The school provides competence-raising programmes in Norway, Denmark and Sweden. The programmes are tailored to Gjensidige’s core competence areas: claims settlement, sales and management.
In 2014, the Gjensidige Customer and Brand School will continue to develop, with the aim of becoming a school offering a full range of courses in subjects, systems, products and customer relations to the Group’s employees, instructors and managers in core competence areas. New use of technology as a teaching tool is an important part of the effort to make the training independent of time and place, and to ensure that the programmes are incorporated in the employees’ day-to-day work.
The rules are available on the intranet and in an e-learning course, and managers shall contribute to ensuring that employees are aware of the rules. The purpose is to help to put a stop to activities that can entail a breach of the regulations at an early stage.
Gjensidige will continue to invest in the technology platform, both in order to simplify and rationalise customer processes and to ensure rational, transparent management of the insurance portfolio.
Dividend Gjensidige shall have a competitive dividend policy compared with comparable investments. In determining the size of the annual dividend, consideration shall be given to the Group’s capital needs, both present and future, and the Group’s objectives and strategic plans.
The Company’s trading in own shares must take place through a stock exchange or in other ways at the listed price.
Deviations from the Code of Practice: None 6. General meetings The general meeting is Gjensidige’s supreme body.
– Pursuant to the Articles of Association, the general meeting will be chaired by the Chair of the Supervisory Board, or by the Deputy Chair, or, if they are both absent, by the Chairman of the Board or another person designated by the Board.
The nomination committee shall recommend all remuneration to be decided by the general meeting or the Supervisory Board, including the remuneration of members of the nomination committee to be decided by the general meeting, and submit a recommendation concerning whether the proposal for the auditor’s fee shall be approved.
Board members’ shareholdings Nine of the board members own shares in the Company; see the overview in the table above. The board members follow the general rules concerning primary insiders, but they have all voluntarily accepted and informed their closely related parties that trading in the Gjensidige share or derivative instruments will only take place within a reasonable time frame after submission of the quarterly report, so that trading can take place on the basis of the same information about the Company and the Company’s financial position as is available to the market in general
• The Board shall ensure that such processes are satisfactorily established, implemented and followed up, among other things by considering reports prepared by the Compliance function and the Risk Management function that are submitted to the Board by the CEO and the internal audit function as direct reports to the Board.
The Board shall not attempt to prevent bids being made, and, as a rule, it shall seek to facilitate the implementation of bids that may be in the interests of the shareholders. The Board shall not take actions as described in the Securities Trading Act Section 6-17 without obtaining instructions from the general meeting. The Company shall not use authorisations to issue shares to prevent a bid.
The Gjensidige Group achieved a good result and solid growth in premiums in 2013. Customer satisfaction increased to a new record-high level, and competitiveness was good.
In addition, private insurance products are sold through a number of partners, especially travel agents, car dealers and estate agents. The private market incidentally is served via call centres and the internet.
Gjensidige’s distribution agreement with Sparebanken Sogn og Fjordane expires with effect from 1 July 2014. The premium volume relating to the agreement amounted to approximately NOK 180 million in 2013, and the customers have their insurance agreements directly with Gjensidige. Several measures will be implemented to ensure new sales and to retain existing customers.
Attractive share The Gjensidige share yielded a total return (including dividend) for the shareholders of 54.3 per cent in 2013. The average number of shares traded daily via Oslo Stock Exchange was about 560,000, and the share is among the 25 most liquid shares listed on Oslo Stock Exchange. In addition, a significant number of shares are traded on other market places than the Oslo Stock Exchange.
Among other things, Andersson has previously been managing director of Skandia Insurance Company Ltd, Nordic manager for Marsh & McLennan, and Executive Director of Mercantile & General Re plc.
The basis for the change is a decision by the European Court of Justice that will lead to gender neutrality being required in a wider area than follows from Norwegian legislation. For Norwegian private customers, gender neutrality is already required in the stipulation of premiums for general insurance products such as motor insurance. Exceptions have been made, however, for accident and health insurance products, such as disability insurance, life insurance etc. The change will take effect once the authorities have adopted the necessary amendments to the Norwegian regulations. Gjensidige is preparing for the change by introducing gender neutrality before the amendments are implemented.
