Topdanmark s Annual Results 1998

Transcription

1 23 March 1999 To the Copenhagen Stock Exchange Annual Results 1998 for Topdanmark The Board of Directors of Topdanmark has today adopted the audited annual accounts for Key features: Topdanmark had an excellent year in 1998 with an improvement in the posttax result from DKK 411m in 1997 to DKK 906m in After adjusting for exceptional / extraordinary items and taxation the underlying operating profit was DKK 508m in 1998 (1997: DKK 371m) representing a 37% increase and a 13.6% return on shareholders funds. During the year Topdanmark enjoyed a growth in premiums of 6.7% in nonlife insurance 15.1% in life assurance and pensions, 15.4% of which was in regular premiums. With this growth Topdanmark enhanced its position in the Danish insurance market. Primarily as a result of an extraordinarily favourable claims trend, the combined ratio of the Topdanmark Group declined from 100.0% in 1997 to 95.1% in For the 1998 financial year the Board of Directors will recommend to the Annual General Meeting a distribution of DKK 250m representing 28% of the profit for the year. The distribution is intended to be in the form of a share buy-back. It is expected that the 1999 result will not be affected by exceptional or extraordinary items or the creation of a further tax asset. Subject to an annual 7% return on equities and stable foreign exchange and interest rates, unchanged from the level as at 23 March 1999, the 1999 pre-tax result is expected to be DKK m. This should be compared with DKK 508m of underlying operating profit in The post-tax result for 1999 is expected to be DKK m. This announcement and Topdanmark s 1998 Annual Report are available on Topdanmark s IR page on its Internet address: Please direct any queries to: Michael Pram Rasmussen, Chief Executive Officer, phone Poul Almlund, Managing Director, phone Steffen Heegaard, Communication and IR Manager, phone

2 23 March 1999 Page 2 of 19 Topdanmark Group Financial highlights DKKm Key figures Premiums earned: Non-life insurance 3,984 3,735 3,398 3,064 2,867 Life assurance 1,986 1, , ,970 5,040 4,393 4,069 3,444 Insurance Topdanmark Forsikring excl. life Topdanmark Livsforsikring Other companies (6) 4 Total profit on insurance Other activities 9 11 (12) (68) (379) Parent company (15) (110) (213) Pre-tax profit (457) Taxation 129 (4) (8) 0 4 Profit for the year (453) Underlying operating profit (441) Exceptional / extraordinary items (1) (104) (16) Taxation 129 (4) (8) 0 4 Profit for the year (453) Shareholders' funds 4,127 3,338 2,917 2,645 2,252 Ratios Return on shareholders' funds (%) (19) Earnings per share (DKK) * (157) Net assets per share (DKK) * 1, Distribution per share (DKK) * ** Share price at 31 Deember (DKK) 1,255 1, * Net of shares bought back ** In the form of share buy-back Non-life insurance Loss ratio (%) Expense ratio (%) Reinsurance ceded (%) Combined ratio (%)

3 23 March 1999 Page 3 of Summary Topdanmark had an excellent year in A significant improvement in the result was combined with an improvement of Topdanmark s position in the Danish insurance market. The post-tax result increased from DKK 411m in 1997 to DKK 906m in After adjusting for exceptional / extraordinary items and taxation totalling DKK 398m, the underlying operating result increased 37% from DKK 371m in 1997 to DKK 508m in This reflects a 13.6% return on shareholders funds which is considered to be satisfactory taking Topdanmark s risk profile into account. The profit for the year surpasses Topdanmark s own forecast of underlying operating profit for 1998 which was upgraded to DKK m in the1998 half-yearly announcement. Trend in results DKKm Underlying operating profit Exceptional / extraordinary items Taxation 129 (4) Profit for the year The improvement in the underlying operating result was achieved in spite of continued strengthening of the equalisation provisions. In 1998 DKK 78m was transferred to the equalisation provisions in Topdanmark Forsikring and Topdanmark Arbejdsskadeforsikring (Workers Compensation Insurance) against DKK 40m in Investment income was lower as a consequence of the general decline in interest rates in The overall improvement came from better results in the Group s core business of non-life insurance, life assurance and pension fund business. It was particularly gratifying that the technical result of the non-life insurance business increased by DKK 165m in 1998 and by a total of DKK 203m after adjusting for equalisation provisions. The improvement in the result was achieved concurrently with the growth in premiums for both non-life insurance (6.7%) and life assurance and pension fund business (15.1%). The growth in premiums in non-life insurance as well regular premiums in life assurance and pensions fund business (15.4%) exceeded the general growth in the market in However, the rates of increase were lower in 1998 than in 1997 and reflect the intensified competition in the Danish insurance market.

