Annual report
2013
We aim to make insurance easier and
provide the best customer experience!
Key figures
Contents
Company history
We have reached several milestones in the past year, with the establishment of new branches in Porsgrunn, Sundsvall and Copenhagen and the acquisition of Saga Forsikring AS. Saga is a well- known provider of insurance solutions to the agent and broker market and has a portfolio of NOK 186 million. The acquisition will significantly strengthen the group’s portfolio,
boost its expertise and improve distribution capabilities. The planned establishment of
Danish operations was carried out by establishing Vardia Forsikringsagentur
A/S in Copenhagen, and opened for new business on 12 February 2014. Our business philosophy is that the company shall be an independent company listed on the stock exchange, providing insurance solutions to the most attractive segments of the private and commercial markets. Our main focus is proactive sales via our internal insurance advisers. We also sell through other channels such as the Internet, as well as through agents, brokers and aggregators. Vardia has an infrastructure that allows us to quickly offer unique and flexible customer concepts.
As regards distribution capacity, we are in a unique position in the Scandinavian insurance market. Vardia is able to dedicate its own sales and service teams to partners, enabling it to build a significant insurance portfolio and ensuring customer satisfaction. Vardia aims to make insurance easier and provide the best customer experience. Our skilled employees are helping us achieve this goal.
In 2013, Vardia had very good access to business. The results still reflect that the group is in an establishment phase and is experiencing strong
growth. Growth will continue to be prioritised and Vardia aims to reach about NOK 3 billion in gross revenue by the end of 2016. This will be achieved primarily through organic growth. New sales in 2013 exceeded NOK 60 million per month and will increase further in 2014. Gross premiums written in 2013 showed an increase of 330% to reach NOK 572 million. Vardia will also be active in consolidating the Nordic insurance market. In practice, this means that we are always looking for portfolios or companies that are attractive for us to develop.
Our goal is to have the most satisfied customers in the industry. We aim to have comprehensive customer relationships and seek to ensure that our customers thrive as a result of our constant availability and our ability to provide them with professional advice. This will be accomplished by having the most motivated and competent employees in the industry.
We will continue to work to ensure that Vardia is an attractive workplace where talented people want to work. We will create results for our shareholders through a positive performance in share value. Vardia plans to be listed on Oslo Stock Exchange in the spring 2014. The group will be in an intense growth phase over the next few years, and market activities will be increased further in 2014. The platform that was created in 2013 and the stock exchange listing will give us a good basis for further profitable and sustainable expansion.
Vardia is here to stay and its strategic direction has been mapped out. The market outlook is promising and there is demand for our services in our core market. This puts a focus on the importance of strengthening our identity, making insurance easier and ensuring the best customer experience.
2013 was the first year we were fully operational since our establishment in 2009. This year also proved that our distribution concept works in the market.
80 59 66 68 62 60 34 51 57 66 63 62 80 83 0 10 2030 40 50 6070 80 90
Feb. 13 Apr. 13 June 13 Aug. 13 Oct. 13 Dec. 13 Feb. 14
NOK million
Norway Sweden
New sales Vardia
In NOK thousands 31.12.2013 31.12.2012
Gross revenue 717 776 345 100
Agent business and sold policies for next year -146 047 -171 896
Gross premiums written 571 729 173 204
Gross premiums earned 393 734 63 876
Premiums earned f.o.a. 98 058 14 866
Gross incurred claims -340 707 -55 859
Incurred claims f.o.a. -91 742 -16 137
Net commission income 53 822 9 089
Administration costs -121 613 -74 694
Other income/expenses 1 955 20 157
Net financial income 404 77
Operating result -59 116 -46 642
Changes in security reserves etc. -10 893 -3 034
Profit/Loss before tax -70 009 -49 676
Profit/Loss for the year (after tax) -49 963 -36 222
Gross loss ratio 86,5 87,4
Gross cost ratio 31,9 116,9
Goss combined ratio 118,4 204,4
Loss ratio f.o.a. 93,6 108,5
Cost ratio f.o.a. 69,1 441,3
Combined ratio f.o.a. 162,7 549,9
Solvency capital 265 793 105 351
Capital adequacy 28% 36%
Solvency margin 156% 117%
Profit/Loss after tax per share -0,69 -0,71
Profit/Loss after tax per share diluted -0,67 -0,68
2009
2010
2011
2012
2013
July Scandinavian Insurance Group AS (SIG) is established by Børge Leknes, Rune Arneberg and Pål Lauvrak.
Aug. Acquisition of infrastructure of 1881 AS at Sortland, and employment of a staff of 50.
April Ole Erik Alnæs, Sigmund Romskoug and Ivar S. Williksen join as partners.
Sept. Vardia Försäkring AB is established in Stockholm. SIG has a 58% stake.
Dec. Receipt of a licence from the Financial Supervisory Authority of Norway to sell insurance.
April NOK 55 million increase in share capital and receipt of final approval for an insurance licence from the Financial Supervisory Authority of Norway.
Sept. SIG acquires the outstanding shares in Vardia Försäkring AB and now owns 100%.
