ASSURANCEFORENINGEN GARD -gjensidig-
Annual report and accounts for the year to 20 February 2015
Assuranceforeningen Gard gjensidig
Table of content
The Board of Directors and the Supervisory Committee 2
Report of the Supervisory Committee 3
Report of the Board of Directors 4
Income statement 9
Balance sheet 10
Cash flow analysis 12
Comments and notes to the accounts 13
Auditor’s report 63
Assuranceforeningen Gard gjensidig
The Board of Directors and the Supervisory Committee
The Board of Directors
Trond Eilertsen, Chairman, Oslo
Tadeusz Niszczota, Deputy Chairman, Polish Steamship Co., Szczecin
Ian Beveridge, Bernhard Shulte, Hamburg
Morten W. Høegh, Leif Höegh (UK) Ltd., London
Jane Sy, Stolt Tankers B.V., Rotterdam
Rolf Thore Roppestad, Managing Director, Arendal
The Supervisory Committee
Stephen Knudtzon, Chairman, Oslo
Helge Aamodt, Bergshav Management AS, Grimstad
Claus Mørch, Anders Wilhelmsen & Co AS, Oslo
Arne Falkanger Thorsen, Oslo
2 3 Assuranceforeningen Gard gjensidig Report of the Board of Directors
INTRODUCTION
The Board of Directors hereby submits the report and accounts of Assuranceforeningen Gard gjensidig (the “Association” or the “Club”) for the 2014 financial year, covering the 12 month period to 20 February 2015. This is the Association’s 107 th year of business.
In the opinion of the Board of Directors this report and accounts for the year to 20 February 2015 gives a true and fair view of the Association’s assets, liabilities, financial position and result.
Statutory minimum requirements with regard to technical reserves and solvency margins, are complied with.
Further, the Association has at the last years’ renewals achieved the budgeted general premium increases. Beyond what has been dealt with in this report, and the risks and uncertainties the marine insurance industry in general are faced with, the Board of Directors does not consider there to be any special risks or uncertainties connected to the business activities of the Club.
THE ASSOCIATION MEMBERSHIP RIGHTS
The Association is a Norwegian mutual insurance association founded in Arendal in 1907. The Association provides Protection and Indemnity (“P&I”) insurance and related insurance products to its members being owners, operators, charterers or other direct insurers of ships entered in the Association. As a mutual insurance association, the Club is owned by its members. There are no external capital owners.
The members of the Club are also members of Gard P. & I. (Bermuda) Ltd and vice versa. Reinsurance agreements have been entered into whereby the two associations are reinsuring each other. As to the tonnage entered in Gard P. & I. (Bermuda) Ltd and reinsured in the Association, the former in its capacity as the reinsured has been given the right to exercise membership rights in the Association on the basis of the reinsured entries full tonnage. This means that Gard P. & I. (Bermuda) Ltd controls the vast majority of all Member votes at the general meeting of the Club giving the Bermuda association the power to control and govern the business of the Association. Against this background the Club is treated as a subsidiary of Gard P. & I. (Bermuda) Ltd for accounting purposes.
THE OPERATION IN GENERAL
P&I insurance
Protection and Indemnity (“P&I”) insurance is the name of the insurance covering the shipowner’s liability towards a third party. The insurance covers both liability for property damage and personal injuries arisen in connection with the operation of the insured ships.
Traditional P&I insurance is currently offered by 13 global insurers covering about 90 percent of the world’s merchant fleet.
These 13 clubs, or mutual insurance associations, have formed an organisation called the International Group of P&I Clubs (the “Group”). One of the most important functions of the Group is to co ordinate the clubs collective purchase of market reinsurances. This is done within the framework of the so called Pooling Agreement. The latter contains three main elements. The first is the claims sharing between the parties to the agreement. The second is the provisions dealing with collective purchase of market reinsurances covering liabilities in excess of the upper limit of the Pool. The third is the provisions governing a claim exceeding the limit of the Group clubs collective market reinsurance contract, a so called overspill claim.
The Association’s branch office in Tokyo
The Association has a branch office in Tokyo. The branch office has one employee and was established several years ago as a consequence of the Association being granted a licence from the Japanese Ministry of Finance to insure vessels flying Japanese flag.
The Association’s branch office in Hong Kong
The Association has a branch office in Hong Kong. The branch office has been authorized by the Office of Commissioner of Insurance to carry on business in or from Hong Kong.
