Annual Report (ESEF) • Feb 24, 2022
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Announcement No. 05/2022 from Topdanmark A/S
Profitable growth - in that order
Focused strategy
y The Topdanmark share is a value case with ambitions to grow profitably
y Danish player
y Stable insurance risks
y Limited financial risk
y Synergy between life and non-life insurance
y Efficient capital management
y High net result
y No protection against take-over in the Articles of Association
See the presentation of Topdanmark’s equity story on www.topdanmark.com → Investors → Share profile
Read about value creation in Topdanmark on www.topdanmark.com → Investors → Investment case → Value creation
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| (DKKm) | ||||||
|---|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | Q4 2020 | |
| Premiums earned: | ||||||
| Non-life insurance | 8,985 | 9,135 | 9,397 | 9,732 | 10,154 | 2,487 |
| Life insurance | 8,525 | 10,111 | 11,106 | 10,981 | 10,360 | 2,575 |
| 17,510 | 19,247 | 20,502 | 20,713 | 20,514 | 5,062 | |
| Results: | ||||||
| Non-life insurance | 1,909 | 1,420 | 1,601 | 1,302 | 2,274 | 648 |
| Life insurance | 249 | 228 | 327 | 117 | 503 | 74 |
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Announcement No. 05/2022 from Topdanmark A/S
A letter to our shareholders from the Chairman of the Board and the Group CEO
2021 was a very satisfactory year for Topdanmark. We delivered record-strong financial results with a reported net profit of DKK 2,138m or DKK 1,978m before run-off, significantly higher than our original expectation at the beginning of 2021 of DKK 1,000-1,100m before run-off. As a result, the Board of Directors has proposed a record-high total dividend payment of DKK 34.5 per share for 2021. The combined ratio came in at 85.7 before run-off, which outperformed our original expectation of 89-90 before run-off by a clear margin, helped by a good business momentum with a solid premium growth of 4.3% in non-life. At Topdanmark, we firmly believe that long-term shareholder value is created through engaged and motivated employees, who ensure first-class customer experiences, which in turn create satisfaction and loyalty to the benefit of our shareholders. To that end, we are very pleased to report a historically high employee satisfaction of 80 compared to 78 in 2020. Likewise, we continue to see a stable, high transactional net promoter score (tNPS) in non-life, and an increasing tNPS as well as a top EPSI ranking in life.
A year ago, Topdanmark launched “Sundhedshjælp” (Digital Healthcare) – a free service for customers having two or more products with us. The service gives more than half a million Danes online access to medical consultations every day of the week from morning till night. The results speak for themselves. 97% of those using the app are more than satisfied, and the loyalty to Topdanmark has been strengthened. At the same time, as a company, we have contributed to solving the well-known social problem that fewer men than women consult their GP. Through Sundhedshjælp, the number of men consulting a GP is the same as the number of women. During 2022, our ambition is to double the number of users who have downloaded the app and registered to use it.
We have rolled out an offer of free health screenings of employees to approx. 55,000 agricultural and commercial life and non-life customers, and the results are good. It is a valued service which has differentiated Topdanmark positively in a competitive market, and data shows that this service has the desired effect in terms of preventing serious illness for the benefit of the individual, the businesses, society, and us as a company.
In 2021, Formålspension (Purpose pension) reached a portfolio amount of DKK 3.6bn. Demand is so high that Formålspension has become the standard recommendation to our new customers. This year, half of the new customers have chosen the purpose “Green transformation”, and exactly this investment profile has yielded some of the absolute best returns in the industry throughout the year.
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Announcement No. 05/2022 from Topdanmark A/S
Ricard Wennerklint
Chairman of the Board
Peter Hermann
Group CEO
The past year, we have made good progress in our strategic agenda by preparing our new core IT system, Guidewire, and launching the first customer segment on the platform (private agriculture clients). The first results are very promising, and we plan to roll out the new platform to the entire agriculture segment and to start the transition for the private segment during 2022. Using state-of-the-art IT systems, we aim to increase our agility and innovative power to deliver new and improved products and services faster.
We have also seen solid traction in our efficiency programme, which aims to improve our profitability by leveraging automation and digitalisation across the value chain, a best-in-class procurement setup, and stringent focus on risk and pricing. In 2021, we have delivered gross savings of DKK 150m and are thus well on track to deliver DKK 500m of gross savings by 2025 as targeted.
As a final remark, the Board of Directors and the Group Executive Management would like to thank all employees for their remarkable efforts and the strong results obtained throughout the year. Considering the continued uncertainty brought by the COVID-19 pandemic, we are very proud to see the hard work and dedication put into helping our customers navigate through these challenging times.
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The Annual General Meeting will be held on 24 March 2022 at 15:00 (CET) as a fully virtual AGM.
Please direct any queries to:
Peter Hermann
Chief Executive Officer
Lars Kufall Beck
Chief Financial Officer
Robin Hjelgaard Løfgren
Head of Investor Relations
Direct tel.: +45 4474 4017
Mobile tel.: +45 2962 1691
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| Q4 | ||||||
|---|---|---|---|---|---|---|
| (DKKm) | 2017 | 2018 | 2019 | 2020 | 2021 | Q4 2020 |
| Premiums earned: | ||||||
| Non-life insurance | 8,985 | 9,135 | 9,397 | 9,732 | 10,154 | 2,487 |
| Life insurance | 8,525 | 10,111 | 11,106 | 10,981 | 10,360 | 2,575 |
| 17,510 | 19,247 | 20,502 | 20,713 | 20,514 | 5,062 | |
| Results: | ||||||
| Non-life insurance | 1,909 | 1,420 | 1,601 | 1,302 | 2,274 | 648 |
| Life insurance | 249 | 228 | 327 | 117 | 503 | 74 |
| Parent company etc. | ||||||
| 77 | 54 | 60 | 34 | (35) | 9 | |
| :----------------------------------------------------- | ------: | -----: | -----: | -----: | -----: | ------: |
| Pre-tax profit | 2,235 | 1,702 | 1,987 | 1,453 | 2,742 | 731 |
| Tax | (502) | (371) | (441) | (329) | (604) | (159) |
| Profit | 1,733 | 1,331 | 1,547 | 1,124 | 2,138 | 571 |
| Run-off profits, net of reinsurance | 344 | 353 | 433 | 164 | 205 | 50 |
| Shareholders' equity of parent company at 1 January | 5,009 | 6,497 | 6,322 | 6,703 | 7,185 | 6,598 |
| Profit | 1,733 | 1,331 | 1,547 | 1,124 | 2,138 | 571 |
| Dividend paid | 0 | (1,710) | (1,350) | (765) | (1,800) | 0 |
| Dividend own shares | 0 | 73 | 50 | 24 | 48 | 0 |
| Share buy-back | (410) | 0 | 0 | 0 | 0 | 0 |
| Share-based payments | 166 | 131 | 148 | 98 | 133 | 16 |
| Other movements in shareholders' equity | 0 | 1 | (14) | 10 | 0 | 2 |
| Shareholders' equity of parent company end of period | 6,497 | 6,322 | 6,703 | 7,185 | 7,705 | 7,185 |
| Deferred tax on security funds | (306) | (306) | (306) | (306) | (306) | (306) |
| Shareholders' equity of Group end of period | 6,191 | 6,016 | 6,397 | 6,879 | 7,399 | 6,879 |
| Total assets, parent company | 7,114 | 6,873 | 7,274 | 7,785 | 8,233 | |
| Total assets, Group | 80,958 | 83,224 | 98,442 | 109,288 | 120,368 | |
| Provisions for insurance and investment contracts: | ||||||
| Non-life insurance | 16,091 | 16,056 | 16,175 | 16,462 | 17,102 | |
| Life insurance | 54,198 | 56,519 | 70,603 | 79,335 | 89,593 |
| Financial ratios (parent company) | Post-tax profit as a percentage of shareholders' equity | Post-tax EPS (DKK) | Post-tax EPS, diluted (DKK) | Share buy-back per share, diluted (DKK) | Dividend per share issued, proposed (DKK) | Net asset value per share, diluted (DKK) | Listed share price end of period | Number of shares end of period ('000) | Average number of shares ('000) | Average number of shares, diluted ('000) |
|---|---|---|---|---|---|---|---|---|---|---|
| 30.5 | 20.2 | 20.2 | 4.8 | 19.0 | 75.6 | 268.1 | 85,876 | 85,700 | 85,873 | |
| 21.8 | 15.4 | 15.4 | 15.0 | 72.9 | 303.0 | 86,432 | 86,242 | 86,637 | ||
| 24.8 | 17.8 | 17.7 | 17.0 | 76.7 | 328.4 | 87,067 | 86,824 | 87,229 | ||
| 16.6 | 12.9 | 12.9 | 20.0 | 82.0 | 264.2 | 87,491 | 87,266 | 87,475 | ||
| 30.5 | 24.4 | 24.3 | 34.5 | 87.4 | 367.0 | 87,978 | 87,703 | 87,948 | ||
| 8.3 | 6.5 | 6.5 | 87,453 | 87,634 | ||||||
| 8.5 | 7.1 | 7.1 | 87,933 | 88,212 |
| Ratios non-life insurance | Gross claims ratio | Net reinsurance ratio | Claims ratio, net of reinsurance | Gross expense ratio | Combined ratio | Combined ratio excl. run-off profits |
|---|---|---|---|---|---|---|
| 61.5 | 4.3 | 65.8 | 16.1 | 82.0 | 85.8 | |
| 66.2 | 1.2 | 67.5 | 16.1 | 83.6 | 87.5 | |
| 65.1 | 2.5 | 67.6 | 16.0 | 83.7 | 88.3 | |
| 67.5 | 2.6 | 70.1 | 16.3 | 86.5 | 88.2 | |
| 67.1 | 0.9 | 68.0 | 15.7 | 83.7 | 85.7 | |
| 64.8 | 3.5 | 68.3 | 16.7 | 85.1 | 87.1 | |
| 64.6 | 1.7 | 66.3 | 15.5 | 81.8 | 83.6 |
From this announcement and going forward, "Gross loss ratio" will be named "Gross claims ratio", and "Claims trend" will be named "Claims ratio, net of reinsurance" with no changes to the calculation of the ratios. In the announcement, "Claims ratio" refers to "Claims ratio, net of resurance."
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| Q4 (DKKm) | Q4 | |||||
|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |
| Non-life insurance - Technical result | 371 | 469 | 1,316 | 1,659 | 1,470 | – |
| – Investment return after return and revaluations of non-life insurance provisions etc. | 277 | 209 | (15) | 615 | 400 | – |
| Profit on non-life insurance | 648 | 677 | 1,302 | 2,274 | 1,870 | – |
| Life insurance | 74 | 132 | 117 | 503 | 400 | – |
| Parent company etc. | 9 | (17) | 34 | (35) | (30) | – |
| Pre-tax profit | 731 | 792 | 1,453 | 2,742 | 2,240 | – |
| Taxation | (159) | (167) | (329) | (604) | (490) | – |
| Profit for the year | 571 | 625 | 1,124 | 2,138 | 1,750 | – |
Forecast 2021 as in Q1-Q3 2021 interim report
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Topdanmark’s post-tax prot for 2021 was DKK 2,138m (2020: DKK 1,124m). The technical result increased by DKK 343m to DKK 1,659m. The improvement was driven mainly by improving trends in house insurance and the absence of major weather-related events throughout the year apart from the heavy rainfall during Q3 2021. Conversely, the very low temperatures in Q1 2021 caused many water pipes to freeze and burst, while Q2 and Q3 2021 saw a higher frequency of rain- and re-related claims. The investment return adjusted for return and revaluation on non-life insurance provisions increased by DKK 630m to DKK 615m. The improvement should be seen in the light of the challenging market conditions especially in Q1 2020, whereas the investment return throughout 2021 was impacted by more favourable market conditions, especially for equity investments and CLOs. The prot on life insurance increased by DKK 386m to DKK 503m aected by a higher investment return and a positive development in the sales and administration result. Since Q3 2021, Topdanmark Kapitalforvaltning (Topdanmark Asset Management) has been included in the life result. As also stated in the company announcement no. 02/2022 dated 14 January 2022, the prot of DKK 2,138m is better than assumed in the latest model prot forecast in the Q1-Q3 Report, showing a post-tax prot of DKK 1,750-1,800m. The prot improvement is due mainly to a higher investment return, a higher life insurance result, run-o prots and the absence of large weather-related events in Q4 2021, as well as an improving underlying claims ratio mainly within house insurance.
The prot for Q4 2021 was DKK 625m (Q4 2020: DKK 571m). The technical result increased by DKK 98m to DKK 469m mainly due to the benign weather conditions in Q4 2021 and the fact that the improving underlying claims ratio in relation to house insurance continued. After return on non-life insurance provisions, the investment return in non-life insurance decreased by DKK 68m to DKK 209m. Q4 2020 was driven by solid gains on listed equities. The investment return in Q4 2021 was mainly driven by gains on listed equities and properties. The prot on life insurance increased by DKK 58m to DKK 132m primarily due to an improved investment return on shareholders’ equity as well as an improved result for sales and administration.
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| Claims ratio, net of re insurance | Q4 2020 | Q4 2021 | 2020 | 2021 |
|---|---|---|---|---|
| Claims ratio, net of rein surance | 68.3 | 66.3 | 70.1 | 68.0 |
| Run-off excl. COVID-19 | 1.9 | 1.8 | 1.9 | 2.0 |
| Weather-related claims | (1.1) | (1.2) | (2.4) | (1.8) |
| Large-scale claims | (0.6) | (0.7) | (0.9) | (1.2) |
| Other | 0.1 | (0.3) | 0.3 | 0.1 |
| Claims before run-off , weather, large-scale claims and other | 68.6 | 65.9 | 69.0 | 67.1 |
| Discounting | 0.1 | 0.9 | 0.4 | 0.6 |
| COVID-19 | 2.5 | 1.2 | ||
| Underlying (undiscou nted) claims ratio, net of reinsurance | 71.2 | 66.8 | 70.7 | 67.7 |
In full year 2020, run-of f loss of DKK 22m related to COVID-19 effects on income protection insurance is included in the line COVID-19.
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Premiums earned Premiums earned increased by 4.3% to DKK 10,154m. The private segment accounted for a 2.2% increase, and the SME segment accounted for a 6.7% increase. The growth was impacted by a change in provisions for unexpired risk in house insurance caused by the strengthening of provisions in Q3 2020 and the subsequent partial release in Q3 2021. By contrast, provisions related to illness and accident insurance were released in Q4 2020 but increased again in Q3 2021. In total, this resulted in an approx. 0.1pp uplift to the reported Group premium growth in 2021.
The distribution agreement with Nordea continues to have good traction and more than compensated for the outow from the old agreement with Danske Bank in 2021. We expect the trend to continue in 2022.
| (DKKm) | Q4 2020 | Q4 2021 | 2020 | 2021 |
|---|---|---|---|---|
| Gross premiums earned | 2,487 | 2,579 | 9,732 | 10,154 |
| Claims incurred | (1,612) | (1,666) | (6,568) | (6,812) |
| Expenses | (416) | (400) | (1,591) | (1,594) |
| Net reinsurance | (87) | (44) | (257) | (90) |
| Technical result | 371 | 469 | 1,316 | 1,659 |
| Investment return after return and revaluations of non-life insurance provisions | 277 | 210 | (12) | 615 |
| Other items | 0 | (2) | (2) | 0 |
| Profit on non-life insurance | 648 | 677 | 1,302 | 2,274 |
| Run-off profits, net of reinsurance | 50 | 45 | 164 | 205 |
| Gross claims ratio | 64.8 | 64.6 | 67.5 | 67.1 |
| Net reinsurance ratio | 3.5 | 1.7 | 2.6 | 0.9 |
| Claims ratio, net of reinsurance | 68.3 | 66.3 | 70.1 | 68.0 |
| Gross expense ratio | 16.7 | 15.5 | 16.3 | 15.7 |
| Combined ratio | 85.1 | 81.8 | 86.5 | 83.7 |
| Combined ratio excl. run-off profits | 87.1 | 83.6 | 88.2 | 85.7 |
The claims ratio, net of reinsurance, improved to 68.0 in 2021 from 70.1 in 2020. The run-o prot, net of reinsurance, was DKK 205m (2020: DKK 186m excluding COVID-19), representing a 0.1pp positive eect on the claims ratio. Run-o prots were primarily generated in house, property and workers’ compensation, while run-o losses were primarily related to illness and accident insurance.
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We saw good traction on the protability-enhancing measures initiated within house insurance. We have sharpened our focus on acceptance criteria as well as claims prevention and handling, and so far we have raised prices by 9% on average for around 130,000 customers. In addition, we see good results of our procurement eorts within building materials and claims handling. As a result, the claims ratio in house insurance improved by approx. 13pp. We have changed the denition for weather-related claims to include all weather-related events regardless of size. Previously, only weather-related events resulting in more than DKK 4.5m in claims over a 72-hour period were included. With the new denition, the normalised annual level of weather-related claims is DKK 285m, split between DKK 85m in Q1, DKK 45m in Q2, DKK 85m in Q3 and DKK 70m in Q4. As a result, the line “rain/frost” has been removed from the claims ratio table. This line included above-normal claims relating to heavy rainfall and severe frost, while the new denition of weather-related claims includes all rain- and frost-related claims. Using the new denition, weather-related claims amounted to DKK 182m in 2021 (2020: DKK 238m), representing a 0.6pp improvement of the claims ratio. This was a result of the absence of major weather-related events throughout the year apart from the heavy rainfall during Q3 2021. In addition, the very low temperatures in Q1 2021 caused many water pipes to freeze and burst.
```The level of large-scale claims (claims exceeding DKK 5m by event after refund of reinsurance) increased by DKK 34m to DKK 120m in 2021, representing a 0.3pp deterioration in the claims ratio. This was primarily driven by a few large fire-related events. The claims ratio was positively impacted by the higher level of interest rates. The discounting effect (movements in the yield curve used for discounting the provisions) had a positive impact on the claims ratio of 0.2pp compared with 2020. Inflation within construction materials has been significant during 2021, most notably regarding iron and steel but also on timber. In the short term, we are in a good position to handle rising cost inflation through procurement, and our efforts within this area continue as part of the efficiency programme. In general, and over time, we see around 2-4% overall inflation in claim expenses, varying between different business lines. Over time, it is our target to maintain our profitability by pricing at least in line with inflation. The claims ratio adjusted for run-off, weather-related claims, large-scale claims and other positions, including change of risk margin, improved by 1.9pp to 67.1. The underlying claims ratio, which is adjusted for discounting and COVID-19 impact, improved by 3.0pp to 67.7. As mentioned in the H1 Report, from Q3 2021 we have stopped reporting on the estimated impact of COVID-19 due to the high uncertainty related to the assessment. However, certain lines, such as travel insurance, are still impacted by the COVID-19 situation.
Expense ratio
The expense ratio was 15.7, down from 16.3 in 2020. The decrease in the expense ratio is driven by our efficiency programme.
Combined ratio
The combined ratio was 83.7 (2020: 86.5). Excluding run-off, the combined ratio was 85.7 (2020: 88.2). The combined ratio of Topdanmark Forsikring (excluding illness and accident insurance underwritten by the life company) was 80.1, including cost synergies from having life and non-life in the group.
Non-life insurance in Q4 2021
Premiums earned in Q4 2021 increased by 3.7% to DKK 2,579m. The growth in premiums was 2.5% and 5.3% in the private segment and the SME segment, respectively. Premium growth in Q4 2021 was negatively affected by 0.6pp as a result of the release of provisions for unexpired risk within illness and accident insurance in Q4 2020. The claims ratio was 66.3, down from 68.3 in Q4 2020.
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The run-off profit, net of reinsurance, was DKK 45m, almost unchanged from the level in Q4 2020 (DKK 48m excluding COVID-19). Run-off was largely in line with preceding quarters following positive trends in house insurance throughout 2021. In addition, run-off profits were generated in workers’ compensation. Using the above new definition, weather-related claims amounted to DKK 31m in Q4 2021, largely in line with the level in Q4 2020 (DKK 27m). The level of weather-related claims was DKK 39m below the assumed normal level of DKK 70m according to the new definition. Large-scale claims amounted to DKK 18m, almost unchanged from the level in Q4 2020 (DKK 16m). The claims ratio was positively impacted by the higher level of interest rates. The discounting effect (movements in the yield curve used for discounting the provisions) had a positive impact on the claims ratio of 0.8pp compared with Q4 2020.
| Q4 2020 | Q4 2021 | 2020 | 2021 | ||
|---|---|---|---|---|---|
| (DKKm) | |||||
| Gross premiums earned | 1,304 | 1,337 | 5,179 | 5,296 | |
| Claims incurred | (956) | (888) | (3,787) | (3,656) | |
| Expenses | (217) | (186) | (824) | (779) | |
| Net reinsurance | (2) | (12) | (41) | (51) | |
| Technical result | 129 | 250 | 527 | 810 | |
| Run-off profits, net of reinsurance | 24 | 20 | 116 | 73 | |
| Gross claims ratio | 73.3 | 66.4 | 73.1 | 69.0 | |
| Net reinsurance ratio | 0.2 | 0.9 | 0.8 | 1.0 | |
| Claims ratio, net of reinsurance | 73.5 | 67.4 | 73.9 | 70.0 | |
| Gross expense ratio | 16.7 | 13.9 | 15.9 | 14.7 | |
| Combined ratio | 90.1 | 81.3 | 89.8 | 84.7 | |
| Combined ratio excl. run-off profits | 92.0 | 82.8 | 92.1 | 86.1 |
The technical result was DKK 810m in 2021, representing an increase of DKK 283m compared with 2020. The claims ratio improved by 3.9pp to 70.0. Activities for improvement of profitability within house insurance were initiated and had a positive impact on the claims ratio. Partly offsetting this positive development, the illness and accident insurance, underwritten by the life company, experienced a worsening in 2021, as a result of the rising inflation.
Segment reporting
Private
The claims ratio adjusted for run-off, weather-related claims, large-scale claims and other positions, including change of risk margin improved by 2.7pp to 65.9 in Q4 2021. The underlying claims ratio, which is adjusted for discounting and the impact of COVID-19, improved by 4.4pp to 66.8. The improvement is driven by the private segment. Please note that we have stopped reporting on the estimated impact of COVID-19 as of Q3 2021. The expense ratio was 15.5 (Q4 2020: 16.7), contributing positively to the improvement in combined ratio. The combined ratio was 81.8 (Q4 2020: 85.1). Excluding run-off, the combined ratio was 83.6 (Q4 2020: 87.1). The private segment offers policies to individual households in Denmark. This segment also includes illness and accident insurance offered through the life company. Premiums earned increased by 2.2% to DKK 5,296m. Adjusted for changes in provisions for unexpired risk in house as well as in illness and accident in the life company, the underlying premiums increased by 2.0% in 2021 and by 3.7% in Q4 2021.
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SME
| Q4 2020 | Q4 2021 | 2020 | 2021 | ||
|---|---|---|---|---|---|
| (DKKm) | |||||
| Gross premiums earned | 1,186 | 1,248 | 4,571 | 4,878 | |
| Claims incurred | (659) | (783) | (2,799) | (3,173) | |
| Expenses | (199) | (214) | (767) | (817) | |
| Net reinsurance | (85) | (32) | (216) | (39) | |
| Technical result | 242 | 220 | 789 | 850 | |
| Run-off profits, net of reinsurance | 25 | 26 | 47 | 132 | |
| Gross claims ratio | 55.6 | 62.7 | 61.2 | 65.0 | |
| Net reinsurance ratio | 7.2 | 2.5 | 4.7 | 0.8 | |
| Claims ratio, net of reinsurance | 62.8 | 65.3 | 66.0 | 65.8 | |
| Gross expense ratio | 16.8 | 17.2 | 16.8 | 16.7 | |
| Combined ratio | 79.6 | 82.4 | 82.7 | 82.6 | |
| Combined ratio excl. run-off profits | 81.7 | 84.5 | 83.8 | 85.3 |
The expense ratio improved to 14.7 from 15.9 in 2020 further contributing positively to the improvement in the combined ratio. The combined ratio was 84.7 in 2021 (2020: 89.8). Excluding run-off, the combined ratio was 86.1 (2020: 92.1). Excluding illness and accident insurance underwritten by the life company, the combined ratio was 77.6, including cost synergies from having life and non-life in the group. The level of weather-related claims was below the level of 2020, even with extraordinary rain claims and many frozen and burst water pipes earlier this year. Run-off of DKK 73m was DKK 43m lower than in 2020. The lower run-off result is due to a negative development in illness and accident insurance underwritten by the life company driven by rising inflation. Excluding illness and accident, run-off improved by DKK 176m related mainly to the turnaround within house insurance.
SME
The SME segment offers policies to Danish-based SMEs and agricultural businesses. Premiums earned increased by 6.7% to DKK 4,878m, and by 5.3% in Q4 2021. The technical result increased by DKK 61m to DKK 850m in 2021. Run-off increased to DKK 132m in 2021 (2020: DKK 47m). Run-off profits in 2021 were driven mainly by workers’ compensation and property. The claims ratio improved by 0.2pp to 65.8, due to the higher run-off level. By contrast, there were more large fire claims, and even though workers’ compensation was positively affected by increasing interest rates it was counteracted by rising wages. The claims ratio in agriculture was normalised compared with 2020 when it was at a low level. The expense ratio was 16.7 in 2021 which is 0.1pp below 2020. The combined ratio improved to 82.6 in 2021 (2020: 82.7). Excluding run-off, the combined ratio was 85.3 in 2021 (2020: 83.8) with the negative development being driven by large and exceptional fire claims.
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Announcement No. 05/2022 from Topdanmark A/S
Life insurance in 2021
Result of life insurance
| Q4 2020 | Q4 2021 | 2020 | 2021 | ||
|---|---|---|---|---|---|
| (DKKm) | |||||
| Investment return on shareholders' equity | 59 | 76 | 19 | 318 | |
| Sales and administration | (12) | 7 | (43) | 26 | |
| Insurance risk | (10) | 7 | (10) | 4 | |
| Risk return on shareholders' equity | 37 | 42 | 152 | 155 | |
| Profit on life insurance | 74 | 132 | 117 | 503 |
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The result from life insurance was a profit of DKK 503m (2020: DKK 117m). Profit on life insurance activities comprises the profit on life insurance plus the investment return of Topdanmark Liv Holding. These profits are calculated in accordance with the stated policy for the calculation of profit for the life insurance company: see www.topdanmark.com → About Topdanmark → Business → Life insurance → Policy for the calculation of profit in life insurance.
Trend in premiums
Gross premiums decreased by 5.7% to DKK 10,360m in 2021, of which premiums on unit-linked pension schemes were DKK 9,691m, representing a 5.1% decrease compared with 2020. Regular premiums increased by 1.7% to DKK 3,450m in 2021. Single premiums decreased by 8.9% to DKK 6,910m in 2021.
Life insurance in Q4 2021
The result in Q4 2021 increased from DKK 74m to DKK 132m, primarily due to an improved investment return on shareholders’ equity, as well as improved result for sales and administration. The insurance risk result has increased by DKK 17m to DKK 7m. The insurance risk result is quite volatile. Gross premiums increased by 6.6% to DKK 2,744m in Q4 2021 of which premiums on unit-linked pension schemes were DKK 2,573m, a 7.2% increase compared with Q4 2020. Regular premiums increased by 2.2% to DKK 902m in Q4 2021 whereas single premiums increased by 8.8% to DKK 1,843m.