4 Page 4 of 19 The result from exceptional / extraordinary items increased from DKK 44m in 1997 to DKK 269m in 1998 primarily from an exceptional gain of DKK 262m on the establishment of Kapital Holding, the result of the merger between BG Bank and Realkredit Danmark. An overall tax credit of DKK 129m was included as income in 1998 against a tax payment of DKK 4m in This was due to the so-called Whitsunpackage which stipulated that insurance companies are liable to pay tax on all types of income. As a result of this law reform, Topdanmark s tax losses and other tax assets, which were previously valued at nil, were now given a value. Shareholders funds increased from DKK 3,338m to DKK 4,127m in 1998, corresponding to the result for the year net of a write-down of DKK 118m following a share buy-back in Non-life insurance activities In 1998 the non-life insurance activities comprised Topdanmark Forsikring, Topdanmark Arbejdsskadeforsikring and the health and accident insurance business in the life assurance group. Topdanmark Forsikring recorded a profit in 1998 of DKK 759m (1997: DKK 309m) to which the subsidiary Topdanmark Livsforsikring contributed DKK 87m (1997: DKK 50m). The result achieved by Topdanmark Forsikring represented a 27.2% return on shareholders funds. The profit uplift came from a DKK 178m increase in the technical result and an exceptional gain of DKK 262m on the establishment of Kapital Holding. Gross premium income in non-life insurance in the Topdanmark Group increased 6.7% from DKK 3,735m in 1997 to DKK 3,984m in In the nonlife insurance company Topdanmark Forsikring premium income increased 5.2% from DKK 3,510m to DKK 3,694m. It was gratifying that premium income for policies written through BG Bank continued to grow, with the 1998 improvement representing 0.8 percentage points of the 5.2% overall increase. However, the rate of growth in 1998 was lower than in 1997 partly as a result of there being no extraordinary premium increases in 1998 and partly intensified competition. After adjusting for the automatic indexation of premiums growth was just over 2% in 1998 reflecting continued positive real growth and improvement on 1997 s market share of 13.5%. In the second half of the year competition intensified with, for example, the establishment of two new insurance companies. It is considered that this is contributing to increasing competition in the non-life market and that it is therefore unlikely that there will be any extraordinary premium increases in As Topdanmark does not want to relax its acceptance policy, a slightly lower rate of growth in premiums in 1999 is expected.

5 Page 5 of 19 Group key figures, non-life insurance Loss ratio Expense ratio Reinsurance ceded Combined ratio The loss ratio of the Topdanmark group reduced from 74.3% in 1997 to 70.4% in 1998 due to a number of factors. A mild winter and significantly lower than normal traffic density during the strike in the spring resulted in fewer motor insurance claims which benefited the claims trend. There were no major cloudburst claims as in 1997 and at the same time there was a general improvement in the loss ratio partly reflecting a further tightening of the restrictive acceptance policy. The unsatisfactory claims trend in accident insurance continued into Reserves were therefore extraordinarily strengthened by DKK 55m in 1998 representing 1.4 percentage points of the loss ratio. However, the run-off loss in accident insurance was offset by run-off gains in other areas. The claims trend was considered to be exceptionally good in 1998, but this is not expected to continue; a more normal level of 72%-73% is likely. In spite of expenditure on year 2000 problems, the expense ratio declined from 24.0% to 23.6%. As a result of strict cost control it is expected to continue the slightly declining trend in Net expenses on reinsurance equalled 1.1% of gross premium income in 1998 as compared with 1.7% in 1997, the reduction being due to the reinsurance programme s cover of several large claims and a general improvement in reinsurance conditions. Topdanmark wants to gradually take on larger retention in order to reduce the level of reinsurance expenditure, but the effect will not be seen in Total expenses on claims, sales, administration and reinsurance as a percentage of gross premium income (combined ratio) declined from 100.0% in 1997 to 95.1% in Owing to the exceptionally good claims trend in 1998 it is not expected that this level will be continued. For 1999 the combined ratio is expected to be around 98%. The favourable trend in the combined ratio was the main reason for the DKK 165m increase in the technical result from DKK 95m in 1997 to DKK 260m in After adjusting for the equalisation provisions the actual technical result improved DKK 203m from DKK 135m to DKK 338m.

