Capital model

Normally, Topdanmark generates a return which significantly exceeds the capital required to allow for the growth in the business. If it is not possible to find value creating investment opportunities, such surplus returns will be paid out to the shareholders.

The size of the payout is determined by the ratio of shareholders' equity to the business' current requirements of capital.

Normally, Topdanmark generates a return which significantly exceeds the capital required to allow for the growth in the business. If it is not possible to find value creating investment opportunities, such surplus returns will be paid out to the shareholders.

The size of the payout is determined by the ratio of shareholders' equity to the business' current requirements of capital.

Shareholders' equity alternatives

The objective of shareholders' equity exceeding the statutory minimum is to protect the business against situations when major disasters could threaten future operations. However, such protection is often available by other means, for example reinsurance or financial instruments.




Supplements to capital adequacy

As supplement to capital adequacy, Topdanmark has raised subordinated loan capital and bought significant reinsurance cover of disaster risks. Disaster meaning both isolated events and combinations of isolated events that would threaten Topdanmark's ability to continue operating at its chosen level of shareholders' equity.




How large should shareholders' equity be in order to be considered sufficient?

In setting a reasonable level of capital adequacy, Topdanmark takes into account the factors that would have a material adverse impact on shareholders' equity. At the same time, it allows for the effect of protection in the form of reinsurance and financial instruments.

Furthermore, other factors including current observations on the risk on insurance portfolios, asset portfolios and the financial markets are taken into account. Finally, our opinion of what is a reasonable level of capital adequacy is compared with the regulatory requirements.

Our objective for the capital structure is that the capital base in the form of shareholders’ equity and supplements are just sufficient to cover the regulatory requirements plus an appropriate management buffer to ensure day-to-day operations and the ability to withstand fluctuations – but not exceeding that. An example of a conservative level of solvency cover could be 170-190%. Excess capital is sought to be paid to the shareholders as dividends. 

Topdanmark has an outstanding subordinated tier 1 loan (restricted tier 1 capital notes) of DKK 400m. This loan is perpetual, but includes an option enabling Topdanmark to redeem the loan as at 23 November 2022.

Topdanmark Forsikring has outstanding subordinated tier 2 notes in two tranches:
•    DKK 500m, with first call date in 2025 and maturity in 2030. 
•    DKK 1,000m, with first call date in 2026 and maturity in 2031.




Distribution of dividend

We have a disciplined approach to capital. Capital that is not necessary to maintain operations will be distributed to the shareholders and to avoid accumulation of unnecessary excess capital.




Potential for distribution of dividend in 2022

The distribution potential in 2022 can be assessed by comparing the capital base (including i.a. the expected profit as well as the development in intangible assets) with the solvency requirement. The solvency cover must be viewed in the light of a conservative level (e.g. 170-190%) which includes an appropriate management buffer to ensure day-to-day operations and the ability to withstand fluctuations, as illustrated below:




Authorisation to issue shares and/or acquire own shares

Topdanmark's Board of Directors has authorisation granted in the Articles of Association to increase the Company's share capital, to raise convertible loans and/or issue warrants. The issues may be with or without pre-emptive rights for the Company's shareholders.

The total authorisation is restricted to 2,500,000 shares and expires on 12 April 2023.




Share capital

Topdanmark has one class of shares. The shares are negotiable instruments with no restrictions on their transferability. The shares are registered in the name of the holder in Topdanmark's register of shareholders or inscribed in the Company's own inscription system. No share confers any special rights upon the holder.

Since 1989 the share capital has varied as a result of share buy-backs, as you can see here.




Contact

INVESTORS
Robin Løfgren
Head of Investor Relations
IR SECRETARIAT
IR secretariat
SHAREHOLDERS
Jens Jørgensen
Head of Shareholder Administration