Report a claim 40,000

Transcription

1 Annual Report 2012

2 Gjensidige delivered a record-strong result in Increased customer orientation in combination with more precise pricing of insurance risk and more efficient distribution contributed positively. In addition, the weather in 2012 was especially benign for Nordic general insurance, which resulted in an extraordinary low claims frequency. The year 2012 Unique model gives customer dividend In May, NOK 1.4 billion was passed on from the Gjensidige Foundation as customer dividend to Gjensidige s general insurance customers in Norway. This corresponded to close to 11 per cent of premiums paid in Report a claim Reporting travel claims online As from 2012 customers can report travel claims online or by mobile phone. In the second half-year 2012, one out of three travel claims were reported online or by mobile phone. Best customer service centers in Norway For the second year in a row Gjensidige won an important award for best call center in the Norwegian insurance industry. 40,000 Aksjon boligbrann As in previous years, Gjensidige took part in the Aksjon Boligbrann fire prevention campaign and made house calls to approximately 40,000 households. Brand renewal Large parts of the organisation were involved in a strategy process in 2012 for the development of a new brand platform and strategy. The renewed brand was launched in December. About the reporting Gjensidige now launches a web-based annual report on The annual report 2012 will not be printed. Find further information about the company on Financial calendar 25 April General meeting 26 April Ex dividend date 7 May Q1-result 16 July Q2-result 22 October Q3-result

3 The year 2012 Preventive work Extensive training for young drivers and refresher courses for the elderly are among the preventive measures that received focus in Partnership agreement with DNT In December 2012, Gjensidige signed a strategic collaboration agreement with the Norwegian Trekking Association (DNT), which with its 246,000 members represents an attractive customer group. Gjensidige and DNT have concurrent values, with the focus on health. Passionate enthusiast of the year The phrase passionate enthusiasm is an expression of Gjensidige s internal identity and culture, and the title of Passionate enthusiast of the year 2012 was awarded following a nomination process among employees. Fay Jønvoll Eriksen, customer advisor in Fredrikstad Record-high customer satisfaction Gjensidige s measurement of the level of satisfaction among its customers in Norway shows considerable progress in the private and commercial segments. The results were the best since the measurements were introduced in Content Key figures 2 Letter from the CEO 6 Operations in brief 8 Additional information 18 Corporate social responsibility 22 Statement on corporate governance 25 The Board s report 41 Financial statements and notes 69 Investor information 20 Gjensidige Annual Report 2012 I 1

4 Key figures 2012 Gjensidige recorded a profit before tax of NOK 5.6 billion in 2012, corresponding to a return on equity before tax of 23.8 per cent. The Board proposes a dividend of NOK 3.4 billion, corresponding to 80.0 per cent of the profit after tax and NOK 6.85 per share. Key figures Profit before tax expence NOK bn 6 Earned premiums general insurance NOK bn Return on equity before tax exp. % Underwriting result general insurance NOK bn Earnings per share NOK Combined ratio general insurance % I Gjensidige Annual Report 2012

5 Key figures 2012 Market value as at NOK billion Total return * Dec 2010 April 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Dec 2012 Gjensidige Nordic Insurance** * Dividend reinvested ** Non-weighted average in local currency for Tryg, Topdanmark, Sampo and Alm.Brand. Total return * Last year Last two years Since IPO Gjensidige 22.4% 55.0% 53.6% Nordic general insurance** 41.9% 39.9% 52.8% * Dividend reinvested ** Non-weighted average in local currency for Tryg, Topdanmark, Sampo and Alm.Brand. Dividend per share 2012* NOK NOK NOK 4.70 * Proposed NOK proposed as dividend per share Gjensidige Annual Report 2012 I 3

6 Key figures 2012 Financial key figures Restated Results Earned premiums, general insurance NOK million 17, , , , ,481.9 Other operating income NOK million 1, , , , Net income from investments NOK million 3, , , ,788.0 (258.7) Claims incurred, general insurance NOK million (12,437.7) (13,249.3) (13,456.6) (12,071.0) (11,983.8) Other claims incurred, losses etc. NOK million (1,150.0) (987.9) (743.0) (390.3) (393.3) Operating expenses, general insurance NOK million (2,751.8) (2,877.9) (2,810.4) (2,771.5) (2,638.3) Other operating expenses NOK million (600.4) (994.6) (1,274.9) (1,059.2) (890.1) Tax expense NOK million (1,353.5) (899.5) (303.6) (861.8) (55.0) Profit for the year NOK million 4, , , , Underwriting result, general insurance 1 NOK million 2, , Run-off results, general insurance 2 NOK million Combined ratio 3 % 85.3% 91.9% 95.3% 94.8% 94.4% Loss ratio 4 % 69.9% 75.5% 78.9% 77.1% 77.4% Cost ratio 5 % 15.5% 16.4% 16.5% 17.7% 17.0% Restated Balance sheet Investment portfolio 6 NOK million 56, , , , ,771.8 Provisions for unearned premiums, gross NOK million 10, , , , ,760.9 Claims provisions, gross NOK million 29, , , , ,561.5 Equity NOK million 25, , , , ,585.9 Total equity and liabilities NOK million 94, , , , ,551.4 Solvency margin capital 7 NOK million 16, , , , ,409.3 Solvency margin 8 % Capital adequacy ratio 9 % Restated Return Return on financial assets (ROI) 10 % (0.6) Return on equity (ROE) 11 % Definitions: 1 Underwriting result, general insurance = earned premiums - claims incurred etc. - operating expenses 2 Run-off results, general insurance = change in estimates from earlier periods 3 Combined ratio = claims ratio + cost ratio 4 Loss ratio = claims incurred etc. /earned premium 5 Cost ratio = operating expenses/earned premium 6 Investment portfolio = includes all investment funds in the Group, except Pension and Savings and Retail Bank 7 Solvency margin capital = net subordinated capital including share of security provisions and natural perils fund (note 24: Solvency margin Gjensidige Forsikring ASA) 8 Solvency margin is calculated at company level according to regulations from the Financial Supervisory Authority of Norway. 9 Capital adequacy ratio = net subordinated capital/risk-weighted calculation basis (note 23: Capital adequacy Gjensidige Group) 10 Return on financial assets = net financial income as a percentage of the average financial assets including property (excluding Pension and Savings and Retail Bank) 11 Return on equity = profit before tax /average equity for the period 4 I Gjensidige Annual Report 2012