Gard AS the Association’s insurance agent
The Association has entered into an agency agreement with Gard AS being a Norwegian registered insurance intermediary. Gard AS is registered with the Norwegian Financial Supervisory Authority as the agent of the Association. All underwriting and claims handling service offered by the Association are performed by Gard AS or its subsidiaries abroad as insurance intermediaries on the basis of the agency agreement.
Personnel and organisation
As a result of the appointment of Gard AS as the agent of the Association there are at the end of the year only 13 persons employed by the Association. These persons include, inter alia , the Managing Director, the Legal Director (Company Secretary) and the Accounting Manager.
In the period 20 February 2015 the level of absence due to sickness has been slightly below the corresponding average in the insurance industry. The organisation is focusing on preventing occupational injuries as a result of long
4 time use of PCs and other office equipment. There have been no injuries or accidents in connection with the operations.
The Association’s objective is to promote gender equality, ensure equal opportunities and rights, and to prevent discrimination due to ethnicity, national origin, descent, skin colour, language, religion and faith.
The working environment in the Association has in the period to 20 February 2015 been good.
Internal control
Pursuant to regulations determined by the Norwegian Financial Supervisory Authority (Finanstilsynet) the Association has established an internal control system. In accordance with the said regulations a report about the internal auditor's findings is submitted to the Board of Directors once a year. In line with the new Solvency II regime a Compliance Officer function has been established with effect from 1 January, 2015. The Compliance Officer is part of the risk assessment and internal control system and shall ensure compliance with governing laws, regulation and administrative provisions.
Pursuant to the Norwegian Insurance Activity Act of 2005 no. 44, Section 5 10, the Association shall have an Audit Committee. However the Association has been granted dispensation from the requirement to have an Audit Committee by the Norwegian Financial Supervisory Authority. The exemption was made on the basis that the parent company of the Association, Gard P. & I. (Bermuda) Ltd., has an Audit Committee overseeing the activities of the Gard on a consolidated basis, including the activities of the Association. The decision by the authorities was also made on the basis that the composition of the Group Audit Committee is in line with the requirements of Norwegian legislation both in relation to its composition as well as responsibility to perform certain tasks.
Safety at sea
The Association is participating in the activities organised under the umbrella of the International Group with a view to review possible measures to be taken by insurers for the purpose of improving safety at sea. The Norwegian Act on Ship Safety, which entered into force on 1 July 2007 allows exchange of information between insurers regarding the technical condition of vessels. The Association believes that this is an important step for the purpose of improving the safety at sea.
Research and development
The Association does not carry out research and development activities.
Environmental damage
The operations does not pollute the environment.
FUND MANAGEMENT
Since 1 August 2006, a major part of the Association’s investment portfolio has been invested through a “Common Contractual Fund” structure. The investment structure represents a common legal framework for the management of the funds belonging to Assuranceforeningen Gard gjensidig , Gard P. & .I (Bermuda) Ltd, Gard Marine & Energy Limited, Gard Marine & Energy Insurance (Europe) AS, Gard Reinsurance Co Ltd and Safeguard Guarantee Company Ltd. The objective of the investment structure is saving of management costs and optimizing the total returns within the investment guidelines. The portfolio managers in the Common Contractual Fund structure are all specialists within the class of assets the individual manager has been given a mandate to manage.
The general investment guidelines for the management of the funds of the Association are determined by the Board of Directors. The general guidelines determined by the Board of Directors contain, inter alia , provisions as to the currency composition of the investments and the types of financial instruments that can be used. The percentage of the investment held in US dollar must be in the range between 30 per cent and 75 per cent. Each portfolio manager employed shall not manage more than 30 per cent of the total fund. The guidelines permit also investments in real estate funds, futures, options and other derivatives for the purpose of improving risk management, efficiency and liquidity of the portfolio. The individual portfolio manager’s mandate is composed on the basis of an index enabling the Association to measure the individual manager’s performance against a benchmark.
The Administration reports on the performance and composition of the portfolio at each Board of Directors meeting. For each meeting, a compliance report is produced showing whether there are non conformities in relation to the investment guidelines.
In the view of the Board of Directors the Association’s investments can be described as having a medium risk profile.
