Furthermore, the interest-rate sensitivity of the fixed income portfolio is shown in the table below. this table does not include the amortized cost portfolio, and the effect of the swap agreements in gjensidiges arbejdsskadeforsikring have not been included either because they have a reciprocal effect on the liabilities. the effect on profits and equity is the same, and tax effects have been disregarded.
the following graph shows the expected payout pattern for the group’s premium and claims provisions at year-end 2010 and 2009 respectively. approximately one third of the provisions are expected to be paid out within one year, and the average duration is about 3.2 years. a portfolio of fixed income instruments will match these cash flows, but the group has no formal policy for the maximum allowable deviation.
figure 7a - payout pattern insurance liabilities, gjensidige group the next graph shows the corresponding payout pattern for gjensidige Forsikring asa. the average duration for gjensidige Forsikring asa is slightly shorter than for the group.
the group owns most of its properties directly, although a small part of the portfolio is invested in property funds outside of norway. in addition to the amounts invested through funds, an additional noK 124.7 million is committed, but not called upon. the management of the directly owned real estate portfolio is carried out in the wholly owned subsidiary oslo areal. the portfolio consists both of property for own use and investment properties. the real estate portfolio has its largest concentration in offices in the oslo area, but also has offices in other major cities in norway as well as a substantial holding of shopping centers. in addition there is a property for own use and an investment property in denmark.
hedge fuNds Hedge fund is a common term for funds that invest in most types of asset classes with few limitations on the use of derivatives, shorting or leverage in order to earn a return that is partly independent of (has a low correlation with) traditional market indices. gjensidige utilizes hedge funds to take out active risk in the individual asset classes and to take out allocation risk between the individual asset classes and/or risk premiums. Both fund-of-funds and individual funds are used. the fund-of-fund manager will perform the selection and follow-up of the underlying hedge funds, thus reducing operational risk.
Horizon tactical trad usd-B 137.1 the Winton evolution Fund 107.7 sector Healthcare - a usd 74.4 sector europower Fund Class a eur 72.0 sector speculare iV Fund Class a usd 51.4 total five largest hedgefunds 442.6 total hedgefunds 532.5 foreigN eXchaNge risk Foreign-exchange risk is defined as the financial loss resulting from a fluctuation in exchange rates. generally, foreign-exchange risk in the investment portfolio is hedged close to 100 per cent, within permitted limit of +/- ten per cent per currency, except for smaller mandates where active currency management is a part.
the group underwrites insurance in the scandinavian and Baltic countries, so it has insurance liabilities in these currencies. the foreignexchange risk at both the group and company levels is generally hedged by matching technical provisions with investments in the corresponding currency. in gjensidige Baltic, there are investments in eur-denominated interest-bearing papers that are not equivalent to liabilities in eur.
the table below shows the foreign currency exposure by currency type. the gross position shows the exposure after taking into account the distribution of the insurance liabilities among different currencies and includes the investments in the subsidiaries that are entered in the parent company’s accounts. in the net position column, the hedges of the subsidiaries are included.
in the opposite case, if there is a ten per cent weakening of noK against all other currencies, the effect on the basis of the situation as at 31 december 2010 will be about the same amount, but with an opposite sign, provided that all other variables are held constant.
Currency transactions are performed within strictly defined limits and are employed in both the ordinary management and to hedge financial instruments. the table below shows both gross and net positions. Currency hedging (not including the hedging of investments in subsidiaries ) is done by means of forwards or swaps, and currency position is monitored continuously against exposure limits per currency.
table 17 – foreign currency exposure noK million gross position in currency gross position in Nok currency contracts
the following tables show the allocation of the fixed-income portfolio by rating category at year-end in 2010 and 2009 table 19a – fixed-income portfolio per rating category
Nok million 31.12.2009 issuer den norske stat 3,893.6 danske Bank 2,062.2 nykredit realkredit 1,861.5 dnB nor Bank 1,506.6 dansk landbrugs realkreditfond 990.7 realkredit danmark 912.4 Brf Kredit 773.1 Barclays Bank plc 738.6 svenska Handelsbanken stockholm 638.3 uBs ag jersey Branch 569.3 total ten largest issuers 13,946.3 total fixed income portfolio 37,859.0 credit risk iN the iNsuraNce operatioNs the table below presents the age distributions of the receivables arising out of direct insurance operations and of the reinsurance receivables.
For a going concern, this will result in a positive net cash flow under normal circumstances. large net outflows will normally arise only from acquisitions or recapitalization of subsidiaries. in case of a large claim or catastrophic event, the payments will take place some time after the event, and the reinsurers will cover most of the amount within a short time after the payments have been made to the claimants. in an extreme scenario, reinsurers could fail to honor their obligations after such a catastrophic event.
Nok million incl. bonds held to maturity excl. bonds held to maturity
Bank deposits 560.5 560.5 Bonds and certificates issued by, or guaranteed by oeCd-countries
Fixed income portfolio with rating a or better and maturity less than 6 months
gjensidige pensjonsforsikring (gpF) has separate strategies for the funds in each portfolio – the unit-linked, paid-up policy, other group policy and company portfolios. gpF does not bear investment risk for the unit-linked portfolio; both positive and negative returns are passed on in full to the customers. the other portfolios expose the Company’s equity to risk. For the company and other group policy portfolios, very little risk is born, the funds are mainly invested in bank deposits and fixedincome instruments with high creditworthiness. the company portfolio is financed by the Company’s equity and also includes a small trading portfolio to support incoming and/or outgoing capital in the customer portfolios. the other group portfolio is funded by premium reserves, claims provisions for unreported and/or unsettled claims and the risk equalization fund. the paid-up policies give a minimum guaranteed interest to the customers at the same time as the customers receive a percentage of any excess return above this amount. therefore, for the paid-up policy portfolio, the objectives are to be able to offer the customers a competitive return over a period of time at the same time as the risk relative to the strain on equity is kept at a targeted low level and to follow a balanced strategy where the risk-taking is managed by the current status of the buffer capital at any given time. the pension and
MaNageMeNt of credit aNd fiNaNcial risk – gjeNsidige BaNk the banking business is exposed to credit risk in its loan portfolio and the liquidity and interest-rate risk from any mismatches of maturity and time of repricing between assets and liabilities. the bank is also exposed to credit risk in connection with placement in securities. the bank does not invest in equity instruments, nor does it have any foreign currency positions. the Board of directors of gjensidige Bank approves the Company’s credit policy and lending regulations. a credit strategy is also specified annually, as well as limits for market and liquidity risk.
risk areas are continuously monitored and statistical models used to calculate capital needs given specified confidence level for most risk categories. the capital need is calculated over the strategy horizon in the current strategy plan, included in the iCaap document, and reported to Board of directors quarterly.
in 2009, gjensidige Bank acquired the consumer loans portfolio of Citibank’s norwegian business. after that, the credit business was divided into two main parts – home loans and consumer loans.
credit risk Credit risk is the risk of losses incurred as a result of customers/opposite parties not being able to or willing to fulfill its obligations to the bank. the bank’s credit risk comes from loans and credits given.
the Board of directors sets the limits for the bank’s credit risk through the credit policy and the yearly credit strategy which lays out the guidelines for the credit business.
gjensidige Bank’s existing portfolio mainly consists of home loans within 80 per cent of an acceptable value. loans that exceed 80 per cent of the acceptable value are only given to designated customer groups. an analysis of the loan portfolio carried out by lindorff decision shows a very high customer quality. all new home loan applications are subject to evaluation of customer financial strength, and in addition to service a loan with today’s conditions, the customer must also be able to service its total loan portfolio in case the rate increases by up to 4.5 percentage points.
gjensidige Bank is one of the largest providers of consumer finance in norway. this portfolio has higher credit risk than the home loan portfolio, but the risk is priced according to internal models. the portfolio development is closely monitored through analyses, and evaluated based on risk adjusted returns. the portfolio show sound profitability.
the risk in the loan portfolio is measured on a monthly basis by the internal model. the customers are categorized in three main categories depending on their risk profile. Classification criteria are not similar in the two main parts, but are shown in aggregate for gjensidige Bank in the table below.
Nok million gross lending per cent individual impairment losses group impairment losses table 27b - risk classification banking operations 2009
Nok million gross lending per cent individual impairment losses group impairment losses the following table shows the amount of unpaid overdue payments and overdrafts. gjensidige Bank bought the norwegian part of Citibank’s consumer loans operations in december 2009. as the portfolio migration was late in the year, payment overdue did not materialize in 2009 figures. the acquisition of the portfolio has increased the overall profitability in gjensidige Bank in 2010, as well as increased overdue payments and losses on loans. overdue loans are subject to impairment on an individual basis every quarter if exposure is above noK 200 thousands. in smaller exposures, groups of similar risky assets are evaluated, and net present value of future payments is calculated. the difference between net present values of future cash flows and loan exposure balance is posted as impairment on existing loans.
table 28 - payments overdue Nok million 31.12.2010 31.12.2009 0-30 days 233.9 0.7 30-90 days 86.3 4.9 over 90 days 157.5 28.4 total 477.8 34.0 interest rate risk the Board of directors has approved limits for interest rate risk. interest rate risk under one year is limited to an exposure of maximum 500 milli years. there is an additional limit for interest rate risk over all durations of +/- 300 milli years. the bank’s maximum total exposure to interest rate risk is 500 milli years. interest rate risk below three month duration is reported, but is not included in overall risk limit. at full interest rate exposure a parallel shift in the yield curve of one percentage point implies a maximum loss tolerance of noK five million. utilization of the limits is reported monthly to the Board of directors.
as at 31 december 2010 the bank has a negative interest rate risk exposure in the interval three months to one year of 313 milli years. net accumulated interest rate risk exposure above three months duration is negative with 299 milli years.
We distinguish between two types of liquidity risk • the bank’s credit rating is downgraded due to severe losses, but liquidity is still available in the financial market • the bank has no access to liquidity due to severe losses the provision for the first type of liquidity risk is estimated by the internal total risk model. losses incurred from a rating downgrade are defined as a charge to equity arising from increased funding costs.
through downward economic trend-scenarios and stress testing linked to the probability and consequences of falling financing, requirements for deposits-to-loan ratio, maturity structure and liquidity reserve are determined. a relative short-term time-frame is the base of these estimates.
the Board of directors has approved limits to the liquidity structure over different time periods, and a target for long-term liquidity. the bank shall have available liquidity reserves (buffer capital) in short term deposits, liquid financial assets and/or committed drawing facilities that are adequate to ensure a reasonable amount of time to take actions if liquidity in the financial markets evaporates.
the liquidity reserve shall cover the sum of a) 100 per cent of funding due in one month b) 100 per cent of funding due in two months c) 75 per cent of funding due in three months d) 50 per cent of funding due in four months e) 50 per cent of funding due in five months f) 25 per cent of funding due in six months g) unexpected decrease in deposits of nine per cent measured by last public quarterly financial statement
Based on the above requirements the liquidity reserve requirement as at 31 december 2010 is noK 1,201 million. at year-end gjensidige Bank had a liquidity reserve of noK 1,816.1 million, where noK 857.0 mil-
Nok million month months months years More than 5 years without maturity total debt to credit institutions 3.8 13.6 542.5 559.9 deposits from and liabilities to customers 9,079.7 0.2 41.4 0.2 9,121.4 debt incurred through the issue of securities 119.2 229.7 955.0 3,776.3 5,080.2 loan approvals and unused drawing rights 2,367.0 2,367.0 derivatives - gross outflows * 0.4 12.7 37.5 50.6 total liabilities 11,566.3 233.7 1,022.7 4,356.5 17,179.2
Nok million month months months years More than 5 years without maturity total debt to credit institutions 2.8 14.8 556.2 573.8 deposits from and liabilities to customers 6,550.4 6,550.4 debt incurred through the issue of securities 117.2 403.8 1,963.2 2,130.5 4,614.7 loan approvals and unused drawing rights 2,578.0 2,578.0 derivatives - gross outflow * 2.3 3.9 33.0 47.2 86.5 total liabilities 9,248.0 410.5 2,011.1 2,733.9 14,403.4
Concentration risk Concentration risk is the possible losses incurred due to large single exposures or limited geographical or business diversification. Concentration risks are managed through risk limits, and are measured and evaluated in annual stress tests and scenario analyses within the credit risk area.
in the liquidity reserve, the largest issuer of financial assets is the norwegian government with noK 514.9 million.
descriptioN of the segMeNts general insurance private Norway gjensidige is a broad supplier of general insurance products to private consumers in norway. the company is a market leader in motor insurance and accident and health insurance and agriculture insurance, and it also has a solid position in other types of private insurances.
general insurance commercial Norway gjensidige is a complete provider of general and life insurance products for norwegian businesses. the company has a particularly strong position in the market segment for medium-sized enterprises, and it is the clear market leader in accident and health insurances.
general insurance Nordic the group offers general insurance products to private and commercial customers in sweden and denmark. Both operations are run under the brand gjensidige. gjensidige has entered inte a strategic collaboration with nykredit concerning distribution of general insurance for gjensidige to the private market under the brand nykredit.
pension and savings gjensidige offers a broad range of pension, investment and savings products for both the private and commercial market. the products offered includes among others occupational pensions, fund pensions, paid-up policies and fund savings.
other assets 3 42,908.6 total assets 74,868.9 other liabilities 3 3,774.5 total liabilities 52,900.7 1 eliminations etc. consist of internal eliminations and other income and expenses not directly attributable to one single segment. 2 there is no significant income between the segments at this level in 2009 and 2010. 3 other assets and liabilities are either not directly attributable to one single segment or can not be allocated on a reasonable basis to a single segment.
carrying amount as at 1 january 2010 1,507.5 338.1 85.5 416.0 7.5 2,354.6 as at 31 december 2010 2,580.7 634.6 68.1 416.0 230.9 3,930.2 amortisation method n/a straight-line straight-line straight-line straight-line useful life (years) n/a 10 10 5-8 5-10 the group’s intangible assets are either acquired or internally developed.
