TOPDANMARK ANNUAL REPORT FOR 2014 4 March 2015 Announcement No. 05/2015
(2013: DKK 442m). The 2013 profit was impacted by the recognition as income from the shadow account
(Q4 2013: 104.9%) • Premium growth: Non-life insurance 1.8%, life insurance 12.6% • Profit on life insurance: DKK 2m (Q4 2013: DKK 102m) • Investment return: DKK 60m (Q4 2013: DKK 283m).
• Assumed premium growth has been changed from 1-2% to around 0% particularly due to an increased focus on profitability promoting initiatives for less profitable customers in the SME and industrial areas, which generated a greater than expected loss of customers at the end of 2014
Webcast In a webcast Topdanmark's CEO, Christian Sagild, will present the financial highlights and comments on the forecast.
1 Key features 3 Financial highlights 4 Results for 2014 4 Results for Q4 2014 5 Non-life insurance 9 Life insurance 10 Investment activities 11 Parent company etc. 11 Taxation 11 Profit forecast model 13 Share buy-back 14 Risk management 17 Solvency 19 Capital model 19 Capital structure and ownership 20 Board of Directors and Articles of Association 20 Severance pay 21 Remuneration structure 22 Corporate Governance 22 CSR 22 Investor Relations 24 Annual General Meeting 24 Financial calendar 25 Company announcements and trading reports 26 Board of Directors and Executive Board 31 Five-year summary – Group
Run-off profits, net of reinsurance 204 148 201 306 351 101 90
Deferred tax on security funds (348) (348) (348) (306) (306) (306) (306) Shareholders' equity of Group
Total assets, parent company 5,712 6,408 6,895 6,485 6,143 6,485 6,143 Total assets, Group 57,542 61,013 59,435 61,092 64,516 61,092 64,516
Financial ratios (parent company) Post-tax profit as a % of shareholders' equity 24.1 21.1 33.9 26.0 28.1 4.5 5.5 Post-tax EPS (DKK) 7.7 7.4 14.2 12.5 14.4 2.2 2.9 Post-tax EPS, diluted (DKK) 7.7 7.4 14.1 12.3 14.3 2.2 2.9 Net asset value per share, diluted (DKK) 33.8 36.8 45.8 48.3 52.2 48.3 52.2 Share buy-back per share, diluted (DKK) 5.9 8.4 9.3 15.4 15.8 2.9 3.9 Listed share price end of period 73.8 89.5 121.3 142.8 200.2 142.8 200.2
Average number of shares ('000) 151,307 137,409 128,276 117,904 107,908 113,695 104,273 Average number of shares, diluted ('000) 151,587 138,023 129,367 119,131 108,805 114,758 105,102 0 Number of shares end of period ('000) 144,724 133,319 123,940 112,632 103,623 112,632 103,623
Ratios non-life insurance (%) Gross loss ratio 75.5 78.2 70.0 80.4 69.3 114.1 64.9 Net reinsurance ratio 2.4 (3.6) 2.2 (5.0) 1.0 (29.7) 3.3
The technical result improved DKK 524m to DKK 1,289m. The improved claims trend benefited from, among other factors, weather-related claims being DKK 262m lower than in 2013. While Q4 2013 was affected by two large storms, there were no major weather events in 2014. Additionally, the claims trend improved for, among other lines, theft and fire. Also, run-off profits improved.
The investment return declined DKK 81m to DKK 514m. In 2014 the investment return was significantly higher than the normal level but lower than the level of 2013, which benefited from an extraordinarily high return on equities, credit bonds and CDOs.
Profit on life insurance declined DKK 242m to DKK 200m, primarily due to the recognition as income of DKK 171m from the shadow account in 2013. In 2014, however, DKK 5m was transferred to the shadow account: see “Life insurance”.
Pre-tax profit for Q4 2014 increased to DKK 404m (Q4 2013: DKK 318m).
The investment return declined DKK 161m to DKK 8m. In Q4 2014 the investment return was affected by an increase in credit spreads, which impacts the return on, for example, credit bonds and CDOs. Furthermore, the return on equities was lower.
Profit in the parent company declined DKK 38m to DKK 16m due to, among other factors, a lower operating result from Topdanmark Kapitalforvaltning and a write-down of property in Topdanmark Invest.
Non-life insurance - Investment return after transfer to technical result etc. 595 470 – 520 514 Profit on non-life insurance 1,361 1,530 – 1,630 1,803
The level of fire claims declined to DKK 28m, representing a 0.3pp improvement of the claims trend. This improvement was mostly due to an improved claims trend for the personal segment.
The interest rate curve used to discount the provisions for outstanding claims was lower in 2014 than in 2013 with a 0.4pp adverse effect on the claims trend.
Non-life insurance - Investment return after transfer to technical result etc. 169 8
Combined ratio Overall expenses on claims, reinsurance, sales and administration as a percentage of premiums earned (combined ratio) improved to 86.0% in 2014 (2013: 91.5%). Excluding run-off profits it improved to 89.8% (2013: 95.0%).
Expense ratio The expense ratio improved to 15.4% (Q4 2013: 16.0%).
The claims trend improved 3.9pp to 68.2%. The claims trend benefited from fewer weather-related claims, representing 1.7pp. Additionally, the claims trend improved for theft and fire insurance, which had a 1.5pp positive impact on the claims trend. Finally, run-off profits were DKK 16m higher than in 2013, representing a 0.3pp improvement of the claims trend.
Investment return after transfer to technical result 165 (4) 575 478
The expense ratio was 16.4% (2013: 16.9%), primarily the result of lower selling expenses and improved efficiency due to, among other factors, digitalisation.
The combined ratio improved to 84.6% in 2014 (2013: 88.9%). Excluding run-off profits it improved to 88.7% (2013: 92.9%).
SME and Industrial The SME and Industrial segment offers policies for Danish-based SME, agricultural and industrial businesses.
Premiums earned improved 2.3% to DKK 4,116m in 2014. This growth was mainly generated in the SME and agricultural areas, while premiums earned declined in the industrial area. In Q4 premiums earned increased 1.7% to DKK 1,045m.
The claims trend improved 6.5pp to 72.9%. The claims trend benefited from fewer weather-related claims, representing 4.3pp, and an improved trend for fire and theft, which reduced the claims trend by 1.1pp and 0.7pp respectively. Run-off profits had a 0.7pp positive impact on the claims trend.
The combined ratio improved to 87.7% in 2014 (2013: 94.8%). Excluding run-off profits it improved to 91.2% (2013: 97.6%).
