Consolidated
Financial
Statements
1 January – 31 December 2025
Vátryggingafélag Íslands hf.
Consolidated Financial Statements 31 December 2025
Consolidated
Financial Statements
____________________________________
1 January to 31 December 2025
Table of Contents
Report and Endorsement by the Board of Directors and the CEO 2
Independent Auditor’s Report 8
Consolidated Statement of profit or loss 14
Consolidated Statement of Comprehensive Income 15
Consolidated Statement of Financial Position 16
Consolidated Statement of Changes in Equity 17
Consolidated Statement of Cash Flows 18
Notes to the Consolidated Financial Statements 19
Appendix 1: Non-financial and sustainability reporting (Unaudited) 83
Appendix 2: EU Taxonomy Regulation 109
Consolidated Financial Statements 31 December 2025 2
Report and Endorsement
by the Board of Directors and the CEO
The consolidated financial statements of Skagi hf. ("the Company”or“Skagi”) for the year 2025 consist of the
financial statements of the Company and its subsidiaries. Subsidiaries include VÍS tryggingar hf. and
Líftryggingafélag Íslands hf. (“Lífís”) (together referred to as “VÍS”), Fossar fjárfestingarbanki hf. (“Fossar” or “the
bank”) and Íslensk verðbréf hf. (“ÍV”), collectively with the Company referred to as "the Group". The Group’s
operations consist of insurance activities, investment banking, 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.
Operating and Financial position
According to the Statement of profit or loss the Group's profit for the year amounted to ISK 1,902 million and return
on equity was 8.6%. The Group's assets at year-end amounted to ISK 85,035 million and equity amounted to ISK
23,984 million according to the Statement of financial position.
Insurance
Continued operational improvement is taking place in the insurance business. Results were supported by strategic
and profitable growth of the insurance portfolio which, combined with emphases on automation, has improved
economy of scale. Insurance business generated 9.5% (2024: 10.2%) insurance revenue growth and life and health
insurance growth of 12.2%. Cost ratio continues to improve at 18.1% in 2025 (2024: 19.1%) and claims and
reinsurance ratio was at 72.6% (2024: 75.8%). This results in a combined ratio of 90.7% (2024: 94.9%). The
insurance service result was positive by ISK 2,970 million in 2025 (2024: ISK 1.479 million) and improves by ISK
1,491 million YoY.
Financial Services
Financial services activities generated growth of 36% in revenue in 2025 compared to prior year. Revenue of
financial activities totalled ISK 3,188 million, compared to ISK 2,344 million in 2024. Assets under management
(AuM) at the Skagi Group stand at ISK 253 billion at the end of 2025 (2024: ISK 227 billion) and grew 11% YoY.
Financial services delivered a profit before tax of ISK 238 million in 2025 (2024: ISK 18 million) and improves by ISK
220 million YoY despite significant consolidation and one-o expenses amounting to ISK 115 million incurred in
2025. Positive tax of ISK 61 million attributed to an after tax profit of ISK 299 million in 2025 in Financial Services.
Investments
The return on the insurance investment assets in 2025 was 5.2% (2024: 8.3%). Investments generated financial
income of ISK 2,355 million in 2025 (2024: ISK 3,555 million) and net financial income of ISK 20 million in 2025 (2024:
ISK 1,760 million), after taking into account net financial expenses of insurance contracts and other financial items
of ISK 2,026 million and operating expenses of investment portfolio of ISK 308 million.
Financial strength and long-term ROE target
Skagi continues to target a return of equity of above 15% each year for the Group. The Group's solvency ratio is 1,31
at year end 2025 compared to internal target of minimum 1.175. The solvency ratio does not account for potential
dividend or share repurchases. Further information on financial strength of the group and its subsidiaries can be
found in the notes to the account.
Financial Targets 2025
Guidance on target operating performance for the fiscal year 2025 was as follows, as updated on as updated on 14
th
October 2025:
• Combined ratio range 89.5%-92.5%
• Financial services revenue target is to be above 3,100 million (range 2,900 – 3,500 million)
• Expected return of insurance investments assets was 10%:
Consolidated Financial Statements 31 December 2025 3
Report and Endorsement
by the Board of Directors and the CEO
The Group met its target combined ratio in the insurance business unit as well as in the financial services business
unit. However, the return of the insurance investment assets was 5.2%, which was below the expected return of
10% set out at the beginning of the year.
Financial Targets 2026
Guidance on target operating performance for the fiscal year 2026 is as follows:
 Target combined ratio below 93.5% (range 92-95%)
 Financial services revenue target is to be above 3,500 million (range 3,300 – 3,800 million)
 Expected return of insurance investments assets is 9.5%.
Skagi will provide update on guidance if operating performance is not considered to be able to meet target range in
insurance business and financial services. No update is given in between quarterly reporting on Investment return
of insurance investments.
Transfer of Insurance operations to a subsidiary
Following approvals from the Financial Supervisory Authority of the Central Bank of Iceland (“FSA”), cf.
announcements by the Company on the Nasdaq Iceland on 23rd December and 30
th
December 2024, Skagi has,
on 1
st
of January 2025, completed the transfer of the VÍS insurance business to its subsidiary VÍS tryggingar hf. This
is in line with announcement made on 17
th
January 2024 following approval of a shareholders meeting of the
Company for the proposed transfer of the insurance portfolio and the insurance operations to a subsidiary, to which
all conditions have now been met and thus the transfer has been executed. At the request of Skagi, the Financial
Supervisory Authority on 4
th
July 2025 revoked Skagi’s insurance operating licence as all insurance activities have
been transferred to VÍS tryggingar and discontinued in the Parent Company.
Integration of financial services concluded
Following the acquisition of Íslensk verðbréf in late 2024, the Company prepared further consolidation of financial
services activities within the Group during 2025, including a merger of Íslensk verðbréf’s brokerage and custody
activities into Fossar and merger of SIV eignastýring hf. asset and fund management with ÍV sjóðir hf. These mergers
were concluded at the end of 1st quarter and are eective as of 1
st
January 2025. The merged entity of SIV and ÍV
sjóðir now operates under the name of Íslensk verðbréf hf., providing asset and fund management to clients. In the
beginning of 2026 Skagi exercised an option to buy 14,1% share in Íslensk verðbréf. Hence, Skagi now has 100%
shareholding in Íslensk verðbréf in addition to its 100% shareholding in Fossar.
Skagi and Íslandsbanki commenced merger discussions
On 6
th
October 2025 the board of directors of Skagi hf. and Íslandsbanki hf. approved the initiation of formal merger
negotiations, and both parties signed a Heads of Terms to that eect. Among other key commercial terms it outlines
that Skagi's shareholders will receive 323,859,440 new shares in Íslandsbanki, representing approximately 15%
ownership in the combined company. This indicates a share price of ISK 21.18 per Skagi share and ISK 124.00 per
Íslandsbanki share. Merger discussions remain subject to a final merger agreement upon which shareholders
approvals and relevant supervisory authority approvals will also be required, e.g. competition and financial
supervisory authorities.
Skagi and Íslandsbanki recognise significant value potential in the merger by creating an integrated financial
services model that utilises the strengths of both entities. The combined company will be a prominent player in
banking and insurance, while also strengthening its investment banking and asset management platforms, oering
numerous opportunities for further expansion. Together, the companies will be well-positioned to compete across
all areas of financial services and take a leading role in the ongoing development of the Icelandic financial
landscape.
Consolidated Financial Statements 31 December 2025 4
Report and Endorsement
by the Board of Directors and the CEO
The merger is expected to enhance customer service and boost profitability by creating a more eicient capital
structure and achieving greater scale in asset management. The transaction is also anticipated to generate
significant synergies, estimated at ISK 1.8-2.4 billion annually.
Skagi’s board of directors considers the proposed transaction an attractive opportunity for Skagi’s shareholders. It
aligns with Skagi’s strategy of actively engaging in the ongoing development of the financial services sector. The
Board also believes that the merger will enhance the long-term profitability of the combined company. Additionally,
the merged entity is anticipated to have considerable excess capital, oering further capacity for growth.
Further discussions on the detailed terms and structure of the merger are ongoing. Updates on the progress of the
negotiations will be provided as appropriate and in accordance with the companies’ legal disclosure obligations.
Non-financial and sustainability reporting
Skagi places emphasis on sustainability being integrated into the Group's operations. Information in our
sustainability reporting is based on a sustainability policy which emphasises certain priorities in ESG
(environmental, social and governance) areas that are relevant to the activities of the Group. 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.
Non-financial and sustainability reporting in Skagi consolidated account is reported in accordance with laws on
annual accounts. In the Annual and Sustainability Report of the Group a more detailed summary of non-financial
information about Skagi and its subsidiaries is provided. 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. Annual and Sustainability Report for 2025 will be published on Skagi’s website www.skagi.is on 18
th
February 2025. Non-financial disclosure for the subsidiaries can also be found in their annual financial statements
and further sustainability information on their respective websites.
Skagi received 81 points in Reitun's ESG evaluation in 2025, which is an improvement by 1 point from the previous
year. Skagi continues to work towards improving it sustainability rating. With regards to that the Group has initiated
work for implementation of European Sustainability Reporting Standards (ESRS) in accordance with the Corporate
Sustainability Reporting Directive (CSRD). Accordingly, we publish further sustainability information on all
subsidiaries of the Group. We also provide further information in accordance with the EU Taxonomy regulation and
classification system. We continued to work on incorporating the ESRS standards, which included double
materiality assessment and updating our sustainability policy on group basis in the year 2025. Sustainability also
continues to be further incorporated into the corporate governance procedures, remuneration policy and risk
management of the Group.
Skagi is a member of Festa, a centre for social responsibility, IcelandSIF, an organisation that promotes responsible
investment, and a signatory of UN-PRI, the United Nations principles for responsible investment. Skagi is also a
signatory of the UN Global Impact on the implementation of responsible policies.
Non-financial and sustainability reporting for the Group can be found in appendix 1 (Non-financial and
sustainability reporting) and information in accordance with EU Taxonomy Regulation in appendix 2 (EU Taxonomy)
to these financial statements. Furthermore, non-financial disclosure on the Group and each subsidiary can also be
found on Skagi’s website www.skagi.is.
Consolidated Financial Statements 31 December 2025 5
Report and Endorsement
by the Board of Directors and the CEO
Corporate governance
Skagi places great emphasis on good corporate governance, which 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. The Company is committed to continually
enhance its governance practices to align with international standards and best practices within the Company and
the Group. These corporate governance requirements are articulated in Shareholder policies for its subsidiaries.
Skagi’s corporate governance practices are described in more detail in its Corporate Governance Statement which
is prepared in accordance Act No. 161/2002, on Financial Undertakings, and Guidelines on Corporate Governance,
6th edition, issued by the Icelandic Chamber of Commerce, NASDAQ Iceland hf. and the Confederation of Icelandic
Employers in February 2021. Corporate governance at Skagi complies with the guidelines with no exceptions. For
further information on Corporate Governance, we refer to the Corporate Governance statement which may be found
on Skagi’s homepage.
Remuneration Policy and equality
Skagi's remuneration policy is reviewed annually and presented to the general meeting for approval. The policy
complies with the provisions of Act No. 90/2003 on income tax, Act No. 2/1995 on limited liability companies, and
other applicable laws and regulations. Further information about the policy can be found on the company's website.
Information on the Group‘s employee incentive scheme and call options are detailed in note 10. In accordance with
articles of association of the Company the board has the right to issue new shares in the nominal amount of up to
55.6 million shares to meet its obligations under call options or share related payments. Full time employees were
240 at the end of year 2025. Gender representation on the board of directors of Skagi is 60% male and 40% female.
Skagi‘s Executive Committee gender ratio is 43% female and 57% male. Gender ratio of the Group in total is 40%
female and 60% male.
Risk management
Risk management is a core component of the Group, guided by the risk policy of Skagi and its subsidiaries. The
Group encounters a range of risks linked to its activities as a financial conglomerate, stemming from its daily
operations. Eective risk management involves assessing, measuring, and implementing actions to mitigate these
risks, along with ongoing monitoring of risk factors throughout the Group. Details about the Group's risk
management and core operations can be found in the notes to the Consolidated Financial Statements. For an
analysis of solvency, capital adequacy and exposure to dierent risk types, please refer to notes 31-35.
Consolidated Financial Statements 31 December 2025 6
Report and Endorsement
by the Board of Directors and the CEO
Shares and allocation of profits
The Company paid a dividend in the amount of ISK 500 million or ISK 0.2637 per share to shareholders on 2nd April
2025, as allocation of profits for the year 2024. In December 2025 the Company sold and issued 9.4 million new
shares at the strike price of 18.85 per share with total value of ISK 177 million to employees in relation to exercise
of general share option agreements.
At the end of the year 2025 the Company's nominal outstanding shares amounted to ISK 1.916,1 million (of which
own shares amounting to ISK 10.3 million), with each share having a nominal value of ISK 1. There were 901
shareholders at the beginning of the year and 908 shareholders at the end of year.
A proposal for allocation of profits and dividend for the fiscal year 2025 will be presented to shareholders at the
Company’s Annual General Meeting on 17
th
March 2026. The board’s proposal is to pay a dividend in the amount of
ISK 760 million or ISK 0.3966 per share which is equivalent to 40% of after tax profit in fiscal year 2025. Dividend
proposal is in line with dividend policy of 40% of after tax profit. The board reserves the right to propose an
extraordinary dividend to either the AGM or later dated shareholders' meeting. Top ten largest shareholders of Skagi
are:
Consolidated Financial Statements 31 December 2025 7
Report and Endorsement
by the Board of Directors and the CEO
To the best knowledge of the Board the consolidated financial statements of Skagi hf. give a true and fair view of the
consolidated financial performance of the Group for the year 2025, and its assets, liabilities, and financial position
as of 31 December 2025. The financial statements are prepared in accordance with IFRS® Accounting Standards as
adopted by the EU and the additional requirements for companies listed on a regulated securities market, and the
Act on Annual Accounts no. 3/2006. Further, in our opinion the consolidated financial statements and the report
and endorsement of the Board of Directors and the CEO give a fair view of the development and performance of the
Group's operations and its position at year end and describe the principal risks faced by the Group.
The Board of Directors and the CEO have today discussed the Company's Consolidated Financial Statements of
Skagi hf. for the period ended 31 December 2025 and confirm by means of their signatures.
Reykjavik, 18 February 2026
On the Board of Directors
Stefán Héðinn Stefánsson Vilhjálmur Egilsson
Chairman of the Board Vice-Chairman of the Board
Marta Guðrún Blöndal Ásgeir Helgi Reykfjörð Gylfason
Board member Board member
Hrund Rudolfsdóttir
Board member
CEO
Haraldur Þórðarson
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Skagi hf. ("the Company"), which comprise the
consolidated statement of financial position as at 31 December 2025, the consolidated statements of profit or loss
and other comprehensive income, changes in equity and cash ﬂows for the year then ended, and notes, comprising
material accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated
financial position of the Company as at 31 December 2025, and of its consolidated financial performance and its
consolidated cash ﬂows for the year then ended in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and additional disclosure requirements for listed companies in Iceland.
Our opinion is consistent with the additional report submitted to the Audit Committee and the Board of Directors.
Other matter
The consolidated financial statements of the Company as at and for the year ended December 31, 2024 were
audited by another auditor who expressed an unmodified opinion on those statements on February 26, 2025.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Company in accordance with the ethical requirements
that are relevant to audits of the consolidated financial statements of public interest entities in Iceland and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is suicient and appropriate to provide a basis for our opinion.
We declare, to the best of our knowledge and belief, that we have not provided any prohibited non-audit services,
as referred to in Article 5(1) of the Regulation (EU) 537/2014 and that we remained independent in conducting the
audit.
We were first appointed as auditors by the Annual General Meeting on 27 March 2025 and we have been
uninterrupted since then.
Ársreikningur Skaga hf. 2025 9
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matters
The Audit
Measurement of Insurance Contract Liabilities
The liability for insurance contracts amounted to ISK
30.3 billion at year‑end 2025 and represents 50% of the
Group’s total liabilities. The liability for insurance
contracts is divided into the liability for remaining
insurance coverage and the liability for incurred
claims. Reference is made to Note 39 regarding
accounting policies for insurance contracts and Note
25 for financial information.
The Group applied a simplified allocation approach in
measuring its insurance contract liabilities, in
accordance with IFRS 17.
The liability for remaining insurance coverage consists
of premiums received for insurance coverage relating
to future periods, as well as obligations associated
with the remaining insurance coverage.
The liability for incurred claims represents the Group’s
best estimate of the present value of expected future
cash outflows required to settle the obligation,
together with a risk adjustment reflecting the
uncertainty inherent in the measurement. The best
estimate incorporates both direct and indirect costs
attributable to the insurance coverage provided during
the contract period, in addition to obligations relating
to incurred claims.
A key area of focus in the audit is management’s
assessment of estimated outstanding claims, given
the significant inherent risk associated with
forecasting expected future payments for incurred
claims. Claims may take several years to be fully
settled, and the ultimate cost may depend on factors
that are unknown at the reporting date or outside of the
Group’s control. The estimation of incurred but not
reported (IBNR) claims is subject to the highest degree
of uncertainty. Claim estimates are based on the data
available and the assumptions applied in the valuation
process. Any changes to these assumptions may have
a material impact on the liability amount.
Our audit procedures were designed to evaluate the
assumptions applied by management in the
measurement of insurance contract liabilities.
We assessed and tested the Group’s internal controls
relating to the recording of claims and the data used to
determine the amounts of outstanding claims at
year‑end.
We evaluated and tested the Group’s internal controls
over the processes for calculating insurance contract
liabilities and the documentation of management’s
assessment.
We evaluated the design and implementation of the
systems used for claims registration, the flow of
information between the claims system and the
financial system, and tested the automated controls
within these systems.
Substantive sample testing was performed on
outstanding claims at year‑end to confirm their
existence and the appropriateness of claim valuations,
as well as to verify the accuracy of claim payments.
We verified reconciliations between the systems on
which the calculation of the claims liability is based.
We performed an independent recalculation on the
insurance liability with the assistance of actuarial
specialists.
We have verified the disclosures to confirm that the
insurance contract liabilities are presented in
accordance with the applicable accounting standards
and are adequate.
Ársreikningur Skaga hf. 2025 10
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Key audit matters
The Audit
Valuation of Unlisted Financial Instruments
Measured at Fair Value
The carrying amount of financial instruments totalled
ISK 55,9 billion. Thereof unlisted financial instruments
measured at fair value amount to ISK 15.7 billion.
Reference is made to Note 39 regarding accounting
policies and Note 34 for the related financial
information.
The financial instruments are measured at fair value,
and the majority of them are listed on active markets,
where observable market prices are available at the
reporting date.
There is, however, a degree of uncertainty associated
with the valuation of unlisted financial instruments
measured at fair value and are classified as Level 2 and
Level 3 in accordance with the applicable accounting
standards. In valuing these instruments, management
must apply assumptions regarding various factors that
influence the measurement. Valuation techniques for
unlisted financial instruments measured at fair value
may include recent arm’s‑length transactions,
discounted cash flow analysis, net asset values
published by fund managers of the relevant investment
funds, or other recognised valuation methodologies.
Accordingly, the valuation of unlisted financial
instruments is a key area of focus in the audit.
Our audit procedures were designed to evaluate the
assumptions applied by management in the valuation
of unlisted financial instruments.
We verified the net asset values of unlisted investment
funds using information obtained from the fund
managers of the respective investment funds in which
the Group has invested.
We assessed management’s valuation methodologies
and calculations for unlisted financial instruments
with the assistance of our valuation specialists.
We evaluated valuations based on recent transactions
and verified the authenticity and relevance of those
transactions.
We performed sample testing of purchases and sales
of financial instruments during the year and confirmed
that the transactions had been recorded accurately.
With the assistance of our valuation specialists, we
assessed the disclosures in Note 34 to confirm that the
financial assets are appropriately classified within the
correct fair value hierarchy levels and that the
presentation complies with the applicable accounting
standards.
Other information
The Board of Directors and CEO are responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. The annual report is not available at our reporting date but is
expected to be made available to us after that date.
Ársreikningur Skaga hf. 2025 11
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Responsibilities of the Board of Directors and CEO for the Consolidated Financial Statements
The Board of Directors and CEO are responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRSs as adopted by the European Union and additional disclosure
requirements for listed companies in Iceland, and for such internal control as they determine is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the Board of Directors and CEO are responsible for assessing
the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
The Board of Directors and CEO are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
inﬂuence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is suicient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eectiveness
of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Ársreikningur Skaga hf. 2025 12
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements, cont.:
Plan and perform the group audit to obtain suicient appropriate audit evidence regarding the financial
information of the entities or business units within the group as a basis for forming an opinion on the group
financial statements. We are responsible for the direction, supervision and review of the audit work
performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with The Board of Directors and audit committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide The Board of Directors and audit committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats
or safeguards applied.
From the matters communicated with The Board of Directors and audit committee, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on European single electronic format (ESEF Regulation)
As part of our audit of the consolidated financial statements of Skagi hf. we performed procedures to be able to
issue an opinion on whether the consolidated financial statements of Skagi hf. for the year 2025 with the file name
213800QFQIHO7KG2P786-2025-12-31-en.xbri is prepared, in all material respects, in compliance with the Act on
disclosure obligation of issuers of securities and the obligation to ﬂag no. 20/2021 relating to requirements
regarding European single electronic format Regulation EU 2019/815 which include requirements related to the
preparation of the consolidated financial statements in XHTML format and iXBRL markup.
Board of Directors and CEO are responsible for preparing the consolidated financial statements in compliance with
the Act on disclosure obligation of issuers of securities and the obligation to ﬂag no. 20/2021. This includes
preparing the consolidated financial statements in an XHTML format in accordance with EU Regulation 2019/815
on the European single electronic format (ESEF Regulation).
Our responsibility is to obtain reasonable assurance, based on evidence that we have obtained, on whether the
consolidated financial statements are prepared in all material respects, in compliance with the ESEF Regulation,
and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the
auditor's judgement, including the assessment of the risks of material departures from the requirement set out in
the ESEF Regulation, whether due to fraud or error.
In our opinion, the consolidated financial statements of Skagi hf. for the year 2025 with the file name
213800QFQIHO7KG2P786-2025-12-31-en.xbri is prepared, in all material respects, in compliance with the ESEF
Regulation.
Ársreikningur Skaga hf. 2025 13
Independent Auditor's Report
To the board of directors and shareholders of Skagi hf.
Report on the report of the Board of Directors and CEO
Pursuant to the legal requirement under Article 104, Paragraph 2 of the Icelandic Financial Statements Act No.
3/2006, we confirm that, to the best of our knowledge, the report of the Board of Directors and CEO accompanying
the consolidated financial statements includes the information required by the Financial Statements Act if not
disclosed elsewhere in the consolidated financial statements.
The engagement partner on the audit resulting in this independent auditor’s report is Sigríður Soía Sigurðardóttir.
Reykjavík, 18 February 2026
KPMG ehf.
Sigríður Soía Sigurðardóttir
Matthías Þór Óskarsson
Consolidated Financial Statements 31 December 2025 14 All amounts are in thousands of ISK
Consolidated Statement of profit or loss
For the year 2025
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The notes on pages 19-82 are an integral part of these financial statements.
Notes 2025 2024
Insurance revenue .................................................................................................................. 31.959.386 29.182.080
Insurance service expenses ................................................................................................... (28.006.004) (26.754.044)
Net expenses from reinsurance contracts .............................................................................. (983.651) (948.562)
Insurance service result 6 2.969.732 1.479.475
Interest income ....................................................................................................................... 2.151.175 1.582.354
Interest expenses .................................................................................................................... (1.690.478) (1.345.297)
Net interest income 7 460.697 237.057
Fee and commission income .................................................................................................. 2.436.643 1.874.042
Fee and commission expenses .............................................................................................. (79.012) (58.371)
Net fee and commission income 8 2.357.631 1.815.671
Financial income ..................................................................................................................... 2.480.837 3.695.304
Net finance expenses from insurance contracts ..................................................................... (1.631.525) (1.121.708)
Other financial items ............................................................................................................... (502.467) (388.569)
Operating expense of the insurance investment portfolio ....................................................... (308.440) (285.019)
Net financial income
9
38.405 1.900.007
Share in profit of associates, after income tax ........................................................................ 20 110.950 0
Other operating income .......................................................................................................... 210.853 241.405
Net operating income 6.148.269 5.673.615
Operating expenses ................................................................................................................ 10 (3.508.235) (2.967.167)
Net credit impairments ............................................................................................................ 35 (6.627) (10.815)
Amortization of intangible assets ............................................................................................ (196.305) (150.374)
Profit before tax 2.437.102 2.545.258
Income tax expenses .............................................................................................................. 11 (534.637) (286.841)
Profit for the year
1.902.466 2.258.417
Attributable to shareholders of the parent company ............................................................... 1.900.657 2.264.210
Attributable to minority interest ................................................................................................ 1.808 (5.793)
Profit for the year
1.902.466 2.258.417
Earnings per share
Basic earnings per share ........................................................................................................ 12 1,00 1,19
Diluted earnings per share* ..................................................................................................... 12 1,00 1,19
Consolidated Financial Statements 31 December 2025 15 All amounts are in thousands of ISK
Consolidated Statement of Comprehensive Income
For the year 2025
The notes on pages 19-82 are an integral part of these financial statements.
2025 2024
Profit for the year
1.902.466 2.258.417
Other Comprehensive income
Items that are or may be reclassified subsequently to profit or loss
12.880 0
(8.483) (9.029)
Total comprehensive income for the year
1.906.863 2.249.389
1.905.054 2.255.181
1.808 (5.793)
Total comprehensive income for the year 1.906.863 2.249.389
Unrealised fair value changes ...................................................................................................................
Attributable to shareholders of the parent company ..................................................................................
Attributable to minority interest ..................................................................................................................
Reclassification of fair value changes to income statement .....................................................................
Consolidated Financial Statements 31 December 2025 16 All amounts are in thousands of ISK
Consolidated Statement of Financial Position
As at 31 December 2025
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The notes on pages 19-82 are an integral part of these financial statements.
Notes 31.12.2025 31.12.2024*
Assets
13 1.750.025 2.321.959
14 55.888.970 51.890.854
15 3.109.524 6.102.840
16
11.836.508 7.880.021
17 162.132 118.541
18 882.144 1.023.545
20 212.140 148.876
21 4.558.785 4.734.006
22 1.384.416 700.356
11 196.090 461.117
23 960.618 1.289.371
24 4.093.665 2.308.612
85.035.018 78.980.095
Liabilities
25 30.331.427 29.744.014
18 882.144 1.023.545
26 20.953.779 17.750.819
27 3.907.720 3.763.931
17 254.981 231.599
28 1.126.536 391.655
11 435.667 358.107
29 3.158.530 3.445.671
61.050.782 56.709.341
Equity
30 1.905.747 1.895.958
3.254.432 3.087.000
2.740.607 2.864.105
16.037.499 14.384.481
23.938.285 22.231.544
45.950 39.209
23.984.235 22.270.753
85.035.018 78.980.095
Total equity attributable to shareholders of the parent company
Total equity
Total liabilities and equity
Total liabilities
Retained earnings ...................................................................................................................
Minority interest .......................................................................................................................
Total assets
Cash and cash equivalents .....................................................................................................
Financial assets ......................................................................................................................
Securities used for economic hedging ....................................................................................
Derivatives ..............................................................................................................................
Loans to customers .................................................................................................................
Investments where investment risk is borne by life-insurance policyholders ..........................
Restricted reserves .................................................................................................................
Investment in associates .........................................................................................................
Intangible assets .....................................................................................................................
Property, plant and equipment ................................................................................................
Deferred income tax asset ......................................................................................................
Assets from reinsurance contracts held ..................................................................................
Other receivables ....................................................................................................................
Insurance contract liabilities ....................................................................................................
Investment contract liabilities ..................................................................................................
Subordinated bond ..................................................................................................................
Financial liabilities ...................................................................................................................
Derivatives ..............................................................................................................................
Lease liability ...........................................................................................................................
Deferred income tax liability ....................................................................................................
Accounts payable and other liabilities .....................................................................................
Share capital ...........................................................................................................................
Share premium .......................................................................................................................
Consolidated Financial Statements 31 December 2025 17 All amounts are in thousands of ISK
Consolidated Statement of Changes in Equity
For the year 2025
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The notes on pages 19-82 are an integral part of these financial statements.
Unrealised
profit of
Share Share Restricted subsidiaries Retained Minority Total
capital premium reserves and associates earnings interest equity
2025
Equity 1.1.2025 ............................................................................................................................. 1.895.958 3.087.000 2.684.635 179.470 14.384.481 39.209 22.270.753
Profit for the year .......................................................................................................................... 1.900.657 1.808 1.902.466
Other comprehensive income ...................................................................................................... 4.397 4.397
Total comprehensive income for the year .................................................................................... 0 0 0 0 1.905.054 1.808 1.906.863
Change of holding in subsidiary ................................................................................................... (4.932) 4.932 0
Share capital increase .................................................................................................................. 9.380 167.432 176.812
Treasury share allocation ............................................................................................................. 410 8.128 8.538
Dividends paid, ISK 0,264 per share ............................................................................................ (500.072) (500.072)
Effects of profit or loss of subsidiaries and associates ................................................................ 1.931.120 (1.931.120) 0
Change in fair value of securities ................................................................................................. (2.054.618) 2.054.618 0
Stock options ................................................................................................................................ 121.341 121.341
Equity 31.12.2025 ......................................................................................................................... 1.905.747 3.254.432 630.017 2.110.590 16.037.499 45.950 23.984.235
2024*
Equity 1.1.2024 ............................................................................................................................. 1.905.550 3.087.000 4.477.882 0 11.660.499 41.002 21.171.933
Profit for the year .......................................................................................................................... 2.264.210 (5.793) 2.258.417
Other comprehensive income ...................................................................................................... (9.029) (9.029)
Total comprehensive income for the year .................................................................................... 0 0 0 0 2.255.181 (5.793) 2.249.389
Change of holding in subsidiary ................................................................................................... 4.000 4.000
Treasury shares acquired ............................................................................................................ (27.813) (472.187) (500.000)
Stock options exercised during the period ................................................................................... 18.221 259.647 277.868
Dividends paid, ISK 0,524 per share ............................................................................................ (984.809) (984.809)
Effects of profit or loss of subsidiaries and associates ................................................................ 179.470 (179.470) 0
Change in fair value of securities ................................................................................................. (1.793.247) 1.793.247 0
Stock options ................................................................................................................................ 52.373 52.373
Equity 31.12.2024 ......................................................................................................................... 1.895.958 3.087.000 2.684.635 179.470 14.384.481 39.209 22.270.753
Other restricted equity
Consolidated Financial Statements 31 December 2025 18
Consolidated Statement of Cash Flows
For the year 2025
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The notes on pages 19-82 are an integral part of these financial statements.
Notes 2025 2024*
Operating activities
1.902.466 2.258.417
(460.697) (237.057)
(1.789.302) (3.268.371)
129.469 52.373
(110.950) 0
22 (2.190) (49.565)
22,28 550.837 545.118
219.633 (699.084)
(1.285.020) 1.117.064
245.990 109.411
2.170.259 (3.156.150)
(3.956.488) (6.207.301)
(1.490.251) (370.422)
17 (20.210) 40.678
775.146 2.299.690
54.586 1.068.712
Cash flows from (used in) operating activities before interest and tax (3.286.352) (5.797.402)
1.912.607 1.741.140
457.738 239.036
(1.887.001) (1.643.871)
(206.964) (142.148)
Cash flows from (used in) operating activities
(3.009.972) (5.603.245)
Investing activities
22 (178.108) (207.928)
22 19.900 66.337
21 (22.959) (32.161)
42.690 15.400
0 4.000
0 26.007
0 (1.383.474)
(138.477) (1.511.819)
Financing activities
0 (500.000)
0 277.856
(500.072) (984.809)
(141.439) (232.802)
26 (1.020.521) 6.436.036
26 6.197.865 6.662.083
26 (2.079.677) (4.478.115)
177.222 0
2.633.378 7.180.249
(515.072) 65.184
2.321.959 2.270.693
(56.863) (13.919)
1.750.025
2.321.959
Loans to customers, change ............................................................................................
Dividends received from associates ...................................................................................
Income taxes paid ...............................................................................................................
Securities, change ...........................................................................................................
Other receivables, change ...............................................................................................
Interest income received .....................................................................................................
Dividend received ...............................................................................................................
Sale of property and equipment ..........................................................................................
Financial expenses paid .....................................................................................................
Insurance contract liabilities, change ...............................................................................
Sale of treasury shares .......................................................................................................
Dividends paid ....................................................................................................................
Sale of shares in subsidiary ................................................................................................
Investments in intangible assets .........................................................................................
Purchase of treasury shares ...............................................................................................
Net cash flow from investment in subsidiary .......................................................................
Investment in associates ....................................................................................................
Cash and cash equivalents at year end ..............................................................................
Principal payments 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 ....................................................
Short-term loans, change ...................................................................................................
Share capital increase ........................................................................................................
Issued bonds and bills ........................................................................................................
Repayment of bonds and bills .............................................................................................
Assets from reinsurance contracts held, change .............................................................
Net financial income .........................................................................................................
