Guidelines for remuneration and career development shall be linked to achievement of the Group’s strategic and financial goals and core values, and both quantitative and qualitative targets shall be taken into consideration. The measurement criteria shall promote the desired corporate culture and long-term value creation, and, as far as possible, take actual capital costs into account. The remuneration system shall contribute to promoting and providing incentives for good risk management, prevent excessive risk-taking and contribute to avoiding conflicts of interest. A fixed basic salary shall be the main element of the overall remuneration, which also consists of variable pay, pension and payments in kind. Variable pay shall be used to reward performances beyond the expected, where both results and behaviour in form of compliance of with the company values, brand and management principles are to be assessed.
The retirement age of the CEO is 62. It is possible to step down after reaching the age of 60 if the Board or CEO so wishes. The CEO has pension rights pursuant to Gjensidige’s closed definedbenefit pension scheme. Pursuant to the CEO’s employment contract, he is entitled to a pension corresponding to 100 per cent of his annual salary on retirement at the age of 62, which is then reduced in steps to 70 per cent upon reaching the age of 67.
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 pay (bonus) can be paid to executive personnel on the basis of concrete performance measurements in defined target areas and a discretionary assessment stipulated in scorecards and derived from the Group’s strategies and goals. The assessment takes into account a combination of the enterprise’s 176 | Gjensidige annual report 2014
overall performance targets for return on equity and combined ratio, the business unit in question and an evaluation of the person in question’s personal contribution, including an overall assessment 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.
With exception from one employee, there are no severance pay arrangements for executive personnel who leave their position in Gjensidige.
Report on executive remuneration in the preceding financial year In accordance with the guidelines, one employee in the finance department has been offered up to 50 per cent variable pay. The Board confirms that the guidelines on the remuneration of executive personnel for 2013 set out in last year’s statement have been complied with.
The senior group management Helge Leiro Baastad, CEO 4,662.1 1,041.5 172.9 1,601.7 1,064.4 8,615 9,073 25,345 28,928 2
Martin Danielsen, Executive Vice President 2,358.9 300.9 163.4 479.8 323.8 4,477.6 3.25% 31.01.2021 2,603 3,046 8,021 14,835 3
The Board Inge K. Hansen, Chairman 535.7 8.2 12,253 Trond V. Andersen 281.2 13.8 1,805 Hans-Erik Andersson 8 411.4 5.9 1,778 Mari T. Skjærstad (1.1.14-27.5.14) 1 188.4 4.7 Gisele Marchand 9 359.1 3.0 1,481 Gunnhild H. Andersen, staff representative 5 274.4 785
The Board, deputies Tore Vågsmyr, staff representative 5 655 Inger-Lise Bratsberg, staff representative 1, 5 (1.1.13 - 29.5.13) 1,952
Total net income and gains/(losses) from financial assets at fair value through profit or loss, designated 1,346.8 460.4
Net income and gains/(losses) from bonds held to maturity Net interest income from bonds held to maturity 162.0 396.2 Unrealised gains/(losses) from bonds held to maturity 0.8 (1.0) Realised gains/(losses) from bonds held to maturity (72.8) (11.2) Total net income and gains/(losses) from bonds held to maturity 90.0 384.0
Net income and gains/(losses) from financial liabilities at amortised cost Net interest income/(expenses) from subordinated debt (9.5) Total net income and gains/(losses) from financial liabilities at amortised cost (9.5)
Net other financial income/(expenses) 1 146.1 (23.3) Discounting of claims provision classified as interest expense (80.7) 296.1 Change in discount rate claims provision (182.8) (82.3)
Interest income from financial assets not recognised at fair value through profit or loss 1,028.7 1,148.9 Interest expenses from financial assets not recognised at fair value through profit or loss (9.5) 1 Net other financial income/(expenses) include financial income and expenses not attributable to individual classes of financial assets or liabilities, and financial administration costs.
