducted our audit in accordance with Danish Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements, parent financial statements and management report are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements, parent financial statements and management report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, parent financial statements and management report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of consolidated financial statements and parent financial statements and for the fair review of a management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements, parent financial statements and management report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the consolidated financial statements and parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2009, and of their financial performance and the consolidated cash flows for the financial year 1 January to 31 December 2009 in accordance with the Danish Financial Buisness Act and the management report contains a fair review in accordance with the Danish Financial Buisness Act. Copenhagen 17 March 2010 DELOITTE Statsautoriseret Revisionsaktieselskab Lone Møller Olsen State Authorised Public Accountant 2010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=42http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=42Finanssektorens Pensionskasse 42 [Blank] Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=43http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=43Finanssektorens Pensionskasse 43 Income statement All amounts in million DKK Note Gross customer contributions Reinsurance premiums paid Customer contributions on own account, total Income from affiliated businesses Income from associated businesses Income from investment properties Interest income and dividend, etc. Market value adjustments of investments Interest costs Administration costs in connection with investment activities Return on investments, total Pension return tax Investment return tax after pension return tax Benefits paid Reinsurance cover received Changes to claims provisions Pension benefits on own account, total Changes to pension provisions Changes to reinsurance share Changes to pension provisions on own account The year's bonus added Changes to special bonus provisions Bonus, total Changes to provisions for unit-linked agreements Administration costs Pension-related operating costs on own account, total Return on investment transferred PENSION-TECHNICAL PROFIT/LOSS TECHNICAL PROFIT/LOSS ON HEALTH AND ACCIDENT INSURANCE Investment return on equity RESULT BEFORE TAX Pension return tax for equity THE YEAR'S RESULT The year's result is transferred to equity. 6 5 5 3 Pension Fund 2009 2008 625.0 -2.8 622.3 1,418.1 -28.3 68.0 104.6 -668.2 -48.7 -28.8 816.8 -117.6 699.2 -588.3 20.3 -1.1 -569.1 -641.0 -4.6 -645.6 -19.4 0.5 -18.8 -50.4 -36.9 -36.9 -102.8 -102.1 7 -0.3 119.6 17.1 -16.9 0.2 631.7 -3.2 628.5 -2,202.4 -209.9 66.8 220.8 -185.7 -48.7 -41.7 -2,400.9 336.7 -2,064.2 -578.0 22.4 -0.3 -555.9 699.3 -4.6 694.7 -48.8 30.6 -18.2 -34.7 -39.8 -39.8 255.3 -1,134.2 -2.0 -296.6 -1,432.8 41.6 -1,391.2 Group 2009 2008 625.0 -2.8 622.3 -28.3 67.9 409.0 474.7 -48.7 -46.1 828.5 -117.6 710.9 -588.3 20.3 -1.1 -569.1 -641.0 -4.6 -645.6 -19.4 0.5 -18.8 -50.4 -48.6 -48.6 -102.8 -102.1 -0.3 119.6 17.1 -16.9 0.2 631.7 -3.2 628.5 -209.9 66.8 726.0 -2,881.2 -48.7 -53.8 -2,400.9 336.7 -2,064.2 -578.0 22.4 -0.3 -555.9 699.3 -4.6 694.7 -48.8 30.6 -18.2 -34.7 -39.8 -39.8 255.3 -1,134.2 -2.0 -296.6 -1,432.8 41.6 -1,391.2 4 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=44http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=44Finanssektorens Pensionskasse 44 Balance sheet All amounts in million DKK Note Ongoing development projects INTANGIBLE ASSETS Operating equipment Domicile properties TANGIBLE ASSETS, TOTAL Investment properties Investments in affiliated businesses Investments in associated businesses Investments in affiliated and associated businesses, total Investments Investment association units Bonds Secured lending Deposits in credit institutions Derived financial instruments Other financial investment assets, total INVESTMENT ASSETS TOTAL INVESTMENT ASSETS RELATED TO UNIT-LINKED AGREEMENTS Reinsurance shares of provisions for pension agreements Receivables in connection with direct pension transactions with pensioners Receivables with affiliated businesses RECEIVABLES, TOTAL Receivable pension return tax Receivable company tax Deferred pension return tax asset Deferred company tax asset Liquid funds Other receivables OTHER ASSETS, TOTAL Interest receivables Other prepayments and accrued income OTHER PREPAYMENTS AND ACCRUED INCOM TOTAL ASSETS 13 12 11 10 8 9 Pension Fund 2009 2008 0.0 0.8 48.0 48.8 1,804.0 9,509.8 146.5 9,656.2 995.7 5,355.3 913.2 0.1 0.4 22.5 7,287.2 18,747.4 1,572.6 314.5 0.4 11.0 325.9 214.6 0.0 0.0 0.0 312.2 47.3 574.0 7.0 41.1 48.1 21,316.8 0.0 0.5 40.2 40.7 1,830.6 9,025.2 174.8 9,200.0 2,062.0 4,114.4 918.7 0.2 174.7 1,219.3 8,489.4 19,520.0 144.5 319.2 12.0 0.0 331.2 0.0 0.0 335.2 0.0 242.1 48.4 625.7 11.1 24.3 35.4 20,697.4 Group 2009 2008 24.4 24.4 0.8 48.0 48.8 1,848.8 146.5 146.5 5,455.8 5,355.3 6,077.6 0.1 0.4 22.5 16,911.6 18,906.9 1,572.6 314.5 0.4 0.0 314.9 214.6 0.8 0.0 0.1 424.3 53.9 693.7 81.6 41.1 122.6 21,684.0 0.0 0.5 40.2 40.7 1,830.6 174.8 174.8 3,948.7 4,128.5 7,252.1 0.2 735.7 1,280.6 17,345.8 19,351.2 144.5 319.2 12.0 0.0 331.2 0.0 0.0 335.2 0.0 357.5 73.1 765.8 80.0 24.3 104.3 20,737.7 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=45http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=45Finanssektorens Pensionskasse 45 Balance sheet All amounts in million DKK Note Revaluation reserves Profits transferred EQUITY, TOTAL Guaranteed payments Bonus potential on future customer contributions Bonus potential on premium-free pensions Pension provisions, total Provisions for claims Special bonus provisions Provisions for unit-linked agreements PROVISIONS FOR PENSION AGREEMENTS AND INVESTMENT AGREEMENTS, TOTAL Debt in connection with direct pension transactions with pension receivers Debt regarding derived financial instruments Debt to mortgage credit institutions