Profit for the year ................................................................................................................
Changes in operating assets and liabilities:
Financial assets, change ..................................................................................................
Operating items not affecting cash flows:
Net interest income ..........................................................................................................
Profit on sale of operating assets .....................................................................................
Derivatives, change ..........................................................................................................
Investments in property and equipment ..............................................................................
Accounts payable and other liabilities, change ................................................................
Depreciation and amortisation ........................................................................................
Share in profit of associate ..............................................................................................
Stock options, change ......................................................................................................
Consolidated Financial Statements 31 December 2025 19
Notes to the Consolidated Financial Statements
General information
1. Reporting entity ............................................... 20
2. Basis of preparation ......................................... 20
3. Functional and presentation currency .............. 21
4. Accounting estimates and judgements ............. 21
Segment information
5. Operating segment reporting ............................ 24
Income statement
6. Insurance service result ................................... 26
7. Net interest income ......................................... 27
8. Net fee and commission income ...................... 27
9. Net financial income ........................................ 28
10. Operating expenses ........................................ 29
11. Income tax ...................................................... 33
12. Earnings per share .......................................... 34
Statement of financial position
13. Cash and cash equivalents ............................. 34
14. Financial assets .............................................. 34
15. Securities used for economic hedging ............. 35
16. Loans to customers ........................................ 35
17. Derivatives ...................................................... 36
18. Investments where investment risk is borne by
the life-insurance policyholders ............................. 36
19. Share in subsidiaries ....................................... 36
Statement of financial position
20. Share in associates ........................................ 37
21. Intangible assets ............................................ 37
22. Property, plant and equipment ....................... 39
23. Assets from reinsurance contracts held .......... 40
24. Other receivables ........................................... 40
25. Insurance contracts ....................................... 41
26. Financial liabilities ......................................... 44
27. Subordinated bond ........................................ 45
28. Leases ........................................................... 45
29. Accounts payable and other liabilities ............ 45
30. Share capital and equity reserves ................... 46
31. Solvency of a financial conglomerate.............. 46
32. Solvency of insurance activities ...................... 47
33. Fossar Capital adequacy ratio ........................ 48
34. Financial instruments .................................... 49
35. Risk management .......................................... 53
Other information
36. Combined ratio .............................................. 68
37. Related parties ............................................... 69
38. Events after the reporting date ........................ 69
39. Material accounting policies ........................... 70
40. Quarterly statement (unaudited) .................... 82
Non-financial and sustainability reporting ............. 83
EU Taxonomy Regulation ...................................... 109
Consolidated Financial Statements 31 December 2025 20 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
1. Reporting entity
Skagi hf., the Parent Company, hereinafter referred to as "the Company" or "Skagi“, is a limited liability company and
operates on the basis of Act No. 100/2016 on Insurance Activities, Act No. 2/1995 on Limited Liability Companies
and Act No. 161/2002 on Financial Undertakings. The Company's headquarters are at Ármúli 3, Reykjavík.
The consolidated financial statements of the Company for the period 1 January to 31 December 2025 consist of the
financial statements of the Company and its subsidiaries. Subsidiaries include VÍS tryggingar hf. and Líftryggingafélag
Íslands hf. (“Lífís”) (together referred to as “VÍS”), Fossar fjárfestingarbanki hf. (“Fossar” or “the bank”) and Íslensk
verðbréf hf. (“ÍV”), collectively with the Company referred to as "the Group". The Group’s operations consist of
insurance activities, investment banking, asset and fund management. The Icelandic Financial Supervisory
Authority supervises the Group's operations based on Act No. 87/1998 on Official Supervision of Financial
Activities.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as
adopted by the European Union and additional requirements according to the Icelandic Financial Statements Act
No. 3/2006. The financial statements were approved and authorized for publication at a meeting of the Board of
Directors on 18 February 2026. A summary of material accounting policies of the Group is provided in note 39.
Disclosure note: Changes in the statement of profit and loss
Certain items within the income statement have been reclassified to improve presentation.
Income relating to card and collection fees in the amount of ISK 102 million, previously presented within finance
income, is now presented under other income. Furthermore, certain expenses previously classified within finance
items in the amount of ISK 119 million have been reclassified to other expenses. The net effect of these reclassifications
is not material and has no impact on profit for the year.
In addition, a misstatement in the calculation of diluted earnings per share for 2024 has been corrected.
Adjustments relating to stock options were previously overstated. Diluted earnings per share for 2024 is ISK 1.19
compared to ISK 1.16 as previously reported.
Disclosure note: Changes in the statement of financial position
During the preparation of the financial statements, certain comparative figures in the Statement of Financial
Position and related disclosures have been reclassified to improve presentation and consistency.
Currency forwards amounting to ISK 499 million were previously presented under Other receivables and are now
classified as part of Financial assets. This reclassification affects Note 14 Financial assets, Note 24 Other
receivables and Note 34 Financial instruments. Reinsurance contract liabilities amounting to ISK 102 million
were previously presented under Accounts payable and other liabilities and are now included in Liabilities for
insurance contracts. This reclassification affects Note 23 Assets from reinsurance contracts held and Note 29
Accounts payable and other liabilities.
Liabilities arising from insurance contract operating expenses amounting to ISK 910 million were previously presented
under Accounts payable and other liabilities and are now included in Liabilities for insurance contracts. This
reclassification affects Note 25 Insurance contracts , Note 29 Accounts payable and other liabilities and Note 35.7
Liquidity risk.
These adjustments do not affect the insurance service result, profit for the year, or total equity. They improve the
classification and accuracy of the comparative information presented.
Consolidated Financial Statements 31 December 2025 21 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
3. Functional and presentation currency
The consolidated financial statements are prepared and presented in Icelandic krónur (ISK), which is the Company's
functional currency. All amounts are presented in thousands of ISK unless otherwise stated.
4. Accounting estimates and judgements
Preparing consolidated financial statements in accordance with IFRS Accounting Standards requires management
to make assumptions, estimates and apply judgements 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. Management distinguishes between areas involving significant
judgement—those requiring interpretation or choice between accounting treatments—and estimates, which involve
assumptions about future events and measurement uncertainty.
Estimates and assumptions are reviewed regularly. Changes in accounting estimates are recognized in the period
when they are revised. Key judgements and estimation uncertainties specific to Skagi’s operations are summarised
below.
Management has made assumptions and accounting estimates regarding the following items that materially impact
the Group's financial statements:
- Financial instruments, see notes no. 14. and 34.
- Loans to customers no. 16.
- Intangible assets, see note no. 21.
- Liability due to insurance contracts, see note no. 25.
Financial instruments
Business model assessment
The classification and measurement of financial instruments depend on the results of the SPPI and the business
model tests. Judgement is required in assessing the relevant evidence including how the performance of the
instruments is evaluated and their performance is measured, the risks that affect the performance of the
instruments and how these are managed and how the managers of the instruments are compensated. Refer to
notes 34 and 38.13 for further information regarding classification of financial instruments. Management regularly
reassesses the business model for each portfolio to ensure classification remains consistent with actual
management practices and strategic objectives.
Fair value measurement
In estimating the fair value of a financial asset or a liability, the Group uses market-observable data to the extent it is
available. Where quoted prices in active markets for identical assets are not available the Group uses other market
observable inputs and lastly unobservable inputs. Refer to notes 34 and 39.13 for more details on fair value
measurement.
Consolidated Financial Statements 31 December 2025 22 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
4. Accounting estimates and judgements (cont.)
Goodwill
Goodwill arises in business combinations. Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. Goodwill is subject to annual impairment testing, or more frequently when
there is an indication of impairment.
Estimation uncertainty arises primarily from assumptions regarding future cash ﬂows, discount rates and growth
assumptions used in testing goodwill and other intangible assets for impairment. Management reviews these
assumptions at least annually to ensure they reﬂect current expectations and market conditions.
For impairment testing of goodwill, the Group estimates the value in use of certain cash-generating units (“CGUs”).
Value in use is the present value of estimated future cash ﬂows expected to arise from the CGU, and such an estimate
requires management to make certain assumptions. The methods, assumptions and key inputs applied in the
impairment testing of goodwill are further described in note 21.
Other intangible assets
Judgement is required in estimating the useful lives of intangible assets and capitalisation period of internally
generated intangible assets.
Customer relationships
Customer relationships have been acquired as part of recent acquisitions and are capitalized and amortized using
the straight-line method over their useful life of maximum 10 years.
Brands
Brands have been acquired as part of recent acquisitions and are capitalized and amortized using the straight-line
method over their useful life but not exceeding 20 years.
Software
Software comprises acquired software licences and external costs associated with the development of bespoke
applications.
Development cost that has been capitalized is amortized on the day that the product is launched using the straight-
line method over their useful life but not exceeding 10 years.
Consolidated Financial Statements 31 December 2025 23 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
4. Accounting estimates and judgements (cont.)
Insurance Contract Liabilities
The Group applies the Premium Allocation Approach (PAA) to the measurement of all insurance contracts as the
coverage period of each contract is one year or less. The Group applies a policy of expensing all insurance acquisition
cash ﬂows as they are incurred.
Judgement is required in estimating the insurance liability in accordance with the PAA method at period end,
including the assumptions about the discount rate used and the assumptions on the future inﬂation. Discounting
and adjustment for future inﬂation are, in particular, important for the long tailed claims such as claims in motor
liability, professional liability, workers’ compensation and personal accident.
Level of aggregation and the evaluation of contract boundary are significant assumptions as these define the use of
the premium allocation model’s simplified measurement model.
Premiums due to the Group for insurance contract services already provided in the period but not yet received at the
end of the reporting period are included in the Liability for Incurred Claims (LIC), in accordance with IFRS 17.
The Group has made an accounting policy choice not to adjust the carrying amount of the LRC to reflect the time
value of money and the effect of financial risk if, at initial recognition, the time between providing each part of the
services and the related premium due date is no more than one year.
When calculating the Liability for Incurred Claims (LIC), the fulfillment cash ﬂow is discounted using the discount
rate applied to the expected cash ﬂow for loss expenses at the time the claim is initially recognized. The liability is
subsequently remeasured using the discount rate applicable at each measurement date. Capital costs resulting
from the calculation of the LIC, such as interest, changes in interest rates for discounting purposes and inﬂation, are
recognized in the statement of profit or loss as insurance financial items, which are part of the investment result.
The Group considers a group of insurance contracts to be onerous if the fulfilment cash ﬂows that relate to the
remaining coverage of the group contract exceed the carrying amount of the liability for remaining coverage of the
group. If the expected fulfilment cash ﬂows allocated to the contract, any previously recognized acquisition cash
ﬂows, and any cash ﬂows arising from the contract at the date of initial recognition in total result in a net cash outﬂow,
the contract is considered onerous. The Group has not recognized any group of onerous contracts in the current or
previous reporting period.
For further information regarding judgements and estimates applied in measuring liability due to insurance contracts
please refer to notes 25, 35.8 and 39.5-7.
Consolidated Financial Statements 31 December 2025 24 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
5. Operating segment reporting
The Group operates through three primary operating segments: Insurance Operations, Insurance Investments, and
Financial Services. These segments have been identified based on the Group’s internal reporting structure, which
reflects the nature of products and services offered.
Insurance Operations comprises the Group’s core insurance activities, including the underwriting of life, health, and
general insurance products. The revenue of this segment primarily consists of premium income from policyholders.
Key expenses include claims incurred and insurance contracts operating expenses.
Insurance Investments includes the management of assets backing insurance liabilities as well as proprietary
investment activities. It covers investments in fixed income securities, equities and other financial instruments. The
primary source of revenue for this segment is investment income, including interest, dividends, and realized or
unrealized gains on financial assets.
The Financial Services segment comprises activities such as asset management, loans to customers, and other non-
insurance financial products. Revenue in this segment is generated through interest income, management fees,
advisory services, and other financial transactions. This segment supports the Group’s strategic objective of
diversifying income streams and expanding its presence in the broader financial sector.
Inter-segment transactions, where applicable, are conducted on an arm’s length basis, and segment performance is
assessed based on key financial metrics, including revenue, profit before tax, and return on capital.
The operating segments' results for the period 1 January to 31 December 2025 are specified as follows:
Skagi Insurance Insur ance Financial Supporting unit s operations investme nt s services and eliminations Total Insurance revenue ....................................................................... 31.959.386 31.959.386 Claims incurr ed ........................................................................... (22.224.160) (22.224.160)Insurance contract operating expenses ...................................... (5.781.843) (5.781.843)Net expenses from reinsurance contracts .................................. (983.651) (983.651)Insurance service result .............................................................. 2.96 9.732 0 0 0 2.969.732 Net interest income ..................................................................... 460.697 460.697 Net fee and com mission income ................................................. 2.533.879 (17 6.248) 2.357.631 Financial income ......................................................................... 2.354.626 189.068 (62.858) 2.480.837 Operating exp. of the insurance investment portf olio .................. (308.440) (308.440)Net finance expenses fr om insurance contracts ......................... (1.631.525) (1.631.525)Other financial items ................................................................... (394.743) (107.724) (502.467)Net financial income .................................................................... 0 19.9 19 189.068 (17 0.582) 38.405 Other operating income ............................................................... 208.011 4.138 (1.296) 210.853 Share in the profit of associates, after inc ome tax ...................... 110.950 110.950 Net operating income .................................................................. 3.177.743 19.919 3.187.783 (237.176) 6.148.269 Operating expenses .................................................................... (160.961) (2.845.062) (502.213) (3.508.235)Allocated costs from supporting units ......................................... (2 46.979) (227.981) (75.960) 550.920 0 Amortization of intangible assets ................................................. (22.505) (173.800) (196.305)Net credit impairm ent .................................................................. (6.627) (6.627)Profit (loss) before tax 2.769.803 (208.062) 237.630 (362.269) 2.437.102 Income tax expenses ....................................................................................................................................................................................(534.637)1.902.466 Profit for the year ...........................................................................................................................................................................................
Consolidated Financial Statements 31 December 2025 25 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
5. Operating segment reporting (cont.)
The operating segments' results for the period 1 January to 31 December 2024 are specified as follows:
Insurance operations consist of non-life and life insurance, and are specified as follows for the year 2025:
Skagi Insurance Ins urance Financial Supporting units operations Investments services and eliminations T otal Insurance revenue ........................................................................ 29.182.080 29.182.080 Claims incurred ............................................................................. (21.178.419) (2 1.178.419)Insurance contract operating expenses ........................................ (5.575.624) (5.575.624)Net expenses from reinsurance contracts .................................... (948.562) (948.562)Insurance service result ................................................................ 1.479.475 0 0 0 1.479.475 Net interest income ....................................................................... 237.057 237.057 Net fee and com mission income ................................................... 1.942.195 (126.524) 1.815.671 0 Financial income ......................................................................... 3.554.909 140.395 3.695.304 Operating exp. of the insurance investment portf olio .................. (285.019) (285.019)Net finance expenses fr om insurance contracts ......................... (1.121.708) (1.121.708)Other financial items ................................................................... (388.569) (388.569)Net financial income .................................................................... 0 1.759.613 140.395 0 1.900.007 Other operating income ................................................................ 224.481 23.892 (6.968) 241.405 Share in the profit of associates, after incom e tax ........................ 0 Net operating income .................................................................. 1.703.955 1.759.613 2.343.539 (133.492) 5.673.615 Operating expenses .................................................................... (145.107) (2.294.014) (528.046) (2.967.167)Amortization of intangible assets ................................................. (20.319) (130.056) (150.374)Net credit impairm ent .................................................................. (1 0.815) (10.815)Profit (loss) before tax 1.558.849 1.759.613 18.391 (791.594) 2.545.258 Income tax expenses ....................................................................................................................................................................................(286.841)2.258.417 Profit for the year ...........................................................................................................................................................................................
Marine General Accident and Property and cargo Vehicle l iability health insurance i nsurance insurance insurance insurance Insurance revenue ....................................................................... 6.259.996 598.496 17.934.298 1.733. 495 2.983.829 Insurance service expenses - Claims incurred ........................................................................ (3.963.612) (296.628) (14.312.771) (553.717) (2.102.580) - Operating expense of insurance .............................................. (1.391.597) (188.101) (2.613.922) (440.696) (656.831)Net expenses from reinsurance contracts .................................. (4 62.327) (77.538) (90.952) (242.603) (27.155)Insurance service result .............................................................. 4 42.461 36.230 916.653 496.479 197.262 Health and T otal critical illness direct Foreign Life insurance insurance insuranc e reinsu rance T otal Insurance revenue ....................................................................... 994.258 1.455.028 31.959.401 (15) 31.959.386 Insurance service expenses - Claims incurred ........................................................................ (340.647) (912.709) (22.482.664) 258.504 (2 2.224.160) - Operating expense of insurance .............................................. (208.307) (269.326) (5.7 68.779) (13.064) (5.781.843)Net expenses from reinsurance contracts .................................. (64.960) (18.116) (983.651) 0 (983.651)Insurance service result .............................................................. 3 80.344 254.877 2.724.308 245.424 2.969.732
Consolidated Financial Statements 31 December 2025 26 All amounts are in thousands of ISK
Note Notes to the Consolidated Financial Statements
5. Operating segment reporting (cont.)
Insurance operations consist of non-life and life insurance, and are specified as follows for the year 2024:
6. Insurance service result
Marine General Accident and Property and cargo Vehicle liabilit y health insurance i nsurance insurance insurance insurance Insurance revenue ....................................................................... 6.045.707 553.593 15.8 87.781 1.669.081 2.842.849 Insurance service expenses- Claims incurred ........................................................................ (4.356.528) (208.526) (12.675.327) (1.200.677) (2.007.606)- Operating expense of insurance .............................................. (1. 278.270) (154.449) (2.671.099) (389.114) (607.890)Net expenses from reinsurance contracts .................................. (285.770) (115.162) (190.436) (58.996) (72. 409)Insurance service result .............................................................. 1 25.139 75.455 350.919 20.294 154.944 Health and Tot al critical illness direct Foreign Life insurance insurance insuranc e reinsurance Total Insurance revenue ....................................................................... 921.789 1.261.129 29.1 81.930 150 29.182.080 Insurance service expenses- Claims incurred ........................................................................ (296.188) (487.647) (21.232.499) 5 4.079 (21.178.419)- Operating expense of insurance .............................................. (213.887) (252.454) (5.567.164) (8.460) (5.575.624)Net expenses from reinsurance contracts .................................. (60.866) (164.922) (948.562) 0 (948.562)Insurance service result .............................................................. 3 50.848 3 56.106 1.433.706 45.769 1.479.475
Insurance revenue 2025 2024 Insurance revenue............................................................................................................................................................ 31.959.386 29.182.080 Insurance service expenses Claims incurred ................................................................................................................................................................ (22.224.160) (21.178.419)Insurance contract operating expenses ........................................................................................................................... (5.781.843) (5.575.624)Insurance service expenses.............................................................................................................................................. (28.006.004) (26.754.044)Net expenses from reinsurance contracts held Expenses from reinsurance contracts held ...................................................................................................................... (1.079.347) (995.753)Reinsurers share in incurred claims ................................................................................................................................. 89.253 41.546 Fee and commis sion income from reinsurance contracts held ....................................................................................... 6.443 5.645 Net expenses from reinsurance contracts held................................................................................................................. (98 3.651) (948.562)2.969.732 1.479.475 Insurance service result, total ..........................................................................................................................................
Consolidated Financial Statements 31 December 2025 27 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
7. Net interest income
Interest income and expenses above are from financial services operations. Net interest income presented in the
table above calculated in accordance with the effective interest rate method amounted to ISK 1.472 million (2024:
ISK 795 million). Interest income of insurance investments is allocated in the statement of profit or loss within
financial income along with all other income from the insurance investment asset portfolio. The breakdown of net
financial income is provided in Note 9.
8. Net fee and commission income
Fees earned from transaction-type services are recognised when the service has been completed (i.e., at a point in
time). Fees that are performance-linked are recognised when the relevant performance criteria are fulfilled (i.e., at a
point in time). Contractual fees, such as fees for asset management, are recognised over the period of the contract
as the services are provided (i.e., over time), usually on a straight-line basis.
There is not considered to be a significant financing component in contracts for commission income, as the credit
period for receivables is relatively short. Uncertainties regarding variable consideration for performance-based
income are generally resolved at the point in time when revenue is recognised.
The Company does not have significant contract assets or contract liabilities. Commission fee income under long-
term contracts is recognised on a straight-line basis over time and invoiced monthly in arrears. Performance-related
fees are mainly in relation to asset management services. For further information reference is made to note 40.9 (Fee
and commission income and expenses).
Interest income is specified as follow s: 2025 2 024 Bank deposits, cash and other interest incom e ...............................................................................................................111.163 95.316 Loans to custom ers ..........................................................................................................................................................1.140.344 465.563 Interest on forward contract derivatives ...........................................................................................................................471.782 580.687 Interest on financial assets at fa ir valu e ...........................................................................................................................207.182 206.404 Interest on financial assets recorded at fa ir valu e through other comprehensive income ...............................................220.704 234.383 Interest income, total ........................................................................................................................................................2.151.175 1.582.354 Money mark et deposits and other borrowin gs .................................................................................................................(1.144.470) (1.019.977)Issued bonds and bills ......................................................................................................................................................(480.174) (307.849)Other interest expenses ...................................................................................................................................................(65.834) (17.471)Interest expenses, total ....................................................................................................................................................(1.690.478) (1.345.297)460.697 237.057 Net interest income, total .................................................................................................................................................
2025 2024 Capital marke ts and corporate finance ............................................................................................................................1.027.248 1.0 70.111 Asset man agement fees ..................................................................................................................................................982.416 590.623 Other net fee and comm ission income ............................................................................................................................347.967 154.937 Net fee and comm ission income, total .............................................................................................................................2.357.631 1.8 15.671
Consolidated Financial Statements 31 December 2025 28 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
9. Net financial income
Fair value change of equities instruments includes ISK 239 million (2024: ISK 141 million) dividend income from
equity holdings.
Interest income and other investment income, net finance expenses and other financial items above are from
Insurance investment operations assets. Net interest income presented in the table above calculated in
accordance with the effective interest rate method amounted to ISK 254 million (2024: 259 ISK million).
2025 2024 Interest incom e and o ther investment incom e ................................................................................................................. 277.631 281.872 Fair value change of equities instruments ........................................................................................................................ (277.886) 478.026 Fair value change of other financial assets....................................................................................................................... 2.48 1.092 2.935.406 Fair value change of financial assets................................................................................................................................ 2.203.206 3.413.432 Financial income, total...................................................................................................................................................... 2.480.837 3. 695.304 Net finance expenses from insurance contracts............................................................................................................... (1.631.525) (1.121.708)Other financial items......................................................................................................................................................... (502.467) (3 88.569)Operating expense of the insurance investm ent portfolio................................................................................................. (308.440) (285.019)Net financial income, total................................................................................................................................................. 38.405 1.900.007
Consolidated Financial Statements 31 December 2025 29 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
10. Operating expenses
The table below shows operating expenses as presented in the Consolidated statement for Profit or Loss.
The following table shows breakdown of total operating expenses, including Insurance contract operating expenses
cf. note 6.
Auditor's fee
10.1 Salaries and related expenses
2025 2 024 Financial services ............................................................................................................................................................. 2.845.062 2.294.014 Skagi supporting units ...................................................................................................................................................... 502.213 528.046 Other cost related to VÍS try ggingar ................................................................................................................................. 160.961 145.107 Total.................................................................................................................................................................................. 3.508.235 2.967.167
2025 2024 Salaries and related expenses ......................................................................................................................................... 5.969.726 5.417.296 Other operating expenses ................................................................................................................................................ 3.274.260 3.015.770 Depreciation and amortisation ......................................................................................................................................... 5 50.837 545.118 Total.................................................................................................................................................................................. 9.794.823 8.978.184 Centralized supporting units and eliminations .................................................................................................................. 502.213 528.046 Operating expenses of financial services ........................................................................................................................ 2.845.062 2.294.014 Insurance contract operating expenses ........................................................................................................................... 5.781.843 5.575.624 Operating expenses of the insurance investm en t portfolio and other insurance cost ..................................................... 469.401 430.126 Amortization of intangible assets ..................................................................................................................................... 196.305 150.374 Operating expenses, total ................................................................................................................................................ 9.794.823 8.978.184
Current Former auditor auditor Total 2025 2 024 Statutory audit of the financial statements ................................................................ 29.444 53.024 82.469 58.111 Other perm itted services, tax service and other assurance ..................................... 17.341 1.246 18.587 12.068 Total fees paid to auditors ........................................................................................ 46.786 54.271 101.056 70.179
Salaries and related expenses are specif ied as follow s: 2025 2024 Salaries ............................................................................................................................................................................ 4.383.196 4.015.812 Pension fund contributions ............................................................................................................................................... 659.046 582.297 Incentive scheme ............................................................................................................................................................. 148.549 157.529 Share option expenses .................................................................................................................................................... 121.341 55.424 Special financial activiti es tax on salaries ........................................................................................................................ 257.182 259.190 Other salary-related expenses ......................................................................................................................................... 400.411 347.044 Salaries and salary-related expenses .............................................................................................................................. 5.969.726 5.417.296 Number of fu llti m e employee s during the ye ar ................................................................................................................. 241 251
Consolidated Financial Statements 31 December 2025 30 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
10.1 Salaries and related expenses (cont.)
Salaries, benefits and contributions to pension funds to CEO, board members and key management personnel are
as follows:
The shareholdings of board members and management include shares held by spouses and dependent children,
as well as shares that they or their spouses own a majority stake in.
10.2 Remuneration policy
The Company's remuneration policy was approved at the Company's board meeting on 26 February 2025 upon the
recommendation of the remuneration committee. Subsequently, the Company's Annual General Meeting approved
the Company's current remuneration policy in March 2025. The Company's remuneration policy undergoes an
annual review and is presented to the Company's Annual General meeting for approval, either with or without
amendments. The remuneration policy complies with the provisions of Act no. 90/2003 on Income Tax, Act no. 2/1995
on Limited Liability companies, and other applicable laws and regulations. Additional information regarding the
policy can be found on the Company's website www.skagi.is.
2025 2024 Salaries and Pen sion fund Salaries and Pension fund benefits contributions be nefits c ontributions Stefán Héðinn Stefánsson, Chairm an of the Board and memb er of the Risk c ommittee and Rem uneration com mittee .......................12.906 1.484 13.247 1.523 Vilhjálmur Egilsson, Board mem ber and memb er of the Risk com mittee and Audit comm ittee ......................................7.056 811 8.059 927 Ásgeir Helgi Reykfjörð Gylfason, Boa rd m ember and memb er of the Remuneration comm ittee ........................................................6.978 802 6.348 730 Hrund Rudolfsdóttir, Board mem ber and memb er of the Remuneration com mittee and Audit comm ittee ......................8.946 1.029 6.069 698 Marta Guðrún Blöndal, Board memb er ...................................................................6.033 694 6.674 768 Ragnheiður Hrefna Magnúsdóttir, alternate Board member ...................................507 58 622 72 Sveinn Friðrik Sveinsson, alternate Board member ...............................................507 58 490 56 Guðný Hansdóttir, form er Board mem ber ...............................................................0 0 1.989 229 Valdimar Svavarsson, form er Board mem ber ........................................................0 0 240 28 Haraldur Þórðarson, Group CEO of Sk agi ..............................................................59.402 10.459 5 4.713 9.922 Helgi Bjarnason, form er CEO of Vátry ggingafélag Íslands .....................................0 0 35. 771 6.618 Group senior m anagement (7)* ..............................................................................304.115 48.046 245.822 43.354 406.450 63.443 380.044 64.924
The members of the Board of Directors held 3,434,000 shares at year-end 2025. The CEO held 56,409,979 shares and management owned a total of
40,723,526 shares and stock options on 7,039,371 shares as shown in note 10.4.
* Group senior management team; Group CFO, Group General Counsel, Group Managing Director of HR, CEO of VIS Insurance, CEO of Fossar
Investment Bank, managing director of Íslensk verðbréf and the Group Managing Director of Risk Management, who was a member of the Group
management team until May 2025.
Consolidated Financial Statements 31 December 2025 31 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
10.3 Incentive scheme
Incentive scheme of the Skagi includes general share options, annual bonus scheme, and cash incentives for each
company within the Group, all in accordance with the company's remuneration policy and incentive scheme.
General share options: are call options provided to all employees which are not related to performance cf. note 10.4
which provides further details of General Share options.
Annual bonus scheme: approved by the Board of Directors annually based on performance criteria. Certain
employees of the Group are included in the annual bonus scheme, where the incentive is calculated as a percentage
of the annual salary, either up to 10% or up to 25% of the total annual salary, depending on the nature of the work. In
cases where the employee's maximum incentive is a fixed amount and under the deferral conditions of the law, it is
assumed that the entire amount will be paid out as a salary when the year's results are known. In cases where the
annual bonus is above 10% of total annual salary, it is assumed that a minimum of 40% of the incentive scheme will
be delivered in the form of share related payments, either shares or share options, that will be delivered after three
years have passed. Information on share options in relation to annual bonus incentive scheme can be found in note
10.4.
Cash incentives: For all employees of VÍS a cash incentive is in place, where cash incentives are paid equally to
employees in accordance with performance criteria. The maximum amount per employee according to the cash
incentive was 600,000 ISK per year.
Incentive scheme payments through profit and loss
10.4 Share options and share related payments
The Company has issued a general share options scheme and share options in relation to annual bonus scheme in
accordance with authorization of the Annual General Meeting and the Company’s remuneration policy. Both the
General share option scheme and the Share options in relation to the annual bonus scheme are equity-settled share-
based payment arrangements in accordance with IFRS 2.
General share options
General share options are call options issued by the Company to all employees of the Group in accordance with the
Company’s remuneration policy. The options are granted annually with a market value of ISK 1.5 million per employee
per year and are issued at a fixed exercise price per share. The issuance of general share options is approved by the
shareholders of the Company and the Icelandic Tax and Customs authorities.
At the Annual General Meeting held on 21 March 2024, the Board of Directors was authorised to implement a three-
year general share option plan and to enter into share option agreements with employees of Skagi and its subsidiaries
under this framework. The plan entitles option holders to purchase shares in the Company for up to ISK 1.5 million
per year over a three-year period, beginning 12 months after the signing of the agreement.
2025 2024 Non-deferred .......................................................................................................................................................................(149.911) (94.164)Deferred ..............................................................................................................................................................................(5.284) (53.528)Salary related expenses .....................................................................................................................................................(46.563) (44.308)(201.758) (192.000)Total ....................................................................................................................................................................................Deferred incentive scheme payments in the statement of financial position 31.12.2025 3 1.12.2024 220.527 238.599 Deferred payments .............................................................................................................................................................
Consolidated Financial Statements 31 December 2025 32 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
10.4 Share options and share related payments (cont.)
The general share options vest solely based on continued employment, with no performance-related vesting
conditions. Options may be exercised after 12 months from the grant date, provided the employee remains employed
by the Group at the time of exercise. Options lapse if the employee leaves the Group prior to exercise or if the
employee elects not to exercise the options within the contractual term.
The total expense recognised in profit or loss in respect of general share options during 2025 amounted to ISK 115
million (2024: ISK 55 million) and is included in operating expenses.
The Company may settle its obligations under the general share option scheme through the issuance of new shares
and/or the use of treasury shares, in accordance with its Articles of Association.
Share options in relation to annual bonus scheme
Certain employees of the Group participate in the annual bonus scheme, under which a portion of the variable
remuneration is delivered in the form of share options, in accordance with the Company’s remuneration policy and
applicable laws and regulations governing incentive schemes for insurance companies.
Share options granted under the annual bonus scheme are equity-settled share-based payment arrangements in
accordance with IFRS 2. The options are granted annually based on performance in the preceding financial year and
form part of the employees’ deferred variable remuneration.
The options vest after three years of continuous service from the grant date and may be exercised thereafter, provided
the employee remains employed by the Group at the vesting date. There are no market-based vesting conditions.
Options lapse if the employee leaves the Group prior to vesting or if the options are not exercised within the
contractual term.
The exercise price of the options is determined based on the weighted average market price of the Company’s shares
prior to the grant date, adjusted for the risk-free interest rate and expected dividends, in accordance with the terms
of the scheme.
The fair value of the options granted under the annual bonus scheme is determined at the grant date using the Black-
Scholes valuation model. Key assumptions applied in the valuation include the share price at grant date, expected
volatility, expected option life, risk-free interest rate and expected dividend yield.
The total expense recognised in profit or loss in respect of share options granted under the annual bonus scheme
during 2025 amounted to ISK 8 million (2024: ISK 11 million) and is included in operating expenses.
The Company may settle its obligations under the annual bonus share option scheme through the issuance of new
shares and/or the use of treasury shares, in accordance with its Articles of Association.
Options outstanding and exercisable
General Bonus related share options share options Total Outstanding at 1 January 2025 ........................................................................................................57.922 7.332 65.255 Granted during the ye ar ....................................................................................................................4.398 4.360 8.759 Exercised during the y ear .................................................................................................................(9.380) 0 (9.380)Forfeited / lapsed ..............................................................................................................................(16.453) 0 (16.453)Outstanding at 31 December 2025 ..................................................................................................36.488 11.693 48.181 Exercisable at 31 December 2025 ...................................................................................................0 0 0
Consolidated Financial Statements 31 December 2025 33 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
10.4 Share options and share related payments (cont.)
Exercise prices and remaining contractual life
11. Income tax
11.1 Calculated income taxes
Income taxes are calculated and recognized in the financial statements.
