in a MOre competitive market

Transcription

1 Gjensidige Forsikring consolidated interim report first quarter 2007

2 first quarter 2007 Gjensidige Forsikring consolidated SATISFACTORY RESULTS in a MOre competitive market Gjensidige reports its consolidated accounts in accordance with the International Financial Reporting Standards (IFRS) from The following results, key figures and comparison figures are therefore based on IFRS. Reference is made to a separate Transition Document for a more detailed description of the effects of the implementation of IFRS. The figures for the first quarter of 2007 have been subject to limited auditing. A statement has been made in respect of limited auditing with no remarks. The figures for the first quarter of 2006 have not been subject to limited auditing. HIGHLIGHTS Profit before tax was NOK 501 million in the first quarter, compared with NOK 519 million for the corresponding period last year. General insurance business is marked by a greater number of medium-sized and large claims than last year. Combined ratio, net of reinsurance 1, for the general insurance business was 105.6, compared with for the corresponding period last year. Return on investment for the quarter 2 was 5.4 per cent, compared with 7.6 per cent last year. Gjensidige Bank was launched in January, and it has total assets of over NOK 600 million after three months. Danish company KommuneForsikring is included in the accounting figures from the first quarter. Figures from the Norwegian Financial Services Association show that Gjensidige is once again the market leader in onshore general insurance with a market share of 31.6 per cent. Market share including marine and one-year insurances of the person products was 31.8 per cent 3. On 21 April 2007 the company s General Meeting approved the continuation of work to study a possible listing of primary capital certificates for Gjensidige. Definitions: 1 Loss ratio, net of reinsurance + cost ratio, net of reinsurance 2 Return on investment, excluding strategic items, annualised 3 Based on Gjensidige s own internal calculations GROUP s profit performance Profit before tax In the first quarter the group had a profit before tax of NOK 501 million, compared with NOK 519 million for the corresponding period last year. This gives a return on equity of 10.4 per cent, compared with 12.7 last year. The Norwegian general insurance business had a profit before tax of NOK 179 million, with NOK 115 million in the household market and NOK 64 million in the business market. The corresponding figure last year was NOK 145 million, which breaks down into NOK 85 million and NOK 60 million, respectively, for the household and business markets. An estimated return on investment is allocated to the results in accordance with the Financial Supervisory Authority of Norway s interest rate for the first quarter. The volume of the Norwegian onshore general insurance market was flat in the first quarter, and it is marked by sharp competition between the players. Therefore it is satisfactory that Gjensidige showed weak growth during this period. A higher volume of claims has entailed an increase in the loss ratio for both the household and business markets compared with last year. The cost development is, however, positive, and there has been a reduction in the operating expenses in relation to last year in both the household and business areas. General insurance in the Nordic region had a profit before tax of NOK 53 million in the first quarter, while the general insurance business in the Baltic States reported a profit before tax of NOK 3 million. This is the profit before amortisation of the group s intangible assets in connection with acquisitions. Gjensidige Bank, which was launched in January this year, had a loss before tax of NOK 19 million in the first quarter. The pension and savings business had a loss of NOK 36 million before tax, while the corresponding loss for the same period in the year of establishment 2006 was NOK 32 million. The profit performance for the new establishments in banking, life insurance and savings was in accordance with the expectations. Total operating expenses for the quarter were NOK million, compared with NOK million for the corresponding period last year. The