Dec. NOK 21 million increase in share capital.
April Vardia Försäkring AB is awarded “Insurance Company of the Year” in Sweden for 2012.
Aug. The agreement with Unison expires and SIG begins to write insurance for own account. Nov. Vardia Agencies AS is established and Lloyds Aquaculture Binder is transferred from Vardia Forsikring AS.
Dec. Share capital is increased by NOK 83.5 million kroner in 2012.
Jan. A strategic agreement is signed for the Nordic region with the Mekonomen Group.
March Share capital is increased by NOK 70 million.
June Vardia is established in Denmark. Sept. Share capital is increased by NOK 76 million.
Nov. Scandinavian Insurance Group AS changes its name to Vardia Insurance Group ASA (Vardia ASA). Dec. Acquisition of 100% of Saga Forsikring AS.
Jan. 2014 Acquisition of 100% of Rein Forsikring AS.
Ivar S. Williksen
President & Chief Executive Officer, Vardia Insurance Group ASA
Photo: Kjell Karlsson
2 Words from the CEO 2 Corporate history 3 Key figures 4 Vardia – Scandinavia 6 Vardia – Norway 8 Vardia – Sweden 10 Vardia – Denmark
12 Board of Directors’ report 2013 16 Income statement
17 Balance sheet 18 Equity statement
19 Statement of changes in equity 20 Cash flow statement
21 Report of the Control Committee 22 Auditor’s report
5
4 VARDIA Annual report 2013
We are a company with a high degree of expertise in the insurance industry and with human capital that is unique and very determined. As a future independent company listed on the Oslo Stock Exchange, we will continue to develop and provide insurance solutions to the most attractive segments of the private and corporate markets. Vardia ASA shall at all times maintain an infrastructure that enables it to offer unique and flexible customer concepts without any delay. Our main focus is proactive sales through our customer centeres and through channels such as agents, brokers and aggregators.
As a challenger in the insurance market, Vardia has a clear market strategy with a registered trademark in Norway, Sweden and Denmark. The Vardia brand is strategically positioned in the market and differentiated from the competition. Through conscious brand building we build a distinct identity in the insurance market on a daily basis so that our existing and new customers associate us with quality and simplicity.
Our customers should be the most satisfied customers in the industry and they shall understand that it is easy to select and have Vardia as its overall insurance provider.
Our customers should be the most satisfied customers in the
industry
Vardia ASA is an insurance company that was established in Norway in 2009 with Scandinavia as its home market. We are a contender and aim to be active in the consolidation of the Nordic insurance market.
We aim to be active in the consolidation
of the Nordic insurance market
Vardia’s management
At the back from the left: Ivar Pedersen, CFO Vardia ASA; Rune Arneberg, COO Vardia ASA, Ivar S. Williksen, President & CEO Vardia ASA; Sigmund Romskoug, Managing Director Vardia Agencies; Aleksander H. Nordahl, Communication Director Vardia ASA.
At the front from the left:
Pål Lauvrak, Marketing Director Vardia ASA; Børge Leknes, Managing Director Vardia Norway; Carsten Müller, Managing Director Vardia Denmark; Andreas Önstorp, Managing Director Vardia Sweden.
Photo: Kjell Karlsson
Skellefteå Stockholm Sundsvall Sortland Molde Hamar Porsgrunn Oslo Copenhagen Luleå
Our employees are our strongest competitive advantage. Our terms and conditions can be copied, but no one can copy the Vardia team and its culture. At year-end, Vardia Norway employed a total of 216 employees. It also had a further 170 people working for Vardia as insurance advisers via direct and indirect contracts with 38 insurance agencies. At the end of 2014, we will have nearly 250 employees as well as over 250 people working through agents and brokers.
In 2013, total revenue in Norway amounted to NOK 334 million. The Vardia team ensured that Vardia has a output speed at year-end of about NOK 40 million per month in new sales. This, in addition to more than 85% renewals, secures the planned development of the portfolio. The split between private and corporate customers is 80% and 20% respectively.
To strengthen Vardia’s position in the Norwegian insurance market, the insurance supplier Saga Forsikring AS (Saga) was purchased by Vardia in December. Saga, which was established in 1998, is a well-run company with 19 employees and offices at Lysaker, just outside Oslo. The company and its employees have quickly become a key part of Vardia. Saga’s experienced employees,
mature portfolio and its business areas complement Vardia’s operations, especially within distribution through insurance brokers and agents.
In 2013, several new major partnership agreements were established with well-known brands such as Komplett, Fjordkraft and Verdibanken. Through our own in-house web team, Vardia will assume a leading position in the digital development of the insurance market. We are and shall be increasingly available to our customers on chat, e-mail and telephone.
We see from the loyalty of our customers and profitability in the industry that “the big four” have been allowed to operate a little too long without any real competition - Vardia is ready to contest their position. Vardia Norway will continue to be a fresh alternative to the four big established companies, so it is up to our customers to judge if we deliver as expected. Børge Leknes
Managing Director, Vardia Norway
Through 2013, Vardia Norway has established a significant distribution capacity which ensures growth targets and makes it possible to handle the rapidly growing portfolio. In addition, new partnership agreements were put in place and a strategic acquisition ensured that 2013 was a very good year.
