World record in Claims settlement Our claims robot settled what was probably the quickest claims settlement in the history of the world when a customer had his claim accepted in 1.6 seconds.
Provisions for unearned premiums, gross NOK million 15,746.3 13,654.9 13,097.2 11,944.6 11,049.2
Total equity and liabilities NOK million 149,072.4 135,926.6 129,264.4 113,982.0 108,946.3 1 Underwriting result, general insurance = earned premiums - claims incurred etc. - operating expenses 2 Large losses = loss events in excess of NOK 10.0 million 3 Run-off gains/(losses) = changes in estimates from earlier periods. Reserving is based on best estimate, and expected run-off result over time is zero. 4 Combined ratio = claims ratio + cost ratio 5 Loss ratio = claims incurred etc. /earned premium 6 Cost ratio = operating expenses/earned premium 7 Investment portfolio includes all investment funds in the Group, except Pension and Retail Bank 8 Return on financial assets = net financial income as a percentage of the average financial assets including property (excluding Pension and Retail Bank) 9 Return on equity = Shareholders’ share of net profit for the period/average shareholders’ equity for the period
As a major asset manager, it is especially important that we require the companies we invest in to operate in a socially responsible manner. We base our ethical guidelines on the UN Global Compact principles and international conventions on inhumane weapons.
Operations in brief 2017 Integration activities relating to companies and portfolios acquired in recent years were again among the priorities in 2017. Work has also been devoted to continuous strengthening of the distribution partnerships and on making operational processes more efficient. The focus on further development of the business model, portfolio restructuring and repricing helped to strengthen the quality of portfolios in the Danish and Swedish part of the business, during the year.
A full version of the group policy for corporate social responsibility (CSR) and socially responsible investments (SRI) is available at www.gjensidige.no.
Socially responsible management is always a topic when we hire external managers. We only enter into agreements with investment managers who have appropriate guidelines and a satisfactory investment history.
In 2017, it was decided to exclude 10 companies from Gjensidige’s investment portfolio, while 11 previously excluded companies were re-included. At year-end, a total of 89 companies had been excluded.
participated in presentations, workshops, group interviews and a social event in the afternoon.
Employee development measures: 1. We have established a model that highlights that most learning – 70 per cent – takes place in connection with day-to-day tasks. The remaining 30 per cent comes from organised tuition and training.
3. All our big office buildings are of universal design in order to accommodate employees with disabilities.
Mapping of gender differences in pay and working conditions in Gjensidige Forsikring. Our statistics are based on full-time equivalents, so that differences in full-time and part-time positions do not explain wage disparities. We see that the wage disparities are greatest in the oldest age groups. Our target is to level wage disparities between male and female employees
In 2017, we estimated that claims expenses resulting from climate-related losses amounted to NOK 292 million. These are losses that can be linked to specific weather events such as storms, flooding and unusually heavy precipitation. The claims mostly concern property, and primarily buildings and their contents. A lower proportion of the claims concern cars, boats, caravans etc.
In 2017, we donated NOK 500,000 as a Christmas gift to the Norwegian branch of SOS Children’s Villages International, which cares for and protects children who lack adult caregivers. The Company’s employees decided which cause would receive the gift through a vote.
The Board has adopted guidelines for ethics and corporate social responsibility. Gjensidige’s commitment will be further developed on the basis of the expertise that it accumulates through conducting its core business.
The Group’s solvency margin at the end of the year was 137 per cent based on the standard formula and 169 per cent based on the Company’s partial internal model. See note 23 for further description of event after the balance sheet date.
distribute additional dividends without having to call an extraordinary general meeting. The authorisation was not used in 2017. The authorisation was considered as a separate item at the Company’s annual general meeting.
More information about the use of proxy and shareholders’ right to have matters considered by the general meeting is provided in the notice of the meeting and at
• When nominating members to the Board, the principles for good corporate governance mean that emphasis should be placed on the overall interests of the shareholders and on reflecting the composition of the shareholders.
In matters in which the Chair of the Board is or has been actively involved, another board member shall chair the Board’s discussion of the matter.