6 Page 6 of 19 Financial highlights - Topdanmark Forsikring DKKm Key figures Premiums earned 3,694 3,510 3,198 Technical interest on own account Claims incurred (2,612) (2,622) (2,410) Expenses (880) (843) (785) Reinsurance ceded (68) (72) (145) Change in equalisation provision (25) (30) 0 Profit / (loss) on insurance (30) Other investment income Profit on ordinary activities Extraordinary items Taxation (24) (4) 0 Profit for the year Shareholders' funds 2,467 2,408 2,099 Technical provisions on own account 2,692 2,482 2,262 Total assets 7,319 5,567 5,089 Ratios (%) Loss ratio Expense ratio Reinsurance ceded Combined ratio Return on shareholders' funds (%) Life assurance activities The activities of Topdanmark Livsforsikring Group are carried out by the parent company Topdanmark Livsforsikring and the subsidiary BG Pension. At the end of 1997 BG Bank sold its 50% stake in BG Pension to Topdanmark Livsforsikring and since 1 January 1998 BG Pension has been included as a 100% owned subsidiary of Topdanmark Livsforsikring. It has been agreed that BG Bank may re-enter as a shareholder. Topdanmark Livsforsikring and BG Pension are two separate legal entities each marketed under their own name and logo. However, the two companies are being operated as a group with joint management, administration and location.

7 Page 7 of 19 Gross premiums in the Topdanmark Livsforsikring Group were DKK 1,986m in In comparison, gross premiums would have been DKK 1,726m in 1997 if BG Pension had been 100% included then, reflecting a 15.1% growth. This growth was the result of a 15.4% increase in regular premiums and a 14.7% increase in single premiums. In 1998 premiums in the life assurance and pension fund market were affected by several large companies raising the bonus rate for pension schemes to 8.5% after real interest rate duty. In the light of an expected return lower than 7% after real interest rate duty, Topdanmark Livsforsikring and BG Pension chose to not keep up with the price competition. Instead pension customers were offered a bonus rate of 7.6% after real interest rate duty. Given the severe competition on bonus rates in 1998 the increase in premiums is considered to be satisfactory, particular so as, again in 1998, Topdanmark Livsforsikring Group s growth in regular premiums has been greater than the market s. As agreed with the Danish Financial Supervisory Authority the return on shareholders funds in Topdanmark Livsforsikring must not exceed the customers bonus rate after real interest rate duty plus three percentage points, plus the result from health and accident insurance. Topdanmark Livsforsikring achieved a profit of DKK 87m in 1998 as compared with DKK 50m in The DKK 87m profit included DKK 2m from health and accident insurance. The gross result of Topdanmark Livsforsikring represented a 10.2% return on shareholders funds. The improvement in the profit was primarily due to shareholders funds being strengthened by DKK 300m following the take-over of the remaining 50% of the shares in BG Pension at the end of BG Bank recorded a profit of DKK 18m as compared with DKK 32m in As BG Pension is a subsidiary of Topdanmark Livsforsikring, the result achieved by BG Pension is included in Topdanmark Livsforsikring s investment result. Bonus reserves In the light of the recent years fairly high returns on investments Topdanmark Livsforsikring fixed the bonus rate after real interest rate duty for 1998 at 7.6% for corporate pension schemes and 7.4% for private schemes. Topdanmark Livsforsikring s return on investments after real interest rate duty was 5.8% in 1998 and it was therefore necessary to reduce the bonus equalisation provisions by DKK 28m. Consequently, bonus equalisation provisions were DKK 588m at the end of the year.

