Notes - Danica Pension Group

Annual report2010DANICA Pension

ContentsFINANCIAL HIGHLIGHTSOVERVIEWOVERVIEW OF EVENTS IN 2010Signs of improvement in the Danish pension marketMany new customer initiativesPrice reductions as a result of lower expensesIncreased premiums in non-Danish operationsContinued focus on openness and transparencyNew legislation in the pipelineFINANCIAL REVIEWFinancial resultsEvents after the balance sheet dateOutlook for 2011INVESTMENT STRATEGYDanica BalanceDanica LinkDanica TraditionelShareholders’ equityReturns and market performanceCONTRIBUTION AND PROFIT POLICYDanica Traditionel profit allocation rulesNew EU solvency rules – Solvency IIORGANISATION, MANAGEMENT AND PARTNERSHIPSInternal controls and risk managementCORPORATE SOCIAL RESPONSIBILITYDanica complies with Danske Bank’s Corporate Responsibility policyHealth-promoting activitiesAbsence and presenceEnvironmental considerationsSocially responsible investment principlesVenture capital for entrepreneursFINANCIAL STATEMENTSGroup financial statementsParent company financial statementsGroup overviewMANAGEMENT AND DIRECTORSHIPSSTATEMENT AND REPORTSStatement by the ManagementAuditors’ report233345566669991010101011121213131414141415151515175475777879This Annual Report 2010 is a translation of the original report in the Danish language (Årsrapport 2010). In case ofdiscrepancy, the Danish version prevails.DANICA PENSION – ANNUAL REPORT 2010 1/80

SELECTED FINANCIAL HIGHLIGHTS FOR THE DANICA PENSION GROUP(DKK millions) 2010 2009 2008 2007 2006PREMIUMS INCLUDING INVESTMENT CONTRACTS 23,769 20,074 21,592 18,338 17.883INCOME STATEMENTTechnical result, Life 1,145 1,466 -59 996 1,056Technical result of health and accident insurance 215 305 -731 -249 -282Return on investment allocated to equity, etc. 771 1,178 -399 809 783Profit before tax 2,131 2,949 -1,189 1,556 1,557Tax -468 -710 324 -282 -415Net profit for the year 1,663 2,239 -865 1,274 1,142BALANCE SHEETTotal assets 285,496 261,582 240,381 244,260 239,135Technical provisions, health and accident insurance 7,828 7,675 7,434 6,877 6,390Provisions for insurance and investment contracts 254,903 236,817 217,489 221,862 218,364Collective bonus potential 1,740 2,775 1,553 13,462 13,864Total shareholders’ equity 19,023 17,348 15,085 15,982 14,997KEY FIGURES AND RATIOS (%)Return before tax on pension returns excl. return on market products 5.6 6.8 -1.0 1.2 2.9Return before tax on pension returns on customer funds in Danica Pension 5.8 7.1 -1.2 1.1 2.9Return on market products in Denmark 12.9 24.0 -24.0 2.6 6.9Expenses as per cent of premiums 5.0 6.0 6.0 6.7 6.3Expenses as per cent of provisions 0.52 0.55 0.64 0.62 0.59Expenses per policyholder (DKK) 1,342 1,360 1,466 1,495 1,438Insurance risk result 0.09 0.08 0.14 0.09 0.05Bonus rate – bonus-paying companies 1.1 1.7 0.9 8.3 8.6Owners’ capital ratio 13.6 12.4 10.8 11.6 11.1Excess core capital ratio 8.6 7.5 5.8 6.7 6.2Solvency ratio 275 260 221 241 226Return on equity before tax 11.7 18.2 -7.7 10.0 10.7Return on customer funds after deduction of expenses before tax 4.6 5.5 -1.3 0.0 1.8RATIOS FOR HEALTH AND ACCIDENT INSURANCEGross claims ratio 84 98 96 99 102Gross expense ratio 14 14 15 15 18Danica Pension’s consolidated financial statements for 2007 - 2010 are presented in accordance with the International Financial Reporting Standards(IFRS) as adopted by the EU. Mandatory ratios pursuant to the Danish FSA’s Executive Order on Financial Reports of Insurance Companiesand Lateral Pension Funds are set out in note 1 to the financial statements.The financial statements for 2006 are presented in accordance with the Danish FSA’s Executive Order on Financial Reports of Insurance Companiesand Lateral Pension Funds.2/80 DANICA PENSION – ANNUAL REPORT 2010

OVERVIEWIn 2010, the Danish pension market felt the repercussionsof the economic downturn, and this wasreflected in premiums. A positive trend was notedfor the year as a whole, however. For the non-Danish units, the improvement was marked. Forthe Danica Pension Group overall, premiums roseby 18% or DKK 3.6 billion.Premiums in the Danish business improved by 2%to a total of DKK 16.6 billion. In Denmark, the marketproducts Danica Balance and Danica Link totalledDKK 9.8 billion in 2010. Of Danica’s Danishlife insurance premiums, 57% are now written forthe market products, with some 147,000 customersopting for market products at the end of 2010. Asexpected, the conventional product lost ground.Premiums fell by 13% to DKK 7.5 billion. In 2010,Danica Traditionel customers chose to move DKK1.7 billion of their savings to market products.In the non-Danish business, Danica experiencedstrong premium growth of 89% to DKK 7.2 billion.The premium growth was mainly related to theSwedish business, although the Norwegian businessexperienced significant growth as well, driven inpart by the transfer of a portfolio from IF Skadesforsikringin Norway.The group generated a return on investment of6.9%. Danica Traditionel’s return amounted to5.8% before tax on pension returns, and the marketproducts provided policyholders with a satisfactoryreturn of 11.4%. Total investment assets rose by9.5% to DKK 278 billion.In 2010, Danica launched a customer commitment:”The safe choice”. The customer commitment impliesthat Danica will focus on eight selected parametersthat are important for customer satisfaction.Combined with new online services launchedin 2010, the customer commitment supportsDanica’s ambition to be the most attractive pensioncompany overall for customers.The profit before tax amounted to DKK 2.1 billion,against DKK 2.9 billion in 2009. The reasons for thedecline were special allotments in the amount ofDKK 0.6 billion and a lower investment return,whereas insurance operations improved.With Danica’s financial strength combined withcareful risk management, Danica is well prepared tomeet the requirements of the new executive orderon the contribution principle of 1 January 2011 andthe new Solvency II rules, which will be effectivefrom 2013.In November 2010, Standard & Poors maintained itsrating of Danica Pension of A (negative outlook).OVERVIEW OF EVENTS IN 2010Signs of improvement in the Danish pensionmarketThe economic downturn, financial turmoil anduncertainty as to the final outcome with respect tothe equalisation tax all had an impact on the pensionmarket during the early part of 2010. Danicahas not seen any major recruitment by companiesfollowing the general cutbacks, and almost 15% oftotal disposals of corporate plans are due to bankruptcies.Also, there are signs that the pensionmarket is becoming saturated. Naturally, these developmentswere reflected in Danica's regular premiums.Moreover, the market was impacted bygrowing competition with many tender rounds formajor company plans.While the economic climate did not change fundamentally,there were signs of gradual improvementfor the year as a whole, and after the issue of equalisationtax was settled, it was once again possible tofocus on the need for long-term savings. WithDanica’s offer of combinations of instalment pensionplans, capital pension plans and life annuitieswith guarantees to surviving relatives, total pensionpremiums can be tailored to the policyholders’ individualneeds. Also, 2010 saw increasing interestin saving up for pensions, and total premiums inDenmark rose by 2% relative to 2009. Towards theend of the year, the company won a number of majorcorporate plans. The effects of these will notfeed through until 2011.2010 was also a busy year for Danica’s broker saleschannel, which saw a large inflow of new customers.One explanation for this was the fact thatDanica’s general product and service offering isstrong compared with those of other providers duringa period of intense competition that demanded agreat deal in terms of delivery and service systems,including self service, at a time when prices areunder great pressure.The tax reform contributed to enhancing focus onthe importance of advisory services and how best tomake use of pension savings on retirement. For thispurpose, Danica’s new senior advisory concept wasvery popular, and Danica will continue tostrengthen this service.As in previous years, the trend throughout 2010 wasthat customers opted for market products, which forthe first time exceeded the conventional products inpremium income. In Denmark, 57% of life insurancepremiums in 2010 related to market products,and for new business, the proportion is approximately85%.In 2010, Danica maintained its position as one ofDenmark’s leading providers of life and pensioninsurance products to the corporate market.DANICA PENSION – ANNUAL REPORT 2010 3/80

Many new customer initiativesIn the spring, Danica launched a new customercommitment: ”The Safe Choice”. This customercommitment was formulated on the basis of thedemands expressed by customers. Danica hasworked on the customer commitment for more thana year, as it was important to have it implementedamong the staff before being launched externally.Danica takes a holistic approach. Accordingly,Danica has selected eight areas which contribute tomaking Danica the safe choice and which all employeesembrace with great commitment and enthusiasm.The 8 areas are:EfficientserviceOpennessAccessibilityFinancial strengthThe safe choiceCompetitive pricesand returnsGood communicationCompetentcouncelingBest productsMany elements are of importance to customers, butit is not possible to be the best in all disciplinesevery year. However, the company will strive to beamong the best in each area so as to be consideredthe safe choice overall. All Danica’s employees havediscussed the importance of honouring this commitment,and Danica is working hard to be consideredthe customers’ safe choice.In August, Danica launched an updated advisorytool, “PC Behovsanalysen” (PC Needs Analysis),which supports Danica’s advisors in mapping outall the customers’ needs. The analysis of a customer’sneeds is finalised by an electronic report,which is sent to the customer’s mailbox immediatelyafter the meeting.Customers demand efficient service in order to reducethe costs of being a Danica customer as well asto reduce the processing times in connection withestablishing or changing pension plans.The digitalisation of Danica continued in 2010.During the year, an improved version of NetpensionCorporate was introduced, which features a numberof functionalities demanded by customers. Also,Din Netpension was updated with improved navigationand log-on using Nem-ID. In addition, accesswas established to electronic customer foldersthrough Din Netpension, making all correspondenceavailable to customers electronically. For customerswho wish to use e-box instead, this is also an option,and customers who prefer physical letters stillreceive those.Danica’s efforts to make pension more easily understandablewere initiated in 2009 and continued in2010. Danica has now redrafted a number of standardletters to a more customer-friendly language.Also, www.danicapension.dk was relaunched. Alltexts have been redrafted and the number of pagesreduced from approximately 800 to 300. All in all,it has become easier for customers to find and understandthe information they need.Arguably the most important new initiative takenby Danica in 2010 was the development of the selfservicesolution “Activate your pension”. Activateyour pension gives customers quick and easy accessto electronic establishment of pension plans 24hours a day, seven days a week by submitting informationin four easy-to-understand screens. Activateyou pension also includes an offer of personaladvice, allowing customers to subsequently adjusttheir pension plan. Activate your pension ensuresthat customers submit the necessary health informationwhen setting up their policies, so that the customersknow their cover before having to use theirpolicy. Activate your pension will be offered toDanica’s corporate customers in 2011.Danica is continually striving to improve accessibilityby providing new and improved internet options,and during the second half a number of newonline services successively became available tocustomers. Danica launched online notification ofclaims at www.danicapension.dk, allowing policyholdersquick and easy use of their insurance. Fornow, disability and certain critical illness claimscan be notified online. At the end of 2010, Danicareceived some 50% of all new claims notificationselectronically.Danica strives to offer the best products, and in2010 risk cover and savings products were improved.Danica launched a new life annuity with anoptional payment guarantee and reduced prices ofmost savings products for numerous customers. At1 January 2011, the company will furthermorelaunch uniform prices on waiver of premium.Danica has established the concept “Tilbage I arbejde”(Back to work), which is designed to facilitate afast return to the workforce after illness. Thechances of returning to work improve significantlywith swift action. Although the concept consists ofknown measures, the establishment of the new serviceconcept significantly reduces the period ofabsence to the benefit of the person in question, thecompany, society at large and Danica.The company guide “Godt klædt på til at fastholdesyge medarbejdere” (Well prepared for retainingsick employees) has been distributed to 2,000 customersso far, and the concept was presented to 800companies in 2010. As part of the concept, Danica’ssocial consultants offer counselling in cases ofstress and stress-related illnesses. In addition, thecompany offers individually tailored support tocustomers with special needs where the public helpoffered is deemed inadequate.4/80 DANICA PENSION – ANNUAL REPORT 2010

Danica finds that companies have increasingly acceptedthe offer of counselling. Danica gets far morerequests regarding sick employees, and the messagethat disability claims should be made in the earlystages of the illness is also feeding through.The servicing of Danica’s customers continued togenerate a great deal of activity in 2010. 61,000 newpensions were set up and 604,000 changes weremade. Danica processed 42,000 disability claims and21,000 death-related claims. The number of healthchecks carried out by Danica in 2010 in connectionwith the establishment or change of insurance contractswas approximately 32,000. The number of callsto Danicalinjen in 2010 was 292,000.Danica’s processing times are publicly available onthe website. The increased automation has reducedthe processing times. As from 1 January 2011, thecompany has therefore further tightened up on targetsfor the processing of disability claims (from 15to 10 days).PROCESSING TIMES(target achievement in %) 2010 2009Disability 95 95Payment on death 99 93Payment on critical illness 99 97Establishment of pension plan 92 95Change of pension plan 95 93Danica has some of the fastest processing times inthe industry. In 2010, Danica continued the work ofautomating even more processes in order to maintainand expand Danica’s position in this area. Anothereffect of this work is that it will create a basisfor a reduction of Danica’s expenses and a furtherreduction of prices.In addition to all these customer initiatives, newlegislation also meant that 2010 became a year ofmajor focus on IT development. In terms of legislation,significant amendments were made to theDanish Act on Taxation of Pension Returns whichchanged calculations as well as disclosure and settlementrequirements. A new executive order on thecontribution principle also required adaptations ofIT systems, and this combined with preparations forthe new solvency rules in 2013, a reduction of thebasic rates and a new executive order on disclosure,will continue to require IT resources in 2011.Price reductions as a result of lower expensesDanica’s operating expenses in the Danish businesstotalled DKK 973 million, which is a reduction ofDKK 71 million relative to 2009. The general freezeon hirings introduced in 2009 continued in 2010.Moreover, it was agreed to defer the salary increasespreviously granted at 1 July 2010 in return for acorresponding reduction of working hours.Danica lowered prices on a number of insuranceand savings products in 2010.Increased premiums for non-Danish operationsSwedenIn Sweden, Danica offers market and risk productsto the private as well as the corporate market. Salesare made through Danske Bank Sweden and throughbrokers as well as directly to major companies andorganisations.Throughout the year, Danica has seen strong customergrowth. The number of customers rose bysome 30,000 in 2010 relative to an increase of some17,000 in 2009. Part of the explanation for this isthat Danica is the only pension company to offerproducts in all collective agreements in relation tomarket products.Danica experienced significant growth in premiumincome, principally attributable to the demand forthe savings product Depåförsäkring. Total premiumincome for the Swedish business amounted to DKK5,791 million in 2010, against DKK 3,111 millionthe previous year, equalling a growth rate of 86%.NorwayIn Norway, Danica offers market and risk productsto the private as well as the corporate market. Salesin the corporate market are made directly throughthe company’s own sales staff, brokers and FokusBank. In the private market, sales are made throughFokus Bank as well as through certain regionalbanks.In 2008, Danica focused its attention on the corporatemarket, and this area saw significant growth in2010. In 2010, Danica took over a portfolio from IFSkadeforsikring of some 5,200 companies and some20,500 members, including a distribution agreement.The transfer of this portfolio contributed DKK455 million in single premiums in 2010. The annualportfolio premium is approximately DKK 110 million.Total premium income amounted to DKK 1,383million in 2010, against DKK 595 million the previousyear, equalling a growth rate of 132%.IrelandIn Ireland, Danica offers risk and market products tothe private market. Sales are made mainly throughNational Irish Bank and, to a lesser extent, throughbrokers. The economic conditions remained underpressure throughout 2010 and premium incomedeclined to DKK 55 million in 2010, against DKK125 million in 2009. Danica focused on expandingits sales channels. The effects of these efforts willnot feed through until 2011, however.By making operations more efficient, Danica hasreduced costs to the lowest level ever. Accordingly,DANICA PENSION – ANNUAL REPORT 2010 5/80

Continued focus on openness and transparencyDanica was one of the first companies in Denmarkto introduce “OmkostningsTjek” (Expense Check) in2009: an easy online calculator allowing anyone tosee what it costs to be a Danica customer. In thespring of 2010, Danica furthermore replaced theannual statement of account with a new, improvedversion which has set new standards for opennessin the industry. The statement shows annual expensesin Danish kroner as well as in percent ofsavings. Danica also presented a new statement ofcover.New legislation in the pipelineWith the 2013 implementation of the internationalsolvency rules, Solvency II, coming up, the demandfor financial strength and professional risk managementis a priority. The rules are introduced toenhance policyholders’ security. A solid financialstrength of DKK 15.6 billion means that Danica hasa strong foundation, ensuring that Danica will remainthe secure choice for customers.FINANCIAL REVIEWFinancial resultsThe Danica Pension Group realised a profit before taxof DKK 2,131 million, against DKK 2,949 million in2009. The net profit after tax amounted to DKK 1,663million, against DKK 2,239 million in 2009. Theprofit for the year is in line with the expectationsexpressed in the Annual Report 2009.DANICA GROUP, PROFIT BEFORE TAX(DKK millions) 2010 2009Risk allowance, etc. 1,126 1,087Unit-linked business, Denmark 274 123Health and accident 198 298Risk result of Forenede Gruppeliv 32 33International activities 72 56Investment return on equity in Danica Pension 486 819Transferred from shadow account 584 573Special allotments -641 -40Profit before tax 2,131 2,949The risk allowance for 2010 was calculated at DKK1,126 million, which was in line with 2009. DanicaPension’s technical basis for risk allowance was DKK2,308 million, and the full amount for the year as wellas the shadow account of DKK 584 million could thusbe booked.The result of health and accident insurance was aprofit of DKK 198 million, against a profit of DKK 298million in 2009. The decline in 2010 was due to alower investment return. The claims ratio for thehealth and accident business was 82%, against 96%in 2009. The claims ratios was affected by a positiverun-off on claims incurred in previous years. Thismeans that the actual claims experience was betterthan previously assumed in view of the financialcrisis and the economic downturn.The result of unit-linked business was improved byDKK 151 million relative to 2009. The business hassufficient volume for income from existing customersto exceed current expenses. The result was particularlyboosted by fund management commissions andcost savings.The pre-tax profit for the year of international activitiesamounted to DKK 72 million, against DKK 56million in 2009. The profit comprises a profit of DKK41 million in the Swedish business, a profit of DKK59 million in the Norwegian business and a loss ofDKK 28 million in the Irish business.Special allotments, cf. the chapter ‘Contribution andprofit policy’, represented an expenditure of DKK 641million, which along with the DKK 40 million from2009 with added interest will be allocated to customersin March 2011. The booking of the shadow accountincreased the special allotments.The Danica Pension Group’s return on equityamounted to 9.1% in 2010, against 13.8% in 2009. Ona two-year average, the return on equity was 11.5%.Gross premiumsGross premiums including health and accident insuranceand payments received on investment contractsamounted to DKK 23.8 billion in 2010, which was anincrease of DKK 3.6 billion or 18.4% relative to 2009.PREMIUMS (INCLUDING INVESTMENT CONTRACTS)(DKK billions) 2010 2009 2008 2007 2006Danica Balance 7.3 4.5 4.0 2.8 2.5Danica Link 2.5 2.8 3.7 4.3 3.5Danica Traditionel 7.5 8.7 10.8 10.2 10.7Internal transfers -1.7 -0.7 -0.9 -1.4 -1.6Health and accident 1.0 1.1 1.0 1.0 0.9International 7.2 3.8 3.0 1.4 1.8Total premiums 23.8 20.2 21.6 18.3 17.8Premiums for the market products, Danica Balanceand Danica Link, rose by 34% in Denmark, whereasgross premiums for Danica Traditionel dropped by13%.In the foreign units, premiums now account for 30%of total premiums, against 10% in 2006. In Sweden,gross premiums rose by 86% to DKK 5,791 million.Gross premiums rose by 132% to DKK 1,383 millionin the Norwegian business, while the premiums inthe Republic of Ireland amounted to DKK 55 million.Return on investmentIn 2010, Danica Pension Group had a return on investmentbefore tax on pension returns of DKK 17.5billion or 6.9%. After tax on pension returns, thereturn was DKK 15.6 billion or 6.1%.6/80 DANICA PENSION – ANNUAL REPORT 2010

The return on investment of assets allocated to shareholders’equity in Danica Pension, excluding insurancesubsidiaries, amounted to DKK 486 million or3.1% in 2010, against 5.3% in 2009.Danica Balance and Danica Link saw a total return ofDKK 4.8 billion or 12.9%.The return on investment of customer funds inDanica Traditionel was DKK 10.9 billion or 5.8%before tax on pension returns. The return was affectedby higher equity and bond prices in 2010. Investmentmanagement expenses rose relative to 2009 due toperformance fees to fund managers, which wereabove the benchmark. Other expenses are in line with2009.Following the allocation of DKK 3.1 billion to lifeinsurance provisions, the return was 4.5%.Collective bonus potentialThe collective bonus potential fell by DKK 1.0 billionto DKK 1.7 billion in 2010, and the bonus rate stoodat 1.1% at year end 2010.COLLECTIVE BONUS POTENTIAL IN DANICA PENSION*(DKK billions) 2010 2009Return on customer funds (life) 10.1 11.9Change in the value of insurance obligations -3.3 -1.26.8 10.7Tax on pension returns -1.2 -1.9Interest added for the period -5.2 -3.1Cost and risk results 0.3 0.1Risk allowance of provisions -1.1 -1.1Booked as income from shadow account -0.6 -0.6Used bonus potential of paid-up policies - -2.8Change in collective bonus potential -1.0 1.3* Comprises customer funds with bonus entitlement only.The decline relative to the end of 2009 should be seenin light of an investment return of 5.8%, a 3.25%interest rate on policyholders’ savings before tax onpension returns and the booking of risk allowanceand shadow account.As from 1 January 2011, the collective bonus potentialwas distributed on the new groups pursuant tothe new executive order on the contribution principle,as described in the chapter on contribution andprofit policy. The distribution is shown in the tablebelow.Charge on customer fundsThe total charge on customer funds in Danica Pensionnot only comprises the risk allowance but also therecognition of cost and risk results. The cost and riskresults in 2010 reduced the charge on customers byDKK 121 million.CHARGE ON CUSTOMER FUNDS IN DANICA TRADITIONEL*(DKK millions) 2010 2009 2008 2007 2006Risk allowance 1,126 1,087 1,088 1,040 1,037Cost result 6 -15 -21 -8 -35Risk result -127 -72 -210 -194 -145Administrative expensesrelated toinvestment activities 444 247 301 304 223Subordinated loancapital 20 20 20 19 12Total charge 1,469 1,267 1,178 1,161 1,092Transferred fromshadow account 584 573 -1,088 - -Total 2,053 1,840 90 1,161 1,092In % of provisions 1.18 1.06 0.05 0.65 0.60* Comprises customer funds with bonus entitlement only.In 2010, the total charge on customers excluding theshadow account was a negative DKK 1,469 million, or0.84% of provisions. The average charge for the period2006-2010 was a negative 0.70% excluding theshadow account.Claims and benefitsClaims and benefits amounted to DKK 16.7 billion in2010 against DKK 15.1 billion in 2009. Surrendersamounted to DKK 8.5 billion in 2010 against DKK 4.4billion in 2009. Just over a third of the increase insurrenders was attributable to increasing levels ofactivity in the non-Danish business, and the rest wasattributable to the Danish business. The increase inDenmark was, among other things, explained by thefact that surrenders in connection with job changestripled compared with 2009.ExpensesIn life insurance, operating expenses relating to insuranceamounted to DKK 1,143 million in 2010,against DKK 1,138 million in 2009 as a result of increasedexpenses in the non-Danish business anddeclining expenses in the Danish business. Overall,expenses were thus in line with 2009. The higherpremiums meant an improvement in the expenseratio from 6.0% to 5.0%.COLLECTIVE BONUS POTENTIAL AT 1 JANUARY 2011Collectivebonuspotential(DKKbillions)Bonusratio(%)Interest rate group 1 (new customers) 0.5 1.0Interest rate group 2 (low guarantee) 0.2 1.0Interest rate group 3 (medium guarantee) 0.1 1.0Interest rate group 4 (high guarantee) 0.8 1.0Risk group (private) 0.0 -Risk group (corporate) 0.1 -Risk group (retirees) 0.0 -Total 1.7 1.1DANICA PENSION – ANNUAL REPORT 2010 7/80