7 Key figures 2012 Employees per country Employees per business area 2,158 Norway 471 Denmark 435 Baltics 99 Sweden 2,983 General insurance 124 Retail Bank 56 Pension and Savings Non-financial key figures Health, safety and the environment Sickness absence, Gjensidige Forsikring Norway % Injuries, Gjensidige Forsikring Number Turnover of employees, Gjensidige Forsikring % Employees Group as a whole Persons 3,163 3,116 3,917 3,780 3,640 Average age, Gjensidige Forsikring Years Average amount spent on skills development per employee NOK 19, , , , ,400.0 Participation in a training programme Days 6,200 4,500 6,200 3,231 4,756 Gjensidige Annual Report 2012 I 5

8 Letter from the CEO «In 2012, we took new steps towards becoming and being perceived as the most customeroriented company in the Nordic general insurance industry.» 6 I Gjensidige annual report 2012

9 Letter from the CEO Throughout 2012, we focused on good customer experiences and continuous improvement in all parts of the business. The year was also characterised by a mild winter, very little extreme weather and few large losses. In total, this contributed to record-strong results for Gjensidige. The unique Gjensidige Experience The profit for the year of NOK 5.6 billion before tax expence was the best we have ever achieved. A good insurance result and a combined ratio for general insurance operations of 85.3 are testament to good operations in all parts of the Group. Unique relations with customers Gjensidige was established by the customers. They continue to be our biggest owner through the customer-governed Gjensidige Foundation, which passes dividends further as customer dividend to our general insurance customers in Norway. This is a unique model in the Nordic insurance market that gives us an important competitive advantage. A clearer brand Relations with customers are also an important part of the brand strategy that was developed in It reaffirms our vision of knowing the customer best and caring the most. Customer needs shall serve as a guiding principle for our behaviour, products and services. Our new logo and visual profile are adapted to a digital age and communicate that it shall be safe and simple even pleasant to be a customer with us. Simplification and self-service We launched a new customer portal towards the end of the year. Here, customers can purchase and update insurance policies, report claims and find useful information in connection with different life events. The online and mobile phone self-service solutions are examples of some of the many measures we implement in order to rationalise, automate and simplify processes for customers and our own staff. In addition to increasing loyalty and satisfaction among customers, the improvements strengthen our basis for remaining one of Europe s most profitable insurance companies. Culture and know-how Products and services in banking and finance are relatively similar. That is why we focus on what cannot be copied: the know-how, experience and passionate enthusiasm we have developed through our nearly 200-year history. In the end, these are the factors that make employees satisfied, keen to develop their skills and motivated to deliver what the Gjensidige brand promises: a customer- oriented, unique Gjensidige Experience. Our customers shall feel that we know them, care about them, make things easy for them and help them. Helge Leiro Baastad CEO It s good to be prepared It is good to be prepared is our message to our customers. I believe it s also a good description of how we meet the challenges and opportunities we face. We have a robust financial position, a clear strategy, a customer-oriented brand and motivated employees. We are ready to develop Gjensidige further. Gjensidige Annual Report 2012 I 7