8 Page 8 of 19 The bonus reserve is calculated as the sum of the bonus equalisation provisions and the difference between the book value and market value of bonds, properties etc. net of the provisions made to cover the obligations of guaranteed interest rates. Bonus reserves before adjusting for guaranteed interest rates totalled DKK 715m at the end of In order to assess the company s financial health the bonus reserve is added to the shareholders funds reserve being the total capital base less an amount required for solvency. The proportion of the combined bonus reserve and shareholders funds reserve to customers savings shows both the future bonus ability and the financial strength needed to resist future fluctuations on the capital markets. After an allocation of DKK 446m to cover guaranteed interest rates, as described below, the ratio for the bonus reserve is calculated at 3.3% and the ratio for the shareholders funds reserve at 6.2%. The company expects that these percentages will increase in the coming years. Yield guarantees In Topdanmark Livsforsikring part of the portfolio has been guaranteed a yield based on a calculated interest rate of 4.5% after real interest rate duty. Due to the combination of the existing low interest rates and the change from the floating real interest rate duty into the increased fixed tax on pension returns, the post-tax return on the company s assets could be lower than 4.5% if interest rates decline further. Topdanmark expects that the ongoing negotiations between the insurance industry and the government will result in a less harsh formula which will allow for a reduction of the new rate of tax on returns if the interest rate falls. For example, the government has indicated that it is prepared to look at the now arbitrarily fixed tax rate if interest rates fall from the level at the end of 1998, but its signals have been quite vague. In the light of this uncertainty the company considers that even the present level of interest rates calls for additional provisioning to cover policies with a guaranteed yield of 4.5% and upwards. Therefore DKK 446m of the total bonus reserves of DKK 715m has been allocated to cover these policies. The amount, representing at least 0.5 percentage points, has been calculated as the necessary additional provision if the calculated interest rate is reduced to 4%. In comparison this reduction corresponds to a fall in the bond rate of about 1.25% percentage points subject to the existing structure of assets and no change in the return on all other assets. In BG Pension the portfolio has been guaranteed a yield of 2.5% after real interest rate duty and therefore the company considers that there is no need to make additional provisioning at present.

9 Page 9 of 19 Structural alignments in the life assurance group After the Danish Parliament passed a new set of rules on taxation of pension savings, the conditions under which Topdanmark Livsforsikring operates have changed so much that the existing group structure is no longer efficient. Therefore Topdanmark has established a new life assurance company to which the portfolio of Topdanmark Livsforsikring was transferred with effect from 1 January 1999 subject to the permission of the Danish Financial Supervisory Authority. When this permission is granted the new life assurance company will continue under the existing name of Topdanmark Livsforsikring. Financial highlights - Topdanmark Livsforsikring Group DKKm Key figures Premiums 1,986 1, Allocated investment income on own account Claims paid (851) (569) (500) Change in the life assurance provisions (1,806) (1,190) (766) Change in the bonus equalisation provision 108 (364) (175) Expenses (155) (167) (106) Reinsurance ceded (21) 9 (3) Technical profit / (loss) on life assurance (28) (17) 16 Technical profit on health and accident insurance Other ordinary items Other investment income Profit on ordinary activities Extraordinary items 0 0 (17) Taxation Profit for the year Shareholders' funds Technical provisions on own account 12,737 11,099 8,257 Total assets 17,052 12,782 8,983 Ratios Return on shareholders' funds (%)

10 Page 10 of 19 Parent company and other activities Excluding the share of the results of subsidiaries, the parent company Topdanmark s DKK 91m profit in 1997 declined to a DKK 15m loss. The 1997 result was affected by a DKK 57m extraordinary gain on the sale of a 17% shareholding in Sydbank, while 1998 was affected by a DKK 31m loss on the remaining 5% shareholding in Sydbank and lower investment income. Other activities include the Topdanmark Group s phase-out activities, which primarily have been placed in the company Topdanmark Invest. The result of other activities was a DKK 9m profit in 1998 (1997: DKK 11m). The activities will continue to be phased out in a controlled process and Topdanmark considers that the portfolio has been fully provided for. Investment Profit on investment activities in the Topdanmark Group excluding Topdanmark Livsforsikring, before the transfer to technical reserves, was DKK 636m in 1998 as compared with DKK 386m in DKK 262m of the profit arose from the establishment of Kapital Holding when Topdanmark s shares in BG Bank were replaced by shares in Kapital Holding carrying a higher net asset value. The return on portfolio assets after management costs declined from DKK 271m in 1997 to DKK 233m in This decline was primarily due to the return on equities relating to principal activities, for example Sydbank, being lower than that of the stock market in general. Additionally, Topdanmark s portfolios comprising mainly Danish mortgage credit bonds and short-term or floating rate foreign securities were adversely affected by the increase in the rate gap between government bonds and mortgage credit bonds following the financial crisis in the second half of the year. The return on portfolio assets after management costs was 4.5%. The market value of interest bearing investment assets owned by the Group excluding life assurance was DKK 2,867m at 31 December 1998, equivalent to 51% of total investment assets. The limit of the interest rate exposure has been fixed at DKK 80m, and that of foreign exchange exposure at DKK 5.2m per day. At 31 December 1998 the actual interest rate exposure was DKK 68m and the foreign exchange exposure DKK 2.2m per day. At the end of 1998 total equity investments of DKK 2,769m comprised primarily the investments in Kapital Holding (DKK 1,133m) and Topdanmark Livsforsikring (DKK 892m). Other equity investments totalling DKK 744m related mostly to the core business. At 31 December 1998 the value of the actual equity portfolio was DKK 356m, primarily vested in Danish listed companies.

