Assumptions for insurance activities

The outlook for the result for 2008 is based on assumptions with respect to gross earned premiums, gross claims incurred, gross expenses, result of business ceded and technical interest.

Our outlook for gross earned premiums is based on the Group’s portfolio at 31 December 2007 and assumptions with respect to sales and loss of policies and price adjustments of existing policies. Assumptions for sales and loss of policies are based on historical levels, planned initiatives and the market situation. Assumptions for price adjustments are primarily based on agreements relating to adjustments of individual insurance policies. The outlook is expressed in local currency.

We generally base our expectations with respect to claims incurred on assumptions for the various products in the individual business areas. Expectations regarding claims ratios are based on historical performance in the form of average claims ratios for the past five years, with recent years’ trends generally being weighted stronger than those of prior years. Trends in the pricing of our insurance premiums, claims frequencies and the discount rate applied are the most important factors that may affect our overall performance. Assumptions for storm events and large claims are based on historical experience for not less than ten years, with recent years’ trends being weighted stronger than those of prior years. In addition, we incorporate the effect of profitability initiatives and the effect of any legislative measures in the anticipated claims level. The outlook for 2008 assumes weatherrelated claims for 2008 of around DKK 225m and large claims of around DKK 500m gross.

The outlook assumes no run-off gains or losses in 2008 on the provisions for claims established.

The outlook regarding gross expenses reflects the projected number of employees during 2008 and the related costs. The projected number of employees incorporates the effect of measures launched to improve efficiency and recruitment of new employees in Finland and Sweden. The outlook further includes other expenses such as those relating to IT, operations and our corporate headquarters, which are predominantly based on agreements that are known to us.

The result of business ceded is based on contracts made with reinsurers to cover claims events and events such as storms and large claims. The expected result of business ceded is calculated on the basis of such contracts and historical data.

Technical interest is based on interest rate assumptions applicable at 31 January 2008.