Jostein Amdal, Executive Vice President 3,085.8 382.9 168.3 569.3 382.1 2,579 366 3,183 14,761 Janne Merethe Flessum, Executive Vice President (1.3.18-31.12.18) 1 2,012.0 217.6 137.8 218.1 207.8 80 69 196 3,819 Aysegul Cin, Executive Vice President (1.9.18-31.12.18) 1 780.4 30.0 116.2 60.8 30.0 1,489 Lars Gøran Bjerklund, Executive Vice President (1.9.18-31.12.18) 1, 11 956.8 38.4 91.6 250.7 38.4 Anne-Mari Kalager, acting Executive Vice President (1.9.18-31.12.18) 1, 12 885.4 20.1 55.4 217.3 20.1
Taxable temporary differences Property, plant and equipment and intangible assets 1,135.8 1,215.2 Shares, bonds and other securities 1,199.6 293.0 Profit and loss account 100.2 125.2 Account for deferred income from technical provisions including security provision 3,780.2 4,223.7 Total taxable temporary differences 6,215.7 5,857.2
Reconciliation of tax expense Profit before tax expense 8,613.9 4,029.5 Estimated tax of profit before tax expense (25%) (2,153.5) (1,007.4)
Tax effect of Dividend received 1.8 1.2 Tax exempted income and expenses 912.8 56.6 Tax on interest on Perpetual Tier 1 capital 12.8 Non-tax-deductible expenses (3.5) (18.8) Profit with lower tax rate 1.1 Correction previous years 74.9 (26.6) Total tax expense (1,153.6) (995.0) Effective rate of income tax 13.4% 24.7%
Change in deferred tax recognised directly in the balance sheet Adjustment related to merger with Nykredit and Mølholm 40.5 Adjustment related to initial application of IFRS 16 (20.1) Net deferred tax liabilities as at 31 December 1,391.4 1,289.0
The main result from the tax relief decision mentioned above, is that an increase in taxable gain from sale of shares in Gjensidige held by Gjensidigestiftelsen, leads to an increase in the taxable basis for depreciation in Gjensidige, which in turn give a decrease in tax payable. In February 2015, Gjensidige received a decision from the Central Tax Office for Large Enterprises in connection with the calculation of a tax gain as a result of the conversion of Gjensidige Forsikring BA into a public limited company (ASA) in 2010. The decision means that the tax payable for 2010 is reduced by around NOK 35 million. The tax will be further reduced for the ensuing years, by a total of around NOK 134 million at known tax rates. Gjensidigestiftelsen received a similar decision, and they have appealed the decision on the grounds that there is no basis for the change and that the
tax office has based its decision on an incorrect valuation. Gjensidige agrees with Gjensidigestiftelsen’s assessment.
The pension assets are higher than the calculated pension liabilities. However, the use of pension assets to pay future premiums is limited, and part of the overfunding is expected to be used to increase pension payments. An increase in the liabilities (such as, as a result of interest exemption) will be partly offset by a reduction in overfunding. Interest rate rises lead to a fall in liabilities that, in isolation, can lead to increased overfunding. The risk factors below must therefore be seen in the light of the overfunding.
Interest rate risk The pension assets’ exposure to interest rate risk is deemed to be moderate because the market value-weighted duration is approximately 3.6 years. The portfolio value will fall by approximately 3.6 per cent in the event of a parallel shift in the yield curve of plus one percentage point.
The pension liability will increase by approximately 12 per cent in the event of a parallel shift in the whole yield curve (fall in interest) of minus one percentage point. The value will fall by approximately 10 per cent in the event of an interest rate increase of one percentage point.
The pension liabilities are exposed to some credit risk because the Norwegian covered bond yield, which forms the basis for determining the discount rate, entails a certain credit risk.
Life expectancy and disability The life expectancy assumptions are based on the K2013BE table as reported by FNO (Finans Norge) AS.
Wage growth Future pension benefits depend on future wage growth and the development of the National Insurance basic amount (G). If wage growth in the Company is lower than the increase in G, the benefits will be reduced.
If wage growth is one percentage point higher, it will lead to approximately 3.6 per cent increase in the liability. If wage growth is one percentage point lower, it will lead to approximately 2.7 per cent decrease in the liability. If G is one percentage point higher it will lead to approximately 1.3 per cent decrease in the liability.
The pension assets must meet certain minimum requirements defined in Norwegian laws, regulations and in orders issued by the Financial Supervisory Authority of Norway (FSA).