Available capital in excess of risk-based capital requirement calculated using the Group’s internal risk model constitutes the Group’s economic excess capital. In addition, a deduction is made for the higher of the estimated additional capital required to maintain the current rating (including a buffer of five per cent) and the capital required to meet the statutory capital adequacy requirements. The surplus in excess of this constitutes the strategic buffer. At the end of the year, the strategic buffer constituted NOK 2.1 billion, after deduction of the Board’s proposed dividend for the 2013 financial year.
Operating expenses amounted to NOK 821.3 million (809.1). The increase in expenses is partly related to the work on integrating the Swedish units. The cost ratio was 11.7 (12.0).
Operating expenses amounted to NOK 567.1 million (506.1). Of the increase NOK 22.3 million was due to changes in the exchange rate. In addition, the expenses increased as a result, among other things, of the acquisition of Gouda Travel Insurance. The cost ratio was 17.0 (17.4).
Net interest margin, annualised 1 2.42% 2.52% Write-downs and losses, annualised 2 0.32% 0.43% Cost/income ratio 3 56.9% 62.8%
Outlook and priorities Gjensidige Bank shall support the Norwegian general insurance operations by helping to provide a wider range of products to existing general insurance customers in Norway. The bank will continue to develop customer-friendly online banking services and to increase the range of products offered through Gjensidige’s distribution system. Based on a full range of banking products and attractive terms for the private market, the bank shall contribute to the Group’s growth and profitability.
Free portfolio The free portfolio amounted to NOK 20.1 billion (17.7) at the end of 2013. The return was 5.8 per cent (7.0).
In the insurance market, Gjensidige is challenged by both established Norwegian financial players and new companies. A loss of business combined with reduced profitability in the insurance operations will have a negative effect on the return on capital and other key figures. Emphasis is therefore placed on Gjensidige’s ability to quickly adapt to consumers’ wishes for new service channels, and its ability to utilise modern technology and support systems in an efficient manner. Continuous efforts are made to develop new, customer-adapted products and service solutions, at the same time as the organisation, processes and value chains are reviewed and standardised to reduce costs and achieve greater efficiency.
Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined benefit liability/asset 19.6 19.6 Share of other comprehensive income of associates 102.2 102.2 Tax on items that are not reclassified to profit or loss (23.7) 36.2 12.5 Total items that are not reclassified subsequently to profit or loss (4.1) 138.4 134.3
IFRS 9 Financial Instruments IFRS 9 (2009) introduces new requirements for the classification and measurements of financial assets. IFRS 9 (2010) introduces additions relating to financial liabilities. IFRS 9 (2013) introduces new requirements for hedge accounting.
Share premium Payments in excess of the nominal value per share are allocated to share premium.
Before internally set buffers, the rating requirement gives the lowest excess capital on group level. Gjensidige Forsikring’s target financial strength rating is "A" (single A) from Standard & Poor’s or the equivalent from another rating institution. This target has been achieved by actual rating of "A" (Stable) from Standard & Poor’s (unchanged since 1999, last updated on 25 November 2013). The rating is subject to an annual review. Standard & Poor’s capital model is used as an approximation of the capital requirements from this perspective, even though a number of other factors also play an important role in determining the Group’s rating. Based on data as at 31 December 2013, the excess capital relative to the targeted A rating is estimated at NOK 2,830.7 million. Gjensidige Bank ASA has its own rating of A- from Standard & Poor’s (last updated on 5 July 2013) while covered bonds issued by Gjensidige Bank Boligkreditt is rated AAA (also updated on 5 July 2013).
The following graph shows the expected payout pattern for the Group’s premium and claims provisions at year-end 2013 and 2012 respectively. Approximately one third of the provisions are expected to be paid out within one year.
Management of credit and financial risk – Gjensidige Bank Gjensidige Bank ASA is exposed to credit risk, market risk, liquidity risk and operational risk. The Board approves Risk Appetite statement and the guidelines and policies for managing the bank's risks. The largest risk is the credit risk. The Board of Gjensidige Bank ASA has the final responsibility for limiting and following up on the risks in the bank. The bank’s management is responsible for implementing and adhering to policies, guidelines, management and reporting related to the bank's risk management.
The bank’s market risk is substantially related to interest rate risk and spread risk (credit risk).