1 goodwill is amortised because previously disparaged deferred tax asset in sweden now has been utilised. in accordance with iFrs 3 goodwill is therefore amortised by the same amount.
2 nykredit Forsikring has sold the acquisition portfolio to the danish branch of gjensidige Forsikring.
each of the units is considered to be separate cash-generating units. in oslo areal is each underlying property defined as a cash-generating unit, and goodwill related to oslo areal occurs as a consequence of provision for deferred tax on temporary differences (tax amortization benefit). in glitne invest every segment in the subsidiary Hjelp24 is a cash-generating unit. goodwill in gjensidige Bank is established through the purchase of Citibank’s norwegian portfolio of consumer loans.
an impairment loss of goodwill has also been recognised in oslo areal amounting to noK 37.0 million. the impairment is of a technical nature due to this being goodwill connected to deferred tax reversed. From the amount of noK 37.0 million, noK 11.0 million is recognised as impairment losses, while noK 26.0 million is recognised as disposal through tax cost.
there is no need for recognition of impairment losses of goodwill or other intangible assets related to other business combinations/portfolios.
recoverable amount for the cash flow generating unit is determined based on an assessment of the utility value. the utility value is based on a discounting of future cash flows, with a relevant discount rate that takes into account maturity and risk.
Budgets/prognoses and the period for which the cash flows are projected the projection of cash flows from the swedish, danish and Baltic subsidiaries is based on budgets for the next three years reviewed by the management and approved by the boards. in the period after 2014 an annual growth of three per cent has been projected until 2019 for gjensidige sweden and Fair Forsikring, and from 20 to ten per cent in gjensidige Baltic. the terminal value is calculated in 2019. the growth in gjensidige sweden and Fair Forsikring is grounded in the fact that the companies are small and with a solid parent company, which gives them good chances of increasing market shares. in gjensidige Baltic it is expected a market growth which will have an impact on the future cash flows. Cash flows are estimated to a normal level before a terminal value is calculated. gjensidige normally has a ten-year horizon on its models, as the company is in a growth phase and a shorter period will not give a correct view of expected cash flows.
the management’s method as far as possible, the management has sought to document the assumptions upon which the models are based through external information.
growth rate the growth rate is considered to be 3.0 per cent. this is based on the following assumptions: long-term real Bnp-growth 2-3 %
long-term expected inflation 2-3 % total nominal expected growth 4-6 %
discount rate the discount rate is before tax, and is composed of a risk-free interest rate, a risk premium, and a market beta. the risk-free rate is equivalent to average five-year and ten-year interest rate on government bonds in the respective countries where the subsidiaries operate. in the Baltic cr-level in growth period cr-level when calculating terminal value cashflow generating units 5 – intangiBle assets (Cont.)
Nok million 2010 2009 subsidiaries/portfolios glitne invest 183.2 165.4 oslo areal 220.6 266.9 gjensidige Forsikring, danish branch Fair Forsikring group 1 (portfolio) 534.3 673.5 nykredit Forsikring 2 (portfolio) 487.9 gjensidiges arbejdsskadeforsikring 98.4 nykredit Forsikring 753.6 gjensidige Baltic 65.5 69.8 gjensidige sweden 151.2 251.2 gjensidige Forsikring, swedish branch 84.7 79.2 gjensidige Bank 1.5 1.5 total 2,580.7 1,507.5
1 subordinated loan of noK 24,0 million is included in cost.
gjensidige also owns bonds issued by spareBank1 sr-Bank. the carrying amount of these bonds is noK 5.0 million.
as at 31 december 2010 360.6 841.7 1,202.2 uncompleted projects 53.5 53.5 as at 31 december 2010, including uncompleted projects 360.6 895.2 1,255.8 depreciation and impairment losses depreciation for the year (6.8) (95.2) (102.0)
7 – owNer-occupied propertY, plaNt aNd eQuipMeNt each component of owner-occupied property, plant and equipment are depreciated using the straight-line method over estimated useful life. land is not depreciated. estimated useful life for the period and comparable periods are between ten and 50 years for owner-occupied property, with technical installations having the highest depreciation rate, and between three and five years for plant and equipment.
the market value of owner-occupied property exceeds the carrying amount as shown below. For plant and equipment there is no material difference between the carrying amount and the market value. some equipment, such as furniture, is fully depreciated, but still in use.
Carrying amount of land and owner-occupied property 318.5 282.2 excess value beyond carrying amount 14.2 66.5
the gjensidige insurance group carries investment properties at fair value. investment properties consist of commercial properties that are rented to tenants outside the group, or are acquired in accordance with the company’s capital management strategy. properties used by group companies are classified as owner-occupied property, see note 7. in properties that are both rented to tenants outside the group and that are used by the group’s own business, the parts held for rent that can be sectioned are classified as investment property.
the investment properties are mainly located in oslo and the surrounding area, and stavanger and trondheim. the group owned no investment properties outside of norway in 2009. one property in denmark has been reclassified from owner-occupied property to investment property. the average rental period is 6.2 years, and the portfolio of investment properties includes offices, shopping centres and education buildings.
in 2009 and 2010 the group’s own valuation model has been used both in the quarterly financial statements and at year end. in addition, two independent external advisors were brought in to value selected parts of the portfolio at year end, thus ensuring that more than 90 per cent of the carrying amounts has been benchmarked against one or two externally assessed values.
the group’s valuation model values each property separately. the most important inputs are yield, market rent, contractual rent, potentially vacant premises, the properties’ long-term normalised operating costs and any investment requirements. Yield is determined based on a normal required rate of return adjusted for the location of the property, type, technical standard and the contracts. the normal required rate of return is determined from the required rate of return that can be derived from transactions in the market, and expectations of interest level and risk adjustment. the market rent is determined from existing contracts on the property and comparable properties, observations from contractual negotiations, requests for offers and information from realtors on recently signed contracts on comparable properties.
Based on market rent, contractual rent, potentially vacant premises and the long-term normalised operating costs, an annual net rent is calculated and discounted by the required rate of return in order to determine the fair value of the property. in addition corrections are made when the need for upgrades is considerable or there are planned reconstructions or rehabilitations.
there are contractual commitments regarding development of investment properties amounting to noK 96.0 million, and also a commitment to invest noK 45.0 million in a residential development project. the latter commitment falls due in the period 2011 to 2013, depending on the progress of the project.
the group has no investment properties for leasing or classified as available for sale.
there are no loans with collateral in investment properties in 2009 or 2010.
Nok Yield average market rent average contractual rent average value per sqm.
Nok million Market rent reduced by 10 % Market rent as at 31.12.2010
the table below shows how the sensitivity of the yield and the market rent affects the value of the property portfolio, as it stands as at 31 december 2010.
Nok million Notes carrying amount as at 31.12.2010 fair value as at carrying amount as at 31.12.2009 fair value as at financial assets Financial derivatives Financial derivatives at fair value through profit or loss 10 382.1 382.1 138.1 138.1 Financial derivatives subject to hedge accounting 10 154.5 154.5 65.1 65.1
Loans and receivables Bonds and other fixed income securities classified as loans and receivables 11 5,163.1 5,154.8 1,364.7 1,379.1 receivables related to direct operations and reinsurance 11 3,585.1 3,585.1 3,435.8 3,435.8 prepaid expenses and earned, not received income 11 84.5 84.5 56.9 56.9 financial liabilities Financial derivatives Financial derivatives at fair value through profit or loss 10 155.3 155.3 92.9 92.9 Financial derivatives subject to hedge accounting 10 0.2 0.2
Financial assets at fair value through profit or loss, initial recognition shares and similar interests 252.1 2,258.0 1,772.8 4,282.9 Bonds and other fixed income securities 12,148.4 6,233.0 8.5 18,389.9 financial liabilities Financial derivatives Financial derivatives at fair value through profit or loss 155.3 155.3
perspektiv 121gjensidige annual report 2010 resu lts 9 – FinanCial assets and liaBilities (Cont.)
Quoted prices iN active Markets Quoted prices in active markets are considered the best estimate of an asset/liability’s fair value. a financial asset/liability is considered valued based on quoted prices in active markets if fair value is estimated based on easily and regularly available prices and these prices represent actual and regularly occurring transaction transactions at arm’s length distance. Financial assets/liabilities valued based on quoted prices in active markets are classified as level one in the valuation hierarchy.
the following financial assets/liabilities are classified as level one in the valuation hierarchy • listed shares • norwegian government/government backed bonds and other fixed income securities • exchange traded funds valuation based on observable market data When quoted prices in active markets are not available, the fair value of financial assets/ liabilities is preferably estimated on the basis of valuation techniques based on observable market data.
the following financial assets/liabilities are classified as level two in the valuation hierarchy • Currency futures, equity options, forward rate agreements and currency swaps, in which fair value is derived from the value of underlying instruments. these derivatives are valued using common valuation techniques for derivatives (option pricing models etc.).
• equity funds, bond funds, hedge funds and combination funds, in which fair value is estimated based on the fair value of the underlying investments of the funds.
the following financial assets are classified as level three in the valuation hierarchy • unlisted private equity investments. the private equity investments that are not organized as funds are valued using cash flow analysis, price multiples and recent market transactions. the private equity investments that are organized as funds are valued based on naV values (net asset Value) as reported by the fund administrators in accordance with ipeV guidelines (international private equity and Venture capital Valuation) set out by the equity Venture Capital association. the naV values are estimated by the fund administrators by using the valuation techniques best suited to estimate fair value, given the actual circumstances of each underlying investment. Because of late reporting from the funds, the naV values from the previous quarterly reporting are used in estimating fair value. these values are then adjusted for known events since the last reporting date. the typical known event is the increase/decrease in value on listed shares owned by a fund.
• real estate funds. the real estate funds are valued based on reported naV values as reported by the fund administrators. Because of late reporting from the funds, the naV values from the previous quarterly reporting are used in estimating fair value.
Net realised/ unrealised gains recognised in profit or loss purchases sales settlements
Bonds and other fixed income securities decrease in value 10 % 0.9 total 121.0 valuatioN hierarchY 2009 the table shows a valuation hierarchy where financial assets/liabilities measured at fair value through profit or loss are divided into three levels based on the method of valuation.
Quoted prices in active markets level 2 valuation techniques based on observable market data level 3 valuation techniques based on non-observable market data total financial assets Financial derivatives Financial derivatives at fair value through profit or loss 0.5 137.6 138.1 Financial derivatives subject to hedge accounting 65.1 65.1
Financial liabilities at fair value through profit or loss, initial recognition interest-bearing liabilities at fair value through profit or loss 1,348.9 1,348.9
interest-related contracts interest rate futures 518.9 1,022.2 1,885.4 1,204.4 interest rate swaps 4,007.7 4,296.4 85.9 (3.0) 5,363.5 4,225.4 4.8 (75.4)
currency-related contracts equity-related contracts derivatives are used in accordance with «regulations on general insurance Companies’ asset Management» in order to improve the efficiency of capital management and risk management.
in each asset class the individual asset managers use appropriate derivatives, and most of the financial derivatives mentioned below are used regularly. the use of derivatives is restricted by the agreement with the individual manager, and requirements are made for approved product lists and sufficient expertise and systems on the part of the manager. short positions (undertakings to sell securities that the company does not already own, or to purchase securities without having sufficient liquid funds to complete the transaction) are normally not permitted. the manager in each asset class may never expose the company to a greater amount than specified in the management mandate.
- Forward rate agreements, which are agreements that set an interest rate on a nominal amount for a future period.
- Bond futures, which are agreements to purchase or sell bonds at a particular price at a future date.
currency-related contracts consist mainly of - Currency futures, which are agreements to purchase or sell a particular amount of currency at a specified exchange rate at a future date.
- Currency swaps, which are agreements with banks to swap certain amounts of different currencies at a specified exchange rate and to pay interest on these amounts for an agreed period.
- equity futures, which are agreements to buy or sell equities at a certain price at a future date.
gjensidige Forsikring asa initiated hedge accounting of the currency exposure of the net investment in the fully owned subsidiary nykredit Forsikring a/s on 1 oktober 2010. the net investment in nykredit Forsikring is hedged through currency-related contracts that are renewed every quarter at a principal equal to the value of the investment in nykredit Forsikring in gjensidige’s consolidated financial statements. the credit risk associated with the hedging derivatives is within the limits of gjensidige’s credit policy.
the effect of the hedge accounting is a loss on the hedging derivatives of noK 58.7 million, which is recognised as exchange rate differences on the net investment.
fair forsikriNg a/s Market value as at 1.12.10 inefficiency recognised Nok million principal asset liability in profit or loss
Hedging efficiency – prospective n/a n/a n/a 100.0 % Hedging efficiency – retrospective n/a n/a n/a 107.4 %
the effect of the hedge accounting is a loss on the hedging derivatives of noK 162.0 million, which is recognised as exchange rate differences on the net investment.
perspektiv 125gjensidige annual report 2010 resu lts 11 – loaNs aNd receivaBles
Nok million 2010 2009 receivables in relation with property 11.3 26.8 receivables in relation with asset management 29.3 154.8 receivables regarding to gjensidigestiftelsen 1 34.4 other receivables and assets 267.2 121.9 total other receivables 342.2 303.5 1 see note 22 related party transactions.
