Interim report 3rd quarter Gjensidige Insurance Group

Transcription

1 Interim report 3rd quarter 2014 Gjensidige Insurance Group

2 Group highlights Third quarter 2014 In the following, figures in brackets indicate the amount or percentage for the corresponding period last year. The year to date Group Profit/loss before tax expense: NOK 4.240,5 million (3.291,0) Profit per share: NOK 6,45 (5,07) General Insurance Earned premiums: NOK ,4 million (13.970,6) Underwriting result: NOK 2.055,1 million (1.643,9) Combined ratio: 86,5 (88,2) Cost ratio: 14,9 (15,3) Financial result: NOK 2.059,0 million (1.603,2) Third quarter Group Profit/loss before tax expense: NOK 1.336,7 million (1.673,3) Profit per share: NOK 2,00 (2,66) General Insurance Earned premiums: NOK 5.203,6 million (4.866,9) Underwriting result: NOK 755,0 million (852,5) Combined ratio: 85,5 (82,5) Cost ratio: 14,5 (14,8) Financial result: NOK 552,0 million (825,7) Special factors and events NOK 1.2 billion subordinated bond issue The dividend for the 2013 financial year increased by NOK 2.0 billion, corresponding to NOK 4.00 per share, based on the current authorisation granted to the Board The current profitability targets for the general insurance operations will continue Profit performance Group NOK million 3 q q General Insurance Private , ,305.5 General Insurance Commercial General Insurance Nordic General Insurance Baltics Corporate Centre/costs related to owner (75.2) (72.2) (232.2) (224.0) (299.4) Corporate Centre/reinsurance 1 (22.8) 37.4 (130.6) (55.5) (357.4) Underwriting result general insurance , , ,019.6 Pension and Savings Retail Bank Financial result from the investment portfolio , , ,480.9 Amortisation and impairment losses of excess value intangible assets (58.4) (66.1) (130.9) (130.0) (161.7) Other items (3.1) (1.5) (7.8) (3.2) (5.5) Profit/(loss) for the period before tax expense 1, , , , ,574.1 Key figures general insurance Large losses Run-off gains/(losses) Loss ratio % 67.7% 71.6% 73.0% 74.0% Cost ratio % 14.8% 14.9% 15.3% 15.3% Combined ratio % 82.5% 86.5% 88.2% 89.2% 1 Large losses in excess of NOK 30.0 million are charged to the Corporate Centre, while claims of less than NOK 30.0 million are charged to the segment in which the large losses occured. The segment Baltics has, as a main rule, a retention level of EUR 0.5 million. Large losses allocated to the Corporate Centre amounted to NOK million (114.4) year to date and NOK 66.8 million (0.0) in the quarter. Moreover, accounting items related to written reinsurance and reinstatement premium are included. 2 Underwriting result general insurance = earned premiums - claims incurred etc. - operating expenses 3 Excluding return on financial assets in Pension and Savings and Retail Bank. 4 Large losses = loss events in excess of NOK 10.0 million. Expected large losses for the quarter was NOK million. 5 Run-off gains/(losses) = changes in estimates from earlier periods. Reserving is based on best estimate, and expected run-off result over time is zero. 6 Loss ratio = claims incurred etc./earned premiums 7 Cost ratio = insurance related operating expenses/earned premiums 8 Combined ratio = loss ratio + cost ratio 2 Gjensidige Insurance Group Third quarter 2014

3 Continued solid premium growth and good profit performance Group profit performance Year to date development The Gjensidige Insurance Group recorded a profit before tax expense of NOK 4,240.5 million (3,291.0). The profit from general insurance operations measured by the underwriting result was NOK 2,055.1 million (1,643.9). For the investment portfolio, the return on financial assets was 3.6 per cent (2.8), corresponding to NOK 2,059.0 million (1,603.2). The tax expense was NOK 1,015.0 million (754.9), corresponding to an effective tax rate of 23.9 per cent (22.9). The effective tax rate is influenced to a large extent by realised and unrealised gains from equity investments in the EEA. The profit after tax expense was NOK 3,225.5 million (2,536.1), corresponding to NOK 6.45 (5.07) per share. The underwriting result was positively influenced by a solid growth in premiums of 8.6 per cent and good cost control. The underlying development in frequency claims was also good, among other things as a result of favourable weather conditions and good control of customer and risk selection, and risk pricing. A higher proportion of large losses was partly compensated by a somewhat higher runoff gain. Earned premiums in the Private segment increased by 4.2 per cent as per the third quarter compared with the corresponding period last year, mainly as a result of premium increases. The underwriting result was positively affected by a good frequency claims development. Earned premiums in the Commercial segment increased by 4.9 per cent as a result of growth in both the Norwegian and Swedish portfolios. The good underlying frequency claims development also contributed to an increase in the underwriting result. In the Nordic segment, earned premiums increased by 29.6 per cent (20.8 per cent in local currency), primarily as a result of new portfolios (Gouda Reiseforsikring and Solid) acquired in 2013 and growth in the number of commercial customers. The underwriting result was better than in the corresponding period last year, mainly as a result of growth. The growth in premiums in the Baltics segment was 5.4 per cent (minus 1.8 per cent in local currency). The underwriting result was weaker than in the corresponding period last year, largely as a result of a weaker run-off result. The Retail Bank s profit performance was good in the period, driven by volume growth and efficient operations. Pension and Savings also recorded a positive profit performance. The investment portfolio yielded a higher return than in the same period last year, which was affected by the impairment loss on the Storebrand holding. The financial result in 2014 includes a gain of NOK million in connection with the reclassification of the investment in SpareBank 1 SR-Bank from associated company to ordinary equity investment. Development during the quarter The Group recorded a profit before tax expense for the quarter of NOK 1,336.7 million (1,673.3). The profit from general insurance operations measured by the underwriting result was NOK million (852.5). For the investment portfolio, the return on financial assets was 1.0 per cent (1.5), or NOK million (825.7). The profit after tax expense was NOK million (1,328.2), corresponding to NOK 2.00 per share (2.66). The underwriting result was driven by a solid growth in premiums and a good underlying frequency claims development, but it was negatively affected by claims relating to thunder and lightning. The proportion of large losses was higher than in the corresponding period last year, among other things as a result of a cloudburst in Denmark and Sweden in August that was charged in the amount of NOK 77.8 million. The overall level of large losses was nonetheless lower than is normally expected. Both the Retail Bank and Pension and Savings have improved their profit performance since the same period last year as a result of volume growth. The financial result in the quarter was satisfactory given the challenging interest rate situation. Equity and capital adequacy The Group s equity amounted to NOK 22,667.3 million (25,068.2) at the end of the period. The annualised return on equity before tax e xpense was 23.8 per cent (17.8). The capital adequacy was 17.6 per cent (15.9), and the solvency margin was per cent (537.0). This year s capital adequacy and solvency margin figures have been adjusted to take account of the Board's decision to increase the dividend for the 2013 financial year, and the issue of a subordinated loan in the third quarter. Available capital in excess of the risk-based requirement, calculated using the Group s internal model, constitutes the Group s economic excess capital. In addition, a deduction is made for the higher of the calculated supplementary capital required to maintain the current rating (including a five per cent buffer) and the capital required to meet the statutory capital adequacy requirements. Any additional capital represents a strategic buffer and excess capital. At the end of the period, this amounted to NOK 1.8 billion. Adjusted for the Board's decision to increase the dividend for the 2013 financial year and the issue of a subordinated loan, the strategic buffer amounts to NOK 1.0 billion. At the end of 2014, the buffer will increase by profits retained for the 2014 financial year. Other matters Capitalisation interest rate In December 2014, the Norwegian Supreme Court is expected to pronounce a judgment that is relevant to the stipulation of the capitalisation interest rate used when calculating the present value of claims for future losses. Approximately two to three per cent of Gjensidige s provisions for claims could be affected by a capitalisation interest rate that is lower than the current five per cent. A potential change in case law is one of several uncertainty factors that will be taken into account when stipulating the provisions for claims. Letter from the Financial Supervisory Authority of Norway concerning Solvency II In a letter of 19 June 2014, the Finance Supervisory Authority informed the Ministry of Finance about some of its assessments relating to the implementation of the Solvency II Directive in Norwegian law. Among other things, the letter contains assessments relating to the special Norwegian provisions arrangements, i.e. the natural perils fund, the guarantee scheme and security provisions. Reference is made to a more detailed discussion of the Financial Supervisory Authority s letter in the interim report for the second quarter. The questions raised by the Financial Supervisory Authority have yet to be clarified. There is therefore still uncertainty attached to these issues. Gjensidige Insurance Group Third quarter

