Topdanmark results: softer than expected.
Many of the items was known beforehand, such as the extra costs to Nordea for failed IT - integration (one-off costs of DKK 195m), but some things surprised me:
First one Oona Health charge (the acquisition already starts to smell like )
"This line item covers costs related to the acquisition of Oona Health, including
amortisation of customer relations and brand rights as well as one-off costs related to the transaction and integration. The profit forecast model assumes a lower level of special costs of DKK 50-55m due to timing of integration tasks"
Secondly: So Sampo’s plan to buy Topdanmark has some costs for Topdanmark shareholders
"As part of the exchange offer from Sampo, Topdanmark has incurred and will incur
extraordinary costs related to the transaction. These costs are expected to amount to
DKK 90-110m with no assumed tax deductibility."
And thirdly, the so called Arne tax kicks in. Arne tax is named after a old man name Arne that had done hard labour his entire life, and wanted early retirement and to pay for this the Social Democrats decided that there will be higher company taxes for banks and insurance companies in Denmark (no I am not making this up…). Other companies pay 22%.
“As at 1 January 2024, the statutory tax rate for Topdanmark Forsikring
A/S has increased to 26% (2023: 25.2%).”
But generally the insurance business was also on the weaker side. This is the risk of operating in one country only.
Topdanmark half-year report for 2024
H1 2024
Profit after tax of DKK 488m (H1 2023: DKK 633m)
Operating EPS was DKK 8.0 (H1 2023: DKK 7.1)
Combined ratio: 85.4 (H1 2023: 82.9)
Combined ratio excluding run-off profits: 88.3 (H1 2023: 85.2)
Insurance revenue increased by 12.7% with an organic growth of 5.0%
Net investment result was DKK 244m (H1 2023: DKK 24m).
Q2 2024
Profit after tax of DKK 112m (Q2 2023: DKK 260m)
Operating EPS was DKK 3.6 (Q2 2023: DKK 2.9)
Combined ratio: 86.0 (Q2 2023: 82.3)
Combined ratio excluding run-off: 88.2 (Q2 2023: 84.5)
Insurance revenue increased by 13.6% with an organic growth of 5.8%
Net investment result was DKK 86m (Q2 2023: DKK -82m).
Profit forecast model for 2024
The expected organic insurance revenue growth is improved from above 4.5% to around 6%.
The assumed combined ratio for 2024 is narrowed from 81.8-84.8 to 83-85 including run-off.
The profit forecast for 2024 has been adjusted from DKK 1,250-1,525m to DKK 950-1,175m after tax and including run-off. The lower expected net profit is a result of one-off costs related to the IT separation agreement with Nordea, and transaction costs related to the exchange offer from Sampo.