Developments in 2021
The positive development primarily derives from investment return on shareholders’ equity, and sales and administration result.Since Q3 2021, Topdanmark Kapitalforvaltning (Topdanmark Asset Management) has been included in the life result whose result also contributes positively in 2021. The investment return on shareholders’ equity was DKK 318m (2020: DKK 19m) affected by a return higher than assumed, primarily due to property revaluation. The result of sales and administration increased by DKK 69m to DKK 26m (2020: DKK 43m (loss)), primarily as higher assets under management gave increased fees/commissions from Topdanmark Asset Management. The insurance risk result increased by DKK 14m to DKK 4m. The insurance risk result is quite volatile.
| Q4 2020 (DKKm) | Q4 2021 (DKKm) | 2020 (DKKm) | 2021 (DKKm) | |
|---|---|---|---|---|
| With-profit products | 114 | 100 | 399 | 353 |
| Unit-linked products | 716 | 750 | 2,727 | 2,835 |
| Group life | 52 | 52 | 268 | 262 |
| Regular premiums | 882 | 902 | 3,394 | 3,450 |
| With-profit products | 10 | 19 | 98 | 54 |
| Unit-linked products | 1,683 | 1,823 | 7,489 | 6,856 |
| Single premiums | 1,693 | 1,843 | 7,587 | 6,910 |
| Gross premiums | 2,575 | 2,744 | 10,981 | 10,360 |
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Announcement No. 05/2022 from Topdanmark A/S earnings from insurance operations. The equity exposure was DKK 847m pre-tax and excluding associated companies but including the impact of derivatives. The equity portfolios are well diversified with no large individual positions. The composition of the portfolios is based on OMXCCAP for Danish equities, representing approx. 20% of the portfolio at year end 2021, and the foreign portfolios are based on MSCI World DC in local currency for foreign equities. The Group’s investments have no significant concentration of credit risk except for investments in AAA-rated Danish mortgage bonds. The class “Government and mortgage bonds” mainly consists of Danish government and mortgage bonds. The interest rate sensitivity of this asset class is to a significant extent equivalent to the total interest rate sensitivity of the technical provisions in Topdanmark Forsikring, and the illness and accident provisions in Topdanmark Livsforsikring (the life insurance company). Consequently, the return on “Government and mortgage bonds” and the return and revaluation of non-life insurance provisions should be assessed on an aggregate level. However, as mentioned above during times of financial distress, proper interest risk management does not necessarily ensure that losses on liabilities are offset by gains on assets and vice versa.
| Portfolio 31 Dec 2020 (DKKm) | % | 2021 (DKKm) | % | |
|---|---|---|---|---|
| Danish equities | 47 | 17.8 | 14 | 7.1 |
| Foreign equities | 100 | 13.2 | 63 | 7.9 |
| Unlisted equities and hedge funds | 46 | 14.6 | 4 | 1.0 |
| Government and mortgage bonds | 71 | 0.4 | 53 | 0.3 |
| Index linked bonds | 3 | 0.9 | 5 | 1.3 |
| CLOs | 59 | 11.5 | 21 | 3.0 |
| Properties | 22 | 1.7 | 36 | 2.9 |
| Expenses, money markets etc. | (6) | (0.3) | 7 | 0.2 |
| Subordinated loan capital | (11) | (0.6) | (5) | (0.4) |
| Total | 331 | 1.6 | 198 | 1.0 |
| Asset management (2021: 6 months) | 29 | - | 94 | 31 |
| Investment return | 359 | 198 | 464 | 100 |
| non-life insurance provisions | (56) | 11 | (374) | 503 |
| Investment return after return on non-life insurance provisions | 303 | 209 | 89 | 604 |
The exposure in foreign equities and credit bonds has been adjusted by the use of derivatives. The return percentages are calculated as the ratio between the return on financial instruments and the size of the exposure of the underlying asset. The return on properties includes revaluation of owner-occupied property, which has been included in other comprehensive income.
| Return 2020 (DKKbn) | Return Q4 2020 | Return 2021 (DKKbn) | Return Q4 2021 | |
|---|---|---|---|---|
| Return and revaluations of non-life insurance provisions | 100 | 11 | 464 | 503 |
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| TD-KC11/01/2022 |
The investment return of the Topdanmark Group excluding life insurance was DKK 100m in 2021 (2020: DKK 464m). Return and revaluation of non-life insurance provisions were DKK 503m in 2021 (2020: loss of DKK 374m). The return on investments after return and revaluation of non-life insurance provisions in 2021 was DKK 604m and thus DKK 499m higher than the assumed return, when calculated by means of Topdanmark’s forecast model at the beginning of 2021. The higher return should be seen in the light of the financial rebound after the COVID-19 pandemic, which seems to be contained by vaccines. Pandemic lockdowns have been replaced by widespread economic expansion. This has been favourable for equities and has led to improved market conditions and spread contractions on credit exposures. In Q4 2021, the Danish mortgage bond market which is dominated by AAA bonds gained from spread tightening to DKK swaps. The gains on assets hedging the provisions were supplemented by profits from revaluations of provisions in Q4 2021 – the gains were supported by spread contraction between EUR and DKK swap yield curves. In 2021, gains on return and revaluation of provisions dominates the losses from assets hedging the interest sensitivity – by a comfortable margin. Topdanmark’s policy is to accept a certain level of financial risk, given its strong liquidity and stable, high
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Announcement No. 05/2022 from Topdanmark A/S
The property portfolio mainly comprises owner-occupied property (DKK 810m). The properties are valued in accordance with the rules of the Danish FSA (Danish Financial Supervisory Authority), i.e. at market value taking into account the level of rent and the terms of the tenancy agreements. The property portfolio is currently fully let when adjusting for properties under construction or being converted for other purposes. “Expenses, money markets etc.” comprises in addition to money market deposits and currency positions, other returns and expenses not included in specified classes. We use the Solvency II discounting curve with volatility adjustment (VA) for assessing insurance provisions. The VA component comprises a corrective element for the development in pricing of Danish mortgage bonds, as well as a corrective element for the development in pricing of European business credits. The VA component was 22bp at the beginning of the year and 47bp at the end of 2021.
The parent company, Topdanmark, does not perform any independent activities. The profit of the parent company etc. includes the profits from subsidiaries not within the insurance business (primarily Topdanmark Asset Management up to and including Q2 2021), financial costs and other expenses. The profit of the parent company decreased by DKK 69m to DKK 35m (loss) in 2021.
The tax charge was DKK 604m of the pre-tax profit of DKK 2,742m, corresponding to an effective tax rate of 22.0% (2020: 22.6%).
The main focus areas of the efficiency programme are:
* Automation, digitalisation and fraud
* Risk and pricing
* Procurement and cost efficiency
We made substantial headway with the programme during 2021, and our efforts to become more efficient are progressing according to plan. Within automation, digitalisation and fraud, we delivered solid progress. Our fraud detection capabilities increased substantially, for instance by way of leveraging machine learning to pinpoint actionable leads. As a result, the nominal value of withheld claims increased 46% compared with 2020. Optimisation and automation of claims processes resulted in a 36% increase in automated claims handling compared with 2020. Within risk and pricing, we improved our products to the benefit of our customers e.g. within content and motor insurance, allowing us to make small price adjustments. Furthermore, we made risk-based price increases on house insurance by 9% on average for approx. 130,000 customers. Likewise, we have increased prices on income protection insurance and illness and accident insurance underwritten by the life company. Within procurement and cost efficiency, our progress was strong. We have established a professional and fully digital procurement department, and in 2021 we launched more than 50 different sourcing projects within claims, IT and indirect expenditure, of which more than 60% is already finalised. Further, costs were reduced through focused efforts to reduce consultancy spend as well as organisational adjustments. Cost efficiencies mainly stem from IT, staff, and back-office functions. As a result of the above, we delivered the expected DKK 70m net efficiency gains in 2021, corresponding to gross efficiency gains of DKK 150m and investments of DKK 80m. In 2022, we will continue our efforts to become more efficient, and gross efficiency gains are expected to reach DKK 260m. We continue to expect the efficiency programme to deliver gross efficiency gains of DKK 500m in 2025.
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Announcement No. 05/2022 from Topdanmark A/S
The process of implementing the new IT system in non-life made significant progress during 2021, and we saw strong results from the first milestones of phase 1 of the implementation plan. As a result, the implementation plan was accelerated, and implementation is progressing accordingly. In 2021, the first segment was launched on the new platform (private agricultural customers), and during 2022 we expect new sales for the entire agriculture segment to be launched on the new platform. In addition, we will also launch a pilot project for the private segment during 2022.
| Results (DKKm) | 2021 | 2022 (1,300 – 1,550) |
|---|---|---|
| Non-life insurance - Technical result | 1,659 | |
| – Investment return after return and revaluations of non-life insurance provisions etc. | 615 | (50 – 75) |
| Profit on non-life insurance | 2,274 | (1,350 – 1,625) |
| Life insurance | 503 | (250 – 300) |
| Parent company etc. |
Topdanmark’s policy is to hedge against risks arising from the company’s activities or to limit such risks to a level that allows Topdanmark to maintain normal operations and implement its planned measures even in the case of highly unfavourable events in the outside world. As a consequence of this policy, for a number of years Topdanmark has identified and reduced or eliminated the risks which could potentially cause losses exceeding what Topdanmark considers to be acceptable. For example, major strategic shareholdings have been sold, the catastrophe cover for weather-related events or terror has been increased significantly and the financial risk has been reduced.
At the end of 2021, Topdanmark’s solvency ratio was 204. The solvency ratio can be adjusted to a certain extent in accordance with the Board of Directors’ wishes. For example, the Board of Directors can choose to increase the solvency ratio by reducing capital requirements via a reduction of the Group’s investment-related risk profile. An element thereof could be to offer life insurance customers having with-profit products to switch to unit-linked products, for which the capital requirement is significantly lower.
Topdanmark’s assessment is that the current level of the solvency ratio is comfortable considering the wish for a sound own funds base and satisfactory profitability, and the ongoing IT investments. In order to ensure strict control of the overall risk, the exposures are calculated as often as deemed necessary, i.e. daily, monthly, quarterly or in a few cases annually, according to the nature of the exposure. The Board of Directors determines the overall risk policies and limits. The internal auditors report to the Board of Directors and report on, among other things, the observance of these risk policies and limits.
Topdanmark’s risk management function identifies, measures, monitors, manage and reports risks. It reports to the Risk Committee, which is responsible for risk policies, risk limits, solvency calculation, capital plans, Topdanmark’s own risk and solvency assessment (ORSA), and Topdanmark’s partial, internal model for non-life insurance risks. The members of the Risk Committee are the CFO of the Group, the head of the compliance function, the head of Investment/ Treasury & Risk, the head of and a member of the risk management function and the heads of the risk areas Statistical Services, Finance and Life Actuarial Services. The DPO and the head of Group Information Security participates as required. The Risk Committee reports and recommends to the Board of Directors via the Executive Board.
The Risk Committee has set up the Model Committee, which is responsible for developing and operating Topdanmark’s internal model for calculation of results probabilities and risks of the non-life insurance portfolio based on random simulation. The model is used for, among other things, optimising the reinsurance programme, calculation of cost of capital, forecast balancing and calculating capital requirements.
The internal model has been used in solvency calculations since 2014 in accordance with the Danish Solvency rules, and from 2016 it has been amended to meet the EU Solvency II rules in force. The Danish FSA has approved the use of Topdanmark’s internal model when calculating solvency capital requirements.
The risk management function implements an annual ORSA process identifying risks in the business, quantifying these risks and collecting them in a risk register. Additionally, the principles of solvency calculation are reviewed, and the risk management process is updated. An ORSA report has been prepared, which, together with the risk register and risk management process, were processed and approved at a board meeting in the autumn of 2021. On an ongoing basis, the risk management function addresses the rules for solvency calculation and reporting etc. of the Solvency II Directive to ensure that Topdanmark meets this set of rules.
Topdanmark believes that the Group’s most important risks relate to the following main areas:
Please refer to Note 46 for a more detailed description of the above risks.
The Group’s risk factors are illustrated in the following table of the most significant risk factors calculated as the post-tax impact on profit and shareholders’ equity. The given assumptions do not reflect Topdanmark’s expected risks but are shown only as examples which could be used as a basis for assessing Topdanmark’s exposure to the risks mentioned.
| Risk scenarios (DKKm) after corporate tax and pension return tax | ||
|---|---|---|
| 2020 | 2021 | |
| Non-life insurance | ||
| Underwriting risk Combined ratio − 1pp increase | (76) | (79) |
| Provisioning risk Provisions on own account − 1% increase | (101) | (105) |
| Storm claims up to DKK 5,100m (Plus reinstatement premium etc.) | (78) | (78) |
| Life insurance | ||
| Disability intensity - 35% increase* | (12) | (11) |
| Mortality intensity - 20% decline | (22) | (16) |
| Market risk | ||
| Interest-bearing assets 1pp increase | (536) | (504) |
| Provisions for claims in effective and benefits etc. interest rate | 537 | 522 |
| Index-linked bonds 5% loss | (21) | (19) |
| Equities 10% loss | (89) | (65) |
| CLOs < AA 10% loss | (53) | (56) |
| Properties 10% loss | (144) | (116) |
| Annual currency loss with an up to 2.5% probability (VaR) | (1) | (2) |
*35% increase first year, subsequently 25%, coincident with 20% decline in reactivation rates.
The solvency cover for the Group decreased to 204% end Q4 2021 from 243% end Q3 2021 due to the above as well as the deduction of the proposed dividend payment for 2021. Excluding the proposed dividend payment for 2021 of DKK 3,105m, the solvency cover was 293%.
Topdanmark has an outstanding subordinated tier 1 loan (restricted tier 1 capital notes) of DKK 400m. This loan is perpetual, but includes an option enabling us to redeem the loan as at 23 November 2022.
Topdanmark Forsikring has outstanding subordinated tier 2 notes in two tranches:
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Solvency II provides insurance companies with the opportunity to develop their own full or partial internal risk model for solvency calculation. We use such a partially internal model developed in-house to calculate the non-life risk. This model, approved by the Danish FSA, provides the basis for including non-life risks in our solvency calculations while we use the standard model for life products.
As mentioned in the Q1-Q3 Report, Topdanmark Forsikring A/S has redeemed subordinated notes of DKK 850m as at 11 September 2021. As part of our ongoing capital optimisation efforts, the subordinated notes were replaced by a new subordinated loan of DKK 1,000m with provisions in accordance with the requirements of Solvency II as at 16 December 2021. The issue was a private placement subscribed by If Forsikring.
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Announcement No. 05/2022 from Topdanmark A/S
Topdanmark pursues a policy of maintaining an efficient capitalisation using a mix of shareholders’ equity, subordinated loan capital and profit margin to fulfil its solvency requirement. Any excess capital will be distributed to shareholders in the form of dividends. Topdanmark’s dividend policy is to pay out at least 70% of net profit for the period, while the actual pay-out ratio has been close to or above 100% in recent years.
Topdanmark does not have a formal solvency cover target. However, we believe that a solvency cover in the range of 170-190% is sufficiently conservative to support the underlying business. Towards 2023/2024, Topdanmark will build intangible assets due to investments into the new IT system in non-life. As a result, the solvency cover is currently retained towards the higher end of the above range.
Using a solvency cover of 190% as an example, Topdanmark retained excess capital of DKK 0.5bn at the end of 2021 after deduction of the proposed dividend for 2021.
Topdanmark’s Board of Directors has an authorisation granted in the Articles of Association to increase the Company’s share capital, to raise convertible loans and/or issue warrants. The issues may be with or without pre-emptive rights for the Company’s shareholders. The authorisations are limited to a total of 2,500,000 shares. They expire on 12 April 2023.
At the end of 2021, Topdanmark’s share capital totalled DKK 90,000,000 divided into shares of DKK 1 each, corresponding to 90,000,000 voting rights. As at 10 February 2022, Topdanmark held 1,875,430 shares representing 2.08% of the share capital.
The following shareholders own more than 5% of the share capital:
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Announcement No. 05/2022 from Topdanmark A/S
The Board of Directors, which is elected at the annual general meeting and by the employees of the Topdanmark Group, is the Company’s top level management formulating the Company’s objectives, goals and strategies, and making decisions on matters that are of significant importance or unusual in nature to the Company.
Topdanmark’s Board of Directors comprises nine members, six of them elected by the annual general meeting and three by Topdanmark’s employees in accordance with the Danish Companies Act. In accordance with this Act, the number of Board members elected by employees must be at least half the number of those elected by the shareholders at the annual general meeting. The rights, duties and responsibilities of the Board members elected by employees are the same as those of the Board members elected by shareholders at the annual general meeting.
The term of office for members elected by shareholders at the general meeting is one year, while according to legislation, it is four years for members elected by employees. Board members are elected individually.
The Board of Directors has addressed its composition and qualifications in “Policy on diversity at board level”. The Company believes that, by imposing in advance very specific requirements on the Board members, it may prevent the election of an evidently qualified Board candidate, if they do not fully meet the requirements. Topdanmark wants to make an individual decision on each Board candidate based on an overall consideration of the candidate’s qualifications as compared with the Company’s business model and associated risks, present needs and the composition of the rest of the Board of Directors.
Topdanmark believes that in a company like Topdanmark, its Board members should possess combined skills within organisation, strategic management, insurance operations, reinsurance, long-tail business, financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private and commercial markets, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, audit, financing and investment, regulatory environment, compliance, IT and IT security, digitalisation as well as recruitment and human resources.
Information on the defined competencies possessed by each of the Board members elected by shareholders at the annual general meeting is provided in the section on the Board of Directors in the Annual Report. Taking the latest evaluation of the Board into account, it is assessed that Topdanmark’s Board of Directors with its current composition possesses the above skills and qualifications.
Topdanmark’s current Board of Directors reflects diversity in many areas, including professional background and education, gender and age. Its members have experience from the financial and industrial sectors, nationally and internationally. The Board of Directors believes that this composition enables it to consider a given problem from many different angles which is confirmed by experience from the day-to-day Board duties.
Read more about each Board member’s background, competencies and rate of attendance on www.topdanmark.com → About Topdanmark → Organisation → Executive Board and Board of Directors, and under Board of Directors and Executive Board in this Annual Report.
Four of the nine Board members are women, two of them elected by the Annual General Meeting and two by Topdanmark’s employees. Consequently, Topdanmark meets its goal: that the Board has a minimum of three persons of each gender. Topdanmark meets the statutory definition of an equal gender distribution.
Topdanmark has signed up to the UN Global Compact intended to ensure, among other things, the prevention of discrimination in businesses. Topdanmark works to maintain and develop openness in the company culture to counter any form of discrimination due to gender, race, colour, nationality, social and ethnic origin, religion, beliefs, political opinion, disability, age and sexual orientation.
Topdanmark believes that diversity provides business value, and that it is important that all employees may advance to managerial positions at all levels.
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Announcement No. 05/2022 from Topdanmark A/S
Topdanmark’s Board of Directors has adopted policies on diversity. “Policy on diversity at Board level” and “Policy on diversity and the under-represented gender in the management body of Topdanmark” have been published on Topdanmark’s website. More information on diversity including “Women in management” is available in the Sustainability Report 2021.
On a regular basis, the Board of Directors evaluates the Board duties, the full Board and the contributions and results made by the individual members, cooperation with the Executive Board, the Chairman’s management of the Board of Directors, the Board composition, the work in the Committees and the set-up of the Committees, the organisation of the work and the quality of the material for the Board of Directors.
The Board evaluation is based on anonymous questionnaires on the work in the Board and cooperation with the Executive Board, anonymous evaluation of the individual members of the Board of Directors and the Executive Board, optional individual interviews between the Chairman of the Board and each member of the Board and questionnaires on the expertise of each Board member. The Board of Directors carries out a self-evaluation once a year. The Chairman of the Board is in charge of the evaluation with no involvement of the Executive Board.
On the basis of a specific evaluation, the Board of Directors decides if it is necessary and/or relevant to involve external consultants in the evaluation process. For 2021/2022 the Board of Directors have engaged an external consultancy bureau to assist the Board of Directors in conducting the board evaluation.
Any additional directorships undertaken by the Board members including the significance and extent of each duty form part of the evaluation of Topdanmark’s Board of Directors. The evaluation of overboarding is based on the guidelines prepared by ISS and additionally, a subjective evaluation is made. None of Topdanmark’s Board members is considered to be overboarded.# Amendments to the Company’s Articles of Association
The annual general meeting is Topdanmark’s ultimate decision-making body. Resolutions at annual general meetings are passed by a simple majority of votes, unless a special majority or representation is required by the Danish Companies Act or the Articles of Association. The Articles of Association provide that resolutions amending the Articles of Association are only valid if adopted by an affirmative vote of not less than two thirds of the votes cast as well as of the capital represented at the general meeting. The Articles of Association provide no restrictions on voting rights.
In order to ensure full loyalty, focus and performance for the Topdanmark Group during the period until a potential take-over is finalised, Topdanmark has agreed with a few members of the Executive Board who have been registered members of the Executive Board for all or parts of the financial year 2021, and one member of Orienteringsforum that under certain circumstances, they will receive compensation in the form of an extended period of notice and increased severance pay, if they resign or are dismissed, or if their position is made redundant because Topdanmark and/or the company in the Topdanmark Group where the member is employed is taken over by or merges with a company outside the Group, or if one or more owners take control of Topdanmark and/ or the company in the Topdanmark Group in which the member is employed. The maximum amount of compensation will represent two years’ remuneration.
In accordance with the rules in force from time to time, Topdanmark Group may sign agreements on severance pay with directors, Orienteringsforum and other material risk takers. For agreements signed after November 2017, the total value of remuneration for the period of termination, including severance pay, cannot exceed two years’ salary including all remuneration elements. For agreements signed before November 2017, severance pay cannot exceed the value of the remuneration for the past two years.
For two members of the Executive Board who have been registered members of the Executive Board for all or parts of the financial year 2021 and one member of Orienteringsforum and one member of Topdanmark’s other management level, who has been employed for all or part of the financial year 2021, it was agreed that, in continuation of Sampo Group’s take-over of de facto control of Topdanmark in 2013, they would earn remuneration equivalent to six months’ salary per vesting year over a period of three years. The vesting period is over, and the remuneration is recognised as a provision in the accounts. The remuneration, which is adjusted annually in relation to the current salary level, will be paid when employment ends.
Topdanmark’s remuneration policy is intended to optimise long-term value creation at group level and support Topdanmark business strategy. At the same time, Topdanmark’s remuneration policy should strengthen the attraction, retention and motivation of qualified members of Topdanmark’s management, as well as ensure consistency between the interests of management, the company and the shareholders.
The annual general meeting has adopted ”Remuneration policy of the Topdanmark Group.” The remuneration policy covers Topdanmark’s Board of Directors, Executive Board, other material risk takers and, as provided by legislation, employees involved in control functions and audit. If specifically stated, Topdanmark’s remuneration policy also covers its senior management team composed of a number of divisional and service area directors (Orienteringsforum) (primarily consisting of level A and B+ managers) and certain other employees, at the discretion of the Board of Directors.
The remuneration policy, as adopted by the annual general meeting, is available on www.topdanmark.com → About Topdanmark → Corporate governance → Remuneration structure.
The overall purpose of Topdanmark’s remuneration policy is to ensure transparency and shareholder influence on Topdanmark’s remuneration. The share price reflects the anticipated value creation at group level. This is one of the reasons why Topdanmark believes that share-based incentive pay, including revolving share options, ensures that management is exposed to the development in share prices and thus encourages individual managers to make decisions which support value creation as much as possible from a holistic perspective.
The decision of the application of short-term and long-term, incentive remuneration has been made for the purpose of ensuring a balance between short-term and long-term results. In addition to a policy on salaries, the remuneration policy also includes the pension policy and the guidelines for granting variable salary components, severance pay and identification of other employees whose activities have material impact on Topdanmark’s risk profile.
The remuneration paid to the Executive Board, Orienteringsforum and other material risk takers should be competitive with remuneration at comparable companies and can be made up of the following remuneration components: fixed basic remuneration, additional remuneration, pension, other benefits, employee shares, option-based long-term incentive programme (LTI programme), cash-based and share-based short-term incentive programme (STI programme) and extraordinary variable remuneration.
The fixed basic remuneration paid to the Executive Board, Orienteringsforum and other material risk takers is, generally, fixed as a gross salary of which the employee defrays expenses for pension and company car, and it is based on a specific assessment of each employee. i.a. based on the position, individual characteristics, and performance of the individual. The fixed basic remuneration for the Executive Board and Orienteringsforum is reassessed annually and is determined by individual negotiations with each member of the Executive Board and Orienteringsforum on the basis of a framework set by the Board of Directors.
Topdanmark’s LTI programme for the Executive Board, Orienteringsforum and certain other managers is a revolving share option scheme which entails that a fixed proportion equivalent to 10% of (the cash salary + pension + company car value) is paid in the form of share options according to a revolving option programme. In addition to options paid to the Executive Board, Orienteringsforum and certain other managers in accordance with the revolving share option scheme, the Executive Board may grant up to a total of 200,000 options to employees, including other material risk takers, who have made special efforts or in other ways contributed extraordinarily to the value creation.
Topdanmark’s STI programme is a cash- and share-based incentive programme tied up with the completion of a number of predefined goals for each member of the programme. STI bonus cannot exceed 40% of the employee’s fixed basic salary including pension. The variable remuneration for a director cannot exceed 50% of the director’s fixed basic remuneration, including pension. The variable remuneration for other material risk takers, including members of Orienteringsforum, cannot exceed 100% of the employee’s fixed basic remuneration including pension. For directors, the share options and other derivatives cannot exceed 12.5% of the fixed basic remuneration including pension at the time of calculation.
The Executive Board is not paid a special pension contribution. The gross salary takes this into account. Consequently, Topdanmark does not have any pension-related obligations to the Executive Board, and there will be no payment of pension on retirement. Orienteringsforum and other material risk takers receive, within their fixed gross salary, a pension contribution of up to 25% of their cash remuneration. The amount is paid to the pension supplier and consequently, all pension obligations are fully covered by the pension supplier.
Reference is also made to the Topdanmark Group’s Remuneration Report 2021 and Payment Report 2021.
| Share options granted | |||
|---|---|---|---|
| Category | Executive Board | Senior Executives | Total |
| 2018 | 49,216 | 262,059 | 311,275 |
| Market value of those options granted (DKKm) | 2911 | ||
| 2019 | 58,756 | 217,868 | 276,624 |
| Market value of those options granted (DKKm) | 2810 | ||
| 2020 | 57,557 | 188,984 | 246,541 |
| Market value of those options granted (DKKm) | 2810 | ||
| 2021 | 77,684 | 228,279 | 305,963 |
| Market value of those options granted (DKKm) | 2710 | ||
| 2022 | 38,441 | 179,820 | 218,261 |
| Market value of those options granted (DKKm) | 2810 |
For 2022, Topdanmark has granted 38,441 share options to its Executive Board and 118,820 share options to senior management. The strike price of DKK 404 was fixed at 110% of the market price of Topdanmark’s shares on 30 December 2021 (average of all trades). Besides the revolving scheme referred to above, further 61,000 share options have been granted for 2022 to a number of other executives who have made a special effort or otherwise contributed extraordinarily to value creation in the Company.
The options granted for 2022 are not to be exercised any earlier than subsequent to the publication of the 2024 annual results in 2025, and any later than subsequent to the publication of the 2026 annual results in 2027. In the intervening period, the options can only be exercised up to three banking days after Topdanmark’s publication of its annual, half year and interim reports.
The value of issuing the options amounts to DKK 10m, using the Black and Scholes model assuming a share price of DKK 367.42, an interest rate equivalent to the zero coupon rate based on the swap curve on 30 December 2021, future annual volatility of 22%, a pattern of exercise similar to Topdanmark’s previous granting of share options and otherwise in accordance with IFRS 2 on share-based payments.Including the granted options for 2022, the exposure of the options held by the Executive Board represented 0.2% of the number of outstanding shares. Topdanmark’s Remuneration Report for 2021 and Topdanmark’s Payment Report for 2021 provides additional information on remuneration in Topdanmark and Topdanmark’s option scheme. Detailed information is available on www.topdanmark.com → Investors → Reports and presentations → Remuneration reports and Payment reports.
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Announcement No. 05/2022 from Topdanmark A/S
Distribution of dividend for 2021
Given Topdanmark’s solid own funds, the Board of Directors will recommend to the AGM that distribution of a total dividend of DKK 3,105m takes place, representing DKK 34.5 per share, a pay-out ratio of 145.2 and a dividend yield of 9.4. The total dividend is made up of an ordinary dividend of DKK 2,115m from this year’s profit of DKK 2,138m, representing DKK 23.5 per share and a pay-out ratio of 98.9, as well as an extra dividend of DKK 990m, representing DKK 11.0 per share. Subject to the approval from the AGM, the distribution of dividend will take place immediately after the AGM on 24 March 2022.
