Strategy Core activity and vision Gjensidige’s core activity is to offer general insurance and risk-based accident and health insurance. We also offer services that naturally support our core activity, such as pension, banking and real estate agency services. We are also increasingly developing value-added additional services that increase our customers’ security and well-being. An ecosystem of products and services creates greater value for the customer, and gives us greater opportunity to defend our ‘ownership’ of the customer from niche companies.
Gjensidige Annual Report 201810 1 Assuming annual run-off gains ~NOK 1 billion through 2022. Corresponds to 90-93 per cent given zero run-off gains post 2022.
2018 The work on strengthening distribution channels and the rationalisation of operating processes continued during 2018, with a focus on increased digitalisation and automation. The focus on further developing the business model, portfolio restructuring and repricing helped to strengthen the quality of portfolios in the Danish part of the business.
Gjensidige will look for opportunities for growth in Denmark, both organic opportunities and through value generating acquisitions.
1. The Board’s and the management’s perspective on sustainability Gjensidige has always had a strong focus on its corporate social responsibility, and this work is based on our role as one of the biggest insurance companies in the Nordic countries. We are convinced that integrating sustainability into our core activities is vital to value creation in the long term. Gjensidige takes its responsibility seriously and shall strive to make the world a better place.
Our role in society It is Gjensidige’s ambition to be the most customer- oriented general insurance company in the Nordic countries and the Baltic states. Customer orientation permeates our behaviour, priorities and communication at all levels of the organisation. The focus on customers is key throughout the value chain, from product and service development via the training of employees, advisory services, sales, claims settlement and the handling of complaints.
Gjensidige has defined clear goals for customer satisfaction. The level of goal attainment influences the payment of bonuses to executive personnel and collective bonuses to all employees. The following results were achieved in 2018: • In 2018, Gjensidige’s customer satisfaction index
Risk and materiality assessment for Gjensidige’s stakeholders The assessment of relevant topics is based on • what topics the stakeholders consider important • the consequences for Gjensidige if we fail to meet stakeholder expectations
By their nature, losses have a negative impact on the environment, since resources are needed to repair the damage or replace the loss. Gjensidige therefore has a strong focus on loss prevention work, and thus helps to prevent claim events and reduce the impact on the environment.
Business School. • Cooperation established with Seema, with a focus on diversity and diversity management.
5.1 Sustainable claims settlements What we do All procurements over a certain size must be quality-assured by the Corporate Procurement department. Most purchasing agreements are the result of competitive tendering carried out in accordance with adopted guidelines.
New measure • Reduce business trips by increasing the use of technology such as video conferences, using trains where possible and borrowing electric cars.
6. Businesses should uphold the elimination of discrimination in respect of employment and occupation.
Customised management development programmes have been developed for groups of managers with different experience backgrounds, from newly appointed managers to the senior group management.
• Good ‘comprehensive insurance’ coverage for bikes and electric bikes in our most sold household contents policy.
• The Gjensidige Foundation is deeply engaged in society and distributes around NOK 200 million every year to help to make society safer.
6. General meetings The Board regards the General Meeting an important arena for all shareholders.
Competition also intensified in Norway as a result of a number of companies changing their reward schemes for motor vehicle owners early on in the year. Gjensidige also adjusted its reward scheme to ensure competitive products for customers, which led to increased claims disbursements throughout the year. At the same time, higher claims inflation for motor vehicles, due, among other things, to more advanced cars and electric and hybrid cars, contributed to increased disbursements.
Dividend Nominal high and stable (and >80 per cent over time)
Growth ambitions in the Nordic region and the Baltic states The sale of Gjensidige Bank to Nordea strengthens Gjensidige’s financial position, and frees up capacity to be able to make value-adding acquisitions. Acquisitions will primarily be relevant in the Nordic region outside Norway, and in the Baltic states, where Gjensidige has clear growth ambitions. If such opportunities do not materialise, the excess capital will be distributed to the shareholders over time, in line with Gjensidige’s dividend policy.
New rules have been adopted for life insurance companies and pension enterprises that clarify the distinction between client and firm assets. Pursuant to the new rules, the recognition of income and deductions and dating of assets in the customer portfolio are carried out in accordance with the accounting rules. Firm assets will still be taxed pursuant to the general stipulation and dating rules in the Taxation Act.
uncertainty associated with this means that the actual figures may deviate from the estimates. It is especially the insurance liabilities that are associated with this type of uncertainty
The profit after tax expense for continued and discontinued operations was NOK 3,716.4 million (4,519.3), corresponding to NOK 7.44 (9,05) per share.
She is Vice President Finance and Control in Equinor, and is a Master of General Business from BI (siviløkonom ). She is a deputy member of the general assembly of Gjensidige Foundation.
Retail Bank (discontinued operation) With reference to IFRS 5, Gjensidige Bank was reported as discontinued operation from the third quarter 2018. Please refer to note 25 for further details. Pension
It is proposed that the parent company’s profit before other components of income and expense of NOK 3,034.5 million be allocated as follows: NOK millions
Net receipts/payments from sale/acquisition of subsidiaries, associates and joint ventures (34.7) (502.6)
Earned premiums from general insurance consist of gross premiums written and ceded reinsurance premiums.
Recognition Current tax and deferred tax are recognised as an expense or income in the income statement, with the exception of deferred tax on items that are recognised in other comprehensive income, where the tax is recognised in other comprehensive income, or in cases where deferred tax arises as a result of a business combination. For business combinations, deferred tax is calculated on the difference between fair value of the acquired assets and liabilities and their carrying amount. Goodwill is recognised without provision for deferred tax.