INSURANCE BUSINESS
Entered tonnage
At the end of the financial year commencing on 20 February 2014, the number of entered vessels and other units was 2,401. The total tonnage of the direct business amounted to 47.7 million GT of which owner’s entries amounted to 38.0 million GT. The full tonnage of the portfolio reinsured on behalf of Gard P. & I. (Bermuda) Ltd amounted to 267.5 million GT.
5
Reinsurance
In 2014 the Association’s retention level for insurance liabilities, arising out of any one event any one vessel, was USD 9 million, net of reinsurance, for mutual entries reinsured under the Pooling Agreement and USD 20 million, net of reinsurance, any one event any one vessel, for liabilities arising under fixed premium entries reinsured outside the Pool structure. The Association’s reinsurance program was structured as outlined below.
According to the P&I Clubs’ Pooling Agreement the Association’s retention for all claims arising out of any one event any one vessel was USD 9 million. The reinsurance protection through the Pool was USD 2,000 million, any one event any one vessel, in excess of the USD 80 million upper limit of the Pool.
Fixed premium entries covering risks falling outside the scope of the Pooling Agreement was reinsured by the Association in the commercial reinsurance market. The level of retained risk for each claim was USD 20 million.
In addition the Association has entered into a separate reinsurance treaty with its parent company, Gard P. & I. (Bermuda) Ltd., covering a proportion of the risks retained under the above reinsurance arrangements based on the Pooling Agreement and the market reinsurance contract for fixed premium business. Pursuant to this separate reinsurance treaty 25 per cent of the insurance liabilities not covered by the Pooling Agreement or the market contracts was ceded to Gard P. & I. (Bermuda) Ltd, as reinsurance in 2014.
The Association has also entered into a stop loss reinsurance agreement with Gard Reinsurance Co. Ltd, a subsidiary of Gard P. & I. (Bermuda) Ltd, protecting the Association’s balance sheet against insurance liabilities in excess of a loss ratio corresponding to 90 per cent for each policy year, subject to a limit of USD 25 million.
Reinsurance of Gard P. & I. (Bermuda) Ltd
The Association has entered into a separate reinsurance treaty with Gard P. & I. (Bermuda) Ltd, where the Association, as the reinsurer, covers a proportion of the risks retained by Gard P. & I. (Bermuda) Ltd under the reinsurance arrangements based on the Pooling Agreement and the market reinsurance contracts for fixed premium business of the latter. Pursuant to this separate reinsurance treaty 2 per cent of the insurance liabilities not covered by the Pooling Agreement or the market contracts of Gard P. & I. (Bermuda) Ltd was ceded from Gard P. & I. (Bermuda) Ltd to the Association, as reinsurance in 2014.
Open policy years
The 2012 policy year
Over the last 12 months the value of reported claims for the policy year 2012 has shown an improvement. The year is expected to produce a deficit. The year can at the earliest be closed in October 2015. Further calls are not expected.
The 2013 policy year
Over the last 12 months the value of reported claims for the policy year 2013 has shown an improvement. The year is expected to produce a surplus. The year can at the earliest be closed in October 2016. Further calls are not expected.
The 2014 policy year
The 2014 policy year shows a surplus. The Board of Directors have decided that a deferred call of 15 per cent shall be levied. The decision takes into account that the Association wishes to maintain a sound financial position.
Closed policy years
All closed years up to and including the 2012 policy year have developed as anticipated and show an overall surplus.
FINANCIAL RISK
Market risk
The currency composition of the Association’s portfolio of assets covering the technical reserves matches the currency exposure with regard to payments of claims to the extent possible. Thus, the exposure as to changes in the currency exchange rates is minimized. Otherwise the assets of the Association are managed in accordance with governing rules and regulations determined by Norwegian authorities with regard to management of assets covering the technical provisions. Any mismatch between assets and liabilities in currency exposure is managed through a rolling forward programme.
Credit risk
The Association’s credit risk is first and foremost connected to a possible shortfall on the part of market reinsurers. Historically only minor amounts have been written off as lost. This is, among other things, due to the fact that only reinsurers with a financial strength rating of “A” or better from Standard & Poor’s or other rating agencies are chosen.
The credit risk in respect of receivables is handled by group policies and by close follow up. Outstanding and overdue premiums from members and customers will be set off in payments of claims compensations.
