7 October 2016
Announcement no 59/2016

Today, Topdanmark publishes “statement by the Board of Directors of Topdanmark A/S” concerning the mandatory public offer submitted by Sampo plc on 27 September 2016.

The statement by the Board of Directors includes information on the profit forecast model for 2016, and Topdanmark’s assumptions for profit forecast model for 2017.

Profit forecast model for 2016
Traditionally, the company does not publish actual profit forecasts. Instead, information is given about the expected level of results if a number of assumptions about the return in the financial markets are met. The return in the financial markets changes on a daily basis, and Topdanmark’s profit forecast model will already deviate from actual expectations by the time it is published.

Therefore, set out in www.topdanmark.com → Investor → Risk management is additional information on how deviations in the assumptions underlying the profit forecast model will affect the results.

Thus, the profit forecast model is not based on a specific estimate of the expected investment return for the rest of the year, but solely on a long-term standard assumption of the return.

It was stated in the half-year report for 2016, which was published on 16 August 2016, that Topdanmark’s post-tax profit forecast model for 2016 was DKK 1,000 – 1,100m.

The profit forecast model was i.a. based on the following assumptions: 

  • A combined ratio of around 89 before run-off in H2 2016
  • An expense ratio of around 16
  • Normal weather conditions in H2 2016, i.e. weather-related  claims of DKK 95 m in H2 2016
  • An annual 7.0% return on equities and foreign exchange rates unchanged from the level as of 5 August 2016
  • Furthermore, it was assumed that the return on interest-bearing assets matching the discounted claims provisions, is just sufficient to cover discounting and revaluation of the provisions, while the return on the remaining interest-bearing assets is 1.81% (the risk-free interest rate plus 2.0 percentage points). 

Since publication of the profit forecast model in the half-year report for 2016, no incidents have occurred which significantly impact the prospects for 2016. Based on the same assumptions as stated in the half-year report, the post-tax profit forecast model of DKK 1,000 – 1,100m is maintained, and a negative trend in non-life insurance premiums in 2016 is still assumed. 

Assumptions for the profit forecast model for 2017
The profit forecast model for 2017 is based on the following assumptions:

  • Like recent years, 2017 will also be characterised by declining average premiums for motor insurance – an area that contributed with 24% of Topdanmark’s gross premiums in H1 2016
  • In recent years, Topdanmark’s exposure to the industrial market, in particular the market for workers’ compensation, has been reduced. Topdanmark surrenders the remaining large-scale industrial customers no later than by the end of 2016
  • The automatic premium indexing in the private segment will be 1.8% in 2017 (2016: 1.4%)
  • In 2015 and in H1 2016, Topdanmark has implemented a new model for distribution through insurance sales representatives in the private segment. The new sales model gives the sales representatives greater responsibility for making individual risk assessments when issuing policies. This has resulted in a loss of momentum in new sales, but will improve the quality of the new-signed customer portfolio. The finalization of implementing the new sales model will result in premium growth in the private segment, excl. motor insurance
  • Weather-related claims of DKK 170m.
  • An interest rate level corresponding to the interest rate curve of 5 August 2016
  • Expense ratio around 16. 

On the basis of the above assumptions, a practically unchanged premium level is assumed for non-life insurance in 2017, and a combined ratio of 90 – 91 excl. run-off. 

The technological development brings new opportunities for Topdanmark. In the digital area, Topdanmark is committed to streamlining and automating a significant part of its business procedures to be able to offer its customers professional, flexible, fast and easy service. It is Topdanmark’s goal to offer digital self-service solutions to those of its customers who are interested. Further, Topdanmark is seeking to exploit the advantages of digitalisation in relation to business and product development for the purpose of creating growth and improving customer experience. The implementation of digital improvement initiatives may temporarily involve additional costs or investments, the amount of which is still unknown. The profit forecast model for 2016 and the assumptions for the profit forecast model for 2017 have not taken these possible additional costs or investments or the resulting potential additional earnings into account.

Please direct any queries to:

Christian Sagild,
Tel: +45 44 74 44 50

Lars Thykier,
Tel: +45 44 74 37 14

Steffen Heegaard
Group Communications and IR Director
Tel: +45 44 74 40 17
Mobil tel: +45 40 25 35 24


Topdanmark A/S
Cvr.-nr. 78040017
Borupvang 4
DK-2750 Ballerup

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