The expense ratio for Danica’s Danish activities improvedfrom 6.0% in 2009 to 5.5% in 2010. Expensesamounted to 0.42% of average provisions, against0.47% in 2009.EXPENSE RATIO 2010 2009Danica Group 5.0 6.0Danica’s Danish activities 5.5 6.0The average number of full-time employees was 898in 2010, against 954 in 2009, and at the end of theyear the Danica Pension Group employed 888 employees.Expenses were reduced by a net amount of DKK 31million in 2010 as a result of reimbursement of financialservices employer tax relating to prior years.The Danica Pension Group paid DKK 591 million toDanske Bank for investment management, IT operationsand development, internal auditing, HR administration,logistics and marketing. In addition, theDanica Pension Group paid DKK 141 million to theDanske Bank Group for its sale of life insurance policies(see note 31).At year end 2010, DKK 52 million had been capitalisedby the Danske Bank Group in respect of systemsdevelopment for the Danica Group. This amount willbe charged to the Danica Group’s income statementover the coming three years.Corporation taxThe group's corporation tax totalled DKK 468 million.Balance sheetThe group’s total assets rose from DKK 262 billion atthe end of 2009 to DKK 285 billion at the end of 2010.Investment assets, including investment assets relatedto unit-linked contracts, rose from DKK 254 billion atyear end 2009 to DKK 278 billion at year end 2010.The performance was positively affected by the priceincreases in 2010.Provisions for insurance and investment contractstotalled DKK 255 billion, against DKK 237 billion atthe end of 2009.Life insurance provisions amounted to DKK 179 billion,against DKK 178 billion in 2009, breaking downinto guaranteed benefits, bonus potential of futurepremiums and bonus potential of paid-up policies.Life insurance provisions were strengthened by theinjection of DKK 336 million in 2010 as a result of areassessment of the forecast increase in life expectancy.In the autumn of 2010, the Danish FSA askedcompanies to state whether the assumptions in respectof mortality rates used in connection with thecalculation of the companies’ life provisions deviatefrom the benchmark and an analysis of whether thecompanies’ life expectancy forecasts deviate from thebenchmark. This statement is to be submitted by 1July 2011 and is aimed at ensuring that the provisionscarried by the companies are sufficient. It is the immediateassessment that the Danish FSA’s benchmarkwill not have any significant influence on the company’sprovisions and solvency situation.The collective bonus potential at the end of 2010amounted to DKK 1.7 billion. To this should be addedadditional provisions of DKK 16.4 billion for compliancewith Danica’s guarantees.Provisions for unit-linked contracts rose from DKK 48billion at the end of 2009 to DKK 66 billion at the endof 2010.Intangible assets totalling DKK 219 million comprisegoodwill acquired on additional acquisition of Norwegianactivities in 2007.At the end of 2010, shareholders' equity stood at DKK19.0 billion, against DKK 17.3 billion at end-2009.In the first half of 2010, Danica merged the companiesDanica Pension, Danica Pension I and Danica Liv III,with Danica Pension as the continuing company. Themerger was completed with effect at January 1 2010.The purpose of the merger was to enhance administrativeefficiency and it did not affect the customers.Risk exposure and sensitivity ratiosNote 36 discloses, for the Danica Group, the effect onshareholders’ equity and on collective bonus potentialand the bonus potential of paid-up policies ofisolated changes in interest rates and other relevantfinancial risks as well as changes in the mortality anddisability rates. The note also discloses risks and themanagement thereof.A 10% decline in the mortality rate, corresponding toan increase in life expectancy of about one year,would reduce the collective bonus potential by DKK1.5 billion.The financial sensitivities in note 36 are defined inthe Danish FSA’s red traffic light scenario. A scenariowith an increase in interest rates of 0.7 of a percentagepoint concurrent with a 12% equity price drop,an 8% drop in property prices and an 8% loss oncounterparties would reduce the collective bonuspotential by DKK 1.7 billion, reduce the bonus potentialof paid-up policies by DKK 0.8 billion and reduceshareholders’ equity by DKK 0.6 billion.Throughout 2010, the Danica Pension Group was inthe green light scenario.Financial strength and solvency requirementThe solvency requirement of the parent companyamounted to DKK 7.8 billion and the capital requirementof subsidiaries amounted to DKK 0.1 billion.In 2007, the Danish FSA introduced a requirement forinsurance companies to assess their individual sol-8/80 DANICA PENSION – ANNUAL REPORT 2010

vency needs. The individual solvency need is a precursorto the international Solvency II directive.The assessment of individual solvency needs is a riskbasedcapital requirement to complement the solvencyrequirement. All Danish insurance companiesare thus required to have a capital base correspondingto at least the higher of the solvency requirement andthe individual solvency needs. All companies in theDanica Pension Group complied with this in 2010.Danica has developed a model to assess the individualsolvency needs. In the model, stress tests are performedof relevant risk factors, including equityprices, property values, interest rates and life expectancy.The individual solvency need is assessed asthe capital requirement after stress testing adjustedfor the use of collective bonus potential and bonuspotential of paid-up policies.In addition to the solvency assessment, Danica reportsthe individual solvency need to the DanishFSA.In October 2006, Danica Pension raised EUR 400million in subordinated loan capital. The loan, whichhas a Standard & Poor’s rating of BBB+, is quoted onthe Irish Stock Exchange and carries interest at 4.35%p.a. The loan can be terminated from October 2011.The Danica Pension Group’s capital base amounted toDKK 21.8 billion. The Danica Pension Group’s totalfinancial strength, i.e. capital base and collectivebonus potential less solvency requirement, amountedto DKK 15.6 billion at year end 2010.DANICA PENSION GROUP, financial strength(DKK millions) 2010 2009Shareholders’ equity 19,023 17,340Subordinated loan capital 2,966 2,961Intangible assets etc. -219 -217Capital base 21,770 20,092Solvency requirement in Danica Pension -7,777 -7,598Capital requirement in subsidiaries -131 -120Excess capital base 13,862 12,374Collective bonus potential 1,740 2,775Financial strength 15,602 15,149The financial strength reflects the security providedfor customers’ funds. To this should be added a bonuspotential of paid-up policies of DKK 11.0 billion, partof which can be used for offsetting losses.In November 2010, Standard & Poor’s maintained itsrating of Danica Pension of A (negative outlook).Danica Pension’s rating is to a large extent dependenton Danske Bank’s rating, which was also maintained.Danica Pension remains one of the highest rated pensioncompanies in the Nordic region.Events after the balance sheet dateNo events have occurred between 31 December 2010,and the date of the signing of the financial statementsthat, in the opinion of the management, will materiallyaffect Danica’s financial position.New contribution rules became effective at 1 January2011. The new rules do not have any material effecton Danica’s financial position.Outlook for 2011In 2011, Danica expects to hold on to its position asone of the leading providers in Denmark.The profit for 2011 will mainly depend on developmentsin the financial markets. These developmentsinfluence whether a risk allowance can be booked for2010 and the expenditure in relation to special allotments.INVESTMENT STRATEGYThe Board of Directors determines Danica’s investmentstrategy and follows up on the results, whileDanica’s investment department prepares specificinvestment plans.Danica does not invest its customers’ pension fundsin companies that deliberately breach internationalstandards on human rights, environmental protection,employee rights, anti-corruption or weapons.See the corporate social responsibility section.The investment strategy is as follows:Danica BalanceIn Danica Balance, savings are invested in combinationsof seven investment funds, specially developedfor Danica.For each customer, Danica continually adjusts thedistribution among the funds based on the customer’sage and chosen risk profile.Two of the funds are invested in equities, based ona portfolio of index-linked international equitiessupplemented by active investment in selectedareas.The remaining five funds are invested in bonds, andtheir main difference consists in the maturities ofthe bonds. The funds invest primarily in Danishand European bonds.Danica LinkDanica Link is Danica’s most flexible pension product,giving individual policyholders significantfreedom to choose the risk profile of their investments.Pension savings are invested based on a funduniverse consisting of 40-45 investment funds froma number of Danish and international fund manag-DANICA PENSION – ANNUAL REPORT 2010 9/80

ers. The development of the individual fund is followedclosely, and any funds that do not meetDanica’s requirements are replaced. This ensuresthat the quality of the investment funds offered ishigh.The individual Danica Link customer can eitherdecide which investment funds to invest in or leavethe choice to Danica by choosing one of the sixDanica Valg portfolios. The Danica Valg portfolioshave different risk levels with equity shares of between0% and 100%.Danica TraditionelThe investment strategy for customer funds inDanica Traditionel is adjusted in respect of:• Life insurance obligations• Bonus and capital reserves• Large portfolio diversification• The return and risk potential in individualinvestment areas.Total risky assets, consisting of equity, credit, propertyand alternative investments, amounted to36.5% at year end 2010.properties. Property investments are concentratedon the Danish market.At year end, alternative investments, accounting for2.1% of the portfolio, mainly consisted of privateequity, infrastructure and a small percentage ofhedge fund investments. The purpose of these alternativeinvestments is to obtain a return similar tothat of equities, but without the volatility of these.Danica employs a number of investment managersto manage its investments. Danske Capital manages78% of the investment assets and BlackRock manages9%. Danske Bank is the main banker.In the property portfolio, shopping centres are managedby Steen & Strøm and Dan-Ejendomme, whileDatea manages Danica’s other investment properties.Shareholders’ equityOf assets allocated to shareholders’ equity in DanicaPension, 5.0% was invested in equities and 10.0%in real property according to the same profile asthat of the customer funds in Danica Traditionel,while 85% was invested in relatively short-termbonds at the end of 2010. Shareholders’ equity isfurther exposed to equities through investmentsattributable to the health and accident business.Returns and market performanceIn 2010, the international financial markets weresomewhat calmer than in the preceding years, althoughthe fundamental economic situation did notimprove much for the western economies.At the end of 2010, 64.4% of the customer funds inDanica Traditionel were invested in bonds issuedby public authorities or mortgage credit institutionsand the like from zone A countries. A fifth of thesefunds were invested in index-linked bonds, whichcontributes to a stable long-term real return.Danica’s investments in Portuguese, Irish, Greekand Spanish government bonds amounted to 1.2%of customer funds at year end 2010.Moreover, Danica invests in credit bonds based onan expectation of a higher return relative to governmentbonds and a lower risk relative to equities.Credit investments amounted to 16.5% of customerfunds at the end of 2010, just over half of whichwere rated Investment Grade by Moody’s or Standard& Poor’s, while the remaining credit investmentshad lower or no ratings.Property investments accounted for 9.8% of customerfunds at the end of 2010. Over an investmenthorizon of several years, property investments traditionallycontribute a relatively stable and inflationproofreturn. Danica is the largest owner of shoppingcentres in Denmark and also holds many officeEquity markets showed fair growth in 2010 on theback of a strong 2009, but the developing countriesperformed better than the industrialised countries.According to the MSCI World index, equities roseby 11.1% in 2010.Several times during the year, there were fears thatthe US economy, in particular, would enter a socalleddouble dip, and this had a negative impacton the financial markets.However, on the whole the central banks managedto keep the economies afloat by means of ultra-lowinterest rates and, with respect to the FED’s, buybacksof bonds, a so-called quantitative easing ofmonetary policy.The expansive monetary policy and budding signsof economic growth supported risky assets duringthe second half. The European markets underperformeddue to the debt crisis in Portugal, the Republicof Ireland, Greece and Spain and the resultingpressure on the European banking sector.Meanwhile, the bond buy-backs caused interestrates in the United States and the European corecountries to drop significantly up to the fourth10/80 DANICA PENSION – ANNUAL REPORT 2010

quarter. During the fourth quarter, interest rates roseagain, however, in expectation of sharply risingpublic sector budget deficits in the United States aswell as in Europe. In Europe, particularly the prospectof EU-countries and IMF having to providemassive support to the aforementioned countries toovercome their economic problems put upwardpressure on bond yields towards the end of the year.Overall, the Danish long-term 10-year governmentbond yields fell from 3.6% at the beginning of 2010to 3.0% at the end of the year, whereas the shorterterm2-year yields fell from 2.0% to 1.0%. The 10-year Danish government bond yield was 8.2% in2010.At approximately 0.3 of a percentage point, thespreads on Danish long-maturity mortgage bonds atthe end of 2010 were more or less unchanged fromthe beginning of the year.The return on credit bonds was positively affectedby declining risk premiums during the year, andDanica’s portfolio of credit bonds with investmentgrade ratings consequently yielded returns of 5.9%.On bonds with lower ratings, the return was 12.6%.The commercial property market remained sluggishin 2010, with generally declining demand for officeand retail leases due to rising unemployment andlimited growth. Danica’s total return on real propertywas 2.6%, which breaks down to a negative2.1% in value adjustments and 4.7% in direct returns.Danica Balance customers under the medium equityrisk profile and with 30 years to retirement age sawa return of 16.1% in 2010 before tax on pensionreturns. Danica Balance customers in 2010 saw atotal return of DKK 2.1 billion before tax on pensionreturns or 12.0%. Over a five-year period, the averagereturn for all customers was 3.3% p.a. before taxon pension returns.DANICA BALANCE, RETURN BEFORE TAX(%) 30 years to maturity 5 years to maturityRisk Return Equity share Return Equity shareAggressive 17.2 100 12.7 59High 17.2 100 11.6 48Medium 16.1 90 10.4 38Low 14.5 75 9.3 27Conservative 11.6 49 8.1 16Average return, Danica Balance 12.0%period, the average return for all customers was3.1% p.a. before tax.DANICA VALG PORTFOLIO’S RETURN BEFORE TAX(%) 2010 2009Danica Valg Guarantee 10.7 14.8Danica Valg 100% Bonds 6.1 13.3Danica Valg Low Risk 9.5 18.4Danica Valg Medium Risk 14.1 27.0Danica Valg High Risk 17.4 32.4Danica Valg 100% Equities 20.8 34.4Average return, Danica Link 14.1%The overall return on Danica Balance and DanicaLink in 2010 was DKK 4.8 billion before tax onpension returns, equal to 12.9%.The total return on customer funds in Danica Traditionelbefore tax on pension returns was 5.8%. Thetotal return after an increase of technical provisionswas 4.5%.The total return on equities was 17.3%, comprisinga return of 34.4% on Danish listed equities and areturn of 15.4% on foreign listed equities. A largepart of the foreign exchange exposure was hedged.DANICA PENSION, CUSTOMER FUNDSHOLDINGS AND RETURNS 2010 2009Value Return Value Return(DKK billions) % %Property investments 18.5 2.6 18.1 4.1Listed equities 15.3 17.3 14.8 28.9Alternative investments 3.9 17.6 2.1 -2.3Credit investments 31.1 9.4 22.8 29.7Global bonds 5.7 0.8 6.6 -0.5Nominal bonds 75.6 4.6 71.4 6.8Index-linked bonds 23.6 7.3 26.7 9.6Short-term bonds and cashand cash equivalents 17.0 4.0 17.2 6.2Total bonds, etc.* 121.9 121.9 7.0Other financial assets -2.6 5.3 1.6 -Total 188.1 5.8 181.3 7.1Return after change inadditional provisions 4.5 6.8* In connection with the merger of Danica Pension, Danica PensionI and Danica Liv III at January 1, 2010, bonds in the amountof DKK 7 billion were transferred to customer funds from theformer Danica Liv III and Danica Pension I.The majority of the Danica Link customers haveopted for Danica Valg with medium risk, and theysaw a return of 14.1% in 2010 before tax on pensionreturns. The return before tax on pension returns forDanica Valg customers who have opted for high riskwas 17.4% and for customers with a 100% equityshare 20.8%. The total return for Danica Link customersbefore tax on pension returns was DKK 2.7billion or an average of 14.1%. Over a five-yearDANICA PENSION – ANNUAL REPORT 2010 11/80

FROM INVESTMENT RETURN TO INTEREST RATE ON POLICY-HOLDERS’ SAVINGS(%) 2010 2009Return on customer funds before investmentcosts 6.1 7.2Investment costs -0.3 -0.1Return on customer funds after investmentcosts 5.8 7.1Change in the value of insurance obligations -1.3 -0.3Investment return including change in insuranceobligations 4.5 6.8Tax on pension returns -0.7 -1.2Risk premium for the year -0.6 -0.6Risk premium transferred to shadow account -0.3 -0.3Risk and cost results 0.1 0.1Transfer from collective bonus potential 0.6 -0.7Transfer from bonus potential of paid-uppolicies 0.0 -1.6Other adjustments -0.8 -0.8Interest rate on policyholders’ savings aftertax on pension returns 2.8 1.7The share of investment assets for whichinvestment costs are included is 100% 100%The above table illustrates the relationship betweeninvestment return and the interest rate on policyholders’savings.CONTRIBUTION AND PROFIT POLICYDanica Traditionel profit allocation rulesThe Danish FSA issued a new executive order onthe contribution principle, which entered into forceat 1 January 2011. The purpose of the changes to theexecutive order on the contribution principle is toclarify the rules on distribution of profits and lossesamong policyholders to safeguard against any structuralredistribution.The most significant change from the previous rulesis that the total portfolio of with-profit products inlife insurance companies should be grouped accordingto the elements of interest, risk and costs. Objectivecriteria should be applied to ensure the homogeneityof the groups.Accordingly, at 1 January 2011 the portfolio ofDanica Traditionel insurances has been divided intofour interest rate groups, four cost groups and threerisk groups, and the Danica Traditionel’s bonusregulations have been adjusted to accommodatethese groups.Danica’s collective bonus potential, at 31 December2010 standing at DKK 1.7 billion, has been distributedamong the individual groups, and a separaterisk allowance has been determined for each group.Within each interest rate group, any losses are coveredcollectively by that group’s collective bonuspotential and bonus potential of paid-up policiesbefore the shareholders’ equity is required to cover.Any losses on risk and cost groups not covered bythe collective bonus potentials of the individualgroups are to be covered by shareholders’ equity.As from 1 January 2011, customers with high guaranteeshave been grouped together in one interestrate group. These customers’ investment returnswill reflect the fact that more caution is required fortheir investments. Customers with high guaranteescan therefore in the longer term expect a lower, butmore stable, rate of interest on their savings comparedwith customers with lower guarantees.Customers with lower guarantees are divided intothree interest rate groups. The lower the guarantee,the more opportunity the customers will have formore risky investments, which are expected in thelonger term to yield higher returns. Accordingly,over time customers with lower guarantees canexpect somewhat higher – but also more volatile –rates of interest on their savings.In connection with the implementation of the newrules, Danica has decided to combine the previoussub-portfolios – sub-portfolio I and sub-portfolio II– which had different bonus rates. In that connection,customers of the former Danica Liv & Pensionreceived an extraordinary 10% bonus to compensatefor the different bonus rates.Special allotments are made to certain policyholdersfrom the former Statsanstalten for Livsforsikring,which today forms part of Danica Pension. Thecustomers in question receive special allotmentsfrom Danica Pension if Danica Pension’s equityexceeds the adequate capital base by a certainamount.New EU solvency rules – Solvency IIDanica is closely monitoring the work on the comingEU solvency rules, Solvency II, which are totake effect in 2013 according to plan. The new rulesare set to change the existing volume-based capitalrequirement to a capital requirement which moreaccurately reflects the risks involved in the operation.During 2010, Danica conducted a gap analysis inrelation to the new internal management and externalreporting requirements, among other things.Based on this, the company has prepared a roadmap leading up to 2013 that will contribute toDanica meeting the new requirements.Also, in 2010 Danica participated in the quantitativeimpact studies conducted (most recently QIS5)for the purpose of assessing the future capital adequacyrequirements. The Committee of EuropeanInsurance and Occupational Pensions Supervisors(CEIOPS) will present the conclusions from QIS5 inspring 2011, and the European Commission is expectedto determine the final calculation assumptionsbefore the end of 2011. It is thus too early topredict Danica’s future solvency requirement underSolvency II. However, Danica does not expect the12/80 DANICA PENSION – ANNUAL REPORT 2010

company’s excess core capital to change significantlyunder the new rules.The coming Solvency II rules allow for the calculationof capital requirement according to internalmodels designed by companies individually.Danica has not yet decided whether Danica will usesuch an internal model. This decision will depend,among other things, on the final capital requirementsunder Solvency II.ORGANISATION, MANAGEMENT ANDPARTNERSHIPSDanica handles the Danske Bank Group’s activitieswithin pension savings and life insurance for companies,organisations and private individuals.Danica Pension’s Board of Directors consists of fivedirectors elected by the general meeting and threedirectors elected by the employees and one directorappointed by the Minister of Finance pursuant to theAct on Privatisation of Statsanstalten for Livsforsikring.The Board of Directors is in charge of the overallmanagement of the company and holds some sixmeetings annually. The Executive Board is incharge of the day-to-day management of the companyand consists of Jørgen Klejnstrup, CEO (acting)and Jesper Winkelmann. Henrik Ramlau-Hansenresigned from the position of CEO at the end of2010. Per Klitgård is appointed new CEO and willjoin the company according to further agreement.The directorships of the members of the Board ofDirectors and the Executive Board are listed on page74.As stated in note 9, the Executive Board members’remuneration was unchanged relative to 2009. For2009 and 2010, Danica suspended performancebasedpay for all employees other than the company’sinsurance brokers and selected investmentofficers, a total of 161 employees.As from 2011, the remuneration structure has beentightened in a number of areas relating to remunerationof the Board of Directors, Executive Board andother staff members whose activities have a materialeffect on the Group’s risk profile (risk takers).Danica follows Danske Bank’s guidelines in thisarea.Danica has great employee commitment. The annualemployee survey, which was conducted in the autumnof 2010, once again showed good improvement.Satisfaction and Motivation were up by 4index points over 2009 to 75 and Loyalty rose by 3index points to 79.In September 2010, Danica started implementing anew management platform – “Vejen til god ledelse”(the Path to Good Management) – based on appreciativemanagement.Danica has set up a framework for the desired leadershipbehaviour. When there is a belief that Danicacan continually improve its management, the employees’sense of everyday work satisfaction andmotivation is heightened. This again supportsDanica’s goal of offering efficient service, so thatquality targets are met, etc.Danica promises its customers competent advice,and to ensure that this promise is kept, all employeeswith direct customer contact annually undergo atest of their professional knowledge. In addition tothis, selected employee groups also take an oralexam designed to assess their communications andprofessional skills based on a customer case.For employees in need of brushing up their professionalskills, their performance interview with theirimmediate superior will include a discussion ofways to heighten their skills.Danica educates some of the best finance trainees inDenmark. The traineeship focuses on a combinationof theoretical and practical knowledge, and in 2010Danica’s trainees once again achieved an averagesignificantly above the national average for pensioncompany trainees. The finance trainees are veryambitious, and as soon as they have completed thetwo-year traineeship they continue on to a relevanteducation at the Danish Insurance Academy. Currently,the company has 19 trainees at the Academy.At 1 January 2011, Danica Pension and Topdanmarkhave entered into an agreement to transfer 44 commercialinsurance agents and back-office staff toTopdanmark. The commercial insurance agents willservice Danica's customers and sell non-life insuranceon behalf of Topdanmark and pension planson behalf of Danica.Internal controls and risk managementAs laid down in the Danish Financial Business Act,the Board of Directors is responsible for ensuring thatthe Executive Board maintains effective procedures toidentify, manage, monitor and report on risks, adequateinternal control procedures as well as satisfactoryIT controls and security measures.Good accounting practices are based on authorities,segregation of duties, regular reporting requirementsand marked transparency in respect of the group’sbusiness.Danica regularly assesses risks in relation to the financialreporting and with particular focus on itemswhere estimates and judgments could significantlyaffect the value of assets or liabilities. These criticalfinancial statement items are listed under Significantaccounting estimates and judgments.Danica has implemented controls to mitigate theidentified risks in relation to the financial reporting,and regularly monitors the development of and compliancewith applicable legislation and other financialDANICA PENSION – ANNUAL REPORT 2010 13/80

eporting regulations and provisions in order to maintainthe best possible quality of financial reporting.Controls have been established for the purpose ofpreventing, detecting and correcting any errors orirregularities in the financial reporting. Such controlsminimise the risk of error but are not a guaranteeagainst errors.Moreover, Danica has set up an internal risk committeewhich is to follow up on Danica’s risks on a regularbasis.The internal audit department regularly examinesinternal management reporting processes and externalinterim and annual reporting processes. InternalAudit also conducts operational audits, focusingamong other things on significant areas of the group’srisk management, including reporting thereon.The Board of Directors regularly receives reportingfrom the Executive Board on compliance with the riskmanagement and investment framework set out andthe statutory investment rules, as well as regular financialinformation. Compliance and Internal Auditregularly submit reports to the Board of Directors oncompliance with rules and regulations, including anyviolation of internal business procedures and policies.In addition, the actuary in charge reports to the Boardof Directors on any significant issues within the actuary’sarea of responsibility.A joint audit committee has been set up for the DanskeBank Group, which also monitors significantissues for the companies of the Danica Group. Once ayear, Internal Audit reports to the Audit Committeeon the effectiveness of the established reporting processesin relation to Danica’s financial reporting andrisk management.The Audit Committee examines accounting, auditingand security issues. These are issues that the Board ofDirectors, the Audit Committee itself, the group chiefauditor or the external auditors believe deserve attentionbefore they are brought before the Board of Directors.In 2010, the Audit Committee held four meetings.For further information on the Audit Committee,see Danske Bank’s management’s report.CORPORATE SOCIAL RESPONSIBILITYDanica complies with Danske Bank’s CorporateResponsibility policyAlong with the Annual Report 2010, the DanskeBank Group has published Corporate Responsibility2010 on the Group's corporate social responsibilityin four main areas: Business, Employees, Environmentand Society. Since 2007, the CR report hasbeen organised in accordance with the sustainabilityreporting guidelines of Global Reporting Initiative(GRI).Compact, the world’s largest voluntary network forcorporate social responsibility which is based on 10principles that act as a common frame of referencefor companies worldwide in the areas of humanrights, labour rights, environment and corruption.As a member of the Global Compact, the Group iscommitted to describing in annual progress reportswhat concrete measures the Group has taken tocomply with the ten principles.For reporting on Corporate Responsibility, see theDanske Bank Group's progress report for 2010,Communication on Progress, which is available onthe website www.unglobalcompact.org.Health-promoting activitiesDanica values the support of the two employeeassociations in focusing on the health of the company’semployees. Danica’s employees are offeredDanica Sundhedsfremmer (Health promoter), andtheir health and physical condition is checkedthrough Sundhedstjek. Each individual is offeredsuggestions for improvements and Danica gets aHealth Guide, providing input on what areas toprioritise. In 2010, a group of selected employeeswho were motivated to make an effort in the areasof diet and exercise were given an offer.Danica Fitness-Club offers employees a broad varietyof activities. In addition to a great range of themost up-to-date training facilities, employees areoffered individual training advice, measurement ofphysical condition and body fat percentage andphysiotherapist treatment.Danica’s canteen widely uses organic produce, andthe food and meal policy sets out guidelines on thepreparation of healthy, low-fat food.Absence and presenceDanica strives to ensure dialogue with employeeswith prolonged absences to maintain their relationswith Danica. Moreover, the company wishes toprovide security and peace of mind for employeesafflicted by critical illness and their families, andDanica takes an active role in relation to employeeswho have an addiction.Danica finds it essential to maintain a permanenthealthy balance between private life and work andto take timely action to avoid stress. Danica’s stresspolicy and measures in this area were set up toensure that Danica meets this responsibility.Danica’s employees are given special offers of reducedworking hours, health checks and seniordays off.Employee sickness absences in 2010 averaged 4days, against a 5-day average in 2009.Since 2007, the Group has supported the UN Global14/80 DANICA PENSION – ANNUAL REPORT 2010