Corporate Governance
Topdanmark’s “Statutory Corporate Governance Report, see section 131 of Executive Order on Financial Reports for Insurance Companies and Multi-employer Occupational Pension Funds” (“Executive Order on Financial Reports”), is available on www.topdanmark.com → Investors → Reports and presentations → Statutory corporate governance reports.
Sustainability
Topdanmark’s statutory report on sustainability, gender diversity and data ethics see Sections 132, 132a and 132d of the Danish Executive Order on Financial Reports for Insurance Companies and Multi-employer Occupational Pension Funds are available on www.topdanmark.com → Investors → Reports and presentations → Sustainability reports.
AGM 24 Mar 2022
Q1 2022 Interim Report 26 Apr 2022
2022 Half-year Report 15 July 2022
Q1-Q3 2022 Interim Report 21 Oct 2022
Z:\KONCREGN\2021_12 Regn\2.Tabeller\Finanskalender\Finanskalender 12 2021 til årsrapporten.xlsxengelsk
Annual General Meeting
The Annual General Meeting will be held on 24 March 2022 at 15:00 (CET) as a fully virtual AGM. The agenda for the Annual General Meeting will be published in the period from 16 February to 2 March 2022.
Financial calendar
29 / 108
Announcement No. 05/2022 from Topdanmark A/S
Company announcements
Topdanmark submits announcements to Nasdaq Copenhagen A/S with information on material and relevant events in the Group which may affect the price of Topdanmark’s shares. The announcements are also sent to the press, share analysts, investors and other interested parties. The announcements are available on www.topdanmark.com → Investors → Company announcements.
| Date | Announcement No. | Description |
|---|---|---|
| 01 Feb | 04/2022 | Correction to Mawer Investment Management’s shareholding in Topdanmark |
| 21 Jan | 03/2022 | Topdanmark announcement of 2021 Annual Results |
| 14 Jan | 02/2022 | Topdanmark A/S expects net profit for 2021 of around DKK 2.1 billion |
| 03 Jan | 01/2022 | Issue of options |
| 14 Dec | 16/2021 | Topdanmark Forsikring A/S issues DKK 1,000m of subordinated notes (subordinated loan capital) |
| 08 Dec | 15/2021 | Brian Rothemejer Jacobsen resigns from his position with Topdanmark |
| 21 Oct | 14/2021 | Correction: Topdanmark Interim Report for Q1-Q3 2021 |
| 21 Oct | 13/2021 | Topdanmark Interim Report for Q1-Q3 2021 |
| 13 Sep | 12/2021 | Employee shares |
| 16 Jul | 11/2021 | Topdanmark Forsikring A/S - Redemption of subordinated notes |
| 16 Jul | 10/2021 | Topdanmark Half-Year Report for 2021 |
| 03 Jun | 09/2021 | Topdanmark Forsikring A/S - Redemption of subordinated notes |
| 26 Apr | 08/2021 | Topdanmark Interim Report for Q1 2021 |
| 08 Apr | 07/2021 | Lars Kufall Beck appointed new CFO of Topdanmark |
| 06 Apr | 06/2021 | Topdanmark A/S expects higher returns and solvency ratio in 2021 |
| 25 Mar | 05/2021 | Annual General Meeting of Topdanmark 25 March 2021 |
| 01 Mar | 04/2021 | Notice convening the Annual General Meeting on 25 March 2021 |
| 18 Feb | 03/2021 | Topdanmark’s Annual Report for 2020 |
| 22 Jan | 02/2021 | Topdanmark announcement of 2020 Annual Results |
| 04 Jan | 01/2021 | Issue of options |
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Announcement No. 05/2022 from Topdanmark A/S
Current position held: Group Executive Vice President, Chief of Strategy, Sampo plc
DATE OF BIRTH: 2 September 1969
NATIONALITY: Swedish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2017
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 1994–1997 Financial Controller, Project Manager, Head of Financial Control, Trygg-Hansa
* 1997–1999 Head of Control, Skandia P&C
* 1999–2001 Senior Vice President, Head of Business and Financial Control, If P&C Insurance Ltd
* 2002–2008 CFO, If P&C Insurance Ltd
* 2006-2019 Managing Director, If P&C Insurance Ltd
* 2008-2019 Deputy CEO, If P&C Insurance Holding Ltd
* 2019-2019 Executive Director, If P&C Insurance Holding Ltd.
EDUCATION
Business Administration and Finance, Stockholm School of Economics
OFFICES HELD
* Member of the Board of Directors of:
* If P&C Insurance Holding Ltd
* Nordax Bank AB (publ.) (Sweden)
* Hastings Group Holdings Ltd, UK (Chairman)
* Mandatum Holding Ltd.
MEMBER OF
* The Audit Committee, Remuneration Committee and Nomination Committee of Topdanmark
* The Nomination Board of Nordea Abp (Chairman).
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Ricard Wennerklint possesses knowledge and experience of the following: Management experience from other financial businesses, board assignments in financial businesses, organisation, strategic management, insurance operations, reinsurance, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
As Ricard Wennerklint represents a controlling shareholder’s interests, he does not meet the definition of independence set out by the Committee on Corporate Governance.
Chairman of the Board of Directors
Elected at the AGM
Current position held: Group Executive Vice President, Chief of Strategy, Sampo plc
DATE OF BIRTH: 26 September 1966
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2016
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 1990 - 2002 Various executive positions, SAS Scandinavian Airlines A/S
* 2002 - 2006 Vice President, SAS Scandinavian Airlines A/S
* 2006 - 2010 CEO, Nordic Media Link AB and Dansk Reklame Film A/S
* 2010 - 2013 CEO, Danske Licens Spil A/S
* 2013 - 2021 Senior Executive Vice President, TDC A/S.
EDUCATION
B.Sc. Business Administration, Copenhagen Business School, Denmark
OFFICES HELD
* Member of the Board of Directors of:
* Dansk Erhverv (the Danish Chamber of Commerce)
* FDM Travel A/S
* Sticks N Sushi (Chairman)
* Blue Ocean Robotics (Chairman).
MEMBER OF
* The Remuneration Committee and Nomination Committee of Topdanmark.
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Jens Aaløse possesses knowledge and experience of the following: Board assignments in financial businesses, organisation, strategic management, insurance operations, reinsurance, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
Jens Aaløse meets the definition of independence set out by the Committee on Corporate Governance.
Deputy Chairman
Elected at the AGM
Current position held: Managing Partner, Maj Invest Equity
DATE OF BIRTH: 14 January 1968
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2019
RATE OF ATTENDANCE 2021: 100%
OFFICES HELD
* Member of the Board of Directors of:
* Bjatola A/S
Elected by employees
Current position held: Chairman of De Overordnedes Forening
DATE OF BIRTH: 24 April 1963
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2019
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 2012 – 2014 Senior Executive VP, Global Head of Corporate & Institutional Banking and Transactional Credit, Danske Bank A/S
* 2014 – 2017 Member of the Board of Directors of Solix Group AB
* 2015 – 2017 Member of the Board of Directors of Sampension KP Livsforsikring A/S
* 2016 – 2018 CCO, Intrum Justitia AB / Lindorff AS
EDUCATION
* B.Com. (Business Administration), Management Accounting & Informatics, CBS
* Master of Law, University of Copenhagen
* ESG Certificate Holder, Competent Boards.
OFFICES HELD
* Member of the Board of Directors of FLSmidth & Co. A/S and FLSmidth A/S
* Finansiel Stabilitet SOV (Deputy Chairman)
* Bavarian Nordic A/S
* Knud Højgaards Fond og Højgaard Ejendomme A/S
* VL52 ApS
* Moneyflow Group A/S (Chairman)
* Chr. Hansen Natural Colors A/S (Oterra) and others
* Unicef Danmark.
MEMBER OF
* The Audit Committee of FLSmidth & Co. A/S
* The Finance, Risk & Audit Committee of Bavarian Nordic A/S (Chairman)
* The Audit Committee of Topdanmark
* The Investment Committee of Knud Højgaards Fond
* The Audit Committee of Chr. Hansen Natural Colors A/S (Oterra) (Chairman)
* Faculty member at Copenhagen Business School, Board Educations.
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Announcement No. 05/2022 from Topdanmark A/S
Elected at the AGM
Current position held: Professional Board Member and Senior Advisor
33 / 108# Topdanmark A/S Announcement No. 05/2022
Elected by employees
DATE OF BIRTH: 20 June 1976
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2015
RATE OF ATTENDANCE 2021: 100%
MEMBER OF The Remuneration Committee of Topdanmark
Elected by employees
Chairman of Forsikringsforbundet (the Staff Association) of Topdanmark
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Anne Louise Eberhard possesses knowledge and experience of the following: Management experience from other financial businesses, board assignments in financial businesses, organisation, strategic management, insurance operations, reinsurance, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
Anne Louise Eberhard meets the definition of independence set out by the Committee on Corporate Governance.
Elected by employees
Current position held: Chairman of Assurandørforeningen of Topdanmark
DATE OF BIRTH: 29 June 1957
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2019
RATE OF ATTENDANCE 2021: 90%
Elected at the AGM
Current position held: Professional Board Member
DATE OF BIRTH: 13 November 1954
NATIONALITY: Danish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2019
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 1987 – 1996 Deputy Director and Group Treasurer, ISS International Service System A/S
* 1992 – 1994 CFO, Kulturby 1996, Copenhagen
* 1994 – 1996 CFO, ISS Scandinavia A/S
* 1996 – 2000 CFO and CEO, Louisiana Museum of Modern Art
* 2000 – 2003 CEO, TV2/Danmark A/S
* 2003 – 2004 Head of secretariat, Det Radikale Venstre
* 2004 – 2008 CEO, Nordea Liv og Pension A/S
* 2008 – 2011 CEO, Nordea Invest A/S
* 2011 – 2016 CEO, Unipension A/S
EDUCATION
M.Sc. (Economics and Business Administration), Copenhagen Business School, Copenhagen
OFFICES HELD
* Member of the Board of Directors of Arbejdsmiljørådet (Chairman)
* LEO Fondet
* C.L. Davids Fond
* Det Obelske Familiefond
* OK-Fonden.
MEMBER OF
* The Investment Committee of LEO Fondet (Chairman)
* The Audit Committee of Topdanmark
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Cristina Lage possesses knowledge and experience of the following: Management experience from other financial businesses, board assignments in financial businesses, organisation, strategic management, insurance operations, reinsurance, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
Cristina Lage meets the definition of independence set out by the Committee on Corporate Governance.
Elected at the AGM
Current position held: Executive Director, Mandatum Group and Mandatum Life Insurance Company Ltd
DATE OF BIRTH: 19 February 1970
NATIONALITY: Finnish
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2017
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 1995 – 1999 Kaleva Mutual Insurance Company
* 1999 – 2000 Sampo Life Insurance Company Limited
* 2000 – 2001 Managing Director, Evli Life Ltd
* 2001 – 2021 Managing Director, Mandatum Life Insurance Company Limited
EDUCATION
LL.M., University of Turku
OFFICES HELD
* Member of the Board of Directors of:
* Mandatum Asset Management Ltd (Finland)
* Kaleva Mutual Insurance Company (Chairman) (Finland)
* Varma Mutual Pension Insurance Company (Finland)
* Confederation of Finnish Industries EK
* Alma Media Corporation (Deputy Chairman)
* Finance Finland (FFI)
* Finance Finland Life Insurance.
MEMBER OF
* The Group Executive Committee of Sampo
* The Executive Committee of Finance Finland Life Insurance
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Petri Niemisvirta possesses knowledge and experience of the following: Management experience from other financial businesses, board assignments in financial businesses, organisation, strategic management, insurance operations, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, finance, own funds, solvency and minimum capital requirements, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
As Petri Niemisvirta represents a controlling shareholder’s interests, he does not meet the definition of independence set out by the Committee on Corporate Governance.
Elected at the AGM
Current position held: President and CEO, If P&C Insurance Ltd (publ.)
DATE OF BIRTH: 23 December 1971
NATIONALITY: Norwegian
JOINED TOPDANMARK’S BOARD OF DIRECTORS: 2019
RATE OF ATTENDANCE 2021: 100%
PREVIOUS POSITIONS HELD
* 1996 - 2002 Various positions including Associate Partner, McKinsey & Company, Inc., Norway/Europe
* 2002 – 2004 Head of Corporate Strategy, If P&C Insurance Ltd. (publ)
* 2004 – 2005 Head of Industrial Underwriting and Claims, If P&C Insurance Ltd (publ)
* 2005 – 2013 Head of BA Industrial, If P&C Insurance Ltd (publ)
* 2013 – 2019 Group Executive Vice President, Head of BA Private, If P&C Insurance Ltd (publ)
EDUCATION
Master of Business and Economics., Norwegian School of Management
OFFICES HELD
* Member of the Board of Directors of Finans Norge
* Euronext N.V.
* Hastings Group.
MEMBER OF
* The Group Executive Committee of Sampo
* The Audit Committee of Euronext N.V.
EXPERTISE AND QUALIFICATIONS
The Board has defined the required competencies and qualifications for board members of Topdanmark. Among these, Morten Thorsrud possesses knowledge and experience of the following: Management experience from other financial businesses, board assignments in financial businesses, organisation, strategic management, insurance operations, reinsurance, long-tail business (premiums, provisions, run-off), financial and insurance reporting, general statistics, risk management and risk assessment, sales to the private market, sales to the professional market, marketing and branding, outsourcing, finance, own funds, solvency and minimum capital requirements, rules for internal models, auditing, financing and investments, regulatory environment, compliance, IT and IT security, digitalisation, recruitment and human resources.
INDEPENDENCE
As Morten Thorsrud represents a controlling shareholder’s interests, he does not meet the definition of independence set out by the Committee on Corporate Governance.
CEO of Topdanmark A/S.
Born 1973, joined Topdanmark in 2016, joined the Executive Board on 5 February 2018.
EDUCATION:
* M.Sc. Actuarial mathematics
* Graduate Diploma in Business Administration (Organisation & Leadership).
MANAGERIAL RESPONSIBILITIES:
* Private Division
* Agriculture & Commercial Division
* Life & Pension Division
* Claims & Customer Excellence
* Finance & Risk
* Price & Product
* Technology & Development
* HR & Communication
* Group Secretariat, Corporate Legal Matters
* Strategy & Sustainability.
MEMBER OF THE BOARD OF DIRECTORS OF:
* Forsikring & Pension
* KBC Brussels.
CFO of Topdanmark A/S.
Born 1974, joined Topdanmark and the Executive Board on 10 August 2021.
EDUCATION:
* M.Sc. Actuarial mathematics
* Graduate Diploma in Business Administration (Finance).
MANAGERIAL RESPONSIBILITIES:
* Asset Management
* Finance
* Investor Relations
* Accounting
* Statistical Services
* Reinsurance
* Tax
* Risk management
* Credits.
CTO of Topdanmark A/S.
Born 1972, joined Topdanmark and the Executive Board on 1 October 2018.
EDUCATION:
* M.Sc. (Economics)
* Executive MBA.
MANAGERIAL RESPONSIBILITIES:
* Project & Program Delivery
* IT Technology, Architecture and Security
* IT Operations
* Solution Development
* Portfolio & Performance.
Information on The Executive Board’s duties outside the Group as approved by the Board of Directors, and as required by Article 80 of the Danish Financial Business Act, is shown in the Annual Report for Topdanmark Forsikring A/S.
| Group (DKKm) | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| NON-LIFE INSURANCE | |||||
| Gross premiums earned* | 9,051 | 9,197 | 9,463 | 9,763 | 10,240 |
| Claims incurred | (5,514) | (6,037) | (6,109) | (6,556) | (6,802) |
| Bonuses and rebates | (66) | (62) | (66) | (31) | (86) |
| Insurance operating expenses | (1,435) | (1,453) | (1,483) | (1,565) | (1,575) |
| Net reinsurance | (389) | (111) | (234) | (257) | (90) |
| TECHNICAL RESULT FROM NON-LIFE INSURANCE | 1,646 | 1,534 | 1,571 | 1,354 | 1,688 |
| LIFE INSURANCE | |||||
| Gross premiums written | 8,525 | 10,111 | 11,106 | 10,981 | 10,360 |
| Allocated investment return, net of reinsurance | 3,372 | (2,326) | 8,357 | 5,291 | 10,791 |
| Pension return tax | (522) | 28 | (1,094) | (617) | (1,521) |
| Claims and benefits | (4,701) | (4,088) | (4,133) | (6,393) | (8,955) |
| Change in the life insurance provisions and profit margin | (6,232) | (3,352) | (13,820) | (8,877) | (10,269) |
| Insurance operating expenses | (433) | (420) | (486) | (559) | (582) |
| Net reinsurance | (2) | (1) | (1) | (2) | 1 |
| TECHNICAL RESULT FROM LIFE INSURANCE | 8 | (48) | (71) | (176) | (175) |
| Profit on investment activities after transfer to technical results | 608 | 251 | 526 | 320 | 1,278 |
| Other income | 23 | 23 | 19 | 14 | 10 |
| Other expenses | (51) | (58) | (57) | (59) | (59) |
| PRE-TAX PROFIT | 2,235 | 1,702 | 1,987 | 1,453 | 2,742 |
| Taxation | (502) | (371) | (441) | (329) | (604) |
| PROFIT FOR THE YEAR | 1,733 | 1,331 | 1,547 | 1,124 | 2,138 |
| Run-off profits, net of reinsurance | 344 | 353 | 433 | 164 | 205 |
| Provisions for insurance and investment contracts: | |||||
| Non-life insurance | 16,091 | 16,056 | 16,175 | 16,462 | 17,102 |
| Life insurance | 54,198 | 56,519 | 70,603 | 79,335 | 89,593 |
| Total insurance assets | 574 | 635 | 585 | 541 | 677 |
| Total shareholders' equity | 6,191 | 6,016 | 6,397 | 6,879 | 7,399 |
| Total assets | 80,958 | 83,224 | 98,442 | 109,288 | 120,368 |
| NON-LIFE INSURANCE | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Gross claims ratio | 61.5 | 66.2 | 65.1 | 67.5 | 67.1 |
| Net reinsurance ratio | 4.3 | 1.2 | 2.5 | 2.6 | 0.9 |
| Claims ratio, net of reinsurance | 65.8 | 67.5 | 67.6 | 70.1 | 68.0 |
| Gross expense ratio | 16.1 | 16.1 | 16.0 | 16.3 | 15.7 |
| Combined ratio (operating ratio) | 82.0 | 83.6 | 83.7 | 86.5 | 83.7 |
| Combined ratio excl. run-off profits | 85.8 | 87.5 | 88.3 | 88.2 | 85.7 |
| Relative run-off profits, net of reinsurance (%) | 2.7 | 2.8 | 3.5 | 1.3 | 1.6 |
| LIFE INSURANCE | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Rate of return related to with-profit products (%) | 4.6 | (0.4) | 7.2 | 4.9 | 4.0 |
| Rate of return related to unit-linked products (%) | 8.6 | (6.1) | 16.3 | 7.5 | 15.4 |
| Risk on return related to unit-link products | 4.50 | 4.50 | 4.50 | 5.25 | 4.75 |
| Expense ratio of provisions | 0.8 | 0.8 | 0.8 | 0.8 | 0.7 |
| Cost per policyholder (DKK) | 2,729 | 2,758 | 3,064 | 3,418 | 3,352 |
| Return on shareholders' equity (%) | 32.2 | 23.0 | 26.1 | 17.4 | 31.8 |
* Before bonuses and rebates.
** Ratios on life insurance are calculated for Topdanmark Livsforsikring A/S. In 2018 Topdanmark changed the classification of contracts in life insurance. To the extent possible, comparatives were restated.
| Group (DKKm) | Note | 2020 | 2021 |
|---|---|---|---|
| NON-LIFE INSURANCE | |||
| Gross premiums written | 3 | 9,803 | 10,282 |
| Ceded reinsurance premiums | (592) | (604) | |
| Change in the provisions for unearned premiums | 3 | 282 | 89 |
| Change in profit margin and risk margin | 3 | (323) | (131) |
| Change in the reinsurers' share of the provisions for unearned premiums | 3 | 4 | |
| Premiums earned, net of reinsurance | 9,174 | 9,640 | |
| Claims paid | (6,500) | (6,156) | |
| Reinsurance cover received | 292 | 288 | |
| Change in the provisions for claims | (87) | (659) | |
| Change in risk margin | 30 | 13 | |
| Change in the reinsurers' share of the provisions for claims | (41) | 141 | |
| Claims incurred, net of reinsurance | 4 | (6,305) | (6,373) |
| Bonuses and rebates | (31) | (86) | |
| Acquisition costs | (1,015) | (1,013) | |
| Administrative expenses | (550) | (561) | |
| Reinsurance commission and share of profits | 81 | 82 | |
| Insurance operating expenses, net of reinsurance | (1,484) | (1,492) | |
| TECHNICAL RESULT FROM NON-LIFE INSURANCE | 5 | 1,354 | 1,688 |
| LIFE INSURANCE | |||
| Gross premiums written | 6 | 10,981 | 10,360 |
| Ceded reinsurance premiums | (1) | (1) | |
| Premiums, net of reinsurance | 10,980 | 10,359 | |
| Allocated investment return, net of reinsurance | 5,291 | 10,791 | |
| Pension return tax | (617) | (1,521) | |
| Claims and benefits paid | 7 | (6,393) | (8,955) |
| Reinsurance cover received | 6 | 6 | 5 |
| Claims and benefits paid, net of reinsurance | (6,387) | (8,951) | |
| Change in the life insurance provisions | 8 | (8,839) | (9,111) |
| Change in the reinsurers' share | (7) | (3) | |
| Change in the life insurance provisions, net of reinsurance | (8,847) | (9,114) | |
| Change in profit margin | (38) | (1,158) | |
| Acquisition costs | (224) | (234) | |
| Administrative expenses | (335) | (348) | |
| Insurance operating expenses, net of reinsurance | (559) | (581) | |
| TECHNICAL RESULT FROM LIFE INSURANCE | (176) | (175) |
| NON-TECHNICAL ACTIVITIES | Note | 2020 | 2021 |
|---|---|---|---|
| Technical result from non-life insurance | 1,354 | 1,688 | |
| Technical result from life insurance | (176) | (175) | |
| Income from associates and joint ventures | 18 | 92 | 588 |
| Income from investment properties | 9 | 191 | 206 |
| Interest income and dividends etc. | 1,909 | 2,373 | |
| Revaluations | 10 | 3,981 | 8,588 |
| Interest charges | (102) | (83) | |
| Expenses on investment activities | (86) | (106) | |
| Total investment return | 5,986 | 11,565 | |
| Return and revaluations of non-life insurance provisions | 11 | (374) | 503 |
| Investment return transferred to life insurance | (5,291) | (10,791) | |
| Other income | 14 | 10 | 10 |
| Other expenses | 12 | (59) | (59) |
| PRE-TAX PROFIT | 1,453 | 2,742 | |
| Taxation | 13 | (329) | (604) |
| PROFIT FOR THE YEAR | 1,124 | 2,138 | |
| EPS (DKK) | 14 | 12.9 | 24.4 |
| EPS, diluted (DKK) | 14 | 12.9 | 24.3 |
| Group | 2020 | 2021 | |
|---|---|---|---|
| Profit for the year | 1,124 | 2,138 | |
| Items which cannot subsequently be reclassified as profit or loss: | |||
| Revaluation / Reversed revaluation owner-occupied properties | 1 | 1 | 0 |
| Other comprehensive income | 1 | 0 | 0 |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 1,125 | 2,138 |
| Group (DKKm) | Note | 2020 | 2021 |
|---|---|---|---|
| INTANGIBLE ASSETS | 15 | 1,486 | 1,641 |
| Operating equipment | 108 | 91 | |
| Owner-occupied properties | 837 | 810 | |
| TOTAL TANGIBLE ASSETS | 16 | 946 | 902 |
| Investment properties | 17 | 3,934 | 2,927 |
| Equity investments in associates and joint ventures | 18 | 1,741 | 2,324 |
| Total investments in associates and joint ventures | 1,741 | 2,324 | |
| Equity investments | 4,751 | 5,085 | |
| Unit trusts | 2 | 16 | |
| Bonds | 41,776 | 32,995 | |
| Loans guaranteed by mortgages | 6 | ||
| Deposits with credit institutions | 4,989 | 2,620 | |
| Derivatives | 1,405 | 127 | |
| Total other financial investment assets | 52,928 | 40,848 | |
| TOTAL INVESTMENT ASSETS | 58,603 | 46,099 | |
| INVESTMENT ASSETS RELATED TO UNIT-LINKED PRODUCTS | 19 | 44,997 | 68,149 |
| Reinsurers' share of the provisions for unearned premiums | 20 | 96 | 99 |
| Reinsurers' share of the life insurance provisions | 5 | 2 | |
| Reinsurers' share of the provisions for claims | 21 | 440 | 576 |
| Total reinsurers' share of provisions | 541 | 677 | |
| Receivables from policyholders | 283 | 313 | |
| Receivables from insurance companies | 71 | 105 | |
| Receivables from associates and joint ventures | 252 | 227 | |
| Other receivables | 584 | 311 | |
| TOTAL RECEIVABLES | 1,731 | 1,633 | |
| Deferred tax assets | 22 | 33 | 86 |
| Liquid funds | 846 | 1,136 | |
| Other | 20 | 79 | |
| TOTAL OTHER ASSETS | 899 | 1,302 | |
| Accrued interest and rent | 415 | 423 | |
| Other prepayments and accrued income | 210 | 218 | |
| TOTAL PREPAYMENTS AND ACCRUED INCOME | 626 | 641 | |
| TOTAL ASSETS | 109,288 | 120,368 |
| Group (DKKm) | Note | 2020 | 2021 |
|---|---|---|---|
| Share capital | 90 | 90 | |
| Revaluation reserve | 1 | 1 | 2 |
| Security fund | 1,146 | 1,146 | |
| Other reserves | 79 | 83 | |
| Total reserves | 1,225 | 1,229 | |
| Profit carried forward | 3,763 | 2,973 | |
| Proposed dividend | 1,800 | 3,105 | |
| TOTAL SHAREHOLDERS' EQUITY | 6,879 | 7,399 | |
| OTHER SUBORDINATED LOAN CAPITAL | 23 | 1,749 | 1,900 |
| Provisions for unearned premiums | 24 | 1,590 | 1,446 |
| Profit margin, non-life insurance contracts | 24 | 1,150 | 1,316 |
| With-profit products | 25 | 23,178 | 22,319 |
| Unit-linked products | 26 | 55,790 | 65,749 |
| Total life insurance provisions | 78,968 | 88,068 | |
| Profit margin, life insurance and investment contracts | 27 | 367 | 1,525 |
| Provisions for claims | 28 | 13,364 | 13,994 |
| Risk margin, non-life insurance contracts | 226 | 189 | |
| Provisions for bonuses and rebates | 130 | 157 | |
| TOTAL PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTS | 95,797 | 106,695 | |
| Pensions and similar commitments | 31 | 28 | |
| Deferred tax liabilities | 22 | 83 | 94 |
| Deferred tax on security funds | 306 | 306 | |
| TOTAL PROVISIONS | 420 | 428 | |
| DEPOSITS RECEIVED FROM REINSURERS | 33 | 11 | |
| Debt relating to direct insurance operations | 165 | 180 | |
| Debt relating to reinsurance operations | 23 | 42 | |
| Amounts due to credit institutions | 1,350 | 451 | |
| Current tax liabilities | 60 | 84 | |
| Derivatives | 983 | 605 | |
| Other debt | 1,727 | 2,468 | |
| TOTAL DEBT | 4,308 | 3,829 | |
| ACCRUALS AND DEFERRED INCOME | 103 | 108 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 109,288 | 120,368 |
| Group (DKKm) | 2020 | 2021 | |
|---|---|---|---|
| Cash flow from operations | |||
| Gross premiums | 9,741 | 10,210 | |
| Claims | (6,488) | (6,122) | |
| Expenses | (1,437) | (1,488) | |
| Reinsurance ceded | (166) | (243) | |
| Cash flow from non-life insurance | 1,651 | 2,357 | |
| Gross premiums | 10,984 | 10,358 | |
| Claims and benefits | (6,660) | (9,011) | |
| Pension return tax | (823) | (737) | |
| Expenses | (483) | (488) | |
| Reinsurance ceded | (19) | (20) | |
| Cash flow from life insurance | 2,999 | 102 | |
| Cash flow from insurance activities | 4,650 | 2,459 | |
| Payments on investment contracts | 145 | 11 | |
| Interest income etc. | 1,483 | 1,820 | |
| Dividends | 526 | 757 | |
| Interest charges etc. | |||
| Corporation tax (313) (616) | |||
| Other items (332) 206 | |||
| Cash flow from operations 5,975 4,453 |
Cash flow from investments
Intangible assets, operating equipment (205) (279)
Properties (191) (256)
Equity investments in subsidiaries (81) -
Equity investments in associates and joint ventures (8) (16)
Dividends from associates and joint ventures 27 21
Equity investments 400 525
Unit trusts 12 (12)
Bonds 1,587 8,078
Derivatives (250) 431
Investment assets related to unit-linked products (5,157) (12,627)
Balances with associates and joint ventures 34 24
Cash flow from investments (3,831) (4,110)
Cash flow from financing
Dividend paid (741) (1,752)
Exercise of share options 33 50
Redemption of subordinated loan capital (500) (850)
Issue of subordinated loan capital 500 1,000
Amounts due to credit institutions 1,195 (899)
