5 May 2009 Announcement No. 07/2009 The level of fire claims in Q1 2009 was exceptional and higher than assumed in the profit forecast model set out in the 2008 Annual Report. Furthermore an inaccuracy has been found in the 2009 profit forecast model where a result was over-estimated by DKK 79m due to the revaluation of provisions being based on an inaccurate interest rate curve. This inaccuracy will not arise again Therefore Topdanmark is now publishing this announcement preceding the Q1 report to be published on 19 May 2009. Q1 2009 result Topdanmark's Q1 2009 post-tax result was a profit of DKK 35m (Q1 2008: DKK 234m loss). Both the technical result and the investment return for Q1 were lower than assumed in the profit forecast model for the full year while the result of life insurance met assumptions. As the development in investment return since the end of Q1 is reasonable, the profit forecast model for the full year 2009 remains unchanged at DKK 875 - 975m. The technical result declined from DKK 369m in Q1 2008 to DKK 233m this quarter. It was assumed that the technical result would decline due to price reductions and lower interest rates. However, the decline exceeded assumptions primarily due to an exceptionally high number of fire claims in Q1 2009 with many very large value claims, particularly in March, leading to claims incurred on fires increasing from DKK 148m in Q1 2008 to DKK 259m this quarter. While in 2008 the fire claims were mainly in agricultural lines, they were primarily in commercial lines this quarter. As described in the 2008 Annual Report, in order to improve the claims trend Topdanmark is due to increase the price of new business written in buildings and property insurance in commercial lines and in house and contents insurance in personal lines. However, in motor insurance the claims trend was favourable primarily due to a 5% decline in the claims frequency (proportion of customers with claims) in Q1 2009. Due to the decline in the technical result the combined ratio increased from 86.2% in Q1 2008 to 91.4% this quarter. Excluding gains on the claims provisions it increased from 88.3% to 93.7%. Premiums earned declined 2.9% to DKK 2,170m. As described in the 2008 Annual Report, this was due to Topdanmark having lost premiums of around DKK 200m on workers' compensation insurance by 1 January 2009 corresponding to a 2.2% adverse effect on premiums earned in Q1. Furthermore, there was an adjustment in arrears in workers' compensation for 2008 as workers' compensation insurance premiums are paid on the basis of an estimated number of employees in each business to be adjusted at the end of each year. The effect of the recession that began in 2008 meant that there were fewer employees at the end of the year than originally estimated which had a DKK 25m or 1 percentage point non-recurring adverse impact on premiums earned in Q1 2009. New sales through Topdanmark's own sales channels continue to improve in the personal and commercial markets. Premiums to be earned in 2009 are assumed to show negative growth of between 1% and 2% (up to now between zero and minus 1%). Investment activities The return on investment activities in Topdanmark Group excluding Topdanmark Livsforsikring Group was a loss of DKK 7m in Q1 2009 including revaluation of provisions and income from associated companies but before the transfer to the technical result (Q1 2008: DKK 370m loss). The return in Q1 2009 was significantly lower than assumed at the beginning of the year primarily due to the weak equity markets in the first two months of the quarter and a decline in the calculated value models of CDOs. The default ratio of the underlying assets of CDOs continues to be at a relatively low but increasing level. At the same time there have been a large number of down-gradings from rating agencies, particularly in the USA. As a result of this negative trend a small number of equity tranches have not passed one or more tests and therefore further payments have been deferred. The overall return on CDO investments was a loss of DKK 45m in Q1 2009 in the Group excluding life insurance. Including the shareholders' share of the return on life insurance the investment return for the CDO investments was a loss of DKK 59m. Profit forecast model for 2009 Topdanmark is not publishing an actual profit forecast for 2009 but the expected level of the result if a number of assumptions of the return in the financial markets are met. As the return in the financial markets changes on a daily basis, Topdanmark's profit forecast model will already deviate from actual expectations by the time it is published. The readers of Topdanmark's annual and interim reports may make