10 Operations in brief Gjensidige is one of the leading players in the Nordic general insurance market. We offer insurance products to private and commercial customers in Norway, Denmark, Sweden and the Baltic states. In Norway, we also offer banking services, pension and savings products. Operations in brief Gjensidige is one of the strongest brands in Norway, and in 2012 a new brand platform was launched to contribute to achieving the target of being the most customer-oriented company in the Nordic general insurance industry. It is based on our vision: We shall know the customer best and care the most. We endeavour to create as much value as possible for customers, owners and society through continuous improvement, simplification and automation of products and processes. Gjensidige s activities are divided into six segments, as illustrated in the figure on the next page, in addition to the asset management unit, which manages the Group s investment portfolio. Targets and strategy Gjensidige s overall target is to be the most customer-oriented general insurance company in the Nordic region, based on profitable operations and a leading position in this market. The target is based on three group-wide, strategic pillars: Customer orientation It is Gjensidige s goal to set a new industry standard for customer service and support. The Gjensidige Experience defines principles for customer service and shall ensure loyalty and satisfaction. Optimal customer and risk selection Automated, system-driven customer selection, tariff development and underwriting shall be a competitive advantage for Gjensidige. Cost efficiency Gjensidige shall be among the most efficient companies in the industry. The business strategy provides opportunities for profitable growth along two axes: geographic expansion in the Nordic region and the Baltics within general insurance product expansion in Norway within banking, pension and savings The Group prioritises profitability over growth. 8 I Gjensidige Annual Report 2012

11 Operations in brief General Insurance Private Norway General Insurance Commercial Norway The segments General Insurance Nordic General Insurance Baltic Pension and Savings Retail Bank Income per segment 42.3% General Insurance Private Norway 28.1% General Insurance Commercial Norway 18.9% General Insurance Nordic 4.9% Retail Bank 3.5% Pension and Savings 2.3% General Insurance Baltic The The distribution distribution is is based based on on earned earned premiums /income, excluding premium, corporate excluding center other income and other income and eleminations. and eliminations. Financial targets Area Target Achievement 2012 Group Return on equity before tax >15 per cent 23.8 per cent Rating Maintain A rating from S&P A rating confirmed in August Dividend per cent of annual profit after tax 80 per cent General Insurance Combined ratio per cent 85.3 per cent Cost ratio 15 per cent within per cent Pension and Savings Return on equity before tax Support the Group target 3.2 per cent Retail Bank Return on equity before tax Support the Group target 8.7 per cent Capital adequacy > 12 per cent 13.6 per cent Gjensidige Annual Report 2012 I 9

12 Our segments General Insurance Private Norway The Private Norway segment offers a wide range of general insurance products in addition to banking, savings and investment products through own distribution network. With loyal customers and a strong brand Gjensidige has a leading postion in the private insurance market. The year 2012 Customer orientation and initiatives for customer retention was the main priorities in the Private Norway segment throughout New tariffs and better customer- and risk selection at the same time contributed to increased quality in the customer portfolio, increased profitability and increased competitiveness. The development in number of customers was the best since 2006, and number of customers at the end of 2012 was practically unchanged compared with the previous turn of the year. Customer satisfaction was at its best since the surveys started in Targets and strategy The Private Norway segment is characterised by a broad focus on customer retention and improved quality in all customer processes. Better access, simplification of products and processes and increased degree of self-service solutions is prioritized to underpin the Group financial targets and become leading on customer orientation. 751,000 customers General Insurance Commercial Norway The Commercial Norway segment offers a wide range of general insurance products and pension and savings products. Gjensidige is market leader in the commercial market, and the majority of the customer portfolio consists of small and medium-sized enterprises and agricultural customers. As many as 96 per cent of the customers are served directly by Gjensidige. The year 2012 Greater cost-efficiency and improvement in profitability were high on the agenda in 2012, and the implementation of the multi-channel distribution model and new tariffs made important contributions to a higher level of activity and the positive profitability trend. In order to strengthen customer orientation, solutions have been established that lead to a higher level of detail relating to the customer s risk profile. At the same time, the selfservice solutions have been further developed and automated processes have resulted in better customer experiences and increased efficiency. Targets and strategy Further simplification and automation shall, together with a continued focus on optimal risk-pricing, contribute to a more forward-looking and simpler Gjensidige, where improved customer experiences and more efficient service processes will be important elements in supporting the Group targets and secure continued strong competitiveness in the Norwegian commercial market going forward. 164,000 customers 10 I Gjensidige Annual Report 2012

13 Our segments Key figures Private Norway Distribution earned premiums NOK million Earned premiums 8, , ,719.9 Underwriting result 1, , Loss ratio 66.5% 70.2% 76.4% 44.9% Motor 27.2% Property 18.2% Accident and health 9.6% Other Cost ratio 13.3% 15.2% 15.1% Combined ratio 79.8% 85.3% 91.4% Market shares 25.4% Other 23.4% If 22.8% Gjensidige 15.6% Tryg 12.6% SpareBank1 Source: Finance Norway, based on earned premiums 2012 Distribution earned premiums Key figures Commercial Norway 28.0% Property 27.8% Accident and health 15.3% Motor 7.8% Agriculture 5.6% Liability 4.5% Marine 0.9% Other NOK million Earned premiums 5, , ,401.0 Underwriting result Loss ratio 72.4% 79.1% 80.3% Cost ratio 12.2% 13.6% 12.8% Combined ratio 84.6% 92.7% 93.2% Market shares 30.8% Gjensidige 27.9% If 22.3% Other 14.2% Tryg 4.8% SpareBank1 Source: Finance Norway, based on earned premiums 2012 Gjensidige Annual Report 2012 I 11

