Vátryggingafélag Íslands hf.

vis.is

Consolidated

Financial Statements

2023

These financial statements are translated from the original which is in Icelandic. Should there be

discrepancies between the two versions, the Icelandic version will take priority over the translated version.

Table of Contents

Report and Endorsement of the Board of Directors and the CEOs 2-13

Statement of Profit or Loss and Other Comprehensive Income 14

Balance Sheet 15

Statement of Changes in Equity 16

Statement of Cash Flows 17

Notes 18-56

Vátryggingafélag

Íslands hf.

Consolidated Financial Statements

2023

Report and Endorsement of the Board of Directors and the CEOs for 2023

The consolidated financial statements of Vátryggingafélag Íslands hf. ("the Company” or “VIS”) for the year 2023 consist of the annual financial

statements of the Company and its subsidiaries. These include Fossar fjárfestingarbanki hf., SIV eignastýring hf., and Líftryggingafélag Íslands hf.,

collectively referred to as "the Group". The Group’s operations consist of insurance activities, investment banking activities and asset and fund

management. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and

the additional requirements for companies listed on a regulated securities market.

2023 operations and financial position

The Group is now based on three revenue pillars, namely insurance activities, financial services activities and investments. Revenue from insurance

contracts under the insurance activities amounted to about ISK 26,474 million, up by 8.2% between years. Profit from insurance activities amounted

to about ISK 143 million and the year-end combined ratio was 99.5%. Net income from investment activities amounted to ISK 494 million.

Investment income from the insurance investment portfolio amounted to ISK 4,753 million. The Group's after-tax profit amounted to ISK 1,832

million. Profit per share was ISK 0.97 and return on equity was 10.2%. The Group's solvency ratio was 1.68 at year-end 2023. In 2023, the average

number of full-time equivalent positions at the Group was 208. The Group’s assets amounted to ISK 65,468 million, liabilities were ISK 44,296

million and equity at year-end amounted to ISK 21,172 million.

Investments

The Company's investment income from the insurance investment portfolio was positive by ISK 4,753 million, representing a 10.7% nominal return.

The investment performance was very good during the year, with the return on the total portfolio considerably above the benchmark. In addition, all

asset classes delivered returns above the benchmark. The Company's sale of Kerecis had a positive impact on earnings, and the return on unlisted

equities was about 24% for the year. Listed equities also performed well during difficult market conditions, with the Company's portfolio of listed

equities rising by about 5.2% as compared to a decline in the overall market, despite a considerable increase towards the end of the year. Bond returns

were also favourable, with government bonds increasing by almost 7% while other bonds rose by more than 10%.

Share capital and allocation of profits

The Company’s share capital amounted to ISK 1,906.7 million at year-end (including treasury shares of ISK 1.15 million), with each share having a

nominal value of ISK 1. All shares are in the same class and carry the same rights The Company is listed on Nasdaq Iceland. The volume of trading in

the Company's shares decreased by 34% last year and the number of trades fell by 30%. The Company's shares traded at 16.9 at the beginning of the

year and 17.1 at year-end ─ representing a 1% increase over the year.

At the 2024 Annual General Meeting, the Board of Directors will propose that the Company pay shareholders a dividend of ISK 0.52 per share for

the year 2023, or ISK 1,000 million in total, after accounting for treasury shares. The dividend payment corresponds to 55% of the year's after-tax

profit. The total dividend last year was about ISK 951 million, but taking treasury shares into account, ISK 939 million was paid to shareholders.

Information on changes in equity and disposal of profits can be found in the annual financial statements.

At year-end 2023, the pension fund Lífeyrissjóður starfsmanna ríkisins A-deild was the Company's largest shareholder with an 8.55% interest. The

Company held 1.15 million treasury shares or 0.06% of the total share capital at year-end 2023. There were 934 shareholders at the beginning of the

year and 913 at the end of 2023. At the Company's Annual General Meeting, it was agreed to reduce the Company's share capital by cancellation of

treasury shares, which reduction, in the nominal value of ISK 53.3 million, was carried out in April 2023.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 2 Amounts are in thousands of ISK

The ten largest shareholders at year-end were:

Shareholder

Lífeyrissjóður starfsmanna ríkisins A-deild 8,55%

Skel fjárfestingafélag hf. 8,23%

Gildi-lífeyrissjóður 8,21%

Sjávarsýn ehf. 8,03%

Frjálsi lífeyrissjóðurinn 7,97%

Lífeyrissjóður verzlunarmanna 5,96%

Klettar fjárfestingar ehf. 4,82%

Stapi lífeyrissjóður 4,19%

Birta lífeyrissjóður 3,30%

Arion banki 2,95%

Report and Endorsement of the Board of Directors and the CEOs for 2023

Shareholders’ meetings and Articles of Association

The Company's Annual General Meeting was held on 16 March 2023. The meeting approved the 2022 annual financial statements and a proposal for

the disposal of the Company's profits. A Board of Directors, auditor and Nomination Committee were also elected at the meeting. The Company's

Remuneration Policy, which includes an incentive scheme for the Company's management and employees, was approved at the meeting. The meeting

approved a 12-month authorisation for the Board of Directors to purchase shares in the Company for the purpose of i) making a market in the

Company, ii) instituting a formal repurchase program and/or iii) making an offer to shareholders generally for the repurchase of their shares.

At the Company's shareholders' meeting held on 14 June 2023, the shareholders approved the merger of VIS and Fossar fjárfestingarbanki as well as

an increase in the share capital to meet the purchase price according to the purchase agreement. Fossar shareholders were paid 210 million new shares

in VIS, corresponding to 11.01% of the share capital after the share capital increase. Amendments to the object clause of the Company's Articles of

Association were also approved, which expanded the Company's object to reflect the shift in focus that has taken place at the Company. In addition,

strategic steps have been taken to change the structure of the Company following the merger, not least with the approval of the shareholders to

transfer the Company's insurance operations to the subsidiary VÍS tryggingar hf. at a shareholders' meeting held on 17 January 2024. The above will

mean that if the transfer of the insurance operations is approved by the Financial Supervisory Authority of the Central Bank of Iceland, the Company

will become a holding company that will be subject to certain supervision and requirements by the Financial Supervisory Authority of the Central

Bank of Iceland and will not be considered an insurance company or a financial undertaking.

Corporate governance

Good corporate governance provides the foundation for responsible management and well-conceived decision-making, while promoting reliable

relations between shareholders, the Board of Directors, management, employees and other stakeholders. In accordance with the Icelandic Annual

Accounts Act and Guidelines on Corporate Governance, the Company’s Board of Directors has prepared a Statement of Corporate Governance

which accompanies the annual financial statements and is published on the Company's website at vis.is.

The principal members of the Board of Directors of the Company are Stefán Héðinn Stefánsson, Chairman, Vilhjálmur Egilsson, Vice-Chairman,

Ásgeir Helgi Reykfjörð Gylfason, Guðný Hansdóttir and Marta Guðrún Blöndal. Sveinn Friðrik Sveinsson and Ragnheiður Hrefna Magnúsdóttir serve

as alternate directors. The gender ratio on the Board of Directors is 60% male and 40% female. Further information on the compositions and

activities of the Board of Directors, management and sub-committees can be found in the Company's Statement of Corporate Governance.

Risk management

Risk management is one of the key functions of an insurance company. The Company has adopted a risk management policy as required by law,

which is designed to meet the required standards for insurance companies' risk management. The policy is approved by the Board of Directors. The

policy addresses the organisation and implementation of risk management within the VIS, identification of risk factors, reporting and information

disclosure and the duty of employees to contribute to the success of the policy. The Company has also adopted a policy on own risk and solvency

assessment, ORSA. Its findings provide information to the Board and management on the Company’s risk profile and capital requirements, based on

given assumptions. The results thus need to be taken into account in all strategic decisions, such as in planning, treasury operations, and development

of new products. Risk Management also monitors the solvency and solvency requirements of the insurance group; the companies Lífís, Fossar, SIV

and T Plús all have an impact on the solvency status of VIS.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 3 Amounts are in thousands of ISK

Report and Endorsement of the Board of Directors and the CEOs for 2023

Fossar's Risk Management plays an important role in the bank's operations, as the bank faces various types of risks in its daily operations, and their

management is an integral part of its operations. Risk Management is responsible for measuring, understanding and analysing the bank's risk factors

and proposing risk limits for individual units in order to ensure that the bank's risk is within the risk appetite; the Board of Directors has defined risk

appetite for all major risks in the business and, in addition, approved a policy on risk management. Risk Management provides independent

assessment and advice regarding the decisions of individual business units that may involve risk, as well as assessing whether the decisions are in line

with the risk appetite of the Board of Directors. The bank's Board of Directors is ultimately responsible for the adequacy of internal controls and the

risk management framework. Risk Management advises the Board and management on the development and improvement of the risk policy, risk

appetite, processes and risk limits.

SIV Asset Management has adopted a risk policy on the basis of Act No. 45/2020 on Alternative Investments Funds Managers, which is approved by

the Board. The aim of the policy is to increase security in the Company's operations and manage risks in investments, as well as to promote

compliance with applicable laws, rules and regulations. The risk policy defines and evaluates different risk factors, while the risk management policy

sets out the main considerations concerning the Company's risk management.

Further details on risk management are provided in note 39.

Integration of employee interests with the Company's long-term goals

In recent years, a bonus scheme has been in place for the Company's employees based on its remuneration policy, which is intended to link the

interests of shareholders and employees in the long term. At the VIS Annual General Meeting on 16. March 2023, the Company's Board of Directors

was authorised to approve a share option scheme pursuant to Article 10 of Act No. 90/2003 on Income Tax and enter into share option agreements

with the employees of VIS and its subsidiaries on its basis. On 9 June 2023, the share option scheme was implemented by the Company's Board of

Directors and it was approved by Iceland Revenue and Customs on 28 June 2023. Subsequently, share option agreements with employees were

concluded on 13 October 2023. The share options extended to all permanent employees of VIS and its subsidiaries. The aim of the scheme is to

integrate the interests of employees with the long-term goals of the Company and its subsidiaries. According to the scheme, the holder of the option

acquires a one-time right to purchase shares in the Company for a maximum of ISK 1,500,000 when 12 months have passed since the signing of the

agreement. The purchase price is the weighted average price in the trading of the Company's shares during the ten trading days preceding the contract

date, which was 13 October 2023, or ISK 15.25 per share. A total of 239 employees of the Group concluded share option agreements covering up to

20,973,700 shares.

The Company's Board of Directors has now began a comprehensive review of its remuneration policy in light of the changes that have taken place at

the Company in the past year. The same purpose underlies the authorisations provided there in connection with a bonus scheme and the general

share option scheme based on Article 10 of the Income Tax Act, i.e. to continue to clearly and efficiently connect the interests of the Company and

the employees of the Group as a whole in the long term. The revised remuneration policy also aims to bring the bonus scheme closer to what is

customary in the financial services industry and adapt the form of bonuses to the rules laid down in Act No. 161/2002 on Financial Undertakings.

Recent changes to the provisions of the Act on bonuses include the requirement that risk should be managed by increasing the weight of stock-based

compensation in the bonus schemes of financial undertakings.

Clear future vision

The Board's goal has been to make VIS an even more attractive investment option in the market with a clear vision of growth, development and

capital structure. This effort entails making the Company more sales-driven and strengthen relationships with customers. In early 2023, the decision

was made to negotiate an agreement with Helgi Bjarnason on his departure as CEO of the Company after serving in that position since 2017. It was

the assessment of the Board that this turning point, which involved the establishment of a new strategy, was the right time to begin a new chapter in

the Company's history. Guðný Helga Herbertsdóttir, Managing Director of Sales and Services, took over as CEO of VIS after being in a leading role

in the Company's development in recent years.

The asset management company SIV, which is majority-owned by VIS, was established at the end of 2022 and received an operating license in mid-

2023. This was part of the Board's strategy ─ and the first step in expanding the Company's activities in the financial services market.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 4 Amounts are in thousands of ISK

Report and Endorsement of the Board of Directors and the CEOs for 2023

Merger of VIS and Fossar

In February 2023, it was announced that VIS and Fossar's shareholders had begun negotiations on the merger of the two companies on the basis of a

purchase agreement, which was subsequently signed at the beginning of May. The shareholders approved the merger with a decisive result at a

shareholders' meeting a month later. In October of the same year, Nasdaq Iceland was notified that the transaction was completed. The merger of

VIS and Fossar created a progressive company in the financial services sector that aims to achieve further growth in the fields of insurance,

investment banking and asset management. This is a merger for expansion — with the two companies benefiting from supporting each other's

growth. Together, these companies form a strong entity with extensive operating licenses, where the emphasis is placed on excellent service and a

solid long-term relationship with customers. In 2023, strategic steps were therefore taken towards the future vision of VIS, which is to be an exciting

option on the Icelandic financial services sector, as well as expanding and strengthening the Company's income sources.

A new Group is formed

At the Company's shareholders' meeting on 17 January 2024, the shareholders approved the transfer of the insurance portfolio to the subsidiary VÍS

tryggingar hf. To that end, a purchase agreement has been signed between VIS and its subsidiary, VÍS tryggingar, whereby the Company's insurance

activities are transferred to the subsidiary. The agreement is subject to the approval of the Financial Supervisory Authority of the Central Bank of

Iceland for the transfer of the insurance portfolio and the insurance activities. The transfer of insurance operations is a logical step towards the

Company's future vision of becoming an active participant in the financial services sector by expanding into finance-related activities. After the

transfer of the insurance operations to a subsidiary has been completed, the future structure of the Group will have been established in the form of a

parent company that supports the subsidiaries with efficiency, cross-selling and business development as a guiding principle. The Group's future

structure offers a competitive advantage going forward, a clearer delineation of risks and a clearer allocation of capital. There are increased

possibilities for financing as well as allocation of capital with a focus on maximizing profitability. It is expected that the future structure of the Group

will be realized in its final form in the year 2024.

The Group's senior management consists of Haraldur Þórðarson, former CEO of Fossar, who was appointed Group CEO at the beginning of

October, Guðný Helga Herbertsdóttir, CEO of VIS's insurance operations, Steingrímur Arnar Finnsson, CEO of Fossar Investment Bank, Brynjar

Þór Hreinsson, Group CFO, and Arnór Gunnarsson, Managing Director of SIV Asset Management.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 5 Amounts are in thousands of ISK

Gender equality

We insure companies, their

operations and assets. In so doing,

we ensure good employment and

economic growth. Through our

cooperation with companies, we

reduce losses and improve

employee safety.

Global Goal Target 8.8 is to

promote a safe and secure working

environment for all workers. By

working together with our

customers, we promote a safe

working environment through

strong prevention efforts.

Responsible consumption and

production

Global Goal 12:

Decent work and economic

growth

Global Goal 8:Global Goal 3:

Good health and well-being

Global Goal 5:

Non-Financial Disclosure

VIS places special emphasis on

gender equality with a gender

equality policy and code of ethics.

VIS is committed to having an

active equal pay policy and

maintaining equal pay certification.

Through strong prevention we

reduce losses and encourage a

better lifestyle.

Global Goal Target 3.6 is to

reduce traffic fatalities.

Responsible consumption and

production through the

implementation of sustainable

development.

Business model

The Company’s main operations consist of insurance operations, investments, asset and fund management and investment banking. Fundamentally,

these activities of the Group are divided into three main areas of focus, namely insurance activities, financial services activities and investments. The

following disclosure covers the insurance activity. Non-financial disclosure for the subsidiaries can be found in their respective annual financial

statements.

Whatever life brings, we can be counted on

The Company is a leading Icelandic insurance company which enjoys a strong position in the market with about a one-third market share. VIS's role

as an insurance company is to be someone people can count on whatever life may bring, which means providing its customers with appropriate

insurance coverage so that they are better prepared for unexpected losses. VIS insures individuals and their families as well as businesses, their

activities and their assets. Last year, VIS paid its customers ISK 19.7 billion (2022: 16.8 billion) in claims — with claims totalling 37,300 (2022: 36,500).

VIS is a member of Festa, a centre for social responsibility, as well as IcelandSIF, an organisation that promotes responsible investment, and a

signatory of UN-PRI, the United Nations principles for responsible investment. VIS is also a signatory of the UN Global Impact on the

implementation of responsible policies. The VIS Sustainability Policy sets out the Company's priorities in ESG (environmental, social and governance)

areas that are relevant to the activities of insurance companies. The Company's Board of Directors is responsible for the policy; the CEO and senior

management are responsible for its implementation and ensuring it is followed in the Company's operations.

VIS remains the top-rated insurance company

VIS received 80 points in Reitun's ESG evaluation in 2023. The Company was able to keep up with the increased demands made in the assessment

and increased its score by two points between years. The Company continues to be the top-rated insurance company. It should be noted that Reitun's

ESG assessment was carried out on the insurance business, and not the group as a whole.

The Company supports the United Nation's Global Goals and particularly supports the following Global Goals:

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 6 Amounts are in thousands of ISK

Outsourcing and Service Procurement Policy

Competition Policy

Conflict of Interest Policy

Owner Policy

Policy on VIS investments

Sustainability Policy

Policy on IT operations

Compliance Policy

Non-Financial Disclosure

Policy on measures against money laundering and terrorist financing

Internal Audit Policy

Policy on treatment of insider information and management trading

Risk Management Policy

Equality and Equal Pay Policy

Transportation Policy

Prevention Policy

Information Policy

Occupational Safety Policy

Information Security Policy

Internal Control Policy

Policies of the Board of Directors Policies of senior management

Policy on Suitability, Competence and Diversity

Corporate Governance Policy

The Company's policies concerning non-financial information, sustainability and ESG (environmental, social and governance)

Due diligence process

The VIS Annual Report contains a sustainability statement along with a more detailed summary of non-financial information. The summary is

based on Nasdaq's ESG guidelines and climate impact calculations are performed by third parties in accordance with the Greenhouse Gas Protocol

methodology.

The selection of key ESG metrics was based on a materiality assessment of the insurance sector and an examination of leading foreign insurance

companies with regard to ESG performance. The assessment was then adapted to VIS's operations. Further details will now be provided about the

actions taken in the 2023 operating year.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 7 Amounts are in thousands of ISK

Main risks Key metrics Performance Goals

Non-Financial Disclosure

Analyse the carbon footprint of the

portfolio and investments according to

the PCAF methodology. Also consider

PCAF membership.