4 Product groups Private Earned premiums year to date (same period last year) 11.4% (10.1) 17.6% (17.2) Lorem ipsum dolores 43.9% (43.0) Motor Property Accident and health Other 27,1% (29.7) General Insurance Private Year to date development The underwriting result for the year to date was NOK 1,174.8 million (912.8). The main reason for the increase in the underwriting result was growth in premiums, combined with a favourable frequency claims development and good cost control. The combined ratio was 80.7 (84.4). Earned premiums amounted to NOK 6,080.0 million (5,832.7). The increase was due to premium increases. The number of customers at the end of the period was at approximately the same level as at the end of the same period in 2013, and our competitiveness was good in a market characterised by more intense competition. Claims incurred amounted to NOK 4,136.1 million (4,142.1). The loss ratio was 68.0 (71.0). The motor product in particular had a lower loss ratio than in the same period last year, partly as a result of the favourable weather situation during the period, but also because of an underlying lower frequency level than is normally expected. The property product had a somewhat weaker claims development, among other things as a result of a higher proportion of weatherrelated claims in the third quarter. There were only minor changes in the loss ratio for other product areas compared with the corresponding period last year. Development during the quarter The underwriting result for the period was NOK million (401.6). The improvement in profit performance is due to a combination of higher earned premiums and good cost control. The combined ratio was 79.9 (80.5). Earned premiums amounted to NOK 2,116.0 million (2,064.5). The positive development in earned premiums is due to premium increases. Earned premiums increased in all product areas. Claims incurred amounted to NOK 1,426.9 million (1,389.9). The loss ratio was 67.4 (67.3). The claims situation for the property product in the quarter was characterised by a large number of claims as a result of thunder and lightning and heavy rain. The favourable claims development continued for the motor product, with a lower underlying frequency level than is normally expected. Operating expenses amounted to NOK million (273.0), and the cost ratio was 12.5 (13.2). Operating expenses amounted to NOK million (777.8), and the cost ratio was 12.6 (13.3). General Insurance Private NOK million 3 q q Earned premiums 2, , , , ,799.0 Claims incurred etc. (1,426.9) (1,389.9) (4,136.1) (4,142.1) (5,466.5) Operating expenses (264.3) (273.0) (769.0) (777.8) (1,027.0) Underwriting result , ,305.5 Amortisation and impairment losses of excess value intangible assets (25.5) (2.4) (31.5) (7.1) (9.5) Large losses Run-off gains/(losses) Loss ratio % 67.3% 68.0% 71.0% 70.1% Cost ratio % 13.2% 12.6% 13.3% 13.2% Combined ratio % 80.5% 80.7% 84.4% 83.3% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio 4 Gjensidige Insurance Group Third quarter 2014

5 Product groups Commercial Earned premiums year to date (same period last year) 2.1% (2.0) 13.3% (13.4) 5.8% (5.4) 3.2% (3.5) 25.4% (25.2) Lorem ipsum dolores 21.5% (21.7) 28.7% (28.9) Motor Property Accident and health Marine/cargo Liability Agriculture Other General Insurance Commercial Year to date development The underwriting result for the year to date was NOK million (695.2). The increase in the underwriting result was largely due to a combination of good growth in premiums and a good underlying frequency claims development. The combined ratio was 84.0 (86.7). Earned premiums increased to NOK 5,475.6 million (5,221.8). Both the Norwegian and the Swedish portfolios showed a positive development. The development in earned premiums was particularly positive for the accident and health, liability and property products in Norway, and for property in Sweden. The growth was negatively affected by a deliberate reduction of the municipal portfolio. Claims incurred amounted to NOK 3,971.4 million (3,898.8) and the loss ratio ended at 72.5 (74.7). A good underlying frequency claims development for most of the main products was partly outweighed by a slight increase in the proportion of large losses. Development during the quarter The underwriting result for the quarter was NOK million (352.3), corresponding to a combined ratio of 82.3 (80.2). The effect of good growth in premiums was outweighed by a higher proportion of large losses and a lower run-off gain. Earned premiums increased to NOK 1,881.9 million (1,779.9). The growth was particularly positive for the accident and health, liability and property products in Norway, and for property in Sweden. Claims incurred amounted to NOK 1,334.1 million (1,213.2), which corresponds to a loss ratio of 70.9 (68.2). More weather-related frequency claims combined with a higher proportion of large losses and a lower run-off gain contributed to a somewhat higher loss ratio in the period. Operating expenses amounted to NOK million (214.4), and the cost ratio was 11.4 (12.0). Operating expenses amounted to NOK million (627.8), which corresponds to a cost ratio of 11.5 (12.0). General Insurance Commercial NOK million 3 q q Earned premiums 1, , , , ,021.8 Claims incurred etc. (1,334.1) (1,213.2) (3,971.4) (3,898.8) (5,207.6) Operating expenses (214.1) (214.4) (628.6) (627.8) (821.3) Underwriting result Large losses Run-off gains/(losses) Loss ratio % 68.2% 72.5% 74.7% 74.2% Cost ratio % 12.0% 11.5% 12.0% 11.7% Combined ratio % 80.2% 84.0% 86.7% 85.9% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio Gjensidige Insurance Group Third quarter