11 Page 11 of 19 Prospects It is expected that the 1999 result will not include any exceptional / extraordinary items or the creation of a tax asset. The Group s earnings base is the business activities in life and non-life insurance. In addition it has investment activities in the operating companies and their subsidiaries. The earnings base in the Group s non-life insurance business grew during 1998 as premium income increased by 6.7%. As a result of an extraordinarily favourable claims trend the loss ratio declined in 1998 from 74.3% to 70.4%. For example the year was affected by a very mild winter and very low traffic density during the two-week long trade union strike in the spring. As the claims trend for 1999 is not expected to be as exceptionally good, the loss ratio is expected to increase. It is expected that again in 1999 there will be no extraordinary premium increases. As a result of severe competition, Topdanmark s growth in premiums is expected to be only slightly higher than the market growth of 4-5% and lower than the 1998 growth rate of 6.7%. The expense ratio declined from 24.0% to 23.6% in A slight decline is expected again in 1999 as a result of the continued strict cost control. Overall the combined ratio is expected to be around 98.0% in 1999 as compared with 95.1% in The result from investments in the non-life insurance business will be affected by the somewhat lower level of interest rates in 1999 than in Moreover the result from investment activities will be affected by the relatively large investment in Kapital Holding of DKK 1,133m at 31 December It is a budgetary assumption that the investment in Kapital Holding will generate a pre-tax return of around 10%, equivalent to DKK 110m. Accordingly, the result for the non-life insurance business is expected to be DKK m including the DKK 110m from the investment in Kapital Holding. Profit on the life assurance business is subject to the guidelines laid down by the Danish Financial Supervisory Authority which states that the profit is not to exceed a return on shareholders funds equivalent to the bonus rate after real interest rate duty plus three percentage points, plus the result from health and accident insurance. The result of life assurance activities is therefore expected to be DKK 65-75m in Other activities, principally comprising Topdanmark s phase-out activities, are expected to record a break-even result in 1999.

12 Page 12 of 19 In the parent company administrative expenses are expected to decline by DKK 6m, to some extent the result of the number of shareholders having been reduced by 159,000. The profit for the parent company is expected to be DKK 40-60m. Accordingly, the 1999 pre-tax profit is expected to be DKK m as compared with the underlying operating result of DKK 508 m in In 1998 a tax asset of DKK 129m was included as income. The tax asset in the parent company was DKK 152m which related to companies not included in the life assurance group. In the years ahead this tax asset will be charged in the accounts in line with its utilisation of the Group s taxable profit. For 1999 the Group expects a tax charge of around DKK 70-90m plus an estimated DKK 30m tax on the share of the profit recorded by Kapital Holding. Accordingly, the overall post-tax result for the entire Topdanmark Group is expected to be DKK m for 1999 subject to an annual 7% return on equities and stable foreign exchange and interest rates unchanged from the level as at 23 March Expected results for 1999 as compared with the 1998 results DKKm Non-life insurance Share of profit in Kapital Holding Merger gain on establishment of Kapital Holding Life assurance Other activities 0 9 Parent company (15) Pre-tax profit Taxation (100) (120) 129 Profit for the year Proposals for the Annual General Meeting In 1997 Topdanmark adopted a distribution policy which, with due regard to the company s results trend and financing requirements, intended to distribute between 25% and 40% of the profit for the year on ordinary activities. In accordance with this policy DKK 118m was distributed for 1997 in the form of a share buy-back, equivalent to 29% of the profit for the year.

