CAPÍTULO II: PLAN ESPECIAL
II. 8.2 Mejoras del hábitat cinegético
Gisele Marchand (1958) has been a member of the Board of Gjensidige since 2010.
She is President and CEO of Eksport- finans ASA, a board member and chair of the audit committee of Selvaag Bolig ASA and a board member of Eiendoms- spar AS, Victoria Eiendom AS and the Norwegian Refugee Council. Marchand has previously been CEO of the Norwegian Public Service Pension Fund, managing director of the Bates Group and has held various mana- gement positions with Den norske Bank. She is a graduate of Copenhagen Business School.
Marchand is up for election to the Board in 2014.
As of 31 December 2013, Marchand held 1,481 shares in Gjensidige Forsikring ASA, including any shares held by closely related parties.
Profit performance
The underwriting result amounted to NOK 35.7 million (18.9). The combined ratio was 93.0 (95.7). The improvement in profit performance is largely due to a positive development in earned premiums. Earned premiums amounted to NOK 510.8 million (436.9). Of the increase NOK 17.5 million was due to changes in the exchange rate. Earned premiums in accident and health and motor insurance deve- loped particularly well.
Claims incurred amounted to NOK 342.5 million (292.6). Of the increase NOK 11.7 million was due to changes in the exchange rate. The loss ratio was 67.1 (67.0). Run-off gains were more than halved compared with the year before.
The nominal operating expenses amounted to NOK 132.5 million (125.4). Of the increase NOK 5.0 million was due to changes in the exchange rate. The cost ratio was 25.9 (28.7).
Outlook and priorities
Gjensidige’s goal is to be one of the leading insur- ance companies in the Baltic states. The market is relatively immature, and a significant proportion of both the private and the commercial segments is still uninsured. Sound growth is expected in step with an improvement in the general economic situation and an increase in the standard of living. Work on rationalising and streamlining distribution and more efficient processing of claims will continue in 2014.
General Insurance Baltics
NOK million 2013 2012
Earned premiums 510.8 436.9
Claims incurred etc. (342.5) (292.6)
Operating expenses (132.5) (125.4)
Underwriting result 35.7 18.9
Amortisation and impairment losses of excess value –
intangible assets (4.8) (4.7) Large losses 1 3.7 6.1 Run-off gains/(losses) 2 10.0 20.4 Loss ratio 3 67.1% 67.0% Cost ratio 4 25.9% 28.7% Combined ratio 5 93.0% 95.7%
1 Large losses = loss event in excess of NOK 10.0 million.
Claims incurred in excess of Euro 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
Pension and Savings
Pension and Savings is a growth area for Gjensidige in Norway. The segment offers various pension and savings products, mainly to the commercial market. The pension products include defined contribution plans in the field of group occupa- tional pensions, individual pensions, individual dis- ability pensions and the management of paid-up policies and pension capital certificates. Gjensidige Investeringsrådgivning is an independent fund pro- vider that offers saving and investment solutions to the private and commercial markets.
The increase in profit in 2013 was very satis- factory despite provisions being made for higher life expectancy and disability. 85 per cent of the customers were also general insurance customers.
Profit performance
The profit before tax expense was NOK 49.9 million (18.3). The positive development was due to an increase in revenues as a result of growth in the customer portfolio combined with a positive mar- ket development. At the start of 2013, Gjensidige Pensjonsforsikring took over two external defined con- tribution portfolios, which led to an increase in assets under management of more than NOK 800 million. Net insurance revenue in the period increased to NOK 124.4 million (105.8) as a result of higher ad- ministration costs due to growth in the portfolios. The management income increased to NOK 82.2 million (65.0) as a result of growth in the pension and
savings portfolio and positive market development. Operating expenses amounted to NOK 182.0 million (170.4). The increase in expenses was mainly due to higher distribution costs.
Financial income amounted to NOK 25.3 million (18.0). This includes the return on the group policy portfolio and corporate portfolio. The reason for the growth was a higher return on the corporate port- folio as a result of reinvestments and growth in the rest of the group policy portfolio. The company’s share of the financial profit on the paid-up policy portfolio was allocated in its entirety as a provision for higher life expectancy.
At the end of the period, the assets under manage- ment in the pension operations amounted to NOK 13,953.8 million (10,408.8). The group policy port- folio accounted for NOK 3,553.2 million (3,163.8) of this amount.
The recognised return on the paid-up policy port- folio was 4.57 per cent (4.76) in the period. The average annual interest guarantee is 3.6 per cent Assets under management for the savings opera- tions amounted to NOK 11,896.4 million (10,070.0) at the end of 2013.
