Interim Report 1st quarter Gjensidige Insurance Group

Transcription

1 Interim Report 1st quarter 2014 Gjensidige Insurance Group

2 Group highlights First quarter 2014 In the following, figures in brackets indicate the amount or percentage for the corresponding period the year before. Group Profit/loss before tax expense: NOK 1,155.9 million (540.7) Profit per share: NOK 1.85 (0.63) General Insurance Earned premiums: NOK 4,907.2 million (4,457.2) Underwriting result: NOK million (342.9) Combined ratio: 92.9 (92.3) Cost ratio: 15.3 (15.7) Financial result: NOK million (172.9) Special factors and events The investment in Storebrand sold Dividend paid for 2013: NOK 6.4 billion, corresponding to NOK per share Profit performance Group NOK million General Insurance Private ,305.5 General Insurance Commercial General Insurance Nordic General Insurance Baltics (6.4) Corporate Centre/costs related to owner (73.2) (77.6) (299.4) Corporate Centre/reinsurance 1 (125.3) (17.1) (357.4) Underwriting result general insurance ,019.6 Pension and Savings Retail Bank Financial result from the investment portfolio ,480.9 Amortisation and impairment losses of excess value intangible assets (36.5) (31.5) (161.7) Other items (1.8) (1.3) (5.5) Profit/(loss) for the period before tax expense 1, ,574.1 Key figures general insurance Large losses Run-off gains/(losses) Loss ratio % 76.6% 74.0% Cost ratio % 15.7% 15.3% Combined ratio % 92.3% 89.2% 1 Large losses in excess of NOK 30.0 million are charged to the Corporate Centre, while claims of less than NOK 30.0 million are charged to the segment in which the large losses occured. The segment Baltics has a retention level of EUR 0.5 million. Large losses allocated to the Corporate Centre amounted to NOK 41.0 million (31.0) year to date. Moreover, accounting items related to written reinsurance and reinstatement premium are included. 2 Underwriting result general insurance = earned premiums - claims incurred etc. - operating expenses 3 Excluding return on financial assets in Pension and Savings and Retail Bank. 4 Large losses = loss events in excess of NOK 10.0 million. Expected large losses for the quarter was NOK million. 5 Run-off gains/(losses) = changes in estimates from earlier periods. Reserving is based on best estimate, and expected run-off result over time is zero. 6 Loss ratio = claims incurred etc./earned premiums 7 Cost ratio = insurance related operating expenses/earned premiums 8 Combined ratio = loss ratio + cost ratio 2 Gjensidige Insurance Group 1st quarter 2014

3 Solid growth in premiums and good start to the year Group profit performance The Group recorded a profit before tax expense of NOK 1,155.9 million (540.7) in the quarter. The profit from general insurance operations measured by the underwriting result was NOK million (342.9). For the investment portfolio, the return on financial assets was 1.3 per cent (0.3), or NOK million (172.9). The tax expense amounted to NOK million (224.0), corresponding to an effective tax rate of 20.2 per cent (41.4). The effective tax rate was influenced to a great extent by realised and unrealised gains from equity investments in the EEA. Last year s high effective tax rate was primarily due to the recognition of an impairment loss of NOK million on the investment in Storebrand. The profit after tax expense was NOK million (316.7), corresponding to NOK 1.85 (0.63) per share. The underwriting result in the quarter was good and on a par with the corresponding quarter in The proportion of large losses was significantly higher in the first quarter 2014 than in the corresponding period last year, and the underlying development in frequency claims was thus favourable. This was largely due to a favourable weather situation, combined with good control of customer and risk selection and pertaining risk pricing. Earned premiums in the Private segment increased by 5.4 per cent compared with the corresponding period last year, mainly as a result of premium increases. The underwriting result increased as a result of the favourable weather situation and a positive frequency claims development. Earned premiums in the Commercial segment increased by 5.1 per cent as a result of growth in both the Norwegian and Swedish portfolios. A good underlying frequency claims development and good cost control contributed to an increase in the underwriting result, despite a considerably higher proportion of large losses compared with the corresponding period in In the Nordic segment, earned premiums increased by 36.0 per cent (21.6 per cent in local currency), primarily as a result of an increase in new commercial customers and the acquisition of the Gouda and Solid portfolios made in The underwriting result improved compared with the corresponding period last year, mainly as a result of a favourable frequency claims development. The growth in premiums in the Baltics segment was 15.4 per cent (3.2 per cent in local currency). The growth was affected by the loss of one large commercial customer. The underwriting result was negative and weaker than in the corresponding period last year, largely as a result of a weaker run-off result. The Retail Bank s profit performance was good in the period, driven by volume growth and efficient operations. Pension and Savings also recorded a positive profit performance. Equity and capital adequacy The Group s equity amounted to NOK 26,958.6 million (26,037.4) at the end of the period. The annualised return on equity before tax expense was 17.4 per cent (8.4). The capital adequacy was 17.2 per cent (16.3), and the solvency margin was per cent (545.2). Available capital in excess of the risk-based requirement calculated using the Group s internal model constitutes the Group s economic excess capital. In addition, a deduction is made for the higher of the calculated additional capital required to maintain the current rating (including a five per cent buffer) and the capital required to meet the statutory capital adequacy requirements. Any additional capital represents a strategic buffer and excess capital. At the end of the period, this amounted to NOK 2.6 billion. The amount does not include the year to date result. Other The rest of the investment in Storebrand was sold in the quarter. The accounting gain was NOK 115 million. Gjensidige Insurance Group 1st quarter