Photo: M
ette Larsen
Vardia Norway strengthens its position
in the Norwegian insurance market
New and more extensive partnership agreements established with
recognised brands
Charlotte Holm
9
8 VARDIA Annual report 2013 9
The Swedish head office is located in central Stockholm; other offices are located in Luleå, Skellefteå and Sundsvall. The total number of employees at the end of 2013 was about 180 people, which is some 40 more than at the beginning of the year. The increase in 2013 is primarily due to the establishment of a new sales office in Sundsvall. In 2012, Vardia was appointed Insurance Company of the Year in Sweden, an award that we have also been able to use to our benefit in 2013. Total sales for Vardia in 2013 amounted to SEK 389.3 million, an increase of 72 per cent compared with 2012. At year- end, Vardia had a market share of 1.4 per cent in the private car segment, which is an increase of 0.8% points from the preceding year. Vardia is, by far, the fastest growing company in this segment of the Swedish market.
In spring, we launched our new optimised web platform. This web platform has made a positive contribution to sales, and in 2013 we had over 200,000 unique hits on our website, with more than 70,000 starting to look for a price estimate.
The development of our insurance products has been intense in 2013. We have launched some twenty new products of which
Combined Company Insurance (KOFF) is the most comprehensive. On the private side, additions included pleasure boat insurance and health insurance. Health insurance is a rapidly growing market in Sweden and we see a great potential for strong growth in this segment in the coming years. Health insurance got a good start in that Vardia took over Hannover Care’s health insurance portfolio on 1st January 2013, which we have since built upon throughout the year. An unusually hard winter resulted in the claims result being negatively impacted during the first quarter and part of the second quarter. The claims trend during the
remainder of the year has been positive. We have also streamlined claims processes for smoother handling and increased profitability. The main focus in 2014 will be to continue to bring new partners so that we are able to further boost growth. This gives Vardia an opportunity to continue to be one of Sweden’s fastest growing insurance companies. Andreas Önstorp
Managing Director, Vardia Sweden
2013 was an eventful year for Vardia Sweden (Vardia Försäkring AB). Good results, exciting collaborations and strong growth ensure that the company has a very stable platform to build on in 2014.
Vardia Sweden is the fastest growing
company in the Swedish insurance market
Strong growth and successful partnerships
Nathalie Zetterström Assistant underwriter, Vardia Sweden
In early November, the first staff members moved into the offices in Ørestad City. Ørestad City is a new and innovative district in Copenhagen with many international growth companies. The district is character-ised by its well-developed infrastructure, with the airport, metro and highway nearby, and only 5 minutes to the heart of Copenhagen. This provides good opportunities for the company to attract qualified employees in the future.
In 2013, the company hired its first employ-ees, who commenced the preparatory work for the launch on the Danish insurance market. In 2013, the company focused in particular on recruitment, the establishment of administrative procedures and supplier agreements, as well as the development of products and ‘go-to-market’ plans. In 2014, the company will continue to work on product development. The company focuses on simple and understandable quality products and will continue to launch them throughout 2014, so that in the course of the year the company will have a fully rolled out non-life insurance programme for the Danish private insurance market. The company will support the products offered with a strong
service concept, where customers get easy access to the company, receive competent service and, not least, experience efficient and professional claims handling. These will be important elements of the company’s services in 2014 and beyond.
As part of the company’s sales and service concept, we are also developing a user-friendly web solution, allowing customers to calculate the cost of insurance and to buy cover. During the year, as part of the execution of the ‘go-to-market’ plan, the company expects to establish more ‘white label’ cooperation with major Danish and international companies with a strong foothold in the Danish market. This will allow the company access to marketing and distribution of non-life insurance products.
By the end of 2014, the company expects to have established a sound and efficient operation in the Danish insurance market, creating a solid foundation for the company’s further expansion in the Danish market in the coming years.
Carsten Müller
Managing Director, Vardia Denmark
In June 2013, a new chapter in Vardia’s history started, when Vardia Forsikrings-agentur A/S was established as a Danish subsidiary of Vardia Insurance Group ASA. The company will operate in non-life insurance for Vardia ASA in the Danish market.
Vardia Denmark will this year have a fully
rolled out non-life insurance programme
With focus on easy and understandable quality products
Carsten Müller Managing Director, Vardia Denmark
13
12 VARDIA Annual report 2013
The company serves the private and commercial markets with insurance solutions. Direct distribution is done through direct telemarketing or through agents/brokers. The company also distributes products through partners, where the products are presented as the partner’s brand.
Special areas of focus for the company are: • Simplification for the customers throughout
the entire value chain • Effective distribution/sales • Cost-effective operations • Competitive prices
The company is planning a listing on Oslo Stock Exchange in the spring 2014, under the name Vardia Insurance Group ASA, and it will continue to be an independent Scandinavian insurance company. The company has nearly 400 employees in the group and offices in the following locations in Norway: Oslo, Sortland, Hamar, Porsgrunn, Molde and Lysaker. In Sweden it has offices in Stockholm, Luleå, Skellefteå and Sundsvall. In Denmark, the company is established in Copenhagen. The group’s head office is in Oslo.
