TOPDANMARK A/S Interim report for Q1 2024
16 April 2024, Announcement no. 05/2024
Topdanmark A/S
Borupvang 4, DK-2750 Ballerup
CVR no. 78040017
2
Contents
- Management's reviewHighlights
Financial highlights Results for Q1 2024
Insurance service result for Q1 2024 Investment result
Parent company etc. Taxation Efficiency programme
Solvency calculation and capital requirements
Profit forecast model for 2024 Financial calendar Disclaimer
16 | Financial Statements for |
Q1 2024 - Group | |
Income statement |
Statement of comprehensive income
Assets
Shareholders' equity and liabilities
Cash flow statement
Statement of changes in equity
Segment information
Notes to the financial statements
25
28
Financial Statements for Q1 2024 - Parent company
Income statement
Statement of comprehensive income Balance sheet
Statement by Management
Management's review
Management's review
Highlights
Q1 2024
Profit after tax of
DKK 377m
(Q1 2023: DKK 373m)
- Operating EPS was DKK 4.4 (Q1 2023: DKK 4.2)
- Combined ratio: 84.8 (Q1 2023: 83.6)
- Combined ratio excluding run-off profits: 88.4 (Q1 2023: 85.9)
- Insurance revenue increased by 11.9% with an organic growth of 4.3%
- Net investment result was DKK 159m (Q1 2023: DKK 106m).
Conference call
A conference call will be held today at 11:00 (CEST) in which Peter Hermann, CEO, and Lars Kufall Beck, CFO, will be available for questions based on the results. The call will be conducted in English.
To participate in the conference call, please call:
DK dial-in number: +45 32 74 07 10
SE dial-in number: +46 8 505 246 90
UK dial-in number: +44 20 3481 4247
US dial-in number: +1 (646) 307 1963 (Conference ID 3990986)
10-15 minutes before the conference call
- or listen to thelive transmissionof the call.
Topdanmark interim report for Q1 2024 | 4 |
Profit forecast model for 2024
- The expected organic insurance revenue growth is unchanged at above 4.5%.
- The assumed combined ratio for 2024 is improved from 82-85 to 81.8-84.8 including run-off.
- The profit forecast for 2024 has been improved from DKK 1,150-1,425m to DKK 1,250-1,525m after tax and including run-off.
Annual General Meeting
The Annual General Meeting (AGM) will take place 23 April 2024 at 13:00 (CEST), and it will be held as a fully virtual AGM.
All relevant information pertaining to the annual general meeting can be found on our website.
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
Management's review | Topdanmark interim report for Q1 2024 | 5 |
Financial highlights
Q1 | Q1 | |
(DKKm) | 2024 | 2023 |
Insurance revenue | 2,797 | 2,500 |
Claims incurred | -1,802 | -1,564 |
Expenses | -450 | -418 |
Reinsurance result | -107 | -91 |
Insurance service result | 437 | 426 |
Net investment result | 159 | 106 |
Other items | -35 | -12 |
Profit on insurance | 561 | 521 |
Special costs | -20 | 0 |
Parent company etc. | -28 | -10 |
Profit before tax | 514 | 511 |
Tax | -137 | -138 |
Profit | 377 | 373 |
Run-off profits, net of reinsurance | 100 | 60 |
Investment assets | 17,985 | 21,520 |
Reinsurance asset | 590 | 548 |
Provisions for insurance contracts | 15,949 | 15,062 |
Shareholders' equity | 5,138 | 6,773 |
Total balance | 24,566 | 24,917 |
Financial ratios | ||
Return on shareholders' equity after tax (annualised) | 30.5 | 22.7 |
Return on own funds (annualised) | 50.3 | 35.0 |
EPS after tax (DKK) | 4.2 | 4.2 |
Operational EPS after tax (DKK) | 4.4 | 4.2 |
Dividend per share issued, proposed (DKK) | ||
Net asset value per share, diluted (DKK) | 57.7 | 76.3 |
Listed share price end of period | 295.3 | 366.8 |
Number of shares end of period ('000) | 88,869 | 88,642 |
Average number of shares ('000) | 88,849 | 88,621 |
Insurance ratios | ||
Gross claims ratio | 64.6 | 62.7 |
Net reinsurance ratio | 3.8 | 3.7 |
Claims ratio, net of reinsurance | 68.4 | 66.4 |
Gross expense ratio | 16.4 | 17.2 |
Combined ratio | 84.8 | 83.6 |
Combined ratio excl. run-off profits | 88.4 | 85.9 |
Full year 2023
10,168 -6,762-1,671-228
1,507
97 -106
1,498
-39-35
1,424
-372
1,051
204
15,414
587
13,939
4,722
21,826
20.6
36.0
11.9
12.3
11.5
52.9
322.4
88,751
88,686
66.7
2.2
68.9
16.7
85.6
87.6
Management's review | Topdanmark interim report for Q1 2024 | 6 |
Results for Q1 2024
The profit after tax for Q1 2024 was DKK 377m (Q1 2023: DKK 373m).