Gross premiums earned 1,242 1,263 4,881 5,021 Technical interest 1 1 7 4 Claims incurred (1,086) (852) (3,638) (3,428) Expenses (208) (205) (823) (822) Net reinsurance 179 (1) 120 3 Technical result 128 207 547 778
Gross premiums earned 1,027 1,045 4,025 4,116 Technical interest 1 0 7 4 Claims incurred (1,498) (647) (3,522) (2,911) Expenses (156) (152) (618) (608) Net reinsurance 492 (77) 325 (91) Technical result (134) 170 217 510
At 31 December 2014, the shadow account was DKK 26m, which will be available for recognition as income over time.
Trend in premiums Gross premiums increased 26.7% to DKK 4,448m in 2014, of which premiums on unit-linked pension schemes were DKK 3,154m, an increase of 67.7% from 2013. Unitlinked pension schemes represented 85.6% of new pension schemes written in 2014 (2013: 70.1%).
Developments in Q4 2014 The result of life insurance declined to DKK 2m in Q4 2014 (Q4 2013: DKK 102m) primarily due to a lower investment return and a larger cost deficit. Furthermore, the result in Q4 2013 benefited from a profit on current annuities due to adaptation of mortality parameters and recognition of income from the shadow account.
Overall premiums were DKK 1,087m in Q4 2014 representing a 12.6% increase from Q4 2013 mainly due to a 22.6% increase in single premiums to DKK 533m. Regular premiums increased 4.3 % to DKK 554m.
The class of "Assets related to I/A" (illness / accident) comprises the investments in Topdanmark Livsforsikring corresponding to the size of the illness / accident provisions.
Parent company etc. The parent company, Topdanmark, does not perform any independent activities. The result of the parent company etc. includes the results of subsidiaries, excluding the insurance business (primarily Topdanmark Kapitalforvaltning) and finance costs.
Profit forecast model Traditionally, Topdanmark does not publish actual profit forecasts but instead 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 changes in the assumptions underlying the profit forecast model will affect the results.
This was based on the following assumptions: • A normal year for weather-related claims of DKK
• A level of interest rates corresponding to the interest rate curve on 7 November 2014.
• Interest rates have declined, representing a 0.4pp deterioration of the combined ratio
• Generally, greater than assumed improvement in the claims trend due to, among other factors, the decline in the number of thefts and fewer accidents caused by slippery roads due to the mild winter. This has an overall positive effect of around 1pp on the assumed combined ratio for 2015. In addition, there is the effect of a relatively large portfolio of unprofitable customers having left Topdanmark at the turn of the year.
The assumed premium growth has been changed from 1-2% to around 0% particularly due to an increased focus on profitability promoting initiatives for less profitable customers in the SME and industrial areas, which generated a greater than expected loss of customers at the end of 2014. The smaller portfolio of customers at the beginning of 2015 will have an adverse effect of around 1pp on the assumed premium growth for 2015. In addition, to improve the quality of new sales the certified insurance sales people in the personal segment will, to a larger extent, have to make individual risk assessment. This is expected to cause a certain loss of momentum for this sales channel. Competition, particularly in the personal segment, intensified at the end of 2014 and the beginning of 2015. During 2015 Topdanmark will invest further in sales promotion initiatives.
Overall, the assumed pre-tax profit on non-life insurance is DKK 1,030-1,110m.
The substantial decline in the assumed profit, as compared to previous years, should be viewed alongside the very low level of interest rates and Management's lower expectations for the future investment return in general. This reduces the assumed investment return on shareholders' equity from DKK 101m in 2014 to around DKK 60m in 2015. Additionally, the risk return charged on with-profits schemes will decline due to movements away from with-profits to unit-linked schemes. At the same time the cost deficit will continue to be large as quite low fees are charged on unit-linked schemes, while actual costs will increase from 2014 to 2015, as sales are expected to be good and at the same time the implementation of the new administration system will have an adverse impact on the resources of the organisation in future years.
Overall, the assumed pre-tax profit on life insurance is DKK 120-150m.
The result is highly sensitive to fluctuations particularly in the investment return. The risk allowance and shadow account are not finally calculated until the preparation of the 2015 Annual Report.
Parent company The profit forecast model for the parent company plus subsidiaries outside of the insurance group assumes a pre-tax profit of DKK 30-40m.
The reduction in shareholders' equity of DKK 1,716m was partly offset by DKK 110m strengthening of shareholders' equity by issue and exercise of share options etc.
Non-life insurance - Technical result 1,289 850 – 900 - Investment return after transfer to technical result etc. 514 180 – 210 Profit on non-life insurance 1,803 1,030 – 1,110 Life insurance 200 120 – 150 Parent company etc. 7 30 – 40 Pre-tax profit 2,010 1,180 – 1,300 Taxation (452) (280) – (300)
In this light it is Topdanmark's opinion that the Company's future annual results will, with a very high probability, be positive even in the event of, for example, another collapse in the financial markets as in 2008.
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, was considered at a Board seminar in the autumn of 2014.
Disaster risks • Storm and rainstorm • Fire • Terror • Workers' comp
Spread of risk on different types of insurance / customer groups
Disability, which is the risk of increasing disability intensity or declines in the rates of resumption of work
Lifetime, where customers with life dependent policies live longer than expected
For agreements with bonus entitlement we aim at balancing return and risk so that ordinary risks are covered by the related bonus potential
Bonus potential on paid-up benefits is protected by loss participation schemes
Guarantees are, to a significant extent, hedged in portfolios with high guaranteed benefits. In portfolios with low guaranteed benefits, movements in interest rates are followed and risk reducing actions are performed as required
Prices relating to death and disability are regularly adjusted to the market situation and the observed claims record
To obtain efficient and secure reinsurance cover which is price competitive, a certain level of counterparty concentration is required
Counterparty risk is limited by mainly buying hedging from reinsurance companies which as a minimum have a rating of A-
Credit risk is limited by diversification both geographically and in terms of type of debtor
Operational risks Most important risks Risk preferences Risk reducing activities IT
In a situation where Topdanmark's solvency might come under pressure, the share buy-back will be stopped. Additionally, the cancellation of own shares bought under the buy-back programme will be effected with a certain delay giving Topdanmark the opportunity to increase its solvency capital by selling own shares
The future EU Solvency II rules will take effect on 1 January 2016. These rules will replace the three sets of rules listed above. Individual solvency requirement has already been aligned with the future rules of Solvency II in respect of contents and the level of capital requirements.