Cash flow from financing 486 (2,451)
Change in cash and cash equivalents 2,631 (2,108)
Cash and cash equivalents at 1 January 3,294 5,835
Revaluation of cash and cash equivalents (90) 29
Cash and cash equivalents at 31 December 5,835 3,756
Cash and cash equivalents comprise:
Liquid funds 846 1,136
Deposits with credit institutions 4,989 2,620
5,835 3,756
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Announcement No. 03/2020 from Topdanmark A/S
Page 7 of 54
| Revalu- ation reserve | Profit ation fund | Security reserves | Other | Share -holders' equity | Proposed dividend | Total |
|---|---|---|---|---|---|---|
| 2020 | ||||||
| Shareholders' equity at 31 December previous year | 90 | 0 | 1,146 | 72 | 3,559 | 1,530 |
| Reduction of proposed dividend previous year | 765 | (765) | ||||
| Profit for the year | 7 | (683) | 1,800 | |||
| Other comprehensive income | 1 | 1 | ||||
| Total comprehensive income for the year | 1 | 8 | (683) | 1,800 | ||
| Dividend paid | (765) | (765) | ||||
| Dividend, own shares | 24 | |||||
| Share-based payments | 70 | |||||
| Exercise of share options | 33 | |||||
| Taxation | (5) | |||||
| Transactions with owners | 122 | (765) | ||||
| Shareholders' equity at 31 December 2020 | 90 | 1 | 1,146 | 79 | 3,763 | 1,800 |
| 2021 | ||||||
| Shareholders' equity at 31 December previous year | 90 | 1 | 1,146 | 79 | 3,763 | 1,800 |
| Profit for the year | 4 | (971) | 3,105 | |||
| Other comprehensive income | 0 | 0 | ||||
| Total comprehensive income for the year | 0 | 4 | (971) | 3,105 | ||
| Dividend paid | (1,800) | (1,800) | ||||
| Dividend, own shares | 48 | |||||
| Share-based payments | 76 | |||||
| Exercise of share options | 50 | |||||
| Taxation | 7 | |||||
| Transactions with owners | 181 | (1,800) | ||||
| Shareholders' equity at 31 December 2021 | 90 | 2 | 1,146 | 83 | 2,973 | 3,105 |
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| Eli- min- ated | Parent | Non-life | Life | etc. | Eli- min- ated | Group | |
|---|---|---|---|---|---|---|---|
| 2020 | |||||||
| Non-life insurance | |||||||
| Gross premiums earned | 5,179 | 4,571 | (18) | 9,732 | 9,732 | ||
| Claims incurred | (3,787) | (2,799) | 17 | (6,568) | (6,556) | ||
| Expenses | (824) | (767) | 1 | (1,591) | (1,565) | ||
| Net reinsurance | (41) | (216) | 0 | (257) | (257) | ||
| Technical result on non-life insurance | 527 | 789 | (0) | 1,316 | 1,354 | ||
| Life insurance | |||||||
| Gross premiums written | 10,981 | 10,981 | 10,981 | ||||
| Allocated investment return | 5,291 | 5,291 | 5,291 | ||||
| Pension return tax | (617) | (617) | (617) | ||||
| Benefits and change in provisions | (15,270) | (15,270) | (15,270) | ||||
| Expenses | (563) | 4 | (559) | (559) | |||
| Net reinsurance | (2) | (2) | (2) | ||||
| Technical result on life insurance | (180) | 4 | (176) | (176) | |||
| Total investment return | 383 | 5,294 | 79 | 229 | 5,986 | ||
| Pension return non-life insurance | (21) | 21 | 0 | 0 | |||
| Return and revaluations of non-life insurance provisions | (374) | (374) | (374) | ||||
| Transferred to technical result | (5,291) | (5,291) | (5,291) | ||||
| Other items | (2) | 274 | (46) | (271) | (45) | ||
| Pre-tax profit | 1,302 | 117 | 34 | 0 | 1,453 | ||
| Taxation | (329) | ||||||
| Profit for the year | 1,124 | ||||||
| 2021 | |||||||
| Non-life insurance | |||||||
| Gross premiums earned | 5,296 | 4,878 | (19) | 10,154 | 10,154 | ||
| Claims incurred | (3,656) | (3,173) | 17 | (6,812) | (6,802) | ||
| Expenses | (779) | (817) | 2 | (1,594) | (1,575) | ||
| Net reinsurance | (51) | (39) | 0 | (90) | (90) | ||
| Technical result on non-life insurance | 810 | 850 | (0) | 1,659 | 1,688 | ||
| Life insurance | |||||||
| Gross premiums written | 10,360 | 10,360 | 10,360 | ||||
| Allocated investment return | 10,791 | 10,791 | 10,791 | ||||
| Pension return tax | (1,521) | (1,521) | (1,521) | ||||
| Benefits and change in provisions | (19,224) | (19,224) | (19,224) | ||||
| Expenses | (585) | 3 | (582) | (582) | |||
| Net reinsurance | 1 | 1 | 1 | ||||
| Technical result on life insurance | (178) | 3 | (175) | (175) | |||
| Total investment return | 83 | 11,312 | 17 | 154 | 11,565 | ||
| Pension return non-life insurance | 29 | (29) | 0 | 0 | |||
| Return and revaluations of non-life insurance provisions | 503 | 503 | 503 | ||||
| Transferred to technical result | (10,791) | (10,791) | (10,791) | ||||
| Other items | 0 | 189 | (52) | (186) | (49) | ||
| Pre-tax profit | 2,274 | 503 | (35) | 0 | 2,742 | ||
| Taxation | (604) | ||||||
| Profit for the year | 2,138 |
| Amortisations and depreciations: | |||||||
|---|---|---|---|---|---|---|---|
| 2020 | 41 | 36 | 77 | 67 | 0 | ||
| 2021 | 39 | 36 | 75 | 75 | 0 | ||
| Results from associates and joint ventures: | |||||||
| 2020 | 7 | 86 | 92 | ||||
| 2021 | 4 | 584 | 588 |
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Announcement No. 03/2020 from Topdanmark A/S
Page 10 of 54
| Parent | Elimin- ated | Non-life | Life | etc. | Group | |
|---|---|---|---|---|---|---|
| 2020 | ||||||
| Intangible assets | 854 | 631 | 0 | 1,486 | ||
| Tangible assets | 923 | 20 | 3 | 946 | ||
| Investment properties | 355 | 3,564 | 15 | 3,934 | ||
| Loans to group entities | 300 | 0 | 0 | (300) | 0 | |
| Equity investments in associates and joint ventures | 72 | 1,670 | 0 | 1,741 | ||
| Other financial investment assets | 21,453 | 31,466 | 10 | 52,928 | ||
| Investment assets related to unit-linked products | 0 | 44,997 | 0 | 44,997 | ||
| Reinsurers' share of provisions | 537 | 5 | 0 | 541 | ||
| Receivables from group entities | 280 | 1,803 | 1,822 | (3,906) | 0 | |
| Other assets | 1,022 | 1,639 | 54 | 2,715 | ||
| Total assets | 25,796 | 85,795 | 1,904 | (4,206) | 109,288 | |
| Other subordinated loan capital | 1,350 | 300 | 399 | (300) | 1,749 | |
| Provisions for insurance and investment contracts | 16,462 | 79,335 | 0 | 95,797 | ||
| Amounts due to group entities | 1,803 | 1,187 | 916 | (3,906) | 0 | |
| Other liabilities | 2,146 | 2,641 | 76 | 4,863 | ||
| Total liabilities | 21,761 | 83,463 | 1,391 | (4,206) | 102,409 | |
| Purchase of tangible and intangible assets | 217 | 123 | 0 | 340 | ||
| 2021 | ||||||
| Intangible assets | 1,054 | 588 | 0 | 1,641 | ||
| Tangible assets | 882 | 17 | 3 | 902 | ||
| Investment properties | 439 | 2,487 | 0 | 2,927 | ||
| Loans to group entities | 300 | 0 | 0 | (300) | 0 | |
| Equity investments in associates and joint ventures | 76 | 2,248 | 0 | 2,324 | ||
| Loans to associates | 0 | 0 | 0 | 0 | ||
| Other financial investment assets | 19,285 | 21,557 | 7 | 40,848 | ||
| Investment assets related to unit-linked products | 0 | 68,149 | 0 | 68,149 | ||
| Reinsurers' share of provisions | 676 | 2 | 0 | 677 | ||
| Receivables from group entities | 2,964 | 1,107 | 1,003 | (5,075) | 0 | |
| Other assets | 1,020 | 1,798 | 81 | 2,899 | ||
| Total assets | 26,696 | 97,952 | 1,095 | (5,375) | 120,368 | |
| Other subordinated loan capital | 1,500 | 300 | 400 | (300) | 1,900 | |
| Provisions for insurance and investment contracts | 17,102 | 89,593 | 0 | 106,695 | ||
| Amounts due to group entities | 1,107 | 3,958 | 10 | (5,075) | 0 | |
| Other liabilities | 1,766 | 2,514 | 95 | 4,375 | ||
| Total liabilities | 21,475 | 96,365 | 504 | (5,375) | 112,969 | |
| Purchase of tangible and intangible assets | 264 | 29 | 0 | 293 |
Assets and liabilities related to illness and accident insurance administered by Topdanmark Life are included in non-life.
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Announcement No. 03/2020 from Topdanmark A/S
Page 11 of 54
| 2020 | 2021 | |
|---|---|---|
| Gross premiums written | 9,803 | 10,282 |
| Change in provisions for unearned premiums | 282 | 89 |
| Change in profit margin and risk margin | (323) | (131) |
| Gross premiums earned | 9,763 | 10,240 |
| Gross premiums earned, direct business, by location of the risk: | ||
| Denmark | 9,753 | 10,231 |
| Other EU-countries | 8 | 8 |
| Other countries | 1 | 1 |
| 9,763 | 10,240 |
| 2020 | 2021 | |
|---|---|---|
| Run-off result: | ||
| Gross business | 201 | 211 |
| Reinsurance ceded | (38) | (6) |
| Run-off profit, net of reinsurance | 164 | 205 |
| Claims incurred include revaluation of derivatives hedging the inflation risk in workers' compensation and illness and accident insurance | (153) | 434 |
In 2021, expenses for loss-prevention included in claims incurred amount to 0.4%, split between Fire and property, Private, 0.1% and Illness and accident 0.3%. In 2020, the expenses amounted to 0,1% related to illness and accident.
| liability | Illness and accident | Workers' compensation | Motor third-party own damage | Motor | Fire and property | Private | Other insurance | Total | |
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
| Gross premiums written | 1,434 | 1,519 | 188 | 211 | 727 | 825 | 501 | 482 | 1,780 |
| Gross premiums earned | 1,425 | 1,487 | 195 | 193 | 713 | 832 | 561 | 512 | 1,702 |
| Claims incurred | (987) | (1,302) | (175) | (179) | (432) | (558) | (438) | (479) | (916) |
| Bonuses and rebates | (26) | (12) | 0 | (0) | (5) | (4) | (2) | (2) | (6) |
| Gross operating expenses | (192) | (186) | (17) | (18) | (66) | (98) | (119) | (104) | (278) |
| Net reinsurance | 12 | 5 | 0 | 0 | 14 | 8 | (3) | (3) | (1) |
| Technical result | 232 | (7) | 4 | (4) | 224 | 179 | (0) | (76) | 501 |
| Gross claims ratio | 70.7 | 88.4 | 89.5 | 92.9 | 61.1 | 67.5 | 78.4 | 94.0 | 54.1 |
| Combined ratio | 83.8 | 100.8 | 98.1 | 102.1 | 68.6 | 78.6 | 100.6 | 115.3 | 70.8 |
| Run-off result, net of reinsurance | 143 | (39) | (14) | (9) | 168 | 127 | 45 | 5 | (7) |
| Claims provisions, net of reinsurance | 3,653 | 3,898 | 111 | 131 | 6,085 | 6,135 | 932 | 919 | 114 |
| Number of claims incurred ('000) | 29 | 32 | 30 | 31 | 6 | 6 | 21 | 22 | 98 |
| Average value of claim (DKK '000) | 38 | 39 | 6 | 6 | 91 | 105 | 23 | 22 | 9 |
| Frequency of claims (per thousand value) | 24 | 26 | 314 | 328 | 113 | 113 | 36 | 37 | 189 |
| Fire and property | Private | Other insurance | Total | |
|---|---|---|---|---|
| 2020 | 2021 | 2020 | 2021 | 2020 |
| Gross premiums written | 2,023 | 2,111 | 485 | 535 |
| Gross premiums earned | 2,021 | 2,098 | 483 | 519 |
| Claims incurred | (1,207) | (1,341) | (320) | (330) |
| Bonuses and rebates | (16) | (33) | (3) | (6) |
| Gross operating expenses | (410) | (417) | (71) | (76) |
| Net reinsurance | (141) | (30) | (77) | (16) |
| Technical result | 247 | 276 | 13 | 91 |
| Gross claims ratio | 60.3 | 65.0 | 66.8 | 64.5 |
| Combined ratio | 88.1 | 87.0 | 97.7 | 82.6 |
| Run-off result, net of reinsurance | (30) | 25 | (64) | (24) |
| Claims provisions, net of reinsurance | 563 | 674 | 538 | 607 |
| Number of claims incurred ('000) | 22 | 23 | 9 | 9 |
| Average value of claim (DKK '000) | 53 | 60 | 34 | 34 |
| Frequency of claims (per thousand value) | 111 | 116 | 81 | 78 |
Claims ratio and combined ratio have been calculated including internal rent in accordance with the Executive Order on Financial Reports.
| 2020 | 2021 | |
|---|---|---|
| Individual policies | 266 | 289 |
| Policies which are part of a tenure | 2,860 | 2,899 |
| Group life | 268 | 262 |
| Regular premiums | 3,394 | 3,450 |
| Individual policies | 4,226 | 3,539 |
| Policies which are part of a tenure | 3,361 | 3,371 |
| Single premiums | 7,587 | 6,910 |
| Gross premiums | 10,981 | 10,360 |
| Unit-linked products not eligible for bonus | 10,216 | 9,691 |
| With-profit products | 765 | 669 |
| 10,981 | 10,360 | |
| Premiums by the policyholders' location: | ||
| Denmark | 10,920 | 10,298 |
| Other EU-countries | 56 | 52 |
| Other countries | 5 | 10 |
| 10,981 | 10,360 |
| 2020 | 2021 | |
|---|---|---|
| Investment contracts (recognised in the balance sheet): | ||
| Regular premiums | 38 | 27 |
| Single premiums | 325 | 610 |
| 363 | 636 | |
| Number of policyholders at 31 December: | ||
| Insurance contracts: | ||
| Individual policies | 95,384 | 99,823 |
| Policies which are part of a tenure | 59,707 | 58,816 |
| Group life | 83,879 | 80,141 |
| Investment contracts: | ||
| Individual policies | 8,442 | 8,904 |
| Policies which are part of a tenure | 838 | 986 |
The investment contracts do not have guarantees.
| 2020 | 2021 | |
|---|---|---|
| Claims payable on death | 204 | 198 |
| Claims payable on invalidity | 1 | 1 |
| Claims payable on maturity | 185 | 262 |
| Pension and annuity payments | 582 | 583 |
| Surrenders | 5,263 | 7,738 |
| Bonuses paid in cash | 158 | 173 |
| Claims and benefits paid | 6,393 | 8,955 |
| 2020 | 2021 | |
|---|---|---|
| With-profit products | 440 | 859 |
| Unit-linked products | (9,279) | (9,970) |
| Change in life insurance provisions | (8,839) | (9,111) |
| 2020 | 2021 | |
|---|---|---|
| Rental income | 281 | 282 |
| Operating expenses from properties rented out | (79) | (60) |
| Operating expenses from properties not rented out | (1) | 0 |
| Gross profit | 201 | 222 |
| Administrative expenses | (10) | (17) |
| Income from investment properties | 191 | 206 |
Tenancy agreements may include a period of non-terminability for the tenant.
Future rental income in the period of non-terminability:
| 2020 | 2021 | |
|---|---|---|
| Up to 1 year | 260 | 277 |
| 2 to 5 years | 329 | 266 |
| Over 5 years | 124 | 113 |
| Total | 712 | 656 |
This year's rental income from non-terminable contracts | 281 | 282 |
| 2020 | 2021 | |
|---|---|---|
| Held for trading: | ||
| Equity investments | 64 | 860 |
| Unit trusts | 7 | 2 |
| Bonds | (269) | (703) |
| Derivatives | 668 | (405) |
| Total held for trading | 469 | (246) |
| Deposits with credit institutions | (46) | 24 |
| Investment assets related to unit-linked products: | ||
| Equity investments | 1,486 | 6,037 |
| Unit trusts | 33 | 94 |
| Bonds | (808) | 50 |
| Derivatives | 2,576 | 2,411 |
| Investment assets related to unit-linked products | 3,288 | 8,592 |
| Total designated at fair value | 3,241 | 8,616 |
| Revaluations of financial assets and liabilities at fair value through profit or loss | 3,710 | 8,369 |
| Of which revaluation of derivatives transferred to claims incurred | 153 | (434) |
| Investment properties | 161 | 646 |
| Liquid funds | (45) | 5 |
| Other | 2 | 2 |
| Revaluations | 3,981 | 8,588 |
| 2020 | 2021 | |
|---|---|---|
| Amortisation | ||
| Provisions for unearned premiums and profit margin | 6 | 6 |
| Reinsurers' share of provisions for unearned premiums | (1) | (1) |
| Provisions for claims | (25) | (39) |
| (20) | (33) | |
| Revaluations | ||
| Provisions for unearned premiums and profit margin | (22) | 36 |
| Provisions for claims | (334) | 503 |
| Risk margin | (1) | 3 |
| Reinsurers' share of the provisions for claims | 2 | (5) |
| (354) | 537 | |
| Return and revaluations of non-life insurance provisions | (374) | 503 |
| 2020 | 2021 | |
|---|---|---|
| Holding expenses | 46 | 52 |
| Other | 13 | 7 |
| Other expenses | 59 | 59 |
| 2020 | 2021 | |
|---|---|---|
| Current tax | 345 | 638 |
| Change in deferred tax | (12) | (42) |
| Prior year adjustment | 1 | 1 |
| Tax for the year | 334 | 597 |
| Of which tax in shareholders' equity | (5) | 7 |
| Tax | 329 | 604 |
| Calculated tax on profit for the year, 22% | 320 | 603 |
| Adjusted for the tax effect of: | ||
| Returns on shares etc. not liable to tax | (6) | 5 |
| Non-deductible expenses/non taxable income | 14 | (5) |
| Prior year adjustment | 0 | 1 |
| 329 | 604 |
| 2020 | 2021 | |
|---|---|---|
| Profit for the year | 1,124 | 2,138 |
| Average number of shares ('000) | 87,266 | 87,703 |
| Diluting impact of options ('000) | 210 | 245 |
| Average number of shares, diluted ('000) | 87,475 | 87,948 |
| EPS (DKK) | 12.9 | 24.4 |
| EPS, diluted (DKK) | 12.9 | 24.3 |
| Developm't | Goodwill | Software projects | Completed projects developm't under con- | Total | |
|---|---|---|---|---|---|
| 2020 | |||||
| Cost at 1 January | 441 | 223 | 1,258 | 196 | 2,119 |
| Additions | 0 | 6 | 0 | 296 | 302 |
| Transferred | 0 | 0 | 79 | (79) | 0 |
| Cost at 31 December | 441 | 229 | 1,337 | 414 | 2,421 |
| Impairment and amortisation at 1 January | 0 | (213) | (615) | 0 | (828) |
| Amortisation for the year | 0 | (7) | (101) | 0 | (108) |
| Impairment and amortisation at 31 December | 0 | (220) | (716) | 0 | (936) |
| Intangible assets 2020 | 441 | 9 | 621 | 414 | 1,486 |
| 2021 | |||||
| Cost at 1 January | 441 | 229 | 1,337 | 414 | 2,421 |
| Additions | 0 | 1 | 0 | 277 | 278 |
| Transferred | 0 | 0 | 529 | (529) | 0 |
| Disposals | 0 | 0 | 0 | (5) | (5) |
| Cost at 31 December | 441 | 230 | 1,867 | 157 | 2,694 |
| Impairment and amortisation at 1 January | 0 | (220) | (716) | 0 | (936) |
| Amortisation for the year | 0 | (5) | (112) | 0 | (118) |
| Impairment and amortisation at 31 December | 0 | (225) | (828) | 0 | (1,053) |
| Intangible assets 2021 | 441 | 5 | 1,038 | 157 | 1,641 |
All development projects are internally generated with assistance from external consultants.
Goodwill and development projects under construction are subjected to an impairment test at the end of the year.
Goodwill: Goodwill relates primarily to the purchase of non-life insurance companies in 1999. The future cash flows are based on three years’ expected technical result and a terminal value of the private segment to which goodwill relates. The expected technical results are calculated as part of an ongoing, quarterly forecast process. Primary assumptions: The calculation of premiums earned is based on the insurance portfolio adjusted to reflect the expected effect of business decisions and market development. The portfolio is indexed by the wage and salary index. Claims incurred are based on the current levels adjusted to reflect the normalised level of weather and large-scale claims. Furthermore, in general, the expected development in the level of claims and the effect of loss prevention activities are included. The levels of claims are adjusted to reflect the expected inflation.Expenses are calculated by projecting the expenditure base by the expected changes in activities and pay increases obtained through collective agreement, changes in taxes and duties etc. The reinsurance result is calculated in accordance with the current reinsurance programme and adjusted to reflect known and expected changes in prices and the size of cover. The calculation of the terminal value includes a growth rate of 0% (2020: 0%). The pre-tax discount rate is 7.7% (2020: 7.7%) and the post-tax rate 6.0% (2020: 6.0%). It is believed that there are no scenarios in which a probable change in the assumptions of the expected technical result or the discount rate will result in a situation where the carrying amount of goodwill exceeds its recoverable amount for the private segment. Development projects: Completed development projects primaly comprise the policy administration system for life, DKK 546m, and the new customer and core system for non-life, DKK 424m. The remaining expected useful lifetime of the life system is 7½ years. The first completed elements of the non-life system were taken into use during 2021. All elements will be amortised over an expected life-time of 10 years. Completed development projects are assessed for impairment end of year and at indications of impairment. The assessment showed no need for write-downs. Development projects under construction mostly comprise elements of the new customer and core system for non-life. The impairment test did not show any need for write-downs. Amortisation of intangible assets is primarily included in claims incurred and operating expenses.
54 / 108
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 16 of 54
Notes to the financial statements • • Group (DKKm)
| Operating equip- ment | Owner- occupied properties | Total | |
|---|---|---|---|
| 2020 | |||
| Cost at 1 January | 349 | 834 | 1,183 |
| Additions, improvements | 35 | 3 | 38 |
| Disposals | (9) | 0 | (9) |
| Revaluation taken to other comprehensive income | 0 | 1 | 1 |
| Transferred on revaluation | 0 | (1) | (1) |
| Cost at 31 December | 375 | 837 | 1,212 |
| Impairment and depreciation at 1 January | (236) | 0 | (236) |
| Depreciation for the year | (35) | (1) | (36) |
| Transferred on revaluation | 0 | 1 | 1 |
| Reversal of total impairment and depreciation of assets sold or withdrawn from operations during the year | 4 | 0 | 4 |
| Impairment and depreciation at 31 December | (266) | 0 | (266) |
| Tangible assets | 108 | 837 | 946 |
| 2021 | |||
| Cost at 1 January | 375 | 837 | 1,212 |
| Additions, improvements | 15 | 0 | 15 |
| Disposals | (6) | 0 | (6) |
| Revaluation taken to other comprehensive income | 0 | 1 | 1 |
| Revaluation taken to income statement | 0 | (27) | (27) |
| Transferred on revaluation | 0 | (1) | (1) |
| Cost at 31 December | 384 | 810 | 1,194 |
| Impairment and depreciation at 1 January | (266) | 0 | (266) |
| Depreciation for the year | (31) | (1) | (32) |
| Transferred on revaluation | 0 | 1 | 1 |
| Reversal of total impairment and depreciation of assets sold or withdrawn from operations during the year | 5 | 0 | 5 |
| Impairment and depreciation at 31 December | (293) | 0 | (293) |
| Tangible assets | 91 | 810 | 902 |
Owner-occupied properties are measured at a revalued amount corresponding to fair value (level 3). The weighted average of the rates of return on which fair value of individual properties was based
| | 2020 | 2021 |
| :------------------------------------------- | :------- | :------- |
| Weighted average rate of return | 5.3% | 5.0% |
| An increase in the required rate of return of 0.5pp will reduce the total fair value by | 75 | 73 |
| Carrying amount if the properties had been valued at cost less depreciations | 717 | 716 |
| 2020 | 2021 | |
|---|---|---|
| Fair value at 1 January | 4,932 | 5,281 |
| Additions, acquisitions | 197 | 285 |
| Additions, improvements | 60 | 8 |
| Disposals | (68) | (29) |
| Fair value revaluation for the year taken to revaluations | 161 | 662 |
| Fair value at 31 December | 5,281 | 6,207 |
Investment properties are recognised in the balance sheet as follows:
| | 2020 | 2021 |
| :---------------------------------------- | :------- | :------- |
| Investment properties | 3,934 | 2,927 |
| Investment assets related to unit-linked products | 1,347 | 3,280 |
The weighted average of the rates of return on which fair value of individual properties was based
| | 2020 | 2021 |
| :---------------------------- | :------- | :------- |
| Weighted average rate of return | 4.8% | 4.5% |
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Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 17 of 54
Notes to the financial statements • • Group (DKKm)
| 2020 | 2021 | 2020 | 2021 | |
|---|---|---|---|---|
| Fair value DKKm | 1,595 | 1,839 | 3,489 | 3,885 |
| Weighted average rate of return | 4.1% | 3.8% | 5.2% | 4.8% |
| Area (1,000 square meters) | 60 | 59 | 226 | 224 |
| Price per square meter (DKK 1,000) | 26 | 31 | 15 | 17 |
| Number of properties | 7 | 6 | 20 | 19 |
Investment properties are measured at fair value (level 3).
| 2020 | 2021 | |
|---|---|---|
| The basis of the measurement, e.g. management's estimate of the fair value, is an expected annual operating return and a required rate of return. Rate of return (4.0%-8.0%) | ||
| Rate of return (3.5%-7.5%) | ||
| An increase in the required rate of return of 0.5pp will reduce the total fair value by | 490 | 570 |
| The fair value includes properties under construction of | 197 | 482 |
Investments in associates and joint ventures mainly include holdings within property and property development. None of the associates and joint ventures are material to the Group.
| 2020 | 2021 | |
|---|---|---|
| Investment Associates | 549 | 957 |
| Joint ventures | 1,192 | 1,367 |
| Equity investments in associates and joint ventures | 1,741 | 2,324 |
| Share of results | ||
| Associates | 13 | 393 |
| Joint ventures | 79 | 195 |
| Income from associates and joint ventures | 92 | 588 |
| 2020 | 2021 | |
|---|---|---|
| Equity investments | 20,844 | 26,085 |
| Unit trusts | 665 | 740 |
| Bonds | 22,141 | 38,044 |
| Investment properties | 1,347 | 3,280 |
| Investment assets related to unit-linked contracts | 44,997 | 68,149 |
| 1 January | 31 December | |
|---|---|---|
| 2020 | ||
| 95 | 96 | |
| Change in accrued commissions | (1) | 0 |
| Ceded reinsurance premiums | 592 | 604 |
| Earned reinsurance premiums | (589) | (601) |
| Amortisation | (1) | (1) |
| Reinsurers' share of the provisions for unearned premiums at 31 December | 96 | 99 |
| Net present value of expected future cashflows | 21 | 20 |
| Profit margin | 75 | 79 |
| Private residence | Office property | |
|---|---|---|
56 / 108
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 18 of 54
Notes to the financial statements • • Group (DKKm)
| 2020 | 2021 | |
|---|---|---|
| Note 21. Reinsurers' share of the provisions for claims | ||
| 1 January | 478 | 440 |
| Reimbursement of claims relating to previous years | (193) | (179) |
| Change in expected income relating to previous years (run-off) | (38) | (6) |
| Reimbursement of claims relating to this year | (99) | (109) |
| Expected income relating to this year | 289 | 434 |
| Revaluation | 2 | (5) |
| Reinsurers' share of the provisions for claims at 31 December | 440 | 576 |
| Note 22. Deferred tax | 2019 | 2020 | 2021 |
|---|---|---|---|
| Properties | 57 | 76 | 93 |
| Operating equipment | 7 | (16) | (62) |
| Liabilities provided | (7) | (7) | (6) |
| Other | (11) | (3) | (17) |
| Deferred tax | 46 | 50 | 8 |
| Recognised as: | |||
| Deferred tax assets | (25) | (33) | (86) |
| Deferred tax liabilities | 71 | 83 | 94 |
| 46 | 50 | 8 | |
| Change | 5 | (42) | |
| Deferred tax related to acquisition | (16) | 0 | |
| Change included in the income statement | (12) | (42) |
| Hybrid core capital | Subordinated loan capital (redeemed 2021) | Subordinated loan capital | Subordinated loan capital | |
|---|---|---|---|---|
| Borrower | Topdanmark A/S | Topdanmark Forsikring A/S | Topdanmark Forsikring A/S | Topdanmark Forsikring A/S |
| Principal | 400 | 850 | 500 | 1.000 |
| Carrying value 2021 | 400 | - | 500 | 1.000 |
| Carrying value 2020 | 399 | 850 | 500 | - |
| Market value (level 2) 2021 | 400 | - | 500 | 1.000 |
| Market value (level 2) 2020 | 400 | 850 | 500 | - |
| Date of issue | November 2017 | December 2015 | December 2020 | December 2021 |
| Maturity | Bullet | 11 June 2026 | 30 December 2030 | 16 December 2031 |
| If permitted by the Danish FSA, the borrower can give notice of termination from | 23 November 2022 | 11 June 2021 | 30 December 2025 | 16 December 2026 |
| Interest rate | Cibor 3 months +275bp | Cibor 3 months +270bp | Cibor 3 months +160bp | Cibor 3 months +125bp |
| 2020 | 2021 | |
|---|---|---|
| Interest charges | 46 | 33 |
The market valuation of subordinated loans is based on a mark-to-model method. Future cashflows are discounted by the risk free rate and an appropriate credit spread. The solvency II interest rate curve is used for approximation for risk free rates. Subordinated loan capital is fully included in the Group's own funds (Capital for solvency purposes).