Since May 2011, Vardia ASA has written insurance in Sweden as a cross border activity and since August 2012 Vardia ASA has written insurancein Norway. Sales of the company’s products go primarily through wholly owned subsidiaries in both countries. As planned, the group established itself in Denmark with Vardia Forsikringsagentur A/S in the 3rd quarter of 2013. The underwriting in Denmark will also be cross border business and started in February 2014.
After completion of a comprehensive due diligence process, the company acquired all the shares in Saga Forsikring AS on 18 December 2013. As of 1 January 2014, the company also acquired the portfolio which Saga Forsikring AS has written with Land-bruksforsikring AS as insurer. This is mainly commercial insurance which has been written since 2010. The portfolio transfer was approved by the Financial Supervisory Authority of Norway on 20 December 2013.
The result for 2013 for the Vardia ASA group is characterised by the fact that the company is still in the establishment phase and under -going strong growth. The group result before tax was a loss of NOK 70.0 million and the result after tax was a loss of NOK 49.96 million.
Premium income
In 2013, the group’s development has been very positive. In 2013, the group’s gross revenue was NOK 718 million. In addition to the premium on our own licence, gross revenue includes agency agreements with other insurers and business written in 2013 that will not come into force until 2014. Gross premiums written totalled NOK 571.7 million as at 31 December 2013, an increase of 330.1% compared to the same period in 2012. Gross earned premiums as at 31 December 2013 totalled NOK 393.7 million, an increase of 616.4%. Premiums earned for own account as at 31 December 2013 aggregated NOK 98.1 million, which is a growth of 659.6%. Of the gross premiums written totalling NOK 571.7 million, NOK 278.1 million applies to Norway and NOK 293.6 million applies to Sweden. As at 31 December 2013, private insurance accounted for approximately 85% and commercial insurance approximately 15%. Of gross premiums earned, NOK 179.2 million comes from Norway and NOK 214.5 million from Sweden.
Result and allocations
Vardia ASA’s operating result before changes in minimum security reserve etc. was a loss of NOK 59.1 million. Gross loss ratio was 86.5% while the loss ratio for own account was 93.6%. A significant portion of the claims reserve relates to IBNR reserves. In addition, the loss ratios include the transfer of estimated paid indirect claims settlement costs from administrative costs and the reserve for indirect claims handling costs, which amounted to approx. 1.9% of gross claims ratio and about 7.5% of the loss ratio for own account. This is according to regulations issued by the Financial Supervi-sory Authority of Norway. Corresponding figures as at 31 December 2012 were 87.4% (gross) and 108.5% (f.o.a.).
The cost ratio as 31 December 2013 was 69.1%. As at 31 December 2012 the corresponding figure was 441.3 %. Net financial income amounted to NOK 0.4 million. The group’s financial assets are currently deposited on high interest bank accounts. In addition, other income amounted to approximately NOK 1.9 million. Security reserves have been increased by NOK 10.9 million in 2013. The total loss for the year was NOK 49.96 million. The loss is allocated against other equity.
Capital/cash flow
The group’s assets consist mainly of bank deposits aggregating NOK 131.1 million, the reinsurers’ share of gross technical reserves amounting to NOK 330.8 million, accounts receivable in the amount of NOK 231.2 million and prepaid expenses of NOK 169.8 million. The group’s net cash flow from operational activities was minus NOK 35.6 million, net cash flow from investment activities amounted to minus NOK 20.8 million, net cash flow from financing activities totalled NOK 143.7 million and net change in cash and cash equivalents amounted to NOK 87.3 million.
New capital issues were made in 2013 with net proceeds aggregating NOK 203.6 million. Of this, NOK 56.7 million was in the form of non-cash contributionin December 2013.
In the establishment phase, Vardia ASA has raised new equity in line with expansion and in line with regulatory requirements. As of 31 December 2013, solvency capital amounted to NOK 265.8 million and the solvency margin for the group was 155.7%. The group’s capital ratio was 27.9%. Regulatory requirements for capital adequacy are 8%. The subsidiaries Vardia Forsikring AS, Vardia Försäkring AB, Vardia Agencies AS, Vardia Forsikringsagentur A/S and Saga Forsikring AS are all booked in Vardia ASA’s balance sheet at cost.
In 2013, the group’s total assets rose from NOK 390.7 million to NOK 1,017.4 million. The increase is due to capital issues and the growth in insurance portfolio.
Reinsurance
The company’s reinsurance is structured with a view to providing satisfactory risk relief in relation to available capital. From the foundation of the company, the group has established quota contracts in all lines of business as needed. The duration of most contracts is through to 30 April 2014. In addition, Excess of Loss programmes were purchased to protect our own account within the various lines of business. The group plans to renew all programmes with satisfactory coverage for a minimum period of 11 months, so that the new principal maturity date will be 31 March 2015.
