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 pay (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 pay is not included in the pension basis. The assessment takes into account the enterprise’s overall performance targets for return on equity and combined ratio, and an evaluation of the CEO’s personal contribution to the Group’s development and results, compliance with the Group’s vision, values, ethical guidelines, management principles and customer satisfaction.
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 promise of shares in Gjensidige Forsikring ASA, one third 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 above-mentioned bonus, but may receive payments in kind such as a company car 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 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 defined-benefit 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. On retirement at the age of 60, a corresponding agreed reduction applies from 100 per cent upon retirement to 70 per cent upon reaching the age of 67. From the age of 67, the pension is calculated on the basis of the Company’s ordinary entitlement earning period of 30 years and is 70 per cent of the fixed salary with a full earning period. Company car arrangements and other benefits are retained until 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 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, management principles and customer satisfac-
174 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 175 tion. 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.
The individual variable pay may amount to up to 30 per cent of the annual salary including holiday pay. Variable pay is not included in the pension basis.
With exception from one more employee, there is no severance pay arrangements for executive personnel who leave their position in Gjensidige.
The Board have decided to continue the Group’s share savings programme for employees in 2013. The CEO and executive personnel are entitled to take part in the programme on a par with other Gjensidige employees. Under the current programme, employees can save through deductions from their salary for the purchase of shares in Gjensidige Forsikring ASA for up to NOK 75,000 per year. Purchases take place quarterly following publication of the results. A discount of 20 per cent of the purchase price is offered, limited upwards to NOK 1,500. For those who keep the shares and are still employed in the Group, one bonus share is awarded for each share they have owned for more than two years.
Catharina Hellerud, Executive Vice President 2,522.1 273.6 159.2 176.6 401.1 4,760 5,052 4,350 3
Kaare Østgaard, Executive Vice President 2,280.4 233.4 173.8 516.3 319.8 4,028 4,028 2,721 3
176 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 177
1 The stated remuneration applies to the period the individual in question has held the position/office. 2 Age 62, 100 per cent salary reducing gradually to 70 per cent at age 67 according to time of earning, then Gjensidige Forsikring's ordinary pension terms will take effect. 3 Age 62, 70 per cent salary until age 67 according to time of earning, then Gjensidige Forsikring's ordinary pension terms will take effect. 4 Annual fee of NOK ten thousand.
Martin Danielsen, Executive Vice President 2,096.8 295.7 39.1 555.8 20.2 4,480.8 3.7 % 31.01.2021 292 7,418 3
Bjørn Asp, Executive Vice President 2,085.2 438.3 203.2 504.4 2.6 5,913.9 3.82-3.89 % 20.07.2033 38 3,918 3
Hege Yli Melhus, Executive Vice President 1,874.5 10.0 19.4 181.0 8.0 116 2,067 3
Control committee 5 Sven Iver Steen, Chairman 343.5 0.5 1,630 Hallvard Strømme 172.5 Lieslotte Aune Lee 176.3 Vigdis Myhre Næsseth, Deputy 111.5
Paid fee for 2011 include fee for three of four quarters, as a change from payment in advance to payment in arrears was done at the end of the year.
1 The stated remuneration applies to the period the individual in question has held the position/office. 2 Age 62, 100 per cent salary reducing gradually to 70 per cent at age 67 according to time of earning, then Gjensidige Forsikring's ordinary pension terms will take effect. 3 Age 62, 70 per cent salary until age 67 according to time of earning, then Gjensidige Forsikring's ordinary pension terms will take effect. 4 Annual fee of NOK ten thousand. There have been three ordinary meetings during 2011. 5 The fee includes fee for subsidiaries. 6 The interest rate is 3.98 nominal in average, unless other is stated.
