GGrreeeenn iinnssuurraannccee Gjensidige launched its first insurance policies with explicitly sustainable properties. The new policies are aimed at young customers and entail that emissions resulting from the claims settlement process are offset by climate certificates purchased from Cemasys. The funds will be directed towards the project “Energy Efficiency and Improved Clean Burning Cookstoves in Ghana”.
Main figures 2020 2019 2018 2017 2016 Earned premiums, general insurance NOK Millions 27,160.5 24,650.4 24,052.8 23,398.3 22,441.9
Solvency margin, partial internal model Per cent 198 206 190 169 180
SSaalleess eeffffiicciieennccyy:: contributes to increased sales for each krone invested in distribution. Requires more digital sales, more analytical CRM and an optimal channel mix.
Through its activities, Gjensidige shall implement measures that promote the Sustainable Development goals (SDGs) and focus on the ones that are most relevant to an insurance company.
SSttrraatteeggiicc ppllaattffoorrmm aanndd ssttrraatteeggyy ttoowwaarrddss 22002255 To ensure our competitiveness and succeed with long-term value creation, we must manage to strike a balance between customer orientation and efficient operations. Both must be based on an analytical approach throughout the value chain. Key success factors are a strong brand, technology/infrastructure that promote flexibility, and relevant future looking competence and culture. Sustainable choices and solutions are a basic precondition for long-term value creation.
Our corporate strategy is about maintaining and further developing our close relationship with our customers through direct contact. We will offer our customers a broader value proposition than ever before – in terms of both services and products, alone or in partnership with other providers. Our goal is to become an even better and more relevant partner for our customers – a problem-solver with a stronger focus on sustainability and damage prevention – and thereby further strengthening ownership of the customer relationship.
Of increasing importance to all stakeholders. Considerable uncertainty about the consequences of climate change, and need for more concrete assessments (figures) for different scenarios.
The insurance industry is subject to stringent regulation and licensing because insurance is important to ensure economic growth and financial security. Good management and control is a critical success factor for safeguarding life, health and assets. Direct and indirect taxes that finance the common good are also an important contribution.
• BBrraaiivvee: Braive is a service developed by psychologists that gives customers the tools to master mental health challenges and thereby improve their mental health. The self-help programmes are adapted to the customer’s challenges and needs, and are recommended based on a health check.
PPrrooppeerrttyy Gjensidige ensures that demolition and removal after a claims event are carried out in an environmentally sound manner. After a claims event, we cover the upgrade to the applicable technical regulations, which indirectly contributes to less energy consumption and less risk of damage.
The Gjensidige Foundation is Norway’s biggest financial foundation, with two main tasks: distributing donations for the public benefit and being the biggest owner of Gjensidige Forsikring ASA. Both are about creating a good life in a safe society.
We have a considerable focus on repairs and reusing car parts in Denmark. We have also selected partners who work on repairing damage to windscreens and car windows. This increases the percentage of repairs considerably, and reduces material consumption and transport costs.
Chapter 2 – Creating added value in Gjensidige - Climate-related financial disclosures (TCFD)
An important part of our climate strategy is therefore to raise the level of awareness and expertise to be able to understand climaterelated threats and opportunities so that stakeholders gain a good understanding of financial risk going forward.
LLaabboouurr rriigghhttss ((IILLOO)) aanndd ccooooppeerraattiioonn wwiitthh uunniioonn rreepprreesseennttaattiivveess The cooperation between the Company’s management and the employees’ trade unions is systematic and good, based on a wellestablished structure with regular meetings of various committees. Rules have been adopted for what processes and decisions union representatives shall be involved in. Union representatives are paid by the Company.
He joined Gjensidige in 2011 and has held several senior management positions in the Group. In the Private division, he has held positions such as Executive Vice President of Group Performance Management, the Customer Centre and, most recently, Digitalisation and Development. Fløystøl holds a MSc BA degree (siviløkonom) from BI Norwegian Business School.
