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Helge Leiro Baastad: Back on a winning track

After several years of record-breaking results, we must conclude that 2018 was a year marked by an abnormally high number of weather-related claims. The total profit amounted nonetheless to a healthy NOK 3.7 billion.

The year


The poorer profit performance was in part due to circumstances beyond our control, including a harsh winter, an unusually dry summer and several flood events. Fluctuations like this are part and parcel of the general insurance business. However, we cannot ascribe the weaker result in 2018 to weather conditions alone. Profitability was also challenged by changes in the market. We have conducted a thorough analysis of the reasons for this development and we have identified targeted measures to get us back on a winning track.

We implement measures throughout the Group, but the focus of the measures varies from market to market, since the drivers and needs differ. In Norway, the primary focus is on adjusting the prices of pro- ducts where we have not kept up with claims infla- tion, as well as implementing certain cost-efficiency measures. Profitability has been weaker over time outside Norway. The measures in place to increase efficiency and profitability have had a positive effect, and they will continue unabated into 2019.

We have implemented measures that will better enable us to update tariffs much more quickly than before, so that we can react more quickly to changes in market terms and thus ensure good profitability. We are also in the process of upgrading our IT platform outside Norway, which will enable us to achieve considerable rationalisation benefits over time.

Sale of Gjensidige Bank

In summer 2018, we agreed to sell Gjensidige Bank to Nordea, and to enter into a cooperation agreement on distribution in the Norwegian market. Gjensidige Bank has experienced strong development, With solid volume growth and increasing profitability. The development in the financial sector however indicates that we can serve our customers better through a cooperation than through a self-owned bank. There is a lot of enthusiasm about this cooperation both in Gjensidige and in Nordea, and I am confident that this will improve our position in Norway.

Attractive customer dividend

Cooperation with our biggest owner, the Gjensidige Foundation, was also good in 2018. The Foundation distributes its ordinary share dividend in full to Norwegian general insurance customers, who received dividend totalling NOK 2.2 billion in 2018. Since the Company was listed in 2010, our customers have received NOK 15 billion in dividend. We are the only insurance company in Norway to pay a customer dividend. A number of savings banks have started paying a customer dividend in recent years, based on the model we use, and we regard this as confirmation that this arrangement is successful and attractive.

Clarification of our corporate social responsibility

Sustainability and corporate social responsibility have been important to our business right back to when the first Gjensidige companies were founded more than 200 years ago. The UN Global Compact Principles, which we have endorsed, form the basis for our current sustainability work. Sustainability is a precondition for long-term value creation and is integral to our strategy.

The Board has highlighted four UN Sustainable Development Goals that we shall particularly endeavour to support: Good health; Decent work and economic growth; Sustainable cities and communities; and Climate action. In 2018, we launched a process to identify concrete measures and goals that will further refine our sustainability work. As a leading insurance company, we will endeavour to reduce carbon intensity by means of loss prevention work and more environmentally friendly claims settlement processes. You can read more about this on page 22–49 of this annual report.

Best today, best in the future

The general insurance business model has remained surprisingly stable for centuries. We are now experiencing leaps and bounds in technology, regulatory changes and changed customer behaviour, which indicate that the business model may undergo material changes over the next ten to twenty years. Those who have not heard about disruption – new business models that completely undermine traditional methods – must have been in hibernation. In other sectors, we have seen large,
established companies being swept away in a short space of time, because they were unable to adapt to the new competitive situation. We are determined to retain a leading role in the changes taking place now, and those we see taking form. We have established an internal think tank to work on developing new business models that can address threats and opportunities. We will not hesitate to ‘disrupt’ our own business models when this is expedient.

In the short term however, our priority is to get the most out of our existing business. Good profitability is a vital condition for ensuring we have the momentum and determination we need to set the agenda, and to be an active driver of development. Our point of departure is very strong. We have particularly satisfied customers and high customer loyalty, in Norway especially, where we have the strongest reputation in the financial sector and one of the strongest regardless of sector. We have the broadest and most refined insurance expertise, and our employees are more engaged than the average for our sector in the Nordic countries.

Going forward, we will work on measures to further strengthen customer satisfaction and loyalty and to attract new customers. Self-service solutions that require digitalisation, standardisation and automation will have high priority, since we see that customers increasingly request such solutions. We already have world-leading solutions in a number of areas, not least with respect to digital registration and automated claims processing.

In the years to come, we will increasingly see the effect of these initiatives, in the form of greater efficiency, reduced expenses and even more satisfied customers.

Structure and capital

We are subject to increasingly complex regulation and stricter requirements to comply with official regulations. Combined with more capital-intensive technology needs, we believe that this will lead to further consolidation in our industry. As a well-capitalised and profitable company, we are well positioned to take part in this development.

The sale of Gjensidige Bank will free up capital in the first quarter of 2019. We will take the time we need to investigate possible acquisition or merger options before any excess capital goes back to our owners.

Our attractive dividend policy remains unchanged. We will deliver high and stable nominal dividend on a regular basis, of at least 80 per cent1 of our current profit after tax over time.

Our ambition for the future is unchanged, strong and clear. We shall be the most customer-oriented company in the Nordic general insurance industry.

Three key strategic priorities have been and remain the basis for our business. We aim to deliver the best digital customer experiences in the Nordic countries and the Baltic states, we will make use of data, technology and knowledge in increasingly sophisticated ways, and we will actively work on management and employee development.

Our customers, be they private or commercial, shall find that we are relevant in their day-to-day lives, and we shall ensure that they are well prepared if something should happen. We will be there to help them if disaster strikes or an accident happens.

We shall know the customer best, and care the most – also in 2019.

1)Assuming sale of Gjensidige Bank