Product and Price and Actuary departments hold regular meetings together with the business areas to capture changes in the development of reported claims. This includes communication with
All subsidiaries will be capitalised in line with the respective regulatory requirements, while capital in excess of the requirements will, as far as possible, be held in the parent company Gjensidige
The Group’s solvency margins at the end of 2018 were calculated to be: • 169 per cent based on Gjensidige’s approved partial internal model
• 190 per cent based on Gjensidige’s own partial internal model
Solvency II regulations. Gjensidige has mainly tier 1 capital, which is considered to be capital of best quality. Of the total amount of tier 1 capital, NOK 1,010 million comes from the restricted tier 1 category. This is the market value of bonds issued by Gjensidige
The solvency capital requirement is based on different sources of risks. The main risks for Gjensidige Forsikring ASA and Gjensidige
Gjensidige Pensjonsforsikring’s ability to access or use the Group’s assets, as well as settling its obligations. Group contributions added
New tax rules imply tax on the security provision which is taken into account in the year-end capital calculations. If the company is ceased there will also be tax on the natural peril fund provision.
Gjensidige’s Baltic operations provide general insurance products to the private and commercial markets in Latvia, Lithuania and
The fixed salary is assessed and stipulated annually on the basis of the wage growth in society in general and in the financial industry in particular. Variable remuneration (bonus) is decided by the Board on the basis of agreed goals and deliveries. It can amount to up to 50 per cent of the fixed salary including holiday pay. Variable remuneration is earned annually and is based on an overall assessment of financial and non-financial performance over the last two years. Variable remuneration is not included in the pension basis. The assessment takes into account the enterprise’s overall performance targets for return on equity adjusted for extraordinary dividends and transactions and combined ratio, as well as developments in customer satisfaction. In addition, it emphasizes the CEO’s personal contribution to the Group’s historical and future results and wealth creation, compliance with the Group’s vision, values, ethical guidelines and management principles.
No need for impairment Need for impairment app. NOK 128 million Need for impairment app. NOK 216 million
Liabilities related to direct insurance and reinsurance 1,174.5 1,174.5 1,132.8 1,132.8
Claims reported and claims handling costs 13,835.4 (374.6) 13,460.8 14,136.9 (781.3) 13,355.5
Perpetual Tier 1 capital Perpetual Tier 1 capital consists of a perpetual hybrid instrument in
As part of its ongoing financial management, Gjensidige has undertaken to invest up to NOK 702.5 million (1,392.5) in loan funds containing senior secured debt and various private equity and real estate investments, over and above amounts recognized in the balance sheet.
The following assumptions were used in the calculation of fair value at the time of calculation
Expected dividend (NOK per share) 1 4.50 6.57 4.50 6.57 1 The expected return is based on the Group's actual profit/loss after tax expense as of the third quarter, grossed up to a full year, plus the maximum distribution of dividend corresponding to 70 per cent (70) of the profit after tax expense. This was carried out as a technical calculation because the Company's forecast for the fourth quarter result was not available at the time the calculations were carried out.
On 2 July Gjensidige Forsikring ASA entered into a share purchase agreement with Nordea for the sale of Gjensidige Bank ASA. The agreed purchase price was NOK 5.5 billion, subject to certain adjustments based on the performance of the bank until closing of the transaction. Closing is expected to take place within Q1 2019, subject to customary regulatory approvals. At the time of the agreement, it was calculated that Gjensidige Forsikring Group could expect a gain of approximately NOK 1.9 billion upon closing of the transaction while Gjensidige Forsikring ASA could expect a gain of approximately NOK 3.1 billion. The result from the time of agreement to final closing is Gjensidige’s risk. Final calculation of the gain will be available a while after the closing.
Shares and similar interests (incl. shares and similar interests measured at cost) 13, 14 5,061.4 6,553.7
IFRS 9 addresses the accounting for financial instruments and is effective for annual periods beginning on or after 1 January 2018.
Gjensidige Forsikring Group, the Senior Group Management is responsible for evaluating and following up the performance of the segments and is considered the chief operating decision maker.
Each component of plant and equipment are depreciated using the straight-line method over estimated useful life. Land, leisure houses and cottages are not depreciated. The estimated useful lives for the current and comparative periods are as follows
Impairment losses are recognised in profit or loss if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated­ first to the carrying amount of goodwill and then proportionally to the carrying amount of each asset in the cash-generating unit. Previously recognised impairment losses are for assets except for goodwill, reversed if the prerequisites for impairment losses are no longer present.
The category financial liabilities at amortised cost comprises the classes subordinated debt, other liabilities, liabilities related to direct insurance and reinsurance, accrued expenses and deferred income and liabilities within Gjensidige.
Since Gjensidige Bank represents a separate and significant business in Gjensidige, which is now sold, Gjensidige Bank is presented as a discontinued operation. See note 25 in the group’s financial statement for further information.
The shares in Gjensidige Bank is presented on a separate line in the statement of financial position.
Income from investments in subsidiaries, associated companies and joint ventures 374.0 83.8
Depreciation and value adjustments (note 11 and note 12), excl. depreciation properties 405.1 368.4
None of the executive personnel with supervisory tasks currently has variable bonus schemes. The fixed salary is based on the
The following financial assets are classified as level one in the valuation hierarchy: • Listed shares
Financial derivatives at fair value through profit or loss 869.9 869.9 568.6 568.6
Incentive Active Value Fund Cl. A EUR Unrestricted Hedge fund 127.4
At the end of the year the number of own shares was 31,371
Fire Mutuals and Gjensidige Pensjonskasse 2 111.0 25.3 111.0 25.4 2 Gjensidige Forsikring ASA is a sponsor of Gjensidige Pensjonskasse and has contributed with funds equivalent to NOK 111.0 million.
Gisele Marchand Lotte K. Sjøberg Eivind Elnan Chair of the Board Board member Board member