178 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 179
Net income and gains/(losses) from investments in subsidiaries and associated companies Net income from investments in subsidiaries and associated companies 515.5 672.7 Impairment of investments in subsidiaries and associated companies (139.5) Net gains/(losses) from sale of investments in subsidiaries and associated companies (227.8) Total net income and gains/(losses) from investments in subsidiaries and associated companies 376.0 444.9
Investment properties Rental income from investment properties, excl. unrealised gains/(losses) 22.6 76.6 Net revaluation investment properties 3.0 57.0 Net gains/(losses) from sale of investment properties 20.0 1.3 Administration expenses related to investment properties (4.3) (12.7) Total net income and gains/(losses) from investment properties 41.3 122.3
Net income and gains/(losses) from financial assets at fair value through profit or loss, designated Shares and similar interests Dividend income 167.5 8.0 Unrealised gains/(losses) from shares and similar interests 56.1 (75.9) Net realised gains/(losses) from shares and similar interests 158.6 (75.8) Total net income and gains/(losses)from shares and similar interests 382.1 (143.6)
Derivatives Net interest income/(expenses) from derivatives (14.8) (10.8) Unrealised gains/(losses) from derivatives 81.6 (307.9) Net realised gains/(losses) from derivatives 522.1 406.8 Total net income and gains/(losses) from derivatives 588.8 88.2 Total net income and gains/(losses) from financial assets at fair value through profit or loss, designated 1,411.8 526.0
Net income and gains/(losses) from loans and receivables Net interest income/(expenses) from loans and receivables 587.0 308.0 Net gains/(losses) from loans and receivables (2.0) (0.5) Net gains/(losses) from changes in exchange rates on loans and receivables (2.0) (60.7) Total net income and gains/(losses) from loans and receivables 583.0 246.9
As part of its ongoing financial management, the Company has undertaken to invest up to NOK 1,158.3 million (746.0) in various private equity and real estate investments, over and above amounts recognized in the balance sheet. Investments in private equity and real estate funds totalled NOK 1,623.9 million (1,496.6) at the end of the year.
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 five years (ten) and seven years (twelve) in average including option of extention.
There are contractual obligations to tenants for renovationg of NOK 6.0 million (1.0).
Associates Bilskadeinstituttet AS Oslo, Norway 29.5 % Sparebank1 SR-Bank ASA 1 Stavanger, Norway 16.3 % Storebrand ASA Oslo, Norway 24.3 % Vervet AS Tromsø, Norway 25.0 %
1 In addition Gjensidige owns bonds in SpareBank1 SR-Bank amounting to NOK 420.9 million.
Interest income and expenses Fair Forsikring A/S (liquidated in 2011) 9.0 Tennant Holding AB 14.9 Gjensidige Bank Boligkreditt AS (owned by Gjensidige Bank ASA) 0.1 Oslo Areal AS 64.4 Total 992.6 691.3 912.2 855.6
Gross paid claims Gjensidige Pensjonsforsikring AS (owned by Gjensidige Pensjon og Sparing Holding AS) 43.1 Gjensidige Baltic AAS 5.0 8.2 Nykredit Forsikring A/S 538.0 606.4
Change in gross provision for claims Gjensidige Baltic AAS 9.5 10.1 Nykredit Forsikring A/S 18.1 62.8
180 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 181
Gains and losses in connection with liquidation of subsidiaries and associates Fair Forsikring A/S (liquidated in 2011) 227.8 Glitne Invest AS (liquidated in 2012) 237.8
182 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 183 22. Events after the balance sheet date
No significant events have occurred after the end of the period.
Intercompany balance The table below shows a summary of receivables/liabilities from/to subsidiaries, associates and related parties.
Intercompany interest-bearing debts and receivables within the group Oslo Areal AS 2,323.6 Gjensidige Bank Boligkreditt AS (owned by Gjensidige Bank AS) 75.0 Total intercompany interest-bearing debts and receivables group 2,398.5
Claims provision within the Group Gjensidige Baltic AAS 2.2 10.1 Total claims provision within the Group 2.2 10.1
Co-operating companies 1 and other related parties Fire Mutuals 18.6 165.0 Total intercompany balance 2,622.6 29.6 380.6 309.7 1 Cooperating companies are defined as companies with which Gjensidige Forsikring has entered into a long-term strategic alliance.
