Customer dividend In May, the Gjensidige Foundation paid NOK 2 billion in customer dividend to Gjensidige’s general insurance customers in Norway. The customer dividend was promoted through an extensive marketing campaign that won several prizes and contributed to increased awareness of the unique model.
A good balance between efficient operations and renewal, profitable growth and good service contributed to a good profit performance and record customer satisfaction. 2014 was one of the strongest years in the history of Gjensidige, with a profit before tax of NOK 5.4 billion.
• We participate in the transport debate and call for investment in safe roads to be given higher priority.
In the Baltic states, Gjensidige contributes to improved road safety by distributing free safety reflectors to pedestrians.
In the case of investments in funds managed by others and where Gjensidige does not decide the framework conditions, we will enter into dialogue with the fund manager with a view to excluding the company concerned. If the dialogue does not lead to a satisfactory outcome, we will terminate our investment in the fund.
One measure aimed at ensuring such compliance is the compilation of pay statistics to bring light to any wage differences for the same work or of equivalent value. Any nonconformities will be followed up by actions. No special measures relating to gender equality or discrimination have been necessary in 2014.
All gifts worth less than NOK 500 from external business connections to employees of Gjensidige shall be registered in a gift and hospitality register. It is not permitted to accept gifts worth more than NOK 500. Regardless of the gift’s value, it must not be accepted if the employee’s partiality or independence can be placed in doubt. Hospitality activities must also be registered.
The rules are available on the intranet and in an e-learning course, and managers shall contribute to ensuring that employees are aware of the rules. The purpose is to prevent and help to put a stop to activities that can entail a breach of the regula tions at an early stage.
Customers can request access to the information stored about them at any time, and they can demand that incorrect information be corrected. Access can be denied in special cases, following a concrete assessment.
The environment and climate As a knowledge-based company, our direct emis sions are largely related to the running of offices, travel and transport, and mail to customers.
We work systematically on our own impact on the natural environment relating to the consumption of energy and the generation of various types of waste, such as paper, office supplies, electrical appliances and household waste.
7. The provisions of the Articles of Association that regulate the appointment and replacement of board members are described in section 8 of the statement.
At present, the Supervisory Board comprises 21 members, 14 elected by the shareholders and seven elected by the employees. Information about the members of the Supervisory Board is available at www.gjensidige.no/group/.
The Supervisory Board’s independence The Supervisory Board has a diverse composition, and the majority of the members are independent of s pecial interests (directly, indirectly or through employment) in the Company. Seven of the 14 shareholder -elected representatives are independent of the Gjensidige Foundation.
The committee shall also monitor the systems for internal control and risk management, as well as the Company’s internal audit function. The committee is also in continuous contact with the Company’s elected auditor about the auditing of the annual accounts, and it assesses and monitors the auditor’s independence; cf. Chapter 4 of the Auditors Act. The committee shall state its opinion on the election of the auditor and the auditor’s fee. The committee held six meetings in 2014.
As of 31 December 2014, the control committee consisted of the following members: – Sven Iver Steen (chair) – Liselotte Aune Lee – Hallvar Strømme
Financial reporting and financial management Among other things, the CFO is responsible for asset management, risk and capital management, the Actuary function, the planning process and financial performance. The Executive Vice President of Group Staff/general services is responsible for financial reporting, among other things. This organisation is intended to ensure independence between the leading premise setter for profit performance and those who report the results.
The Group is concerned with ensuring that processes relating to financial reporting and financial management are carried out by personnel with the right expertise for the different tasks. Professional updating in the form of self-studies, courses and continuing education takes place on the basis of the needs and complexity of the position in question. The goal is that the Group shall have sufficient expertise and resources at all times to be able to carry out timely closing of the accounts without there being material errors in the consolidated and company accounts.
Hansen is up for election to the Board in 2015. Hansen holds 12,253 shares in Gjensidige Forsikring ASA, including any shares held by closely related parties (last change 10 December 2012).