Target setting to reduce greenhouse

gas emissions and adapt to climate

change, consider SBTi certification

and create an action plan.

Continue to reduce greenhouse gas

emissions in accordance with the

action plan.

The Company continues to follow an

action plan for reducing emissions by

2025. The plan was drawn up in 2021.

Greenhouse gas emissions decreased

slightly or by about 4% year-on-year.

There was a decline of around 17% in

Scope 1 due to lower fuel

consumption and around 10% in

Scope 2 due to lower energy

consumption. Emissions on Scope 3

decreased by 1%.

Emissions intensity as a percentage of

revenue (all scopes) was 5.8 kg

CO2/ISKm ─ decreasing by 22%.

For the third year in a row, the

remaining emissions from the

Company's operations are offset with

verified units from Natural Capital

Partners.

At the time of publication of the

annual accounts, a guarantee of origin

of electricity had not been purchased

and therefore the emission is 350.4

tons of Co2 for the year 2023 (market

based).

Emissions intensity

Emissions intensity shows total GHG

emissions based on the main sample sizes in

the Company's operations.

Does the Company have an

environmental policy?

Materiality factor:

Climate policy.

Risk:

Failing to achieve the desired results in

mitigation and adaptation to climate

change.

VIS is aware of greenhouse gas emissions in

its operations. However, it is clear that in

insurance operations, emissions fall mainly

under Scope 3, i.e. emissions stemming from

the insurance and investment portfolio. VIS

does not specifically measure this, but closely

monitors the methodology used for such

calculations, e.g. by the Partnership for

Carbon Accounting Financials (PCAF ).

Inform customers about the

environmental benefits of Ökuvísir.

The use of Ökuvísir results in lower

emissions of greenhouse gases as well

as promoting safer traffic.

In 2023, VIS began a collaboration

with Netpartar, an environmentally

friendly vehicle recycling company, in

order to increase the supply of spare

parts for car repairs. In this way, VIS

wants to contribute to the circular

economy and reduce the carbon

footprint of car repairs.

Does the Company have a

sustainable product offering?

Materiality factor:

Responsible product offering.

Risk:

Not being competitive with green

products that are in demand.

Environmental

VIS received 87 points for the environmental component in Reitun's ESG evaluation, increasing its score by two points from the prior year. In the

justification, it was stated that the Company has created a good framework for environmental issues and that VIS's environmental policy is considered

effective. The Company follows a comprehensive action plan in order to achieve the goals set in the environmental policy. It should be noted that the

environmental impact of insurance companies mostly relates to losses and loss property.

Collaboration with Netpartar

In 2023, VIS began a collaboration with Netpartar, an environmentally friendly vehicle recycling company, in order to increase the supply of spare parts

in car repairs. Netpartar demolished 45 cars of certain types, yielding about 10,000 spare parts. Only spare parts from Netpartar which are the same age

or younger than the repaired car, and have received appropriate treatment according to ISO environmental and quality certification, are used. This

initiative reduces the demand for new spare parts and thus the emissions from their production. In this way, VIS wishes to contribute to the circular

economy and reduce the carbon footprint of car repairs. A life cycle analysis showed that the project can lead to a reduction of 179.5 to 188.9 tCO2

equivalents per year. Attention is drawn to the fact that it corresponds to the total emissions of VIS for the year 2022.

The reduction in emissions from this initiative can be compared to taking several cars off the road each year. If the average car emits, for example, 4.6

tons of carbon dioxide per year, the emission reduction achieved with this initiative corresponds to between 39 and 41 cars being taken off the road each

year.

Used spare parts have been used for car repairs for many years in Iceland, and for the past 30 years, VIS has sold around 1,000 damaged cars each year

at auctions where the cars are either repaired or disassembled in order to give spare parts a second life. VIS is the only insurance company in Iceland

that has held closed auctions of damaged cars exclusively for spare parts dealers who have the required licenses to resell used spare parts. This has

ensured that spare parts dealers have access to damaged cars for demolition and resale at more reasonable prices than at public auctions.

Verified carbon units

For the third year in a row, the Company offset emissions from its operations with Natural Capital Partners verified units. The projects selected reflect

the chosen Global Goals.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 8 Amounts are in thousands of ISK

Main risks Key metrics Performance Goals

Non-Financial Disclosure

Materiality factor:

Customer welfare.

Risk:

Reputational risk due to customer

dissatisfaction.

The number of incidents that can

affect customer welfare.

Customer satisfaction; NPS net

promoter score.

No reports received in 2023.

We achieved our goal of increasing

customer satisfaction.

VIS increased its score in the Icelandic

Customer Satisfaction Index and was

the only insurance company to do so

in 2023. VIS increased its score for the

first time in eight years.

The NPS recommendation index

increased by 25 points by the end of

2023. We achieved our goal.

About 20% of our customers

downloaded the loyalty program app

by the end of 2023.

We intend to continue to increase the

satisfaction of our customers. Our

goal is to increase the NPS

recommendation index by 30 points

by the end of 2024.

Our goal is that 40% of our customers

will have downloaded the loyalty

program app by the end of 2024.

Materiality factor:

Human resources.

Risk:

Staff disunity and stagnation.

The gender pay gap.

Diversity at all levels, as per the

Company's policy on suitability,

competence and diversity.

Recruitment, employee

engagement and employee

turnover.

In 2021, an important milestone was

reached in that there was no wage gap

between the sexes ─ and that success

has been maintained.

VIS also achieved the goal of reducing

the unadjusted gender pay gap in 2023.

The annual staff survey revealed that

no one had experienced sexual

harassment, which is in line with the

results of previous years.

Continued good results of workplace

analysis at VIS. Engagement measured

at 4.37, which places VIS among the

top 25% of companies in Iceland.

Job satisfaction measured at 4.49,

which means that 94% of employees

are satisfied or very satisfied in their

jobs.

These are excellent results and

engagement has never measured

higher at the Company.

Continued objective of having no

unexplained gender pay gap.

To reduce the unadjusted gender wage

gap, so that the average gender wage is

as equal as possible.

To continue to work purposefully to

ensure the competence and

professionalism of managers. In this

way, we create the best possible

working conditions in order to attract

top talent.

Identify opportunities to maintain

good employee job satisfaction and

continue to offer diverse training and

career development opportunities.

Materiality factor:

Responsible marketing.

Risk:

Reputational risk e.g. due to

greenwashing.

The number of reports of harmful

or misleading marketing.

Whether there is a defined

procedure around grants.

No reports received in 2023.

Community grants are connected to

the chosen Global Goals, with a

particular focus on prevention.

Analyse EGS risks related to

responsible marketing.

Social

ESG received 90 points for the social component in Reitun's ESG evaluation, an increase of one point from the previous assessment. The increase can

be attributed to the fact that the Company took major steps in relation to customer service during the year, including the implementation of a loyalty

program and the development of an online store. Along with these innovations, which are designed to increase customer satisfaction, the Company has

increased the number of metrics in order to further analyse those factors. Results from customer satisfaction surveys, both by the Company and

independent parties, indicate that satisfaction is increasing. Reitun's review also states that VIS achieved good results in the category of social factor and

it is positive that the Company continues to improve the framework for the aspects examined.

VIS employees are satisfied and engaged

The results of workplace analysis at VIS continue to be good. Engagement measured at 4.37, which places VIS among the top 25% of companies in

Iceland. Job satisfaction measured at 4.49, which means that 94% of employees are satisfied or very satisfied in their jobs. These are excellent results

and engagement has never measured higher at the Company.

Grants to the community

Once a year, ISK 10 million is allocated to social prevention projects. In 2023, three exciting projects received funding, including an electronic course

that discusses life after the loss of a spouse. The aim is to assist in the processing of grief through education, projects and mindfulness. Also funded was

SoGreen, whose aim is to produce verified carbon units in collaboration with the main aid organizations in low-income countries to ensure education

for girls and at the same time lead to a significant reduction in greenhouse gas emissions. The "missing girls" project also received funding, which is a

comprehensive toolkit for girls with ADHD, or suspected ADHD.

VIS also sponsored the World Women Leadership Congress, Reykjavík Global Forum, which is held in Harpa once a year. The Congress has become a

regular forum for international discussion and networking on women's rights and gender equality. About 500 participants registered for the forum from

about 80 countries, of which a fifth were from Iceland.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 9 Amounts are in thousands of ISK

Goals

Materiality factor:

Data protection and cyber security.

Risk:

Data breach and being vulnerable

to cybercrime.

Rating according to the Reitun

annual EGS assessment.

Loophole analysis based on

upcoming EU legislation

(CSRD and EU taxonomy).

Shareholder rights.

Response rate in regular

stakeholder survey.

Implement and enhance

employee cyber security

awareness

Number of data breaches

Number of complaints

regarding data protection and

cyber security

Number of reported privacy

breaches.

VIS received a score of 80 out of

100 from Reitun. The Company

continues to be the top-scoring

insurance company.

VIS received 75 points for the

governance component in Reitun's

ESG evaluation.

VIS was recognized for good

governance while also being

named:

Exemplar of Corporate

Governance.

Continued remote participation in

shareholders' meetings.

Preparation for stakeholder

analysis.

Achieve a score of 85 out of 100

from Reitun for 2024.

Continue to deepen internal

knowledge of EU taxonomy

legislation with respect to present

policies and the Company's

disclosures.

Review and implement necessary

policies and processes in

accordance with legislation (CSRD

and EU taxonomy).

Conduct meaningful stakeholder

analysis.

The number of mitigation

measures and their status.

Results of supplier evaluation

and number of suppliers who

are committed to human rights.

Whether ESG factors are taken

into account in investment

decisions.

Supplier code of conduct defined

and supplier assessment prepared.

Continue to define active

involvement in investments (e.g.

through a conversation about ESG

with companies in which

investments are made).

Redo materiality analysis based on

double materiality and stakeholder

analysis.

Insert provisions in contracts

requiring suppliers to comply with

laws on labour, human rights and

environmental protection.

Incorporate EGS risk assessment

into existing risk management

processes.

Examine methods for

implementing EGS risk assessment

for new policyholders.

The Company received ISO 27001

certification in January 2024. Work

continues according to a defined

plan on the maintenance of the

information security management

system.

No data breaches occurred in

2023.

No complaints received regarding

data protection or cyber security.

No privacy-related complaints

received last year.

Receive continued good results

from auditors on ISO 27001.

Receive a good result from the

auditor (KPMG) in relation to

compliance with recommendation

no. 1/2019 and the EIOPA

guideline.

Maintain good results in risk

assessment in the operation of

information systems and in

information security.

Ensure that the Company complies

with the Date Protection Act and

good business practices.

Materiality factor:

Good corporate governance.

Risk:

Disagreement between

stakeholders and failure to comply

with the law.

Materiality factor:

Risk management.

Risk:

That risks are not identified and no

mitigation measures are

implemented. Lack of awareness of

risks in the value chain and in

investments.

Non-Financial Disclosure

Main risks Key metrics Performance

Governance

VIS received 75 points for governance, an increase of two points from the prior year. In the justification, it was stated that the Company has already

taken large steps in the factors under review, including the establishment of a clear sustainability focus, membership of UN-PRI and a responsible

product and service offering. In this context it is worth mentioning Ökuvísir, which provides a financial incentive to drive better, thereby reducing

pollution and potentially reducing the frequency of traffic accidents. General governance and business ethics are considered in good order at the

Company.

In 2021, VIS became the first insurance company in Iceland to become a member of UN-PRI, the United Nations Principles for Responsible

Investment. The Company has significant influence though its asset portfolio. By taking sustainability factors into consideration in its investments, the

Company minimizes the risks associated with sustainability while at the same time encouraging other companies to improve their business practices.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 10 Amounts are in thousands of ISK

EU Taxonomy

On 1 June 2023, Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment was transposed into Icelandic

law by Act No. 25/2023 on the provision of information on sustainability in the field of financial services and a taxonomy system for sustainable

investments. Companies that are subject to the requirement of Article 66d of the Annual Accounts Act No. 3/2006 on non-financial disclosure must

now also provide information according to the requirements of the aforementioned Regulation, also known as the EU Taxonomy Regulation. VÍS is

among them.

According to Article 3 of the Taxonomy Regulation, economic activities that are considered to be environmentally sustainable must contribute

significantly to one or more of the environmental objectives that have been established, while at the same time not significantly harming other

environmental objectives. The activities must also be carried out in compliance with minimum safeguards and comply with technical screening

criteria. Technical screening criteria for non-life insurance: underwriting of climate-related perils, are defined in section 10.1 of Annex II to Delegated

Regulation (EU) 2021/2139. In order to meet the aforementioned criteria, VIS will need to carry out a comprehensive analysis of its operations and

make appropriate improvements. Ambition is present within the Company for continued work when it comes to the Taxonomy Regulation, as can be

seen in the goals for the current operating year.

Key performance measures are established according to Annex IX and Annex XI to Delegated Regulation (EU) 2021/2178.

Minimum criteria

Some of the criteria for environmentally sustainable economic activities concern social factors and governance, also known as minimum safeguards.

The minimum safeguards set out in the Taxonomy Regulation refer to the processes that ensure minimum compliance with the standards of the

Organization for Economic Co-operation and Development (OECD) for multinational companies and of the United Nations for human rights and

business. They are intended to ensure that economic activities meet certain minimum standards when it comes to human rights, corruption and

bribery, tax matters and competition matters.

Human rights

VIS operates in accordance with applicable laws and regulations and respects human rights in all its activities. The Board has set a policy on

qualifications, competence and diversity, equality policy and occupational health and safety policy. VIS has set a policy to be a role model in matters of

equality. The VIS equality and equal pay policy clearly states that VIS is a workplace where gender-based and sexual harassment, violence or bullying

are not tolerated. At VIS, there is a clear channel for issues related to bullying and sexual harassment, and employees are given clear information about

the channels of communication and the progress of such cases. At VIS, it is understood that it is the joint task of all employees to follow the

company's equality and equal pay policy. Each employee must be careful to show respect, openness and discretion in their dealings with others. It is

also the responsibility of each employee to be aware of their environment and their moral duty to act if they witness what could be considered an

EKKO incident (EKKO is an Icelandic abbreviation for bullying, sexual harassment, gender-based harassment and violence).

The Company has a procedure in place for the handling of reports of misconduct and the protection of whistleblowers in accordance with the Act on

the Protection of Whistleblowers No. 40/2020. The procedure is available on the Company's website. The purpose of the procedure is to document

the method for handling and reporting alleged misconduct in relation to the Company's operations and the protection of whistleblowers. The

Compliance Officer is responsible for ensuring that adequate communication channels are in place for reporting alleged misconduct. On the

Company's website, it is possible to submit a notification of potential misconduct in VIS's activities. Notifiers are encouraged to submit a notification

under their own name, but the system also offers the ability to send anonymous notifications.

The Company has implemented and ensured compliance with the Act on data protection and the processing of personal data. The Company's Board

of Directors has set a policy on the handling of personal data and a Data Protection Officer has been appointed. Procedures have been established

and processes defined to ensure careful handling of personal data, and a committee for information security and data protection operates within the

Company. On the Company's website, customers can find information in the Company's Privacy Policy on how the Company processes personal data

and how they can exercise their rights under the Data Protection Act.

The Company has not violated any laws or rules imposed by regulators in the area of human rights.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 11 Amounts are in thousands of ISK

Corruption/bribery

The Company engages in honest and responsible business practices where any form of bribery, corruption, criminal activity and money laundering is

neither practiced nor tolerated. The Company has established and implemented internal processes, codes of conduct and procedures in the area

of compliance and has taken measures to identify and prevent bribery. VIS has established a code of ethics which is signed by employees upon

commencing work at the Company. The Board reviews and confirms the code of ethics each year.

The Board has also established a policy on internal control, defined the internal control process and procedures for the implementation of internal

control. In addition, the Board has established a policy on compliance that describes the way in which work should be done to identify the risk of

failure by the Company to fulfil obligations according to laws and regulations.

The Company has reporting channels on its website for reporting possible misconduct, including acceptance of bribery, and has a misconduct team

whose role it is to receive and investigate reports received. Procedures have been established for perks received by employees from customers,

partners and suppliers, and employees must report all gifts, perks or invitations.

The Board has established a policy on measures against money laundering and the financing of terrorism, and procedures have been established based

on the policy. The Company has appointed a person in charge of measures against money laundering who is responsible for the enforcement of the

laws and regulations on measures against money laundering and the financing of terrorism, and the Compliance Officer handles notifications of

suspicious transactions and funds.

The Company has not violated any laws or rules imposed by regulators in the area of corruption and bribery.

Taxes

The Company does not have a defined tax policy that is set by the Board and published publicly. However, tax procedures are well defined at the

Company with the involvement of senior management. The Group CFO is the person responsible, while the CFO of VIS is responsible for following

through on paying taxes with the help of tax experts and the payment of public dues. The Company receives services from external consultants in the

field of tax matters who assist with calculation and review before tax returns are filed. The Company's position is clear on the issue, and the Company

complies with applicable laws and regulations in every respect. The Company strives to set an example here as elsewhere.

The Company has reporting channels on its website for reporting possible misconduct, including inappropriate behaviour or actions related to taxes,

and has a misconduct team whose role it is to receive and investigate reports received.

The Company has not violated any laws or rules imposed by regulators in the area of taxes.

Competition

Competition rules play an important role in a free market, as they are intended to ensure that consumers and society as a whole benefit from the

efficient use of production resources and thereby from active competition. Competition laws are part of the regulatory environment in which the

Company operates at any given time. It is therefore a fundamental prerequisite for the Company's operations and structure to comply with the rules

of the Competition Act. The board of VIS has established a policy on competition matters which is reviewed annually. Based on the policy, the

Company has also published a manual on competition rules for employees. The Company attaches great importance to regular education of

employees about competition rules and that employees are well informed about the laws and regulations that apply to competition matters. It is

emphasized that competition law considerations are always taken into account in decision-making.

The CEO is responsible for the implementation of the policy on competition matters and must ensure that appropriate measures are taken to ensure

that it is followed, while the General Counsel is the supervisor of the policy and the Compliance Officer is responsible for ensuring that employees

receive appropriate training on competition matters while monitoring compliance with the policy.