14 Our segments General Insurance Nordic The Nordic segment includes the Group s operations in the Danish and Swedish private and commercial markets. In addition Gjensidige has a leading position in the Scandinavian municipal market. Gjensidige has a scalable business model in the Nordics. The year 2012 Measures aimed at improving profitability and capitalisation on Nordic group functions were key issues in the Nordic segment in Portfolio restructuring and repricing, mainly in the commercial portfolio in Denmark and the municipal portfolio in Sweden, contributed to better quality in the portfolios and a satisfactory profitability trend. Targets and strategy Gjensidige has established a scalable business model for future growth outside Norway. The presence in the Nordic countries shall contribute to economies of scale, diversification of risk and increased competitiveness. The segment shall support the Group targets, and starting implementation of new tariffs and facilitating increased degree of self-service will be high on the agenda in Scalable Model - General Insurance Baltics Gjensidige s Baltic operations provide general insurance products to the private and commercial markets in Latvia, Lithuania and Estonia. The Baltics is still an immature insurance market, and Gjensidige has an exciting position for future growth. The year 2012 The premium volume developed in a positive direction in 2012, primarily as a result of a general improvement in the Baltic insurance markets. A continuous focus on more efficient operations has contributed to increased profitability. Targets and strategy Gjensidige s goal is to be one of the leading insurance companies in the Baltic states. The market is relatively immature, and a significant proportion of both the private and the commercial segment is still uninsured. We expect solid growth in step with the general economic situation and the standard of living improving. In the short term, focus will bework on rationalisation and streamlining distribution and more efficient claims handling. The segment shall support the Group targets. growth opportunity 12 I Gjensidige Annual Report 2012

15 Our segments Market share Denmark Key figures Nordic 28.8% Other 20.2% Tryg 17.5% Topdanmark 12.5% Codan 9.7% Alm Brand 5.8% If 5.5% Gjensidige NOK million Earned premiums 3, , ,453.1 Underwriting result (70.4) Loss ratio 70.3% 80.7% 83.5% Cost ratio 16.3% 17.2% 18.6% Combined ratio 86.5% 97.9% 102.0% Source: Forsikring og pensjon, based on gross premiums written 2011 Market share Sweden Distribution earned premiums 29.5% Länsförsäkringar 19.3% Other 18.5% If 16.2% Trygg-Hansa 15.4% Folksam 1.1% Gjensidige 38.8% Property 31.4% Motor 19.5% Accident and health 5.3% Agriculture 4.3% Liability 0.7% Other Source: Svensk Försäkring, based on earned premiums 2012 Key figures Baltics Distribution earned premiums NOK million Earned premiums Underwriting result Loss ratio 67.0% 68.4% 66.5% Cost ratio 28.7% 30.9% 29.8% Combined ratio 95.7% 99.2% 96.2% 62.0% Motor 15.7% Property 14.7% Accident and health 4.4% Liability 3.2% Other Market shares 24.5% Other 22.4% Codan 14.4% If 13.4% Ergo 11.5% BTA 7.8% Gjensidige 6.0% Seesam Source: Baltics Insurance Supervisory Authorities of Latvia and Lithuania, Estonia Statistics, competitor reports, and manual corrections Based on gross premiums written. Gjensidige Annual Report 2012 I 13

16 Our segments Pension and Savings Pension and Savings is a growth area for Gjensidige in Norway. The segment shall contribute to sales of a wide range of products to Norwegian general insurance customers by offering various pension and savings products, mainly to the commercial market. The year 2012 Investment- and pension advisors have in 2012 worked systematically with selling to existing insurance customers through the distribution channels of Private Norway and Commercial Norway, and 85 per cent of the customers are general insurance customers as well. The result increase was satisfying despite substantial reservations made for higher life expectancy and disability risk. Targets and strategy Pension and Savings is a growth area that shall support the Norwegian general insurance operations by contributing to a wider range of products for existing general insurance customers in Norway, and thereby strengthening customer relations and loyalty. A new law on group occupational pension and the pertaining transitional rules provide opportunities for growth in the Norwegian pension market in the years ahead. 85%......of the customers are also general insurance customers Retail Bank Gjensidige Bank is an online bank that mainly targets the Norwegian private market. The bank offers day-to-day banking services, loans secured by mortgage, and consumer financing, and shall contribute to selling a wider range of products to Norwegian general insurance customers. The year 2012 The focus on growth and quality in the lending portfolio as well as changes in the organisational structure contributed to a positive trend in profitability At the end of the year, 46 per cent of the customers were also general insurance customers. Customer satisfaction is good, and the bank s customer centre was rated second best in the Norwegian banking sector by Confex/See You. Targets and strategy Gjensidige Bank shall support the Norwegian general insurance operations by helping to provide a wider range of products to existing general insurance customers in Norway, and thereby strengthening customer relations and loyalty. The bank will continue the work on customer-friendly online banking services and a broader range of products via financial advisory services through Gjensidige s office network. 15%......increase in lendings 14 I Gjensidige Annual Report 2012