The timing of the outflow of capital is dependent on when the funds are making capital calls from their investors. Average remaining operating time for the funds, based on fair value, is slightly above four years (five) and six years (seven) in average including option for extension.
Gjensidige Forsikring is liable externally for any insurance claim arising in the cooperation mutual fire insurers' fire insurance operations.
Gross premiums written Gjensidige Baltic AAS 13.7 11.8 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 1.9 1.3 Nykredit Forsikring A/S 819.1 794.9
Gross paid claims Gjensidige Baltic AAS 20.2 3.5 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 22.5 1.0 Nordisk Forsikrings Service AS 4.3 Nykredit Forsikring A/S 740.9 591.2
Change in gross provision for claims Gjensidige Baltic AAS 16.8 2.2 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 8.4 Nykredit Forsikring A/S 112.3 173.7
Gjensidige Pensjon og Sparing Holding AS 9.3 8.3 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 47.7 37.9 Gjensidigestiftelsen 4.1 12.8 Nordisk Forsikrings Service AS 30.9 22.2 Nykredit Forsikring A/S 101.6 86.1 Oslo Areal AS 0.3 1.0 0.3 1.3 Tennant Assuranse AS 18.8 17.9
Cooperating companies 1 Fire Mutuals 17.7 130.0 16.6 131.5 Gjensidige Pensjonskasse 48.2 52.5 1 Cooperating companies are defined as companies with which Gjensidige Forsikring has entered into a long-term strategic alliance.
Group contributions Gjensidige Pensjon og Sparing Holding AS 1.5 1.6 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 2 (22.4) Oslo Areal AS 22.0 75.0 Tennant Assuranse AS 4.0 3.0
Dividends Gjensidige Baltic AAS 41.0 75.1 Nordisk Forsikrings Service AS 35.2 Nykredit Forsikring A/S 83.0 99.8 Oslo Areal AS 70.0 SpareBank 1 SR-Bank ASA 39.7
Intercompany non-interest-bearing debts and receivables Byggeriet Forsikringsservice A/S 1.3 2.7 Försäkringshuset Amb & Rosèn AB 1.3 Gjensidige Baltic AAS 1.6 Gjensidige Bank ASA (owned by Gjensidige Bank Holding AS) 0.3 1.1 Gjensidige Pensjon og Sparing Holding AS 0.4 3.8 1.6 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 10.3 9.5 0.1
Gjensidigestiftelsen 0.3 0.9 Nordisk Forsikrings Service AS 49.8 37.4 65.8 Nykredit Forsikring A/S 32.5 30.3 84.9 Oslo Areal AS 92.0 75.0 Tennant Assuranse AS (owned by Lokal Forsikring AS) 5.4 (3.0) 2.3 1.5 Total intercompany non-interest-bearing debts and receivables 133.2 57.4 164.9 153.9
Intercompany interest-bearing debts and receivables Oslo Areal AS 3,430.5 2,365.9 Total intercompany interest-bearing debts and receivables 3,430.5 2,365.9
Claims provision Gjensidige Baltic AAS 7.5 23.9 Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 8.4 Nykredit Forsikring A/S 576.7 643.1 Total claims provision 592.5 667.0
Total intercompany balances within the Group 4,140.4 650.0 3,173.9 820.9 183 | Gjensidige annual report 2014
23. Events after the balance sheet date On 2 February Gjensidige announced the acquisition of 99.88 per cent of the share in PZU Lietuva from PZU SA at EUR 54 million. The acquisition is in line with Gjensidige’s strategy for growth in the Nordic region and the Baltics. PZU Lietuva is a general insurance company mainly offering motor, property and personal insurance products in Lithuania. The company also has operations in Estonia and Latvia, but these will be separated out before final closing and is not part of the transaction. Gross premiums written for the operation bought in Lithuania was approximately EUR 50 million in 2014. Gjensidige’s market share in the Baltics will increase from around 7 per cent to around 13 per cent, and the acquisition of PZU Lietuva contributes to a critical mass in a market with growth potential and potential for improved profitability going forward. Closing is expected in the beginning of the third quarter, contingent upon approval from the relevant authorities.