4 Product groups Private Earned premiums year to date (same period last year) 10.1% (8.3) 18.3% (17.8) Lorem ipsum dolores 43.5% (43.1) Motor Property Accident and health Other 28.0% (30.8) General Insurance Private The underwriting result for the period was NOK million (218.5). The combined ratio was 85.6 (88.1). The main reason for the increase in the underwriting result was a combination of good growth in premiums and a favourable frequency claims development. Earned premiums amounted to NOK 1,934.5 million (1,834.6). The increase was due to premium increases. The number of customers at the end of the period was on a par with the end of the corresponding period in Claims incurred amounted to NOK 1,405.8 million (1,369.7). The loss ratio was 72.7 (74.7). The motor product in particular had a lower loss ratio than in the corresponding period last year, primarily as a result of the favourable weather situation. The property product had a somewhat higher loss ratio than in the first quarter last year, among other things because of the big fires in Lærdal and Flatanger in January. There were only small changes in the loss ratio for other product areas compared with the corresponding period last year. Operating expenses amounted to NOK million (246.4), and the cost ratio was 12.9 (13.4). General Insurance Private NOK million Earned premiums 1, , ,799.0 Claims incurred etc. (1,405.8) (1,369.7) (5,466.5) Operating expenses (250.1) (246.4) (1,027.0) Underwriting result ,305.5 Amortisation and impairment losses of excess value intangible assets (3.0) (2.4) (9.5) Large losses Run-off gains/(losses) Loss ratio % 74.7% 70.1% Cost ratio % 13.4% 13.2% Combined ratio % 88.1% 83.3% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio 4 Gjensidige Insurance Group 1st quarter 2014

5 Product groups Commercial Earned premiums year to date (same period last year) 1.0% (1.8) 5.6% (5.3) 13.4% (13,5) 4.0% (3.4) 25.6% (25.7) Lorem ipsum dolores 21.2% (21.5) 29.2% (28.7) Motor Property Accident and health Marine/cargo Liability Agriculture Other General Insurance Commercial The underwriting result amounted to NOK million (152.8). The combined ratio was 90.5 (91.0). The increase in the underwriting result was due to a combination of good growth in premiums, good underlying frequency claims development and stringent cost discipline. Earned premiums increased to NOK 1,783.5 million (1,697.6). Both the Norwegian and the Swedish commercial portfolios showed a positive development. The development in earned premiums was particularly positive for the property, assets/interruption losses and liability products in Norway, and for property in Sweden. The growth was negatively affected by a conscious reduction of the municipal portfolio. Claims incurred amounted to NOK 1,407.9 million (1,331.1) and the loss ratio was 78.9 (78.4). The proportion of large losses increased considerably compared with the corresponding period last year, mainly as a result of several big fires. The underlying frequency claims development was positive, especially for the agriculture, motor and liability products. Operating expenses amounted to NOK million (213.7), which correspond to a cost ratio of 11.5 (12.6). The cost ratio in the first quarter 2013 was negatively affected by expenses relating to the moving of portfolios. General Insurance Commercial NOK million Earned premiums 1, , ,021.8 Claims incurred etc. (1,407.9) (1,331.1) (5,207.6) Operating expenses (206.0) (213.7) (821.3) Underwriting result Large losses Run-off gains/(losses) Loss ratio % 78.4% 74.2% Cost ratio % 12.6% 11.7% Combined ratio % 91.0% 85.9% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio Gjensidige Insurance Group 1st quarter

6 Product groups Nordic Earned premiums year to date (same period last year) 4.7% (7.0) 3.0% (2.7) 17.0% (22.0) 9.9% (0.4) Lorem ipsum dolores 34.2% (37.4) 31.1% (30.5) Motor Property Accident and health Liability Agriculture Other General Insurance Nordic The underwriting result was NOK million (64.5) in the period, corresponding to a combined ratio of 89.8 (91.6). The improvement in profit performance was largely due to a positive underlying fre quency claims development. Earned premiums increased to NOK 1,040.1 million (764.8). Of the increase NOK 90.4 million was due to changes in the exchange rate. The increase in premiums over and above exchange rate effects was due to an increase in the number of new commercial customers and to the acquisitions of the Gouda and Solid portfolios made in Earned premiums from the two acquired portfolios amounted to approximately NOK 150 million in the quarter. Claims incurred amounted to NOK million (579.2). Of the increase NOK 68.3 million was due to changes in the exchange rate. The loss ratio was 73.1 (75.7). The lower loss ratio was largely due to an improvement in the underlying frequency claims development, especially for the motor and property products. Operating expenses amounted to NOK million (121.1). Of the increase NOK 14.3 million was due to changes in the exchange rate. The cost ratio was 16.7 (15.8). The increase in the cost ratio can largely be ascribed to the acquisition of businesses. Among other things, the distribution model in Gouda Reiseforsikring entails a relatively higher level of commissions. General Insurance Nordic NOK million Earned premiums 1, ,326.4 Claims incurred etc. (760.2) (579.2) (2,417.0) Operating expenses (174.1) (121.1) (567.1) Underwriting result Amortisation and impairment losses of excess value intangible assets (32.2) (28.0) (147.2) Large losses Run-off gains/(losses) Loss ratio % 75.7% 72.7% Cost ratio % 15.8% 17.0% Combined ratio % 91.6% 89.7% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of NOK 30.0 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio 6 Gjensidige Insurance Group 1st quarter 2014