6
Liquidity risk
The Board of Directors considers the liquidity risk of the Association to be low. A credit facility with Nordea Bank Norge ASA and a cash pool between the direct insurance entities in the Gard group, secure access to liquidity across the legal entities. The Association is holding a significant short equity position through futures which are marked to market daily. The risk is managed by the access to funds and type of assets held.
ACCOUNTS FOR 2014
The Association has been granted dispensation by the Norwegian Financial Supervisory Authority of the requirement to present the annual accounts in Norwegian currency and in the Norwegian language. In accordance with this the annual accounts are presented in United States dollar (USD) and in the English language. Comparing figures as per 20 February, 2014 are included in brackets.
Result
Technical result before change in contingency reserve was a deficit of USD 9.5 million (deficit of USD 0.6 million).
Premiums
The gross written premium in 2014 was USD 134.8 million (USD 128.4 million). Earned premium for own account was USD 78.1 million (USD 71.3 million).
Non technical result
The net income derived from assets was a deficit of USD 0.6 million in 2014 (USD 17.1 million).
Claims compensations
Gross claims paid during the period was USD 116.9 million (USD 151.7 million). Gross claims cost incurred during the period amounted to USD 66.4 million (USD 137.9 million). Net claims incurred for own account was USD 75.3 million (USD 61.8 million).
Technical provisions
As at 20 February 2015 the Association’s technical provisions to cover reported and unreported claims for own account amounted to USD 124.8 million (USD 121.9 million). In addition, the contingency reserve amounted to USD 116.7 million (USD 128.4 million). The contingency reserve is retained to meet unforeseen fluctuations in claims exposure, possible catastrophes, and extraordinary claims patterns that fall within the Association’s liabilities.
The Board of Directors is of the opinion that the technical provisions are sufficient to cover all technical liabilities for the 2015 policy year and earlier years.
Cash Flow Analysis
The Association’s bank deposit as of 20 February, 2015 amounted to USD 23.3 million (USD 42.7 million).
Continued operation and the future development
Pursuant to the Norwegian Accounting Act of 1998, section 3 3a, the Board of Directors is of the opinion that it is basis for continued operation. The year end accounts are based on these premises.
The premium income and the financial position is expected to be stable in 2015.
GOVERNING CORPORATE BODIES
The Board of Directors and committees of the Association are composed as shown on page 1.
Board of Directors
Mr. Høegh shall retire by rotation at the forthcoming Annual General Meeting but can be re elected.
* * *
The Board of Directors wishes to express its gratitude to Members, business associates and correspondents for their participation and support to the Association, and thanks all employees of the Association and Gard AS for their loyalty and interest throughout the year.
7 8 Assuranceforeningen Gard - gjensidig - Income statement
21.02.14 21.02.13 to 20.02.15 to 20.02.14 Amounts in USD 000's Notes Restated*
Technical account Gross written premium 4,5 134,818 128,463 Ceded reinsurance (56,673) (57,147) Earned premium for own account 78,144 71,316
Other insurance related income 98 40
Gross settled claims 116,901 151,735 Reinsurers' share of gross settled claims (44,384) (98,184) Change in gross claims reserve (50,497) (13,817) Reinsurers' share of change in claims reserve 53,302 22,052 Claims incurred for own account 3,6 75,322 61,786
Aquisition costs 5,587 4,897 Agents' commission 9,362 7,259 Commission received (7,700) (7,128) Insurance related expenses for own account 3,7 7,248 5,028
Other insurance related expenses 7 5,190 5,164
Technical result before change in contingency reserve 6 (9,519) (622)
Change in contingency reserve 18 11,687 (15,539)
Technical result 2,168 (16,161)
Non-technical account Interest and similar income 8 5,715 9,155 Change in unrealised gain/loss on investments (7,781) 178 Gains on realisation of investments 2,787 8,826 Investment management expenses (1,352) (1,015) Non-technical result (631) 17,144
Profit before tax 1,537 983 Taxation 9 1,252 134
Net result 285 849
Other comprehensive income / loss Remeasurement due to change in pension assumptions (285) (849) Total result 0 0
* See Note 20
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
