Topdanmark Årsrapport 2023 (engelsk) (9 MB)

Topdanmark wants to make a difference to our customers, employees and society, and to play an active role in solving the challenges of our society.

The purpose of Topdanmark is to help our customers before, during and after a claim. We are proactive and assist with prevention, so damage and injuries do not occur, and we want to promote well-being and good health. When the damage has occurred or the customer has fallen ill, we help limit the consequences in the best possible way, and we pay out compensation. This also means that we want to deliver more than just insurance products.

We want to be the market leader in terms of the delivery and development of claims solutions and additional services which create value for customers, partners and society. Satisfied customers are our livelihood, and we always endeavour to deliver good customer experiences making it easy to be a Topdanmark customer. The essence of our ambitions can be summed up in our promise to our customers:

"We are here to help."

Corporate

Governance

Corporate Governance

Board of Directors and Articles of Association Amendments to the Company's Articles of Association Severance pay

Remuneration structure Board of Directors Executive Board

Annual financial statements

- Group

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Shareholder information

Capital policy

Capital structure and ownership Distribution of dividend for 2023 Annual General Meeting Financial calendar

Company announcements

Five-year summary

Income statement

Statement of comprehensive income

Assets

Shareholders' equity and liabilities

Cash flow statement

Statement of changes in equity

Notes to the financial statements

104 Annual financial statements

- Parent company

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35

Sustainability

Sustainability is anchored in our business strategy Strategic targets, actions and progress in 2023 Reporting on the EU taxonomy

Preparing the first CSRD statement in 2024

Risk management

Risk management

Income statement

Statement of comprehensive income Balance sheet

Statement of changes in equity Notes to the financial statements Disclaimer

Statement by Management on the Annual Report Independent auditor's report

A letter to our shareholders from the Chairman of the Board and the Group CEO

2023 was another eventful year for Topdanmark. In March, we announced the acquisition of Oona Health A/S, including the market-leading Danish health insurance provider Dansk Sundhedssikring. The timing of the acquisition was favourable, as we had completed the divestment of our life insurance operations just a few months earlier. After the divestment, Topdanmark had no market share or significant capabilities within health insurance and solutions - all of which Oona Health has in abundance. We see a strong strategic fit between Topdanmark and Oona Health as we see personal health solutions as a strategic focus area for any insurance company for many years to come, not least in terms of customer loyalty and market growth. Oona Health will continue to operate as a standalone company to best allow it to continue the innovative and high-growth journey that has characterised the company for many years. However, we will seek to reap all possible synergies between the two companies, including selling Oona Health's products to Topdanmark's existing customers and vice versa.

From a macroeconomic perspective, 2023 also turned out to be quite eventful. Geopolitical

tensions remain elevated with continued Russian aggressions in Ukraine and the war between Israel and Hamas. In addition,

rising inflation has been followed by rising wage growth, supporting higher interest rates which seem to remain for a prolonged period. However, interest rates fell sharply during the last months of the year. All of this has affected individuals, enterprises, and equity markets on a global scale. This macroeconomic uncertainty also

affects Topdanmark, and consequently we have decided to de-risk our investment portfolio further through reducing our equity exposure by more than 40% during the year in addition to reducing our CLO exposure to zero.

In addition to this, 2023 was marked by a high level of weather-related and large-scale claims as well as a rising claims frequency within motor insurance. Further, reinsurance markets were hard, affecting both 2023 and future years. As a result, we reported a net profit of DKK 1,051m or DKK 898m before run-off, below our original expectation of DKK 1,050-1,310m before run-off at the beginning of 2023, fully explained by the higher amount of weather- related claims. Consequently, the Board of Directors will propose a dividend payment

of DKK 11.5 per share for 2023. The combined ratio was 87.6 before run-off, above our original expectation of 83-86 before run-off. The adverse developments during the year call for actions across our entire organisation, and we will continue our efforts to improve profitability e.g. by way of efficiencies, procurement initiatives, and pricing actions. This way, we seek to consolidate our market-leading profitability within Danish P&C insurance.