57 / 108
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 19 of 54
Notes to the financial statements • • Group (DKKm)
| 2020 | 2021 | |
|---|---|---|
| Note 24. Provisions for unearned premiums and profit margin - non-life insurance | ||
| Provisions for unearned premiums at 1 January | 1,849 | 1,590 |
| Profit margin at 1 January | 838 | 1,150 |
| 2,687 | 2,741 | |
| Gross premiums written | 9,803 | 10,282 |
| Gross premiums earned | (9,763) | (10,240) |
| Change in risk margin | (3) | 22 |
| Amortisation | (6) | (6) |
| Revaluation | 22 | (36) |
| Provisions for unearned premiums at 31 December | 1,590 | 1,446 |
| Profit margin at 31 December | 1,150 | 1,316 |
| Provisions for unearned premiums and profit margin at 31 December | 2,741 | 2,762 |
| 2020 | 2021 | |
|---|---|---|
| Life insurance provisions direct business at 1 January | 23,618 | 23,178 |
| Profit margin at 1 January | 79 | 86 |
| Total insurance provisions at 1 January | 23,697 | 23,263 |
| Collective bonus potential at 1 January | (1,961) | (1,810) |
| Accumulated revaluation at 1 January | (1,994) | (2,739) |
| Retrospective provisions at 1 January | 19,742 | 18,714 |
| Gross premiums written | 765 | 669 |
| Addition of return | 214 | 184 |
| Claims and benefits | (1,716) | (1,771) |
| Expense loading inclusive of expense bonus | (84) | (72) |
| Risk gain after allocating policyholders' risk bonus | 21 | (1) |
| Other | (9) | (4) |
| Intra-group transfers | (220) | (281) |
| Retrospective provisions at 31 December | 18,714 | 17,437 |
| Accumulated revaluation at 31 December | 2,739 | 1,884 |
| Collective bonus potential at 31 December | 1,810 | 3,075 |
| Total insurance provisions direct business at 31 December | 23,263 | 22,396 |
| Profit margin at 31 December | (86) | (77) |
| Life insurance provisions with-profit products | 23,178 | 22,319 |
| Portfolios analysed by guaranteed interest rates | Guaranteed benefits | Guaran- teed bonus | Individual bonus potential | Collective bonus potential | Life insurance provisions |
|---|---|---|---|---|---|
| 2020 | |||||
| Interest rate group 9 1% | 2,346 | 67 | 102 | 2,515 | |
| Interest rate group 10 1% | 610 | 1 | 57 | 669 | |
| Interest rate group 1 ]1%-2%] | 8,186 | 11 | 195 | 8,392 | |
| Interest rate group 3 ]1%-2%] | 802 | 3 | 83 | 888 |
58 / 108
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 20 of 54# Notes to the financial statements
| Guaranteed interest rate | Guaranteed benefits | Individual bonus potential | Collective bonus potential | Life insurance provisions |
|---|---|---|---|---|
| 2021 | ||||
| Interest rate group 11 (0.5%) | 20 | 14 | 0 | 34 |
| Interest rate group 9 1% | 1,979 | 134 | 187 | 2,300 |
| Interest rate group 10 1% | 617 | 3 | 91 | 712 |
| Interest rate group 1 ]1%-2%] | 7,280 | 143 | 715 | 8,137 |
| Interest rate group 3 ]1%-2%] | 782 | 4 | 151 | 936 |
| Interest rate group 2 ]2%-3%] | 2,326 | 0 | 335 | 2,662 |
| Interest rate group 4 ]2%-3%] | 945 | 6 | 177 | 1,128 |
| Interest rate group 5 ]3%-4%] | 1,992 | 0 | 437 | 2,429 |
| Interest rate group 6 ]4%-5%[ | 2,428 | 0 | 645 | 3,073 |
| Interest rate group 7 5% | 19 | 0 | 55 | 74 |
| Risk groups | 0 | 0 | 282 | 282 |
| Total contribution | 18,388 | 305 | 3,075 | 21,767 |
| Group Life | 187 | |||
| U74-life annuities | 91 | |||
| Other | 274 | |||
| Total 2021 | 18,388 | 305 | 3,075 | 22,319 |
| 2020 | ||||
| Interest rate group 11 (0.5%) | 20 | 14 | 0 | 34 |
| Interest rate group 9 1% | 1,979 | 134 | 187 | 2,300 |
| Interest rate group 10 1% | 617 | 3 | 91 | 712 |
| Interest rate group 1 ]1%-2%] | 7,280 | 143 | 715 | 8,137 |
| Interest rate group 3 ]1%-2%] | 782 | 4 | 151 | 936 |
| Interest rate group 2 ]2%-3%] | 2,326 | 0 | 335 | 2,662 |
| Interest rate group 4 ]2%-3%] | 945 | 6 | 177 | 1,128 |
| Interest rate group 5 ]3%-4%] | 1,992 | 0 | 437 | 2,429 |
| Interest rate group 6 ]4%-5%[ | 2,428 | 0 | 645 | 3,073 |
| Interest rate group 7 5% | 19 | 0 | 55 | 74 |
| Risk groups | 0 | 0 | 282 | 282 |
| Total contribution | 18,388 | 305 | 3,075 | 21,767 |
| Group Life | 187 | |||
| U74-life annuities | 91 | |||
| Other | 274 | |||
| Total 2021 | 18,388 | 305 | 3,075 | 22,319 |
The previous table seems to be partially duplicated with a 2020 column missing information. The following tables provide the requested data.
| Interest rate group | Guaranteed interest rate | Guaranteed benefits | Individual bonus potential | Collective bonus potential | Life insurance provisions |
|---|---|---|---|---|---|
| 2020 | |||||
| Interest rate group 11 (0.5%) | 0.5% | 20 | 14 | 0 | 34 |
| Interest rate group 9 | 1% | 1,979 | 134 | 187 | 2,300 |
| Interest rate group 10 | 1% | 617 | 3 | 91 | 712 |
| Interest rate group 1 | 1%-2% | 7,280 | 143 | 715 | 8,137 |
| Interest rate group 3 | 1%-2% | 782 | 4 | 151 | 936 |
| Interest rate group 2 | 2%-3% | 2,326 | 0 | 335 | 2,662 |
| Interest rate group 4 | 2%-3% | 945 | 6 | 177 | 1,128 |
| Interest rate group 5 | 3%-4% | 1,992 | 0 | 437 | 2,429 |
| Interest rate group 6 | 4%-5% | 2,428 | 0 | 645 | 3,073 |
| Interest rate group 7 | 5% | 19 | 0 | 55 | 74 |
| Risk groups | 0 | 0 | 282 | 282 | |
| Total contribution | 18,388 | 305 | 3,075 | 21,767 | |
| Group Life | 187 | ||||
| U74-life annuities | 91 | ||||
| Other | 274 | ||||
| Total 2021 | 18,388 | 305 | 3,075 | 22,319 |
The following sections contain data for 2020 that was not presented in a structured table in the original input. Reconstructed tables are provided based on the surrounding text.
| Interest rate group | 2020 | 2021 |
|---|---|---|
| Interest rate group 11 (0.5%) | - | 0 |
| Interest rate group 9 1% | 13 | 11 |
| Interest rate group 10 1% | 0 | 0 |
| Interest rate group 1 ]1%-2%] | 37 | 31 |
| Interest rate group 3 ]1%-2%] | 2 | 2 |
| Interest rate group 2 ]2%-3%] | 13 | 10 |
| Interest rate group 4 ]2%-3%] | 5 | 5 |
| Interest rate group 5 ]3%-4%] | 21 | 17 |
| Interest rate group 6 ]4%-5%[ | 34 | 29 |
| Interest rate group 7 5% | 1 | 0 |
| Total contribution | 126 | 106 |
| U74-life annuities | 2 | 2 |
| Other | 1 | 2 |
| Total risk margin | 130 | 109 |
| Interest rate group | Bonus ratio 2020 | Bonus ratio 2021 | Return (%) 2020 | Return (%) 2021 |
|---|---|---|---|---|
| Interest rate group 11 (0.5%) | - | 43.7 | - | 7.3 |
| Interest rate group 9 1% | 7.2 | 15.4 | 4.2 | 4.3 |
| Interest rate group 10 1% | 9.7 | 15.3 | 0.8 | 5.1 |
| Interest rate group 1 ]1%-2%] | 2.7 | 12.1 | 4.4 | 4.7 |
| Interest rate group 3 ]1%-2%] | 11.3 | 20.5 | 0.8 | 5.1 |
| Interest rate group 2 ]2%-3%] | 7.2 | 16.2 | 8.9 | 3.8 |
| Interest rate group 4 ]2%-3%] | 9.5 | 21.2 | 0.8 | 5.0 |
| Interest rate group 5 ]3%-4%] | 17.2 | 26.9 | 6.7 | 3.1 |
| Interest rate group 6 ]4%-5%[ | 25.8 | 36.5 | 6.8 | 3.1 |
| Interest rate group 7 5% | 238.2 | 356.2 | 0.8 | 5.1 |
Note 25. Life insurance provisions with-profit products - continued
| 2020 | 2021 | |
|---|---|---|
| Risk result after addition of risk bonus | 9 | 15 |
| Risk result after addition of risk bonus (%) | 0.0 | 0.1 |
| Cost groups | ||
| Customers' share of administration expenses after addition of expense bonus | 57 | 53 |
| Insurance operating expenses | (239) | (184) |
| Result of sales and administration | (182) | (131) |
| Result of sales and administration (%) | (0.8) | (0.6) |
| Return on customer funds after expenses before tax (%) | 4.1 | 3.1 |
| 2020 | 2021 | |
|---|---|---|
| Gross provisions at 1 January | 46,656 | 55,790 |
| Profit margin at 1 January | 250 | 281 |
| Retrospective provisions at 1 January | 46,906 | 56,072 |
| Gross premiums written | 10,578 | 10,327 |
| Addition of return | 3,675 | 8,479 |
| Claims and benefits | (5,185) | (7,832) |
| Expense loading inclusive of expense bonus | (104) | (116) |
| Risk gain after addition of risk bonus | (20) | (19) |
| Other | 2 | 3 |
| Intra-group transfers | 220 | 281 |
| Retrospective provisions at 31 December | 56,072 | 67,197 |
| Profit margin at 31 December | (281) | (1,447) |
| Gross provisions 31 December 2020 | 55,790 | |
| 2021 | ||
| Gross provisions at 1 January | 55,790 | |
| Profit margin at 1 January | 281 | |
| Retrospective provisions at 1 January | 56,072 | |
| Gross premiums written | 10,327 | |
| Addition of return | 8,479 | |
| Claims and benefits | (7,832) | |
| Expense loading inclusive of expense bonus | (116) | |
| Risk gain after addition of risk bonus | (19) | |
| Other | 3 | |
| Intra-group transfers | 281 | |
| Retrospective provisions at 31 December | 67,197 | |
| Profit margin at 31 December | (1,447) | |
| Gross provisions 31 December 2021 | 65,749 |
| 2020 | 2021 | |
|---|---|---|
| Return on customer funds after expenses before tax (%) | 8.3 | 17.3 |
| 2020 | 2021 | |
|---|---|---|
| With-profit products | 86 | 77 |
| Unit-linked products | 281 | 1,447 |
| Profit margin, life insurance and investment contracts | 367 | 1,525 |
| 2020 | 2021 | |
|---|---|---|
| Provisions at 1 January | 13,071 | 13,364 |
| Claims paid relating to previous years | (3,192) | (2,906) |
| Change in expected claims payments relating to previous years (run-off) | (201) | (211) |
| Claims paid relating to this year | (3,308) | (3,250) |
| Expected claims payments relating to this year | 6,788 | 7,026 |
| Inflation hedging | (153) | 434 |
| Amortisation | 25 | 39 |
| Revaluation | 334 | (503) |
| Provisions for claims | 13,364 | 13,994 |
| 2020 | 2021 | |
|---|---|---|
| Provisions at 1 January | 12,593 | 12,924 |
| Claims paid relating to previous years | (2,998) | (2,727) |
| Change in expected claims payments relating to previous years (run-off) | (164) | (205) |
| Claims paid relating to this year | (3,209) | (3,141) |
| Expected claims payments relating to this year | 6,499 | 6,592 |
| Inflation hedging | (153) | 434 |
| Amortisation | 25 | 39 |
| Revaluation | 332 | (498) |
| Provisions for claims, net of reinsurance | 12,924 | 13,418 |
Provisions net of reinsurance for business lines being settled in whole or partly as annuities:
| 2020 | 2021 | |
|---|---|---|
| Workers' compensation insurance | 6,085 | 6,135 |
| Average period of settlement | 6 years | 6 years |
| Illness and accident insurance, administered by Topdanmark Livsforsikring | 2,631 | 2,860 |
| Average period of settlement | 12 years | 12 years |
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| End of year | 6,414 | 7,549 | 6,652 | 6,599 | 6,468 | 5,928 | 6,400 | 6,527 | 6,814 | 7,000 | 65,495 |
| 1 year later | 6,439 | 7,755 | 6,715 | 6,685 | 6,448 | 6,043 | 6,568 | 6,701 | 6,583 | ||
| 2 years later | 6,455 | 7,771 | 6,691 | 6,592 | 6,367 | 6,059 | 6,650 | 6,704 | |||
| 3 years later | 6,402 | 7,742 | 6,646 | 6,589 | 6,346 | 6,147 | 6,697 | ||||
| 4 years later | 6,321 | 7,646 | 6,472 | 6,547 | 6,159 | 6,069 | |||||
| 5 years later | 6,303 | 7,571 | 6,376 | 6,426 | 6,131 | ||||||
| 6 years later | 6,229 | 7,478 | 6,312 | 6,367 | |||||||
| 7 years later | 6,215 | 7,442 | 6,288 | ||||||||
| 8 years later | 6,214 | 7,457 | |||||||||
| 9 years later | 6,198 | ||||||||||
| Less paid incl. inflation hedging | 5,818 | 7,026 | 5,837 | 5,845 | 5,577 | 5,325 | 5,663 | 5,446 | 4,627 | 3,242 | 54,406 |
| Provisions before discounting at 31 December | 380 | 430 | 452 | 522 | 555 | 744 | 1,034 | 1,259 | 1,955 | 3,758 | 11,089 |
| Discounting | (0) | (0) | (0) | (0) | (1) | (1) | (1) | (1) | (3) | (4) | (12) |
| Provisions relating to previous years at 31 December | 380 | 430 | 451 | 522 | 553 | 743 | 1,033 | 1,257 | 1,953 | 3,755 | 11,077 |
| Gross provisions at 31 December 2021 | 13,994 |
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| End of year | 6,028 | 6,387 | 6,259 | 6,183 | 6,007 | 5,736 | 6,016 | 6,281 | 6,525 | 6,566 | 61,056 |
| 1 year later | 6,098 | 6,461 | 6,301 | 6,270 | 6,027 | 5,832 | 6,175 | 6,424 | 6,274 | ||
| 2 years later | 6,115 | 6,476 | 6,288 | 6,190 | 5,942 | 5,855 | 6,257 | 6,437 | |||
| 3 years later | 6,066 | 6,449 | 6,242 | 6,179 | 5,924 | 5,945 | 6,301 | ||||
| 4 years later | 5,990 | 6,354 | 6,069 | 6,097 | 5,733 | 5,870 | |||||
| 5 years later | 5,972 | 6,279 | 5,964 | 6,050 | 5,678 | ||||||
| 6 years later | 5,898 | 6,179 | 5,900 | 6,001 | |||||||
| 7 years later | 5,886 | 6,143 | 5,908 | ||||||||
| 8 years later | 5,877 | 6,160 | |||||||||
| 9 years later | 5,861 | ||||||||||
| Less paid incl. inflation hedging | 5,489 | 5,736 | 5,459 | 5,483 | 5,194 | 5,126 | 5,292 | 5,196 | 4,436 | 3,133 | 50,544 |
| Provisions before discounting at 31 December | 372 | 425 | 449 | 518 | 484 | 743 | 1,009 | 1,241 | 1,838 | 3,433 | 10,512 |
| Discounting | (0) | (0) | (0) | (0) | (1) | (1) | (1) | (1) | (2) | (3) | (10) |
| Provisions relating to previous years at 31 December | 372 | 425 | 449 | 517 | 483 | 743 | 1,008 | 1,240 | 1,836 | 3,430 | 10,502 |
| Provisions, net of reinsurance, at 31 December 2021 | 13,418 |
Reconciliation:
| Provisions for claims | 13,994 |
| Less reinsurers' share of provisions | (576) |
| Provisions, net of reinsurance, at 31 December 2021 | 13,418 |
Composition of expected payments, net of reinsurance:
| 2020 | 2021 | |
|---|---|---|
| Original payment | 5,991 | 6,397 |
| Loss / (gain) on settlement | (320) | (412) |
| Amortisation / revaluation workers' compensation and illness and accident | 169 | 150 |
| Total | 5,840 | 6,135 |
The table shows the historical development in the estimated final liability (the sum of claims payments and provisions) for each claims year. Significant proportions of the liabilities shown have been calculated without discounting which to a great extent eliminates changes in discounting rates. However, illness and accident administered by Topdanmark Livsforsikring and workers' compensation are included at discounted values.
| 2020 | 2021 | |
|---|---|---|
| Customers' share of technical basis for risk allowance | (95) | 1,315 |
| Share of technical basis for risk allowance allocated to shareholders' equity | (17) | 294 |
| Insurance technical result | (112) | 1,609 |
The allocation of the technical basis for risk allowance to policyholders is in accordance with the executive order on the contribution principle.
| 2020 | 2021 | |
|---|---|---|
| Shadow account at 1 January | 57 | 91 |
| Depreciation | (5) | 0 |
| Provided | 39 | 54 |
| Shadow account at 31 December | 91 | 144 |
Expenses in the income statement presented by nature:
| Staff costs (excl. |
| Fee to the auditors elected at the Annual General Meeting | 2020 | 2021 |
|---|---|---|
| Fee for statutory audit of the annual accounts | 4.2 | 4.3 |
| Fee for other assurance engagements* | 0.2 | 0.4 |
| Fee for tax advice | 0.0 | 0.2 |
| Fee for services, other than audit work | 0.3 | 1.0 |
| Total | 4.8 | 5.8 |
*Fee for other assurance engagements includes fee for issuance of reports to the Danish Tax Authority and other public authorities. Fee for services, other than audit work, includes general accounting advisory.
| 2020 | 2021 | |
|---|---|---|
| Salaries | 1,568 | 1,547 |
| Pensions | 257 | 261 |
| Social security costs | 32 | 42 |
| Payroll tax | 274 | 290 |
| Employee shares | 57 | 60 |
| Share options | 8 | 8 |
| STI-Bonuses | 0 | 3 |
| Total | 2,195 | 2,211 |
| Average number of full-time employees | 2,460 | 2,417 |
For the period November 2020 to October 2021, Topdanmark has allotted 184,387 shares at a value of DKK 63m for a salary cut. For the period November 2019 to October 2020, Topdanmark has allotted 228,556 shares at a value of DKK 59m for a salary cut.
Topdanmark's long-term option-based LTI-programme comprises the Executive Board and senior executives. The strike price has been fixed at 110% of the market price on the last trading date, prior year (average of all trades). The options may be exercised 3-5 years subsequent to the granting. The scheme is settled by shares (equity instruments). There are no other earnings conditions to the option scheme than employment in the full year of allocation. Options are allocated at the beginning of the year and in connection with resignation in the year of allocation a proportional deduction in the number of allocated options is made.
Total number of options ('000)
| Strike price | Executive Board | Senior executives | Resigned | Total | |
|---|---|---|---|---|---|
| 2020 | |||||
| Outstanding at 1 January | 230 | 178 | 648 | 260 | 1,086 |
| Granted | 362 | 58 | 188 | 1 | 247 |
| Transferred | 0 | (120) | 120 | 0 | 0 |
| Exercised | 168 | (11) | (118) | (67) | (195) |
| Forfeited | 324 | 0 | 0 | (7) | (7) |
| Outstanding at 31 December 2020 | 260 | 224 | 598 | 308 | 1,130 |
| Fair value at 31 December 2020 | 10 | 22 | 18 | 50 | |
| Fair value of granting 2020 | 2 | 8 | 0 | 10 | |
| Average current price on date of exercise 2020 | 300 | ||||
| 2021 | |||||
| Outstanding at 1 January | 260 | 224 | 598 | 308 | 1,130 |
| Granted | 291 | 78 | 228 | 0 | 306 |
| Transferred | (171) | 103 | 67 | 0 | 0 |
| Exercised | 169 | (23) | (165) | (115) | (302) |
| Forfeited | 285 | 0 | 0 | (12) | (12) |
| Outstanding at 31 December 2021 | 270 | 108 | 765 | 249 | 1,121 |
| Fair value at 31 December 2021 | 9 | 74 | 30 | 113 | |
| Fair value of granting 2021 | 2 | 7 | 0 | 10 | |
| Average current price on date of exercise 2021 | 308 |
Per granting:
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| 135 | 234 | 290 | 334 | 271 | |
| 1 | 9 | 30 | 29 | 40 | |
| 52 | 108 | 172 | 189 | 243 | |
| 38 | 115 | 58 | 25 | 13 | |
| 91 | 232 | 259 | 243 | 296 |
The fair value of the granting for the year has been calculated using the Black and Scholes model assuming a price of DKK 264.37 (2020: DKK 329.05) per share, an interest rate corresponding to the zero coupon rate based on the swap curve end of December the previous year, future volatility of 22% (2020: 22%) p.a. and a pattern of exercise similar to Topdanmark's previous granting of share options, resulting in an average life of the options of approximately 4 years. The volatility has been calculated on the basis of previous years' volatility, which continues to be Management's best estimate of future volatility. The stated strike prices for outstanding options are reduced by dividend distributions.
| 2020 | 2021 | |
|---|---|---|
| Number of options which could be exercised on 31 December ('000) | 331 | 324 |
Topdanmark´s short-term cash and share based STI-programme comprises the Executive Board and senior executives. The programme is tied up with the completion of a number of predefined goals for each member of the programme. Bonuses are mainly paid with 50% cash and 50% shares in Topdanmark A/S. Costs in 2021 comprise bonuses earned in 2021 and 2020.
Severance pay has been described in "Severance pay" in "Management's review".
| January 2021 - January 2023 | January 2022 - January 2024 | January 2023 - January 2025 | January 2024 - January 2026 | |
|---|---|---|---|---|
| Exercise period | ||||
| January 2020 - January 2022 | ||||
| January 2021 - January 2023 | ||||
| January 2022 - January 2024 | ||||
| January 2023 - January 2025 | ||||
| January 2024 - January 2026 |
Possessing an ownership interest of 49.44% of the shares outstanding, Sampo plc, Fabianinkatu 27, Helsinki, Finland has a controlling interest in Topdanmark A/S. Related parties with material influence comprise the Board of Directors, the Executive Board and their related parties.
Directors' fees adopted by the AGM were DKK 6,458m (2020: DKK 5,871m). The fee includes DKK 318 thousands (2020: DKK 289 thousands) concerning Topdanmark Forsikring A/S. The board counts nine members.
| (DKK '000) | 2020 | 2021 |
|---|---|---|
| Ricard Wennerklint | 1,733 | 1,906 |
| Jens Aaløse | 962 | 1,059 |
| Elise Bundgaard | 385 | 424 |
| Anne Louise Eberhard | 578 | 635 |
| Mette Jensen | 481 | 529 |
| Cristina Lage | 578 | 635 |
| Ole Lomholt Mortensen | 385 | 424 |
| Petri Niemisvirta | 385 | 424 |
| Morten Thorsrud | 385 | 424 |
| Total fee paid | 5,871 | 6,458 |
For Ricard Wennerklint, social charges of DKK 377 thousands (2020: DKK 344 thousands) have additionally been paid. The Board of Directors solely receives a fixed remuneration.
| Peter Lars Kufall (From 10 August) | Thomas (To 10 August) | Brian R. Jacobsen | Lars Hermann Beck | Erichsen Thykier | Total | |
|---|---|---|---|---|---|---|
| 2021 | ||||||
| Salaries etc. | 7.3 | 2.0 | 5.4 | 6.4 | 3.7 | 24.9 |
| Pensions | 0.2 | 0.2 | 0.2 | |||
| Fixed remuneration | 7.3 | 2.2 | 5.4 | 6.4 | 3.7 | 25.0 |
| Share options | 0.7 | 0.0 | 0.5 | 0.6 | 0.4 | 2.3 |
| STI-bonus | 3.2 | 0.4 | 1.0 | 0.8 | 0.6 | 5.9 |
| Variable remuneration | 4.0 | 0.4 | 1.6 | 1.4 | 1.0 | 8.2 |
| Salaries earned | 11.3 | 2.5 | 7.0 | 7.7 | 4.7 | 33.2 |
Remuneration for Lars Thykier is included up until his resignation from the Executive Board on 10 August 2021. Brian R. Jacobsen and Lars Thykier have successively accrued remuneration equal to 18 months' salary to be paid on expiry of the employment. Any regulation of the amount is included in the fixed remuneration. Lars Thykier is paid one year’s salary up until 10 August 2022, of which DKK 2.7m has been paid in 2021. The remaining part has been accrued in the annual report for 2021. Brian R. Jacobsen receives remuneration during the period of notice up until 30 April 2023. STI-Bonus includes bonus for 2020 and 2021.
| Peter | Thomas | Brian R. Jacobsen | Lars Erichsen | Thykier | Total | |
|---|---|---|---|---|---|---|
| 2020 | ||||||
| Salaries etc. | 7.3 | 5.2 | 5.9 | 5.9 | 24.5 | |
| Remuneration* | 0.4 | 0.4 | 0.8 | |||
| Fixed remuneration | 7.3 | 5.2 | 6.4 | 6.3 | 25.3 | |
| Share options | 0.7 | 0.5 | 0.6 | 0.6 | 2.3 | |
| Variable remuneration | 0.7 | 0.5 | 0.6 | 0.6 | 2.3 | |
| Salaries earned | 8.0 | 5.7 | 6.9 | 6.9 | 27.6 |
*Brian R. Jacobsen and Lars Thykier have successively earned a remuneration equivalent to 18 months' salary which is to be paid by the termination of the employment. The stated amount under Remuneration is regulation of the obligation.
