Note 5 - Insurance operating expenses, net of reinsurance

DKKm                         2008   2007
Insurance operating expenses, net of reinsurance
Commission regarding direct business -406
Other acquisition costs             -1,415
Total acquisition costs -1,821
Administrative expenses             -948
Insurance operating expenses, gross -2,769
Commission from reinsurers             95
              -2,674
Administative expenses include fee to the auditors appointed by the Annual General Meeting:
Deloitte                             -8
                              -8
Of which services other than audit:
Deloitte                             -2
                              -2
In addition, expenses have been incurred for the Group´s Internal Audit Department.
Insurance operating expenses, gross, classified by type
Commision -406
Staff expenses -1,594
Other staff expenses -198
Office expenses and fees, Headquarter expenses -462
Operating and maintenance costs IT, Software expenses -198
Depreciation, amortisation and impairment writedowns -102
Other income             191
              -2,769
Total expenses for lease amounts to xx DKKm (2007 106 DKKm).
Insurance operating expenses and claims include the following staff expenditure:
Salaries and wages -1,832
Commision -21
Allocated share options -8
Pensions -257
Other social security costs -5
Payroll tax             -249
              -2,372
Remuneration for Supervisory Board and Group Executive Management appears in the note 29 'Related parties'.
Average number of full-time employees during the year (continuing business)             3,813
Share option programmes
In 2007, TrygVesta awarded share options to the Executive Management (6 persons) and other senior employees (88 persons).
At 31 December 2007, the share option plan comprised 329,902 share options (at 31 December 2006 186,020 share options).
Each share option entitles the holder to acquire one existing share of DKK 25 nominal value in the company.
The share option plan entitles the holders to buy 0.49 % of the share capital if all share options are exercised.
The share option agreement entities the employes to the options unless the employes resigns his position or is dismissed
due to breach of the employment relationship. In case of termination due to restructuring or retirement, the employes is still
entitled to the options. Special provisions are in place concerning sickness and death and in case of change to the companys
capital position. No other vesting conditions apply.
The share option grogrammes are classified as equity-settled and recognised directly in equity.
treasure shares are acquired for use and hedging purposeas.
          
Specification of outstanding options:
Total Numbers Fair Value
Group Executive Management Other senior employees Other employees Total Per option at grant date DKK Total fair value per option at grant date DKKm Per option at 31 December DKK Total fair value at 31 December DKK
2006
Outstanding options 1 January 2006 0 0 0 0 0 0 0 0
Allocated concerning 2005 44,540 141,480 0 186,020 64 12 150 28
Exercised 0 0 0 0 0 0 0 0
Cancelled 0 0 0 0 0 0 0 0
Expired 0   0   0   0   0   0   0   0
Outstanding options from allocation 2006 44,540   141,480   0   186,020   64   12   150   28
Number of options exercisable end of 2006 0 0 0 0 0 0 0 0
2007
Allocated concerning 2005 44,540 141,480 0 186,020 64 12 119 22
Exercised 0 0 0 0 0 0 0 0
Cancelled 2006 0 -2,620 0 -2,620 64 0 119 0
Expired 0   0   0   0   0   0   0   0
Outstanding options from allocation 2006 44,540   138,860   0   183,400   -   12   -   22
Number of options exercisable end of 2007
Allocated concerning 2006 40,916 91,039 18,000 149,955 99 15 49 7
Exercised 0 0 0 0 0 0 0 0
Cancelled 2007 -1,453 -2,000 -3,453 99 -1 49 0
Expired 0   0   0   0   0   0   0   0
Outstanding options from allocation 2007 40,916   89,586   16,000   146,502   -   14   -   7
Number of options exercisable end of 2007 0   0   0   0   0   0   0   0
Total Numbers
  Total share options allocated   Exercised   Cancelled   Expired   Outstanding   Period of exercise  
Outstanding share options at exercise date
Allocated in 2006 concerning 2005 186,020 0 -2,620 0 183,400    February 2009 - February 2010
Allocated in 2007 concerning 2006 149,955   0   -3,453   0   146,502      February 2010 - February 2012
Total outstanding options 31 December 2007 335,975   0   -6,073   0   329,902            
In 2007, the fair value of share options for the Group amounted to DKK 8m. The fair value in 2007 for the programme allocated in 2006 are DKK 7m and for the programme allocated in 2007 the fair value are DKK 4m.
Fair values at the time of allocation are based on the Black & Scholes option pricing formula.
The following assumptions were applied in calculating the market value of outstanding share options at the time of allocation:
2008 2007
Average share price (DKK) at the time of allocation 456.76
Exercise price (DKK) 0
Expected volatility 24.10%
Expected maturity 4 years
Risk-free interest rate 3.90%
The expected volatility is based on the average volatility of TrygVesta shares in 2007.
The expected maturity is 4 years, corresponding to the average of the exercise period of 3 to 5 years.
The risk-free interest rate is based on a bullet loan with the same maturity as the expected maturity for the options at the time of allocation.
The calculation is based on the strike price as set out in the option agreement and the average share price at the time of grant.
The dividend payout ratio is not included in the calculation as the strike price is reduced by dividends paid in order to prevent recipients of option payments from being penalised for the company’s dividend payments.
The assumptions for calculating the market value at the end of the period are based on the same principles as for the market value at the time of allocation.
For outstanding options at 31 December 2007, the average term to maturity is 2.2 years and 3.2 years.
Employee shares
In 2007, TrygVesta granted employee shares at a discount to the market price to employees at all levels in the parent company and Danisk subsidiaries.
Employees of non-Danish branches were offered employee shares or alternative a cash consideration. Each employee was offered 23 shares, at a discount to the market price equal to DKK 25 DKK per share, equivalent to a total of 49,338 shares or around DKK 23m being granted to the employees.
Senior executives received part of their bonus in the form of shares at a discount to the market price.
In 2007, a total of 20.321 shares were granted at discount to the market price of DKK 25 per share or DKK 9m.
The Grant of shares equalled 0.1% of the share capital.
The amount was provided in 2006 and did not affect the profil for 2007.
In 2007, TrygVesta offered its employees employee shares at a discount to the market price equal to DKK 25 per share subject to achievement of specific financial benchmarks for 2007.
Employees of non-Danish branches were offered employee shares or an alternative cash consideration.
Senior executives of TrygVesta may elect to receive part of their bonus for 2007 in the form of shares at a discount to the market price. Bonus will be granted in early 2008.
Provisions have been made for the above obligations in 2007.
  
TrygVestaKlausdalsbrovej 601DK-2750 BallerupTelephone: +45 7011 2020Fax: +45 4420 6700E-mail: ir@trygvesta.com