The total assets under management increased by NOK 5,371.3 million (2,731.2), amounting to NOK 25,850.2 million (20,478.9) at the end of 2013.
Pension and savings
NOK million 2013 2012
Earned premiums 904.0 680.7
Claims incurred etc. (779.7) (574.9)
Net insurance revenue 124.4 105.8
Management income etc. 82.2 65.0
Operating expenses (182.0) (170.4)
Net operating income 24.6 0.3
Net financial income 25.3 18.0
Profit/(loss) before tax expense 49.9 18.3
Run-off gains/(losses) 1 (15.7)
Operating margin 2 11.89% 0.19%
Recognised return on the paid-up policy portfolio 3 4.57% 4.76%
Value-adjusted return on the paid-up policy portfolio 4 4.67% 4.77% 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
Outlook and priorities
Pension and Savings is a growth area that helps to make Gjensidige a complete supplier of insurance and pension products. The area contributes to stronger customer relations and loyalty among our general insurance customers.
Increased maximum rates in the Act relating to Defined Contribution Pensions, combined with the absence of transitional rules relating to the new act on group occupational pensions, are expected to lead to a higher rate of conversion from defined benefit to defined contribution pension plans. This will increase the market for occupational pensions in which the company has specialised.
Retail Bank
Gjensidige Bank’s business is geared towards the private market in Norway. The bank offers a full range of day-to-day banking services, mortgages, savings products and car and consumer financing. The growth in lendings was very good throughout 2013, driven by competitive lending terms, espec- ially in the second and third quarters. The bank launched a new product for car financing through car dealers in 2013. At year end, 45 per cent of the bank’s customers were also general insurance customers.
Profit performance
Profit before tax expense was NOK 191.0 million (113.0). The positive development was primarily due to an increase in net interest income as a
result of volume growth. Efficient operations and somewhat lower write-downs and losses also con- tributed to the positive development.
Net interest income amounted to NOK 546.1 million (442.9), primarily driven by lending growth. Net commission income and other income amounted to NOK 53.3 million (44.8). Customer-related commis- sion income and the gains from the previously written-off loans in the unsecured lending port- folio contributed to an increase in net commission income and other income that was partly offset by a reduction in income from financial instruments. The net interest margin was 2.42 per cent (2.52). The reduction was due to significant increase in the proportion of secured loans in the portfolio in 2013, partly offset by lower financing costs.
Operating expenses amounted to NOK 341.3 million (306.4). The increase in expenses was pri- marily driven by volume growth and costs relating to the newly launched car financing product. The cost/income ratio was 56.9 per cent (62.8). The reduction in the cost/income ratio was due to both increased revenues and more efficient operations. The bank expensed NOK 67.1 million (68.4) in write-downs and losses, primarily related to the unsecured lending portfolio. Annualised write- downs and losses as a percentage of average gross lending amounted to 0.32 per cent (0.43). The improvement was due to an increase in payments from customers on previously written-off loans,
Retail Bank
NOK million 2013 2012
Interest income and related income 1,135.0 949.7 Interest expenses and related expenses (588.9) (506.7)
Net interest income 546.1 442.9
Net commission income and other income 53.3 44.8
Total income 599.5 487.7
Operating expenses (341.3) (306.4)
Write-downs and losses (67.1) (68.4)
Profit/(loss) before tax expense 191.0 113.0
Net interest margin, annualised 1 2.42% 2.52%
Write-downs and losses, annualised 2 0.32% 0.43%
Cost/income ratio 3 56.9% 62.8%
Capital adequacy 4 14.6% 13.6%
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
combined with a higher proportion of loans secured by a residential mortgage. The weighted average loan to value was estimated to be 64.4 per cent for the mortgage portfolio.
Gross lendings increased by 39.7 per cent and amounted to NOK 24,193.9 million (17,324.3) at the end of the year. The bank experienced particu- larly good growth in lendings in the second and third quarters. Deposits increased by 29.0 per cent and amounted to NOK 14,938.3 million (11,580.5) at the end of the year. The deposit-to-loan ratio was 61.7 per cent (66.8). Access to external financing is good. At the beginning of July 2013, Standard & Poor’s upgraded Gjensidige Bank’s rating from BBB+ to A-, with a ‘negative’ outlook. The upgrade was based on a new assessment of the parent company’s support for the bank. The covered bonds issued by Gjensidige Bank Boligkreditt have an AAA rating. As a result of growth and new capital requirements from 1 July, the bank received a total of NOK 341.0 million in new equity from the parent company during 2013.
Outlook and priorities
Gjensidige Bank shall support the Norwegian general insurance operations by helping to provide a wider range of products to existing general insur- ance customers in Norway. The bank will continue to develop customer-friendly online banking services and to increase the range of products offered through Gjensidige’s distribution system. Based on a full range of banking products and attractive terms for the private market, the bank shall contribute to the Group’s growth and profitability.