On 1 January 2014 a new executive order on solvency took effect. This new order is based on all Danish insurance companies using the same rules when calculating their solvency, while the method was optional up to and including 2013. The rules of the new executive order are close to the future Solvency II rules.
The most significant changes in the new rules from the most recent solvency calculation of the Topdanmark Group are: • Change in the calculation of life insurance provisions, including recognition of surrender probabilities • Recognition as loss absorbing buffer in the solvency calculation of a tax asset due to a negative 200-yearevent.
The solvency calculation for Topdanmark Livsforsikring (life Insurance) has been adjusted in keeping with the relevant rules. Particularly, loss absorption is now calculated in accordance with the Solvency II rules and not the Danish accounting rules. For this purpose a model has been developed, which recognises best estimate for the utilisation of a portfolio of its surrender and paid-up options. The calculation of the effect of all the company's risks is now based on this model.
Transitional rules related to the new executive order on solvency require that the calculation of the capital base is substantially, but not fully, adapted to the new solvency rules.
Provisioning risk Provisions on ow n account − 1% increase (94) (98)
Market risk Interest-bearing assets 1 pp increase (464) (484) Provisions for claims in effective and benefits etc. interest rate 441 505
exceed best estimate, the surplus amount is added to the capital base
Significant expected Solvency II elements which are not included in the calculation of capital base according to the transitional rules: • Recognition of subordinated loan capital, where in 2015 Topdanmark will not be able to recognise the full subordinated loan capital. Full recognition is expected in accordance with new rules as of 2016
• The rules on subsidiaries in the parent company's solvency and capital base will be changed in 2016. The new rules are not expected to bring about further capital requirements.
A new accounting order is also expected, which will take effect as of 2016. These accounting rules will be amended to comply with the Solvency II principles. The new accounting rules are not expected to materially change the solvency or capital base from the solvency and capital base announced by Topdanmark in 2015, except that no increase is expected in the capital base in 2016 on the basis of a difference in the provisions for outstanding claims between the accounts and Solvency II.
Insurance holding companies are also covered by the new executive order on solvency for insurance companies. According to these rules, Topdanmark A/S is an insurance holding company. These rules do not require the calculation of solvency requirement for Topdanmark A/S, but they require the calculation of a capital base which must be positive after deduction of the solvency requirements for the subsidiaries.
Solvency II Solvency II is the future EU regulation for insurance companies setting requirements for solvency calculations, capital base and risk management. In addition there are requirements for detailed reporting on risk management to supervisory authorities and for publication. Solvency II will take effect on 1 January 2016.
Solvency calculation and capital requirements An important goal of Solvency II is to promote good risk management based on market values and actual risk calculations. Solvency II will include a standard model for calculation of solvency requirements, which will be common to all insurance companies in the EU. Although the model will provide the opportunity for companyspecific values for some variables, the standard model will not provide a fair view of all the risk elements of all companies.
Topdanmark is in constant dialogue with the DFSA on the model. The application for Solvency II approval will be submitted to the DFSA in 2015 with expected approval of the model before Solvency II takes effect on 1 January 2016.
The necessary capital of DKK 4,700m, as stated above, has been based on an expected approval of Topdanmark's internal model for non-life insurance risk. If it is not approved, the Solvency II requirement will increase by around DKK 800m. This is not expected to affect the necessary capital, because in this case the capital increase in the solvency requirement will be reduced, because the said DKK 250m of subordinated loan capital could be included, and because supplementarily the investment risk could be adjusted.
There are two important outstanding sub-projects, partly the new, very detailed external report to the DFSA and the report for publication on the website, and partly the approval of Topdanmark's own risk model for non-life risk to be used under Solvency II as partial internal model. Both sub-projects are proceeding to plan towards 2016.
Capital model Topdanmark pursues a policy of keeping its shareholders' equity at a relatively low level and paying out to shareholders any amounts in excess of the conservatively estimated shareholders' equity sufficient to support the underlying business.
In spite of this policy Topdanmark has decided on a capital model that has a relatively high proportion of shareholders' equity. This ensures that any regulatory requirements on solvency capital in excess of expectations could be covered solely by issuing further supplementary capital.
Furthermore, for the period until the Annual General Meeting in 2015, the Board of Directors is authorised to acquire own shares of up to 15% of the share capital for the purpose of ownership or security. The shares can be acquired at a minimum market price of DKK 1.05 per share and a maximum price of current market value plus 10%. It is a standing authorisation which, subject to the approval of the general meeting, is renewed regularly.
The age limit for Board members is 70, and the term of office for members elected by shareholders at the general meeting is one year, while in accordance with legislation, it is four years for members elected by employees.
Board members are elected individually, and no Board member may be appointed by any individual shareholder.
Three of the nine Board members are women, two of them elected at the general meeting and one by Topdanmark's employees. Consequently, Topdanmark meets its goal: that the Board members elected at the AGM comprise a minimum of two persons of each gender. Topdanmark meets the statutory definition of an equal gender distribution.
and an increased severance pay if Topdanmark is taken over by or merges with a company outside of the Group, or if one or more owners take control of Topdanmark. The maximum amount of compensation will represent two years' salary.
On 23 September 2013, the EU Commission decided that If P & C Insurance Holding Ltd (publ) de facto is in control of Topdanmark. By extension of this decision, the Executive Board earns a compensation representing six months' salary in each of the years 2013-2015. The compensation will be paid on resignation.
No special pension contribution is paid to the Executive Board, and, therefore, they are paid a personal allowance of 25% of their cash salary. Consequently Topdanmark has no pension commitments towards the Executive Board and no type of pension compensation on retirement is granted. The Friday Team and significant risk takers receive a pension contribution of up to 25% of their cash salary. The amount is paid to the chosen pension provider and consequently all pension obligations are fully covered by them.
Besides the revolving scheme referred to above, a further 151,500 share options have been granted for 2015 to a number of other executives who are expected to make a special effort or otherwise contribute extraordinarily to value creation in the Company.