6 Product groups Nordic Earned premiums year to date (same period last year) 3.0% (3.4) 4.7% (5.6) 17.5% (21.9) 10.1% (0.5) Lorem ipsum dolores 33.3% (37.5) 31.3% (31.3) Motor Property Accident and health Liability Agriculture Other General Insurance Nordic Year to date development The underwriting result for the year to date was NOK million (295.7). The increase was mainly due to growth in premiums. The combined ratio was 88.4 (87.7). Earned premiums increased to NOK 3,126.6 million (2,411.6). Of the increase, NOK million was due to changes in the exchange rate. The increase in premiums over and above exchange rate effects was due to an increase in the number of new commercial customers and to the acquisition of the Gouda and Solid portfolios in Earned premiums from the two acquired portfolios amounted to approximately NOK 450 million for the year to date. The integration and optimisation of the two portfolios is expected to contribute to somewhat lower current earned premiums going forward. Claims incurred amounted to NOK 2,251.5 million (1,722.0). Of the increase, NOK million was due to changes in the exchange rate. The loss ratio was 72.0 (71.4). The positive effect of an increased runoff gain was offset by a higher proportion of large losses, and the underlying loss ratio was practically unchanged. Operating expenses were NOK million (393.9). Of the increase, NOK 28.6 million was due to changes in the exchange rate. The cost ratio was 16.4 (16.3). The distribution model in Gouda means a some what higher proportion of commission costs, which has an effect on the cost ratio. Development during the quarter The underwriting result was NOK 91.8 million (124.8), corresponding to a combined ratio of 91.2 (85.1). The reduction in the result was due to a combination of more losses caused by weather related events and a weak profitability from the acquired portfolio. The latter is as expected in the integration phase. Earned premiums amounted to NOK 1,041.8 million (838.7). Of the increase, NOK 25.0 million was due to changes in the exchange rate. The increase in premiums over and above exchange rate effects was due to an increase in the number of new commercial customers and to the acquisition of the Gouda and Solid portfolios in Earned premiums from the two acquired portfolios amounted to approximately NOK 150 million in the quarter. Claims incurred amounted to NOK million (586.8). Of the increase, NOK 16.7 million was due to changes in the exchange rate. The loss ratio was 75.2 (70.0). The cloudburst in August was charged to the segment in the amount of NOK 24.0 million. In addition, the loss ratio was negatively affected by a higher loss ratio in the acquired portfolio. Operating expenses amounted to NOK million (127.0). Of the increase, NOK 3.1 million was due to changes in the exchange rate. The increase in operating expenses was largely due to the acquired business. In addition, NOK 6.3 million relating to restructuring in the Swedish private market was charged. The cost ratio was 16.0 (15.1) and the underlying cost development was good. General Insurance Nordic NOK million 3 q q Earned premiums 1, , , ,326.4 Claims incurred etc. (783.7) (586.8) (2,251.5) (1,722.0) (2,417.0) Operating expenses (166.3) (127.0) (511.6) (393.9) (567.1) Underwriting result Amortisation and impairment losses of excess value intangible assets (31.6) (62.3) (95.5) (119.1) (147.2) Large losses Run-off gains/(losses) Loss ratio % 70.0% 72.0% 71.4% 72.7% Cost ratio % 15.1% 16.4% 16.3% 17.0% Combined ratio % 85.1% 88.4% 87.7% 89.7% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio 6 Gjensidige Insurance Group Third quarter 2014

7 Product groups Baltics Earned premiums year to date (same period last year) 1.9% (2.6) 4.4% (4.3) 16.3% (15.3) 15.3% (14.9) Lorem ipsum dolores 62.1% (62.9) Motor Property Accident and health Liability Other General Insurance Baltics Year to date development The underwriting result for the year to date was NOK 4.0 million (19.7). The reduction in the underwriting result was due to a weaker run-off result and somewhat higher operating expenses. The combined ratio was 99.0 (94.7). Earned premiums amounted to NOK million (372.9). Of the increase, NOK 27.6 million was due to changes in the exchange rate. The development in earned premiums was negatively affected by the loss of a large commercial customer. Profitability is given priority in a market with considerable price competition. Claims incurred amounted to NOK million (254.7). Of the increase, NOK 18.9 million was due to changes in the exchange rate. The loss ratio was 72.0 (68.3). The loss ratio increased primarily as the result of a run-off loss in the current year, compared with a runoff gain in the same period last year. Operating expenses were NOK million (98.5). Of the increase, NOK 7.3 million was due to changes in the exchange rate. The cost ratio was 26.9 (26.4). Development during the quarter The underwriting result for the quarter was NOK 2.8 million (8.6). The combined ratio was 97.8 (93.5). Earned premiums amounted to NOK million (132.5). Changes in the exchange rate had a positive effect on the premiums in the amount of NOK 4.5 million. The loss of a large commercial customer in the first quarter had a negative effect on underlying earned premiums. Earned premiums from accident and travel insurance showed a positive development, while earned premiums from motor insurance showed a weaker development. Claims incurred amounted to NOK 89.9 million (89.9). Changes in the exchange rate resulted in an increase of NOK 3.0 million in claims incurred. The loss ratio was 70.5 (67.9). The loss ratio increased primarily as the result of a run-off loss in the current quarter, compared with a run-off gain in the same period last year. Operating expenses were NOK 34.9 million (34.0). Changes in the exchange rate resulted in an increase of NOK 1.1 million. The cost ratio was 27.4 (25.7). General Insurance Baltics NOK million 3 q q Earned premiums Claims incurred etc. (89.9) (89.9) (283.3) (254.7) (342.5) Operating expenses (34.9) (34.0) (105.9) (98.5) (132.5) Underwriting result Amortisation and impairment losses of excess value intangible assets (1.3) (1.4) (3.8) (3.8) (4.8) Large losses Run-off gains/(losses) 2 (5.4) 0.9 (9.0) Loss ratio % 67.9% 72.0% 68.3% 67.1% Cost ratio % 25.7% 26.9% 26.4% 25.9% Combined ratio % 93.5% 99.0% 94.7% 93.0% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of EUR 0.5 million per event are, as a main rule, charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio Gjensidige Insurance Group Third quarter