7 Product groups Baltics Earned premiums year to date (same period last year) 1.8% (2.9) 15.8% (15.6) 15.2% (15.0) 4.3% (4.2) Lorem ipsum dolores 62.8% (62.2) Motor Property Accident and health Liability Other General Insurance Baltics The underwriting result was a loss of NOK 6.4 million (profit of NOK 1.7 million). The combined ratio was (98.5). The result in the first quarter 2014 was negatively affected by a run-off loss, while the result in the first quarter 2013 was positively affected by a substantial run-off gain. Earned premiums amounted to NOK million (116.5). Of the increase NOK 13.7 million was due to changes in the exchange rate. The development in earned premiums was negatively affected by the loss of one large commercial customer. In addition, the focus on profitability is given priority in a market with considerable price competition. Claims incurred amounted to NOK million (83.2). Of the increase NOK 9.8 million was due to changes in the exchange rate. The loss ratio was 77.9 (71.4). The loss ratio increased primarily as the result of a run-off loss in the present year, compared with a run-off gain in the same quarter last year. The nominal operating expenses amounted to NOK 36.1 million (31.5). Of the increase NOK 3.7 million was due to changes in the exchange rate. The cost ratio was 26.9 (27.1). General Insurance Baltics NOK million Earned premiums Claims incurred etc. (104.7) (83.2) (342.5) Operating expenses (36.1) (31.5) (132.5) Underwriting result (6.4) Amortisation and impairment losses of excess value intangible assets (1.3) (1.2) (4.8) Large losses Run-off gains/(losses) 2 (4.0) Loss ratio % 71.4% 67.1% Cost ratio % 27.1% 25.9% Combined ratio % 98.5% 93.0% 1 Large losses = loss event in excess of NOK 10.0 million. Claims incurred in excess of EUR 0.5 million per event are charged to the Corporate Centre. 2 Run-off gains/(losses) = changes in estimates from earlier periods 3 Loss ratio = claims incurred etc./earned premiums 4 Cost ratio = operating expenses/earned premiums 5 Combined ratio = loss ratio + cost ratio Gjensidige Insurance Group 1st quarter

8 Asset allocation the group policy portfolio At the end of the period (same period last year) 83.3% (79.3) 6.1% (11.4) 7.7% (2.9) Lorem ipsum dolores 3.0% (6.5) Bonds held to maturity Money market Other financial investments Bonds classified as loans and receivables Pension and Savings The profit before tax expense was NOK 20.9 million (9.8). This positive development was largely due to an increase in revenues as a result of growth in the customer portfolio. Net insurance revenue in the period amounted to NOK 34.1 million (31.2). The increase was due to increased administration revenues as a result of growth in the portfolio for defined contribution pensions. The management income increased to NOK 23.5 million (18.8) as a result of growth in assets under administration, for both the pensions and savings areas. Operating expenses amounted to NOK 46.9 million (45.5). The increase in expenses was mainly due to higher distribution costs. Financial income amounted to NOK 10.1 million (5.3). This includes the return on the group policy and corporate portfolio. The reason for the growth was an increased return on the rest of the group policy portfolio as a result of increased claims provisions and the realisation of gains on bonds. The company s share of the financial profit on the paid-up policy portfolio was allocated in its entirety as a provision 1 for higher life expectancy. At the end of the period, the assets under administration in the pension operations amounted to NOK 14,570.9 million (12,033.8). The group policy portfolio accounted for NOK 3,666.1 million (3,255.0) of this amount. The recognized return on the paid-up policy portfolio was 1.10 per cent (1.14) in the period. The average annual interest guarantee is 3.6 per cent. For the savings business, assets under administration amounted to NOK 12,035.2 million (10,923.2) at the end of the period. The total assets under administration increased by NOK million (2,478.1), amounting to NOK 26,606.0 million (22,956.9) at the end of the period. 1 Total provisions at the end of the year amounted to NOK million, and the total provision need up to and including 2018 is approximately NOK 250 million. Pension and Savings NOK million Earned premiums Claims incurred etc. (246.3) (177.6) (779.7) Net insurance revenue Management income etc Operating expenses (46.9) (45.5) (182.0) Net operating income Net financial income Profit/(loss) before tax expense Run-off gains/(losses) 1 Operating margin % 9.07% 11.89% Recognised return on the paid-up policy portfolio % 1.14% 4.57% Value-adjusted return on the paid-up policy portfolio % 1.16% 4.67% 1 Run-off gains/(losses) = changes in estimates from earlier periods 2 Operating margin = net operating income/(net insurance revenue + management income etc.) 3 Recognized return on the paid-up policy portfolio = realised return of the portfolio 4 Value-adjusted return on the paid-up policy portfolio = total return of the portfolio 8 Gjensidige Insurance Group 1st quarter 2014