9 Assuranceforeningen Gard - gjensidig - Balance sheet
As at As at As at 20.02.15 20.02.14 20.02.13 Amounts in USD 000's Notes Restated* Restated*
Assets Investments Financial investments at fair value through profit or loss Equities and investments funds 11,12,13 32,104 33,144 33,778 Bonds 11,12,13 169,531 152,685 160,341 Financial derivative assets 11,12,13 2,487 264 627 Other financial investments 11,12 6,127 11,714 12,025 Total investments 210,249 197,807 206,771
Reinsurers' share of technical provisions Reinsurers' share of gross claims reserve 3,6 198,857 252,159 274,211 Total reinsurers' share of technical provisions 198,857 252,159 274,211
Receivables Policyholders 14 14,266 12,720 10,352
Receivables from reinsurance operations Receivables from reinsurance operations 0 3,724 4,316 Receivables from group companies 6,092 9,810 10,193
Other receivables 13,15 11 0 3,771 Total receivables 12 20,368 26,254 28,632
Other assets Equipment 10 2,201 2,946 2,967 Cash and cash equivalents 16 23,342 42,743 6,569 Other financial assets 12 1,696 2,086 2,123 Total other assets 27,238 47,775 11,659
Prepayments and accrued income Accrued income and other prepayments 2,518 2,133 1,228 Total prepayments and accrued income 2,518 2,133 1,228
Total assets 12 459,229 526,128 522,501
* See Note 20
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
10 Assuranceforeningen Gard - gjensidig - Balance sheet
As at As at As at 20.02.15 20.02.14 20.02.13 Amounts in USD 000's Notes Restated* Restated*
Equity and liabilities Technical provisions Gross claims reserve 6,19 323,628 374,125 387,937 Total technical provisions 323,628 374,125 387,937
Contingency reserve Contingency reserve 18 116,685 128,380 111,776 Total contingency reserve 116,685 128,380 111,776
Provision for other liabilities Pension obligations 17 3,050 3,187 3,497 Total provisions for other liabilities 3,050 3,187 3,497
Payables Payables arising out of direct insurance operations 1,300 1,187 256 Payables arising out of reinsurance operations 3,083 2,981 3,261 Payables group companies 2,023 226 2,441 Financial derivative liabilities 439 349 611 Other payables 11,12,13,15 8,539 14,685 11,752 Total payables 15,384 19,428 18,321
Accruals and deferred income Accruals and deferred income 482 1,008 970 Total accruals and deferred income 482 1,008 970
Total liabilities 12 459,229 526,128 522,501
Total equity and liabilities 459,229 526,128 522,501
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
11 Assuranceforeningen Gard - gjensidig - Cash flow analysis
21.02.14 21.02.13 to 20.02.15 to 20.02.14 Amounts in USD 000's Notes Restated*
Cash flow from operating activities Profit from ordinary operations before tax 1,537 983 Tax paid 9 (88) (134) Change in unrealised gain/loss on investments 8 7,781 (178) Impairment of equipment 10 745 0 Change in pension obligation 17 (422) (310) Change in receivables and payables 678 3,872 Change in technical provisions and other accruals (9,800) 23,133 Purchase/sale of other investments (19,832) 8,786 Net cash flow from operating activities (19,401) 36,152
Cash flow from investment activities Disposal of equipment 10 0 22
Net cash flow from investment activities 0 22
Net change in cash and cash equivalents (19,401) 36,174 Cash and cash equivalents at beginning of year 42,743 6,569
Cash and cash equivalents at end of year 23,342 42,743
* See Note 20
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
12 Assuranceforeningen Gard - gjensidig- Notes to the accounts
Departures from Regulations for annual accounts for Note 1 - Corporate information insurance companies:
Assuranceforeningen Gard - gjensidig. 1. A part of the financial income is not allocated to the (the “Association”) is a mutual insurance association technical result. registered with the Norwegian Companies Register (organisation number 939 717 609). The registered office The financial statements of insurance companies with of the Association is Kittelsbuktveien 31, 4836 Arendal. operation in Norway are subject to regulations established The Association is licensed by the Norwegian Ministry of by the Norwegian Ministry of Finance. According to a Finance to carry out marine liability and legal costs resolution from the Financial Supervisory Authority of insurances. As a mutual insurance association the Norway (FSA) the Association has been given Association is owned by its Members being the owners dispensation to present the financial statements in the and charterers of the ships from time to time insured by the English language and in USD currency. Association for Protection and Indemnity (P&I) risks. There are no external capital owners. 