Gottschalk holds an MSc in Industrial Economics and Technology Management (sivilingeniør) from the Norwegian University of Science and Technology (NTNU) and the University of St. Gallen.
JJøørrggeenn RRiinnggddaall EVP Organisation, HR and Investigation Jørgen Ringdal (1960) has been Executive Vice President of Organisation, HR and Investigation since 1 March 2018.
Chapter 2 – Creating added value in Gjensidige - Senior group management
Gjensidige considers good relations with external managers to be very important, as this can give us greater influence on underlying companies than we can achieve directly.
AAccttiivvee oowwnneerrsshhiipp We endeavour to influence companies through dialogue where we consider it expedient.
Nafstad is a member of the board of the Gjensidige Foundation, and holds several directorships in Equinor’s international subsidiaries.
Gabe Kristiansen has held various positions at both Alka Forsikring and If. At Gjensidige, he has worked on claims processing and system development.
Notifications of irregularities or malpractices are dealt with by Gjensidige’s Internal Investigation Unit. The department carries out a preliminary investigation or assessment based on the content of the notification. If the assessment uncovers matters that warrant criticism, the HR department will take over the case, assess it and decide which sanctions to impose. The CEO will decide whether to report employees to the police.
Collaborations with non-profit organisations in all the countries we operate in to contribute to: • a warmer society • work experience and good integration of at least four full-time equivalents/persons per year
1 Carried out risk inspections for all new agricultural policies in Denmark.
• The terms and conditions for commercial property and housing associations have been expanded in 2020 to include an environmental dividend in the event of loss. If customers choose to rebuild buildings to become BREEAM-NOR certified to a ”Very Good” standard or better, they achieve an environmental dividend as an extra payment of five per cent of the compensation amount.
CCoonnttrriibbuuttiioonnss wweerree mmaaddee ttoo nnoonn--pprrooffiitt oorrggaanniissaattiioonnss iinn tthhiiss uunnuussuuaall yyeeaarr aallssoo –– ttoo hheellpp tthhoossee wwhhoo nneeeedd iitt tthhee mmoosstt • Earmarked NOK 25 million for the prevention of mental health problems among young people over a period of 3–5 years. • This year’s Christmas donation from Gjensidige and its employees went to the Red Cross’s mental health work.
• Increased proportion of suppliers followed up to ensure compliance with our environmental requirements.
IInnccrreeaassiinngg ddeeggrreeee ooff ddiiggiittaalliisseedd ccllaaiimmss pprroocceesssseess ffrreeee uupp ttiimmee ffoorr ccuussttoommeerrss wwhhoo nneeeedd eexxttrraa hheellpp
To reduce the use of materials, we have implemented initiatives in all the countries we operate in to see which measures are most effective in reducing greenhouse gas emissions. Examples of initiatives: Property/movable property
• The Diversity and Equality Committee held four meetings in 2020 and deals with reported cases of discrimination.
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CChhaapptteerr 33 –– VVaalluuee ccrreeaatteedd iinn 22002200 -- RReessuullttss ooff oouurr ccoommmmiittmmeenntt ttoo rreessppoonnssiibbllee iinnvveessttmmeennttss
NNeeww mmeeaassuurreess 22002211 • Further develop risk assessment of customers/objects in relation to climate risk (physical, liability and transition risks) • Complete topography project in the first quarter 2021.
TTrraaiinniinngg aanndd ffoollllooww--uupp ooff ccoommpplliiaannccee wwiitthh eetthhiiccaall rreeqquuiirreemmeennttss • In the performance appraisal interview, all employees must state whether they have experienced ethical dilemmas and confirm to their line manager that they are familiar with the ethical framework (Code of Conduct).
• Ethics course for all new managers. • Status of compliance with Code-of-Conduct is included in the sixmonthly senior management follow-up, ‘People Review’. • Joined the the FinAut authorisation scheme, where all sellers/advisers must pass two knowledge tests: one digital test in ethical dilemmas and one practical test.