forecast assumptions different from those chosen by Topdanmark. They also have the opportunity to calculate their own profit expectations for Topdanmark, for example by using Topdanmark's result simulation model on www.topdanmark.com → Shares → Result and share price simulation model. Accordingly, the investment return forecast model has been based solely on a long-term standard assumption of the return rather than a specific estimate of the expected investment return for the year. Given the assumptions of Topdanmark's profit forecast model, in the 2008 Annual Report, the post-tax profit forecast for 2009 was quoted as DKK 875 - 975m. As mentioned above, fire claims incurred were higher than assumed in Q1 2009, around 1 percentage point for the full year. This trend has since slowed down and a normalised level of fire claims was experienced in April. However, for the rest of 2009 it is assumed there will a recession effect of just over 1 percentage point on the combined ratio. If this effect is realised, there will be further premium increases in fire and property insurance. As a result of the tax reform workers' compensation insurance will incur additional expenses of just over DKK 25m in 2009 corresponding to a 0.3 percentage point effect on the combined ratio. These expenses arise from many claims paid to customers being calculated on the basis of a standardised tax rate, which following the tax reform will be reduced which will increase the level of claims paid to customers. Overall, it is assumed that the net effect for the full year 2009 will be a slightly higher claims trend than originally assumed in the 2008 Annual Report corresponding to a change in the combined ratio from 90% to between 91% and 92%. This assumed combined ratio includes a contingency element of 1 percentage point but excludes any gains on the claims provisions. In the investment business, the improvement in equity markets in April in particular has contributed to an increase in the underlying assumptions of the profit forecast model of up around DKK 150m, net of the adjustment of DKK 79m for amounts incorrectly included in the previous forecast released in March. Overall, the post-tax profit forecast model for 2009 remains unchanged at DKK 875 - 975m based on assumptions including unchanged foreign exchange rates, an annual 7.0% equity return given the level of equity prices on 1 May 2009 as well as a return on interest-bearing investments of 3.3% (risk-free interest rate plus an allowance for risk of 0.75 percentage points). See profit forecast model in the attached file Capital Regarding solvency, at the end of 2008 the capital adequacy of Topdanmark Forsikring was DKK 661m putting this company within the "green light", while the amount above the solvency minimum was DKK 454m in the parent company Topdanmark. At the end of 2008 shareholders' equity was about DKK 255m lower than the level required by Topdanmark's own capital model. At today's date, shareholders' equity is much closer to the level required by Topdanmark's capital model and Topdanmark continues to expect that its shareholders' equity will exceed the required level by the time the half-year report is published on 25 August 2009. Topdanmark has signed a Letter of Intent in respect of TVM's Danish insurance activities Topdanmark has signed a Letter of Intent to write TVM's Danish insurance business. TVM is a Dutch insurance group specialising in insurance policies for the road transport industry. TVM's Danish portfolio is about DKK 40m. Up until now, Topdanmark has not been active in the Danish market for road transport insurance and thus the strategic rationale for writing TVM's Danish business is to provide a platform for Topdanmark's profitable growth in this market. It is expected that this move will have only a marginal impact on Topdanmark's profit forecast model for 2009. A conference call will be held today at 14:00 (CET) when Poul Almlund, CEO, Christian Sagild, Group Managing Director and Lars Thykier, Managing Director will be available for questions. The call will be conducted in English. In order to participate in the conference call, please phone: UK dial in number: +44 (0)20 7162 0025 US dial in number: +1 334 323 6201 5 - 10 minutes before the conference asking the operator to connect you to the Topdanmark conference call, or listen to the live transmission of the call. Please direct any queries to: Poul Almlund, Chief Executive Officer, Direct tel.: +45 4474 3453 Christian Sagild, Group Managing Director, Direct tel.: +45 4474 4450 Lars Thykier, Managing Director of Asset Management, Direct tel.: +45 4474 3714 Steffen Heegaard, Head of IR and Group Communications, Direct tel.: +45 4474 4017