The Company has not violated any laws or rules imposed by regulators in the area of competition matters.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 12 Amounts are in thousands of ISK

Statement of the Board of Directors and CEOs

In our opinion and to the best of our knowledge, the consolidated annual financial statements of Vátryggingafélag Íslands hf. give a true and fair view

of the Group's operating results for the year 2023, and its assets, liabilities and financial position as at 31 December 2023. It is also our opinion that

the consolidated annual financial statements and the report and endorsement by the Board of Directors and the CEOs give a true and fair view of the

development and performance of the Group's operations and its financial position at year-end and describe the principal risks facing the Group.

The Board of Directors and the CEOs of Vátryggingafélag Íslands hf. have today reviewed the Company’s consolidated annual financial statements

for the year 2023 and confirm them with their signatures. The Board of Directors and the CEOs recommend that the consolidated annual financial

statements be confirmed at the Company’s Annual General Meeting.

Reykjavik, 28 February 2024

On the Board of Directors

Stefán Héðinn Stefánsson Vilhjálmur Egilsson

Chairman of the Board Vice-Chairman of the Board

Marta Guðrún Valdimar Svavarsson

Blöndal

Guðný Hansdóttir

CEOs

Guðný Helga Herbertsdóttir Haraldur Þórðarson

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 13 Amounts are in thousands of ISK

Notes

2023

2022

Insurance revenue ................................................................................................ 6 26.474.076 24.467.123

Insurance service expenses ................................................................................. 7 (25.784.142) (22.673.735)

Net expenses from reinsurance contracts ........................................................ 8 (546.762) (579.335)

Insurance service result 143.172 1.214.052

Interest income ..................................................................................................... 323.200 0

Interest expense .................................................................................................... (249.517) 0

Net interest income 9 73.683 0

Fee and commission income .............................................................................. 373.112 0

Fee and commission expense ............................................................................. (17.453) 0

Net fee and commission income 10 355.659 0

Net financial income (expenses) ........................................................................ 11 2.829.526 (159.203)

Share in the profit of affilliates, after income tax ........................................... 36 9.191 0

Other operating income ...................................................................................... 74.055 47.372

Other net operating income 2.912.772 (111.831)

Net operating income 3.485.286 1.102.221

Operating expenses .............................................................................................. 12 (888.232) (48.214)

Impairment of intangible assets ......................................................................... 17 (805.628) 0

Profit (loss) before taxes 1.791.426 1.054.007

Income tax ............................................................................................................. 14 40.178 (113.958)

Profit for the year 1.831.604 940.048

Profit attributible to shareholders ................................................................... 1.846.832 940.048

Profit attributible to minority interest ............................................................ (15.228) 0

Total profit for the year .................................................................................... 1.831.604 940.048

Basic and diluted earnings per share ................................................................. 15 0,97 0,55

The notes on pages 18-56 are an integral part of the financial statements.

Statement of comprehensive income 2023

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Statement of financial position as at 31 December 2023

Notes

31.12.2023

31.12.2022

Assets

16 329.531 346.180

17 3.483.211 1.414.824

18 584.453 615.906

14 191.211 78

36 190.283 0

19 42.758.589 41.854.357

22 1.672.720 0

34 4.562.123 0

34 337.320 0

4.521.114 0

21 1.047.382 1.154.453

23,32 1.229.156 1.137.811

24 143.235 0

25 2.146.748 1.250.281

26 2.270.693 2.380.526

65.467.768 50.154.414

Equity

27 1.905.550 1.715.600

3.087.000 0

625.620 625.620

3.852.262 6.671.783

11.660.499 8.265.816

21.130.931 17.278.819

41.002 45.960

21.171.933 17.324.779

Liabilities

30 3.589.584 3.320.195

14 271.629 116.389

37 6.227.385 0

2.285.315 0

34 700.000 0

31 636.966 663.802

32 26.162.186 25.087.730

21 1.047.382 1.154.453

24 215.615 0

33 3.159.773 2.487.066

44.295.835 32.829.635

65.467.768 50.154.414

investment risk is borne by the policyholders .................................................

Accounts payables and other liabilites ..............................................................

Subordinated bonds .............................................................................................

Technical provision for life-insurance policies where

Total liabilities

Total equity and liabilities

The notes on pages 18-56 are an integral part of the financial statements.

Tax liability ............................................................................................................

Money market deposits .......................................................................................

Insurance contract liabilities ...............................................................................

Lease liability .........................................................................................................

Liabilities to credit institutions ...........................................................................

Borrowings ............................................................................................................

Total equity

Minority interest ...................................................................................................

Operating assets ....................................................................................................

Goodwill and other intangible assets ................................................................

Right-of-use asset .................................................................................................

Deferred income tax asset ..................................................................................

borne by life-insurance policyholders ...............................................................

Reinsurance assets ................................................................................................

Other assets ...........................................................................................................

Cash and cash equivalents ...................................................................................

Share in subsidiaries .............................................................................................

Insurance investment assets ...............................................................................

Fixed income securities .......................................................................................

Shares and other variable income securities ....................................................

Loans to customers ..............................................................................................

Investments where investment risk is

Total assets

Share capital ...........................................................................................................

Share premium ......................................................................................................

Derivatives .............................................................................................................

Securities used for hedging .................................................................................

Bills .........................................................................................................................

Statutory reserve ...................................................................................................

Retained earnings .................................................................................................

Restricted reserves ................................................................................................

Total equity group

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Statement of Changes in Equity for the year 2023

premium

Statutory

Other

Retained

Minority

Total

capital

account

reserve

reserves

earnings

interest

equity

Equity 1.1.2022 ............................................................

1.750.000

625.620

9.371.188

8.705.832

20.452.640

Minority interest .......................................................... 45.960 45.960

Dividends paid, ISK 2 per share ............................... (3.500.000) (3.500.000)

Own shares purchased ................................................ (34.400) (579.470) (613.870)

Total comprehensive income for the year ...............

940.048

Restricted reserve for securites ..................................

(2.699.405)

2.699.405

Equity 31.12.2022 ........................................................ 1.715.600 0 625.620 6.671.783 8.265.816 45.960 17.324.779

Change in share of owenership in affiliates ............. 10.270 10.270

Dividends paid, ISK 0.554 per share ........................ (939.335) (939.335)

Own shares purchased ................................................ (20.050) (332.335) (352.385)

Increase of share capital ............................................. 210.000 3.087.000 0 3.297.000

Total comprehensive income for the year ............... 1.846.832 (15.228) 1.831.604

Restricted reserve for securites .................................. (2.819.521) 2.819.521 0

Equity 31.12.2023 ........................................................ 1.905.550 3.087.000 625.620 3.852.262 11.660.499

41.002 21.171.933

The notes on pages 18-56 are an integral part of the financial statements.

Consolidated financial statements of Vátryggingafélag Íslands hf.. 2023 16 Amounts are in thousands of ISK

Notes 2023 2022

Operating activities

1.831.604 940.048

(678.158) (139.761)

(2.829.526) (852.651)

72.380 0

(9.191) 0

(6.014) (1.287)

1.477.464 588.595

1.659.793 5.829.252

0 (2.357.123)

0 (676.116)

(91.345) 69.569

(478.998) 16.359

(173.980) 51.661

1.074.456 1.368.504

511.587 166.207

Cash flows from opearating activities before interest and tax 2.360.072 5.003.258

856.171 659.039

167.135 205.544

(203.800) (251.128)

(66.711) (286.092)

Cash flows from operating activities 3.112.867 5.330.622

Investing activities

16 (96.345) (31.925)

25.200 14.832

17 (178.524) (248.866)

(2.103.583) 0

(1.011.514) 0

10.000 0

(82.725) 0

1.285.596 0

(22.766) 0

(2.174.662) (265.960)

Financing activities

(352.385) (613.870)

(939.335) (3.500.000)

(179.748) (142.395)

368.037 0

(8.849) 0

67.913 0

(865) 0

(1.045.232) (4.256.264)

(107.028) 808.397

2.380.526 1.552.903

(2.805) 19.226

2.270.693 2.380.526

The notes on pages 18-56 are an integral part of the financial statements.

Derivatives, change ........................................................................................

Purchase of treasury shares ..............................................................................

Dividends paid ...................................................................................................

Net cash flow due to the acquisition of a subsidiary .....................................

Loans to related parties, change .......................................................................

Share in the profit of affilliates .....................................................................

Sale of operating assets .....................................................................................

Income taxes paid ..............................................................................................

Short term receivables .......................................................................................

Investments in subsidiary ..................................................................................

Purchase of operating assets .............................................................................

Tax liability, change ........................................................................................

Sale of shares in subsidiaries .............................................................................

Purchase of intangible assets ............................................................................

Securities, change ...............................................................................................

Accounts payable and other liabilities, change ............................................

Financial expenses paid .....................................................................................

Insurance contract liabilities, change ...........................................................

Accounts receivable, change .........................................................................

Interest income received ...................................................................................

Cash and cash equivalents at year end .............................................................

Capital payment of lease liability ......................................................................

Change in cash and cash equivalents ...............................................................

Effect of movements in exchange rates on cash held ...................................

Cash and cash equivalents at the beginning of the year ................................

Change in short term liabilities to credit institutions .....................................

Short term loan, changes ..................................................................................

Other liabilities ...................................................................................................

Capital gain tax ...................................................................................................

Dividend received ..............................................................................................

Statement of cash flows for the year 2023

Reinsurance assets, change ............................................................................

Other assets, change ......................................................................................

Profit for the year ..............................................................................................

Bonds and other receivables, change ...........................................................

Changes in operating assets and liabilities:

Financial assets, change .................................................................................

Operating items not affecting cash flows:

Financial income and expenses ....................................................................

Sale of operating assets ..................................................................................

Fair value changes of financial assets ...........................................................

Depreciation and amortisation ....................................................................

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023 17 Amounts are in thousands of ISK

Notes

2. Basis of preparation

Breytingar á reikningsskilaaðferðum og framsetningu

The effect of the implementation of IFRS 17 on the amounts for the year 2022

Income statementIFRS 17IFRS 4ChangePremiums earned .....................................................................................................................023.989.586(23.989.586)Impairment of accounts receivables .....................................................................................0(23.949)23.949Insurance revenue ....................................................................................................................24.467.123024.467.123Claims incurred ........................................................................................................................0(17.966.330)17.966.330Operating expenses .................................................................................................................(48.214)(5.637.658)5.589.444Insurance service expenses ....................................................................................................(22.673.735)0(22.673.735)Premiums earned, reinsurers' share ......................................................................................0(792.415)792.415Claims incurred, reinsurers' share .........................................................................................0205.603(205.603)Net expenses from reinsurance contracts ...........................................................................(579.335)0(579.335)Interest income ........................................................................................................................0659.039(659.039)Foreign exchange difference ..................................................................................................032.934(32.934)Fair value changes of financial assets ...................................................................................0852.651(852.651)Technical interest rate and fx rate changes of technical provisions ...............................0173.517(173.517)Interest expenses .....................................................................................................................0(486.343)486.343Net financial income ...............................................................................................................(159.203)0(159.203)Other income ...........................................................................................................................047.372(47.372)Other operating income .........................................................................................................47.372047.372Income taxes .............................................................................................................................(113.958)(113.958)0Profit for the year ..............................................................................................940.048 940.0480

The Group has also adopted the IFRS 9 standard for financial instruments. IFRS 9 replaces IAS 39. Effect of implementation of IFRS 9 are insignificant for

the financial statements.

The Group uses retroactive implementation of the standards, where comparison amounts have been changed according to the new standards. Other than that

the Group uses the same accounting principles are used when making the Consolidated Financial Accounts for 2022.

The consolidated financial statements of Vátryggingafélag Íslands hf. comprise the financial statements of the Company and its subsidiaries, Líftryggingafélag

Íslands ("Lífís"), SIV eignastýring and Fossar fjárfestingarbanki. The Group's operations consist of casualty insurance, life insurance, investment activities and

financial undertakings. The Icelandic Financial Supervisory Authorities supervises the operations of the Group according to law no. 87/1998 on the official

supervision of financial operations.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European

Union and Icelandic law on annual accounts. The financial statements were approved and authorised for issue at a board meeting on 28 February 2024. A

summary of significant accounting policies is provided in note 42.

The Group has adopted the IFRS 17 accounting standard from 1 January for VÍS and Lífís. IFRS 17 replaces the IFRS 4 accounting standard for insurance

contracts from January 2023 and sets new rules for reporting, valuation, presentation, and information about Insurance contracts. The most visible effect is

reorganization of items within the financial statements. The implementation of the standards had no effect on equity ratios in the Group.

Reporting entity

Vátryggingafélag Íslands hf., hereafter referred to as "the Company", "the Group" or "VÍS", is a limited liability company and operates according to law no.

100/2016 on insurance operations, law no. 2/1995 on limited liability companies and law no. 161/2002 on financial undertakings. The Company´s

headquarters are at Ármúli 3, Reykjavík.

On 15 June VÍS shareholders meeting agreed to VIS buying all the shares in Fossar Investment bank (Fossar). After approval from surveillance authorities the

purchase agreement was fully finalized on 2 October 2023. From that day Fossar is a part of the consolidated accounts.

A purchase agreement has been signed between VÍS and VÍS tryggingar hf, for purchase of the Insurance business of VÍS. The purchase agreement is subject

to approval of the shareholders meeting and the approval of the Financial Supervisory Authority of the transfer of Insurance contracts and the insurance

business to a subsidiary. The Company is expecting that the movement of the insurance business to a subsidiary will happen in the year 2024.

The consolidated accounts of Vátryggingarfélag Íslands for the year 2023 (consolidated accounts) consists of the annual Financial Accounts of Vátryggingafélag

Íslands (VÍS or the parent company) and it subsidiaries, Líftryggingafélag Íslands (Lífís), Siv Asset Management (SIV) and Fossar Investment bank. To those

combined is referred to as "the group". The Group operates in the field of non-life and life insurance, finance and operation of an investment bank. The

Groub is under the supervision of the Financial Supervisory authority on basis of law nr. 87/1998 on public surveillance of financial institutions.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

IFRS 17IFRS 4Balance sheet 31.12.2022 31.12.2022 ChangeOperating assets ....................................................................................................................... 346.180 346.180 0Goodwill and other intangible assets ................................................................................... 1.414.824 1.414.824 0Right-of-use asset .................................................................................................................... 615.906 615.906 0Financial assets ......................................................................................................................... 41.854.357 41.854.357 0Investments where investment risk is borne by life-insurance policyholders .............. 1.154.453 1.154.453 0Accounts receivables ............................................................................................................... 0 7.090.340 (7.090.340)Reinsurance assets ................................................................................................................... 1.137.811 1.137.811 0Other receivables ..................................................................................................................... 1.250.358 727.202 523.156Cash and cash equivalents ...................................................................................................... 2.380.526 2.380.526 0Total assets 50.154.415 56.721.598 (6.567.183)EquityShare Capital ............................................................................................................................. 1.715.600 1.715.600 0Statutory reserve ...................................................................................................................... 625.620 625.620 0Restricted reserves ................................................................................................................... 6.671.783 6.671.783 0Retained earnings ..................................................................................................................... 8.265.816 8.265.816 0Total equity group ................................................................................................................... 17.278.819 17.278.819 0Minority interest ....................................................................................................................... 45.960 45.960 0Total equity 17.324.779 17.324.779 0LiabilitiesSubordinated bonds ................................................................................................................ 3.320.195 3.320.195 0Deferred income tax liability ................................................................................................. 116.389 116.389 0Lease liability ............................................................................................................................ 663.802 663.802 0Insurance contract liabilities .................................................................................................. 25.087.730 0 25.087.730Technical provision ................................................................................................................. 0 31.654.913 (31.654.913)Technical provision for life-insurance policies where 0investment risk is borne by the policyholders .................................................................... 1.154.453 1.154.453 0Accounts payables and other liabilites .................................................................................2.487.0662.487.0660Total liabilities32.829.63539.396.818(6.567.183)Total equity and liabilities50.154.415 56.721.598(6.567.183)

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

2. Basis of preparation cont.

Use of accounting standard under the Premium Allocation Approach (PAA)

3. Functional and presentation currency

4. Accounting estimates

- Insurance contract liabilities, see note no. 32

- Financial assets, see notes no. 19 and 34.2

- Intangible assets, see note no. 17

- Useful life of fixed assets, see note no. 16

- Impairment of account receivables, see note no. 13

Preparing financial statements in accordance with IFRS requires management to make assumptions, estimates and apply judgement that affect the assets and

liabilities at the reporting date, disclosures in notes and income and expenses. Estimates and judgements are based on experience and various other factors that

are considered appropriate and form the basis of decisions made regarding the reported amounts of assets and liabilities not evident by other means.

Estimates and assumptions are reviewed regularly. Changes in accounting estimates are recognised in the period when they are revised.

Management has made assumptions and accounting estimates regarding the following items that materially impact the Group's financial statements:

In the exceptional cases where contracts are longer than 12 months, the Group recognizes all cost in the accounting year they are entered into.

When calculating Liability for Remaining Coverage (LRC) the Group does not use discounting of cash flows, since the contracts are not longer than 12

months. When calculating Liability for Incurred Claims, the estimated future claims are discounted to their present value using an appropriate discount rate.

This is the same method as used under IFRS 4, for claims where it is expected that settlement will take more than 12 months.

Financial Cost stemming from calculation of the Liability for Incurred Claims, such as discounting, effects of interest rate changes and inflation adjustment are

shown in the Income Statement under net financial Income.

These consolidated financial statements are presented in Icelandic Krona (ISK), which is the Company´s functional currency. All amounts are presented in

thousands of ISK unless otherwise stated.

IFRS 17, or the International Financial Reporting Standard 17, is a global accounting standard for insurance and re-insurance contracts. IFRS 17 aims to

provide a more transparent and consistent approach to the accounting for insurance contracts, ensuring that insurers provide relevant information to users of

financial statements. IFRS 17 aims to improve comparability and transparency in the financial reporting of insurance contracts across different jurisdictions,

providing investors and other stakeholders with better insights into an insurer's financial position, performance, and risk exposure of the group.