Present value of the defined benefit obligation As at 1 January 2,043.7 559.9 2,603.6 2,149.1 552.2 2,701.3 Current service cost 24.5 9.6 34.1 25.0 9.2 34.2 Employers' national insurance contributions of current service cost 4.7 1.8 6.5 4.8 1.8 6.5
Fair value of plan assets As at 1 January 2,198.8 2,198.8 2,353.6 2,353.6 Interest income 64.0 64.0 60.5 60.5 Return beyond interest income 40.5 40.5 (116.2) (116.2) Contributions by the employer 164.8 6.3 171.2 6.7 6.7 Benefits paid (112.7) (112.7) (99.0) (99.0) Employers' national insurance contributions of benefits paid (26.4) (6.3) (32.8) (6.7) (6.7)
Pension expense recognised in profit or loss Current service cost 24.5 9.6 34.1 25.0 9.2 34.2 Interest cost 59.4 15.1 74.5 55.2 13.2 68.4 Interest income (64.0) (64.0) (60.5) (60.5) Settlement 2.1 2.1 Employers' national insurance contributions 4.7 1.8 6.5 4.8 1.8 6.5 Pension cost 24.5 26.5 51.0 24.5 26.3 50.7
Cumulative amount as at 1 January (2,685.3) (2,635.9) Return on plan assets 40.5 (116.2) Changes in demographic assumptions (133.4) (23.8) Changes in financial assumptions (74.4) 58.6 The effect of the asset ceiling 50.9 32.0 Exchange rate differences (0.0) 0.1 Cumulative amount as at 31 December (2,801.7) (2,685.3)
Other specifications Amount recognised as expense for the defined contribution plan 203.9 197.1
Expected contribution to the defined benefit plan for the next year 142.7 0.0 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 Gjensidige's population is 1.91 per cent (1.55). See explanation under Actuarial assumptions.
Sensitivity - 1%-point discount rate 12.2% 12.5% + 1%-point discount rate (10.1%) (9.8%) - 1%-point salary adjustment (2.7%) (3.1%) + 1%-point salary adjustment 3.6% 3.9% - 1%-point social security base amount 1.6% 1.7% + 1%-point social security base amount (1.3%) (1.5%) + 1%-point future pension increase 10.3% 12.4% 10% decreased mortality 2.8% 2.7% 10% increased mortality (3.8%) (3.6%)
Shares and similar interests 129.7 129.7 Bonds 2,020.7 2,020.7 Derivatives 48.4 48.4 Total 2,198.8 2,198.8 11. Goodwill and intangible assets
Cost As at 1 January 2018 1,943.4 749.9 1,097.7 366.1 4,157.1 Additions 2.1 216.8 218.9 Disposals/reclassifications (14.5) (9.9) (24.4) Exchange differences 3.1 1.1 0.8 (5.8) (0.8) As at 31 December 2018 1,946.6 753.2 1,300.7 350.3 4,350.7 Uncompleted projects 195.7 195.7 As at 31 December 2018, including uncompleted projects 1,946.6 753.2 1,496.4 350.3 4,546.5
Amortisation and impairment losses As at 1 January 2018 (100.0) (534.9) (583.4) (115.7) (1,334.0) Amortisation (61.2) (209.9) (89.2) (360.3) Disposals/reclassifications 3.7 9.9 13.6 Exchange differences (2.7) (1.7) (1.8) (6.2) As at 31 December 2018 (100.0) (598.8) (791.4) (196.7) (1,686.9)
Carrying amount As at 1 January 2018 1,843.4 215.0 603.4 250.4 2,912.2 As at 31 December 2018 1,846.6 154.3 705.1 153.6 2,859.5
Carrying amount As at 1 January 2019 1,846.6 154.3 705.1 153.6 2,859.5 As at 31 December 2019 2,950.1 161.4 748.6 116.0 3,976.2
Budgets/prognoses and the period for which the cash flows are projected The projection of cash flows is based on budget and forecast for the next four years reviewed by the management and approved by the Board. The growth in this five-year period is higher than the long-term growth expectancy. In the period after 2023 a lower annual growth has been used than in the budget period to arrive at a normal level before a terminal value is calculated. The terminal value is calculated in 2028.