Individual board members are obliged to ensure they are not disqualified from considering a matter on grounds of partiality. In cases of doubt, the matter shall be presented to the Chair of the Board. The Chair of the Board shall submit cases of doubt relating to his or her own impartiality to the whole Board.
Introduction programme for new board members Relevant information about the Company and the work of the Board is made available to new board members on the Company’s web-based portal for board members. In addition, new board members will, by meeting key members of the management, be given an introduction to the organisation and running of the Company.
• Compliance with internal and external regulations. • Loss limitation and safeguarding of assets
• The Board shall ensure that risk management and internal control are integrated in the Group’s strategy and business processes.
The fixed salary is assessed and stipulated annually based on wage growth in society in general and in the financial industry in particular. Variable pay (bonus) for executive personnel is earned annually and is based on an overall assessment of financial and non-financial performance over the past two years. Individual variable remuneration, including holiday pay, can amount to up to 30 per cent of the annual salary. Variable pay is not included in the pension basis. Half of the variable remuneration is in the form of a promise of shares in Gjensidige Forsikring ASA, one third of which are allocated in each of the following three years. Restricted variable remuneration that has not yet been disbursed may be reduced if subsequent results and developments indicate that it was based on incorrect assumptions.
The return on financial assets was 3.7 per cent, or NOK 2.0 billion, a reduction of 7.1 per cent from 2016.
The general insurance operations include both property insurance and accident and health insurance. The Norwegian general insurance operations also include life insurance, which is pure risk insurance with a duration of up to one year. This is largely group life insurance.
We expect digitalisation, automation and artificial intelligence to form the basis for more user-friendly solutions in the time ahead.
Our most loyal insurance customers are those who have the most products. In addition to a broad range of insurance products, we offer banking, pension and savings products in Norway as part of our efforts to increase our product range and the number of products individual customers buy. As much as 75 per cent of the Retail Bank’s lending volume at year-end 2017 consisted of loans to insurance customers, and most of the growth in volume comes from insurance customers who are members of organisation or loyalty programmes.
Changes in framework conditions Solvency II The Solvency II Directive came into effect on 1 January 2016. It entails new rules on capital requirements, requirements for risk management and
GDPR – new data protection legislation In May 2018, the new General Data Protection Regulation enters into force. The new rules entail enhanced protection of customers’ personal data and increased duties for companies. The new rights include portability – that customers will be able to transfer data they have disclosed to the company – more stringent requirements for erasure, enhanced right of access, that systems have built-in privacy and that choices customers make on the company ’s website have a privacy setting. It is demanding in terms of resources to change system solutions to meet new requirements, and an implementation project has been established in Gjensidige to address this on behalf of the Group.
Proposed rule changes for telephone sales – the industry can continue its practices In December 2016, the Government adopted a proposal for a legislative amendment that would tighten the rules that apply to telemarketing. The proposal aimed to protect consumers who have opted out of this type of telemarketing from such marketing. The Standing Committee on Family and Cultural Affairs’ recommendation took into account the objections made by the financial industry during the consultation process. If the Storting adopts the proposal, telemarketing calls will still be allowed to consumers who have opted out of this type of marketing in the Central Marketing Exclusion Register, provided that there is an existing customer or donor relationship where the trader has received the consumer’s contact information in connection with sales or donations. Such marketing can only concern the traders’ own services corresponding to those on which the customer or donor relationship is based.
It is uncertain when the proposal will be considered by the Storting.
Available capital in excess of the risk-based requirement calculated using the Group’s partial internal model constitutes the Group’s economic excess capital. In addition, a deduction is made for the higher of the estimated additional capital required to maintain the current A rating and the capital required to meet the statutory capital adequacy requirements. At year-end, excess capital above and beyond this amounted to NOK 0.8 billion (1.3).
Operating expenses amounted to NOK 840.1 million (801.1) and the cost ratio was 11.5 (11.0). Continued initiatives to strengthen the distribution model affected the cost base somewhat.