In addition to the Executive Board, another 27 (2020: 27) employees have material influence on Topdanmark’s risk profile.
| 2020 | 2021 | |
|---|---|---|
| Fixed remuneration | 58.6 | 58.5 |
| Variable remuneration | 10.3 | 18.5 |
| Total | 68.9 | 77.0 |
The number of material risk takers are calculated as a weighted average.
The information relates to the Board of Directors and the Executive Board notified on 31 December.
Board of Directors
| 2020 | 2021 | |
|---|---|---|
| Ricard Wennerklint | 2,000 | 2,000 |
| Jens Aaløse | 50 | 50 |
| Elise Bundgaard | 1,458 | 1,789 |
| Anne Louise Eberhard | 100 | 100 |
| Mette Jensen | 1,125 | 1,270 |
| Cristina Lage | 450 | 450 |
| Ole Lomholt Mortensen | 1,221 | 1,564 |
| Petri Niemisvirta | 500 | 500 |
| Morten Thorsrud | 500 | 500 |
Executive Board
| 2020 | 2021 | |
|---|---|---|
| Peter Hermann | 4,776 | 8,031 |
| Lars Kufall Beck | - | 0 |
| Thomas Erichsen | 4,070 | 5,943 |
| Lars Thykier | 3,835 | - |
| Brian Rothemejer Jacobsen | 15,073 | 17,725 |
| (DKKm) | 2020 | 2021 |
|---|---|---|
| Sampo plc holds: | ||
| Subordinated notes in Topdanmark Forsikring A/S | 270 | 0 |
| If P&C Insurance Ltd. holds: | ||
| Subordinated notes in Topdanmark Forsikring A/S | 500 | 1,500 |
| Subordinated notes in Topdanmark A/S | 133 | 133 |
For a joint venture with another institutional investor, the Group has granted a call loan of DKK 227m in connection with the construction of residential property. Today, the property is fully let. The loan is non interest bearing and is amortised periodically. The solvency ratio of the debtor is 65% by the end of 2021.
| 2020 | 2021 | |
|---|---|---|
| Financial assets at fair value through profit and loss | ||
| Held for trading: | ||
| Equity investments | 4,751 | 5,085 |
| Unit trusts | 2 | 16 |
| Bonds | 41,776 | 32,995 |
| Loans guaranteed by mortgages and other loans | 6 | 5 |
| Derivatives | 1,405 | 127 |
| Total Held for trading | 47,939 | 38,228 |
| Designated at fair value: | ||
| Deposits with credit institutions | 4,989 | 2,620 |
| Investment assets unit-linked products excl. |
Financial assets recorded at fair value based on non-observable input (level 3):
| 1 January | 31 December | |
|---|---|---|
| Purchases | 371 | 7,278 |
| Revaluations on assets transferred to level 2 | 583 | 664 |
| Transferred from level 2 | 0 | 270 |
| Transferred to level 2 | 6,628 | 0 |
| Repayments | 0 | (7,463) |
| Revaluations (unrealised) | (327) | (689) |
| Revaluations (realised) | 22 | 6 |
| 1 | 15 | |
| Total | 7,278 | 80 |
Due to the COVID-19 situation, end of March 2020 Topdanmark transferred structured products as CLOs of DKK 6,628m from level 2 to level 3 implying valuation models based on non-observable inputs. In Q2 2021, management assessed that, in general, the markets for structured credit products (CLOs) could be defined as active again in accordance with the definition in IFRS 13. Therefore, according to the applied accounting policies, these assets were transferred back from level 3 to level 2. The portfolio end 2021 (DKK 80m), consists of bonds for which current return depends on payment on life annuity contracts.
Group companies have agreed to lend equities against security:
| 2020 | 2021 | |
|---|---|---|
| Carrying value of equities lent | 1,596 | 474 |
| Fair value of bonds received as security | 1,888 | 651 |
Outline of equity investments can be obtained on application.
Financial liabilities at fair value through profit and loss
| 2020 | 2021 | |
|---|---|---|
| Held for trading: | ||
| Derivatives | 983 | 605 |
| Designated at fair value: | ||
| Amounts due to credit institutions | 1,350 | 451 |
| Total financial liabilities at fair value | 2,333 | 1,055 |
| (observable inputs level 2) |
Financial liabilities at amortised cost
| 2020 | 2021 | |
|---|---|---|
| Other subordinated loan capital | 1,749 | 1,900 |
| Deposits received from reinsurers | 33 | 11 |
| Debt relating to direct insurance | 165 | 180 |
| Debt relating to reinsurance | 23 | 42 |
| Current tax liabilities | 60 | 84 |
| Other debt | 1,727 | 2,468 |
| Total financial liabilities at amortised cost | 3,757 | 4,684 |
Total financial liabilities | 6,089 | 5,739
Other subordinated loan capital Amounts due to credit institutions
| Beginning 2020 | Cash flow from financing | Redemption/net change | Issue | Other changes | Amortisation | End 2020 | Cash flow from financing | Redemption/net change | Issue | Other changes | Amortisation | End 2021 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Other Amounts | 1,747 | (500) | 500 | 1 | 1,749 | (850) | 1,000 | 1 | 1,900 | ||||
| due to credit institutions | 155 | 1,195 | 0 | 0 | 1,350 | (899) | 0 | 0 | 451 |
2020
| Gross Carrying value | Net position | Offsetting | |
|---|---|---|---|
| Assets | |||
| Bonds | 1,405 | 0 | 1,405 |
| Cash position | 7 | 0 | 7 |
| Derivatives, investment assets | 1,412 | 0 | 1,412 |
| Derivatives hedging inflation, other | 0 | (1,031) | 381 |
| Liabilities | 257 | 2,651 | 1,668 |
| Repos debt | (983) | 0 | (983) |
| Derivatives | 2,651 | 1,668 | (1,240) |
| (1,240) | 0 | (1,240) | |
| Total | 257 | 2,651 | 1,668 |
2021
| Gross Carrying value | Net position | Offsetting | |
|---|---|---|---|
| Assets | |||
| Derivatives, investment assets | 127 | 0 | 127 |
| Derivatives hedging inflation, other | 66 | 0 | 66 |
| 193 | 0 | 193 | |
| Liabilities | 0 | (59) | 134 |
| Repos debt | (386) | 0 | (386) |
| Derivatives | (605) | 0 | (605) |
| 1,211 | 1,174 | 1,781 | |
| Total | (991) | 0 | (991) |
| 1,593 | 1,174 | 1,777 |
2020
As at 1 April 2020, the Group acquired the company Rådhuskontorerne ApS for DKK 81m cash. The purchase price was compounded as follows:
| Investment properties | 112 |
| Deferred tax liabilities | (16) |
| Other debt | (15) |
| Collateral | 81 |
Assets related to with-profit products
| 1 January | 31 December | Return (%)* | |
|---|---|---|---|
| Land and buildings | 3,360 | 3,528 | 15.6 |
| Listed equity investments | 2,411 | 2,655 | 23.3 |
| Unlisted equity investments | 1,288 | 1,244 | 21.0 |
| Total equity investments | 3,699 | 3,899 | 22.6 |
| Government and mortgage bonds | 15,062 | 11,592 | (2.0) |
| Index-linked bonds | 934 | 859 | (2.7) |
| Credit bonds and emerging market bonds | 1,498 | 1,510 | 15.7 |
| Total bonds | 17,494 | 13,961 | (0.6) |
| Associates and joint ventures | 319 | 591 | 78.8 |
| Other investment assets | (1,789) | 791 | 0.0 |
| Derivatives to hedge against the net change in assets and liabilities | 575 | 30 |
* Annual return as a percentage before pension return tax (PAL) and corporation tax.
Assets related to unit-linked products
| 2020 | 2021 | |
|---|---|---|
| Land and buildings | 2,017 | 3,036 |
| Listed equity investments | 15,772 | 19,310 |
| Total equity investments | 15,772 | 19,310 |
| Government and mortgage bonds | 11,941 | 18,019 |
| Credit bonds and emerging market bonds | 6,510 | 7,892 |
| Total bonds | 18,452 | 25,911 |
| Other investment assets | 3,056 | (1,916) |
The exposure in listed equity investments has been adjusted by means of financial derivatives and amounts to 20,398 (2021: 24,781).
Liquidity not bound in equity investments due to the use of financial derivatives is mainly invested in government and mortgage bonds and amounts to 7,170 (2021: 5,471).
Assets related to unit-linked products do not include assets chosen by policy holders. When calculating yield rates, the return of derivatives is allocated in proportion to the exposure in the underlying asset.
| Selected age points in relation to time of retirement | Percentage of provisions before PAL | Return in average percentage 2020 | Return in average percentage 2021 | |
|---|---|---|---|---|
| Life cycle: | ||||
| 30 years | 1.1 | 5.1 | 5.75 | 5.50 |
| 15 years | 2.9 | 4.2 | 5.25 | 4.75 |
| 5 years | 1.3 | 3.4 | 4.50 | 4.50 |
| 5 years later | 0.0 | 3.5 | 4.25 | 4.25 |
| Non life-cycle | 31.9 | 6.1 | 5.75 | 5.75 |
Reconciliation of the number of shares ('000)
| 2020 | 2021 | |
|---|---|---|
| Shares issued at 1 January | 90,000 | 90,000 |
| Own shares at 1 January | (2,933) | (2,509) |
| Number of shares at 1 January | 87,067 | 87,491 |
| Shares sold | 424 | 487 |
| Shares issued at 31 December | 90,000 | 90,000 |
| Own shares at 31 December | (2,509) | (2,022) |
| Number of shares at 31 December | 87,491 | 87,978 |
| Number of shares '000 | Nominal value DKKm | Percentage of share capital | Proceeds on sale DKKm | |
|---|---|---|---|---|
| Held at 1 January 2020 | 2,933 | 3 | 3.3 | |
| Sold in 2020 | (424) | (0) | 0.5 | (92) |
| Held at 31 December 2020 | 2,509 | 3 | 2.8 | |
| Sold in 2021 | (487) | (0) | 0.5 | (114) |
| Held at 31 December 2021 | 2,022 | 2 | 2.2 |
Number of shares held to cover the granting of options and STI-bonuses: 1,135 thousands (2020: 1,130 thousands).
Own shares are held by the parent company.
| 2020 | 2021 | |
|---|---|---|
| The Life insurance company has registered the following assets as security for technical provisions: | ||
| Equity investments in associates and joint ventures | 382 | 591 |
| Unit trusts | 2 | 16 |
| Equity investments | 3,670 | 2,661 |
| Bonds | 27,092 | 18,296 |
| Deposits with credit institutions | 1,300 | 725 |
| Investment assets related to unit-linked products | 44,997 | 68,149 |
| Accrued interest | 331 | 339 |
| Equity investments in and receivables from group entities eliminated | 4,963 | 3,743 |
| Registered assets | 82,736 | 94,520 |
| Bonds provided as security for loans in accordance with standard repo-contracts | 257 | 0 |
| 2020 | 2021 | |
|---|---|---|
| Contract liabilities | 501 | 222 |
| Adjustments to VAT liabilities | 136 | 121 |
| Other liabilities | 1 | 1 |
| Capital commitments made to loan funds and private equity funds etc. | 356 | 413 |
| All companies in the Topdanmark Group and other Danish companies and branches in the Sampo Group are jointly taxed with Topdanmark A/S being the management company. Pursuant to the specific rules on corporation taxes etc. in the Danish Companies Act, the companies are liable for the jointly taxed companies and for any obligations to withhold tax on interest, royalties and dividend for companies concerned. | ||
| In connection with the implementation of a new customer and core system, Topdanmark Forsikring A/S has undertaken to provide support to specific suppliers to fulfil Topdanmark EDB IV ApS' obligations in accordance with the contracts. |
| Name | Registered office | Activity |
|---|---|---|
| Topdanmark A/S | Ballerup | Holding |
| Topdanmark Forsikring A/S | Ballerup | Insurance |
| TDP.0007 A/S | Ballerup | Property |
| Topdanmark EDB A/S | Ballerup | IT services |
| Topdanmark EDB IV ApS | Ballerup | IT services |
| E. & G. Business Holding A/S | Ballerup | Holding |
| Topdanmark Holding S.A. | Luxembourg | Holding |
| Risk & Insurance Services S.A. | Luxembourg | Administration |
| Topdanmark Liv Holding A/S | Ballerup | Holding |
| Topdanmark Livsforsikring A/S | Ballerup | Insurance |
| Topdanmark Kapitalforvaltning A/S | Ballerup | Asset management |
| Topdanmark EDB II ApS | Ballerup | IT services |
| Topdanmark Ejendom A/S | Ballerup | Property |
| TDE.201 ApS | Ballerup | Property |
| Rådhuskontorerne ApS | Ballerup | Property |
| Topdanmark Invest A/S | Ballerup | Investment |
| Topdanmark Ejendomsadministration A/S | Ballerup | Property |
All of the companies are 100% owned (2020: 100%).
The five-year summary, in accordance with Section 91(a) of the Danish Executive Order on Financial Reports for Insurance Companies is presented as first page in the annual financial statements for the Group. Sensitivity information according to Section 126 is part of "Risk Scenarios" in Management's review. There have been no events in the period from 31 December 2021 until the presentation of the consolidated financial statements which could change the assessment of the annual report.
72 / 108
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
Page 34 of 54
Notes to the financial statements
The following description of risks in the Topdanmark Group elaborates on risk management.
Personal, liability and property insurance for the private, SME, and agricultural markets.
| Most important risks | Risk preferences | Risk reducing activities |
|---|---|---|
| Underwriting risk | • Acceptance policy • Follow-up policy. |
|
| Reserve risk: | • Provisions for outstanding claims • Provisions for unearned premiums. |
|
| Catastrophe risks: | • Storm and cloudburst • Fire • Terror • Workers' compensation. |
|
| Cumulative risk. | Profit on both product and customer level. | Spread of risk on different types of insurance/customer groups. Limited effect on results from individual claims events by means of reinsurance. Advanced risk-based price models. Clear rules for new business. |
| Risk equalisation through extensive reinsurance programme. Systematic follow-up on profitability. High data quality. Use of statistical models for calculation of provisions. |
Life insurance contracts with bonus entitlement, unit-linked contracts with no investment guarantees and group life.
| Most important risks | Risk preferences | Risk reducing activities General insurance rates are re-calculated on a regular basis. Provisions are generally calculated on a monthly basis across all lines of business. The claims trend is assessed monthly and followed up by any necessary price changes. Topdanmark continues to improve its administration systems to achieve more finely meshed data capture, which in turn enables it to identify the claims trends at an earlier point in time and compile information on the constituent parts of the various types of claims.
To ensure uniform and efficient claims handling, Topdanmark has grouped the handling of all types of claims into one operational unit. The claims handling is intended to make the customers feel "well-helped" and safe while at the same time ensure efficient management and control of the claims incurred.
Topdanmark helps its customers when they need assistance
Focus is on the customer experience, ensuring that the individual customer finds Topdanmark delivering an excellent service. Customers’ satisfaction with visits and email-, telephone- and internet contact is monitored daily to act immediately on each dissatisfied customer enabling us to help the customer and as well as learn from the incident.
Efficient management of claims incurred
Topdanmark is continuously focusing on making its claims handling processes more efficient under the following three main headings:
It is important to promptly obtain an overall impression of the size of a claim, implement any damage controlling actions and/or commence the repair. Prompt attention not only reduces the compensation paid but also provides a better experience for the customer. Typically, the claims department operates with day-to-day management of claims notifications and other claims 75 / 108 Announcement No. 05/2022 from Topdanmark A/S Announcement No. 03/2020 from Topdanmark A/S Page 37 of 54 handling, so the value of the claim does not increase. Customers increasingly report of claims online. Turnaround times are continuously monitored.
Topdanmark always seeks to optimise procurement for the benefit of both customers and shareholders.
Topdanmark has developed procedures for all major claims processes to ensure that they are handled in a uniform and controlled manner. These are supplemented by rules governing the level of professional and financial competence expected of each of the employees in the claims department. The overall professionalism is controlled by regular quality assessment of a random sample of claims. For example, it is investigated whether the cover, reason for the claim and provisioning are correct, the recourse possibilities have been tested and that the deductible, VAT etc. have all been charged.
Topdanmark’s claims handling system supports professional accuracy, and Topdanmark continuously works to optimise its systems in order to improve the claims handling processes through automation. The claims organisation works with the version of the Lean concept used by the service organisations, based on the customer’s needs and focusing on providing the right help in the first contact with the customer. In addition to improved customer satisfaction, the correct assessment of the damage also reduces the claims handling time and the average compensation.
Topdanmark has a contingency plan to ensure that prompt, correct and targeted action is taken on a major weather event such as storm, hurricane, cloudburst or flood. The contingency programme consists of several levels, and this enables a proportional response depending on the size of the event. Topdanmark has appointed emergency helpers throughout the company whose claims handling knowledge is regularly kept up-to-date by training targeted at the knowledge level of the individual emergency helper. Furthermore, automation technology and robot processes are being implemented on an ongoing basis to improve the scalability of the contingency programme.
Topdanmark focuses on loss prevention and loss limitation by investing in, among others, IoT-solutions and machine learning. The main objective is to incline customers towards pro-active risk handling so that they themselves can keep abreast of reducing their vulnerability. By doing this, Topdanmark ensures security for the customer and reduces its own risk at the same time.
Traditionally, the insurance classes are divided into short- tail i.e. those lines where the period from notification until settlement is short and long-tail, i.e. those lines where the period from notification until settlement is long. Examples of short-tail lines are buildings, personal property and comprehensive motor insurance. Long-tail lines relate to personal injury and liability such as workers' compensation, accident, motor third-party insurance and commercial liability.
Composition of Topdanmark’s overall provisions for outstanding claims:
| 2020 | 2021 | |
|---|---|---|
| % Duration | % Duration | |
| Short-tail | 13 1 | 14 1 |
| Annuity provisions in workers' compensation | 26 10 | 24 11 |
| Other claims provisions in workers' compensation | 21 2 | 22 2 |
| Accident | 29 10 | 30 9 |
| Motor personal liability | 6 2 | 6 2 |
| Commercial liability | 4 2 | 5 2 |
The much higher provisioning risk in long-tail than in short-tail lines is due to the longer period of claims settlement. It is not unusual that claims in long-tail lines are settled three to five years after notification and in rare cases up to 10-15 years. During such a long period of settlement, the levels of compensation could be significantly affected by changes in legislation, case-law or practice in the award of damages adopted by, for example, the Danish Labour Market Insurance which awards compensation for injury 76 / 108 Announcement No. 05/2022 from Topdanmark A/S Announcement No. 03/2020 from Topdanmark A/S Page 38 of 54 and loss of earnings capacity in all cases of serious industrial injuries. The exposure to industrial injuries has been reduced substantially over the past five years. The practice adopted by the Danish Labour Market Insurance also has some impact on the levels of compensation for accident and personal injury within motor, liability and commercial liability insurance.
The provisioning risk represents mostly the ordinary uncertainty of calculation and claims inflation, i.e. an increase in the level of compensation due to the annual increase in compensation per policy being higher than the level of general indexation or due to a change in judicial practice/legislation. The sufficiency of the provisions is tested in key lines by calculating the provisions using alternative models as well, and then comparing the compensation with information from external sources, primarily statistical material from the Danish Labour Market Insurance and the Danish Road Sector/Road Directorate. The actuarial team is continuously in dialogue with the claims departments on any changes in the practices stemming from new legislation, case law or compensation awards as well as the impact of such changes on the procedures used to calculate individual provisions. The provision risk is described mathematically in Topdanmark's internal model and is quantified in the calculation module in the internal model. From this is known the probability of loss / gain of a given size, including Topdanmark's 200-year provision risk, i.e. a negative run-off that is so large that it will only occur in one of 200 financial years. The 200-year provision risk is included in the calculation of the capital requirement for operating Topdanmark's insurance business.
Premium provisions are measured based on an estimate of future payments for incidents in the remaining period of cover. A significant uncertain and estimated assessment is involved in the determination thereof. Premium provisions must be seen in connection with the profit margin as an increase in the estimated cashflow will be absorbed by the profit margin up to a combined ratio of 100. Financial estimates and assessments with effect on the result of the year and shareholders’ equity are therefore primarily relevant within businesses with combined ratio of 100 or more, where premiums are insufficient for covering expected payments and a risk margin, and consequently provisions to cover losses must be made.
Topdanmark limits its insurance risk on significant events through a comprehensive reinsurance programme.
Reinsurance covers storm claims of up to DKK 5.1bn with a retention of DKK 100m. Snow load, snow thawing and cloudbursts are also covered. Reinstatement for the proportion of the cover used is activated by payment of a reinstatement premium. In the event of another storm within the same year, there is cover of a further DKK 5.1bn with a retention of DKK 100m. In the event of a third and fourth storm, there is cover of up to DKK 670m with a retention of DKK 20m if the events occur within the same calendar year. To this should be added the cover not already hit twice by the first two storms. The cover of a third or fourth storm is dependent on the storm programme not having been hit previously by two individual storms each exceeding DKK 2.9bn. The storm programme is renewed on 1 July. Specific reinsurance cover of DKK 100m for cloudbursts takes effect if accumulated annual cloudburst claims exceed DKK 50m. For a claim to be accumulated, the single event must exceed DKK 10m. The maximum retention in the event of an extreme cloudburst is DKK 75m plus reinstatement premiums.
Topdanmark has a proportional reinsurance programme structure for fire with a maximum retention of DKK 30m per claim on any one business.## Terrorism
With certain restrictions, terrorism is covered by the reinsurance contracts. The NBCR terrorism risks are covered by a public organisation financed by fees on insurance covers if a claims event take place. This is according to an act on NBCR terror in force as at 1 July 2019.
In workers' compensation, up to DKK 1bn is covered with a retention of DKK 50m.
Known cumulative risk is where it has been recognised prior to the event that several policyholders could be affected by the same event. In personal lines, Topdanmark's retention is DKK 15m for the first claim, DKK 5m for the subsequent claims up to a total aggregated amount of DKK 50m. DKK 15m for further claims after exhausting of the aggregate cover of DKK 50m. The retention is a maximum of DKK 25m in the SME line. Unknown cumulative risk is where several policyholders could be affected by the same individual event (conflagration damage) without the common risk being recognised prior to the event occurring. The retention is a maximum of DKK 50m.
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Customers’ individual and collective bonus potential is the loss absorbing buffers in life insurance against any losses incurred by customers on investment activities. Low interest rates mean that the market value of the guarantees granted is high, and that the related bonus potential is low. The lower the bonus potential, the higher the risk of any losses being wholly or partially borne by shareholder's equity. If interest rates are high, the same losses could, to a larger degree, be absorbed by the bonus potential. Declines in the collective bonus potential are most frequently due to the investment return being lower than the addition of interest to deposits. Declines in collective bonus potential are also possible if interest rates are relatively high. In order to protect shareholders' equity, it will in general be relevant to reduce market risks in the event of low interest rates. All policies have been split into contribution groups according to the guaranteed benefit scheme. In each contribution group, the investment policy is intended to ensure the ability to meet the guaranteed benefits, and the market risk is adjusted in accordance with the risk capacity of the contribution groups. The movements in interest rates are followed in order that risk reducing actions may be taken when needed.
Disability risk is the risk of increasing disability intensity or declines in the rates of resumption of work, in that the benefits have been guaranteed until expiry. Losses may incur due to an increase in disability frequency or due to inadequate health evaluation when the policy is written. Extra costs due to a permanent change in disability risk will be partially covered by individual and collective bonus potential. The remainder affects profit/loss for the year and consequently shareholders' equity.
Longevity risk is the risk that customers with life dependent policies, primarily annuities, live longer than expected, which will increase provisions for lifetime products. Extra costs due to longer lifetimes will be partially covered by individual and collective bonus potential. The remainder affects profit/loss for the year and consequently shareholders' equity.
Extraordinary losses as a result of a pandemic affecting the age groups insured in the company’s group life portfolio must be financed by shareholders equity.
Market risk represents the risk of losses due to changes in the market value of the Group's assets, liabilities and off-balance items as a result of changes in market conditions. Market risk includes interest rate, equity, property, credit spread, concentration, currency, inflation and liquidity risk. The limits for these financial risks are set by Topdanmark's Board of Directors. In practice, Topdanmark Kapitalforvaltning (asset management) handles the investment, finance and risk alignment processes. Compliance with the limits set by the Board of Directors is regularly controlled. The result of this is reported to the Board of Directors.
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Topdanmark is exposed to an interest rate risk due to provisions for outstanding claims in non-life insurance and guaranteed benefits in life insurance. Generally, the interest rate risk is limited and controlled by investing in interest-bearing assets in order to reduce the overall interest rate exposure of the assets and liabilities to the desired level. With regard to cover of interest-bearing assets, supplementary hedging by interest rate swaps will be bought as required.
Topdanmark is exposed to an equity risk from direct investments as well as investments made via derivatives. The equity risk is alleviated by trades in the market and by derivatives.
Topdanmark is exposed to a property risk from investments in properties rented out for business or private residence. The risk on the property portfolio is limited by a strategy focusing on Copenhagen and Aarhus. Topdanmark invests preferably in well-situated properties within the segments of housing and flexible office properties.
Topdanmark is exposed to a credit spread risk from bonds and other investments where prices are dependent on counterparty creditworthiness. The credit spread risk is alleviated by focusing predominantly on bonds etc. with very high creditworthiness and by a spread on counterparties.
Concentration risk is a risk that increases when investments are consolidated with individual issuers, whereby dependence on these issuers’ solvency grows. The concentration risk is limited by ensuring that investment size reconciles with counterparty creditworthiness.
Topdanmark's currency risk relates in practice only to investments. The currency risk is alleviated by derivatives.
Future inflation is implicitly included in a number of the models Topdanmark uses to calculate its provisions. Workers' compensation and illness/accident insurance differ from the general principles regarding the inclusion of an allowance for inflation. The provisions in workers' compensation insurance are calculated on the basis of the expected future indexation of wages and salaries, and those in illness and accident insurance on the basis of the expected net price index. An expected higher future inflation rate would generally be included in the provisions with a certain time delay, while at the same time the result would be impacted by higher future indexation of premiums. In order to reduce the risk of inflation within workers' compensation and illness and accident insurance, Topdanmark uses index-linked bonds and derivatives hedging a significant proportion of the expected cash flows.
In insurance companies the liquidity risk is very limited as premiums are paid prior to the beginning of the risk period. Topdanmark’s liquidity risk is therefore primarily related to the parent company. Topdanmark performs an ongoing monitoring of the liquidity risk based on scenario-based stress reporting.
