Denmark: Financial System Stability Assessment with reports on - IMF

18D. Insurance Companies25. The Danish insurance industry is well developed and its performance hasgenerally improved following the difficulties early in this decade (Table 4). At end-2005,assets of life insurance and general pension funds amounted to almost 120 percent of GDP.The five largest companies account for about 55 percent of gross premiums and theten largest for 73½ percent. 12 Assets of non-life insurance companies amounted to 9 percentof GDP at end-2005. This market is mainly one of individual business, motor, and householdinsurance, representing approximately 70 percent of the non-life market. In 2005, grosspremiums amounted to 2.9 percent of GDP (Table 5). Life insurance companies and pensionfunds are covered by the same legislative framework. Reinsurance is mainly provided fromthe international market, although there are five captive Danish reinsurance companies thatprimarily reinsure risks originating from the group.Table 4. Selected <strong>Financial</strong> Indicators for Life Insurance and Pension Funds, 2001–05(In percent unless indicated otherwise)2001 2002 2003 2004 2005Life insuranceGross premiums to GDP 3.72 4.01 4.23 4.23 4.37Net premiums to GDP 3.67 3.95 4.19 4.21 4.34Return on equity before tax -13.65 2.86 14.37 11.74 11.34Return on investments before tax on pension returns -1.68 2.98 6.51 9.82 12.98Ratio of operating expenses to gross premiums 7.17 7.31 7.21 6.55 5.79Ratio of expenses to provisions 0.7 0.7 0.8 0.6 0.6Ratio of equity to provisions 6.6 7.5 8.7 8.5 8.7Ratio of excess solvency to provisions 3.2 3.9 4.7 4.6 4.7Solvency indicator 166.8 182.1 201.5 195.0 196.8Pension fundsGross premiums to GDP 0.9 0.9 1.0 1.0 0.8Return on equity before tax -19.04 -30.99 25.5 23.16 23.55Return on investments before tax on pension returns -1.5 -1.16 7.72 11.78 17.44Ratio of operating expenses to gross premiums 3.6 3.5 3.4 3.1 3.0Ratio of expenses to provisions 0.2 0.2 0.2 0.2 0.2Ratio of equity to provisions 17.21 13.43 17.35 20.41 23.74Ratio of excess solvency to provisions 9.18 8.75 13.03 15.97 18.97Solvency indicator 433.3 309.5 398.5 460.5 476.7Source: The Danish <strong>Financial</strong> Supervisory Authority.12 In 2003, life insurance penetration (direct gross premiums in percent of GDP) was in <strong>Denmark</strong> 5.17, Finland2.00, Germany 3.90, the Netherlands 5.40, Norway 2.81, Sweden 4.58, and the United Kingdom 9.76 percent.According to the OECD: Insurance Statistics Yearbook 1994–2003, (Paris: OECD).