Mortgage loans consist mainly of loans from the gjensidige Bank group. primarily this is loans with floating interest to customers in the private segment.
other loans are primarily interest-free loans to agricultural customers. the loans are in their entirety intended for installment of fire detection systems with these customers. there is no mortgage attached to the loans, and the terms varies from two years to over 20 years. gjensidige Forsikring has not offered this type of loan to its customers in 2010 or 2009. the default rate is 1.5 per cent at year end, compared to 0.76 per cent in 2009.
on 15 december 2009 gjensidige Bank acquired Citibank’s norwegian portfolio of loans for consumer goods, and as at 31 december the portfolio of loans for consumer goods consist mainly of this portfolio. the portfolio of loans for consumer goods is spread across norway.
assets in life insurance with investment options consist of equity funds, money market funds, bond funds, combination funds and bank deposits. these assets belong to the customers and the customers bear all risk associated with the investments. a corresponding amount is thus carried as a liability under liabilities in life insurance with investment options.
gjensidige considers the credit and liquidity risk associated with policy holders to be small, since the outstanding amount per policyholder is relatively small. provisions for potentially irrecoverable amounts have been made.
Weighted average rate for interest earned on cash, bank deposits and deposits with financial institutions is approximately 3,1 percent (2009: app. 3,3 per cent).
perspektiv 127gjensidige annual report 2010 resu lts 13 – sHares and siMilar interests (Cont.)
Nok million interest held beyond 10 % 31.12.2010 lgt Crown european private equity plC 22.7 energy Ventures ii B is 17.4 % 22.3 Viking Venture ii as 21.9 Viking Venture iii dis 20.4 neoMed innovation iV lp 19.6 BaltCap peF lp 17.5 teknoinvest Viii Ks 13.9 % 16.5 Convexa Capital Viii as - klasse B 15.9 HitecVision asset solution Ks 12.1 CapMan Bo iX lp 11.0 teknoinvest Viii B dis 15.7 % 9.2 energy Ventures is 17.5 % 9.0 Fjord invest as 8.9 Verdane Capital V B Ks 8.8 Viking Venture as 8.2 Verdane Capital Vii Ks 6.4 nordic pep 1 is (altor fund iii) 12.3 % 5.6 northzone Vi l.p. 5.0 Kapnord Fond as 4.7 Viking Venture ii B is 16.9 % 4.3 Helgeland Vekst as 4.0 tun Media (landbrukets Medieselskap as) 3.7 Convexa Capital iV - B-aksjer 3.1 BtV investeringsfond as 3.0 Convexa Capital iV 2.8 norchip as 2.5 rogaland Kunnskapsinvest 2.5 norinnova 2.1 Berger eiendom 1.7 Convexa Capital Vi as - klasse B 1.5 såkorninvest sør 1.5 norinnova invest as 1.3 Midvest i a 1.2 other private equity investments 5.5 total private equity investments 1,127.2 hedgefunds Winton Futures Fund- lead series 180.0 sector polaris 144.2 the Winton evolution Fund 112.9 sector europower Fund Class a eur 81.0 sector Healthcare - a usd 79.3 Winton evolution fund, Class H- euro 67.3 sector speculare iV Fund Class a usd 42.8 sector exspec Fund Class a usd (utfisjonert sels.) 20.5 HoriZon taCtiCal trad usd-B (in specie rest verdi) 12.6 sector speculare ii Fund Class a usd 11.4 russell alt. strat. Fund ii total designated inves 4.7 total hedgefunds 756.6 real estate funds Cerep ii 69.6 Cerep iii 63.6 Cerep 25.4 la salle 17.9 total real estate funds 176.4 combination funds Fortis l Fund-Bd ConV Wrld-i 523.2 total combination funds 523.2
Claims incurred, but not reported 14,574.4 12,247.5 total claims provision, gross 28,339.3 25,857.2 other insurance related provisions 119.0 69.7 total insurance-related liabilities, gross 37,536.6 33,598.6 short-term insurance contracts, reinsurers’ share reinsurers’ share of unearned premiums, gross 27.6 12.6
Claims paid, prior year claims (6,258.8) 118.7 (6,140.1) (5,672.0) 181.5 (5,490.5)
increase in liabilities arising from current year claims 14,284.9 (455.2) 13,829.6 12,456.0 (28.6) 12,427.4 - of this paid (6,033.0) 135.7 (5,897.3) (5,602.3) 12.2 (5,590.1) arising from prior year claims (run-off) (314.0) 12.8 (301.1) (292.8) (17.3) (310.2) other changes, including effects from discounting (20.4) (20.4) 283.4 0.4 283.8 exchange differences (309.8) 5.8 (304.0) (907.8) (7.1) (914.9)
Nok million 2010 2009 discounted claims provision, gross - gjensidiges arbejdsskadeforsikring a/s 3,515.4 3,625.9 non discounted claims provision, gross - gjensidiges arbejdsskadeforsikring a/s 4,853.0 5,235.6 14 – insuranCe-related liaBilities and reinsurers’ sHare (Cont.)
gjensidige Forsikring is required to have an occupational pension plan pursuant to the Mandatory occupational pension act. the company’s pension plans meet the requirements of the act.
defiNed coNtriButioN plaN defined contribution plan is a private pension plan which is a supplement to the national insurance. Contributions from the pension plan come in addition to retirement pension from the national insurance. the retirement age is 67 years.
the plan also includes disability pension and spouse and child’s pension subject to specific rules.
defiNed BeNefit plaN the retirement pension together with contributions from the national insurance and taken into consideration paid-up policies, constitutes about 70 per cent of salary at retirement age, provided a completed contribution time of 30 years. the retirement age is 67 years, while as for the underwriters a retirement age of 65 years applies.
pension liabilities are measured at the present value of future pension benefits that for accounting purposes are considered as accrued at the reporting date. Future pension benefits are calculated on the basis of expected salary at the time of retirement. estimated liability at the reporting date is used when measuring accrued pension liability. plan assets are measured at fair value. For the valuation of pension funds, estimated value at the reporting date is used. net pension liability is the difference between the present value of the pension liability and the fair value of the plan assets. a provision is recognised for employers ’ national insurance contributions in periods of underfunding. net pension liability is presented in the balance sheet under the line Pension liabilities.
Nok million 2010 2009 present value of the defined benefit obligation as at 1 january 2,765.6 3,100.7 adjustment of opening balance (9.9) Current service cost 73.4 88.2 interest cost 105.4 105.6 actuarial gains and losses 115.8 (412.7) Benefits paid (139.2) (138.9) past service costs (96.6) 0.4 Business combinations (38.1) 41.3 Foreign currency exchange rate changes (2.9) (9.1)
amount recognised in the balance sheet present value of unfunded plans 432.7 503.9 present value of funded plans 2,350.8 2,261.7 present value of the defined benefit obligation 2,783.4 2,765.6 Fair value of plan assets (2,160.2) (2,080.7) Net defined benefit obligation 623.3 684.9 employers' national insurance contributions 82.0 89.5 liability recognised in the balance sheet for defined benefit obligation 705.3 774.4 fair value of plan assets as at 1 january 2,080.7 1,858.1 adjustment of opening balance (12.5) expected return on plan assets 119.0 106.6 actuarial gains and losses 16.5 (23.7) Contributions by the employer 116.2 256.5 Benefits paid (140.6) (135.9) Business combinations (31.6) 31.6 as at 31 december 2,160.2 2,080.7 expense recognised in profit or loss Current service cost 73.4 88.2 interest cost 105.4 105.6 expected return on plan assets (119.0) (106.6) past service cost (96.6) 0.4 Business combinations 1.4 employers' national insurance contributions (5.2) 12.9 total defined benefit pension cost (42.0) 101.9 the expense is recognised in the following line items in the income statement total operating expenses (42.0) 101.9 actuarial gains and losses recognised in other comprehensive income Cumulative amount as at 1 january (2,005.9) (2,448.6)
expected rates of return on plan assets are based on current asset allocations. expected return is determined in conjunction with external advisers and takes into account both current and future market expectations when these are available, and historical returns. the actual return on plan assets amounted to 6.57 per cent i 2010 (12.52).
all employees turning 62 years after 1 january 2011 are entitled to apply for pension according to new aFp arrangement as from 1 january 2011. this implies that the liability regarding earned rights is fully repealed.
aFp is a defined benefit pension plan and should intentionally be accounted for as a pension liability in the balance sheet. there is, however, not sufficient information to recognize a liability in the financial statements for 2010 and the arrangement is therefore recognised as a defined contribution plan.
no premium to the Fellesordningen for lo/nHo is paid for 2010.
employers national insurance contributions 14.10 % 14.10 % staff turnover before/after 40 years decreasing decreasing probability of aFp early retirement n/a 31,00 %
deferred tax liabilities and deferred tax assets deferred tax liabilities and deferred tax assets are offset when there is a legally enforceable right to offset those assets/liabilities and when deferred tax liabilities/ deferred tax assets relate to the same fiscal authority. the amounts offset are as follows taxable temporary differences intangible assets 429.2 shares, bonds and other securities 295.5 129.7 properties 1,827.9 1,258.9 security provisions etc. 2,973.7 2,974.9 profit and loss account 365.4 496.8 total taxable temporary differences 5,462.6 5,289.5
Nok million 2010 2009 deductible temporary differences intangible assets (555.5) loans and receivables (101.8) (148.0) plant and equipment (115.7) (124.8) provisions for liabilities (62.3) (69.1) Claims provision (15.3) (23.4) other deductible temporary differences (6.3) (1.7) pension liabilities (699.9) (708.5) total deductible temporary differences (1,556.9) (1,075.6)
loss and dividend tax deduction carried forward 2012 0.2 2013 0.3 2014 0.2 2015 0.2 2016 0.2 later or no due date 77.0 3.3 total loss and dividend tax deduction carried forward 77.0 4.5 change in deferred tax deferred tax liabilities as at 1 january 1,205.5 987.4 Change in deferred tax recognised in profit or loss (242.5) 29.3 Change in deferred tax recognised directly in the balance sheet pensions (33.1) 124.0 Hedge accounting 20.2 71.8 Companies sold and purchased 148.7 (2.5) other changes in deferred tax (21.9) exchange differences (1.9) (4.4)
19 – salaries aNd reMuNeratioN 2010 2009 average number of employees 4,008 3,750 the Board of directors’ stateMeNt oN deterMiNiNg salaries aNd other reMuNeratioN gjensidige’s remuneration policy the group has established a remuneration scheme that applies to all employees. remuneration shall be competitive, but not wage leading. it is expected that the employees will view the group’s offer of remuneration and benefits as a total package. the group’s remuneration schemes shall be open and performance-based so that they are regarded as fair and predictable to the greatest possible extent. there shall be conformity between agreed performance and the remuneration that is given. remuneration and career development shall be associated with the achievement of the group’s expressed strategic and financial goals and core values, where both quantitative and qualitative objectives are included in the assessment. the measurement criteria shall promote long-term economic growth and take the actual capital costs into consideration as much as possible. the remuneration scheme shall help promote and provide incentives for good risk management, counteract excessive risk-taking and avoid conflicts of interest. a regular basic salary shall be the main element in the overall remuneration, which also consists of bonus, pension and benefits in kind.
the group Ceo has a retirement age of 62. the group Ceo has the option to retire at age 60 if the Board of directors or he himself so desires. the group Ceo is entitled to a pension in accordance with gjensidige’s closed defined-benefit pension scheme. in accordance with his employment contract, he is entitled to a pension of 100 per cent of his annual salary upon retirement at age 62, which will subsequently be reduced to 70 per cent of his salary upon reaching age 67 and thereafter. in the event of retirement at age 60, there will be a corresponding contractual reduction from 100 per cent upon retirement to 70 per cent upon turning 67. the company car scheme and other benefits will be maintained until the age of 67.
the total remuneration is determined by the need to offer competitive terms and conditions in the various business areas and shall help attract and retain managers who promote the group’s growth and profitability.
an upper ceiling of 30 per cent of the annual salary, included holiday pay, is set on the payment of bonuses. Variable salary is not included in the pensionable income. the deputy Ceo has a bonus agreement equivalent to the group Ceo’s agreement, where the bonus can amount to 50 per cent at most of his/her regular annual salary.
after consultation with the remuneration committee, the group Ceo may make exceptions for the remuneration of special positions if it is necessary in order to offer competitive terms. awarding of benefits in kind to executive management shall be contingent upon their function in the group and also in keeping with marketing practices.
perspektiv 137gjensidige annual report 2010 resu lts 19 – salaries and reMuneration (Cont.)
remuneration of employees with job tasks of crucial importance to the enterprise’s risk exposure the bonuses to employees with job tasks of crucial importance to the enterprise’s risk exposure can be paid on the basis of specific performance indicators of defined target areas and discretionary assessments specified in the personal scorecards and derived from the group’s strategies and objectives. in this assessment, consideration is given to a combination of the enterprise’s results in the last two years, the business unit in question and an assessment of personal contributions. Half of the bonus is given in the form of shares in gjensidige Forsikring asa, one-third of which can be sold in each of the next three years. the restricted bonus may be reduced if subsequent results and developments indicate that it was based on incorrect assumptions. an upper ceiling of 30 per cent of the annual salary, included holiday pay, is set on the payment of bonuses. Variable salary is not included in the pensionable income. after consultation with the remuneration committee, the group Ceo can make exceptions for the remuneration of special positions if it is necessary in order to provide competitive terms.
remuneration of employees with supervisory tasks remuneration of employees with supervisory tasks shall be independent of the results in the operations they supervise.
the awarding of pensions and benefits in kind complies with the group’s general scheme.
on an equivalent basis with the other employees in gjensidige, the group Ceo and executive management will be entitled to take part in any share subscription schemes that exist for the employees.