3 Gjensidige Forsikring consolidated first quarter Product groups private Norway 11,7 % Agriculture Motor 33,5 % 30,4 % Person private Leasure 6,2 % House 18,2 % cost increase is due to the acquisition of companies in Denmark and the Baltic States, as well as horizontal expansion in Norway. In the autumn of 2006 a project was implemented to reduce the nominal operating expenses in the parent company Gjensidige Forsikring by NOK 350 million, with full effect from The organisation has been significantly flattened by reducing the number of management levels between the group management and the customer, and roles and the division of work between various support functions and distribution channels have also been simplified and standardised. The new division of roles between the service channels is expected to increase the overall sales power. This work is in its final phase and is already having positive effects on the cost development. For the parent company, the nominal operating expenses at the end of March show a reduction of NOK 65 million compared with the same period in The work to improve the company s settlement processes is also nearing the final phase. A similar project has also been initiated to coordinate activities and realise cost savings at the group level. Key figures Group - profit before tax (Figures in NOK 1,000) this year last year Full year 2006 General insurance household market in Norway 114,878 85, ,934 General insurance business market in Norway 63,991 59, ,474 General insurance in the rest of the Nordic region 53,137 - (47,556) General insurance in the Baltic States 3,306 - (278) Banking (18,645) - (8,996) Pension and savings (36,125) (31,857) (116,925) Unallocated 1 320, ,473 2,650,892 Consolidated profit before tax 500, ,498 4,230,545 Management of financial assets Group s return on investment for the quarter was 5.4 per cent (annualised), compared with 7.6 per cent last year. The parent company Gjensidige Forsikring has a return on investment on ordinary managed funds in the first quarter of 1.4 per cent (periodic return). Investments in shares has yielded a return of 2.9 per cent year to date. This can be broken down into a return of 2.0 per cent on the portfolio of Norwegian shares, 2.0 per cent on the portfolio of global shares, and 5.3 per cent on the portfolio of shares in growth markets. The company s greatest exposure is in the global share markets, and over 17 per cent of the total ordinary managed assets are allocated to investments in the share market. Year to date the money market portfolio has yielded a return of 1.0 per cent, while the short-term and long-term bond portfolios have yielded a return of 0.1 and 1.0 per cent, respectively. Balance sheet The group s balance sheet total was NOK 55.6 billion at the end of the first quarter, compared with NOK 46.0 billion at the same time last year. The equity was NOK 19.7 billion at the end of the first quarter, which is an increase of NOK 2.8 billion since the end of the first quarter last year. The solvency margin was 134.4, compared with for the corresponding period last year. general insurance HOUSEHOLD MARKET in norway The Norwegian general insurance business is carried out through the parent company Gjensidige Forsikring, and the customer-oriented business in the household market is organised into five geographic regions, in addition to Internet sales. The household market encompasses insurance related to homes and holiday homes, motor vehicles and insurances of the person. interim report Definition: 1 Consists primarily of activities in the health area and group adjustments due, for example, to the fact that the actual return on investment deviates form the estimated allocated return on investment. Premiums Premiums written were NOK 2,380 million at the end of the first quarter, compared with NOK 2,263 million for the corresponding period last year. The greatest growth has been in motor insurance and insurances of the person.

4 4 first quarter 2007 Gjensidige Forsikring consolidated Product groups business Norway 10,2 % Marine/ transport Motor 13,2 % Product group other Nordic countries 22,6 % Private Building 16,0 % Municipal/ business 41,7 % 49,3 % Person business Assets/ operating loss 7,3 % Liability 4,1 % 35,7 % Occupational injury Overall Gjensidige has around 976,000 customers in the household market. Compared with the corresponding period last year, the company has suffered a net loss of around 200 customers. There is a positive development in the number of customers from labour organisations who have an agreement with Gjensidige, and the launch of a new customer programme in May is expected to have a positive effect on the development. Claims The loss ratio increased from 78.0 in the first quarter last year to 81.2 in the first quarter this year. There has only been a slight increase in motor insurance compared with last year, but the figures show an improvement in the last month of the quarter. Compared with last year, there has also been a greater number of losses and fires, which also includes the agricultural area. Operating expenses The operating expenses in the household market showed a positive development compared with the corresponding period last year. It is expected that the operating expenses will be reduced further as a result of the ongoing efficiency enhancement work. This gives a cost ratio of 20.9 per cent for the household market, compared with 21.9 per cent for the corresponding period last year. Key figures Household market in Norway (Figures in NOK 1,000) this year last year Full year 2006 Premiums earned, net of reinsurance 1,805,356 1,786,742 7,373,363 Profit before tax 114,878 85, ,934 GENERAL INSURANCE BUSINESS MARKET IN NORWAY Gjensidige is a key player in the business market with high market shares, particularly for insurances of the person. Industrial, business, personal (including occupational injury insurance) and motor insurance, as well as marine insurance, are offered. The customer-oriented activities in the business market for small and medium-sized enterprises are carried out in the five geographic regions, while large and brokered customers are served by a separate unit, Corporate Customers/Brokers. Premiums Premiums written were NOK 2,782 million at the end of the first quarter, compared with NOK 2,916 million for the corresponding period last year. There has been growth in marine, property and liability insurance. The business volume for insurances of the person declined compared with last year,partly as a consequence of profitability requirements. Growth in marine insurance is due to the takeover of portfolios from three marine insurance companies that Gjensidige has entered into cooperation agreements with. Overall there are close to 95,000 customers in the business market, and the changes from the end of the year are insignificant. Claims The loss ratio in the business market was 97.8 at the end of the first quarter, compared with 91.3 for the corresponding period last year. This is due primarily to a higher volume of major property losses in the marine, building, asset and operational loss areas, as well as higher claims payments in motor insurance. Operating expenses Total operating expenses were reduced by NOK 22 million, compared with the corresponding period last year. This gives a cost ratio of 13.5 per cent for the business market, compared with 13.5 per cent for the corresponding period last year. It is also expected in the business market that the operating expenses will be reduced further as a result of the efficiency enhancement work. Key figures Business market in Norway (Figures in NOK 1,000) this year last year Full year 2006 Premiums earned, net of reinsurance 1,348,662 1,398,150 5,491,347 Profit before tax 63,991 59, ,474 general insurance IN THE REST OF THE NORDIC REGION Gjensidige has two subsidiaries in Denmark, KommuneForsikring AS and Fair Forsikring AS, which are included in the Gjensidige Forsikring Group from January 2007 and April 2006, respectively. Both companies operate in the general insurance area. KommuneForsikring is the market leader in the Danish municipal market and also focuses on the

