Topdanmark s Annual Results The Board of Directors of Topdanmark has today adopted the audited annual accounts for 2000.

Transcription

1 To the Copenhagen Stock Exchange Annual Results 2000 for Topdanmark The Board of Directors of Topdanmark has today adopted the audited annual accounts for Key features: In spite of reserve strengthening of DKK 490m following the hurricane in December 1999, Topdanmark recorded a DKK 1,005m post-tax profit for 2000 representing a 25.4% return on shareholders funds. (1999: DKK 163m loss). The DKK 92m build-up of equalisation provisions in the fourth quarter of 2000 had an adverse effect on the result. After adjusting for the hurricane claims, underlying operating profit increased 128% from DKK 679m to DKK 1,547m. The overall growth in non-life insurance premiums was 37.0%, 5.3% after adjusting for the take-over of the non-life insurance portfolio from Danske Bank. In life assurance premium income increased 5.7% reflecting a 9.2% increase in regular premiums and a 1.9% decline in single premiums. The expense ratio continued its recent years declining trend with a fall from 23.4% in 1999 to 22.1% in This contributed to the reduction in the combined ratio from 95.8% in 1999 to 94.9% in 2000, after adjusting for hurricane claims. On 1 January 2001 Topdanmark took over Industriens Arbejdsskadeforsikring. Topdanmark s ordinary share buy-back programme is expected to total DKK m in Including an extraordinary share buy-back from Danske Bank the overall share buy-back is expected to total DKK 800-1,000m in Subject to an annual 8.5% return on equities and stable foreign exchange and interest rates unchanged from the level on Topdanmark expects a post-tax profit of DKK m in Topdanmark s complete 2000 Annual Report is available on Please direct any queries to: Michael Pram Rasmussen, Chief Executive Officer, tel: Poul Almlund, Managing Director, tel: Steffen Heegaard, Communication and IR Manager, tel:

2 Page 2 of 21 Financial highlights DKKm EUR mio.** Key figures Premiums earned: Non-life insurance 3,398 3,735 3,984 4,178 5, Life assurance 989 1,299 1,978 1,979 2, ,387 5,034 5,962 6,157 7,815 1,047 Insurance Non-life insurance (550) Life assurance Total profit / (loss) on insurance (484) Parent company etc (6) Pre-tax profit on ordinary activities (361) Extraordinary items (1) 44 6 (64) 6 1 Taxation (8) (4) Profit / (loss) for the year (163) 1, Underlying operating profit , Exceptional / extraordinary items and goodwill (1) (1,104) (556) (74) Taxation (8) (4) Profit / (loss) for the year (163) 1, Shareholders' funds 2,917 3,338 4,127 3,580 4, Ratios Annual return on shareholders' funds (%) (4.1) Earnings per share (DKK)* (4) Net assets per share (DKK)* Share buy-back per share (DKK)* Share price at 31 December (DKK) Non-life insurance (%) Loss ratio Reinsurance ceded (21.6) (5.7) Expense ratio Combined ratio Non-life insurance excluding hurricane claims (%) Loss ratio Reinsurance ceded (2.9) (3.7) Expense ratio Combined ratio

3 Page 3 of Summary In spite of reserve strengthening of DKK 490m following the hurricane in December 1999, Topdanmark recorded a DKK 1,005m post-tax profit for 2000 (1999: DKK 163m loss) representing a 25.4% return on shareholders funds, which the Board of Directors considers to be satisfactory. In its interim report for January-September 2000 Topdanmark announced it was contemplating transferring DKK m to the equalisation provisions in the fourth quarter of Subsequently DKK 92m was transferred. After adjusting for the build-up of equalisation provisions in the fourth quarter the profit was DKK 1,097m, which should be viewed in the light of Management s forecast of DKK m in the 1999 annual report and the following two upgraded forecasts, first in the half-yearly announcement and most recently the DKK 1,000-1,050m, with no transfer to the equalisation provisions, forecasted in the interim report for January-September Trend in results DKKm Non-life insurance RealDanmark Danske Bank Life assurance Parent company etc. (6) Underlying operating profit ,547 Hurricane claims 0 (1,040) (490) Goodwill amortisation and exceptional / extraordinary items 269 (64) (66) Taxation Profit / (loss) for the year 906 (163) 1,005