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The liabilities of the Group's insurance companies are primarily technical provisions on which the payment obligation is met by means of the cash flow from operations. The Group uses derivatives to hedge investment risks. The hedging of currency risk often results in significant positive or negative balance values. Topdanmark pays or receives cash security for any changes in value. The extent of these daily changes is limited so that there is no challenge to liquidity. In general, there are no maturity concentrations on derivative contracts. The Group's insurance companies may raise money market loans as part of the day-to-day liquidity management. Typically, the maturity of such loans is less than a month. Both the subordinated loans raised by Topdanmark Forsikring and any outstanding money market loans will be repaid from the cash generated from operations. Furthermore, the Group has a significant liquidity base of high-quality liquid bonds.
Counterparty risk, also known as credit risk, is the risk of losses caused by one or more counterparties' full or partial breach of their payment obligations. Topdanmark is exposed to credit risks in both its insurance and investment business.
Within insurance the reinsurance companies' ability to pay is the most important risk factor. Topdanmark minimises this risk by spreading and primarily buying reinsurance cover from reinsurance companies with a minimum rating of A-. Accordingly, almost 100% of its storm cover has been placed with such reinsurance companies.
Topdanmark may suffer losses due to its counterparties’ inability to meet their obligations on bonds, loans and other contracts including derivatives. The majority of Topdanmark’s interest bearing assets comprise of Danish mortgage bonds. In order to minimise the risk to a single debtor, Topdanmark strives to always have a well- diversified portfolio of bonds not only in regard to a debtor but also geographically. To limit the counterparty risk of financial contracts, including derivative contracts, the choice of counterparties is restrictive, and security is required when the value of the financial contracts exceeds the predetermined limits. The size of the limits depends on the counterparty's credit rating and the term of the contract.# Expected cash flows
| Carrying amount (DKKm) | 1 | 2-6 | 7-16 | 17-26 | 27-36 | >36 |
|---|---|---|---|---|---|---|
| Provisions for claims | ||||||
| 2020 | 13,364 | 4,075 | 5,231 | 2,655 | 1,001 | 363 |
| 2021 | 13,994 | 4,468 | 5,465 | 2,973 | 1,153 | 445 |
| Life insurance provisions with-profit | ||||||
| 2020 | 23,178 | 2,018 | 6,994 | 9,153 | 3,833 | 1,142 |
| 2021 | 22,319 | 2,119 | 7,346 | 9,430 | 3,720 | 1,041 |
| Bond portfolio including interest derivatives | ||||||
| 2020 | 39,651 | 16,240 | 16,950 | 11,782 | 4,917 | 0 |
| 2021 | 31,058 | 11,527 | 11,026 | 14,087 | 3,729 | 0 |
Life insurance provisions for unit-linked products are covered by investments. The provisions and related bonds are therefore not included. The expected cash flows of the bond portfolio are calculated based on option adjusted durations that are used to measure the duration of the bond portfolio. The option adjustment relates primarily to Danish mortgage bonds and reflects the expected duration capturing the shortening effect of the borrower’s option to cause the bond to be redeemed through the mortgage institution at any point in time.
| 2020 | 2021 | |
|---|---|---|
| >A+ | 81 | 80 |
| A+, A, A- | 4 | 4 |
| <BBB- | 11 | 13 |
| Money market deposits | 5 | 3 |
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Operational risk includes the risk of losses incurred due to errors and deficiencies in internal processes, human errors, fraud, system errors, breakdowns of IT systems and the risk of losses incurred due to external events. Topdanmark regularly develops and improves IT systems, routines, and procedures. The responsible business units are also responsible for the risk management of this development. Projects are to carry out a risk assessment with a description of the risks, possible consequences and measures to limit these risks. New IT systems will not be put into production until completion of an extensive test procedure.
The department Group Security is responsible for Topdanmark’s general information security.
Risk assessments of each operational IT risk are made regularly. Group Security reports on risks and events to management on a quarterly basis. Topdanmark's IT risk assessment, information security policy, prioritisation of risks and IT contingency strategy, are based on ISO27001, revised each year and approved by the Board of Directors.
In general, Topdanmark handles the risk via an IT Security Committee/Cyber-Security Board that regularly assesses the threat and the preventive actions necessary to secure the required security level. Two external firms possessing special expertise within cyber-crime are members of Topdanmark’s IT Security Committee/Cyber-Security Board and thus act as advisers to Topdanmark’s Chief Information Security Officer. One of the firms provides consultancy on security solutions to maintain an effective defense against cybercrime while the other firm conducts tests to verify Topdanmark’s resilience against critical attacks from outside. The firm also gives advice about vulnerabilities which must be fixed. Topdanmark’s IT Security Committee reviews and prioritises the results from these tests. Within the first month of employment, new employees must complete e-learning courses in e.g. information security and GDPR and all employees and consultants in Topdanmark must undergo an e-learning course annually on information security. Outsourcing is increasingly used in Topdanmark. Consequently, Topdanmark investigates and evaluates the information security with new cooperation and service partners. Topdanmark also monitors the information security with existing partners to prevent cybercrime. Topdanmark’s technical IT security is based on several layers of protection (Defense in Depth) and Technology & Solutions also tests infrastructure and new applications, among others. Relevant employees have been trained to use the tools to conduct such tests.
The IT contingency plan includes plans for re-establishing the IT environment if the systems suffer breakdowns. The IT contingency plan is tested regularly. Topdanmark's business critical systems can be inaccessible for 24 hours without causing larger business consequences. In order to reduce the probability of breakdowns of the IT systems and limit their duration, Topdanmark has for example, emergency power plants with a diesel generator, disk mirroring, alarms and automatic firefighting equipment. Critical IT equipment is in duplicate and placed in two physically separated machine rooms. Back-up of systems and data is made, and a duplicate of the back-up is kept with an outsourcing partner.
Topdanmark's goal is for the accessibility of its main systems to be no less than 99.5%. The mainframe platform has a higher average accessibility level than the decentralised systems, because these often depend on the mainframe platform.
Topdanmark is working continuously on digitisation and automation to ensure efficient business and a good customer experience. Focus is on automation of a number of processes, which will help to reduce the risk of human errors. Digitisation is not only robots of which Topdanmark has introduced some so far. Topdanmark also needs to focus on the future and what it requires to navigate in an increasingly and rapidly changing technological development going forward. Topdanmark therefore continues its plan to secure its competitiveness by accelerating the digital transformation to the next level. The company must to a much greater extent deliver individualised, digital customer experiences on the basis of customer insights, simplified insurance and services as well as automated processes. In order to control the operational risk connected to processes based on algorithms, machine learning and artificial intelligence, robots are tested regularly in order to prevent and eliminate possible programming and system errors. Tests are always carried through prior to new releases and in case of breakdowns of operation.
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The robot handling bad weather damage is tested regularly to ensure that it works properly in case of major events. The robots are working according to the specified rules. In case that the correct parameters have not been implemented in the robot enabling it to find and register the required information, the task is channeled to the relevant employee. Subsequently, the employee will ensure that the parameters are updated. The algorithms saved in the robots’ software are based on the experience of expert employees within the subject area. For example, the software calculating prices is adjusted as actuarial adjustments of the tariff in question are made. Thus, Topdanmark has been assessed to have the proper rules of procedure and competencies to detect and handle technology related risks.
Topdanmark's well-documented routines, procedures and efficient control environment minimise these risks. It has made contingency plans for the most significant areas.
The routines and procedures in all critical areas are regularly checked by the auditors to assess the risks and recommend measures to limit each individual risk.
Central Claims is a department solely dealing with cases where fraud is suspected. Topdanmark believes that honest customers should not have to pay for the dishonest customers. Therefore, we owe it to our customers to examine any suspicion of insurance fraud.
Topdanmark monitors and reports on operational risks so the organisation will learn from its mistakes. Consequently, a process has been established including a tool to register incidents, which are then collected centrally in an incident log and communicated onwards in the management system.
Topdanmark has a robust business model with a high degree of diversification between the business activities, a very low liquidity risk and a solid capital base. In case of a pandemic like the COVID-19 escalating, Topdanmark will operate with an effective contingency plan. The contingency plan concerns both Topdanmark internally and the changed risk factors for non-life, life- and market risks.
At Topdanmark, compliance comprises compliance with all statutory and managerial requirements for Topdanmark's corporate governance. Compliance risk is the risk that Topdanmark does not have sufficient knowledge of current or future rules. Additionally, compliance risk is the risk of contravention of rules and the losses this might cause Topdanmark and Topdanmark's customers. Such losses can be direct financial losses or indirect losses in the form of sanctions or bad publicity as a consequence of not acting in compliance with the rules. Rules comprise all rules, internal rules of Topdanmark's policies and the relevant guidelines as well as all relevant legislation and its sub-rules. Furthermore, rules comprise fixed business practices for the performance of activity in Topdanmark. Accordingly, compliance comprises compliance with the rules which are necessary and required to ensure that Topdanmark's business is conducted in an appropriate and, in terms of business, proper way. Documentation of compliance for Topdanmark's stakeholders is part of compliance.
The compliance function is intended to:
* issue rules for identification, management and control of compliance risks
* exercise control and advise the Group on compliance with legislation and internal rules.
Topdanmark's compliance function exercises control and provides advice to ensure that the Group's divisions and service departments comply with relevant legislation and internal rules.The compliance function's work is part of Topdanmark's overall control environment, which covers the procedures, control and organisation ensuring observance of rules. The compliance function's work comprises the following principal tasks:
• Control of compliance
• Annual status with all of the Group's divisions and service departments
• Reporting on compliance risks to the Executive Board and the Board of Directors
• Administration and updating of the compliance function's procedures and tools.
Incident register
The compliance function administers Topdanmark's incident register.
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Climate risk
Risks due to climate change include both insurance and investment risks. Insurance risks in Topdanmark non-life related to climate are especially relating to storm and cloudburst. The company includes these risks in underwriting and hedges the assumed risk in the reinsurance programme. Stress tests show that a storm event on the company's current insurance portfolio will only, in one out of 900 stormevents, exceed the reinsurance coverage of DKK 5.1 billion. Stress tests regarding cloudburst events cause significantly less damage, e.g. as a result of the local authorities’ efforts against floods. Overall, the company has hedged the climate risks of non-life insurance satisfactorily. Topdanmark Livsforsikring does not have significant climate-related insurance risks. Investment risks for the companies related to climate mainly comprise the property portfolios and are hedged through investments in new / newer properties as well as maintenance of existing properties. In addition, the investment policies include an exclusion list which i.a. includes companies with activities within tar sands and thermal coal. In Topdanmark’s active investment management, there is a focus on acquiring attractive investment opportunities in “green companies” and opting out of investments in companies that have a disproportionately large negative climate impact Formålspension (Purpose pension) has become the standard recommendation to Topdanmarks new customers. In 2021, half of the new customers have chosen the purpose “Green transformation”, and exactly this investment profile has yielded some of the absolute best returns in the industry throughout the year. Overall, Topdanmark has the necessary focus on climate conditions in relation to the investment company.
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Notes to the financial statements
Group
Topdanmark Group's 2021 Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements of the Danish Financial Business Act on annual reports prepared by listed financial services companies. Topdanmark Group has implemented the IFRS standards and interpretations that take effect from 2021. None of these has affected recognition or measurement in 2021. Accounting policies remain unchanged compared with 2020.
Changes in accounting estimates
Profit margin life insurance
The model for calculation of profit margin in life insurance has been updated, and the effect of the transfer of the asset management company to the life insurance company has been included in the calculation. Profit margin related to unit-linked products has increased from DKK 281m end of 2020 to DKK 1,447m end of 2021, while profit margin related to with-profit contracts is basically unchanged.
Other changes
Expenses for loss-preventing activities have been reclassified from administrative expenses to claims incurred due to a change in the Danish FSA´s Executive Order on Financial Reports for Insurance Companies. The change has had no significant effect. The allocation of costs between acquisition costs and administrative expenses in life insurance has been reviewed, with the effect that app. DKK 50m has been reallocated from administrative expenses to acquisition costs. Comparatives have been restated.
Future accounting standards
IFRS
The IASB has issued a number of new and revised standards and interpretations, which have not yet taken effect and/or been approved by the EU of which the most significant are:
IFRS 9 “Financial instruments”
came into force on 1 January 2018. However, under certain conditions, insurance groups may postpone IFRS 9 to 2023 at the time where IFRS 17 “Insurance contracts” is expected to come into force. Topdanmark Group meets these conditions and has postponed the implementation of IFRS 9 to the implementation of IFRS 17. The standard is not expected to substantially affect the presentation of accounts for the Group.
IFRS 17 “Insurance Contracts”
This standard defines the principles for recognition and measurement of insurance contracts. IFRS 17 is expected to come into force on 1 January 2023. Topdanmark has initiated an analysis of the standard. The financial effect has not yet been clarified.
Accounting estimates and judgements
In the preparation of Topdanmark's financial statements, estimates and judgements have been made which affect the size of assets and liabilities and consequently the results and shareholders’ equity in this and subsequent financial years. The most significant estimates and judgements are made in the calculation of insurance provisions and investment properties. Significant management´s judgements include:
• Determination of methods and models valuation
• Determination of yields assumption
• Future cash flows expectations
• Assessment of data and information obtained from external parties as well as Management’s determination of specific risks affects the fair value.
Provisions for claims
Provisions for claims incurred, but not yet paid, have been calculated as the best estimate at the end of any given year. As all necessary information is not available, there will be deviations between the actual claims paid and the provisions made in the form of either run-off losses (provisions too low) or run-off profits (provisions too high). The provisioning risk is significant, particularly in lines with a long period of claims settlement such as workers' compensation, accident, commercial and motor liability. The levels of compensation could be significantly affected by any changes in legislation, case -law or the practice in the award of damages adopted by, for example, the Danish Labour Market Insurance.
Provisions for unearned premiums
Premium provisions are measured based on an estimate of future payments for incidents in the remaining period of cover. A significant uncertain and estimated assessment is involved in the determination thereof. Premium provisions must be seen in connection with the profit margin as an increase in the estimated cashflow will be absorbed by the profit margin up to a combined ratio of 100. Financial estimates and assessments with effect on the result of the year and shareholders’ equity are therefore primarily relevant within business lines with
Note 47. Accounting policies
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combined ratio of 100 or more, where premiums are insufficient for covering expected payments and a risk margin, and consequently provisions to cover losses must be made.
Life insurance provisions
The uncertainty related to the value of the life insurance provisions is based on a number of actuarial estimates of disability, lifetime etc., and the frequency concerning surrenders and termination of premiums which may have a significant effect on the size of the life insurance provisions.
Investment properties
A return model based on market-determined net earnings and rates of return with various parameters such as location, idleness, quality of tenants etc. is used for determining the fair value of investment properties.
General
Consolidated financial statements
The consolidated financial statements include the parent company Topdanmark A/S and all of the companies that are controlled by the parent company. The income statement and balance sheet are presented in accordance with the Danish FSA's IFRS-compatible Executive Order on Financial Reports for Insurance Companies and Multi-Employer Occupational Pension Funds.
Consolidation
The consolidated financial statements have been prepared by aggregating items within the financial statements of the parent company and the subsidiaries on a line-by-line basis. The same accounting policies are applied by the subsidiaries as by the parent company. Properties owned by the subsidiaries and used by the group have been re-classified from investment properties to owner-occupied properties. Intra-group income and expenses, shareholdings, balances and dividends as well as gains and losses on intra-group transactions have all been eliminated. Companies acquired during the year have been included in the consolidation from the date of assumption of control and those companies sold during the year, until the date of relinquishment of control.
Measurement of fair value
Fair value is the price which would be achieved on the sale of an asset or paid for the transfer of a liability in a normal transaction between the market players at the time of measurement. The IFRS defines a hierarchy of three levels for measurement of fair value:
Level 1
The calculation of fair value should always be based on the listed prices of transactions in active markets whenever possible. If there is no listed price, another public price is used, which is believed to be the most appropriate. If the transaction on the open market is limited or if there is no closing price, prices from banks/brokers can be used if these are calculated based on fully updated market data and are deemed to be in accordance with the closing price.## Level 2
If the transaction on the open market is limited or if listed prices are not set on the market, indicative prices from banks/brokers specifying the non-forced sale value can be used. If this is not possible, valuation methods in which input is based on publicly available information are used.
If the valuation of the investment asset cannot be based on publicly available market information alone, valuation models that could imply the use of estimates of both the future and the nature of the current market situation are used.
The accounting policies for measurement of properties are described below under “Owner-occupied properties” and “Investment properties” respectively.
The Topdanmark Group writes contracts which transfer insurance risk, investment risk or both. An insurance contract is a contract under which the insurer accepts significant insurance risk from the policyholder by agreeing to compensate if a specified uncertain future event adversely affects the policyholder. Insurance risk is always considered to be significant in non-life insurance. In life insurance, it is considered to be significant when it covers disability including premium waiver or when the contract is with profit. The classification is carried out on contract level. Contracts with related joint and several premium waiver or group products are considered insurance contracts in full. An investment contract is one in which the insurance risk is not sufficient for it to be classified as an insurance contract. Payments received and made on investment contracts have been recognised directly in the life insurance provisions for investment contracts.
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As the predominant rule, DKK is the Group companies' functional currency and the presentation currency of the Annual Report. The initial recognition of transactions in currencies other than DKK is made at the exchange rates prevailing at the date of the transactions. Debts and receivables, and other monetary items which have not been settled on the financial position date, are translated at the closing exchange rates. Translation differences are recognised in Revaluations in the Income Statement.
Expenses are recognised in the Group’s income statement classified by function. The allocation of expenses, which do not directly relate to a function, is based on an assessment.
The Executive Board and Senior Executives participate in a long-term incentive programme based on share options. The fair value, on the date the option is granted, is included as staff costs in the income statement, with a set-off in shareholders’ equity. The fair value is calculated using the Black & Scholes model. The options are primarily settled with own shares. Any strike amount received on the exercise of the options is taken to shareholders’ equity.
The Executive Board and Senior Executives participate in a short-term incentive programme based on cash and shares in Topdanmark A/S. The cash and fair value of the shares are included in the income statement; the shares with a set-off on shareholders’ equity.
Topdanmark has established an employee share scheme implying a pay cut. The value of the shares is included as staff costs in the income statement with a set-off on shareholders’ equity.
The calculation of profit in life insurance is regulated by the Danish Financial Business Act. Topdanmark's policy on the calculation of the profit for the year has been reported to the Danish FSA. The result of life insurance comprises unconditional and conditional profit elements. The unconditional profit elements comprise the return on assets allocated to shareholders' equity, acquisition cost result and the profit on contracts outside of contribution. The conditional profit elements comprise the risk return which is calculated for each contribution group. The risk return for each contribution group (cost, risk and interest rate groups) has been based on their estimated risk on shareholders' equity and on the profit margin determined by the company for the year. The risk return is transferred to shareholders' equity if it can be covered by individual and collective bonus potentials. Shareholders’ equity must contribute to the financing of a potential negative result for each contribution group if it cannot be covered by collective bonus potential and individual bonus potential. A deficit which is not covered by the bonus potentials is assigned to a shadow account for the group which can be restored at a later time when bonus potential is sufficient.
The Topdanmark Group´s insurance business is segmented into three:
Recognition and measurement in the segments follow the same accounting policies as those applied by the Group. Management reporting for non-life segments comprises reporting on technical results. Topdanmark conducts insurance business only in Denmark and, therefore, no specific geographical segmental information is provided.
The cash flow statement of the group has been prepared in accordance with the direct method disclosing cash flow from operations, investments and financing. Cash and cash equivalents comprise liquid funds as well as deposits with credit institutions.
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Gross premiums in non-life insurance comprise those premiums which are due within the financial year. Premiums earned net of reinsurance are recognised in line with the distribution of risk over the period of cover. For onerous insurance contracts, the expected loss is included when the contracts are underwritten or when the contracts become onerous. As premium provisions and profit margin are calculated at a discounted basis, an element of interest is included in premiums earned. In life insurance, gross premiums comprise those premiums for insurance contracts, which are due within the year.
Allocated investment return is calculated as the overall investment return in life insurance net of return relating to illness and accident insurance and shareholders' equity in accordance with the definition of profit reported to the Danish FSA.
Pension return tax comprise individual tax on pension returns, calculated on the interest accrued on policyholders´ savings, and tax on return allocated to collective bonus potential and accumulated revaluations etc. The tax rate is 15.3%.
Claims incurred in non-life insurance comprise claims relating to the year as well as any adjustments to the claims provided for the year before. Furthermore, claims incurred comprise direct and indirect expenses on claims handling. The effect on change in provisions for outstanding claims due to discounting is transferred to Return and revaluations non-life insurance provisions. Revaluation of derivatives partially hedging the provisions for workers’ compensation and annuities in illness and accident insurance against changes in future wage and price indexation is included in claims incurred. In life insurance, claims and benefits paid comprise payments relating to claims, pensions and annuities, surrenders and cash bonuses.
Bonuses and rebates include those premiums that have been or will be paid back to policyholders where the amount is calculated based on the claims trend using criteria determined prior to the beginning of the financial year, or when the insurance contracts were written.
Technical operating expenses which relate, either directly or indirectly, to the acquisition and renewal of the portfolios are included in acquisition costs. Sales commission is generally recognised in the income statement on the date the insurance contract takes effect. Administrative expenses comprise other costs incurred in the administration of the portfolios which relate to the financial year, and which have been accounted for on accruals basis. Commission received from reinsurers has been accounted for on accruals basis over the reinsurance contracts’ period of cover.
Income from associates and joint ventures comprises a share of the post-tax results of the associates and joint ventures, calculated in accordance with the Group's accounting policies. Income from investment properties comprises the operating results excluding interest charges and revaluations. Interest income and dividends etc. comprise all earned interest income and dividends received in the year. Realised and unrealised gains and losses on investment assets, exchange rate adjustments, and realised gains and losses on owner-occupied properties are included in revaluations. Administrative expenses on investment activities comprise the cost of asset management including transaction costs.
Return and revaluation of non-life insurance provisions include amortisation and revaluation of premium provisions, claims provisions, profit margin and risk margin, net of reinsurance.
Income and expenses that do not relate to the administration of insurance portfolios or investment assets are included in other income and expenses.# Taxation
The tax charge for the year comprises the current corporation tax for the year and any changes in deferred tax. The tax charge related to profit for the year is included in the income statement, and the share related to other comprehensive income and shareholders' equity are taken to other comprehensive income and shareholders' equity respectively. The current tax for the year is calculated using the tax rates and rules applicable on the financial position date. Topdanmark A/S is jointly taxed with all the Danish companies of the Topdanmark Group and all Danish companies and affiliates in the Sampo Group. As the management company of the joint taxation, Topdanmark A/S settles all corporation tax payments with the tax authorities.
Announcement No. 05/2022 from Topdanmark A/S
Announcement No. 03/2020 from Topdanmark A/S
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The joint tax contributions are distributed to the jointly taxed companies on a proportionate basis relative to their taxable income. Furthermore, those companies with tax losses receive joint tax contributions from those companies which have been able to use this loss to reduce their own taxable income.
Goodwill relates to the acquisition of non-life insurance companies in 1999. Goodwill is tested for impairment on a yearly basis. Acquired software licences are measured at cost and amortised on a straight-line basis over the expected useful life of a maximum of three years. Development projects which are clearly defined and definable are measured at costs incurred and amortised over the expected useful life of a maximum of 10 years. Impairment of the assets is assessed end of year. Development projects under construction are subjected to an impairment test on a yearly basis.
Operating equipment is measured at cost less depreciation on a straight-line basis over the expected useful life with respect of the residual value, which is annually revalued. Impairment is assessed end of year. IT equipment, other equipment and cars as well as improvements of rental properties are depreciated over their expected useful life of up to five years. Solar cell plants are depreciated over their expected useful life of 25 years.
Owner-occupied properties are those properties used for the Group's own operations. The properties are measured at a revalued amount being the fair value on the date of revaluation. The buildings are depreciated on a straight- line basis, given an expected life of 50 years and an annually re-assessed residual value. Land is not depreciated. The fair value of owner-occupied properties is assessed continuously as for investment properties. Any revaluation surplus is included in other comprehensive income unless the revaluation is a reversal of a previous impairment. Impairments are included in the income statement unless the impairment is a reversal of previous revaluation included in other comprehensive income.
The initial recognition of investment properties is made at cost, which comprises the purchase price of the properties plus any directly related initial expenditure. In accordance with the guidelines of the Danish FSA, the subsequent measurement of the investment properties is made at fair value representing the estimated amount at which the property could be sold within a reasonable time frame to an independent buyer. The fair value is calculated, using the return model, as the calculated capital value of the expected cash flow from each property. The expected cash flow is based on the assumed net earnings for the next year adjusted to reflect normal earnings, including the current market rent. Adjustments are made for factors which are not reflected in normal earnings, for example, major renovation works, expected idleness etc. The calculation of the capital value uses a rate of return which is set for each property on the basis of the current market conditions on the balance sheet date for the type of property concerned, the location of the properties, the quality of the tenants etc. with the effect that the rate of return is estimated to reflect the market’s current rates of return for corresponding properties. The properties are continuously assessed by the Group's own valuers. Market trends and the rates of return of the market are regularly analysed. The calculated fair values are tested to other valuation models and by use of external valuers on a regular basis.
Associates are companies over which the Group has substantial influence through a significant shareholding and representation on the board of the company. Joint ventures are companies in which Topdanmark has joint control and right to the net asset. Equity investments in associates and joint ventures are measured according to the equity method, in accordance with the Group's accounting policies.
Financial assets are classified at the time of their initial recognition as:
Financial assets at fair value with any value adjustment through profit and loss are financial assets which are either included in a trading portfolio, are derivatives or at
Announcement No. 05/2022 from Topdanmark A/S
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their first recognition are designated in this classification, because the assets are managed and measured on a fair value basis, or because this eliminates or significantly reduces accounting inconsistency. All financial assets included in "Other financial investments assets" and "Investment assets related to unit-linked products" are measured at fair value with any value adjustment through profit and loss. The initial recognition of financial instruments is made at fair value on the date of settlement. Any changes in the value between the trade and settlement dates are included in the balance sheet under the heading Derivatives. Direct expenses on the acquisition or issue of financial instruments which are measured at fair value with any revaluation of the fair value taken to the income statement are included in expenses on investment activities, when incurred. However, financial instruments which, subsequent to the initial recognition, have been measured at amortised cost are recognised at fair value adjusted for direct expenses on the acquisition or issue of the financial instrument. True sale and repurchase transactions and true purchase and resale transactions (repo/reverse transactions) are recognised and measured as secured loans.
On initial recognition receivables are measured at fair value, and subsequently at amortised cost. The receivables are regularly assessed for impairment and written down to a lower recoverable amount.
Reinsurers' share of the provisions for unearned premiums represents the proportion of reinsurance premiums paid, net of commission received, which based on the spread of risk during the period of cover, relate to the period after the end of the financial year. Reinsurers' share of the provisions for claims represents the amounts expected to be received from reinsurance companies according to the reinsurance contracts concluded. Expected future payments are discounted using an interest rate structure. The reinsurers' share is regularly assessed for impairment and written down to a lower recoverable amount.
The security funds are special funds under shareholders' equity. Prior to 1989, they were transferred to shareholders' equity for capital adequacy and were tax- deductible. The security funds can only be used for strengthening the technical provisions or otherwise for the benefit of policyholders and only if permitted by the Danish FSA.
Other reserves comprise a reserve at net asset value relating to non-life insurance.
Dividend forms part of shareholders´ equity until the adoption at the annual general meeting. From the time of adoption, the dividend is recognised as a liability.
The initial recognition of other subordinated loan capital is made at fair value less transaction costs and, subsequently, measured at amortised cost. Any difference between the proceeds (less transaction costs) and the nominal value is recognised in the income statement over the loan period based on an effective interest rate.