9 Deposits and lending At the end of the period (same period last year) NOK million Lending Lending Deposits Deposits Retail Bank Profit before tax expense was NOK 61.9 million (47.9). The positive development was mainly a result of increased net interest income, coming from the growth in customer lending. Increased expenses driven by business growth partially offset the improvement. Net interest income was NOK million (126.4), primarily driven by customer lending growth. Net commission income and other income were NOK 16.5 million (10.4). There was an increase in the customer related commission income, financial instruments and the gains from the previously written off portion of the acquired un secured lending portfolio. Net interest margin was 2.20 percent (2.66). The decline was a result of significant growth in the secured lending in the past 12 months. Operating expenses were NOK 85.7 million (74.1). The increase was driven by volume growth and business development through new car financing product. Cost/income ratio was 52.0 per cent (54.2). Total write-downs and losses were NOK 17.1 million (14.8), predominantly related to the unsecured lending portfolio. Annualized write-downs and losses in per cent of average gross lending were 0.29 per cent (0.34). The decline was driven by an increased share of the secured loans in the total lending portfolio. The weighted average loan to value 1 was estimated at 61.9 (62.7) per cent for the mortgage portfolio. Gross lending increased by 34.6 per cent year over year, and a mounted to NOK 24,551.7 million (18,238.0) at the end of the period. Lending growth was NOK million during the quarter (913.7). The bank s deposits balance increased by 36.4 per cent year over year, reaching NOK 15,672.2 million (11,487.0) at the end of the period. Deposits growth was NOK million during the quarter (negative 93.4). Deposits to loans ratio was 63.8 per cent (63.0). There is good access to external financing. 1 The loan to value estimate is calculated based on the exposure at the reporting date and the property valuation at the time the loan was approved, including any higher priority pledge(s). Retail Bank NOK million Interest income and related income ,135.0 Interest expenses and related expenses (177.3) (126.5) (588.9) Net interest income Net commission income and other income Total income Operating expenses (85.7) (74.1) (341.3) Write-downs and losses (17.1) (14.8) (67.1) Profit/(loss) before tax expense Net interest margin, annualised % 2.66% 2.42% Write-downs and losses, annualised % 0.34% 0.32% Cost/income ratio % 54.2% 56.9% Capital adequacy % 12.6% 14.6% 1 Net interest margin, annualised = net interest income/average total assets 2 Write-downs and losses, annualised = write-downs and losses/avarage gross lending 3 Cost/income ratio = operating expenses/total income 4 Capital adequacy = primary capital/basis of calculation for credit risk, market risk and operational risk. The result of the period is not included in the calculation for the quarters, with the exception of fourth quarter. Gjensidige Insurance Group 1st quarter

10 Portfolio split At the end of the period (same period last year) Geographic distribution match portfolio At the end of the period 1.8% 7.3% 44,3% (40,9) Lorem ipsum dolores 55,7% (59,1) Match portfolio Free portfolio 2.5% 6.2% 28.0% Lorem ipsum dolores 48.3% Norway Sweden Denmark USA UK Baltic Other 5.9% Management of financial assets and properties The Group s investment portfolio includes all investment funds in the Group except for investment funds in the Pension and Savings and Retail Bank segments. The investment portfolio consists of two parts: a match portfolio and a free portfolio. The match portfolio is intended to correspond to the Group s actuarial provisions. It is in vested in fixed-income instruments whose duration is adapted to match the disbursement of the actuarial provisions. The free port folio consists of various assets. The allocation of assets in this portfolio must be seen in connection with the Group s capitalisation and pertaining risk capacity, as well as the Group s ongoing risk manage ment. At the end of the period, the investment portfolio totalled NOK 59.6 billion (57.9). The financial result amounted to NOK million (172.9), which corresponds to a return on financial assets of 1.3 per cent (0.3). Corrected for the recognition of an impairment loss on the investment in Storebrand in the first quarter last year, the result was roughly on the same level. Match portfolio The match portfolio amounted to NOK 33.2 billion (34.2). The portfolio yielded a return of 0.9 per cent (0.8) excluding changes in the value of the part of the portfolio recognised at amortised cost. Unrealised excess value from bonds valued at amortised cost amounted to NOK 1,292.3 million (1,101.8) at the end of the period. The average duration of the match portfolio was 3.6 years, the same as the average term to maturity for corresponding insurance debt. The distribution of counterparty risk and credit rating is shown in the charts on pages 11 and 12. Securities without an official credit rating amounted to NOK 8.9 billion. Of these securities, 20.0 per cent were issued by Norwegian savings banks, while the remainder were mostly issued by Norwegian power producers and distributors, property companies or government-guaranteed companies. A third-party internal rating existed for 75.2 per cent of the portfolio without an official rating. Bonds with a coupon that is adjusted on the basis of the development in the Norwegian consumer price index, accounted for 13.0 per cent of the match portfolio. The geographical distribution 1 of the match portfolio is shown in the above chart. Free portfolio The free portfolio amounted to NOK 26.4 billion (23.6) at the end of the period. The return was 1.8 per cent (a negative return of 0.5). 1 The geographical distribution is related to issuers and does not reflect the actual currency exposure. Financial assets and properties Result Carrying amount NOK million Match portfolio Money market , ,553.8 Bonds at amortized cost , ,613.0 Current bonds , ,062.4 Match portfolio total , ,229.2 Free portfolio Money market , ,266.6 Other bonds , ,015.7 Convertible bonds Current equities (373.8) 3, ,421.2 PE funds , ,539.3 Property , ,237.5 Other (12.4) 2, ,251.5 Free portfolio total (112.9) 26, ,639.4 Financial result from the investment portfolio , ,868.6 Financial income in Pension and Savings and Retail Bank Net income from investments The item includes the discounting effects of insurance obligations in Denmark and mismatch between interest rate adjustments on the liability side in Denmark, versus the interest rate hedge. 2 The item consist of total investment grade, high yield and current bonds. Investment grade and high yield are investments in internationally diversified funds externally managed. 3 Investments in internationally diversified funds externally managed. 4 The item include the investment in SpareBank 1 SR-Bank and effect on profit of the sale of shares in Storebrand. 5 The item includes currency hedging of Gjensidige Sverige, Gjensidige Baltic and Gjensidige Danmark, and lendings, paid-in capital in Gjensidige Pensjonskasse, hedge funds and finance related expenses. 10 Gjensidige Insurance Group 1st quarter 2014

