Gjensidige Insurance Group Helge Leiro Baastad, CEO 10 January 2012
Agenda I. Unique history II. Performance record III. Outlook 2
200 years of proactive transformation and reinvention 1816-1920 1922 1980s / 1990s 2005 2006-2010 2010 Established mutual fire insurers throughout the country Created joint reinsurance company Developed into a financial group offering insurance, pensions, banking and financial services Transformed from mutual federation into integrated mutual group Transformed into a standalone general insurer Initiated geographic growth Expanded into Sweden, Denmark and Baltics through acquisitions Re-entered the pension and savings markets Launced Gjensidige Bank Converted into a public limited company (ASA) Listed on Oslo Børs (Oslo Stock Exchange) 3
Cost ratio Employees Significant turnaround from mutual to public company Relentless focus on efficiency improvements 1) 35 3,000 30 2,500 2,000 25 1,500 20 1,000 15 500 10 0 1999 2001 2003 2005 2007 2009 Employees Cost ratio From regional to multichannel distribution Branch offices in Norway down from ~180 in 1999 to 51 in 20 Streamlined processes Internet penetration Stringent capital management Equity grown by more than five times NOKm 16,000 14,000 12,000 10,000 8,000 6,000 1999 2001 2003 2005 2007 2009 Gross premiums written 4 1) Figures from Norwegian general insurance business.
Successful listing and positive share price development Oslo Stock Exchange 10 largest shareholders 1) Geographical distribution of free shares 2) No Shareholder Stake (%) 1 Gjensidigestiftelsen 63.5 13 % 6 % 2 Skagenfondene 4.0 14 % 53 % 3 Folketrygdfondet 2.8 4 Lansdowne Partners 1.9 14 % Norway UK USA Europe excl. UK Other 5 DWS Investments 1.7 6 Thornburg Investment Mgmt 1.7 7 Greenlight Capital 1.4 130 120 Total return since IPO 3) + 25% 8 BlackRock 1.3 9 People s Bank of China 1.0 0 100 90-7% 10 Odin Fund Management 0.9 Total 10 largest 80.2 80 des 10 feb apr jun aug okt des Gjensidige Forsikring MSCI Europe Index 5 1) Shareholder list based on analysis performed by RD:IR of the register of shareholders in the Norwegian Central Securities Depository (VPS) as per 30 Sept 2010. This analysis provides a survey of the shareholders who are behind the nominee accounts. There is no guarantee that the list is complete. 2) Free shares means total shares excluding shares owned by Gjensidigestiftelsen. 3) Source: Bloomberg, 10 Dec 2010 until 2 January 2012
Leading domestic position, international growth opportunities Other 21.6 % Gjensidige 26.5 % Other 19.9 % Gjensidige 1.3 % If 18.7 % Sparebank1 10.3 % Norway Folksam 15.5 % Sweden Tryg 16.5 % If 25.1 % Trygg Hansa 15.8 % Länsförsäkringar 28.8 % Other 32.5 % Gjensidige 5.8 % Topdanmark 17.9 % Other 22.4 % Gjensidige 6.9 % If 15.0 % Codan 13.2 % Denmark Alm.Brand 10.0 % Tryg 20.6 % Codan 20.8 % Seesam 7.0 % Baltic Ergo 13.5 % BTA 14.6 % 6 Sources: Finance Norway, general insurance, 30 September 20. The Swedish Insurance Federation, general insurance statistics, 30 September 20. The Danish Insurance Association, general insurance statistics 3 rd quarter 2010. Baltic: Insurance Supervisory Authorities of Latvia and Lithuania, Estonia Statistics, competitor reports, and manual corrections on FY2010 statistics.