11.2 Deferred taxes
General Bo nus related share options share options Exercise price range (ISK) ...............................................................................................................................................18,85-19,78 17,27 - 20,84 W eighted average exercise price (ISK) ...........................................................................................................................18,85 18,88 W eighted average remaining contractual life (years) .......................................................................................................1,0 1,5 Expense recognised in profit or los s 2025 2024 General share options ......................................................................................................................................................108.383 36.858 Bonus-related share options ............................................................................................................................................7.989 11.000 Total share-based payment expense ...............................................................................................................................116.372 47.858
Effective tax rate: 2024 2025 Amount % Am ount %Profit before income taxes ...................................................................................... 2.437.102 2.545.258 Income tax acc ording to preva iling tax rate ............................................................ 487.420 20,0% 534.504 21,0%Fair value changes of financial assets .................................................................... 140.846 5,8% (226.863) -8,9%Share in profit of associates .................................................................................... (22.190) -0,9% 0 0,0%Share in profit of non-taxable companies ............................................................... 7.193 0,3% (8.442) -0,3%Dividends received .................................................................................................. (91.548) -3,8% (50.198) -2,0%Special tax on financial activity ............................................................................... 20.846 0,9% 28.951 1,1%Effect of temporary change in tax rate .................................................................... 0 0,0% 9.247 0,4%Other changes ........................................................................................................ (7.931) -0,3% (358) 0,0%Income taxes according to the statement of profit or loss ...................................... 534.637 21,9% 286.841 11,3%
Deferred tax asset and (liability) is specified as follows: 2025 2024 Deferred tax Defer red tax D eferred tax Deferr ed tax asset liability a sset lia bility At the beginning of the y ear ...................................................................................... 461.117 (358.107) 191.211 (2 71.629)Tax synergies ........................................................................................................... (20 0.105) 0 0 0 Assum ed deferred tax asset upon investment of subsidiary .................................... 0 0 68.000 0 Acquired trademark s and business relationships ..................................................... 0 0 0 (1 02.000)Income t axes according to the statement of profit or loss ........................................ (91.352) (443.285) 31.171 (318.012)Effect of share in the results of non-independent taxable e ntities ............................ 0 7.193 0 (8.442)Taxes to be pa id for the year .................................................................................... 94.628 290. 331 170.733 341.974 Total .......................................................................................................................... 264.290 (503.866) 461.117 (358.107)Deferred tax ass ets and liabil ities offsetting ............................................................. (68.200) 68.200 0 0 Net deferred income tax asset and (liabili ty) at year end ........................................ 19 6.090 (435.667) 461.117 (3 58.107)The main term s of defer red income tax asset and (liability) are specified as follows: 2024 2025 Deferred tax Defer red tax D eferred tax Deferr ed tax asset liability a sset lia bility Operating assets and software ...............................................................................222 (8.585) (2.332) 23.559 Intangible assets .....................................................................................................(15.175) (388.896) (44 6) (3 26.602)Financial assets ......................................................................................................0 (99.722) 0 (55.339)Derivatives ..............................................................................................................18.570 0 22.612 0 Tax loss c arry-forward ............................................................................................190.719 3 0.695 440.526 0 Other items .............................................................................................................1.754 30.84 1 756 2 74 Deferred income t ax asset and (liabili ty) at y ear end ..............................................196.090 (435.667) 461.117 (358.107)
Consolidated Financial Statements 31 December 2025 34 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
11.2 Deferred taxes (cont.)
A deferred tax asset has been recognised in respect of ISK 191 million (2024: ISK 441 million) of unused tax losses
which management expects will be utilized against future taxable profits. Included in unused tax losses are losses of
ISK 974 million that will expire in 2034, ISK 1.068 million that will expire in 2033 and ISK 159 million that will expire in
the year 2031-2032.
12. Earnings per share
Basic earnings per share (EPS) is calculated based on earnings attributable to shareholders and the weighted average
number of shares outstanding during the reporting period. Diluted EPS is determined by adjusting the weighted
average number of shares outstanding to account for the potential conversion of all dilutive ordinary
shares, including share options granted to employees. The company has issued share options that have a dilutive
effect on EPS.
Earnings per outstanding share is calculated based on the following assumptions:
*The presentation of comparative figures has been revised.
13. Cash and cash equivalents
Cash and cash equivalents at year-end are specified as follows:
14. Financial assets
The table below shows Financial assets from the Consolidated statement of financial position for each operating
segment:
2025 2024*Profit for the y ear attributabl e to shareholders of the Parent Company ........................................................................... 1.900.657 2.264.210 W eighted average number of outstanding shares ........................................................................................................... 1.897.042 1.895.993 Adjustmen ts for stock options .......................................................................................................................................... 2.069 84 Diluted weighted average number of outstanding shares ................................................................................................ 1.899.111 1.953.915 Basic earnings per share ................................................................................................................................................. 1,00 1,19 Diluted earnings per share ............................................................................................................................................... 1,00 1,19
31.12.2025 31.12.2024 Bank deposits in ISK ........................................................................................................................................................ 1.599.246 2.088.309 Bank deposits in foreign currencies ................................................................................................................................. 150.779 233.650 Cash and cash equivalents .............................................................................................................................................. 1.750.025 2.321.959
31.12.2025
Insurance Financial Shares in other companies investments services Total Listed on domestic stock exchanges ................................................................................................3.797.389 459.228 4.256.618 Listed on foreign stock ex changes ...................................................................................................3.518.905 0 3.518.905 Other com panies ..............................................................................................................................8.183.576 57.571 8.241.146 15.499.870 5 16.799 16.016.669 Other securities Government-bac ked securities, indexed ..........................................................................................2.500.633 307.614 2.808.247 Government-back ed securities, non-indexed ...................................................................................8.345.277 5.997.752 14.343.028 Other bonds ......................................................................................................................................11.519.128 2 12.568 11.731.696 Bond funds .......................................................................................................................................8.320.339 253.174 8.573.513 Institutional inve stor funds ................................................................................................................2.103.653 0 2.103.653 32.789.030 6.771.1 07 39.560.137 Other financial assets Currency forwards ............................................................................................................................312.164 0 312.164 Total financial assets ........................................................................................................................48.601.064 7.287.9 06 55.888.970
Consolidated Financial Statements 31 December 2025 35 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
14. Financial assets (cont.)
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
15. Securities used for economic hedging
The Group, via Fossar, offers its clients exposures through derivative contracts on listed bonds and
equities instruments. To hedge these client exposures the bank holds the underlying securities for economic
hedging which are accounted for on its balance sheet. The carrying amount of securities held for this purpose is as
follows:
16. Loans to customers
Loans to customers are specified as follows:
Loans to customers includes both margin loans and credit loans and are all payable within 24 months. These loans
are non-indexed and secured by liens on the borrowers’ assets. Further analysis of loans to customers is provided in
notes 35.9 and 35.10.
31.12.2024 Insurance Financial Shares in other companies investments services Total Listed on domestic stock exchanges ................................................................................................4.650.350 464.211 5.114.561 Listed on foreign stock ex changes ...................................................................................................3.400.052 0 3.400.052 Other com panies ..............................................................................................................................7.953.557 4.809 7.958.366 16.003.959 4 69.019 16.472.978 Other securities Government-back ed securities, indexed ..........................................................................................3.790.116 428.568 4.218.684 Government-back ed securities, non-indexed ...................................................................................5.998.580 5.237.732 11.23 6.312 Other bonds ......................................................................................................................................8.612.351 0 8.612.351 Bond funds .......................................................................................................................................8.010.225 329.530 8.339.755 Institutional inve stor funds ................................................................................................................2.511.653 0 2.511.653 28.922.926 5.995.8 30 34.918.756 Other financial assets Currency forwards* ...........................................................................................................................499.119 0 499.119 Total financial assets ........................................................................................................................45.426.005 6.464.8 50 51.890.854
31.12.2025 31.12.2024 Government bonds ............................................................................................................................................................. 124.439 1.068.281 Equities instruments ............................................................................................................................................................ 2.453.276 4.721.242 Other bonds ........................................................................................................................................................................ 531.809 313.318 3.109.524 6.102.840
31.12.2025 31.12.2024 Loans to custom ers .......................................................................................................................................................... 11.853.950 7.890.836 Impairme nt of loans ......................................................................................................................................................... (17. 442) (10.815)11.836.508 7.88 0.021
Consolidated Financial Statements 31 December 2025 36 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
17. Derivatives
Forward contracts derivatives are specified as follows:
The Group, via Fossar, offers its clients exposures through forward contracts derivatives on listed bonds and
equities instruments. To hedge these exposures Fossar holds the underlying securities which are accounted for on
its balance sheet cf. Note 15.
18. Investments where investment risk is borne by the life-insurance policyholders
The Group, via Lífís, offers life-insurance policies which consist of life insurance and contribution to
investments funds. The investment component in these contracts is considered distinct and therefore accounted
for separately applying IFRS 9. 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. The life-
insurance policyholder bears the investment risk.
19. Share in subsidiaries
VF Nord ehf. and Skagi ehf. are holding companies with no operations. ÍV sjóðir hf. (owned 100% by Skagi pre-merger),
SIV eignastýring hf. (owned 70% by Skagi pre-merger) and Íslensk verðbréf hf. (owned 100% by Skagi pre-merger)
were all merged, effective as of 1
st
January 2025, under the name Íslensk verðbréf hf. (owned 85,9% by Skagi post-
merger). Reference is made to announcement published by the Company on the NasdaqIceland on 6
th
January 2026
where Skagi exercised an option to acquire 14,1% share in Íslensk verðbréf hf. (ÍV). Skagi has an option to pay the
purchase price with issuance of new Skagi shares, equivalent to nominal amount of 24,231,800.-, issued at
average closing price of shares in Skagi traded on Nasdaq OMX Iceland ten days before exercise of option. Issue
of new shares in Skagi is subject to shareholders approval but Skagi also has the right to pay the purchase price in
cash. Issuance of new shares will be proposed at the next AGM of the Company.
A ssets 31.12.2025 31.12.2024 Derivatives, equ ities ......................................................................................................................................................... 153. 201 113.267 Derivatives, bonds ............................................................................................................................................................ 8.932 5.273 162.132 118.541 Liabilities Derivatives, equ ities ......................................................................................................................................................... 248. 063 229.745 Derivatives, bonds ............................................................................................................................................................ 6.918 1.854 254.981 231.599
Balance at 01.01.202 5 ................................................................................................................................................................................... 1. 023.545 Premium s ...................................................................................................................................................................................................... 24.392 Claims ........................................................................................................................................................................................................... 322 Pay o ut .......................................................................................................................................................................................................... (168.033)Return of investments ................................................................................................................................................................................... 10.701 Premium s for life insurance & waiver of premium ......................................................................................................................................... (6.113)Cost (f ees & discounts) ................................................................................................................................................................................... (2.670)Balance at 31.12.202 5 ................................................................................................................................................................................... 882.144
31.12.2025 31.12.2024 Principal activi ty VÍS try ggingar hf. .........................................................................100,0% 100,0%Insurance operations Fossar fjár festingarbanki hf. ........................................................100,0% 100,0%Investment bank ing VF Nord ehf. ................................................................................ 100,0% 1 00,0%Investing activites Skagi ehf. ....................................................................................100,0% 0,0%Investing activites Líftryg gingafélag Íslands hf. ........................................................100,0% 100,0%Life insurance Íslensk verðbréf hf. ...................................................................... 85,9% 100,0%Asset and fund managem ent SIV eignastý ring hf. .....................................................................0,0% 70,0%Asset and fund managem ent
Consolidated Financial Statements 31 December 2025 37 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
20. Share in associates
T plus hf. is an Icelandic financial services provider specializing in back office outsourcing for the financial services
sector. Services provided range from clearing and settlement of securities, custody services and pension fund
services. T plus hf. operates according to Act No. 161/2002 on Financial Undertakings and is under the supervision
of the Financial Supervisory Authority. Vex ehf. is an independent asset management company operating according
to Act No. on 45/2020 on Asset Management Companies for specialized funds and is under the supervision of the
Financial Supervisory Authority.
Changes in holdings in associates are specified as follows:
21. Intangible assets
Assets such as goodwill are subject to annual impairment testing, or more frequently when there is an indication of
impairment. Goodwill is allocated to cash generating units ("CGUs") for the purpose of impairment testing. Goodwill
has been allocated to the following CGUs; Insurance operations and Financial Services operations. The allocation
is made to those CGUs or groups of CGUs that are expected to benefit from the business combinations in which the
goodwill arose.
Book value Book value Share 31.12.2025 31.12.2024 Tplús hf. ............................................................................................................................................35,0% 158.378 135.994 Vex ehf. ............................................................................................................................................33,3%53.762 12. 883 212.140 148.876
31.12.2025 31.12.2024 Balance at beginning of year ............................................................................................................................................148.876 190.283 Share reduction in accociates ..........................................................................................................................................0 (26.007)Share in profit of associate ...............................................................................................................................................110.950 0 Received dividend ............................................................................................................................................................(47.686) (15.400)212.140 148.876
Custom er Cost Goodwill relationships Brands Soft ware T otal Cost at 1.1.2024 .......................................................................... 2.24 2.583 936.195 310.146 3.984.335 7.473.259 Additions during the y ear ............................................................ 861.008 217.000 316.000 9.661 1.403.669 Cost at 31.12.2024 ...................................................................... 3.103.591 1.153.195 626.146 3.993.996 8.876.928 Additions during the period .......................................................... 0 0 0 22.959 22.959 Total cost 31.12.2025 .................................................................. 3.103.591 1.153.195 6 26.146 4.016.955 8.899.887 A mortisation Accum ulated amortisation as at 1.1.2024 ................................... 0 23.125 7.625 3.959.299 3.990.049 Amortisation for the year ............................................................. 0 1 03.488 36.514 12.872 152.874 Accum ulated amortisation as at 31.12.2024 ............................... 0 126.613 44.139 3.972.171 4.142.923 Amortisation for the period .......................................................... 0 118.949 63.7 25 15.506 1 98.1 80 Accum ulated amortisation as at 31.12.2025 ............................... 0 245.562 107.864 3.987.677 4.341.103 Carrying amount Carrying amount a t the begin ning of the year 202 4 .................... 2.242.583 913.070 302.520 25.036 3.483.211 Carrying amount a t y ear-end 2024 .............................................. 3.103.591 1.026.582 582.007 21.825 4.734.006 Carrying amount a s at 31.12.2025 .............................................. 3.103.591 9 07.633 518.282 29.279 4.558.785 Amortisa tion rates ...................................................................... 0% 10% 10% 10-33%
Consolidated Financial Statements 31 December 2025 38 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
21. Intangible assets (cont.)
The goodwill impairment testing was made at the end of the fiscal year. Results of the impairment testing show that
the recoverable values exceed the carrying values of goodwill. In addition to the base case testing, additional
scenarios were tested where some key inputs had been stressed. In all scenarios tested the results show that there
is sufficient headroom and that there are no triggers indicating that impairment is required.
The cash ﬂow projections for the impairment testing are derived from the Group's three year business plan which has
been approved by the Board of Directors. In some instances, the Group's subsidiaries have prepared a three year
business plan which has been approved by the Board of Directors of those companies. Management prepares a cash
ﬂow projection for each CGU, which is derived from the three year business plan and is also based on management
assumptions. The following table shows the key assumptions used in the estimation of the recoverable amount. The
recoverable amounts are calculated by discounting the estimated future cash ﬂow of the CGUs and the terminal
value of which has been determined by use of a long-term growth rate. The time value of money and price of
uncertainty are based on external market information about market risk, interest rates and CGU specific elements
like country risk. It is management opinion that reasonable changes in key inputs would not lead to impairment of
goodwill.
Future Discount G oodw ill 31.12.2025 growth rate rate bo ok value Insurance operations ........................................................................................................................5,0% 12, 0%474.599 Financial services .............................................................................................................................3,3% 13, 1%2.628.992 Total goodwil l ....................................................................................................................................3.103.591 Future Discount G oodw ill 31.12.2024 growth rate rate bo ok value Insurance operations ........................................................................................................................5,0% 13, 1%474.599 Financial services .............................................................................................................................3,0% 15, 5%2.628.992 Total goodwil l ....................................................................................................................................3.103.591
Consolidated Financial Statements 31 December 2025 39 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
22. Property, plant and equipment
The assessment value of properties at year-end 2025 amounted to ISK 146 million (2024: 126 million). The insurance
value of properties amounted to ISK 343 million. The insurance value of properties and equipment amounted to ISK
662 million.
Included in properties and land are Right-of-use assets from lease agreements in the amount of ISK 982 million
(2024: ISK 352 million). For further information on leases please refer to note 28.
Leases 31.12.2025 31.12.2024 Right of use asset at year end ......................................................................................................................................... 982.1 95 351.989
31.12.2025 31.12.2024 Tota l property, plant and equipment at year end ........................................................................................................ 1.384.416 700.356
Property and equipment Computer, Buildings equipment Cost and land and vehicles T otal Cost at 1.1.2024 ...............................................................................................................................113.840 1.521.427 1.635.270 Additions during th e year ..................................................................................................................0 20 7.92 8 207.928 Sold and disposed of during the year ...............................................................................................(866) (15.905) (16.772)Total value 1.1.2025 .........................................................................................................................112.974 1.713.450 1.826.426 Additions during th e year ..................................................................................................................0 17 8.10 8 178.108 Sold and disposed of during the year ...............................................................................................0 (17.710) (17.710)Total cost at 31.12.2025 ...................................................................................................................112.974 1.873.848 1.986.825 Accumulated depreciation Depreciated 1.1.2024 .......................................................................................................................60.108 1.245.627 1.305.734 Depreciation for the year ..................................................................................................................2.181 170.139 172.320 Depreciated 1.1.2025 .......................................................................................................................62.289 1.415.766 1.478.054 Depreciation for the year ..................................................................................................................1.521 105.023 106.544 Depreciated 31.12.2025 ...................................................................................................................63.810 1.520.789 1.584.598 Carrying amount Carrying amount at beginnin g of the year 2024 ................................................................................53.732 275.800 329.531 Carrying amount at beginnin g of the year 2025 ................................................................................50.684 297.684 348.367 Carrying amount at end of the year 2025 .........................................................................................49.164 353.058 402.221 Depreciation rates ............................................................................................................................3% 10-33%
Consolidated Financial Statements 31 December 2025 40 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
23. Assets from reinsurance contracts held
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
24. Other receivables
Other receivables are specified as follows:
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
31.12.2025 31.12.2024*Assets from remaining coverage ..................................................................................................................................... 227.397 207.751 Assets from incurred claims ............................................................................................................................................ 7 33.222 1.081.619 Assets from reinsurance contracts held ........................................................................................................................... 960.618 1.289.371
Assets fo r incurred claims Assets for Risk adjustment remaining Future f or non-financial coverage cash flows r isk Total Balance as at 01.01.2025 (207.751) (905.034) (176.58 5) (1.289.371)Reinsurers' share of insurance revenue ..................................... 1.079.347 1.079.3 47 Claims recovered & other directly attri b. income ......................... (6.443) (370.734) (73.789) (450.967)Run-off pr evious y ea rs adju stm. to the LIC ................................. 178.685 176.585 355.270 Profit/loss on reinsurance contracts held .................................... 1.072.904 (192.049) 102.796 983.650 Cash flow s Reinsurance premium s paid ....................................................... (1.098.993) (1.098. 993)Recoveries from reinsurance ...................................................... 6.443 437.652 444.095 Total cash f lows .......................................................................... (1.092.550) 4 37.652 0 (654.898)Balance as at 31.12.2025 (227.397) (659.432) (73.789) (960.618)Assets fo r incurred claims Assets for Risk adjustment remaining Future f or non-financial coverage cash flows r isk Total Balance as at 01.01.2024 (187.525) (1.041.630) (372.247) (1.601.402)Reinsurers' share of insurance revenue ..................................... 995.753 995.753 Claims recovered & other directly attri b. income ......................... (5.645) (289.628) (176.585) (471.858)Run-off pr evious y ea rs adju stm. to the LIC ................................. 52.421 37 2.247 424.668 Profit/loss on reinsurance contracts held .................................... 990.107 (237.207) 195.662 948.562 Cash flow s Reinsurance premium s paid ....................................................... (1.015.979) (1.015. 979)Recoveries from reinsurance ...................................................... 5.645 373.803 379.448 Total cash f lows .......................................................................... (1.010.334) 3 73.803 0 (636.531)Balance as at 31.12.2024 (207.751) (905.034) (176.58 5) (1.289.371)
31.12.2025 31.12.2024*Prepaid taxes ................................................................................................................................................................... 712.946 4 56.136 Prepaid expenses ............................................................................................................................................................ 246.856 549.001 Receivables related to do mes tic operations and other receivables ................................................................................. 3.133.863 1.303.474 Other receivables, total .................................................................................................................................................... 4.093.665 2.308.612
Consolidated Financial Statements 31 December 2025 41 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
25. Insurance contracts
25.1 Insurance contract liabilities
Insurance contract liabilities are specified as follows:
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
31.12.2025 31.12.2024*Liability for remaining coverage ........................................................................................................................................ 2.758.248 2. 608.357 Liabilit y for incurred claims ............................................................................................................................................... 27.573.179 27.135.657 Liability for insurance contracts, total ............................................................................................................................... 30.331.427 2 9.744.014
Liability for Liabilitie s for incurr ed claims remaining coverage for contracts under the PAA Present value Risk adjustm ent Excluding loss Loss of f uture for non-financial component component cash flows risk Total Balance as at 01.01.2025 2.608.357 0 26.516.885 618.774 29.744.014 Insurance revenue ....................................................................... (31.959.386) (31.959.386)Incurred claims & other directly attrib. exp. ................................. 23.143.720 340.326 23.484.045 Other cost for insurance services provided ................................. 5.781.843 5. 781.843 Run-off previous years adjustm. to the LIC ................................. (1.400.356) 140.472 (1.259.885)Profit/loss on gross business ...................................................... (31.959.386) 0 27.525.206 480.796 (3.953.382)Finance exp. from insurance contracts ....................................... 0 0 1.631.525 0 1.6 31.525 Cash flows Insurance revenue received 32.109.277 32.109.277 Claims & other directly at trib. exp. paid ....................................... (23.228.373) (23.228.373)Insurance operational cash flows ................................................ (5.487.802) (5.487.802)Total cash flows .......................................................................... 32.109.277 0 (28.716.175) 0 3.393.102 Reclassified to other balance sheet items ................................... (483.832) (483.832)Balance as at 31.12.2025 2.758.248 0 26.473.609 1.099.570 30.331.427 The risk adjustmen t calculation cor res ponds to an 85% confidenc e interval as at 31 Dec ember 2025. Liability for Liabilitie s for incurr ed claims remaining coverage for contracts under the PAA Present value Risk adjustm ent Excluding loss Loss of f uture for non-financial component component cash flows risk Total Balance as at 01.01.2024 2.185.132 0 24.518.797 766.360 27.470.289 Insurance revenue ....................................................................... (29.182.080) (29.182.080)Incurred claims & other directly attrib. exp. ................................. 21.966.745 273.912 22.240.657 Other cost for insurance services provided ................................. 5.575.624 5. 575.624 Run-off previous years adjustm. to the LIC ................................. (640.740) (421.497) (1.062.237)Profit/loss on gross business ...................................................... (29.182.080) 0 26.901.629 (147.586) (2.428.036)Finance exp. from insurance contracts ....................................... 0 0 1.121.708 0 1.1 21.708 Cash flows Insurance revenue received ........................................................ 29.605.305 29.605.305 Claims & other directly at trib. exp. paid ....................................... (20.423.661) (20.423.661)Insurance operational cash flows ................................................ (5.120.575) (5.120.575)Total cash flows .......................................................................... 29.605.305 0 (25.544.236) 0 4.061.069 Reclassified to other balance sheet items ................................... (481.013) (481.013)Balance as at 31.12.2024 2.608.357 0 26.516.885 618.774 29.744.014 The risk adjustmen t calculation cor res ponds to an 85% confidenc e interval as at 31 Dec ember 2024.
Consolidated Financial Statements 31 December 2025 42 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
25.2 Development of incurred claims
The table shows the Group's estimate of the total amount of claims for each claim year and how this estimate has
developed from year to year. The liability is based on paid claims, reported but unsettled claims and unreported
claims.
The following tables show the reinsurers' share of the liability and the liability net of reinsurance.
Total amounts in ISK m illi on 2018 2019 20 20 2021 2022 2023 2024 20 25 Total Estimate of f inal claim ex penses At end of claim y ear ......................................... 14.555 16.404 16.105 17.046 1 8.860 22.354 23.160 2 4.170 One y ear later .................................................. 16.331 18.351 15.377 16.532 19.610 22.267 23.081 Two y ears later ................................................ 1 7.974 19.102 15.840 16.120 18.928 2 2.606 Three years later ........................................... 18.374 19.507 15.618 15.984 1 8.498 Four years later ................................................ 18.441 19.325 15.561 15.612 Five y ears later ................................................ 1 8.265 19.439 15.566 Six y ears later .................................................. 18.245 18.938 Seven y e ars later ............................................. 18.196 Estimate of ac cumulated claims at ye ar-end 2025 .............................................. 18.196 18.938 15.566 15.612 1 8.498 22.606 23.081 24.170 Accum ulate d payments At yea r-end 2025 ............................................. 18.119 18.785 15.239 14.705 17.164 18.329 1 5.237 10.954 Claims provision at ye ar end 2025 ................... 77 153 3 27 907 1.335 4.277 7.844 1 3.216 28.137 Discounting ...................................................... -6 -10 -26 -85 -110 -310 -6 14 -1.246 -2.409 Provisions from 2017 and prior years ................................................................................................................................................................164 Gross provisions for C laims, end of year ..........................................................................................................................................................25.892 Debt releated to Liabili ty for incurred claim (LIC) and other insurance liabilities ...............................................................................................1.681
Assets f rom reinsurance contract s held in ISK million 2018 2019 20 20 2021 2022 2023 2024 2025 T otal Estimate of f inal claim ex penses At end of claim y ear ......................................... 668 564 1 39 878 276 468 3 92 371 One y ear later .................................................. 651 6 95 221 823 2 53 409 286 Two y ears later ................................................ 889 708 194 8 13 232 457 Three years later ........................................... 901 707 215 7 70 233 Four years later ................................................ 900 664 210 6 41 Five y ears later ................................................ 839 708 219 Six y ears later .................................................. 612 6 43 Seven y e ars later ............................................. 614 Estimate of ac cumulated claims at ye ar-end 2025 .............................................. 614 643 2 19 641 233 457 2 86 371 Accum ulate d payments At yea r-end 2025 ............................................. 614 643 210 1 42 232 426 2 52 228 Claims provision at ye ar end 2025 ................... 0 0 9 498 1 31 34 143 716 Discounting ........................................................................................................................................................................................................0 Recoverables from 2017 and prior y ears ..........................................................................................................................................................8 Recoverabels for incurred claim s, end of ye ar ..................................................................................................................................................0 Assets releated to incurred claim (LIC) and other insurance asse ts ................................................................................................................9
Consolidated Financial Statements 31 December 2025 43 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
25.2 Development of incurred claims (cont.)
25.3 Eiopa yield curves used on all contracts measured under PAA:
Net of own account in ISK million 2018 2019 2020 2021 2022 2023 2024 2025 T otal Estimate of f inal claim ex penses At end of claim y ear ......................................... 13.887 15.840 15.966 1 6.168 18.584 21.886 22.769 23.799 One y ear later .................................................. 15.680 17.656 15.156 15.709 19.357 21.858 22.795 Two y ears later ................................................ 1 7.085 18.394 15.646 15.307 1 8.696 22.149 Three years later ........................................... 17.473 18.799 15.402 15.214 18.266 Four years later ................................................ 17.541 18.662 15.351 14.971 Five y ears later ................................................ 1 7.426 18.732 15.347 Six y ears later .................................................. 17.633 18.295 Seven y e ars later ............................................. 17.582 Estimate of ac cumulated claims at ye ar-end 2025 .............................................. 17.582 18.295 15.347 14.971 18.266 2 2.149 22.795 2 3.799 Accum ulate d payments At yea r-end 2024 ............................................. 1 7.505 18.141 15.029 14.562 1 6.931 17.902 14.985 10.726 Claims provision at ye ar end 2025 ................... 77 153 318 409 1.334 4.246 7.810 13.073 27.420 Discounting ...................................................... -6 -10 -26 -85 -110 -310 -6 14 -1.246 -2.409 Net Provisions from 2017 and prior years .........................................................................................................................................................156 Liability for incurred claims (L IC) and assets for incurred claim s (AIC) ............................................................................................................25.168
2025 2024 1 y ear 5 years 10 y ears 1 y ear 5 y ears 10 y ears 7,0% 6,5% 6,2% 8,2% 6,9% 5,9%
Consolidated Financial Statements 31 December 2025 44 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
26. Financial liabilities
Financial liabilities are specified as follows. For a detailed breakdown, refer to notes 26.1 and 26.2.
26.1 Borrowings
Borrowings are specified as follows:
26.2 Issued bonds and bills
Issued bonds and bills are specified as follows:
26.3 Reconciliation of Liabilities Arising from financing activities
In accordance with IAS 7,44D the table below provides reconcilation between the opening and closing balances of
liabilities arising from financing activities, distinguishing between cash flows and non-cash movements such as
new leases, accrued interest and foreign exchange differences.
31.12.2025 31.12.2024 Borrowings ......................................................................................................................................................................12.342.900 13.363.421 Issued bonds and bills .....................................................................................................................................................8.610.879 4.387.399 Financial liabil ities total ....................................................................................................................................................20.953.779 17.750.819
31.12.2025 31.12.2024 Money market deposits ...................................................................................................................................................8.972.015 10.663.421 Liabilitie s to credit institutions ..........................................................................................................................................3.370.884 2.700.000 Total ................................................................................................................................................................................12.342.900 13.363.421
1.508.772
1.523.767
Issued bonds and bills Issued Maturity Type and terms of interest 31.12.2025 FOS 26 0311 ......................................................11.9.2025 11.3.2026 Bill, discounted ..........................................................1.023.153 FOS 26 0528 ......................................................28.11.2025 28.5.2026 Bill, discounted ..........................................................908.819 FOS 26 1 ............................................................10.7.2024 10.1.2026 Bond, floating 1M Reibor +1.5% ...............................783.014 FOS 27 1 ............................................................23.12.2025 23.6.2027 Bond, floating 1M Reibor +1.7% ...............................2.805.907 FOS 040728 .......................................................4.7.2025 4.7.2028 Bond, fixed 9.03% .....................................................1.566.220 28.10.2024 28.10.2026 Bond, fixed 9.2% .......................................................FOS 281026 .......................................................1.523.767 8.610.879 Issued bonds and bills Issued Maturity Type and terms of interest 31.12.2024 FOS 25 0311 ......................................................11.9.2024 11.3.2025 Bill, discounte d ..........................................................392.440 FOS 25 0530 ......................................................29.11.2024 30.5.2025 Bill, discounte d ..........................................................962.420 FOS 26 1 ............................................................10.7.2024 10.1.2026 Bond, floating 1M Reibo r + 1.5% ..............................FOS 281026 .......................................................28.10.2024 2 8.10.2026 Bond, fixed 9.2% .......................................................4.387.399
Interest bearing Lease borrowings lia bilities T otal Opening balance as 1 January 2025 ................................................................................................ 21.514.751 391.655 21.906.406 Cash flow from financing activities .................................................................................................... 2.868.018 (141.709) 2.726.310 New leases ....................................................................................................................................... 0 827.287 827.287 Accrued interest ................................................................................................................................ 444.987 0 444.987 Other non cash m ovements ............................................................................................................. 33.742 49.302 83.045 Closing balance at 31 December 2025 .............................................................................................24.861.498 1.126.536 25.988.034
Consolidated Financial Statements 31 December 2025 45 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
27. Subordinated bond
At the end of February 2016, the Company issued a subordinated bond in the nominal amount of ISK 2,500 million.
The bond is classified as Tier II capital and is included in the Company's solvency. The bond bears a 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.
28. Leases
The Group's right-of-use asset is recognised based on the provisions of leasing agreements, see note 39.21 for further
information. Total payments under lease agreements during the year amounted to ISK 192 million (2024: 201
million).
At 2024 year-end the remaining lease period for the Group's leases was 10-36 months.
Interest expenses in respect of the lease liability during the year, which are included in the operating expenses for the
year, amounted to ISK 51 million.