13 Page 13 of 19 As published in announcement No. 10/1998, Topdanmark adjusted its distribution policy for 1998, 1999 and 2000 after having evaluated its capital structure. For each of these years it intends, whilst giving due consideration to the Company s results trend and financing requirements, to distribute DKK 250m by way of share buy-back. This distribution level has evolved from a desire not to operate with capital in excess of that required to meet solvency margins whilst still allowing for growth in the business. Topdanmark considers that given the proposed level of distribution, its shareholders funds will be at the level required to support the Group s expected volume of business at the end of For 1998 the Board of Directors will therefore recommend to the general meeting a distribution of DKK 250m, representing 28% of the profit for the year. It is intended that the share buy-back will be in two equal stages after the announcement of the 1998 annual results on 23 March 1999 and after the announcement of the 1999 half-yearly results in August The Board of Directors intends to recommend to the general meeting a writedown in the share capital by an amount corresponding to the number of shares bought back. It has been agreed with the two largest shareholders, Eureko B.V. and Kapital Holding, that as part of the share buy-back they will reduce their shareholdings in Topdanmark to retain their relative stakes of 20% and 15% respectively. The Board of Directors will propose to elect Anders Knutsen, CEO, as a new member of the Board. The Board of Directors will propose to the general meeting to appropriate the DKK 906m profit for the year as follows: DKKm Net revaluation reserve at net asset value 65 Reserve for own shares 94 Profit carried forward 747 Profit 906 The Annual General Meeting will be held on Tuesday 18 May at 2 p.m. at: Scandinavian Congress Center Margrethepladsen Århus C Denmark

14 Page 14 of 19 Accounting policies According to the guidelines laid down by the Danish Financial Supervisory Authority, the Topdanmark Group's accounts have been prepared in accordance with the provisions of the Danish order on preparation of the consolidated accounts for insurance companies and pension funds. The accounts for the parent company have been adjusted to comply with the Group s accounting policies. Accounting policies have been changed from 1997 in respect of taxation in affiliated and associated companies. Taxation in the Group accounts now includes Topdanmark s proportionate share of the tax in the affiliated and associated companies while Topdanmark s share of the pre-tax result in those companies is shown in income from affiliated and associated companies. The comparatives have been changed accordingly. The change in accounting policies had no effect on the profit for the year nor on shareholders funds. Appendix 5 pages accounts Financial calendar Annual Report published on the Internet: 23 March 1999 Expected distribution of printed Annual Report: Mid-April 1999 Annual General Meeting: 18 May 1999 Expected announcement of 1999 half-yearly results: 23 August 1999

15 Page 15 of 19 Profit and loss account Group Parent Company DKKm NON-LIFE INSURANCE Premiums earned Gross premiums written 4,035 3, Outward reinsurance premiums (367) (345) 0 0 Change in the provision for unearned premiums, gross (31) (67) 0 0 Change in reinsurers' share of the provision for unearned premiums Premiums earned on own account 3,638 3, Technical interest on own account Claims incurred Gross claims paid (2,561) (2,580) 0 0 Reinsurance cover received Change in the provisions for claims, gross (232) (189) 0 0 Change in reinsurers' share of the provision for claims Claims incurred on own account (2,517) (2,543) 0 0 Change in other technical provisions on own account (15) (9) 0 0 Bonuses and rebates (20) (16) 0 0 Operating expenses Acquisition costs (371) (359) 0 0 Administrative expenses (567) (535) 0 0 Reinsurance commission and share of profits Total operating expenses on own account (890) (840) 0 0 Change in the equalisation provision (78) (40) 0 0 Technical profit on non-life insurance