4 Page 4 of 21 The upgrade from the original forecast of DKK m was, to a great extent, the affect of a gain on the merger between Danske Bank and RealDanmark and a general increase in investment income. After adjusting for DKK 490m of hurricane expenses, underlying operating profit increased DKK 868m or 128% from DKK 679m in 1999 to DKK 1,547m in DKK 621m of this increase was an improvement in investment income, of which DKK 423m came from a gain on the merger between Danske Bank and RealDanmark and DKK 198m related to an improvement in investment income after the transfer to the technical result. The remaining DKK 247m increase reflected general operational improvements. Shareholders funds increased by DKK 663m to DKK 4,243m being the DKK 1,005m profit for the year and a reduction of DKK 342m following the share buy-back. Effect of the merger between Danske Bank and RealDanmark In the fourth quarter of 2000 Danske Bank and RealDanmark merged as a result of a share exchange offer made by Danske Bank to RealDanmark s shareholders. With this merger Topdanmark s two largest distribution partners, Danske Bank and BG Bank, joined forces. Danske Bank s and BG Bank s separate brand identities are being maintained. Topdanmark will continue to sell non-life insurance through the two bank channels under the brands of Danske Forsikring and BG Skade. However, in life assurance Danske Bank exercised its right to buy back BG Pension from Topdanmark. The merger between Danske Bank and RealDanmark provided Topdanmark with a significant financial gain that has been reflected in its results. Prior to the merger Topdanmark had a 5% stake in RealDanmark recorded at a net asset value DKK 512m higher than the market value. As a result of the share exchange offer the market value of Topdanmark s shareholding in RealDanmark / Danske Bank increased DKK 935m, of which DKK 423m was reflected in the accounts in It has been agreed that the business relationship with Danske Bank will continue unchanged, i.e. distribution only with no cross-holding arrangements. Consequently, Topdanmark intends to buy back 10% of its share capital from Danske Bank during 2001 to reduce Danske Bank s stake in Topdanmark to less than 10%.

5 Page 5 of 21 Acquisition of Industriens Arbejdsskadeforsikring and distribution agreements with DLG and Nykredit Topdanmark s development strategy is based upon organic growth, growth through alliance partners and acquisitions. As part of this strategy, Topdanmark acquired the Danish industrial workers compensation insurance company, Industriens Arbejdsskadeforsikring, on 1 January 2001, with a payment for goodwill of DKK 68m. It has business relationships with about 2,900 commercial and industrial enterprises. Industriens Arbejdsskadeforsikring had premium income of DKK 145m in 2000, equivalent to 3% of Topdanmark s premium income in non-life insurance. Already in 2001 the acquisition of Industriens Arbejdsskadeforsikring is expected to contribute positively to Topdanmark s results. To improve its distribution efficiency Topdanmark has made distribution agreements with Denmark s largest supplier of foodstuffs, DLG (Danish Cooperative Farm Supply) and Denmark s second largest mortgage credit institution, Nykredit. Non-life insurance Non-life insurance activities generated a DKK 866m profit in 2000 (1999: DKK 550m loss due to hurricane losses of DKK 1,040m). The result from non-life insurance was affected by two opposing factors in On the one hand there were strengthened hurricane reserves of DKK 490m. Topdanmark now believes that the hurricane reserves are sufficient, as no further strengthening has been required since the third quarter of On the other hand there was a DKK 695m increase in investment income after the transfer to technical result of which DKK 423m was a gain on the merger between Danske Bank and RealDanmark. The result for 2000 was affected by a build-up of the equalisation provisions of DKK 51m. In the accounts for the period January-September 2000 DKK 41m of the equalisation provisions had been utilised. In the fourth quarter, this amount was reversed and an additional DKK 51m was credited so the total increase in the equalisation provisions had a DKK 92m adverse impact on the fourth quarter s results. In 1999 DKK 30m of the equalisation provisions was used. The build-up of equalisation provisions in 2000 was due to Topdanmark s wish, after having increased its reinsurance ceiling on storm, to trim the increase in future reinsurance expenses by having a larger retention on storm claims.

