Outlook Gjensidige’s goal is to be one of the leading insurance companies in the Baltic states. The market is relatively immature, and a significant proportion of both the private and the commercial segments is still uninsured. We expect growth in the market in step with improvements in the general economic situation and increase in the standard of living.
Source: Finance Norway, 3rd quarter 2017, Assets under management * With individual investment options
Gjensidige Forsikring ASA Total eligible own funds to meet the SCR (SF) 7 NOK million 18,877.4 18,625.0 18,659.7
Total eligible own funds to meet the MCR (SF) 9 NOK million 16,281.4 16,124.4 16,236.6
General insurance Gross premiums written Private NOK million 8,614.5 8,375.9 8,269.1 Commercial NOK million 7,637.0 7,446.1 7,434.9 Nordic NOK million 6,703.9 6,262.4 5,430.0 Baltics NOK million 1,074.9 1,080.6 702.9 Corporate Centre/reinsurance NOK million 47.2 53.0 138.7 Total NOK million 24,077.5 23,218.0 21,975.6
An annual employee survey is conducted in the whole Group. It is followed up to ensure correct development and learning. All managers receive feedback from their employees through a structured process. We see that it pays off to involve individual employees in establishing measures that will help them to be happier at work.
4. We have established an internship scheme, where students work for us for a whole academic year. In 2017, we had 16 students in internships. The work is intended to be relevant for their studies and to help them to put theory into practice.
Measures: 1. Gjensidige shall be an inclusive workplace for all employees. We are an Inclusive Workplace (IW) enterprise and cooperate with the Norwegian Labour and Welfare Administration (NAV) on job training for people who, for various reasons, have been unemployed. NAV pays subsidies for employees who suffer from chronic illnesses but still manage to work.
three such audits were carried out in Norway, two in Denmark and two in Sweden.
The result shows that the Company takes a systematic approach to health, safety and the environment, and that relevant measures are successfully implemented. The nonconformities that were found will be addressed and closed.
The quality of insurance products is not directly measureable. Quality for the individual customer will depend on the extent to which their expectations are met in connection with claims settlements. It is Gjensidige’s ambition that all customers shall receive the right settlement as soon as possible.
innovation. In the period from 2015 to 2022, we are participating in a research collaboration with, among others, the University of Oslo, the University of Bergen and the Norwegian Computing Centre on several projects that we expect to give us new insight into topics relating to the processing of large data volumes (big data). Examples include risk pricing, forecast and trend analyses and insurance fraud.
Employees are encouraged to report matters warranting criticism and matters they perceive as ethically questionable. Everyone has a duty to report criminal matters, or situations where life or health is at risk. A poster with instructions on procedures for whistleblowing is easily accessible on our intranet site. – We have established notification channels in all countries we operate in. – In Norway, whistleblowing is facilitated through two electronic mailboxes: – An internal mailbox for reporting ethics-related matters – An external mailbox for reporting irregularities and malpractices
• Ensure that products delivered to Gjensidige are of high environmental quality
The information includes tips on • how to reduce the generation of waste, and how to recycle as much as possible • energy saving • how to reduce the use of polluting transport and travel
Strategy A strong focus on customers is the core of Gjensidige’s strategy. Backed by a down-to-earth business culture and analysis-based core operations, this will give Gjensidige a competitive advantage.
A fast pace and flexibility in the development of products, services and service models are necessary in order to be the preferred insurance provider. The automation of internal processes is intended to ensure cost-efficiency and facilitate increased use of self-service solutions by customers.
Deviations from the Code of Practice: Pursuant to the Code of Practice, the whole Board, the whole Nomination Committee and the auditor should
The CEO’s responsibilities: • The CEO shall ensure that Gjensidige’s risk management and internal control are implemented, documented, monitored and followed up in a satisfactory manner. The CEO shall issue instructions and guidelines for how the Group’s risk management and internal control shall be carried out in practice, and establish expedient control processes and functions.
As part of the Board’s above-mentioned annual review of the Group’s risk areas and internal control, an evaluation is also carried out of risks and controls in the financial reporting process, and of whether measures are necessary.
• Gjensidige’s centralised purchasing function, the Group Procurement function, shall be notified of all outsourcing and shall have an updated overview of all outsourcing agreements. The function ensures that the agreements are in accordance with internal requirements. The Group Procurement function is also responsible for sending a message to the FSA when notification to the FSA is required.