Environmental considerationsIn 2010, Danica implemented measures to reducepaper consumption. Danica reorganised all lettersystems so that customers can choose to receivemost of Danica’s letters electronically. At the end of2010, 112,000 Danica customers received mail electronically.The formats of the longest letters havealso been changed so that customers receiving lettersin hard copy no longer receive as much as 30-40 pages. Instead, they receive a brief overview ofno more than 3-4 pages and can order the rest ifthey wish to. The new electronic customer communicationinitiatives and the marked reduction inthe number of pages in the letters still sent in hardcopy have reduced paper consumption by almost amillion sheets of paper.The requirements in respect of Danica’s propertyportfolio include that Danica’s suppliers shouldcomply with the ethical rules of the Danish ConstructionAssociation.Venture capital for entrepreneursIn January 2011, the pension industry entered into anagreement with the Danish government to provideventure capital for small and medium-sized companieswith growth potential. The commitment is for atotal of DKK 5 billion, of which Danica’s share isexpected to be up towards DKK 500 million.The company regularly monitors heating, electricity,water consumption and mileage on the company’svehicles. Also, all of Danica’s vehicles havebeen replaced by environmentally friendly cars. Asfrom 2010, Danica is included in Danske Bank’sCO2 accounts. The complete report is available atDanske Bank’s website.DEVELOPMENT IN POWER, HEAT AND WATER CONSUMPTIONIndex2010 2009 10/09Total power consumptionMWh 1,224 1,343 91Total heat consumptionTotal water consumptionMWh 2,673 2,475 108M3 4,700 4,490 104Mileage Km’000 2,252 2,427 92Water consumption covers the head office only, while power and heatalso includes regional offices. The consumption covers the period October2009 to September 2010.The heat consumption was up by 8% relative to2009 due to the cold winter weather in 2009/10,which caused a general 16% increase in the numberof day degrees.Socially responsible investment principlesIn 2008, Danica implemented a socially responsibleinvestment (SRI) policy in order to ensure thatDanica does not invest customers’ money in companiesthat do not comply with international humanrights, environmental, employee rights, weaponsand anti-corruption guidelines. In 2010,Danica’s focus on socially responsible investmentwas further strengthened with the decision for thegroup to adopt the UN Principles for ResponsibleInvestment (PRI). This decision reflected thegroup’s ambition to comply with international standardsin Danica's environmental, social and ethicalguidelines. The list of companies not eligible forinvestment can be seen at www.danicapension.dk.At the end of 2010, the list comprised some 30companies that Danica does not wish to invest in.DANICA PENSION – ANNUAL REPORT 2010 15/80

16/80 DANICA PENSION - ANNUAL REPORT 2010

Financial statements - contentsINCOME STATEMENT 18COMPREHENSIVE INCOME 19BALANCE SHEET 20STATEMENT OF CAPITAL 22CASH FLOW STATEMENT 24FINANCIAL HIGHLIGHTS 25NOTES1 Significant accounting policies 263 Business segments 334 Gross premiums, incl. payments received under investment contracts 345 Income from investment properties 356 Interest income and dividends 357 Market value adjustments 358 Claims and benefits paid 359 Operating expenses relating to insurance 3610 Technical result of health and accident insurance 4011 Other income 4012 Profit before tax 4113 Tax 4214 Intangible assets 4215 Operating equipment 4216 Domicile property 4317 Investment properties 4318 Holdings in associated undertakings 4419 Holdings 4420 Bonds 4421 Derivatives 4522 Financial investment assets 4523 Unit-linked investment assets 4524 Provisions for insurance and investment contracts, reinsurers' share 4625 Outstanding claims provision 4626 Provisions for unit-linked contracts 4627 Provisions for insurance and investment contracts 4628 Other creditors 4629 Subordinated loan capital 4730 Assets deposited as security and contingent liabilities 4731 Related parties 4832 Balance sheet items broken down by expected due date 4833 Specification of assets and retu 4934 Percentage allocation of share portfolios on industries and regions 4935 Financial instruments 5036 Risk management and sensitivity ratios 51DANICA PENSION - ANNUAL REPORT 2010 17/80

Income statement - Danica Pension GroupNote (DKK millions)2010 2009LIFE INSURANCE4 Gross premiumsReinsurance premiums cededTotal premiums, net of reinsuranceIncome from associated undertakings5 Income from investment properties6 Interest income and dividends, etc.7 Market value adjustments of investmentsInterest expensesAdministrative expenses related to investment activitiesTotal investment returnTax on pension returns16,936 15,729-43 -5016,893 15,67920 -43911 1,0307,582 8,5059,710 13,379-268 -336-427 -19017,528 22,345-1,920 -2,826Return on investment after tax on pension returns 15,608 19,5198 Claims and benefits paidReinsurers' share receivedChange in outstanding claims provisionChange in outstanding claims provision, reinsurers' shareTotal claims and benefits, net of reinsuranceChange in life insurance provisionsChange in reinsurers' share-16,715 -15,125109 96-132 -22-9 -3-16,747 -15,054-999 -40956 -26Total change in life insurance provisions, net of reinsurance-943 -435Change in collective bonus potentialTotal bonusChange in provisions for unit-linked contractsChange in reinsurers' shareTotal change in provisions for unit-linked contracts, net of reinsurance1,035 -1,2971,035 -1,297-12,570 -14,2161 0-12,569 -14,216Acquisition costs-314 -340Administrative expenses-878 -852Reimbursement of costs from group undertakings49 54Reinsurance commissions and profit sharing17 169 Total operating expenses relating to insurance, net of reinsuranceTransferred investment returnTECHNICAL RESULT OF LIFE INSURANCE-1,126 -1,122-1,006 -1,6081,145 1,46618/80 DANICA PENSION - ANNUAL REPORT 2010

Income statement - Danica Pension GroupNote (DKK millions)2010 2009Brought forwardHEALTH AND ACCIDENT INSURANCEGross premiumsReinsurance premiums cededChange in unearned premiums provisioniChange in unearned premiums provision, reinsurers' sharePremiums, net of reinsuranceTechnical interestClaims paid, grossReinsurers' share receivedChange in outstanding claims provisionChange in outstanding claims provision, reinsurers' shareClaims, net of reinsuranceBonus and premium discountsAcquisition costsAdministrative expensesReinsurance commissions and profit sharingTotal operating expenses relating to insurance, net of reinsurance1,145 1,4661,055 1,066-98 -8823 381 0981 1,01616 108-869 -8111 3638 -19360 50-770 -918-90 -75-41 -50-92 -9513 10-120 -135Return on investment 198 30910 TECHNICAL RESULT OF HEALTH AND ACCIDENT INSURANCEReturn on investment allocated to equity11 Other incomeOther expenses12 PROFIT BEFORE TAX13 Tax215 305558 1,023213 160- -52,131 2,949-468 -710NET PROFIT FOR THE YEAR 1,663 2,239Net profit for the year1,663 2,239Other comprehensive income:Translation of foreign units30 54Foreign unit hedges-24 -40Tax relating to other comprehensive income6 10Total other comprehensive incomeNET COMPREHENSIVE INCOME FOR THE YEAR12 241,675 2,263DANICA PENSION - ANNUAL REPORT 2010 19/80

Balance sheet - Danica Pension GroupAssetsNote (DKK millions)2010 200914 INTANGIBLE ASSETS15 Operating equipment16 Domicile properties219 2170 460 60TOTAL TANGIBLE ASSETS 60 6417 Investment properties18 Holdings in associated undertakingsLoans to associated undertakingsTotal investments in associated undertakings19 HoldingsUnit trust certificates20 BondsOther loansDeposits with credit institutions21 Derivatives22 Total financial investment assetsTOTAL INVESTMENT ASSETS23 UNIT-LINKED INVESTMENT ASSETS20,290 19,5521,027 1,036172 1701,199 1,20617,465 15,95331,649 24,958139,002 142,15267 -818 1,5211,334 2,091190,335 186,675211,824 207,43366,261 46,437Unearned premiums provision, reinsurers' share4 3Life insurance provisions, reinsurers' share1,807 1,750Outstanding claims provision, reinsurers' share 230 195Provisions for unit-linked contracts, reinsurers' share1 -24 Total technical provisions, reinsurers' shareAmounts due from policyholdersAmounts due from insurance companiesAmounts due from group undertakingsOther debtorsTOTAL DEBTORS2,042 1,948300 5461,048 97111 21369 5833,770 4,069Current tax assets 78 15Cash and cash equivalents444 501Other2 1TOTAL OTHER ASSETSAccrued interest and rentOther prepayments and accrued incomeTOTAL PREPAYMENTS AND ACCRUED INCOME524 5172,413 2,411425 4342,838 2,845TOTAL ASSETS 285,496 261,58220/80 DANICA PENSION - ANNUAL REPORT 2010

Balance sheet - Danica Pension GroupLiabilities and equityNote (DKK millions)2010 2009LIABILITIESUnearned premiums provisionGuaranteed benefitsBonus potential of future premiumsBonus potential of paid-up policies27 TOTAL PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTS929 835157,150 148,56610,437 15,66510,965 14,160Total life insurance provisions178,552 178,39125 Outstanding claims provision7,274 7,088Collective bonus potential1,740 2,775Provisions for bonuses and premium discounts98 10526 Provisions for unit-linked contracts66,310 47,623254,903 236,817Pensions and similar obligations13 Deferred taxAmounts owed, direct insuranceAmounts owed to reinsurersAmounts owed to credit institutionsAmounts owed to group undertakingsCurrent tax liabilities28 Other creditorsOther accruals and deferred income29 Subordinated loan capitalTOTAL CREDITORS- 11,174 1,152164 14810 42812 670166 16825 2435,992 1,562186 3463,041 3,085266,473 244,234SHAREHOLDERS' EQUITYShare capital1,100100 1,100100Revaluation reserveContingency fundRetained earningsTOTAL SHAREHOLDERS' EQUITYTOTAL LIABILITIES AND EQUITY1 11,499 1,49916,423 14,74819,023 17,348285,496 261,582DANICA PENSION - ANNUAL REPORT 2010 21/80

Statement of capital - Danica Pension Group(DKK millions)Changes in shareholders' equityShareholders' equity at 31 December 2009Profit for the yearOther comprehensive incomeTranslation of foreign unitsForeign unit hedgesTax on other comprehensive incomeTotal other comprehensive incomeComprehensive income for the yearShareholders' equity at 31 December 2010ForeignRevalu- currencyShare ation translation Other Retainedcapital reserve reserve reserves earnings Total1,100 1 -7 1,499 14,755 17,3481,663 1,663- - 30 - - 30- - -24 - - -24- - - - 6 6- - 6 - 6 12- - 6 - 1,669 1,6751,100 1 -1 1,499 16,424 19,023Shareholders' equity at 31 December 2008Profit for the yearOther comprehensive incomeTranslation of foreign unitsForeign unit hedgesTax on other comprehensive incomeTotal other comprehensive incomeComprehensiveincomefortheyearincome Shareholders' equity at 31 December 20091,100 1 -21 1,499 12,506 15,085- - - - 2,239 2,239- - 54 - - 54- - -40 - - -40- - - - 10 10- - 14 - 10 24- - 14 - 2,249249 2,2632631,100 1 -7 1,499 14,755 17,348Danica Pension has an obligation to allocate part of the excess equity to certain policyholders of Statsanstalten for Livsforsikring (now part of Danica Pension)if the percentage by which the equity exceeds the required capital base is higher than the percentage that had been maintained by Statsanstalten forLivsforsikring prior to the privatisation of this company in 1990. Otherwise, it is the intention not to distribute dividends for a period of at least 25 yearsfrom 1990. Paid-up capital and interest accrued thereon may, however, be distributed.See also Contribution and profit policy in the Management's report.The share capital is made up of 11,000,000 shares of a nominal value of DKK 100 each. All shares carry the same rights; there is thus only one class of shares.22/80 DANICA PENSION - ANNUAL REPORT 2010

Statement of capital - Danica Pension Group(DKK millions)2010 2009Solvency requirement and capital baseShareholders' equity19,023 17,348Core capital19,023 17,348- Intangible assets-219 -217Reduced core capitalSupplementary capital- Limitations to supplementary capitalReduced supplementary capitalCapital base18,804 17,1313,041 3,085-75 -1242,966 2,96121,770 20,092Solvency requirement for life insurance7,613 7,423Solvency requirement for health and accident insurance 295 295Total solvency requirementExcess capital base7,908 7,71813,862 12,374The capital base should at any time exceed the solvency requirement calculated in accordance with the Danish Financial Business Act.DANICA PENSION - ANNUAL REPORT 2010 23/80

Cash flow statement - Danica Pension Group(DKK millions)2010 2009Cash flow from operationsProfit before taxAdjustment for non-cash operating itemsNon-cash items relating to premiums and benefits2,13113,1982,94916,699Non-cash items relating to reinsurance-140 -34Non-cash items relating to investment return-10,550 -13,925Non-cash items relating to tax on pension returns1,932 1,312Non-cash items relating to expenses73 154Net investment, customer funds-7,112 -8,538Payments received and made, investment contracts3,013 2,216Taxes paid-704 -54Cash flow from operations1,841 779Cash flow from investing activitiesAcquisition of holdings-200 -Sale of holdings- 600Purchase of bonds-11,142 -11,766Sale of bonds8,598 10,806Purchase of derivatives- -10Sale of derivatives1 14Cash flow from investing activitiesCash flow from financing activitiesDebt to credit institutions-2,743 -356142 6Cash flow from financing activities 142 6Cash and cash equivalents, beginning of yearCash flow for the yearCash and cash equivalents, end of yearCash and cash equivalents, end of yearDeposits with credit institutionsCash in hand and demand deposits2,022 1,593-760 4291,262 2,022818 1,521444 501Total 1,262 2,02224/80 DANICA PENSION - ANNUAL REPORT 2010

Notes – Danica Pension GroupNote1 Financial highlights(DKK millions) 2010 2009 2008 2007 2006INCOME STATEMENTLife insurancePremiums 16,936 15,729 17,904 15,648 14,813Return on investment after tax on pension returns 15,608 19,519 -9,241 2,950 7,030Claims and benefits -16,715 -15,125 -14,706 -15,760 -13,975Change in life insurance provisions and outstanding claims provisions -1,131 -431 -6,515 5,582 3,869Change in collective bonus potential 1,035 -1,297 11,911 811 -2,597Change in provisions for unit-linked contracts -12,570 -14,216 783 -6,143 -6,131Total operating expenses relating to insurance -1,143 -1,138 -1,221 -1,170 -1,056Result of reinsurance 131 33 244 -111 -34Transferred return on investment -1,006 -1,608 782 -811 -863Technical result, Life 1,145 1,466 -59 996 1,056Health and accident insuranceGross premium income 1,078 1,104 1,176 1,050 1,020Gross claims -831 -1,004 -1,021 -938 -1,018Total operating expenses relating to insurance -133 -145 -154 -142 -183Profit/loss on business ceded -23 8 -14 -12 -7Return on investment less technical interest 198 309 -504 -100 7Technical result of health and accident insurance 215 305 -731 -249 -282Return on investment allocated to equity, etc. 771 1,178 -399 809 783Profit before tax 2,131 2,949 -1,189 1,556 1,557Tax -468 -710 324 -282 -415Net profit for the year 1,663 2,239 -865 1,274 1,142BALANCE SHEETTotal assets 285,496 261,582 240,381 244,260 239,135Insurance assets, health and accident insurance 226 183 127 112 90Technical provisions, health and accident insurance 7,828 7,675 7,434 6,877 6,390Provisions for insurance and investment contracts 254,903 236,817 217,489 221,862 218,364Collective bonus potential 1,740 2,775 1,553 13,462 13,864Total shareholders’ equity 19,023 17,348 15,085 15,982 14,997KEY FIGURES AND RATIOS (%)Return before tax on pension returns 5.6 6.8 -1.0 1.2 2.9Return before tax on pension returns on customer funds in Danica Pension 3.3 6.9 -3.6 1.8 4.9Return after tax on pension returns 5.8 7.1 -1.2 1.1 2.9Expenses as per cent of premiums 5.0 5.8 -0.8 1.2 2.7Expenses as per cent of provisions 5.0 6.0 6.0 6.7 6.3Expenses per policyholder (DKK) 0.5 0.6 0.6 0.6 0.6Cost result 1,342 1,360 1,466 1,495 1,438Insurance risk result -0.08 -0.10 -0.14 -0.12 -0.07Bonus rate – bonus-paying companies 0.09 0.08 0.14 0.09 0.05Owners’ capital ratio 1.1 1.7 0.9 8.3 8.6Excess core capital ratio 13.6 12.4 10.8 11.6 11.1Solvency ratio 8.6 7.5 5.8 6.7 6.2Return on equity before tax 275 260 221 241 226Return on equity after tax 11.7 18.2 -7.7 10.0 9.7Return on customer funds after deduction of expenses before tax 9.1 13.8 -5.6 8.3 7.0Return on subordinated loan capital before tax 4.6 5.5 -1.3 0.0 1.8RATIOS FOR HEALTH AND ACCIDENT INSURANCE 1.4 2.2 5.7 5.0 4.0Gross claims ratio 84 98 96 99 102Gross expense ratio 14 14 15 15 18Combined ratio. net of reinsurance 100 111 112 115 122Operating ratio 98 100 124 116 132Relative run-off 1.6 0.2 1.1 0.5 0.3Run-off. net of reinsurance (DKK millions) 105 11 60 27 35Danica Pension’s consolidated financial statements for 2007 - 2010 are presented in accordance with the International Financial Reporting Standards(IFRS) as adopted by the EU. The financial statements for 2006 are presented in accordance with the Danish FSA’s Executive Order on FinancialReports of Insurance Companies and Lateral Pension Funds. These rules are identical to the group’s measurement under IFRS. The financialhighlights for the Parent Company, Danica Pension are disclosed in the notes to the Parent Company’s financial statements.DANICA PENSION – ANNUAL REPORT 2010 25/80

Notes – Danica Pension GroupNote2 ACCOUNTING POLICIESGENERALThe Danica Group presents its consolidated financialstatements in accordance with the International FinancialReporting Standards (IFRSs). issued by the InternationalAccounting Standards Board (IASB). as adopted bythe EU and with relevant interpretations. issued by theInternational Financial Reporting Interpretation Committee(IFRIC). Furthermore. the consolidated financialstatements comply with the Danish FSA’s disclosure requirementsfor annual reports of issuers of listed bonds.The group has not changed its significant accounting policiesfrom those followed in the annual report for 2009.except for the treatment of acquisitions. For acquisitionsmade after 1 January 2010. direct transaction costs arenot recognised as part of cost. but are expensed when incurred.The group made no acquisitions in 2010.Change in presentationAs a result of a classification error in the annual reportfor 2009. an amount of DKK 71 million which should havebeen included in life insurance provisions was recognisedin the collective bonus potential. The error has been corrected.and at year end 2010. this had reduced the collectivebonus potential by DKK 60 million and increasedlife insurance provisions by a corresponding amount. Thecorrection does not affect the net profit for the year andis immaterial to key figures and ratios.Accounting estimates and judgmentsThe preparation of the consolidated financial statementsis based on the management’s estimates and judgmentsof future events that will significantly affect the carryingamounts of assets and liabilities. The estimates andjudgments that are deemed critical to the consolidated financialstatements are:• the measurement of liabilities under insurance contracts• the fair value of financial instruments• the fair value measurement of real propertyThe estimates and judgments are based on assumptionsthat the management finds reasonable but which are inherentlyuncertain and unpredictable. The assumptionsmay be incomplete. unexpected future events or circumstancesmay arise or situations may occur. Therefore.such estimates and judgments are difficult to make andwill always entail uncertainty. even under stable macroeconomicconditions. when they involve mortality and disabilityrates. Other people may make other estimates.Liabilities under insurance contractsThe calculation of obligations under insurance contractsis based on a number of actuarial computations that relyon assumptions about a number of variables. includingmortality and disability.Insurance obligations are calculated by discounting theexpected future benefits to their present values. For lifeinsurance. the expected future benefits are based on expectedmortality rates. For health and accident insurance.the insurance obligations are calculated based on expectationsas to the number of future recoveries and reopeningsof old claims. The expectations are based on thegroup’s existing portfolio of insurance contracts and areupdated regularly.The calculation of life insurance provisions is based on anassumed increase in life expectancy over today’s life expectancyof 1.4 year for a sixty five-year-old man and 1.1 year fora sixty five-year-old woman. A sixty five-year-old man is thusexpected to live for almost 20 more years and a sixty fiveyear-oldwoman for almost 22 more years. At the currentlevel of interest rates. these assumptions result in additionalprovisions of DKK 7.7 billion over the assumptions at thetime when the policies were written.The obligations are furthermore affected by the discount rate.which is determined using a zero-coupon yield curve. Thezero-coupon yield curve is estimated on the basis of a Euroswap market with the addition of the spread between Danishand German government bonds. Moreover. until the end of2012 a mortgage yield curve spread is added to the abovementionedzero-coupon yield curve. pursuant to the agreementbetween the Danish Ministry of Economic and BusinessAffairs and the Danish Insurance Association on financialstability in the pension area.See the sensitivity analysis in note 36 to the financial statements.Fair value measurement of financial instrumentsMeasurements of financial instruments for which prices arequoted in an active market or which are based on generallyaccepted models employing observable market data are notsubject to critical estimates.Measurements of financial instruments that are only to alimited extent based on observable market data are subjectto estimates. This for example applies to unlisted holdings.certain listed holdings and certain bonds for which there is noactive market. See Financial investment assets below andnote 35 Financial instruments for a more detailed description.Fair value measurement of real propertyThe fair value measurement of investment property is basedby the group’s valuers on a systematic assessment of theexpected operating return on the property and of a requiredrate of return calculated for each property in accordance withappendix 7 to the Executive Order on the Presentation ofFinancial Reports by Insurance Companies.ConsolidationTogether with the undertakings consolidated in the DanicaPension Group. Forsikringsselskabet Danica is included in theconsolidated financial statements of Danske Bank A/S.Copenhagen.Group undertakingsThe consolidated financial statements cover Danica Pensionand group undertakings in which the group has control overfinancial and operating policy decisions. Control is said toexist if Danica Pension. directly or indirectly. holds more thanhalf of the voting rights in an undertaking or otherwise haspower to control management and operating policy decisions.provided that most of the return on the undertaking accruesto the group and that the group assumes most of the risk.The consolidated financial statements are prepared by aggregatingitems similar in nature. Intragroup transactionsand balances are eliminated.26/80 DANICA PENSION – ANNUAL REPORT 2010