When adopting the IFRS 17 accounting standard, all insurance and er-insurance contracts of the group were investigated and decided what was the proper way

to treat them in accounting. The conclusion was that all insurance contracts and er-insurance contracts are eligible for the PAA method. The Premium

Allocation Approach is designed for contracts that have a relatively short coverage period or simple cash flows, which is the case for almost all insurance

contracts within the Group.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

5. Operating segments

The operating segments' results for the year 2023 are specified as follows:

The Group's operations are in accordance with its organisation and internal reporting divided into three operating segments: Insurance operations, investment

activities and financial operations.

InsuranceInvestmentFinancialoperationsactivitiesoperationsTotalInsurance revenue ....................................................................................................................26.474.07626.474.076Claims incurred ........................................................................................................................(19.878.985)(19.878.985)Insurance service expenses ....................................................................................................(5.905.156)(5.905.156)Net expenses of reinsurance contracts ................................................................................(546.762)(546.762)Insurance service result .......................................................................................................... 143.172 0 0 143.172Net interest income .................................................................................................................73.68373.683Net fee and commission income ..........................................................................................355.659355.65900429.342429.342Investment income ..................................................................................................................4.752.88458.3414.811.225Investment expenses ...............................................................................................................(320.987)(320.987)Finance expenses from insurance contracts held ..............................................................(1.184.268)(1.184.268)Other finance expenses .......................................................................................................... (476.444) (476.444)Investment and financial result after finance expenses .................................................... 0 2.771.185 58.3412.829.526Other income ...........................................................................................................................68.0935.96174.055Share in the profit of affilliates, after income tax ...............................................................9.1919.191Impairment of intangible assets ............................................................................................(805.628)(805.628)Financial expenses ................................................................................................................... (621.762) (621.762)Segment result .......................................................................................................................... (662.456) 2.848.469 (128.118) 2.057.897Other expenses .................................................................................................................................................................................................................................(266.470)Income tax ........................................................................................................................................................................................................................................40.178Profit for the year .................................................................................................................... 1.831.604

Under net financial Income in the Statement of Comprehensive Income, operational cost of investment activities, finance expenses from insurance contracts

held and other finance expenses, a total of ISK 1.982 million, has been taken into consideration.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

The operating segments' results for the year 2022 are specified as follows: *

InsuranceInvestmentFinancialoperationsactivitiesoperationsTotalInsurance revenue ....................................................................................................................24.467.12324.467.123Claims incurred ........................................................................................................................(17.328.330)(17.328.330)Insurance service expenses ....................................................................................................(5.345.406)(5.345.406)Net expenses of reinsurance contracts ................................................................................(579.335)(579.335)Insurance service result .......................................................................................................... 1.214.052 0 0 1.214.052Net interest income .................................................................................................................0Net fee and commission income ..........................................................................................00000Investment income ..................................................................................................................1.173.6871.173.687Investment expenses ...............................................................................................................(263.014)(263.014)Finance expenses from insurance contracts held ..............................................................(583.533)(583.533)Other finance expenses .......................................................................................................... (486.343) (486.343)Investment and financial result after finance expenses .................................................... 0 (159.203) 0 (159.203)Other income ...........................................................................................................................47.37247.372Share in the profit of affilliates, after income tax ...............................................................0Impairment of intangible assets ............................................................................................0Financial expenses ................................................................................................................... 0Segment result .......................................................................................................................... 1.214.052 (111.831) 0 1.102.222Other expenses ........................................................................................................................ (48.214)Income tax ................................................................................................................................ (113.958)Profit for the year .................................................................................................................... 1.214.052 (111.831) 0 940.048

*Comparative figures have been changed in accordance with IFRS 17, see note 2

Under net financial Income in the Statement of Comprehensive Income, operational cost of investment activities, finance expenses from insurance contracts

held and other finance expenses, a total of ISK 1.333 million, has been taken into consideration.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

Insurance activities consist of casualty and life insurance, and are specified as follows for the year 2023:

General Accident andProperty Marine Vehicle liability healthinsurance insurance insurance insurance insuranceInsurance revenue ...................................................................................5.676.272 555.763 14.162.203 1.539.949 2.631.053 Insurance service expense .....................................................................- Claims incurred ....................................................................................(4.201.974) (640.140) (11.464.304) (835.936) (1.979.508)- Operating cost of insurance ..............................................................(1.379.810) (159.832) (2.871.645) (412.818) (643.232)Net expenses from reinsurance contracts ..........................................(388.736) 9.935 (63.350) (124.024) (28.775)Profit (loss) ...............................................................................................(294.248) (234.273) (237.095) 167.170 (20.461)Health and Totalcritical illness direct ForeignLife-insurance insurance insurance reinsurance TotalInsurance revenue ...................................................................................833.814 1.066.750 26.465.805 8.271 26.474.076 Insurance service expense .....................................................................- Claims incurred ....................................................................................(218.738) (565.714) (19.906.313) 27.328 (19.878.985)- Operating cost of insurance ..............................................................(187.429) (221.160) (5.875.926) (29.231) (5.905.156)Net expenses from reinsurance contracts ..........................................(40.806) 88.992 (546.762) 0 (546.762)Profit ........................................................................................................386.842 368.869 136.803 6.369 143.172 Insurance activities consist of casualty and life insurance, and are specified as follows for the year 2022*:General Accident andProperty Marine Vehicle liability healthinsurance insurance insurance insurance insuranceInsurance revenue ...................................................................................5.243.031 591.171 12.981.990 1.462.221 2.450.224 Insurance service expense .....................................................................- Claims incurred ....................................................................................(3.050.420) (215.637) (10.488.928) (787.086) (2.081.256)- Operating cost of insurance ..............................................................(1.246.607) (162.177) (2.605.824) (371.311) (575.135)Net expenses from reinsurance contracts ..........................................(268.978) (78.175) (55.970) (67.314) (25.752)Profit (loss) ...............................................................................................677.026 135.181 (168.732) 236.510 (231.919)Health and Totalcritical illness direct ForeignLife-insurance insurance insurance reinsurance TotalInsurance revenue ...................................................................................760.638 924.958 24.414.233 52.889 24.467.123 Insurance service expense .....................................................................- Claims incurred ....................................................................................(384.753) (321.607) (17.329.687) 1.357 (17.328.330)- Operating cost of insurance ..............................................................(162.623) (182.607) (5.306.284) (39.122) (5.345.406)Net expenses from reinsurance contracts ..........................................(17.212) (64.266) (577.667) (1.668) (579.335)Profit .........................................................................................................196.051 356.478 1.200.595 13.457 1.214.052 *Comparative figures have been changed in accordance with IFRS 17, see note 2

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

6. Insurance revenue

2023 2022*Premiums earned ............................................................................................................................................................................................ 26.046.553 24.120.168Other insurance revenue ................................................................................................................................................................................427.523 346.955Insurance revenue............................................................................................................................................................................................ 26.474.076 24.467.123*Comparative figures have been changed in accordance with IFRS 17, see note 2

7. Insurance service expense

2023 2022*Claims incurred ................................................................................................................................................................................................19.878.985 17.328.330Operating cost of insurance activities ......................................................................................................................................................... 5.905.156 5.345.406Insurance service expense...............................................................................................................................................................................25.784.141 22.673.736

8. Net expenses from reinsurance contracts

2023 2022Reinsurers' share of premiums earned ........................................................................................................................................................(893.979) (792.415)Reinsurers' share of claims incurred ............................................................................................................................................................341.831 205.603Commission from reinsurers ........................................................................................................................................................................ 5.386 7.477Net expenses from reinsurance contracts....................................................................................................................................................(546.762) (579.335)

Net interest income

Interest income is broken down as follows: 2023Bank deposits, liquid assets, loans and other interest income ................................................................................................................ 102.220Derivatives ........................................................................................................................................................................................................106.443Interest on financial assets at fair value through profit and loss ............................................................................................................65.183Interest on financial assets is recognized at fair value through OCI...................................................................................................... 49.353Total interest income ......................................................................................................................................................................................323.200Money market deposits and issued bills.......................................................................................................................................................(238.147)Lease liabilities' interest expense, note 19....................................................................................................................................................1.293Other interest expense.................................................................................................................................................................................... (12.663)Total interest expense......................................................................................................................................................................................(249.517)Net interest income......................................................................................................................................................................................... 73.683

10. Net fee and commission income

2023Capital markets and corporate finance ........................................................................................................................................................41.645Asset Management ..........................................................................................................................................................................................197.879Other net fee commission income ...............................................................................................................................................................29.266268.659

Commission income includes remuneration for services provided to customers in the areas of market trading, corporate consulting, asset

management, securities trading and lending.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

11.

Investment income

2023 2022Interest income and other fianance income ............................................................................................................................................... 638.584 321.036Fair value changes of shares* ........................................................................................................................................................................ 1.715.133 464.861Fair value changes of other financial assets*............................................................................................................................................... 2.457.509 387.789Fair value changes of financial assets............................................................................................................................................................ 4.172.642 852.650Financial Income..............................................................................................................................................................................................4.811.2251.173.687Financial cost of insurance contracts............................................................................................................................................................ (1.184.268) (583.533)Other financial cost.......................................................................................................................................................................................... (476.444) (486.343)Operational cost of Investment activities.................................................................................................................................................... (320.987) (263.014)Net Financial Income...................................................................................................................................................................................... 2.829.526 (159.203)

Included in fair value change of shares is 167 (2022: 206) million ISK dividend from share holding.

*Fair value change of finance operations included

12.

Operating expenses

20232022Salaries and salary-related expenses ............................................................................................................................................................. 3.971.062 3.126.938Other operating expenses .............................................................................................................................................................................. 2.502.162 1.942.298Depreciation and amortisation ..................................................................................................................................................................... 641.081 587.419Total.................................................................................................................................................................................................................... 7.114.305 5.656.655Other cost ......................................................................................................................................................................................................... 888.232 48.214Operating cost of Insurance contracts ........................................................................................................................................................ 5.905.156 5.345.406Operating cost of Investment activities of Insurance assets ................................................................................................................... 320.917 263.035Total operating expenses ............................................................................................................................................. 7.114.305 5.656.655Auditors fee for the audit of the annual financial statements amounted to ISK 37.6 (2022: ISK 30.7) million and for other services ISK 2.6 (2022: ISK 0.2)million. The aforementioned amounts include VAT of 24%.Salaries and salary-related expenses are specified as follows: 2023 2022Salaries ............................................................................................................................................................................................................... 3.100.468 2.411.138Contribution to pension funds ..................................................................................................................................................................... 415.398 347.744Special financial activities tax on salaries ..................................................................................................................................................... 176.396 157.329Other salary-related expenses ....................................................................................................................................................................... 278.799 210.727Salaries and salary-related expenses ............................................................................................................................................................. 3.971.062 3.126.938Number of fulltime employees ..................................................................................................................................................................... 208 186Salaries, benefits and contribution to pension funds to CEO, board members and key management personnel are as follows:2023 2022Salaries and Contributes to Salaries and Contributes tobenifits pension fund benifits pension fundStefán Héðinn Stefánsson, chairman of boardand member of remuneration committee ........................................................................... 11.418 1.313 10.755 1.237Vilhjálmur Egilsson, vice chairman of boardand member of audit committee ........................................................................................... 7.500 863 7.149 822Guðný Hansdóttir, board memberand member of risk committee ............................................................................................. 7.677 883 6.825 785Marta Guðrún Blöndal, board memberand member of remuneration committee .............................................................................. 8.061 927 7.251 834Ásgeir Helgi Reykfjörð Gylfason, board member ................................................................ 4.275 492 0 0Ragnheiður Hrefna Magnúsdóttir, alternative board member ........................................ 475 55 445 51Sveinn Friðrik Sveinsson, alternative board member .......................................................... 475 55 445 51Valdimar Svavarsson, former board memberand a member of audit committee ........................................................................................ 7.671 882 7.029 808Guðný Helga Herbertsdóttir, CEO of VÍS* ......................................................................... 54.804 9.579 0 0Haraldur Þórðarson, Group CEO** ...................................................................................... 12.928 2.205 0 0Helgi Bjarnason, former CEO of VÍS*** .............................................................................. 58.359 10.688 69.916 12.212Executive board of directors (3)*** ...................................................................................... 37.541 5.747 0 0211.183 33.689 109.814 16.799

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

12. Operating expenses (contd.)

*Included in salary and salary related cost for the CEO of VÍS is a 40% delayed incentive payment from the year 2019 of ISK 3.045.004.

** Salaries of the CEO of the parent Company are for the period October to December 2023.

*** Directors of Group; Group CFO, CEO of Fossar and MD of SIV.

12.1 Share Purchase option plan

13. Impairment of accounts receivables

20232022Account receivables write-offs ..................................................................................................................................................................... 66.419 56.191Impairment, change ........................................................................................................................................................................................(48.434) (32.242)Impairment of accounts receivables............................................................................................................................................................. 17.985 23.949

14.

14.1 Calculated income taxes

Effective tax rate:

Income taxes are calculated and recognised in the financial statements.

2023 2022Amount % Amount %Profit before income taxes .....................................................................................................1.791.426 1.054.007Income tax according to domestic tax rate .........................................................................358.285 20,0% 210.801 20,0%Fair value changes of financial assets ...................................................................................(293.002) -16,4% (51.863) -4,9%Share in profit of associate .....................................................................................................(1.838) -0,1% 0 0,0%Effect of shares in other companies .................................................................................... (52.089) -2,9% 0 0,0%Share of profit of non-taxable companies ...........................................................................(17.514) -1,0% (3.965) -0,4%Dividends received ..................................................................................................................(33.427) -1,9% (41.109) -3,9%Other changes .......................................................................................................................... (593) 0,0% 94 0,0%Income taxes according to the statement of profit or loss .............................................. (40.178) -2,2% 113.958 10,8%

Shares of spouses and financial dependent children and shares held by companies in majority ownership by board members and management are included and

considered as shares of the board members.

VÍS launched a Share Purchase option plan for all employees of the company, SIV and Fossar, approved at the AGM. There was no cost associated with the

arrangement in the year 2023. The estimated remaining cost of the option plan is ISK 39 million and will be carried out over the next three years.

Income taxes

At the company's 2023 general meeting, an incentive system was approved for all employees. The incentive system was linked to financial goals, policy-related

factors and the amount was a maximum of 500 thousand ISK per employee. In addition, an incentive system was approved for managers that was linked to

certain goals in the company's operations. These include financial goals, growth and customer satisfaction. The benefit of the incentive system for the

company's top managers could not exceed 25% of the employee's annual salary, but 10% in the case of directors. Half of the purchase bonus shall be paid out

as share-based rights, and their delivery shall be deferred for three years. 159 million ISK were expensed for the incentive system in 2023.

Board members' shareholding in the Company at year-end is specified as follows: Stefán Héðinn Stefánsson 2,200,000 shares (directly 500,000 and 1,700,000

through a company owned by him), Guðný Hansdóttir 887,525 shares (through KG eignarhald ehf., which is 100% owned by her husband). Guðný Helga

Herbertsdóttir 514,346 shares, Haraldur Þórðarson 56,212,147 shares(directly 226,832 and 55,985,315 through a company owned by him) and other members

of executive board and director of investments held in total 38,591,789 shares.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

14.2 Deferred taxes

Deferred income tax liability is specified as follows:

15.

Earnings per outstanding share is calculated based on the following assumptions:

16.Operating assetsComputer,Buildings andequipmentlandand vehiclesTotalCostTotal value as at 1.1.2022 ............................................................................................................................................113.840 1.381.459 1.495.301Additions during the year ...........................................................................................................................................0 31.925 31.925Sold and disposed of during the year .......................................................................................................................0 (13.546) (13.546)Total value 1.1.2023 .....................................................................................................................................................113.840 1.399.839 1.513.681Additions during the year ...........................................................................................................................................0 69.218 69.218Taken over during the year due to the purchase of Fossar ..................................................................................0 79.103 79.103Sold and disposed of during the year .......................................................................................................................0 (19.186) (19.186)Total value 31.12.2023 .................................................................................................................................................113.840 1.528.975 1.642.818DepreciationDepreciated 1.1.2022 ...................................................................................................................................................55.738 965.264 1.021.001Depreciation of the year .............................................................................................................................................2.185 144.312 146.497Depreciated 1.1.2023 ...................................................................................................................................................57.923 1.109.576 1.167.498Depreciation of the year .............................................................................................................................................2.185 136.051 138.236Taken over during the year due to the purchase of Fossar ..................................................................................0 7.548 7.548Depreciated 31.12.2023 ...............................................................................................................................................60.108 1.253.175 1.313.282Carrying amountCarrying amount at beginning of the year 2022 .....................................................................................................58.102 416.195 474.297Carrying amount at beginning of the year 2023 .....................................................................................................55.917 290.263 346.180Carrying amount at end of the year 2023 ................................................................................................................53.732 275.800 329.531Depreciation rates ........................................................................................................................................................3% 10-33%Tax value of buildings at year end 2023 amounted to ISK 136 million. Insurance value of fire insurance of buildings amounted to ISK 369 million at year end 2023. Insurance value of operating assets amounted to ISK 623 million.