CCaappiittaall aanndd bbaallaannccee sshheeeett ooppttiimmiissaattiioonn Gjensidige works continuously on balance sheet and capital optimisation in order to ensure attainment of the Group’s financial targets, as well as an efficient capital structure and sufficient financial flexibility.
The Board of Gjensidige Forsikring ASA decided to postpone the annual general meeting that was scheduled for 26 March. The decision was based on a letter from the Ministry of Finance to the Financial Supervisory Authority of Norway, expressing expectations of all financial undertakings to refrain from distributing dividend until the economic certainty caused by Covid-19 had been reduced. This was despite Gjensidige’s very strong financial position at the time. The annual general meeting took place as a digital meeting on 25 May. The Board was authorised to distribute dividend when conditions permitted, and a dividend of NOK 6,125.0 million was paid in September. Of this amount, NOK 3,625.0 million was related to the profit for 2019, and NOK 2,500.0 million to the distribution of excess capital. This is in line with our dividend policy, the aim of which is to pay a high and stable nominal dividend in addition to distributing excess capital over time.
In October, it became clear that the distribution partnership between Gjensidige and Nykredit will end when the agreement expires, with effect from 1 May 2021. The cooperation with Nykredit has been based on referrals, and insurance contracts have been entered into directly with Gjensidige. Gjensidige is a well-established player in the Danish market and will implement targeted measures to maintain and improve customer retention in Denmark. The termination of the agreement provides for the possibility of collaborating with new
OOffff--bbaallaannccee sshheeeett ccoommmmiittmmeennttss aanndd ddeerriivvaattiivveess As part of the Group’s investment activities, an agreement has been entered into for the investment of up to NOK 582.8 million (590.5) in loan funds with secured loans and various private equity and property fund investments, in addition to the amounts recognised in the balance sheet. In addition, Oslo Areal has a credit facility of a total of NOK 4 billion, of which NOK 2.4 billion (2.4) had been used as of 31 December 2020.
Dividends Nominal high and stable Payout ratio >80 % over time
Claims cost NOK 483 million Reduce by NOK 500 million, Group
The share of automated tariffs increased as further products and insurance covers were included in this new methodology, allowing for significantly faster response to changing market dynamics. Efforts will continue to add all products relevant for tariffs in the methodology within 2022.
Run-off gains/(losses) 1 444.4 617.0 1 Defined as an alternative performance measure (APM). APMs are described at www.gjensidige.no/reporting in a document named APMs Gjensidige Forsikring Group 2020.
Earned premiums in local currency (DKK) 1 1 Defined as an alternative performance measure (APM). APMs are described at www.gjensidige.no/reporting in a document named APMs Gjensidige Forsikring Group 2020.
Operating expenses Operating expenses from general insurance (3,951.4) (3,635.4) Operating expenses from pension (291.1) (275.6) Other operating expenses (4.1) (46.2) Amortisation and impairment losses of excess value - intangible assets (182.1) (256.4) Total operating expenses 7 (4,428.7) (4,213.6)
Profit/(loss) attributable to: Owners of the company continuing operations 4,953.8 6,556.1 Owners of the company discontinued operations 37.6 Non-controlling interests 0.1 0.1 Total 4,953.9 6,593.8
Insurance liabilities Premium reserve in life insurance 7,364.1 6,896.1 Provision for unearned premiums, gross, in general insurance 16 11,314.5 10,499.1 Claims provision, gross 16 28,534.3 28,164.8 Other technical provisions 419.2 410.4
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 2020. They have not been applied when preparing these consolidated financial statements. Those that may be relevant to Gjensidige are mentioned below. Gjensidige does not plan early implementation of these standards.
• probability-weighted estimates of future cash flows, an adjustment to reflect the time value of money and the financial risks associated with those future cash flows, and a risk adjustment for non-financial risk.
The tables below show how total claims in Gjensidige develop over time.