The insurance service result increased by DKK 11m to DKK 437m. The higher insurance service result is driven by tight cost control and a sound run-off result, partly offset by a significantly higher level of weather-related claims in Q1 2024 compared with the more normal level in Q1 2023. The underlying claims ratio was negatively affected by approx. 2,000 more claims within motor and personal accident than in Q1 2023. The claims were related to the harsh winter weather, and thus not captured in the weather-related claims definition.
The net investment result increased by DKK 53m to DKK 159m, significantly above expectations and supported by positive contributions from equities, running yields and lower provisions due to changes in the non- hedged capitalisation factor.
Other items included a DKK 15m one-off contribution to DFIM (Danish Motor Insurers' Bureau).
Insurance service result for Q1 2024
Insurance revenue
Insurance revenue increased by 11.9% to DKK 2,797m, corresponding to an organic growth of 4.3% when adjusting for the acquisition of Oona Health. Organic growth was supported by higher indexation, pricing initiatives, a stronger net customer inflow, and continued good traction in Oona Health.
The private segment accounted for a 22.4% reported growth (6.3% organic growth), and the SME segment accounted for a 2.2% increase.
Claims ratio
Underlying claims ratio | Q1 | Q1 |
2024 | 2023 | |
Claims ratio, net of reinsurance | 68.4 | 66.4 |
Run-off | 3.6 | 2.4 |
Weather-related claims | -4.9 | -3.6 |
Large-scale claims | -0.2 | -0.9 |
Discounting | 2.4 | 2.5 |
Other | -0.3 | 0.0 |
Underlying (undiscounted) | ||
claims ratio, net of reinsurance | 69.0 | 66.8 |
Full year 2023
68.9
2.0 -5.1-1.8 2.7 0.1
66.8
The gross claims ratio increased to 64.6 (Q1 2023: 62.7). The claims ratio, net of reinsurance, increased to 68.4 from 66.4 in Q1 2023.
The quarter was marked by a high frequency of weather-related claims resulting from the heaviest snowstorm and the coldest January
in more than ten years as well as the storm Rolf in February. By comparison, weather-related claims in Q1 2023 were largely normal. As a result, weather-related claims amounted to DKK 137m, significantly above the Q1 2023 level (DKK 89m) and the normalised modelled level of DKK 90m.
Management's review | Topdanmark interim report for Q1 2024 | 7 |
Large-scale claims amounted to DKK 5m, somewhat below the level last year (DKK 23m) and the normalised modelled level of
DKK 27.5m.
The discounting effect was largely unchanged at 2.4pp.
The run-off profit, net of reinsurance, was DKK 100m (Q1 2023: DKK 60m), representing a 1.2pp positive effect on the claims ratio. The quarter was marked by extraordinarily high runoff gains related to the storm Pia experienced in December 2023 and a one-off gain from the estate after a former subsidiary of Topdanmark Forsikring A/S.
The underlying claims ratio rose by 2.2pp to
69.0. Our pricing and efficiency measures continue to yield results, but these were more than offset by approx. 2,000 more weather- driven claims within motor and personal accident insurance than in Q1 2023. Within motor, we saw more claims related to single accidents and rear-end collisions than in
Q1 2023, which typically are the more weather prone motor claim types. Similarly, we saw more slip and trip claims within personal accident than in Q1 2023, which is also related to the harsh winter weather. In combination, these weather-driven claims accounted for 1.8pp of the increase in the underlying claims ratio.
