* Q1 net profit DKK 418 mln vs 300 mln in forecast
* Predicts higher 2014 net profit and share buy back and better combined ratio
* Shares up 3.1 pct at 1137 GMT (Adds CEO and analyst comments, details, background)
By Shida Chayesteh
COPENHAGEN, May 20 (Reuters) - Denmark's No. 2 insurer, Topdanmark, posted a better than expected first-quarter net profit on Tuesday thanks to higher investment income and raised its 2014 net profit forecast to between 1.15 and 1.25 billion Danish crowns ($211.4-$229.8 million).
Analysts in a Reuters poll had expected income from investments to be 89 million crowns, well below the company's reported 219 million crowns.
"Topdanmark seems like a very well-engined insurance machine after the first quarter," Sydbank analyst Jacob Pedersen said.
First-quarter net profit fell to 418 million crowns from 505 million in the same period a year ago, beating forecasts for a 300 million crown profit in a Reuters poll.
The company said the year-on-year net profit decline was due to lower profit in its life insurance unit, which fell to 74 million crowns from 209 million crowns a year earlier.
In the non-life unit the company reported a growth of 3.4 percent in premiums, reflecting an a rise in customers, its chief executive said in a statement.
"But we must expect that competitors will be more aggressive in 2014," chief executive officer Christian Sagild.
The combined ratio in the quarter improved marginally to 89.5 percent from 89.6 percent in the first quarter last year. The lower the combined ratio, the more profitable the company is.
Topdanmark, which lost 330 million crowns last year due to storms in October and November, now sees full-year net profit in the range of 1.15 to 1.25 billion crowns, up from an earlier forecast of between 950 million and 1.05 billion crowns, but said it still expected 2-3 percent premium growth for non-life insurance.
It also said it now expected a combined ratio of 90-91 percent, down from an earlier forecast of 91-92 percent.
The company said it upgraded its share buy back by 200 million crowns to 1.9 billion crowns.
Topdanmark shares were up 3.1 percent at 1137 GMT, outperforming a 0.8 percent rise in Copenhagen's benchmark index . ($1 = 5.4409 Danish Crowns) (Additional reporting by Annabella Nielsen, editing by Pravin Char and Louise Heavens)