Other debts Other accruals and deferred income DEBT, TOTAL 16 17 15 14 Pension Fund 2009 2008 1.8 1,691.0 1,692.7 15,187.9 984.6 506.5 16,679.0 4.1 196.8 1,572.6 1.8 1,690.7 1,692.5 16,017.4 1,175.4 222.7 17,415.5 2.8 197.3 144.5 Group 2009 2008 1.8 1,691.0 1,692.7 15,187.9 984.6 506.5 16,679.0 4.1 196.8 1,572.6 1.8 1,690.7 1,692.5 16,017.4 1,175.4 222.7 17,415.5 2.8 197.3 144.5 18,452.5 17,760.1 18,452.5 17,760.1 18 12.9 119.7 952.1 86.8 0.0 1,171.6 12.4 0.0 1,163.4 68.6 0.5 1,244.9 12.9 326.3 952.1 247.5 0.0 1,538.8 12.4 0.0 1,163.4 108.9 0.5 1,285.2 LIABILITIES, TOTAL Contingent liabilities Connected parties Interest curve change, etc. 19 20 21 21,316.8 20,697.4 21,684.0 20,737.7 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=46http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=46Finanssektorens Pensionskasse 46 Equity All amounts in million DKK Equity Equity as at 1 January Transferred from distribution of the year's result Provisions for appreciation, the year's adjustment Equity, total Pension Fund 2009 2008 1,692.5 0.2 0.0 1,692.7 3,083.7 -1,391.2 0.0 1,692.5 Group 2009 2008 1,692.5 0.2 0.0 1,692.7 3,083.7 -1,391.2 0.0 1,692.5 Capital adequacy requirement and capital base Capital base: Equity Special bonus provisions Capital base Capital adequacy requirement Surplus capital base Pension Fund 2009 2008 Group 2009 2008 1,692.7 196.8 1,889.5 652.1 1,237.4 1,692.5 197.3 1,889.8 644.5 1,245.3 1,692.7 196.8 1,889.5 652.1 1,237.4 1,692.5 197.3 1,889.8 644.5 1,245.3 Shadow account (return on equity) Balance, start of the year The year's return Applied/provision Balance, end of the year Pension Fund 2009 2008 1,460.7 88.4 101.6 1,650.7 356.4 -29.5 1,133.7 1,460.7 2009 1,460.7 88.4 101.6 1,650.7 Group 2008 356.4 -29.5 1,133.7 1,460.7 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=47http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=47Finanssektorens Pensionskasse 47 Notes All amounts in million DKK. Note 1 Accounting policies General information The annual report has been prepared in accordance with the rules of the Danish Financial Activities Act and the related Executive Order on Preparation of financial reports for insurance companies and non-occupational pension funds (the Executive Order on Financial Statements). Amounts in income statement, balance sheet and notes are in million DKK unless otherwise indicated. Each figure is rounded off on its own, and therefore deviations may occur between the total amounts stated and the sum of the underlying figures. At the end of 2009, FSP conducted a pension selection in connection with which many customers have with effect from 1 January 2010 changed from average interest schemes to unit-linked schemes. To maintain the correct view, the re-selected accounts and assets are presented as unitlinked schemes as at 31 December 2009. Changes to accounting policies No changes have been made in 2009 to the accounting policies, except for some immaterial reclassifications in comparative figures. The reclassifications are not important to the result and the equity for 2008. Accounting estimates in general Calculating the book value of some assets and liabilities involves an estimate of the effect of future events on such estimates. The estimates made have been based on assumptions which the management considers reasonable, but which are, of course, uncertain and unpredictable. The actual results may therefore deviate from the estimates made. Estimates are in particular involved in the calculation of pension commitments, properties and unlisted securities. Such estimates are described in detail in the following in relation to the individual entries. No changes have been made to the accounting estimates in 2009. Consolidation The consolidated financial statements include the parent company FSP, FSP It ApS (100% owned), FSP Ejendomsholding ApS (100% owned), FSP Ejendomme og Projekter ApS (100% owned by FSP Ejendomsholding ApS) and FSP Invest F.M.B.A. (80.67% owned). The consolidated financial statements have been prepared by adding entries of uniform nature. Intra-group transactions and balances are eliminated. Intra-group transactions Transactions between businesses in the group are made on market terms or on a cost-recovery basis and according to agreement between the businesses, unless the transactions are insignificant. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=48http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=48Finanssektorens Pensionskasse 48 Note 1 Accounting policies, continued Balance sheet Intellectual property includes the rights of use for IT systems. Intellectual property is entered at cost price less accumulated amortisation and write-downs or at the recoverable amount, if this amount is lower. Tangible assets, operating equipment includes the acquisition of small equipment, office equipment and IT hardware and is entered in the year of acquisition as administration costs. Operating equipment is valued at acquisition price and depreciated on a straight-line basis over five years except for IT hardware which is depreciated over three years. Investment properties are valued at market value calculated by the DCF method. The expected generation of liquidity from the operation of properties and the established return requirement have material influence on the valuation. The development in the general interest level is thus important for the estimates made in connection with the determination of return requirements. Furthermore, external experts have contributed to the calculation which has been finally determined by FSP's management. The contribution has been periodic and will be repeated as required. Ongoing construction work is valued at the purchase price. The headquarters of the Pension Fund, Amaliegade 27, has been sold as at 1 January 2010 and has thus been calculated at the sales price. In 2009, the depreciation for the headquarters amounted to DKK 80,000. The depreciation period is 50 years. Investments in group enterprises and associates are calculated at book value and included with FSP's pro rata ownership share. Listed investments are calculated at market value according