6 Page 6 of 21 Financial highlights - Non-life insurance DKKm Technical result (excl. hurricane) Hurricane expenses on own account 0 (1,040) (490) Technical result 260 (709) 84 Investment income Goodwill amortisation 0 0 (72) Profit / (loss) on non-life insurance 698 (550) 866 Technical provisions on own account 3,740 7,446 6,229 Non-life insurance (%) Loss ratio Reinsurance ceded 1.1 (21.6) (5.7) Expense ratio Combined ratio Non-life insurance excluding hurricane claims (%) Loss ratio Reinsurance ceded 1.1 (2.9) (3.7) Expense ratio Combined ratio

7 Page 7 of 21 The claim payments relating to the 1999 hurricane turned out to be seven times greater than those seen so far in Denmark. Topdanmark believes that the hurricane set a completely new level for the size of potential claim payments relating to storm. Therefore since December 1999 Topdanmark increased its reinsurance ceiling in Topdanmark Forsikring from DKK 800m to DKK 3bn until August There is a further DKK 300m reinsurance ceiling for the non-life insurance portfolio taken over from Danske Bank. The additional cost of the increased reinsurance programme in 2000 was DKK 47m. After the expiry of the base cover in August 2001 reinsurance expenses are expected to increase further. Gross premiums in non-life insurance increased 37.0% from DKK 4,178m in 1999 to DKK 5,724m in Most of the increase came from the take-over of Danske Bank s non-life insurance activities which, on the acquisition at the end of December 1999, increased premium income by 31.7%. After adjusting for the portfolio taken over from Danske Bank premium income increased 5.3%, which was higher than the general market increase. Accordingly the market share of just over 18% in 1999 (including Danske Forsikring) further improved in The market for health insurance and insurance against critical illness (illness / accident insurance) has grown in recent years as a result of the Danish population s general discontent with the level of service provided by the Danish public health authorities. Premium income from illness / accident increased 25.2% to DKK 154m in It is Topdanmark s opinion that the level of premiums should reflect the future insurance risk. Consequently shareholders have had to pay a total of DKK 1,530m for the hurricane claims. However, it is Topdanmark s policy that the additional expense of the increase in reinsurance cover should primarily be paid for by customers through premium increases on those policies which bear the increased risk. Due to its competitive expense ratio and consequently low combined ratio Topdanmark, unlike a number of other market players, has had no need to notify customers of general increases in premium rates.

8 Page 8 of 21 However, for agricultural policies relating to damage to buildings, it has decided to raise premiums to cover the increase in reinsurance expenses. The premium increase for an average farm corresponds to a 3-4% increase in overall insurance expenses and will be implemented in line with the expiry of the typical five-year insurance agreements. Furthermore, as a result of an unsatisfactory claims trend in accident insurance in recent years, Topdanmark will implement an exceptional increase in premium rates on these policies. In spite of these modest increases in premium rates Topdanmark still expects organic growth in 2001 in line with or higher than the market. After adjusting for the hurricane the gross loss ratio of the Topdanmark Group increased from 75.3% in 1999 to 76.5% in 2000 as a result of the increase in claim payments following a storm in January 2000 and several large claims particularly in the third quarter. Including the effect of the strengthened reserves relating to the 1999 hurricane the gross loss ratio was 87.0% in The reinsurance programme covered most of the claims paid on the January 2000 storm. Therefore, after adjusting for the hurricane, the net result from reinsurance was a profit representing 3.7% of gross premium income. The sum of the loss ratio and reinsurance ratio reflects the overall claims trend. In 2000 Topdanmark s overall claim payments represented 72.8% of gross premium income after excluding the hurricane claims (1999: 72.4%). This adjusted claims trend was extremely good in both 1999 and The expense ratio was reduced from 23.4% in 1999 to 22.1% in 2000, primarily the result of economies of scale derived from the acquisition of Danske Bank s non-life insurance activities. Expenses on claims, reinsurance, sales and administration as a percentage of gross premium income (combined ratio) declined from 95.8% in 1999 to 94.9% in Including the reserve strengthening the combined ratio was 103.4% in The technical result increased from a DKK 709m loss in 1999 to a DKK 84m profit in However, after adjusting for hurricane claims and the build-up of equalisation provisions, the technical result increased from DKK 301m in 1999 to DKK 625m in This improvement was due to a better combined ratio, a higher technical interest rate and an increase in business volume following the take-over of Danske Forsikring.