In addition, the acquisition of Oona Health added seasonally higher claims in Q1 2024, causing a minor headwind to the underlying
claims ratio. Please note that this relates to systematic timing of claims over the calendar year within the health insurance industry and has no incremental impact on our profit forecast model for 2024. This, in combination with the mentioned weather-driven claims within motor and personal accident insurance, explains the vast majority of the increase in underlying claims ratio.
It is important to note that although the underlying claims ratio is, among other things, adjusted for large-scale claims and weather- related claims, the underlying claims ratio will by nature continue to be impacted by the inherent volatility of an insurance portfolio.
Expense ratio
The expense ratio was 16.4, down from 17.2 in Q1 2023. The improvement was driven by tight cost control throughout the Group. Part of the improvement is driven by phasing and as such only leads to a smaller improvement in our overall cost guidance for the full year.
Combined ratio
The combined ratio was 84.8 (Q1 2023: 83.6). Excluding run-off, the combined ratio was 88.4 (Q1 2023: 85.9).
Management's review | Topdanmark interim report for Q1 2024 | 8 |
Segment reporting
Private
Private | Q1 | Q1 |
(DKKm) | 2024 | 2023 |
Insurance revenue | 1,467 | 1,199 |
Claims incurred | -980 | -768 |
Expenses | -242 | -198 |
Net reinsurance | -26 | -14 |
Insurance service result | 219 | 218 |
Run-off profits, net of reinsurance | 9 | 47 |
Gross claims ratio | 66.8 | 64.0 |
Net reinsurance ratio | 1.8 | 1.2 |
Claims ratio, net of reinsurance | 68.6 | 65.2 |
Gross expense ratio | 16.5 | 16.5 |
Combined ratio | 85.1 | 81.8 |
Combined ratio excl. run-off profits | 85.7 | 85.7 |
Full year 2023
4,926 -3,203-813-54
856
94
65.0
1.1
66.1
16.5
82.6
84.5
The private segment services individual households in Denmark. The private segment also includes Oona Health.
Insurance revenue increased by 22.4% to DKK 1,467m with the inclusion of Oona Health. Organic growth amounted to 6.3% and was positively impacted by higher indexation, pricing initiatives, a stronger net customer inflow, and continued good traction in Oona Health.
The insurance service result was DKK 219m, in line with the level in Q1 2023.
The claims ratio, net of reinsurance, rose by 3.4pp to 68.6. Weather-related claims amounted to DKK 68m (Q1 2023: DKK 48m). The quarter was marked by a harsh winter and
- storm. Run-off was a profit of DKK 9m, DKK 38m below the level last year
corresponding to a 2.6pp deterioration of the claims ratio. The harsh winter weather also had an impact on the claims frequency within motor insurance, while the underlying claims frequency within motor was in line with expectations. Offsetting these impacts, we saw fewer fires in the quarter.
The expense ratio was unchanged at 16.5, mainly due to tight cost control.
The combined ratio was 85.1 (Q1 2023: 81.8). Excluding run-off, the combined ratio was 85.7 (Q1 2023: 85.7).
Management's review | Topdanmark interim report for Q1 2024 | 9 |
Segment reporting
SME
SME | Q1 | Q1 |
(DKKm) | 2024 | 2023 |
Insurance revenue | 1,332 | 1,304 |
Claims incurred | -828 | -803 |
Expenses | -217 | -232 |
Net reinsurance | -81 | -77 |
Insurance service result | 206 | 192 |
Run-off profits, net of reinsurance | 92 | 12 |
Gross claims ratio | 62.2 | 61.5 |
Net reinsurance ratio | 6.1 | 5.9 |
Claims ratio, net of reinsurance | 68.2 | 67.5 |
Gross expense ratio | 16.3 | 17.8 |
Combined ratio | 84.5 | 85.3 |
Combined ratio excl. run-off profits | 91.4 | 86.2 |
Full year 2023
5,252 -3,582-892-174
604
110
68.2
3.3
71.5
17.0
88.5
90.6
The SME segment services Danish-based SMEs and agricultural businesses.
Insurance revenue increased by 2.2% to
DKK 1,332m. Growth was higher than the same period last year, mainly due to higher indexation and pricing initiatives.
The insurance service result increased by DKK 14m to DKK 206m.
The claims ratio, net of reinsurance, rose by 0.7pp to 68.2.
Run-off profits were DKK 80m higher than the level last year, representing a 6.0pp improvement of the claims ratio. Run-off gains were extraordinarily high related to the storm Pia experienced in December 2023 and
- one-offgain from the estate after a former subsidiary of Topdanmark Forsikring A/S.