to the official prices at the end of the year. Official closing prices from OMX Exchanges, Copenhagen, are used for Danish investments. Unlisted investments are calculated at market value on the basis of recognised methods, including EVCA standards, and are affected by estimates to a much higher degree than listed securities. Information about prices, etc., published after the closing of accounts will only be included if they are material for the assessment of the annual report. Units in investment associations are calculated at market value according to the official closing prices from OMX Exchanges, Copenhagen, and relevant international stock exchanges at the end of the year. Danish and international bonds are calculated at market value according to the official closing prices from OMX Exchanges, Copenhagen, and relevant international stock exchanges at the end of the year. Derived financial instruments include unsettled forward transactions, futures, swaps and swaptions. Derived financial instruments are included on the date of transaction and subsequently valued at market value. All value adjustments are made via the income statement. Investment assets related to unit-linked insurance are the assets corresponding to insurance where the insured decide the investment portfolio and carry the entire, related investment risk. The assets are calculated at market value according to the official closing prices from OMX Exchanges, Copenhagen, at the end of the year. All financial investment assets are included in the balance sheet on the date of transaction. Assets and liabilities in foreign currencies are entered at the official exchange rates on the date of the balance sheet. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=49http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=49Finanssektorens Pensionskasse 49 Note 1 Accounting policies, continued Deferred tax assets are calculated at the value at which the asset is expected to be realised, either by set-off in future earnings or by set-off in deferred tax liabilities. Pension provisions are calculated by the Pension Fund's responsible actuary on the technical basis reported to the Danish Financial Supervisory Authority and include guaranteed payments, bonus potential regarding future contributions, and bonus potential regarding premium-free pensions. Guaranteed payments represent the present value of the payments guaranteed towards the customer, and the present value of the expected future costs of administration of the insurance, less the present value of the agreed future contributions paid by the customers. Guaranteed payments include an estimated amount to cover future payments originating from insurance events occurred during the financial year but not reported at the end of the financial year. Bonus potential of future contributions includes the present value of obligations to grant bonus regarding contributions which have been agreed but are not yet due. Bonus potential of premium-free pensions include the present value of obligations to grant bonus regarding the already paid contributions, etc. Bonus potential of premium-free pensions is used for partial coverage of losses in case of negative realised result. The bonus potential is re-established with future profits, before a share of the profit is added to the equity. The Pension Fund calculates the provisions at present value on the basis of the term-depending adjusted discount rate of the Financial Supervisory Authority less 5%. This risk addition is first of all to cover uncertainties/estimates in the risk process of the Pension Fund, including in particular the expected life of pensioners. The calculation is also based on assumptions about the risks and costs of the Pension Fund. In relation to the customers' accounts (the retrospective provisions), the lifetime has been increased by three years. This means that a strengthening is calculated for some pensioners in Department B.2 which has a calculation rate of 4.5%. For the vast majority of pension schemes, the market value of the pension payment is lower than the account. This creates bonus potential for future contributions and bonus potential for premium-free pensions. By using bonus potential for premium-free pensions, the strengthening is reduced, leading to lower total provisions. The calculation of the size of the provisions assumes that the administration costs of managing the customers of the Pension Fund are covered by the cost deductions charged to the policies. Claims provisions include payments due from insurance events during the financial year which had not been paid or reported at the end of the financial year. Provisions for unit-linked agreements are basically calculated as the share of the individual insurance of the market value of the related investment assets. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=50http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=50Finanssektorens Pensionskasse 50 Note 1 Accounting policies, continued Income statement Customer contributions include current contribution (including contributions to unit-linked insurance and transfers from Special Pension Savings) paid by financial institutions as part of an employment agreement, one-off contributions and contributions from own payments. Labour market contribution has been deducted in the item customer contributions. Business ceded includes customer contributions ceded to other companies and reassurance companies' share of pension benefits. Income from investment properties comprises the operating results of the properties exclusive of value adjustments which are included in the designated items. The operating result does not include rent regarding headquarters property. Positive value adjustments for headquarters property are adjusted directly in equity, and the customers' share is transferred directly from the equity to the pension provisions. Negative value adjustment is made via the income statement. Interest and dividend, etc. include the interest due and earned during the financial year as well as share dividend. Price and exchange rate adjustments include value adjustments, gains