Total disbursed 12,858.5 13,778.6 11,916.5 13,361.0 13,694.6 12,203.1 13,154.5 13,541.6 14,565.9 12,568.5 10,045.3 141,688.2 Claims provision 744.1 863.7 889.5 939.8 984.4 1,086.7 1,479.9 1,644.1 2,225.6 3,193.9 7,141.6 21,193.5 Prior-year claims provision and loss adjustment provision 6,797.1 Total 27,990.6
Government bonds 19.3% 23.8% 17.7% 22.5% Corporate bonds 80.7% 76.2% 82.3% 77.5% Collateralised securities 0.0% 0.0% 0.0% 0.0% Total 100.0% 100.0% 100.0% 100.0%
The equity investments in Gjensidige Forsikring ASA are mainly investments in internationally diversified funds. Investments are both in developed and emerging markets, together with funds in the Norwegian market. The degree of diversification, both for sector and geographical concentration, is thus dependent of the composition in the fund structure.
Each counterparty shall have a credit limit defined in NOK kroner applicable to the Gjensidige Forsikring Group. The guidelines for establishment of the Group’s credit limits are regulated by the Group Credit policy. The purpose is to ensure that the loss risk in the Group do not exceed the risk appetite. It is continuously monitored that the exposure does not exceed the credit limits.
Counterparty default risk – OTC derivatives The over-the-counter (OTC) derivatives are covered by ISDA Master agreements, which set out standard terms that apply to all the transactions entered between parts. The Master Agreement allows parties to limit their financial exposure under OTC transactions on a net basis. The Credit Support Annex (CSA) is a legal document that defines the rules under which collateral is posted or transferred between swap counterparties to mitigate the credit risk arising from derivative positions. As at 31. December the collateral pledged for OTC derivatives is NOK 439.7 million.
Table 14 – Eligible own funds to meet Minimum Capital Requirement, split by tiers
Stress test The stress test for the Gjensidige Forsikring Group is defined in the Capital Management policy approved by the Board. The main purpose of the stress test is to demonstrate that there is sufficient capital even after extreme but possible negative events. The stress test is performed by summing up probable losses from the various areas of the business. Stress parameters for investments are chosen in order to reflect a loss probability of 1 in 200 on a quarterly basis. Diversification is accounted for by choosing diversified parameters. Tax effects are accounted for as a deferred tax asset would arise after a large financial loss.
General Insurance Private 9,433.6 8,872.4 (5,450.7) (5,682.6) (1,225.5) (1,164.7) 2,757.4 2,025.1 General Insurance Commercial 8,929.0 8,164.1 (5,943.9) (5,608.6) (888.4) (825.7) 2,096.6 1,729.8 General Insurance Denmark 5,910.2 4,960.1 (4,250.2) (3,642.0) (859.5) (718.8) 800.5 599.3 General Insurance Sweden 1,592.0 1,405.8 (1,209.9) (1,058.6) (306.0) (271.3) 76.1 75.9 General Insurance Baltics 1,175.7 1,126.9 (767.2) (728.7) (340.7) (337.3) 67.7 60.9 Pension 1,096.3 1,047.2 (674.5) (616.3) (291.1) (275.6) 36.0 41.5 166.8 196.9 Eliminations etc. 1 123.2 125.5 (511.5) (258.1) (517.4) (620.3) 1,282.4 3,818.7 376.7 3,065.9 Total 28,259.9 25,702.0 (18,808.0) (17,594.9) (4,428.7) (4,213.6) 1,318.5 3,860.3 6,341.7 7,753.8 1 Eliminations etc. consist of internal eliminations and other income and expenses not directly attributable to one single segment and large losses of NOK 431.1 million (163.4). 2 There is no significant income between the segments at this level in 2020 and 2019.
