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UPDATE 2-Topdanmark net up, insurance profit down

Published 08/25/2009, 10:09 AM
Updated 08/25/2009, 10:12 AM
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* Q2 net profit rises to 555 mln DKK, above 392 mln forecast

* Company raises 2009 net profit guidance to 1.1-1.2 bln DKK

* Insurance result disappointed the market, analyst said

* Shares 2.6 pct down, underperforming Danish bluechip index

(Adds quotes, details, updates share price)

By Teis Jensen

COPENHAGEN, Aug 25 (Reuters) - Denmark's second-largest insurer Topdanmark posted a bigger-than-expected rise in net profit for the second quarter and raised its full-year forecast, but its insurance result disappointed the market.

Net profit rose to 555 million Danish crowns ($106.6 million) in April-June from 243 million in the year-ago quarter primarily due to improved investment returns.

The result beat the mean forecast in a Reuters survey of nine analysts for net profit of 392 million crowns. Estimates had ranged from 224 million to 604 million.

But the core insurance business profit fell to 216 million crowns in the quarter from 383 million in the year-ago quarter.

The company lifted its forecast for full-year net profit to between 1.1 billion crowns and 1.2 billion from a May forecast of between 900 million and 1 billion.

The investment return in the first six months of 2009 increased to a profit of 552 million crowns from a loss of 226 million in the first half of 2008. In the second quarter alone the investment result was 559 million crowns.

"We have seen a development in investments that was better than we had anticipated. We have had a significantly better investment result in the second quarter," Chief Executive Christian Sagild told Reuters.

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Second-quarter pretax profit in non-life insurance rose to 653 million crowns from 360 million in the same quarter last year, beating analysts' mean forecast of 494 million.

The combined ratio -- a measure of costs and claims as a percentage of premiums -- weakened to 91 in the second-quarter from 86 year earlier, weaker than analysts' average estimate of 88. A figure under 100 means that an insurer's underwriting business is profitable.

Analyst Christian Hede from Jyske Bank said he had expected Topdanmark to disappoint the market on the insurance profit and then deliver a positive surprise on the investment part.

"They did that, and even to a higher degree than I had expected," Hede said.

After a surge earlier in the day Topdanmark shares were down 2.6 percent at 745 crowns by 1314 GMT, underperforming the Danish blue chip index which rose 0.1 percent.

Hede said the shares fell because of the disappointing insurance profit.

A week ago, Denmark's largest insurer TrygVesta also posted higher second-quarter profit above analysts' average forecast, but TrygVestas's insurance result also fell below analysts' forecast. (Editing by Will Waterman) ($1=5.208 Danish Crown)

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