2023 2022Tax asset (liability) at the beginning of the year .........................................................................................................................................(116.389) (64.728)Correction of balance at beginning of year ................................................................................................................................................ 0 (15.260)Acquired income tax credit on the purchase of a subsidiary .................................................................................................................. 120.213 0Acquired brands and business relationships ..............................................................................................................................................(258.300) 0Income taxes according to the statement of profit or loss ......................................................................................................................40.178 (113.958)The effect of participation in the results of non-independent taxpayers ..............................................................................................(16.712) (4.042)Taxes to be paid for the year .........................................................................................................................................................................150.590 81.600Deferred income tax liability at year end .................................................................................................................................................... (80.418) (116.389)The most signifcant items of deferred income tax liability are specified as follows:2023 2022Operating assets and software.......................................................................................................................................................................35.522 (78.202)Intangible assets.............................................................................................................................................................................................(253.041) 0Financial assets ................................................................................................................................................................................................ (53.557) (34.139)Borrowings .................................................................................................................................................................................................... 14.476 0Tax loss carryforward................................................................................................................................................................................... 177.415 0Other items ...................................................................................................................................................................................................... (1.234) (4.049)Deferred income tax liability at year end .................................................................................................................................................... (80.418) (116.389)

Earnings per share

2023 2022Profit for the year attributable to shareholders of the Parent Company .............................................................................................. 1.846.832 940.048Weighted average number of outstanding shares ..................................................................................................................................... 1.906.255 1.715.337Earnings per share ......................................................................................................................................................................................... 0,97 0,55 Diluted earnings per share is the same as basic earnings per share since neither share-based payment contracts nor convertible bonds have been issued.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

17.Intangible assetsCustomerCost relationship BrandGoodwillSoftware TotalTotal value as at 1.1.2022 .........................................................................474.599 0 0 3.531.909 4.006.508Additions during the year ........................................................................ 0 0 0 248.866 248.866Total value as at 1.1.2023 .........................................................................474.599 0 0 3.780.775 4.255.374Additions during the year ........................................................................ 1.767.984 925.000 305.000 178.524 3.176.508Taken over during the year due to the purchase of Fossar ............... 12.887 5.923 28.820 47.630Total value as at 31.12.2023 .....................................................................2.242.583 937.887 310.923 3.988.119 7.479.512AmortisationAccumulated amortisation as at 1.1.2022 ..............................................0 0 0 2.545.801 2.545.801Amortisation of the year ..........................................................................000294.749294.749Accumulated amortisation as at 1.1.2023 ..............................................0 0 0 2.840.550 2.840.550Taken over during the year due to the purchase of Foss............ 0 1.692 778 3.784 6.253Amortisation /write-off of the year .......................................................0 23.125 7.625 313.121 343.871Impairment of software asset ..................................................................0 0 0 805.628 805.628Accumulated amortisation as at 31.12.2022 ......................................... 0 24.817 8.403 3.963.083 3.996.302Carrying amountCarrying amount at beginning of the year 2021 ...................................474.599 0 0 986.108 1.460.707Carrying amount at beginning of the year 2022 ...................................474.599 0 0 940.225 1.414.824Carrying amount at year end 2022 ..........................................................2.242.583 913.070 302.520 25.036 3.483.211Amortisation rates .....................................................................................0% 10% 10% 10-33%

18. Right-of-use asset

Right-of-use assets of buildings: 2023 2022Right-of-use asset at beginning of year ...........................................................................................................................................................615.906 699.536Addition to the Right-of-use asset during the year ...................................................................................................................................... 96.478 0Depreciation of the year ....................................................................................................................................................................................(175.924) (146.173)Indexation for the year ...................................................................................................................................................................................... 47.993 62.543Right-of-use asset at year end ...........................................................................................................................................................................584.453 615.906

19. Investment securities

Financial assets designated at fair value through profit or loss are specified as follows:20232022Shares in other companiesListed on domestic stock exchange ............................................................................................................................................................. 3.852.460 5.575.085Listed on foreign stock exchange .................................................................................................................................................................1.896.105 1.526.158Other companies .............................................................................................................................................................................................6.408.261 7.376.04312.156.827 14.477.286Other securitiesGovernment backed securities, indexed .....................................................................................................................................................4.338.264 4.784.981Government backed securities, non-indexed .............................................................................................................................................5.066.129 4.139.665Other bonds .....................................................................................................................................................................................................12.044.764 13.500.631Bond funds .......................................................................................................................................................................................................6.628.339 2.676.493Institutional investor funds ...........................................................................................................................................................................2.524.266 2.275.30030.601.762 27.377.071Total financial assets at fair value .................................................................................................................................................................42.758.589 41.854.357

At year end an annual impairment test was carried out on the software asset. The result was that the asset was overvalued and was impaired in full at year end

2023.

The Group's right-of-use asset is recognized based on the provisions of leasing agreements in accordance with IFRS 16. Total payments for lease agreements

for the year amounted to ISK 206 million.

The Group's goodwill stems from VÍS's acquisition of Lífís in 2012 along with the purchase of Fossar in the year 2023. At year-end an annual impairment test

was carried out á viðskiptavild Lífís, based on discounted future cash flows. According to the impairment test there is no sign of impairment.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

20.

Securities used for hedging

Securities used for hedging are specified as follows:21.2023Investments where investment risk is borne by the life-insurance policyholdersGovernment bonds and treasury bills .........................................................................................................................................................991.441Shares ................................................................................................................................................................................................................ 2.877.705Other securities ............................................................................................................................................................................................... 651.9684.521.114

22.

Loans to customers

Loan to customers are specified as follows:

2023Loans to customers .........................................................................................................................................................................................1.654.013Accrued interest on loans ..............................................................................................................................................................................18.7071.672.720

Loans to customers are due in 2024. The loans are non-indexed and secured by collateral on the customer's assets.

23. Reinsurance assets

2023 2022Reinsurers' share in unearned premiums ....................................................................................................................................................187.525 166.720Reinsurers' share in claims provision .......................................................................................................................................................... 1.030.918 948.132Claims on reinsurers .......................................................................................................................................................................................10.712 22.959Reinsurance assets ...........................................................................................................................................................................................1.229.156 1.137.811

24. Derivatives

Derivatives are specified as follows:

Assets: 2023Derivatives shares ........................................................................................................................................................................................... 126.986Derivatives bonds ........................................................................................................................................................................................... 16.249143.235Liabilities:Derivatives shares ........................................................................................................................................................................................... 194.563Derivatives bonds ........................................................................................................................................................................................... 21.052215.615

25. Other receivables

2023 2022Prepaid taxes ....................................................................................................................................................................................................460.581 412.859Accrued interest income and prepaid expenses 794.027 218.647Receivables from domestic operations ....................................................................................................................................................... 892.139 618.775Other receivables ............................................................................................................................................................................................ 2.146.748 1.250.281

Lífís has offered life-insurance policies which consist of life insurance and contribution to investments funds. The cost of the life insurance decreases as the

amount in the investment fund increases and ceases by the time the amount in the investment fund exceeds the life-insured amount. Life-insurance

policyholder bears the investment risk.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

26.

Cash and cash equivalents at year-end is specified as follows:

2023 2022Funds .................................................................................................................................................................................................................20.438 0Bank deposits in Icelandic Krona ................................................................................................................................................................ 2.134.293 2.188.760Deposits in foreign currencies ......................................................................................................................................................................115.961 191.766Cash and cash equivalents.............................................................................................................................................................................. 2.270.693 2.380.526

27.

Share capital of Vátryggingafélag Íslands hf. is specified as follows at year-end:

28.

The capital adequacy ratio of the bank is calculated in accordance with Act No. 161/2002 on financial undertakings. The capital requirement for credit, market,

and operational risk is calculated using a standard method, and the bank's capital adequacy ratio is 30.7%.

31.12.2023Fossar total equity year end ...........................................................................................................................................................................1.925.908Deduction items ..............................................................................................................................................................................................(218.894)Own funds ........................................................................................................................................................................................................1.707.014Risk weighted exposures:Credit risk .........................................................................................................................................................................................................1.764.845Market risk ........................................................................................................................................................................................................1.417.711Total risk weighted exposure for part a, 3rd paragraph. Article 84 ...................................................................................................... 3.182.556Capital requirements for operational risk ................................................................................................................................................... 2.372.280Total risk weighted exposure for part b, 3rd paragraph. Article 84 ......................................................................................................2.372.280Total risk weighted assets for Article 84 .....................................................................................................................................................5.554.836Capital adequacy ratio for Fossar .................................................................................................................................................................30,7%

According to the Limited Liability Companies Act the Company is required to retain amounts corresponding to 25% of the nominal value of shares in a

statutory reserve that is prohibited to be distributed as dividends to shareholders. Amounts in excess of 25% of the nominal value of shares are at the

Company's disposal.

According to the Annual Accounts Act the Company is to recognise unrealised fair value income of financial assets designated at fair value through profit or

loss in a restricted reserve among equity which is not distributable as dividend.

According to the Annual Accounts Act the Company is to restrict the share in profit from a subsidiary and associate in excess of dividends received.

Retained earnings consist of profit and loss of the Company not distributed as dividend or contributed to statutory reserve or other reserves. Retained earnings

can be distributed to shareholders as dividends. However, solvency requirements limit the amounts the Company can pay as dividends.

Capital adequacy ratio

Cash and cash equivalents

Share capital

2023 2022Share capital according to the Company's articles of association ................................... 1.906.700 100,00% 1.750.000 100,00%Own shares ............................................................................................................................... (1.150) -0,06% (34.400) -1,97%Share capital according to the financial statements ........................................................... 1.905.550 99,94% 1.715.600 98,03%

One vote is attached to each share of the nominal value of one Icelandic Krona in the Company.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

29.

Solvency ratio of the Group as a financial conglomerate is specified as follows:

Available capital31.12.2023Own Funds eligible for non insurance activities1.868Own Funds eligible for insurance activities17.817Total19.685Solvency requirement for insurance activitiesSolvency Capital Requirements (SCR)11.867Own funds requirement for non insurance activitiesStatutory minimum capital requirement (Pillar I)743Additional capital requirements (Pillar II)0Minimum capital requirement for non insurance activities743Additional capital protection buffers0Total743Solvency 19.685Solvency requirement (SCR)11.867Own funds requirement for non insurance activities743Minimum solvency of financial conglomerate12.609Solvency ratio1,56

2023 2022Equity according to the statement of financial position ..........................................................................................................................21.171.933 17.324.779Intangible assets .............................................................................................................................................................................................. (3.483.211) (1.414.824)Subordinated bond ......................................................................................................................................................................................... 3.589.584 3.320.195Proposed dividend payment ......................................................................................................................................................................... (1.000.000) (939.972)Share buy-back plan ........................................................................................................................................................................................(500.000) (333.008)Other .................................................................................................................................................................................................................(93.231) 285.865Calculated solvency capital ............................................................................................................................................................................19.685.076 18.243.036Solvency capital requirement (SCR) ............................................................................................................................................................ 12.609.495 11.522.643Solvency ratio ...................................................................................................................................................................................................1,56 1,58

Solvency measures the Group's ability to take on setbacks, thus indicating its financial strength. The available capital and capital requirements of the Group is

calculated as a financial conglomerate according to Articles 16, 17 and 18 of Act on Additional Supervision of Financial Conglomerates No. 61/2017. The

Group's solvency ratio is 1.66, with a regulatory minimum requirement of 1.0

Solvency

The Group's solvency is based on its equity less intangible assets, expected dividend payments and share buy-back but with subordinated bond added. The

Board has set the Company's risk appetite, according to the standard rule of Solvency II, as the Group's Solvency ratio to be on the scale 1.35 to 1.70.

The board of directors' dividend proposal is in the amount of ISK 1,000 million taking into account own shares.

Solvency and solvency capital requirements

Given that the FME will designate the Group as a financial conglomerate as defined in Article no. 3 of Act no. 61/2017 on Additional Supervision of Financial

Conglomerates the Group's capital adequacy is now calculated as the solvency ratio of a financial conglomerate.

The Group furthermore calculates the consolidated capital adequacy ratio for entities not belonging to the insurance sector by excluding the insurance activities

from calculation of risk weighted exposures and capital base. The Group similarly calculates the solvency ratio of entities solely belonging to the insurance

sector.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

30.

2023 2022Balance at 1.1. .................................................................................................................................................................................................. 3.320.195 3.032.821Accrued interest and price indexation .........................................................................................................................................................447.853 451.473Paid interests ....................................................................................................................................................................................................(178.465) (164.098)Balance at 31.12. ..............................................................................................................................................................................................3.589.584 3.320.195

The Company's minimum solvency means that certain capital, equity, is required due to the Company's risk. Standard rule according to law no. 100/2016 is

applied, whereas calculation is based on all measurable risks. How solvency requirement is divided into subcomponents of risk is specified in the following

tables.

Diversification effects are deducted since it is not assumed that all risks will realize simultaneously. Adjustment for the loss-absorbing capacity of deferred

taxes is deducted upon realization of risks.

Solvency capital requirement 2023 2022Basic Solvency capital requirement (BSCR) ...............................................................................................................................................12.916.417 12.507.979Operational risk ...............................................................................................................................................................................................955.206 886.664Adjustment due to deferred taxes ................................................................................................................................................................(2.005.000) (1.872.000)Total minimum solvency ............................................................................................................................................................................... 11.866.623 11.522.643Basic Solvency capital requirement (BSCR)Market risk ........................................................................................................................................................................................................6.683.185 6.916.702Counterparty risk ............................................................................................................................................................................................ 1.820.181 1.591.772Life underwriting risk .....................................................................................................................................................................................147.200 125.155Health underwriting risk ................................................................................................................................................................................1.782.403 1.744.003Non-life underwriting risk .............................................................................................................................................................................7.806.635 7.264.110Diversification effects .................................................................................................................................................................................... (5.323.187) (5.133.763)Total BSCR ..................................................................................................................................................................................................... 12.916.417 12.507.980Market riskInterest rate risk ...............................................................................................................................................................................................160.382 350.448Equity risk ........................................................................................................................................................................................................ 5.780.115 6.018.278Property risk .....................................................................................................................................................................................................189.942 240.522Spread risk ........................................................................................................................................................................................................738.573 672.795Foreign currency risk ......................................................................................................................................................................................273.147 313.177Concentration risk ...........................................................................................................................................................................................1.201.890 1.158.747Diversification effects .................................................................................................................................................................................... (1.660.864) (1.837.266)Total market risk ............................................................................................................................................................................................. 6.683.185 6.916.703

Subordinated bond

At the end of February 2016 the Company issued subordinated bond in the nominal amount of ISK 2,500 million. The bond is classified as Tier II equity and

is included in the Company's solvency. The bond bears fixed inflation-indexed interest rate of 5.25%. Its maturity is 30 years but with a prepayment option and

a step-up in interest rate to 6.25% ten years after the issue date.

Changes in subordinated loan from the beginning to the end of the year.

29.2 Solvency capital requirement (SCR)

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

31. Lease liability

32. Insurance contract liabilities

Lease liability development: 2023 2022Lease liability at the beginning of the year ..................................................................................................................................................... 663.802 742.477Change of Lease liabiliy .....................................................................................................................................................................................101.727 0Lease payments of the year ...............................................................................................................................................................................(177.853) (142.395)Indexation for the year ...................................................................................................................................................................................... 49.292 63.719 Lease liability at year end ...................................................................................................................................................................................636.966 663.802The Group's lease liability is recognized based on the provisions of leasing agreements in accordance with IFRS 16. Interest expense on lease liability for theyear 2023, which is included in interest expense for the year, amounted to ISK 29 million.Lease obligation further recongition: 2023 2022Lease payments 2023 ......................................................................................................................................................................................0 154.851Lease payments 2024 ......................................................................................................................................................................................230.208 161.965Lease payments 2025 ......................................................................................................................................................................................215.141 169.405Lease payments 2026 ......................................................................................................................................................................................175.942 163.098Lease payments 2027 ......................................................................................................................................................................................14.022 12.995Discounted payments total ............................................................................................................................................................................635.313 662.313Unrecognized interest expenses ...................................................................................................................................................................1.653 1.489Lease obligation according to statement of financial position ................................................................................................................636.966 663.802

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

32. Insurance contract liabilities

The calculated risk adjustment corresponds to the confidence level of 85% at 31 December 2023.

Liability for Liabilities for incurredremaining coverage claims for contracts under the PAAPresent value Risk adjustmentExcluding loss Loss of future for none-financialcomponent component cash flows risk TotalBalance as at 01.01.2023 - reinsurance share(189.679) (948.132) 0 (1.137.811)Insurance revenue ...................................................................................893.979 893.979 Incurred claims & other direcctly attrib. exp. .................................... (544.440) (372.247) (916.687)Run-off previous years adjustm. to the LIC ...................................... 202.550 202.550 Profit/loss on gross business ............................................................... 893.979 0 (341.890) (372.247) 179.842 Finance exp. from ins. contr. held ....................................................... 0 Cash flows ..............................................................................Insurance revenue received ................................................................... (906.910) (906.910)Claims & other directly attrib. exp. paid ............................................. 263.475 263.475 Insurance acquisition cash flows .......................................................... 0 Total cash flows ...................................................................................... (906.910) 0 263.475 0 (643.435)Transferred into other insurance liabilities ......................................... 372.247 372.247 Balance as at 31.12.2023 - reinsurance share(202.610) 0 (1.026.547) 0 (1.229.156)Liability for Liabilities for incurredremaining coverage claims for contracts under the PAAPresent value Risk adjustmentExcluding loss Loss of future for none-financialcomponent component cash flows risk TotalBalance as at 01.01.2023 - net2.021.594 21.049.826 878.499 23.949.919 Insurance revenue ...................................................................................(25.580.097)(25.580.097)Incurred claims & other direcctly attrib. exp. .................................... 6.398.556 20.228.187 (12.058) 26.614.685 Run-off previous years adjustm. to the LIC ...................................... (574.606) (472.328) (1.046.934)Profit/loss on gross business ............................................................... (19.181.541) 0 19.653.581 (484.386) (12.346)Finance exp. from ins. contr. held ....................................................... 1.184.268 1.184.268 Cash flows ..............................................................................Insurance revenue received ................................................................... 25.541.025 25.541.025 Claims & other directly attrib. exp. paid ............................................. (19.330.900) (19.330.900)Insurance acquisition cash flows .......................................................... (6.398.556) (6.398.556)Total cash flows ...................................................................................... 19.142.469 0 (19.330.900) 0 (188.431)Balance as at 31.12.2023 - net1.982.522 0 22.556.776 394.112 24.933.409