Nordic Gjensidige distributes general insurance products in Denmark through its own sales network and in cooperation with the Nykredit group. In addition, private insurance products are sold through a number of partners, especially travel agents, car dealers and estate agents. Otherwise, the private market is served directly via call centres and the internet.
• Reduction of NOK 400–500 million in claims cost • Reduction in claims settlement costs per claim of 10 per cent • Continued high customer loyalty • Maintain the number of customers with >4 general insurance products
The Board has defined five strategic focus areas that will play a central role in achieving the financial and operational targets in the period up to 2018: • Enhance and expand multi-channel distribution • Develop value-adding services for loyalty and preference • Further digitalise business and customer processes • Strengthen business intelligence and analytics • Build dynamic organisational capabilities
See page 32 for a more detailed description of the strategic focus areas.
General Insurance Private 1,624.0 1,305.5 General Insurance Commercial 1,140.3 992.9 General Insurance Nordic 529.4 342.3 General Insurance Baltics 0.6 35.7 Corporate Centre/costs related to owner (311.4) (299.4) Corporate Centre/reinsurance 1 (120.5) (357.4) Underwriting result general insurance 2 2,862.3 2,019.6
The segments Gjensidige’s business is organised in six operational segments. Management of the investment portfolio comes in addition. A summary of the results and outlook for the individual segments follows below. It is emphasised that there is always considerable uncertainty attached to the assessment of future developments.
In the fourth quarter, Gjensidige signed a cooperation agreement with the Norwegian Automobile Federation (NAF), which has around 500,000 members. NAF and Gjensidige will cooperate on insurance and car financing for NAF’s members. The agreement
Large losses 1 399.6 346.6 Run-off gains/(losses) 2 91.3 120.2 1 Large losses = loss event in excess of NOK 10.0 million.
Earned premiums 1,262.4 904.0 Claims incurred etc. (1,126.4) (779.7) Net insurance revenue 136.0 124.4 Management income etc. 98.1 82.2 Operating expenses (221.4) (182.0) Net operating income 12.7 24.6 Net financial income 31.2 25.3 Profit/(loss) before tax expense 43.9 49.9
The weighted average loan to value1 was estimated at 62.4 per cent (61.8) for the mortgage portfolio.
Mjåtvedt is up for election to the Board in 2016. Mjåtvedt holds 1,838 shares in Gjensidige Forsikring ASA, including any shares held by closely related parties (last change 14 February 2014).
Risk management is based on specified goals and strategies and the limits on risk exposure stipulated by the Board. Responsibility for good risk management and internal control primarily rests with the first-line management, i.e. the CEO and all managers and employees in the operational units, who carry out their work in accordance with the authorisations, instructions and guidelines that apply to each of them. A Risk Management function has been established at Group level. It is responsible for monitoring 1 The geographical distribution is related to issuers and does not reflect the actual currency exposure.
In the insurance market, Gjensidige faces challenges from both traditional Norwegian financial players and new companies. A loss of business combined with reduced profitability in the insurance operations will have a negative effect on the return on capital and other key figures. Emphasis is therefore placed on Gjensidige’s ability to quickly adapt to consumers’ wishes for new service channels, and its ability to utilise modern technology and support systems in an efficient manner. Continuous efforts are made to develop new, customer-adapted products and service solutions, at the same time as the organisation, processes and value chains are reviewed and standard ised to reduce costs and achieve greater efficiency.
Tine Gottlob Wollebekk (1962) has been a member of the Board of Gjensidige since 2014. She is a Senior Vice President responsible for Global Financial Services in Telenor ASA , Board member of Aars AS, Tameer Micro Finance Bank, Telenor Banka, Idea Foundation and Finn Clausen Gruppen AS.