Number of shares held interest rate 7 applicable conditions and installment plan retirement conditions
the senior group Management Helge leiro Baastad, Ceo 4,129.3 1,277.6 254.1 1,586.3 6,213 2 tor Magne lønnum, deputy Ceo 2,913.7 1,397.0 218.1 663.9 4,213 3 jørgen inge ringdal, executive Vice president 2,145.5 435.8 194.5 705.5 3,835 2 trond delbekk, executive Vice president 2,390.9 381.7 233.6 658.0 2,319 3 Bjørn Walle (1.1.10-31.8.10) 1, executive Vice president 1,321.9 269.4 163.8 206.0 4 petter Bøhler (1.1.10-22.3.10) 1, executive Vice president 445.3 123.0 46.0 105.8 547.5 3.0 % 20.11.2012 3
Hege toft Karlsen (1.9.10-31.12.10) 1, exec. Vice president 591.2 27.7 53.5 76.2 1,965.3 2,348 3.0-3.3 % 16.04.2019 3
Martin danielsen, executive Vice president 1,911.2 324.0 162.1 555.8 4,479.6 4,213 3.0-3.3 % 28.04.2019 3
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 percent at age 67 according to time of earning. 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 age 60, 70 per cent salary until age 67 according to time of earning, then gjensidige Forsikring’s ordinary pension terms will take effect. 5 annual fee of noK three thousand five hundred, in addition to a per meeting fee of noK three thousand five hundred. there have been three ordinary meetings during 2010. 6 the fee includes a fee for subsidiaries.
7 the interest rate is 3.0 nominal, unless other is stated. 8 For employees only remuneration for the current position is stated.
Hallvard strømme (28.6.10-31.12.10) 1 1.5 lieslotte aune lee (28.6.10-31.12.10) 1 6.5 Vigdis Myhre næsseth (28.6.10-31.12.10) 1, deputy 11.5 supervisory board Kirsten indgjerd Værdal (1.1.10-28.6.10) 1, 11, Chairman 126.0 0.4 Bjørn iversen (28.6.10-31.12.10) 1, Chairman 23.0 trond Bakke (1.1.10-28.6.10) 1, deputy Chairman 107.5 Kirsten indgjerd Værdal (28.6.10-31.12.10) 1, 11, deputy Chairman in addition 43 representatives from the company/Fire Mutuals/organisations/employees. 5
perspektiv 139gjensidige annual report 2010 resu lts 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 percent at age 67 according to time of earning. 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 age 60, 70 per cent salary until age 67 according to time of earning, then gjensidige Forsikring’s ordinary pension terms will take effect. 5 annual fee of noK three thousand, in addition to a per meeting fee. there were two ordinary meetings during 2009. the fees have been of noK three thousand and three thousand five hundred respectively. 6 the fee includes a fee for subsidiaries. 7 the interest rate is 2.6 nominal, unless other is stated.
Nok thousand fixed salary/fee variable salary calculated value of total benefits other than cash rights earned in the financial year according to defined benefit pension plan 9 loans, advance payments, guarantees. outstanding amount interest rate 7 applicable conditions and installment plan retirement conditions
Valborg lippestad 23.0 Harald Milli 14.5 john ove ottestad 18.0 sissel johanne Monsvold (01.04.09-31.12.09) 1 13.5 ingvild sollie andersen, employee 11.0 Christian Kristensen (01.01.09-31.03.09) 1, employee
Marit tønsberg, Chairman 115.2 0.6 snorre inge roald, deputy Chairman 68.7 3.7 tove Melgård 80.5 4.0 supervisoy board 5
Net income and gains/( losses) from property Owner-occupied properties rental income from owner-occupied properties 14.2 16.7 net gain/(loss) from sale of owner-occupied properties 55.0 2.4 administration expenses related to owner-occupied properties (11.5) (13.3) impairment owner-occupied properties (2.2) total net income and gains/(losses) from owner-occupied properties 55.5 5.8
Net income and gains/(losses) from financial assets at fair value through profit or loss, designated Derivatives net interest income/(expenses) from derivatives (15.0) 32.0 unrealised gain/(loss) from derivatives 140.7 509.0 net realised gain/(loss) from derivatives (65.0) 740.2 total net income and gains/(losses) from derivatives 60.7 1,281.2
Bonds and other fixed-income securities net interest income/(expenses) from bonds and other fixed-income-securities 432.0 601.6 unrealised gain/(loss) from bonds and other fixed-income securities 78.6 72.3 net realised gain/(loss) from bonds and other fixed-income securities 271.1 (355.8) total net income and gains/(losses) from bonds and other fixed-income securities 781.6 318.1 total net income and gains/(losses) from financial assets at fair value through profit or loss, designated 1,217.3 1,969.5
Net income and gains/(losses) from bonds held to maturity net interest income from bonds held to maturity 773.1 849.7 unrealised gain/(loss) from bonds held to maturity (11.8) (22.8) net gain/(loss) from changes in exchange rates on bonds held to maturity (32.9) total net income and gains/(losses) from bonds held to maturity 761.4 794.0
Net income and gains/(losses) from loans and receivables net interest income/(expenses) from loans and receivables 236.9 77.5 net gain/(loss) from loans and other receivables 19.7 17.1 net gain/(loss) from changes in exchange rates on loans and other receivables (94.4) (100.3) total net income and gains/(losses) from loans and other receivables 162.2 (5.7)
Net income and gains/(losses) from financial liabilities measured at amortised cost net gain/(loss) from changes in exchange rates of insurance related financial liabilities (0.2) 5.4 total net income and gains/(losses) from financial liabilities measured at amortised cost (0.2) 5.4 net other financial income/(expenses) 1 (119.2) (223.0) discounting of claims provision classified as interest expense (130.2) (123.7) Change in discount rate claims provision (21.8)
total net income from investments 2,748.2 2,788.0 20 – Net iNcoMe froM iNvestMeNts
perspektiv 141gjensidige annual report 2010 resu lts 20 – net inCoMe FroM inVestMents (Cont.)
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 is slightly above eight years and ten years in average including option of extention.
there are contractual commitments regarding developing of investment properties amounting to noK 96.0 million, and a commitment to invest noK 45.0 million in a residential development project. the latter commitment will fall due during the period from 2011 to 2013, depending on the project’s progress.
other financially related income and expenses not recognised in net income from investments Commission arising from the investment of assets on behalf of life insurance 22.4 11.2 1 net other financial income/(expenses) includes financial income and expenses not attributable to individual classes of financial assets or liabilities, and financial administration costs.
traNsactioNs with related parties iNcoMe stateMeNt the table below shows transactions with related parties recognised in the income statement.
registered office interest held other related parties Fire Mutuals all over the country, norway gjensidige pensjonskasse oslo, norway 94.7 %
gjensidigestiftelsen has covered part of the expenses related to the stock exchange listing of gjensidige Forsikring asa. expenses related to the conversion of gjensidige Forsikring Ba to a public limited company are evenly divided between gjensidigestiftelsen and gjensidige Forsikring. the expenses are charged gjensidige Forsikring and invoiced gjensidigestiftelsen. at year end the intercompany account was noK 34.4 million.
1 Cooperating companies are defined as companies with which gjensidige Forsirking has entered into a long-term strategic alliance guaraNtees gjensidige Forsikring is responsible externally for any insurance claim arising from the cooperating mutual fire insurers’ fire insurance business, see note 21.
the table below shows a summary of receivables/liabilities from/to subsidiaries, associates and related parties.
as per 1 october 2010, the danish branch of gjensidige Forsikring acquired the commercial and change-of-ownership portfolios from nykredit Forsikring a/s (nykredit Forsikring). after this transaction, only the private insurance portfolio remains in nykredit Forsikring. the transaction was conducted at fair value and amounts to dKK 545.0 million.
tax effects 821.4 829.2 equity Ngaap 20,325.0 19,733.9 Hybrid capital in associates, proportion 426.3 417.3 effect of administration prov., guarantee scheme prov. and natural perils fund (4,307.0) (3,966.6)
index bonds in associates, proportion 8.3 11.4 subordinated loans in associates, proportion 1,670.7 1,702.2 45 % of investment properties, unrealised gains, proportion 120.7 125.2 additional capital 1,799.7 1,838.8 primary capital 13,839.8 15,385.1 primary capital in other financial institutions (108.6) (108.6) Net primary capital (a) 13,731.2 15,276.5 assets with 0 % risk weight 6,459.5 6,038.6 assets with 10 % risk weight 551.4 931.6 assets with 20 % risk weight 32,445.8 27,843.0 assets with 35 % risk weight 11,011.7 8,285.4 assets with 50 % risk weight 2,097.9 1,498.3 assets with 100 % risk weight 26,131.2 27,614.0 assets with 150 % risk weight 743.1 100.3 other non-weighted assets goodwill 2,580.7 1,507.5 deferred tax assets 199.4 other intangible assets 1,349.5 847.1 derivatives 536.6 203.2 assets with 0 % risk weight 0.0 0.0 assets with 10 % risk weight 55.1 93.2 assets with 20 % risk weight 6,489.2 5,568.6 assets with 35 % risk weight 3,854.1 2,899.9 assets with 50 % risk weight 1,049.0 749.1 assets with 100 % risk weight 26,131.2 27,614.0 assets with 150 % risk weight 1,114.6 150.5 net basis of calculation for institutions reporting in accordance with Basel ii and which are not distributed according to risk weight total risk weighted assets 85,565.6 81,113.3
Weighted reinvestment cost derivatives 123.8 33.2 primary capital in other financial institutions (108.6) (108.6) loss provisions (116.5) (14.5)
perspektiv 145gjensidige annual report 2010 resu lts 25 – solveNcY MargiN
Nok million 2010 2009 net primary capital 13,731.2 15,276.5 proportion of security provision 1,079.3 1,207.5 proportion of natural perils fund (up to 25 % of the natural perils fund is included) 660.7 597.5 solvency margin capital 15,471.1 17,081.4 Solvency margin minimum requirement 6,097.6 5,740.0 in excess of requirement 9,373.5 11,341.4 solvency margin capital in per cent of requirement 253.7 % 297.6 %
Nok million 2010 2009 restricted bank deposits source-deductible tax accounts 65.2 74.7 securities placed as security for insurance operations 13.9 14.8 deposits placed as security for insurance operations 8.3 the 20 largest shareholders as of 31 december 2010.
Credit suisse securities nominee 9,730,483 1.95 % goldman sachs int. - equity 8,655,305 1.73 %
dnB nor Bank asa 2,460,837 0.49 % Barclays Bank plC 2,400,000 0.48 % Vital Forsikring asa 1,998,200 0.40 %
27 – shareholders the shareholder list is based on the Vps shareholder registry as of 31 december 2010. a shareholder list showing the owners behind nominee accounts can be found on page 46.
28 – share-Based paYMeNt in connection with the stock-exchange listing of gjensidige Forsikring asa on 10 december 2010 all employees in the group except for the employees in gjensidige Baltic were given the opportunity to buy shares in the company.
the fair value at the moment of allocation was measured based on the price in the customer tranche versus the price in the employee tranches. the value of the bonus shares was discounted using a discount factor after respectively one and two years. the amount is recognised as wage cost in the income statement and as other paid in equity in the statement of changes in equity.
perspektiv 147gjensidige annual report 2010 resu lts 30 – acQuisitioN of NYkredit fair value of each major class of transaction price carrying amount fair value fair value at the dkk million before the transaction adjustment acquisition date intangible assets 593.0 593.0 Financial assets 2,856.3 2,856.3 associated companies 21.6 8.0 29.6 total assets 2,877.9 601.0 3,478.9 liabilities related to direct insurance 1,830.7 1,830.7 deferred tax liabilities 28.7 148.3 176.9 other liabilities 137.9 137.9 total liabilities 1,997.2 148.3 2,145.5 net identified assets and liabilities 880.7 452.8 1,333.5 goodwill 1,212.2 transaction price 2,545.7 equity as at 1 May 2010 came to dKK 880.7 million, compared to an equity of dKK 1,482.3 million as at 31 desember 2009.
all terms and conditions related to the acquisition were clarified and the payment was transferred by the end of april, so the acquisition date was set at 1 May 2010. nykredit Forsikring is recognised in the consolidated accounts of gjensidige Forsikring as from that date.
in connection with the acquisition, gjensidige is entering into a longterm strategic collaboration with nykredit. as part of this collaboration, nykredit shall distribute general insurance for gjensidige. nykredit is one of denmark’s largest financial groups, with activities in banking, insurance, pensions and estate agency business. the group has extensive distribution, including 70 advisory offices and two estate agency chains with a total of 310 offices.
the accounting of the acquisition was based on the acquisition method. the analysis of acquired assets and liabilities is presented in the table below and is considered to be temporary. the value in addition to the identifiable acquired assets and assumed liabilities is recognised as goodwill in the consolidated financial statement. excess value is identified for customer relationships, distribution agreements, databases for claims history and associated companies. provisions were made for deferred tax liability for excess value with the exception of excess value in associated companies and goodwill. goodwill consists of expected synergies from the merging of the private and Commercial business areas and optimisation of the reinsurance cover for the group as a whole.
gross premiums written for nykredit Forsikring for the period 1 january 2010 to 31 december 2010 came to dKK 1,309.6 million, whereas the profit before tax expense in this period was dKK 533.0 million. a profit before tax expenses of noK 644.9 million from nykredit Forsikring is included in the consolidated accounts after the acquisition date. gross premiums written in the same period amounted to noK 683.7 million.