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

32. Insurance contract liabilities

Liability for Liabilities for incurredremaining coverage claims for contracts under the PAAPresent value Risk adjustmentExcluding loss Loss of future for none-financialcomponent component cash flows risk TotalBalance as at 01.01.2022 - Total1.668.476 21.135.602 915.147 23.719.226 Insurance revenue ...................................................................................(24.467.123)(24.467.123)Incurred claims & other direcctly attrib. exp. .................................... 5.656.894 17.364.907 412.894 23.123.207 Run-off previous years adjustm. to the LIC ...................................... (4.275) (449.543) (453.818)Profit/loss on gross business ............................................................... (18.810.229) 0 17.360.632 (36.648) (1.797.733)Finance exp. from ins. contr. held ....................................................... 583.533 583.533 Cash flows ..............................................................................Insurance revenue received ................................................................... 25.009.920 25.009.920 Claims & other directly attrib. exp. paid ............................................. (17.081.809) (17.081.809)Insurance acquisition cash flows .......................................................... (5.656.894)(5.345.406)Total cash flows ......................................................................................19.353.029 0 (17.081.809) 0 2.582.705 Transferred into other insurance liabilities ......................................... 0 0 Balance as at 31.12.2022 - Total2.211.273 0 21.997.958 878.499 25.087.730 Liability for Liabilities for incurredremaining coverage claims for contracts under the PAAPresent value Risk adjustmentExcluding loss Loss of future for none-financialcomponent component cash flows risk TotalBalance as at 01.01.2022 - reinsurance share(149.908) (992.042) (1.141.950)Insurance revenue ...................................................................................792.415 792.415 Incurred claims & other direcctly attrib. exp. .................................... (129.418) (129.418)Run-off previous years adjustm. to the LIC ...................................... (76.185) (76.185)Profit/loss on gross business ............................................................... 792.415 0 (205.603) 0 586.812 Finance exp. from ins. contr. held ....................................................... 0 Cash flows ..............................................................................Insurance revenue received ................................................................... (832.187) (832.187)Claims & other directly attrib. exp. paid ............................................. 249.513 249.513 Insurance acquisition cash flows .......................................................... 0 Total cash flows ...................................................................................... (832.187) 0 249.513 0 (582.673)Transferred into other insurance liabilities ......................................... 0 0 Balance as at 31.12.2022 - reinsurance share(189.679) 0 (948.132) 0 (1.137.811)

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

32. Insurance contract liabilities

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Notes

32. Insurance contract liabilities

Total amountin million ISK.2016 2017 2018 2019 2020 2021 2022 2023 TotalEstimation of final claims costAt the end of the claims year ...........................................13.253 12.664 14.555 16.404 16.105 17.046 18.860 22.354One year later ......................................................................13.956 15.385 16.331 18.351 15.377 16.532 19.610Two years later ....................................................................14.266 15.360 17.974 19.102 15.840 16.120Three years later ..............................................................14.311 15.949 18.374 19.507 15.618Four years later ...................................................................14.34616.39918.44119.325Five years later ....................................................................14.374 16.298 18.265Six years later .......................................................................14.47416.022Seven years later ..................................................................14.385Estimation of accumulated claimsat year end 2023 ..................................................................14.385 16.022 18.265 19.325 15.618 16.120 19.610 22.354141.698Accumulated paymentsAt year end 2023 ................................................................14.347 15.857 18.001 18.253 14.551 12.92811.9789.963115.877Claims provision at year end 2023 ..................................38 165 264 1.072 1.067 3.192 7.632 12.391 25.821Discounting .........................................................................-7 -13 -26 75 -647 -373 -303 -1.312 -2.606Older insurance contract liabilities ..................................368Risk margin ..........................................................................766Total insurance contract liabilities 24.349Reinsurance assetsin million ISK.2016 2017 2018 2019 2020 2021 2022 2023 TotalEstimation of final claims costAt the end of the claims year ...........................................2 135 668 564 139 878 276 468One year later ......................................................................42 34 651 695 221 823 253Two years later ....................................................................39 33 889 708 194 813Three years later ..............................................................37 33 901 707 215Four years later ...................................................................3733900664Five years later ....................................................................2 33 839Six years later .......................................................................233Seven years later ..................................................................2Estimation of accumulated claimsat year end 2023 ..................................................................2 33 839 664 215 813 253 4683.287Accumulated paymentsAt year end 2023 ................................................................2 33 841 664 198 1372161832.274Claims provision at year end 2023 ..................................0 0 -3 0 18 676 37 285 1.012Discounting .........................................................................0Older insurance contract liabilities ..................................19Risk margin ..........................................................................372Total insurance contract liabilities 1.403

The table shows the Group's assessment of the final amount of claims for each claims year and how that assessment has developed between years. The final estimated cost consists of paid

losses, provisions for reported but not settled claims and incurred but not reported claims.

The tables below show the reinsurance share in the insurance contract liabilities and then net share.

Samstæðuársreikningur Vátryggingafélags Íslands hf. 2023

Amounts are in thousands of ISK

32. Insurance contract liabilities

Net of own accountin million ISK.2016 2017 2018 2019 2020 2021 2022 2023 TotalEstimation of final claims costAt the end of the claims year ...........................................13.251 12.530 13.887 15.840 15.966 16.168 18.584 21.886One year later ......................................................................13.914 15.351 15.680 17.656 15.156 15.709 19.357Two years later ....................................................................14.227 15.327 17.085 18.394 15.646 15.307Three years later ..............................................................14.274 15.916 17.473 18.799 15.402Four years later ...................................................................14.31016.36617.54118.662Five years later ....................................................................14.371 16.265 17.426Six years later .......................................................................14.47115.989Seven years later ..................................................................14.382Estimation of accumulated claimsat year end 2023 ..................................................................14.382 15.989 17.426 18.662 15.402 15.307 19.357 21.886138.411Accumulated paymentsAt year end 2023 ................................................................14.344 15.824 17.160 17.589 14.353 12.79111.7619.781113.603Claims provision at year end 2023 ..................................38 165 266 1.073 1.049 2.517 7.595 12.106 24.809Discounting .........................................................................-7 -13 -26 75 -647 -373 -303 -1.312 -2.606Older insurance contract liabilities ..................................349Risk margin ..........................................................................394Total insurance contract liabilities 22.946

Eiopa yield curves used on all contracts measured under PAA:

2023 2022

1 year 5 years 10 years 1 year 5 years 10 years

ISK 9,1% 7,0% 6,3% 6,8% 6,5% 6,0%

Samstæðuársreikningur Vátryggingafélags Íslands hf. 2023

Amounts are in thousands of ISK

33. Accounts payable and other liabilities 2023 2022Accounts payable ............................................................................................................................................................................................ 785.401 549.314Income tax payable ......................................................................................................................................................................................... 150.590 81.600Liability from reinsurance operation ........................................................................................................................................................... 67.623 112.521Other liabilities ................................................................................................................................................................................................ 2.156.160 1.743.631Accounts payable and other liabilites .......................................................................................................................................................... 3.159.773 2.487.066

34. Financial instruments

34.1 Classification of financial instruments

The Group's financial assets pertain to the following categories of financial instruments:

31 December 2023Financialassets at fairLoans andFinancial assetsvaluereceivablesTotalFair valueShares and share funds .......................................................................... 13.661.697 13.661.697 13.661.697 Debt instruments and other securities ................................................26.387.54326.387.54326.387.543Bonds ........................................................................................................2.709.3492.709.349Accounts receivables and other receivables .......................................1.781.0631.781.063Cash in escrow accounts and restricted cash .....................................154.607154.607Cash and cash equivalents .....................................................................2.158.6202.158.620Total financial assets ...............................................................................40.049.2406.803.63946.852.87931 December 2022*Financial assetsShares and share funds .......................................................................... 15.281.019 15.281.019 15.281.019 Debt instruments and other securities ................................................22.995.41322.995.41322.995.413Bonds ........................................................................................................3.577.9253.577.925Accounts receivables and other receivables .......................................1.138.0611.138.061Cash in escrow accounts and restricted cash .....................................112.297112.297Cash and cash equivalents .....................................................................2.380.5262.380.526Total financial assets ...............................................................................38.276.4327.208.80945.485.240

*Comparative figures have been changed in accordance with IFRS 17, see note 2

34.2 Fair value hierarchy

Level 2: Fair value is not based on quoted price in an active market (level 1) but on inputs that are observable for the asset, either directly (i.e. as prices) or

indirectly (i.e. derived from prices). Financial assets for which there is not an active market are classified into level 2. The fair value assessment is based on

recent transactions between unrelated parties or bid prices of unrelated parties. Comparison to smiliar financial assets is also applied.

Level 3: Fair value measurement is based on significant inputs other than market value. Fair value measurement of financial assets classified as level 3 is based

on inputs such as valuation from fund managers of investment or institutional investment funds, put options or the Company's valuation based on financial

results or comparison to other similar financial assets.

Group31 December 2023Level 1Level 2Level 3TotalFinancial assets at fair value ...................................................................................................27.394.4391.054.67011.600.33540.049.444Group31 December 2022Level 1Level 2Level 3TotalFinancial assets at fair value ...................................................................................................26.014.746721.49011.540.19838.276.432

The carrying amount of other financial assets reflects their fair value.

The following table discloses financial assets at fair value or held-to-maturity according to valuation techniques. The valuation techniques are separated into

three levels based on the significance of the assumptions made in determining fair value. The levels are as follows:

Level 1: Quoted price in an active market for identical assets.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

34.3 Classification of financial instruments for financial activites

The fair value of loans and receivables that bear fixed interest is assessed using the cash flow method, where the yield is based on the estimated market interest

rate for the respective debt instrument on the balance sheet date. Fair value of other financial assets and financial liabilities, incl. Those with variable interest

rates are not considered significantly different from the book value at the end of the year.

*Thereof is ISK 1,447 million realized and unrealized is ISK 329 million. Interest and fair value changes is recorded among changes in fair value in the

statement of profit and loss.

31.12.2023AmortiziedFair value through Fair valueFinancial assetscost profit and loss through OCICash and cash equivalents ..................................................................... 112.073Other receivables (net of prepayment) ............................................... 211.078Fixed income securities .......................................................................... 1.801.714 2.657.469 Shares and other variable income securities ....................................... 337.320Securities used for hedging ................................................................... 4.521.114Loans to customers ................................................................................ 1.672.720Total .......................................................................................................... 6.660.147 2.657.469 1.995.872Financial liabilitiesMoney market deposits .......................................................................... 6.227.385Bills ............................................................................................................ 2.285.315Liabilities to credit institutions ............................................................. 700.000Accounts payables and other liabilities (net of tax) .......................... 292.507Credit institutions ................................................................................... 22.176Total .......................................................................................................... 9.527.383 0 0Fair value hierarchyThe following table shows the book value of financial assets at fair value according to fair value hierarcy:Breakdown for the year 2023:Level 1 Level 2 Level 3 TotalInvestment in listed companies ............................................................3.215.025 3.215.025Investment in bonds ...............................................................................6.102.5926.102.592Shares in other companies total ...........................................................9.317.617009.317.617

Changes that fall under level 3 in the year are specified as follows:20232022Balance at 1.1. ..................................................................................................................................................................................................11.540.19811.860.409Purchased .........................................................................................................................................................................................................2.371.1952.329.772Sold / Repayments .........................................................................................................................................................................................(3.781.357)(3.266.389)Moved to level 1 ..............................................................................................................................................................................................(305.964) (1.561.188)Interest and fair value changes* ...................................................................................................................................................................1.776.2642.177.593Balance at 31.12 ...............................................................................................................................................................................................11.600.33511.540.198

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

35. Share in subsidiaries

35.1 Vátryggingafélags Íslands hf. purchase of Fossum fjárfestingarbanka hf.

The following table shows the purchase price for Fossar and the assets and liabilities that were purchased:

37. Money market deposits

38. Bills

Money market deposits are money market loans that involve Fossar investment bank's borrowing from customers in the form of a customer's

deposit in ISK into a bank account owned by the bank, without the loan forming a deposit on a payment account owned by the customer.

The deposit is redeemable by the customer within twelve months from the invoice date, and is therefore a short-term loan. The weighted

average interest rate on money market loans is 9.56% on 31.12.2023.

Three bonds are outstanding, totaling 2,360 b. at nominal value and have a weighted average interest rate of 10.66%. The last issue is due at

the end of May and has a 0.52% spread on top of the interest base (6M REIBOR).

36. Shares in affiliates Book value Book valueShare31.12.202331.12.2022Tplús ..........................................................................................................................................35,0%151.3930Vex .............................................................................................................................................35,0%38.8890Changes in shares in affiliates are as follows:2023Initial balance as part of financial assets ..............................................................................98.366Purchase of shares in affiliates ..............................................................................................82.725Share in the profit of affilliates, after tax .............................................................................9.191190.283

On 14 February 2023 VÍS and the shareholders of Fossar fjárfestingarbanki hf. started negotiations on VÍS's purchase of the entire share capital in Fossar. On

5 May 5 2023, the purchase agreement was signed and the purchase was fully completed on 2 October of the same year. New share capital was issued in VÍS

with a nominal value of 210 million as compensation to the shareholders of Fossar, in addition to the approval of a capital increase in Fossar which amounted

to 1.4 billion ISK and consisted of share capital plus the conversion of a subordinated bond.

Purchase pricePurchase price of Fossar - paid with 210 million shares in VÍS ..........................................................................3.297.000Share capital increase in Fossar - paid for by conversion of a subordinated bond ..........................................364.311Share capital increase in Fossar - paid in cash ........................................................................................................1.000.0004.661.311valueCash and cash equivalents ..........................................................................................................................................2.649.908Accounts receivables and other receivables ............................................................................................................417.468Bonds .............................................................................................................................................................................5.199.267Shares and other securities .........................................................................................................................................74.773Securities used for hedging ........................................................................................................................................1.780.386Loans to customers .....................................................................................................................................................661.207Income tax asset ...........................................................................................................................................................120.213Operating assets ...........................................................................................................................................................51.976Right-of-use asset .........................................................................................................................................................155.015Intangible assets ...........................................................................................................................................................47.630Short term loans ...........................................................................................................................................................(8.844.663)Accounts payables and other liabilites .....................................................................................................................(49.601)Other shert term liabilities ..........................................................................................................................................(150.955)Credit institutions ........................................................................................................................................................(27.545)Lease liability .................................................................................................................................................................(163.452)Net purchased assets1.921.627Premium2.739.684Premiums do to purchase are broken down into brands and goodwill, see note 17.

20232022Main activitesLíftryggingafélag Íslands .........................................................................................................99,9%99,9%Life insuranceSIV eignastýring hf. .................................................................................................................72,0%77,0%Asset and fund managementFossar fjárfestingarbanki hf. ..................................................................................................100,0%0,0%Investment bankingVF Nord ehf. ............................................................................................................................100,0%0,0%Financial activites

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39. Risk Management

39.1 Risk management in general

39.2 Own risk- and solvency assessment (ORSA)

Capital risk is the risk that the Group‘s equity is insufficient to meet these requirements. Equity control is to manage this risk factor.

The Board sets targets for its solvency ratio as a part of the risk appetite for the Group, including both upper and lower limits.

Calculation of the Company's solvency capital requirement (SCR) is risk based and takes into account all the main risks applicable to insurance companies. The

model (standard formula), upon which the calculations are based, assesses these risks based on 99.5% value at risk (VaR). The Group's solvency consists of its

shareholders equity, adjusted for items that are not permanently accessible capital in its operations, e.g. intangible assets and expected dividend payments, but

including subordinated bond.

The purpose of own risk and solvency assessment (ORSA) is to simplify the Group's optimization of solvency. The objective of the ORSA is to inform how

much solvency the Group needs compared to current and future risk-taking. ORSA informs the Board, directors and others relevant on the Group's risk

profile, solvency need and risk factors at any time and thus enabling rational and well-implanted decisions regarding setting the Group's policy and risk-taking.

ORSA is a continuous key process of the Group's operations and is inherent in its activities and thus enhances the understanding of the relationship of the

Group‘s risk profile, solvency and capital requirements for the shorter and longer term.

The ORSA can be defined as the entirety of the processes and procedures employed to identify, assess, monitor, manage, and report the short- and long term

risks which insurance company faces or may face and to determine the own funds necessary to ensure that the undertaking's overall solvency needs are met at

all times. The Group has implemented an ORSA-policy which has been approved by the Board. For further details on solvency and solvency capital

requirements, see notes 23.1 and 23.2.

The Group has implemented a policy for coordinated risk management. Its purpose is to ensure that the Group has an effective system of risk management

that includes, among other things, analyzing, measuring, controlling and monitoring the Group's risks. The objective of the policy is to set and define a clear

and straightforward manner of risk policies, principles, governance structures, risk appetite and risk management systems, including the Group's rights to

decision-making.

The Group's risk policy is only to take on risks it understands, identifies, detects, evaluates, manages, meets and monitors; and are profitable and efficient.

The Board decides the coordinated risk management framework and written risk management policy. The board is responsible for ensuring implementation of

risk policy and that it is followed. The Board sets the risk appetite, including the Group's criteria, objectives and targets, as well as placing the CEO's

framework in accordance with the Board's approved policy. The Board has set the Company's risk appetite, according to the standard rule of Solvency II, as

the Group's Solvency ratio to be on the scale 1.35 to 1.70.

One of the Board's sub-committees is the Risk Committee. It is appointed by the Board and answers directly to the Board. The Risk Committee's role is to

advise the Board and to assist in carrying out tasks related to risk management, internal control and compliance.

The CEO is responsible for the effective implementation of the Group's risk policy and that it is followed. The CEO shall provide information to the Board

on the Group's risk profile which is close to the risk appetite limits and inform the Board without delay if risk taking exceeds the risk appetite.

Risk management is one of the key functions in operation of an insurance company according to Act no. 100/2016 on insurance activities. Risk management

department of VÍS executes the clauses on management of risk. The Risk management department ensures that management is included with the Group‘s risk

management system, including policies and risk appetite, assists the Board and other divisions in the effective operation of risk management systems, monitors

the Group‘s overall risk profile and manages own risk and solvency assessment.

The Group's policy on equity and dividends is to ensure it has sufficient equity to fulfill its commitments and meet solvency capital requirements despite

possible losses.

Equity (and other recognised solvency components) needs to be sufficient so the Group can fulfil its commitments and comply with solvency capital

requirements according to Act. no. 100-2016, section XVI, despite losses.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.3 Market risk

Primary market risk which are specially monitored:

39.4 Interest rate risk

Interest sensitivity analysis

39.5 Equity risk and other risk of market securities

Equity risk is the risk of potential loss of capital due to changes in price of shares in other companies.

31.12.202331.12.2022Shares and share funds at fair value through profit or loss .....................................................................................................................13.999.01715.281.019Debt instruments and other securities at fair value through profit or loss ..........................................................................................30.571.33722.995.413

The effect of 5% and 10% increase in the market value of shares and debt securities on profit or loss is disclosed below, net of 20% income tax. Accordingly

5% and 10% decrease in market value would have the same effect but in the opposite direction.

