Solvency II raised from DKK 4.5bn to DKK 4.7bn, primarily due to lower interest rates.
A conference call will be held today at 15:30 (CET) when Christian Sagild, CEO, and Lars Thykier, CFO, will be available for questions based on the Annual Report and the webcast. The call will be conducted in English.
On 2 July 2011 the Copenhagen area was hit by a massive rainstorm causing Topdanmark gross claims of around DKK 680m. Topdanmark's retention is DKK 50m and the reinstatement premium was around DKK 65m. Overall expenses relating to the rainstorm on 2 July were therefore around DKK 115m.
Investment return after transfer to technical result 131 130 445 123
The expense ratio declined to 15.9% in Q4 2011 (Q4 2010: 16.3%).
Premiums earned increased 2.2% to DKK 3,934m and in Q4 they increased 4.1%. This improvement was due to one new large customer, a small decline in customer losses and fewer negative premium adjustments than in 2010.
• In 2011 Topdanmark merged its two business areas of SME and Industrial into a larger and more efficient unit: "SME and Industrial".
Detailed description of each element is available on www.topdanmark.com → Investor Relations.
Topdanmark's pricing has been aligned with the individual markets and types of customers. In the personal and commercial markets prices are mostly based on standardised rates while major commercial and industrial customers are offered more individualised charges.
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. An example of this is the new claims system which was first implemented in 2007 and which now manages all claims handling.
Reinsurance Topdanmark has a restrictive acceptance policy in its choice of reinsurance companies as normally it only buys cover from insurance companies which, as a minimum, have a rating corresponding an S&P rating of A-.
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 generated from operations.
If there are tests that have not been met, the return will be allocated only to those tranches specified in the Articles of Association. Normally the tests will include factors such as excess cover, rating quality, diversification and liquidity security. The investors of the top tranche will incur losses only if these are of such a size that the lower tranches lose their value. It is opposite for the sub-tranche in the opposite end of the subordination order. The sub-tranche is the first to bear any losses that cannot be covered by earnings but is not without protection. If the underlying assets perform adversely, the cash flow of the subtranche will stop for a shorter or longer period or stop completely but before then a good deal of the original investment will have returned by way of regular payments.
In the column "Overall effect on Group results" and the two following columns it is assumed that the bonus reserves and the individual bonus potential in the life insurance group could offset adverse fluctuations at the levels described as the overall collective bonus potential was DKK 540m (2010: DKK 554m) and the individual bonus potential DKK 2,306m (2010: 4,260m) at 31 December 2011.
The rules of individual solvency requirement will lapse when Solvency II takes effect. Topdanmark does not expect this to significantly change the capital requirement as already in its individual solvency requirement Topdanmark aims to meet the Solvency II capital requirement.
Solvency II Solvency II is a future EU regulation for insurance companies setting requirements on solvency calculations, capital base, risk management and detailed reporting on risk management to supervisory authorities and for publication. Solvency II is expected to take effect in January 2014.
systems / other tools • Accounting and budget organisation • Risk measurement and risk management • Passing on of authorities including outsourcing and the authority to bind the company • Control • Appropriate and sufficiently diverse employee resources • Appropriate IT systems and support • Appropriate methods for communication across the company
which would be performed by a nomination committee in other companies. This is not contrary to the Recommendations on Corporate Governance which point out that the functions of a board committee may be performed by the entire Board of Directors.
make a special effort or otherwise contribute extraordinarily to value creation in the Company in that year of granting.
Payments made and received on investment contracts 37 (382) Dividends from associated companies 0 28 Interest income and dividends etc. 2,065 2,289 Interest charges (108) (124) Pension return tax 181 (325) Corporation tax (261) (207) Other items (28) 2 Total cash flow from operations 3,003 1,424
Technical interest, net of reinsurance 9 9 2 2 4 7
Sold during the year 12 0 0 0 Impairment and amortisation at 31 December 0 (136) (218) 0 (355)
Provisions for workers' compensation insurance, net of reinsurance 5,370 5,845 Average period of settlement 7 years 7 years Illness / accident insurance, net of reinsurance, administered by the life insurance business 1,495 1,791 Average period of settlement 14 years 14 years
Note 26. Life insurance provisions - continued Portfolios analysed by capitalisation rates Guaranteed future paid-up 2011 benefits premiums benefits Topdanmark Livsforsikring A/S: Outside of contribution 102 1 13
Note 39. Analysis of assets and their return - life insurance - continued * Annual return as a percentage before pension return and corporation tax.
Bonds provided as security for loans in accordance with standard repo-contracts for Danish mortgage and government bonds 3,065 5,020 Other provision of security 18 18
The use of the new interest rate curve and the change in life expectancy have together reduced overall life insurance provisions by DKK 354m.
Such estimates and judgements are most material to the following sections of the accounts: • Provisions for outstanding claims • Fair value of financial instruments
Amounts due from affiliated companies 77 114 TOTAL DEBTORS 77 114
Cost at 31 December 5 4 Impairment and amortisation at 1 January (1) (1) Impairment and amortisation at 31 December (1) (0) Machinery and equipment 4 4
Topdanmark Forsikring A/S 5,308 5,964 Topdanmark Kapitalforvaltning A/S 52 99 TD.0151 ApS (Investment) 31 31 Topdanmark Invest A/S (investment) 175 190 Shares in affiliated companies 5,567 6,285 The affiliated companies are domiciled in Ballerup.