Due to the harsh winter weather and the storm experienced in the quarter, weather-related claims amounted to DKK 69m (Q1 2023:
DKK 41m), causing a 2.1pp higher claims ratio than last year.
Large-scale claims were 1.4pp below the level last year.
The expense ratio decreased to 16.3 from 17.8 in Q1 2023 due to tight cost control and efficiency measures.
The combined ratio improved to 84.5 (Q1 2023: 85.3). Excluding run-off, the combined ratio rose to 91.4 (Q1 2023: 86.2).
Management's review | Topdanmark interim report for Q1 2024 | 10 |
Investment result
Investment result | Portfolio 31 March | ||
2024 | 2023 | ||
(DKKbn) | |||
Danish equities | 0.1 | 0.2 | |
Foreign equities | 0.5 | 0.5 | |
Unlisted equities and hedge funds | 0.2 | 0.2 | |
Government and mortgage bonds | 15.1 | 15.0 | |
Credit bonds | 0.3 | 0.3 | |
Index linked bonds | 0.6 | 0.7 | |
CLOs | 0.0 | 0.1 | |
Properties | 0.8 | 0.7 | |
Inflation swaps | 0.0 | 0.1 | |
Expenses, money markets etc. | 0.8 | 4.1 | |
Subordinated loan capital | -1.1 | -1.1 | |
Investment return | 17.3 | 20.9 | |
Insurance finance income and expenses |
Net investment result
Return Q1 2024 | Return Q1 2023 | ||
(DKKm) | % | (DKKm) | % |
9 | 7.9 | 9 | 6.4 |
50 | 10.1 | 48 | 9.8 |
10 | 4.2 | 8 | 3.2 |
90 | 0.6 | 122 | 0.8 |
1 | 0.4 | 6 | 2.4 |
-2 | -0.3 | 19 | 2.9 |
0 | 0.0 | 9 | 6.6 |
13 | 1.8 | -14 | -1.8 |
-1 | - | -10 | - |
2 | 0.1 | 14 | 0.3 |
-18 | -1.6 | -14 | -1.2 |
155 | 0.9 | 199 | 1.0 |
3 | -74 | ||
158 | 124 |
The investment result for Q1 2024 includes income from insurance (DKK 159m), income from the parent company (DKK -13m, presented in the line "Parent company etc." in financial highlights), and profit on owner-occupied properties (DKK 12m, eliminated in the Group accounts and in financial highlights).
In Q1 2024, the net investment result amounted to DKK 158m (Q1 2023: DKK 124m). The investment return contributed with DKK 155m while insurance finance income and expenses accounted for DKK 3m.
The net investment result was supported by positive contributions from equities, running yields and lower provisions due to changes in the non-hedged capitalisation factor.
The predominant investment theme in the first quarter was the continuation of the equity market performance from Q4 2023. This performance followed from central banks adopting a more hawkish stance, leading to an increase in short-term interest rates. At the same time, the economic narrative continues to lean towards a soft landing, with labour markets demonstrating resilience despite higher interest rates and ongoing geopolitical risks.
Inflation further declined during the first two months of the quarter. However, long-term inflation expectations remained relatively stable.
The "free" portfolio, which consists of the remaining assets after matching liabilities and liquidity reservations, made a positive contribution to the overall investment return, primarily due to the equity exposure. These
equity holdings span globally, with all regions contributing positively to the return. However, the most significant geographic contributions to returns originated from Japan and the US.
Additionally, the property portfolio, consisting solely of owner-occupied properties, contributed positively to the overall investment return.
The "matching" portfolio contributed positively to the overall investment return. On the asset side of the "matching" portfolio, the macroeconomic environment, characterised by relatively limited yield volatility throughout the quarter, bolstered the bond portfolio.
Specifically, favourable running yields, spread performance on short- and medium-term fixed income securities and tightening of the DKK-EUR yield spread (EUR rates increasing more than DKK rates) all played significant roles in driving the positive net investment outcome.
The duration matching part, in which interest rate risk on insurance provisions are hedged using fixed income assets, primarily Danish mortgage bonds and derivatives, has worked as intended. The net effect from duration was negligible.
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Topdanmark A/S published this content on 16 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2024 06:16:03 UTC.
