Topdanmark (Hold, TP: DKK305.00) - Superior capital generation
Q1 turned out to be even better than pre-announced, with a c13% EPS beat to consensus and a superior 73%-point QOQ improvement in its Solvency II ratio. While this leaves improved scope for extraordinary capital distributions, we have raised our 2021e DPS to only DKK20, implying a c100% payout ratio. We have also lifted our 2022–2023e EPS by 1–2% following higher P&C premiums and a raised Life contribution. We reiterate our HOLD and DKK305 target price, considering the valuation fair at c18x our 2022e EPS – implying an appropriate discount to its pan-Nordic P&C peers, in our view.Topdanmark A/S is a Denmark-based insurance company engaged in the insurance and pension fund business. The Company's activities are divided into such segments, as Personal, and SME (Small and Medium Enterprises) and Industrial. The Personal segment sells policies for individual households in Denmark. The SME and Industrial segment offers policies for Denmark-based SME, agricultural and industrial businesses. The Company's private insurance offering includes such insurance products, as home, vehicle, accident, pet, child and life and health insurance, as well as pension funds. Its corporate insurance offering includes property insurance, insurance of goods and equipment, and car insurance, among others. As of December 31, 2012, it had subsidiaries responsible for life and non-life insurance, as well as for asset management, investment and property-related activities.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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