29. Accounts payable and other liabilities
Accounts payable are specified as follows:
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
Changes in the subordinated bond from the beginning to the end of the y ear: 31.12.2025 31.12.2024 Balance at 1 January .......................................................................................................................................................3.763.931 3.589.584 Accrued interest and price indexation .............................................................................................................................341.475 364.887 Paid interests ...................................................................................................................................................................(197.687)(190.540)Balance at 31 December .................................................................................................................................................3.907.720 3.763.931
2025 2024 Right-of-use Lease Right-of-use Lease Asset Liabili ty Asset Liability Balance at beginni ng of year ..........................................................351.989 391.655 584.453 636.966 Change during the y e ar ..................................................................827.017 827.287 (35.144) (36.676)Pay ment of liabi lities ......................................................................(141.709) (232.802)Depreciation ...................................................................................(246.114) (221.488)Indexation .......................................................................................49.302 49.302 24.168 24.168 Balance at y ear end .......................................................................982.195 1.126.536 351.989 391.655
31.12.2025 31.12.2024*Accounts paya ble ............................................................................................................................................................ 155.943 975.807 Income tax pay able ......................................................................................................................................................... 356.628 511.031 Other liabiliti es ................................................................................................................................................................ 2.645.960 1.958.833 Accounts payable and o ther liabilities, total ..................................................................................................................... 3. 158.53 0 3.445.671
Consolidated Financial Statements 31 December 2025 46 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
30. Share capital and equity reserves
The share capital is specified as follows:
One vote is attached to each share of the nominal value of one Icelandic Krona in the Company.
Statutory reserve
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 from being distributed as dividends to
shareholders. Amounts in excess of 25% of the nominal value of shares are at the Company's disposal. Statutory
reserve in the amount of ISK 625 million is presented within restricted reserves in the statement of changes in equity,
and there were no changes in this reserve in 2024 and 2025.
Restricted reserve
According to the Financial Statements Act, the Company is to recognize unrealized 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 dividends. 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
Retained earnings consist of accumulated profit or loss of the Company not distributed as dividends 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.
31. Solvency of a financial conglomerate
The Financial Supervisory Authority has specified that the Group is a financial conglomerate as defined in Article 3
of Act no. 61/2017 on Supplementary Supervision of Financial Conglomerates. The capital requirement and own
funds of the Group is calculated according to method 1 of Act no 61/2017. As the primary entity in the group is an
insurance company, method 1 requires that all assets and liabilities in Skagi, that do not belong to a subsidiary, are
included in the solvency calculations of the insurance activates in the computation of the solvency of the
conglomerate. The numbers in the current period in this note are therefore not fully comparable to the numbers from
the previous period.
The Group calculates the minimum capital requirements for companies that do not fall under the insurance
operations using applicable regulations while using the Solvency II framework to calculate own funds and minimum
own funds requirements for insurance activities.
Solvency is a measure of the Group's ability to absorb shocks, or in other words, an indication of its financial strength.
The Group's available capital and capital requirements are calculated on basis that the Group has now been defined
as a financial conglomerate, according to Articles 16, 17 and 18 of Regulation No. 61/2017 on Supplementary
Supervision of Financial Conglomerates. The Group's solvency ratio is 1.31 compared to the minimum requirement
in the Regulation, which is 1.0 and internal limit of 1.175. Group solvency ratio is after assumed dividend as of
reporting date in accordance with target dividend payout ratio of 40% of profits. Group solvency ratio is also shown
before assumed dividend.
31.12.2025 31.12.2024 Share capital according to the Company's Articles of Association .................................................................................. 1. 916.08 0 1.906.700 Treasury shares .............................................................................................................................................................. (10.3 3 3) (10.742)Share capital according to annual financia l statements .................................................................................................. 1.905.74 7 1.895.958
Consolidated Financial Statements 31 December 2025 47 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
31. Solvency of financial conglomerate (cont.)
The Group's solvency ratio as a financial conglomerate is specified as follows:
32. Solvency of insurance activities
The standard rule according to Act No. 100/2016 is applied to calculate the minimum solvency requirements of
insurance activities. The following tables specify how the solvency requirement is divided into subcomponents of
risk. Diversification effects are included since it is not assumed that all risks will be realized simultaneously. An
adjustment for the loss-absorbing capacity of deferred taxes is deducted upon realization of risks. The solvency ratio
of the insurance activities is 1.44 compared to internal limit of 1.35. Solvency ratio of the insurance activities is after
assumed dividend and/or share repurchase to Skagi parent company. Solvency ratio of the insurance activities is also
shown before assumed dividend.
The insurance activities solvency ratio is specified as follows:
Own funds 31.12.2025 31.12.2024 Own funds for insurance activities .................................................................................................................................. 20. 105.530 18.671.822 Own funds for other ac tiv ities .......................................................................................................................................... 3.288.46 1 2.791.057 Total own funds (before assum ed dividend or share repurchase) .................................................................................. 23. 393.99 1 21.462.879 Mi nimum own fun d requirements Own funds requirements f or insurance activities ............................................................................................................ 14.3 28.36 5 13.567.776 Own fund requirements for other activities ...................................................................................................................... 2.93 5.881 2.335.626 17.264.246 15.903.402 Total minimum own fund requirements ...........................................................................................................................31.12.2025 31.12.2024 Equity according to the statement of f inancial positio n ................................................................................................... 2 3.984.235 22.270.753 Intangible assets ............................................................................................................................................................. (4.558.785) (4.734.006)Subordinated bond .......................................................................................................................................................... 3.907.720 3.763.931 Assumed divid end plan ................................................................................................................................................... (7 60.000) 0 Share repurchase program ............................................................................................................................................. 0 0 Other ............................................................................................................................................................................... 60.822 162.200 Calculated own funds ...................................................................................................................................................... 22.633.991 21.462.879 Minimum own fund requi rem ents .................................................................................................................................... 17.264.246 15.903.402 Solvency ratio (after assumed dividend or share repurchase) ........................................................................................ 1,31 1,35 Solvency ratio (before assumed d ividend or share repurchase) ..................................................................................... 1,36 1,35
Solvency capital requirements 31.12.2025 31.12.2024 Base Solvency capital requirement (BSCR) .................................................................................................................... 15.714.987 14.961.935 Operational risk ............................................................................................................................................................... 1.127.280 1.035.841 Adjustment due to deferred taxes ................................................................................................................................... (2.526.170) (2.430.000)Total m inimum solvency .................................................................................................................................................. 14.316.097 13.567.776 Base Solvency capital requirement (BSCR) 31.12.2025 31.12.2024 Market risk ....................................................................................................................................................................... 9.246.964 8.423.089 Counterparty r isk ............................................................................................................................................................ 1.902.212 1.914.552 Life underwriting risk ....................................................................................................................................................... 184.21 6 251.393 Health underwriting risk ................................................................................................................................................... 1.951.091 2.056.803 Non-life underwriting risk ................................................................................................................................................. 8.727.296 8.516.322 Diversification effects and other fac tors .......................................................................................................................... (6.296.792) (6.200.222)Total BSCR ..................................................................................................................................................................... 15.714.987 14.961.935 Market risk Interest rate risk .............................................................................................................................................................. 700.832 577.915 Equity risk ........................................................................................................................................................................ 8.077.662 7.315.682 Property risk .................................................................................................................................................................... 2 68.610 175.456 Spread risk ...................................................................................................................................................................... 1.037.481 633.718 Foreign currency risk ....................................................................................................................................................... 396.282 507.974 Concentration risk ........................................................................................................................................................... 599.090 712.935 Diversification effec ts ...................................................................................................................................................... (1.832.994) (1.500.591)Total m arket risk ............................................................................................................................................................. 9.246.964 8.423.089
Consolidated Financial Statements 31 December 2025 48 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
32. Solvency of insurance activities (cont.)
33. Fossar Capital adequacy ratio
The capital adequacy ratio of Fossar is calculated in accordance with Act No. 161/2002 on Financial Undertakings.
The capital requirement due to credit, market, and operational risk is calculated using a standard method and the
bank's capital adequacy ratio is 24.0%.
The minimum required capital ratio of credit undertakings is 8% according to Article 84 of the Act No. 161/2002 on
Financial Undertakings. The bank shall as of 31 December 2024 maintain an additional capital requirement of 9.1%
of the risk exposure amount. In addition to the minimum required capital base, the Bank must maintain certain
capital buffers, specified by the Financial Supervisory Authority of the Central Bank of Iceland from time to time,
which today consist of a countercyclical capital buffer and a capital conservation buffer, which total 5.0%. The
banks overall capital requirement, taking into account capital buffers, is 22.1%.
Solvency
Minimum own fund requi rem ents .................................................................................................................................... 14. 316.09 7 13.567.776 Calculated own funds (befor e assumed dividend or share repurchase) ......................................................................... 21. 794.43 0 18.671.822 Solvency ratio (before assumed d ividend or share repurchase) ..................................................................................... 1,52 1,38 Calculated own funds (afte r assumed dividend or share repurchase) ............................................................................ 20. 594.430 18.671.822 Solvency ratio (after assume d divi dend or share repurchase) ........................................................................................ 1,44 1,38
31.12.2025 31.12.202 4 Fossar total equity a t period end ..................................................................................................................................... 3.182.493 2.683.967 Deduction items .............................................................................................................................................................. (236.870) (408.387)Own funds ....................................................................................................................................................................... 2.945.623 2.275.580 Risk weighted exposures: Credit risk ........................................................................................................................................................................ 6. 880.546 4.985.493 Market risk ....................................................................................................................................................................... 2.478.240 2.128.398 Operational risk ............................................................................................................................................................... 2.918.189 2.518.318 Total risk exposure amount ............................................................................................................................................. 12.276.974 9.632.209 Capital adequacy ratio for Fossar ................................................................................................................................... 24,0% 2 3,6%
Consolidated Financial Statements 31 December 2025 49 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
34. Financial instruments
The Group's financial instruments pertain to the following categories:
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The carrying amounts of financial instruments at amortised cost approximates their fair values. Loans to customers
are predominantly on ﬂoating interest and/or with short maturity (<12 months). Same applies to liabilities, including
money market deposits, bonds, bills and borrowings. Subordinated bond is redeemable at the company’s choice as
of 1
st
March 2026. Therefore, book value of those instruments is predominantly in line with fair value at the reporting
date.
31.12.2025 Fair value Fair value through through Amortised Financial instument s - assets profit or loss OCI cos t Tot al Cash and cash equivalents .....................................................................................0 0 1.750.025 1.750.025 Cash in escrow accounts and term deposits ...........................................................0 0 80.096 80.096 Other receivables (without prepay ments) ................................................................0 0 3.099.367 3.099.367 Equity instruments and equity funds .......................................................................15.798.944 0 0 15.798.944 Debt instruments and other securities .....................................................................29.218.148 0 0 29.218.148 Secured debt instruments .......................................................................................0 0 3.271.807 3.271.807 Currency forwards ...................................................................................................312.164 0 0 312.164 Bonds ......................................................................................................................3.628.506 3.142.602 0 6.771.107 Equities and other securities ...................................................................................516.799 0 0 516.799 Securities used for hedging .....................................................................................3.109.524 0 0 3.109.524 Loans to customers .................................................................................................0 0 11.836.508 11.836.508 Derivatives ...............................................................................................................162.132 0 0 162.132 Total ........................................................................................................................52.746.218 3.142.6 02 20. 037.80 3 75.926.623 Financial instrument s - liabilities Money market deposits ...........................................................................................0 0 8.972.015 8.972.015 Issued bonds and bills .............................................................................................0 0 8.610.879 8.610.879 Borrowings ..............................................................................................................0 0 3.370.884 3.370.884 Accounts paya ble and other liabili ties (without unpaid taxes) .................................0 0 2.511.886 2.511.886 Subordinated bond ..................................................................................................0 0 3.907.720 3.907.720 Derivatives ...............................................................................................................254.981 0 0 254.981 Long-term borrowings .............................................................................................0 0 19.575 19.575 Total ........................................................................................................................254.981 0 27.392.960 27.647.941 31.12.2024*Fair value Fai r value through through Amortised Financial instument s - assets profit or loss OCI cos t Total Cash and cash equivalents .....................................................................................0 0 2.212.801 2.212.801 Cash in escrow accounts and term deposits ...........................................................0 0 109.159 109.159 Other rec eiva bles (without prepay ments) ................................................................0 0 1.726.366 1.726.366 Equity instruments and equity funds .......................................................................17.108.703 0 0 17.108.703 Debt instrum ents and other securities .....................................................................25.411.137 0 0 25.411.137 Secured debt instruments .......................................................................................0 0 2.407.045 2.407.045 Currency forwards ...................................................................................................499.120 0 0 499.120 Bonds ......................................................................................................................3.496.218 2.499.612 0 5.995.830 Equities and other securities ...................................................................................469.019 0 0 469.019 Securities used for hedging .....................................................................................6.102.840 0 0 6.102.840 Loans to customers .................................................................................................0 0 7.880.021 7.880.021 Derivatives ...............................................................................................................118.541 0 0 118.541 Total ........................................................................................................................53.205.578 2.499.612 14.335.391 70.040.582 Financial instrument s - liabilities Money market deposits ...........................................................................................0 0 10.663.421 10.663.421 Issued bonds and bills .............................................................................................0 0 4.387.399 4.387.399 Borrowings ..............................................................................................................0 0 2.700.000 2.700.000 Accounts paya ble and other liabili ties (without unpaid taxes) .................................0 0 3.382.695 3.382.695 Subordinated bond ..................................................................................................0 0 3.763.931 3.763.931 Derivatives ...............................................................................................................231.599 0 0 231.599 Long-term borrowings .............................................................................................0 0 23.394 23.394 Total ........................................................................................................................231.599 0 24.920.839 25.152.439
Consolidated Financial Statements 31 December 2025 50 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
34. Financial instruments (cont.)
Fair value measurement – valuation techniques and inputs
The Group measures financial instruments at fair value using valuation techniques consistent with its internal
investment valuation procedures. Valuation techniques are applied in the order of priority described below,
depending on the availability and reliability of observable inputs.
Valuation methods and inputs by instrument class:
Instrument class
Fair
value
level
Valuation
method
Significant
observable
inputs
Significant
unobservable inputs
Listed equity securities
Level 1
Quoted market prices on an
active market (Method 1)
Quoted closing
prices
–
Listed debt securities
Level 1 /
Level 2
Quoted market prices on an
active market; where not
available, valuation based on
comparable market yields
(Methods 1 and 6)
Quoted prices,
yield curves,
observable
market
spreads
–
Derivatives (interest
rate swaps, FX
forwards)
Level 2
Market
-
standard valuation
models (discounted cash
ﬂow / forward pricing
models)
Yield curves, FX
rates, forward
curves
–
Holdings
in investment
funds (UCITS, AIFs,
limited partnerships)
Level 2 /
Level 3
Net asset value (NAV)
provided by fund manager
(Method 3)
Reported NAV
Adjustments to NAV
where applicable
Unlisted equity
instruments
Level 3
Discounted cash ﬂow
models and/or valuation
based on comparable
companies or transactions
(Methods 5 and 6)
Comparable
multiples
(EV/EBITDA,
P/E), market
benchmarks
Forecast cash ﬂows,
discount rates, terminal
growth rates, discounts
for lack of marketability
Unlisted debt
instruments
Level 2 /
Level 3
Discounted cash ﬂow
models and/or valuation
based on comparable debt
instruments (Methods 5 and
6)
Benchmark
interest rates
Credit spreads,
probability of default
(PD), loss given default
(LGD), prepayment
assumptions
Equity instruments with
contractual exit prices
(put options /
shareholder
agreements)
Level 3
Valuation based on
contractual sale rights or
shareholder agreements
(Method 4)
Contractual
terms
Assumptions regarding
enforceability and timing
Other financial
instruments
Level 3
Cost as an approximation of
fair value where no other
valuation technique is
reliable (Method 7)
–
Cost
-
based
assumptions
Consolidated Financial Statements 31 December 2025 51 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
34. Financial instruments (cont.)
Fair value hierarchy
The following table discloses financial instruments 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.
Level 2: Fair value is not based on quoted prices 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 similar 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.
The fair value of loans and receivables that bear fixed interest is assessed using the discounted cash ﬂow method,
where the yield is based on the estimated market interest rate for the respective debt instrument on the reporting
date. The fair value of other financial assets and financial liabilities, including of those with variable interest rates, is
not considered significantly different from the carrying amounts at period-end.
31.12.2025 Level 1 Level 2 Level 3 T otal Listed equity securities ............................................................................................9.347.953 0 0 9.347.953 Listed debt securities ...............................................................................................25.874.654 326.336 0 26.200.990 Derivatives ...............................................................................................................0 474.296 0 474.296 Holdings in investment funds ..................................................................................253.174 4.470.959 4.679.462 9.403.594 Unlisted equity instruments .....................................................................................57.571 950.693 8.113.732 9.121.995 Unlisted debt instruments ........................................................................................0 1.152.540 187.451 1.339.991 Total investments at fair value ................................................................................35.533.352 7.374.8 23 12. 980.64 5 55.888.820 31.12.2024 Level 1 Level 2 Level 3 T otal Listed equity securities ............................................................................................12.937.933 0 0 12.937.933 Listed debt securities ...............................................................................................22.725.568 209.769 0 22.935.337 Derivatives ...............................................................................................................0 617.661 0 617.661 Holdings in investment funds ..................................................................................329.530 4.298.195 4.666.316 9.294.041 Unlisted equity instruments .....................................................................................0 1.093.877 7.275.677 8.369.553 Unlisted debt instruments ........................................................................................0 1.104.744 445.921 1.550.665 Total investments at fair value ................................................................................35.993.031 7.324.2 45 12. 387.91 4 55.705.190
Changes that f all under level 3 during the period are specified as follo ws: 31.12.2025 31.12.2024 Balance 1.1. .................................................................................................................................................................... 12. 387.91 4 11.600.335 Purchased .......................................................................................................................................................................2.609.823 2.678.684 Sold / Repay ments ..........................................................................................................................................................(2.726.364)(1.927.354)Interest and fair value changes* ......................................................................................................................................709.272 36.249 12.980.645 12.387.914 B alance at 31.12 .............................................................................................................................................................
*Of which ISK 97 million is realised and ISK 612 million is unrealised. Interest and fair value changes are recorded among net financial income in the
statement of profit or loss.
Consolidated Financial Statements 31 December 2025 52 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
34. Financial instruments (cont.)
Sensitivity analysis of fair value
The table below illustrates the fair value of Level 3 unlisted equity instruments that are measured using cost,
manager‑provided pricing, recent transaction data (Asset class 1), or valuation techniques based on peer multiples
or discounted cash flows (Asset class 2).
A 5% decrease in the fair value of asset class 1 and a 0.5‑percentage‑point increase in the cost of equity applied to
the valuation of asset class 2 would decrease total fair value by ISK 374 million.
A 5% increase in the fair value of asset class 1 and a 0.5‑percentage‑point decrease in the cost of equity for asset
class 2 would increase total fair value by ISK 381 million.
Governance and controls over valuation
The valuation of investment assets is reviewed at least quarterly. The Investment Committee of the insurance
business is responsible for the valuation of investment assets, while day-to-day monitoring is performed by the
investment function. Where deviations from third-party valuations occur, these are documented in formal
memoranda and approved by the Investment Committee, in accordance with the Group’s valuation procedures.
Fair value Asset Asset Asset c lass 31.12.2025 class 1 class 2 Change in cost of Cost of equity - 9,96%equity Change in valu e 7.226.915 -5% / 5% 0,5% / -0,5%Unlisted equities ................................................................................................................................
Consolidated Financial Statements 31 December 2025 53 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35. Risk management
35.1 Risk management in general
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, analysing, measuring, controlling and
monitoring the Group's risks. The objective of the policy is to establish and define in a clear and straightforward
manner risk policies, principles, governance structures, risk appetite and risk management systems, including the
Group's decision-making powers.
The Board of Directors establishes a framework for coordinated risk management and a written risk management
policy. The Board of Directors is responsible for ensuring implementation of risk policies and that they are followed.
The Board of Directors sets the risk appetite, including the Group's criteria, objectives and targets, and establishes a
framework for the CEO in accordance with the Board's approved criteria. The Board of Directors has established the
target for the Group's solvency ratio to be above 1.25.
The CEO is responsible for the effective implementation of the Group's risk policies and that they are followed. The
CEO shall provide information to the Board on the Group's risk-taking which is close to the risk appetite limits and
inform the Board without delay if risk-taking exceeds the risk appetite.
The Chief Risk Officer is responsible for enforcing provisions related to risk management. Risk management
ensures that the Group's risk management system is managed, 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 fulfil its commitments and meet
minimum own fund requirements despite potential setbacks.
The Board sets targets for the Group's solvency ratio as a part of establishing a risk appetite for the Group. The
calculation of the minimum own fund requirements is risk-based and takes into account all the main risks applicable
to the Group´s operation. The Group calculates it´s risk profile at least monthly in accordance with the Group´s risk
policy and risk appetite.
Consolidated Financial Statements 31 December 2025 54 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.2 Own risk- and solvency assessment (ORSA)
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, management and other relevant parties on the Group's risk profile, solvency need and risk
factors at any given time, thus enabling rational and well-informed decisions related to the Group's policies and risk-
taking.
ORSA is a continuous key process in the Group's operations and is inherent in its activities and thus enhances the
understanding of the relationship between 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 an insurance company faces or may be exposed to and to
determine the own funds necessary to ensure that the undertaking's overall solvency needs are met at all times. In
this connection, the Group has adopted an ORSA policy which has been approved by the Board.
35.3 Market risk
Market risk is the risk of loss or unfavourable change in financial position, which arise directly or indirectly from
ﬂuctuations in the market value of assets, provisions and financial instruments.
The main market risk factors that are specifically considered:
• Interest rate risk
• Equity risk
• Foreign exchange rate risk
35.4 Interest rate risk
Interest rate risk is the risk of loss from ﬂuctuations in fair value of financial instruments due to a change in interest
rate (required rate of return). The duration of the assets is in most cases not the same as the duration of the liabilities
due to insurance contracts and therefore interest rate risk can arise in the operation of the Group.
Interest sensitivity analysis
The following table discloses the effect that 50 and 100 bp increase in interest on net interest bearing assets and on
the discounting of insurance contract liabilities, would have on profit or loss and on equity at the reporting date. The
sensitivity analysis is presented for interest bearing assets 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 changes in the value of the underlying financial instruments
are in no cases recognised directly in equity. A positive number indicates an increase in profit and equity. A
decrease of interest rates would have the same effect in the opposite direction.
31.12.2025 31.12.2024 50 bp 100 bp 50 bp 100 bp Net impact on interest bearing assets ........................................(501.244) (992.034) (342.451) (678.945)Higher discounting of insurance contract liabliites ....................157.493 312.456 1 49.133 295.901 Net Im pact on profit and loss and equity ....................................(343.750) (679.579) (193.318) (383.044)
Consolidated Financial Statements 31 December 2025 55 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.5 Equity risk and other price risks of market securities
Equity risk is the risk of loss due to changes in the price of equities.
The Group's listed and unlisted equities are measured at fair value and therefore fluctuations in share prices have a
considerable effect on investment income. The management of the Group constantly monitors market developments 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.
The effect of 5% and 10% increases in the market value of equities and debt securities on profit or loss is disclosed
below, net of 20% income tax. Accordingly, 5% and 10% decreases in market value would have the same effect but
in the opposite direction.
31.12.2025 31.12.2024 Equities instruments and equity funds at fair value through profit or loss ........................................16.315.743 17.577.722 Debt instrume nts and other securities at fair value through profit or loss ........................................36.268.342 35.509.315 Derivatives at fair value through profit or loss ..................................................................................162.132 1 18.541
31.12.2024 31.12.2025 5% 10% 5% 10%Equities - impact on profit or loss ...............................................815.787 1.631.574 878.886 1.757.772 Debt securities - imp act on profit or loss ....................................1.450.734 2.901.467 1.420.373 2.840.745 Derivatives - impact on profit or loss ..........................................6.485 12.971 4.742 9.483
Consolidated Financial Statements 31 December 2025 56 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.6 Foreign exchange rate risk
Foreign exchange rate risk is the risk of loss from ﬂuctuations in the exchange rates of foreign currencies. It arises if
there is a mismatch in position of assets and liabilities in individual foreign currencies.
The majority of the Group's assets and liabilities are denominated in ISK, but the Group also holds some foreign
financial assets. Information regarding those foreign currencies that have the largest impact on the Group's
operations is provided below.
Sensitivity analysis
The following table discloses the effect of 5% and 10% strengthening of the ISK against 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 assumption that all other variables remain constant. It is based on pre-tax effects, 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.
Impact on profit or loss and equity
A weakening of the ISK against the above mentioned foreign currencies would have a positive impact on profit and
equity.
Foreign exchange rate risk as at 31.12.202 5 Assets Liabili ties N et position USD ........................................................................................................................1.474.990 14.690 1.460.300 EUR ........................................................................................................................74.565 12.494 62.071 GBP ........................................................................................................................46.402 0 46.402 DKK ........................................................................................................................3.560 4 4.353 (40.793)NOK .......................................................................................................................45.567 0 45.567 SEK ........................................................................................................................14.575 0 14.575 Total .......................................................................................................................1.659.659 71.538 1.588.122 Foreign exchange rate risk as at 31.12.202 4 Assets Liabilities Net position USD ........................................................................................................................4.201.047 7 08.316 3.492.731 EUR ........................................................................................................................1.863.022 6 62.171 1.200.851 GBP ........................................................................................................................54.079 2 34.644 (180.565)DKK ........................................................................................................................786.331 0 786.331 NOK .......................................................................................................................856.231 0 856.231 SEK ........................................................................................................................6.829 0 6.829 Total .......................................................................................................................7.767.539 1.605.131 6.162.408
31.12.2025 31.12.2024 5% 10% 5% 10%USD ............................................................................................58.412 116.824 139.709 279.418 EUR ............................................................................................2.483 4.966 48.034 96.068 GBP ............................................................................................1.856 3.712 (7.223) (14.445)DKK ............................................................................................(1.632) (3.26 3) 31.453 62.906 NOK ...........................................................................................1.823 3.645 34.249 68.498 SEK ............................................................................................583 1.166 273 546
Consolidated Financial Statements 31 December 2025 57 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.7 Liquidity risk
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.
The 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 there being always adequate liquid assets to meet expected
payments of both claims and other liabilities. The Group's expected payments are very well covered by its liquidity
position. The Group's policy on liquid assets is to have at a minimum enough liquid assets, including access to credit
lines, to cover the operating costs of the parent company for 3 months, in addition to at least ISK 500 million to
support subsidiaries if they run into difficulties. It is part of the Group’s risk policy that each subsidiary adheres to
its own liquidity risk policy.
Expected cash ﬂows of liabilities is specified as follows:
*The presentation of comparative figures has been revised. For further details, refer to Note 2.
The following table provides a maturity analysis of the Group´s liability in respect of insurance contracts, which
reﬂects the dates on which the cash ﬂows are expected to occur. Liabilities for remaining coverage measured under
the PAA have been excluded from this analysis.
W ithin 31.12.2025 one y ear 1-5 years Over 5 y ears Total Financial liabi lities ........................................................................................................18.415.422 4.372.127 22.787.549 Subordinated bond .......................................................................................................203.796 815.750 7. 040.097 8.059.643 Lease liabilit y ................................................................................................................230.072 1.090.985 1.321.057 Accounts payable and other short-term liabili ties ........................................................3.158.530 3.158.530 Total .............................................................................................................................22.007.821 6.278.861 7.040.097 35.326.779 W ithin 31.12.2024 one y ear 1-5 years Ov er 5 ye ars T otal Financial liabi lities ........................................................................................................14.718.281 3.032.539 17.750.819 Subordinated bond .......................................................................................................194.648 781.84 3 6. 937.446 7.913.937 Lease liabilit y ................................................................................................................204.774 204.05 9 408.833 Accounts payabl e and other short-term liabilities* .......................................................3.445.671 3.445.671 18.563.374 4.018.441 6.937.446 29.519.260 Total .............................................................................................................................
W ithin 31.12.2025 one year 1-2 years 2-3 years 3-4 ye ars 4-5 yea rs Over 5 years Total Liabiliti es for incurred claim s ......................................................13.153.135 8.184. 786 3.834.434 1.502.196 768.242 727.114 28.169.906 W ithin 31.12.2024 one year 1-2 years 2-3 years 3-4 ye ars 4-5 yea rs Over 5 years Total 13.665.350 7.890. 586 3.624.669 1.455.811 729.505 705.832 28.071.753 L iabilities for incurred claims ......................................................
Consolidated Financial Statements 31 December 2025 58 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.7 Liquidity risk (cont.)
Liquidity risk of financial services activities is specified as follows:
The main measure of the bank's liquidity risk is the liquidity coverage ratio (LCR) as defined in Rules No. 1520/2022
of the Central Bank of Iceland and the bank adheres to prudent internal standards regarding the minimum liquidity
coverage ratio. The bank's liquidity coverage ratio was 417% on 31.12.2025, while the minimum liquidity coverage
ratio according to the CBI's rules is 100%.
Time analysis of assets and liabilities in respect of Fossar financial liabilities and assets
The tables show non-discounted contractual interest and principal payments in respect of Fossar financial liabilities
and assets. The aggregates for each liability and asset type are therefore higher than the corresponding figures in the
consolidated statement of financial position. For contractual obligations, amounts are broken down by period
depending on when contractual principal payments and estimated interest payments occur. Liabilities which do not
have a contractual maturity date are classified based on the assumption that the customer will demand payment
from the Group at the first opportunity.
*The presentation of comparative figures has been revised.
Assets 31 December 2025: 0-3 months 4-6 m onths 7-12 months 1-5 y ears Ov er 5 years Total Current receivables ......................................... 2.364.104 2.364.104 Cash and cash equivalents ............................. 496.987 496.987 Derivatives ....................................................... 1.442.507 1.442.507 Securities ......................................................... 2.984.478 1.445.867 4.287.174 1.32 9.760 10.047.280 Loans to customers ......................................... 9.012.399 1.492.047 894.417 437.645 11.836.508 16.300.477 1.492.047 2.340.285 4.724.819 1.329.760 26.187.387 Liabilities 31 December 2025: 0-3 months 4-6 m onths 7-12 months 1-5 y ears Ov er 5 years Total Money market deposits ................................... 8. 993.053 8.993.053 Issued bonds and bills ..................................... 1.951.775 1.073.050 1.764.825 4.699.000 9.488.650 Borrowings ...................................................... 3.305.698 3.305.698 Derivatives ....................................................... 750.473 750.473 Other liabilities ................................................. 993.784 993.784 15.994.783 1.073.050 1.764.825 4.699.000 0 23.531.658 Net position ..................................................... 305.694 418.997 575.460 25.819 1.32 9.760 2.655.729 Assets 31 December 2024: 0-3 months 4-6 months 7-12 m onths 1-5 years O ver 5 y ears Total Current receivables ......................................... 1.359.216 1.359.216 Cash and cash equivalents ............................. 138.777 138.777 Derivatives ....................................................... 118.541 118.541 Securities ......................................................... 6.338.280 2.52 0.442 2.539.308 606.551 12.004.580 Loans to customers ......................................... 4.461.531 1.171.869 2.073.951 577.326 0 8.284.677 12.416.343 3.692.311 2.073.951 3.116.634 606.551 21.905.790 Liabilities 31 December 2024: 0-3 months 4-6 months 7-12 m onths 1-5 years O ver 5 y ears Total Money market deposits ................................... 10.140.691 627.522 10.768.213 Issued bonds and bills ..................................... 400.00 0 1.000.000 3.402.554 4.802.554 Borrowings ...................................................... 2.700.0 00 2.700.000 Derivatives ....................................................... 231.599 231.599 Other liabilities ................................................. 1.050.997 1.050.997 14.523.288 1.627.522 0 3.402.554 0 19.553.364 Net position ..................................................... (2.106.944) 2.06 4.789 2.073.951 (285.920) 606.551 2.352.426
Consolidated Financial Statements 31 December 2025 59 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.8 Insurance risk
Insurance risk compromises of underwriting risk and reserve risk. The underwriting risk is the risk that the insurance
premiums are not sufficient to cover the losses and other of the insurance contracts.
The underwriting risk is the risk that the insurance premiums collected are not sufficient to cover losses, claims, or
expenses arising from the insurance contracts. It can be broken down into life, health, and non-life insurance risks,
each of which can be further divided into sub-categories. The main risk drivers are increase in claims frequency,
claims inﬂation, large loss events and loss of a single large risk.
Mitigation measures for underwriting risk typically include rigours monitoring of the insurance risk, prudent risk
selection, well diversified business across many different risk groups, premium setting based on actuarial analysis,
policy terms, and the use of reinsurance to transfer a portion of the risk.
Reserve risk refers to the possibility that the technical provisions (reserves) held by the insurer are insufficient to
cover future claim obligations. Inadequate reserves may result from inaccurate estimates of future claims or
changes in assumptions such as inﬂation rates or legal settlements.
T o mitigate reserve risk, the Group regularly reviews and reassesses technical provisions using actuarial
methodologies. This includes applying historical claims data, trend analyses, and stress-testing scenarios.
Independent actuarial assessments may also be used to ensure the adequacy of reserves.
The underwriting risk is mainly managed in the insurance guidelines and via business processes and underwriting
rules.
Reinsurance is used to manage part of the underwriting risk. The is mainly the risk of large claims or major events.
The reserve risk is managed through the insurance guidelines, in which the guidelines for reserving are set out.
Reserves for the long-tailed risk are subject to discounting and inﬂation risk. These risks are managed through groups
assets portfolio matching the financial risks.