As a fundamental part of our strategy, we seek to create long-term shareholder value through committed and motivated employees, who ensure first-class customer experiences, which in tucreate satisfaction and loyalty to the benefit of our shareholders. Therefore, we are very pleased that we maintain our historically high employee satisfaction level of 81. Likewise, we continue to see a stable, high transactional net promoter score (tNPS). We actively work to strengthen our customer offerings in close collaboration with partners, and we have recently launched embedded cyber insurance with internet provided by Norlys.

Insurance companies have long played an important role in supporting the Danish

labour market, and Topdanmark continues to strengthen its position as one of the leading companies within this field. Prevention of injuries and illnesses is an important element of our business, and we continue to invest in the concept Topdanmark Recovery and Work Rehabilitation ensuring SME customers that they can retain their employees after an injury. A good example is the investment in exoskeletons as a part of the concept. In the past year, we have seen a 5% increase of severe injuries in workers' compensation. To address and counteract the negative development, we have been working with exoskeletons more intensively during 2023, as they are helpful for both customers having suffered an injury, and an effective means of prevention, as it can lessen the physical load on the body.

Topdanmark also continues to support the unique mobility in the Danish labour market. We are the first company to develop and launch insurance providing security for those who change jobs. This is an excellent example of a product that creates security for the employee while at the same time making it easier for an employer to attract candidates.

Climate change and increasingly extreme weather continued to affect our private, agricultural and commercial customers. In fact, 2023 became the wettest year ever in Denmark, and we have helped 94% more customers who have been affected by damage related

to precipitation and cloudbursts compared to the average over the past five years. In this light, we continue to invest in and popularise several preventive measures to the benefit of our customers, society and us as a company. For example, we sent out warnings and advice specifically targeted at customers living in

high-risk areas giving them the opportunity to prepare for the events.

2023 was yet another year of progress with our strategic agenda by preparing our new core IT system, Guidewire. The first implementation wave - agricultural customers - is now finalised, and we have already gone live with the first private customers as part of the second wave. Our overarching ambition is still to be able to solve 80% of all customer inquiries within 20 seconds. But our investments are also starting to affect the customer-facing processes as we launched our new app in December and are redesigning digital interfaces to provide even simpler and seamless customer experiences.

We have also seen continued good traction on our efficiency programme, which aims to improve our profitability by leveraging automation and digitalisation across the value chain, a best-in-class procurement setup, and

a stringent focus on risk and pricing. In 2023, we delivered gross savings of DKK 430m in line with expectations, and we remain on track to reach DKK 650m of gross savings by 2025.

Lastly, the Board of Directors and the Group Executive Management would like to express their gratitude to all employees for their outstanding contributions throughout the year. In a year marked by our acquisition of Oona Health as well as continued efforts to hand over the life insurance company to Nordea, we sincerely appreciate your unwavering commitment to providing best-in-class experiences for our customers.

Management's review

2023

Combined ratio: 82.7

Adjusted to normalised weather-related and large-scale claims.

Efficiency programme

• In 2023, we continued the sound progress in our efforts to become more efficient.
• We realised gross efficiency gains of DKK 430m in 2023, in line with the expectations at the start of the year.
• The programme continues to target gross efficiency gains of DKK 650m in 2025, of which DKK 540m in 2024.

Annual General Meeting

The Annual General Meeting (AGM) will take place on 23 April 2024 at 13:00 (CET), and it will be held as a fully virtual AGM.

The agenda for the Annual General Meeting will be published in the period from 18 March to 27 March 2024.

The acquisition was completed on 1 December 2023.

Profit forecast for 2024 of DKK 1,150- 1,425m incl. run-off with CR of 82-85 incl. run-off and organic growth above 4.5%. (Please refer to page 20 for more details)