9 Page 9 of 21 Life assurance In 2000 the life assurance business recorded a profit of DKK 70m after charges to the bonus equalisation provisions of DKK 619m (1999: DKK 66m profit; DKK 943m charges). Gross premiums in life assurance increased 5.7% to DKK 2,091m in 2000 reflecting a 9.2% increase in regular premiums but a 1.9% decline in single premiums. The growth in regular premiums came from a significant 16.7% growth in corporate pensions, a 4.3% growth in individual schemes and a 6.1% growth in group life schemes. The decline in single premiums in 2000 was due to the taxation uncertainty requiring Topdanmark to pursue a cautious policy regarding customers bonus rate as well as only a few very large single premium schemes being written in The uncertainty about taxation arose following the Danish Parliament s adoption of the government s so-called Whitsun-package in 1998 which tightened taxation on the return on pensions. This, combined with falling interest rates created ambiguity over who would be responsible for paying out guaranteed pension benefits should the life assurance company have difficulties paying them. As a consequence Topdanmark reduced its bonus rate to 4.5% after real interest rate duty / pension return tax in both 1999 and With effect from 1 January 2001 the act on pension return tax was amended so that all types of return on pension investments are now taxed at 15%. In 2000 the act set out differentiated tax rates with a 26% rate on return on bonds and properties, but only 5% on equities. Topdanmark is favourably disposed to this amendment, but it still did not change the issue of responsibility in the case of life assurance companies not being able to pay the guaranteed pension benefits due to the tightened taxation. However, the risk has been significantly reduced for those companies with investment assets primarily in bonds and properties. As the portfolio in the life assurance business is predominantly in bonds and properties, the amendment improved Topdanmark s competitiveness.

10 Page 10 of 21 Following the amendment the Danish Financial Supervisory Authority reduced its requirements for additional provisions by raising the maximum actuarial basis for calculation of the provisions to 4.25% in December Due to this, combined with a satisfactory return on investments in 2000, Topdanmark s bonus reserves were significantly strengthened. Accordingly the bonus reserves as a percentage of the life assurance provisions (i.e. customers total savings) increased from 9.8% in 1999 to 15.0% at the end of 2000 in Topdanmark Livsforsikring. In the light of this Topdanmark set its post-tax bonus rate for 2001 at 8.5% for corporate customers and 8.3% for personal customers giving it a competitive edge. In the autumn of 2000 Topdanmark launched a project to develop unit-linked pension schemes, which are expected to be introduced during the second half of 2001 on the basis of anticipated growth in this market sector in coming years. Parent company etc. Profit in the parent company etc. declined from DKK 123m to DKK 49m in 2000 due to lower gains on equities as well as reduced liquidity due to, among other things, the share buy-back. Investment Profit on investment activities in the Topdanmark Group, excluding Topdanmark Livsforsikring, before the transfer to technical result was DKK 1,283m in 2000 as compared with DKK 461m in Rises in the share price of the holding in Danske Bank were reflected in the profit in 2000, contributing DKK 423m alone. Additionally investments in both Danish and foreign equities generated an excellent result this year, while the return on interest bearing investment assets was in line with expectations. Furthermore, there was an increase in the return on investments due to a significantly greater volume of business and significantly higher technical reserves. The return on investment assets excluding affiliated and associated companies was 17.9% after management expenses. This excellent result was to a considerable extent due to the gain on the investment in Danske Bank in the fourth quarter.