Insurance categories - insurance revenue 2025 2024 Property insurance .....................................................................6.259.996 19,6%6.045.707 20,7%Marine and cargo insurance ......................................................598.496 1,9%553.593 1,9%Vehicle insurance .......................................................................17.934.298 56,1%15.887.781 54,4%Liability insurance .......................................................................1.733.495 5,4%1.669.081 5,7%Accident and health insurance ...................................................2.983.829 9,3%2.842.849 9,7%Life and health insurance ...........................................................2.449.287 7,7%2.182.918 7,5%Reinsurance ...............................................................................(15)0,0%150 0,0%31.959.386 100,0% 29.182.080 100,0%Domestic and foreign o perations - premiums earned Domestic opera tions ..................................................................31.959.401 100,0%29.181.930 100,0%Foreign operations .....................................................................(15)0,0%150 0,0%31.959.386 100,0% 29.182.080 100,0%
Consolidated Financial Statements 31 December 2025 60 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.8 Insurance risk (cont.)
Sensitivity analysis of claims in the insurance business
The following table shows the impact of a 1% change in claim amounts, the claims provision and premiums on the
Group's profit or loss and equity. A 1% decrease in claim amounts would have the same effect but in the opposite
direction.
The main risk factors involve mistakes in the processing and settlement of claims, wrong decision-making or fraud
by employees. There is also a risk that the claimant gives wrong information or exaggerates the effects of the loss,
i.e. insurance fraud. Other risks relate to the handling of sensitive personal information and that the Group's
contractors will go beyond their purview.
35.9 Credit and counterparty risk
The operations of the Group are based on three pillars: insurance, financial services and investments. Credit risk
exists in all three pillars and is mitigated using various approaches, including the monitoring of counterparty
exposures, collaterals, and credit ratings. Internal credit policies specify constraints on credit ratings of new
customers. Credit risk associated with insurance stems mainly from unpaid premiums, that are mitigated by short
maturities, and reinsurance exposures, that are mitigated by high credit ratings of reinsurance counterparties. The
Group considers counterparty risk to be a form of credit risk and therefore these risks are presented together in this
note.
The main components of credit and counterparty risks are the following:
• Risk of loss or unforeseeable change in financial position due to a counterparty's lower rating
• Risk of lower rating of a bond issuer (spread risk)
• The risk that a counterparty cannot meet a contractual obligation
The main sources of counterparty risk are:
• Primary insurance
• Reinsurance
• Lending
• Investments in debt securities
• Bank deposits
• Derivatives
The Group's counterparty risk is regularly monitored.
2025 2 024 Claim am ounts ...................................................................................................................................186.853 169.095 Claims provision ................................................................................................................................200.221 196.812 Prem iums based on no change in claims and cost ratios .................................................................9.884 9.028
Consolidated Financial Statements 31 December 2025 61 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.9 Credit and counterparty risk (cont.)
Counterparty risk is specified as follows:
The Group's maximum exposure to counterparty risk corresponds to the carrying amounts disclosed above.
35.9 a. Reinsurance counterparty risk
Reinsurance counterparty risk
Reinsurers' risk is among other things the risk that reinsurers do not meet their obligations of paying their share of
claims, the reinsurance amount 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 claims in each contract. In addition, the number of reinsurers in each contract and
the maximum risk exposure of each reinsurer is based on that reinsurer's rating. All sensitivities presented in
connection with insurance and reinsurance risk are shown after the effect of reinsurance. The applied 1% stress on
claims amounts reﬂects management’s assessment of the Group’s risk profile and portfolio composition, and is
intended to illustrate the impact of reasonable changes in key insurance risk parameters. The following table shows
the disaggregation of premiums to reinsurers based on their latest available credit rating.
31.12.2025 31. 12.2024 Marketable debt instrume nts, credit rating A .......................................................................................22.391.730 16.542.71 3 Marketable debt instruments, c redit rating BBB ................................................................................1.021.934 1.779.718 Other mar ketable securities ...............................................................................................................16.659.174 17.648.39 4 Reinsurance receivables ...................................................................................................................0 102.180 Other receivables ...............................................................................................................................4.093.665 2.807.731 Cash and cash equivalen ts ................................................................................................................1.750.025 2.321.959 Total ...................................................................................................................................................45.916.528 41.202.69 4
2026 2025 AA+ ....................................................................................................................................................0,6% 0,8%AA ......................................................................................................................................................23,1% 39,4%AA- .....................................................................................................................................................42,6% 22,1%A+ ......................................................................................................................................................24,4% 29,4%A ........................................................................................................................................................6,9% 6,7%A- .......................................................................................................................................................2,4% 1,6%100,0% 100,0%
Consolidated Financial Statements 31 December 2025 62 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.9 b. Credit risk of financial activities
Large exposures of the bank before risk adjusted mitigation
Collateral against exposures to derivatives
The Group applies the same valuation methods to collateral held as other comparable assets held by the
Group. Haircuts are applied to the market value of the collateral for liquidity and other factors which may affect the
applied collateral value of the asset.
Management regularly monitors the development of assets related to credit risk, and the company has implemented
policies and rules aimed at minimizing the likelihood of credit losses by, e.g., imposing stricter requirements for
security and choosing counterparties diligently. The underlying collateral is not taken into account when estimating
the maximum credit risk.
The maximum exposure to credit risk corresponds to the carrying amounts disclosed below:
Cash and cash equivalents are bank deposits with financial institutions that the bank considers to be trustworthy
and are also mostly insured, and management therefore assesses the credit risk of cash and cash equivalent as
being insignificant. Securities consist of government bonds and government bills where the credit risk is considered
insignificant. Management assesses credit risk due to accounts receivable, other receivables, receivables from
related entities and loans to customers on a case-by-case basis based on individual customers and receivables as
there are relatively few debtors.
31.12.2025 31.12.2024 Number Am ount Number Am ount 10-20% of capital base ..............................................................5 2.116.380 3 944.830 20-25% of capital base ..............................................................0 0 0 Exceeding 25% of capital base ..................................................0 0 0 Total ...........................................................................................5 2.116.380 0 944.830 5 2.116.380 3 944.830 Large exposure net of risk a djusted mitigation ..........................
Market value of collateral Fixed Variable income in come Total 31.12.2025 Deposits se curities securi ties colla teral Financial institutions ...................................................................178.688 2 69.133 268.494 716.315 Corporate custom ers .................................................................107.274 4 99.689 3.955.348 4.56 2.311 Individ uals ..................................................................................5.200 0 2.506 7.706 291.162 7 68.822 4.226.348 5.28 6.332 Market value of collateral Fixed Variable income in come Total 31.12.2024 Deposits se curities securi ties colla teral Financial institutions ...................................................................173.112 1 80.761 495.750 849.623 Corporate custom ers .................................................................186.150 1.239.908 2.426.416 3.85 2.475 Individ uals ..................................................................................0 0 0 0 359.262 1.420.669 2.922.166 4.70 2.097
31.12.2025 31.12.2 024 Cash and cash equivalents ................................................................................................................496.987 134.795 Other receivables (without pay m ents) ...............................................................................................2.389.467 917.051 Securities used for hedging ...............................................................................................................3.109.524 6.102.840 Loans to custom ers ...........................................................................................................................11.836.508 7.880.021 17.832.486 15.034.70 7
Consolidated Financial Statements 31 December 2025 63 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.9 b. Credit risk of financial activities (cont.)
The tables below show changes in provisions by type of financial asset and level of the IFRS 9 impairment model.
Changes from Stage 1 to Stage 2 occur when there has been a significant increase in credit risk. A reassessment from
Stage1 and 2 to Stage 3 occurs when there is an objective indication of impairment. Reassessment from Stage 3
occur when there is no longer an objective indication of impairment or when the credit risk has decreased and is no
longer considered to have significantly increased since the initial classification (from Stage 2 to Stage 1).
A total of 417 m ISK were classified in Stage 2 as of 31 December 2025.
The table below shows the nominal value of financial assets and write-downs by age (number of days past maturity)
and classification:
2025 2024 Im pairment Im pairment Carryov er from prior ye ar ...................................................................................................................10.815 0 Reassessm ent of expected credit loss ..............................................................................................6.627 10.815 Final loss ............................................................................................................................................0 0 Total provisions at y ear-end ..............................................................................................................17.442 10.815
Nominal Expect ed Bo oked value of claim c redit losses balance Not ye t due .............................................................................................................11.853.950 (17.442) 11.836.508 Default 1-30 day s ...................................................................................................Default 31-60 days .................................................................................................Default 61-90 days .................................................................................................Default >90 day s ....................................................................................................11.853.950 (17.442) 11.836.508
On and off balance sheet exposure for Fossar
The maximum exposure to credit risk for on‑balance sheet and off‑balance sheet items, for the Bank, before taking
into account any collateral held or other credit enhancements, is specified as follows:
31.12.2025 Public Financial Corporate entities institutions custom ers Individuals T otal Cash and cash equivalents ............................. 496.987 496.987 Fixed income sec urities ................................... 5.773.556 323.417 420.960 6.517.934 Loans to custome rs ......................................... 0 11.836.508 11.836.508 Derivatives ....................................................... 162.132 162.132 Other assets .................................................... 2.389.467 2.38 9.467 Total ................................................................ 5.773.556 820.404 14.809.067 0 21.403.028 31.12.2024 Public Financial Corporate entities institutions custom ers Individuals T otal Cash and cash equivalents ............................. 134.795 134.795 Fixed income sec urities ................................... 7.008.612 44.560 7.053.173 Loans to custome rs ......................................... 783.746 7.096.27 4 7.880.021 Derivatives ....................................................... 118.541 118.541 Other assets .................................................... 917.051 917.051 Total ................................................................ 7.008.612 963.101 8.131.867 0 16.103.580
Consolidated Financial Statements 31 December 2025 64 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.10 Credit quality of financial assets
a. Breakdown of loans to customers by industry and type of collateral.
Collateral under the category Other is comprised mostly of land under development but also includes machinery and receivables.
A llocated collateral Impairment Listed Unlisted Claim t o expected Carrying Tot al securities and securities and Commercial 31.12.2025 value credit loss amount collateral D eposits liquid fu nds other funds real estate Othe r Public entities Financial institutions Corporate Real estate activities 3.993.210 (12.268) 3.980.941 9.380.842 2.389 3.532.853 1.600 3.357.000 1.120. 000 Construction 484.381 (189) 484.192 1.733.715 0 0 228.000 1.020.715 0 Service activiti es 0 0 0 0 0 0 0 0 0 Accommodat. and Food Service Activit. 201.804 (108) 201.696 1.83 5.612 3.175 0 1.052.437 780.000 0 Activities of Holding Companies 4.62 6.540 (623) 4.625.917 20.87 3.492 135.176 12.405.10 6 4.541.510 1.335.850 1.120.000 W holesale and Retail Trade 0 0 0 0 0 0 0 0 0 Other 2.548.016 (4. 254) 2.543.762 9.161.793 9 6.207 401.730 5.194.047 638.000 2.598. 059 Individual Total 11.853.950 (17.442) 11.836.508 42.985.454 236.947 16.339.689 11.017.594 7.131.565 4.838.059 A llocated collateral Impairment Listed Unlisted Claim t o expected Carrying Tot al securities and securities and Commercial 31.12.2024 value credit loss amount collateral D eposits liquid fu nds other funds real estate Othe r Public entities Financial institutions Corporate Real estate activities 3.129.150 (5. 540) 3.123.610 7.188.322 0 2.937.682 1.120.800 1.701.940 1.427.900 Construction 254.363 (634) 253.729 1.55 9.250 0 0 2 28.000 1.264.000 67. 250 Service activiti es 0 0 0 0 0 0 0 0 0 Accommodat. and Food Service Activit. 235.024 (649) 234.375 2.55 1.335 0 0 2.091.335 460.000 0 Activities of Holding Companies 3.07 9.210 (2.607) 3.076.603 7.988.212 190.078 3.479.218 2.896.226 569.000 853. 690 W holesale and Retail Trade 0 0 0 0 0 0 0 0 0 Other 1.193.089 (1. 385) 1.191.704 2.956.928 250.299 860.829 1.120.800 185.000 540. 000 Individual Total 7.890.836 (10.815) 7. 880.021 22.244.047 440. 377 7.27 7.729 7.457.161 4.179.940 2.888.840
Consolidated Financial Statements 31 December 2025 65 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
b. Credit quality of loans to customers by credit quality band
The following tables show financial assets subject to the impairment requirements of IFRS 9 broken down by credit
quality bands where band I denotes the lowest and band IV the highest credit risk. The Bank has primarily used
adjusted external credit ratings to assess the default probability of its customers. The Bank’s impairment model uses
external credit ratings as one of its main inputs, while LGD is based on internal estimates that take into account
management judgement as well as economic outlook.
Credit quality of financial assets by credit quality band
31.12.2025 Loans to customers: Stage 1 Stage 2 Stage 3 Total Credit quality band I .....................................................................9.922.861 0 0 9.922.861 Credit quality band II ....................................................................1.163.305 56.381 0 1.219.687 Credit quality band III ...................................................................340.165 23 5.746 0 575.911 Credit quality band IV ..................................................................10.483 125.00 9 0 135.492 In default ......................................................................................0 0 0 0 Non-Rated ...................................................................................0 0 0 0 Gross car ry ing amount ................................................................11.436.813 41 7.137 0 1 1.853.9 50 Expected credit loss ....................................................................(11.342) (6.100) 0 (17.442)Book value ...................................................................................11.425.472 41 1.037 0 1 1.836.5 08 31.12.2024 Loans to customers: Stage 1 Stage 2 Stage 3 Total Credit quality band I .....................................................................7.760.750 7.7 60.750 Credit quality band II ....................................................................130.086 130.086 Credit quality band III ...................................................................Credit quality band IV ..................................................................In default ......................................................................................Non-Rated ...................................................................................Gross car ry ing amount ................................................................7.890.836 0 0 7.890.836 Expected credit loss ....................................................................(10.815) (10.815)Book value ...................................................................................7.880.021 0 0 7.880.021
Consolidated Financial Statements 31 December 2025 66 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
c. Breakdown of loans to customers into not past due and past due
d. Allowance for expected credit loss on loans to customers and on loan commitments,
guarantees and unused credit facilities during the period
The following tables show changes in the expected credit loss allowance of loans to customers and for loan
commitments, guarantees and unused credit facilities during the period.
31.12.2025 Expected credit loss allowance total Transf er of financial assets: Stage 1 Stage 2 Stag e 3 T otal Balance as at 1 January 2025 10.815 10.815 Transfer to Stage 1 ...................................................................0 Transfer to Stage 2 ....................................................................0 Transfer to Stage 3 ....................................................................0 Net rem easurement of loss allowance ........................................2.037 3. 101 5.139 New financial assets, originated or purchased ............................1.512 2. 464 3.976 Derecognitions and maturities .....................................................(2.488) (2.488)W rite‑offs .....................................................................................Balance as at 31 December 2025 11.876 5.565 0 17.442 31.12.2024 Transf er of financial assets: Stage 1 Stage 2 Stag e 3 T otal Balance as at 1 January 2024 0 0 Transfer to Stage 1 ...................................................................0 0 Transfer to Stage 2 ....................................................................0 0 Transfer to Stage 3 ....................................................................0 0 Net rem easurement of loss allowance ........................................2.646 2.646 New financial assets, originated or purchased ............................8.169 8.169 Derecognitions and maturities .....................................................W rite‑offs .....................................................................................Balance as at 31 December 2024 10.815 0 0 10.815
31.12.2025 Claim Expected value credit lo ss Book value Not past due .............................................................................................................11.853.950 (17.442) 11.836.508 Past due 1-30 day s ..................................................................................................Past due 31-60 day s ................................................................................................Past due 61-90 day s ................................................................................................Past due 91-180 day s ..............................................................................................Past due 181-360 day s ............................................................................................Past due more than 360 days ..................................................................................Total .........................................................................................................................11.853.950 (17.442) 11.836.508 31.12.2024 Claim Expected value credit lo ss Book value Not past due .............................................................................................................7.890.836 (10.815) 7.880.0 21 Past due 1-30 day s ..................................................................................................Past due 31-60 day s ................................................................................................Past due 61-90 day s ................................................................................................Past due 91-180 day s ..............................................................................................Past due 181-360 day s ............................................................................................Past due more than 360 days ..................................................................................7.890.836 (10.815) 7.880.0 21 Total .........................................................................................................................
Consolidated Financial Statements 31 December 2025 67 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
e. Loan-to-value
The loan‑to‑value ratio (LTV) is the ratio of the gross amount of the loan to the value of the collateral, if any, for the
loans to customers of the Bank. Collateral position and the general creditworthiness of a customer are together
viewed as the most reliable indicators of credit quality of a loan. Besides collateral included in the LTV ratios the Bank
uses other risk mitigation measures, such as guarantees, negative pledge, cross‑collateral and collateralization of
non‑quantifiable assets.
The breakdown of loans to customers by LTV is specified as follows:
35.11 Operational risk
Operational risk consists of all risks that are related to regular operations of the Group and its subsidiaries 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's policy is to reduce operational risk, taking
the cost and effectiveness of preventive measures into account.
The main components of operational risk are the following:
• Organisational structure
• Documentation and contracting
• Information technology
• Employees
• External events
35.12 Concentration of risk
The Group is exposed to concentration of risk arising from insurance contracts within the scope of IFRS 17, which
could result in significant impacts from specific events or economic conditions affecting certain geographical
regions, insurance lines, or weather-related conditions. The primary sources of risk concentration include:
Geographical Risk: Exposure to regions prone to natural disasters, economic downturns, or regulatory changes.
Lines of Insurance Risk: Dependence on specific insurance products that may be susceptible to adverse claims
experience.
Weather-Related Risk: Increased exposure to extreme weather events such as severe storms, ﬂoods, and wildfires,
as well as severe winter conditions leading to higher incidences of car accidents and storms causing property
damage.
31.12.2025 % 3 1.12.2024 %Less than 50% .............................................................................3.520.710 30% 2.642.171 34%51-70% ........................................................................................6.055.787 51% 3.696.008 47%71-90% ........................................................................................2.260.012 19% 1.504.511 19%91-100% ......................................................................................0 0% 37.331 0%101-125% ....................................................................................0 0% 0 0%126-200% ....................................................................................0 0% 0 0%Greater than 200% ......................................................................0 0% 0 0%No or negligible collateral: ...........................................................0 0% 0 0% Other loans wit h no collateral ....................................................0 0% 0 0%Total .............................................................................................11.836.508 10 0% 7.880.021 100%
Consolidated Financial Statements 31 December 2025 68 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
35.12 Concentration of risk (cont.)
The Group actively manages these risks through diversification strategies, reinsurance arrangements, and
underwriting policies to mitigate potential financial impacts. Sensitivity analyses and stress testing are conducted
regularly to assess the resilience of the portfolio against risk concentrations.
35.13 Internal management and control
The Group's policy is to have a well-organized and reliable internal control framework. The framework is articulated
by the Board, the subsidiaries Board’s, their management and employees and is designed to give reasonable
assurance of the achievement of the Group's objectives on:
• Performance and efficiency of operations (operational
targets)
• Reliability of information data (accurate information target)
• Compliance with laws and regulations (compliance target)
To achieve those objectives, the Group's internal management and control systems are divided into the following five
components:
• Control environment
• Risk assessment
• Control procedures
• Information and communication
• Management controls
The policy is based on the COSO (Committee of Sponsoring Organisations of the Treadway Commission) Internal
Control– Integrated Framework, published in May 2013.
Internal management and control are reﬂected in the Group’s and subsidiaries’ procedures, practices, code of
conduct and human resources policy. It is a normal part of the Group's activities and is integrated with its operations.
However, internal management and control are subject to human limitations such as mistakes and the intention to
circumvent the Group's rules and other unforeseeable factors.
36. Combined ratio
The combined ratio is the sum of incurred claims, insurance contract operating expenses and net expenses from
reinsurance contracts as a proportion of insurance revenue. The claims ratio, insurance contracts expense ratio and
net reinsurance ratio are calculated as a proportion of the insurance revenue.
The following table shows the combined ratio and other key ratios of the insurance operations for the past five years.
2025 2024 2023 2022 2021 Claims rat io .................................................................69,5% 72,6% 76,5% 70,8% 73,3%Net reinsurance ratio ..................................................3,1% 3,3% 0,7% 2,4% -0,8%Claims and net reinsurance ratio ................................72,6% 75,8% 77,2% 73,2% 72,5%Insurance contracts expe nse ratio ..............................18,1% 19,1% 22,3% 21,8% 23,0%Combined ratio .........................................................90,7%94,9%99,5%95,0%95,5%
Consolidated Financial Statements 31 December 2025 69 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
37. 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 board members of the Group, the CEOs of the Group, key management personnel,
associates as disclosed in note 20, close family members of individuals identified as related parties, 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, CEOs and key management personnel
are disclosed in note 10.1.
Transactions and balances with related parties are specified as follows:
38. Events after the reporting date
No events have occurred after the end of the reporting period that require the Group to change these financial
statements. On 6
th
October 2025 the board of directors of Skagi hf. and Íslandsbanki hf. approved the initiation of
formal merger negotiations, and both parties signed a Heads of Terms to that eect. Among other key commercial
terms it outlines that Skagi's shareholders will receive 323,859,440 new shares in Íslandsbanki, representing
approximately 15% ownership in the combined company. This indicates a share price of ISK 21.18 per Skagi share
and ISK 124.00 per Íslandsbanki share. Merger discussion remain subject to a final merger agreement upon which
shareholders approvals and relevant supervisory authority approvals will also be required, e.g. competition and
financial supervisory authorities. Reference is made to note 19 (Share in subsidiaries) in relation to purchase of
shares in Íslensk verðbréf hf.
2025 Income Expenses Assets Liabiliti es Board of directors and key managem ent ............................................. 8.181 8.274 2.652 0 Associates ............................................................................................. 4.460 231.242 25 18.860 2024 Income Expenses Assets Liabiliti es Board of directors and key managem ent ............................................. 25.425 15.501 128.592 845 Associates ............................................................................................. 4.203 138.981 178 9.520
Consolidated Financial Statements 31 December 2025 70 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39. Material accounting policies
The accounting policies as set out below have been applied consistently for all periods described in the annual
financial statements and for all the Group's entities.
To increase the information value of the annual financial statements, notes are included based on their relevance
and importance for the readers of these statements. Therefore, information that is neither considered important nor
relevant for the readers of the annual financial statements is not included in the notes.
39.1 The Group
The Group's annual financial statements include the annual financial statements of the Parent Company and its
subsidiaries. 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 the ability to affect those returns through
its control 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.
The financial results of subsidiaries acquired or sold during the year are included in the consolidated financial
statements from the date of acquisition 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 transitions are eliminated in the consolidated accounts. Where
applicable, the financial statements of subsidiaries are adjusted to align them with the accounting policies of the
Group.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Profit or loss and
each component of other comprehensive income are attributed to the owners of the parent company and to the non-
controlling interests.
39.2 Associates
Associates are those companies in which the Company has significant inﬂuence, but not control, over their financial
and operating policy. Significant inﬂuence is usually present when the Company holds 20% to 50% of the voting
rights, including any potential exercisable voting rights. Interests in associates are accounted for using the equity
method.
Equity method
The equity method is an accounting policy whereby investments in associates are initially recognised at cost and the
carrying amount is subsequently adjusted in accordance with any changes in the Company's share of the net assets
of the associates. The Company's share of the profit of an associate is recognised as part of the Company's profit or
loss. If the Company's share of loss of an associate exceeds 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 the profit of associates until the unrecognised
share of loss has been equalised.
39.3 Goodwill
Goodwill that arises from acquisitions is recognised on the date the Company achieves control of the acquired
company. Goodwill is the difference between the acquisition 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 occurred if the carrying amount exceeds the 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.
Consolidated Financial Statements 31 December 2025 71 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.4 Foreign currencies
Transactions in foreign currency are recognised at the prevailing exchange rate on the transaction date. Monetary
assets and liabilities in foreign currencies are recognised at the prevailing exchange rate at the end of the reporting
date. Foreign exchange differences are recognised in profit or loss.
39.5 Insurance Revenue
Insurance revenue is recognized over the coverage period in line with the transfer of insurance services to the
policyholder. Under the Premium Allocation Approach (PAA), insurance revenue reﬂects the release of the Liability
for Remaining Coverage (LRC) as services are provided over time.
Measurement of the Liability for Remaining Coverage (LRC)
Initial Recognition: At the inception of the contract, the LRC is measured as the premiums received (or
receivable), net of any acquisition cash flows if applicable. If a financing component exists, the LRC is
discounted accordingly.
Subsequent Measurement: The LRC is reduced over the coverage period as insurance services are
provided, with the corresponding amount recognized as insurance revenue. Adjustments are made for
changes in estimates of future premiums and expected claims.
Recognition of Insurance Revenue Insurance revenue for each reporting period is derived from the amount of the
LRC released as services are provided of the period. The Group allocates the revenue on a straight-line basis over
the coverage period. If the expected pattern of the release of service differs significantly from the straight-line basis,
then the allocation is changed to the expected pattern for release of service. The group changes the method if facts
and circumstance change.
Key considerations for recognizing insurance revenue:
Time-Based Recognition: If insurance coverage is provided evenly over the contract period, revenue is
recognized on a straight-line basis.
Alternative Systematic Approaches: If the risk profile changes over time, an alternative allocation method
is used to reflect the transfer of services more accurately.
Adjustments for Premium Changes: Revenue is adjusted for cancellations, modifications, and other
changes in premium estimates.
Premiums received in advance for future coverage periods are recorded as part of the LRC and recognized as revenue
when the coverage is provided. Insurance revenue is presented separately from the insurance service result, which
includes claims incurred, risk adjustments, and other related expenses.
39.6 Insurance service expenses
Insurance service expenses include both the operating expenses of insurance contracts, and the claims expensed
during the year. Claims expensed consist of claims incurred during the year as well as the effect of reassessment of
claims from previous years. The liability due to claims incurred consists of the total amount of reported and unsettled
claims as well as an actuarial estimation of incurred but unreported claims.
Consolidated Financial Statements 31 December 2025 72 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.7 Insurance contracts
The Group issues contracts that transfer both financial and insurance risk from its customers to the Group.
Definition of insurance contracts
Insurance contracts are contracts under which the insurer agrees, in accordance with the term of the contract, to
compensate the policyholder for financial loss incurred due to an 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.
Classification of insurance contracts
Insurance contracts are classified into categories based on the nature of the insured risk, life insurance and non-life
insurance with non-life insurance contracts consisting of liability insurance contracts, accident insurance contracts
and property insurance contracts, including marine and cargo insurance contracts.
Liability insurance contracts protect the customer from 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 with
contractual provisions.
Property insurance contracts compensate the Group's customers for damage to or loss of property. Customers that
carry on commercial activities may also be entitled to compensation for a loss of earnings if their business is
curtailed or temporarily suspended due to damage to the insured property.
Life insurance contracts are related to human life, for instance death or living beyond the insurance period. Premiums
are recognized as revenue over the life of the contract. Compensation is expensed when an insured event occurs.
Within each category, it is assessed whether contracts can become onerous based on the assumption that pricing
or underlying risks will lead to a loss on the contract during the contract period. If a contract proves to be onerous,
the expected loss from the contract is recognised as an expense through profit or loss. No groups of agreements have
been identified at the Group that are considered onerous.
Contract boundaries
Contract boundaries define the cash ﬂows within the boundary of each insurance contract. The measurement of a
group of insurance contracts includes all future cash ﬂows arising within the contract boundary. In determining which
cash ﬂows fall within the contract boundary, substantive rights and obligations arising from the terms of the contract,
together with applicable laws and regulations, are considered.
The insurance contracts have a less than one-year contract boundary, typically until the next renewal date, i.e.
contract has one-year coverage period during which there are substantive rights and obligations.
The group uses the same principles for the contract boundaries of reinsurance contracts held.
Consolidated Financial Statements 31 December 2025 73 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.7 Insurance contracts (cont.)
Insurance contract liabilities
Liability for remaining coverage:
The Group uses the premium allocation approach (PAA) to simplify the measurement of groups of insurance
contracts. On initial recognition of each group of contracts, the carrying amount of the liability for remaining coverage
is measured as the premiums received on initial recognition.
The insurance contracts issued by the group have a coverage period of one year or less. For contracts where the
coverage period is over one year, it is calculated that the obligation for remaining coverage will not deviate
significantly from the obligation that would have been arrived at by applying the general measurement model called
GMM, and therefore PAA will also be used for these contracts.
The Group has chosen to expense insurance acquisition cash ﬂows when they are incurred. The coverage period is
defined as the period when an insured event can occur.
Subsequently, the carrying amount of the liability for remaining coverage is increased by any premiums received and
decreased by the amount recognised as insurance revenue for services provided.
Services is usually provided based on passage of time.
If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then
the Group recognises a loss in profit or loss and increases the liability for remaining coverage to the extent that the
current estimates of the fulfilment cash ﬂows that relate to remaining coverage exceed the carrying amount of the
liability for remaining coverage.
Liability for incurred claims:
Liability for Incurred claims is measured as the total of the expected fulfilment cash ﬂows, which comprise estimates
of future cash ﬂows, adjusted to reﬂect the time value of money and the associated financial risks, and a risk
adjustment for non-financial risk.
Claims and claims handling costs including expected claims handling costs are expensed in the statement of profit
or loss as incurred based on the estimated future cash ﬂows to policyholders or third parties to fulfil the obligations
toward policyholders.
Claims include direct claims handling costs that arise from events that have occurred up to the statement of financial
position date even if they have not yet been reported to the Group.
The Group recognises the liability for incurred claims of a group of insurance contracts at the amount of the fulfilment
cash flows relating to incurred claims. The future fulfilment cash flows are discounted (at current rates) and
adjusted for the effect of future inflation. Fulfilment cash flows are estimated using the assessments of individual
cases reported to the Group and statistical analyses of claims incurred but not reported. The provisions include
claims handling costs.
Assumptions and interdependencies
Level of aggregation and the evaluation of contract boundary are significant assumptions as these define the use of
the premium allocation model’s simplified measurement model. Discounting and adjustment for future inflation
affects in particular long tailed claims where the assessment of the actual claim takes time. This is the case for
claims in motor liability, professional liability, workers’ compensation, personal accident.
Consolidated Financial Statements 31 December 2025 74 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.7 Insurance contracts (cont.)
Liability for incurred claims is determined for each line of business based on actuarial methods. Expected cash
flows are adjusted for the future effect of inflation. The models currently used are Chain-Ladder, Bornhuetter
Ferguson. In some instances, historic data used in the actuarial models need to be supplemented with predictions for
the expected future development of claims. This is used when there are structural changes in underlying insurance
risk. In this situation, the historical data is supplemented with an a priori estimate for the expected change in the
level of claims.
Measurement, reinsurance contracts held
The Group applies the same principles to measure a group of reinsurance contracts and insurance contracts
issued, adapted where necessary to reflect features that differ from those of insurance contracts.
The Liability for remaining coverage is measured using the PAA method. The reinsurance held have a coverage period
of one year or less. For contracts where the coverage period is over one year, the obligation for remaining coverage
will not deviate significantly from the obligation that would have been arrived at by applying the general measurement
model called GMM, and therefore PAA will also be used for these contracts.
If a loss-recovery component is created for a group of reinsurance contracts measured under the PAA, then the Group
adjusts the carrying amount of the asset for remaining coverage.
Risk adjustment for non-financial risk for reinsurance contracts are modelled using similar statistical models as for
direct insurance contract so that it represents the amount of risk being transferred by the holder of the group of
reinsurance contracts to the issuer of those contracts.
Principles for Discounting
Discounting under IFRS 17 involves adjusting future cash ﬂows to present value to reﬂect the time value of money.
Liability for incurred claims is discounted to reﬂect the time value of money and the associated financial risks at the
reporting date. Discount rate reﬂects the yield curve in the appropriate currency for instruments that expose the
holder to no or negligible credit risk, adjusted to reﬂect the liquidity characteristics of payment of future incurred
claims.
The EIOPA risk free discount meets these requirements and have been used.
Principles for Risk Adjustment
The risk adjustment represents the compensation an entity requires for bearing the uncertainty about the amount
and timing of the cash ﬂows that arises from non-financial risk as the entity fulfils insurance contracts. The risk
adjustment for non-financial risk (RA) reﬂects the compensation required by the insurer to bear the uncertainty of
the amount and timing of cash ﬂows arising from non-financial risk. Sources of the uncertainty about the amount
and timing of the cash ﬂows are linked to the determination of the LIC, stated above, and the estimation of the future
cash ﬂows, i.e. when the claims payments take place.
RA is calculated on a group level for the insurance business. A cost of capital approach is chosen, and risk
adjustment is chosen to represent a confidence level of 85 per cent. RA is presented in full in the insurance service
result.
Risk adjustment for non-financial risk for reinsurance contracts are modelled using similar statistical models as for
direct insurance contract so that it represents the amount of risk being transferred by the holder of the group of
reinsurance contracts to the issuer of those contracts.
Consolidated Financial Statements 31 December 2025 75 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.7 Insurance contracts (cont.)
Principles for Level of Aggregation
Insurance contracts are aggregated into portfolios of insurance contracts. A portfolio comprises of insurance
contracts with similar risks that are managed together. These portfolios are further divided into annual cohorts, i.e.
contracts not issued more than one year apart based in a risk basis. Portfolios are determined based on a
segmentation of business, or a combination of line of business (as defined by the management), business area and
country.
No material onerous contracts have been identified.