Notes – Danica Pension GroupNoteUndertakings acquired are included in the financial statementsfrom the date of acquisition.The net assets of such undertakings (assets. including identifiableintangible assets. less liabilities and contingent liabilities) areincluded in the financial statements at fair value at the date ofacquisition according to the purchase method.If the cost of acquisition (including direct transaction costsuntil 1 January 2010) exceeds the fair value of the net assetsacquired. the excess amount is recognised as goodwill.Goodwill is recognised in the functional currency of the undertakingacquired. If the fair value of the net assets exceedsthe cost of acquisition (negative goodwill). the excess amountis recognised as income at the date of acquisition. The portionof the acquisition that is attributable to minority interestsdoes not include goodwill.Divested undertakings are included in the financial statementsuntil the transfer date.Holdings in associated undertakingsAssociated undertakings are businesses. other than groupundertakings. in which the group has holdings and significantinfluence on but not control. Generally. the group classifiesundertakings as associated undertakings if Danica Pension.directly or indirectly. holds 20-50% of the voting rights.Holdings in associated undertakings are recognised at cost atthe date of acquisition and are subsequently recognised andmeasured according to the equity method. The proportionateshares of the undertakings’ shareholders’ equity with the additionof goodwill on consolidation are recognised in the itemHoldings in associated undertakings and the proportionateshare of the net profit or loss of the individual undertaking isrecognised in Income from associated undertakings. The proportionateshare is calculated on the basis of data from financialstatements with balance sheet dates that differ no morethan three months from the balance sheet date of the groupand calculated in accordance with Danica Pension’s significantaccounting policies.The proportionate share of the profit and loss on transactionsbetween associated undertakings and undertakings in theDanica Pension Group is eliminated.Jointly controlled assetsProperties that are owned jointly with other undertakings outsidethe group. and where each venturer has control over itsshare of the future economic benefits through its share of theproperty. are classified as jointly controlled assets.Jointly controlled assets are consolidated on a pro rata basisin the income statement and the balance sheet.Jointly controlled operationsThe group is involved in joint operations with other pensioncompanies. These joint operations are administrated byForenede Gruppeliv. Income. expenses. assets and insuranceliabilities. etc. are distributed between and recognised by theventurers according to their individual quota. which is determinedbased on the premiums written by the individual venturerduring the year.Intragroup transactionsTransactions between companies in the Danske Bank Group areconducted on arm’s length terms or on a cost recovery basisand according to contractual agreement between the undertakings.unless the transactions are insignificant.Segment reportingIn the financial statements. the group is broken down into threebusiness segments based on differences in products. The segmentTraditionel covers traditional life insurance and pension plans withguaranteed benefits and Forenede Gruppeliv. while the Unit-linkedcontract segment covers market return pension plans. The segmentHealth and accident covers disability. In the segment reporting.profit before tax is calculated according to the accountingpolicies applied in the consolidated financial statements. Thepresentation of the main consolidated income statement items ischanged in accordance with the segment reporting used internallyby the group’s management to assess earnings and resourceallocation. The changes are shown in the reclassification column.Inter-segment transactions are settled on an arm’s-lengthbasis. Expenses incurred centrally by support. administrativeand back-office functions are charged to the business unitsaccording to consumption and activity at calculated unitprices or at market prices. if available.Translation of transactions in foreign currencyThe presentation currency of the consolidated financialstatements is Danish kroner. which is the functional currencyof Danica Pension. The functional currency of each of thegroup’s units is the currency of the country in which the unitis domiciled. as most income and expenses are settled in thelocal currency.Transactions in foreign currency are translated to the functionalcurrency at the exchange rate at the transaction date.Gains and losses on exchange rate differences arising betweenthe transaction date and the settlement date arerecognised in the income statement.Monetary assets and liabilities in foreign currency are translatedat the exchange rates at the balance sheet date. Exchangerate adjustments of monetary assets and liabilitiesarising as a result of differences in the exchange rates at thetransaction date and at the balance sheet date are recognisedin the income statement.Non-monetary assets and liabilities in foreign currency thatare subsequently revalued at fair value are translated at theexchange rates at the date of revaluation. Exchange rateadjustments are included in the fair value adjustment of theasset or liability.Translation of non-Danish unitsAssets and liabilities of non-Danish units are translated intoDanish kroner at the exchange rates at the balance sheetdate. Income and expenses are translated at the exchangerates at the date of transaction. Exchange rate gains andlosses arising on translation of net investments in unitsoutside Denmark are recognised in other comprehensiveincome. Net investments include the shareholders’ equity andgoodwill of the unit as well as holdings in the unit in the formof subordinated loan capital.DANICA PENSION – ANNUAL REPORT 2010 27/80

Notes – Danica Pension GroupNoteHedge accountingThe group uses derivatives to hedge the interest rate riskon fixed-rate liabilities measured at amortised cost. Hedgedrisks that meet specific criteria qualify for fair value hedgeaccounting and are treated accordingly. The interest raterisk on the hedged liabilities is measured at fair value as avalue adjustment of the hedged items in the income statement.If the hedge accounting criteria cease to be met. the accumulatedvalue adjustments of the hedged items are amortisedand recognised in the income statement over theterm to maturity.Financial liabilities in foreign currency are used to hedge netinvestments in foreign units. Exchange rate adjustments attributableto a hedge are recognised in other comprehensiveincome. If the hedge accounting criteria cease to be met. theexchange rate adjustments of the financial liabilities are recognisedin the income statement from the date when thehedge is discontinued.When a foreign unit is divested. the amounts previously recognisedin other comprehensive income in relation to thehedge. including amounts recognised in connection with foreigncurrency translation of the foreign unit. are recognised inthe income statement.Insurance contractsLife insurance policies are classified as insurance or investmentcontracts. Insurance contracts are contracts that entailsignificant insurance risks or entitle policyholders to bonuses.Investment contracts are contracts that entail insignificantinsurance risk. and consist of unit-linked contractsunder which the investment risk lies with the policyholder.ContributionIn accordance with the Executive Order on the ContributionPrinciple. the Danish FSA has been notified of Danica Pension’sprofit policy. The Executive Order in effect for 2010permits the recognition of the risk allowance only if it doesnot exceed the technical basis for risk allowance and if thebonus potential of paid-up policies has not been used to covera deficit in the collective bonus potential. The technical basisfor risk allowance mainly consists of the difference betweenthe annual investment return and the technical rate of interestused to calculate the guaranteed benefits payable to policyholders.Consequently. the contribution principle entailsfluctuating results. To the extent that it is not possible to bookthe full risk allowance. the amount outstanding is transferredto a shadow account. The amount may be booked over futureyears if justified by. among other things. the return on investment.In connection with the implementation of new contributionrules. the collective bonus potential at the end of 2010 hasbeen distributed on the new interest rate. risk and costgroups at the beginning of 2011.INCOME STATEMENTLife insurance premiumsRegular and single premiums on insurance contracts areincluded in the income statement at the due dates. The reinsurers’share of the premiums is deducted. Premiums oninvestment contracts are recognised directly in the balancesheet and disclosed in the notes.Return on investmentIncome from associated undertakings comprises the company’sshare of the associated undertakings’ profit after tax and realisedgains and losses on sales during the year.Income from investment properties comprises the profit fromoperating investment properties after deduction of propertymanagement expenses.Interest income and dividends etc. comprises yield on bondsand other securities and interest on amounts due.In addition. the item comprises dividends from holdings withthe exception of dividends from group undertakings andassociated undertakings.Market value adjustments comprise realised and unrealisedgains and losses and exchange rate adjustments on investmentassets other than associated undertakings.Interest expenses comprise interest on loans and otheramounts due.Administrative expenses related to investment activitiescomprise portfolio management fees to investment managers.direct trading costs. custody fees and own expensesrelated to the administration of investment assets.Tax on pension returnsTax on pension returns is calculated on the basis of the partof the investment return for the financial year allocated topolicyholders. The rate of tax on pension returns is 15%.Claims and benefitsClaims and benefits. net of reinsurance. comprises the claimsand benefits paid on insurance contracts for the year. adjustedfor the change for the year in outstanding claimsprovisions and net of the reinsurers’ share. Claims andbenefits on investment contracts are recognised directly inthe balance sheet.Change in life insurance provisionsChange in life insurance provisions. net of reinsurance. comprisesthe change for the year in gross life insurance provisionsnet of the reinsurers’ share. The change is specified in thenotes. divided into guaranteed benefits. bonus potential offuture premiums and bonus potential of paid-up policies.Change in collective bonus potentialThe change in collective bonus potential comprises the changefor the year in collective bonus potential for insurance policieswith bonus entitlement.Change in provisions for unit-linked contractsThe change in provisions for unit-linked contracts comprisesthe change for the year in the unit-linked provisions other thanpremiums and benefits relating to investment contracts.Operating expenses relating to insurance activitiesAcquisition costs cover accrued costs related to acquiring andreviewing the insurance portfolio. Administrative expensescover other accrued expenses related to insurance operations.The allocation of non-directly attributable expenses betweenacquisition costs and administrative expenses and between lifeinsurance and health and accident insurance is based on an28/80 DANICA PENSION – ANNUAL REPORT 2010

Notes – Danica Pension GroupNoteABC allocation model. The model uses drivers based on activityregistrations.The group’s contributions to defined contribution plans forthe employees are recognised in the income statement whenthey are earned by the employees.Employee bonuses are expensed as they are earned. Until2008. part of the bonuses for the year was paid in the form ofequity-settled options conditional shares in Danske Bank.Share options may not be exercised until three years afterthe grant date and are conditional on the employee not havingresigned from the group. Conditional shares vest three yearsafter the grant date. provided that the employee has not resignedfrom the group. In this context. retirement is not consideredresignation.The fair value of share-based payments at the grant date isexpensed over the service period that unconditionally entitlesthe employee to the payment. The intrinsic value of the grantis expensed in the year when the options vest. whereas thetime value is accrued over the remaining service period. Subsequentfair value adjustments are not recognised in the incomestatement.Transferred return on investmentTransferred return on investment consists of the return onthe assets allocated to shareholders’ equity and the return onhealth and accident insurance.Health and accident insurancePremiums. net of reinsurance. are included in the incomestatement when they fall due. Premiums. calculated net ofdiscounts not related to claims and the like and insurancepremiums ceded. are accrued.Technical interest. which is a calculated return on averagetechnical provisions. net of reinsurance. is transferred fromreturn on investment. The amount is calculated on the basisof the maturity-dependent discount rate published by theDanish FSA. The proportion of the increased premium andclaims provisions attributable to discounting is transferredfrom premiums and claims and set off against technical interest.Market value adjustment is included in the item Returnon investment.Claims. net of reinsurance. comprise claims paid for the year.adjusted for changes in outstanding claims provisions. includinggains and losses on prior-year provisions (run-off result).Furthermore. claims include expenses for assessment ofclaims. expenses for damage control and an estimate of theexpected administrative and claims handling expenses on theinsurance contracts written by the undertaking. Total grossclaims are calculated net of reinsurance.Transferred return on investment is calculated as a proportionof the total investment return. excluding hedges of interestrate risk. the return allocated to shareholders’ equity andunit-linked investments. This proportion is calculated in accordancewith the ratio of health and accident provisions tototal technical provisions.Other incomeComprises income which cannot be directly attributed to insuranceor investment activities.Other expensesComprises expenses which cannot be directly attributed toinsurance or investment activities.TaxCalculated current and deferred tax on profit for the year beforetax and subsequent adjustments of tax charges for previousyears are recognised in the income statement. Income tax forthe year is recognised in the income statement on the basis ofthe tax laws applying in the countries in which the Group operates.Tax on items recognised in other comprehensive incomeis also recognised in other comprehensive income.BALANCE SHEETASSETSIntangible AssetsGoodwillGoodwill arises on acquisition of undertakings and is calculatedas the difference between the cost of the undertakingsacquired and the fair value of the acquired net assets includingcontingent liabilities at the date of acquisition. Goodwill onnon-group acquisitions made before 2002 is written offagainst shareholders’ equity in the year of acquisition.Goodwill is allocated to business units constituting the smallestidentifiable cash-generating units. corresponding to theinternal reporting structure and the level at which managementmonitors its investment. Goodwill is not amortised;instead each business unit is tested for impairment at leastonce a year. Goodwill is written down to its recoverableamount in the income statement provided that the carryingamount of the net assets of the cash-generating unit exceedsthe higher of the assets’ fair value less costs to sell and theirvalue in use. which equals the present value of the futurecash flows expected to be derived from each unit.Goodwill on associated undertakings is recognised underHoldings in associated undertakings. The unit tested forimpairment is the total carrying amount (including goodwill) ofholdings in the associated undertaking.Goodwill in subsidiaries is tested for impairment according toa model based on the cash-generating unit’s estimated futurecash flows for the next ten years. The expected cash flowsare discounted at a rate of 9% after tax. Goodwill in associatedundertakings is tested for impairment based. amongother things. on their financial statements.Other intangible assetsSoftware acquired is measured at cost. including costsincurred to make each software application ready for use.Software acquired is amortised over the expected useful life.which is usually three years. according the straight-linemethod.Costs attributable to the maintenance of intangible assetsare expensed in the year of maintenance.Tangible assetsTangible assets comprise domicile property and operatingequipment.Operating equipmentOperating equipment. comprising vehicles. furniture andleasehold improvements. is recognised at cost less depreciationand impairment. Depreciation is charged on a straightlinebasis over the expected useful lives of the assets. whichDANICA PENSION – ANNUAL REPORT 2010 29/80

Notes – Danica Pension GroupNoteis usually three years. Leasehold improvements are depreciatedover the term of the lease. with a maximum of tenyears.Domicile propertyDomicile property is real property occupied by the group’sadministrative departments. The section Investment propertybelow explains the distinction between domicile andinvestment property. Domicile property is measured at fairvalue according to the same principles as the group’s investmentproperty. see the section Investment property.Increases in revalued amounts are recognised in othercomprehensive income. unless the increase counters avalue reduction previously recognised in the income statement.Decreases in revalued amounts are recognised inthe income statement. unless the decrease counters avalue increase previously recognised in other comprehensiveincome.Domicile property is depreciated on a straight-line basis.based on the expected scrap value and an expected usefullife of 50 years.Investment propertyInvestment property is real property. including real propertylet under operating leases. which the group owns forthe purpose of receiving rent and/or obtaining capital gains.Investment property is real property that the group doesnot use for its own administrative purposes etc.. as suchproperty is classified as domicile property. Property whichcomprises both domicile property and investment propertyelements is allocated proportionally to the two categories ifthe elements are separately sellable. If that is not the case.such real property is classified as investment property.unless the group occupies at least 10% of the total floorage.On acquisition. investment property is measured at cost.including transaction costs. Subsequently the property ismeasured at fair value.Investment property under construction is measured atcost until the date when the fair value can be measuredreliably. typically at the date of completion. If there is anindication of impairment. the property is tested for impairmentand written down to its recoverable amount. which isthe higher of its fair value less costs to sell and its value inuse.The fair value of investment property is assessed by thegroup’s valuers on the basis of a systematic assessment ofthe expected operating return on the property and of a requiredrate of return calculated individually for each property.The rate of return of a property is determined on thebasis of its location. type. possible uses. layout and conditionas well as of the terms of lease agreements. rent adjustmentand the credit quality of the lessees.Financial instruments – generalThe classification of financial assets and liabilities and disclosureof income recognition of interest and value adjustments.etc. are explained in note 35 Financial instruments.instruments are recognised from the trading date to thesettlement date.Financial investment assetsAt initial recognition. financial investment assets are classifiedas financial assets at fair value through profit or loss. as theseassets are managed on a fair value basis. Exceptions from thisare derivatives. which by definition are classified as held fortrading. and Deposits with credit institutions. which areclassified as debtors. See note 35 Financial instruments.The fair value is measured on the basis of quoted market pricesof financial instruments traded in active markets. If an activemarket exists. fair value is based on the most recently observedmarket price at the balance sheet date.If a financial instrument is quoted in a market that is not active.the valuation is based on the most recent transaction price.Adjustment is made for subsequent changes in marketconditions. for instance by including transactions in similarfinancial instruments that are assumed to be motivated bynormal business considerations.If an active market does not exist. the fair value of standard andsimple financial instruments. such as interest rate andcurrency swaps and unlisted bonds. is measured according togenerally accepted methods. Market-based parameters areused for measuring fair value.The fair value of more complex financial instruments. such asswaptions and other OTC products and unlisted holdings. ismeasured on the basis of valuation models. many of which arebased on valuation methods generally accepted within theindustry. The results of the calculations made on the basis ofvaluation techniques are often estimates. because exact valuescannot be determined from market observations. Consequently.additional parameters. such as liquidity and counterparty risk.are sometimes used to measure fair value.Derivatives comprise derivatives with positive fair values. whilederivatives with negative fair values are recognised under Othercreditors.Investment assets related to unit-linked contractsAt initial recognition. unit-linked investments are classified asfinancial assets at fair value through profit or loss due to theirrelation to the associated liabilities.If an active market exists. the official year-end market price isused. If market prices in an active market are not available. fairvalue is determined on the basis of generally accepted measurementtechniques according to the principles described forfinancial investment assets.DebtorsThe reinsurers’ share of insurance provisions is shown dividedinto unearned premiums provisions. life insurance provisions.outstanding claims provisions and provisions for unit-linkedcontracts.Debtors are measured at amortised cost. which generallycorresponds to nominal value less a write-down to cover losses.Purchases and sales of financial instruments are measuredat the settlement date at fair value. which usuallyequals cost. Fair value adjustments of unsettled financial30/80 DANICA PENSION – ANNUAL REPORT 2010

Notes – Danica Pension GroupNoteLIABILITIES AND EQUITYUnearned premiums provisionsUnearned premiums provisions relate to health and accidentinsurance and are made in accordance with the portion ofpremiums written that relates to subsequent financial years.Life insurance provisionsLife insurance provisions are computed for each insurancepolicy on the basis of a zero-coupon yield curve. The computationof life insurance provisions is based on assumptions ofexpected future mortality and disability rates. based on historicaldata derived from the existing portfolio of insurancecontracts. including an allowance for risk. The risk allowancehas been determined using a margin on mortality intensity.Special allotments for the financial year are recognised in lifeinsurance provisions as they arise.Life insurance provisions are divided into guaranteed benefits.bonus potential of future premiums and bonus potentialof paid-up policy benefits.Guaranteed benefits comprise obligations to pay guaranteedbenefits to policyholders. Guaranteed benefits are calculatedas the present value of the current guaranteed benefits plusthe present value of expected future administrative expensesless the present value of future premiums. The guaranteedbenefits are calculated without taking into account any futureconversion of the policies into paid-up policies and policyholders’surrender of their plans.The bonus potential of future premiums comprises obligationsto pay a bonus over time in relation to premiums agreedbut not yet due. For the portfolio of insurance policies withbonus entitlement. the bonus potential of future premiums iscalculated as the difference between the value of the guaranteedpaid-up policy benefits and the value of guaranteed benefits.Guaranteed paid-up policy benefits comprise obligationsto pay benefits guaranteed under the insurance if the policy isconverted into a paid-up policy. Guaranteed benefits underpaid-up policies are calculated as the present value of theguaranteed benefits under paid-up policies plus the presentvalue of expected future expenses for the administration ofthe policies.The bonus potential of paid-up policies includes obligations topay bonuses in relation to premiums already due less claimsand benefits paid. etc.The bonus potential of paid-up policies is calculated as thevalue of the policyholders’ savings less the guaranteed benefits.the bonus potential of future premiums and the presentvalue of future administrative results. The bonus potential ofeach insurance policy cannot be negative.The bonus potential of paid-up policies can be applied tocover losses when the collective bonus potential has beenused up. If bonus potential of paid-up policies is reduced tosuch an extent that the provision for each insurance policy islower than the guaranteed surrender value. the guaranteedbenefits for the policy are increased to reduce the likelihoodof surrenders.Sub-portfoliosIn 2002. Danica’s life insurance companies merged. DanicaPension being the continuing company. At the time of themerger. Danica Liv & Pension’s bonus rate was higher thanthose of the other portfolios. To ensure that the customers ofthe former Danica Liv & Pension were not placed at a disadvantageafter the merger. these customers were subsequentlygrouped in a separate sub-portfolio. At the end of 2010. thesub-portfolio of the former Danica Liv & Pension was mergedwith the company’s remaining portfolio. In that connection.customers of the former Danica Liv & Pension received anadditional bonus. As a result of the merger. the two subportfoliosare no longer disclosed separately in the notes to thefinancial statements.Outstanding claims provisionsThe outstanding claims provisions are an estimate of expectedpayments of benefits and benefits due but not yet paid out. Asregards claims under health and accident insurance policieswhere benefits are paid out successively. the liability is calculatedas the present value of expected future payments. includingcosts to settle claims obligations.Collective bonus potentialProvisions for collective bonus potential comprise the policyholders’share of the technical basis for risk allowance forinsurance policies with bonus entitlement. which has not yetbeen allocated to individual policyholders.Transfers between assets allocated to customer funds andassets attributable to shareholders’ equity are made at fairvalue. The difference between fair value and carrying amountin relation to transferred assets is recognised in the collectivebonus potential. with set-off directly against equity.Provisions for bonus and premium discountsProvisions for bonus and premium discounts compriseamounts payable to the policyholders as a result of a favourableclaims experience for this or previous years.Provisions for unit-linked contractsProvisions for unit-linked contracts are measured at fairvalue on the basis of the share of each contract of the unittrusts in question and the guarantees entered into. Forpolicies with guaranteed benefits. the value of the guaranteedbenefits and paid-up benefits is calculated on the basis of themethods reported to the Danish FSA.Deferred taxDeferred tax is calculated in accordance with the balancesheet liability method on all temporary differences betweenthe tax base of the assets and liabilities and their carryingamounts. Deferred tax is recognised in the balance sheetunder Deferred tax assets and Deferred tax liabilities on thebasis of current tax rates.Tax assets arising from unused tax losses and unused taxcredits are recognised as deferred tax assets to the extentthat it is probable that the unused tax losses and unused taxcredits can be utilised.CreditorsDerivatives are measured at fair value. Derivatives withnegative fair values are recognised under Other creditors.Other creditors are measured at amortised cost. whichusually corresponds to the nominal value.Subordinated loan capitalSubordinated loan capital is subordinated debt. comprisingissued bonds. In the event of the company’s voluntary orcompulsory winding-up. subordinated loan capital will not berepaid until after the claims of ordinary creditors have beenmet.DANICA PENSION – ANNUAL REPORT 2010 31/80