5 Gjensidige Forsikring consolidated first quarter ,0 % 21,0 % 16 % Real estate Product groups Baltic Others Motor liability Comprehensive insurance Motor 53,0 % Gjensidige pension and savings 10,1 % 3,7 % Defined contribution pension Pension self-employed Mandatory occupational pensions 86,1 % business segment. Fair offers general insurance in the household market. The Danish operations were recently reorganised. The companies now have a common management. There are a total of 310 employees in the Danish operations. Premiums Combined premiums written, net of reinsurance, were NOK 951 million at the end of the first quarter, and premiums earned, net of reinsurance, were NOK 315 million. Claims The loss ratio was 75.3 per cent. Operating expenses Total operating expenses were NOK 57 million. The cost ratio after the first quarter was 17.9 per cent. Claims The loss ratio was 65.7 per cent for the period. There were no large claims in the first quarter. Operating expenses The company s total operating expenses were NOK 20.5 million, which corresponds to a cost ratio of 29.5 per cent. Combined with the loss ratio, this gives a combined ratio of Key figures Baltic States (Figures in NOK 1,000) this year last year Full year 2006 Premiums earned, net of reinsurance 69,475-66,453 Profit before tax 3,306 - (278) interim report Key figures Rest of the Nordic region (Figures in NOK 1,000) this year last year Full year 2006 Premiums earned, net of reinsurance 315, ,398 Profit before tax 53,137 - (47,556) GENERAL INSURANCE IN THE BALTIC STATES Gjensidige engages in the general insurance business in the Baltic States through the subsidiary Parekss Insurance Company. Parekss was integrated in the Gjensidige Forsikring Group from September This is a general insurance company, and the head office is located in Riga, Latvia. Parekss owns the subsidiary Baltic Polis, which operates in Lithuania. Baltic Polis will be converted to a branch of Parekss from the second quarter of In Estonia, Parekss operates through a branch in Tallinn. There are a total of 280 employees in the Baltic States, with 150 in Latvia, 120 in Lithuania and 10 in Estonia. Premiums Premiums written, net of reinsurance, were NOK 95 million at the end of the first quarter, and premiums earned, net of reinsurance, were NOK 69 million. The company shows strong growth in premium volume. Premium growth was 32 per cent compared with the corresponding period in PENSION AND SAVINGS Gjensidige s pension and savings business is organised with Gjensidige Pensjon og Sparing AS as the holding company for Gjensidige Pensjonsforsikring AS (GPF) and Gjensidige Investeringsrådgivning ASA (GIR). Gjensidige Pensjonsforsikring has been operational for one year and provides individual and group pension products. So far, the focus has been on the sale of pension schemes associated with the introduction of mandatory occupational pensions. The company has 73 employees. Gjensidige Investeringsrådgivning started its operations in the first half of 2006 and has established a broad range of savings products, where the Vekter Funds make up the core. A team of advisers has also been established to provide advice and manage sales. The company s concept is to be an independent adviser. Therefore it does not have its own funds and enters instead into agreements with fund providers that the company expects can deliver a high return over time. The company has 9 employees. Premium and management income Income totalled NOK 1.5 million in the first quarter. Customer assets under management totalled NOK 565 million.