Net income from investments 2,029.0 2,196.1 1 The item includes discounting effects of the insurance liabilities in Denmark and Sweden, and a mismatch between interest rate adjustments on the liability side in Denmark and the corresponding interest rate hedge. Investments include mortgage, sovereign and corporate bonds, investment grade bond funds and loan funds containing secured debt.
Continuous efforts are being made to develop new products and service solutions that are adapted to customer needs, at the same time as the organisation, processes and value chains are reviewed and standardised to reduce costs and increase efficiency. There is a risk that Gjensidige will not manage to adapt to the changes in time and in line with market expectations. In order to reduce this risk, Gjensidige keeps close track of developments in the insurance market.
Notes 2. Use of estimates ...................................................154 3. Risk and capital management ..............................154 4. Premiums and claims etc. in general insurance ......155 5. Shares in subsidiaries and joint ventures ................156 6. Net income from investments ...............................158 8. Salaries and remuneration ................................... 160 11. Goodwill and intangible assets ...............................169 12. Owner-occupied property, plant and equipment .... 171 13. Financial assets and liabilities ................................172 14. Shares and similar interests ...................................176 15. Loans and receivables ...........................................177 16. Insurance-related liabilities and reinsurers' share ....178 19. Provisions and other liabilities ............................... 180 20. Related party transactions ................................... 181 21. Contingent liabilities..............................................182 22. Share-based payment ..........................................183 23. Events after the balance sheet date ..................... 184 24. Earnings per share ............................................... 184
Equity Share capital 1,000.0 999.9 Share premium 1,430.0 1,430.0 Natural perils capital 2,333.4 2,266.2 Guarantee scheme provision 638.3 628.9 Other equity 18,283.4 16,981.2 Total equity attributable to owners of the company 23,685.1 22,306.3 Non-controlling interests 18.0 19.8 Total equity 17 23,703.1 22,326.0
Equity as at 31.12.2016 attributable to the owners of the company
The technical provisions related to the unit linked contracts are determined by the market value of the financial assets. The unit linked contracts portfolio is not exposed to investment risk related to the customer assets since the customers are not guaranteed any return. In addition there is a portfolio of annuity contracts which have an average 3.3 per cent annually guaranteed return on assets.
Financial assets that are not individually significant or that are assessed individually, but not impaired, are assessed in groups with respect to impairment. Assets with similar credit risk characteristics are grouped together.
Impairment losses are reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. The reversal shall not result in the carrying amount of the financial asset exceeding the amount of the amortised cost if the impairment had not been recognised at the time the loss was reversed. Reversal of previous losses on impairment is recognised in profit or loss.
The Board has established an audit committee and a risk committee consisting of chosen Board members. The audit committee is tasked with preparing the Board’s monitoring of the financial reporting process, the systems for internal control and risk management, as well as the Company’s internal audit function. The risk committee is tasked with preparing the Board’s monitoring of risk and capital matters. While the audit committee has a retrospective perspective, the risk committee has a forward-looking perspective in relation to the company's strategy, risk appetite and risk capacity. The aim is to strengthen and increase the efficiency of the full Board's discussions. In addition, a remuneration committee assists the Board in remuneration matters.
Gjensidige Forsikring ASA buys reinsurance as protection against the effect of catastrophic events (such as wind storms) and large claims (such as major fires). The reinsurance programme is mainly bought to protect the Group’s equity capital. Gjensidige purchases almost exclusively non-proportional reinsurance contracts with sufficiently high retentions for only relatively few, large claims to be recoverable. Subsidiaries are reinsured by Gjensidige Forsikring
Investment portfolio total 1 The item includes the market value of the interest rate hedge in Denmark. Investments include mortgage, sovereign and corporate bonds, investment grade bond funds and loan funds containing secured debt. 2 The item includes total investment grade, emerging market debt (EMD) and current bonds. Investment grade bonds and EMD are investments in internationally diversified funds that are externally managed. 3 Investments in internationally diversified funds that are externally managed.