Notes – Danica Pension GroupNoteSubordinated loan capital is measured at amortised costplus the fair value of the hedged interest rate risk. see thesection Hedge accounting.Shareholders’ equityForeign currency translation reserveThe foreign currency translation reserve covers differencesarising on the translation of the financial results ofand net investments in non-Danish entities from their functionalcurrencies to Danish kroner. It also includes exchangerate adjustments of financial liabilities classified ashedges of net investments in foreign units.Contingency fundIn accordance with the articles of association, the contingencyfund may be used to strengthen technical provisionsor to otherwise benefit policyholders. Allocations to thefund were made before Danica Pension became liable totaxation.Revaluation reserveThe revaluation reserve comprises fair value adjustmentsof domicile property less accumulated depreciation. Theportion of the revaluation attributable to insurance andinvestment contracts with bonus entitlement is transferredto collective bonus potential.Proposed dividendsThe Board of Directors’ proposal for dividends for the yearsubmitted to the general meeting is included as a separatereserve in shareholders’ equity. The dividends are recognisedas a liability after the general meeting has adoptedthe proposal.Cash flow statementThe group prepares its cash flow statement according tothe indirect method. The statement is based on the profitfor the year before tax and shows the consolidated cashflows from operating. investing and financing activities andthe increase or decrease in cash and cash equivalents duringthe year.Cash and cash equivalents consist of Cash and Depositswith credit institutions.Key ratiosThe key ratios of the group have been prepared in accordancewith the provisions of the Executive Order on financialreports presented by insurance companies and lateralpension funds. The return ratios are calculated using acomposite weighting procedure.surement of financial instruments and derecognition. whilethe next phases will address impairment. hedge accountingand offsetting of financial assets and liabilities.The EU has decided to postpone adoption of IFRS 9 until thedetails of the remaining phases are known.The transitional provisions in IFRS 9 (phase 1) imply implementationof the standard by 1 January 2013. A postponementof the implementation deadline is currently underconsideration, however.Under IFRS 9. financial assets are classified on the basis ofthe business model adopted for managing the assets andtheir contractual cash flow characteristics. including anyembedded derivatives (unlike IAS 39. IFRS 9 no longer requiresseparate recognition). Assets held with the objectiveof collecting contractual cash flows and where the cash flowsrepresent principal and interest are measured at amortisedcost. Other assets are measured at fair value through profitor loss. The fair value of equities may always be adjustedthrough comprehensive income. however. and. satisfyingcertain requirements. a business may opt for fair valueadjustment of its loans. advances. etc.The principles applicable to financial liabilities are largelyunchanged relative to IAS 39. Generally. financial liabilitiesshould still be measured at amortised cost and with separaterecognition of embedded derivatives not closely related to ahost contract. Financial liabilities to be measured at fair valuecomprise derivatives. the trading portfolio and liabilitiesdesignated at fair value through profit or loss. However. theportion of the value adjustment of financial liabilities designatedat fair value relating to the inherent credit risk of suchliabilities should be recognised under other comprehensiveincome unless this leads to an accounting mismatch.The principles for derecognition stated in IFRS 9 are a continuationof the existing principles of IAS 39.The group does not expect IFRS 9 to materially affect themeasurement of its financial instruments. Under IFRS 9. bondportfolios are measured at amortised cost or at fair valuethrough profit or loss. Meaningful classification and measurementof financial instruments is not possible withoutinformation about the future content of IFRS 9 to clarify theoverall accounting effects of the standard and the time ofimplementation.Standards and interpretations not yet in forceThe International Accounting Standards Board (IASB) hasissued a number of amendments to international accountingstandards which have not yet come into force. Similarly.the International Financial Reporting Interpretations Committee(IFRIC) has issued a number of interpretations whichhave not yet come into force. None of these are expected tomaterially affect the future financial reporting of the group.The paragraphs below list the standards and interpretationsthat are likely to affect the group’s financial reporting.In October 2010. the IASB issued IFRS 9. Financial Instruments.This version of the standard is the first step to replacethe requirements of IAS 39 in 2011. After implementationof phase 1. IFRS 9 deals with classification and mea-32/80 DANICA PENSION – ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions)2010 20093 BUSINESS SEGMENTSThe groups business segments are based on differences in products. The segment Traditionel covers traditional life insuranceand pension plans with guaranteed benefits and Forenede Gruppeliv, while the Unit-linked contract segment covers market returnpension plans. The Health and accident segment covers health and accident insurance.Health andUnit-link accidentReclassificationBUSINESS SEGMENTS 2010Traditionel contracts insuranceTotalGroupGross premiums7,472 16,879 1,055 25,406 -1,637 23,769- Gross premiums from inter-segment sales- -1,637 - -1,637 1,637 0Gross premiums from external sales7,472 15,242 1,055 23,769 0 23,769- Gross premiums on investment contracts- -5,778 - -5,778 - -5,778Gross premiums in the income statement7,472 9,464 1,055 17,991 0 17,991Return on investment allocated to technical result 9,195 5,342 - 14,537 279 14,816Claims and benefits paid -14,901 -1,814 -869 -17,584 - -17,584Change in provisions for insurance and investmentcontracts -142 -12,467 -29 -12,638 -57 -12,695Total operating expenses relating to insurance-609 -534 -133 -1,276 - -1,276Result of reinsurance143 -12 -23 108 - 108Other income, net- 347 - 347 -134 213Technical result1,158 326 1 1,485 88 1,573Change in shadow account584 - - 584 -584 0Special allotment-641 - - -641 641 0Return on investment, shareholders' equity489 - - 489 69 558Return on investment, health and accident - - 214 214 -214 0Profit before tax1,590 326 215 2,131 0 2,131Other segment informationInterest incomeInterest expenses5,839 36 186 6,061-259 -4 -5 -268Income from associated undertakings at book value 20 - - 20Impairment, depreciation and amorisation charges-2 -11 - -13Other non-cash operating items4,524 -7,245 122 -2,599The Danica Pension Group has no single customers generating 10% or more of the combined revenue.BUSINESS SEGMENTS 2009Gross premiums8,685 11,009 1,066 20,760 -686 20,074- Gross premiums from inter-segment sales-33 -653 - -686 686 0Gross premiums from external sales8,652 10,356 1,066 20,074 0 20,074- Gross premiums on investment contracts- -3,279 - -3,279 - -3,279Gross premiums in the income statement8,652 7,077 1,066 16,795 0 16,795Return on investment allocated to technical result 10,263 7,676 - 17,939 389 18,328Claims and benefits paidChangesinprovisionsforinsuranceandinsurance and-14,397 -728 -811 -15,936 - -15,936investment contracts -2,828 -13,563 -230 -16,621 447 -16,174Total operating expenses relating to insuranceResult of reinsuranceOther income , net-62655--512-22224-1458--1,28341224---69-1,28341155Technical resultChange in shadow accountSpecial allotmentReturn on investment, shareholders' equityReturn on investment, health and accident1,119 152 -112 1,159 767 1,926573 - - 573 -573 0-40 - - -40 40 0709 131 - 840 183 1,023- - 417 417 -417 0Profit before tax2,361 283 305 2,949 0 2,949Other segment informationInterest incomeInterest expenses6,251 87 368 6,706-325 -5 -6 -336Income from associated undertakings at book value -43 - - -43Impairment, depreciation and amorisation charges-4 -11 - -15Other non-cash operating items4,418 -6,430 -104 -2,116The Danica Pension Group has no single customers generating 10% or more of the combined revenue.DANICA PENSION GROUP - ANNUAL REPORT 2010 33/80

Notes - Danica Pension GroupNote (DKK millions) 2010 20093(cont'd)GEOGRAPHICAL SEGMENTSPremium income from external customers are allocated to the country in which the contract was sold.Assets comprise only intangible assets, tangible assets, investment property and holdings in associated undertakingsin accordance with IFRS and do not provide a useful description of the groups assets for management purposes.Goodwill is allocated to the country in which activities are performed, whereas other assets are allocated on the basis of their location.DenmarkSwedenNorwayIrelandPremiums, external customersAssets2010 2009 2010 200916,540 16,243 21,491 20,7595,791 3,111 - -1,383 595 97 9255 125 8 19Total23,769 20,074074 21,596 20,8704 GROSS PREMIUMS, incl. payments received under investment contractsDirect insurance:Regular premiumsSingle premiumsTotal direct insurance13,105 13,4679,609 5,54122,714 19,008Total gross premiums 22,714 19,008In the above gross premiums, premiums paid on investment contractswhich are not included in the income statement constitute:Regular premiumsSingle premiumsTotal premiums paidTotal gross premiums included in the income statementPremiums, direct insurance, broken down by insurance arrangement:Insurance taken out in connection with employmentInsurance taken out individuallyGroup life insuranceTotalNumber of insured, direct insurance (1,000):Insurance taken out in connection with employmentInsurance taken out individuallyGroup life insurance648 6695,130 2,6105,778 3,27916,936 15,72915,761 13,8015,273 3,5151,680 1,69222,714 19,008344 313458 479672 720Premiums, direct insurance, broken down by bonus arrangement:With profits insurance7,472 8,620Without profits insurance185 179Unit-linked insurance15,057 10,209TotalPremiums, direct insurance, broken down by policyholders' residence:DenmarkOther EU countriesOther countries22,714 19,00815,104 14,7926,146 3,5521,464 664Total 22,714 19,00834/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 20095 INCOME FROM INVESTMENT PROPERTIESRentOperating expenses1,309 1,273-398 -243Total 911 1,030Operating expenses on unoccupied premises was DKr53m in 2010 (DKr29m in 2009).Investment property leases are accounted for as operating leases.Some of the leases are non-terminable by the lessee for a number of years.Breakdown of minimum lease payments on non-terminable leases by lease term:Within 1 year1-5 yearsAfter 5 years817 764930 772413 285Total 2,160 1,8216 INTEREST INCOME AND DIVIDENDSInterest incomeDividendsIndexationTotal6,061 6,7061,076 1,153445 6467,582 8,5057 MARKET VALUE ADJUSTMENTSHoldingsUnit trusts certificatesBondsOther loansDeposits with credit institutionsCash in hand and demand depositsOther3,265 3,0648,098 12,6121,260 2,92655 -38148 --1 --2,696 -4,976Market value adjustments of financial assets and liabilities at fair value through profit or loss 10,129 13,588Investment properties-419 -209Total market value adjustments9,710 13,3793798 CLAIMS AND BENEFITS PAIDDirect insurance:Insurance amounts on deathInsurance amounts on disablementInsurance amounts on expiryRetirement benefits and annuitiesSurrender valuesCash payments of bonusesTotal direct insuranceExpenses to minimise disablementTotal claims and benefits paid-817 -816-270 -301-1,488 -2,403-7,103 -7,023-6,050 -3,587-984 -992-16,712 -15,122-3 -3-16,715 -15,125DANICA PENSION GROUP - ANNUAL REPORT 2010 35/80

Notes - Danica Pension GroupNote (DKK millions) 2010 20099 OPERATING EXPENSES RELATING TO INSURANCECommission on direct insuranceOperating lease payments on premises, cars, etc. amount toIT development costs amount toHereof capitalised in Danica Pension group, see note 14 to the financial statementsAudit feesTotal fees:KPMGGrant ThorntonIncluding fees for non-audit services:KPMGGrant ThorntonAverage number of full-time-equivalent employees during the yearNumber of full-time-equivalent employees, end of yearStaff costs:SalariesEmployee sharesPensionsSocial security and taxOtherTotal staff costs-228 -188-48 -47-185 -1731 5-2.0 -2.4-0.9 -1.2-0.3 -0.3-0.1 -898 954888 928-462 -515- -3-87 -91-32 -65-51 -51-632 -725All the groups pension plans are defined contribution plans under which the group makes contributionsto insurance companies, principally i Danica. Such payments are expensed as incurred.Pension plansContributions to external defined contribution plansContributions to internal defined contribution plansTotalBoard of Directors' remuneration (DKr'000)Peter StraarupSven LystbækTonny Thierry AndersenJakob BrogaardThomas FalckGitte JensenIb KatznelsonPer SøgaardErik SevaldsenTotal remuneration-16 -12-71 -79-87 -91-240 -240-180 -180-120 -120-120 -120-120 -120-120 -120-120 -120-120 -120-120 -120-1,260 -1,26036/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 20099(cont'd)Remuneration of the Executive Board 2010Salary **PensionsTotalHenrik *JørgenJesperRamlau-Hansen Klejnstrup Winkelmann-4.2 -3.5 -3.0 -10.7-0.7 -0.4 -0.5 -1.6-4.9 -3.9 -3.5 -12.3Remuneration of the Executive Board 2009HenrikRamlau-HansenJørgenKlejnstrupJesperWinkelmannSalary a -4.1 -3.4 -3.0 30-10.5Pensions-0.7 -0.4 -0.5 -1.6Total* Henrik Ramlau-Hansen resigned at 31.12.2010** The increase relates to replacement of company car.-4.8 -3.8 -3.5-12.1PensionsThe members of the Executive Board are entitled to retire at three months notice from the year in which they attainthe age of 60 and will in that connection receive an amount equivalent to 12 months salary. Pension plans are funded.TerminationJesper Winkelmann may resign his position at three months' notice.Jørgen Klejnstrup may resign his position at six months' notice.During the period until 1 January 2013, Jørgen Klejnstrup will be allowed to resign his position on the same terms as thoseapplying in case of termination by Danica Pension.Danica Pension may terminate the service contracts of the Executive Board members at eight months' notice - twelve months' notice for JørgenKlejnstrup - in which case the Executive Board members are entitled to a severance payment equivalent to 24 months' salary.The severance payment is reduced from the year when the Executive Board member attains 23 years' pension seniorityuntil it is the equivalent of 12 months' salary. Pension contributions paid before the age of 35 are not included in the calculation of seniority.Share-based paymentThe Executive Board and senior managers are covered by the incentive plan offered by Danske Bank Group until 2008. The planconsisted of share options and conditional shares. Incentive payments reflected individual performances and also depended on financialresults and other measures of value creation. The options and shares were granted in the first quarter of the following year, most recentlyin the first quarter of 2008.Issued share options carry a right to buy Danske Bank shares exercisable from three to seven years after they are granted providedthat the employee has not resigned from the group. The exercise price of the options is computed as the average price of Danske Bankshares for 20 stock exchange days after the release of the annual report plus 10%.Rights to buy Danske Bank shares under the conditional share programme were until 2008 granted as a portion of the annualbonus earned.The shares vest after three years provided that the employee has not resigned from the group.The fair value of the share options at the grant date is determined based on a dividend-adjusted Black & Scholes model. The grantin 2008 was based on the following assumptions. Share price 179.76. Dividend payout ratio: 3.9%. Rate of interest: 4.7%, equalto the swap rate. Volatility: 19%. Average time of exercise 5 years. The volatility is estimated on the basis of historical volatility.The fair value at 31 December 2010 was based on the following assumptions: Share price: 143 (2009: 118). Dividend payout ratio: 1.5%(2009: 0%). Interest rate 1.2-1.8% (2009: 1.6-2.7%), equal to the swap rate. Volatility: 35% (2009: 52%). The averagetime of exercise 1-2 years (2009: 1-3 years). The volatility is estimated on the basis of historical volatility.The fair value of the conditional shares at the grant date is calculated as the share price less the payment made by the employees.Intrinsic value is recognised in the year the share options and rights to conditional shares vest, while time value is accured over theremaining service period, which is the vesting period of three years.Danica has hedged its equity price risk.DANICA PENSION GROUP - ANNUAL REPORT 2010 37/80

Notes - Danica Pension GroupNote (DKK millions) 2010 20099(cont'd)Share-based payment 2010Share options -changes during the yearGranted in 2004-2007,beginning of yearGranted in 2004-2007, end of yearNumberExecutive Other Exercise Fair value (FV)Board employees Total price (DKK) Issue date End of year209,296 - 209,296 204.47 3.9 1.8209,296 0 209,296 204.47 3.91.8Granted in 2008, beginning of year 48,200 - 48,200 197.74 1.5 0.3Granted in 2008, end of year 48,200 0 48,200 197.74 1.50.3Executive Board members' holdings, end of yearYear of grant 2004-2007 2008 2009 2010Henrik Ramlau-HansenJørgen KlejnstrupJesper WinkelmannNo share options were granted or exercised in 2010.Number FV Number FV Number FV Number FV123,388 0.5 18,190 0.3 - -- -6,200 0.0 16,370 0.2 - - - -79,708 0.2 13,640 0.2 - -- -NumberConditional shares -changes during the yearGranted in 2007, beginning of yearExercisedExecutive Other Fair value (FV)Board employees Total Issue date End of year3,411 5,060 8,471 2.3 1.2-3,411 -5,060 -8,471 - -Granted in 2007, end of year0 0 0 0.00.0Granted in 2008, beginning of year 5,960 10,130 16,090 2.9 2.3Forfeited-282 -282 -0.1 01 0.0 00Granted in 2008, end of year5,960 9,848 15,808 2.82.3Executive Board members' holdings, end of yearYear of grant 2008 2009 2010Number FV Number FV Number FVHenrik Ramlau-Hansen2,249 0.3 - - - -Jørgen Klejnstrup2,024 0.3 - - - -Jesper Winkelmann 1,687 0.2 - - - -In 2010, a total of 8,471 conditional shares were exercised at an average price of 127.05.38/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 20099(cont'd)Share-based payment 2009NumberShare options - changes during the yearGranted in 2002-2006,beginning of yearForfeitedExecutive Other Exercise Fair value (FV)Board employees Total price (DKK) Issue dateEnd of year189,396 - 189,396 186.95 3.3 1.8-10,000 - -10,000 186.95 -0.3 -Granted in 2002-2006, end of year179,396 0 179,396 186.95 3.01.8Granted in 2007, beginning of year 29,900 - 29,900 244.57 0.9 0.3Granted in 2007, end of year 29,900 0 29,900 244.57 0.90.3Granted in 2008, beginning of yearGranted in 2008, end of year48,200 20,510 68,710 194.74 1.5 1.948,200 20,510 68,710 194.74 1.51.9Executive Board members' holdings, end of yearYear of grant 2004-2006 2007 2008 2009Number FV Number FV Number FV Number FVHenrik Ramlau-Hansen93,788 0 25,000 0 14,600 0 18,190 0Jørgen Klejnstrup- - - - 6,200 0 16,370 0Jesper Winkelmann54,008 0 16,600 0 9,100 0 13,640 0No share options were exercised in 2009.NumberConditional shares -changes during the yearExecutiveBoardOtheremployees TotalFair value (FV)Issue date End of yearGranted in 2006, beginning of year 3,124 4,572 7,696 1.7 0.9Exercised -3,124 -4,572 -7,696 - -Granted in 2006, end of year0 0 0 0.00.0Granted in 2007, beginning of yearExercised3,411 5,231 8,642 2.3 1.0- -171 -171 - -Granted in 2007, end of year3,411 5,060 8,471 2.31.0Granted in 2008, beginning of yearExercised5,960 10,328 16,288 2.9 1.9- -198 -198 - -Granted in 2008, end of year 5,960 10,130 16,090 2.91.9Executive Board members' holdings, end of yearYear of grant 2007 2008 2009Henrik Ramlau-HansenJørgen KlejnstrupJesper WinkelmannIn 2009, a total of 8,065 conditional shares were exercised at an average price of 37.73.Number FV Number FV Number FV1,663 0.2 2,249 0.3 - -709 0.1 2,024 0.2 - -1,039 0.1 1,687 0.2 - -DANICA PENSION GROUP - ANNUAL REPORT 2010 39/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200910 TECHNICAL RESULT OF HEALTH AND ACCIDENT INSURANCETotal run-off regarding prior years:GrossNet of reinsurance111 17105 11Calculation of technical interest and return on investment:Technical interest amountOutstanding claims provision, discounted amountDiscounted risk increasing with ageTechnical interest, net of reinsurance, less discounted amountReturn on investment transferred to health and accident insuranceMarket value adjustments of outstanding claims provisionTotal return on investment incl. market value adjustmentsTransferred to technical interestReturn on investmentNumber of claimsAverage amount of claims234 255-196 -127-22 -2016 108448 585-16 -21432 564-234 -255198 3091,7460.5Gross premiums, direct insurance, broken down by policyholders' residence:Denmark990 1,017Other EU countries24 26Other countries64 61Total1,078 1,10411 OTHER INCOMECommission from fund managersOther213 155- 5Total 213 16040/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200912 PROFIT BEFORE TAXDanica Pensions technical basis for risk allowance is to be allocated in accordance with the Executive Order on theContribution Principle.In accordance with the Executive Order on the Contribution Principle and the Guidelines on Market Discipline, the Danish FSAhas been notified of Danica Pensions consolidation policy for 2010. The companys profit for the year consists of the return on assetsallocated to shareholders equity, including the results of unit-linked business, Denmark and the three foreign subsidiaries,the risk result of Forenede Gruppeliv, the health and accident result and a risk allowance of the technical provisions.To the extent that the Executive Order on the Contribution Principle does not permit the company to recognise full riskallowance, the amount may be booked over the coming years if justified by the technical basis for risk allowance.For this purpose, a shadow account is set up. The shadow account accrues interest at the rate that applies to bondsallocated to shareholders equity.The calculation of technical basis for risk allowance only comprises policies under contribution, and individual itemstherefore cannot be reconciled to the groups income statement.Technical basis for risk allowanceTechnical result, life insurance1,086 1,625Transferred return on investment, excl. tax on group undertakingsTax on pension returnsChange in collective bonus potentialSpecial allotmentsBonus potential of paid-up policies usedAddition of bonus4361,187-1,106641-5001,5411,9321,291402,800-2,092Total technical basis for risk allowanceReturn on investment allocated to shareholders' equity and health and accident insuranceTotal technical basis for risk allowance relating to life insurance customers2,744 7,137-436 -1,4732,308 5,664In accordance with the contribution principle, the risk allowance may be booked for 2010.Additionally, the remainder of the shadow account was booked in 2010,Specification of risk allowance:Percentage of insurance provisionsTotal risk allowance1,126 1,0871,126 1,087The percentage of insurance provisions was 0.64%Development in shadow accountShadow account, beginning of yearAdded interestUsed/set asideShadow account, end of year573 1,08811 58-584 -5730 573DANICA PENSION GROUP - ANNUAL REPORT 2010 41/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200913 TAXTax for the year can be broken down as follows:Tax on the profit for the yearTax on other comprehensive incomeForeign unit hedges-4686-71010TotalTax on the profit for the year is calculated as follows:Current taxAdjustment of prior-year current taxAdjustment of prior-year deferred taxOther changes in deferred taxTotalEffective tax rateDanish tax rateAdjustment of prior-year tax chargeNon-taxable income and non-deductible expensesEffective tax rateAllocation of deferred tax on main itemsTangible assetsInvestment propertiesFinancial investment assetsTax loss carry-forwardOtherTotal-462 -700-439 -287-7 -197-19 233-3 -459-468 -710-25.0 -25.0-1.0 1.28.2 -0.3-17.8 -24.12 621,177 1,029- 67-4 -5-1 -11,174 1,152Other than the deferred tax provided for, the group has no contingent tax liability relating to shares ingroup undertakings.14 INTANGIBLE ASSETSCost, beginning of year231 196Exchange rate adjustment13 30Additions and improvements during the year1 5Cost, end of yearImpairment and amortisation charges, beginning of yearDepreciation charges during the yearImpairment and amortisation charges, end of yearCarrying amount, end of year245 231-14 -4-12 -10-26 -14219 217Intangible assets mainly consist of goodwill on acquisition of Norwegian activities in 2007.Amortisation during the year is recognised under administrative expenses in the income statement and are included in the segment Unit-linked contract.15 OPERATING EQUIPMENTCost, beginning of yearDisposals during the yearTransferred to other items during the yearCost, end of year18 22-6 -4-7 -5 18Impairment and depreciation charges, beginning of yearExchange rate adjustment-14-1 -13-Depreciation charges during the year-2 -4Reversals during the year of prior-year impairment charges and reversal of totaldepreciation and impairment charges on assets sold or retired during the year12 3Impairment and depreciation charges, end of yearCarrying amount, end of year-5 -140 442/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200916 DOMICILE PROPERTYCost, beginning of yearCost, end of year48 4848 48Depreciation charges, beginning g of year -2 -1Depreciation charges for the year0 -1Depreciation charges, end of year-2 -2Revalued amount, beginning of yearRevaluation for the yearRevalued amount, end of yearCarrying amount, end of year14 70 714 1460 60Of revaluations for the year, DKK 0 million was taken to the revaluation reserve in equity and DKK 0 million wastransferred to the collective bonus potential.17 INVESTMENT PROPERTIESFair value, beginning of yearProperty improvement expenditureDisposalsFair value adjustmentsFair value, end of yearThe weighted average of the rates of return on whichthe fair value of the individual properties is based for:Shopping centresCommercial propertiesResidential propertiesReal property consolidated on a pro rata basis is included with the following amounts in:Investment propertiesTotal assetsOther creditorsTotal investment return19,552 19,1621,172 633-10 -19-424 -22420,290 19,5526.0% 6.2%6.3% 6.5%4.9% 4.9%2,067 2,1932,114 2,22169 706 123DANICA PENSION GROUP - ANNUAL REPORT 2010 43/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200918 HOLDINGS IN ASSOCIATED UNDERTAKINGSCost, beginning of yearAdditions673 675-2Cost, end of year 673 673Revaluations and impairment charges, beginning of yearShare of profitDividendsRevaluations and impairment charges, end of yearCarrying amount, end of year363 42120 -43-29 -15354 3631,027 1,036Holdings in associated undertakings consist of:Name and domicileOwnershipTotalActivity % assets Liabilities Income ResultHovedbanegårdens Komplementarselskab Investment companyApS, Copenhagen 50% 0 0 0 0EjendomsSelskabet af Januar 2002 A/S,Property companyCopenhagen 50% 846 315 3032Privathospitalet Hamlet af 1994 A/S,HospitalFrederiksberg 35% 487 297 419-6DNP Ejendomme Komplementarselskab ApS, Investment companyCopenhagen 50% 0 0 00DNP Ejendomme P/S, Copenhagen Property company 50% 1,130 130 21 91 22Dantop Ejendomme ApS, Copenhagen Property company 50% 281 6 912DAN-SEB I A/S, Copenhagen Property company 50% 73 49 2 -1The information disclosed is extracted from the companies' most recent annual reports.Holdings in associated undertakings are included in the segment Traditionel.19 HOLDINGSListed holdings14,212 13,813Unlisted holdings3,253 2,140Total17,465 15,95320 BONDSListed bonds139,002 142,152Total 139,002 142,15244/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200921 DERIVATIVESThe group uses derivatives, including forward contracts and swaps, to manage its exposure to currency, interest rateand equity market risk. Derivatives are also used to hedge guaranteed benefits and other interest-bearing liabilities.For more details, see the section "Risk management and investment strategy" in the note 36 to the financial statements.Derivatives are recognised and measured at fair value in the financial statements.Interest on the group's issued subordinated debt is added at a fixed rate. Subordinated debt is recognised at amortisedcost in the financial statements. In accordance with general accounting standards, the fair value of the interest rate risk onfixed-rate loans is not included in the income statement, whereas changes in the fair value of hedging derivativesare included in the income statement. In the financial statements, the group applies fair value hedge accounting when the interestrate risk on fixed-rate financial liabilities is hedged by means of derivatives (see note 29 to the financial statements).Collateral agreements have been entered into in respect of some of the derivatives. In connection with these, the group hasreceived collateral in the form of liquid bonds in an amount corresponding to a fair value of DKK 864 million in 2010and DKK 2,138 million in 2009.2010Currency contractsInterest rate contractsEquity contractsTotal derivativesNotionalPositive fairNotionalNegativeamountvalue amount fair value4,679 32 38,846 32039,484 1,302 60,003 2,5510 0 0 044,163 1,334 98,849 2,8712009Currency contracts20,870 32 15,487 383Interest rate contracts61,826 2,052 2,530 15Equity contracts0 7 0 0Total derivatives82,696 2,091 18,017 39822 FINANCIAL INVESTMENT ASSETSComprises the following investments in undertakings in the Danske Bank Group:HoldingsBondsDeposits with credit institutionsCash in hand and demand depositsOther216 18226,381 29,714384 198729 47518 5023 UNIT-LINKED INVESTMENT ASSETSConsists of unit trusts in which the underlying assets break down as follows:WithguaranteeWithoutguaranteeHoldings3,553 39,022 42,575 28,543Bonds7,096 15,532 22,628 16,376Deposits with credit institutions31 1,027 1,058 1,518TotalUnit-linked investments break down as follows:Insurance contractsInvestment contractsTotal10,680 55,581 66,261 46,43743,869 31,56222,392 14,87566,261 46,437DANICA PENSION GROUP - ANNUAL REPORT 2010 45/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200924 PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTS, REINSURERS' SHAREBeginning of yearPremiums receivedClaims and benefits paidAdded interest on policyholders' savingsFair value adjustmentForeign currency translationChange in outstanding claims provisionOther changesEnd of year1,948 1,918141 137-110 -13240 2594 20-15 -951 -22-107 112,042 1,94825 OUTSTANDING CLAIMS PROVISIONGross life insuranceGross health and accident insurance4736,8013536,735Outstanding claims provision7,274 7,08826 PROVISIONS FOR UNIT-LINKED CONTRACTSProvisions for unit-linked contracts break down as follows:Insurance contractsInvestment contractsTotal provisions for unit-linked contracts43,913 32,58922,397 15,03466,310 47,623Provisions for unit-linked contracts without guarantee 56,406 40,014Provisions for unit-linked contracts with investment guarantee9,904 7,609Total provisions for unit-linked contractsTotal provisions for guaranteed unit-linked contracts include:Guaranteed benefitsGuaranteed paid-up policies66,310 47,6234,735 3,0576,894 5,09527 PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTSBeginning of year236,817 217,489Payments received16,936 15,729Claims and benefits paid-16,715 -15,125Added interest on policyholders' savings11,285 11,390Fair value adjustment3,103 5,033Currency translation2,163 827Change in outstanding claims provisions94 215Change in collective bonus potential-1,035 1,297Other changes2,255 -38End of year254,903 236,817For a more detailed description of methods calculation methods used for provisions, see note 2, Significant accounting policies.For an explanation of the development in collective bonus potential, see the section in the managements report on p. xx.28 OTHER CREDITORSOther creditors comprise:Derivatives with negative fair valuesTax on pension returnsStaff commitments2,871 3982,041 -95 8946/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200929 SUBORDINATED LOAN CAPITALSubordinated loan capital consists of loans which, in the event of the company's voluntary or compulsory windingup, will not be repaid until after the claims of ordinary creditors have been met. Subordinated loan capital is includedin the capital base, etc. in accordance with sections 126, 132 and 136 of the Danish Financial Business Act.Currency Borrower Note Danica Pension a)Redemp-InteresttionPrincipal rate Issued Maturity price400 4.35 2006 perpetual 100 2,9822,976Subordinated loan capitalDiscountHedging of interest rate risk at fair value2,982 2,976-3 -662 115Total 3,041 3,085The capital base includes2,966 2,961a) The loan was raised on 6 October 2006, and is quoted on the Irish Stock Exchange. The loan can be redeemed from October2011. If the loan is not redeemed, the interest will be 2.08 percentage points above 3-month EURIBOR.Interest for 2010 amounted to DKK 43 million.In the above table, the subordinated loan capital is stated at amortised cost plus the fair value of thehedged interest rate risk.30 ASSETS DEPOSITED AS SECURITY AND CONTINGENT LIABILITIESAt the end of the year, assets were provided as security for policyholders' savings at a total carrying amount ofMortgages have been issued as security for the technical liabilities in a total amount ofAs collateral for derivative transactions, the group has delivered bonds equal to a total fair value ofThe group has undertaken contractual obligations to purchase, construct, convertor extend investment properties or to repair, maintain or improve these at an amount of269,237 250,41475 1,5191,593 -363 936The group has undertaken to participate in investment in unlisted shares with an amount of 3,699 2,782The group is voluntarily registered for VAT on certain properties. The group's VAT adjustment liabilityamounts toIn certain cases, Danica Pension is liable to pay compensation to policyholders who have transferredtheir pension plan to Danica Pension. The total amount of compensation cannot exceedAs a participant in partnerships, the group is liable for a total debt ofAmount of this included in the group's balance sheet655 57645 4593 9469 70The Danish group companies are registered jointly for financial services employer tax and for VAT forfor which they are jointly and severally liable.Danica Pension is jointly and severally liable with the other participants for the insurance obligations concerningall the policies administered by Forenede Gruppeliv A/S.Owing to its size and business volume, the Danica Pension Group is continually a party tovarious lawsuits. The Danica Pension Group does not expect the outcomes of the casespending, to have any material effect on its financial position.DANICA PENSION GROUP - ANNUAL REPORT 2010 47/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200931 RELATED PARTIESForsikringsselskabet Danica A/S, domiciled in Copenhagen, wholly owns the share capitalof Danica Pension and consequently exercises control over the Danica Pension Group. As theultimate parent company, Forsikringsselskabet Danicas parent company, Danske Bank A/Salso exercises control over the Danica Pension Group.Transactions with management cover remuneration only. The amounts are disclosed in note 9.Transactions with related parties are settled on an arm's-length or a cost reimbursement basis.The group's IT operations and development, internal audit, HR administration, logistics, marketingand the like are handled by Danske Bank.The Danica Pension Group entered into the following significant transactions and balances with othercompanies in the Danske Bank Group. For more information, see note 22 to the financial statements.IT developmentIT operationsOther administrationProvision for insurance sales and portfolio managementOrdinary portfolio management feePerformance fee for portfolio managementTotal net custody fees and brokerage for trades in holdings and the likeInterest incomeInterest expensesRent from premisesAmounts owed to group undertakingsOwed to credit institutions-161 -166-121 -114-35 -36-141 -133-101 -122-132 0-41 -181,579 2,055-81 -12612 7162 168715 670Furthermore, the Danica Pension Group manages the employer pension plans of the Danske BankGroup and its related parties.Loans to associated undertakings comprise subordinated loans granted on equal terms as other investors.The Danica Pension Groups transactions with the jointly controlled operations in ForenedeGruppeliv consists in recognition i of premiums.32 BALANCE SHEET ITEMS BROKEN DOWN BY EXPECTED DUE DATEAssets2010 2009< 1 year > 1 year < 1 year > 1 yearIntangible assetsTangible assetsInvestment assets8- 9,951951 21160 201,873 114 9,014 20660198,419Unit-linked investments- 66,261 - 46,437Debtors3,770 - 4,069 -Other assets524 - 517 -Prepayments and accrued income2,838 - 2,845 -Total assetsLiabilities17,091 268,405 16,460 245,122Provisions for insurance and investment contracts23,648 231,255 18,591 218,226Other liabilities 4,804 6,766 3,180 4,237Total liabilities 28,452 238,021 21,771 222,46348/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200933 SPECIFICATION OF ASSETS AND RETURNSLand and buildings:Land and buildings, owned directlyProperty companiesTotal land and buildings% return p.a.before taxon pensionInvest- returnsBegn. of year End of year ment, net & corp.tax19,552 20,290 1,157 2.5967 970 -30 3.520,519 21,260 1,127 2.5Other holdings:Listed Danish holdings2,199 1,596 -1,059 34.4Unlisted Danish holdings844 693 -304 19.1Listed foreign holdings12,825 14,557 221 15.4Unlisted foreign holdings1,332 2,800 1,163163 15.8Total other holdings17,200 19,646 21 17.0Bonds:Government bonds (Zone A) *21,356 39,244 17,870Mortgage bonds *94,270 73,402 -22,058Foreign exchange hedging-127 -8 548Government bonds (Zone A) and mortgage bonds including foreign exchange hedging 115,499 112,638 -3,640 4.6Index-linked bonds26,687 23,610 -4,406 7.3Credit bonds, investment grade10,699 12,515 1,463 5.5Credit bonds, non-investment grade and emerging market bonds12,304 18,807 4,967 12.2Other bonds406 651 390 12.6Total bondsOther financial investment assetsDerivative financial instruments to hedge net changes of assets and liabilities165,595 168,221 -1,226 5.91,592 818 -851 0.92,029 -1,165 2,122 -* Rate of return before foreign exchange hedge for Government bonds (Zone A) was 9.2% and for Mortgage bonds was 4.8%.A specification of the companys holdings is available on Danicas website: www.danicapension.dk.34 PERCENTAGE ALLOCATION OF SHARE PORTFOLIOS ON INDUSTRIES AND REGIONS 2010DenmarkRest ofEuropeNorthAmericaSouthAmericaEnergy0.0 2.7 4.3 0.4 0.1 0.9 0.5 8.9Materials0.3 2.7 2.7 0.0 0.6 0.3 0.8 7.4Industrials2.6 2.6 3.0 0.1 1.3 0.5 0.1 10.2Consumer discretionary0.5 2.2 3.2 0.3 1.4 0.3 1.0 8.9Consumer staples0.7 2.5 3.8 0.2 0.2 0.2 0.8 8.4Health care2.8 2.1 3.2 0.0 0.3 0.1 0.2 8.7Financials79 7.9 92 9.2 96 9.6 01 0.1 09 0.9 16 1.6 19 1.931.2Information technology0.0 0.8 0.9 0.0 0.2 0.1 0.0 2.0Telecommunications0.3 1.1 1.9 0.0 0.2 0.6 0.3 4.4Utilities0.1 0.6 6.2 0.0 0.6 1.1 0.3 8.9Non allocated0.5 0.2 0.0 0.0 0.0 0.1 0.2 1.0JapanRest ofAsia/PacificOthercountriesTotalTotal15.7 26.7 38.8 1.1 5.8 5.8 6.1 100.0DANICA PENSION GROUP - ANNUAL REPORT 2010 49/80

