Insurer Topdanmark to reduce share buybacks

COPENHAGEN, Dec 9 (Reuters) - Danish insurance company Topdanmark (TOP.CO) said on Wednesday it would reduce a share buyback programme as it expects tougher capital requirements under planned new European regulations for insurers.

European insurance regulator CEIOPS is hammering out a set of new rules called Solvency II which will determine how much capital insurers must hold.
"Topdanmark expects that the future capital requirements of Solvency II will be significantly higher than the existing requirements," the company said in a statement.

Denmark's second-biggest insurer said it would raise its capital surplus to 300-400 million crowns ($60-80 million) above requirements under the new rules, which are expected to take effect in 2012.

It said that CEIOPS' recommendations to the European Commission would require a strengthening of the capital base of Topdanmark Forsikring by around 800 million crowns from the level pertaining at the end of 2008.


"The intended strengthening of the capital base of Topdanmark Forsikring requires a corresponding reduction in Topdanmark's share buy-back programme. However, Topdanmark will still maintain a substantial share buy-back," it said.

The group will in 2009 strengthen Topdanmark Forsikring's capital base by 300 million crowns, which has already been taken into account in the proposed share buy-back for the year of 825 million, it said.

In 2010 and 2011, Topdanmark Forsikring's capital structure will be strenghened by a further 250 million per year.

"The share buy-back in each of the years 2010 and 2011 will be 500-600 million crowns corresponding to a buy-back yield of around 5 percent," it said.

The buy-back is expected to normalise from 2012 onwards, it said. (Editing by Greg Mahlich)

http://www.reuters.com/article/idUSGEE5B809V20091209