Equity 16,164.2 16,283.1 Effect of guarantee scheme provision and Natural perils fund (2,902.2) (2,797.8) Goodwill (1,568.6) (1,388.7) Deferred tax assets (31.2) Other intangible assets (795.5) (763.0) Reinsurance provision, minimum requirement (11.5) (11.5) Core capital before 50/50-deductions 10,855.3 11,322.1 Proportion 50/50-deductions (588.9) (108.5) Core capital 10,266.3 11,213.5
Assets with 0% risk weight 4,620.7 5,240.1 Assets with 10% risk weight 1,894.6 1,694.5 Assets with 20% risk weight 24,283.9 23,489.1 Assets with 35% risk weight 0.5 0.5 Assets with 50% risk weight 793.1 1,422.7 Assets with 100% risk weight 30,996.1 31,070.3 Assets with 150% risk weight 1,733.1 1,712.6
Risk weighted calculation base (B) 37,994.1 39,170.7 Capital ratio (A/B) 28.6% 28.6% FSAN minimum requirement 8.0% 8.0% FSAN minimum requirement (C) 3,039.5 3,133.7 Primary capital surplus (A - C) 7,834.9 8,079.9 185 | Gjensidige annual report 2014
Net primary capital 10,874.5 11,213.5 Proportion of security provision 1,268.1 1,244.2 Proportion of Natural perils fund (up to 25 % of the Natural perils fund is included) 576.3 553.9 Deduction due to discounting effects (61.4) (106.4) Limitation of additional capital which may be included (344.6) Solvency margin capital 12,312.9 12,905.2 Solvency margin minimum requirement 3,359.3 3,045.2 In excess of requirement 8,953.6 9,860.0 Solvency margin capital in per cent of requirement 366.5% 423.8%
Restricted bank deposits Source-deductible tax accounts 67.1 65.8 Total restricted bank deposits 67.1 65.8 186 | Gjensidige annual report 2014
The number of bonus shares Outstanding 1 January 53,923 66,006 Granted during the period 35,262 35,551 Movement to/(from) during the period 0 (635) Released during the period (18,497) (39,755) Cancelled during the period (884) (3,082) Forfeited during the period (2,410) (4,162) Exercised during the period Expired during the period (24) Outstanding 31 December 67,370 53,923 Exercisable 31 December 0 0 Average remaining life of outstanding bonus shares 0.96 1.12 Weighted average fair value of bonus shares granted 100.79 79.30 Weighted average share price of bonus shares released during the period 119.60 111.70
The number of shares Outstanding 1 January 52,494 49,383 29,123 27,441 Granted during the period 19,717 17,884 29,561 27,721 Forfeited during the period (20,961) (19,728) (9,704) (9,144) Cancelled during the period Exercised during the period Expired during the period Modification dividend during the period 7,895 7,324 3,514 3,365 Outstanding 31 December 59,145 54,863 52,494 49,383 Exercisable 31 December 0 0 0 0
Today, the Board and the CEO have considered and approved the Board’s Report and the Annual Accounts for Gjensidige Forsikring ASA, the Group and the parent company, for the calendar year 2014 and as per 31 December 2014.
To be included and published on 27 March 2015 194 I Gjensidige Annual Report 2014
Gjensidige is a leading Nordic insurance group built by customers, for customers. The Group is listed on the Oslo Stock Exchange. For nearly 200 years, we have worked passionately to secure the lives, health and assets of our customers. We have about 3,500 employees and offer insurance products in Norway, Denmark, Sweden and the Baltic states. In Norway, we also offer banking, pension and savings. Operating income was NOK 23.1 billion in 2014, while total assets were NOK 114 billion.