8 Asset allocation the group policy portfolio At the end of the period (same period last year) 2.5% (6.8) 0.4% (0.0) 20.0% (6.4) Bonds held to maturity 74.6% (84.1) Lorem ipsum dolores 2.5% (2.7) Current bonds Money market Other financial investments Bonds classified as loans and receivables Pension and Savings Year to date development The profit before tax expense for the year to date was NOK 60.2 million (36.3). The improvement in profit performance was largely due to an increase in revenues as a result of growth in the customer portfolio and assets under management. Net insurance revenue in the period amounted to NOK million (93.0). The increase in income is explained by increased administration expenses as a result of growth in the portfolio for defined contribution pensions. Management income increased to NOK 72.5 million (59.5) as a result of growth in assets under management, for both the pensions and savings areas. Operating expenses were NOK million (134.9). The increase was mainly due to an increase in business volume. Financial income amounted to NOK 25.8 million (18.6). This includes the return on the group policy portfolio and corporate portfolio. The reason for the growth was a higher return on the rest of the group policy portfolio as a result of increased claims provisions and the realisation of gains on bonds in the first quarter. The Company s share of the financial profit on the paid-up policy portfolio was allocated in its entirety as a provision 1 for higher life expectancy. At the end of the period, the assets under management in the pension operations amounted to NOK 16,099.1 million (13,259.4). Of this amount, the group policy portfolio accounted for NOK 4,062.0 million (3,459.6). The recognised return on the paid-up policy portfolio was 3.36 per cent (3.43) in the period. The average annual interest guarantee is 3.6 per cent. Assets under management for the savings operations amounted to NOK 13,569.1 million (11,563.3) at the end of the period. The total assets under management increased by NOK 3,817.9 million (4,343.8), amounting to NOK 29,668.1 million (24,822.7) at the end of the period. Development during the quarter The profit before tax expense was NOK 19.7 million (12.9). Net insurance revenue amounted to NOK 34.4 million (30.7) and the management income was NOK 26.1 million (21.0). The improvement was largely related to portfolio growth in the pension operations. Operating expenses amounted to NOK 48.8 million (45.3), while financial income amounted to NOK 8.0 million (6.4). 1 Total provisions at the end of the year amounted to NOK million, and the total provision need up to and including 2018 is approximately NOK 250 million. Pension and Savings NOK million 3 q q Earned premiums Claims incurred etc. (203.7) (162.3) (703.1) (528.6) (779.7) Net insurance revenue Management income etc Operating expenses (48.8) (45.3) (141.6) (134.9) (182.0) Net operating income Net financial income Profit/(loss) before tax expense Run-off gains/(losses) 1 Operating margin % 12.51% 19.55% 11.59% 11.89% Recognised return on the paid-up policy portfolio % 3.43% 4.57% Value-adjusted return on the paid-up policy portfolio % 3.50% 4.67% 1 Run-off gains/(losses) = changes in estimates from earlier periods 2 Operating margin = net operating income/(net insurance revenue + management income etc.) 3 Recognized return on the paid-up policy portfolio = realised return of the portfolio 4 Value-adjusted return on the paid-up policy portfolio = total return of the portfolio 8 Gjensidige Insurance Group Third quarter 2014

9 Deposits and lending At the end of the period (same period last year) NOK million Retail Bank Development during the year Profit before tax expense was NOK million (140.8). The positive development was mainly a result of increased net interest income, coming primarily from the growth in customer lending. Expenses were at similar level while write-downs and losses were lower as compared to prior year. Net interest income was NOK million (398.5), primarily driven by customer lending growth. Net commission income and other income were NOK 55.1 million (39.9), mainly related to increased revenues from financial instruments. Net interest margin was 2.10 percent (2.50). The decline was a result of strong growth in the secured lending in the past 12 months. Operating expenses were NOK million (249.2). Cost/income ratio was 50.3 per cent (56.9). Total write-downs and losses were NOK 41.3 million (48.3), predominantly related to the unsecured lending portfolio. The decrease was a result of improved impairment levels and lower portfolio growth compared to prior year. Annualised write-downs and losses in per cent of average gross lending were 0.22 per cent (0.33). The decline was driven by an increased share of the secured loans and improved credit quality in the total lending portfolio. The weighted average loan to value 1 was estimated at 61.1 per cent (64.0) for the mortgage portfolio. Gross lending increased by 13.9 per cent year over year, amounting to NOK 26,421.7 million (23,196.3) at the end of the period. Deposits increased by 28.1 per cent year over year, reaching NOK 16,619.7 million (12,973.0) at the end of the period. Deposits to loans ratio was 62.9 per cent (55.9). Standard & Poor's upgraded the outlook for Gjensidige Bank ASA and Gjensidige Bank Boligkreditt AS from negative to stable and kept the long term rating unchanged to A- in the beginning of July. The amendment was based on their assessment of the strategic position the bank has within Gjensidige Group. The outlook for the covered bonds portfolio issued by Gjensidige Bank Boligkreditt AS was also changed to stable while the long term-rating rating remained AAA Lending Lending Deposits There is good access to external financing. Deposits The Bank issued a subordinated bond of NOK in second quarter, among other things to comply with more stringent capital requirements from 1 July Development during the quarter Profit before tax expense was NOK 71.5 million (49.8). The positive development was a result of decreased expenses and write-downs and losses as well as increased net interest income. Net interest income was NOK million (139.8), driven by the growth in customer lending. Net commission income and other income were NOK 19.8 million (19.4). Operating expenses were NOK 83.2 million (92.6). The improvement was due mainly to extraordinary project expenses in Cost/income ratio was 50.3 per cent (58.2). Total write-downs and losses were NOK 10.6 million (16.8), predominantly related to the unsecured lending portfolio. Gross lending growth was NOK million (2,297.4) while the increase in the deposits was NOK million (512.6). 1 The loan to value estimate is calculated based on the exposure at the reporting date and the property valuation at the time the loan was approved, including any higher priority pledge(s). Retail Bank NOK million 3 q q Interest income and related income ,135.0 Interest expenses and related expenses (185.0) (153.7) (543.9) (418.0) (588.9) Net interest income Net commission income and other income Total income Operating expenses (83.2) (92.6) (249.6) (249.2) (341.3) Write-downs and losses (10.6) (16.8) (41.3) (48.3) (67.1) Profit/(loss) before tax expense Net interest margin, annualised % 2.50% 2.42% Write-downs and losses, annualised % 0.33% 0.32% Cost/income ratio % 58.2% 50.3% 56.9% 56.9% 1 Net interest margin, annualised = net interest income/average total assets 2 Write-downs and losses, annualised = write-downs and losses/avarage gross lending 3 Cost/income ratio = operating expenses/total income Gjensidige Insurance Group Third quarter