2.2 Changes to presentation and classification The principal activities of the Association are; the The Association has changed its presentation and insurance of marine Protection and Indemnity risk on classification of foreign exchange gains and losses in behalf of its Members, including the reinsurance of a the income statement. The changes have been made proportion of the Protection and Indemnity risk primarily to provide more accurate information on the underwritten by Gard P. & I. (Bermuda) Ltd. as a direct presentation of technical and non-technical results in insurer; and management of assets covering the technical the income statement. Comparative information has provisions. been changed accordingly. The change does not affect the total result reported in prior periods. The Members of the Association are also Members of Gard P. & I. (Bermuda) Ltd. and vice versa. The major part The Association has also changed the way of of the two associations’ combined portfolio of direct presenting commissions regarding the Association’s business (currently about 80 per cent) is underwritten by reinsurance contracts, which are posted as gross Gard P. & I. (Bermuda) Ltd. The Association is primarily agents’ commission and commission received, earlier used as a vehicle for a smaller proportion of the combined shown net. P&I portfolio being primarily direct P&I business in certain countries within the EU/EEA area where an EU/EEA based 2.3 Changes in accounting policies insurer is required in order to comply with the governing IAS 19, ‘Employee benefits’ is mandatory for the EU regulations with regard to cross border activities. Association for the financial year ending 20 February, 2015. NRS6 used on earlier financial statements. The In as much as Gard P. & I. (Bermuda) Ltd. has got the right changes to the accounting policies have been as follows: to exercise membership rights in the reinsured portfolio, it to immediately recognise all past service costs; and to controls more than two thirds of the voting rights in the replace interest cost and expected return on plan assets Association being the legal basis for consolidating the two with a net interest amount that is calculated by applying associations’ accounts pursuant to the International the discount rate to the net defined benefit liability (asset). Accounting Standard 27 Consolidated and Separate See note 23 for the impact on the financial statements. Financial Statements. 2.4 Use of accounting estimates when preparing Assuranceforeningen Gard – gjensidig- is consolidated into the accounts the accounts of Gard P. & I. (Bermuda) Ltd. and the The preparation of the accounts requires consolidated accounts are available at the office of management to make estimates and assumptions Gard P. & I. (Bermuda) Ltd’s management company, that affect assets, liabilities, revenues, expenses and Lingard Ltd in Bermuda. contingent liabilities. Due to circumstances in the future these estimates can change. Estimates and their assumptions are considered continuously and Note 2 - Accounting Policies accounts adjusted accordingly.
Insurance contract liabilities 2.1 Basis of preparation of the Accounts Insurance contract liabilities are the main items in the This year’s accounts include the activity from 21 balance sheet based upon judgements and February 2014 to 20 February 2015. estimates. Estimates have to be made both for the
expected total cost of claims reported and for the The financial statements have been prepared in expected total cost of claims incurred but not reported accordance with Regulations for annual accounts for at the balance sheet date. Standard actuarial insurance companies approved by the Norwegian methods are used in estimating the total cost of Ministry of Finance, except for the departures from outstanding claims. The actuarial method uses these regulations listed below. The Association fulfils historical data as one of the elements in the model to the exemption criteria in paragraphs 1-5 and 1-6 of estimate the future claims costs. It can take a Regulations for annual accounts for insurance significant period of time before the ultimate claims companies which require limited use of International cost can be established with certainty. Financial Reporting Standards (IFRS). Paragraph 7-3 of the Regulations for annual accounts for insurance companies which allows late adoption of IFRS 13 and certain paragraphs in IFRS 7 have been applied.