17 Our segments Key figures Pension and Savings NOK million Earned premiums Underwriting result (17.1) (9.6) (31.8) Profit/(loss) before tax expense (27.9) Assets under management NOK bn Market shares defined contribution* 29.6% Storebrand Liv 29.5% DnB Liv 15.8% Nordea Liv 8.7% Andre 8.3% Gjensidige 8.1% Sparebank1 Liv Source: Finance Norway. Assets under management per Q * Unit linked Deposits and lending as at NOK bn Key figures Retail Bank NOK million Net interest income Total income Write-downs and losses (68.4) (94.2) (109.4) Profit/(loss) before tax expense Deposits Lending Net interest income % Net interest income in per cent annualised = net interest income/average total assets Gjensidige Annual Report 2012 I 15

18 Asset management The purpose of the investment portfolio is primarily to cover the actuarial liabilities and to achieve the Group target return on equity. At the end of 2012, the portfolio totalled NOK 56.3 billion. Asset management The Group s investment portfolio includes all investment funds in the Group except for investment funds in the Pension and Savings segment and the Retail Bank segment. A great part of the management is outsourced to external managers, while the investment function concentrates on asset allocation, risk management and the selection of managers. Direct property investments are made via the wholly owned property company Oslo Areal. The investment portfolio consists of three parts: a match portfolio, a free portfolio and associated companies. 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 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 risk management. Associated companies mainly comprise the holdings in Storebrand and SpareBank1 SR-Bank. At the end of 2012, the investment portfolio totalled NOK 56.3 billion. The financial result was NOK 3.0 billion, which corre sponded to a return on financial assets of 5.4 per cent. 5.4%......return on financial assets 16 I Gjensidige Annual Report 2012

19 Asset management Financial assets and properties Return per cent Profit NOK million Match portfolio , , ,175.4 Associated companies Free portfolio , ,040.5 Financial profit/loss on the investment portfolio , , ,704.6 Net income from investments 3, , ,748.2 Portfolio composition as at % 57,7 % 8.2 % 34.1 % NOK 56.3 bn % 57,7 % 8.2 % 37.6 % NOK 54.5 bn % 8.9 % 31.5 % NOK 52.3 bn Match portfolio Associated companies Free portfolio Gjensidige Annual Report 2012 I 17

20 Additional information Additional information Gjensidige insurance group Return on financial assets 1 % Equity NOK million 25, , Return on equity annualised 2 % Equity per share NOK Capital adequacy ratio 3 % Capital adequacy margin Gjensidige Forsikring 4 % Share capital Number of outstanding shares at the end of the period Number 500,000, ,000, ,000,000 The period s earning per share (basic and diluted) 5 NOK General insurance Market share non-marine insurance Norway (Finance Norway) % Gross premium written Private NOK million 8, , ,031.7 Commercial NOK million 5, , ,682.7 Nordic NOK million 3, , ,357.1 Baltic NOK million Corporate Centre/reinsurance Total NOK million 18, , ,466.8 Premiums, net of reinsurance 6 % Earned premiums. net of reinsurance Private NOK million 8, , ,719.9 Commercial NOK million 5, , ,401.0 Nordic NOK million 3, , ,453.1 Baltic NOK million Eliminations NOK million Total NOK million 17, , ,063.3 Loss ratio 7 Private % Commercial % Nordic % Baltic % Total % Cost ratio 8 Private % Commercial % Nordic % Baltic % Total % I Gjensidige Annual Report 2012

21 Additional information Combined ratio Private % Commercial % Nordic % Baltic % Total % Combined ratio discounted Pension and Savings Assets under management, pension, additions in the period NOK million 2, , ,303.8 Assets under management, savings, additions in the period NOK million , ,016.6 Assets under management, pension at the end of the period NOK million 10, , ,674.1 of which the group policy portfolio NOK million 3, , ,146.0 Assets under management savings at the end of the period NOK million 10, , ,697.2 Profit margin savings in per cent 11 % Recognised return on paid-up policies portfolio 12 % Value adjusted return on paid-up policies portfolio 13 % Number of customers (pension) at the end of the period Number 105,112 80,796 66,468 Number of customers (savings) at the end of the period Number 4,805 5,145 5,479 Customers (pension) with insurance agreements at the end of the period Number 89,345 68,677 56,498 Customers (savings) with insurance agreements at the end of the period Number 3,604 4,219 4,493 Return on equity, annualised 2 % (6.3) Retail Bank Gross lending, addition in the period NOK million 2, ,543.9 Deposits, addition in the period NOK million 1, ,569.6 Gross lending, at the end of the period NOK million 17, , ,119.5 Deposits at the end of the period NOK million 11, , ,120.0 Deposit-to-loan ratio at the end of the period 14 % Net interest income in per cent 15 % Write-downs and losses in per cent, annualised Cost/income ratio Customers at the end of the period Number 95,726 98,183 89,594 Customers with insurance agreement at the end of the period Number 44,205 47,396 43,764 Capital adequacy 18 % Return on equity % Return on financial assets = net financial income in per cent of average finanscial assets including property, excluding Pension and Savings and Retail Bank 2 Return on equity, annualised = profit before tax expense for the period/average equity for the period 3 Capital adequacy ratio = net subordinated capital/risk-weighted calculation basis, calculated on the basis of NGAAP for the Group. The result of the period is not included in the calculation for the quarters, with the exception of fourth quarter. 4 The solvency margin is calculated at the company level and in accordance with the rules of the Financial Supervisory Authority of Norway. The result of the period is not included in the calculation for the quarters, with the exception of fourth quarter. 5 Earnings per share in the period = the shareholders share of the profit or loss for the period/average number of outstanding shares in the period 6 Premiums, net of reinsurance = gross premiums written, net of reinsurance/gross premiums written (general insurance) 7 Loss ratio = claims incurred etc./earned premiums 8 Cost ratio = operating expenses/earned premiums 9 Combined ratio = loss ratio + cost ratio 10 Combined ratio discounted = combined ratio if claims provisions had been discounted 11 Profit margin savings, in per cent = management income/average assets under management, savings 12 Recognised return on the paid-up policy portfolio, in per cent = realised return of the portfolio 13 Value-adjusted return on the paid-up policy portfolio, in per cent = total return of the portfolio 14 Deposit-to-loan ratio = deposits as a per centage of gross lending 15 Net interest income in per cent, annualised = net interest income/average total assets 16 Write-downs and losses in per cent, annualised = write-downs and losses/average gross lending 17 Cost/income ratio = operating expenses/total income 18 Capital adequacy = primary capital/basis of calculation for credit risk, market risk and operational risk Gjensidige Annual Report 2012 I 19