Gjensidige Forsikring, Danish branch Need for impairment app. NOK 301 million No need for impairment No need for impairment Need for impairment app. NOK 623 million Nykredit portfolio No need for impairment No need for impairment No need for impairment No need for impairment Mølholm portfolio No need for impairment No need for impairment No need for impairment No need for impairment
Gouda portfolio No need for impairment No need for impairment No need for impairment Need for impairment app. NOK 9 million
Gjensidige Forsikring, Swedish branch No need for impairment No need for impairment No need for impairment No need for impairment Gjensidige Forsikring, white label No need for impairment No need for impairment No need for impairment No need for impairment
Cost As at 1 January 2019 28.5 456.6 485.1 Implementation of IFRS 16 1,110.3 13.0 1,123.3 Merger (0.0) 2.3 2.2 Additions 35.5 29.3 3.6 68.4 Disposals (33.2) (103.2) (136.4) Exchange differences (2.9) (1.5) (0.0) (4.4) As at 31 December 2019 28.5 1,109.7 383.5 16.5 1,538.1 Uncompleted projects 48.4 48.4 As at 31 December 2019, including uncompleted projects 28.5 1,109.7 431.9 16.5 1,586.5
Owner-occupied property in Gjensidige Forsikring ASA mainly consists of leisure houses and cottages that are not depreciated.
Lease liability 31 December 2018 Operational lease liability 31 December 2018 1,352.1 Effect of discounting of the lease liability (148.3) Lease liability recognized 1 January 2019 1,203.8
Summary of the lease liability in the financial statements At initial application 1 January 2019 1,203.8 Change in lease liability 27.3 New lease liabilities recognized in the year (21.4) Paid installment (Cash flow) (146.0) Paid interest (Cash flow) (30.4) Accrued interest (Profit and loss) 30.4 Exchange rate differences (Other comprehensive income) (3.2) As at 31 December 2019 (143.3)
Undiscounted lease liability and maturity of cash flows Less than 1 year 181.4 1-2 years 175.6 2-3 years 160.135 3-4 years 142.248 4-5 years 119.899 More than 5 years 387.831 Total undiscounted lease liability as at 31 December 2019 1167.17
Financial assets Financial derivatives Financial derivatives at fair value through profit or loss 934.1 934.1 577.9 577.9
Financial assets at fair value through profit or loss, designated upon initial recognition Shares and similar interests 14 6,545.3 6,545.3 5,061.4 5,061.4 Bonds and other fixed income securities 28,446.3 28,446.3 22,152.3 22,152.3 Loans 2.2 2.2
Financial liabilities at amortised cost Subordinated debt 18 1,198.6 1,201.6 1,198.3 1,186.3 Other liabilities 19 2,650.7 2,650.7 2,766.0 2,766.0 Liabilities related to direct insurance and reinsurance 427.0 437.8 422.4 425.5 Liabilities within the group 20 56.7 45.8 104.9 101.9
Financial assets Financial derivatives Financial derivatives at fair value through profit or loss 934.1 934.1
Financial assets at fair value through profit or loss, designated upon initial recognition Shares and similar interests 69.2 5,170.0 1,306.1 6,545.3 Bonds and other fixed income securities 10,051.3 17,686.4 708.6 28,446.3 Loans 2.2 2.2
Bonds and other fixed income securities classified as loans and receivables 15,226.1 15,226.1 Loans 2,410.8 2,410.8
gains rec. in profit or loss that are attributable to instruments held as at
Shares and similar interests 1,442.5 96.6 126.4 (159.5) (153.5) 1,352.5 70.1 Bonds and other fixed income securities 904.3 60.7 (187.6) 1.3 778.7 Total 2,346.8 157.4 126.4 (347.1) (153.5) 1.3 2,131.2 70.1
Perpetual Tier 1 capital ¹ 999.8 0.7 1,000.5 Subordinated debt 1,198.0 0.3 1,198.3
Total shares and similar interests owned by Gjensidige Forsikring ASA 6,545.3 15. Loans and receivables
Loans and receivables Bonds classified as loans and receivables 14,705.4 15,341.4 Other loans 9.4 129.9 Total loans and receivables 14,714.8 15,471.3
Other receivables Receivables in relation with asset management 776.9 730.0 Other receivables 87.5 90.3 Total other receivables 864.4 820.2
Provisions for unearned premiums As at 1 January 9,399.6 (39.6) 9,360.1 8,769.5 (41.4) 8,728.0 Addition through merger 172.8 172.8 Increase in the period 24,703.4 (716.3) 23,987.2 23,795.3 (714.2) 23,081.1 Earned in the period (24,236.4) 712.9 (23,523.5) (23,148.0) 715.9 (22,432.0) Exchange differences (36.4) 0.6 (35.8) (17.2) 0.1 (17.0) Total as at 31 December 10,003.0 (42.3) 9,960.7 9,399.6 (39.6) 9,360.1 1 For own account.
