Q1 2024 Topdanmark A/S (3 MB)

25

28

Financial Statements for Q1 2024 - Parent company

Income statement

Statement of comprehensive income Balance sheet

Statement by Management

Financial highlights

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

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

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.

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).

Segment reporting

Private

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).

Segment reporting

SME

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).

Net investment result

In Q1 2024, the net investment result amounted to DKK 158m (Q1 2023: DKK 124m). The investment retucontributed 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.