Change in provision for unearned premiums, reinsurerers' share 18.9 1.8 total earned premiums, net of reinsurance 15,674.7 12,684.5
Received commissions for ceded reinsurance and profit share 8.2 7.2 total insurance-related operating expenses (2,889.5) (2,418.4)
profit/(loss) of non-technical account 1,381.7 2,094.7 profit/(loss) before tax expense 2,831.0 3,429.8 prOFit/(lOss) beFOre COMpOnents OF Other COMprehensive inCOMe 2,590.2 2,943.6
Other intangible assets 659.1 235.2 total intangible assets 5 1,694.7 387.1 investments buildings and other real estate investment properties 8 1,102.5 1,163.5 Owner-occupied property 7 112.0 182.9 subsidiaries and associates shares in subsidiaries 6 14,471.5 10,565.1 shares in associates 6 3,435.2 3,434.8 Financial assets measured at amortised cost Bonds held to maturity 9 13,600.6 14,856.5 Loans 9, 11 4,168.4 1,693.0 Financial assets measured at fair value shares and similar interests 9, 13 3,912.2 6,281.6 Bonds and other fixed-income securities 9 8,463.7 8,448.7 Financial derivatives 9, 10 434.5 166.9 Reinsurance deposits 344.6 0.6 reinsurers' share of insurance-related liabilities in general insurance, gross Reinsurers' share of provision for unearned premiums, gross 14 22.2 0.5
Reinsurers' share of claims provision, gross 14 412.8 154.4 total reinsurers' share of gross insurance-related liabilities in general insurance, gross 435.0 154.9 receivables Receivables related to direct operations 9 3,336.3 2,924.3 Receivables related to reinsurance 9 43.5 51.9 Receivables within the group 9, 22 190.7 222.7 Other receivables 9, 11 123.8 188.8 total receivables 3,694.4 3,387.7
perspeCtive 153gjensidige AnnUAL RePORT 2010 resu lts nOk million 1.1.-31.12.2010 1.1.-31.12.2009
Net receipts/payments from investments shares and other equity participations (577.1) (547.2) Bonds and other fixed-income securities 5,408.0 (173.9) Financial derivatives and other financial instruments 411.5 (586.9)
net group contribution and liquidation dividend 50.3 890.5 interest and other financial income 193.0 688.3 net receipts/payments - property activities 40.0 16.7 Payments of tax (716.9) (298.1)
net receipts/payments - equity transactions in subsidiaries (587.7) (500.3) net cash flow from financing activities (2,265.3) (507.1)
Cash and cash equivalents at the beginning of the period 1,143.9 939.6 Merged, added and disposed companies 296.6 84.3 adjusted holdings at the beginning of the period 1,440.5 1,023.9
Cash and cash equivalents at the end of the period 775.5 1,143.9 net movements in cash and cash equivalents (665.0) 120.0
gjensidigestiftelsen has controlling interest of gjensidige Forsikring AsA and is thus obligated to prepare consolidated financial statements. The consolidated financial statements can be obtained by contacting gjensidigestiftelsen at drammensveien 288, Oslo, norway.
The accounting policies applied in the financial statements are described below.
Changes in accounting policies There are no changes in accounting policies in 2010.
The iFRss and interpretations that have been issued up until 17 March 2011, not yet mandatory as at 31 december 2010; i.e. iFRs 9 and iFRiC 19, amendments to iAs 32, iFRiC 14, revised iAs 24, as well as improvements to iFRss are assumed, based on assessments made so far, not to have material impact on reported figures.
basis of measurement The financial statements have been prepared based on the historical cost principle with the following exceptions • derivatives are measured at fair value • financial instruments at fair value through profit or loss are measured at fair value • financial assets available for sale are measured at fair value • investment properties are measured at fair value
The recognition and measurement principles for gjensidige’s segment reporting are based on the iFRs principles adopted in the consolidated financial statements.
subsiDiaries anD assOCiateD COMpanies subsidiaries and associated companies are recognised using the cost method.
Cash FlOW stateMent Cash flows from operating activities are presented according to the direct method, which gives information about material classes and payments.
reCOgnitiOn OF revenue anD eXpenses premiums insurance premiums are recognised over the term of the policy. gross premiums written include all amounts the company has received or is owed for insurance contracts where the insurance period starts before the end of the accounting period. At the end of the period provisions are recorded, and premiums written that relate to subsequent periods are adjusted for in Change in gross provision for unearned premiums in the income statement.
perspeCtive 155gjensidige AnnUAL RePORT 2010 resu lts insurance-related operating expenses insurance-related operating expenses consist of insurance-related administration expenses including commissions for received reinsurance and sales expenses, less received commissions for ceded reinsurance and profit share.
net income from investments Financial income consist of interest income on financial investments, dividend received, realised gains related to financial assets, change in fair value of financial assets at fair value through profit or loss, and gains on financial derivatives. interest income is recognised in profit or loss using the effective interest method.
FOreign CurrenCy Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies at exchange rates at the date of the transaction.
exchange differences arising on retranslations are recognised in profit or loss.
exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form a part of the net investment in the foreign branch and are recognised in other comprehensive income.
goodwill arising on the acquisition of a foreign portfolio and fair value adjustments of the carrying amount of assets and liabilities arising on the acquisition of the foreign branch are treated as assets and liabilities of the foreign operation.
Owner-occupied property is defined as property that is used by gjensidige for conducting its business. if the properties are used both for the company’s own use and as investment properties, classification of the properties is based on the actual use of the properties.
Depreciation each component of owner-occupied property, plant and equipment are depreciated using the straight-line method over estimated useful life. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows • owner-occupied property 10-50 years • plant and equipment 3-5 years depreciation method, expected useful life and residual values are reassessed annually. An impairment loss is recognised if the carrying amount of an asset is less than the recoverable amount.
investment properties are measured initially at cost, i.e. the purchase price including directly attributable expenses associated with the purchase. investment properties are not depreciated.
Fair value is based on market prices, after consideration of any differences in type, location or condition of the individual property. Where market prices are not available, the properties are individually assessed by discounting the expected future net cash flow by the required rate of return for each investment. The net cash flow takes into ¬account existing rental contracts and expectations of future rental income based on the current market situation. The required rate of return is determined based on the expected future risk-free interest rate and an individually assessed risk premium, dependent on the rental situation and the location and standard of the building. An observation of yields reported from market transactions is also performed. The valuation is carried out both by external and internal expertise having substantial
Other intangible assets Other intangible assets which consist of customer relationships, trademarks, internally developed software and other intangible assets that are acquired separately or as a group are recognised at historical cost less accumulated amortisation and accumulated impairment losses. new intangible assets are capitalized only if future economic benefits associated with the asset are probable and the cost of the asset can be measured reliably.
• other external and internal indicators goodwill is tested for impairment annually. The annual testing of goodwill is performed in the third quarter.
impairment losses recognised for goodwill will not be reversed in a subsequent period. On disposal of a cash generating unit, the goodwill attributable will be included in the determination of the gain or loss on disposal.
Claims provision, gross The claims provision comprise provisions for anticipated future claims payments in respect of claims incurred, but not fully settled at the reporting date. These include both claims that have been reported to the company (RBns – reported but not settled) and those that have not yet been reported (iBnR – incurred but not reported). The provisions related to reported claims are assessed individually by the Claims department, while the iBnR provisions are calculated based on empirical data for the time it takes from a loss or claim occurring (date of loss) until it is reported (date reported). Based on experience and the development of the portfolio, a statistical model is prepared to calculate the scope of post-reported claims. The appropriateness of the model is measured by calculating the deviation between earlier post-reported claims and post-reported claims estimated by the model.
adequacy test A yearly adequacy test is performed to verify that the level of the provisions is sufficient compared to the company’s liabilities. Current estimates for future claims payments for the company’s insurance
reinsurers’ share of insurance-related liabilities in general insurance, gross Reinsurers’ share of insurance-related liabilities in general insurance, gross is classified as an asset in the balance sheet. Reinsurers’ share of provision for unearned premiums, gross and reinsurers’ share of claims provision, gross are included in reinsurers’ share of insurancerelated liabilities in general insurance, gross. The reinsurers’ share is less expected losses on claims based on objective evidence of impairment losses.
• the financial assets are included in a portfolio that is measured and evaluated regularly at fair value gjensidige holds an investment portfolio that is designated at fair value at initial recognition, and that is managed and evaluated regularly at fair value. This is according to the Board of directors’ approved risk management and investment strategy, and information based on fair value is provided regularly to the senior group Management and the Board of directors.
The category loans and receivables comprises the classes loans, receivables related to direct operations and reinsurance, other receivables, prepaid expenses and earned, not received income, cash and cash equivalents, bonds and other fixed income securities classified as loans and receivables and receivables within the group.
Transaction expenses are recognised in profit or loss when they incur. subsequent to initial recognition financial derivatives are measured at fair value and changes in fair value are recognised in profit or loss.
The category financial liabilities at amortised cost comprises the classes other liabilities, liabilities related to direct insurance and reinsurance, accrued expenses and deferred income and liabilities within the group.
iMpairMent OF FinanCial assets loans, receivables and investments held to maturity For financial assets that are not measured at fair value, an assessment of whether there is objective evidence that there has been a reduction in the value of a financial asset or group of assets is made on each reporting date. Objective evidence might be information about credit report alerts, defaults, issuer or borrower suffering significant financial difficulties, bankruptcy or observable data indicating that there is a measurable reduction in future cash flows from a group of financial assets, even though the reduction cannot yet be linked to an individual asset.
available for sale For financial assets available for sale, an assessment to whether the assets are impaired is carried out quarterly.
if a decline in fair value of an available-for-sale financial asset, compared to cost, is significant or has lasted longer than nine months, the cumulative loss – measured as the difference between the historical cost and current fair value, less impairment loss on that financial asset that previously has been recognised in profit or loss - is removed from equity and recognised in profit or loss even though the financial asset has not been derecognised.
DiviDenD dividend from investments is recognised when the company has an unconditional right to receive the dividend. Propsed dividend is recognised as a liability in accordance with the Accounting Act and Regulations on simplified Application of international Accounting standards (FOR 2008-01-21 nr. 57). This implies that dividend reduces equity in the fiscal year the dividend provision relates to.
pensiOns gjensidige has both defined contribution and defined benefit plans for its employees. The defined benefit plan has been placed in a separate pension fund and is closed to new employees.
Plan assets are measured at fair value, and are deducted from pension liabilities in the net pension liabilities in the balance sheet. Any surplus is recognised if it is likely that the surplus can be used.
share-baseD payMent The fair value of share-based payment arrangements allocated to employees is at the time of allocation recognised as personnel costs, with a corresponding increase in equity. share-based payment arrangements which are recovered immediately are recognised as expenses at the time of allocation. none-recovery conditions are reflected in the measurement of fair value, and no adjustment of the amount recognised as expenses is done upon failing to meet such conditions.
Current and deferred tax Current tax and deferred tax are recognised as an expense or income in the income statement, with the exception of deferred tax on items that are recognised in other comprehensive income, where the tax is recognised in other comprehensive income, or in cases where deferred tax arises as a result of a business combination. For business combinations, deferred tax is calculated on the difference between fair value of the acquired assets and liabilities and their carrying amount. goodwill is recognised without provision for deferred tax.
The owners of ordinary shares have dividend and voting rights. There are no rights attached to the holding of own shares.
in thousand equity certificates 2009 Outstanding 1 january 77,200 Capital reduction 22,800 Outstanding 31 december 100,000
As at 30 september 2009 the equity certificate capital was reduced to nOK 1,000.0 million, divided into 100 million equity certificates with a nominal value of nOK 10. The amount being reduced was transferred with equal amounts to premium reserve and equalization fund belonging to class i capital. The change did not change the ownership fraction between class i capital and class ii capital.
in the column for own shares the nominal value of the company’s holdings of own shares is presented. Amounts paid in that exceeds the nominal value is charged to other equity so that the cost of own shares reduces the group’s equity.
Other paiD in eQuity Other paid in equity consists of wage costs that are recognised in profit and loss as a result of the share purchase program for employees.
DiviDenD Proposed and approved dividend nOk million 2010 2009 As at 31 december nOK 4.70 per ordinary share (2009: nOK 3.30) 2,350.0 1,650.0
perspeCtive 161gjensidige AnnUAL RePORT 2010 resu lts 2 – use OF estiMates
The accounting policies that are used by gjensidige in which the assessments, estimates and prerequisites may deviate significantly from the actual results are discussed below.
investMent prOperties Fair value is based on market prices and generally accepted valuation models where there are no market prices. A key parameter of the valuation is the long-term required rate of return for the individual property. A further description of the real estate price risk and a sensitivity analysis of investment properties are given in note 8.