10 Portfolio split At the end of the period (same period last year) Geographic distribution match portfolio At the end of the period 1.6% 6.0% 1.6% 6.0% 39.5% (42.5) Lorem ipsum dolores 60.5% (57.5) Match portfolio Free portfolio 27.9% Lorem ipsum dolores 52.4% Norway Sweden Denmark USA UK Baltics Other 4.4% Management of financial assets and properties The Group s investment portfolio includes all investment funds in the Group, except for investment funds in the Pension and Savings and Retail Bank segments. The investment portfolio consists of two parts: a match portfolio and a free portfolio. The match portfolio is intended to correspond to the Group s actuarial provisions. It is invested in fixed-income instruments whose duration is adapted to match the disbursement of the actuarial provisions. The free portfolio consists of various assets. The allocation of assets in this portfolio must be seen in connection with the Group s capitalisation and pertaining risk capacity, as well as the Group s ongoing risk management. Year to date development At the end of the third quarter, the investment portfolio totalled NOK 55,1 billion (57.1). The reduction in the portfolio must be seen in conjunction with the disbursement of excess capital in May. The financial result for the year to date amounted to NOK 2,059.0 million (1,603.2), which corresponds to a return on financial assets of 3.6 per cent (2.8). Adjusted for the impairment loss on the investment in Storebrand in 2013, the profit for the year to date was somewhat weaker. Match portfolio The match portfolio amounted to NOK 33.3 billion (32.8). The portfolio yielded a return of 2.6 per cent (2.7) excluding changes in the value of the part of the portfolio recognised at amortised cost. Unrealised excess value from bonds valued at amortised cost amounted to NOK 1,714.3 million (938.1) at the end of the period. The average duration of the match portfolio was 3.4 years. The average term to maturity for the corresponding insurance debt was 3.7 years. The distribution of counterparty risk and credit rating is shown in the charts on pages 11 and 12. Securities without an official credit rating amounted to NOK 9.7 billion. Of these securities, 21.7 per cent were issued by Norwegian savings banks, while the remainder were mostly issued by Norwegian power producers and distributors, property companies or government-guaranteed companies. A third-party internal rating existed for 74.2 per cent of the portfolio without an official rating. Bonds with a coupon that is adjusted on the basis of the development in the Norwegian consumer price index accounted for 13.0 per cent of the match portfolio. The geographical distribution 1 of the match portfolio is shown in the above chart. 1 The geographical distribution is related to issuers and does not reflect the actual currency exposure. Financial assets and properties Result 3 q. Result Carrying amount NOK million Match portfolio Money market , ,238.8 Bonds at amortized cost , ,521.6 Current bonds , ,072.9 Match portfolio total , ,833.3 Free portfolio Money market , ,778.8 Other bonds 2 (3.5) , ,551.0 Convertible bonds 3 (13.4) ,046.5 Current equities , ,204.0 PE funds , ,642.3 Property , ,011.2 Other (6.3) 15.4 (33.3) ,080.6 Free portfolio total , , ,314.5 Financial result from the investment portfolio , , , ,147.8 Financial income in Pension and Savings and Retail Bank Net income from investments , , The item includes the discounting effects of insurance obligations in Denmark and mismatch between interest rate adjustments on the liability side in Denmark, versus the interest rate hedge. 2 The item consist of total investment grade, high yield and current bonds. Investment grade and high yield are investments in internationally diversified funds externally managed. 3 Investments in internationally diversified funds externally managed. 4 The item include the investment in SpareBank 1 SR-Bank and effect on profit of the sale of shares in Storebrand. 5 The item includes currency hedging of Gjensidige Sverige, Gjensidige Baltic and Gjensidige Danmark, and lendings, paid-in capital in Gjensidige Pensjonskasse, hedge funds and finance related expenses. 10 Gjensidige Insurance Group Third quarter 2014