Investor Relations Topdanmark wishes to openly and sufficiently inform investors, analysts and other stakeholders on the Group's matters in order to ensure that as far as possible: • Value creating activities are reflected in a fair price for
The AGM will be held on 15 April 2015, 15:00 (CET) at: Tivoli Hotel & Congress Center Arni Magnussons Gade 2 1577 København V
2015 19 Feb 04/2015: Topdanmark Announcement of 2014 Annual Results 23 Jan 03/2015: Annual General Meeting 2015 05 Jan 02/2015: Topdanmark increases its holding of own shares 02 Jan 01/2015: Issue of options 2014 18 Nov 12/2014: Topdanmark’s Interim Report for Q1-Q3 2014 29 Aug 11/2014: Share capital and voting rights in Topdanmark 19 Aug 10/2014: Topdanmark 2014 Half-Year Report 18 Aug 09/2014: Write-down of Topdanmark’s share capital ̵ Topdanmark’s holding of own shares below 10% 20 May 08/2014: Topdanmark Interim Report Q1 2014 15 May 07/2014: Resignation of employee elected to the Boards of Directors of Topdanmark and Topdanmark Forsikring 10 Apr 06/2014: Annual General Meeting of Topdanmark – 10 April 2014 13 Mar 05/2014: Notice convening AGM of Topdanmark A/S 04 Mar 04/2014: It is proposed to elect Torbjörn Magnusson to Topdanmark’s Board of Directors 04 Mar 03/2014: Topdanmark Annual Report 2013 06 Jan 02/2014: CORRECTION: Topdanmark increases its holding of own shares 06 Jan 02/2014: Topdanmark increases its holding of own shares 02 Jan 01/2014: Issue of options
Previous positions held: 1979-1982: Nye Danske Lloyd A/S 1982-1984: Baltica Forsikring A/S 1984-1986: Deputy General Manager,
– and one subsidiary • Coloplast A/S (Chairman) • Semler Holding A/S (Chairman)
Kemtekniske Produkter, Allerød 1992-1994: Market Manager, Estrella A/S 1994-1996: Sales and Marketing Manager, Schulstad
Chairman) • IC Companys A/S (Deputy Chairman) • The Ejnar and Meta Thorsen Foundation • Executive Committee and Governing Body of DI
Independence: Anders Colding Friis meets the definition of independence set out by the Committee on Corporate Governance
Offices held: Member of the Boards of Directors of: • Insurance Europe (Vice President) • Insurance Sweden • Academedia AB
Independence: As Torbjörn Magnusson represents a controlling shareholder’s interests, he does not meet the definition of independence set out by the Committee on Corporate Governance
FLS Industries A/S 2000-2003: CFO, FLS Industries A/S 2003-2006: Independent consultancy, Nielsen +
Divisional Manager, Baltica Re / BalticaNordisk Re 1986-1989: Ass. General Manager, Baltica-Nordisk Re 1989-1993: Deputy General Manager, Employers
Offices held: Chairman of Topdanmark's Senior Officers' Association 1) Elected at the AGM 2) Elected by employees 3) Member of Topdanmark’s Audit committee 4) Member of Topdanmark’s Remuneration committee 5) Member of Topdanmark’s Nomination committee
Member of the Boards of Directors of: • The Danish Insurance Association (Chairman) • Ambu A/S • Bruhn Holding ApS • Gobike A/S • Gobike Danmark A/S
Managerial responsibilities: • Personal • SME and Industrial • Marketing • Claims Administration
Change in the provisions for unit-linked contracts (914) (233) (978) (1,968) (3,079)
Provisions for insurance and investment contracts: Relative run-off profits, net of reinsurance (%) 1.8 1.3 1.6 2.4 2.8 * Before deducting bonuses and rebates
Gross premiums written 3 9,018 9,121 Reinsurance ceded (726) (661) Change in the provisions for unearned premiums, gross 3 (56) 47 Change in the reinsurers' share of the provisions for unearned premiums 12 2 Premiums earned, net of reinsurance 8,248 8,509
Claims and benefits paid 8 (3,860) (4,200) Reinsurance cover received 8 9 Change in the provisions for claims and benefits (11) 12 Claims and benefits paid, net of reinsurance (3,862) (4,180)
Income from associated companies 57 193 Income from investment properties 11 144 143 Interest income and dividends etc. 1,676 1,786
Interest charges (78) (69) Expenses on investment business (45) (56) Total investment return 3,298 4,052
Technical interest transferred to non-life insurance business (182) (155) Pension return tax (272) (509) Investment return transferred to life insurance business (2,031) (2,691) Other income 19 17
Profit for the year 1,468 1,558 Items which cannot subsequently be reclassified as profit or loss: Deferred tax on security fund (change in the tax percentage) 42 0 Revaluation of owner-occupied properties 2 0 Reversed revaluation of owner-occupied properties 0 (12)
Machinery and equipment 116 115 Owner-occupied properties 869 857 TOTAL TANGIBLE ASSETS 17 985 972
Total other financial investment assets 44,471 45,773 TOTAL INVESTMENT ASSETS 49,731 50,430
Reinsurers' share of the provisions for unearned premiums 22 87 89 Reinsurers' share of the life insurance provisions 34 33 Reinsurers' share of the provisions for claims and benefits 23 1,337 648 Total reinsurers' share of provisions 1,458 769 Amounts due from policyholders 346 304 Amounts due from insurance companies 65 195 Amounts due from associated companies 36 10 Other debtors 121 114 TOTAL DEBTORS 2,026 1,392
Assets held temporarily 2 3 Deferred tax assets 24 22 19 Liquid funds 420 323
Accrued interest and rent 373 372 Other prepayments and accrued income 164 201 TOTAL PREPAYMENTS AND ACCRUED INCOME 537 573 TOTAL ASSETS 61,092 64,516
Guaranteed pension benefits 19,231 20,824 Bonus potential on future premiums 3,387 2,192 Bonus potential on paid-up benefits 2,364 746 Total life insurance provisions 27 24,982 23,761
Collective bonus potential 29 1,472 1,677 Provisions for bonuses and rebates 121 124 Provisions for unit-linked contracts 30 7,088 10,851 TOTAL PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTS 50,361 52,860
Payments on investment contracts 39 295 Dividends from associated companies 0 3 Interest income and dividends etc. 1,833 1,903 Interest charges etc. (120) (130) Pension return tax (322) (287) Corporation tax (472) (434) Other items (32) (39)
Financing Shares bought back (1,836) (1,716) Share-based payments 133 71 Sale of own shares 0 38 Bond loans (16) (30) Amounts due to credit institutions 152 (198)
Cash and cash equivalents comprise: Liquid funds 420 323 Deposits with credit institutions 1,047 2,267
Cancellation of own shares (13) 13 0 Share buy-back (1,836) (1,836) Issue of share options 9 9 Exercise of share options 133 133