FinanCial assets anD liabilities The fair value of financial assets and liabilities that are not traded in an active market (such as unlisted shares) is determined by means of generally accepted valuation methods. These valuation methods are based primarily on the market conditions at the reporting date. see note 9.
lOans anD reCeivables For financial assets that are not measured at fair value, it is assessed whether there is objective evidence that there has been a reduction in the value of a financial asset or a group of financial assets on each reporting date. see note 11.
pensiOn The present value of pension liabilities is calculated on the basis of actuarial and financial assumptions. Any change in the assumptions affects the estimated liability. Changes in the discount rate is the assumption most significant to the value of the pension liability. The discount rate and other assumptions are normally reviewed once a year when the actuarial calculations are performed unless there have been significant changes during the year. see note 15.
Provision for unearned premiums, gross 392.5 726.7 423.1 160.7 262.4 148.1 218.5 58.0 36.0 8.3 15.8 9.0 517.6 2 553.8 security provision 1 205.6 FSAN 1 minimum requirement 1,205.6 1 The Financial supervisory Authority of norway.
Of which other classes small craft and pleasure craft accident travel Oter private total private underwriting result gross claims incurred technical provisions
as at 31 December 2009 152.0 15.8 272.4 881.2 1,321.4 Uncompleted projects 82.0 82.0 as at 31 December 2009, including uncompleted projects 152.0 15.8 354.4 881.2 1,403.4 amortisation and impairment losses As at 1 january 2009 (81.3) (864.4) (945.7) Amortisation recognised during the period (1.8) (52.3) (16.9) (71.0) disposals 0.3 0.3 impairment losses reversed in profit or loss during the period 0.1 as at 31 December 2009 (1.8) (133.3) (881.3) (1,016.3)
Carrying amount As at 1 january 2009 204.7 16.8 221.5 as at 31 December 2009 152.0 14.1 221.1 387.1
Carrying amount As at 1 january 2010 152.0 14.1 221.1 387.1 as at 31 December 2010 1,035.6 306.8 44.4 262.6 45.3 1,694.7
Amortisation method n/A straight-line straight-line straight-line straight-line Useful life (year) n/A 10 10 5-8 5-10 5 – intangible assets
The company’s intangible assets are either acquired or internally developed. goodwill and customer relationships are acquired through acquisition of portfolios, and are a result of a purchase price allocation of initial cost of the acquisition. internally developed software is developed for use in the insurance business. external and internal assistance used in relation with implementation or substantial upgrade of software, including adjustment of standard systems, are capitalised as intangible assets. Amortisation is included in Insurance-related administration expenses including commissions for received reinsurance and sales expenses.
disposals of other intangible assets concerns amortised insurance portfolios. none of the intangible assets have undetermined useful lives.
iMpairMent testing OF gOODWill The carrying amount of goodwill in the company as at 31 december 2010 is nOK 1,035.6 million. Of this nOK 162.4 million is related to gjensidige Forsikring AsA, swedish branch’s acquisition of the insurance portfolio from the subsidiary Tennant Försäkringsaktiebolag AB at 1 October 2009 and nOK 873.2 million related to gjensidige Forsikring AsA, danish branch’s acquisition of insurance portfolio from Fair Forsikring A/s and Kommuneforsikring A/s 1 january 2010 and from nykredit Forsikring A/s from 1 October 2010. The branches are independent cash-generating units.
An annual assessment of impairment was carried out in the third quarter 2010. There has also been carried out an indication assessment during the fourth quarter in order to assess whether there is new evidence that calls for a new impairment assessment.
budgets/prognoses and the period for which the cash flows are projected The projection of cash flows is based on budgets for the next three years reviewed by the management and approved by the Board of directors. in the period after 2014 an annual growth of three per cent has been projected in until 2019. The terminal value is calculated in 2019. The growth in is grounded in the fact that the companies are small and with a solid parent company, which gives them good chances of increasing market shares. The cash flows are estimated to a normal level before a terminal value is calculated. gjensidige normally has a tenyear horizon on its models, as the company is in a growth phase and a shorter period will not give a correct view of expected cash flows.
Based on an overall assessment the management has nevertheless chosen to use a 3.0 per cent growth expectation, as this is considered to be more in line with market expectations.
sensitivity analysis key assumptions The excess values associated with the acquisition are based on different key assumptions. if these assumptions change significantly from what they are expected to be in the impairment models, a need for impairment may arise. see table.
Possible need for impairment, app. nOK 40 million nykredit Forsikring Possible need for impairment, app. nOK 230 million sensitivity table Discount rate increases by 1 %
growth reduced by 2 % compared to expected next 3 years
Cr increases by 2 % next 3 years all 3 circumstances occur simultaneosly gjensidige Forsikring, danish branch need for impairment, app. nOK 250 million no need for impairment no need for impairment need for impairment, app. nOK 340 million gjensidige Forsikring, swedish branch need for impairment, app. nOK 80 million no need for impairment no need for impairment need for impairment, app. nOK 120 million 5 – intangible assets (COnt.)
Fair Forsikring A/s Copenhagen 100 % 2,668.7 2,668.7 2,668.7 2,668.7 gjensidige Bank Holding As Førde 100 % 1,590.4 1,491.7 1,590.4 1,491.7 gjensidige norge As Oslo 100 % 195.7 1.1 195.7 7.0 gjensidige Pensjon og sparing Holding As Oslo 100 % 761.8 761.8 732.0 732.0 glitne invest As Oslo 100 % 340.1 340.1 340.1 340.1 Oslo Areal As Oslo 100 % 4,938.1 4,938.1 4,403.1 4,403.1 gjensidige Baltic Riga 100 % 351.5 347.8 351.5 347.8 samtrygd eigedom As Førde 100 % 6.9 6.9 5.8 5.8 strandtorget drift As Oslo 100 % 0.4 0.4 0.4 0.4 strandtorget eiendom As Oslo 100 % 0.1 0.1 0.1 0.1 Tennant Holding AB stockholm 100 % 568.3 474.6 568.3 568.3 gjensidiges Arbejdsskadeforsikring As Copenhagen 100 % 770.2 770.2 nykredit Forsikring A/s Copenhagen 100 % 2,669.6 2,669.6 total shares in subsidiaries 14,862.1 14,471.5 10,856.2 10,565.1 subsiDiaries – aDDitiOnal inFOrMatiOn nOk million assets equity liabilities revenues 2 profit/(loss)
For the whole company 2010 Fair Forsikring As (group) 2,457.6 2,456.1 1.4 296.1 129.4 n/A gjensidige Bank Holding (group) 15,789.6 1,314.9 14,474.6 335.7 24.6 n/A gjensidige norge As 1.2 1.1 0.1 n/A gjensidige Pensjon og sparing Holding (group) 7,257.2 462.6 6,794.6 335.8 (20.1) n/A glitne invest (group) 647.3 417.1 230.2 544.7 31.6 n/A Oslo Areal As 5,420.4 4,823.7 596.6 107.0 n/A gjensidige Baltic 717.5 313.1 404.4 459.3 43.9 n/A samtrygd eigedom As 6.4 6.4 0.1 0.3 n/A strandtorget drift As 1.8 0.5 1.2 n/A strandtorget eiendom As 0.1 0.1 n/A Tennant Holding AB (group) 727.0 344.7 382.3 453.0 41.9 n/A gjensidiges Arbejdsskadeforsikring A/s 4,221.5 512.0 3,709.5 360.2 54.1 n/A nykredit Forsikring A/s 2,461.8 1,443.9 1,018.0 116.2 537.9 n/A total subsidiaries 39,709.2 12,096.3 27,612.9 2,901.1 950.6 assOCiates nOk million registered office interest held
For the whole company 2009 Fair Financial ireland Limited (liquidated during 2009) 36.2 33.4 n/A Fair Forsikring As (group) 8,639.5 2,774.9 5,864.6 1,824.8 210.7 n/A gjensidige Bank Holding (group) 12,757.6 1,241.3 11,516.4 344.1 (51.6) n/A gjensidige norge As 7.2 7.1 0.1 0.1 0.1 n/A gjensidige Pensjon og sparing Holding (group) 4,921.8 453.8 4,468.0 28.2 (73.9) n/A glitne invest (group) 565.7 396.4 169.3 550.3 44.9 n/A Oslo Areal As 4,627.3 4,376.7 250.6 313.2 75.0 n/A gjensidige Baltic 853.9 310.2 543.6 664.8 58.7 n/A samtrygd eigedom As 4.9 4.9 0.1 (0.1) n/A strandtorget drift As 1.5 0.5 1.0 n/A strandtorget eiendom As 0.1 0.1 n/A gjensidige sverige AB (group) 946.3 508.5 437.7 648.8 92.8 n/A total subsidiaries 33,325.8 10,074.4 23,251.4 4,410.7 390.0 assOCiates - aDDitiOnal inFOrMatiOn nOk million assets equity liabilities revenues 2 profit/(loss)
For the whole company 2009 storebrand AsA 366,159.0 17,217.0 348,942.0 48,236.0 934.0 4,330.2 spareBank 1 sR-Bank 124,909.0 8,073.0 116,836.0 2,674.0 1,111.0 1,035.7 Bilskadeinstituttet As 5.3 4.8 0.5 1.6 0.2 n/A Forsikring og Finans sandnes As 0.7 0.4 0.3 2.1 0.1 n/A Forsikringskontoret johansen og Torkelsen As 4.0 0.6 3.4 6.7 n/A Fossmark Assuranse As 0.7 0.1 0.6 2.0 (0.6) n/A
For the whole company 2010 spareBank 1 sR-Bank 134,778.0 9,402.0 125,376.0 3,414.0 1,317.0 1,180.6 Bilskadeinstituttet As 5.3 4.8 0.5 1.6 0.2 n/A Forsikring og Finans sandnes As (sold during 2010) n/A n/A n/A n/A n/A n/A Forsikringskontoret johansen og Torkelsen As (sold during 2010) n/A n/A n/A n/A n/A n/A Fossmark Assuranse As (sold during 2010) n/A n/A n/A n/A n/A n/A
Depreciation and impairment losses depreciation for the year (9.0) (53.3) (62.4)
Carrying amount As at 1 january 2009 190.7 247.9 438.6 as at 31 December 2009 182.9 243.9 426.7
Uncompleted projects 53.5 53.5 as at 31 December 2010, including uncompleted projects 144.8 732.3 877.1
Depreciation and impairment losses depreciation for the year (6.0) (78.9) (84.9) disposals 36.5 6.2 42.7 exchange differences 0.3 0.3 impairment losses 2 (2.2) (2.2)
7 – OWner-OCCupieD prOperty, plant anD eQuipMent each component of owner-occupied property, plant and equipment are depreciated using the straight-line method over estimated useful life. Land is not depreciated. estimated useful life for the period and comparable periods are between ten and 50 years for owner-occuppied property, with technical installations having the highest depreciation rate, and between three and five years for plant and equipment.
Carrying amount of land and owner-occupied property 112.0 182.9 excess value beyond carrying amount 10.9 66.5
perspeCtive 169gjensidige AnnUAL RePORT 2010 resu lts 8 – investMent prOperties nOk million 2010 2009 statement of financial position As at 1 january 1,163.5 1,170.7 Additions from subsequent expenditure 82.6 32.4 disposals (128.1) (2.3) net gains/(losses) from fair value adjustments (15.5) (37.3)
The group’s valuation model values each property separately. The most important inputs are yield, market rent, contractual rent, potentially vacant premises, the properties’ long-term normalised operating costs and any investment requirements . Yield is determined based on a normal required rate of return adjusted for the location of the property, type, technical standard and the contracts. The normal required rate of return is determined from the required rate of return that can be derived from transactions in the market, and expectations of interest level and risk adjustment. The market rent is determined from existing contracts on the propery and comparable properties, observations from contractual negotiations, requests for offers and information from realtors on recently signed contracts on comparable properties.
The table below shows how the sensitivity of the yield and the market rent affects the value of the property portfolio, as it stands as at 31 december 2010.
nOk million notes Carrying amount as at 31.12.2010 Fair value as at 31.12.2010 Carrying amount as at 31.12.2009 Fair value as at 31.12.2009
Financial assets Financial derivatives Financial derivatives at fair value through profit or loss 10 434.5 434.5 166.9 166.9
Receivables related to direct operations and reinsurance 3,379.8 3,379.8 2,976.2 2,976.2
Prepaid expenses and earned, not received income 11 11.5 11.5 7.8 7.8
Liabilities related to direct insurance and reinsurance 310.2 310.2 300.9 300.9 Accrued expenses and deferred income 16 130.6 130.6 128.6 128.6 gain/(loss) not recognised in profit or loss 444.2 499.2 valuatiOn hierarChy 2010
Financial assets Financial derivatives Financial derivatives at fair value through profit or loss 434.5 434.5
Financial assets at fair value through profit or loss, initial recognition shares and similar interests 210.7 2,010.6 1,690.9 3,912.2 Bonds and other fixed income securities 3,003.4 5,451.8 8.5 8,463.7
Fair value Financial assets and liabilities measured at fair value are carried at the amount each asset/liability can be settled to in a transaction carried out at arm’s length distance.
• Real estate funds. The real estate funds are valued based on reported nAV values as reported by the fund administrators. Because of late reporting from the funds, the nAV values from the previous quarterly reporting are used in estimating fair value.
