Economic depression hits Apna

September 18, 2008 7:46 AM

The General Pension Fund of the Netherlands Antilles (Apna) has booked a negative result of 8.4 percent on foreign investments in the first half of 2008. Apna obviously did not remain unaffected by the current international economic depression.

According to Apna, the negative international result is directly attributed to disappointing European investments, the credit crisis that American and European institutions are coping with and the stagnated economies due to high inflation of those two continents.
Apna that was forever popular as one of the better institutional investors of the Antilles reports that in comparison to the same period, NASDAQ booked a negative result of 13.5 percent, while S&P 500 didn’t score much better with a negative result of 12.8 percent. Not to mention the MSCI Euro which had a negative result of 23.2 percent in the first half of 2008.
BNA-block
Apna’s domestic returns was not as bad, even though it remained stuck on 3 percent, while according to the objectives, the fund is supposed to fulfill a minimum return of 4 percent. Considering the quantitative relation between the domestic and the foreign investments, the Apna has booked a total return of 1.9 percent in the first half year.
The total invested capital is 3570 billion guilders: 2165 billion guilders local and 1405 billion abroad. A marginal note on this is that if this 60/40-percent ratio which the Bank of the Netherlands Antilles (BNA) imposes was different – with more capital in foreign investments, like many financial institutions would have liked – it would have been even worse for the Apna.

In the meantime Apna’s cover factor keeps on eroding. At the end of 2005 this indiciation for the measure in which the fund can live up to its current and future legal pension obligations, was 103.2 percent, per the end of June 2008 it was only 101 percent. The Apna was striving for a cover factor of 105 percent. Eventhough there are no hard rules for this, internationally a cover factor of between the 105 and 110 percent is considered ‘healthy’.
In comparison: the cover factor of Apna’s biggest role model, the ABP in the Netherlands, rose to 140 percent in 2007. This means that for every 100 euro the ABP has to pay out in pensions, they have 140 euros in cash. The ABP-asset grew to 217 billion euros – about 158 times the asset amount of Apna.

The governments continue to owe the Apna billions of guilders; the total debt of the governments per the end of June of this year, amounted to 1533 billion guilders, or 39 percent of Apna’s pension capital which was 3949 billion guilders on that date.
Obligations and loans, also loans to third parties under government guarantee, payment arrears of pension premiums, and cost-of-living allowance (pension indexation) that the government still has to pay to Apna, and VUT-payments are all part of the government’s debt.
Apna has all along been pre-financing the cost-of-living allowance and the VUT, which means that the debt continues to grow. As already known, Apna’s income is from her investment results for capital levy and definitely not from payment discipline of the Antillean or other island governments.

(Source: National Newspaper Amigoe)

16 September, 2008

Remarks on Apna-figures

The figures that the Amigoe published yesterday of the General Pension Fund of the Neth.Antilles (Apna), appear to need some enhancing.
The 3 percent domestic return is for the first half of the current year. There is in this case no ‘constant value’ that is ‘unrelated’ to the period it was considered: this figure is indeed sensitive to the duration of the period. This 3 percent on half-year basis would become 6 percent on annual basis – which does exceed the annual minimum return of 4 percent that the Apna must aim for.
This means that the domestic return is sound. And even if the restraining BNA-policy regarding the capital-division on domestic and foreign investments has prevented the foreign result from being worse, the local market is in fact too small for the Apna with her milliards. Apna can only invest in a limited number of projects locally. That is always more risky than investing more diversified.

Another detail is that the ABP is using the market interest to calculate her degree of covering, while the Apna is still holding on to arithmetic interest. Other than that because of this the degree of covering of the ABP can intensively fluctuate, a straightforward comparison with the Apna is perhaps ‘indicative’, but definitely not ‘accurate’.

An annoying error has crept in yesterday in the article. By omitting the decimal comma, all the amounts became 1000 times higher. Apna’s invested capital per June 30 was 3.570 milliard guilders – or 3570 million guilders – and not 3570 milliard guilders. The local capital was 2.165 milliard guilders (and not 2165 milliards); the foreign capital was 1.405 milliard guilders (instead of 1405 milliards). The governments owe the Apna 1.533 milliard guilders (not 1533 milliards) and the pension capital on June 30, 2008 was 3.949 milliard guilders and not 3949 milliards.

(Source: National Newspaper Amigoe)

17 September, 2008