Segment information income statement 1 Segment information balance sheet 2 Gross premiums earned - non-life insurance 3 Technical interest, net of reinsurance - non-life insurance 4 Claims incurred, net of reinsurance - non-life insurance 5 Technical result - non-life insurance 6 Gross premiums written - life insurance 7 Claims and benefits paid - life insurance 8 Change in life insurance provisions 9 Bonus 10 Income from investment properties 11 Revaluations 12 Other expenses 13 Taxation 14 Profit per share 15 Intangible assets 16 Tangible assets 17 Investment properties 18 Shares in associated companies 19 Loans to associated companies 20 Investment assets related to unit-linked contracts 21 Reinsurers' share of the provisions for unearned premiums 22 Reinsurers' share of the provisions for claims 23 Deferred tax 24 Subordinated loan capital 25 Provisions for unearned premiums 26 Life insurance provisions 27 Provisions for claims 28 Collective bonus potential 29 Provisions for unit-linked contracts 30 Technical basis for risk allowance and shadow account 31 Advanced tax 32 Expenses 33 Auditors' fee 34 Staff costs 35 Related parties 36 Financial assets 37 Financial liabilities 38 Settlement of assets and liabilities 39 Analysis of assets and their return - life insurance 40 Exposure information 41 Shares analysed by industry and region (%) - life insurance 42 Leasing 43 Number of shares 44 Own shares 45 Provision of security 46 Contingent liabilities 47 Companies 48 Other disclosures 49 Risk factors 50 Accounting policies 51
Shares in associated companies 57 283 0 340 Loans to associated companies 0 488 0 488 Other financial investment assets 16,255 29,511 7 45,773 Investment assets related to unit-linked contracts 0 10,117 0 10,117 Reinsurers' share of provisions 736 33 0 769 Amounts due from affiliated companies 1,681 27 102 (1,810) 0
Purchase of tangible and intangible assets 84 33 0 117 Results from associated companies 5 188 0 193
Note 3. Gross premiums earned - non-life insurance Gross premiums written 9,018 9,121 Change in gross provisions for unearned premiums (56) 47 Gross premiums earned 8,963 9,167
Note 4. Technical interest, net of reinsurance - non-life insurance Calculated interest 182 155 Discounting (amortisation) of technical provisions and reinsurers' share (168) (147) Technical interest, net of reinsurance 14 8
Claims incurred include revaluation of derivatives hedging the inflation risk in workers' compensation and illness / accident insurance (163) (211)
Note 6. Technical result - non-life - continued 2013 2014 2013 2014 2013 2014
Average value of claim (DKK '000) 38 37 6 6 64 72
Technical interest, net of reinsurance 1 1 3 1 3 2
Average value of claim (DKK '000) 43 50 33 33 5 5 liability
Gross premiums written, direct business, by the policyholders' location: Other EU-countries 27 51 Other countries 4 6
Number of policyholders at 31 December ('000): Individual policies 50 46 Policies which are part of a tenure 81 80 Group life 162 151
Note 8. Claims and benefits paid - life insurance Claims payable on death 118 136 Claims payable on maturity 480 305 Pension and annuity payments 584 589
Note 10. Bonus Provisions for collective bonus potential at 1 January 768 1,472 Provisions for collective bonus potential at 31 December 1,472 1,677 Change in provisions for collective bonus potential 704 205
Loans guaranteed by mortgages (1) (0) Derivatives (45) 300 Total held for trading 559 2,062 Investment assets related to unit-linked contracts: Unit trusts 64 107
Calculated tax on profit for the year (24.5%) 469 493 Adjusted for the tax effect of: Returns on shares etc. not liable to tax (47) (31) Non-deductible expenses / income not liable to tax (5) (6) Change in rate of taxation (8) 0 Prior year adjustment (2) (4)
Note 15. Profit per share Profit for the year 1,468 1,558 Average number of shares ('000) 117,904 107,908 Diluting impact of options ('000) 1,227 897 Average number of shares, diluted ('000) 119,131 108,805 EPS (DKK) 12.5 14.4 EPS, diluted (DKK) 12.3 14.3
Completed development projects includes primarily the Group's claims system. Amortisation of intangible assets is mainly included in claims incurred and operating expenses.
Cost / revaluation at 1 January 413 869 1,282 Additions, including improvements 48 2 50
Reimbursement of claims relating to previous years (268) (1,006) Change in expected income relating to previous years (81) 97
Note 25. Subordinated loan capital Hybrid Subordinated Subordinated core capital loan capital loan capital
Date of issue July 2007 June 2010 June 2011 Maturity Bullet 18 June 2018 24 June 2019 If permitted by the DFSA, the borrower can give notice of termination from 15 Sep 2017 18 June 2015 24 June 2016 Interest rate EURIBOR 3 months+1.90% to 2017 7.150% to 2015 6.633% to 2016 Subsequently EURIBOR 3 months+2.90% Cibor 3 months+625bp Cibor 3 months+525bp
Intra-group transfers (323) (390) Retrospective provisions at 31 December 23,537 21,370 Accumulated revaluation at 31 December 1,445 2,392 Life insurance provisions at 31 December 24,982 23,761
Guaranteed benefits 19,231 20,824 Bonus potential on future premiums 3,387 2,192 Bonus potential on paid-up benefits 2,364 746 Life insurance provisions 24,982 23,761
Increase in guaranteed benefits as life insurance provisions must not be lower than the guaranteed surrender value 4 1
Claims paid relating to this year (3,379) (3,366) Expected claims payments relating to this year 7,519 6,561
Claims paid relating to this year (3,223) (3,186) Expected claims payments relating to this year 6,361 6,169
Non-life insurance, net of reinsurance, at 31 December 12,494 12,989 Life insurance 98 86 Provisions for claims, net of reinsurance 12,592 13,076
Illness / accident insurance, net of reinsurance, administered by the life insurance business 1,946 2,066 Average period of settlement 14 years 13 years
Less paid incl. inf lation hedging 3,370 5,732 5,014 6,154 5,924 5,807 5,852 5,816 5,295 6,136 55,098 Provisions before discounting
The table show s the historical development in the estimated f inal liability (the sum of claims payments and provisions) for each claims year from 2005. Signif icant proportions of the liabilities show n have been calculated w ithout discounting w hich to a great extent eliminates changes in discounting rates and methods after the change to IFRS. How ever, w orkers' compensation and illness / accident administered by Topdanmark Livsforsikring A/S are included at discounted values.