17. Equity Share capital At the end of the year the share capital consisted of 500 million ordinary shares with a nominal value of NOK 2, according to the statutes. All issued shares are fully paid in.
In thousand shares 2019 2018 Issued 1 January 500,000 500,000 Issued 31 December 500,000 500,000
At the end of the year the number of own shares was 18,529 (31,371).
Perpetual Tier 1 capital Perpetual Tier 1 capital consists of a perpetual hybrid instrument, classified as equity.
NOK millions 2019 2018 As at 31 December NOK 7.25 kroner (7.10) based on profit for the year 3,625.0 3,550.0
General terms Regulatory regulation Solvency II Solvency II Regulatory call Yes Yes Conversion right No No 19. Provisions and other liabilities
Other provisions and liabilities Restructuring costs 1 71.6 125.6 Other provisions 2 222.9 190.9 Total other provisions and liabilities 294.5 316.5
Earned premiums written and gross claims 28.1 50.0 1,157.0 815.3 Administration expenses 325.1 392.5 440.0 473.9 Interest income and expenses 60.4 39.9 Gain and losses on sale and impairment losses on subsidiaries 3,093.1 153.2 76.0
Group contributions NAF Forsikringsformidling AS 16.5 Gjensidige Tech AS (former Gjensidige Bolighandel AS) 24.2 24.9
Transactions with related parties that are defined as core business (reinsurance, distribution, claims handling) as well as lending are priced based on market prices. Group functions of a purely administrative nature (such as IT, purchasing, accounting) are priced based on the cost-plus method.
Gjensidige Forsikring has granted a loan to Oslo Areal amounting to NOK 2.4 billion (2.5) at year end. The loan is interest-bearing and total loan limit is NOK 4.0 billion. Gjensidige Forsikring is liable externally for any insurance claim arising in the cooperation mutual fire insurers' fire insurance operations. 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.
Share-based remuneration for key personnel 3.7 3.4 Share savings programme for employees 7.9 6.9 Total expenses (note 7) 11.6 10.3
The number of bonus shares Outstanding 1 January 88,765 76,354 Granted during the period 44,326 51,454 Forfeited during the period (3,692) (4,929) Released during the period (34,533) (31,595) Cancelled during the period (3,854) (2,418) Movement to/(from) during the period (528) (101) Outstanding 31 December 90,484 88,765 Exercisable 31 December 0 0
The number of shares Outstanding 1 January 31,885 28,868 37,349 34,060 Granted during the period 14,084 12,869 13,256 11,919 Exercised during the period (17,097) (15,565) (18,986) (17,418) Cancelled during the period 0 0 (1,264) (1,127) Modification dividend during the period 1,318 1,233 1,530 1,434 Outstanding 31 December 30,190 27,405 31,885 28,868 Exercisable 31 December 0 0 0 0
Statement from the Board and the CEO The Board of Directors and the CEO have today considered and approved the integrated annual report for Gjensidige Forsikring ASA, the Group and parent company, for the 2019 calendar year and as of 31 December 2019. The integrated annual report includes the annual accounts, the Directors’ report and statements on corporate governance and corporate social responsibility.
We hereby declare that, to the best of our knowledge: o the 2019 annual accounts for the Group and the parent company have been prepared in accordance with applicable accounting standards; o the information in the accounts gives a true and fair picture of the Group and the parent company’s assets, liabilities, financial position and overall performance as of 31 December 2019; o the integrated annual report, prepared in accordance with the International Integrated Reporting Framework (IR), meets the requirements for the content of the Directors’ report, the statement on corporate governance, and the Global Reporting Initiative’s (GRI) standards for corporate social responsibility and sustainability reporting; o the integrated annual report for the Group and the parent company, including the Directors’ report, gives a true and fair picture of - the Group and the parent company’s development, performance and position, - key risk and uncertainty factors facing the Group and the parent company.
December 2019, the income statement, statement of changes in equity and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and
In our opinion: • The financial statements are prepared in accordance with the law and regulations. • The accompanying financial statements give a true and fair view of the financial position of the
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTIL"), its network of member firms, and their related entities. DTIL and each of its member firms are legally separate and independent entities. DTIL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.no for a more detailed description of DTIL and its member firms.
The calculation models, assumptions and estimates applied are of great significance when measuring the claims provisions. The most important assumptions and estimates relate to: • Estimate of future claims payments, which, among other, are based on historic payment patterns,.
We challenged and evaluated the choice of models and the use of assumptions and estimates in the measurement of claims provisions.