11 Page 11 of 21 The market value of interest bearing investment assets owned by the Group excluding life assurance was DKK 4,978m at 31 December 2000, equivalent to 67% of total investment assets. The limit of the interest rate exposure has been fixed at DKK 70m after taxation and that of foreign exchange exposure at DKK 3.9m per day after taxation. At 31 December 2000 the actual interest rate exposure was DKK 59m and the foreign exchange exposure DKK 1.6m per day after taxation. At the end of 2000 total equity investments of DKK 3,600m comprised primarily the investments in Danske Bank (DKK 1,691m) and Topdanmark Livsforsikring (DKK 1,119m). The value of non-consolidated subsidiaries and associated companies was DKK 278m, while other equities had a value of DKK 512m. In addition the effect of financial instruments contributed to an exposure in equities of DKK 75m at 31 December Taxation In 2000, Topdanmark included in income a tax asset of DKK 14m (1999: DKK 262m) arising from much of the Group s return on investments being gains on equities not liable to tax. Topdanmark s share capital In the programme for 2000 Topdanmark bought back 2,328,116 own shares, equivalent to DKK 344m. These shares have been cancelled or will be cancelled. Movement in share capital Number of shares at 31 December ,808,200 Cancellation (2,567,820) Number of shares after expiry of time limit set out in a notice to creditors 36,240,380 Cancellation (402,365) Number of shares after expiry of time limit set out in a notice to creditors 35,838,015 Cancellation (937,430) Number of shares after expiry of time limit set out in a notice to creditors 34,900,585 Cancellation (1,039,066) Number of shares after expiry of time limit set out in a notice to creditors 33,861,519 Cancellation (2,314,790) Number of shares after expiry of time limit set out in a notice to creditors 31,546,729

12 Page 12 of 21 Topdanmark plans an extraordinary share buy-back of up to 10% of the share capital from Danske Bank during 2001 to reduce Danske Bank s stake in Topdanmark to less than 10%. Furthermore, it intends to make an ordinary share buy-back of DKK m in the market. Accordingly, the overall share buy-back in 2001 is expected to total DKK 800-1,000m. It is anticipated that in coming years the level of ordinary share buy-backs will be higher that the said DKK Following the cancellation of the cross-holding agreements with Eureko B.V. and RealDanmark in 2000 all of Topdanmark s shares are now freely tradeable. Prospects 2000 was affected by a small number of events that had a huge impact on the result. On the one hand the hurricane claim payments transpired to be much higher than estimated in the 1999 accounts having had an adverse impact of DKK 490m on the result for On the other hand the result benefited by a DKK 423m gain following the merger between Danske Bank and RealDanmark. Furthermore, other investment income significantly exceeded the forecast. It is assumed that the result for 2001 will not be affected by such major events. Excluding the run-off loss on the hurricane, underlying operating profit was extremely good in It is expected to decline to a lower, but continued satisfactory level into 2001 but without the unusually high investment income which affected the 2000 result. Premium income in non-life insurance increased 37.0% in 2000 of which 31.7% came from the take-over of Danske Bank s non-life insurance activities, while 5.3% was organic growth. Overall premium income in non-life insurance was DKK 5,724m. Besides ordinary organic growth premium income will be affected by two factors in 2001: Danske Bank has exercised its right to buy back BG Pension and consequently the non-life insurance element of illness / accident insurance which had premium income of DKK 87m in 2000, will be discontinued. On the other hand Topdanmark took over Industriens Arbejdsskadeforsikring on 1 January 2001 which had premium income of DKK 145m in 2000.

