DANSKE BANK A/S 
Danica Pension
Livsforsikringsaktieselskab
Primary Credit Analyst:
Silke Sacha, Frankfurt + 49 693 399 9195; silke.sacha@spglobal.com
Secondary Contact:
Andreas Lundgren Harell, Stockholm + 46 8 440 5921; andreas.lundgren.harell@spglobal.com
Table Of Contents
Outlook
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Danica Pension Livsforsikringsaktieselskab
Rationale
The 'A-'long-term issuer credit rating on Danica Pension Livsforsikringsaktieselskab (Danica) is based on S&P Global Ratings' view of its role as a core subsidiary of Danske Bank A/S (A+/Stable/A-1).The core status reflects Danica's key role in Danske Bank's financial services offering, as a market-leadinglife insurer in Denmark, and its strong integration within the group. As a core entity, we rate Danica at the level of the bank's stand-alonecredit profile (SACP), since we expect that it would receive support under all foreseeable circumstances if needed. However, we do not believe that it will benefit from the bank's additional loss-absorbingcapacity in resolution.
We view Danica as one of the leading life insurers in Denmark, with a market share in 2023 of about 25% by premiums and about 30% by assets under management. We believe that Danica benefits from its strong integration into Danske Bank, with close collaboration and distribution ties. We therefore believe that Danica Pension Group will continue to occupy a top position (second largest) in the Danish market as a life and pensions provider. The group holds an increased market share of 25% as of 2023, with the top three players (PFA, Danica, and Well life) controlling more than 80% of the market. Furthermore, the issuer has prioritized its focus on the Danish market by divesting in Sweden in 2019 and Norway in 2022, thus narrowing its geographic exposure and customer reach. Danica Pension's strategic focus on the Danish market, emphasis on customer returns, and commitment to preventative healthcare position it well for future growth.
In 2023, Danica's premiums grew by 10% to DKK38.6 billion (€38,647 million), up from DKK35.1 billion in 2022, while net profit improved to DKK1.24 billion, up from -DKK1.37 billion in 2022. The improvement is mainly due to favorable financial markets in 2023.
Operating Company Covered By This Report
Financial Strength Rating
Local Currency
NR/--/--
Positive financial markets in 2023, and continued improvement of underlying operations. For 2023, Danica experienced a surge in profitability with a return on equity (ROE) of 5.6% compared with -7.1% in the previous year. The positive numbers could be well attributed to the supportive financial markets in 2023. The five-year average ROE stands strong at about 7.7% (2019-2023).
The health and accident segments continue to report losses from -DKK1.03 billion in 2022 to -DKK924 million in 2023. Conversely, the life segment continues to show a positive swing, improving by about 249% to DKK1.18 billion from -DKK742 million in 2022. Overall, we believe that the issuer should perform well going forward supported by favorable
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Danica Pension Livsforsikringsaktieselskab
investment results. Danica's group solvency coverage ratio remained healthy at 170% as of year-end 2023 (188% in 2022).
Outlook
Our stable outlook on Danica mirrors that on Danske Bank. This is because we regard Danica as a core subsidiary of the bank, so we believe it would receive support under all foreseeable circumstances.
Downside scenario
We could lower the rating on Danica over the next 12-24 months if we revised down our assessment of the group's SACP. Although unlikely, we could also lower the rating if we no longer regarded Danica as a core subsidiary of Danske Bank. That could result from a significant weakening in Danica's operating performance or group integration, or any indication of Danske Bank's reduced commitment to Danica.
Upside scenario
We could raise the rating on Danica over the next 12-24 months if we revised our assessment of Danske Bank's group SACP upward.
Related Criteria
- General Criteria: Hybrid Capital: Methodology And Assumptions , March 2, 2022
- Criteria | Financial Institutions | General: Financial Institutions Rating Methodology , Dec. 9, 2021
- Criteria | Financial Institutions | Banks: Banking Industry Country Risk Assessment Methodology And Assumptions , Dec. 9, 2021
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings , Oct. 10, 2021
- General Criteria: Group Rating Methodology , July 1, 2019
- General Criteria: Methodology For National And Regional Scale Credit Ratings , June 25, 2018
- Criteria | Financial Institutions | General: Risk-Adjusted Capital Framework Methodology , July 20, 2017
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings , April 7, 2017
- General Criteria: Principles Of Credit Ratings , Feb. 16, 2011
Ratings Detail (As Of May 30, 2024)*
Operating Company Covered By This Report | |
Danica Pension Livsforsikringsaktieselskab | |
Financial Strength Rating | |
Local Currency | NR/--/-- |
Issuer Credit Rating | A-/Stable/-- |
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Danica Pension Livsforsikringsaktieselskab | |
Ratings Detail (As Of May 30, 2024)*(cont.) | |
Subordinated | BBB |
Related Entities | |
Danske Bank A/S | |
Issuer Credit Rating | A+/Stable/A-1 |
Nordic Regional Scale | --/--/K-1 |
Resolution Counterparty Rating | AA-/--/A-1+ |
Certificate Of Deposit | |
Foreign Currency | A+/A-1 |
Commercial Paper | |
Foreign Currency | A+/A-1 |
Local Currency | A-1 |
Junior Subordinated | BB+ |
Senior Secured | AAA/Stable |
Senior Subordinated | BBB+ |
Senior Unsecured | A+ |
Senior Unsecured | A+/A-1 |
Short-Term Debt | A-1 |
Subordinated | BBB |
Danske Bank A/S, Swedish Branch | |
Issuer Credit Rating | A+/Stable/A-1 |
Danske Hypotek AB (publ) | |
Senior Secured | AAA/Stable |
Realkredit Danmark A/S | |
Senior Secured | AA/Stable |
Senior Secured | AAA/Stable |
Short-Term Secured Debt | A-1+ |
Domicile | Denmark |
*Unless otherwise noted, all ratings in this report are global scale ratings. S&P Global Ratings' credit ratings on the global scale are comparable across countries. S&P Global Ratings' credit ratings on a national scale are relative to obligors or obligations within that specific country. Issue and debt ratings could include debt guaranteed by another entity, and rated debt that an entity guarantees.
Additional Contact:
Insurance Ratings EMEA; Insurance_Mailbox_EMEA@spglobal.com
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Danske Bank A/S published this content on 03 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 June 2024 14:47:08 UTC.