11 Geographic distribution fixed income instruments in free portfolio At the end of the period 12.0% 16.0% 16.6% Lorem ipsum dolores 35.9% 37.2% Norway Sweden Denmark USA UK Other Counterparty risk fixed income instruments At the end of the period Per cent Industry Banks/ financial institutions Government/ public sector 24.8% 25.0% 8.7% 2.0% 0 Match portfolio Free portfolio Free portfolio The free portfolio amounted to NOK 21.8 billion (24.3) at the end of the period. The return was 5.1 per cent (3.0). Fixed-income instruments The fixed-income instruments in the free portfolio amounted to NOK 9.4 billion (9.4). The portfolio yielded a profit of 2.2 per cent (2.7), and high yield and convertible bonds in particular were negatively affected by a fall in the interest rate and a tightening of credit margins. The average duration of the portfolio was approximately 0.6 years at the end of the period. The distribution of counterparty risk and credit rating is shown in the charts on this and the next page. Securities without an official credit rating amounted to NOK 1.8 billion. Of these securities, 9.6 per cent were issued by Norwegian savings banks, while the remainder were mostly issued by Norwegian power producers and distributors, property companies or government-guaranteed companies. A third-party internal rating existed for 72.4 per cent of the portfolio without an official rating. The geographical distribution 1 of the fixed-income instruments in the free portfolio is shown in the chart above. Equity portfolio The total equity exposure at the end of the period was NOK 5.8 billion (8.8), of which NOK 3.9 billion (7.2) consisted of current equities and NOK 1.8 billion (1.6) of PE funds. The return on current equities was 9.0 per cent (1.9). This includes the return on derivatives used for hedging purposes. The shareholding in SpareBank 1 SR-Bank was recognised at market value from the second quarter. Gjensidige is no longer represented on the bank s board and the bank is no longer defined as an associated company for accounting purposes. The market value of the investment amounted to NOK 1,615.5 million at the end of the period. The return on PE funds was 14.6 per cent (10.3). Property portfolio At the end of the period, the property portfolio amounted to NOK 5.8 billion (5.0). The property portfolio yielded a return of 5.7 per cent (4.1). The general required rate of return in connection with the valuation of the properties was adjusted downwards to 6.4 per cent (6.5). The individual valuations resulted in a net increase in value of NOK 71.9 million. External valuations of five individual properties were carried out at the end of the period. The portfolio is concentrated in office properties in Oslo, but it also includes a few office properties in other Norwegian towns and cities. 1 The geographical distribution is related to issuers and does not reflect the actual currency exposure. Return per asset class NOK million 3 q q Match portfolio Money market Bonds at amortized cost Current bonds Match portfolio total Free portfolio Money market Other bonds 2 (0.1) Convertible bonds 3 (2.1) Current equities PE funds Property Other (0.8) 0.8 (3.7) (9.8) Free portfolio total Return on financial assets The item includes the discounting effects of insurance obligations in Denmark and mismatch between interest rate adjustments on the liability side in Denmark, versus the interest rate hedge. 2 The item consist of total investment grade, high yield and current bonds. Investment grade and high yield are investments in internationally diversified funds externally managed. 3 Investments in internationally diversified funds externally managed. 4 The item include the investment in SpareBank 1 SR-Bank and effect on profit of the sale of shares in Storebrand. 5 The item includes currency hedging of Gjensidige Sverige, Gjensidige Baltic and Gjensidige Danmark, and lendings, paid-in capital in Gjensidige Pensjonskasse, hedge funds and finance related expenses. Gjensidige Insurance Group Third quarter

12 Credit rating fixed income instruments At the end of the period Per cent No official rating High yield Investment grade Match portfolio Free portfolio Development during the quarter The financial result for the total investment portfolio was NOK million (825.7) in the quarter. This resulted in a return on financial assets of 1.0 per cent (1.5). The return on the match portfolio was 0.9 per cent (0.9), excluding changes in the value of the portfolio valued at amortised cost. The return on the free portfolio was 1.3 per cent (2.2). The decrease was due to a weaker return on most asset classes, with the exception of PE funds and property. Organisation The Group had a total of 3,479 employees at the end of the third quarter, compared with 3,437 at the end of the second quarter. The number of employees broke down as follows: 2,093 (2,046) in general insurance operations in Norway, 132 (135) in Gjensidige Bank, 66 (64) in Gjensidige Pensjon og Sparing, 636 (629) in Denmark, 170 (166) in Sweden and 382 (382) in the Baltic States (excluding agents). The figures in brackets refer to the number of employees at the end of the second quarter Events after the balance sheet date On 15 September 2014, Gjensidige issued a subordinated bond with a nominal value of NOK 1,200 million and a coupon of 3-month NIBOR percentage points per annum. The loan has a tenor of 30 years, and Gjensidige Forsikring ASA has a call option on 2 October The terms of the loan are in compliance with existing and expected future requirements for subordinated debt eligible as tier 2 capital. The bond was released on 2 October 2014 and recognised in the accounts from that date. Gjensidige will apply to have the bond listed on Oslo Stock Exchange before the turn of the year. Dividend At a board meeting on 20 October 2014, the Board decided to distribute excess capital in the form of increased dividend for the 2013 financial year of NOK 2,000 million, corresponding to NOK 4.00 per share. The decision was made on the basis of the Board s current authorisation to determine distribution of dividend granted by the ordinary general meeting on 24 April 2014, and the distribution is in accordance with the current capital strategy and dividend policy. At the same time, the Board set the ex-dividend date to 28 October 2014, and the dividend will be distributed on 6 November Gjensidige Insurance Group Third quarter 2014

13 Outlook At the board meeting on 20 October 2014, the Board also decided that the target of a cost ratio of around 15 per cent for the general insurance operation is continued also after The Board also decided that the previously communicated targets for combined ratio (90-93) and return on equity after tax (15 per cent from and including 2015) are continued. Throughout 2014, Gjensidige has taken various measures to optimise its balance sheet and capital, which mean that, at the start of 2015, the Group will have a balance sheet and capital structure that supports the target of a 15 per cent return on equity after tax expense from Competition remains strong, and is increasing to some extent, in the Norwegian general insurance market, particularly from established financial players that are focusing on general insurance. Gjensidige s competitiveness is regarded as good, with a solid growth in premiums and volume combined with good profitability. The work of retaining and strengthening the customer base and the company s position in the Norwegian market continues unabated. At the same time, new profitable opportunities for growth in the rest of the Nordic countries and in the Baltics are continuously assessed. Emphasis is placed on further developing cooperation with partners and distributors. The group-wide programmes for analytical pricing, customer and risk selection and the improvement of processes will continue. Continuous investments are being made in forward-looking digital service solutions in order to meet customer needs. High priority is given to continuous competence-raising measures in order to ensure that Gjensidige remains an attractive place to work and that it has the right composition of expertise going forward. Uncertainty about the international economic situation, combined with low interest rates and financial challenges in several key economies, remains a source of uncertainty for Gjensidige as well. Gjensidige has a robust investment strategy, however. It is financially sound and has a high proportion of its business in the Norwegian general insurance market. The macroeconomic situation with respect to the Norwegian general insurance operations is still regarded as good. The Danish property market is improving, and the Baltic economies are showing positive development. There is still uncertainty relating to changes to the framework conditions for the financial sector in Norway and internationally. The Solvency II regulations are expected to be implemented in Norway in New Norwegian pension legislation entered into force on 1 January The Group has substantial capital buffers in relation to internal risk models, statutory capital adequacy requirements and its target rating. The Board considers the Group s capital situation and financial strength to be good. Oslo, 20 October 2014 The Board of Gjensidige Forsikring ASA Inge K. Hansen Gunnhild H. Andersen Trond Vegard Andersen Hans-Erik F. Andersson Per Arne Bjørge Chairman Kjetil Kristensen Gisele Marchand Gunnar Mjåtvedt Tine G. Wollebekk Mette Rostad Helge Leiro Baastad CEO Gjensidige Insurance Group Third quarter