6 6 first quarter 2007 Gjensidige Forsikring consolidated Number of employees Gjensidige Forsikring consolidated Baltic Denmark 425 Hjelp24 Banking 30 GPS 100 Gjensidige Forsikring 2108 Expenses Total operating expenses were NOK 19.8 million. The company is in the establishment phase, and the cost development is as expected. Key figures Pension and savings (Figures in NOK 1,000) this year last year Full year 2006 Premium income 1, ,689 Profit before tax (36,125) (31,857) (116,925) BankING Gjensidige Bank ASA was established in 2006 and launched from 1 January The company s head office is in Førde, and it cooperates closely with Sparebanken Sogn og Fjordane. Gjensidige Bank is a full service bank for household customers, and the distribution will be through the Internet with telephone support. The company had 30 employees at the end of the first quarter. Interest income Gross lending was NOK 308 million at the end of the first quarter. The company already has over 5,000 customers. Interest expenses Total deposits were NOK 122 million, which gives a deposit-to-loan ratio of 39.6 per cent. Key figures Banking (Figures in NOK 1,000) Net interest/credit commission income and other income, excluding securities Full year this year last year , Profit before tax (18,645) - (8,996) unallocated Income under unallocated emerges as negative. This is due to two factors, one is the fact that the stated bank income is not included in the group s line for premiums earned, net of reinsurance, and it must therefore be deducted from total income for complete reconciliation of the line. The other is due to the fact that intragroup income shall be included in segment income. Since this is eliminated in the consolidated accounts, it must de deducted from unallocated for complete reconciliation. The unallocated profit before tax is attributed primarily to the fact that investment income is much higher than the allocated return on investment that is used for the segments, in addition to the profit/loss from the group s health venture. Key figures Unallocated (Figures in NOK 1,000) this year last year Full year 2006 Income (5,817) (32) (32) Profit before tax 320, ,473 2,650,892 ORGANISATION The group had a total of 3,253 employees at the end of the first quarter of This breaks down into 2,108 employees in the general insurance business in Norway, 30 employees in Gjensidige Bank, 100 employees in Gjensidige Pensjon og Sparing, and 425 employees in other business areas in Norway. These are employees in the health venture Hjelp24 Glitne. There are 310 employees in Denmark and 280 employees in the Baltic States. The ongoing efficiency enhancement programme in the Norwegian general insurance business is expected to contribute to a reduction in the number of employees upon its completion. EVENTS AFTER THE BALANCE SHEET DATE Gjensidige had a significant share of the hull insurance and portions of the insurances of the person for the anchor handling vessel Bourbon Dolphin, which was wrecked off the coast of the Shetland Isles in the middle of April. Provisional estimates indicate a share of the losses before reinsurance of over NOK 200 million, in addition to the rescue costs incurred. OUTLOOK Gjensidige s investment income will be heavily influenced by the development of the Norwegian and global economy. The year 2007 started as the fifth year in a row with strong growth in the global economy, and the performance of the financial markets has been good so far. The global growth is expected to continue at a relatively stable level in 2007, and it will contribute to a continued high demand for oil and commodities. This indicates continued good stock market performance, at the same time as interest rate levels will increase compared with 2006.

7 Gjensidige Forsikring consolidated first quarter The technical result is somewhat poorer in the first quarter compared with the previous years, primarily due to the higher number of mediumsized and large claims. Satisfactory profitability is expected nevertheless for 2007 as a whole. Competition has sharpened recently. The board expects, however, that the development of new service solutions and channels in accordance with the desires of the customers will make the company well equipped to meet this sharpened competition. The established measures focusing on pensions, savings and banking are well under way and will strengthen the company s foundation for growth, while the investments abroad will be the first step in realising cost and income synergies that ensure long-term returns and competitive power. Surveys conducted by Norsk Kundebarometer show that Gjensidige has the most satisfied and loyal customers in insurance. The brand strength of Gjensidige provides a good foundation for continued horizontal expansion within the group. On 21 April 2007 the company s General Meeting approved the continuation of work to study a possible listing of primary capital certificates for Gjensidige. The purpose of issuing primary capital certificates is to increase the core capital so that the company has greater freedom of action and opportunities to participate in the structural changes that affect the financial industry in the Nordic region. A final decision on the issuance and listing of primary capital certificates, including the size of the issue, will be made by Gjensidige s General Meeting as close as possible to a possible listing. The subsequent process is aiming for a listing of Gjensidige s primary capital certificates on the Oslo Stock Exchange by the end of interim report Oslo, 9 May The Board of Directors of Gjensidige Forsikring Jørgen Tømmerås Jorund Stellberg Marianne Bø Engebretsen Odd Kristian Hamborg Marianne Lie Cato Litangen Chairman deputy chairman Gunnar Mjåtvedt Magne Revheim Einar Rist Randi B. Sætershagen Hans Ellef Wettre Tor Øwre Helge Leiro Baastad chief Executive Officer