Risk groups 143 181 Cost groups 8 12 Collective bonus potential 1,472 1,677
Intra-group transfers 306 17 323 Retrospective provisions at 31 December 6,534 554 7,088 Provisions for unit-linked contracts 2013 6,534 554 7,088
Gross provisions at 1 January 6,534 554 7,088 Retrospective provisions at 1 January 6,534 554 7,088 Gross premiums written 3,155 374 3,529
Claims and benefits (747) (79) (826) Expense loading inclusive of expense bonus (35) (3) (38) Risk gain after addition of risk bonus 11 0 11 Premiums waived transferred to life insurance provisions (22) 0 (22) Intra-group transfers 356 34 390 Retrospective provisions at 31 December 9,915 936 10,851 Provisions for unit-linked contracts 2014 9,915 936 10,851
Customers' share of technical basis for risk allowance 1,362 811 Share of technical basis for risk allowance allocated to shareholders' equity 78 77 Insurance technical result 1,440 888
The Company has calculated advanced tax of a total of DKK 871m on capital pension schemes, analysed as follows: Paid tax on savings 761 Calculated tax on: Accumulated revaluation 48 Collective bonus potential 62 Total advanced tax 871 Tax on accumulated revaluation and collective bonus potential to be settled in 2015.
Note 33. Expenses Expenses by their nature: Commission - non-life insurance 253 228 Commission - life insurance 47 58 Staff costs (excl. commission) 1,718 1,768 Other staff costs 118 131 Premises costs etc. 153 151 IT operations and maintenance 162 190 Impairment and amortisation 144 122 Other expenses 151 171 Total expenses 2,746 2,819
The fair value of the granting for the year has been calculated using the Black and Scholes model assuming a price of DKK 142.95 (2013: DKK 121.14) per share, an interest rate corresponding to the zero coupon rate based on the swap curve on 31 December the previous year, future volatility of 22% (2013: 22%) p.a. and a pattern of exercise similar to Topdanmark's previous granting of share options. The volatility has been calculated on the basis of previous years' volatility, which continues to be Management's best estimate of future volatility.
Remuneration of the Board of Directors Directors' fees were DKK 4,712,000 (2013: DKK 4,631,000) of which DKK 244,000 (2013: 244,000) related to Topdanmark Forsikring A/S. Fee (DKK '000): Michael Pram Rasmussen 1,300 1,192 Søren Thorup Sørensen 758 975 Anders Colding Friis 325 325 Torbjörn Magnusson - 217 Per Mathiesen 244 325 Birgitte Nielsen 217 433 Annette Sadolin 488 488 Desiree Schultz 325 325 Aage Nedergaard Smidt - 203
Charlotte Hougaard 325 122 Jens Maaløe 325 108 Anders Knutsen 244 Trine Zappe 81 Total fee paid to nine Board members 4,631 4,712 The Board of Directors receive only a fixed remuneration.
Christian Sagild 8.6 8.8 Kim Bruhn-Petersen 5.7 5.8 Lars Thykier 5.6 5.7 10% of the fixed basic salary etc. paid to the Executive Board is paid as share options. Additionally, the Executive Board earns successively a compensation representing six months' salary in each of the years 2013-2015. The compensation will be paid on resignation. The Executive Board receives only a fixed remuneration. The Group has no unhedged pension commitments.
IF P&C Insurance Holding Ltd (publ) The company owns 31,476,920 shares in Topdanmark A/S and subordinated notes (hybrid core capital) in Topdanmark A/S, nominal value EUR 33,500,000.
Associated companies Premiums ceded 107 92 Commission received (6) (6) Reimbursed claims (240) (145) Reinsurers' share of provisions 50 23
There were no changes in the classification of financial assets or liabilities in 2014. The Group's investment in financial assets, which are recorded at fair value using valuation models based on non-observable inputs (project financing Carlsberg Byen), was DKK 172m (2013: DKK 71m). The fair value was equivalent to the acquisition price.
Bonds measured by reference to non-observable inputs - Level 3: Portfolio at 1 January 0.0 0.1
Financial liabilities measured at amortised cost Subordinated loan capital 1,155 1,156 Deposits with ceding undertakings 143 154 Creditors arising out of direct insurance operations 93 315 Creditors arising out of reinsurance operations 115 34 Bond loans 58 29 Amounts due to associated companies 5 3 Current tax liabilities 15 31 Other creditors 1,115 1,446 Total financial liabilities measured at amortised cost 2,700 3,168 Total financial liabilities 5,029 6,000
Observable inputs Financial liabilities recorded at fair value Level 2 Held for trading: Designated at fair value: Amounts due to credit institutions 2,159 1,961 Total financial liabilities recorded at fair value 2,329 2,832
Credit bonds investment grade 2,746 2,185 (747) 3.6 Credit bonds non-investment grade and emerging market bonds 1,599 1,340 (601) 4.7
Other financial investment assets 894 1,155 723 0.1 Derivatives to hedge against the net change in assets and liabilities** 919 1,697 * Annual return as a percentage before pension return and corporation tax. ** Topdanmark Livsforsikring has invested in interest rate options - Euro-CMS-floors with a strike rate of 5% - to hedge the guaranteed benefits.
Note 41. Exposure information Non-life insurance Event Effect on shareholders' equity 0.7-1.0 pp increase in interest rates (6) 31 0.7-1.0 pp decline in interest rates 9 (11) 12% decline in equity prices (182) (145) 8% decline in property prices (104) (105) Exchange rate exposure (VaR 99.0%) (14) (6) Loss on counterparties of 8% (187) (138)
Event 0.7-1.0 pp increase in interest rates (158) 62 530 0 0.7-1.0 pp decline in interest rates 157 (189) (547) (26)
Note 43. Leasing Operational finance leases: Minimum lease Present 2013 payment Interest value
Reconciliation of the number of shares ('000) Shares issued at 1 January 137,500 125,000 Own shares at 1 January (13,560) (12,368) Number of shares at 1 January 123,940 112,632 Shares bought back (13,033) (10,393) Shares sold 1,725 1,384 Shares issued at 31 December 125,000 115,000 Own shares at 31 December (12,368) (11,377) Number of shares at 31 December 112,632 103,623
The Group's insurance companies have registered the following assets as security for technical provisions: Shares in associated companies 723 83 Loans to associated companies 158 1
Note 47. Contingent liabilities Contract liabilities - 310 Adjustments to VAT liabilities 26 28 Other liabilities 11 11 Capital commitments made to loan funds and private equity funds etc. 509 701 Share of associated companies' liabilities: Contract liabilities 283 48 The Group companies participate in technical insurance collaboration where they are jointly liable for the insurance liabilities.