and losses from sale of investment assets, including financial instruments. Realised and unrealised exchange rate gains and losses from value adjustment of investment assets are included in the income statement and are calculated as the difference between the value of the asset at the start of the financial year plus the weighted average purchase amount for the assets acquired during the financial year and the market value at the end of the year. Pension return tax covers tax on the calculated taxable base for the financial year and changes to provisions for deferred pension return tax and deferred tax assets. Pension benefits on own account covers non-recurrent payments on death and age retirement, current pension benefits and exit payments on own account less the pension benefits refunded by the reassurance. Change to pension provisions covers the year's gross changes to pension provisions less the share of reassurance and the year's use of bonus potential for premium-free pensions. Total bonus includes the year's added bonus and the year's changes to special bonus provisions. Pension-related operating costs covers the administration costs which can be referred to the financial year, including expenses to public authorities and the book depreciations on furniture and furnishings, etc. Administration costs have been distributed among pension activities, investment activities and non-life insurance activities. The distribution has been made on the basis of the concrete use of resources. Transferred return on investments includes the share of the investment return relating to the return on the equity and the share relating to health and accident activities. Ratios are prepared according to the rules of the Executive Order on financial reports of life insurance companies and non-occupational pension funds. The calculation of the return ratios is based on a money-weighted method, whereas the return by type of asset in the return table is calculated for investment assets according to a time-weighted method. Hedging of currency risks is distributed on the individual investment categories in the table. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=51http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=51Finanssektorens Pensionskasse 51 Note 2 FIVE-YEAR SURVEY Pension activities, pension fund 2009 2008 2007 2006 2005 Financial highlights (million DKK) Customer contributions on own account 622.3 628.5 579.0 905.8 523.8 Pension payments on own account -569.1 -555.9 -529.7 -501.1 -393.1 Return on investment 816.8 -2,400.9 684.3 1,090.4 2,391.5 Pension-related operating costs -36.9 -39.8 -33.1 -31.7 -26.9 Profit/loss from reinsurance 12.9 14.6 10.6 10.0 11.6 Technical result -102.1 -1,134.2 -348.0 177.1 807.5 Technical result health and accident insurance -0.3 -2.0 -2.1 -1.8 -2.6 The year's result 0.2 -1,391.2 -213.2 415.8 1,084.1 Pension provisions 16,683.1 17,418.3 17,944.6 17,311.3 16,536.9 Provisions for unit-linked agreements 1,572.6 144.5 109.8 77.3 50.7 Equity 1,692.7 1,692.5 3,083.7 3,296.3 2,880.5 Assets, total – parent company 21,316.8 20,697.4 22,975.7 21,621.7 20,419.3 Capital base 1,873.5 1,873.8 3,295.5 3,368.6 2,864.5 Capital adequacy requirement 652.1 644.5 717.5 690.6 658.6 2009 Return ratios Return before pension return tax (%) Return after pension return tax (%) Cost and result ratios Cost in percentage of premiums (%) Cost in percentage of provisions (%) Costs per customer (DKK) Cost result (%) Risk result (%) Consolidation ratios Customer capital ratio (%) Owner capital ratio (%) Excess cover ratio (%) Solvency ratio (%) Return ratios Return on equity before tax Return on equity after tax Return on insurance provisions before tax 4.1 3.5 6.0 0.2 2,182 -0.04 -0.16 1.1 9.8 7.2 290 1.0 0.0 4.7 2008 -11.1 -9.6 6.3 0.2 2,389 -0.06 0.10 1.1 9.2 6.8 293 -60.0 -58.3 -5.2 2007 3.3 2.9 5.7 0.2 1,961 -0.03 -0.04 1.3 17.3 14.6 462 -6.0 -6.7 4.8 2006 5.6 4.9 3.5 0.2 1,985 -0.02 0.00 0.5 19.0 15.6 490 13.5 12.3 3.7 2005 13.5 12.0 5.1 0.2 1,729 0.00 0.62 17.4 13.4 437 46.4 44.8 10.5 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=52http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=52Finanssektorens Pensionskasse 52 Note 2 FIVE-YEAR SURVEY, continued Pension activities, the group 2009 Financial highlights (million DKK) Return on investments Pension-related operating costs Assets, total – the group 828.5 -2,400.9 684.3 -48.6 -39.8 -33.1 21,684.0 20,737.7 23,060.4 2008 2007 2006 2005 2009 Cost and result ratios Costs in percentage of premiums (%) Costs in percentage of provisions (%) Costs per customer (DKK) Cost result (%) 7.9 0.3 2,862 0.10 2008 6.4 0.2 2,386 0.06 2007 5.7 0.2 1,961 -0.03 2006 - 2005 - Main and key figures for the group are only stated where they do not correspond to the figures for the parent company. Health and accident insurance activities 2009 Financial highlights (million DKK) Gross premium income Gross claims expenses Business-related operating costs, total Return on investments after insurance technical interest The year's result Run-off result Insurance-related provisions, total Equity Capital base 16.0 -14.9 -1.4 0.0 -0.3 -0.5 2.7 16.0 16.0 2009 Nøgletal Key ratios Gross claims ratio (%) Gross cost ratio (%) Combined ratio Operating ratio Relative run-off result Return on equity (%) Capital adequacy (%) 94.3 8.5 102.7 102.7 -3.1 -2.1 442 104.4 8.6 113.0 113.0 -4.2 -12.6 488 111.6 6.4 118.1 118.1 -15.2 -12.9 529 113.9 6.5 120.4 120.4 0.9 -11.4 619 126.1 6.7 132.8 132.8 -18.7 -21.5 728 13.2 -14.7 -1.1 -0.3 -2.0 -0.6 2.6 16.0 16.0 2008 11.7 -12.7 -0.8 0.1 -2.1 -1.8 3.6 16.0 16.0 2007 9.6 -10.4 -0.6 0.1 -1.8 0.1 3.1 16.0 16.0 2006 8.6 -9.7 -0.6 0.2 -2.6 -1.6 2.6 16.0 16.0 2005 2008 2007 2006 2005 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=53http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=53Finanssektorens Pensionskasse 53 Note 3 Gross customer contributions Customer contributions Customer deposits Group life assurance premium Gross customer contributions, total Gross customer contributions by country: Denmark, Greenland, the Faeroe Islands Gross membership contribution for direct pension agreements can be