14 Consolidated income statement NOK million Notes 3 q q Operating income Earned premiums from general insurance 4 5, , , , ,736.9 Earned premiums from pension Interest income etc. from banking operations ,135.0 Other income including eliminations Total operating income 3 5, , , , ,884.5 Net income from investments Results from investments in associates (110.3) Operating income from property Interest income and dividend etc. from financial assets , ,495.6 Net changes in fair value on investments (incl. property) ,006.0 Net realised gain and loss on investments 11.6 (129.3) (321.0) Expenses related to investments (45.0) (41.5) (140.1) (110.0) (166.7) Total net income from investments , , ,538.1 Total operating income and net income from investments 6, , , , ,422.6 Claims, loss etc. Claims incurred etc. from general insurance 5,6 (3,695.3) (3,293.7) (10,862.5) (10,195.4) (13,859.6) Claims incurred etc. from pension (203.7) (162.3) (703.1) (528.6) (779.7) Interest expenses etc. and write-downs and losses from banking operations (195.6) (170.4) (585.2) (466.3) (656.0) Total claims, interest expenses, loss etc. (4,094.7) (3,626.5) (12,150.8) (11,190.3) (15,295.3) Operating expenses Operating expenses from general insurance (753.2) (720.6) (2,254.7) (2,131.3) (2,857.8) Operating expenses from pension (48.8) (45.3) (141.6) (134.9) (182.0) Operating expenses from banking operations (83.2) (92.6) (249.6) (249.2) (341.3) Other operating expenses (3.4) (2.1) (9.1) (7.1) (10.4) Amortisation and impairment losses of excess value - intangible assets (58.4) (66.1) (130.9) (130.0) (161.7) Total operating expenses (947.1) (926.7) (2,786.0) (2,652.6) (3,553.2) Total expenses (5,041.7) (4,553.3) (14,936.8) (13,842.8) (18,848.5) Profit/(loss) for the period before tax expense 3 1, , , , ,574.1 Tax expense (339.0) (345.2) (1,015.0) (754.9) (903.5) Profit/(loss) for the period , , , ,670.6 Earnings per share, NOK (basic and diluted) Gjensidige Insurance Group Third quarter 2014

15 Consolidated statement of comprehensive income NOK million 3 q q Profit/(loss) for the period , , , ,670.6 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined benefit liability/asset (250.0) (320.0) 19.6 Share of other comprehensive income from associates 1.9 (50.9) Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss (182.5) 1.9 (284.5) Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations (104.9) 95.1 (83.6) Share of exchange differences from associates 16.5 (142.4) Exchange differences from hedging of foreign operations 85.2 (74.9) 68.3 (296.7) (376.0) Tax on items that may be reclassified to profit or loss (8.1) 21.0 (4.6) Total items that may be reclassified subsequently to profit or loss (27.7) 57.7 (162.2) Total components of other comprehensive income (210.2) 59.6 (446.7) Total comprehensive income for the period , , , ,093.7 Gjensidige Insurance Group Third quarter

16 Consolidated statement of financial position NOK million Notes Assets Goodwill 2, , ,562.2 Other intangible assets 1, , ,138.2 Deferred tax assets Investments in associates , ,772.0 Owner-occupied property Plant and equipment Investment properties 8 5, , ,644.3 Pension assets Financial assets Financial derivatives Shares and similar interests 7 7, , ,023.4 Bonds and other securities with fixed income 7 24, , ,398.0 Bonds held to maturity 7 2, , ,211.3 Loans and receivables 7 45, , ,692.4 Assets in life insurance with investment options 11, , ,330.6 Reinsurance deposits Reinsurers' share of insurance-related liabilities in general insurance, gross Receivables related to direct operations and reinsurance 4, , ,290.5 Other receivables Prepaid expenses and earned, not received income Cash and cash equivalents 2, , ,729.4 Total assets 111, , ,946.3 Equity and liabilities Equity Share capital Share premium 1, , ,430.0 Other equity 20, , ,857.9 Total equity 22, , ,287.8 Provision for liabilities Subordinated loan Premium reserve in life insurance 3, , ,064.6 Provision for unearned premiums, gross, in general insurance 9, , ,984.6 Claims provision, gross 9 32, , ,749.6 Other technical provisions Pension liabilities Other provisions Financial liabilities Financial derivatives Deposits from and liabilities to customers 7 16, , ,938.3 Interest-bearing liabilities 7 9, , ,771.6 Other liabilities 7 1, Current tax , Deferred tax liabilities 1, , ,340.6 Liabilities related to direct insurance Liabilities in life insurance with investment options 11, , ,330.6 Accrued expenses and deferred income Total liabilities 88, , ,658.5 Total equity and liabilities 111, , , Gjensidige Insurance Group Third quarter 2014

17 Consolidated statement of changes in equity Remeasurement of the net NOK million Share capital Own shares Share premium Other paid-in capital Exchange differences defined benefit liab./asset Other earned equity Total equity Equity as at ,000.0 (0.1) 1, (245.3) (1,323.7) 24, , Profit/(loss) for the period 3, ,670.6 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset Share of other comprehensive income from associates Tax on items that are not reclassified to profit or loss (23.7) Total items that are not reclassified subsequently to profit or loss (4.1) Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations (0.4) Share of exchange differences from foreign operations Exchange differences from hedging of foreign operations (376.0) (376.0) Tax on items that may be reclassified to profit or loss Total items that may be reclassified subsequently to profit or loss (0.4) Total components of other comprehensive income (4.5) Total comprehensive income for the period (4.5) 3, ,093.7 Own shares 0.0 (5.3) (5.3) Paid dividend (3,424.5) (3,424.5) Equity-settled share-based payment transactions Equity as at ,000.0 (0.1) 1, (84.8) (1,328.2) 25, , Profit/(loss) for the period 3, ,225.5 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset (320.0) (320.0) Share of other comprehensive income of associates (50.9) (50.9) Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss (233.6) (50.9) (284.5) Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations (83.6) (83.6) Share of exchange differences from associates (142.4) (142.4) Exchange differences from hedging of foreign operations Tax on items that may be reclassified to profit or loss (4.6) (4.6) Total items that may be reclassified subsequently to profit or loss (19.8) (142.4) (162.2) Total components of other comprehensive income (19.8) (233.6) (193.2) (446.7) Total comprehensive income for the period (19.8) (233.6) 3, ,778.8 Own shares (0.0) (5.0) (5.0) Paid dividend (6,399.1) (6,399.1) Equity-settled share-based payment transactions Equity as at ,000.0 (0.1) 1, (104.7) (1,561.8) 21, ,667.3 Gjensidige Insurance Group Third quarter