8 8 first quarter 2007 Gjensidige Forsikring consolidated consolidated income statement IFRS NOK million Note First quarter 2007 First quarter Premiums Gross premiums written 6, , ,787.2 Ceded reinsurance premiums (255.8) (274.9) (331.5) Premiums written, net of reinsurance 6, , ,455.7 Change in the gross provision for unearned premiums (2,711.1) (1,922.1) (268.2) Change in the provision for unearned premiums, reinsurers share Earned premiums, net of reinsurance 2,4 3, , ,193.2 Allocated return on investments transferred from the non-technical account ,008.1 Claims Gross paid claims (2,558.9) (2,165.2) (8,287.9) Paid claims, reinsurers share Change in the provision for claims, gross (473.2) (539.0) (1,858.8) Change in the provision for claims, reinsurers share (70.2) (11.1) (17.6) Claims incurred, net of reinsurance (3,085.4) (2,669.9) (10,014.9) Premiums discounts and other profit agreements (1.5) 3.2 (21.7) Administrative expenses including sales expenses (672.2) (615.2) (2,566.6) Reinsurance commissions Change in provisions for insufficient premium level Net operating expenses (670.6) (614.8) (2,561.6) Underwriting result general insurance ,603.2 Financial income Income from associates 0.0 (0.2) (0.8) Income from buildings and real estate ,118.4 Income from other financial assets ,528.6 Unrealised gains and reversal of unrealised losses on financial assets (128.7) Reversal of assessment on financial assets ,681.6 Total financial income 1, , ,471.2 Financial costs Administration costs on buildings and real estate (44.9) (48.8) (288.9) Other administration costs (39.7) (5.9) (55.0) Interest costs (88.1) (180.6) (500.1) Other costs related to financial assets 1.8 (17.1) (129.3) Unrealised losses and reversal of unrealised gains on financial assets (121.9) (9.6) (6.8) Write-downs of financial assets (1.4) Loss on sale of securities (46.9) (166.7) (801.2) Total financial costs (341.1) (428.6) (1,780.9) Allocated return on investments transferred to the technical account (369.7) (211.4) (1,008.1) Other income Other costs (130.8) (79.9) (368.7) Balance on the non-technical account ,230.5 Tax (63.7) 68.8 (138.7) PROFIT FOR THE period ,091.9 Statement of recognised income and expenses Exchange rate adjustment of foreign entities (8) Changes in assets available for sale 310 (862) Equity adjustments, subsidiaries (40) Actuarial gains/losses on defined benefit pension planes (51) (206) Other adjustments (12) Recognised income and expenses directly in equity (1,039) Profit for the period ,092 Total recognised income and expenses ,053

9 Gjensidige Forsikring consolidated first quarter consolidated BALANcE sheet IFRS consolidated BALANCE SHEET NOK million Note ASSETS Goodwill 1, Intangible assets 1, Investments in associates Owner-occupied property 1, , Tangible fixed assets other than property Investment property 7, , ,157.9 Financial assets Financial assets at fair value through profit or loss 19, , ,755.4 Financial assets held to maturity 12, , ,537.4 Loans and other receivables Financial assets available for sale 2, , ,434.1 Reinsurance deposits Reinsurance assets Receivables arising out of direct insurance operations 4, , ,794.0 Other receivables Prepaid expenses and accrued interests Cash and cash equivalents 3, , ,323.8 TOTAL ASSETS 55, , ,112.7 interim report EQUITY AND LIABILITIES Equity fund 19, , ,717.3 Gjensidige fund TOTAL EQUITY 8 19, , ,017.3 LIABILITIES Provision for unearned premiums, gross 8, , ,737.9 Claims provisions, gross 21, , ,556.7 Provisions for premium discounts Pension liabilities Other provisions Other liabilities 2, , ,977.7 Deferred tax 1, ,134.4 Liabilities arising out of direct insurance operations Accrued expenses and prepaid income TOTAL EQUITY AND LIABILITIES 55, , ,112.7 Oslo, 9 May The Board of Directors of Gjensidige Forsikring Jørgen Tømmerås Jorund Stellberg Marianne Bø Engebretsen Odd Kristian Hamborg Marianne Lie Cato Litangen Chairman deputy chairman Gunnar Mjåtvedt Magne Revheim Einar Rist Randi B. Sætershagen Hans Ellef Wettre Tor Øwre Helge Leiro Baastad chief Executive Officer