4 The item mainly includes investments in internationally diversified funds that are externally managed. In addition, there is negative derivative exposure of NOK 202.9 million. 5 In addition, there is a total return swap with Gjensidige Pensjonskasse reducing the property exposure by NOK 150.0 million. 6 The item includes currency hedging related to Gjensidige Sverige and Gjensidige Denmark, lending, paid-in capital in Gjensidige Pensjonskasse, hedge funds and commodities.
Liquidity risk is defined as the inability to meet payments when due, or by the need to realise investments at a high cost to meet payments. For most general insurers, liquidity risk is quite limited.
Interest-rate risk arises when the bank’s assets and liabilities have different remaining fixed-rate periods. The interest-rate risk is managed by adopting fixed-interest rate periods for assets and liabilities. In addition, derivatives are used for hedging. Fixedinterest assets and liabilities in millions multiplied by the remaining interest rate period are used to measure interest-rate risk exposure.
Liabilities opened for the issue of securities 3.5 66.6 1,221.3 17,284.0 2,983.6 21,559.0
Forsikring ASA. The Group will make use of all forms of Tier 1 and
The stress test is performed for the Gjensidige Forsikring Group, including Gjensidige Pensjonsforsiking AS.
Percentage of votes held is the same as percentage of interest held for all investments.
With exception from one employee in the Group, there are no severance pay arrangements for executive personnel who leave their position in Gjensidige Forsikring ASA. In accordance with practice in Denmark and the Baltic, there are certain individual agreements on severance pay in connection with resignation in
The pension assets must meet certain minimum requirements defined in Norwegian laws, regulations and in orders issued by the
Expected contribution to Fellesordningen LO/NHO next year 1 Future salary increases represent our expected average future salary increase for the industry. Since Gjensidige has a closed plan, average future salary increase for our population is 1.5 per cent (1.5). See explanation under Actuarial assumptions.
The growth rate is determined to 2.5 per cent in Scandinavia and 3.0 per cent in Baltics. This is the same growth as in 2016.
Bonds and other fixed income securities 2,174.6 (114.4) 324.2 (119.2) (832.9) (98.7) 1,333.5 24.0
Total funds 6,316.3 1 Norwegian Private Equity funds organised as internal partnerships doesn't have organisation number.
Regulatory regulation CRD IV CRD IV CRD IV Solvency II Solvency II
The table below shows transactions with related parties recognised in the income statement.
Cash and cash equivalents at the start of the year 1,143.0 1,704.5
Recognition and derecognition Financial assets and liabilities are recognised when Gjensidige becomes a party to the instrument’s contractual terms. Initial recognition is at fair value. For instruments that are not derivatives or measured at fair value through profit or loss, transaction expenses that are directly attributable to the acquisition or issuance of the financial asset or the financial liability, are included. Normally the initial recognition value will be equal to the transaction price.
Deferred tax Deferred tax is determined based on differences between the carrying amount and the amounts used for taxation purposes, of assets and liabilities at the reporting date. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that they can be offset by future taxable income. If deferred tax arises in connection with the initial recognition of a liability or asset acquired in a transaction that is not a business combination, and it does not affect the financial or taxable profit or loss at the time of the transaction, then it will not be recognised.
Gjensidige Pensjon og Sparing Holding AS (group) 24,350.0 675.6 23,674.4 1,479.4 85.6
³ Operating income. For companies where financial income is operating income, financial income is included. For other companies financial income is not included.
Total insurance-related operating expenses incl. commissions for received reinsurance and sales expenses
Gjensidige used up to and including 2016 GAP07, which is a dynamic mortality model that takes into account expected life expectancy. In 2017, K2013BE is used as it estimates life expectancy in a better way than GAP07 proved to be doing.
Bonds and other fixed income securities 2,174.5 (114.3) 324.2 (119.2) (832.9) (98.7) 1,333.5 24.0
Arising from current year claims 16,967.8 (621.4) 16,346.4 16,202.2 (479.2) 15,723.0
Group’s equity. Gains or losses on transactions with own shares are not recognised in the income statement.
Gjensidige Forsikring ASA Schweigaardsgate 21, 0191 Oslo Postboks 700, Sentrum, 0106 Oslo