22 The Gjensidige share The Gjensidige share yielded a total return of 21.1 per cent in At the end of 2012, Gjensidige had about 42,000 shareholders and was the seventh largest company listed on Oslo Stock Exchange. Earnings per share was NOK 8.56, and the Board has proposed a dividend of NOK 6.85 per share. Investor information Gjensidige shall maintain an open dialogue with all stakeholders and complies with the Oslo Stock Exchange s code of practice for reporting IR information. Established guidelines for investor relations can be found on Dividend and dividend policy Unless the capital need indicates otherwise, the Board s target is that between 50 and 80 per cent of the profit after tax for the year will be distributed as dividend. In addition to paying a cash dividend, Gjensidige will also consider buying back shares as a means of increasing the total shareholder return. For more information, see page 27 or For the financial year 2012 a dividend of NOK 6.85 per share is proposed, corresponding to 80 per cent of the earnings per share. The dividend will be approved by the Annual General Meeting on 25 April 2013 and paid to shareholders registered on the date of the General Meeting. Dividend is to be paid 8 May Customer dividend Dividend 62.2% 37.8% Dividend Other shareholders Customer dividend Gjensidige s general insurance customers in Norway For ownership policy of the Gjensidige Foundation, see The customer dividend for 2011 represented close to 11 per cent of premiums paid. Also for 2012, it is proposed that the Gjensidige Foundation s dividend from Gjensidige, after deduction of costs, is distributed to Gjensidige s general insurance customers in Norway. 20 I Gjensidige Annual Report 2012

23 The Gjensidige share Ownership The 20 largest owners hold a total of 80.6 per cent of the shares in Gjensidige. The Gjensidige Foundation is the largest owner, with a holding of 62.2 per cent. In its Articles of Association, the Gjensidige Foundation has stipulated to have an ownership in Gjensidige of at least 60 per cent, and shall contribute to stable ownership and predictability. The Foundation expresses a willingness to consider reducing the holding in the event of any acquisitions or capital increases that are in accordance with Gjensidige s overall strategy. Geographical distribution shareholders as of % Norway 20% Rest of Europe 14% UK 14% USA 5% Other The Gjensidige Foundation manages the ownership of Gjensidige on behalf of Gjensidige s general insurance customers in Norway. The Foundation has an ownership policy that focuses on high value creation over time, and expects a competitive dividend. Distribution of shares excluding shares owned by the Gjensidige Foundation. The 20 largest shareholders as of 31 December Per cent 1 Gjensidigestiftelsen Folketrygdfondet DWS Investments Skagen Fondene Thornburg Inv. Mgmt People s Bank of China BlackRock Greenlight Capital UBS Fidelity DNB Asset Management SSGA Danske Capital BNP Paribas Odin KLP Invesco Argonaut Vanguard SEB 0.3 General Meeting The next ordinary General Meeting will be held at on 25 April 2013 on Gjensidige s premises at Lysaker, Drammensveien 288, Oslo. For more detailed information about governing bodies and/or the General Meeting, see page 29 and/or 1 The list of shareholders is based on an analysis of the register of shareholders in the Norwegian Central Securities Depository (VPS) carried out by RD:IR. The analysis maps the owners behind the nominee accounts. There is no guarantee that the list is complete. An overview of the 20 largest shareholders as specified in VPS s register of shareholders is available in Note 26 on page 135. Gjensidige Annual Report 2012 I 21