18 Remeasurement of the net NOK million Share capital Own shares Share premium Other paid-in capital Exchange differences defined benefit liab./asset Other earned equity Total equity Profit/(loss) for the period 2, ,536.1 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset Share of other comprehensive income of associates Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations Share of exchange differences from associates Exchange differences from hedging of foreign operations (296.7) (296.7) Tax on items that may be reclassified to profit or loss Total items that may be reclassified subsequently to profit or loss Total components of other comprehensive income Total comprehensive income for the period , ,873.5 Own shares (0.1) (3.8) (3.9) Paid dividend (3,424.5) (3,424.5) Equity-settled share-based payment transactions Equity as at ,000.0 (0.2) 1, (105.0) (1,838.7) 24, , Gjensidige Insurance Group Third quarter 2014

19 Consolidated statement of cash flows NOK million Cash flow from operating activities Premiums paid, net of reinsurance 18, , ,080.0 Claims paid, net of reinsurance (11,117.6) (9,663.4) (13,554.2) Net payment of loans to customers (2,238.4) (5,872.0) (6,869.7) Net payment of deposits from customers 1, , ,357.8 Payment of interest from customers ,073.0 Payment of interest to customers (26.7) (16.3) (369.3) Net receipts/payments on premium reserve transfers (371.0) (284.6) (472.4) Net receipts/payments from financial assets (887.5) (2,534.1) Net receipts/payments from properties Net receipt/payments on sale/aquisition of investment property (614.1) (107.1) (135.7) Operating expenses paid, including commissions (2,665.2) (2,263.7) (3,639.2) Taxes paid (1,341.5) (919.4) (1,338.5) Net other receipts/payments Net cash flow from operating activities 3,645.7 (123.0) (1,127.7) Cash flow from investing activities Net receipts/payments from sale/aquisition of subsidiaries and associates 3,208.2 (12.5) Net receipts/payments on sale/aquisition of owner-occupied property, plant and equipment (129.5) (45.0) (24.7) Dividends from investments in associates Net cash flow from investing activities 3,121.1 (17.7) Cash flow from financing activities Payment of dividend (6,399.1) (3,424.5) (3,424.5) Net receipts/payments on loans to credit institutions (241.4) 3, ,433.5 Net receipts/payments on other short-term liabilities 17.3 (15.5) (13.5) Net receipts/payments on interest on funding activities (162.0) (97.8) (153.1) Net receipts/payments on sale/acquisition of own shares (5.0) (3.9) (5.3) Net cash flow from financing activities (6,790.3) Effect of exchange rate changes on cash and cash equivalents (15.9) Net cash flow for the period (39.3) Cash and cash equivalents at the start of the period 2, , ,331.5 Cash and cash equivalents at the end of the period 2, , ,729.4 Net cash flow for the period (39.3) Specification of cash and cash equivalents Deposits with central banks Cash and deposits with credit institutions 2, , ,853.9 Total cash and cash equivalents 2, , ,729.4 Gjensidige Insurance Group Third quarter

20 Notes 1. Accounting policies The consolidated financial statements as of the third quarter of 2014, concluded on 30 September 2014, comprise Gjensidige Forsikring and its subsidiaries (collectively referred to as the Group) and the Group s holdings in associated companies. The accounting policies applied in the interim report is the same as those used in the annual report for The consolidated financial statements as of the third quarter of 2014 have been prepared in accordance with IFRS and IAS 34 Interim Financial Reporting. The interim report does not include all the information required in complete annual report and should be read in conjunction with the annual report for The following International Financial Reporting Standards (IFRS) and interpretation statements published up until 20 October 2014 have been implemented: IFRS 10 Consolidated Financial Statements (2011) have entailed that Gjensidige has changed its accounting principle to determine if it has control over, and therefore will consolidate other entities, based on a new model of control. The change has not had effect on Gjensidige's financial statements. Based on our preliminary assessments and on the basis of Gjensidige s current operations, other amendments to standards and interpretation statements will not have a material effect. The preparation of interim accounts involves the application of assessments, estimates and assumptions that affect the use of accounting policies and recognised amounts for assets and liabilities, revenues and expenses. The actual results may deviate from these estimates. The most material assessments involved in applying the Group s accounting policies and the most important sources of uncertainty in the estimates are the same in connection with preparing the interim report as in the annual report for Comparable figures are based on IFRS. All amounts are shown in NOK million unless otherwise indicated. Due to rounding-off differences, figures and percentages may not exactly add up to the exact total figures. A complete or limited review of the interim report has not been carried out. The following IFRSs and interpretation statements have been published up until 20 October 2014, without having entered into force or having been implemented early: IFRS 15 Revenue from Contracts with Customers (2014) comprises all contracts with customers, but which among others insurance contracts are not in scope. To the extent that contracts comprise more services this might have an effect on recognition of revenue in Gjensidiges accounts. However, it is assumed that the change will not have a material effect. 2. Seasonal variations For some insurance products, seasonal premiums are used. This is because the incidence of claims is not evenly distributed throughout the year, but follows a stable seasonal pattern. Normally, premium income (earned premiums) is accrued evenly over the period of insurance, but for products with a seasonal pattern, premium income must also be allocated according to the incidence of claims. Gjensidige Forsikring has a seasonal premium for the following products: pleasure craft, snowmobiles and motorcycles. For example for motorcycles, earned premiums for the period from April to September amount to a full 85 per cent of the annual premiums. Another consequence of a seasonal premium is that if the customer cancels the insurance contract before the renewal date, only the portion of the seasonal premium is refunded for which the Company did not bear any risk. For motorcycle insurance taken out on 1 April, but cancelled on 1 October, the policyholder will only be refunded 15 per cent of the annual premium, even though the insurance was in effect only for six months. 20 Gjensidige Insurance Group Third quarter 2014