11 Geographic distribution fixed income instruments in free portfolio At the end of the period 15.1% 5.7% 4.9% 6.9% 9.5% Lorem ipsum dolores 57.9% Norway Sweden Denmark USA UK Other Counterparty risk fixed income instruments At the end of the period Per cent Match portfolio Free portfolio Industry Banks/ financial institutions Government/ public sector Fixed-income instruments The fixed-income instruments in the free portfolio amounted to NOK 13.6 billion (9.2). The increase in the portfolio was largely due to the fact that the proceeds from the sale of the Storebrand holding were reinvested in fixed-income instruments. The portfolio yielded a return of 1.2 per cent (1.1). Investment grade, convertible and high yield bonds yielded a good return in the period. The average duration of the portfolio was approximately 0.8 years at the end of the period. The distribution of counterparty risk and credit rating is shown in the charts on this and the next page. Securities without an official credit rating amounted to NOK 3.7 billion. Of these securities, 18.7 per cent were issued by Norwegian savings banks, while the remainder were mostly issued by Norwegian power producers and distributors, property companies or government-guaranteed companies. A third-party internal rating existed for 90.8 per cent of the portfolio without an official rating. The geographical distribution 1 of the fixed-income instruments in the free portfolio is shown in the chart above. period. Equity portfolio The total equity exposure at the end of the period was NOK 5.4 billion (8.0), of which NOK 3.7 billion (6.4) current equities and NOK 1.8 billion (1.5) PE funds. The return on current equities was 2.8 per cent (a negative return of 5.7). This includes the return on derivatives used for hedging purposes. From this quarter, the shareholding in SpareBank 1 SR-Bank is included in the current equity portfolio. The shareholding amounted to NOK 1,479.5 million. The holding is still recognised in accordance with the equity method, and Gjensidige s estimated share of SpareBank 1 SR-Bank s profit amounted to NOK 58.8 million, including the amortisation of excess values and estimate deviation from the previous period. The return on current equities also includes a gain of NOK million on the sale of the Storebrand holding. The return on the private equity portfolio was 5.1 per cent (6.6). Property portfolio At the end of the period, the property portfolio amounted to NOK 5.3 billion (5.2). The property portfolio yielded a return of 1.3 per cent (1.4). The return on directly owned properties was good, while the return on property funds was negative. The general required rate of return in connection with the valuation of the properties was 6.5 per cent (6.6). The individual valuations resulted in a net increase in value of NOK 6.3 million. No external valuations of the properties were carried out at the end of the period. The portfolio is concentrated in office properties in Oslo, but it also includes office properties in other Norwegian towns and cities. 1 The geographical distribution is related to issuers and does not reflect the actual currency exposure. Return per asset class NOK million Match portfolio Money market 0,7 0,3 1,9 Bonds at amortized cost 1,2 1,2 5,1 Current bonds 1 0,4 0,1 0,7 Match portfolio total 0,9 0,8 3,6 Free portfolio Money market 0,6 0,5 1,7 Other bonds 2 2,0 1,5 4,1 Convertible bonds 3 2,8 4,1 16,5 Current equities 4 2,8 (5,7) 8,2 PE funds 5,1 6,6 10,3 Property 1,3 1,4 5,7 Other 5 1,0 (1,3) (9,8) Free portfolio total 1,8 (0,5) 5,4 Return on financial assets 1,3 0,3 4,3 1 The item includes the discounting effects of insurance obligations in Denmark and mismatch between interest rate adjustments on the liability side in Denmark, versus the interest rate hedge. 2 The item consist of total investment grade, high yield and current bonds. Investment grade and high yield are investments in internationally diversified funds externally managed. 3 Investments in internationally diversified funds externally managed. 4 The item include the investment in SpareBank 1 SR-Bank and effect on profit of the sale of shares in Storebrand. 5 The item includes currency hedging of Gjensidige Sverige, Gjensidige Baltic and Gjensidige Danmark, and lendings, paid-in capital in Gjensidige Pensjonskasse, hedge funds and finance related expenses. Gjensidige Insurance Group 1st quarter