The improved rating of the bonds issued by Gjensidige Bank Boligkreditt AS is also expected to have a positive effect on margins in the longer term. The bank will continue its work to ensure efficient operations and lower losses on loans.
Management of financial assets and properties
The Group’s investment portfolio includes all invest- ment funds in the Group except for invest ment funds in the Pension and Savings and Retail Bank segments. A large part of the management is outsourced to external managers, while the Group’s investment function concentrates on asset alloca- tion, risk management and the selection of man- agers. 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 associa- ted 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 match the disbursement of the actuarial provisions. The free portfolio consists of various assets. The allocation of assets in this port- folio must be seen in connection with the Group’s capitalisation and pertaining risk capacity, as well as the Group’s ongoing risk management. Associated companies mainly comprised the holdings in Storebrand and SpareBank 1 SR-Bank. At the end of 2013, the investment portfolio to- talled NOK 58,148.2 million (56,296.0). The finan- cial result was NOK 2,480.9 million (3,005.1), which corresponds to a return on financial assets of 4.3 per cent (5.4). The contribution from current equities was significantly higher than in 2012, while the con- tribution from other bonds was considerably lower as a result of higher interest rates. The return was also affected by the impairment loss recognised on the investment in Storebrand in the first quarter.
Match portfolio
The match portfolio amounted to NOK 33.2 billion (33.5). The portfolio yielded a return of 3.6 per cent (3.9) 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 1,032.5 million (1,046.8) at year end.
The average duration of the match portfolio was 3.5 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 page 63. Of the securi- ties without an official credit rating, 22.1 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. Bonds with a coupon that is adjusted on the basis of the Norwegian consumer price index accounted for 13.0 per cent of the match portfolio.
The geographical distribution 1 of the match port-
folio is shown in the chart on page 63. At the end of the year, there were no direct bond investments in the PIIGS countries.
Free portfolio
The free portfolio amounted to NOK 20.1 billion (17.7) at the end of 2013. The return was 5.8 per cent (7.0).
Fixed-income instruments
The fixed-income instruments in the free portfolio amounted to NOK 9.6 billion (9.1) and yielded a re- turn of 4.0 per cent (6.9). Investment grade bonds and money market instruments in particular yielded a poorer return as a result of higher interest rates, while high yield and convertible bonds yielded a good return in 2013 as well.
The average duration in the portfolio was approxi- mately 1.9 years at the end of the year. The dis- tribution of counterparty risk and credit rating is shown in the charts on page 63. Of the securities without an official rating, 9.7 per cent were issued by Norwegian savings banks, while the remainder were mostly issued by Norwegian power producers and distributors, property companies or govern- ment-guaranteed companies.
The geographical distribution1 of the fixed-income
instruments in the free portfolio is shown in the chart on page 63. Bond investments through funds in the PIIGS countries amounted to NOK 347.1 million at the end of the period.
Equity portfolio
The total equity exposure at the end of the year (including private equity, but excluding associated companies) was NOK 3.9 billion (2.9). The return on current equities was 18.6 per cent (8.5). This includes the return on derivatives used for hedging purposes. The return on private equity was 10.3 per cent (16.7).
Property portfolio
At the end of 2013, the property portfolio amounted to NOK 5.1 billion (4.9). The property portfolio yielded a return of 5.7 per cent (5.0). The return on directly owned properties was good, while the return on property funds was negative. The ge- neral 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 81.5 million. External valua tions of more than 90 per cent of the properties were carried out at the end of 2013. The portfolio is concentrated in office properties in Oslo, but it also includes office properties in other Norwegian cities and one office building in Copenhagen.
Associated companies
Associated companies amounted to NOK 4.8 billion (5.0) at the end of the year. The shareholding in Storebrand was recognised in the amount of NOK 3,306.3 million. The corresponding figure for the investment in SpareBank 1 SR-Bank was NOK 1,423.0 million. The return on associa- ted companies was 4.0 per cent (9.3), which corresponds to NOK 192.7 million (441.5). An impairment loss on the investment in Storebrand was recognised in the amount of NOK 611.0 million in the first quarter. Further the return included a gain of NOK 35.3 million on the subsequent sale of shares in Storebrand. Gjensidige’s estimated share of Storebrand’s profit/loss for the year amounted to a loss of NOK 22.1 million, including the amor- tisation of excess value. Gjensidige’s estimated share of SpareBank 1 SR-Bank’s profit/loss for the year amounted to NOK 179.0 million, including the amortisation of excess value.