It is proposed that the parent company’s profit of NOK 5,121.3 million before other components of income and expense be allocated as follows: NOK million
Own shares 0.0 (5.3) (5.3) Paid dividend (3,424.5) (3,424.5) Equity-settled share-based payment transactions 6.2 6.2 1.1.-31.12.2014 Profit/(loss) for the year 4,189.6 4,189.6
IAS 32 Financial instruments – presentation The changes clarify when financial assets and liabilities are to be presented net. The change has no significant bearing on Gensidige's accounts.
Foreign operations Foreign operations that have other functional currencies are translated to NOK by translating the income statement at average exchange rates for the period of activity, and by translating the balance sheet at exchange rates at the reporting date. Exchange differences are recognised as a separate component of equity. On disposal of the foreign operation, the cumulative amount of the exchange difference recognised in other comprehensive income relating to that foreign operation is recognised in profit of loss, when the gain or loss on disposal is recognised.
insurance liabilities at the reporting date, as well as related cash flows, are used to perform the test. This includes both claims incurred before the reporting date (claims provisions) and claims that will occur from the reporting date until the next annual renewal (premium provisions). Any negative discrepancy between the original provision and the liability adequacy test will entail provision for insufficient premium level.
General insurance Private 8,296.3 34.7% 8,013.8 35.4% General insurance Commercial 7,772.6 32.6% 7,416.5 32.7%
Table 27 – Asset allocation excluding the unit-linked portfolio, Gjensidige Pensjonsforsikring NOK million 31.12.2014 31.12.2013
The bank's maximum exposure to credit risk is NOK 32,475.8 million. The bank has no loans exceeding 100 per cent loan to value ratio.
The bank's finance strategy approved by the Board sets guidelines and limits for managing the bank's market risk.
Pension and Savings Pension and Savings is a growth area for Gjensidige in Norway. The segment offers various pension and savings products, mainly to the commercial market. The pension products include defined contribution plans in the field of group occupational pensions, individual pensions, individual disability pensions and the management of paid-up policies and pension capital certificates. Gjensidige Investeringsrådgivning is an independent fund provider that offers saving and investment solutions to the private and commercial markets.
Sensitivity financial assets level three The sensitivity analysis for financial assets that are valued on the basis of non-observable market data shows the effect on profits of realistic and plausible market outcomes. General market downturns or a worsening of the outlook can affect expectations of future cash flows or the applied multiples, which in turn will lead to a reduction in value. A fall in value of ten per cent is deemed to be a realistic and plausible market outcome for both equities and units and bonds and other securities with a fixed return that are included in level three of the valuation hierarchy.
Included in other loans are also NOK 53.8 million (214.9) in loans given with regard to sale of subsidiaries.
Real estate fund CEREP III 103.9 La Salle 27.3 Total real estate funds 131.2
Acquisitions through business combinations 184.3 (127.1) 57.3 77.8 77.8 Claims paid, prior year claims (6,688.6) 448.0 (6,240.6) (5,839.0) 329.9 (5,509.1)
NOK million Funded 2014 Unfunded 2014 Total 2014 Funded 2013 Unfunded 2013 Total 2013 Pension expense recognised in profit or loss Current service cost 31.9 8.6 40.6 33.0 7.8 40.8 Interest cost 81.1 18.1 99.1 82.2 16.7 98.9 Interest income (96.3) (96.3) (99.2) (99.2) Employers' national insurance contributions 4.5 1.2 5.7 4.7 1.1 5.7 Total defined benefit pension cost 21.2 27.9 49.1 20.5 25.6 46.1
Specification of tax expense Tax payable (1,203.7) (853.7) Correction previous years (8.6) 88.5 Change in deferred tax 2.3 (138.4) Total tax expense (1,210.0) (903.5)