Accounting policies
In 2013, the consolidated financial statements are prepared in accordance with IFRS for the first time. Earlier, statements were prepared in accordance with accounting regulations etc. for insurance companies (Regulation 1998-12-16, no. 1241). See Note 1 regarding accounting principles.
Risk profile and risk management
The company’s capacity to assume risk for its own account is continually evaluated based on the company’s capital situation. Through its activities, the company is exposed to key risk categories such as counterparty risk, financial market risk, operational risk, liquidity risk, counterparty risk exposure to reinsurers and risk related to the insurance business itself.
In 2011, the company was granted a licence by the Financial Supervisory Authority of Norway to engage in insurance business. We have focused on ensuring understanding of risk and risk measurement in the organisation. Company policies and procedures are subject to annual review and confirmation by the auditor in accordance with the requirements set out by the internal control regulations.
Counterparty risk
Credit risk is the loss arising from a counter-party being unable to meet its obligations to the company. Credit risk relates to the company’s customers, reinsurers and to asset management. To control this risk, Vardia ASA sets stringent capital requirements that their counterparts must satisfy when establishing a customer and collaboration relationship. Free assets are invested in financial markets in accordance with guidelines issued by the Financial Supervisory Authority and the Board. Vardia ASA’s financial risk profile is embodied in the company’s asset manage-ment policy which was adopted by the Board
on 22 November 2011 and most recently updated on 28 January 2014.
Financial market risk
This risk is defined as the risk that value and the future cash flows of a financial instrument will change with changes in market prices. Financial market risk is the equity risk, interest rate risk and currency risk.
Operational risk
This is the risk of loss resulting from weaknesses and errors in processes and systems, errors committed by the company’s employees, and as a result of external events. Through an efficient organisation and clearly defined responsibilities, the company seeks to reduce this risk. Furthermore, the company is constantly working toward improvements. Crawford & Company is a company that specialises in handling claims settlement processes, and Vardia ASA has entered into an agreement with the company to handle these in Norway, Sweden and Denmark.
Liquidity risk
This risk refers to the company’s inability to meet its liabilities as they fall due or if the company must realise investments with additional costs for making the payments. The company considers this risk to be small as the company gets premiums paid in advance and claims payments are reported in a timely manner before payment is made. Currently, financial deposits/placements are made only with banks and can therefore be realised at very short notice. The company’s liquidity management is an important risk relief measure and procedures have been established to ensure that the company has sufficient liquidity to meet its obligations at all times. The company gives priority to assuming low risk in financial investments in order to use available capital to finance planned growth in the insurance business.
Counterparty risk to reinsurers
Through reinsurance, the uncovered risk for own account is calculated per single event. The company’s uncovered own account risk per claim varies between the different insurance line programmes. This counterparty risk is reduced by establishing a comprehensive reinsurance programme with a total of 12 participants. According to Vardia ASA’s general underwriting guidelines, the minimum rating for a reinsurer of all contracts shall be «A-» (average rating per 31 December 2013 was «AA»/»A+»). The company has on-going contact with reinsurance brokers who have
placed the programmes and the largest reinsurers throughout the year, and it receives updated information regarding ratings and solvency.
Insurance risk
The risk in an insurance contract is the probability that the insured event will occur and the uncertainty in relation to the size of the compensation to be paid. One risk that Vardia ASA faces with insurance contracts is that the compensation amounts exceed the amount set aside to cover claims. With the company’s relatively low premium volume in the start-up phase, individual claims might have a major impact. One can therefore expect higher volatility in the results compared with a portfolio with a larger premium volume. The company’s reinsurance programmes even out this risk for own account.
Research and development
In 2013, the company continued its effort to further develop its IT systems. This work will also be given priority in 2014, though the appointment of a dedicated IT manager with effect from 1 January 2014.
Shareholder relations
Vardia ASA’s share capital as at 31 December 2013 was NOK 2.0 million divided into 104,000,522 outstanding shares with a nominal value of NOK 0.02 per share. Book equity at the same time was NOK 249.1 million. The company had 138 shareholders at the end of December 2013, but some of these are nominee and custodian accounts. The actual number of shareholders is therefore assumed to be around 200.
Preparations Solvency 2
Vardia Insurance Group ASA will, as part of its risk management system, conduct a self-assessment of risk and capital situation in line with the Solvency 2 Directive 2009/138/ EC Article 45 (Own Risk and Solvency Assessment - ORSA process). In 2013, the Board of Directors held a seminar on Solvency 2 in collaboration with PWC, so that the Board is updated with regard to the new rules. The ORSA policy was adopted by the Board on 28 January 2014. A preliminary ORSA report is planned to be presented to the Board in March 2014. The final report is planned to be adopted by the Board in May 2014. The company is continuously working on Pillar 2 preparations.