Financial assets at fair value through profit or loss, initial recognition Shares and similar interests 12 6,023.4 6,023.4 4,321.2 4,321.2 Bonds and other fixed income securities 22,398.0 22,398.0 19,884.2 19,884.2 Shares and similar interests in life insurance with investment options 9,230.2 9,230.2 6,302.0 6,302.0 Bonds and other fixed income securities in life insurance with investment options 1,100.4 1,100.4 887.7 887.7
Gjensidige Forsikring ASA Norwegian financial shares Ringerikes Sparebank 25.1 Indre Sogn Sparebank 0.3
Teknoinvest VIII B DIS 8.8 Teknoinvest VIII C IS 8.2 Scalepoint Technologies Limited 6.9 Sector Asset Management AS 6.9 Teknoinvest VIII KS (inkl. Teknoinv. VIII (GP) KS) 6.3 NPEP Triton IV IS 5.6 Convexa Capital VIII AS - klasse B 5.5 Procuritas Capital Investor V 5.0 Viking Venture AS 4.4 Fjord Invest AS 4.2 Helgeland Invest 4.0 Tun Media (Landbrukets Medieselskap AS) 3.7 BTV Investeringsfond AS 3.0 Norchip AS 2.5 Rogaland Kunnskapsinvest 2.5 NPEP NeoMed V IS 2.5 Nord II IS 2.4 Convexa Capital IV - -B-aksjer 2.2 Norinnova 2.1 Midvest I A 2.1 Northzone VII L:P 1.6 Såkorninvest Sør 1.5 Midvest II A 1.3 CapMan Buyout X 1.3 Norinnova Invest AS 1.3 Other private equity investments 5.7 Total private equity investments 1,656.8
The discount rate is the assumption that has the greatest impact on the value of the pension liability. Wage growth, pension increases and the adjustment of the National Insurance basic amount are based on historical observations and expected future inflation. Because the average age of the employees who are members of the defined contribution plan is above 50 years, wage growth does not contain a career supplement, and the determined wage growth may therefore be lower than is otherwise normal in the market. The decreasing wage trend applied to Gjensidige Forsikring for 2013 shows an average salary increase of 2.6 per cent (2.6).
Gjensidige’s pension assets are invested in Gjensidige Pensjonskasse. Gjensidige’s pension assets are managed as an investment choice portfolio. This means that Gjensidige Forsikring decides itself how the pension assets are invested within a set of limits that are approved by the board of the pension fund. Gjensidige has a separate investment committee that decides how the pension assets are allocated. The investment choice portfolio entails a financial risk for Gjensidige Forsikring.
Liabilities in life insurance with investment options Liabilities in life insurance with investment options 10,330.6 7,189.7
Tax effect of Tax rate different from 28% 6.1 8.1 Change in tax rate 43.6 Dividend received 3.1 44.4 Tax exempted income and expenses 204.3 10.2 Associates 43.9 123.6 Non tax-deductible expenses (12.4) (3.9) Consequence of tax relief decision 14.4 Correction previous years 88.5 27.0
The senior group management Helge Leiro Baastad, CEO 4,487.3 996.2 254.5 1,567.9 412.8 12,260 4,552 22,467 23,462 2 Jørgen Inge Ringdal, Executive Vice President 2,356.9 334.2 190.3 693.1 153.3 4,027 1,644 7,395 11,751 2
Martin Danielsen, Executive Vice President 2,305.2 328.0 160.5 447.1 158.7 4,498.5 3.70% 31.01.2021 3,949 1,705 7,441 12,515 3
Net income and gains/(losses) from investments in subsidiaries and associated companies Net income from associated companies 768.3 441.5 Impairment associated companies (611.0) Net gains/(losses) from sale of associated companies 35.3
Total net income and gains/(losses) from loans and receivables 714.7 565.6
140 | Gjensidige annual report 2013 27. Share-based payment Description of the share-based payment arrangements As at 31 December 2013, Gjensidige has the following share-based payment arrangements: Share-based remuneration for executive personnel with settlement in equity and cash (remuneration scheme) Gjensidige has established equity-settled share-based payment for the group management and more explicitly defined executive personnel.