182 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 183
Deferred tax assets (75.6) Other intangible assets (684.0) (689.1) Investment properties, unrealised gains, proportion (158.4) Reinsurance provision, minimum requirement (11.5) (4.5)
Assets with 0 % risk weight 2,748.4 3,513.2 Assets with 10 % risk weight 1,770.0 1,287.2 Assets with 20 % risk weight 20,235.9 20,597.7 Assets with 35 % risk weight 0.5 0.5 Assets with 50 % risk weight 1,916.5 1,070.6 Assets with 100 % risk weight 30,258.0 30,492.1 Assets with 150 % risk weight 1,510.1 118.3
Weighted reinvestment cost derivatives 46.6 24.5 Primary capital in other financial institutions (108.5) (108.5)
FSAN minimum requirement (C) 3,011.5 2,829.5 Primary capital surplus (A - C) 11,576.6 10,633.4 23. Capital ratio
184 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 185 24. Solvency margin NOK million 2012 2011
Solvency margin capital in per cent of requirement 545.1 % 535.2 %
Restricted bank deposits Source-deductible tax accounts 63.3 59.1 Securities placed as security for insurance operations 0.6 13.8 Deposits placed as security for insurance operations 0.1 8.3 Total restricted bank deposits 63.9 81.3
184 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 185 27. Share-based payment Description of the share-based payment arrangements As at 31 December 2012, Gjensidige has the following share-based payment arrangements: Share-based remuneration for executive personnel with settlement in equity and cash (remuneration scheme)
The fair value at the grant date is measured based on the market price. The amount is recognized as payroll expenses at grant date. No specific company-related or market-related entitlement criteria apply to the shares, but the Company may carry out a re-assessment based on greater negative events and/or developments. The expected allocation is set to 100 per cent. The value of the cashsettled share is adjusted at each reporting period based on the share price at this time.
Fair value of the bonus shares allocated through the share savings programme is calculated on the basis of the share price at grant date, taking into account the likelihood of the employee still being employed after two years and that he/she has not sold his/her shares during the same two-year period. The amount is recognized during the vesting period which is two years.
Share-based remuneration 2012 4.0 Share savings programme for employees in 2012 1.8 Share buying programme for employees in 2011 0.9 Total expenses (note 17) 5.9 0.9
Outstanding 1 January 46,543 Granted during the period 21,574 46,951 Forfeited during the period 29 Cancelled during the period (2,111) (437) Exercised during the period Expired during the period
Outstanding bonus shares as at 31 December 2012 have an average remaining life of 1.09 years (1.88).
Outstanding 1 January Granted during the period 29,123 27,441 Forfeited during the period Cancelled during the period Exercised during the period Expired during the period
Outstanding bonus shares as at 31 December 2012 have an average remaining life of 1.11 years.
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 2012 and as per 31 December 2012.
Inge K. Hansen Gunnhild H. Andersen Trond Vegard Andersen Chairman Board member Board member
Statement by the Control Committee Gjensidige Insurance Group 190 I Gjensidige annual report 2012 Gjensidige annual report 2012 I 191
TO THE GENERAL MEETING AND THE SUPERVISORY BOARD OF GJENSIDIGE FORSIKRING ASA
The Control Committee has held seven meetings in 2012. All meetings have been held at the Company's offices in Oslo. One meeting was held over two days. The Company's management has provided supplementary information about the Company's financial position and other matters at the meetings. The committee has received satisfactory answers to its questions and been informed about matters that it requested information about.
The committee has reviewed the Board of Directors' report and the income statement for 2012. The committee finds the Board's assessment of the Company's financial position to be accurate and it recommends that the income statement be adopted as the Company's income statement for 2012.
Liselotte Aune Lee Hallvard Strømme Vigdis Myhre Næsseth Deputy Chairman Alternate member
The Supervisory Board recommends that the general meeting approves the submitted company accounts as Gjensidige Forsikring ASA’s annual accounts for 2012.
The Supervisory Board recommends that the general meeting approves the submitted consolidated accounts as Gjensidige Forsikring’s consolidated accounts for 2012.
The Supervisory Board recommends that the general meeting approves the Board of Directors’ report for Gjensidige Forsikring ASA for 2012.
Gjensidige is a leading Nordic insurance group built by customers, for customers. The Group has been listed on the Oslo Stock Exchange since 2010. For nearly 200 years, we have worked passionately to secure the lives, health and assets of our customers. We have about 3,100 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 19.4 billion in 2012, while total assets was NOK 94.2 billion.