Premium provisions are calculated as the best estimate of expected payments for future insurance events covered by insurance contracts concluded. Premiums for insurance contracts concluded comprise due and undue premiums for insurance contracts for which the Group is committed on the reporting day. Topdanmark’s insurance contracts are mostly written for a 1-year period, and the provisions are calculated based on the prognosis for combined ratio for the next 12 months. The prognosis is based on analyses of the trend in premiums, claims and expenses and for change of ownership also statistical analyses of trend in claims notification in relation to the time when the insurance contracts were written. Expected payments are calculated at present value discounted by the volatility adjusted interest rate curve. Best estimate of undue premiums for insurance contracts concluded is deducted, considering expected customer defection. Changes in provisions due to a change in the interest rate curve used and amortisation are transferred to “Return and revaluation of non-life insurance provisions”.
Announcement No. 05/2022 from Topdanmark A/S
Announcement No.# Profit margin on non-life insurance contracts
Profit margin is the expected profit during the remaining part of the period of cover for insurance contracts concluded. Profit margin is calculated as the difference between expected premiums for future periods of cover for insurance policies concluded and present value of the expected payments included in premium provisions. Changes in the value due to changes in the interest rate curve used and amortisation are transferred to “Return and revaluation non-life insurance provisions”. The share of the risk margin related to settlement of premium provisions is deducted from the profit margin. Profit margin for a portfolio of insurance contracts with similar risks cannot be lower than zero.
Life insurance provisions for with-profit products are measured at fair value. Accordingly, the liabilities are calculated based on market value independent of the original technical base. The fair value of the life insurance provisions is based on the realistically expected future premiums to be received, benefit payments to be made and administrative expenses incurred on the contracts written. The future payments to be received and made have been based on the assumed incidents of death, disability, resumption of work, renewal and premium expiry. The mortality rate is calculated by considering the Danish FSA's population mortality rate and Topdanmark's own observed mortality rate. Furthermore, the Danish FSA's assessed improvement in future life expectancy is applied. The other parameters stated are best estimates based on Topdanmark’s observations.
The life expectancy for a 60-year-old man and a 60-year- old woman is as follows:
| 60 year old man | 60 year old woman | |
|---|---|---|
| Topdanmark Livsforsikring | 26,7 | 29,6 |
| Danish FSA's benchmark | 26,6 | 29,2 |
The provisions include amounts to cover the expected expenses on the future administration of the insurance contracts written. These expenses have been calculated using annual indexation of 2%. The present value of the expected future payments has been calculated using an interest rate curve determined in Solvency ll (EIOPA interest rate curve). The interest rate curve is volatility adjusted and for contracts subject to pension return tax - each interest rate used is reduced by the tax rate of 15.3%.
The provisions include a risk margin corresponding to the percentage which would be demanded by an independent purchaser of the company's portfolio of life insurance policies to compensate for the risk of fluctuations in the expected payments. The risk margin is calculated as the increase in guaranteed benefits stressing the biometric risks.
Life insurance provisions are calculated as the sum of a best estimate for guaranteed benefits, best estimate for unguaranteed benefits and the risk margin.
Best estimate for guaranteed benefits is measured as the present value of current, guaranteed benefits plus future administration expenses and deduction of present value of agreed premiums. Guaranteed benefits are calculated considering amendments of the insurance contracts to paid-up policies and surrender.
Best estimate for unguaranteed benefits is calculated at contribution group level as the group’s collective bonus potential adjusted for risk margin and positive values of the difference between, on the one hand, the accumulation of the insurance contracts (retrospective provisions) and on the other hand, best estimate of guaranteed benefits of these insurance contracts. Collective bonus potential is used for equalisation of each year’s bonus allocations. Thus, in years where the investment and insurance results are better than the allocated bonus, transfer to collective bonus potential will be made, while in years when the result is insufficient to finance the allocated bonus, funds will be transferred from the collective bonus potential.
Life insurance provisions for unit-linked products are calculated at fair value corresponding to the assets related to the insurance contracts less the profit margin.
Profit margin is the expected future profit for the company from contracts concluded and when possible, profit margin for products with guarantees and profit sharing is financed by the individual bonus potential and secondarily by the collective bonus potential. The value is calculated as an interest margin in accordance with the going concern principle.
Claims provisions must cover future payments of claims incurred and their administration. Claims provisions are assessed for each line of business, either on a claim-by-claim basis (individual provisions), or by using statistical methods (collective as well as incurred but not reported (IBNR) and incurred but not enough reported (IBNER) provisions). Claims exceeding a fixed amount, dependent on the line of business, are assessed individually, and provisions for smaller claims are assessed collectively. IBNR provisions cover expenses on post-notified large claims. IBNER provisions cover extra expenses on claims already reported for which the individually assessed provisions are not sufficient due to, for example, inadequate information at the time of assessment.
The collective provisions are calculated using de Vylder's credibility model adjusted for each line of business. The IBNR and IBNER provisions are calculated using models developed in-house.
In agricultural and commercial lines, claims are assessed individually. IBNR and IBNER provisions are also included in the total provision.
In personal lines, claims not exceeding DKK 100,000 are assessed collectively while larger claims, and all claims on change of ownership policies are assessed individually. IBNR and IBNER provisions are also included in the total provision.
In motor and accident lines, total provisions comprise the sum of the collective and individual provisions. Individual provisions are the result of an assessment where the claims handler has assessed the total claim payment to exceed DKK 1.5m, and the case is estimated to exceed the amount paid out. Large claims and claims relating to previous years are individually assessed within personal liability in motor insurance.
IBNR provisions for illness and accident insurance are calculated using models developed in-house. Inflation is taken into account when calculating the value of the provisions as future inflation is implicitly included in a number of the statistical models used. Therefore, an expected higher future inflation rate would generally be included in the provisions with a specific time delay. The annuity reserves for disability in illness and accident insurance are calculated using an inflationary structure.
Provisions for claims in workers' compensation insurance comprise provisions for annuities and other provisions for claims and benefits. The assessment of the future annuities is based on the annuities in force including the expected wage and salary indexation, and a rate of mortality corresponding to G82 with monthly age write- downs on annuities based on the act on accidents and an adjusted G82 rate of mortality on annuities on the act on workers´ compensation amended to comply with Topdanmark’s experience base within death intensity for annuitants. Workers’ compensation claims are often paid as the capitalised value of an annuity. The capitalisation rate at the time of capitalisation is to be calculated as a moving average of the most recent five years’ interest rate on leading mortgage bonds less tax. The capitalisation rate is calculated as the forward swap rates plus 0.85% p.a. and less a deduction for tax corresponding to the base tax rate.
The assessment of other provisions for claims relating to injuries, loss of provider and expenses is based on traditional actuarial triangulation models. Due to the special conditions surrounding payments on disability claims, it is not possible to use traditional actuarial triangulation models for this type of provisions. Topdanmark, therefore, uses a model developed in- house, which, among other things, takes into account the stage each claim has reached. The calculation includes an allowance for the expected wage and salary indexation. Provisions for claims already incurred for disability in illness and accident insurance are calculated using an in- house statistical model that is based on the relationship between the possibility of resumption of work and the period passed since the occurrence of the claim.
Topdanmark has purchased derivatives partially hedging the provisions for workers’ compensation and annuities in illness and accident insurance against changes in future wage and price indexation. Gains and losses on these derivatives are included in claims incurred. The provisions for claims and benefits include the amounts that are expected to be included to cover direct and indirect expenses on settlement of the liabilities. All provisions have been measured at present value by discounting the expected future payments using an interest rate curve determined in Solvency ll (EIOPA interest rate curve). The interest rate curve is adjusted for volatility. In illness and accident administered by the life insurance company, interest rates are reduced by the tax rate of 15.3%.
Risk margin is calculated as the amount which would be demanded by a purchaser of the company's insurance portfolio for taking on the risk that actual expenses deviate from best estimate relating to settlement of the insurance provisions. Topdanmark Forsikring calculates risk margin by means the “Cost of Capital” model using a cost of capital rate of 6% in addition to the risk-free interest rate.# Announcement No. 05/2022 from Topdanmark A/S
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Other liabilities
Provisions for pensions and similar liabilities
Provisions for anniversary bonuses and retirement benefits are built up on an on-going basis over the period of employment. The liability is calculated taking into account the expected level of staff reduction based on the Company's experience. The liability is measured at present value by discounting the expected future payments using the interest rate structure.
Corporation tax and deferred tax
Current tax liabilities and tax receivable, including joint tax contributions, are included in the balance sheet as calculated tax on taxable income for the year adjusted for tax on previous years' taxable income and prepaid tax on account. Deferred tax on temporary differences between the accounting, and tax value of assets and liabilities is charged in accordance with the balance sheet liability method. Deferred tax on investments in subsidiaries and associates is not included where the Group controls the timing of the reversal of the temporary difference, and where it is probable that the temporary difference will not be reversed within the foreseeable future. The calculation of deferred tax is based on the planned use of each asset and the settlement of each liability, using the tax rates expected to be in force when the deferred tax is expected to crystallise as current tax, based on the tax rates and rules in force on the financial position date. Deferred tax on security funds comprises deferred tax on untaxed amounts transferred to the security funds under shareholders' equity. The security funds will be taxed in the proportion of 10% for every 10pp decline in technical provisions net of reinsurance from the level at 31 December 1994. A decline of 10% from the 1994 level is considered improbable as long as Topdanmark Forsikring, in which the transfers were made, continues its current operations. Therefore, the security funds will only be taxed if the insurance portfolio is transferred or the company ceases to conduct insurance business.
Deposits received from reinsurers
Deposits received from reinsurers represent amounts deposited to cover reinsurers' liabilities to the company.
Debt
Amounts due to credit institutions and derivatives are measured at fair value. The fair value of amounts due to credit institutions usually corresponds to their nominal value. The fair value of derivatives is calculated on the same basis as financial assets. Other loans are measured at amortised cost.
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Ratios in Financial highlights and Five-year summary have been calculated in accordance with the Danish FSA´s Executive Order on Financial Reports for Insurance Companies and Multi-Employer Occupational Pensions Funds.
The average Shareholders’ equity is calculated as a time-weighted average. Number of shares is the number of issued shares less the number of own shares. Number of shares, diluted, is adjusted for the effect of potentially diluting share options.
Gross premiums earned comprise the line items “Gross premiums written”, “Change in the provisions for unearned premiums”, “Change in profit margin and risk margin” and “Bonuses and rebates”. Gross claims incurred comprise the line items “Gross claims paid”, “Change in the provisions for claims” and “Change in risk margin”. Gross operating expenses comprise “Administrative expenses” and “Acquisition costs”. Reinsurance result comprises reinsurer´s share of the abovementioned line items. The run-off result is due to claims provisions at the beginning of the year being settled or reassessed through the current year at amounts other than expected and provided for in last year´s accounts. The run-off result, gross, is included in claims incurred regardless of income or expense. Run-off result on own account is net of reinsurance’s share.
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• • Parent company (DKKm)
| Note | 2020 | 2021 |
|---|---|---|
| Income from subsidiaries | 1 | 1,168 |
| Revaluations | 2 | 0 |
| Interest charges | (11) | |
| Total investment return | 1,157 | |
| Other expenses | 3 | (46) |
| PRE-TAX PROFIT | 1,112 | |
| Taxation | 4 | 12 |
| PROFIT FOR THE YEAR | 1,124 |
Proposed appropriation of profit for the year:
| 2020 | 2021 | |
|---|---|---|
| Dividend | 1,800 | 3,105 |
| Transfer to net revaluation reserve at net asset value | 1,168 | 2,197 |
| Transfer from profit carried forward | (1,844) | (3,164) |
| 1,124 | 2,138 |
● Parent company
| 2020 | 2021 | |
|---|---|---|
| Profit for the year | 1,124 | 2,138 |
| Other comprehensive income from subsidiaries | 1 | 0 |
| Other comprehensive income | 1 | 0 |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 1,125 | 2,138 |
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• • Parent company (DKKm)
| Note | 2020 | 2021 |
|---|---|---|
| Assets | ||
| Operating equipment | 5 | 3 |
| TOTAL TANGIBLE ASSETS | 3 | |
| Equity investments in subsidiaries | 6 | 6,816 |
| Total investment in subsidiaries | 6,816 | |
| Equity investments | 4 | 1 |
| Total other financial investment assets | 4 | |
| TOTAL INVESTMENT ASSETS | 6,820 | |
| Receivables from subsidiaries | 913 | |
| Other receivables | 48 | |
| TOTAL RECEIVABLES | 961 | |
| Liquid funds | 1 | 1 |
| TOTAL OTHER ASSETS | 2 | |
| TOTAL ASSETS | 7,785 | |
| Shareholders' equity and liabilities | ||
| Share capital | 7 | 90 |
| Other reserves | 3,067 | |
| Total reserves | 3,067 | |
| Profit carried forward | 2,228 | |
| Proposed dividend | 1,800 | |
| TOTAL SHAREHOLDERS' EQUITY | 7,185 | |
| OTHER SUBORDINATED LOAN CAPITAL | 8 | 399 |
| Amounts due to subsidiaries | 133 | |
| Current tax liabilities | 60 | |
| Other debt | 8 | 11 |
| TOTAL DEBT | 201 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 7,785 |
Related parties 9
Own shares 10
Contingent liabilities 11
Other note disclosures 12
Accounting policies 13
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• • Parent company (DKKm)
| Profit Share | Other carried forward | Proposed dividend | Total | |
|---|---|---|---|---|
| 2020 | ||||
| Shareholders' equity at 31 December previous year | 90 | 2,682 | 2,401 | 1,530 |
| Reduction of proposed dividend previous year | 765 | (765) | 0 | |
| Profit / (loss) for the year | 1,168 | (1,844) | 1,800 | |
| Other comprehensive income in subsidiaries | 1 | 1 | ||
| Total comprehensive income for the year | 1,169 | (1,844) | 1,800 | 1,125 |
| Dividend paid | (765) | (765) | ||
| Dividend, own shares | 24 | 24 | ||
| Dividends received from subsidiaries | (840) | 840 | 0 | |
| Other movements in capital of subsidiaries | 55 | 55 | ||
| Share-based payments | 10 | 10 | ||
| Exercise of share options | 33 | 33 | ||
| Transactions with owners | (785) | 907 | (765) | |
| Shareholders' equity at 31 December 2020 | 90 | 3,067 | 2,228 | 1,800 |
| 2021 | ||||
| Shareholders' equity at 31 December previous year | 90 | 3,067 | 2,228 | 1,800 |
| Profit / (loss) for the year | 2,197 | (3,164) | 3,105 | |
| Other comprehensive income in subsidiaries | 0 | 0 | ||
| Total comprehensive income for the year | 2,197 | (3,164) | 3,105 | 2,138 |
| Dividend paid | (1,800) | (1,800) | ||
| Dividend, own shares | 48 | 48 | ||
| Dividends received from subsidiaries | (1,872) | 1,872 | 0 | |
| Other movements in capital of subsidiaries | 49 | 25 | 73 | |
| Share-based payments | 10 | 10 | ||
| Exercise of share options | 50 | 50 | ||
| Transactions with owners | (1,823) | 2,005 | (1,800) | |
| Shareholders' equity at 31 December 2021 | 90 | 3,440 | 1,069 | 3,105 |
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• • Parent company (DKKm)
| Note | 2020 | 2021 |
|---|---|---|
| Note 1. Income from subsidiaries | ||
| Topdanmark Forsikring A/S | 1,098 | |
| Topdanmark Kapitalforvaltning A/S (until June 30, 2021) | 73 | |
| Topdanmark Invest A/S (3) | 3 | |
| Income from subsidiaries | 1,168 | |
| Note 2. Revaluations | ||
| Equity investments | 0 | |
| Revaluations | 0 | |
| Note 3. Other expenses | ||
| Holding expenses | 46 | |
| Other expenses | 46 | |
| Note 4. | ||
| Current tax 12 12 | ||
| Prior year adjustment 0 (1) | ||
| Taxation (income) 12 11 | ||
| Pre-tax profit excl. income from subsidiaries (57) (70) | ||
| Calculated tax on profit for the year, 22% 12 15 | ||
| Adjusted for the tax effect of: | ||
| Non-deductible expenses / income not liable to tax (0) (2) | ||
| Tax in subsidiaries 0 (1) | ||
| Prior year adjustment 0 (1) | ||
| 12 11 |
Cost 3 3
Operating equipment 3 3
| 2021 | 2020 | |
|---|---|---|
| Topdanmark Forsikring A/S | 6,672 | 7,114 |
| Topdanmark Invest A/S | 51 | 54 |
| Topdanmark Kapitalforvaltning A/S | 92 | - |
| Equity investments in subsidiaries | 6,816 | 7,169 |
For detailed information please see note 44 to the financial statements for the Group.
Each of Topdanmark's 90,000,000 shares has a nominal value of DKK 1 and has one vote. No share enjoys any special rights. The shares are freely negotiable. All shares are fully paid.
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Announcement No. 05/2022 from Topdanmark A/S
Notes to the financial statements • • Parent company (DKKm)
| Principal | Date of issue | Maturity | If permitted by the Danish FSA, the debtor can give notice of termination from 23 November 2022 | Interest rate | 2020 | 2021 | |
|---|---|---|---|---|---|---|---|
| DKK 400m | November 2017 | Bullet | Cibor 3 months +275bp | ||||
| Carrying value | 399 | 400 | |||||
| Market value (level 2) | 400 | 400 | |||||
| Interest charges | 10 | 10 |
Possessing an ownership interest of 49.44% of the shares outstanding, Sampo plc, Fabianinkatu 27, Helsinki, Finland has a controlling influence on Topdanmark A/S. Related parties with material influence comprise the Board of Directors, the Executive Board and their related parties. Remuneration and shareholdings in Topdanmark appear from note 33 to the financial statements for the Group.
| 2021 | 2020 | |
|---|---|---|
| Sampo plc holds: | ||
| Subordinated notes in Topdanmark Forsikring A/S | 270 | 0 |
| If P&C Insurance Ltd holds: | ||
| Subordinated notes in Topdanmark A/S | 133 | 133 |
| Subordinated notes in Topdanmark Forsikring A/S | 500 | 1,500 |
| Expenses charged from subsidiaries | 32 | 38 |
| Dividends received from subsidiaries | 840 | 1,872 |
Average effective interest rate on Group internal balances is 0,01% (2020: 0.00%).
Topdanmark A/S has transferred Topdanmark Kapitalforvaltning A/S to Topdanmark Livsforsikring A/S at a market value corresponding to net asset value.
The number of own shares held by the parent company appear from note 41 to the financial statements for the Group.
All companies in the Topdanmark Group and other Danish companies and affiliates in the Sampo Group are jointly taxed with Topdanmark A/S being the management company. Pursuant to the specific rules on corporation taxes etc. in the Danish Companies Act, the companies are liable for the jointly taxed companies and for any obligations to withhold tax on interest, royalties and dividend for companies concerned.
The five-year summary, in accordance with Section 91(a) of the Danish Executive Order on Financial Reports for Insurance Companies, is included in financial highlights. Risk disclosures in accordance with Section 91(b) are included in "Management's review" in "Risk management " and in note 46 "Risk factors". There have been no events in the period from 31 December 2021 until the presentation of the financial statements which could change the assessment of the annual report.
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Announcement No. 05/2022 from Topdanmark A/S
Notes to the financial statements • • Parent company
The annual financial statements of the parent company Topdanmark A/S have been prepared in accordance with the Danish Financial Business Act, including the executive order issued by the Danish FSA on financial reports for insurance companies and multi-employer occupational pension funds. The accounting policies remain unchanged from 2020. The company’s accounting policies for recognition and measurement are in accordance with the Group’s accounting policies with the following amendment: Equity investments in subsidiaries are recognised and measured according to the equity method. If the net asset value exceeds the recoverable amount, the investment is written down to this lower amount. The share of the post- tax results of subsidiaries is included in the income statement under income from subsidiaries less any write- downs. Where investments in subsidiaries are revalued to net asset value, the net revaluation reserve is included in shareholders' equity. The share of the changes in other comprehensive income items and equity of subsidiaries is included directly in other comprehensive income items and shareholders' equity respectively. The net asset value of subsidiaries is calculated without providing for deferred tax on security funds, unless it is probable that a situation creating such a tax liability will arise within the foreseeable future.
Other
Generally, all the amounts in the report are disclosed in whole numbers of DKKm. The amounts have been rounded, and consequently the sum of the rounded amounts and totals may differ slightly.
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Announcement No. 05/2022 from Topdanmark A/S
This annual report includes statements relating to the future. Such statements are uncertain and involve both general and specific risks. Many factors may cause significant deviation from the forecasts and assumptions set out in the annual report. Such factors could be, for example, cyclical movements, changes in the financial markets, the financial effect of unexpected events such as acts of terrorism or exceptional weather conditions, changes in Danish and EU rules, competitive factors in the insurance industry, and trends in the reinsurance market. See also: www.topdanmark.com → Investors → Risk management. The above description of risk factors is not exhaustive. Investors and others, who may base decisions relating to Topdanmark on statements in relation to the future, should give their own careful consideration to these and other factors of uncertainty. Topdanmark’s statements relating to the future are based solely on information known at the time of the preparation of this annual report.
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Announcement No. 05/2022 from Topdanmark A/S
The Board of Directors and the Executive Board have today considered and approved the Annual Report of Topdanmark A/S for 2021. The consolidated financial statements are presented in accordance with International Financial Reporting Standards as adopted by the EU, and the annual financial statements for the parent company are presented in accordance with the Danish Financial Business Act. Further, the Annual Report is presented in accordance with additional Danish disclosure requirements for listed financial services companies. In our opinion, the consolidated financial statements and annual financial statements give a true and fair view of the Group’s and the parent company’s assets, liabilities and financial position at 31 December 2021 as well as of the Group’s and the parent company’s activities and the Group’s cash flow for the financial year 1 January to 31 December 2021. We believe that the management review contains a fair review of the development of the Group’s and parent company’s activities and financial position, together with a description of the most material risks and uncertainties by which the Group and the parent company can be affected. In our opinion, the annual report of Topdanmark A/S for the financial year 1 January to 31 December 2021 with the file name TOPDANMARK-2021-12-31.zip is prepared, in all material respects, in compliance with the ESEF Regulation. We recommend the Annual Report for adoption at the Annual General Meeting.
Ballerup, 24 February 2022
Executive Board:
Peter Hermann
Lars Kufall Beck
Thomas Erichsen (CEO)
Board of Directors:
Ricard Wennerklint
Jens Aaløse
Elise Bundgaard (Chairman)
(Deputy Chairman)
Anne Louise Eberhard
Mette Jensen
Cristina Lage
Ole Lomholt Mortensen
Petri Niemisvirta
Morten Thorsrud
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Announcement No. 05/2022 from Topdanmark A/S
To the shareholders of Topdanmark A/S
Report on the audit of the consolidated financial statements and parent company financial statements
Opinion
In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group’s and the Parent Company’s assets, liabilities and financial position at 31 December 2021 and of the results of the Group’s and Parent Company’s operations and cash flows for the financial year 1 January – 31 December 2021. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed financial institutions and the parent company financial statements are prepared in accordance with the Danish Financial Business Act. Our opinion is consistent with our long-form audit report to the Board or Directors and the Audit Committee.
Audited financial statements
Topdanmark A/S’ consolidated financial statements and parent company financial statements for the financial year 1 January – 31 December 2021 comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and notes, including summary of significant accounting policies, for the Group as well as for the Parent Company. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed financial institutions and the parent company financial statements are prepared in accordance with the Danish Financial Business Act.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark.# Auditor's Report
Our responsibilities under those standards and requirements are further described in the “Auditor’s responsibilities for the audit of the nancial statements” section of our report. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fullled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We declare, to the best of our knowledge and belief, that we have not provided any prohibited non-audit services, as referred to in Article 5(1) of the Regulation (EU) 537/2014 and that we remained independent in conducting the audit. We were appointed auditors of Topdanmark A/S for the rst time on 25 March 2021 for the nancial year 2021.
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Announcement No. 05/2022 from Topdanmark A/S
Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial statements for the 2021 nancial year. These matters were addressed in the context of our audit of the nancial statements as a whole, and in the forming of our opinion thereon. We do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided on that context.
Subjective valuation and inherent uncertainty
Insurance and investment contract provisions that mainly include life insurance and non-life insurance provisions represent the largest liability for the Company. Total provisions for insurance and investment contracts amount to DKK 106,695m at 31 December 2021 (2020: DKK 95,797m) and mainly comprise of:
With the exception of provisions related to unit-linked products, the measurement of these liabilities is highly judgemental because they require a number of management estimates to be made with high estimation uncertainty related to the expected future cash ows. Future cash ows regarding non-life insurance provisions include among other things the following signicant management estimates:
Signicant management estimates regarding life insurance provisions also include:
The interest rate curve applied in measuring the provisions for insurance and investment contracts is also material to the value. The determination and application of the methodology and models and performance of the calculations are also complex.
How our audit addressed the key audit matter
With the assistance of our actuarial specialists, our procedures included:
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Announcement No. 05/2022 from Topdanmark A/S
The valuation of the insurance contract provisions depends on complete and accurate data covering the volume, amount and pattern of current and historical claims since they are often used to form expectations about future claims. If the data used in calculating insurance liabilities or for forming judgements of key assumptions is not complete and accurate, then material impacts on the valuation of insurance liabilities may arise.
How our audit addressed the key audit matter
Based on the above we consider the audit of the following part of the provisions for insurance and investment contracts to be a key audit matter:
Information on provisions for insurance and investment contracts is disclosed in notes 24 and 28 (provisions regarding non-life insurance contracts) and notes 25-27 (provisions regarding life insurance contracts). In addition, specied risks, assumptions, etc., related to the estimates of the insurance and investment contract provisions are described in ”Provisioning risk” and ”Life insurance” in note 46 Risk Factors and in ”Accounting estimates and judgements” in note 47 Accounting policies.
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Announcement No. 05/2022 from Topdanmark A/S
Unlisted investments amount to DKK 19,867m at 31 December 2021 (2020: DKK 17,879m), corresponding to 17% of the Group’s total investment assets at 31 December 2021 (2020: 17%). Unlisted investments include among other things, investment properties, unlisted securities, loans, derivatives and CLOs. Measurement of unlisted investments involves management estimates which materially aect the carrying amount. We consider the audit of the following part of the unlisted investments to be a key audit matter, due to the high degree of estimate on the carrying value:
Information on unlisted investments is disclosed in notes 17 and 34. In addition, specied judgements, assumptions, etc., related to the measurement of unlisted investments are described in ”Accounting estimates and judgements” in note 47 Accounting policies.
Management is responsible for the Management’s review. Our opinion on the nancial statements does not cover the Management’s review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the nancial statements, our responsibility is to read the Management’s review and, in doing so, consider whether the Management’s review is materially inconsistent with the nancial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management’s review provides the information required under the Danish Financial Business Act. Based on the work we have performed, we conclude that the Management’s review is in accordance with the nancial statements and has been prepared in accordance with the requirements of the Danish Financial Business Act. We did not identify any material misstatement of the Management’s review.
Management is responsible for the preparation of consolidated nancial statements that give a true and fair view in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed nancial institutions and the parent company nancial statements in accordance with the Danish Financial Business Act and for such internal control that Management determines is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error.# Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements may arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determined that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
As part of our audit of the consolidated financial statements and parent company financial statements of Topdanmark A/S we performed procedures to express an opinion on whether the annual report of Topdanmark A/S for the financial year 1 January – 31 December 2021 with the file name TOPDANMARK-2021-12-31.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements.
Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes:
Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include:
In our opinion, the annual report of Topdanmark A/S for the financial year 1 January – 31 December 2021 with the file name TOPDANMARK-2021-12-31.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
Copenhagen, 24 February 2022
KPMG Statsautoriseret Revisionspartnerselskab
CVR no. 25 57 81 98
Anja Bjørnholt Lüthcke Kim Schmidt
State Authorised State Authorised
Public Accountant Public Accountant
mne26779 mne34552
Topdanmark A/S
Borupvang 4 • DK-2750 Ballerup
Tel +45 44 68 33 11 • CVR no. 78040017
[email protected] • www.topdanmark.com# Reporting class D
549300PP3ULLF0SQRK46
Basis for Opinion
| 2021-01-01 | 2021-12-31 | 2020-01-01 | 2020-12-31 | |
|---|---|---|---|---|
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iso4217:DKK
xbrli:shares
xbrli:pure
Annual report
Reporting class D
549300PP3ULLF0SQRK46
78040017
Topdanmark AS
Borupvang 4
2750 Ballerup
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