distributed as follows: Insurances with bonus scheme Unit-linked agreements Group life premiums Number of customers: Pension agreements made in employment relations Note 4 Market value adjustments of investments Investment properties Domicile properties Investments Investment association units Bonds Secured lending Other loans Derived financial instruments Liquid funds Mortgage debt Other Market value adjustments of investments, total Note 5 Changes to pension provisions Guaranteed payments Bonus potential on future customer contributions Bonus potential on premium-free pensions Re-establishment of bonus potential on premiumfree pensions Re-selection to unit-linked The year's added bonus PAL compensation Premium for health and accident insurance Changes to pension provisions, total Pension Fund 2009 2008 597.6 26.9 0.6 625.0 625.0 568.8 62.4 0.5 631.7 631.7 Group 2009 2008 597.6 26.9 0.6 625.0 625.0 568.8 62.4 0.5 631.7 631.7 562.9 61.5 0.6 17,162 560.6 70.6 0.5 17,100 562.9 61.5 0.6 17,162 560.6 70.6 0.5 17,100 Pension Fund 2009 2008 -12.1 7.9 -197.2 404.9 -9.0 0.0 0.0 -844.9 6.4 -24.1 0.0 -668.2 -133.7 0.0 -971.8 -312.3 47.2 0.0 0.0 1,221.7 -4.3 -32.4 0.0 -185.7 Group 2009 2008 -12.1 7.9 698.0 404.9 140.6 0.0 0.0 -760.1 19.7 -24.1 -0.1 474.7 -133.7 0.0 -3,072.1 -312.3 -433.5 0.0 0.0 1,221.7 -4.3 -32.4 -114.5 -2,881.2 Pension Fund 2009 2008 847.6 190.8 -44.1 -239.8 -1,377.7 -19.4 -1.8 -16.0 -660.3 -2,619.4 462.6 1,532.6 1,198.5 0.0 -48.8 138.2 -13.2 650.5 Group 2009 2008 847.6 190.8 -44.1 -239.8 -1,377.7 -19.4 -1.8 -16.0 -660.3 -2,619.4 462.6 1,532.6 1,198.5 0.0 -48.8 138.2 -13.2 650.5 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=54http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=54Finanssektorens Pensionskasse 54 Note 6 Administration costs Staff costs, total Other costs Total costs before distribution Distributed costs Refund from affiliated businesses Administration costs, total Staff costs are specified as follows: Salaries, employees Pension contributions Payroll tax, etc. Staff costs, total Salary and remuneration including pension contribution for Executive Board Fee for Supervisory Board Number of fulltime employees Auditors: Deloitte Auditing Other tasks Total auditor costs Note 7 Technical result of health and accident insurance Customer contribution on own account, total Insurance-technical interest Claims expenses, critical disease Changes to claims provisions Claims expenses, total Operating costs on own account, total Return on investment Return on insurance-related provisions Technical result of health and accident insurance, total Number of compensations Average compensation for accidents in million Compensation ratio in % Run-off result for the account of third parties (million DKK) Pension Fund 2009 2008 -37.5 -40.8 -78.3 30.4 11.0 -36.9 -35.1 -48.0 -83.0 43.2 -39.8 Group 2009 2008 -37.5 -41.5 -79.0 30.4 -48.6 -35.1 -48.0 -83.0 43.2 -39.8 -30.9 -4.1 -2.6 -37.5 -2.5 -0.8 47 -28.6 -3.6 -2.9 -35.1 -2.5 -0.6 44 -30.9 -4.1 -2.6 -37.5 -2.5 -0.8 47 -28.6 -3.6 -2.9 -35.1 -2.5 -0.7 44 0.9 4.7 5.7 0.5 3.8 4.4 1.2 4.7 5.9 2009 16.0 0.1 -14.9 -0.2 -15.1 -1.4 0.1 -0.1 -0.3 126 0.1 0.8 -0.5 0.7 3.8 4.5 Group 2008 13.2 0.1 -14.7 1.0 -13.7 -1.1 -0.3 -0.1 -2.0 123 0.1 0.8 -0.7 Pension Fund 2009 2008 16.0 0.1 -14.9 -0.2 -15.1 -1.4 0.1 -0.1 -0.3 126 0.1 0.8 -0.5 13.2 0.1 -14.7 1.0 -13.7 -1.1 -0.3 -0.1 -2.0 123 0.1 0.8 -0.7 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=55http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=55Finanssektorens Pensionskasse 55 Note 8 Operating equipment Cost price as at 1 January Added during the year Disposed of during the year Cost price, total Depreciation and write-downs as at 1 January The year's write-downs The year's depreciation The year's reversal of previous years' depreciation on assets sold Depreciation and write-downs, total Operating equipment, total Note 9 Domicile properties Re-assessed value as at 1 January The year's depreciation The year's value adjustments Market value, total The investment properties have been valued according to dialogue with external experts. Note 10 Investment properties Market value as at 1 January Added during the year Disposed of during the year The year's value adjustment at market value Market value, total The market value has been determined using the following weighted average of return rates used: Residential rental properties Commercial rental properties Mixed rental properties The investment properties have been valued according to dialogue with external experts. Pension Fund 2009 2008 3.0 0.8 -2.6 1.2 -2.5 -0.3 2.4 -0.4 0.8 3.0 0.0 0.0 3.0 -2.2 -0.3 0.0 -2.5 0.5 Group 2009 2008 3.0 0.8 -2.6 1.2 -2.5 -0.3 2.4 -0.4 0.8 3.0 0.0 0.0 3.0 -2.2 -0.3 0.0 -2.5 0.5 Pension Fund 2009 2008 40.2 -0.1 7.9 48.0 40.3 -0.1 0.0 40.2 Group 2009 2008 40.2 -0.1 7.9 48.0 40.3 -0.1 0.0 40.2 Pension Fund 2009 2008 1,830.6 3.7 -15.2 -15.1 1,804.0 1,814.3 160.2 -8.4 -135.6 1,830.6 Group 2009 2008 1,830.6 48.5 -15.2 -15.1 1,848.8 1,814.3 160.2 -8.4 -135.6 1,830.6 4.6 5.3 5.0 4.5 5.2 4.9 4.6 5.3 5.0 4.5 5.2 4.9 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=56http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=56Finanssektorens Pensionskasse 56 Note 11 Other financial investment assets Investments Information according to §98 (2) of the Executive Order on Financial Statements appears from the section "Publishing of ownership shares" in the management report. Financial instruments Information according to §92 of the Executive Order on Financial Statements appears from the section on "Risk management and compliance" in the management report. Note 12 Investment activities, unit-linked agreements Investment association units, affiliated businesses Investment association units Investment assets, unit-linked agreements, total Note 13 Pension return tax Share of the taxed return on investments exempt from pension return tax under the transitional stipulation on exemption of reserves as at 31.12.1982 (the exemption fraction) amounts to (%) Pension Fund 2009 2008 1,279.7 292.9 1,572.6 Group 2009 2008 144.5 144.5 1,572.6 1,572.6 144.5 144.5 Pension Fund 2009 2008 Group 2009 2008 5.8 6.3 