The overall remuneration is decided on the basis of the need to offer competitive terms in the various business areas. It shall contribute to attracting and retaining executive personnel with the desired expertise and experience who promote the Group's core values and development.
Deviations from the Code of Practice: None 13. Information and communication Gjensidige shall have an open dialogue with all stakeholders. All financial market participants shall have simultaneous access to correct, clear, relevant and detailed information about the Group’s historical results, operations, strategy and outlook. The information shall be consistent over time. The Board has adopted guidelines for the reporting of financial information and other information in the form of an IR policy. The guidelines are available at Gjensidige has published all relevant ownership information about the Group at
In conversations with the bidder and in its other actions, the Board shall endeavour to safeguard the interests of the Company and the shareholders as a whole. The Board shall ensure that all the
Customer orientation Gjensidige is working systematically to become the most customer-oriented Nordic general insurance company. Our vision is to ‘know the customer best and care the most’. Customer satisfaction is measured systematically, both at group level and down to the individual employee level, and improvement measures are implemented continuously. Customer satisfaction was record-high in 2017. This is not a coincidence, but the result of systematic work over a long period.
Many of the pricing tariffs used outside Norway were improved during 2017. This work will continue to have high priority in 2018. Furthermore, extensive efforts were made in 2017 to improve and standardise the data basis used in connection with pricing. In 2018, this work will continue on an inter-Nordic basis, at the same time as we standardise our analysis processes and automate model management.
Marchand has previously been CEO of Eksportfinans AS, the Norwegian Public Service Pension Fund, the Bates Group and an EVP of Den norske Bank. She is a graduate of Copenhagen Business School.
Earned premiums 6,563.5 5,917.8 Claims incurred etc. (5,354.9) (4,739.6) Operating expenses (1,016.1) (930.9)
General Insurance Baltics The underwriting result was negative at minus NOK 7.2 million (minus 99.5). The improvement was mainly driven by lower operating expenses and an improved frequency claims development. The combined ratio was 100.7 (109.6), negatively affected by several medium-sized claims.
Pension The year was dominated by strong portfolio growth and a good underlying operational development. Operating revenues increased due to a growing number of customers and growth in assets. However, the strengthening of IBNR reserves and generally low interest rates hampered earnings growth which resulted in a profit before tax expense of NOK 103.7 million (114.8).
Administration fees increased to NOK 134.6 million (127.8) in step with the growing customer portfolio. Insurance income decreased to NOK 36.3 million (68.0) as a result of strengthened IBNR reserves.
Geographic distribution �xed income instruments in free portfolio at the end of 2017
Counterparty risk �xed income instruments at the end of 2017 Per cent
1. Organic growth is expected to be in line with nominal GDP growth in Gjensidige’s market areas in the Nordic countries and the Baltic states over time. In addition, profitable growth will be achieved by pursuing a disciplined acquisition strategy, as has been done successfully for the past twelve years.
Notes 2. Use of estimates ................................................... 93 3. Risk and capital management .............................. 94 5. Shares in associates and joint ventures ................ 112 6. Net income from investments ..............................114 8. Salaries and remuneration ...................................116 11. Goodwill and intangible assets .............................125 12. Owner-occupied property, plant and equipment ..127 13. Financial assets and liabilities ...............................128 14. Shares and similar interests ..................................132 15. Loans and receivables ......................................... 134 16. Insurance-related liabilities and reinsurers’ share ...135 18. Hybrid capital ......................................................137 19. Provisions and other liabilities .............................. 138 20. Related party transactions ..................................139 21. Contingent liabilities ............................................141 22. Share-based payment .........................................141 23. Events after the balance sheet date .....................142 24. Earnings per share ...............................................142
Amortisation and impairment losses of excess value - intangible assets (261.3) (254.2)
Net receipts/payments on sale/acquisition of customer portfolios - intangible assets (3.9) (45.5)
Cash and cash equivalents at the start of the year 2,158.7 3,151.9
Gjensidige Forsikring Group (Gjensidige) as at and for the year ended 31 December 2017 comprise Gjensidige Forsikring ASA and its subsidiaries and Gjensidige’s interests in associates and joint ventures. The activities of Ggjensidige consist of general insurance, pension and banking. Gjensidige does business in Norway,
The standard introduces new requirements for the classification and measurement of financial assets, including a new expected loss model for the recognition of impairment losses, and changed requirements for hedge accounting.