31.12.2023 31.12.20225% 10% 5% 10%Shares - impact on profit or loss ........................................................................................... 699.951 1.399.902 764.051 1.528.102Debt securities - impact on profit or loss ........................................................................... 1.222.853 2.445.707 919.817 1.839.633

31.12.202331.12.202250 bp100 bp50 bp100 bpInpact on profit or loss and equity ....................................................................................... 15.530 31.061 15.417 30.835

The Group invests in shares in other companies to maximize expected returns and diversify risk to level out fluctations in the portfolio. Limits are defined in

the company's investment policy to establish diversification in the equity portfolio and manage equity risk. Maximum limit is set on weight on equities as total

of investment assets, limits on both listed and unlisted domestic equities, limits on funds as percentage of portfolio and limits on specific investments.

Listed and unlisted shares in other companies are measured at fair value and therefor fluctuations in share prices have considerable effect on investment

income. The management of the Group constantly follows developments of markets to be able to react to changes in equity risk.

The Group also invests in market debt securities to spread risk and even fluctuations in accordance with the Group policy on investments.

Strategy for controlling market risk is done predominantly by revision of capital structure policy investment strategy and composition of assets in a portfolio.

The strategy is based on the risk appetite of the Group, expectation of return from assets and historical analyses on return. Current portfolio, environment and

restriction are taken in to account.

• Interest rate risk

• Equity risk

• Foreign exchange rate risk

Interest rate risk is risk of loss from fluctuations in fair value of financial instruments from change in interest (required rate of return). Duration of portfolio is

in most cases not the same as duration of technical provision and therefore interest rate risk can occur in the operation of the Group.

The following table discloses the effect that 50 and 100 bp increase in interest on interest bearing assets would have on income and equity at the reporting date.

The sensitivity analysis is presented for interest bearing assets with floating rate interests and is based on the presumption that all other variables remain

constant. The sensitivity is presented post-tax and therefore reflects the effect on profit or loss and equity.

The effect on profit or loss and equity is the same since value changes of the underlying financial instruments is in no instances recognised directly in equity. A

positive number indicates an increase in profit and equity. Decrease of interest rates would have the same effect in the opposite direction.

Market

risk

the

risk

loss

unfavorable

change

financial

position,

which

arise

directly

undirectly

from

fluctuation

market

value

assets,

provisions and financial instruments.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.6 Foreign exchange rate risk

AnnualYear-end exchange rates Average exchange rateschangeCurrency20232022202320222023USD ...........................................................................................................135,77 142,01 137,98 135,46 -4,4%EUR ..........................................................................................................150,10 151,50 149,14 142,33 -0,9%GBP ...........................................................................................................172,82 171,04 171,46 166,90 1,0%DKK ......................................................................................................... 20,14 20,37 20,02 19,13 -1,1%NOK .........................................................................................................13,38 14,39 13,07 14,09 -7,1%SEK ...........................................................................................................13,57 13,61 13,00 13,39 -0,3%Foreign exchange rate risk as at 31.12.2023 Assets Liabilities Net positionUSD ................................................................................................................................................................................3.104.17027.8973.076.273EUR ................................................................................................................................................................................1.692.968146.3871.546.581GBP ................................................................................................................................................................................153.987 265.930 (111.943)DKK ..............................................................................................................................................................................57.549057.549NOK ..............................................................................................................................................................................795.8600795.860SEK ................................................................................................................................................................................3.41903.419Total ...............................................................................................................................................................................5.807.953440.2145.367.739Foreign exchange rate risk as at 31.12.2022AssetsLiabilitiesNet positionUSD ................................................................................................................................................................................2.497.08642.4822.454.604EUR ................................................................................................................................................................................815.077 153.636 661.441GBP ................................................................................................................................................................................323.047265.27557.772DKK ..............................................................................................................................................................................35.841035.841NOK ..............................................................................................................................................................................976.169 0 976.169SEK ................................................................................................................................................................................3.345 0 3.345Total ...............................................................................................................................................................................4.650.565461.3934.189.172

Foreign exchange rate risk is the risk of loss from fluctuations in exchange rates of foreign currencies. It arises if there is a mismatch in position of assets and

liabilities in individual foreign currencies. Part of the Groups securities and technical provision are in foreign currencies. When limits are set for weight of

assets in currencies in investment policies the foreign exchange rate risk of the Group is taken into the account.

The majority of the Group's assets and liabilities are denominated in ISK, but the Group holds also some foreign financial assets. Following are information

regarding those foreign currencies that have most impact on the Group´s operations. Exchange rates and calculation of volatility disclosed is based on the

average exchange rates of the Central Bank of Iceland during the year. Year-end rate is according to mid-exchange rate according to Íslandsbanki.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.6 Foreign exchange rate risk (contd.)

Sensitivity analysis

39.7 Counterparty risk

Primary counterparty risk components are:

The main source of counterparty risk is:

The Group regularly monitors its counterparty risk.

Counterparty risk is as follows:

31.12.2023 31.12.2022Securities, credit rating A ............................................................................................................................................................................... 15.466.701 10.021.050Securities, credit rating BBB ........................................................................................................................................................................ 2.263.964 2.562.360Other market securities ..................................................................................................................................................................................12.871.09714.793.661Account receivables ........................................................................................................................................................................................0523.157Claims on reinsurers .......................................................................................................................................................................................15.08522.959Other receivables ............................................................................................................................................................................................2.146.748727.125Cash and cash equivalents .............................................................................................................................................................................2.270.6932.380.52635.034.28731.030.836

The Group's maximum exposure to counterparty risk corresponds to the carrying amounts disclosed above.

• Risk of loss or unforseeable change in financial position due to counterparty's lower rating

• Risk of lower rating of bond issuer (spread risk)

• Risk that counterparty can't comply with the obligation that contracts specify

• Primary insurance

• Reinsurance

• Lending

• Investments in debt securities

• Bank deposits

Impact on profit or loss and equity31.12.202331.12.20225%10%5%10%USD ...........................................................................................................................................123.051246.10298.184196.368EUR ........................................................................................................................................... 61.863 123.726 26.458 52.915GBP ...........................................................................................................................................(4.478)(8.955)2.3114.622DKK ..........................................................................................................................................2.3024.6041.4342.867NOK ..........................................................................................................................................31.83463.66939.04778.094SEK ............................................................................................................................................137274134268

Weakening of ISK to the above mentioned foreign currencies would have positive impact on profit and equity.

Operation of the Group is based on two foundations, insurance- and financial operation and counterparty risk can be found in both pillars.

The following table discloses the effect of 5% and 10% strengthening of ISK to the respective foreign currencies on profit or loss and equity. The analysis is

based on the carrying amount of assets and liabilities denominated in those currencies at the reporting date. The table above discloses those foreign assets and

liabilities on which the sensitivity analysis is based, which are mainly foreign denominated securities. The sensitivity analysis is based on the presumption that all

other variables remain constant. It is based on post-tax amounts, 20% income tax, and reflects the impact on profit or loss and equity. The negative impact on

profit or loss and equity is the same since value changes of the underlying financial instruments are in no instances recognised directly in equity.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.8 Liquidity risk

Expected cash flows of financial liabilities is specified as follows:

Withinone year1-5 yearsOver 5 yearsTotal31.12.2023Liabilities for incurred claims ................................................................................................12.519.01012.292.959664.84625.476.815Reinsurers assets for incurred claims ...................................................................................229.01818.4460247.464Subordinated bond ..................................................................................................................186.548743.6086.798.9947.729.149Lease liability ............................................................................................................................250.536227.443194.303672.281Accounts payable and other short-term liabilities ............................................................. 3.159.773 0 0 3.159.773Withinone year1-5 yearsOver 5 yearsTotal31.12.2022Liabilities for incurred claims ................................................................................................8.686.1697.805.9566.938.81923.430.944Reinsurers assets for incurred claims ...................................................................................247.56114.314201262.076Subordinated bond ..................................................................................................................174.421735.5487.011.5847.921.552Lease liability ............................................................................................................................180.808180.808360.923722.539Accounts payable and other short-term liabilities ............................................................. 2.487.066 0 0 2.487.066

39.9 Liquidity risk of financial activites

Time analysis of assets and liabilities:

The main measure of the bank's liquidity risk is the liquidity ratio (LCR) as defined in Central Bank of Iceland rules no. 1520/2022 and the bank adheres to

prudent internal standards regarding the minimum liquidity ratio. The bank's liquidity ratio was 538% on 31.12.2023, but the minimum liquidity ratio according

to SÍ rules is 100%.

The tables show undiscounted contractual interest and principal payments for financial liabilities and assets. Totals for each type of liabilities and assets are

therefore higher than the corresponding figures on the consolidated balance sheet. For contractual obligations, amounts are broken down into periods

depending on when contractual principal payments and estimated interest payments occur. Open liabilities, which do not have a contractual due date, are

classified based on the fact that the customer demands payment from the group at the first opportunity.

Assets 31. desember 2023: 0-3 4-6 7-12 1-2months months months years TotalShort term liabilities ................................................................................512.659 0 0 512.659Cash ...........................................................................................................112.073 0 0 112.073Derivatives ...............................................................................................143.235 143.235Securities ...................................................................................................9.317.617 0 0 9.317.617Loans to customers ................................................................................1.051.145 306.015 332.825 16.484 1.706.46911.136.729 306.015 332.825 16.484 11.792.053Liabilities 31. desember 2023:2027Within year 2025 2026or laterTotalMoney market deposits ..........................................................................6.288.012 0 0 0 6.288.012Bills ............................................................................................................2.285.315 0 0 0 2.285.315Liabilities to credit instistutions ...........................................................700.000 0 0 0 700.000Derivatives ...............................................................................................215.615 0 0 0 215.615Accounts payables ..................................................................................413.520 0 0 0 413.520Other liabilities .......................................................................................... 82.186 32.413 0 0 114.5999.984.648 32.413 0 0 10.017.062

Liquidity risk is the risk that the Group will not have enough liquid assets or not being able to sell assets in time and therefore encounter difficulty in meeting

its financial obligations when due.

Liquidity position, its development as well as the impact of market conditions and future outlook is monitored on a regular basis. Particular emphasis is placed

on that there are always adequate liquid assets to meet expected payments of both claims and other liabilities. The Group's expected payments are very well

secured by its liquidity position. The Group's policy on liquid assets is to have minimum cash and cash equivalents at each time and that large part of assets can

be sold immediately.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.10 Insurance risk

Sensitivity analysis

2023 2022Loss amounts ................................................................................................................................................................................................... 156.426 142.077Claims provision .............................................................................................................................................................................................. 180.416 168.422Premiums, based on no change in loss and cost ratios ............................................................................................................................ 8.185 7.423

2024 2023AA+ ................................................................................................................................................................................................................... 0,5% 0,3%AA- .................................................................................................................................................................................................................... 58,1% 56,4%AA ...................................................................................................................................................................................................................... 0,0% 0,1%A+ ...................................................................................................................................................................................................................... 29,1% 31,5%A ......................................................................................................................................................................................................................... 10,6% 5,7%A- ....................................................................................................................................................................................................................... 1,7% 6,0%100,0% 100,0%

Reinsurers' risk is among other things the risk that reinsurers doesn´t meet its obligations of paying their share of losses, the reinsurance amont is not adequate,

there is a mismatch between primary insurance and reinsurance and different interpretation between the insurer and the reinsurer regarding the reinsurance

agreement. The Group's reinsurance policy stipulates that its reinsurers shall have a rating from an international rating agency. Limits are applied regarding

reinsurance from each individual reinsurer. Ratings requirements depend on the estimated settlement period of losses in each contract. In addition to that the

number of reinsurers in each contract and maximum risk exposure of each reinsurer is based on that reinsurer's rating. The following table discloses the

disaggregation of premiums to reinsurers based on their rating for the year 2022 and an estimation for the year 2023.

Insurance risk is the risk of loss or unfavorable change in insurance liabilities due to unadequate pricing or measurement of claims provision. Insurance risk

comprises of life-, health- and casualty insurance risk which are divided into sub-categories.

Insurance classes - premiums earned2023 2022Property insurance ................................................................................................................... 5.676.272 21,4% 5.243.031 21,4%Marine and cargo insurance ................................................................................................... 555.763 2,1% 591.171 2,4%Vehicle insurance ..................................................................................................................... 14.162.203 53,5% 12.981.990 53,1%General liability insurance ...................................................................................................... 1.539.949 5,8% 1.462.221 6,0%Accident and health insurance .............................................................................................. 2.631.053 9,9% 2.450.224 10,0%Life and health insurance ...................................................................................................... 1.900.564 7,2% 1.685.597 6,9%Reinsurance ............................................................................................................................... 8.271 0,0% 52.889 0,2%26.474.076 100,0% 24.467.123 100,0%Domestic and foreign operations - premiums earnedDomestic operations ............................................................................................................... 26.465.805 100,0% 24.414.233 99,8%Foreign operations .................................................................................................................. 8.271 0,0% 52.889 0,2%26.474.076 100,0% 24.467.123 100,0%

Technical provision risk is the risk that the obligation of the Group related to its insurance contracts is underestimated, both for unearned premiums and

claims provision. Unearned premiums liability is the estimated amounts due to unexpired policies. Claims provision is the estimated liability due to incurred but

unsettled losses, both reported and unreported. Estimated value of technical provision is based on the methods of Solvency II.

The following table discloses the impact of 1% change in loss amounts, claims provision and unearned premiums on the Group's profit or loss and equity.

The main risk factors involve mistakes in handling of and settlement of claims, wrong decision making or fraud by employees. There is also risk that claimant

gives wrong information or exaggerates the effects of the the claim, i.e. insurance fraud. This also includes administration of sensitive personal information and

contractors will go beyond their purview.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.11 Credit risk of financial activites

The maximum credit risk is the carrying amount which is broken down below:

31.12.2023Cash ................................................................................................................................................................................ 112.073Other receivables (without advance payments) ...................................................................................................... 211.078Securities used for hedging ........................................................................................................................................ 4.521.114Loans to customers ..................................................................................................................................................... 1.672.7206.516.985

No movements were between levels 1, 2 and 3 in 2022 and 2023.

The table below shows the nominal value of financial assets and write-downs by age (number of days past maturity) and classification:

39.12 Operational risk

The main factors of operational risk are:

Operational risk consists of all risks that are related to regular operations of the Group and is defined as a risk of direct or indirect loss due to insufficient or

faulty internal systems or working procedures, conduct of employees or external factors, such as legal risk. The Group policy is to reduce operational risk,

taking the cost of preventive proceedings into account.

• Organisational structure

• Documentation and contracting

• Information technology

• Employees

• External events

Nominal value Expected Bookedof claim credit losses balanceUndue .............................................................................................................................................................................1.739.412 2.049 1.737.363Default 1-30 days .........................................................................................................................................................0 0 0Default 31-60 days .......................................................................................................................................................0 0 0Default 61-90 days .......................................................................................................................................................0 0 0Default >90 days ..........................................................................................................................................................0 0 01.739.412 2.049 1.737.363

Credit risk consists of the risk that the bank's counterparties will not be able to meet their obligations, which will result in the bank losing money on its

financial instruments. Credit risk primarily comes from loans to customers, deposits with other financial institutions and derivatives. The managers regularly

monitor the development of the assets related to credit risk, and the bank has implemented policies and rules aimed at minimizing the likelihood of credit

losses by e.g. to make strict requirements for insurance and choose counterparties diligently. The underlying collateral is not taken into account when assessing

the maximum credit risk.

Cash and cash equivalents are bank deposits with financial institutions that the bank considers to be reliable and are also mostly insured, and managers

therefore assess the credit risk of cash as insignificant. Securities consist of government bonds and government bills where the credit risk is considered

insignificant. Management assesses the credit risk due to trade receivables, other receivables, receivables from related parties and loans to customers down to

individual customers and receivables where there are relatively few debtors.

The tables below show changes in the contribution to the depreciation account according to the types of financial assets and levels of the IFRS 9 impairment

model. Changes from level 1 to level 2 occur when there has been a significant increase in credit risk. Transfers from level 1 and 2 to level 3 occur when there

is objective evidence of impairment. Downgrades occur when objective evidence of impairment is no longer present (from level 3) or when the credit risk has

decreased and is no longer considered to have significantly increased since the initial registration (from level 2 to level 1).

2023Level 1Carried over from last year ............................................................................................................................................................................838Reassessment of expected credit losses ......................................................................................................................................................2.098Ultimately lost ..................................................................................................................................................................................................-888Total depreciation account at the end of the year .....................................................................................................................................2.049

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

39.13 Internal management and control

39.14 Combined ratio and operating ratio

20232022*2021*2020*2019*Claims ratio ..............................................................................................75,1%70,8%73,3%84,5%74,8%Net reinsurance ratio ..............................................................................2,1%2,4%-0,8%1,9%0,9%Claims and net reinsurance ratio ..........................................................77,2%73,2%72,5%86,4%75,7%Insurance contracts expense ratio ........................................................22,3%21,8%23,0%22,4%21,6%Combined ratio ......................................................................99,5%95,0%95,5%108,8%97,3%*Comparative figures have been changed in accordance with IFRS 17, see note 2

40.

2023IncomeExpensesAssetsLiabilitiesBoard of directors and key management ............................................................................ 23.902 55.749 389.318 02022Board of directors and key management ............................................................................ 13.647 7.428 456.057 0

Related parties

Related parties are those parties, or their companies, that have a significant influence on the Group, whether directly or indirectly. Related parties are large

shareholders, board members and members of the boards sub-committees, key management personnel and their families, as well as other dependent parties

directed by or under the influence of the Group. Transactions with related parties have been on the same terms as with unrelated parties. Salaries and benefits

of the board and management are disclosed in note 9.

Transactions and balances with related parties are specified as follows:

• Control Environment

• Risk Assessment

• Control Procedures

• Information & Communication

• Management Controls

The policy is based on COSO's (Committee of Sponsoring Organisations of the Treadway Commission) framework on Internal Control (Internal Control –

Integrated Framework) published in May 2013.

The Internal management and Control can be witnessed in all practices, methods, codes of conduct and policies on human resources and is at the same time

an integrated part of daily business and operation. Internal management and control are subject to human limitations such as mistakes and intentional override

of the Group´s rules, as well as other unpredictable factors.