Total investments in associates and joint ventures 1,890.1 3,760.2 1,879.2 3,318.6
Employee benefit expenses Wages and salaries 2,401.5 2,188.1 Social security cost 535.8 506.3 Pension cost - defined contribution plan (note 10) 226.1 209.0 Pension cost - multi-employer plan (AFP) (note 10) 22.5 23.6 Pension cost - defined benefit plan (note 10) 47.8 52.0 Share-based payment (note 22) 17.6 13.1 Total employee benefit expenses 3,251.3 2,992.1
Variable remuneration relating to Gjensidige’s performance is decided on the basis of the past two years’ performance. Half of the variable remuneration is paid in the form of a contingent promise of shares in Gjensidige Forsikring ASA, 1/3 of which will be released 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 CEO does not receive performance-based benefits over and above the abovementioned bonus but may receive payments in kind such as a car arrangement and the coverage of costs for electronic communication. Payments in kind shall be related to the CEO’s function in the Group, and otherwise be in line with market practice.
The fixed salary is assessed and stipulated annually on the basis of wage growth in society in general and in the financial industry in particular. Variable remuneration (bonus) to executive personnel is earned annually and is based on an overall assessment of financial and non-financial performance over the two last years. The assessment takes into account a combination of 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 evaluates the target achievement of the business unit in question, as well as personal contribution relating to compliance with the Group’s vision, values, ethical guidelines and management principles. Half of the variable remuneration is in the form of a promise of shares in Gjensidige Forsikring ASA, one third of which are released 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.
Catharina Hellerud, Executive Vice President 3,260.7 481.5 166.7 433.0 484.6 2,976 2,795 5,509 23,611 3
In addition, Gjensidige has pension liabilities to some employees over and above the ordinary group pension agreement. This applies to employees with a lower retirement age, employees who earn more than 12 times the National Insurance basic amount (G) and supplementary pensions.
Depreciation and impairment losses As at 1 January 2020 (0.6) (159.1) (302.8) (6.6) (469.1) Depreciation (0.1) (177.8) (48.4) (6.7) (233.0) Disposals 0.1 24.0 102.0 6.8 132.9 Exchange differences (3.1) (5.0) (0.2) (8.4) As at 31 December 2020 (0.7) (316.1) (254.1) (6.7) (577.6)
Expenses related to low value contracts (excluding short-term low value contracts) 4.6 0.9
Premiums etc. Earned premiums, gross 4 26,608.4 24,236.4 Ceded reinsurance premiums (623.6) (712.9) Total earned premiums, net of reinsurance 25,984.8 23,523.5
Subsidiaries, associated companies and joint ventures Subsidiaries, associated companies and joint ventures are recognised using the cost method.
Financial instruments Financial instruments are classified in one of the following categories
Provision for restructuring are recognised when Gjensidige has approved a detailed and formal restructuring plan which has commenced or has been announced. Provisions are not made for future expenses attributed to the operations.
Gross claims incurred (951.4) (907.8) (512.6) (1,074.5) (3,669.9) (215.0) (6,715.1) (768.7) (855.0) (956.3) (1,029.7) Incurred during the year (940.3) (1,017.3) (836.3) (1,680.1) (3,646.0) (201.3) (6,772.3) (680.5) (855.1) (982.7) (1,113.0) Incurred previous years (11.0) 109.4 323.7 605.6 (23.9) (13.7) 57.3 (88.2) 0.1 26.4 83.3
Subsidiaries - additional information Gjensidige Norge AS 0.2 0.2 Gjensidige Pensjonsforsikring AS 43,945.6 1,026.8 42,918.8 1,132.3 124.1 Samtrygd AS 0.1 0.1 Lokal Forsikring AS 7.9 7.9 Försäkringshuset Amb & Rosèn AB 1.0 3.8 (2.8) 1.3 Gjensidige Business Services AB 766.1 690.5 75.6 23.2 ADB Gjensidige 1,971.4 660.6 1,310.8 1,187.5 105.2 Gjensidige Tech AS (former Gjensidige Bolighandel AS) (0.4) Ejendomsselskabet Krumtappen 2 A/S 1.5 1.5 0.1 Vardia Försäkring AB 20.7 17.4 3.3 1.7 Försäkringsakademin JW AB 15.0 14.2 0.8 (2.7) Certes Sak AB 5.9 5.9 Total subsidiaries 46,735.2 2,428.8 44,306.4 2,319.8 252.5
In Sweden, the general retirement age is 65 years. In Denmark, the general retirement age is 70 years.