12 Credit rating fixed income instruments At the end of the period Per cent No official rating High yield Investment grade Match portfolio Free portfolio Organisation The Group had a total of 3,510 employees at the end of the first quarter, compared with 3,377 employees at the end of The number of employees broke down as follows: 2,057 (1,987) in general insurance operations in Norway, 135 (130) in Gjensidige Bank, 66 (61) in Gjensidige Pensjon og Sparing, 682 (695) in Denmark, 163 (104) in Sweden and 407 (400) in the Baltic States (excluding agents). (The figures in brackets refer to the number of employees at the end of 2013.) The increase in Sweden is related to the acquisition of the Solid portfolio. Events after the balance sheet date The Board s proposal of a dividend of NOK 6.4 billion for 2013 was approved by the general meeting on 24 April No other significant events have occurred after the end of the period. Outlook In October 2013, Gjensidige communicated a return on equity target after tax expense of 15 per cent with effect from Focus on capital discipline and work on optimisation of the balance sheet will continue through Gjensidige s profitability targets for its general insurance operations remain unchanged. Over time, the annual combined ratio shall be within the corridor Competition remains strong, and is in part increasing, in the Norwegian general insurance market, not least from established financial players that are increasingly focusing on general insurance. Gjensidige s competitiveness is regarded as good, with a solid growth in premiums and volume combined with good profitability. Work on maintaining and strengthening the customer base and the position in the Norwegian market continues unabated, while new, profitable opportunities in the Nordic region in general and in the Baltics states are continuously considered. The optimal utilisation of partnerships and distribution collaboration has high priority. The group-wide programmes for analytical pricing, customer and risk selection and the simplification of products and processes will continue. Continuous investments are being made in forwardlooking digital service solutions in order to meet customer needs. Considerable attention is being devoted to measures aimed at rationalising operations and thereby ensuring continued good competitiveness. High priority is given to continuous competence-raising measures in order to ensure that Gjensidige is an attractive place to work and that it has the right composition of expertise going forward. Uncertainty about the international economic situation, combined with financial challenges in several key economies, remains a source of uncertainty for Gjensidige as well. Gjensidige has a robust investment strategy, however. It is financially sound and has a high proportion of its business in the Norwegian general insurance market. The macroeconomic situation with respect to the Norwegian general insurance operations is still regarded as good. The Danish property market is improving, and the Baltic economies show positive development. There is still uncertainty relating to changed framework conditions for the financial sector in Norway and internationally. The Solvency II regulations are expected to be implemented in Norway in New Norwegian pension legislation entered into force on 1 January The Group has substantial capital buffers in relation to internal risk models, statutory capital adequacy requirements and its target rating. The Board considers the Group s capital situation and financial strength to be good. Oslo, 13 May 2014 The Board of Gjensidige Forsikring ASA Inge K. Hansen Gunnhild H. Andersen Trond Vegard Andersen Hans-Erik F. Andersson Per Arne Bjørge Chairman Kjetil Kristensen Gisele Marchand Gunnar Mjåtvedt Mari T. Skjærstad Mette Rostad Helge Leiro Baastad CEO 12 Gjensidige Insurance Group 1st quarter 2014

13 Consolidated income statement NOK million Notes Operating income Earned premiums from general insurance 4 4, , ,736.9 Earned premiums from pension Interest income etc. from banking operations ,135.0 Other income including eliminations Total operating income 3 5, , ,884.5 Net income from investments Results from investments in associates (477.6) Operating income from property Interest income and dividend etc. from financial assets ,495.6 Net changes in fair value on investments (incl. property) (282.2) ,006.0 Net realised gain and loss on investments (321.0) Expenses related to investments (45.2) (34.7) (166.7) Total net income from investments ,538.1 Total operating income and net income from investments 6, , ,422.6 Claims, loss etc. Claims incurred etc. from general insurance 5,6 (3,809.3) (3,414.4) (13,859.6) Claims incurred etc. from pension (246.3) (177.6) (779.7) Interest expenses etc. and write-downs and losses from banking operations (194.4) (141.2) (656.0) Total claims, interest expenses, loss etc. (4,249.9) (3,733.3) (15,295.3) Operating expenses Operating expenses from general insurance (748.9) (699.9) (2,857.8) Operating expenses from pension (46.9) (45.5) (182.0) Operating expenses from banking operations (85.7) (74.1) (341.3) Other operating expenses (3.0) (3.4) (10.4) Amortisation and impairment losses of excess value - intangible assets (36.5) (31.5) (161.7) Total operating expenses (921.0) (854.4) (3,553.2) Total expenses (5,170.9) (4,587.6) (18,848.5) Profit/(loss) for the period before tax expense 3 1, ,574.1 Tax expense (232.9) (224.0) (903.5) Profit/(loss) for the period ,670.6 Earnings per share, NOK (basic and diluted) Gjensidige Insurance Group 1st quarter