Principles for Separation
Contracts that transfer a significant insurance risk are classified as insurance contracts. Contracts held by the group
under which it transfers significant insurance risk related to underlying insurance contracts are classified as
reinsurance contracts.
The Group issues certain group of life insurance policies, which included a life insurance part, and a separate unit
linked saving part. Using the principles for separation, these contracts are split into a savings and an insurance
component. The savings component is valued using IFRS 9, because the investment risk is borne by the policyholder,
and it is distinct from the insurance risk. The insurance component is valued using IFRS17.
These principles ensure that insurance contracts are measured accurately, transparently, and in a manner that
reﬂects the economic reality of the underlying risks and cash ﬂows.
Insurance acquisition cost
All insurance acquisition costs are recognized immediately in the statement of profit or loss as an expense in the
period in which they are incurred and are recognised under insurance service expense in the Income statement.
Reinsurance contracts held
The Group enters into reinsurance contracts with the purpose of mitigating its risk. Reinsurance contracts held are
either proportional or cover the total risk if the loss from a claim event exceeds the pre-agreed claim amount.
Premium on reinsurance contracts held are recognised as reinsurance expenses and on reinsurers held as claims
received. These consists of claims on reinsurers due to their share of the claims provision. The Group applies the
same accounting policies to measure a group of reinsurance contracts, adapted where necessary to reflect
features that differ from those of insurance contracts.
Risk adjustment for non-financial risk for reinsurance contracts are modelled using similar statistical models as for
direct insurance contract so that it represents the amount of risk being transferred by the holder of the group of
reinsurance contracts to the issuer of those contracts.
Net finance expenses from insurance contracts
Net finance expenses from insurance contracts comprise the insurance finance income and expenses recognised
in profit or loss during the period in accordance with IFRS 17 Insurance Contracts. These amounts arise from the
effect of the time value of money and financial risk related to insurance contracts issued.
Insurance finance income and expenses include the unwinding of discount rates applied to insurance contract
liabilities and the impact of changes in financial assumptions that relate to future cash ﬂows. Finance income and
expenses are determined using the discount rates applied on initial recognition of the insurance contracts and,
where applicable, updated discount rates reﬂecting current market conditions.
Net finance expenses from insurance contracts are presented within net financial income/expense in the statement
of profit or loss.
Consolidated Financial Statements 31 December 2025 76 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.8 Interest income and expenses
Interest income is recognised in the statement of profit or loss as it accrues.
Interest expense on financial liabilities measured at amortised cost is recognised in the statement of profit or loss as
it accrues.
39.9 Fee and commission income and expenses
Fee and commission income is mainly due to the Company's services to clients in the field of asset management,
fund management and corporate consulting. Fee and commission income and expense for services provided over a
certain period are recognized as the services are provided. Fees earned from transaction type services are recognized
when the service has been completed, i.e. point in time. Fees that are performance linked are recognized when the
performance criteria are fulfilled, i.e. point in time. Contractual fees, such as fees for asset management, are
recognised over the period of the contract as the services are provided (i.e. over time), usually on a straight line basis.
There is not considered to be a significant financing component in contracts for commission income, as the credit
period for receivables is relatively short. Uncertainties regarding variable consideration for performance-based
income are commonly resolved at the point in time when revenue is recognised. The Company does not have
significant contract assets or liabilities on its balance sheet. Commission fee income according to long-term
contracts is recognised on a straight line basis over time and invoiced monthly in arrears. Performance-related fees
are recognized as income when the set target has been reached.
39.10 Net financial income
Net financial income, stems from insurance investment activities and consists of interest income from bank
deposits, exchange rate gains from monetary assets and liabilities and interest-bearing financial receivables, fair
value changes of financial assets through the statement of profit or loss, and
unwinding, interest and exchange rate change of technical provision. Dividend income from investments is
recognised on the date when the right to a dividend is established. Dividends are presented as a component of net
financial income.
Financial expenses consist of interest expenses on interest-bearing financial liabilities, exchange rate losses on
monetary assets and liabilities and fair value changes of financial assets. Financial expenses are recognised during
the period in which they are incurred.
39.11 Income taxes
Income taxes expensed consists of current taxes and deferred tax.
Current tax
Current taxes are the taxes expected to be 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 before tax
according to the financial statements. Calculated income tax is based on the tax rates in effect at the reporting date.
Deferred income tax
Deferred income tax is due to a temporary difference between taxable income and profit or loss according to the fi
financial statements. This is because the Group's tax base is based on assumptions different from the financial
statements. Deferred income tax is not recognised on non-deductible goodwill.
A deferred tax asset is estimated at the reporting date and 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.
Deferred income tax is expensed in profit or loss unless it is related to items recognised in other comprehensive
income or directly in equity, in which case the tax is also recognised in other comprehensive income or equity.
Consolidated Financial Statements 31 December 2025 77 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.12 Cash and cash equivalents
Cash and cash equivalents consist of unrestricted deposits with financial institutions, and highly liquid financial
assets that are due within three months from the acquisition date and can easily be converted into cash where risk
of changes in their fair value is insignificant.
39.13 Financial assets
Initial recognition
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets, as appropriate, on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.
Classification of financial assets
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets. The classification of financial assets is based on the business
model within which they are held and their contractual cash ﬂow characteristics. All regular way purchases or sales
of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame established by regulation
or convention in the marketplace.
Financial assets at amortised cost
A financial asset which is intended to hold to maturity and where the contractual payments on set due dates consist
only of payments of principal and interest shall be recorded at amortised cost unless the instrument is defined at fair
value through profit or loss in accordance with the fair value option. Such assets are initially recognised at fair value
plus any related transaction costs. After the initial recognition, such financial assets are valued at amortised cost
based on the effective interest rate, less impairment. All loans and receivables of Fossar are recognised at
amortised cost.
Financial assets at fair value
Debt instruments that are held within a business model whose objective is both to collect the contractual cash ﬂows
and to sell the debt instruments, and that have contractual cash ﬂows that are solely payments of principal and
interest on the principal amount outstanding, are measured subsequently at fair value through other comprehensive
income unless the fair value option is applied. All other debt investments and equity investments not measured at
amortised cost are measured subsequently at fair value through profit or loss. Derivatives are recorded at fair value
through profit or loss, except for derivatives that have been defined as hedging instruments in hedge accounting.
During the year ended 31 December 2025, the Group held debt instruments (bonds) classified as financial assets
measured at fair value through other comprehensive income (FVOCI). As at 31 December 2023, these instruments
had a carrying value of ISK 2.499.612 (2024: 2.499.612). The related unrealised fair value changes are recognised in
other comprehensive income and accumulated in the FVOCI reserve within equity.
Consolidated Financial Statements 31 December 2025 78 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.13 Financial assets (cont.)
Impairment of financial assets
The Group's loans and receivables fall under the IFRS 9 impairment model. Estimates of expected credit losses are
updated at each reporting date, and the impairment model divides financial assets into three stages:
Stage 1
All financial assets at initial recognition, with a few exceptions. Expected credit losses are estimated based on the
probability of default in the next 12 months from the reporting date.
Stage 2
A significant increase in credit risk has occurred. Expected credit losses are estimated based on the probability of
default during the lifetime of the financial asset.
Stage 3
There are objective indications of impairment. Expected credit losses are estimated based on the probability of
default during the lifetime of the financial asset.
All financial assets within the scope of the impairment model are recorded at stage 1 at initial recognition, with the
exception of financial assets that are impaired at initial recognition and financial assets covered by the simplified
model of the standard (e.g. trade receivables with payment due in less than 12 months).
Since there are relatively few receivables (excluding insurance contracts for which credit risk is considered limited),
management assesses expected credit losses separately for individual receivables. Therefore, the Group does not
apply the presumption that the credit risk on a financial asset has increased significantly since initial recognition
when contractual payments are more than 30 days past due and that objective indicators of impairment exist when
payments are more than 90 days past due.
If the credit risk of 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. to level 1 or 2 depending on the circumstances.
Definition of default
Management believes that objective indications of impairment exist if it is considered likely that the debtor will not
be able to fully meet its obligations to the Group. The following are examples of circumstances where the Group
believes that objective indications of impairment exist:
- a debtor has applied for bankruptcy, a company has been deregistered, or if a company no longer operates on a
going concern
- it is considered unlikely that the debtor will meet his obligations due to violations of the terms of the loan agreement
or his financial restructuring
Final write-off of financial assets
Receivables are written off when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery.
Consolidated Financial Statements 31 December 2025 79 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.14 Customer relationships
Customer relationships, recognised upon acquisition of operations, are amortised over the estimated useful life,
which is 10 years.
39.15 Software
Software is recognized at cost less accumulated amortisation and impairment. The cost price consists of the
purchase price and all direct costs associated with getting the software into use. Software is amortised using the
straight-line method over 3 to10 year from the date it is taken into use.
39.16 Property, plant and equipment
Property, plant and equipment are recognised when it is probable that economic benefits embodied in the asset will
ﬂow to the Group and its cost can be measured reliably. Property, plant and equipment assets are recognised at cost
value less accumulated depreciation and impairment. The cost of property, plant and equipment assets consists of
the purchase price and all directly attributable cost necessary to make the asset capable of generating revenue.
Property, plant and equipment are recognised at cost less accumulated depreciation and impairment.
Depreciation is recognised on a systematic basis over the expected useful life of the asset, taking into account its
estimated residual value. The depreciation method expected useful life and residual value are reviewed at least
annually.
Gain or loss on the sale of property, plant and equipment are calculated as the difference between the sale price
and carrying amount. It is recognised in profit or loss as part of other income.
39.17 Impairment of non-financial assets
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.
The recoverable amount is the higher of fair value less estimated cost to sell and value in use. Value in use is based
on estimated future cash ﬂows, discounted at the 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.
Consolidated Financial Statements 31 December 2025 80 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.18 Financial liabilities
Financial liabilities are recorded at fair value upon initial recognition. Transaction costs that are directly attributable
to the purchase or issuance of financial liabilities that are not recognized at fair value through profit or loss are added
to or deducted from fair value at initial recognition as appropriate. Transaction costs in respect of financial liabilities
that are recognised at fair value through profit or loss are immediately recognised in profit or loss.
Financial liabilities are valued at amortised cost based on the effective interest rate. The Group derecognises fi
financial liabilities only when the obligation associated with them no longer exists. Gains or losses due to the
derecognition are recorded in profit or loss.
39.19 Equity instruments
An equity instrument is a contract that evidences residual interests in assets of the Group after deduction of all its
liabilities. Equity instruments issued by the Group are recorded at cost less the direct costs of their issuance.
Purchases of own shares are recognised as a reduction in the total share capital. No gains or losses are recognised
through profit or loss due to the purchase, sale or issuance of own shares.
39.20 Provisions
A provision is recognised when the Group has a 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 provision is based on the best possible estimation of the liability at the reporting date. If the
amount of the provision is based on estimated future cash ﬂows, it is recognised at present value.
If the provision is recoverable from a third party, the recoverable amount is recognised as an asset.
39.21 Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date. For discounting the Group uses its incremental borrowing rate when the rate implicit in the
lease cannot be readily determined.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
39.22 Earnings per share
The Group presents basic earnings per share and diluted earnings per share for ordinary shares in the statement of
profit or loss. Basic earnings per share are calculated as a percentage of the profit allocated to the ordinary
shareholders in the company, and the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by taking into account all shares, whether issued or potential shares at the
reporting date, such as share options granted to employees.
Consolidated Financial Statements 31 December 2025 81 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
39.23 New standards, interpretations and amendments to standards
A number of new accounting standards are effective for annual reporting periods beginning after 1 January 2025
and earlier application is permitted. However, the Group has not early adopted the following new or amended
accounting standards in preparing these consolidated financial statements.
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on
or after 1 January 2027. The new accounting standard introduces the following key new requirements:
Entities are required to classify all income and expenses into five categories in the statement of profit or loss,
namely the operating, investing, financing, discontinued operations and income tax categories. Entities are
also required to present a newly-defined operating profit subtotal. Entities´ net profit will not change.
Management-defined performance measures (MPMs) are disclosed in a single note in the financial
statements.
Enhanced guidance is provided on how to group information in the financial statements.
In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash
ﬂows when presenting operating cash ﬂows under the indirect method.
The Group is still in the process of assessing the impact of the new accounting standard, particularly with respect to
the structure of the Groups´ statement of profit or loss, the statement of cash ﬂows, and the additional disclosure
required for MPMs. The Group is also assessing the impact of how information is grouped in the financial statements,
including for items currently labelled as other.
Other accounting standards
The following new and amended accounting standards are not expected to have a significant impact on the Group´s
consolidated financial statements:
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7)
Consolidated Financial Statements 31 December 2025 82 All amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
40. Quarterly statement (unaudited)
Q4 2025 Q3 2025 Q2 2025 Q1 2025 Q4 2024
Insurance revenue ........................................................ 8.204.617 8.368.737 7.854.521 7.531.512 7.546.073
Net interest income ....................................................... 137.845 122.830 91.633 108.389 77.244
Net fee and commission income .................................. 686.128 479.882 603.761 587.860 679.466
Net financial income ..................................................... 1.532.395 (252.962) (143.437) (1.097.590) 1.312.202
Share in profit of associates, after income tax ............. 59.500 0 26.366 25.084 0
Other income ................................................................ 125.420 13.685 46.472 25.276 162.816
Total income ................................................................. 10.745.905 8.732.173 8.479.315 7.180.530 9.777.802
Insurance service expenses ......................................... (7.985.855) (6.590.384) (6.026.185) (7.403.579) (6.800.948)
Net expenses from reinsurance contracts .................... (168.842) (307.324) (329.007) (178.478) (308.071)
Operating expenses ..................................................... (1.056.389) (726.349) (806.057) (919.441) (1.008.566)
Amortization of intangible assets .................................. (49.802) (49.170) (50.071) (47.262) (42.952)
Net credit impairments .................................................. (249) (2.309) (1.005) (3.064) (1.365)
Profit (loss) before income taxes .................................. 1.484.768 1.056.638 1.266.990 (1.371.294) 1.615.901
Income tax .................................................................... 80.681 (339.241) (294.647) 18.570 (57.558)
Profit (loss) for the period .............................................
1.565.449 717.397 972.343 (1.352.724) 1.558.343
Insurance operations
Claims ratio ................................................................... 78,6% 62,6% 58,3% 79,1% 72,9%
Net reinsurance ratio .................................................... 2,1% 3,7% 4,2% 2,4% 1,5%
Claims and net reinsurance ratio .................................. 80,7% 66,3% 62,5% 81,4% 74,4%
Insurance contracts expense ratio ................................ 18,7% 16,1% 18,4% 19,2% 19,8%
Combined ratio .............................................................
99,4% 82,4% 80,9% 100,7% 94,2%
Investment Operations
Insurance investment portfolio return ........................... 4,0% 1,0% 1,2% -1,1% 3,6%
Financial services
Financial Services revenue (excl. Interco. adj.) ............ 976 700 732 780 892
Assets under Management (AuM) ISKbn ..................... 253 236 232 225 227
Group
ROE on annual basis .................................................... 27,2% 13,2% 18,4% -25,1% 29,0%
Profit per share ............................................................. 0,82 0,38 0,51 -0,71 0,82
Consolidated Financial Statements 31 December 2025 83 All amounts are in thousands of ISK
Appendix 1
Non-Financial Disclosure 2025
CEO Statement
Skagi is a leading Icelandic Financial Services Group focused on sustainable and profitable growth in
insurance, investment banking, and asset management. Building on a long-standing legacy in insurance,
the Group has developed a strong track record in financial services and long-term investment
performance. Skagi consists of VÍS Insurance (“VÍS”), Fossar Investment Bank (“Fossar”), and Íslensk
verðbréf (“ÍV” or “ÍV Asset Management”). Skagi and all its subsidiaries are conscious of the importance
of sustainability in their operations and activities.
One of Skagi’s objectives is to open new dimensions in financial markets, by drawing on the combined
strength and distinct expertise of its three subsidiaries. By emphasizing quality growth, supporting
innovation, and expanding opportunities for clients with diverse needs and ambitions, Skagi aims to help
foster broader participation in financial markets and a more resilient economy. Sustainability plays an
integral role in achieving this objective. Integrating responsible business practices not only benefits the
environment and the society but supports the Group’s long-term success.
2025 was the first full year in which all three subsidiaries operated under Skagi, with Íslensk verðbréf
becoming fully merged with SIV eignastýring at the beginning of the year 2025. Following these changes
within the Group, emphasis was placed on developing a comprehensive sustainability policy for Skagi and
its subsidiaries. The policy was built based on a double materiality assessment, which was conducted on
a group-wide basis. The information presented in this year’s Sustainability Report reﬂects the priorities
identified through that assessment.
Skagi aims to contribute to sustainability and ESG through areas where the group holds a particular
advantage to provide value. For example, VÍS contributes significantly to accident prevention measures
through education, grants and gifts. Both ÍV and Fossar work to promote financial health of both its
customers and the economy in general by providing specialized services and supporting healthy
competition in the market.
This report is Skagi’s first in which EFRAG’s Voluntary Standards for SMEs, Basic Module, is used to provide
non-financial information, with European Sustainability Reporting Standards (ESRS) also used as a
reference point for disclosure. With the new presentation of the report, Skagi aims to increase
transparency and accountability in its sustainability-related disclosures for the Group.
General Disclosure
General Basis for Preparation of Sustainability Report
This Sustainability Report covers the period from 1 January 2025 to 31 December 2025. It provides insight
into the sustainability eorts of Skagi (the “Company”) and its subsidiaries (the “Skagi Group” or the
“Group”) on a consolidated basis for the relevant period. Skagi’s subsidiaries are VÍS tryggingar hf. (“VÍS
Insurance”, “VÍS”), Fossar fjárfestingarbanki hf. (“Fossar Investment Bank”, “Fossar”) and Íslensk verðbréf
hf. (“Íslensk verðbréf”, “ÍV” or “ÍV Asset Management”). All companies of the Group have a registered
address at Ármúli 3, 108 Reykjavík, Iceland.
In preparing the report, Skagi has for the first time referred to the European Financial Reporting Advisory
Group (“EFRAG”) standards known as the European Sustainability Reporting Standards (“ESRS”) when
Consolidated Financial Statements 31 December 2025 84 All amounts are in thousands of ISK
disclosing information for selected data points. However, Skagi has chosen to provide the required
information under EFRAG’s voluntary standards for small and medium-sized enterprises (Voluntary
Standards for SMEs, Basic Module). Information is provided on the matters assessed as material based
on the double materiality assessment conducted in the first half of 2025.
Skagi will continue to develop its sustainability disclosures in line with regulatory developments as they
occur. At the time of preparing this report, the EU’s Corporate Sustainability Reporting Directive (“CSRD”)
has not been implemented into Icelandic law. This report therefore complies with the current
requirements of Article 66(d) of Act no. 3/2006 on Annual Accounts, concerning non-financial reporting.
While the EU is drawing back on its sustainability disclosure framework for companies through its intended
Omnibus Regulation, Skagi chooses to reﬂect the prevailing best practices in sustainability-related
disclosures to ensure consistency, maintain transparency towards stakeholders and prepare the Group
for potential future developments in regulation and market expectations. Climate impact calculations are
performed by a third party in accordance with the Greenhous Gas Protocol methodology.
Non-financial disclosure for the subsidiaries can also be found in their annual financial statements. More
detailed non-financial disclosure, including numeric data, on the Group and each subsidiary can also be
found in Skagi’s Annual and Sustainability Report for 2025 which will be published on Skagi’s website
(www.skagi.is).
Double Materiality Assessment – Methodology and Results
General
A double materiality assessment involves evaluating both impact materiality, i.e. the eects that a
company’s operations have on the external environment and society, and financial materiality, i.e. the
ways in which sustainability matters aect a company’s operations, including whether they present
financial opportunities or risks for the company. A double materiality assessment makes it possible to
determine which ESRS sustainability topics are material for the Group.
The results of the group-wide double materiality assessment conducted in the first half of 2025 identified
material sustainability topics for the Group, namely impacts, risks and opportunities, that form the basis
for this financial year’s Sustainability Report. In carrying out the assessment, Skagi relied on EFRAG’s
guidance on double materiality while also taking into account the practices of comparable companies in
the Nordic region.
Figure 1: Double Materiality Methodology
Consolidated Financial Statements 31 December 2025 85 All amounts are in thousands of ISK
Methodology
To identify and assess the Group’s actual and potential impacts, risks, and opportunities, an initial
assessment was conducted of how the ESRS sustainability standards relate to the Group’s strategy and
organizational structure. This was followed by analytical work involving key personnel within the Group,
namely employees who, through their participation, were able to provide insight into the relevance and
impacts of sustainability matters for the Group. These participants reviewed the sustainability topics set
out in the ESRS standards and assessed additional factors that should be included in the assessment.
In assessing impact materiality, consideration was given to actual and potential, positive and negative
impacts that the Group has or may have on the external environment. The assessment covered the
operations of all entities within the Group, and the impacts were evaluated based on the following criteria:
(a) Scale: The extent to which the negative or positive impacts are, or could be, severe.
(b) Scope: The breadth or extent of the impacts, or the potential breadth thereof.
(c) Irremediable Character: The degree to which it is diicult or impossible to prevent, mitigate,
or remedy negative impacts.
(d) Likelihood: The probability that the impacts will materialize, whether positive or negative.
In assessing financial materiality, consideration was given to the financial risks and/or financial
opportunities that sustainability factors may create for the Group. Financial materiality encompasses
potential impacts on the Group’s financial position, including both direct financial impacts, such as costs
or revenues, and indirect impacts, such as changes in market conditions, the regulatory environment, or
eects on Skagi’s reputation. In the assessment of financial materiality, the following factors were
considered:
(a) Potential Scale: The potential magnitude of the financial consequences, i.e. the risk or
opportunity.
(b) Likelihood: As in the assessment of impact materiality, the probability that the risk or
opportunity will materialize.
The results of the impact materiality assessment and the financial materiality assessment were
subsequently combined, forming the Group’s double materiality assessment and thereby determining the
ESRS standards on which Skagi will provide disclosures. To validate the outcome of Skagi’s double
materiality assessment, the results were presented to key personnel within the Group for approval. Once
it becomes clear how EU sustainability legislation will be transposed into Icelandic law, Skagi will consider
how future materiality assessments for the Group should be conducted.
The double materiality assessment was based on available information and data on the Group’s
operations, as well as on the results of a workshop held with Group employees who, through their
participation, were able to provide insights into the relevance of sustainability topics for the Group. Skagi
will update the results of its double materiality assessment as needed and adapt it to developments within
the Group and, where applicable, to changes in the regulatory framework.
Results
The results of the double materiality assessment showed that the following sustainability topics were
assessed as material for Skagi’s operations:
E1 – Climate change
S1 – Own workforce
Consolidated Financial Statements 31 December 2025 86 All amounts are in thousands of ISK
S4 – Consumers and End-Users
G1 – Business Conduct
Figure 2: Skagi's Results from the Double Materiality Assessment
Skagi’s Operations and Sustainability Governance
Skagi’s main operations consist of insurance activities, investment banking activities and asset and fund
management, through the operations of its subsidiaries. Skagi operates as a financial conglomerate in the
insurance sector and a mixed holding company in financial activities pursuant to Act no. 61/2017 and as
such is subject to certain supervision and requirements imposed by the Financial Supervisory Authority.
Skagi operates as a public holding company pursuant to Act no. 2/1995 on Public Holding Companies.
Full-time employees numbered 240 at the end of the year 2025. Skagi’s turnover in 2025 was ISK 35,355
million and the balance sheet size was ISK 85,035 million at the end of year 2025. The country of primary
operations and location of significant assets of the Group is in Iceland. The Group solely operates in
Iceland, both in the capital and rural area.
Skagi’s Value Chain
Skagi’s value chain was analysed to identify where sustainability-related matters may arise within the
Group’s activities and business relationships, both in terms of impacts on people and the environment
and in terms of potential eects on Skagi’s financial position, performance and future prospects. The value
chain serves as a key reference point for Skagi’s sustainability governance and climate-related risk
management.
Consolidated Financial Statements 31 December 2025 87 All amounts are in thousands of ISK
Figure 3: Skagi's Value Chain
Skagi’s value creation is primarily driven by the provision of services, financial expertise and indirect
impacts through capital allocation and risk management. On that basis, the value chain was defined as
follows:
External environment (upstream)
The external environment comprises the operating conditions that shape Skagi’s activities but fall outside
the Group’s direct control. This includes the regulatory and supervisory framework, public authorities,
external business partners, financing and capital markets, investors and other capital providers. These
elements inﬂuence Skagi’s operating environment and inform the sustainability-related risks and
opportunities the Group must manage.
Internal operations (own operations)
Internal operations represent the areas over which the Group exercises direct control, primarily through
its subsidiaries and consist of Skagi’s core activities and internal supporting functions.
Skagi’s activities are organised into three main business areas: insurance operations, insurance
investments and financial services. Insurance operations comprise life and health insurance as well as
property and casualty (P&C) insurance. Insurance investments include investment of the insurance
portfolio assets. Financial services activities include asset and fund management, corporate finance
advisory, debt finance and market making. Fund management constitutes a dedicated activity focused on
the establishment and management of investment funds.
These activities are supported by Skagi’s internal functions, including its workforce, internal governance
structures, risk management, compliance and information technology. Together, these business areas
and internal functions form the foundation of Skagi’s value creation and enable the delivery of reliable
financial and insurance services.
Value creation (downstream)
Value creation materialises through the products and services delivered to customers and the outcomes
these support in society. Skagi’s oerings include insurance coverage and solutions, financial and
investment services and asset and fund management products, where sustainability considerations are
increasingly integrated into decision-making processes.
The stakeholder groups, sustainability impacts, risks and opportunities, as well as potential financial
eects associated with each part of the value chain form an important basis for Skagi’s ongoing
management of sustainability-related risks and opportunities.
Consolidated Financial Statements 31 December 2025 88 All amounts are in thousands of ISK
Sustainability Governance
In 2025, a new comprehensive sustainability policy was developed by Skagi and its subsidiaries. The policy
was built on the basis of the double materiality assessment discussed above, which was conducted on a
group-wide basis. 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.
Non- Financial Disclosure Report of Skagi is approved by Skagi’s Board of Directors. Reference is made to
the Independent Auditor's Report with regards to its confirmation of their best knowledge that the report
of the Board of Directors and CEO accompanying the consolidated financial statements includes the
information required by the Financial Statements Act if not disclosed elsewhere in the consolidated
financial statements.
Policies Related to Sustainability
Skagi and its subsidiaries have various policies in place that relate to sound governance and sustainability
factors. Following is an overview of various policies that relate to sound governance and sustainability
factors, both at parent company level and subsidiary level. In most cases the policies are approved on a
group-level basis by Skagi’s board, where the board of directors in each subsidiary also implements the
policy or solely on a subsidiary-level. Further, the subsidiaries may have other policies and procedures
tailored to their operations, which may relate to sustainability. It is therefore possible that additional
policies and internal rules may fall within this scope; however, analysis to that eect is ongoing within
Skagi and has not been completed at this time. Accordingly, the overview should not be regarded as
exhaustive. The table also includes a concise description of the content of each policy as well as to which
sustainability factors they connect.
Policies and Internal Rules
Scope in relation to Material Sustainability Factors and Sub
-
Factors
Sustainability Policy
E
-
1 Climate change
S-1 Own workforce
S-1 Working conditions
S-1 Equal treatment and opportunities for all
G-1 Corporate culture
S-4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
G-1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
Corporate Governance Policy
G
-
1 Business Conduct
G-1 Corporate culture
Remuneration Policy
S
-
1 Own workforce
S-1 Working conditions
S-1 Equal treatment and opportunities for all
G-1 Corporate culture
Code of Conduct
S
-
1 Own workforce
S-1 Working conditions
G-1 Business conduct
G-1 Corporate culture
Human Resources Policy
S
-
1 Own workforce
S-1 Working conditions
S-1 Equal treatment and opportunities for all
G-1 Corporate culture
E-1 Climate change
Risk Management Policy
E
-
1 Climate change
S-1 Own workforce
S-1 Working conditions
Consolidated Financial Statements 31 December 2025 89 All amounts are in thousands of ISK
S
-
1 Equal treatment and opportunities for all
G-1 Corporate culture
S-4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
G-1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
Internal Control Policy
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
G-1 Whistle blower protection
Compliance Policy
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
G-1 Whistle blower protection
S-4 Personal safety of consumers and/or end-users
Ownership Policy
G
-
1 Business conduct
G-1 Corporate culture
Data Protection and Privacy Policy
S
-
4 Personal safety of consumers and/or end
-
users
G-1 Corporate culture
Conflict of Interest Policy
G
-
1 Business conduct
G-1 Corporate culture
S-1 Own workforce
Policy on treatment of insider information and
management trading
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and bribery
G-1 Whistle blower protection
Competition Policy (subsidiary level)
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and bribery
Policy on IT Operations
S
-
4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
G-1 Corporate culture
Outsourcing and Service Procurement Policy
G
-
1 Business conduct
G-1 Corporate culture
S-4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
Internal Audit Policy
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
Policy on measures against money laundering
and terrorist financing
G
-
1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
Operational Risk Policy
E
-
1 Climate change
S-1 Own workforce
S-1 Working conditions
S-1 Equal treatment and opportunities for all
G-1 Corporate culture
S-4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
G-1 Business conduct
G-1 Corporate culture
G-1 Corruption and Bribery
Policy and Response Plan for Bullying,
Harassment and Violence
S
-
1 Own workforce
S-1 Working conditions
S-1 Equal treatment and opportunities for all
G-1 Corporate culture
Information Policy
G
-
1 Business conduct
G-1 Corporate culture
Policy on Product Governance (subsidiary level)
G
-
1 Business conduct
Consolidated Financial Statements 31 December 2025 90 All amounts are in thousands of ISK
S
-
4 Information related impacts for consumers and/or end
users
S-4 Personal safety of consumers and/or end-users
Supplier Code of Conduct
G
-
1 Business conduct
G-1 Corporate culture
S-1 Own workforce
S-1 Working conditions
Policy on Responsible Investments (subsidiary
level)
E
-
1 Climate change
G-1 Corporate culture
Sustainability Focus
Sustainability Commitments
Skagi is a member of Festa, a centre for social responsibility, IcelandSIF, an organisation that promotes
responsible investment, and a signatory of UN PRI, the United Nations Principles for Responsible
Investment. Skagi is also a signatory of the UN Global Impact on the implementation of responsible
policies and the UN Women’s Empowerment Principles, where Skagi’s commitments reach to all
subsidiaries.
Fossar has been a pioneer in managing the issuance of sustainable bonds in Iceland, and Fossar has been
a leading consultant in the sustainable bond market. Fossar is also a direct member of IcelandSIF. VÍS,
now Skagi, was a signatory of the 2020 Declaration of Intent on Investments in Support of Sustainable
Development, as well as the 2015 Climate Declaration of Festa and the City of Reykjavík.
Skagi supports the United Nations Sustainable Development Goals and will use them as guiding principles
in its operations. The Group focuses in particular on the following goals:
 SDG 3, Good Health and Well-Being: Promote healthy living and well-being for all, from cradle to
grave.
 SDG 5, Gender Equality: Ensure gender equality and empower all women and girls.
 SDG 8, Decent Work and Economic Growth: Promote sustained, sustainable economic growth
and productive and decent employment opportunities for all.
 SDG 12, Responsible Consumption and Production: Ensure sustainable consumption and
production patterns.
Skagi Remains Above Market Average in Reitun’s ESG Evaluation
Skagi improved year-on-year in Reitun’s ESG assessment, receiving 81 points and a B1 rating. In Reitun’s
summary, it is noted that Skagi’s performance remains strong and is above average in all categories when
compared with 45 other domestic issuers. The market average shows an overall score of 73 out of a
possible 100 points, corresponding to rating category B2.
Skagi, together with its subsidiaries VÍS Insurance and Fossar Investment Bank, was also awarded the
designation of Outstanding Governance Company, a recognition granted by Stjórnvísi, the Iceland
Chamber of Commerce, the Confederation of Icelandic Enterprise, and Nasdaq Iceland.
Consolidated Financial Statements 31 December 2025 91 All amounts are in thousands of ISK
Topical Disclosure
Disclosure on Factors Identified as Material Based on the Materiality Assessment
1. Social Factors
Skagi places strong emphasis on ensuring an attractive working environment for its employees and on
promoting positive societal change by advancing diversity, equality, and human rights, both within its own
operations and in the wider community. The Group plays an important social role by providing individuals
with access to a range of services and by enhancing financial well-being through sound advice and
information, thereby supporting a well-functioning and competitive financial market.
Skagi received 92 points for the social component in Reitun's ESG evaluation. Skagi continues to pay close
attention to human resources, job satisfaction and customer satisfaction. The results of the double
materiality analysis revealed that Skagi can have the most positive impact on social factors through both
its human resources and end-users. Policies related to social factors are presented in the table on Policies
and Internal Rules.
Skagi’s social objectives primarily support SDG number 3, Good Health and Well-Being, SDG Goal number
5 on Gender Equality and Goal number 8 on Decent Work and Economic Growth.
