Danish pensions and insurance firm Topdanmark – on the brink of completing the sale of its life unit to Nordea – has reported a 9.1% investment loss for the first three quarters of 2022, and introduced withdrawal penalties for customers transferring their savings after equities losses wiped out bonus reserves.
Releasing its interim report for January to September 2022 this morning, Topdanmark reported that its investment activities overall had suffered a 9.1% loss in the period, or DKK1.6bn (€215m) in absolute terms.
In percentage terms, foreign and Danish equities were the biggest loss-makers for Topdanmark out of all asset classes, losing 25.3% and 24.9%, respectively, although these assets in total only made up around 5% of the portfolio at the end of September.
More significant were the losses suffered by the firm on government and mortgage bonds because of their 64% portfolio weighting. Those assets lost 10.2% in the period, which amounted to DKK1.2bn, according to the report.
Topdanmark, a listed company almost half owned by Finnish insurer Sampo, reported that after “return and value adjustments” of its non-life insurance provisions, its loss on investments for Q1-Q3 was DKK555m, which was still sharply lower than the DKK362m profit it had made under that definition for the same period last year.
“The lower return should be seen in the light of the steep rise in yield levels supplemented by increasing uncertainty, a worsened economic outlook and spread expansions on the financial markets,” it said.
Singling out the results in the first three quarters of this year for the business to be sold to Nordea, called “discontinued operations” in the report, Topdanmark said the after-tax profit here had fallen to DKK103m, down DKK81m from the same period last year.
Profit here had been affected by the negative development mainly from investment as well as risk return on shareholders’ equity, the firm said, whereas the year before profit had been positively impacted by valuation adjustments of the property portfolio.
In March, Topdanmark signed a deal to sell Topdanmark Life Insurance to Nordea, leaving it to focus on its general insurance business alone, and said in today’s report that the sale was expected to generate a net DKK1.2bn (€161m) and be completed before the end of 2022.
Back in March, Nordea said the agreed price was €270m which corresponded to around 13 times Topdanmark’s expected net earnings for 2022 – but said that price would be adjusted according to calculated earnings up to the completion of the transaction.
According to data from Insurance & Pension Denmark, Topdanmark last week became the third Danish pension provider during the current market downturn to impose an emergency withdrawal-penalty measure on some of its average-rate pension groups, known as kursværn (price protection) – a decision implying the market value of the invested assets had fallen below the value of the members’ total pension deposits.
Norli Pension and P+ are the other two providers to have triggered withdrawal penalty measures this year.
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