Personnel and equality
The company’s head office is located in Oslo. At the end of 2013, the parent company had
Vardia Insurance Group ASA (Vardia ASA) is the parent company of a Norwegian non-life insurance group and was established in 2009. The company has five wholly-owned subsidiaries that underwrite business as agents. Vardia ASA defines Scandinavia as its home market and has been granted a licence for all classes of non-life insurance with the exception of credit and surety insurance. At the Extraordinary General Meeting held on 25 November 2013 it was resolved to change the company name and transform the company into a public limited company (ASA).
12 employees, while the group had a total of 379 employees. 15 were employed in Denmark, 148 in Sweden and 216 in Norway. The Board consists of two women and four men, one of whom is a man elected by the employees. The group seeks to have gender balance at all levels of the organisation. The Norwegian Act on prohibition of discrimination based on ethnicity, religion, etc. [Anti-discrimination Act] aims to promote equality, ensure equal opportunities and rights, and to prevent discrimination based on ethnicity, national origin, ancestry, colour, language, religion and faith. The group works actively, determinedly and systematically to promote the Act’s objectives within our business, including work relating to recruitment, salaries and working conditions, promotion, personal development and protection from harassment.
Working environment
The Board considers that the working environment is good and every effort has been made to ensure job satisfaction and good working conditions for employees. The group’s goal is to provide a workplace without discrimination on grounds of disability, and it works actively to design and implement the physical conditions in the best possible way for the employees and new applicants who have disabilities.
Total sick leave in Vardia ASA in 2013 was 7.0% (3.0%). Short-term sick leave was 2.9% (2.2%) and long-term sick leave (4.1%). No injuries were registered in the group during 2013. The Board considers the working environment of the group to be satisfactory, and focuses on implementing measures to reduce sick leave to the 2012 level. The company’s business does not result in any contamination of the external environment.
Social responsibility
Vardia ASA will be a reliable provider of insurance solutions to private individuals and commercial businesses. The group’s values (personal, corporate and cultural) shall be the guideline for all activities that we engage in, and where we support the vision and mission. The values we should adhere to are: • Simplicity • Respect • Honesty • Proactiveness • Responsibility • Supportiveness
At the same time, Vardia ASA shall promote sustainable social development and long-term values through responsible business practices that promote the environment, ethical behaviour and social issues. Vardia ASA’s social responsibility is reflected in its involvement in community development through future cooperation with sports clubs and organisations.
Fighting corruption and money laundering
Vardia ASA will contribute to the fight against corruption and money laundering by adhering to responsible business practices and routines that safeguard against this. Routines have been developed for this, which were adopted by the Board on 30 January 2013.
Future developments
The financial statements have been prepared on a going concern basis, which is confirmed by the Board. Nothing has occurred since the end of the financial year that has a serious effect on an assessment of the company’s position and performance.
The Board expects the company’s positive development to continue in 2014. Growth in gross premium income is also expected in Norway and Sweden, where the company is now well established. There are high expectations linked to the start-up in Denmark and the expansion of the company’s business as Lloyd’s Cover Holder through the subsidiary Vardia Agencies AS. The underwriting in Denmark will be cross-border business and was started in February 2014. Vardia ASA plans to be listed on Oslo Stock Exchange in the 2nd quarter of 2014. This will be an important milestone in the company’s development and will pave the way for the company to gain access to the financial resources that will be needed to continue the positive trend.
Vardia ASA’s plans to expand its operations throughout Scandinavia and the start-up is mainly going according to the original plans. As a consequence of investments in the organisation and growth in premium income, the company reported a loss in its first years of operation. For 2014, however, the Board expects, according to current plans, that the company will report a small profit. There is some uncertainty associated with the assessment of future conditions. However, the Board is of the opinion that Vardia ASA has a good foundation for growth and profitability in the coming years.
Nils Aakvik
Member of the Board since 2011. In addition to a number of directorships, Aakvik is CEO of Kristiansund Baseselskap AS.
Line Sanderud
Member of the Board since 2013. Sanderud is partner and Chairman of RAW Performance AS.
Pål Lauvrak
Employee-elected board member since 2009. Lauvrak is Director of Marketing at Vardia Insurance Group ASA.
Åge Korsvold
Chairman since 2011.
In addition to a number of directorships, Korsvold was CEO of Orkla ASA through to February 2014.
Nina Charlott Gullerud
Member of the Board since 2013. Over the past few years, Gullerud has held a number of leading posts in Cisco Systems in Norway and abroad.
Karl Høie
Board member and Vice Chairman since 2011.
Høie works for Quartz+Co AS.