10 10 first quarter 2007 Gjensidige Forsikring consolidated consolidated cash flow statement consolidated CASH FLOW STATEMENT NOK million First quarter 2007 First quarter Cash flow from operational activities Premiums paid, net of reinsurance 4,981 3,817 12,629 Claims paid, net of reinsurance (2,325) (1,992) (7,669) Operating expenses paid, including commision (966) (866) (2,431) Group contributions and liquidation proceeds received Interest and other financial income ,911 Other income (net) (146) Change in inter-company balances with other entities in the Gjensidige Group 4 28 (1,920) Taxes paid (16) (2) (12) Net cash flow from operational activities (A) 1,852 1,772 3,761 Cash flow from investment activities Net cash flow from loans to customers etc (283) 103 (143) Net cash flow from shares and similar interests (718) (1,706) (2,334) Net cash flow from bonds and certificates 2,057 (759) (403) Net cash flow from real estate (4) (53) 207 Net cash flow from other financial assets (2,111) 12 (1,084) Net cash flow from tangible fixed assets etc 3 (17) (141) Net cash flow from investment activities (B) (1,056) (2,419) (3,899) Cash flow from financing activities Payment for portfolio transferred Payment of the general insurance company s guarantee scheme Group contributions paid / Equity in subsidiaries Net cash flow from subordinated loan capital 0 0 (477) Net loans Net cash flow from financing activities (C) (315) Net cash flow for the period (A+B+C) 909 (614) (454) Effect of currency fluctuations of cash and cash equivalents (6) (3) 7 Net change in cash and cash equivalents 903 (617) (447) Holdings of cash and cash equivalents at the beginning of the period 2,271 2,663 2,663 Merged, added and disposed companies Adjusted holdings at the beginning of the period 2,378 2,663 2,718 Holdings of cash and cash equivalents at the end of the period 3,281 2,046 2,271 Net change in cash and cash equivalents 903 (617) (447)

11 Gjensidige Forsikring consolidated first quarter Notes to the consolidated interim financal statements 1. Accounting POLICIES The consolidated accounts for the first quarter of 2007, which ended on 31 March 2007, include Gjensidige Forsikring and its subsidiaries (referred to collectively as the group ), and the group s interests in associated companies and joint ventures. The accounting policies used in the interim reporting are the same that are used in the Transition Document, and they are described in the Transition Document that will be published at the same time as the report for the first quarter of The consolidated accounts for the first quarter of 2007 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim accounts do not include all the information that is required in complete annual accounts, and they should be read in conjunction with the Transition Document. 2. seasonal variations A seasonal premium is used for certain insurance products. This means that the claims are not randomly distributed throughout the year and follow a stable seasonal pattern. Normally the premium income (premium earned) is accrued evenly over the insurance period. For products with a seasonal pattern, however, the premium income must also be accrued according to the claims pattern. Gjensidige Forsikring has seasonal premiums for the following products: pleasure craft, snow scooters and motorcycles. For motorcycles, for example, the premium earned for the period from April to September represents 85 per cent of the annual premium. The preparation of the interim accounts entails the use of assessments, estimates and assumptions that affect the application of accounting policies and the recorded amounts for assets and liabilities, income and expenses. The actual results may deviate from these estimates. With regard to the ongoing reorganisation to reduce expenses in the company, reference is made to the comments in the Board of Directors Report. The most important assessments made by application of the group s accounting policies, and the most important sources of uncertainty in the estimates, are the same for the preparation of the interim accounts as stated in the Transition Document. Comparable figures are based on IFRS. The comparable figures have not been restated as a result of the subsidiaries acquired in 2006 and Another consequence of seasonal premiums is the fact that only the portion of the seasonal premium that the company has covered the risk for will be refunded if the customer cancels the insurance contract before the annual renewal date. For a motorcycle policy that is taken out on 1 April and cancelled on 1 October, for example, the policyholder will only receive 15 per cent of the annual premium refunded, even though the insurance was only in effect for six months. interim report 3. Gjensidige fund The Gjensidige Fund was approved at the General Meeting of 12 April No specific allocations have been adopted as of yet. 4. Segment information First quarter 2007 General insurance Norway General insurance Rest of Nordic region General insurance Baltic Private Total Private Total business Private Business Private Business Pension and Savings Banking* Unallocated **** Total* NOK million ** External segment income 1, , , , , , , , (2.2) 3, ,184.9 Group segment income (3.6) (0.0) - - Total segment income 1, , , , , , , , (5.8) (0.0) 3, ,184.9 Profit before tax*** (7.4) (36.1) (31.9) (18.6) * The bank segment is not included in the line for premium income, net of reinsurance, in the group s profit and loss account. ** Comparison figures are not presented since the companies were not part of the Gjensidige Forsikring Group during this period. *** The profit before tax for general insurance in Norway, household and business markets, includes standardised financial income corresponding to the Financial Supervisory Authority of Norway s allocated return on investment distributed in accordance with the size of the technical provisions. **** The unallocated profit is due to the fact that the actual return on investment is higher than the normalised return used for the segments, in addition to the result of the group s health venture and group adjustments.