• gjensidige’s investment in gjensidige Pensjonskasse. The investment is valued equal to the paid-in equity.
sensitivity FinanCial assets level three The sensitivity analysis for financial assets valued based on nonobservable market data show the gain/loss of realistic and plausible market scenarios. A decrease in value of ten per cent is considered a realistic and plausible market scenario for both shares and similar interests and for bonds and other fixed income securities that are included in level three in the valuation hierarchy..
The table shows a valuation hierarchy where financial assets/liabilities measured at fair value through profit or loss are divided into three levels based on the method of valuation.
Financial assets at fair value through profit or loss, initial recognition shares and similar interests 855.9 4,287.9 1,137.8 6,281.6 Bonds and other fixed income securities 2,704.8 5,734.9 9.0 8,448.7
Financial liabilities Financial derivatives Financial derivatives at fair value through profit or loss 17.7 17.7 nOk million as at 1.1.2009 net realised/ unrealised gains recognised in profit or loss purchases sales settlements
transfers into/out of level 3 as at amount of net realised/ unrealised gains recognised in profit or loss that are attributable to instruments held as at 31.12.2009
Bonds and other fixed income securities reCOnCiliatiOn FinanCial assets valueD baseD On nOn-Observable Market Data (level 3) 2010 nOk million sensitivity shares and similar interests decrease in value 10 % 169.1
sensitivity FinanCial assets valueD baseD On nOn-Observable Market Data (level 3) 2010 sensitivity FinanCial assets valueD baseD On nOn-Observable Market Data (level 3) 2009
The principal volume of derivatives is a gross quantity, and is a measure of the extent of derivatives within the different categories of contracts. The principal average is the average gross principal volume throughout the year. The market value of assets and liabilities state the carrying amount of derivatives as at 31 december.
The company’s overall exchange risk is hedged approximately 100 per cent using currency futures. The total risk in the equity portfolio has been reduced during the year by investing in options on broad indexes instead of investing in equities. Financial derivates that constitute a part of hedgefunds are not included in the note.
interest-related contracts consist mainly of - interest rate swaps, which are agreements to exchange interest terms on nominal amounts with customers or banks.
- Currency options, which are agreements giving the right/obligation to purchase or sell currency at a specified exchange rate at a future date.
These transactions are carried out mainly with banks as counterparties. The credit risk from these activities is considered to be marginal. Both interest-related and currency-related transactions are conducted within established position limits.
Bonds are securities classified as loans and receivables in accordance with iAs 39.
nominal value Cost Market value subordinated loans Four seasons Venture iii As 2.8 2.8 1.3 norinnova invest 0.6 0.6 0.6 0.6 0.6 0.6 Vervet As 1 24.0 24.0 24.0 24.0 total subordinated loans 24.6 27.3 24.6 27.3 0.6 1.9 1 Vervet As is 25 per cent owned by gjensidige Forsikring and is classified as receivables from associates. The subordinated loan was recognised as impairment loss of associates in 2008. interest does not accrue on the subordinated loans.
Provision for impairment losses as at 1 january 7.5 6.4 Change in provision for impairment losses for the period (1.3) 1.1 provision for impairment losses as at 31 December 6.2 7.5
Outstanding account sOs international 24.8 19.1 Other receivables 78.3 20.7 total other receivables 123.8 188.8
Beyond the liabilities that arise from insurance contracts, gjensidige Forsikring has not issued guarantees for which provisions have been made.
Cash and bank deposits are cash and bank deposits available for day to day business.
perspeCtive 175gjensidige AnnUAL RePORT 2010 resu lts 13 – shares anD siMilar interests nOk million interest held beyond 10 % 31.12.2010 norwegian financial shares dnB nOR AsA 17.6 total norwegian financial shares 17.6
Other branches shares and similar interests held by gjensidige Forsikring AsA, danish branch 2.1 total shares and similar interests held by other branches 2.1 tOtal shares anD siMilar interests 3,912.2
Claims incurred, but not reported 11,803.0 10,184.5 total claims provision, gross 22,971.8 19,161.2
Claims incurred, but not reported 10,184.5 (8.1) 10,176.4 9,380.6 (46.1) 9,334.5 total as at 1 January 19,161.2 (154.4) 19,006.8 18,343.4 (261.0) 18,082.4
increase in liabilities Arising from current year claims 13,150.8 13,150.8 9,748.0 9,748.0 - of this paid (5,533.2) (5,533.2) (4,371.9) (4,371.9) Arising from prior year claims (run-off) (230.9) 1.5 (229.3) (63.8) 1.5 (62.3) Other changes, including effects from discounting 2.6 2.6 exchange differences (28.7) (30.4) (59.1) (60.3) (30.4) (90.6)
Claims reported and claims handling costs 11,168.8 (386.1) 10,782.6 8,976.7 (146.3) 8,830.4
Claims incurred, but not reported 11,803.0 (26.7) 11,776.3 10,184.5 (8.1) 10,176.4 total as at 31 December 22,971.8 (412.8) 22,559.0 19,161.2 (154.4) 19,006.8 provisions for unearned premiums, gross, short-term insurances As at 1 january 5,620.2 (0.5) 5,619.7 5,368.5 (2.1) 5,366.4 increase in the period (15,310.6) 398.1 (14,912.5) (12,784.6) 368.5 (12,416.1) Release in the period 16,094.4 (419.8) 15,674.7 13,051.4 (366.9) 12,684.5 exchange differences 2.6 2.6 (15.1) (15.1)
The defined benefit plan is a closed arrangement. new employees become members of the defined contribution plan.
DeFineD beneFit plan The retirement pension together with contributions from the national insurance and taken into consideration paid-up policies, constitutes about 70 per cent of salary at retirement age, provided a completed contribution time of 30 years. The retirement age is 67 years, while as for the underwriters a retirement age of 65 years applies.
The plan also includes disability pension and spouse and child’s pension subject to specific rules. in addition, gjensidige Forsikring has pension liabilities beyond the ordinary collective plan for some employees. This applies to employees with a lower retirement age, employees with salaries above 12 times the social security base amount and supplementary pensions.
difference between estimated pension liability and estimated value of plan assets as at last financial year and estimated pension liability and fair value of plan assets as at the beginning of this year is recognised in other comprehensive income.
in the calculation for 2009 a combination of a declining salary and turnover trend, and a higher discount rate, yielded a positive effect on equity of about nOK 400 million. in 2010 a combination of a reduced discount rate and salary adjustment yielded a negative effect on equity of more than nOK 100 million.
nOk million 2010 2009 present value of the defined benefit obligation As at 1 january 2,528.4 2,894.7 Acquired pension liability in connection with purchase of insurance portfolio 50.5 Current service cost 62.3 75.5 interest cost 99.6 100.1 Actuarial gains and losses 112.4 (408.2) Benefits paid (136.3) (133.6) Past service costs (87.7) Foreign currency exchange rate changes (2.9) as at 31 December 2,626.4 2,528.4 amount recognised in the balance sheet Present value of unfunded plans 412.3 473.7
Present value of funded plans 2,214.1 2,054.8 present value of the defined benefit obligation 2,626.4 2,528.4 Fair value of plan assets (2,040.8) (1,953.3) net defined benefit obligation 585.6 575.2 employers' national insurance contributions 76.7 81.1 liability recognised in the balance sheet for defined benefit obligation 662.3 656.3
expense recognised in profit or loss Current service cost 62.3 75.5 interest cost 99.6 100.1 expected return on plan assets (113.4) (100.7) Past service cost (87.7) employers' national insurance contributions (5.5) 10.6 total defined benefit pension cost (44.7) 85.4 the expense is recognised in the following line items in the income statement insurance-related adm. expenses including provisions for received reinsurance and sales expenses (44.7) 85.4 actuarial gains and losses recognised in other comprehensive income Cumulative amount as at 1 january (1,729.0) (2,163.7) Adjustment of opening balance (257.0) Recognised during the period (122.9) 434.6 Cumulative amount as at 31 December (2,108.9) (1,729.0)
actuarial assumptions expected return on plan assets 5.80 % 5.80 %
employers national insurance contributions 14.10 % 14.10 % staff turnover before/after 40 years decreasing decreasing Probability of AFP early retirement n/A 31.00 %
expected rates of return on plan assets are based on current asset allocations. expected return is determined in conjunction with external advisers and takes into account both current and future market expectations when these are available, and historical returns. The actual return on plan assets amounted to 6.57 per cent i 2010 (12.52).
The discount rate is based on ten years government bonds in norway, adjusted for the duration of the pension liabilities. The discount rate is the assumption that has the largest impact on the value of the pension liability. salary increases, pension increases and change in social security base amount are based on historical observations and expected future inflation. due to an average age of above 50 years on employees in the defined benefit plan the salary increase does not contain a career addition, and determined salary increase can therefore be lower than in the market in general. The decreasing salary trend applied for 2010 gives an average salary increase of 3.5 per cent.
Change in pension benefits accrued during the year (16.2 %) 23.0 % 20.4 % (15.1 %)
Change in pension benefits accrued during the year (14.7 %) 18.8 % 16.2 % (13.7 %)
All employees turning 62 years after 1 january 2011 are entitled to apply for pension according to new AFP arrangement as from 1 january 2011. This implies that the liability regarding earned rights is fully repealed.
new AFP constitutes a lifelong addition to retirement pension from the national insurance and is estimated based on pensionable salary including the year in which he or she is 61 years. AFP can earliest be applied for from the age of 62 years. Yearly AFP will increase by a higher age of withdrawal.
AFP is a defined benefit pension plan and should intentionally be accounted for as a pension liability in the balance sheet. There is, however, not sufficient information to recognize a liability in the financial statements for 2010 and the arrangement is therefore recognised as a defined contribution plan.
no premium to the Fellesordningen for LO/nHO is paid for 2010.
perspeCtive 181gjensidige AnnUAL RePORT 2010 resu lts 16 – prOvisiOns anD Other liabilities 17 – taX
Accrued personnel costs 130.6 126.3 Other accrued expenses and deferred income 2.4 total other accrued expenses and deferred income 130.6 128.6 restructuring costs1 Provision as at 1 january 64.4 8.0 new provisions 25.0 64.4 Provisions used during the year (34.7) (8.0) provision as at 31 December 54.7 64.4 1 in 2010 it has been decided to make a new provision of nOK 25.0 million in association with the ongoing efficiency improvement measures of Commercial functions. These processes have been communicated to all business areas involved. during 2010 nOK 34.7 million of the provisions of nOK 64.4 milllion from 2009 has been used.
nOk million 2010 2009 specification of tax expense Tax payable (286.7) (833.7) Wealth taxes (36.0) Correction previous years 65.9 Change in deferred tax (20.0) 383.6 total tax expense (240.7) (486.2)
Deferred tax liabilities and deferred tax assets deferred tax liabilities and deferred tax assets are offset when there is a legally enforceable right to offset those assets/liabilities and when deferred tax liabilities/ deferred tax assets relate to the same fiscal authority. The amounts offset are as follows taxable temporary differences Properties 209.3 156.9 shares, bonds and other securities 269.9 251.7 Profit and loss account 362.8 451.9 total taxable temporary differences 842.0 860.4
Deductible temporary differences Loans and receivables (82.2) (111.0) Plant, equipment and intangible assets (129.4) (82.4) Provisions for liabilities (62.3) (69.1) Pension liabilities (662.3) (656.3) total deductible temporary differences (936.8) (918.8)
Tax effect of dividend received 54.0 48.5 Tax exempted income and expenses 103.9 22.0 One-time effect of insurance-related provisions 1 441.4 non tax-deductible expenses (4.8) (1.8) Wealth taxes (36.0) Consequence of tax relief decision 333.0 Correction previous years 65.9 total tax expense (240.7) (486.2) effective rate of income tax (8.5 %) (14.2 %)
Change in deferred tax deferred tax liabilities as at 1 january (16.4) 245.6 Change in deferred tax recognised in profit or loss 20.0 (383.6)
Deferred tax liabilites/(deferred tax assets) as at 31 December (26.4) (16.4)
tax recognised in other comprehensive income total tax recognised in other comprehensive income 34.6 (121.7)
taX COst in connection with the conversion of gjensidige Forsikring BA to a public limited company the Ministry of Finance has consented to an exemption from capital gains taxation on the transfer of business to the newly formed public limited company under certain conditions. The consequences of the tax relief decision have been incorporated into the tax expense and tax liabilities from the current quarter. The tax relief decision involves greater complexity and discretionary assessments, which entails a greater degree of uncertainty with respect to the tax expense and tax liabilities until all the effects have ultimately been evaluated by the tax authorities.
Other expenses 586.9 634.1 total insurance-related operating expenses incl. commissions for received reinsurance and sales expenses 2,897.7 2,425.5
Commodity costs and other expenses 32.6 12.1 total other expenses 32.6 12.1
Average number of employees 2,621 2,101 the bOarD OF DireCtOrs’ stateMent On DeterMining salaries anD Other reMuneratiOn gjensidige’s remuneration policy The group has established a remuneration scheme that applies to all employees. Remuneration shall be competitive, but not wage leading. it is expected that the employees will view the group’s offer of remuneration and benefits as a total package. The group’s remuneration schemes shall be open and performance-based so that they are regarded as fair and predictable to the greatest possible extent. There shall be conformity between agreed performance and the remuneration that is given. Remuneration and career development shall be associated with the achievement of the group’s expressed strategic and financial goals and core values, where both quantitative and qualitative objectives are included in the assessment. The measurement criteria shall promote long-term economic growth and take the actual capital costs into consideration as much as possible. The remuneration scheme shall help promote and provide incentives for good risk management, counteract excessive risk-taking and avoid conflicts of interest. A regular basic salary shall be the main element in the overall remuneration, which also consists of bonus, pension and benefits in kind.