CONTENT 3 About this report 4 The year that passed 6 Key figures and alternative performance measures 11 Chair letter 14 CEO letter Chapter 1 – This is us Chapter 2 – Creating added value in Gjensidige Chapter 3 – Value created in 2020 Chapter 4 – Financial statements and notes Gjensidige Forsikring Group Gjensidige Forsikring ASA 242 Income statement 243 Statement of financial position 245 Statement of changes in equity 246 Statement of cash flows 247 Note 1 Accounting policies 253 Note 2 Use of estimates 254 Note 3 Risk and capital management 254 Note 4 Premiums and claims etc. in general insurance 255 Note 5 Shares in subsidiaries and joint ventures 257 Note 6 Net income from investments
Other specifications Amount recognised as expense for the defined contribution plan 218.8 203.9
The company has not acquired any portfolio or company in 2020. It has been assessed whether goodwill and intangible assets have been negatively affected by Covid-19, without this being the case.
Other receivables Receivables in relation with asset management 196.1 776.9 Other receivables 57.4 87.5 Total other receivables 253.5 864.4
Claims reported and claims handling costs 12,161.4 (516.6) 11,644.7 13,843.6 (554.5) 13,289.1 Claims incurred, but not reported 15,936.0 15,936.0 13,849.7 13,849.7 Total as at 31 December 28,097.3 (516.6) 27,580.7 27,693.3 (554.5) 27,138.8
At the end of the year the number of own shares was 11,800 (18,529).
1 Cooperating companies are defined as companies with which Gjensidige Forsikring has entered into a long-term strategic alliance.
According to the agreement with Gjensidige Pensjonskasse, the return, if not sufficient to cover the pension plans guaranteed interest rate, should be covered from the premium fund or through contribution from Gjensidige Forsikring.
Gjensidige has established an overall governance model and control activities related to its IT systems. We have obtained an understanding of the overall governance model for IT systems that are relevant for financial reporting.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 laws, regulations, and auditing standards and practices generally accepted in Norway, including 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Report on Other Legal and Regulatory Requirements Opinion on the Integrated annual report Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Integrated annual report concerning the financial statements, required by the Norwegian Accounting Act section 3-3a, 3-3b and 3-3-c (the Board of Directors’ report, the statements on Corporate Governance and Corporate Social Responsibility) the going concern assumption, and the proposed allocation of the result is consistent with the financial statements and complies with the law and regulations.
INDEPENDENT AUDITOR’S ASSURANCE REPORT ON GJENSIDIGE – INTEGRATED ANNUAL REPORT 2020
282 Declaration from the Board and CEO 283 Auditor’s report 288 Assurance integrated report Appendix 290 GRI Content Index and Board of Directors Report 296 Selected governing documents 297 Description of ratings and whom we support 298 Statement on equality 304 Certificates and guarantees 310 Climate accounts own operations
414 Supplier Social Assessment 414-1 Rskl §3-3c New suppliers that were screened using social criteria
Value created in Gjensidige – Ethical operations. Gjensidige offers no direct nor indirect support for political parties 417 Marketing and Labelling 417-2 Incidents of non-compliance concerning product and service information and labeling
NRS 16 2.5.2 Financial position and capital base Statement concerning the annual account 159
We identified the following possible causes of risks and obstacles, and initiated measures
Reduce turnover in the group. Help to ensure increase in the proportion of female employees.
Initiated Through the year, we have moved 65% of our competence-raising measures online to ensure the desired development.
SSIITTUUAATTIIOONN WWIITTHHOOUUTT PPRROOJJEECCTT Traditional cookstoves that expose users to toxic smoke and gas from burning biomass will remain the main source of fuel for households for a long time
More efficient stoves provide health benefits by reducing the amount of carbon monoxide and toxic fumes that are being inhaled. The health benefits are more evident among women and children as they traditionally have the responsibility of the household. Surveys show that the project has provided cost savings and improved health for those that adopt the stoves.