The five-year summary in accordance with Section 91(a) of the Danish executive order on financial reports for insurance companies and lateral pension funds is included in Management's review. For further details see "Risk management" and "Capital model" in "Management's review".
There have been no events in the period from 31 December 2014 until the presentation of the consolidated financial statements which could change the assessment of the annual report.
Customers’ satisfaction with visits and telephone and internet contact is monitored daily to act immediately on each dissatisfied customer enabling us to help the customer and also to learn from the incident.
The responsibility for arranging co-operation and purchase agreements has been channelled into one centralised purchasing function to ensure the highest possible discount, quality and security when delivering products and services. Service agreements have been made with, for example, Falck, Falck Health Care,
Provisioning risk Provisions for outstanding claims Traditionally, the insurance classes are divided into shorttail (i.e. those lines where the period from notification until settlement is short) and long-tail (those lines where the period from notification until settlement is long).
The sufficiency of the provisions is tested in key lines by calculating the provisions using alternative models as
Provisions for unearned premiums The risk on provisions for unearned premiums is relevant particularly within change of ownership insurance and lines with high levels of compensation, for example, workers' compensation and motor liability insurance. In the event of a change in the level of either premiums or compensation in these lines, the provision for unearned premiums could be insufficient to cover the related expenses. In this case it will be necessary to strengthen this provision.
Cumulative risk 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 second and DKK 15m for any third or subsequent risk. The retention is a maximum of DKK 25m in SME and industrial lines. 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.
Life insurance Loss absorbing buffers in the event of low interest rates Bonus potential on paid-up benefits and collective bonus potential are 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 born by shareholder's equity. If interest rates are high, the same losses could, to a larger degree, be absorbed by the bonus potential.
In portfolios with low guaranteed benefits, comprising policies with guaranteed benefits of 2.5%, 1.5% and 0.5%, the movements in interest rates are monitored and risk reducing actions are taken as needed.
Lifetime Lifetime risk is the risk customers with life dependent policies, primarily annuities, live longer than expected, which will increase provisions for lifetime products.
In life insurance the interest rate risk on 4.5% guaranteed benefits is hedged by interest rate options − EURO CMS floors with a strike rate of 5%, while standard swaptions have been bought for benefits guaranteed lower interest rates in order to supplement the investments in interest-bearing assets
Property risk Topdanmark is exposed to 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 the four largest cities in Denmark, with main emphasis on Copenhagen and Århus. Topdanmark invests in well-situated properties within the segments of housing and flexible office properties
Inflation risk Future inflation is implicitly included in a number of the models Topdanmark uses to calculate its provisions
At the end of 2014 Topdanmark received cash margin payments of DKK 1,497m securing unrealised gains on derivatives (2013: 885m).
Operational risk Operational risk includes errors in internal processes, human errors, system errors, breakdowns of IT systems and losses incurred due to external events.
IT emergency plan The IT emergency plan includes plans for re-establishing the IT environment if the systems suffer breakdowns. The IT emergency plan is tested regularly. Topdanmark's business critical systems can be inaccessible for 24 hours without causing significant business problems. In order to reduce the probability of breakdowns of the IT systems and limit their duration, Topdanmark has invested in, for example, emergency power plants with a diesel generator, disk mirroring, alarms and automatic fire fighting equipment. Critical IT equipment is in duplicate and placed in two physically discrete machine rooms.
Tests Periodically Topdanmark’s critical IT systems are tested to see if they can be compromised from outside and whether the IT systems have vulnerabilities that need to be repaired.
Accessibility It is Topdanmark's goal that the accessibility of its main systems is no less than 99.5%. In 2014 it was 99.99%.
Topdanmark Group's 2014 Annual Report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and the additional Danish disclosure requirements of NASDAQ OMX, Copenhagen and the Danish Financial Business Act on annual reports prepared by listed financial services companies.
Future changes to the rules are not expected to materially change Topdanmark Group’s accounting policies.
The most significant estimates and judgements are made in the calculation of the provisions for outstanding claims.
Provisions for claims incurred, but not yet paid, have been calculated as the best possible estimate at the end of any given year. As, at this time of the year, 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).
Level 3 In certain cases the valuation cannot be based on publicly available market information alone. In these cases, 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, which are the most significant assets of level 3, are described below under “Owneroccupied properties” and “Investment properties” respectively.
Exchange rate differences on the translation of foreign associated companies are included in other comprehensive income.
Expenses Expenses are recognised in the Group’s income statement and disclosed classified by function: claims incurred (claims handling), acquisition and administrative expenses, investment return and other expenses. The allocation of expenses, which do not directly relate to a function, is based on an assessment.
Ratios The financial ratios have been calculated in accordance with the definitions of ratios issued by the Danish Society of Investment Professionals in 2010, except for “profit per share” and “diluted profit per share”, which have been calculated in accordance with IAS 33 Earnings per share.
Ratios for non-life insurance are in accordance with the DFSA's accounting order. These calculations, which have been made before elimination of intra-group rent, are disclosed in segment information. Topdanmark has not calculated consolidated ratios for life insurance, as it does not believe that a true and fair view would be achieved by presenting ratios based on an accumulation of completely different portfolios.
changes in capital, including the purchase and sale of own shares. Furthermore, it includes the raising of loans and repayments on interest-bearing debt. Cash and cash equivalents comprise liquid funds as well as deposits with credit institutions.
Income statement Premiums earned Gross premiums in non-life insurance comprise those premiums receivable during the year and an estimate of premiums on insurance contracts written, either directly or indirectly, for which the period of risk has commenced before the end of the financial year. They do not include own risks. Premiums earned net of reinsurance comprise gross premiums for the year adjusted for changes in the provisions for unearned premiums and net of reinsurance. Effectively, this means the premiums are being recognised in line with the distribution of risk over the period of cover.
Investment properties The initial recognition of investment properties is made at cost, and subsequent recognitions are made at fair value with revaluations in the income statement. A value has been calculated for each property on the basis of an expected future return on its operations and a rate of return (required yield). This value is adjusted for any special conditions having a temporary effect on the earning capacity of the property as well as the level of maintenance required on each property. The yield has been fixed taking into account the relevant market conditions for each type of property, its position, use, tenure of lease etc. and sales efforts within a reasonable time frame. Market trends and the return requirements of the market are regularly analysed. Each property is assessed annually by the Group's own valuation experts.
