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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.

Additionally, Topdanmark has invested in financial instruments reducing the risk of sharp falls in equity markets and also in instruments protecting the life insurance Group against any adverse consequences of marked reductions in interest rates.




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.

The goal of solvency capital is the highest value of what Topdanmark considers a reasonable level of capital adequacy and the regulatory requirement plus an appropriate buffer.

Given the current assessment of the market conditions, we estimate that the shareholders' equity, reduced by the value of intangible assets, must represent at least DKK 3,400m in accordance with the holding company’s accounting policies, i.e. without any allowance for deferred tax on security funds. Furthermore, Tier 1 capital of DKK 400m and Tier 2 capital of DKK 1,350m has been issued. Of these DKK 1,350m tier 2 capital, DKK 500m have been redeemed. The intention is to issue new tier 2 capital to replace the redeemed loan.




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 2020

Basically, the distribution potential in 2020 is planned to reflect the growth in what is considered a reasonable level of capital adequacy and the expected pre-tax profit and goodwill, 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
Steffen Heegaard
Head of IR
mobile +45 40 25 35 24
phone +45 44 74 40 17
email
IR SECRETARIAT
IR secretariat
phone +45 44 74 40 18
email
SHAREHOLDERS
Jens Jørgensen
Head of Shareholder Administration
phone +45 44 68 44 11
email