From the left: Nils Aakvik, Line Sanderud Bakkevig, Pål Lauvrak (employee-elected), Åge Korsvold (Chairman), Nina Charlott Gullerud and Karl Høie (Vice Chairpman). Photo: Kjell Karlsson
Oslo, 11 February 2014
The Board of Directors of Vardia Insurance Group ASA
Åge Korsvold
Chairman Vice ChairmanKarl Høie
Line Sanderud Bakkevig Nina Charlott Gullerud
Nils Aakvik Pål Lauvrak Ivar S. Williksen
17
16 VARDIA Annual report 2013
Income statement
Consolidated income statement – Vardia Insurance Group ASA
1 000 NOK Note 2013 2012
Premium income
Gross premiums written 571 729 173 204
Ceded reinsurance premium -426 866 -129 307
Premiums written for own account 4, 5 144 863 43 897
Changes in premium reserves gross -177 995 -109 328
Reinsurance share 131 190 80 297
Premiums earned for own account 4, 5 98 058 14 866 Allocated return on investment transferred from the non-technical account 1 621 296 Other insurance-related income 4 1 955 20 157 Claims
Gross claims paid -229 189 -30 547
Reinsurance share 169 756 21 729
Change in gross claims reserve -111 518 -25 312
Reinsurance share 79 209 17 993
Claims incurred for own account 4, 5 -91 742 -16 137 Operating expenses
Sales costs -3 862 -
Insurance-related administration costs -121 613 -74 694
Commission received 57 684 9 089
Total operating expenses for own account 12 -67 791 -65 605 Technical result before changes in security reserve etc. -57 899 -46 423 Change in security reserves etc.
Change in security reserve -10 893 -3 034
Total change in security reserve etc. 5 -10 893 -3 034
Technical result -68 792 -49 457
Net financial income
Interest income and dividends etc. on financial assets 404 82
Interest cost - -5
Total financial income 14 404 77
Allocated return on investment transferred to technical account -1 621 -296
Non-technical result -1 217 -219
Result before tax 13 -70 009 -49 676
Tax 13 18 196 13 455
Result before other result components 13 -51 813 -36 222 Other result components
Other income and expenses
Revaluations 1 171
Exchange rate differences 14 561 -
Actuarial gains and losses on pensions 11 164 -
Tax on other result components 13 -46 -
Total other income and expenses 1 850 - Result for the year 13 -49 963 -36 222
Balance sheet
Consolidated statement of financial position – Vardia Insurance Group ASA
1 000 NOK Note 2013 2012 2011
Assets
Goodwill 18 57 347 3 655 2 855
Other intangible assets 17 26 396 6 386 11 142
Deferred tax benefit 13 49 034 27 422 14 973
Plant and equipment 16 7 157 4 698 4 550
Financial assets
Investments in shares and parts 3 1 671 - -
Reinsurers share of gross technical reserves 5 330 778 110 266 12 060
Receivables in connection with direct insurance and reinsurance. 5 231 198 93 174 7 249
Other receivables 19 12 997 3 458 3 407
Prepaid costs and earned income not received 12 169 799 97 839 15 335
Cash and cash equivalents 3 131 053 43 754 31 505
Total assets 1 017 429 390 652 103 075 Equity and liabilities
Share capital 2 080 688 477
Subscribed but unregistered capital 3 034 3 343
Share premium 380 912 180 830 100 584
Other paid-in equity 960 436 -
Other equity -136 685 -85 522 -49 106
Provision for Natural Perils Fund - 15 -
Provision for Guarantee Scheme 1 831 68 -
Total equity 8, 9 249 098 99 549 55 298 Provisions for liabilities
Gross premium reserve 5 309 028 121 692 12 558
Gross claims reserve 5 143 652 28 099 2 828
Other technical provisions 1, 5 16 695 5 802 2 768
Pension liabilities 3, 11 4 173 2 911 752
Financial liabilities
Other liabilities 3 34 491 16 575 4 038
Liability for current tax 3 1 721
Liabilities in connection with direct insurance and reinsurance 5 217 478 93 638 8 405
Accrued costs and received unearned income 3 41 093 22 386 16 427
Total liabilities 768 331 291 103 47 776 Total equity and liabilities 1 017 429 390 652 103 075
Equity statement
Vardia Insurance Group ASA Share capital
At year-end, the share capital comprised, in accordance with the Articles of Association, 104 000 522 ordinary shares with a nominal value of NOK 0.02 each. All issued shares are fully paid. The owners of the ordinary shares have a right to dividend and to vote.
As at 31 December 2013, the company owned none of its own shares.
Number of shares 2013 2012
As at 1 January 68 750 000 47 784 625
As at 31 December 104 000 522 68 750 000
Share premium
The share premium reserve comprises amounts paid in and can be used to cover losses.
Other paid-in equity
Other paid-in equity comprises the wage costs that are recorded in the income statement as a result of the option programme for the company’s employees.
Other earned equity
Other earned equity is made up of the result for the year and previous years’ results.
Natural Perils Fund
The operating profit from mandatory natural perils insurance shall be allocated to a separate natural perils fund. This allocation can only be used to meet natural perils claims. The company established its insurance operations in Norway in August 2012, and the operating profit of NOK 0 has been allocated to the natural perils fund as at 31 December 2013. The natural perils reserve can only be used to meet claims for natural perils.
Allocation to the Guarantee Scheme
Allocations to the Guarantee Scheme shall ensure that those insured under direct non-life insurance agreements written in Norway will receive proper settlement of their insurance claim pursuant to the agreement. As at 31 December 2013 an amount of NOK 1 831 has been allocated to the Guarantee Scheme.