Key Social Objectives for 2026:
S-1 Workforce
Skagi operates on the basis of an ambitious group-level human resources policy. The human resources
manager of Skagi is a member of the Group’s executive management, thereby ensuring a consistent
human resources policy and approach to HR matters across the organization. The workforce has been
identified as a material topic for Skagi through the Group’s double materiality assessment, reﬂecting both
the significance of people-related matters for Skagi’s long-term value creation and the impact of Skagi’s
practices on employees. Key material factors include attracting and retaining qualified employees,
ensuring equal opportunities and fair treatment, maintaining a healthy and safe working environment,
supporting employee wellbeing and professional development, and fostering an inclusive and
performance-oriented culture across all entities within the Group.
a. General Characteristics of Skagi’s Workforce
The table below presents key quantitative information relating to the composition of Skagi’s workforce in
2025.
Consolidated Financial Statements 31 December 2025 92 All amounts are in thousands of ISK
Skagi’s
workforce composition
Total Number of Employees
240
Men
144
Women
96
Number of Permanent Employees
232
Men
142
Women
90
Gender Ratio of Senior Management
1
Men
63%
Women
38%
Employee Turnover Rate
19,9 %
Number of Work
-
Related Accidents
0
Number of Employees Covered by Collective
Agreements
2
240
b. Equal Opportunities and Fair Treatment
Skagi is committed to being a desirable workplace that creates a healthy, safe and constructive work
environment for its employees. Each employee is appraised based on merit, competence and
performance, irrespective of gender, sex, race, colour, nationality, religion, political opinions, social
status, origin or other irrelevant factors or circumstances. Consideration is also given, where appropriate,
to diversity perspectives within the workforce. Through an active equality and equal pay policy, the Group
promotes the full utilization of the talents and capabilities of its entire workforce, where employees shall
be paid equal wages and enjoy the same terms for the same or equally valuable work.
Skagi complies with legislation on equal status and equal rights irrespective of gender, as laid out in Act
no. 150/2020. VÍS has an equal pay certificate and Fossar has equal pay confirmation, where the latter has
less stringent requirements and is aimed at smaller companies. Pay equity analysis has not been carried
out on a group-level. The most recent pay equity analysis at VÍS was conducted in 2025, and the results of
the wage analysis showed that the adjusted gender pay gap measured 0.10% in favour of women. In
connection with Fossar’s equal pay certification in 2024, a wage analysis was conducted which showed
that the adjusted gender pay gap measured 0.20% in favour of men.
Skagi’s Code of Conduct covers in detail good business practices, the quality of the working environment
and behaviour at the workplace, risk culture and non-discrimination. The Code of Conduct, as well as the
Group Sustainability Policy, provides that Skagi shall ensure equal opportunities for its employees. The
impacts of these commitments are reﬂected in a strong workplace culture, high employee satisfaction
and a positive working environment. Employee turnover was higher during the reporting period was among
other reasons due to internal organizational changes within the Skagi Group. Opportunities exist to further
strengthen this area and to promote gender balance in senior and managerial positions.
c. Employee Satisfaction and Professional Development
Skagi is a desirable workplace, with a strong majority of employees reporting that they are satisfied or very
satisfied in their roles. Skagi prioritizes that subsidiaries should preserve their individual cultures, while at
1
Senior Management is defined as the CEO and the Managing Directors of Skagi and its subsidiaries.
2
Meaning number of employees that receive pay that is equal or above applicable minimum wage according to the relevant
collecve agreement.
Consolidated Financial Statements 31 December 2025 93 All amounts are in thousands of ISK
the same time ensuring a coherent and shared employee culture across the Group. Continued emphasis
is placed on a result-oriented culture within the Group.
In the summer of 2025, a harmonized employee satisfaction survey was conducted across the Group. The
results indicate continued high levels of employee satisfaction across all entities within the Group. Skagi’s
HR department analyses the survey results and monitors developments over time. Surveys are conducted
at least annually, and the results provide insight into employees’ expectations, needs and views, and are
intended to raise awareness and encourage dialogue about the working environment and conditions.
Managers are also encouraged to have regular performance and feedback sessions with their employees
where purpose is to ensure a shared understanding between the manager and the employee regarding role
expectations as well as the employee’s needs. The format and frequency of these discussions vary
depending on managers and departments.
Skagi‘s operations are to a large extent dependent on the skills and contributions of qualified personnel.
A key factor in the Group‘s continued development is the retention of skilled employees and ensuring
appropriate training and continuing education. The Group strives to provide good working conditions and
competitive remuneration. In September 2025, it was announced that Skagi and Íslandsbanki hf. were in
ongoing merger discussions. Uncertainty during periods of strategic change can pose a risk to morale and
employee engagement, which in turn may impact wellbeing, productivity and retention if not managed
appropriately. Skagi has in place a communication plan to ensure clear engagement and consistent
management practices.
Opportunities lie in maintaining this competitive advantage and continuously strengthening workplace
culture, enhancing employee satisfaction and, consequently, supporting strong performance.
d. Health and Safety
Skagi focuses on promoting a healthy work–life balance, providing opportunities and attractive terms of
employment, supported by a robust occupational health and safety policy. Skagi complies with legislation
on working environment, health and safety, as laid out in Act no. 46/1980. Employee safety is ensured
through dedicated occupational health and safety committees and structured training programs that
facilitate knowledge sharing across the Group. These measures also contribute to the United Nations’ goal
related to labour rights and equality in the labour market.
Skagi condemns and will not tolerate bullying, harassment, violence or other inappropriate conduct in the
workplace and has established a policy and a response plan to address such situations in a safe and
eective manner. The policy and response plan have been developed in accordance with applicable laws
and regulations governing the working environment, health and safety. Employees are clearly informed of
reporting channels and procedures relating to the response plan. In this way, Skagi fosters a safe working
environment in which respect and equality among employees prevail.
By providing ﬂexible working hours where possible, Skagi wishes to ensure that the Company is a family-
friendly workplace and that dierent situations of employees are considered. Similarly, Skagi oers
employees a fitness membership allowance and commuting allowance for employees that wish to
commute. Inﬂuenza vaccination is oered every year, and employees have access to psychological
counselling annually. Skagi is committed to oering expectant parents the ﬂexibility to take parental leave
in ways that best suit their families. Employees are encouraged to utilize the vacation they are entitled to
by law. In addition to payments from the Icelandic Parental Leave Fund to which employees are entitled
during parental leave, all permanent employees are eligible to receive a supplementary employer
contribution from Skagi in accordance with SSF’s collective agreements.
Consolidated Financial Statements 31 December 2025 94 All amounts are in thousands of ISK
e. Remuneration, Collective Bargaining and Training
Skagi promotes job satisfaction and stability through fair and appropriate remuneration and maintaining
healthy incentive structures within the Group. Skagi's current remuneration policy aims to oer
competitive compensation to ensure the Group remains an attractive workplace for qualified individuals.
The Remuneration Committee for the Skagi Group serves in an advisory and monitoring role for the Board
of Directors, ensuring that remuneration practices support the Bank's goals and interests. Risk is
associated with regulatory restrictions on variable remuneration within the financial sector, which reduces
ﬂexibility and can adversely aect competitiveness.
Each employee spent an average of 3,5 hours in 2025 on online training and education. In addition, a
substantial portion of training is delivered on-site and in person, including workshops, internal training
sessions, and hands-on learning that is not captured in online training hours. Education and training have
always been key pillars in human capital development at Skagi, and its predecessor VÍS. The objective of
employee training is to strengthen and maintain employees’ professional knowledge.
Various educational material is available to employees, both optional and mandatory, which increases
their knowledge of the Bank's operations, regulations and culture. Due to the nature of their work, some
employees of Fossar and Íslensk verðbréf must have securities trading rights. Those who have acquired
securities trading rights are obliged to attend regular continuing education courses of their choosing,
which ensure that they maintain academic knowledge, professional competence and values. Skagi has
supported employees in acquiring these licenses where applicable as well as continuing education. For
example, Fossar has organized training that has been approved as continuing education by the
Examination Committee for securities trading rights.
S-4 Consumers and End-Users
As a financial conglomerate with operations in insurance, asset management and investment services,
Skagi has identified three closely linked, material topics for its customers: (i) financial health and grants
to the community, (ii) data protection and privacy, and (iii) cybersecurity.
a. Financial Health
Supporting the financial health of customers is a core part of Skagi’s value proposition and social role.
Skagi’s customers are a diverse group of individuals and business entities. Dierent customer groups have
distinct needs and preferences for various products and services within the Group, which range from
insurance services, investment funds, corporate finance services, asset management, lending, trading in
complex financial instruments and more.
Skagi’s products and services are designed to help households, companies and investors cope with
unexpected financial shocks, access capital and investment opportunities, and build long-term financial
security. Within the Group, insurance solutions play an important role as a financial safety net, protecting
customers against unforeseen events and losses. Investment banking services, covering lending,
brokerage, asset management and corporate finance services, enable investors and companies to
allocate capital eiciently, manage financial risk and support growth. Complementing these activities, the
Group’s fund management, within Íslensk verðbréf, provides professionally managed investment funds
that aim to deliver stable, long-term wealth accumulation for a broad range of customers.
Skagi seeks to promote financial health through clear and responsible communication, high level of
services and accessible information. Furthermore, the Group is at the forefront when it comes to
connecting Icelandic business with the global investment environment. For example, Fossar’s core
Consolidated Financial Statements 31 December 2025 95 All amounts are in thousands of ISK
strength lies in its strong service levels, achieved by providing customers with insights into their portfolios
and the financial markets through one-on-one communication, as applicable. To achieve this, Fossar
prioritizes deep knowledge and expertise within its sta, to ensure high-quality service. VÍS Insurance has
prioritized ensuring access to services, both in the capital area and across the country. In early 2025, VÍS
and Íslandsbanki hf. signed a partnership agreement, aimed to ensure that customers who do business
with both companies enjoy special benefits within loyalty programs within each company. As part of the
cooperation, VÍS started oering services with a visible presence across all of Íslandsbanki’s distribution
channels, including its website, mobile app, and online banking platform. The partnership’s objective is to
enhance customer service and support customer growth. In 2025, VÍS Insurance increased its score in the
Icelandic Customer Satisfaction Index, for the second year in a row, placing second for the first time in
seventeen years.
Risk related to financial health may materialize as operational risk in business relationships, including
reputational risk due to inadequate services, non-compliance with regulatory requirements or systematic
disruptions which could negatively aect Skagi’s products and services. Skagi sees an opportunity to
further expand initiatives that raise awareness of financial resilience, risk prevention and broader
participation in financial markets. With these objectives at the forefront, Skagi aims to increase
competition in the financial market.
b. Grants to the Community
Skagi and its subsidiaries are committed to being present in local communities throughout Iceland,
making a direct positive impact on their local community.
Íslensk verðbréf focuses on supporting children‘s and youth sports activities in its local community, mainly
in Northern Iceland, through financial contributions to local sport clubs.
During 2025, VÍS Insurance allocated more than ISK 7 million to community projects. This included grants
to sports clubs in the form of match programs, advertising boards, travel grants and naming rights for VÍS
Stadium, where Þór Akureyri plays its home football matches. Support was also provided to memorial
funds and the installation of memorials. VÍS additionally supported a range of social and prevention-
focused initiatives. This included support to Pieta, an organization that carries out prevention work against
suicide and self-harm and provides support to family members, as well as public health projects aimed at
increasing participation in breast cancer screening and the Bjössi Fire Safety Bear program. Various safety-
related products were purchased and distributed, such as reﬂective items and ice scrapers for car
windows. Free condoms were distributed at the Þjóðhátíð festival for the second consecutive year. In
2025, 1,630 rear-seat car mirrors were provided free of charge to new parents, as part of VÍS’s ongoing
focus on child and traic safety. Customers with children under the age of four were oered first aid
training, which was delivered on four occasions during the year. In addition, VÍS donated ten ﬂotation suits
to the Icelandic Safety School (Slysavarnaskóli Íslands) for the fifteenth time. VÍS also hosts the largest
B2B safety and prevention conference in Iceland, further strengthening its role in promoting risk
awareness, accident prevention and workplace safety across industries.
The most significant initiative in this regard by Fossar is Fossar’s Thanks Day, which has been held annually
since Fossar's inception in 2015. Since the first Thanks Day, over 170 million ISK has been raised. On this
day, all Fossar's fee and commission income along with direct donations are donated to a cause chosen
by the employees. Additionally, Nasdaq Iceland and T Plus waive all fees from Fossar's transactions and
contribute them to the cause. In 2025, the chosen cause was Ljósið, a rehabilitation and support center
for people who have been diagnosed with cancer and their families. A total of 32.3 million ISK was raised,
which will be used to build a new support center on new premises.
Consolidated Financial Statements 31 December 2025 96 All amounts are in thousands of ISK
c. Data Protection and Consumer Privacy
Given the volume and sensitivity of data processed in connection with customers, such as when handling
claims, providing advisory services and executing transactions, consumer privacy and data protection are
considered material. The Group has implemented policies, procedures and technical and organizational
controls aimed at protecting personal data in line with applicable data protection laws and regulatory
requirements, such as Act no. 90/2018. This includes governance for data access and use, confidentiality
obligations, training for employees who handle customer information and ongoing monitoring of
regulatory developments and evolving customer expectations. Protecting personal data is a fundamental
precondition for trust and long-term customer relationships, while breaches of data protection rules could
result in significant financial, legal and reputational consequences for the Group. Data protection
therefore remains a strategic priority in Skagi’s risk management and governance.
d. Cyber Security and Resilience
Cybersecurity threats are a growing risk for Skagi, reﬂecting the increasing digitalisation of financial
services and the handling of sensitive personal and financial data. A significant cyber incident could
disrupt services, compromise customer data and undermine confidence in the group.
Skagi invests in cybersecurity infrastructure to prevent, detect and respond to cyber threats. The group
maintains controls designed to protect critical systems and collaborates with specialised partners and
authorities where relevant. Cybersecurity is integrated into risk management and IT governance
processes, and Skagi aims to continuously adapt its defences to technological developments, changing
threat landscapes and regulatory evolvements.
The Group seeks to proactively identify, assess, and mitigate cybersecurity risks through appropriate
technical and organisational measures, regular monitoring, and ongoing awareness and training initiatives
across all sta. For example, 16 educational videos and questionnaires on cyber security were presented
to employees during the year, with close to full participation across all subsidiaries. In 2025, the core focus
was on implementing the EU Digital Operational Resilience Act (DORA), which took eect in Iceland in the
beginning of 2026.
VÍS Insurance holds an ISO 27001:2022 certification for its information security management system. Both
Fossar and Íslensk verðbréf outsource the operations of information systems to VÍS Insurance as well as
matters relating to information security. Thereby, a harmonized and comprehensive framework for
managing these matters has been established across the Skagi Group. This arrangement strengthens the
Group’s infrastructure and simplifies governance. It further ensures that uniform requirements, procedure
and oversight now apply to all companies within the Group.
Consolidated Financial Statements 31 December 2025 97 All amounts are in thousands of ISK
2. Governance Factors
Maintaining a robust governance framework with clearly defined roles and procedures is highly material
for a financial conglomerate such as Skagi. Through eective governance structures, robust risk
management, and adherence to applicable laws and regulations, the Group supports transparent,
accountable, and responsible business practices.
Skagi received 77 points for the governance component in Reitun's ESG evaluation. General governance
and business ethics were considered to be in good order at the Company. Following the formalisation of
the Skagi Group, governance practices have continued to be updated in line with the Group's new
structure.
Skagi’s double materiality assessment revealed that the most material factors within governance are
compliance culture and regulatory compliance, sound business conduct, engagement with suppliers,
anti-bribery and anti-corruption processes and risk management. Further, Skagi can have a positive
impact by focusing on oering responsible services and products. Policies related to governance factors
are presented in the table on Policies and Internal Rules.
Skagi's governance goals primarily support SDG number 5 on Gender Equality, SDG number 8 on Decent
Work and Economic Growth and SDG number 12 on Responsible Consumption and Production.
Key Governance Objectives for 2026:
G-1 Business Conduct
The primary objective of Skagi's management is to ensure that the Group’s activities are consistently
conducted in compliance with laws and regulatory requirements, as well as adhering to responsible
business practices within the financial services sector. The interests of the Group’s clients remain the
guiding principle in all operations.
a. General Characteristics of Skagi’s Governance Structure
Good corporate governance provides the foundation for responsible management and sound
decision-making, and supports strong relations between shareholders, the Board of Directors,
management, employees and other stakeholders. As with other areas, there is a risk that shortcomings
may arise in this area. The potential impacts may be wide-ranging and significant but continued focus on
governance practices is intended to mitigate such risks and limit potential impacts.
In recent years, Skagi has undergone a significant transformation process, starting with the merger of VÍS
and Fossar in 2023, the decision to transfer the insurance operations in 2024, which was finalized at the
beginning of 2025, and the acquisition and merger of Íslensk Verðbréf and ÍV sjóðir hf. into the Skagi Group,
Consolidated Financial Statements 31 December 2025 98 All amounts are in thousands of ISK
which was fully completed at the end of the first quarter of 2025 with accounting eect from 1 January
2025. The year 2025 is therefore the first year of the Group in its current form.
Skagi’s has implemented a Corporate Governance Policy, aimed at ensuring eective management of the
Company and establishing clear responsibilities within the governance system. Further, Skagi has
implemented a General Ownership Policy and specific ownership policies for all subsidiaries as well,
outlining owner expectations, corporate governance of the subsidiary within the group and KPIs of the
subsidiaries.
Skagi adheres to the guidelines set forth by the Icelandic Chamber of Commerce, Nasdaq Iceland, and
the Confederation of Icelandic Enterprise. This adherence is in accordance with the seventh paragraph of
Article 54 of Act No. 161/2002 on Financial Undertakings and Article 9 of Act no. 100/2016 on Insurance
Activities. Skagi’s subsidiaries adhere to these guidelines according to the size and scope of its operations,
which leads to certain deviations.
In 2025, Skagi, VÍS and Fossar all received recognition for good corporate governance and were awarded
the designation Exemplary Company in Corporate Governance (Fyrirmyndarfyrirtæki í góðum
stjórnarháttum). The recognition is jointly granted by Stjórnvísi, the Icelandic Chamber of Commerce,
Nasdaq Iceland, and the Confederation of Icelandic Enterprise.
Skagi’s corporate governance is focused on clarifying the roles and responsibilities of the Group’s
management, both internally and towards shareholders, thereby enabling them to achieve their
objectives. At Skagi, strong emphasis is placed on the continuous development and strengthening of good
corporate governance within the company, ensuring that processes are aligned with internationally
recognised best-practice standards in the field of corporate governance.
Gender Representation on Boards
Skagi
Group
VÍS
Insurance
Fossar
Íslensk
verðbréf
Share of women on the board (compared to men) 40% 40% 60% 33%
Share of women serving as committee chairs (compared to men) 67% 0% 100% N/A
Board Independence
Is the CEO prohibited from serving as Chair of the Board?
3
Yes Yes Yes Yes
Share of independent board members 100% 60% 60% 100%
Incentive Compensation
Do executive managers receive formal incentive compensation
linked to sustainability performance?
Yes Yes Yes Yes
The Board of Skagi has appointed two subcommittees of the board; Remuneration Committee and Audit
Committee. At subsidiary level, VÍS Insurance and Fossar have board-level Risk Committees. Fossar
further has a representative on Skagi’s Audit Committee, elected by shareholders. Íslensk verðbréf does
not have any board committees. In addition, Skagi has a Nomination Committee appointed by
shareholders.
3
Not prohibited inter-group.
Consolidated Financial Statements 31 December 2025 99 All amounts are in thousands of ISK
In 2025, Skagi updated it remuneration policy where performance in sustainability related matters is now
incorporated into the bonus criteria under the employee incentive scheme.
Further information on the key aspects of Skagi’s governance can be found in the Corporate Governance
Statement, which is published alongside the Group's financial statements and is available on Skagi’s
website.
b. Compliance Culture and Risk Management
Emphasis on compliance reduces legal risk and reputational risk, and thereby the company’s operational
risk. Compliance with laws and regulations is not only a legal obligation but also a key factor in building
trust, both internally and externally. Various measures are taken to promote a strong compliance culture
within the company; the Group operates dedicated training programs, and these aspects are also
incorporated into the subsidiaries’ bonus scheme. Adherence to and monitoring of both risk and internal
policies is essential, as significant risks may arise in this area.
The Board of Skagi is responsible for ensuring that an eective internal control system is in place. Skagi’s
internal control framework is structured around three lines of defence, with the objective of ensuring
eiciency and clear allocation of responsibilities within the Group.
Skagi has in place a Compliance Policy, with the purpose of outlining how Skagi shall work to identify the
risk of non-compliance with its legal and regulatory obligations. This policy sets out in more detail the tasks
of the compliance function, as well as its responsibilities and powers. Skagi further has set a Risk
Management Policy. To assess, measure, and manage the issuer’s risk-taking and to ensure compliance
with applicable laws and regulations, the bank relies on various policies and other internal rules.
c. Regulatory Environment
Skagi is a financial conglomerate in the insurance sector and a mixed holding company in financial
activities according to Act No. 61/2017 on supplementary supervision of financial conglomerates. VÍS
Insurance has a license as an insurance company pursuant to Act No. 100/2016 on Insurance
Undertakings. Fossar has a license to operate as a credit institution according to Act No. 161/2002 on
Financial Undertakings. Fossar’s operating license extends to receipt of repayable funds from the public,
granting of credit, investment services and investment activities. Íslensk verðbréf operates on the basis of
an operating license pursuant to Act No. 116/2021 on Undertakings for Collective Investment in
transferable Securities (UCITS) and Act No. 45/2020 on Alternative Investment Fund Managers. Íslensk
verðréf is also authorised to provide asset management services.
The following operating licenses entail that companies within the Group are bound by extensive and
complex regulatory requirements, which can cause risk within the Skagi Group. For example, there could
be risk of regulatory oversight, inadequate implementation of new legislation or sta not having adequate
knowledge of regulatory requirements. This can cause financial risk such as risk of higher cost of capital
or risk of fines and other sanctions by supervisory authorities. As detailed above, there are various policies
and procedures in place within the Skagi Group to promote compliance with applicable laws and
regulations as well as sound risk-management throughout Skagi’s operations.
All regulatory changes that could aect Skagi’s operations are monitored closely, but a constantly evolving
legal framework, gold-plating of EU legislation in Icelandic law and new interpretations by authorities and
courts can have negative eects on Skagi’s operations.
d. Measures Against Bribery and Corruption
Consolidated Financial Statements 31 December 2025 100 All amounts are in thousands of ISK
To mitigate risk related to bribery and corruption, the Group has established comprehensive rules and
policies to address conﬂicts of interest. These rules outline the Group's methods for analysing, preventing,
and managing conﬂicts of interest within its operations. They also aim to ensure that objectivity of the
Group’s employees, board of each subsidiary and management. Additionally, subsidiaries have
implemented rules on incentive payments, gifts and rewards, employees' own trading in financial
instruments, separation of work areas, and employees' other employment, all of which serve to prevent
bribery and corruption. The Group has clear rules relating to inter-group transactions.
The Group has formal procedures in place for reporting misconduct and protecting whistleblowers.
Furthermore, all subsidiaries have instituted a comprehensive policy on measures against money
laundering and terrorist financing. The policies encompass risk assessment, internal rules, and
processes. It is the Group's clear stance to combat money laundering and the financing of terrorism,
ensuring that the Bank's activities are not misused for such purposes.
Skagi operates within the framework of the EU Market Abuse Regulation (MAR) as a listed company and
ensures that all required information is disclosed to the market in a timely, accurate, and transparent
manner, in accordance with the Group’s information policy and policy on treatment of insider information
and management trading. In addition, the Group’s banking subsidiary has adopted a dedicated policy on
the prevention of market abuse, setting out clear requirements, controls, and procedures to mitigate risks
related to insider dealing and market manipulation.
During the reporting period, there were no convictions or reported incidents related to violations of
applicable anti-bribery and anti-corruption laws.
e. Suppliers
In 2025, Skagi implemented a comprehensive framework covering its supplier base with the objective of
establishing a practical, risk-based approach for identifying and managing sustainability-related risks
across the value chain.
As part of this framework, Skagi established a group-wide Supplier Code of Conduct applicable to all
subsidiaries and published on their respective websites. The Code of Conduct sets out minimum
requirements for suppliers in relation to responsible business practices and sustainability, while also
encouraging alignment with Skagi’s own standards. It covers, among other matters:
 compliance with applicable laws and regulations,
 human rights, labour rights and non-discrimination,
 health and safety,
 environmental management and climate-related impacts,
 business ethics, anti-corruption and fair competition,
 governance, transparency and responsible sourcing, including expectations towards
subcontractors.
To support implementation and oversight, Skagi introduced a formal supplier assessment, where the
scope is based on specified thresholds. The assessment is conducted using a structured questionnaire
aligned with the Supplier Code of Conduct, Skagi’s sustainability policy and broader sustainability criteria.
The process is designed to assess suppliers’ compliance with Skagi’s minimum requirements and to
identify potential sustainability- and climate-related risks within the value chain. Assessment results are
recorded in Skagi’s quality management system and escalation mechanisms are in place if a supplier does
not meet Skagi’s standards.
Consolidated Financial Statements 31 December 2025 101 All amounts are in thousands of ISK
The Supplier Code of Conduct is attached to all new supplier contracts and incorporated into existing
agreements upon renewal, progressively embedding ESG requirements into Skagi’s contractual
relationships.
During 2025, Skagi completed supplier assessments covering approximately 90% of in-scope suppliers
and obtained formal confirmation of adherence to the Supplier Code of Conduct from around 50% of in-
scope suppliers. Assessments of the remaining in-scope suppliers and continued collection of formal
confirmations will take place in 2026. Skagi will also further develop its remediation, follow-up and risk
mitigation processes as part of its ongoing non-financial risk management and sustainability governance.
f. Responsible Products and Services
In 2021, Skagi became a member of UN PRI, the United Nations Principles for Responsible Investment.
The Group 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.
Fossar and Íslensk verðbréf have continued to advance the implementation of EU’s SFDR Regulation and
sustainability provisions of MiFID II, relating to sustainability in financial services, for example by
integrating sustainability risk into investment decision-making processes and investment advice.
3. Environmental Factors
Skagi prioritizes environmental and climate-related matters and seeks to support the transition towards a
carbon-neutral economy while taking environmental impacts into account in its own operations. The
outcome of the Group’s double materiality assessment was that, among environmental sustainability
matters, E1 – Climate change was assessed as material. Policies related to environmental factors are
presented in the table on Policies and Internal Rules.
Skagi received 84 points for the environmental component in Reitun's ESG evaluation. In assessing
environmental factors, primary emphasis is placed on VÍS, as this is where the most significant
environmental impacts of the Group occur.
Skagi's environmental goals primarily support SDG number 12 on Responsible Consumption and
Production as well as SDG number 13 on Climate Action.
Key Environmental Objectives for 2026:
E-1 Climate Change
Consolidated Financial Statements 31 December 2025 102 All amounts are in thousands of ISK
a. Governance of Environmental Risk
Skagi is exposed to climate-related risks, which are divided into physical risks, which are further classified
as acute or chronic risks, and transition risks. Physical risks can for example arise as increased claims and
losses due to more frequent and severe extreme weather events, as well as gradual, long-term changes in
climate patterns that aect insured assets, operations and collateral values. Transition risks can arise as
greenwashing and broader regulatory, legal, market and technological developments associated with the
move towards a low-carbon economy, which may impact Skagi’s business model, product oering, asset
values and reputation.
The Board of Directors and management of Skagi are actively involved in climate-related matters
according to the Group’s formal sustainability policy. Skagi has not completed a formal climate-related
risk assessment at group-level but intends to conduct such assessment in year 2026. However, insurance
companies are subject to a strict regulatory framework regarding risk assessment and disclosure, and VÍS
therefore carries out a regular Own Risk and Solvency Assessment (ORSA). VÍS prepares an ORSA report
on an annual basis, which is submitted to the Board of Directors and to the Financial Supervisory Authority
of the Central Bank of Iceland. Climate-related risk assessment forms part of this report and covers both
VÍS’s insurance operations and its investment portfolio.
There is a risk that VÍS may experience increased claims severity or higher claims frequency as a result of
extreme weather events (physical risk) attributable to climate change. In addition, there is a risk that
climate change may have a negative impact on the return of the investment portfolio if climate-related
considerations are not taken into account in investment decisions (transition risk). The conclusion of VÍS’s
assessment of climate-related risks is that none of the identified risk factors are considered material. That
said, the majority of losses attributable to natural disasters caused by climate change fall under the
responsibility of the Icelandic Natural Catastrophe Insurance, and therefore do not constitute a significant
part of the Company’s risk exposure.
Fossar have initiated work to integrate ESG risk into the business model, taking into account the scale of
operations, and to assess it in connection with the assessment of other risk factors in the activities,
through traditional types of financial risk.
In 2026, the Group aims to conduct a group-wide risk assessment, extending from VÍS Insurance to all
subsidiaries. Further, opportunities may arise with the transition to a more climate resilient economy, such
as with increased demand for green products. Skagi subsidiaries have generated positive climate impacts
in this regard. For example, Fossar has been the leading advisor in the domestic green bond market in the
recent years. VÍS oers the product Ökuvísir, which encourages customers to drive responsibly. The aim
of Ökuvísir is to reduce the number of car accidents and lower greenhouse gas emissions, and the product
therefore delivers both environmental and social benefits.
b. Emissions from Own Operations and Carbon Osetting
Skagi places importance on minimizing the negative environmental impact and greenhouse gas emissions
from its activities. The Group aims to analyze the environmental impact of its operations and propose
actions to reduce this impact. Although a formal greenhouse gas emissions target has not yet been
established by the Group, Skagi measures and discloses statistics on its own greenhouse gas emissions
in accordance with a recognised methodology. The statistics cover both direct and indirect emissions from
the Group’s operations. In 2026, Skagi saw a dramatic decrease in emissions under Scope 1, and slight
increases under Scope 2 and 3. In 2026, Skagi aims to implement measurable target for decreasing
emissions on a group-wide basis.
Consolidated Financial Statements 31 December 2025 103 All amounts are in thousands of ISK
At Skagi's workplace, waste is sorted and recycled, and charging stations are accessible for employees
who commute in electric cars. Employees are encouraged to utilize local services as much as possible.
Skagi’s workplace is almost entirely electronic in regards of minimal paper usage.
Digitalisation at VÍS has proved to have positive environmental eects. A factor like increased self service
solutions which reduces oice visits has been assessed to reduce driven kilometres to the oice of about
200,000 km per year. All electronic process and documents also contribute environmentally by heavily
reduced paper usage.
VÍS works constantly on various prevention operations both through marketing and with collaboration and
risk assessment at companies. This part of the business contributes to the environmental factors by
reducing car and property claims which carry environmental costs. This is hard to measure but clearly a
factor worth mentioning, along with the beneficial factors on the society with fewer accidents and bodily
harm.
Continued good results were achieved during the year in increasing electronic and paperless transactions
to reduce paper consumption and reduce carbon emissions from employee and customer travel, whether
through increased electronic claim notifications, video calls to assess water damage or increased sales
through the vastly improved VÍS online store. During the year, VÍS increased its focus on providing more
sustainable options for consumers when it comes to shopping for insurance online. VÍS customers can
now buy insurance online in a matter of minutes, which saves time while also providing increased
transparency and convenience.
Figure 4: Overview of GHG Protocol Scopes and Emissions Across the Value Chain
For the fifth year in a row, Skagi oset emissions from operations of the Group with verified units. In 2025,
Skagi’s total greenhouse gas emissions amounted to 260.5 tCO₂e (including Scope 1, Scope 2 and
selected Scope 3 categories). To mitigate Skagi’s climate impact, 261 removal units were purchased
through Carbonmark, a global carbon credits marketplace, to support certified and registered projects by
the International Carbon Registry (ICR). Projects were chosen which support certain set of United Nations
Sustainable Development Goals (SDGs).
In parallel, Skagi procured approximately 82 Guarantees of Origin (GOs) to cover 100% of its annual
electricity consumption. By doing so, Skagi ensures that all reported electricity use is backed by certified
renewable energy on a market-based basis, thereby reducing Scope 2 emissions from electricity to zero.
Consolidated Financial Statements 31 December 2025 104 All amounts are in thousands of ISK
The combination of renewable electricity procurement and carbon removals reﬂects Skagi’s approach of
prioritizing emission reductions in its own operations and then compensating for residual emissions
through high-quality climate projects.
Total Greenhouse Gas Emissions
Total Greenhouse Gas Emissions
Unit Change 2025 2024
Scope 1 – Fuel tCO₂e
↓ -52%
19,4 40,8
Scope 2 – Electricity & Heating
4
tCO₂e
↑ 12%
14,9 13,3
Scope 3 – Other
5
tCO₂e
↑ 11%
228,5 205,1
Total Gross Emissions tCO₂e
↑ 1%
262,8 259,2
Effect of GO’s
6
tCO₂e -2,3 -2,4
Total net Emissions
7
tCO₂e
↑ 1%
260,5 256,8
Carbon Credits Offsets tCO₂e -261,0 -257,0
Net GHG Emissions (after offsets) tCO₂e
−
0,0 0,0
Energy Consumption
Energy Consumption by Type
Unit Change 2025 2024
Direct
-
Fuels
MWh
↓ -48 %
75,5 4% 146,3 9%
Indirect
–
Electricity & Heating
MWh
↑ 34 %
1973,7 96% 1463,0 91%
Total Energy Consumption
MWh
↑ 27%
2049,2 100% 1609,3 100%
GHG Emission Intensity
GHG Emission Intensity
Unit Change 2025 2024
Emissions Intensity per Revenue
All Scopes
kgCO
₂e /
ISKm
−
7,4 7,4
Emissions Intensity per Revenue
of which Scopes 1-2
kgCO
₂e /
ISKm
↓ 37 %
1,0 1,5
Emissions Intensity per Employee
All Scopes
tCO₂e
−
1,1 1,1
Emissions Intensity per Employee
of which Scopes 1-2
tCO₂e
↓ 37 %
0,1 0,2
4
Locaon-Based emissions for electricity and heang.