12 12 first quarter 2007 Gjensidige Forsikring consolidated 5. SIGNIFICANT EVENTS AFTER THE END OF THE QUARTER Gjensidige had a significant share of the hull insurance for the anchor handling vessel Bourbon Dolphin, which was wrecked off the coast of the Shetland Isles in the middle of April. See the discussion in the Board of Directors Report. 6. Business combinations Gjensidige Forsikring entered into an agreement with Foreningen til Begrænsning av Skadeutgifter i Kommuner og Regioner f.m.b.a. in the autumn of 2006 to acquire 100 per cent of the shares in KommuneForsikring AS and European Institute for Risk Management AS (EIRM). The acquisition was contingent on Gjensidige Forsikring being granted a licence to acquire the company by the Norwegian and Danish authorities, which was granted the 19 of January. The net result in the first quarter of 2007 in KommuneForsikring AS was NOK 60,5 million. The purchase method was used for the acquisition. The analysis of the acquired assets and liabilities is illustrated below. The value in excess of the net tangible assets acquired has been integrated as intangible assets and goodwill in the consolidated accounts. The fair value has been set provisionally since the final assessment has not been completed for all the components of the fair value assessment. At the time of the acquisition EIRM AS had equity of NOK 2.3 million, and NOK 2.3 million has been allocated to acquire the company. Kommune Forsikring AS reported a profit of over NOK 140 million for 2006, and this is the second highest profit in the history of the group. The company had a combined ratio of 95.8 and a cost ratio of 10.0 in Acquisition of subsidiary KommuneForsikring AS NOK 1,000 Value at time of purchase Fair value adjustments Accountable value after purchase Property, plant and equipment 95,307 19, ,846 Investments 5,271,129 5,271,129 Other assets 65,807 65,807 Receivables 90,346 90,346 Income paid in advance 140, ,521 Insurance technical reserves 4,016,045 4,016,045 Miscellaneous liabilities 22,345 22,345 Supplier debts and other debts 272, ,281 Net assets acquired 1,352,439 19,539 1,371,978 Trademark 101,640 Customer relations 284,154 Software developed in-house 130,055 Value of employees (part of goodwill) 68,853 Goodwill 413,761 Liabilities deferred tax 144,015 Compensation 2,226,426 Acquired cash 0 Net outgoing cashflow 2,226, CHANGES IN CONTINGENT LIABILITIES OR CONTINGENT ASSETS after the balance sheet DATE There have been no changes in contingent liabilities or contingent assets after the balance sheet date. 8. ConsolidateD statement of changes in equity NOK 1,000 Exchange rate adjustments Fair value of reserves Other equity Total equity Balance on NGAAP 12,487,086 12,487,086 IFRS implementation effect ,477,700 3,477,700 Profit for the year 4,091,853 4,091,853 Exchange rate adjustments of foreign entities (8,100) (8,100) Changes in assets available for sale (861,668) (861,668) Actuarial gains/losses on defined benefit pension plans (205,800) (205,800) Other adjustments 36,244 36,244 Total recognised income and expenses (8,100) (1,067,468) 20,092,883 19,017,315

13 Gjensidige Forsikring consolidated first quarter ConsolidateD statement of changes in equity (cont.) NOK 1,000 Exchange rate adjustments Fair value of reserves Other equity Total equity Dividend - Other adjustments - Balance on (8,100) (1,067,468) 20,092,883 19,017,315 Profit for the year 437, ,036 Exchange rate adjustments of foreign entities - Changes in assets available for sale 309, ,776 Equity adjustments, subsidiaries (14,453) (25,165) (39,618) Other adjustments (12,449) (12,449) Total (22,553) (757,692) 20,492,305 19,712,060 Dividend Oslo Areal 2006 (66,423) (66,423) Other adjustments - Balance on (22,553) (757,692) 20,425,882 19,645,637 Equity on IFRS 15,964,786 15,964,786 Profit for the year 587, ,256 Actuarial gains/losses on defined benefit pension plans (51,450) (51,450) Other adjustments 318,700 (10,250) 308,450 Balance on ,250 16,541,792 16,809, Liabilities not included in the balance sheet NOK 1, interim report Gross guarantees 17,339 Gross guarantees 17,339 Commited capital 704,233 Total guaranteed amount 704,233 As part of its ongoing financial management, the company has pledged to invest up to NOK 704 million in various private equity investments, in addition to the amounts entered in the accounts. 10. consolidated statement of changes in equity Equity NGAAP vs IFRS Equity NGAAP 12,259.5 Unrealised gains on investment property Unrealised gains on shares 1,505.1 Fair value loans (128.4) Security provision 2,126.9 Natural perils fund 1,914.5 Guarantee scheme Deferred tax (1,441.1) Pension (24.0) Various minor changes 11.5 Total changes 4,549.5 Equity IFRS 16,809.0 profit and loss NGAAP Change in security provision 48.7 Income reporting interest loans made 7.5 Depreciation of goodwill 8.1 Various minor changes (3.7) Total changes 60.6 TOTAL IFRS 587.3