24 Corporate social responsibility Gjensidige s object is to create value for society through safeguarding life, health and assets and by relieving customers of risk. Gjensidige shall ensure that the Group s experience and expertise in the prevention of loss benefits society at large. Ethical, social and environmental considerations are integrated in day-to-day operations and in relations with the Group s stakeholders. Corporate social responsibility The Board has adopted guidelines setting out goals and limits for the Company s commitment to social responsibility, including guidelines for socially responsible investments. The guidelines are available at The main points of the guidelines are that Gjensidige shall 1. Contribute to a safer society 2. Respect human rights 3. Respect labour rights 4. Combat corruption and financial irregularities 5. Minimise the impact on the environment and climate Selected quantitative goals have been adopted for socially responsible operations in relation to customers, suppliers, employees and the environment. The goals and goal achievement are presented in the table on page 24. Contributing to a safer society Through its operations, Gjensidige has built considerable expertise in loss prevention. This knowledge shall, as far as possible, benefit society at large. In 2012, we collaborated with the Norwegian Council for Road Safety on a public awareness project targeting apprentices. We supported participation in the 65+ refresher course for elderly drivers, and we participated in the debate on transport and communication with the demand that investments in safe roads be given higher priority. Together with the Norwegian Fire Protection Association, the Directorate for Civil Protection and Emergency Planning (DSB) and local fire brigades, we organised the Aksjon Boligbrann fire prevention campaign making home visits to 40,000 houses. A joint project with the City of Oslo and the Oslo Fire and Rescue Department targeting elderly people living at home was continued in We also contributed to the development and marketing of educational material on fire prevention for schools. In 2012, as in previous years, Gjensidige has been represented on a number of councils, committees and boards that work on fire prevention. Gjensidige contributed to almost 700 newspaper articles and radio and TV reports on the prevention of losses and injuries in Respecting human rights Gjensidige only has operations in Scandinavia and the Baltics, where there is strong respect for human rights. The Company s investment portfolio shall comply with internationally recognised guidelines for socially responsible investments (SRI). 22 I Gjensidige Annual Report 2012

25 Corporate social responsibility This is followed up through quarterly reviews of the SRI follow-up and through contact with advisers as concrete concerns arise. Four meetings have been held during the year. It was decided to exclude six companies in 2012, so that the number of excluded companies was 70 at the end of the year. Respecting labour rights Gjensidige shall be a health-promoting workplace where all employees are given opportunities for professional development and competence-raising. The Company spent NOK 21,400 per employee on competence-raising measures in Other matters relating to personnel are described on pages Combating corruption Gjensidige has zero tolerance for corruption, and this is governed by stringent rules and close follow-up. We have established a gift register where all gifts, regardless of value, must be registered. There are strict rules for giving gifts to business associates and for bringing them to events that can be perceived as greasing. The rules and how they are practised are well known among employees and are available on the intranet and in e-learning courses. The strong awareness of this means that initiatives that may be in breach of the regulations are stopped at an early stage. The practice of cash settlements in connection with claims payments in the Baltics was discontinued in 2012, to reduce the risk of irregularities. All material purchases must be quality assured by the Corporate Procurement department. The department was involved in 240 procurements in Most agreements are the result of competitive tendering carried out in accordance with adopted guidelines. All suppliers must sign a self-declaration on corporate social responsibility. A project will be initiated in 2013 for the purpose of clarifying whether it is possible to improve the procurement procedures and implement even stronger prevention and uncover more breaches of the rules. The environment and climate The Group s operations result in minimal pollution of the natural environment. The Group s environmental measures focus on energy efficiency, reduced travelling through increased use of video conferencing, standardised duplex printing for printers/photocopiers and responsible waste management. The number of paper-free customers who receive documents electronically increased by nine per cent in 2012 as a result of targeted efforts. The reported consumption of paper increased due to a larger share of the company being accounted for. Office space use was reduced by 4.1 per cent, which contributes to lower energy consumption and resource use in general. Gjensidige s head office at Sollerud was certified as an Eco-Lighthouse in The goal of certifying all branch offices that have more than 30 employees was achieved in spring Recertification of branch offices that are already Eco- Lighthouses takes place on a continuous basis. Gjensidige has worked for many years to learn more about climate change and the consequences it may entail. Gjensidige conducted an extensive survey in 2012 on the municipalities ability to handle increasing precipitation. As far as the Board is aware, there are no products containing PCB in Gjensidige s buildings and properties. Gjensidige Annual Report 2012 I 23

26 Corporate social responsibility Target group Subject Status 2011 Status 2012 Target 2012 Target 2013 Value creation and resource use Owners Return on equity before tax 15.9% 23.8% > 15% >15% Dividend (NOK million)* 2, ,425.0 Dividend payout ratio* 83.0 % 80.0 % 50 80% 50 80% Customers Customer satisfaction (KTI) retail KTI Corporate Financial advisers authorised 77% 85% 100% 100% Insurance advisers certified 93% 91 % 100% 100% Environment Energy consumption in MWh CO2 emission in tonnes 2,658 2,569 2,525 2,450 Square metres in use 66,500 63,754 63,200 60,754 Offices certified as Eco Lighthouses Video conferences, hours 13,094 14,635 14,400 15,659 Paper consumption in tonnes** Paper-free customers 409, , , ,000 Working environment Employees Women 46% 47% approx. 50% approx. 50% Female managers 41% 40% Increase Increase Sickness absence Gjensidige Forsikring 5.2% 5.1% 4.0% 4.0% Norway Average amount spent on training (NOK) 16,400 19,400 17,500 20,400 Average retirement age (years) Ethics Employees Policies, measures regarding Control Continued impartiality, bribery and ethics Suppliers Fair competition/ anti-corruption Control Continued Taxes and fees VAT registered, Control Continued no illegal labour Personal statement regarding Yes Yes Continued environment and social responsibility for suppliers Human rigths Asset management The Group s own financial investments follow international rules for Socially responsible investments (SRI). * Figures for 2012 based on the Board s recommendation. ** Figures for 2012 not directly comparable with 2011 figures 24 I Gjensidige Annual Report 2012

