Gjensidige (GJF) Q3 2021 (Q&A) earnings summary

Executive summary

• Record Q3 underwriting result reflected premium growth, effective pricing, risk selection and cost control; pre-tax profit was NOK 2,022m.

• Pricing and retention were strongest in Norway; Sweden and the Baltics remained margin-improvement priorities, alongside expansion of customer relationships outside Norway.

Financial highlights

• Q3 pre-tax profit was NOK 2,022.0m versus NOK 2,048m YoY; underwriting result rose to NOK 1,804.0m from NOK 1,512.3m.

• Earned premiums rose 8.2% YoY to NOK 7,516.1m; local-currency growth was 9.1%.

• Net profit was NOK 1,495.1m versus NOK 1,550.6m; EPS was NOK 2.99 versus NOK 3.10.

• Financial result was NOK 207m, a 0.3% return, versus NOK 551m in Q3 2020; amortised-cost running yield was 3.3% and reinvestment rate 2.5%.

• NEM Forsikring contributed no premiums to Q3 P&L; annual premium volume was ~DKK 190m, with Q4 expected to include close to a full quarter after the October closing.

Outlook and guidance

• Targets through 2022: undiscounted combined ratio 86–89%, or 90–93% with zero run-off gains; cost ratio below 15%, after-tax ROE above 20%, and solvency margin 150–200%.

• Average annual run-off gains of ~NOK 1bn expected through 2022; the combined-ratio target assumes NOK 1bn annual run-off gains.

• Organic growth expected to track nominal GDP over time, with higher near-term growth; profitability prioritized, with pricing used to address claims inflation.

• 2022 underwriting-result target outside Norway was NOK 750m excluding run-off; dividend policy targets nominally high and stable payouts, with more than 80% over time.

• Norway commercial pricing ambition remained above expected claims inflation for the Jan. 1 renewal, covering 4% of the portfolio; private property pricing was also above inflation, while motor pricing was closer to inflation.