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Topdanmark January 2002

Topdanmark January 2002. How Topdanmark intends to create value. Capital Topdanmark is an insurance company Not an investment trust Topdanmark intends to avoid unnecessary excess capital Share buy-back. How Topdanmark intends to create value. Operations

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Topdanmark January 2002

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  1. TopdanmarkJanuary 2002

  2. How Topdanmark intendsto create value Capital • Topdanmark is an insurance company • Not an investment trust • Topdanmark intends to avoid unnecessary excess capital • Share buy-back

  3. How Topdanmark intendsto create value Operations • An increase in premium income higher than the market • A declining expense ratio

  4. Financial highlights Q1 - Q3 2001 • DKK 131m profit after DKK 50m transfer to equalisation provisions (Q1 - Q3 2000: DKK 559m after utilising DKK 41m equalisation provisions) • Result affected by decline in Danske Bank’s share price in Q3 (414 mio. kr.) • Claims trend increased from 72.3% to 75.3% • Expense ratio declined from 22.0% to 21.5% • Combined ratio increased from 94.3% to 96.8%

  5. Accounts Q1 - Q3 2001- Topdanmark Group

  6. Accounts Q1 - Q3 2001- Non-life insurance

  7. Non-life insuranceRatios excl. hurricane claims

  8. Non-life insurance Trend in combined ratio 96.8 2.2 94.3 0.8 (0.5)

  9. Non-life insuranceRatios on own account 6 months 2001

  10. 2000 6 months 2001 Non-life insuranceAnnual growth in premiums % 6 months 2001

  11. Non-life insuranceReinsurance • General increase in prices • Increase in retention • Increase in reinsurance prices will be transferred to customers

  12. Non-life insurancePerspectives Personal • No general increase in premium rates • The Danish act on civil liability provides increase in premium rates from mid-2002 • Favourable tracking figures • Branding project to be continued • eBusiness • ScalePoint (purchasing portal) • home (estate agency chain)

  13. Non-life insurancePerspectives Agricultural • Limited increase in premium rates • Distribution agreement with DLG • Top Agricultural Rescue Commercial • No general increase in premium rates except the effect of the act on civil liability • Increase in premium rates for Industriens Arbejdsskade

  14. Non-life insurancePerspectives Industrial • General and individual increases in premium rates • Top Industrial Rescue

  15. Non-life insuranceStructural adjustment • Unclarified structural adjustment • Tryg • Codan • Alm. Brand • if… • Others

  16. Non-life insuranceTracking figures Top of mind - trend

  17. Can profit be made on non-life insurance? Assumptions • Shareholders’ funds 50% of premium income • Combined ratio 96% • Technical interest rate 4% • Return on shareholders’ funds 7% Return on operations • Income 100 • Technical interest 4 104 • Expenditure 96 8 ~ ROE = 16% Return on shareholders’ funds 7% • ROE before taxation 23%

  18. Life insuranceGrowth in premiums Q1 - Q3 2001 33.22) 28.31) 16.1 ? 7.8 1) Excl. BG Pension 2) About half the growth due to the take-over of BG Pension

  19. Life insurancePerspectives • Improved competitive position • Some players have stopped taking in new business • Increase in sale of life insurance through own sale channels • Distribution agreements with Nykredit, DLG and Handelsbanken • Recent introduction of unit-linked products • Satisfactory return on investments • Hedging of guaranteed pension benefits purchased in Q2 2001 • Throughout 2001 Topdanmark has been in the Danish Financial Supervisory Authority’s green classification

  20. Life insurancePerspectives • New profit principle from 2002 • ROE will depend on investment result • Not expected to to cause lower average ROE generated by life insurance activities

  21. Life insuranceTrend in return on investments since 1994 % p.a

  22. Can profit be made on life insurance? Shareholders’ funds in Topdanmark life insurance - about DKK 1,200m Bonus rate (6%) + 3%DKK 108m Plus miscellaneous - illness / accident 10 - cost synergies 25 - income from asset management 10 - tax saved in parent company 15 60 DKK 60m DKK168m 14% p.a.

  23. Share buy-back • Ordinary share buy-back in 2001: DKK 310m • Extraordinary share buy-back in 2001: DKK 722m • Ordinary share buy-back expected to be higher in 2002

  24. Profit forecast

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