Operating expenses Depreciation and value adjustments (note 5 and note 7), excl. depreciation properties 404.7 325.8 Employee benefit expenses (note 18) 2,263.4 1,976.1 Fee for customer representatives 6.3 5.4 Software costs 421.6 375.1 Auditor’s fee (incl. VAT) 6.0 8.7 Consultants’ and lawyers’ fees 94.3 130.6 Commissions 617.5 572.3 Other expenses 1 (2.0) 159.1
Catharina Hellerud, Executive Vice President 2,750.4 392.9 162.6 223.5 415.8 3,517 3,365 9,676 8,726 3
Hege Yli Melhus, Executive Vice President 2,393.2 309.2 156.0 146.7 322.2 4,114 1,564 7,694 4,510 3
Sigurd Austin, Executive Vice President 2,400.5 358.2 225.9 471.6 358.2 3,914 1,278 6,940 2,618 3
Net income and gains/(losses) from buildings and other real estate Investment properties Rental income from investment properties, excl. unrealised gains/(losses) 326.6 315.8 Net revaluation investment properties 279.3 81.5 Net gains/(losses) from sale of investment properties 0.5 3.7 Administration expenses related to investment properties (61.9) (52.5) Total net income and gains/(losses) from investment properties 544.5 348.4
In addition, at the beginning of 2015, Gjensidige acquired the Mondux group in Denmark. Mondux is an agency company that offers insurance in the private market in Denmark. Among other things, the company will strengthen Gjensidige's position in the motor insurance market and give greater insight into the product insurance market. The company is expected to be taken over at the end of the second quarter 2015. The premium volume in 2014 was slightly below DKK 250 million.
Received commission for ceded reinsurance and profit share 5.8 4.1 Total insurance-related operating expenses (2,882.8) (2,746.1)
Accrued expenses and deferred income Other accrued expenses and deferred income 8, 15 275.6 237.8 Total accrued expenses and deferred income 275.6 237.8
New standards and interpretations not yet adopted A number of new standards, changes to standards and interpretations have been issued for financial years beginning after 1 January 2013. They have not been applied when preparing these financial statements. Those that may be relevant to Gjensidige are mentioned below. Gjensidige does not plan early implementation of these standards.
Ceded reinsurance premiums reduce gross premiums written, and are adjusted for according to the insurance period. Premiums for inward reinsurance are classified as gross premiums written, and are earned according to the insurance period.
NOK 5.90 per ordinary share (12.80) 2,950.0 6,400.0 Dividend for 2013 increased by NOK 4,00 per share based on power of attorney to the Board 1 1 Increased dividend was agreed in October and paid in November 2014.
Technical provisions Provision for unearned premiums, gross 11.7 11.7 111.0 7,836.7
Security provision 36.7 109.1 2,818.0 FSAN 1 minimum requirement 36.7 109.1 2,818.0 1 The Financial Supervisory Authority of Norway.
Carrying amount As at 1 January 2014 84.4 243.8 328.1 As at 31 December 2014 79.2 312.3 391.5
Determination of parameters implies a significant level of judgment. Emphasis is put on this judgment being consistent with that observed in the market and that the judgment is applied consistently from period to period. The table below shows how the sensitivity of the yield and the market rent affects the value of the portfolio, as it stands at 31 December 2014.
Depreciation and value adjustments (note 5 and note 7) 3.5 3.7 Other expenses 159.9 138.4 Total administration expenses related to financial assets, excl. interest expenses, incl. administration expenses properties 163.4 142.1 1 Other expenses include cost reductions for Gjensidige Forsikring ASA in connection with duties performed for subsidiaries and cost allocations to claims and finance.
Bonds and other fixed-income securities Net interest income/(expenses) from bonds and other fixed-income-securities 437.1 301.0 Unrealised gains/(losses) from bonds and other fixed-income securities 169.6 240.1 Realised gains/(losses) from bonds and other fixed-income securities 187.5 (108.9) Total net income and gains/(losses) from bonds and other fixed-income securities 794.3 432.2
ISIN NO0010720378 Issuer Gjensidige Forsikring ASA Principal, NOK million 1,200 Currency NOK Issue date 02.10.2014 Maturity date 03.10.2044 First call date 02.10.2024 Interest rate 19 NIBOR 3M + 1.5%