13 Page 13 of 21 In spite of several of Topdanmark s competitors having made exceptional increases in premium rates and Topdanmark having only raised premiums in accident insurance and on agricultural building policies, organic growth is still expected to be in line with or higher than the market in As stated above, 2000 was affected by a run-off loss of DKK 490m. Furthermore, a storm at the end of January and a number of large fires, which, however, were partially covered by reinsurance, also affected the 2000 claims trend. After adjusting for the hurricane loss the claims trend (loss ratio plus net reinsurance ratio) was 72.8%. Due to an increase in reinsurance expenses in 2001 and the assumption that the level of claims in 2001 will not reach quite the same level as in 2000, the claims trend is expected to be approximately 74% in Following the purchase of Danske Bank s non-life insurance activities the expense ratio declined from 23.4% in 1999 to 22.1% in The purchase of Industriens Arbejdsskadeforsikring will have an immediate favourable effect of 0.3 percentage points on the expense ratio. However, the sale of BG Pension and the investments in ebusiness and branding will have an adverse effect. Overall, the expense ratio is expected to be around 22% in 2001 and the combined ratio around 96%. Given that the last of the hurricane claims will be fully paid out soon and therefore the claims reserves significantly reduced during the year, the 2001 investment return of the non-life insurance business will be affected. Furthermore, the dividend of DKK 650m will be paid to the parent company Topdanmark on 1 May It is expected that the level of interest rates will be slightly higher in 2001 than in At the same time it is assumed that the investment return, which in 2000 was affected by large equity gains on both the ordinary investment portfolio and the investment in Danske Bank, will be normalised in It is a budgetary assumption that the investments in both the ordinary equity portfolio and Danske Bank will generate an annual 8.5% return representing a DKK 144m return on the investment in Danske Bank, based upon a Danske Bank s share price of DKK at 31 December A price fluctuation of 1 price point per Danske Bank share will impact about DKK 12m on Topdanmark s result.

14 Page 14 of 21 The transfer of BG Pension to Danske Bank more than halves premium income in the life assurance group, but profit is only affected in non-life insurance because this business sector takes the share of the profit on illness / accident insurance which equates to less than DKK 10m annually. The profit on life assurance is determined by the customers bonus rate, as the return on shareholders funds is equivalent to the customers bonus rate plus three percentage points. Accordingly, in 2001 the return on shareholders funds is expected to be 11.5% corresponding to DKK m. In the parent company the share buy-back will be exceptionally large in 2001 as an ordinary buy-back of DKK m will be supplemented by a share buy-back of up to 10% of own shares from Danske Bank. As the value of the share buy-back will exceed the dividend of DKK 650m from Topdanmark Forsikring, the reduced liquidity will have an adverse impact on investment income. This, together with an expected unchanged level of expenditure, will cause the parent company to suffer a loss of DKK 30-40m. The overall underlying operating profit is expected to be DKK m in 2001 (2000: DKK 1,547m). This decline is almost entirely due to the assumption of investment income being lower than the exceptionally high return of Unlike 2000, 2001 is not expected to be affected by extraordinary / exceptional items. However, the goodwill amortisation will increase to DKK 79m as a result of the take-over of Industriens Arbejdsskadeforsikring for which goodwill of DKK 68m was paid. This goodwill is expected to be amortised over ten years in the same way as the payment of goodwill relating to the take-over of Danske Bank s non-life insurance activities. In 2000 Topdanmark included in income a tax asset of DKK 14m primarily because a significant portion of the investment return was not liable to tax. At the end of 2000 the tax asset in the parent company amounted to DKK 490m which will be available for offset against the taxable profits within the Group. A tax charge of DKK m is expected for As neither the payment of goodwill nor the tax payment in 2001 requires liquidity, the operating cash flow will correspond to the profit before goodwill and taxation of DKK m. Subject to an annual 8.5% return on equities and stable foreign exchange and interest rates unchanged from the level on Topdanmark expects a post-tax profit of DKK m after goodwill in 2001, representing a return of % on shareholders funds.