14 14 first quarter 2007 Gjensidige Forsikring consolidated key figures IFRS NOK million (unless other stated) First quarter 2007 First quarter Gjensidige Forsikring consolidated Return on assets exclusive strategically ownership, % annualised Equity 19, , ,017.3 Return on equity % annualised Capital adequacy 2 % Solvency margin 3 % GENERAL INSURANCE Market shares non-marine insurance Norway (FNH), % Market shares total insurance business Norway, % Gross premium written, exclusive of Natural perils premium Private 2,380 2,263 6,163 Business 2,782 2,916 7,162 Total Norway 5,162 5,179 13,325 Rest of the Nordic region 993 NA Baltic 97 NA Total 6,252 5,179 13,895 Premiums, net of reinsurance 4 % Premiums earned, net of reinsurance exclusive of Natural perils premium Private 1,805 1,787 7,373 Business 1,349 1,398 5,491 Total Norway 3,154 3,185 12,865 Rest of the Nordic region 315 NA Baltic 69 NA Total 3,539 3,185 13,345 Loss ratio, net of reinsurance 5 Private Business Total Norway Rest of the Nordic region 75.3 NA Baltic 65.7 NA Cost ratio 6, net of reinsurance % Private Business Total Norway Rest of the Nordic region 17.9 NA Baltic 29.5 NA Combined ratio 7, net of reinsurance % Private Business Total Norway Rest of the Nordic region 93.2 NA Baltic 95.2 NA Combined ratio, net of reinsurance, for the general insurance business % Equity Rest of the Nordic region 1,358 NA Baltic 81 NA Return on equity %, annualised Rest of the Nordic region 15.4 NA 8 (58.3) Baltic 16.2 NA

15 Gjensidige Forsikring consolidated first quarter NOK million First quarter 2007 First quarter PENSION AND SAVINGS Average signing provision after discounts % 0.71 NA Average management provision p.a. % 0.70 NA Customer funds for management (GPF and GIR) Number of savings agreements 1,115 NA Number of customers (saving) 3,131 NA Equity Return on equity, % anualised (64.6) (60.6) (51.0) BANKING (start-up January 2007) NA 8 NA 8 Gross lending Deposits Deposit ratio % 39.6 Costs in respect of average total assets % 15.2 Number of customers (number of bank accounts) 6,150 Equity Return on equity, % annualised (15.3) interim report Definitions: 1 Profit before tax for the period / average adjusted equity for the period 2 Net subordinated capital / risk-weighted calculation basis 3 Solvency capital / premiums written, net of reinsurance (solvency capital = equity in accordance with IFRS) 4 Premiums written, net of reinsurance / gross premiums written (total general insurance operations) 5 Claims incurred, net of reinsurance / premium income, net of reinsurance 6 Total operating expenses / premium income, net of reinsurance 7 Loss ratio, net of reinsurance + cost ratio, net of reinsurance 8 NA means that it is not applicable, since there was no activity during this period / was not a part of the Gjensidige Group.

16 gjensidige.no Main office GJENSIDIGE Drammensveien 288 P.O.Box Lysaker Phone Regions GJENSIDIGE Øst Stortorvet Fredrikstad Phone Drammensveien 288 P.O.Box Lysaker Phone GJENSIDIGE Innlandet Tjuvholmen P.O.Box Hamar Phone GJENSIDIGE Syd Holbergs gt 14 P.O.Box Skien Phone GJENSIDIGE Vestlandet Sandviksboder 66 P.O.Box Bergen Phone GJENSIDIGE Nord Søndre gate 12 P.O.Box Trondheim Phone 03100