14 Consolidated statement of comprehensive income NOK million Profit/(loss) for the period ,670.6 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined benefit liability/asset (70.0) 19.6 Share of other comprehensive income from associates (46.1) Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss (97.2) Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations (38.7) Share of exchange differences from associates (142.4) (25.1) Exchange differences from hedging of foreign operations 33.9 (59.4) (376.0) Tax on items that may be reclassified to profit or loss (3.2) Total items that may be reclassified subsequently to profit or loss (150.4) Total components of other comprehensive income (247.6) Total comprehensive income for the period , Gjensidige Insurance Group 1st quarter 2014

15 Consolidated statement of financial position NOK million Notes Assets Goodwill 2, , ,562.2 Other intangible assets 1, , ,138.2 Deferred tax assets Investments in associates 1, , ,772.0 Owner-occupied property Plant and equipment Investment properties 8 4, , ,644.3 Pension assets Financial assets Financial derivatives Shares and similar interests 7 5, , ,023.4 Bonds and other securities with fixed income 7 25, , ,398.0 Bonds held to maturity 7 4, , ,211.3 Loans and receivables 7 43, , ,692.4 Assets in life insurance with investment options 10, , ,330.6 Reinsurance deposits Reinsurers' share of insurance-related liabilities in general insurance, gross 1, Receivables related to direct operations and reinsurance 6, , ,290.5 Other receivables 1, Prepaid expenses and earned, not received income Cash and cash equivalents 5, , ,729.4 Total assets 114, , ,946.3 Equity and liabilities Equity Share capital Share premium 1, , ,430.0 Other equity 24, , ,857.9 Total equity 26, , ,287.8 Provision for liabilities Premium reserve in life insurance 3, , ,064.6 Provision for unearned premiums, gross, in general insurance 11, , ,984.6 Claims provision, gross 9 32, , ,749.6 Other technical provisions Pension liabilities Other provisions Financial liabilities Financial derivatives Deposits from and liabilities to customers 7 15, , ,938.3 Interest-bearing liabilities 7 9, , ,771.6 Other liabilities Current tax , Deferred tax liabilities 1, , ,340.6 Liabilities related to direct insurance Liabilities in life insurance with investment options 10, , ,330.6 Accrued expenses and deferred income Total liabilities 87, , ,658.5 Total equity and liabilities 114, , ,946.3 Gjensidige Insurance Group 1st quarter

16 Consolidated statement of changes in equity NOK million Share capital Own shares Share premium Other paid-in capital Remeasurement of the Exchange net defined differences benefit liab./asset Other earned equity Total equity Equity as at ,000.0 (0.1) 1, (245.3) (1,323.7) 24, , Profit/(loss) for the period 3, ,670.6 Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset Share of other comprehensive income from associates Tax on items that are not reclassified to profit or loss (23.7) Total items that are not reclassified subsequently to profit or loss (4.1) Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations (0.4) Share of exchange differences from foreign operations Exchange differences from hedging of foreign operations (376.0) (376.0) Tax on items that may be reclassified to profit or loss Total items that may be reclassified subsequently to profit or loss (0.4) Total components of other comprehensive income (4.5) Total comprehensive income for the period (4.5) 3, ,093.7 Own shares 0.0 (5.3) (5.3) Paid dividend (3,424.5) (3,424.5) Equity-settled share-based payment transactions Equity as at ,000.0 (0.1) 1, (84.8) (1,328.2) 25, , Profit/(loss) for the period Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset (70.0) (70.0) Share of other comprehensive income of associates (46.1) (46.1) Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss (51.1) (46.1) (97.2) Exchange differences from foreign operations (38.7) (38.7) Share of exchange differences from associates (142.4) (142.4) Exchange differences from hedging of foreign operations Tax on items that may be reclassified to profit or loss (3.2) (3.2) Total items that may be reclassified subsequently to profit or loss (8.1) (142.4) (150.4) Total components of other comprehensive income (8.1) (51.1) (188.5) (247.6) Total comprehensive income for the period (8.1) (51.1) Own shares (0.0) (5.3) (5.3) Paid dividend Equity-settled share-based payment transactions Equity as at ,000.0 (0.1) 1, (92.9) (1,379.3) 25, , Gjensidige Insurance Group 1st quarter 2014