5
Other indirect GHG emissions including purchased goods & services, employee commung, business travel and waste.
6
Eﬀects of Guarantees of Origins (GO’s) for Market-Based Electricity.
7
Total net emissions (tCO2) post oﬀseng by landlord. Total net emissions are then oﬀset by Skagi (260,5 tCO2) in year
2025 with purchase of 261 removal units.
Consolidated Financial Statements 31 December 2025 105 All amounts are in thousands of ISK
c. Emissions Related to Claims
A large share of VÍS’s emissions arises in connection with claims. Emissions specifically related to claims
are not measured separately, but VÍS’s Scope 3 emissions have increased year-on-year. Emissions
associated with claims handling, such as vehicle repairs, spare parts and waste, fall under such indirect
emissions. Although VÍS does not perform these repairs itself, the company inﬂuences how they are
carried out through its policies, terms and conditions, and choice of partners.
VÍS has undertaken various measures to generate positive impacts in this area. VÍS emphasizes accident
prevention as well as setting specific requirements for the disposal of damaged goods. Ökuvísir is another
example of a product aimed at having a positive impact in this category, as the project also aims to reduce
claims. There is likewise an opportunity to promote lower emissions by encouraging repairs rather than
replacement.
d. Emissions Related to Investments
Emissions associated with investments are not yet measured separately by the Group. Skagi recognizes
the importance of addressing indirect (financed) emissions from its asset portfolio, which constitutes the
largest emissions category (scope 3). Skagi has not yet initiated such an assessment but intends to explore
this further in the near term.
Íslensk verðbréf and Fossar follow EU’s SFDR Regulation, which is aimed promoting transparency within
the financial market for responsible and sustainable investments. Both subsidiaries have implemented a
policy on how sustainability risk, whether material or likely to be material, is integrated into its investment
decision-making process and investment advice. Íslensk verðbréf, further follows a responsible
investment policy, integrating environmental and social factors into its asset management investment
process.
E-5 Circular Economy
a. Reuse in claims handling and repairs
The materiality factor regarding a circular economy is most applicable to VÍS Insurance, due to its
operations as an insurance company. By placing greater emphasis on the circular economy, it is possible
to reduce waste, shorten supply chains, lower emissions and decrease the use of raw materials. The
biggest impact in this field is related to damaged cars and spare parts, given their portion in claims at VÍS.
VÍS has conducted auctions for decades and sold more than 1,000 damaged cars each year at auctions
where the cars are either repaired or disassembled to give spare parts a second life.
It is important for VÍS contribute to the circular economy and in all agreements with auto body repair shops
related to car claims and construction contractors related to property claims, it is especially stated that
they are expected to support the circular economy by reusing and repairing whatever is possible and in
accordance with industry standards. This applies e.g. to windshields and plastic repairs for cars. It is also
stated in those agreements that disposal of waste should be done in an environmentally friendly way. VÍS
has collaborated in special projects related to the circular economy and did so in 2024 with a company
which actively focused on increasing the use of used spare parts for damaged cars. That company stopped
operating in 2025 so as did the project. VÍS looks at such projects on ad hoc basis and keeps an open eye
for such collaboration.
VÍS emphasises repairing vehicles as much as possible instead of replacing parts. The proportion of
plastic and car window repairs is lower in Iceland than in comparison countries. VÍS has the goal of
Consolidated Financial Statements 31 December 2025 106 All amounts are in thousands of ISK
increasing the percentage of repairs instead of parts being replaced. The ratio of windshield repairs to
windshield replacements grew from 19% to 20% between 2024-2025, and the aim is to get closer to 30%.
For comparison the ratio was 10% in 2019. Estimated savings in carbon emissions are about 43.5 kgCO2
for each windshield that is repaired instead of replaced so 10% increase saves around 30 tons of carbon
emissions.
Minimum safeguards
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
Skagi operates in accordance with applicable laws and regulations and respects human rights in all its
activities. The Group has a policy on qualifications, competence and diversity, equality policy and
occupational health and safety policy. Skagi’s equality and equal pay policy clearly states that Skagi is a
workplace where gender-based and sexual harassment, violence or bullying are not tolerated. Within the
Group, 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 Skagi, it
is understood that it is the joint task of all employees to follow the Group'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 Group 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 website of subsidiaries, as required. The purpose of the procedure is to
document the method for handling and reporting alleged misconduct in relation to the Group's operations
and the protection of whistleblowers. The Compliance Oicer is responsible for ensuring that adequate
communication channels are in place for reporting alleged misconduct. On the websites of Skagi’s
subsidiaries, it is possible to submit a notification of potential misconduct in Skagi's activities. Notifiers
are encouraged to submit a notification under their own name, but the system also oers the ability to
send anonymous notifications.
The Group has implemented and ensured compliance with the Act on Data Protection and the Processing
of Personal Data. Skagi's Board of Directors has set a policy on the handling of personal data and a Data
Protection Oicer has been appointed for each subsidiary within the Group. 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 Group. On the Company's and subsidiaries’
websites, 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 Group has not violated any laws or rules imposed by regulators on human rights.
Corruption/Bribery
Skagi engages in honest and responsible business practices where any form of bribery, corruption,
criminal activity and money laundering is neither practiced nor tolerated. The Group has established and
Consolidated Financial Statements 31 December 2025 107 All amounts are in thousands of ISK
implemented internal processes, codes of conduct and procedures around compliance and has taken
measures to identify and prevent bribery. Skagi has established a Code of Conduct which all new
employees airm upon commencing work at the Company. The Board reviews and confirms the code of
ethics each year.
The Group has established a board-level policy on internal control and defined the internal control process
and procedures for the implementation of internal control. In addition, the Group has established a policy
on compliance that describes the way in which work should be done to identify the risk of failure by the
Group to fulfil obligations according to laws and regulations.
The Group has reporting channels for reporting possible misconduct, including acceptance of bribery, and
has a misconduct team whose role it is to receive and investigate reports received. All subsidiaries have
reporting channels for misconduct available on their website. Procedures have been established for perks
received by employees from customers, partners and suppliers, and employees must report all gifts, perks
or invitations.
The boards of all subsidiaries of the Group have established a policy on measures against money
laundering and the financing of terrorism, and procedures have been established based on the policy. The
subsidiaries have appointed a person in charge of measures against money laundering who are
responsible for the enforcement of the laws and regulations on measures against money laundering and
the financing of terrorism, who handle notifications of suspicious transactions and funds.
The Group has not violated any laws or rules imposed by regulators on corruption and bribery.
Taxes
Skagi does not have a defined tax policy that is set by the Board and published publicly. However, tax
procedures are well defined at the Group with the involvement of senior management. The Group CFO is
the person responsible, while the CFO of subsidiaries are responsible for following through on paying taxes
with the help of tax experts and the payment of public dues. The Group receives services from external
consultants in the field of tax matters who assist with calculation and review before tax returns are filed.
The Group's position is clear on the issue, and the Group complies with applicable laws and regulations in
every respect. The Group strives to set an example here as elsewhere.
The Group has reporting channels 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. All subsidiaries have reporting channels available on their website.
The Group has not violated any laws or rules imposed by regulators on 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 eicient use of production resources and thereby from active
competition. Competition laws are part of the regulatory environment in which the Group operates at any
given time. It is therefore a fundamental prerequisite for the Group's operations and structure to comply
with the rules of the Competition Act. The Board of VÍS has established a policy on competition matters
which is reviewed annually. Based on the policy, VÍS has also published a manual on competition rules for
employees. The Group 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 considered in decision-making.
The CEO of Skagi and subsidiaries 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
Consolidated Financial Statements 31 December 2025 108 All amounts are in thousands of ISK
relevant General Counsel is the supervisor of the policy and the relevant Compliance Oicer is
responsible for ensuring that employees receive appropriate training on competition matters while
monitoring compliance with the policy.
The Group has not violated any laws or rules imposed by regulators on competition matters.
Consolidated Financial Statements 31 December 2025 109 All amounts are in thousands of ISK
Appendix 2
EU Taxonomy Regulation
On 1 June 2023, Regulation (EU) 2020/852 on a framework for sustainable investment was transposed into
Icelandic law through Act no. 25/2023 on Sustainable Financial Disclosure and Taxonomy for Sustainable
Investments. Companies that are subject to the obligation of Article 66d of the Annual Accounts Act no.
3/2006 on non-financial disclosure must now also provide disclosure according to the requirements of the
aforementioned regulation, also known as the EU Taxonomy Regulation. This includes VÍS and Fossar.
VÍS Insurance operations and insurance investments
According to Article 3 of the EU Taxonomy Regulation, an economic activity that qualifies as
environmentally sustainable must contribute substantially to one or more of the environmental objectives
set out in the Regulation while at the same time not significantly harm any other environmental objectives.
The activity shall also be carried out in compliance with minimum safeguards and technical screening
criteria. The technical screening criteria for non-life insurance: underwriting of climate-related perils, is
defined in section 10.1 of Annex II to Commission Delegated Regulation (EU) 2021/2139. In order to meet
this criteria, VÍS will continue to carry out a detailed analysis of its activities and make appropriate
improvements as required. The Company is committed to continue its work related to the EU Taxonomy
Regulation.
Key performance indicators are set out in Annex IX and XI to Commission Delegated Regulation (EU)
2021/2178.
In line with the requirements of Article 8 of the EU Taxonomy Regulation and the accompanying Delegated
Regulation (EU) 2021/2178, the company is obligated to report on specific key performance indicators
(KPIs). These indicators reﬂect both the share of the company’s investment portfolio that falls within the
scope of the Taxonomy Regulation and the portion of those investments that meet the criteria for
Taxonomy alignment.
The disclosure relies solely on information publicly disclosed by the entities in which the company has
invested, as required by the regulation. Icelandic companies subject to these reporting obligations
provided information on Taxonomy eligibility and alignment in their 2023 annual financial statements,
including details on the eligibility of their business activities under the Taxonomy framework and the extent
to which those activities align with its criteria.
Economic a ctivities (1)
Absolute
premiums,
year 2025 (2)
Proportion
of
pr emiums,
year 2025
(3)
Proportion
of
premiums,
year 2024 (4)
Climate
change
mitigation
(5)
Water and
marine
resour ces
(6)
Circular
economy
(7)
Pollution
(8)
Biodiversity
and
ecosystems
(9)
Minimum
sa feguards
(10)
Currency % % Y/N Y/N Y/N Y/N Y/N Y/N
A.1. Non-life insurance and reinsurance
underwriting Taxonomy-ali gned activi ties
(environmentally sustai nable)
A.1.1. Of which reinsured
A.1.2. Of which stemming from reinsurance activity
A.1.2.1. Of which reinsured (retrocession)
A.2. Non-life insurance and reinsurance
underwriting Taxonomy-eligible but not
environmentally sustainable activities (not
Taxonomy-aligned activities)
29.510.099 92% 26.999.162
B. Non-life insurance and reinsurance
underwriting Taxonomy-non-eligible a ctivities
2.449.287 8% 2.182.918
Total (A.1 + A.2 +B)
31.959.386 100% 29.182.080
Substantia l contribution to climate change
adaptation
DNSH (Do No Significant Harm)
Consolidated Financial Statements 31 December 2025 110 All amounts are in thousands of ISK
The methodology for calculating the KPIs is based on the company’s total investment portfolio, with
specific exclusions applied to ensure compliance with regulatory standards. These exclusions include:
- Holdings in sovereign debt, exposures to central banks, and investments in supranational
organizations.
- Investments in entities not required to disclose non-financial information under Articles 19a and
29a of Directive 2013/34/EU.
It is important to note that experience with EU Taxonomy reporting is still evolving, particularly regarding
the availability and consistency of data from issuers, which may aect the completeness and accuracy of
the company’s disclosures. Significant data gaps remain, as a number of companies that are required to
report under the Taxonomy Regulation have either not provided the necessary disclosures or have done so
inconsistently or incompletely.
The proportion of the insurance or reinsurance undertaking’s investments that are directed at
funding, or are associated with, Taxonomy-aligned in relation to total investments
1,6% Turnover-based: 557.463.848
1,6% Capital expenditures-based: 554.602.778
74% Coverage: 34.702.947.500
The weighted average value of all the investments of insurance or
reinsurance undertakings that are directed at funding, or are associated
with Taxonomy-aligned economic activities relative to the value of total
assets covered by the KPI, with following weights for investments in
undertakings per below:
The weighted average value of all the investments of insurance or
reinsurance undertakings that are directed at funding, or are
associated with Taxonomy-aligned economic activities, with following
weights for investments in undertakings per below:
Turnover-based:
Capital expenditures-based:
The percentage of assets covered by the KPI relative to total investments
of insurance or reinsurance undertakings (total AuM). Excluding
investments in sovereign entities.
The weighted average value of all the investments of insurance or
reinsurance undertakings that are directed at funding, or are associated
with Taxonomy-aligned economic activities, with following weights for
investments in undertakings per below:
Coverage ratio:
Consolidated Financial Statements 31 December 2025 111 All amounts are in thousands of ISK
0%
The value in monetary amounts of derivatives. 0
27% For non financial undertakings: 9.289.915.173
28% For financial undertakings: 9.553.555.024
0% For non financial undertakings: 37.606.195
4% For financial undertakings: 1.250.056.578
16% For non financial undertakings: 7.423.720.898
15% For financial undertakings: 7.148.093.632
0% Value of exposures to other counterparties: 0
1,2%
Value of insurance or reinsurance undertaking’s
investments other than investments held in respect
of life insurance contracts where the investment
risk is borne by the policy holders, that are directed
at funding, or are associated with, Taxonomy-aligned
economic activities : 557.463.848
11,1%
Value of all the investments that are funding
󶂢
economic acvies that are not Taxonomy eligible:
3.849.906.850
8,7%
The value of all the investments that are funding
Taxonomy-eligible economic activities, but not
Taxonomy-aligned relative to the value of total
assets covered by the KPI:
3.016.350.200
󶂢
The proporon of exposures to financial and non financial undertakings
subject to Articles 19a and 29a of Directive 2013/34/EU over total assets
covered by the KPI:
󶂢
Value of exposures to financial and non financial undertakings subject to
Articles 19a and 29a of Directive 2013/34/EU:
Additional, complementary disclosures: breakdown of denominator of the KPI
The percentage of derivatives relative to total assets covered by
the KPI.
󶂢
The proporon of exposures to financial and non financial undertakings not
subject to Articles 19a and 29a of Directive 2013/34/EU over total assets
covered by the KPI:
󶂢
Value of exposures to financial and non financial undertakings not
subject to Articles 19a and 29a of Directive 2013/34/EU:
For non financial undertakings:
For financial undertakings:
󶂢
The proporon of exposures to financial and non financial undertakings
from non-EU countries not subject to Articles 19a and 29a of Directive
2013/34/EU over total assets covered by the KPI:
󶂢
Value of exposures to financial and non financial undertakings from non-
EU countries not subject to Articles 19a and 29a of Directive
2013/34/EU:
For non financial undertakings:
For financial undertakings:
For non financial undertakings:
For financial undertakings:
The proportion of exposures to other counterparties over total
assets covered by the KPI:
The proportion of the insurance or reinsurance
undertaking’s investments other than investments held in
respect of life insurance contracts where the investment risk is
borne by the policy holders, that are directed at funding, or are
associated with, Taxonomy-aligned economic activities:
The value of all the investments that are funding
󶂢
economic acvies that are not Taxonomy eligible relave to
the value of total assets covered by the KPI:
The value of all the investments that are funding Taxonomy-
eligible economic activities, but not Taxonomy-aligned relative
to the value of total assets covered by the KPI:
1,6% Turnover-based: 557.463.848
1,6% Capital expenditures-based: 554.602.778
0,0% Turnover-based: 0
0,0% Capital expenditures-based: 0
1,6% Turnover-based: 557.463.848
1,6% Capital expenditures-based: 554.602.778
0% Turnover-based: 0
0% Capital expenditures-based: 0
Turnover-based:
Additional, complementary disclosures: breakdown of numerator of the KPI
The proportion of Taxonomy-aligned exposures to financial and non-financial
undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over
total assets covered by the KPI:
Value of Taxonomy-aligned exposures to financial and non-financial
undertakings subject to Articles 19a and 29a of Directive
For non financial undertakings: For non financial undertakings:
Capital expenditures-based:
Capital expenditures-based:
For financial undertakings: For financial undertakings:
Turnover-based:
Capital expenditures-based:
The proportion of the insurance or reinsurance undertaking’s investments
other than investments held in respect of life insurance contracts where
the
investment risk is borne by the policy holders, that are directed at funding,
or are associated with, Taxonomy-aligned:
Value of insurance or reinsurance undertaking’s investments other than
investments held in respect of life insurance contracts where the
investment risk is borne by the policy holders, that are directed at
funding, or are associated with, Taxonomy-aligned:
Turnover-based:
Capital expenditures-based:
The proportion of Taxonomy-aligned exposures to other counterparties in
over total assets covered by the KPI:
Value of Taxonomy-aligned exposures to other counterparties over total
assets covered by the KPI:
Turnover-based:
Consolidated Financial Statements 31 December 2025 112 All amounts are in thousands of ISK
Fossar fjárfestingarbanki hf. - financial services operations
Companies in the financial services industry are required to disclose information on environmentally
sustainable assets, which is presented in a key performance indicator on the green asset ratio (GAR). The
indicator shows the proportion of the Fossar bank's assets that it finances and invests in economic
activities that fall under the taxonomy, i.e. which are considered environmentally sustainable according to
Article 3 of the EU Taxonomy Regulation.
When determining the extent to which the institution’s exposures are Taxonomy-eligible or Taxonomy-
aligned, the disclosure relies exclusively on information publicly disclosed by counterparties, as
mandated by the regulation. This applies to both financial and non-financial undertakings that fall within
the scope of the Corporate Sustainability Reporting Directive (CSRD) and related EU regulations.
However, data availability challenges persist, particularly regarding Taxonomy-aligned activities:
- For non-financial undertakings, significant data gaps remain, as a number of companies that are
required to report under the Taxonomy Regulation have either not provided the necessary
disclosures or have done so inconsistently or incompletely.
Key performance indicators are presented in accordance with Annex V and VI to Commission Delegated
Regulation (EU) 2021/2178.
The calculation of key performance indicators (KPIs) is based on the institution’s total assets covered by
the KPI, with specific exclusions to maintain consistency with regulatory guidelines. The following are
excluded from the calculations:
- Exposures to sovereign entities, central banks, and supranational organizations,
- Exposures to entities not required to disclose non-financial information under Articles 19a and 29a
of Directive 2013/34/EU.
The data used for the KPI calculations, including the determination of Taxonomy eligibility and alignment,
is sourced from the public 2024 financial reports of counterparties. Given the evolving nature of EU
Taxonomy reporting, particularly in relation to the consistency and completeness of data disclosures,
there may be limitations in the accuracy and scope of the reported figures.
As stated before, significant data gaps remain, as some counterparties required to report under the
Taxonomy Regulation have either not provided the necessary information or have done so in an incomplete
or inconsistent manner. This impacts the institution’s ability to fully capture Taxonomy alignment in its
investment and lending activities.
Turnover: 100% Transitional activities 1%, 1%
CapEx: 100%
Enabling activities:
20,5%, 17%
Turnover: 0%
Enabling activities:
0%,0%
CapEx: 0%
Turnover: 0%
Enabling activities:
0%,0%
CapEx: 0%
Turnover: 0%
Enabling activities:
0%,0%
CapEx: 0%
Turnover: 0%
Enabling activities:
0%,0%
CapEx: 0%
Turnover: 0%
Enabling activities:
0%,0%
CapEx: 0%
(5) Pollution prevention and control
(6) The protection and restoration of
biodiversity and ecosystems
Breakdown of the numerator of the KPI per environmental objective
Breakdown of the numerator of the KPI per environmental objective
(1) Climate change mitigation
(2) Climate change adaptation
(3) The sustainable use and protection of
water and marine resources
(4) The transition to a circular economy
Consolidated Financial Statements 31 December 2025 113 All amounts are in thousands of ISK
0. Summary of key performance indicators that credit institutions are required to disclose according to
Article 8 of the EU Taxonomy Regulation
1. Assets for the calculation of the green asset ratio
Additionally, columns b-aa are excluded from this report because the disclosure is limited to Taxonomy
alignment related to climate change mitigation. No reporting has been conducted on other environmental
objectives.
Furthermore, certain rows are not included in the disclosure because no investments were made by
Fossar in the corresponding asset categories. As a result, these sections are not applicable to the bank’s
asset composition.
These exclusions reﬂect both the evolving nature of EU Taxonomy reporting and the current structure of
Fossar’s investment activities.
Total environmentally
sustainable assets (turnover)
Total environmentally
sustainable assets (CAPEX) KPI**** KPI*****
% coverage (over total assets)***
% of assets excluded from
the numerator of the GAR
(Article 7(2) and (3) and
Section 1.1.2. of Annex V)
% of assets excluded from the
denominator of the GAR
(Article 7(1) and Section 1.2.4
of Annex V)
Main KPI Green asset ratio (GAR) stock 78.905.518 81.824.880 1,45% 1,50% 75% 54% 25%
Total environmentally sustainable activities
KPI KPI % coverage (over total assets)
% of assets excluded from
the numerator of the GAR
(Article 7(2) and (3) and
Section 1.1.2. of Annex V)
% of assets excluded from the
denominator of the GAR
(Article 7(1) and Section 1.2.4
of Annex V)
Additional KPIs GAR (flow) 76.655.573 78.340.310 1,41% 1,44%
Trading book* N/A N/A N/A
Financial guarantees N/A N/A N/A
Assets under management N/A N/A N/A
Fees and commissions income** N/A N/A N/A
a b c d e f ab ac ad ae af ag ah ai aj ak al bg bh bi bj bk
Of which Use of
Proceeds
Of which
transitional
Of which enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in bot h numerator and denominator
1
Loans and advances, debt securities and equity instruments not HfT
eligible for GAR calculation
5.441.879.770 52.093.642 76.655.573 766.556 13.798.003 5.441.879.770 52.093.642 76.655.573 766.556 5.401.176.893
2 Financial undertakings 1.902.250.761 2.400.949.870
3 Credit institutions 1.902.250.761 2.400.949.870
4 Loans and advances
5 D ebt securities, including UoP 447.572.367 215.724.755
6 Equity instruments 1.454.678.394 2.185.225.115
20 Non-financial undertakings 3.539.629.009 52.093.642 76.655.573 3.000.227.023 1.403.102.550 1.288.224 1.242.216 1.403.102.550 1.288.224 1.242.216
21 Loans and advances 3.000.227.023 1.403.102.550 1.288.224 1.242.216 1.403.102.550 1.288.224 1.242.216
22 Debt securities, including UoP 2.086.711.239 76.655.573 766.556 13.798.003
23 Equity instruments 1.452.917.770 52.093.642 3.000.227.023 1.403.102.550 1.288.224 1.242.216 1.403.102.550 1.288.224 1.242.216
24 Households -
25 of which loans collateralised by residential immovable property -
26 of which building r enovation loans -
27 of which motor vehicle loans -
28 Local governments financing -
29 Housing financing -
30 Other local government fin ancing -
31
Collateral obtained by taking possession: residential and
commercial immovable properties
32
Assets excluded from the numerator for GAR calculation (covered in
the denominator)
13.672.401.954
48 Total GAR assets 5.441.879.770 52.093.642 76.655.573 766.556 13.798.003 5.441.879.770 52.093.642 76.655.573 766.556 5.401.176.893 1.403.102.550 1.288.224 1.242.216 1.403.102.550 1.288.224 1.242.216
49 Assets not covered for GAR calculation 6.434.320.968
50 Central governments and Supranational issuers 6.429.804.988
51 Central banks exposure
52 Trading book 4.515.980
53 Total assets 25.548.602.692 21.781.096.000
Climate Change Mitigation (CCM)
Of which towar ds taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
ISK
Of which towa rds taxonomy relevant s ectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Total [gross]
carrying amount
Disclosure reference date 2024Disclosure reference date 2025
Total [gross] carrying amount
Of which environmentally sustainable (Taxonomy-aligned) Of which environmentally sustainable (Taxonomy-aligned)
Climate Change Mitigation (CCM) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towa rds taxonomy relevant s ectors (Taxonomy-eligible) Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Consolidated Financial Statements 31 December 2025 114 All amounts are in thousands of ISK
2. Information on the green asset ratio by sector
a b c d y z aa ab
ISK
Of which
environmentally
sustainable (CCM)
ISK
Of which
environmentally
sustainable (CCM)
ISK
Of which
environmentally
sustainable (CCM
+ CCA + WTR + CE
+ PPC + BIO)
ISK
Of which
environmentally
sustainable (CCM +
CCA + WTR + CE +
PPC + BIO)
1
Manufacture of pharmaceutical preparations (21.20)
11.755.200 11.755.200
2 Other monetary intermediation (64.19) 1.778.095.522 1.778.095.522
3 Other non-specialised retail sale (47.12) 73.946.196 73.946.196
4
Non-specialised retail sale of predominately food,
beverages or tobacco (47.11)
82.495.998 82.495.998
5
Activities of holding companies and financing conduits
(64.2)
2.026.934.378 2.026.934.378
6
Other financial service activities, except insurance and
pension funding n.e.c. (64.99)
25.582.471 25.582.471
8
Telecommunication reselling activities and intermediation
service activities for telecommunication (61.20)
131.400.000 131.400.000
9 Retail sale of automotive fuel (47.30) 91.850.000 91.850.000
10 Steam and air conditioning supply (35.30) 84.236.893 76.655.573 84.236.893 76.655.573
11 Other credit granting (64.92) 124.155.239 124.155.239
12 Manufacture of soft drinks and bottled waters (11.07) 7.082.994 7.082.994
Breakdown by sector - NACE 4 digits level (code and label)
[Gross] carrying amount [Gross] carrying amount
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Non-Financial corporates (Subject to SMEs and other NFC not subject to
Non-Financial corporates (Subject to
SMEs and other NFC not subject to
Climate Change Mitigation (CCM)
[Gross] carrying amount [Gross] carrying amount
a b c d y z aa ab
ISK
Of which
environmentally
sustainable (CCM)
ISK
Of which
environmentally
sustainable (CCM)
ISK
Of which
environmentally
sustainable (CCM
+ CCA + WTR + CE
+ PPC + BIO)
ISK
Of which
environmentally
sustainable (CCM +
CCA + WTR + CE +
PPC + BIO)
1
Manufacture of pharmaceutical preparations (21.20)
11.755.200 11.755.200
2 Other monetary intermediation (64.19) 1.778.095.522 1.778.095.522
3 Other non-specialised retail sale (47.12) 73.946.196 73.946.196
4
Non-specialised retail sale of predominately food,
beverages or tobacco (47.11)
82.495.998 82.495.998
5
Activities of holding companies and financing conduits
(64.2)
2.026.934.378 2.026.934.378
6
Other financial service activities, except insurance and
pension funding n.e.c. (64.99)
25.582.471 25.582.471
8
Telecommunication reselling activities and intermediation
service activities for telecommunication (61.20)
131.400.000 131.400.000
9 Retail sale of automotive fuel (47.30) 91.850.000 91.850.000
10 Steam and air conditioning supply (35.30) 84.236.893 78.340.310 84.236.893 78.340.310
11 Other credit granting (64.92) 124.155.239 124.155.239
12 Manufacture of soft drinks and bottled waters (11.07) 7.082.994 70.830 7.082.994 70.830
[Gross] carrying amount [Gross] carrying amount
Non-Financial corporates (Subject to
SMEs and other NFC not subject to
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Non-Financial corporates (Subject to SMEs and other NFC not subject to
Breakdown by sector - NACE 4 digits level (code and label)
Climate Change Mitigation (CCM)
[Gross] carrying amount [Gross] carrying amount
Consolidated Financial Statements 31 December 2025 115 All amounts are in thousands of ISK
3. GAR KPI stock
4. GAR KPI ﬂow
Information on ﬂows for the year 2025 is estimated as the dierence between the position of equity
instruments and debt securities at year-end 2024 and year-end 2025, as detailed information on new
investments during the period was not available.
a b c d e aa ab ac ad ae af ag ai aj ak bf bg bh bi bj bk
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity instruments not HfT
eligible for GAR calculation
0% 0% 0%
2 Financial undertakings 39,68% 0,12% 0,004% 39,68% 0,12% 0,004% 7,4% 0% 0% 0%
3 Credit institutions 39,68% 0,12% 0,004% 39,68% 0,12% 0,004% 7,4% 0% 0% 0%
4 Loans and advances 0%
5 Debt securities, including UoP 9,23% 0,02% 9,23% 0,02% 1,8% 0% 0% 0%
6 Equity instruments 30,46% 0,10% 30,46% 0,10% 5,7% 0% 0% 0%
20 Non-financial undertakings 1,47% 2,17% 0,02% 0,39% 1,47% 2,17% 0,02% 0,39% 13,9% 46,77% 0,04% 46,8% 0,04% 0,001% 46,8%
21 Loans and advances 0%
22
Debt securities, including UoP
2,17%
0,02%
0,39%
2,17%
0,02%
0,39%
8,2%
0%
23 Equity instruments 1,47% 5,7% 0,001% 0%
32 Total GAR assets 14,83% 1,45% 0,01% 0,25% 0,01% 0,25% 21,30% 46,77% 0,04% 46,8% 0,04% 0,001% 46,8%
Disclosure reference date 2025
Climate Change Mitigation (CCM)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)TOTAL (CCM + CCA + WTR + CE + PPC + BIO) Climate Change Mitigation (CCM)
% (compared to total covered assets in the denominator)
Disclosure reference date 2024
Proportion
of total
assets
covered
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxon omy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy relevan t
sectors (Tax onomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxono my-eligible)
a b c d e aa ab ac ad ae af ag ah ai aj ak bf bg bh bi bj bk
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity instruments not HfT
eligible for GAR calculation
2 Financial undertakings 39,13% 0,18% 39,13% 0,18% 7,4%
3 Credit institutions 39,13% 0,18% 39,13% 0,18% 7,4%
4 Loans and advances
5 Debt securities, including UoP 7,61% 0,02% 0,003% 0,01% 7,61% 0,02% 0,003% 0,01% 1,8%
6 Equity instruments 31,53% 0,02% 5,7%
20 Non-financial undertakings 2,48% 2,22% 2,21% 0,002% 2,48% 2,22% 2,21% 0,002% 13,9% 49% 0,13% 0,004% 49% 0,13% 0,004% 49,21%
21 Loans and advances 0%
22
Debt securities, including UoP
2,21%
2,21%
8,2%
0%
23 Equity instruments 2,48% 0,002% 2,48% 0,002% 5,7% 49% 0,13% 0,004% 49% 0,13% 0,004% 49,21%
32 Total GAR assets 15,29% 1,50% 0,001% 0,003% 15,29% 1,50% 0,001% 0,003% 21,3% 49% 0,13% 0,002% 49% 0,13% 0,002% 49,21%
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportio
n of total
assets
covered
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Climate Change Mitigation (CCM)
% (compared to total covered assets in the denominator)
Disclosure reference date 2025 Disclosure reference date 2024
Climate Change Mitigation (CCM) TOTAL (CCM + CCA + WTR + CE + PPC + BIO) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-
eligible)
a b c d e aa ab ac ad ae af
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity instruments not HfT
eligible for GAR calculation
1,6% 1,4% 1,6% 1,4% 3,8%
20 Non-financial undertakings 2,5% 2,2% 2,5% 2,2% 3,8%
21 Loans and advances
22 Debt securities, including UoP 0,7% 3,7% 0,7% 3,7% 3,3%
23 Equity instruments 3,8% 0,0% 3,8% 0,4%
32 Total GAR assets 1,6% 1,4% 1,6% 1,4% 3,8%
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
% (compared to flow of total eligible assets)
Disclosure reference date 2025
Climate Change Mitigation (CCM) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion
of total
new assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
a b c d e aa ab ac ad ae af
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity instruments not HfT
eligible for GAR calculation
1,6% 1,4% 1,6% 1,4% 3,8%
20 Non-financial undertakings 2,5% 2,2% 2,5% 2,2% 3,8%
21 Loans and advances
22 Debt securities, including UoP 3,8% 3,8% 3,8% 3,8% 3,3%
23 Equity instruments 0,7% 0,0% 0,7% 0,0% 0,4%
32 Total GAR assets 1,6% 1,4% 1,6% 1,4% 3,8%
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
% (compared to flow of total eligible assets)
Disclosure reference date 2025
Climate Change Mitigation (CCM) TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total
new assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
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