(less than 12 months) and leases of low-value assets are exempt from the requirements. A lessee shall recognise a right-of-use assets and a lease liability. The interest effect of discounting the lease liability shall be presented separately from the depreciation charge for the right-of-use asset. The depreciation expense will be presented with Gjensidige’s other depreciations, whereas the interest effect of discounting will be presented as a financial item.
Insurance revenue, insurance service expenses and insurance finance income or expenses will be presented separately. IFRS 17 is effective 1 January 2021. The standard is expected to have an effect on the group’s financial statements, significantly changing the measurement and presentation of income and expenses.
The second line of defence is carried through by centralised control functions for risk management, compliance and actuary; • The risk management function is responsible for monitoring and developing Gjensidige Forsikring Group’s risk management and internal control system. In addition, the function shall have an overview of the risks the Group is or may be exposed to, and what this means for the Group solvency. The risk management function is headed by the Chief Risk Officer (CRO) in Gjensidige Forsikring ASA. The CRO has responsibility for establishing the procedures for performing risk management and reporting risk exposures as well as monitoring Board approved limits.
Reserve risk and premium risk are both material risks, where reserve risk is the biggest risk. Lapse risk contributes only marginally to the total risk exposure for both the Gjensidige
Monitoring of prices, interest rate, credit spread and foreign currency risk is also performed through “stress tests”, where the buffer capital at all times must be sufficient to withstand the risk of simultaneous sharp falls in asset prices.
These are taken into account in the strategic asset allocation. There are no specific liquidity requirements for Gjensidige Forsikring
Sensitivity analysis is performed at the Gjensidige Group level. The aim of the sensitivity analysis is to show the financial effect of different predefined scenarios. The following assumptions are made for the different risk drivers: • Equities: It is assumed that the market value of equities increases/decreases with 20 per cent
(CRO and Compliance) is responsible for independent surveillance of the banks risk management and risk exposure and ensure that the Board at all time is adequately informed of the bank risk exposure.
The bank uses application score models based on internal and external customer information for decisions relating to customers’
The capitalisation of the Group will be based on the following requirements for solvency margin: • Standard Formula (SF): 120 - 150 per cent • Partial Internal Model (PIM): 125 - 175 per cent
The stress test is performed on a monthly basis. A rule has been set for management action with escalation to the CEO or the Board if the solvency margin is below the predefined levels.
Total net income and gains/(losses) from buildings and other real estate 45.4 38.8
Total net income and gains/(losses) from loans and receivables 713.2 725.1
Variable remuneration shall be performance-based without being a risk driver, and shall reflect the results and contributions on company, division, department and individual level. Other elements of compensation offered should be considered attractive from both new and current employees. There is an upper limit for variable remuneration.
The retirement age of the CEO is 62. It is possible to step down after reaching the age of 60 if the Board or CEO so wishes. The
Mats C. Gottschalk, Executive Vice President 2,913.3 379.6 157.5 486.2 425.4 3,135 4,441 7,391 10,569 3
The defined contribution plan is a post-employment benefit plan under which Gjensidige pays fixed contributions into a separate entity and there is no legal or constructive obligation to pay further amounts.
Insurance basic amount (G) and 20 per cent of earnings between
The rate of disability is based on the IR73 table. This measures long-term disability. The incidence of disability is low compared to many other employers.
Deposits from and liabilities to customers, bank 19 23,765.7 23,765.7 21,270.4 21,270.4
MTPL personal injuries are paid as lifelong annuities. The discount rate used is the swap rate.
Weighted average share price of bonus shares released during the period 139.43 142.43
Shares and similar interests (incl. shares and similar interests measured at cost) 13, 14 6,553.7 6,134.4
Net receipts/payments from sale/acquisition of subsidiaries, associates and joint ventures (516.7) (96.6)
If there is objective evidence that the asset is impaired, impairment loss are calculated as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the original effective interest rate. The loss is recognised in profit or loss.
Standards (FOR 2008-01-21 nr. 57). This implies that dividend reduces equity in the fiscal year the dividend provision relates to.
For information about insurance and financial risk please refer to note 3 in the consolidated financial statements that cover both
In total, the reduction in the liabilities would be slightly higher than the fall in the value of the pension assets.
172 | Gjensidige annual report 2017 13. Financial assets and liabilities
Gjensidige Forsikring ASA is the Group's parent company. As at 31 December 2017 the following companies are regarded related parties. See note 5 in Gjensidige Forsikring ASA for specification of subsidiaries and joint ventures.