Decision-making process The Board of directors has established a remuneration committee composed of three members; the chairman of the Board of directors and two board members.
The basic salary is assessed annually and determined on the basis of the wage trend in the society in general and the financial sector in particular. The bonus is determined by the Board of directors on the basis of agreed objectives and deliveries and can amount to 50 per cent at most of the regular annual salary, included holiday pay. Variable salary is not included in the pensionable income. in the assessment, consideration is given to the enterprise’s results in the last two years, together with an assessment of the group CeO’s personal contributions to the group’s core values, development and results. Half of the bonus is given in the form of shares in gjensidige Forsikring AsA, one-third of which can be sold in each of the next three years. The restricted bonus may be reduced if subsequent results and developments indicate that it was based on incorrect assumptions. The group CeO is not given any performance-based benefits in addition to the abovementioned bonus, but can also be given benefits in kind, such as a company car and coverage of expenses for electronic communication. The awarding of benefits in kind shall be contingent upon the group CeO’s function in the group and must also be in keeping with current market practices.
The group CeO has a retirement age of 62. The group CeO has the option to retire at age 60 if the Board of directors or he himself so desires. The group CeO is entitled to a pension in accordance with gjensidige’s closed defined-benefit pension scheme. in accordance with his employment contract, he is entitled to a pension of 100 per cent of his annual salary upon retirement at age 62, which will subsequently be reduced to 70 per cent of his salary upon reaching age 67 and thereafter. in the event of retirement at age 60, there will be a corresponding contractual reduction from 100 per cent upon retirement to 70 per cent upon turning 67. The company car scheme and other benefits will be maintained until the age of 67.
The group CeO has no severance pay agreement if he resigns before reaching retirement age.
An upper ceiling of 30 per cent of the annual salary, included holiday pay, is set on the payment of bonuses. Variable salary is not included in the pensionable income. The deputy CeO has a bonus agreement equivalent to the group CeO’s agreement, where the bonus can amount to 50 per cent at most of his/her regular annual salary.
perspeCtive 185gjensidige AnnUAL RePORT 2010 resu lts only two exceptions, current members of the group management are members of the closed defined-benefit pension scheme. With a full contribution period, these members are entitled to a pension of 70 per cent. The Company will maintain a previous individual pension agreement for one member of the group management.There are no severance pay agreements for managers who resign their position in gjensidige.
The bonus to employees with supervisory tasks will be based on a discretionary assessment of contributions from the unit in question specified in personal scorecards, plus other personal contributions. Half of the bonus is paid in the form of shares in gjensidige Forsikring AsA, one-third of which can be sold in each of the next three years. An upper ceiling of 30 per cent of the annual salary, included holiday pay, is set on the payment of bonuses. Variable salary is not included in the pensionable income. The restricted bonus may be reduced if subsequent results and developments indicate that it was based on incorrect assumptions.
binding guidelines for shares, underwriting rights, etc. for the coming financial year Of bonuses earned in 2011 by the group CeO, executive management, employees with job tasks of crucial importance to the enterprise’s risk exposure and employees with supervisory tasks, a percentage equivalent to 50 per cent of the gross bonus earned will be invested in shares in gjensidige Forsikring AsA. Up to 1/3 of the shares may be sold in each of the three coming years.
explanation of the executive pay policy in the previous financial year The Board of directors confirms that the guidelines for executive pay for 2010 presented in last year’s statement have been complied with.
the senior group Management Helge Leiro Baastad, CeO 4,129.3 1,277.6 254.1 1,586.3 6,213 2
Hege Toft Karlsen (1.9.10-31.12.10) 1, exec. Vice President 591.2 27.7 53.5 76.2 1,965.3 2,348 3.0-3.3 % 16.04.2019 3
Martin danielsen, executive Vice President 1,911.2 324.0 162.1 555.8 4,479.6 4,213 3.0-3.3 % 28.04.2019 3
Bjørn Asp, executive Vice President 2,026.1 418.9 199.2 595.5 5,663.9 3,353 3.0-3.1 % 20.07.2033 3
Kim Rud-Petersen (15.3-31.12.10) 1, executive Vice President 2,115.3 223.1 136.5 2,244 Lise Westly (1.3-31.12.10) 1, executive Vice President 1,325.8 164.5 309.7 1,502 the board of Directors 6 inge K. Hansen, Chairman 439.0 1.5 5,711 Randi B. sætershagen, deputy Chairman 375.0 3.6 2,711
7 The interest rate is 3.0 nominal, unless other is stated. 8 For employees only remuneration for the current position is stated.
9 everyone in the senior group Management has pension plans, benefit based or contribution based. 10 The person concerned has not received any fees during 2010.
key ManageMent persOnell COMpensatiOn 2010 nOk thousand Fixed salary/fee variable salary
Marianne Brinch van Meenen (28.6.10-31.12.10) 1, 10, employee ingvild sollie Andersen (1.1.10-28.6.10) 1, employee 11.0
Hallvard strømme (28.6.10-31.12.10) 1 1.5 Lieslotte Aune Lee (28.6.10-31.12.10) 1 6.5
Bjørn iversen (28.6.10-31.12.10) 1, Chairman 23.0 Trond Bakke (1.1.10-28.6.10) 1, deputy Chairman 107.5 Kirsten indgjerd Værdal (28.6.10-31.12.10) 1, 11, deputy Chairman in addition 43 representatives from the company/Fire Mutuals/organisations/employees. 5
Calculated value of total benefits other than cash rights earned in the financial year according to defined benefit pension plan 9 loans, advance payments, guarantees. outstanding amount interest rate 7 applicable conditions and installment plan retirement conditions
Bjørn Asp, executive Vice President 2,014.4 10.5 200.9 562.5 5,704.8 2.6-2.7 % 20.07.2033 3
Petter Bøhler, executive Vice President 2,019.3 314.6 190.0 962.6 821.6 2.6 % 20.11.2012 3
Valborg Lippestad 23.0 Harald Milli 14.5 john Ove Ottestad 18.0 sissel johanne Monsvold (01.04.09-31.12.09) 1 13.5 ingvild sollie Andersen, employee 11.0 Christian Kristensen (01.01.09-31.03.09) 1, employee
nOk million 2010 2009 net income and gains/( losses) from buildings and real estate Investment properties Rental income from investment properties, excl. unrealised gain/(loss) 80.0 84.9 net revaluation investment properties (15.5) (37.3) net gain/(loss) from sale of investment properties 9.2 0.3 Administration expenses related to investment properties (13.1) (18.0) total net income and gains/(losses) from investment properties 60.5 29.8
Specifications interest income and expenses from financial assets and liabilities not recognised at fair value through profit or loss interest income from financial assets not recognised at fair value through profit or loss 931,0 836,3 interest expense from financial assets not recognised at fair value through profit or loss (40,1) 1 net other financial income/expense include financial income and expenses not attributable to individual classes of financial assets or liabilities, and financial administration costs.
perspeCtive 189gjensidige AnnUAL RePORT 2010 resu lts 21 – COntingent liabilities nOk million 2010 2009 guarantees and committed capital gross guarantees 0.6 0.6 Committed capital, not paid 705.8 946.0
As part of its ongoing financial management, the Company has undertaken to invest up to nOK 705.8 million in various private equity and real estate investments, over and above amounts recognised in the balance sheet. investments in private equity and real estate funds totalled nOK 1,303.6 million 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 is slightly above eight years and ten years in average including option of extention.
As at 31 december 2010 there are contractual commitments regarding reconstruction for lessees amounting to nOK 2.0 million gjensidige Forsikring is responsible externally for any insurance claim arising from the co-operating Fire Mutuals’ operations.
1 in addition gjensidige owns bonds in spareBank1 sR-Bank amounting to nOK 5.0 million.
Change in gross provision for unearned premiums Fair Forsikring A/s including subsidiaries 0.1 gjensidige Baltic 0.3 gross paid claims Fair Forsikring A/s 96.7 gjensidige Baltic 0.7 nykredit Forsikring A/s 374.5 Tennant Forsikring nUF (branch of Tennant Försäkringsaktiebolag AB) 24.3
Within the group Fair Forsikring A/s including subsidiaries 3.5 12.7 gjensidiges Arbejdsskadeforsikring A/s 13.0 gjensidige Baltic 3.8 gjensidige norge As 0.1 gjensidige Bank AsA (owned by gjensidige Bank Holding As) 0.8 5.3 74.0 gjensidige Pensjon og sparing Holding As 1.2 (0.2) gjensidige Pensjonsforsikring As (owned by gjensidige Pensjon og sparing Holding As) 22.8 10.0 75.2 gjensidige investeringsrådgivning AsA (owned by gjensidige Pensjon og sparing Holding As) 14.8 9.5 44.9 gjensidigestiftelsen 34.4 glitne invest As 22.2 17.9
Co-operating companies 1 and other related parties 1 Cooperating companies are defined as companies with which gjensidige Forsikring has entered into a long-term strategic alliance.
guarantees gjensidige Forsikring is responsible externally for any insurance claim arising from the cooperating mutual fire insurers’ fire insurance business, see note 21.
Assets with 0 % risk weight 3,391.0 4,851.3 Assets with 10 % risk weight 292.6 150.6 Assets with 20 % risk weight 18,267.7 16,603.7 Assets with 35 % risk weight 1.3 2.5 Assets with 50 % risk weight 1,524.4 1,488.6 Assets with 100 % risk weight 31,213.2 28,399.1 Assets with 150 % risk weight 126.7 69.0
Other non-weighted assets goodwill 1,035.6 152.0 deferred tax assets 26.4 16.4 Other intangible assets 659.1 235.2 derivatives 434.5 166.9
Assets with 0 % risk weight 0.0 0.0 Assets with 10 % risk weight 29.3 15.1 Assets with 20 % risk weight 3,653.5 3,320.7 Assets with 35 % risk weight 0.4 0.9 Assets with 50 % risk weight 762.2 744.3 Assets with 100 % risk weight 31,213.2 28,399.1 Assets with 150 % risk weight 190.0 103.5 total risk weighted assets 35,848.7 32,583.6
risk weighted calculation base (b) 35,859.5 32,507.8 Capital ratio (A/B) 38.9 % 47.1 %
Solvency margin minimum requirement 2,700.0 2,399.3 in excess of requirement 12,991.7 14,727.7 solvency margin capital in per cent of requirement 581.2 % 713.8 %
26 – restriCteD FunDs nOk million 2010 2009 restricted bank deposits source-deductible tax accounts 59.0 57.6 securities placed as security for insurance operations 13.9 14.8 deposits placed as security for insurance operations 8.3
state street Bank And Trust Co. nominee 8,022,600 1.60 % goldman sachs & Co - equity nominee 7,513,210 1.50 % skagen Kon-Tiki 6,947,000 1.39 % deutsche Bank Ag London nominee 6,000,000 1.20 % state street Bank And Trust Co. nominee 5,675,591 1.14 % Morgan stanley & Co internat. PLC nominee 5,045,750 1.01 %
skagen global ii 3,206,328 0.64 % Morgan stanley & Co inc. new York 2,611,286 0.52 %
eligible employees were permanent employees as at 13 december 2010. There were no requirements with regards to position percentage, whether or not the employees had been at work, reported sick or on leaves of absence etc. The offer was also given to employees who received employment clarification money. There are no other terms attached to the stock purchase offering.
The fair value at the moment of allocation was measured based on the price in the customer tranche versus the price in the employee tranches. The value of the bonus shares was discounted using a discount factor after respectively one and two years. The amount is recognised as wage cost in profit and loss and as other paid in equity in the statement of changes in equity.
DeClaratiOn FrOM the MeMbers OF the bOarD OF DireCtOrs anD CeO
The consolidated accounts have been prepared in accordance with the EU-approved International Financial Reporting Standards (IFRS) and interpretations, together with the additional disclosure requirements that derive from the Regulations concerning annual accounts for insurance companies pursuant to the Norwegian Accounting Act and that shall be adopted as per 31 December 2010. The annual accounts for the parent company were submitted in accordance with the Accounting Act and the Regulations concerning annual accounts for insurance companies as per 31 December 2010. The Annual Report for the Group and the parent company is in accordance with the requirements of the Accounting Act and Norwegian Accounting Standard no. 16 as per 31 December 2010.
The committee recommends the adoption of the accounts presented as the financial statements of gjensidige Forsikring AsA and gjensidige insurance group for 2010.
Liselotte Aune Lee Hallvard strømme Vigdis Myhre næsseth deputy Chairman (Alternate member)
The Supervisory Board recommends that the general meeting approves the distribution of the parent company’s profit before components of comprehensive income of NOK 2.590,2 million as proposed by the Board of Directors: Dividends NOK 2.350,0 million Transferred to restricted funds NOK 249.3 million Transfer from other unrestricted reserves NOK (9.1) million
The Supervisory Board recommends that the general meeting approves the submitted consolidated accounts as Gjensidige Forsikring’s consolidated accounts for 2010
The Supervisory Board recommends that the general meeting approves the Board of Directors’ report for Gjensidige Forsikring ASA for 2010.