16 Page 16 of 19 Profit and loss account Group Parent Company DKKm LIFE ASSURANCE Premiums Gross premiums written 1,986 1, Outward reinsurance premiums (44) (28) 0 0 Premiums on own account 1,942 1, Allocated investment income on own account Claims paid Claims paid (845) (568) 0 0 Reinsurance cover received Change in the provisions for claims (6) (1) 0 0 Claims paid on own account (828) (558) 0 0 Change in the life assurance provisions Change in the life assurance provisions, gross (1,806) (1,190) 0 0 Change in reinsurers' share of life assurance provisions Change in the life assurance provisions on own account (1,806) (1,164) 0 0 Bonus Change in the bonus equalisation provision 108 (364) 0 0 Operating expenses Acquisition costs (70) (96) 0 0 Administrative expenses (85) (71) 0 0 Total operating expenses on own account (155) (167) 0 0 Technical (loss) on life assurance (28) (17) 0 0

17 Page 17 of 19 Profit and loss account Group Parent Company DKKm Technical profit on non-life insurance Technical (loss) on life assurance (28) (17) 0 0 NON-TECHNICAL ACTIVITIES Income from investment assets Income from affiliated companies Income from associated companies Income from land and buildings Interest, dividends etc Realised gains on investment assets Total income from investment assets 1,530 1, Unrealised gains on investment assets Investment charges Administrative expenses (27) (20) (2) (2) Interest charges (115) (122) (6) (17) Total investment charges (142) (142) (8) (19) Unrealised losses on investment assets 0 0 (24) 0 Exchange rate adjustments 10 (134) (5) (5) Real interest rate duty (30) (16) 0 0 Total investment income 1,409 1, Technical interest transferred to non-life insurance business (188) (167) 0 0 Investment income transferred to life assurance business (711) (959) 0 0 Other ordinary income Other ordinary expenses (2) (2) 0 0 Expenses in parent company (24) (24) (24) (24) Pre-tax profit on ordinary activities Extraordinary income Extraordinary expenses 0 (46) 0 0 Pre-tax profit Taxation 182 (4) 129 (4) Profit for the year

18 Page 18 of 19 Balance sheet - Assets Group Parent Company DKKm Intangible assets Investment assets Land and buildings 1,988 1, Investment in affiliated and associated companies Shares in affiliated companies ,557 2,490 Shares in associated companies 1, Total investment in affiliated and associated companies 1, ,557 2,490 Other financial investment assets Equities 3,329 2, Unit trusts Bonds at market value 3,819 4, Bonds valued at acquisition cost incl. gains to maturity 8,769 5, Loans guaranteed by mortgages at market value Loans guaranteed by mortgages at acquisition cost incl. gains to maturity Other loans Deposits with credit institutions 1, Total other financial investment assets 17,656 14, Deposits with ceding undertakings Total investment assets 20,837 17,358 2,923 2,749 Debtors Amounts due from policyholders Amounts due from insurance companies Amounts due from affiliated companies , Amounts due from associated companies Other debtors Total debtors 905 1,118 1, Other assets Equipment, IT systems, vehicles etc Cash at bank and in hand Own shares Other Tax asset Total other assets Prepayments and accrued income Accrued interest and rent Other prepayments and accrued income Total prepayments and accrued income Total assets 22,693 19,098 4,312 3,405

19 Page 19 of 19 Balance sheet - Liabilities Group Parent Company DKKm Shareholders' funds Share capital Share premium account 1,092 1,092 1,092 1,092 Reserves Reserve for own shares Net revaluation reserve at net asset value Other reserves Total reserves 593 1, ,231 Profit carried forward 2, , Total shareholders' funds 4,127 3,338 4,127 3,338 Subordinated capital Technical provisions Provision for unearned premiums Gross provision 1,111 1, Reinsurers' share (76) (75) 0 0 Provision for unearned premiums on own account 1,035 1, Life assurance provisions Gross provision 12,001 10, Reinsurers' share (134) (47) 0 0 Life assurance provisions on own account 11,867 10, Outstanding claims Gross outstanding claims 3,036 2, Reinsurers' share (346) (297) 0 0 Outstanding claims on own account 2,690 2, Provision for bonuses and rebates Equalisation provision Bonus equalisation provision Other technical provisions Total technical provisions on own account 16,477 14, Provision for other risks and expenses Deferred real interest rate duty Provision for pension schemes and similar commitments 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 1, Amounts due to affiliated companies Financial instruments Corporation tax Other creditors Total creditors 1, Total liabilities 22,693 19,098 4,312 3,405