Notes - Danica Pension GroupNote (DKK millions) 2010 200935 FINANCIAL INSTRUMENTSFinancial instruments, classification and valuation methodFair valueAmortised cost*Held forFair value2010 trading Designated hedge Debtors LiabilitiesTotalFinancial investment assets 1,334 188,183 - 818 - 190,335Unit-linked investments - 66,261 - - - 66,261Debtors- - - 369 - 369Cash and cash equivalents- - - 444 - 444Total financial assets1,334 254,444 - 1,631 - 257,409Provisions for unit-linked contracts - 22,397 - - - 22,397Due to credit institutions- - - - 812 812Derivatives2,871 - - - - 2,871Subordinated loan capital- - 62 - 2,979 3,041Other liabilities- - - - 980 980Total financial liabilities2,871 22,397 62 - 4,771 30,1012009Financial investment assets 2,090 183,064 - 1,521 - 186,675Unit-linked investments - 46,437 - - - 46,437Debtors- - - 583 - 583Cash and cash equivalents- - - 501 - 501Total financial assets2,090 229,501 - 2,605 - 234,196Provisions for unit-linked contracts - 15,034 - - - 15,034Due to credit institutions- - - - 670 670Derivatives398 - - - - 398Subordinated loan capital- - 115 - 2,970 3,085Other liabilities - - - - 1,119 1,119Total financial liabilities398 15,034 115 - 4,759 20,306* The fair value of subordinated loan capital amounted to DKK 2,883 million in 2010 and DKK 2,783 million in 2009. For other itemsmeasured at amoritised cost, fair value equals amortised cost.Recognition as income:Interest income from debtors at amortised costs are recognised as income at DKK 92 million in 2010 and DKK 181 million in 2009.Interest expense from creditors at amortised costs are recognised as expenses at DKK 153 million in 2010 and DKK 272 million in 2009.The remainder of return on investment, included in the income statement items interest income and dividends, etc.,interest expenses and market value adjustments relate to financial instruments at fair value.Exchange rate adjustment t of debtors and liabilities measured at amortised cost are recognised in the income statement t t undermarket value adjustments of investments as an expense of DKK 5 million in 2010 and as income of DKK 4 million in 2009.50/80 DANICA PENSION GROUP - ANNUAL REPORT 2010

Notes - Danica Pension GroupNote (DKK millions) 2010 200935(cont'd)Financial instruments at fair valueThe fair value is the amount for which a financial asset could be exchanged between knowledgeable, willing parties. If an active marketexists, the market price is applied. If an active market does not exist, which is the case for a number of financial assets and liabilities, adiscounted cash flow or generally accepted estimation and valuation techniques based on market conditions at the balance sheet dateare used to calculate an estimated value.Non-Quoted Observable observable2010 prices input input TotalFinancial investment assetsUnit-linked investments180,861 3,932 4,724 189,51766,261 - - 66,261Total financial assets 247,122 3,932 4,724 255,778DerivativesTotal financial liabilities2,547 324 - 2,8712,547 324 - 2,8712009Financial investment assets169,487 11,510 4,157 185,154Unit-linked investments 46,437 - - 46,437Total financial assets215,924 11,510 4,157 231,591DerivativesTotal financial liabilities15 383 - 39815 383 - 398At 31 December 2010, financial instruments measured on the basis of non-observable input comprised unlisted sharesDKK 3,253 million and illiquid bonds DKK 1,471 million.Valuation based on non-observable observable input2010 2009Fair value, beginning of yearFair value through profit or lossPurchaseSale and redemptionTransferred from quoted prices and observable inputTransferred to quoted prices and observable input4,157 1,734566 -401,366 579-720 -146- 2,030-645 -Fair value, end of period4,724 4,157Transfers to non-observable input were principally due to a large portfolio of bonds, the latest quoted prices of which are not deemed to reflecttheir year-end values.In 2010, unrealised market value adjustments were recognised at DKK 184 million (2009: a negativeDKK 122 million) on financial instruments valued based on non-observable input.Assuming a widening of the credit spread by 50 bps, the fair value would be reduced by DKK 28 million. A narrowing of the creditspread by 50 bps would cause the fair value to be increased by DKK 28 million.DANICA PENSION GROUP - ANNUAL REPORT 2010 51/80

Notes – Danica Pension GroupNote36 RISK MANAGEMENT AND SENSITIVITY RATIOSRISK MANAGEMENTThe Board of Directors defines Danica Pension Group’s riskmanagement framework. while the daily management monitorsDanica’s risks and ensures compliance with the framework.Danica is exposed to a number of different risks.Financial risksMarketLiquidityCounterpartyConcentrationInsurance risksLongevityMortalityDisabilityConcentrationOperational risksITLegalAdministrativeFraudBusiness risksReputationStrategicFinancial risksFinancial risks comprise market risks. liquidity risk. counterpartyrisk and concentration risk. Market risk is the risk of losses due to1changes in the fair value of Danica’s assets and liabilities due tochanging market conditions. such as changes in interest rates. equityprices. property values. exchange rates and credit spreads. Liquidityrisk is the risk of losses as a result of a need to liquidatetied-up cash to pay liabilities within a short timeframe. Counterpartyrisk is the risk of losses because counterparties default ontheir obligations. Concentration risk is the risk of losses as a resultof high exposure to a few asset classes. industries. issuers. etc.In Danica. there are three sources of financial risk:• Investments relating to conventional products• Investments relating to market products• Direct investments of shareholders’ equityThe amount of financial risk differs for the various products inDanica’s product range. A list of the Danica Pension Group’s companiesand activities is shown on page 75.The most significant financial risk of the Danica Pension Group isthe market risk relating to Danica Pension’s traditional life insuranceproducts.Investments relating to conventional productsDanica’s conventional product is policies with guaranteed benefitsand collective investments.The market risk of traditional products consists of the relationshipbetween investment assets and guaranteed benefits.If the return on investment of customer funds for the year inDanica Pension is inadequate to cover customers’ returns and thenecessary strengthening of life insurance obligations etc.. the deficitis covered first by the collective bonus potential and then by thebonus potential of paid-up policies. If the bonus potentials are insufficientto cover losses. the assets attributable to shareholders’ equityare used.Market risks are monitored and limits have been set for the risk foreach class of asset. Stress tests are conducted on a regular basisto support Danica Pension’s ability to withstand a 20% drop in aweighted combination of equities and credit exposure concurrentwith significant changes in interest rates.The risk related to asset/liability management. i.e. the relationshipbetween investment assets and guaranteed benefits. is reduced byensuring that the interest rate sensitivity of the bond portfolio isappropriate and by hedging interest rate risk by means of derivatives.Foreign exchange risks are insignificant as they are limited bymeans of derivatives.Liquidity risks are limited by placing a major portion of investmentsin liquid listed bonds and foreign listed equities. Liquidityrisk is limited as it is possible to adjust the timing of payments inconnection with surrenders and internal transfers to the situationin the financial markets.The credit spread risk in relation to Danica Pension’s bond portfoliois moderate as 67% of the bond portfolio at December 31.2010 consists of government and mortgage bonds with highcredit ratings (AA – AAA) with the international credit ratingagencies and 11% of the portfolio is invested in non-investmentgrade bonds. The counterparty risk is reduced by demanding securityfor derivatives and high credit ratings for reinsurancecounterparties.Concentration risk is limited by investing with great portfolio diversificationand by limiting the number of investments in a singleissuer. For mortgage bonds. the issuer is not consideredcritical to the concentration risk. as the individual borrower providescollateral for issued mortgage bonds.Investments relating to market productsFor investments in the market products. Danica Link and DanicaBalance. the policyholders bear the financial risks involved. exceptfor policies to which an investment guarantee is attached.At the end of 2010. 15% of policyholders had an investmentguarantee within the guarantee period. The guarantee does notapply until the policyholder retires and is paid for by the policyholderby way of an annual fee.The risk associated with the Danica Link guarantee is covered bymeans of derivatives and adjustment of the policyholder’s investmentportfolio over the five years prior to retirement. Therisk associated with the Danica Balance guarantee is managedmainly by means of regular adjustment of the individual policyholder’sinvestment portfolio over the ten years prior to retirement.The investment portfolio is adjusted to the guaranteeamount. the investment horizon. etc. As a result of the chosenrisk management strategy. the market risk relating to guaranteesin market products is considered to be limited.Direct investments of shareholders’ equityShareholders’ equity is subject to financial risk on the investmentof assets allocated to shareholders’ equity and on investmentsrelating to the health and accident business.The Board of Directors has defined a separate investment strategyfor assets allocated to shareholders’ equity while investmentsrelating to the health and accident business in all materialrespects follow the investment of customer funds in Danica Traditionel.Insurance risksInsurance risks relate to the development in mortality. disability.critical illness etc. For example. a rise in life expectancyincreases the time during which pensions are payableunder certain pension products while the development in thenumber of deaths. cases of sick leave and subsequent recoveriesaffect the benefits paid under insurance policies cover-52/80 DANICA PENSION – ANNUAL REPORT 2010

Notes – Danica Pension GroupNoteing death and disability. The main insurance risk is life expectancy.In respect of insurance risk. concentration risk comprises therisk of losses as a result of high exposure to a few customergroups and high exposure to a few individuals. Concentrationrisk is limited by means of risk diversification of the insuranceportfolio and by reinsurance.To limit losses on individual life insurance policies with high riskexposure. a minor portion of the risks relating to death and disabilityis reinsured.The various risk elements are subjected to ongoing actuarialassessment for the purpose of calculating insurance obligationsand making any necessary business adjustments.Operational risksOperational risks relate to the risk of losses resulting from ITsystem errors. legal disputes. inadequate or faulty proceduresand fraud. Danica limits operational risks by establishing internalcontrols that are regularly updated and adjusted to Danica’scurrent business volume. Another measure taken is segregationof duties.A few customers have brought actions against Danica. claimingthat the expense loading should not be included in the calculationof the bonus on paid-up policies. current policies and premium-payingpolicies. This has been industry practice for anumber of years. and in Danica’s opinion is in accordance withthe existing terms for the policies in question. On 28 August2008. the Western Division of the Danish High Court deliveredits judgment in the case. ruling in favour of Danica. The claimanthas appealed to the Supreme Court of Denmark.Business risksBusiness risks comprise strategic risks. reputational risks andother risks relating to external factors.Danica closely monitors the development on the markets whereDanica operates in order to ensure the competitiveness ofprices and customer service. Danica is committed to treatingcustomers fairly and communicating openly and transparently.Danica subjects it business units to systematic assessmentsto reduce the risk of financial losses due to damage to itsreputation.Sensitivity informationThe below table discloses. for the Danica Pension group. theeffect on shareholders’ equity and on collective bonus potentialand the bonus potential of paid-up policies of isolatedchanges in interest rates (increases and decreases)andother relevant financial risks as well as changes in the mortalityand disability rates.A 10% decline in the mortality rate. corresponding to an increasein life expectancy of about one year. would increase liabilitiesby DKK 1.5 billion. and shareholders’ equity wouldnot be affected.Of the two interest rate scenarios. an interest rate increasewould be the worse for the Danica Pension Group. A scenariowith an increase in interest rates of 0.7 of a percentage pointconcurrent with the rest of the financial sensitivity ratios definedin the Danish FSA’s red traffic light scenario would reducethe collective bonus potential by DKK 1.7 billion. reducethe bonus potential of paid-up policies by DKK 0.8 billion andreduce shareholders’ equity by DKK 0.6 billion. Going forward.interest rate increases will be advantageous to Danica.however. as it would be easier to cover the guaranteed benefits.The risk exposure was relatively stable during the year. althoughthe proportion of credit bonds was increased duringthe year and the proportion of government and mortgagebonds etc. was reduced.Except for credit spreads. the financial sensitivities in the tablebelow are defined in the Danish FSA’s red traffic lightscenario. A company is considered to be in the red light scenarioif its capital is insufficient to cover the solvency requirementless 3% of life insurance provisions under the redlight scenario. If a company is in the red light scenario. theDanish FSA will become involved in the financial managementof the company.The Danica group has been in the green light scenario sincethe FSA’s traffic light scenario was introduced in 2001.SENSITIVITY RATIOS 2010Minimum effecton capital baseMaximumeffect oncollectivebonus potentialMaximum effecton bonus potentialof paid-up policiesbefore change inMaximum effectof drawn bonuspotential ofpaid-up policiesdrawn bonuspotential of paidup(DKr m)policiesInterest rate increase of 0.7 of a percentage point -0.3 -0.4 4.1 0.0Interest rate fall of 0.7 of a percentage point 0.4 -0.1 -4.1 0.0Share price fall of 12% -0.2 -1.7 0.0 -0.1Fall in property prices of 8% -0.2 -1.2 0.0 -0.0Foreign exchange risk (VaR 99.0%) 0.0 -0.3 0.0 0.0Loss on counterparties of 8% -0.2 -1.7 0.0 -0.6Rise in credit spread of 1.0 percentage point 0.0 -1.2 0.0 0.0Fall in mortality rate of 10% 0.0 -1.5 -0.1 0.0Rise in mortality rate of 10% 0.0 1.4 0.1 0.0Rise in disability rate of 10% 0.0 -0.1 0.0 0.0DANICA PENSION – ANNUAL REPORT 2010 53/80