Agenda I. Unique history II. Performance record III. Outlook 7
Solid underwriting performance Earned premiums General insurance (NOKm) Combined ratio 1) General insurance (%) 20,000 16,000 +0.4 % +12.6% +4.3% +1.2% +9.0% +4.3% 105.0 100.0 12,000 95.0 8,000 4,000 90.0 85.0 80.0 94.9 96.3 94.4 94.8 95.3 96.2 90.6 0 2006 2007 2008 2009 2010 9M 2010 9M 20 75.0 2006 2007 2008 2009 2010 9M 2010 9M 20 Cost ratio General insurance (%) 20.0 19.0 18.0 17.0 16.0 15.0 18.9 17.5 17.0 17.7 16.5 16.5 16.3 2006 2007 2008 2009 2010 9M 2010 9M 20 8 1) Undiscounted
Sound investment returns from conservative asset allocation ROI: 9.2% 6.3% (0.6%) 5.5% 5.2% 3.1% Carrying amount (NOKbn): 42.0 46.8 47.8 50.7 52.3 53.3 2006 2007 2008 2009 2010 30.09.20 Fixed income instruments Real estate Hedge funds and other Equities Associated companies 9
Strong capital position Capital position as at 30 September 20 (NOKbn) 2.1 5.7 4.6 3.3 22.8 7.2 ECR operatonal segments Asset risk (non-life companies) 1) Additional binding capital req. Excess EC over binding req. Bridging ECA and IFRS Equity capital IFRS Equity Capital 10 1) Asset risk reflects two components. Firstly the market and credit risk for the asset exposures not assumed to be financing the general insurance liabilites. Secondly, any risk due to the actual asset portfolio backing the liabilities deviating from the replicating portfolio. Any diversification between asset risk and insurance risk is therefore implicitly allocated within asset risk.
Pre-tax RoE (%) Equity (NOKbn) Sound RoE supporting attractive dividend payout Equity and return on equity Dividend payout (NOKm/ %) 30 % 25 80 % 25 % 20 % 15 % 10 % 5 % 20 15 10 5 41 % 1,022 72 % 1,650 2,350 0 % 2006 2007 2008 2009 2010 9M 20 Equity RoE (pre-tax) 1) 0 2007 2008 2009 2010 1) Annualized
Agenda I. Unique history II. Performance record III. Outlook 12
Ambitious financial targets for long-term value creation Combined ratio 90-93 % as from 20 Cost ratio 15 % by 2015 Pre-tax RoE >15 % Capitalisation Maintain S&P A-rating Attractive dividend policy 50-80 % payout ratio 13
Support products Growth strategy Norway Nordic Baltic Disciplined geographic expansion in general insurance through M&A General insurance Geographical expansion scale Core business Support group RoE target within 3 years Meet combined ratio target within 2-3 years Pension and savings Support products to secure customer loyalty in Norway Online retail banking Meet RoE target in 2 years 14
The financial turmoil has limited impact on Gjensidige Total return development since IPO Differentiation from banks 130 120 0 100 90 80 70 60 + 25% - 9% - 15% - 23% - 38% No need for funding Limited counter party risk Limited exposure to PIIGS Stable demand for insurance products 50 des 10 jan feb mar apr mai jun jul aug sep okt nov des Gjensidige Forsikring ASA EuroStoxx Insurance EuroStoxx Banks 1) Nordic Non-life Nordic Banks 2) 15 Source: Bloomberg as of 3 January 2012. Note: Share prices rebased to 100%. 1) Unweighted average performance of Sampo, Tryg, Topdanmark and Alm. Brand. 2) Unweighted average performance of Nordea, Handelsbanken, Swedbank, DnB NOR, SEB, Danske, Pohjola, Jyske Bank and Sydbank.
Dividends Dividends Unique policyholder relationship key strength in competitive market Policyholders Structure Maintains benefits of former mutual structure Foundation Shareholders Public shareholders Alignment of interests between the Foundation and public shareholders Gjensidige Foundation distributes dividend to Norwegian policyholders 2010 customer dividend corresponded to 12% of premiums paid Gjensidige Forsikring ASA Increases customer loyalty, decreases churn rates and reduces costs 16
Tariff development supports CR target and sustained competitiveness Tariff program 2008-20 Three years after start-up: Indication of important positive effects Example: Private cars Development in loss ratio - 3.0 %-points Major shifts in micro-segment pricing Ensuring profitability in previously bad segments Improving competitiveness in good segments New tariffs: Better risk selection Segmentation by factors currently not used by competitors 2008 2009 2010 Oct 2010 - Sep 20 Future developments Other important product areas in Norway Continuous improvements Implementation in Denmark and Sweden 17
Investor Value Proposition Potential for enhanced returns Leading GI group in unique, stable, profitable Nordic market Strong capital position Unique policyholder relationship with winning retention programme Outstanding performance track record Sustainable profitability high, stable dividend 18
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