Statement of changes in equity
Vardia Insurance Group ASA
(In NOK thousands)
Consolidated capitalShare
Share premium
fond equityOther
Other earned
equity perils fundNatural Guarantee scheme Total
Equity as at 1 January 2012 477 103 927 - -49 106 - - 55 298
Increase in equity in 2012 211 76 903 77 114
Paid in in 2012, registered in 2013 3 034 3 034
Changes in provisions in 2012 -83 15 68 -
Options expensed 436 436
Foreign exchange gains/
losses recognised against equity -111 -111
IFRS adjustments Balance -
Result before OCI -36 222 -36 222
Other result components
Currency differences
Actuarial gains and losses on pensions Tax on other result components
Equity as at 31 December 2012 688 183 864 436 -85 522 15 68 99 549
Consolidated capitalShare
Share premium
fond equityOther
Other earned
equity perils fundNatural Guarantee scheme Total
Equity as at 1 January 2013 688 183 864 436 -85 522 15 68 99 549
Increase in equity in 2013 432 198 008 198 440
Change in nominal value of share 960 -960 0
Changes in provisions 2013 -1 748 -15 1 763 0
Options expensed 524 524
Foreign exchange gains/
losses recognised against equity 548 548
IFRS adjustment Balance 0
Result before OCI -51 813 -51 813
Other result components
Revaluations 1 171 1 171
Currency differences 561 561
Actuarial gains and losses on pensions 164 164
Tax on other result components -46 -46
21
20 VARDIA Annual report 2013
Statement of cash flow
Vardia Insurance Group ASA
Cash flow from operational activities 2013 2012
Premiums paid 461 157 89 092
Claims paid -217 444 -25 110
Net reinsurance premiums -66 983 -3 589
Payment to operations, including commissions -89 884 -45 528
Payments to employees, pension schemes, employers’ National Insurance contribution etc. -129 706 -89 136
Net interest/financial income 404 77
Net other proceeds/payments 6 856 20 157
Net cash flow from operational activities -35 600 -54 037 Cash flow from investment activities
Proceeds/payments on acquisition/sale of subsidiaries -512
Proceeds/payments on acquisition/sale of associated companies -500
Net cash flow from purchase of fixed assets and intangible assets -19 757 -13 837
Group contribution received
Net cash flow from investment activities -20 769 -13 837 Cash flow from financial activities
Payment of dividend
Net proceeds/payments on other short term debt Payments relating to intra-group equity transactions
Proceeds on issuance of equity capital 143 706 80 148
Net cash flow from financial activities 143 706 80 148
Effect of changes in foreign exchange rate on cash and cash equivalents -39 -25
Net cash flow for the period 87 299 12 249
Cash and cash equivalents as at 1 Jan 43 754 31 505
Cash and cash equivalents as at. 31 Dec 131 053 43 754
Net cash flow for the period 87 299 12 249 Specification of cash and cash equivalents
Cash in hand and bank 131 053 43 754
Total cash and cash equivalents 131 053 43 754
For complete accounts, please contact Alexander H. Nordahl, Communications Director at the Head Office, e-mail address: [email protected]
The Control Committee’s report
Translation from Norwegian to English;
The Control Committee has examined the company’s activities including the boards dispositions and confirm that the
company has followed the laws, regulations and provisions as well as the articles of association and resolutions passed
by the company’s decision-making bodies.
The control Committee has reviewed the board of director’s proposals for the 2013 annual report and the Auditors
statements of 18th February, 2013 to the General Meeting. With reference to the Auditor’s Report, the Control
Committee recommends full acceptance of the submitted annual statement as Vardia Insurnace Group ASA’s Annual
Report for 2013.
Auditor’s report
Norway Oslo
Haakon VIIs gate 2 P.O. Box 1860 Vika NO-0124 Oslo Telephone: +47 21 04 90 90 Lysaker Saga forsikring AS Strandveien 18 NO-1366 Lysaker Telephone: +47 67 53 36 00 Sortland P.O. Box 185 NO-8401 Sortland Telephone: +47 08415 Porsgrunn Kammerherreløkka 2 NO-3915 Porsgrunn Telephone: +47 08415 Hamar Grønnegata 41 NO-2317 Hamar Telephone: +47 62 50 99 10 Molde Verftsgata 10 NO-6416 Molde Telephone: +47 08416 Sweden Stockholm Humlegårdsgatan 14 SE-114 46 Stockholm Telephone : +46 8 501 121 50 Luleå Box 38 SE-971 02 Luleå Visiting address: Skeppsbrogatan 48 Telephone: +46 8 501 121 50 Skellefteå Expolaris Center Visiting address: Kanalgatan 77 SE-931 34 Skellefteå Telephone: +46 8 501 121 50 Sundsvall Köpmangatan 10 SE-852 31 Sundsvall Telephone: +46 8 501 121 50 Denmark Copenhagen Edvard Thomsens Vej 14 Ørestad City DK-2300 Copenhagen S Telephone: +45 70 10 60 60
Vardia Insurance Group ASA Haakon VIIs gate 2,NO-0161 Oslo, Norway P.O. Box 1860 Vika NO-0124 Oslo, Norway
signatur
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