15 Page 15 of 21 Profit forecast for 2001 DKKm Non-life insurance Danske Bank / RealDanmark Life assurance Parent company etc (40) - (30) Underlying operating profit 679 1, Exceptional / extraordinary items (1,104) (484) 0-0 Goodwill amortisation 0 (72) (79) - (79) Taxation (85) - (105) Profit / (loss) for the year (163) 1, Proposals for the Annual General Meeting In order to observe the principles of good Corporate Governance the Board of Directors will propose a number of amendments to the Articles of Association at the Annual General Meeting on 1 May These will remove the limitations set out in the Articles of Association. The key features are: to remove the limitations on voting rights so that all decisions made at the general meeting will be based on the principle of one vote per share; to remove the voting ceiling of 25% altogether; to remove the Representative Assembly s election of four Board members. In the future all eight external Board members will be elected directly at the general meeting; and to reduce the term of office for Board members from three years to one. Furthermore, the Board of directors will recommend to the Annual General Meeting a reduction in share capital by cancellation of the number of shares bought back since the most recent reduction in share capital decided at the extraordinary general meeting on 30 January 2001.

16 Page 16 of 21 The Board of Directors will propose to the general meeting to appropriate the profit for 2000 as follows: Appropriation of the result DKKm 2000 Reserve for own shares 114 Profit carried forward 768 Transferred to net revaluation reserve at net asset value 123 Profit for the year 1,005 The Annual General Meeting will be held on Tuesday 1 May 2001 at 2 pm at: Scanticon Comwell Kolding Skovbrynet Kolding Denmark Accounting policies Topdanmark s accounts have been prepared in accordance with the Danish Insurance Act, including the orders issued by the Danish Financial Supervisory Authority on the preparation of consolidated accounts and annual accounts for insurance companies. The parent company s accounting policies follow those applied by the Group. There have been no changes in accounting policies from those adopted in the 1999 annual accounts. Appendix Five pages accounts Financial Calendar 2001 Annual General Meeting: 1 May Announcement of results for the first three months of 2001: 29 May Announcement of results for the first half of 2001: 21 August Announcement of results for the first nine months of 2001: 27 November

17 Page 17 of 21 Profit and loss account Group Parent Company DKKm NON-LIFE INSURANCE Premiums earned Gross premiums written 4,220 5, Outward reinsurance premiums (375) (462) 0 0 Change in the provision for unearned premiums, gross (30) (74) 0 0 Change in reinsurers' share of the provision for unearned premiums Premiums earned on own account 3,821 5, Technical interest on own account Claims incurred Gross claims paid (2,845) (6,058) 0 0 Reinsurance cover received 277 1, Change in the provisions for claims, gross (2,145) 1, Change in reinsurers' share of the provision for claims 942 (823) 0 0 Claims incurred on own account (3,771) (4,254) 0 0 Change in other technical provisions on own account (9) (1) 0 0 Bonuses and rebates (12) (9) 0 0 Operating expenses Acquisition costs (401) (492) 0 0 Administrative expenses (574) (775) 0 0 Reinsurance commission and share of profits Total operating expenses on own account (924) (1,211) 0 0 Change in the equalisation provision 30 (51) 0 0 Technical profit / (loss) on non-life insurance (709)

18 Page 18 of 21 LIFE ASSURANCE Premiums Gross premiums written 1,979 2, Outward reinsurance premiums (81) (2) 0 0 Premiums on own account 1,898 2, Allocated investment income on own account 1,166 1, Claims paid Claims paid (929) (1,147) 0 0 Reinsurance cover received Change in the provisions for claims 1 (12) 0 0 Claims paid on own account (906) (1,145) 0 0 Change in the life assurance provisions Change in the life assurance provisions, gross (1,083) (1,264) 0 0 Change in reinsurers' share of life assurance provisions 60 (8) 0 0 Change in the life assurance provisions on own account (1,023) (1,272) 0 0 Bonus Change in the bonus equalisation provision (943) (619) 0 0 Operating expenses Acquisition costs (83) (83) 0 0 Administrative expenses (86) (93) 0 0 Total operating expenses on own account (169) (176) 0 0 Technical profit / (loss) on life assurance