Combined ratio is the sum of incurred losses, operating expenses and net reinsurance cost as a proportion of earned premiums. Operating ratio is calculated as

the combined ratio, except that the ratio's denominator also includes investment income and other income from insurance operations. Claims ratio, operating

ratio and reinsurers' cost ratio are calculated as proportion of premiums for the year.

The following table discloses combined ratio, operating ratio and other key figures of the insurance operations for the past five years.

The Group's policy is to have well organized and reliable internal control framework that is integrated part of its enterprise risk management. The framework is

articulated by the Board, its management and employees and is designed to give reasonable assurance of the achievement of the Groups's objectives on:

• Effectiveness and efficiency of operations (operational goal)

• Reliability of reporting (objective of correct information)

• Compliance with laws and regulations (objective on following rules)

To achieve those objectives in the Group's effective internal control system the following five components work to support its mission, strategies and business

objectives:

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

41. Events after the reporting date

42.

Significant accounting policies

42.1 Group

42.2 Associates

42.3 Goodwill

42.4 Customer relationships

Equity method

Equity method is an accounting policy whereby investments in associates are initially recognised at cost and the carrying amount subsequently adjusted in

accordance with any changes in the Company´s share of the net assets of the associates. The Company´s share of profit of an associate is recognised as part of

the Company´s profit or loss. In case the Company´s share of loss of an associate is in excess of its carrying amount the Company does not recognise any

further share of loss unless it has issued guarantees on behalf of the associate or financed its operations. In subsequent periods the Company does not

recognise any share of profit of associates until unrecognised share of loss has been equalised.

Goodwill that arises from acquisitions is recognised on the date the Company achieves control of the acquired company. Goodwill is the difference between

the acquision price of a subsidiary and the acquirer's interest in the net assets of the subsidiary, at fair value at the acquisition date. Goodwill is not amortised

but tested annually for impairment or more often if there is any indication of impairment. For the purpose of impairment testing goodwill is allocated to cash-

generating units. Those cash-generating units to which goodwill has been allocated are tested for impairment. Impairment has occured if carrying amount

exceeds recoverable amount. Impairment is first recognised by the expense of goodwill and thereafter as a reduction of the carrying amount of other assets of

that cash-generating unit. Impairment losses of goodwill are not reversed in later periods.

Customer relationships, recognised upon acquisition of operations, are amortised over the estimated useful life, which is 10 years.

The financial results of subsidiaries acquired or sold during the year are included in the financial statements from the date of acquistion to the date of disposal,

as applicable.

The consolidated financial statements include the revenue, expenses, assets and liabilities of the Group from transactions with third parties. Intercompany

transations are eliminated in the consolidated accounts. When applicable the financial statements of subsidiaries are modified to align them with the accounting

policies of the Group.

If shareholding in a subsidiary is less than 100% a non-controlling interest in profit or loss and equity is recognised. However, since non contolling interest is

immaterial it is not presented separately in the financial statements.

Associates

Associates are those companies in which Company has significant influence, but not control, over their financial and operating policy. Significant influence is

usually present when the Company has 20% to 50% of voting rights, including any potential exercisable voting right. Interest in associates are accounted for

using the equity method.

At the company's shareholders' meeting on 17 January 2024, the company's shareholders approved the transfer of the insurance business to the subsidiary VÍS

tryggingar hf. No events have occurred after the end of accounting period that require the Group to change this financial statements.

The accounting policies as set out below have been applied consistently for all periods to the financial statements and for all the Group's entities.

The Group's financial statements include the financial statements of the Parent Company and its subsidiary. Subsidiaries are entities controlled by the Group.

The Group controls an entity when it is exposed to or has rights to variable returns from its involvement with the entity and has ability to affect those returns

through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control

commences until the date on which control ceases.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

42.5 Revenue

42.6 Insurance service expenses

42.7 Insurance contracts

Definition of insurance contracts

Classification of insurance contracts

Technical provision

Reinsurance contracts

Investments where investment risk is borne by the life-insurance policyholder

Within each category, it is assessed whether contracts can become onerous based on the fact that pricing or underlying risks will lead to a loss of the contract

during the contract period. If a contract proves to be onerous, the expected loss from the contract is expensed in the profit and loss account. The group has

not found any groups of contracts that could be considered onerous.

At each reporting date the Group evaluates its technical provision so as to conclude on if it is sufficient to cover the Group's liabilites due to written insurance

contracts. The evaluation is based on estimated future cash flows of the technical provision. All changes in technical provision are recognised in profit or loss.

The evaluation takes into account all expected contractual cash flows due to claims and claims expenses.

The Group enters into reinsurance contracts with the purpose of mitigating its risk. Reinsurance contracts are either proportional or bearing all risk if insurance

loss amount due to a loss event exceeds prior determined contractual amount.

Claims on reinsurers due to premiums and claims are recognised as reinsurance assets. It consists of claims on reinsurers due to their portion of claims in

accordance with reinsured insurance contracts as well as their portion of the claims provision. Liabilities due to reinsurance consist of reinsurers's share of

premiums due to reinsurance contracts, expensed in profit or loss on renewal of reinsurance contracts.

Investments where the investment risk is borne by the policyholder are financial assets of the Company selected by the investment and life-insurance

policyholders. The policyholders bear the investment risk in those investment life-insurance policies. Investment for the benefit of life-insurance policyholders

is recognsied as a liability in the balance sheet to the same amount.

Insurance contracts are contracts under which the insurer accepts, in accordance with contractual provisions, to compensate the policyholder for financial loss

incurred due to insured event.

The insured event is uncertain, it is not known if or when it occurs, and generally its financial consequences are not known beforehand.

Casualty insurance contracts consist of third party liability contracts, accident contracts and property insurance contracts including marine insurance contracts.

Third party liability contracts protect the customer for the risk of causing harm to third parties as a result of their legitimate activities.

Accident insurance contracts compensate the insured own bodily injuries in accordance to contractual provisions.

Property insurance contracts compensate the Group's customers for damage suffered to their properties or for the value of property lost. Customers operating

in businesses could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business.

Insurance revenue are income from insurance coverage. Premiums are recognized as income proportionally over the period covered by the insurance coverage.

Premiums recognised in the income statement are the premiums incurred during the operating year plus transferred premiums from previous year but minus

premiums for the following year. The liability for remaining coverage in the balance sheet is the part due to premiums assumed insurance risk that has been

paid but not provided.

Dividend and interest income

Dividend income from investments is recognised on the date when the right to dividend is established.

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.

Interest income is recognsied as accrued based on effective interest rate. Effective interest rate is the rate of interest that discounts the expected cash flows or

revenue over its estimated life so as to equal the carrying amount of the financial asset.

Insurace service expenses include both operating costs of insurance contracts and incurred claims for the year. Claims expensed are incurred claims of the year

together with the reassessment of prior year claims. Liability for incurred claims is the total amount of reported unsettled claims as to actuarial estimates for

incurred but unreported claims.

The Group issues contracts that transfer both financial and insurance risk from its customers to the Group.

Revenue is recognised at the fair value of the consideration received or receivable after deduction of discounts.

Insurance revenue

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

42.8 Foreign currencies

42.9 Financial expenses

42.10 Income taxes

Current taxes

Deferred income tax

42.11 Operating assets

42.12 Software

42.13 Financial assets

Registration and initial assessment

Software is recognized at cost less accumulated amortisation and impairment. The cost price consist of the purchase price and all direct cost to get the software

in to use. Software is amortised using the straight-line method over 3 to 10 year from the date it is taken into use.

The group values financial assets and financial liabilities at initial registration at the fair value paid. Purchases and sales of financial assets are recorded on the

transaction date which the group undertakes to buy or sell the assets. All other financial assets and financial liabilities are recorded on the transaction date as

the group will be part of the contractual payments of the financial asset or liability.

Financial assets and financial liabilities are recognized at fair value upon initial registration. For financial assets and financial liabilities that are not recognized at

fair value through income statement an expense directly related to purchases or sales is added. Transaction costs for financial assets at fair value through the

profit and loss account are immediately transferred to the profit and loss account.

Deferred income tax is expensed in profit or loss unless it is related to items recognised in other comphrensive income or directly in equity. If so the tax is

also recognised in other comphrensive income or equity.

An operating asset is recognised when it is probable that economic benefits embodied in the asset will flow to the Group and its cost can be measured reliably.

Operating assets are recognised at cost value less accumulated depreciation and impairment. The cost of operating assets consists of the purchase price and all

directly attributable cost necessary to make the asset capable of generating revenue.

Operating asset is recognised at cost less accumulated depreciation and impairment.

Depreciation is recognised on a systematic bases over the expected useful life of the asset, taking into account its estimated residual value. Depreciation

method, expected useful life and residual value is reviewed at least annually.

Gain or loss on sale of operating assets is calculated as the difference between the sale price and carrying amount. It is recognised in profit or loss as part of

other income.

Financial expenses are expensed in profit or loss as incurred.

Income taxes expensed consists of current taxes and deferred tax.

Current taxes are the expected taxes payable on taxable income for the year, and any adjustment to taxes payable in respect of previous years. Taxable income

for the year is generally different from profit or loss for the year according to the financial statements. Calculated tax is based on tax rates enacted at the

reporting date.

Deferred income tax is due to temporary difference between taxable income and profit or loss according to the financial statements. The reason is that the

Group's tax base is based on premises different from the financial statements. Deferred tax is not recognised on non-deductible goodwill. Deferred tax is

calculated based on the tax rate enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable income will be available against which the tax asset can

be utilised in the future.

Foreign exchange difference is recognised in profit or loss as incurred.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

42.13 Financial assets (contd.)

Classification of financial assets

Financial assets at amortized cost

Financial assets at fair value

Impairment of financial assets

Level 1

Level 2

The bank's loans and receivables are covered by the IFRS 9 impairment model. The assessment of expected credit losses is updated at each financial reporting

date, but the impairment model divides financial assets into three levels:

All financial assets at initial registration, with few exceptions. Expected credit losses are estimated based on the probability that defaults will occur in the next

12 months from the reporting date.

There has been a significant increase in credit risk. Expected credit losses are estimated based on the probability of default during the lifetime of the financial

asset.

Financial assets are divided into the following categories: financial assets at amortized cost and financial assets at fair value through profit and loss. The

classification is determined upon initial registration and depends on the group's business model for the relevant financial asset. All general transactions with

financial assets are recorded on the transaction date.

General business refers to the purchase and sale of financial assets based on an agreement or market practice for the delivery or receipt of financial assets

within a specified time.

A financial asset that is estimated to hold to maturity and contractual payments consist only of installments of principal and interest shall be recorded at

amortized cost unless the instrument is defined at fair value through profit and loss in accordance with the fair value source. Such assets are initially recognized

at fair value plus any related transaction costs. After initial registration, such financial assets are valued at amortized cost based on effective interest, less

impairment. All the bank's loans and receivables are recorded at amortized cost.

A financial asset that is both intended to collect a contractual payment and profit from sale, and the contractual payments consist only of installments of

principal and interest, shall be recorded at fair value through other comprehensive income. This applies unless the choice is to record the fair value through

profit and loss in accordance with the fair value source, if certain conditions are met. Financial assets that are not valued at amortized cost or at fair value

through other comprehensive income must be valued at fair value through the income statement. Derivatives are recorded at fair value through the profit and

loss account, except for derivatives that have been defined as a hedge in the hedge accounting. Fossar did not transfer any financial assets at fair value through

other comprehensive income in the previous year, but the bank started buying bonds during the year with the aim of managing the bank's liquidity needs, as

both contractual payments are collected and profits are made through sales. The effect of the change in the fair value of these bonds is recognized through

other comprehensive income.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

Final depreciation of financial assets

42.14 Impairment of other assets

42.15 Obligations

42.16 Financial liabilities and equity instruments

If the obligation is recoverable from a third party, the amount is recognised as an asset.

Financial liabilities are recognized at fair value upon initial registration. Business expenses that are directly attributable to the purchase or issuance of financial

liabilities that are not recognized at fair value through profit and loss are added to or deducted from fair value at initial registration as appropriate. Transaction

costs for financial liabilities at fair value through profit and loss are immediately transferred to the profit and loss account.

Financial liabilities are valued at amortized cost based on effective interest. The group derecognizes financial liabilities only when the obligation for them no

longer exists. Profit or loss due to deregistration is entered in the profit and loss account.

Recoverable amount is the higher of fair value less cost to sell and value in use. Value in use is based on estimated future cash flows, discounted at pre-tax rate

of interest, where the interest rate reflects the market assessment of time value of money at each time and the risk embodied in the asset.

Intangible assets with indefinite useful life and intangible assets not ready for use are tested for impairment annually and more often if there is any indication of

impairment.

If the recoverable amount of an asset is lower than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment loss is

recognised in profit or loss.

A recovery of the asset, subsequent to impairment recognition, is reversed. However reversal is limited to the amount of the asset not being recognised at an

amount higher than its carrying amount prior to the impairment recognition. Reversal of impairment of goodwill is prohibited.

An obligation is recognised when the Group has legal or constructive obligation due to a past event, payment is probable and the amount of the obligation can

be reliably determined.

The amount of the obligation is based on the best possible estimation of the liability at the reporting date. If the amount of the obligation is based on estimated

future cash flows it is recognised at present value.

- the debtor has filed for bankruptcy, the company has been deregistered, or the condition for operating is no longer present,

- it is considered unlikely that the debtor will meet his obligations due to a breach of the terms of the loan agreement or his financial restructuring.

Receivables and loans are recognized as finally lost, either in part or in full, when there is no realistic chance of recovering the amounts that are written off.

At each reporting date management reviews the carrying amount of tangible and intangible assets for indications of impairment. If any such indication exists

the recoverable amount of the asset is estimated. The recoverable amount of a cash-generating unit to which the asset belongs, is estimated if it is not possible

to test the asset individually for impairment.

Level 3

There is objective evidence of impairment. Expected credit loss assessed based on the probability of default over the life of the financial asset.

Allfinancialassetswithinthescopeoftheimpairmentmodelarerecordedatlevel1atinitialregistration,withtheexceptionoffinancialassetsthatare

impairedatinitialregistrationandfinancialassetscoveredbythestandard'ssimplifiedmodel(e.g.tradereceivableswherethepaymenttermislessthan12

months).

Sincetherearerelativelyfewclaims,managementestimatesexpectedcreditlossesseparatelyonindividualclaims.Becauseofthis,claimsarenotautomatically

moved down a category upon certain changes, such as 30 or 90 days default.

If the credit risk due to a financial asset in level 2 or 3 decreases and the reasons for this are not considered short-term, the relevant financial asset is lowered by

a level, i.e. level 1 or 2 depending on the circumstances.

Impairmentassessmentofeachportfoliooffinancialassetsisbasedonhistoricalexperiencewithrespecttothoseassets,thedateonwhichthelosscould

possiblyberecoveredandtheamountoftheloss.Theasssessmentsincludesmanagementestimateastowhethercurrenteconomicandloanconditionsare

such that the loss will be more or less than would be expected based on historical experience.

Definition of non-compliance

Thegroupbelievesthatobjectiveevidenceofimpairmentispresentifitislikelythatthedebtorwillnotbeabletofullymeetitsobligationstothebank.The

following are examples of situations where the Group believes that objective evidence of impairment exists:

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

42.17 Equity instruments

42.18 Lease liability

42.19 New standards, interpretations and amendments to standards

The company is a lessee of housing and leases are entered in the balance sheet in accordance with the provisions of IFRS 16. Current payment obligations due

to contracts classified as operating leases are recognized as a liability, while the right of use is recognized as an asset. The right of use is amortized and interest

charges are transferred from the lease liability. See details in explanation number 15 and 25.

The Group has adopted all international financial reporting standards, interpretations and changes to standards adopted by the European Union that are

applicable to the Group and effective as at 1 January 2022. The Group has not adopted standards, amendments to standards or interpretations effective for

periods starting later than 1 January 2022 where early adoption is permitted.

The group applied the same accounting periods in the years 2023 and 2022.

The group has not adopted standards that take effect later than may be applied earlier. It is assumed that their implementation will have an insignificant effect

on the consolidated financial statements.

An equity instrument is any type of contract that includes a residual interest in the group's assets after all of its liabilities have been deducted. Equity

instruments issued by the group are recorded at cost less the direct costs of their issuance.

Purchases of own shares are reduced to total share capital. No profit or loss is recognized through operations due to the purchase, sale or issue of own shares.

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK

43. Quarterly statement (unaudited)

Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022*

Insurance revenue ..................................................................................... 6.843.539 6.952.232 6.500.845 6.177.460 6.259.617

Net investment return .............................................................................. 845.132 396.871 719.700 867.823 112.071

Net interest, fee and commission income ............................................ 391.452 37.891 0 0 0

Share in the profit of affilliates, after income tax ................................ 9.191 0 0 0 0

Other income ............................................................................................. 17.337 14.584 19.094 23.040 13.664

Total income .............................................................................................. 8.106.650 7.401.578 7.239.640 7.068.323 6.385.353

Insurance service expenses ......................................................................

(6.641.423) (6.344.821) (6.152.501) (6.645.398) (5.595.918)

Net expenses from reinsurance contracts ............................................. 42.994 (238.933) (169.546) (181.278) (220.492)

Operating expenses ...................................................................................

(658.669) (105.464) (94.377) (29.721) (9.729)

Impairment of intangible assets ..............................................................

(805.628) 0 0 0 0

Profit before tax ........................................................................................ 43.924 712.360 823.216 211.926 559.215

Income tax expense .................................................................................. 108.016 (104.888) 19.653 17.397 (98.363)

Profit for the period ................................................................................. 151.940 607.471 842.869 229.323 460.852

Claims ratio .............................................................................................. 73,3% 72,6% 71,7% 83,4% 67,5%

Net reinsurance ratio ..............................................................................

-0,6% 3,4% 2,6% 2,9% 3,5%

Claims and net reinsurance ratio ..........................................................

72,6% 76,0% 74,3% 86,4% 71,1%

Insurance contracts expense ratio ........................................................

23,8% 18,7% 22,9% 24,1% 21,9%

Combined ratio ....................................................................................... 96,4% 94,7% 97,2% 110,5% 92,9%

Consolidated financial statements of Vátryggingafélag Íslands hf. 2023

Amounts are in thousands of ISK