How the matter was addressed in the audit _____ .......,,,_., .,,,-------·----·-·---·-M=--~~------MW mWHNHN,Nmw,wN--N-WNPNff,...,,.._WKNff--N--, ~,-----~--,-----·---m=-----,·--~,---·--------·,. 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.
Gjensidige has an extensive IT environment with a variety of different IT systems that support financial reporting. IT systems include both in-house developed and
Good governance and control of IT systems in Gjensidige and service providers are essential for ensuring accurate, complete and reliable financial reporting and is thus identified as a key audit matter.
I We used our own IT specialists to understand the overall l I governance model for IT systems and in the assessment 1 and testing of control activities related to IT.
Management is responsible for the other information. The other information comprises information in the Integrated annual report, except the financial statements and our auditor's report thereon.
therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
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 3-3c (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.
Description of the GRI-principles and requirements to the Board’s report – with references
The requirements according to GRI and the Board’s report are listed below, with reference to where the issue is covered in the integrated report. We believe all the requirements to both GRI and the Board’s report are fully covered.
Overview of requirements in GRI and the Board’s report Disclosure number GRI
Requirements Board’s report Disclosure description Comment Page 1. Organisational profile Rskl§ 3-3a 102-1 Name of the organization Gjensidige Forsikring ASA
Mission, vision and position “Code-of-conduct” Our core values 4. Governance 102-18 – 102-39 Rskl §3-3b / Vphl5-8a Governance structure Risk understanding and mitigation are essential for long term value creation 46-55
102-54 Claims of reporting in accordance with the GRI Standards Introduction 7 102-55 GRI content index Appendix 1 212 102-56 External assurance Audit report from Deloitte 207
Our business model Creating value for our stakeholders 103-3 Evaluation of the management approach Taxes paid locally 91
Our business model Creating value for our stakeholders 103-2 The management approach and its components
Our commitment to our suppliers Reducing carbon intensity 103-1 Explanation of the material topic and its Boundary Our commitment to our suppliers 82 103-2 The management approach and its components Our commitment to our suppliers 82
Engaged employees A safer society 408 Child labor Engaged employees A safer society 409 Forced or Compulsory Labor Engaged employees A safer society 410 Security Practices Engaged employees GDPR and notification 411 Rights of Indigenous people Prohibited according to local law and according to Sustainability policy to comply with Global Compact 412 Human Rights Assessment Engaged employees A safer society 103-1 Explanation of the material topic and its Boundary Stakeholder analysis 31 103-2 The management approach and its components Engaged employees 73-75 103-3 Evaluation of the management approach
Gjensidige has distribution and claims handling at several local offices in all countries and contribute to jobs and local tax income 414 Supplier social assessment Our commitment to our suppliers Reducing carbon intensity 414-1 Percentage of new suppliers that were screened using social criteria
Requirements Board’s report Disclosure description Comment Page 103-1 Explanation of the material topic and its Boundary Stakeholder analysis 31 103-2 The management approach and its components Areas subject to strict follow-up of compliance 49-50 103-3 Evaluation of the management approach Areas subject to strict follow-up of compliance 49-50 416 Customer health Business mode A safer society - sustainable products 417 Marketing and Labeling
A safer society - customer complaints 91 103-1 Explanation of the material topic and its Boundary Stakeholder analysis 31 103-2 The management approach and its components Areas subject to strict follow-up of compliance 49-50 103-3 Evaluation of the management approach Areas subject to strict follow-up of compliance 49-50 418 Customer Privacy Code-of-conduct
Substantiated complaints concerning breaches of customer privacy and losses of customer data
Explanation of the material topic and its Boundary Stakeholder analysis 31 103-2 The management approach and its components Areas subject to strict follow-up of compliance 49-50 103-3 Evaluation of the management approach Areas subject to strict follow-up of compliance 49-50
NRS 16 2.5 Research and development Statement concerning the annual accounts 98
NRS 16 2.8 Going concern Statement concerning the annual accounts 98
NRS 16 2.9 Allocation of the profit before other income and expenses Statement concerning the annual accounts 108
Appendix 2 – Description of ratings and whom we support Membership, obligations, certifications.
Rating Morgan Stanley (MSCI) Sustainalytics Standard & Poor’s (S&P) Carbone Disclosures Project (CDP)
Gjensidige is a leading Nordic insurance group listed on the Oslo Stock Exchange. We have about 3,700 employees and offer insurance products in Norway, Denmark, Sweden and the Baltic states. In Norway, we also offer pension and savings.
The Group’s operating income was NOK 26 billion in 2019, while total assets were NOK 112 billion.