27 Statement on corporate governance The formal requirements for this statement follow from the Norwegian Accounting Act section 3-3b and Oslo Børs s requirement that listed companies must comply with or explain deviations from the Norwegian Code of Practice for Corporate Governance as last amended on 20 December The Code of Practice is available at Statement on corporate governance This statement is part of the Company s annual report and it applies to the accounting period The statement is based on the structure set out in the Act and the main elements in the Code of Practice issued by the Norwegian Corporate Governance Board. The Board bases its corporate governance on: Optimising the Company s assets in a long-term perspective Equal treatment of all shareholders Equal and assured access to reliable, relevant and up-to-date information about the Company s business. Statement on corporate governance in accordance with the Norwegian Accounting Act The statement on corporate governance follows the structure set out in the Act. 1. The Company complies with the Norwegian Code of Practice for Corporate Governance. 2. The Code of Practice is available at 3. The Board has provided a statement on the Company s corporate governance. Reference is made to this statement. 4. The main elements in the systems for internal control and risk management relating to financial reporting processes are described in section 10 of the statement. 5. The Company s Articles of Association do not contain provisions that in full or in part expand on or deviate from the provisions of the Public Limited Liability Companies Act chapter The report gives an account of the composition of the Board, the corporate assembly, the Supervisory Board, the control committee and the Board s select committees. The main elements in the currently applicable instructions and guidelines for these bodies are described in sections 8 and 9 of the statement. 7. The provisions of the Articles of Association that regulate the appointment and replacement of board members are described in section 8 of the statement. 8. The provisions of the Articles of Association and authorisations that entitle the Board to decide that the enterprise shall buy back or issue own shares are described in section 3 of the statement. 1. Statement on corporate governance Corporate governance is subject to an annual evaluation and discussion by the Board. The Board discussed and prepared this statement at a meeting on 13 February 2013 and adopted it at a meeting on 6 March Gjensidige s compliance with the individual sections is also described. Gjensidige Annual Report 2012 I 25

28 Statement on corporate governance The Board s report on corporate governance in Gjensidige Forsikring ASA is available at Core values and social responsibility Gjensidige s core values lie in its core business operations: a social mission to create value for society by safeguarding life, health and assets through relieving customers of risk. Gjensidige therefore has an important social responsibility through its expertise in the prevention of loss. This benefits society as a whole within commercially responsible limits. This voluntary social responsibility shall be practised in line with society s expectations of Gjensidige s important social role. On this basis, the Board has stipulated guidelines for ethics and social responsibility. Gjensidige s commitment shall be further developed on the basis of the expertise that it accumulates through conducting its core business. Traffic and fire are especially important areas in which the Company s expertise in loss prevention can help to save lives and assets. Other important areas are awareness-raising campaigns aimed at combating fraud and other crime, and efforts to promote physical and mental health in the population. Our efforts in the area of social responsibility will therefore be concentrated on loss prevention in the broadest sense. Our internal control systems include the Company s core values and guidelines for ethics and social responsibility. A dedicated ethics suggestion box has been established for reporting relevant matters. Effective notification procedures have also been established to ensure that whistle-blowers are protected and that matters that are raised receive relevant follow-up. The Group shall be characterised by high ethical standards. Its corporate governance shall be in accordance with best practice. A good corporate governance policy will improve the Group s potential for value creation and increase the trust and respect it enjoys in society over time. Our work on social responsibility is described in more detail on page in the annual report and at Quantitative goals have been adopted for socially responsible operations in relation to owners, customers, employees and the environment. The goals and goal achievement are presented in the table on page 24 of the annual report. The Group s efforts in relation to the working environment, equal opportunities and integration are described in more detail in the Board s report. The Company s financial investments shall comply with generally accepted guidelines for socially responsible investments (SRI). The Company shall not itself invest in individual securities in companies that fail to meet the requirements relating to human rights, labour rights, the environment, corruption or weapons production. When investing in funds administered by others and where the Company does not decide the framework conditions, the Company shall endeavour to ensure that the Company s criteria are complied with. Deviations from the Code of Practice: None 2. The business Operations Pursuant to its Article of Associations, Gjensidige can engage in direct and indirect general and life insurance operations, including taking on pure risk insurance with a duration of no more than one year in the area of life insurance, owning companies that engage in general insurance, life insurance, banking, financing and securities 26 I Gjensidige Annual Report 2012