17 NOK million Share capital Own shares Share premium Other paid-in capital Exchange differences Remeasurement of the net defined benefit liab.asset Other earned equity Total equity Profit/(loss) for the period Components of other comprehensive income Items that are not reclassified subsequently to profit or loss Remeasurement of the net defined liability/asset Share of other comprehensive income of associates Tax on items that are not reclassified to profit or loss Total items that are not reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Exchange differences from foreign operations Share of exchange differences from associates (25.1) (25.1) Exchange differences from hedging of foreign operations (59.4) (59.4) Tax on items that may be reclassified to profit or loss Total items that may be reclassified subsequently to profit or loss 14.4 (8.4) 6.0 Total components of other comprehensive income Total comprehensive income for the period Own shares (0.0) (2.7) (2.7) Equity-settled share-based payment transactions Equity as at ,000.0 (0.2) 1, (230.9) (1,323.7) 25, ,037.4 Gjensidige Insurance Group 1st quarter

18 Consolidated statement of cash flows NOK million Cash flow from operating activities Premiums paid, net of reinsurance 6, , ,080.0 Claims paid, net of reinsurance (3,810.8) (3,274.1) (13,554.2) Net payment of loans to customers (357.7) (913.7) (6,869.7) Net payment of deposits from customers (93.4) 3,357.8 Payment of interest from customers ,073.0 Payment of interest to customers (4.9) (3.8) (369.3) Net receipts/payments on premium reserve transfers (128.2) (117.4) (472.4) Net receipts/payments from financial assets (2,443.0) (2,146.1) (2,534.1) Net receipts/payments from properties Net receipt/payments on sale/aquisition of investment property (245.7) (308.8) (135.7) Operating expenses paid, including commissions (916.5) (871.1) (3,639.2) Taxes paid (704.8) (501.2) (1,338.5) Net other receipts/payments Net cash flow from operating activities (625.4) (773.3) (1,127.7) Cash flow from investing activities Net receipts/payments from sale/aquisition of subsidiaries and associates 3, Net receipts/payments on sale/aquisition of owner-occupied property, plant and equipment (48.3) (10.6) (24.7) Dividends from investments in associates Net cash flow from investing activities 3,182.1 (8.7) Cash flow from financing activities Payment of dividend (3,424.5) Net receipts/payments on loans to credit institutions (1.1) ,433.5 Net receipts/payments on other short-term liabilities (3.2) (7.0) (13.5) Net receipts/payments on interest on funding activities (36.0) (30.2) (153.1) Net receipts/payments on sale/acquisition of own shares (5.3) (5.3) Net cash flow from financing activities (45.5) Effect of exchange rate changes on cash and cash equivalents (1.8) Net cash flow for the period 2,509.4 (187.7) Cash and cash equivalents at the start of the period 2, , ,331.5 Cash and cash equivalents at the end of the period 5, , ,729.4 Net cash flow for the period 2,509.4 (187.7) Specification of cash and cash equivalents Deposits with central banks Cash and deposits with credit institutions 4, , ,853.9 Total cash and cash equivalents 5, , , Gjensidige Insurance Group 1st quarter 2014

19 Notes 1. Accounting policies The consolidated financial statements as of the first quarter of 2014, concluded on 31 March 2014, comprise Gjensidige Forsikring and its subsidiaries (collectively referred to as the Group) and the Group s holdings in associated companies. The accounting policies applied in the interim report is the same as those used in the annual report for The consolidated financial statements as of the first quarter of 2014 have been prepared in accordance with IFRS and IAS 34 Interim Financial Reporting. The interim report does not include all the in formation required in complete annual report and should be read in conjunction with the annual report for The following International Financial Reporting Standards (IFRS) and interpretation statements published up until 13 May 2014 have been implemented: IFRS 10 Consolidated Financial Statements (2011) have entailed that Gjensidige has changed its accounting principle to determine if it has control over, and therefore will consolidate other entities, based on a new model of control. The change has not had effect on Gjensidige's financial statements. Based on our preliminary assessments and on the basis of Gjensidige s current operations, other amendments to standards and interpretation statements will not have a material effect. The preparation of interim accounts involves the application of assessments, estimates and assumptions that affect the use of accounting policies and recognised amounts for assets and liabilities, revenues and expenses. The actual results may deviate from these estimates. The most material assessments involved in applying the Group s accounting policies and the most important sources of uncertainty in the estimates are the same in connection with preparing the interim report as in the annual report for Comparable figures are based on IFRS. All amounts are shown in NOK million unless otherwise indicated. Due to rounding-off differences, figures and percentages may not exactly add up to the exact total figures. A complete or limited review of the interim report has not been carried out. 2. Seasonal variations For some insurance products, seasonal premiums are used. This is because the incidence of claims is not evenly distributed throughout the year, but follows a stable seasonal pattern. Normally, premium income (earned premiums) is accrued evenly over the period of insurance, but for products with a seasonal pattern, premium income must also be allocated according to the incidence of claims. Gjensidige Forsikring has a seasonal premium for the following products: pleasure craft, snowmobiles and motorcycles. For example for motorcycles, earned premiums for the period from April to September amount to a full 85 per cent of the annual premiums. Another consequence of a seasonal premium is that if the customer cancels the insurance contract before the renewal date, only the portion of the seasonal premium is refunded for which the Company did not bear any risk. For motorcycle insurance taken out on 1 April, but cancelled on 1 October, the policyholder will only be refunded 15 per cent of the annual premium, even though the insurance was in effect only for six months. Gjensidige Insurance Group 1st quarter