Financial statements - contentsINCOME STATEMENT 55BALANCE SHEET 56STATEMENT OF CAPITAL 58NOTES1 Significant accounting policies 602 Gross premiums, incl. payments received under investment contracts 613 Market value adjustments 614 Tax on pension returns 615 Claims and benefits paid 626 Change in life insurance provisions, gross 627 Change in provisions for unit-linked contracts 648 Operating expenses relating to insurance 659 Technical result of health and accident insurance 6610 Other income 6611 Profit before tax 6712 Tax 6813 Tangible assets 6814 Investment properties 6815 Holdings in associated undertakings 6916 Other financial investment assets 6917 Unit-linked investments 6918 Shareholders' equity 6919 Subordinated loan capital 6920 Outstanding claims provision 6921 Provisions for unit-linked contracts 7022 Creditors 7023 Contingent liabilities 7024 Intra-group transactions 7025 Specification of assets and return 7126 Percentage allocation of share portfolios on industries and regions 7127 Financial highlights 7228 Risk expousure and sensitivity ratios 7354/80 DANICA PENSION - ANNUAL REPORT 2010

Income statement - Danica PensionNote (DKK millions)2010 20092 Gross premiumsReinsurance premiums cededTotal premiums, net of reinsuranceIncome from group undertakingsIncome from associated undertakingsIncome from investment propertiesInterest income and dividends, etc.3 Market value adjustments of investmentsInterest expensesAdministrative expenses related to investment activitiesTotal investment return4 Tax on pension returns15,211 14,684-20 -2515,191 14,659539 779-13 -215 906,907 7,8939,304 11,327-252 -312-333 -15616,157 19,600-1,920 -2,826Return on investment after tax on pension returns14,237 16,7745 Claims and benefits paidReinsurers' share receivedChange in outstanding claims provisionTotal claims and benefits, net of reinsurance6 Change in life insurance provisionsChange in reinsurers' share-16,519 -14,997103 91-152 -24-16,568 -14,930-1,087 -39357 -32Total change in life insurance provisions, net of reinsurance-1,030 -425Change in collective bonus potentialTotal bonus7 Change in provisions for unit-linked contractsChange in reinsurers' shareTotal change in provisions for unit-linked contracts, net of reinsurance1,035 -1,3021,035 -1,302-9,933 -10,8251 --9,932 -10,825Acquisition costs-178 -245Administrative expenses-725 -721Reimbursement of costs from group undertakings50 538 Total operating expenses relating to insurance, net of reinsuranceTransferred investment returnTECHNICAL RESULT9 TECHNICAL RESULT OF HEALTH AND ACCIDENT INSURANCEReturn on investment allocated to equityOther income11 PROFIT BEFORE TAX12 Tax-853 -913-978 -1,5901,102 1,448198 298533 1,008273 1802,106 2,934-443 -695NET PROFIT FOR THE YEAR 1,663 2,239DANICA PENSION - ANNUAL REPORT 2010 55/80

Balance sheet - Danica PensionAssetsNote (DKK millions)2010 2009INTANGIBLE ASSETS13 TANGIBLE ASSETS211 1980 214 Investment properties 307 1,848Holdings in group undertakings20,520 18,503Loans to group undertakings83 7215 Holdings in associated undertakings57 69Total investments in group and associated undertakings20,660 18,644HoldingsUnit trust certificates16,89634,26915,04526,139Bonds136,208 141,188Other loans67 -Deposits with credit institutions705 1,413Other1,328 2,09016 Total other financial investment assetsTOTAL INVESTMENT ASSETS17 UNIT-LINKED INVESTMENTSUnearned premiums provision, reinsurers' shareLife insurance provisions, reinsurers' shareOutstanding claims provision, reinsurers' shareProvisions for unit-linked contracts, reinsurers' shareTotal technical provisions, reinsurers' shareAmounts due from policyholdersAmounts due from insurance companiesAmounts due from group undertakingsAmounts due from associated undertakingsOther debtorsTOTAL DEBTORS189,473 185,875210,440 206,36744,658 32,9703 21,790 1,733164 1201 -1,958 1,855271 5281,035 971734 5682164024,214 4,324Current tax assets78 15Cash and cash equivalents56 258TOTAL OTHER ASSETSAccrued interest and rentOther prepayments and accrued incomeTOTAL PREPAYMENTS AND ACCRUED INCOME134 2732,359 2,393412 4122,771 2,805TOTAL ASSETS 262,428 246,93956/80 DANICA PENSION - ANNUAL REPORT 2010

Balance sheet - Danica PensionLiabilities and equityNote (DKK millions)2010 2009Share capitalContingency fund1,100 1,1001,499 1,499Retained earnings 16,424 14,74918 TOTAL SHAREHOLDERS' EQUITY19 SUBORDINATED LOAN CAPITAL19,023 17,3483,041 3,085Unearned premiums provisionGuaranteed benefitsBonus potential of future premiumsBonus potential of paid-up policies741 822156,922 148,35910,436 15,66510,965 14,1606 Total life insurance provisions178,323 178,18420 Outstanding claims provision7,217 6,923Collective bonus potential1,740 2,775Provisions for bonuses and premium discounts97 10521 Provisions for unit-linked contracts44,661 34,112TOTAL PROVISIONS FOR INSURANCE AND INVESTMENT CONTRACTS12 Deferred taxTOTAL PROVISIONS FOR LIABILITIES232,779 222,9211,177 1,1561,177 1,156Amounts owed, direct insurance143 140Amounts owed to reinsurers2 7Amounts owed to credit institutions715 670Amounts owed to group undertakings40 35Current tax liabilities- 222Other creditors5,330 1,01722 TOTAL CREDITORSACCRUALS AND DEFERRED INCOME6,230 2,091178 338TOTAL LIABILITIES AND EQUITY 262,428 246,939DANICA PENSION - ANNUAL REPORT 2010 57/80

Statement of capital - Danica Pension(DKK millions)Changes in shareholders' equityShare Contingency Retainedcapital fund earnings TotalShareholders' equity at 31 December 20091,100 1,499 14,749 17,348Translation of foreign unitsForeign unit hedgesTax on entries on shareholders' equity- - 30 30- - -24 -24- - 6 6Net gains not recognised in the income statementNet profit for the yearTotal income- - 12 12- - 1,663 1,663- - 1,675 1,675Shareholders' equity at 31 December 2010 1,100 1,499 16,424 19,023Shareholders' equity at 31 December 2008Translation of foreign unitsForeign unit hedgesTax on entries on shareholders' equityNet gains not recognised in the income statementNet profit for the year1,100 1,499 12,486 15,085- - 54 54- - -40 -40- - 10 10- - 24 24- - 2,239 2,239Total income- - 2,263 2,263Shareholders' equity at 31 December 20091,100 1,499 14,749 17,348Danica Pension has an obligation to allocate part of the excess equity to certain policyholders of Statsanstalten for Livsforsikring (now part of Danica Pension)if the percentage by which the equity exceeds the required capital base is higher than the percentage that had been maintained by Statsanstalten forLivsforsikring prior to the privatisation of this company in 1990. In addition, it is the intention not to distribute dividends for a period of at least 25 yearsfrom 1990. Paid-up capital and interest accrued thereon may, however, be distributed.See also Contribution and profit policy in the Management's report.58/80 DANICA PENSION - ANNUAL REPORT 2010

Statement of capital - Danica Pension(DKK millions)2010 2009Solvency requirement and capital baseShareholders' equity19,023 17,348Proportionate share of capital base of insurance subsidiaries671 599- Value of proportionate share -683 -636Core capital- Intangible assets- Proportionate share of capital requirement of insurance subsidiariesReduced core capitalSupplementary capital- Limitations to supplementary capitalReduced supplementary capitalCapital baseSolvency requirement for life insuranceSolvency requirement for health and accident insuranceTotal solvency requirement19,011 17,311-211 -198-131 -12018,669 16,9933,041 3,085-75 -1242,966 2,96121,635 19,9547,482 7,304295 2957,777 7,599Excess capital base 13,858 12,355DANICA PENSION - ANNUAL REPORT 2010 59/80

Notes – Danica PensionNote1ACCOUNTING POLICIESThe financial statements of the Parent Company. DanicaPension are presented in accordance with the provisions ofthe Danish Financial Business Act. including the DanishFSA’s Executive Order No. 1310 of 16 December 2008 onfinancial reports presented by insurance companies and lateralpension funds. The disclosure requirement on the effectof changed discount rate in section 95 and section 125(2)has been omitted on early implementation of this statementof the executive order No. 16 of 13 January 2011.These rules are identical to the group’s measurement underIFRS. See the description of significant accounting policies innote 2 to the consolidated financial statements.Holdings in group undertakingsHoldings in group undertakings are measured in accordancewith the equity method. and the profit/loss after taxin subsidiaries is charged to the item Income from groupundertakings.Holdings in group undertakings include Danica Pension.which is a life insurance company and the parent companyof a life insurance group.Key ratiosThe ratios of the Parent Company are prepared in accordancewith the provisions of the executive order on financialreports presented by insurance companies and lateralpension funds. The return ratios are calculated using acomposite weighting procedure.MergerAt 1 January 2010, Danica Pension merged with Danica PensionI and Danica Liv III, with Danica Pension as the continuingcompany.Pursuant to section 143(3) of the Danish FSA’s Executive Orderon financial reports presented by insurance companiesand lateral pension funds, the financial statements are presentedin such a way that comparative figures comprise theformer Danica Pension I and Danica Liv III, using the pooling ofinterests method.All comparative figures, including those included in the financialhighlights for 2006-2009, have been restated to reflectthe merger, apart from the below elements.Following the merger, the risk result for insurance contractsin the former Danica Pension I is allocated to the collectivebonus potential rather than, as previously, to shareholders’equity. This change has not been incorporated retrospectivelyin the comparative figures. The risk result amounted to DKK10 million in 2009.Also, the merger has caused changes to the allocation of assetsand, consequently, the investment return on assets allocatedto shareholders’ equity, and these changes have notbeen incorporated retrospectively in the comparative figures.As a result, following the merger, additional funds correspondingto the value of the equity in Danica Pension I have beencontributed. Prior to the merger, the result of Danica PensionI was recognised as an allocated asset.60/80 DANICA PENSION – ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions)2010 20092 GROSS PREMIUMS, incl. payments received under investment contractsDirect insurance:Regular premiumsSingle premiums11,493 12,3014,108 2,942Total direct insurance15,601 15,243Total gross premiumsPremiums, direct insurance, broken down by insurance arrangement:Insurance taken out in connection with employmentInsurance taken out individuallyGroup life insuranceTotalNumber of insured, direct insurance (1,000):Insurance taken out in connection with employmentInsurance taken out individuallyGroup life insurancePremiums, direct insurance, broken down by bonus arrangement:With profit insuranceUnit-linked insuranceTotalPremiums, direct insurance, broken down by policyholders' residence:DenmarkOther EU countriesOther countriesTotal15,601 15,24312,467 12,0921,454 1,4591,680 1,69215,601 15,243235 241381 388669 7207,472 8,6218,129 6,62215,601 15,24315,104 14,793312 327185 12315,601 15,243In the above gross premiums, premiums paid on investment contractswhich are not included in the income statement constitute:Regular preimums118 376Single premiums 272 183Total premiums paid390 5593 MARKET VALUE ADJUSTMENTSInvestment propertiesHoldingsUnit trust certificatesBondsOther loansDeposits with credit institutionsOtherTotal market value adjustments12 -412,891 2,5867,271 10,5321,251 2,88554 -39147 --2,322 -4,5969,304 11,3274 TAX ON PENSION RETURNSExemption fraction7.1% 6.1%DANICA PENSION - ANNUAL REPORT 2010 61/80

Notes - Danica PensionNote (DKK millions) 2010 20095 CLAIMS AND BENEFITS PAIDDirect insurance:Insurance amounts on deathInsurance amounts on disablementInsurance amounts on expiryRetirement benefits and annuitiesSurrender valuesCash payments of bonusesTotal direct insuranceExpenses to minimise disablementTotal claims and benefits paid-781 -792-231 -259-1,488 -2,403-7,096 -7,019-5,937 -3,529-984 -992-16,517 -14,994-2 -3-16,519 -14,9976 CHANGE IN LIFE INSURANCE PROVISIONS, GROSSProvisions, beginning of yearAccumulated value adjustment, beginning of year178,184184 177,731731-13,342 -9,486Retrospective provisions, beginning of year164,842 168,245Changes during the period:Gross premiums7,472 8,626Interest added5,727 3,584Claims and benefits-15,049 -15,099Expense supplement after addition of expense bonus-594 -636Risk gain after addition of risk bonus-74 -36Special allotments641 40Other-123 58Total changesOther changes:Transfer of provisionsChange in quota share, Forenede GruppelivTotal other changesRetrospective provisions, end of yearAccumulated value adjustment, end of yearLife insurance provisions, end of yearChange in gross life insurance provisions consists of:Change in retrospective provisionsChange in accumulated value adjustmentChange in gross life insurance provisionsChange in gross life insurance provisions consists of:Change in guaranteed benefitsChange in bonus potential of future premiumsChange in bonus potential of paid-up policiesChange in gross life insurance provisions-2,000 -3,463-879 118-69 -58-948 60161,894 164,84216,429 13,342178,323 178,184-2,000 -3,4633,087 3,8561,087 3939,511 5,146-5,229 -1,527-3,195 -3,2261,087 393Increase in provisions because the bonus potential of future premiums andpaid-up policies must be positive for each policy:Bonus potential of future premiums164 72Bonus potential of paid-up policies 14,258 11,04962/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions)6(cont'd)Life insurance provisions break down as follows by sub-portfolio2010Guaranteed benefitsBonus potential of future premiumsBonus potential of paid-up policiesTotal life insurance provisionsOriginal interest rate in %Withoutguarantee 0 1.5 2.5 4.5 6 - 20 Total1,600 644 33,371 16,767 99,273 5,267 156,9228,510 1,072 855 - 10,4373,202 4,090 3,672 - 10,9641,600 644 45,083 21,929 103,800 5,267 178,3232009Sub-portfolio I - Danica Liv & Pension:Guaranteed benefitsBonus potential of future premiumsBonus potential of paid-up policiesTotal life insurance provisionsSub-portfolio II - Danica Pension, other:Guaranteed benefitsBonus potential of future premiumsBonus potential of paid-up policiesOriginal interest rate in %Withoutguarantee 0 1.5 2.5 4.5 6 - 20 Total6 - 5,745 12 6,773 60 12,596- - 786 - 29 0 815- - 640 1 163 0 8046 - 7,171 13 6,965 60 14,2151,524 839 19,691 16,024 91,877 5,750 135,705- - 12,206206 1,528 1117 1,117 - 14,851- - 5,166 4,852 3,324 - 13,342Total life insurance provisions 1,524 839 37,063 22,404 96,318 5,750 163,898DANICA PENSION - ANNUAL REPORT 2010 63/80

Notes - Danica PensionNote (DKK millions) 2010 20097 CHANGE IN PROVISIONS FOR UNIT-LINKED CONTRACTSProvisions, beginning of yearAccumulated value adjustment, beginning of yearRetrospective provisions, beginning g of yearChanges during the year:Gross premiumsInterest addedClaims and benefitsExpense supplementRisk gainOtherTotal changesOther changes:Payments received under investment tcontractstPayments made under investment contractsTransfer of provisionsOtherTotal other changesRetrospective provisions, end of yearAccumulated value adjustment, end of yearProvisions, end of yearChange in provisions for unit-linked contracts breaks down as follows:Change in retrospective provisionsChange in accumulated value adjustmentChange in provisions for unit-linked contractsProvisions for unit-linked contracts break downs as follows:Insurance contractsInvestment contracts34,112 23,030-135 -10933,977 22,9217,739 6,7124,060 4,973-1,617 -575-242 -212- -9-37 -909,903 10,799390 559-865 -3471,206 45-115616 25744,496 33,977165 13544,661 34,1129,903 10,79930 269,933 10,82539,607 29,6625,054 4,450Provisions for unit-linked contracts, end of year 44,661 34,11264/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions) 2010 20098 OPERATING EXPENSES RELATING TO INSURANCECommission on direct insuranceAudit fees:Total fees:KPMGGrant ThorntonAverage number of full-time-equivalent employees during the yearNumber of full-time-equivalent employees, end of yearStaff costs:SalariesPensionsOther social security and taxOtherTotal staff costs-121 -128-0.8 08 -1.1 11-0.9 -1.1762 825745 799-386 -454-80 -83-14 -49-42 -44-522 -630Board of Directors' remuneration (DKK'000)Peter StraarupSven LystbækTonny Thierry AndersenJakob BrogaardThomas FalckGitte JensenIb KatznelsonPer SøgaardErik Sevaldsen-240 -240-180 -180-120 -120-120 -120-120 -120-120 -120-120 -120-120 -120Erik Sevaldsen -120 -120Total remuneration-1,260 -1,260For information on remuneration of the Executive Board and share-based payment, see note 9 in the Danica Pension groups financial statements.DANICA PENSION - ANNUAL REPORT 2010 65/80

Notes - Danica PensionNote (DKK millions) 2010 20099 TECHNICAL RESULT OF HEALTH AND ACCIDENT INSURANCEGross premiumsReinsurance premiums cededChange in unearned premiums provisionChange in unearned premiums provision, reinsurers' sharePremiums, net of reinsuranceTechnical interestClaims paid, grossReinsurers' share receivedChange in outstanding claims provisionChange in outstanding claims provision, reinsurers' share940 1,000-60 -5267 391948 98712 106-854 -8021 1956 -13644 23Claims, net of reinsurance -753 -896Bonus and premium discountsAcquisition costsAdministrative expensesReinsurance commissions and profit sharingTotal operating expenses relating to insurance, net of reinsuranceReturn on investmentTECHNICAL RESULT OF HEALTH AND ACCIDENT INSURANCETotal run-off regarding prior years:GrossNet of reinsuranceCalculation of technical interest and return on investment:Return on investment transferred to health and accident insuranceTechnical interest rate-91 -76-37 -45-83 -863-117 -131199 308198 298100 37100 7445 5823.10% 3.45%Technical interest amount230 253Outstanding claims provision, discounted amount-196 -127Discounted risk increasing with age-22 -20Technical interest, net of reinsurance, less discounted amountReturn on investment transferred to health and accident insuranceMarket value adjustments of outstanding claims provisionTotal return on investment incl. market value adjustmentsTransferred to technical interest12 106445 582-16 -21429 561-230 -253Return on investment 199 308Number of claimsAverage amount of claimsClaims frequencyGross premiums, direct insurance, broken down by policyholders' residence:DenmarkOther EU countriesOther countriesTotal1,3090.70.5%990 1,01712 145 81,007 1,03910 OTHER INCOMECommissions from fund managers 273 18066/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions) 2010 200911 PROFIT BEFORE TAXDanica Pensions technical basis for risk allowance is to be allocated in accordance with the Executive Order onthe Contribution Principle.In accordance with the Executive Order on the Contribution Principle and the Guidelines on Market Discipline, theDanish FSA has been notified of Danica Pensions consolidation policy for 2010. The companys profit for the year consistsof the return on assets allocated to shareholders equity, including the results of unit-linked business, Denmarkand the three foreign subsidiaries, the risk result of Forenede Gruppeliv, the health and accident result and arisk allowance of the technical provisions.To the extent that the Executive Order on the Contribution Principle does not permit the company to recognise fullrisk allowance, the amount may be booked over the coming years if justified by the technical basis for risk allowance.For this purpose, a shadow account is set up. The shadow account accrues interest at the rate that applies to bondsallocated to shareholders equity.The calculation of technical basis for risk allowance only comprises policies under contribution, and individual itemstherefore cannot be reconciled to the groups income statement.Technical basis for risk allowanceTechnical result, life insuranceTransferred return on investmentTax on pension returnsChange in collective bonus potentialSpecial allotmentsBonus potential of paid-up policies usedAddition of bonusTotal technical basis for risk allowanceReturn on investment allocated to shareholders' equity and health and accident insuranceTotal technical basis for risk allowance relating to life insurance customers1,086 1,625436 1,5411,187 1,932-1,035 1,302641 40- 2,800500 -2,0922,815 7,148-436 -1,4732,379 5,675In accordance with the contribution principle, the risk allowance may be booked for 2010.Additionally, the remainder of the shadow account regarding 2008 was booked in 2010.Specification of risk allowance:Percentage of insurance provisionsTotal risk allowance1,126 1,0871,126 1,087The percentage of insurance provisions was 0.64Development in shadow accountShadow account, beginning of yearAdded interestUsed/set asideShadow account, end of year573 1,08811 58-584 -5730 573DANICA PENSION - ANNUAL REPORT 2010 67/80

Notes - Danica PensionNote (DKK millions) 2010 200912 TAXTax for the year can be broken down as follows:Tax on the profit for the yearTax on changes in shareholders' equityTotalTax on the profit for the year is calculated as follows:Current taxAdjustment of prior-year current taxAdjustment of prior-year deferred taxOther changes in deferred taxTotal-443 -6956 10-437 -685-415 -269-7 3-19 33-2 -462-443 -695Effective tax rateDanish tax rate25.0 25.0Adjustment of prior-year tax charge0.9 -0.9Non-taxable income and non-deductible expenses-9.1 -6.4Effective tax rate16.8 17.7Deferred tax broken down on main items:Tangible assets2 61Investment properties1,177 1,029Other financial investment assets- 67Other -2 -1Total1,177 1,156Other than the deferred tax provided for, Danica Pension has no contingent tax liability at the end of 2010relating to shares in group undertakings.13 TANGIBLE ASSETSCost, beginning of yearDisposals during the year15 18-6 -3Cost, end of year 9 15Impairment and depreciation charges, beginning of yearDepreciation charges during the yearReversals during the year of prior-year impairment charges and reversal of totaldepreciation and impairment charges on assets sold or retired during the yearImpairment and depreciation charges, end of yearCarrying amount, end of year-13 -12-2 -46 3-9 -130 214 INVESTMENT PROPERTIESFair value, beginning of yearAcquisitions and improvements during the yearDisposals during the yearFair value adjustments for the yearFair value, end of year1,848 1,860- 57-1,547 -196 -50307 1,848The weighted average of the rates of return on whichthe fair value of the individual properties is based for:Shopping centres- 6.8%Commercial properties53% 5.3% 66% 6.6%Residential properties 4.5% 4.5%68/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions) 2010 200915 HOLDINGS IN ASSOCIATED UNDERTAKINGSHoldings in associated undertakings consist of:OwnershipName and domicile Activity % Result EquityPrivathospitalet Hamlet af 1994 A/S, Hospital 35% -6 190FrederiksbergThe information disclosed was extracted from the companies' most recent annual reports.16 OTHER FINANCIAL INVESTMENT ASSETSComprises the following investments in undertakings in the Danske Bank Group:HoldingsBondsDeposits with credit institutionsCash in hand and demand depositsOther117 18224,343 29,714272 12656 25579 5017 UNIT-LINKED INVESTMENTSConsists of unit trusts in which the underlying assets break down as follows:SharesBondsDeposits with credit institutionsTotalWithguaranteeWithoutguarantee3,040 22,175 25,215 17,9526,558 12,529 19,087 14,7553 353 356 2639,601 35,057 44,658 32,97018 SHAREHOLDERS' EQUITYNumber of shares of DKK 10011,000,000 11,000,00019 SUBORDINATED LOAN CAPITALSubordinated loan capital consists of loans which, in the event of the Company's voluntary or compulsory winding up, will not be repaiduntil after the claims of ordinary creditors have been met. Subordinated loan capital is included in the capital base, etc. in accordancewith sections 126, 132 and 136 of the Danish Financial Business Act.Redemp-InteresttionCurrencyNote Principal rate Issued Maturity price a)400 4.35 2006 perpetual 100 2,982 2,976Subordinated loan capital2,982 2,976Discount-3 -6Hedging of interest rate risk at fair value62 115Total, equalling fair value3,041 3,085The capital base includes2,966 2,961a) The loan was issued on 6 October 2006, and is quoted on the Irish Stock Exchange. The loan can be redeemed from October 2011.If the loan is not redeemed, the interest will be 2.08 percentage points above 3-month EURIBOR.The interest payable for 2010 amounted to DKK 43 million.In the above table, the subordinated loan capital is stated at amortised cost plus the fair value of the hedged interest rate risk.20 OUTSTANDING CLAIMS PROVISIONGross life insuranceGross health and accident insuranceTotal outstanding claims provision458 3216,759 6,6027,217 6,923DANICA PENSION - ANNUAL REPORT 2010 69/80