Premiums Gross premiums written 4 18,964.7 17,608.8 Ceded reinsurance premiums (565.4) (478.2)
Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined benefit liability/asset 19.3 623.8 Tax on items that are not reclassified to profit or loss 12.7 (174.7)
Definition of amortised cost Subsequent to initial recognition, investments held to maturity, loans and receivables and financial liabilities that are not measured at fair value are measured at amortised cost using the effective interest method. When calculating effective interest rate, future cash flows are estimated, and all contractual terms of the financial instrument are taken into consideration. Fees paid or received between the parties in the contract and transaction costs that are directly attributable to the transaction, are included as an integral component of determining the effective interest rate.
Amortisation and impairment losses As at 1 January 2012 (100.0) (101.8) (19.1) (229.0) (13.9) (463.9) Amortisations (36.1) (8.1) (94.3) (5.6) (144.2) Disposals 62.3 62.3 Exchange differences 3.9 1.0 2.1 0.9 7.9
2 Portfolio bought 1 November 2013 in Denmark, Sweden and Norway.
Gjensidige Bank Holding (group) 18,518.4 1,377.9 17,140.5 419.8 81.4 N/A Gjensidige Norge AS 0.1 0.1 N/A Gjensidige Pensjon og Sparing Holding (group) 11,008.1 483.7 10,524.4 680.7 12.2 N/A Glitne Invest (group - liquidated in 2012) 74.2 60.6 N/A Oslo Areal AS 4,749.5 1,894.8 2,854.7 198.2 145.5 N/A Gjensidige Baltic AAS 775.5 337.5 437.9 436.9 42.5 N/A Samtrygd Eigedom AS 6.2 6.2 0.0 0.2 (0.0) N/A Strandtorget Drift AS (0.0) (0.0) (0.1) (0.1) N/A Strandtorget Eiendom AS 0.1 0.1 0.0 0.0 (0.0) N/A Tennant Holding AB 10.1 8.7 1.4 0.4 0.3 N/A Lokal Forsikring (group) 42.2 41.6 0.6 0.2 4.3 N/A Gjensidiges Arbejdsskadeforsikring A/S 4,551.1 568.0 3,983.0 304.6 47.2 N/A Nykredit Forsikring A/S 1,300.4 756.9 543.5 (2.9) N/A Byggeriets Forsikringsservice AS 37.9 1.6 36.3 (3.0) N/A
As at 31 December 2012 113.5 478.5 592.0 Uncompleted projects 0.1 35.2 35.4
Gjensidige annual report 2013 | 173 choice portfolio. This means that Gjensidige Forsikring decides itself how the pension assets are invested within a set of limits that are approved by the board of the pension fund. Gjensidige has a separate investment committee that decides how the pension assets are allocated. The investment choice portfolio entails a financial risk for Gjensidige Forsikring.
Present value of the defined benefit obligation As at 1 January 2,431.3 2,991.9 Current service cost 39.6 53.9 Employers' national insurance contributions of current service cost 5.6 7.6 Interest cost 97.2 80.6 Actuarial gains and losses 28.3 (531.0) Benefits paid (135.2) (141.7) Employers' national insurance contributions of benefits paid (6.9) (27.7)
Specification of tax expense Tax payable (737.9) (1,201.6) Correction previous years 100.5 28.5 Change in deferred tax (29.5) (100.3)
Catharina Hellerud, Executive Vice President 2,653.8 373.0 159.8 150.9 168.5 4,510 1,814 8,280 6,239 3
The Board, deputies Tore Vågsmyr, staff representative 5 655 Inger-Lise Bratsberg, staff representative (1.1.13-29.5.13) 1, 5 1,952
Sigurd Austin, Executive Vice President 2,256.8 233.4 158.3 392.9 17.9 3,836 3,836 1,952 3
Total net income and gains/(losses) from investments in subsidiaries and associated companies 479.8 376.0
Discounting of claims provision classified as interest expense 296.1 Change in discount rate claims provision (82.3)
Interest income and expenses Gjensidige Bank Boligkreditt AS (owned by Gjensidige Bank ASA) 1.4 0.1 Oslo Areal AS 66.1 64.4
Opinion on the separate financial statements In our opinion, the parent company’s financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Gjensidige Forsikring ASA as at 31 December 2013, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and the regulation concerning annual accounts for insurance companies.