5.8 6.3 Note 14 Result carried forward Result carried forward as at 1 January Carried forward from distribution of the year's result Result carried forward, total Pension Fund 2009 2008 1,690.7 0.2 1,691.0 3,082.0 -1,391.2 1,690.7 Group 2009 2008 1,690.7 0.2 1,691.0 3,082.0 -1,391.2 1,690.7 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=57http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=57Finanssektorens Pensionskasse 57 Note 15 Pension provisions Pension provisions as at 1 January Accumulated value adjustment as at 1 January Applied bonus potential for premium-free pensions to cover losses Retrospective provisions as at 1 January Gross contributions Deposits PAL compensation Costs PAL compensation Interest accrued Pension payments Extra surrencer charge Costs added after accrual of cost bonus Risk gains after accrual of risk bonus Premiums for health and accident insurance Transfer of unit-linked agreements Re-selection Transferred to BonusKapital, net Retrospective provisions as at 31 December Accumulated value adjustment as at 31 December Applied bonus potential for premium-free pensions to cover losses Pension provisions, total Increase in bonus potential for future customer contributions as a consequence of the requirements in §66 (7) and (8) of the Executive Order on Financial Statements amounts to: Increase in bonus potential for premium-free pensions as a consequence of the requirements in §66 (7) and (8) amounts to: Pension Fund 2009 2008 17,415.5 -310.6 1,198.5 18,303.4 562.3 1.2 0.0 450.8 -559.2 -73.1 -30.9 29.6 -16.0 1.8 -1,377.7 11.1 17,303.4 334.3 -958.8 16,679.0 17,941.0 -146.1 0.0 17,794.9 561.1 138.2 0.0 438.7 -576.4 0.0 -28.7 -18.9 -13.2 -2.3 0.0 10.1 18,303.4 310.6 -1,198.5 17,415.5 Group 2009 2008 17,415.5 -310.6 1,198.5 18,303.4 562.3 1.2 0.0 450.8 -559.2 -73.1 -30.9 29.6 -16.0 1.8 -1,377.7 11.1 17,303.4 334.3 -958.8 16,679.0 17,941.0 -146.1 0.0 17,794.9 561.1 138.2 0.0 438.7 -576.4 0.0 -28.7 -18.9 -13.2 -2.3 0.0 10.1 18,303.4 310.6 -1,198.5 17,415.5 -6.7 -4.9 -6.7 -4.9 631.1 892.8 631.1 892.8 Pension provisions by original basic interest: Pension provisions as at 1 January 2009 0.00% others 1.75% basic interest 2.75% basic interest 4.50% basic interest Pension provisions as at 31 December 2009 0.00% others 1.75% basic interest 2.75% basic interest 4.50% basic interest Bonus potential Bonus potential Guaranteed on future customer on premium-free payments contributions pensions 0.5 -256.3 15,168.6 1,104.7 0.0 618.7 554.8 1.8 0.0 125.2 97.5 0.0 1.0 -5.2 14,114.0 1,078.0 0.0 361.3 620.1 3.1 0.0 101.5 405.0 0.0 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=58http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=58Finanssektorens Pensionskasse 58 Note 16 Special bonus provisions Special bonus provisions as at 1 January Interest accrual Transferred to special bonus capital Share of the year's profit Shadow account (special bonus provisions) Balance, start of the year The year's interest Applied/set aside Balance, end of the year Note 17 Provisions for unit-linked agreements Provisions for unit-linked agreements as at 1 January Gross contributions Interest accrued Pension payments Cost addition after adding cost bonus Risk gain after adding cost bonus Transferred from pension provisions Transferred to BonusKapital, net Total Re-selection Provisions for unit-linked agreements, end of year Note 18 Debt to mortgage credit institutions Debt, due after five years Security in properties for the nominal value of the debt has been issued to mortgage credit institutions. Note 19 Contingent liabilities As security for the provisions of the insured, assets at a total balance value have been registered as at the end of the year Promise regarding investment in unlisted securities Pension Fund 2009 2008 197.3 10.6 -11.1 0.0 196.8 3.4 0.2 6.0 9.7 227.9 1.9 -10.0 -22.4 197.3 0.0 0.0 3.4 3.4 Group 2009 2008 197.3 10.6 -11.1 0.0 196.8 3.4 0.2 6.0 9.7 227.9 1.9 -10.0 -22.4 197.3 0.0 0.0 3.4 3.4 Pension Fund 2009 2008 144.5 61.5 24.9 -29.6 -2.8 -1.8 -1.8 0.0 194.9 1,377.7 1,572.6 109.8 70.6 -33.5 -1.9 -1.8 -1.1 2.3 0.0 144.5 0.0 144.5 Group 2009 2008 144.5 61.5 24.9 -29.6 -2.8 -1.8 -1.8 0.0 194.9 1,377.7 1,572.6 109.8 70.6 -33.5 -1.9 -1.8 -1.1 2.3 0.0 144.5 0.0 144.5 Pension Fund 2009 2008 912.1 705.0 Group 2009 2008 912.1 705.0 Pension Fund 2009 2008 Group 2009 2008 19,361.6 1,102.5 18,637.0 1,107.0 19,361.6 1,102.5 18,637.0 1,107.0 The pension fund is not a party to any legal disputes which may change the financial position. Security has been provided in bonds to a value of DKK 103.1 million as security for financial instruments. The rental agreement regarding the domicile property of the pension fund cannot be terminated until the end of 2019. The total obligation during the period of interminability amounts to DKK 42 million. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=59http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=59Finanssektorens Pensionskasse 59 Note 20 Related parties, etc. Pension Fund 2009 2008 The pension fund has investments in the following affiliated businesses: FSP Invest F.M.B.A. with domicile in Copenhagen. Activity: Investment Ownership share: 80.67% Result of the business Equity of the business FSP IT ApS with domicile in Gentofte. Activity: IT investments Ownership share: 100% Result of the business Equity of the business During the financial year, FSP has invoiced FSP IT ApS for costs of DKK 11.0 million paid by FSP on behalf of FSP It Aps. The invoices have been issued on cost-covering basis and in accordance with the intra-group agreements. FSP Ejendomsholding ApS with domicile in Gentofte Activity: Investment in property companies Ownership share: 100% Result of the business Equity of the business The pension fund has investment shares in the following associated businesses: Britannia Invest A/S with domicile in Copenhagen Activity: British property investments Ownership share: 32% Result of the business Equity of the business -82.8 457.9 -662.7 540.7 -82.8 457.9 -662.7 540.7 -0.1 52.9 0.0 0.0 -11.4 42.6 0.0 0.0 1,624.8 13,193.0 -2,104.9 11,523.8 Group 2009 2008 Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=60http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=60Finanssektorens Pensionskasse 60 Note 21 Interest curve change, etc. Pension Fund 2009 Adjusted interest curve Not adjusted interest curve Pension Fund 2008 Adjusted interest curve Not adjusted interest curve Size of all interest curve-based items after new and old interest curve, respectively, as at 31.12: Changes to pension provisions Return on investment carried forward Return on investment on equity Pension return tax for equity The year's result Guaranteed payments Bonus potential for future customer contributions Bonus potential for premium-free pensions Provisions for claims Equity Capital base -660.3 -102.8 119.6 -16.9 0.2 15,187.9 984.6 506.5 4.1 1,692.7 1,889.5 -415.1 -94.2 109.6 -15.5 245.5 15,096.1 978.5 500.6 4.1 1,796.6 1,993.4 650.5 255.3 -296.6 41.6 -1,391.2 16,017.4 1,175.4 222.7 2.8 1,692.5 1,889.8 509.2 255.3 -296.6 41.6 -1,532.6 16,237.9 1,138.0 181.0 2.8 1,551.1 1,748.4 Adjusted interest curve Size of the items at the end of the financial year and changes to items due to interest curve change: Capital adequacy requirement Capital base Effect in amount Adjusted of interest interest curve change curve Effect in amount of interest curve change 652.1 1,889.5 0.2 -103.9 644.5 1,889.5 0.0 141.1 The effect of interest curve change for the pension fund corresponds to the effect on the group. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=61http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=61Finanssektorens Pensionskasse 61 Note 22 Specification of investment assets and their return at market value, pension fund Book value Net investments Return in % p.a. before pension return tax and company tax 3.4 -37.0 -10.5 -0.3 25.7 -0.1 25.6 1.7 -14.7 -6.4 8.1 9.4 32.0 Start of year Land and buildings directly owned Property companies Land and buildings, total Other subsidiaries Listed Danish investments Unlisted Danish investments Listed international investments Unlisted international investments Other investments, total Treasury bonds (Zone A) Mortgage credit bonds Index-linked bonds Mortgage credit bonds investment grade Mortgage credit bonds non investment grade and emerging market bonds Other bonds Bonds, total Secured lending Other financial investments Derived financial instruments to secure net change of assets and liabilities 1,066.1 858.9 2,114.0 10,548.3 0.2 567.1 1,870.8 1,079.9 2,950.7 2.0 696.2 376.9 2,527.9 581.8 4,182.8 893.8 6,000.6 581.6 99.4 End of year 1,852.2 881.3 2,733.5 106.5 586.0 294.5 2,505.7 897.1 4,283.3 837.5 6,804.3 636.0 960.7 33.5 38.8 72.2 105.0 -223.0 -75.4 -13.0 288.3 -23.1 -150.1 3.5 -100.0 797.0 2,025.6 1,388.8 12,652.7 0.1 279.9 459.1 -958.3 51.2 -0.2 -301.0 40.1 11.0 7.8 4.7 4.4 120.2 -133.9 100.0 Return in % is time-weighted on the basis of the monthly return. As at 1 January 2010, DKK 1,377.7 million of the investment assets included in the above table have been changed to unit-linked schemes. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=62http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=62Finanssektorens Pensionskasse 62 Note 23 Sensitivity information and risk information All amounts in million DKK Event Minimum effect on capital base Maximum effect on collective bonus potential Maximum effect on bonus potential on premium-free pensions before change to bonus potential applied to premium-free pensions Maximum effect of bonus potential applied to premium-free pensions Interest increase of 0.7 percentage points Interest fall of 0.7 percentage points Share price fall of 12% Property price reduction of 8% Foreign exchange risk (VaR 99.5%) Loss on counterparties of 8% Fall in mortality rate of 10% Increase in mortality rate of 10% Increase in disability rate of 10% -236.0 279.0 -96.0 -37.0 -14.0 -1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 730.0 -412.0 0.0 0.0 0.0 0.0 -90.0 108.0 -32.0 -365.0 32.0 -362.0 -140.0 -53.0 -3.0 -327.0 272.0 -10.0 Information about risk information according to §91 b of the Executive Order on Financial Statements appears from the section on "Risk management and compliance" in the management report. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=63http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=63Finanssektorens Pensionskasse 63 Note 24 Specification of investment shares, including investment shares in investment associations All figures in % Rest of North South Rest of the Other Not Denmark Europe America America Japan Far East countries distributed Energy Materials Industry Durables Consumer goods Health care Finance IT Telecommunication Utilities Not distributed Total 0.1 % 0.2 % 2.0 % 0.5 % 0.5 % 1.3 % 0.5 % 0.9 % 1.0 % 1.0 % 1.1 % 0.7 % 0.6 % 0.2 % 0.5 % 0.6 % 0.5 % 0.6 % 2.4 % 0.9 % 0.1 % 0.2 % 10.2 % 16.8 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.1 % 0.0 % 0.3 % 0.0 % 0.0 % 0.0 % 0.1 % 0.0 % 0.2 % 0.0 % 0.1 % 0.0 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.9 % 0.0 % 0.0 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Total 1.2 % 1.3 % 3.7 % 2.4 % 2.1 % 2.7 % 36.6 % 24.7 % 0.2 % 0.0 % 0.0 % 10.0 % 0.3 % 0.3 % 0.3 % 0.0 % 0.0 % 63.9 % 0.0 % 0.0 % 0.0 % 1.5 % 0.5 % 0.5 % 0.0 % 20.2 % 0.0 % 100.0 % 51.4 % 30.8 % Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=64http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=64Finanssektorens Pensionskasse 64 Note 25 Management of the Pension Fund Supervisory Board Claus E. Petersen Chairman of the Supervisory Board, Managing Director, Den Jyske Sparekasse. Chairman of the Supervisory Board of DJS Erhvervsinvest A/S and DJS Leasing A/S. Vicechairman of Sparinvest Holding A/S. Member of the Supervisory Board of ID Sparinvest A/S, PRAS A/S, DLR Kredit A/S, Spar Pantebrevsinvest A/S, HN Invest Tyskland I A/S and Amanah Kredit A/S. Elected chairman of the Supervisory Board in 2004, 48 years old. Special competences: Management experience from a number of financial businesses. Sector political experience from the Supervisory Board of Lokale Pengeinstitutter. Wide experience within banking, finance and investment as well as in management and financial affairs. Michael Budolfsen Vice-chairman of the