Notes - Danica PensionNote (DKK millions) 2010 200921 PROVISIONS FOR UNIT-LINKED CONTRACTSProvisions for unit-linked contracts without guaranteeProvisions for unit-linked contracts with investment guaranteeTotal provisions for unit-linked contractsProvisions for guaranteed unit-linked contracts include:Guaranteed benefitsGuaranteed paid-up policies34,901 26,6099,760 7,50344,661 34,1124,271 3,0576,360 5,09522 CREDITORSOther creditors comprise:Derivatives with negative fair valuesTax on pension returnsStaff commitments2,871 3982,041 -84 8823 CONTINGENT LIABILITIESAt the end of the year assets were earmarked as security for policyholders' savings.Mortgages have been issued as security for the technical liabilities in a total amount ofAs collateral for derivative transactions, the group has delivered bonds equal to a total fair value ofThe company has undertaken contractual obligations to purchase, construct, convert or extendinvestment properties or to repair, maintain or improve these at an amount ofThe company has undertaken to participate in investment in unlisted shares with an amount ofThe company is voluntarily registered for VAT on certain properties. The company's VAT adjustment liabilityamounts toIn certain cases, Danica Pension is liable to pay compensation to policyholders who have transferredtheir pension plan to Danica Pension. The total amount of compensation may not exceed251,931 238,23775 1,5191,593 -0 883,699 2,7820 3945 45The company is registered jointly with group undertakings for financial services emloyer taxand VAT, for which it is jointly and severally liable.Danica Pension is jointly and severally liable with the other participants for the insurance obligations concerningall the policies administered by Forenede Gruppeliv A/S.Owing to its size and business volume, Danica Pension is continually a party to various lawsuits. The Companydoes not expect the outcomes of the cases pending to have any material effect on the financial position.24 RELATED PARTIESForsikringsselskabet Danica, domiciled in Copenhagen, Denmark, wholly owns the share capital of Danica Pensionand thus exercises control.Danica Pension's IT operations and development, internal audit, HR administration, logistics, marketing and the like are handled byDanske Bank. These services are settled on an arm's-length or a cost reimbursement basis. In 2010, DKK 241 millionwas paid to Danske Bank for IT operations and development and DKK 39 million for other administrative services.In addition, the company paid DKK 102 million to the Danske Bank Group for its sale of insurance policies and for portfoliomanagement, corresponding to 3.5% of gross premiums from policies written through the Danske Bank Group.In addition, Danske Bank handles portfolio management and securities trading. In 2010, Danica Pension paid DKK 101 million for ordinaryportfolio management, corresponding to 0.06% of the investment assets under management, and DKK 132 million in performance fees.In addition, the company paid custody fees and brokerage for trades in shares and the like, totalling DKK 41 million net.The insurance companies in the Danica group are managed by Danica Pension, which settles expences with the companies managedon an arm's-length or a cost reimbursement basis.70/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions)25 SPECIFICATION OF ASSETS AND RETURN 2010Land and buildings:Land and buildings, owned directlyProperty companiesTotal land and buildings% return p.a.before taxon pensionInvest- returnsBeg. of year End of year ment, net & corp.tax1,848 307 -1,553 5.817,939 19,920 1,490 2.619,787 20,227 -63 2.6Other group subsidiariesOther holdings:Listed Danish holdings5642,1996001,596-11-1,05913.234.4Unlisted Danish holdings844 693 -304 19.1Listed foreign holdings13,156 14,524 -191 15.4Unlisted foreign holdings1,332 2,800 1,163 15.8Total other holdings17,531 19,613 -391 17.0Bonds:Government bonds (Zone A) *21,043 38,947 17,788Mortgage bonds *93,758 73,225 -21,699Foreign exchange hedging-127 -8 548Government bonds (Zone A) and mortgage bonds including foreign exchange hedging 114,674 112,164 -3,363 4.7Index-linked bonds 26,687 23,609 -4,406 7.3Credit bonds, investment gradeCredit bonds, non-investment grade and emerging market bondsOther bonds10,685 12,498 1,465 5.512,121 18,584 4,998 12.2406 651 390 12.6Total bondsOther financial investment assetsDerivative financial instruments to hedge net changes of assets and liabilities164,573 167,506 -916 5.91,484 788 -852 0.92,029 -1,165 -2,122 -* Rate of return before foreign exchange hedge for government bonds (Zone A) was 9.4% and for mortgage bonds was 4.8%.A specification of the company's holdings is available on Danica's Danish website, www.danicapension.dk.26 PERCENTAGE ALLOCATION OF SHARE PORTFOLIOS ON INDUSTRIES AND REGIONS 2010DenmarkRest ofEuropeNorthAmericaSouthAmericaEnergy0.0 2.7 4.3 0.4 0.1 0.9 0.5 8.9Materials0.3 2.7 2.7 0.0 0.6 0.3 0.8 7.4Industrials2.6 2.6 3.0 0.1 1.3 0.5 0.1 10.2Consumer discretionary0.5 2.2 3.2 0.3 1.3 0.3 1.0 8.8Consumer staples07 0.7 25 2.5 38 3.8 02 0.2 02 0.2 02 0.2 08 0.8 84 8.4Health care2.8 2.1 3.2 0.0 0.3 0.1 0.2 8.7Financials7.9 9.3 9.5 0.1 0.9 1.6 1.9 31.2Information technology0.0 0.8 0.9 0.0 0.2 0.1 0.0 2.0Telecommunications0.3 1.1 1.9 0.0 0.2 0.6 0.3 4.4Utilities0.1 0.6 6.3 0.0 0.6 1.1 0.3 9.0Non allocated0.5 0.2 0.0 0.0 0.0 0.1 0.2 1.0JapanRest ofAsia/PacificOthercountriesTotalTotal15.7 26.8 38.8 1.1 5.7 5.8 6.1 100.0DANICA PENSION - ANNUAL REPORT 2010 71/80

Notes - Danica PensionNote (DKK millions)27 FINANCIAL HIGHLIGHTS2010 2009 2008 2007 2006INCOME STATEMENTPremiums 15,211 14,684 16,898 15,076 14,366Return on investment after tax on pension returns14,237 16,774 -6,877 2,791 6,580Claims and benefits-16,519 -14,997 -14,542 -15,694 -13,907Change in life insurance provisions and outstanding claimsprovisions -1,239 -417 -6,518 5,585 3,886Change in provisions for unit-linked contracts-9,933 -10,825 -987 -5,587 -5,405Change in collective bonus potential1,035 -1,302 11,910 806 -2,597Total operating expenses relating to insurance-853 -913 -998 -1,070 -958Result of reinsurance141 34 263 -96 -31Transferred return on investment-978 -1,590 797 -812 -826Technical result, life insurance1,102 1,448 -54 999 1,108Gross premium income1,007 1,039 1,110 110 1,040 1,098Gross claims-798 -938 -982 -932 -1,159Total operating expenses relating to insurance-120 -131 -145 -141 -182Profit/loss on business ceded-11 -10 -5 -9 55Return on investment less technical interest199 308 -503 -101 7Technical result of health and accident insuranceReturn on investment allocated to equityProfit before taxTax198 298 -740 -250 -282806 1,188 -408 805 7312,106 2,934 -1,202 1,554 1,557-443 -695 337 -280 -415Net profit fitfor the year1,663 2,239239 -865 1,274 1,142142BALANCE SHEETTotal assetsInsurance assets, health and accident insuranceProvisions for health and accident insuranceProvisions for insurance and investment contractsCollective bonus potentialTotal shareholders' equity262,428 246,939 232,059 234,931 233,126167 122 99 92 807,597 7,529 7,351 6,816 6,378232,779 222,921 209,888 213,233 212,8951,740 2,775 1,553 13,462 13,86419,023 17,348 15,085 15,982 14,99772/80 DANICA PENSION - ANNUAL REPORT 2010

Notes - Danica PensionNote (DKK millions)27 FINANCIAL HIGHLIGHTS(cont'd)2010 2009 2008 2007 2006KEY FIGURES AND RATIOS (%)Return before tax on pension returns 5.6 6.9 -1.0 1.0 2.9Return before tax on pension returns on equity funds3.3 6.9 -3.6 1.8 4.9Return before tax on pension returns on customer funds5.8 7.1 -1.2 1.1 2.9Return after tax on pension returns5.0 5.9 -0.8 1.0 2.7Expenses as per cent of premiumsExpenses as per cent of provisionsExpenses per policyholder (DKK)Cost resultInsurance risk resultBonus rateEquity ratioExcess core capital ratioSolvency ratioReturn on equity before taxReturn on equity after taxReturn on customer funds after deduction of expenses before taxReturn on subordinated loan capital before tax5.5 6.0 5.7 6.7 6.30.4 0.5 0.5 0.6 0.51,233 1,295 1,407 1,514 1,362-0.01 -0.03 -0.08 -0.09 -0.040.04 0.02 0.08 0.08 0.041.1 1.7 0.9 8.3 8.613.6 12.4 10.8 11.6 11.18.6 7.5 5.8 6.7 6.2278 263 222 242 22711.6 18.1 -7.7 10.1 9.79.1 13.8 -5.6 8.3 7.14.6 5.5 -1.3 0.0 1.81.4 2.2 5.7 5.0 4.0RATIOS FOR HEALTH AND ACCIDENT INSURANCEGross claims ratio87 97 98 100 102Gross expense ratio13 14 15 15 19Combined ratio, net of reinsurance101 112 114 116 122Operating ratio100 101 127 116 132Relative run-off (%)1.5 0.1 1.0 0.5 0.3Run-off, net of reinsurance (DKr m)100 7 57 27 13RATE OF INTEREST ON POLICYHOLDERS' SAVINGS (%)Rate of interest on policyholders' savings before tax on pension returnsRate of interest on policyholders' savings after tax on pension returnsKey figures and ratios are set out in the Danish FSAs executive order on financial reporting.3.3 2.0 6.5 5.3 5.32.8 1.7 5.5 4.5 4.5DANICA PENSION - ANNUAL REPORT 2010 73/80

Notes – Danica PensionNote28 RISK MANAGEMENT AND SENSITIVITY RATIOSRISK MANAGEMENTSee the description of risk management in note 36 to theconsolidated financial statements.SENSITIVITY INFORMATIONThe below table discloses, for Danica Pension, the effect onshareholders’ equity and on collective bonus potential and thebonus potential of paid-up policies of isolated changes in interestrates (increases and decreases) and other relevant financialrisks as well as changes in the mortality and disabilityrates.A 10% decline in the mortality rate, corresponding to an increasein life expectancy of about one year, would increase liabilitiesby DKK 1.5 billion, and shareholders’ equity would notbe affected.Of the two interest rate scenarios, an interest rate increasewould be the worse for Danica Pension. A scenario with an increasein interest rates of 0.7 of a percentage point concurrentwith the rest of the financial sensitivity ratios defined inthe Danish FSA’s red traffic light scenario would reduce thecollective bonus potential by DKK 1.7 billion, reduce the bonuspotential of paid-up policies by DKK 0.8 billion and reduceshareholders’ equity by DKK 0.6 billion. Going forward, interestrate increases will be advantageous to Danica Pension,however, as it would be easier to cover the guaranteed benefits.The risk exposure was relatively stable during the year, althoughthe proportion of credit bonds was increased duringthe year and the proportion of government and mortgagebonds etc. was reduced.The financial sensitivities in the table below are defined in theDanish FSA’s red traffic light scenario. A company is consideredto be in the red light scenario if its capital is insufficientto cover the solvency requirement less 3% of life insuranceprovisions under the red light scenario. If a company is in thered light scenario, the Danish FSA will become involved in thefinancial management of the company.Danica Pension has been in the green light scenario since theFSA’s traffic light scenario was introduced in 2001.SENSITIVITY RATIOS 2010Minimum effecton capital baseMaximumeffect oncollectivebonus potentialMaximum effecton bonus potentialof paid-up policiesbefore change inMaximum effectof drawn bonuspotential ofpaid-up policiesdrawn bonuspotential of paidup(DKr m)policiesInterest rate increase of 0.7 of a percentage point -0.3 -0.4 4.1 0.0Interest rate fall of 0.7 of a percentage point 0.4 -0.1 -4.1 0.0Share price fall of 12% -0.2 -1.7 0.0 -0.1Fall in property prices of 8% -0.2 -1.2 0.0 -0.0Foreign exchange risk (VaR 99.0%) 0.0 -0.3 0.0 0.0Loss on counterparties of 8% -0.2 -1.7 0.0 -0.6Rise in credit spread of 1.0 percentage point 0.0 -1.2 0.0 0.0Fall in mortality rate of 10% 0.0 -1.5 -0.1 0.0Rise in mortality rate of 10% 0.0 1.4 0.1 0.0Rise in disability rate of 10% 0.0 -0.1 0.0 0.074/80 DANICA PENSION – ANNUAL REPORT 2010

Group overviewCurrencyNet profitfor theyearSharecapitalOwnershipShareholders’equityStaff Directorships 2)% millions millions millions Number1)JKLJWLIFE INSURANCEDanica Pension. Livsforsikringsaktieselskab. Copenhagen 100 DKK 1.663 1.100 19.023 745 D DDanica Pension Försåkringsaktiebolag. Stockholm 100 SEK 43 100 47 56 BDanica Pensjonsforsikring AS. Trondheim 100 NOK 46 106 243 75 BDanica Life Ltd. Ireland 100 EUR -4 5 44 7 BPROPERTY INVESTMENTDanica Ejendomsselskab ApS. Copenhagen 100 DKK 492 2.628 19.921 -PROPERTY INVESTMENT, (pro rata consolidation)Samejet SlotsArkaderne. Copenhagen 90 DKK -24 - 1.019Samejet Nymøllevej. Copenhagen 75 DKK -64 - 562Frederiksberg Centret I/S. Copenhagen 67 DKK 98 - 973Hovedbanegårdens Forretningscenter K/S. Copenhagen 3) 50 DKK 21 - 2151) Comprises employees in group companies at 31 December 2010.2) Directorships of Jørgen Klejnstrup (JKL) and Jesper Winkelmann (JW).B stands for board member and D stands for executive board member.3)Financial year ends 30 September.DANICA PENSION – ANNUAL REPORT 2010 75/80

Group overviewCompaniesForsikringsselskabetDanica A/SActivitiesParent company. Its principal activity is non-lifeinsurance. comprising the health care and criticalillness products Sundhedssikring (health care). KritiskSygdom (critical illness) and Sundhedsfremmer(health promoter).Danica Pension A/SSale of the market products Danica Balance andDanica Link in which the return on policyholders’savings equals the market return. Life insurance anddisability cover may be attached to the policies.Danica Balance is a lifecycle product combining theadvantages of collective investment with individualadjustment options. The customers select an investmentprofile. Guarantee option. In Danica Link. customersmay choose their own investment among 40-45 funds or they may choose an equity share and letDanica handle the investment. Guarantee option.Sale of conventional life insurance and pensionproduct (Danica Traditionel) and health and accidentinsurance. including disability cover. Danica Traditionelis policies with guaranteed benefits and collectiveinvestments. which is managed by Danica Pension.The rate of interest on savings is determined byDanica Pension.Conventional life insurance in the form of guaranteedlife-long annuities without bonus entitlement.No new policies have been written since 1982.Danica PensionFörsäkringsaktiebolagSale of market products and health and accidentinsurance in Sweden.Danica Pensjons-Forsikring ASSale of market products and health and accidentinsurance in Norway.Danica Life LtdSale of market products and risk products in Ireland.DanicaEjendomsselskabApSProperty company investing primarily in commercialproperty and shopping centres.Danica has merged the companies Danica Pension, Danica Pension I and Danica Liv III, with Danica Pension asthe continuing company. The merger was completed with effect at 1 January 201076/80 DANICA PENSION – ANNAUL REPORT 2010

Management and directorshipsUnder section 80(8) of the Danish Financial BusinessAct. financial institutions are required to publishinformation at least once a year about directorships.etc. held with the approval of the Board ofDirectors by persons employed by the Board accordingto statutory regulations (section 80(1) of theAct).This page also lists directorships held by membersof the Board of Directors outside the ForsikringsselskabetDanica group. Information on board memberswho are members of the management of DanskeBank A/S includes the number of directorshipsin other wholly-owned subsidiaries of DanskeBank.Board of DirectorsPeter Straarup (Chairman)Chairman of the Executive Board of Danske BankA/SBorn on 19.07.1951Director of:One wholly-owned subsidiary of Danske Bank A/S(Chairman)Danmark-Amerika FondetInternational Monetary ConferenceInstitut International d’Etudes BancairesDet Private Beredskab til Afvikling af NødlidendeBanker. Sparekasser og Andelskasser (Chairman)Finansrådet (Chairman)Sven Lystbæk (Deputy Chairman)Born on 26.09.1951Director of:Danske Bank International S.A.Bankernes Kontantservice A/S (Chairman)Kreditforeningen Danmarks PensionsafviklingskasseVP Securities A/S (Chairman)Nets Holding A/SMultidata Holding A/S (Chairman)Multidata A/S (Chairman)VISA Europe LimitedTonny Thierry AndersenChief Financial Officer of Danske Bank A/SBorn on 30.09.1964Director of:Two wholly-owned subsidiaries of Danske BankA/S(Chairman)Newco Aep A/SO.W. Bunker & Trading A/SRoskilde Bank A/S (Deputy Chairman)Wrist Group A/SThomas FalckSenior Pension Specialist. Danica PensionBorn on 09.06.1952Gitte JensenChairman of Staff Association. Danica PensionBorn on 14.04.1949Ib KatznelsonHead of AdministrationBorn on 30.10.1941(appointed by the Minister of Economic Affairs)Director of:European Bank for Reconstruction andDevelopmentErik SevaldsenExecutive Vice President of Danske Bank A/SBorn on 01.04.1948Director of:Five wholly-owned subsidiaries of Danske BankA/SMember of The Financial Business CouncilPer SøgaardSenior Advisor. Danica PensionBorn on 07.02.1969Director of:Witt & Søn A/SOT-Europlay A/SExecutive BoardInformation on directorships. etc. in wholly-ownedsubsidiaries is provided in the group overview.Jørgen KlejnstrupMember of the Executive BoardBorn on 09.01.1953Director of:Pensionsinfo (Chairman)Forsikring & PensionJesper WinkelmannMember of the Executive BoardBorn on 14.02.1958Jakob BrogaardBorn on 30.06.1947Director of:Finansiel Stabilitet A/S (Deputy Chairman)DONG Energy A/SLR Realkredit A/S (Deputy Chairman)FORSIKRINGSSELSKABET DANICA – ANNUAL REPORT 2010 77/80

Statement and reportsStatement by the ManagementThe Board of Directors and the Executive Board (the management) have today considered and approved the annualreport of Danica Pension for the financial year 2010.The consolidated financial statements have been prepared in accordance with the International Financial ReportingStandards (IFRS) as adopted by the EU. and the Parent Company’s financial statements have been prepared in accordancewith the Danish Financial Business Act.In our opinion. the consolidated financial statements and the Parent Company's financial statements give a true andfair view of the Group’s and the Parent Company's assets. liabilities. shareholders’ equity and financial position at31 December 2010 and of the results of the Group’s and the Parent Company’s operations and the consolidated cashflows for the financial year starting on 1 January and ending on 31 December 2010. Moreover. in our opinion. themanagement’s report includes a fair review of developments in the Group’s and the Parent Company’s operationsand financial position and describes the significant risks and uncertainty factors that may affect the Group and theParent Company.The management will submit the annual report to the general meeting for approval.Copenhagen. 10 February 2011Executive BoardJørgen KlejnstrupJesper WinkelmannBoard of directorsPeter Straarup Sven Lystbæk Tonny Thierry AndersenChairmanDeputy ChairmanJakob Brogaard Thomas Falck Gitte JensenIb Katznelson Erik Sevaldsen Per Søgaard78/80 DANICA PENSION – ANNUAL REPORT 2010

Auditors’ reportsINTERNAL AUDIT’S REPORTWe have audited the annual report of Danica Pension. Livsforsikringsaktieselskab for the financial year 2010. The consolidated financialstatements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU and theParent Company’s financial statements have been prepared in accordance with the Danish Financial Business Act.Basis of opinionWe conducted our audit in accordance with the executive order of the Danish Financial Supervisory Authority on auditing financial businessesand financial groups and in accordance with Danish Standards on Auditing. These standards require that we plan and perform theaudit to obtain reasonable assurance whether the annual report is free from material misstatement. The audit comprised all significant areasand risk areas and was conducted in accordance with the division of responsibilities agreed with the external auditors. enabling the externalauditors to the widest possible extent to base their audit on the work performed by Internal Audit.We planned and conducted our audit such that we have assessed the business and internal control procedures. including the risk and capitalmanagement implemented by the management. aimed at the Group’s and the Parent Company’s reporting processes and major businessrisks.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual report. The proceduresselected depend on the auditor’s judgment. including the assessment of the risks of material misstatement of the annual report. whether dueto fraud or error. In making those risk assessments. the auditor considers internal controls relevant to the preparation and fair presentation ofthe annual report in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates made by the management. as well as evaluating theoverall presentation of the annual report.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Our audit did not result in any qualification.OpinionIn our opinion. the consolidated financial statements give a true and fair view of the Group’s assets. liabilities. shareholders’ equity andfinancial position at 31 December 2010 and of the results of the Group’s operations and cash flows for the financial year 2010 in accordancewith the International Financial Reporting Standards (IFRSs) as adopted by the EU. Furthermore. in our opinion. the Parent Company’sfinancial statements give a true and fair view of the Parent Company’s assets. liabilities and financial position at 31 December 2010 and ofthe results of the Parent Company’s operations for the financial year 2010 in accordance with the Danish Financial Business Act.Furthermore. we believe that the business and internal control procedures. including the risk and capital management implemented by themanagement. aimed at the Group’s and the Parent Company’s reporting processes and major business risks operate effectively.Copenhagen. 10 February 2011Jens Peter ThomassenGroup Chief AuditorDANICA PENSION – ANNUAL REPORT 2010 79/80

INDEPENDENT AUDITORS REPORTWe have audited the consolidated financial statements and the Parent Company’s financial statements of´ Danica Pension. Livsforsikringsaktieselskabfor the financial year 2010. The consolidated financial statements comprise the income statement. statement of comprehensiveincome. balance sheet. statement of capital. cash flow statement and notes. The Parent Company’s financial statements comprise incomestatement. balance sheet. statement of capital and notes. The consolidated financial statements have been prepared in accordance with theInternational Financial Reporting Standards (IFRSs) as adopted by the EU. and the Parent Company’s financial statements have been preparedin accordance with the Danish Financial Business Act. In addition to our audit. we have read the management’s report prepared inaccordance with Danish Financial Business Act and issued a statement in this regard.Management’s responsibilityManagement is responsible for preparing and presenting consolidated financial statements and Parent Company financial statements that givea true and fair view in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU in respect of the consolidatedfinancial statements and in accordance with the Danish Financial Business Act in respect of the Parent Company. This responsibilityincludes: designing. implementing and maintaining internal controls relevant to the preparation and fair presentation of consolidatedfinancial statements and Parent Company’s financial statements that are free from material misstatement. whether due to fraud or error;selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Further. itis the responsibility of Management to prepare a management’s report that gives a fair review in accordance with the Danish Financial BusinessAct.Auditors’ responsibility and basis of opinionOur responsibility is to express an opinion on the consolidated financial statements and the Parent Company’s financial statements based onour audit. We conducted our audit in accordance with Danish Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements and the ParentCompany’s financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statementsand the Parent Company’s financial statements. The procedures selected depend on the auditor’s judgment. including the assessment of therisks of material misstatement of the consolidated financial statements and the Parent Company’s financial statements. whether due to fraudor error. In making those risk assessments. the auditor considers internal controls relevant to the preparation and fair presentation of theconsolidated financial statements and the Parent Company’s financial statements in order to design audit procedures that are appropriate inthe circumstances. but not for the purpose of expressing an opinion on the effectiveness of internal controls. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management. as well asevaluating the overall presentation of the consolidated financial statements and the Parent Company’s financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Our audit did not result in any qualification.OpinionIn our opinion. the consolidated financial statements give a true and fair view of the Group’s assets. liabilities. shareholders’ equity andfinancial position at 31 December 2010 and of the results of the Group’s operations and cash flows for the financial year 2010 in accordancewith the International Financial Reporting Standards (IFRSs) as adopted by the EU. . Furthermore. in our opinion. the Parent Company’sfinancial statements give a true and fair view of the Parent Company’s assets. liabilities and financial position at 31 December 2010 and ofthe results of the Parent Company’s operations for the financial year 2010 in accordance with the Danish Financial Business Act.Statement on the management’s reportPursuant to the Danish Financial Business Act. we have read the management’s report. We have not performed any other procedures inaddition to the audit of the consolidated financial statements and the Parent Company’s financial statements. On this basis. it is our opinionthat the information given in the management’s report is consistent with the consolidated financial statements and the Parent Company’sfinancial statements.Copenhagen. 10 February 2011KPMGStatsautoriseret RevisionspartnerselskabCopenhagen. 10 February 2011Grant ThorntonStatsautoriseret RevisionsaktieselskabLars Rhod Søndergaard Gerda Retbøll-Bauer Ole Fabricius Christian F. JakobsenState Authorised Public AccountantsState Authorised Public Accountants80/80 DANICA PENSION – ANNUAL REPORT 2010

AddressDanica Pension.LivsforsikringsaktieselskabParallelvej 172800 Kgs. LyngbyDenmarkTel: (+45) 70 11 25 25Fax: (+45) 45 14 96 16www.danicapension.dkCompany Registration No.CVR 24256146Contact: Janne Dyrlev. Executive Vice President