Financial assets Financial assets are classified at the time of their initial recognition as: • Financial assets which are measured at fair value with any value adjustment taken to the income statement or,
Receivables that are measured at amortised cost The initial recognition of receivables is made at fair value and subsequent recognitions are made at amortised cost. The receivables are regularly assessed for impairment and written down to their recoverable amount, as required. Such impairments are generally made collectively on the basis of the receivable ageing analysis. When an individual receivable is considered irrevocable, the value of the impairment is transferred out of the account for collective allowances.
Reinsurers' share Reinsurers' share of the provisions for unearned premiums represents the proportion of reinsurance premiums paid which, net of commission received and based on the spread of risk during the period of cover, relate to the period after the end of the financial year.
Security fund reserves The security funds are special funds under shareholders' equity. Prior to 1989 they were transferred to shareholders' equity for capital adequacy and were taxdeductible.
Subordinated loan capital The initial recognition of subordinated loan capital is made at fair value less transaction costs and subsequently measured at amortised cost.
Provisions for insurance and investment contracts Provisions for unearned premiums These provisions represent the proportion of premiums collected which, based on the spread of risk during the period of cover, relates to the period after the end of the financial year. The provisions for unearned premiums cover future payments of claims not yet incurred in the remaining period of risk as well as administration costs of the insurance contracts written. Therefore, they are calculated per line of business at the present value of these amounts, as a minimum. The sufficiency of the provisions is regularly tested on the basis of the current expectations of future cash flow.
The provisions include an allowance for risk corresponding to the percentage which would be demanded by an arms-length purchaser of the company's portfolio of life insurance policies to compensate for the risk of fluctuations in the expected payments. The overall allowance for risk is an estimate calculated as the interest rate used less 5%.
Proposed appropriation of profit for the year: Transfer to net revaluation reserve at net asset value 1,511 1,599 Transfer to profit carried forward (43) (41)
Profit for the year 1,468 1,558 Other comprehensive income in affiliated companies 1 (10) Other comprehensive income 1 (10) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,470 1,548
Deferred tax assets 1 1 Liquid funds 2 2 TOTAL OTHER ASSETS 3 4 TOTAL ASSETS 6,485 6,143
Bond loans 58 29 Amounts due to affiliated companies 503 217 Current tax liabilities 11 30
Shareholders' equity at 31 December prior year 138 2,991 2,587 5,716
Shareholders' equity at 31 December prior year 125 2,574 2,792 5,490
Note 3. Other expenses Holding expenses 42 48 Other expenses 42 48
Adjusted for the tax effect of: Prior year adjustment (1) 3
Note 6. Shares in affiliated companies Topdanmark Forsikring A/S 6,043 5,794 Topdanmark Invest A/S (investment) 180 170 Topdanmark Kapitalforvaltning A/S 99 69
Note 7. Share capital DKK Share capital at 1 January 137,500,000 125,000,000 Reduction in capital (12,500,000) (10,000,000) Share capital 125,000,000 115,000,000 Each of Topdanmark's 115,000,000 (2013: 125,000,000) shares has a nominal value of DKK 1. No share enjoys any special rights. The shares are freely tradeable. Each share has one vote.
Remuneration of the Board of Directors Directors' fees were DKK 4,712,000 (2013: DKK 4,631,000) of which DKK 244,000 (2013: 244,000) related to Topdanmark Forsikring A/S.
Fee (DKK '000): Michael Pram Rasmussen 1,300 1,192 Søren Thorup Sørensen 758 975 Anders Colding Friis 325 325 Torbjörn Magnusson - 217 Per Mathiesen 244 325 Birgitte Nielsen 217 433 Annette Sadolin 488 488 Desiree Schultz 325 325 Aage Nedergaard Smidt - 203
Charlotte Hougaard 325 122 Jens Maaløe 325 108 Anders Knutsen 244 Trine Zappe 81 Total fee paid to nine Board members 4,631 4,712
Remuneration of the Executive Board The Company has paid no remuneration to the Executive Board but an adminstration agreement provides that it pays a share of the overall remuneration paid to the Executive Board
Salaries etc. 18 19 Share options 2 2 Total remuneration to three members of the Executive Board 20 20
Christian Sagild 8.6 8.8 Kim Bruhn-Petersen 5.7 5.8 Lars Thykier 5.6 5.7 10% of the fixed salary etc. paid to the Executive Board is paid as share options. Additionally, the Executive Board earns successively a compensation representing six months' salary in each of the years 2013-2015. The compensation will be paid on resignation. The Executive Board receives only a fixed remuneration.
Executive Board Number of shares 173,430 83,430 Bonds, nominal value DKK '000 1,146 690
Average effective interest rate on balances is 0.05% (2013: 0.01%). Shares are disclosed in the balance sheet and specified in the note on Shares in affiliated companies. Balances are disclosed in the balance sheet.
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.
There have been no events in the period from 31 December 2014 until the presentation of the financial statements which could change the assessment of the annual report.
Many factors may cause a 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 nonanticipated events like acts of terror 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 → Investor → Risk management.
The Board of Directors and the Executive Board have today considered and approved the Annual Report of Topdanmark A/S for 2014.
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 2014 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 2014.
Board of Directors: Michael Pram Rasmussen Søren Thorup Sørensen Anders Colding Friis (Chairman) (Deputy Chairman)
Internal audit’s reports Report on the consolidated financial statements and annual financial statements We have audited the consolidated financial statements and annual financial statements of Topdanmark A/S for the financial year 1 January to 31 December 2014, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity and notes, including the accounting policies, for the Group as well as the parent company, and including cash flow statement for the Group. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed financial services companies. The annual financial statements have been prepared in accordance with the Danish Financial Business Act.
Opinion In our opinion, the consolidated financial statements give a true and fair view of the Group’s assets, liabilities and financial position at 31 December 2014, and of the results of its activities and cash flows for the financial year 1 January to 31 December 2014 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed financial services companies.
Independent auditor’s reports To the shareholders of Topdanmark A/S Report on the consolidated financial statements and annual financial statements We have audited the consolidated financial statements and annual financial statements of Topdanmark A/S for the financial year 1 January to 31 December 2014, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity and notes, including the accounting policies, for the Group as well as the parent company, and including cash flow statement for the Group. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed financial services companies. The annual financial statements have been prepared in accordance with the Danish Financial Business Act.