19 Page 19 of 21 Profit and loss account Group Parent Company DKKm Technical profit/(loss) on non-life insurance (709) Technical profit/(loss) on life assurance NON-TECHNICAL ACTIVITIES Income from investment assets Income from affiliated companies (12) 1 (463) 962 Income from associated companies Income from land and buildings Interest, dividends etc , Realised gains on investment assets Total income from investment assets 1,164 2,207 (410) 1,040 Unrealised gains on investment assets Investment charges Administrative expenses (23) (34) (2) (3) Interest charges (51) (87) (7) (44) Realised losses on investment assets (20) Total investment charges (94) (121) (9) (47) Exchange rate adjustments (79) (88) 4 (15) Pension return tax (31) (51) 0 0 Total investment income 1,739 2,684 (343) 1,002 Technical interest transferred to non-life insurance business (186) (387) 0 0 Investment income transferred to life assurance business (1,166) (1,289) 0 0 Other ordinary income Other ordinary expenses (2) (3) 0 0 Expenses in parent company (18) (17) (18) (17) Pre-tax profit / (loss) on ordinary activities before goodwill amortisation (317) 1,239 (361) 985 Goodwill amortisation 0 (72) 0 0 Pre-tax profit / (loss) on ordinary activities (317) 1,167 (361) 985 Extraordinary income Extraordinary expenses (69) (1) (69) (1) Pre-tax profit/(loss) (381) 1,173 (425) 991 Taxation 218 (168) Profit / (loss) for the year (163) 1,005 (163) 1,005

20 Page 20 of 21 Balance sheet - Assets Group Parent Company DKKm Intangible assets Investment assets Land and buildings 2,247 2, Investment in affiliated and associated companies Shares in affiliated companies ,824 3,035 Shares in associated companies 1, Loans to associated companies Total investment in affiliated and associated companies 1, ,000 3,035 Other financial investment assets Equities 4,107 6, Unit trusts Bonds at market value 6,543 5, Bonds valued at acquisition cost incl. gains to maturity 8,852 10, Loans guaranteed by mortgages at market value Loans guaranteed by mortgages at acquisition cost incl. gains to maturity Other loans Deposits with credit institutions Financial instruments Total other financial investment assets 20,563 23, Deposits with ceding undertakings Total investment assets 24,228 26,111 3,372 3,251 Debtors Amounts due from policyholders Amounts due from insurance companies Amounts due from affiliated companies ,189 Amounts due from associated companies Other debtors Total debtors 1,006 1, ,189 Other assets Equipment, IT systems, vehicles etc Cash at bank and in hand Own shares Tax asset Other Total other assets 1,033 1, Prepayments and accrued income Accrued interest and rent Other prepayments and accrued income Total prepayments and accrued income Total assets 27,327 29,345 4,338 5,193

21 Page 21 of 21 Balance sheet - Liabilities Group Parent Company DKKm Shareholders' funds Share capital Share premium account 1, , Reserves Reserve for own shares Net revaluation reserve at net asset value Total reserves Profit carried forward 1,983 2,943 1,983 2,943 Total shareholders' funds 3,580 4,243 3,580 4,243 Subordinated capital Technical provisions Provision for unearned premiums Gross provision 1,671 1, Reinsurers' share (83) (90) 0 0 Provision for unearned premiums on own account 1,588 1, Life assurance provisions Gross provision 13,521 14, Reinsurers' share (194) (187) 0 0 Life assurance provisions on own account 13,327 14, Provision for claims Gross provisions 7,073 4, Reinsurers' share (1,413) (587) 0 0 Provision for claims on own account 5,660 4, Provision for bonuses and rebates Equalisation provision Bonus equalisation provision 1,121 1, Other technical provisions Total technical provisions on own account 21,913 22, Provision for other risks and expenses Deferred pension return tax Provision for pension schemes and similar commitments Provision for tax Other provisions Total provisions for other risks and expenses Deposits received from reinsurers Creditors Creditors arising out of direct insurance operations Creditors arising out of reinsurance operations Amounts due to credit institutions 556 1, Amounts due to affiliated companies Amounts due to associated companies Financial instruments Corporation tax Other creditors Total creditors 1,428 2, Accruals and deferred income Total liabilities 27,327 29,345 4,338 5,193