Supervisory Board. Vice-chairman of Finansforbundet. Chairman of Kobæk Strand Konferencecenter A/S. Member of the Supervisory Board since 2006, 46 years old. Special competences: Experience within board work from Spar Nord Bank, Kobæk Strand Konferencecenter and various commercial funds and associations. Sector political experience from membership of the Central Board of Finansforbundet (the Danish Financial Services Union). Strategic and political management experience as Vice-chairman of Finansforbundet. Negotiating experience as the central negotiator in the collective bargaining process in the financial services sector. Banking experience as retail customer advisor. René Holm Member of the Branch Board, Danske kreds, Danske Bank Member of the Supervisory Board since 2008, 50 years old. Special competences: Experience from Supervisory Board and professional work from the branch board of among other things Danske Kreds and Sydbank. Member of the Supervisory Board of FTF, Region Sjælland. Former member of the Supervisory Board of Danske Bank. Member of the consultation committee at Danske Bank and the European Works Council (EWC). Negotiating experience and banking experience. Jan Steen Jensen Property advisor, Spar Nord Bank A/S. Member of the Supervisory Board since 2002, 51 years old. Special competences: Experience within insurance and pension advice in the financial services sector for 25 years, of which eight years as responsible for insurance and pensions in Spar Nord. Education at level 4 and 5 of the Forsikringsakademiet (insurance academy) and as investment advisor. Property advisor specialising in investment, tax and pension. Shop steward at Spar Nord. Allan Johannesen Deputy Director, Sparekassen Lolland A/S. Member of the Supervisory Board of Ejendomsselskabet af 16. februar 2009 A/S and Ejendomsaktieselskabet Krøyers Gård A/S, Nakskov. Member of the Supervisory Board since 2009, 51 years old. Special competences: Management experience from a financial business with responsibility for among other things financial affairs, internal control, legal department, IT and credit office. Many years' experience with auditing from a position as head of auditing at Sparekassen Lolland A/S from 1990 to 2007. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=65http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=65Finanssektorens Pensionskasse 65 Note 25 Management of the Pension Fund, continued Pia Lærke HR consultant, Nova Bank Fyn A/S. Member of the Supervisory Board since 2003, 43 years old. Special competences: Experience in board work from Fionia Bank. Sector political experience from former membership of the Central Board of Finansforbundet (Danish Financial Services Union). Experience within negotiation and conflict handling as former shop steward, consultation committee member and branch board member. Experience within banking and finance as former retail and commercial advisor. Bente Nannestad Commercial advisor, Nordea. Member of the Supervisory Board of Kreds Nordea. Member of the Supervisory Board since 2009, 62 years old. Special competences: Experience in board work and union work from Kreds Nordea. Member of the consultation committee and salary committee of Nordea and the salary committee of Finansforbundet. Negotiator for local agreements. Case worker. Experience in banking and finance as fomer commercial advisor in Nordea. Ane Marie Holm Nielsen Director of department, Spar Nord Bank A/S. Member of the Supervisory Board since 1981, 60 years old. Special competences: Experience from board work and union work as former Deputy-chairmen of DSfL and member of the Supervisory Board of Nordisk Bankmanna Union. Many years' experience in management and within banking as Director of Department with Spar Nord. Lasse Nyby Man. Director of Spar Nord Bank A/S. Chairman of the Supervisory Board of Erhvervsinvest Nord A/S, Finans Nord A/S, JSNFA Holding A/S and Spar Nord Ejendomsselskab A/S. Member of the Board of Directors of Nykredit Holding A/S, PRAS A/S, SN Finans Nord AB, Vækst-Invest Nordjylland A/S. Member of the Supervisory Board since 2009, 49 years old. Special competences: About 25 years' management experience from the financial services sector, including 15 years on the Executive Board of Spar Nord Bank A/S. Board experience from the bank's subsidiaries and a number of financial businesses. Sector political experience from board work with Regionale Bankers Forening and Finansrådet. Knud Pedersen Project employee, DGI Nordjylland. Member of the Supervisory Board since 2000, 60 years old. Special competences: Experience with management and financial affairs from a number of banks. Savings bank education supplemented by business diplomas, basic law studies at university and courses within the sector. Experience in union work and pension policy via previous positions as branch chairman and member of the General Council of Danske Sparekassefunktionærers Landsforening. Hans Erik Rasmussen Branch board member Danske Kreds, Danske Bank. Member of the Supervisory Board since 2001, 58 years old. Special competences: Member of the branch board of Danske Kreds. HD, accounting. Experience in organisational assignments. Annual report 20092010-07-02T11:40:02+02:00http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=66http://innovisio.ipaper-cms.dk/FSP/aarsrapporter/AnnualReport2009/?Page=66Finanssektorens Pensionskasse 66 Note 25 Management of the Pension Fund, continued Executive Board Steen Jørgensen Director of Finanssektorens Pensionskasse since 1993 and of 100% owned subsidiaries, 52 years old. Member of the Supervisory Board of Britannia Invest A/S, ei invest european retail (and subsidiaries), Ejendomsinteressentskabet Vestervang III and Eqvitec Technology Fund III General Partner A/S. Member of the committee of representatives for Lån & Spar Bank A/S. Delegate for the general meeting of Spar Nord Bank A/S. Delegate for Købstædernes Forsikring G/S and Ejendomsforeningen Danmark. According to §80 of the Danish Financial Activities Act, the Supervisory Board has approved the above managerial positions of the CEO. Annual report 20092010-07-02T11:40:02+02:00