13 Assuranceforeningen Gard - gjensidig- Notes to the accounts
Note 2 - Accounting Policies (cont’d) expenses and commission received are expensed over the underlying policy period. 2.5 Foreign currency Other Functional currency and presentation currency Other income and expenses are accounted for in the The accounts are prepared in USD, which is both the period they are incurred. functional currency and presentation currency of the Association. 2.7 Income tax Transactions in foreign currency Transactions in foreign currencies are translated at The tax expense consists of tax payable and changes in the rate applicable on the transaction date. Monetary deferred tax. items in a foreign currency are translated into USD using the exchange rate applicable on the balance Deferred tax/tax asset is calculated on all differences sheet date. The currency exposure of the provision between the book value and the tax value of assets and for claims is assessed to be equivalent to the same liabilities. Deferred tax is calculated at the nominal tax rate currency exposure as claims paid. The opening and of temporary differences and the tax effect of tax losses closing balances of the provision for claims in foreign carried forward at the tax rate at the end of the accounting currency are translated into USD based on the same year. Changes in tax rates are accounted for when the method as for monetary items. Non-monetary items new rate has been approved and changes are presented that are measured at fair value expressed in foreign as part of the tax expense in the period the change has currency are translated into USD using the exchange been made. A deferred tax asset is recorded in the rate applicable on the transaction date. Translation balance sheet, when it is more likely than not that the tax differences are recognised in the income statement asset will be utilised. as they occur during the accounting period. Foreign exchange gains and losses that relate to borrowings, cash and cash equivalents and financial investments 2.8 Financial instruments are presented as part of the non-technical result as interest and similar income and change in unrealised Classification gain/loss on investments respectively. All foreign The Association classifies its financial assets in the exchange gains and losses relating to technical following categories: at fair value through profit or operations are presented in the income statement as loss, loans and receivables and held to maturity part of the technical result. investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its 2.6 Revenue and expense recognition financial assets at initial recognition. Premiums Premiums are based on the insurance contracts Financial assets at fair value through profit or loss where one party (the insurer) has accepted a Financial assets at fair value through profit or loss are significant risk from another party (the policyholder) financial assets held for trading. A financial asset is by agreeing to compensate the policyholder if a classified in this category if acquired principally for specified uncertain future event adversely affects the the purpose of selling in the short term. Derivative policyholder. Premiums are recognised over the financial instrument are also categorised as held for insurance policy period. A deferred call for P&I trading. business for the accounting year is subject to approval from the Board of Directors in the following Loans and receivables year but is included as revenue in the accounts for Loans and receivables are non-derivative financial the current year. Supplementary calls for P&I assets with fixed or determinable payments that are business may be charged to members for the three not quoted in an active market. They are classified as last policy years. receivables and payables in the balance sheet. Unearned premiums are those proportions of premiums written in a year that relate to periods of Held-to-maturity financial assets risk after the reporting date. Unearned premiums are Held-to-maturity investments are non-derivative calculated on a daily pro rata basis. The proportion financial assets with fixed or determinable payments attributable to subsequent periods is deferred as and fixed maturities that the group’s management gross premium reserve. has the positive intention and ability to hold to maturity, other than: Reinsurance premiums those that the group upon initial recognition Reinsurance premiums are recognised as an designates as at fair value through profit or loss; expense over the underlying policy period. those that meet the definition of loans and receivables. Claims expenses Expenses regarding incurred claims and other administrative expenses are recognised in the period Recognition and measurement in which they are incurred. Paid claims include an Regular purchases and sales of financial assets are allocated portion of both direct and indirect claims recognised on the trade date – the date on which the handling cost. Association commits to purchase or sell the asset. Investments are initially recognised at fair value plus Insurance related expenses for own account transaction costs for all financial assets not carried at Insurance related expenses for own account consist fair value through profit or loss. Financial assets of sales and administrative expenses, less carried at fair value through profit or loss is initially commission received on ceded reinsurance recognised at fair value, and transaction costs are premiums. Sales expenses are recognised in the expensed in the income statement. period in which they are incurred. The administrative
14 Assuranceforeningen Gard - gjensidig- Notes to the accounts
Note 2 - Accounting Policies (cont’d) financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the Financial assets are derecognised when the rights to amount of the loss is recognised in the consolidated receive cash flows from the investments have expired income statement. If a loan or held-to-maturity or have been transferred and the Association has investment has a variable interest rate, the discount transferred substantially all risks and rewards of rate for measuring any impairment loss is the current ownership. Loans and receivables and held to effective interest rate determined under the contract. maturity investments are initially recognised at fair As a practical expedient, the Association may value including direct and incremental transaction measure impairment on the basis of an instrument’s costs and measured subsequently at amortised cost, fair value using an observable market price. using the effective interest method. If, in a subsequent period, the amount of the Unrealised gains or losses arising from changes in impairment loss decreases and the decrease can be the fair value of the ‘financial assets at fair value related objectively to an event occurring after the through profit or loss’ category are presented in the impairment was recognised (such as an improvement income statement within change in unrealised gain in the debtor’s credit rating), the reversal of the (loss) on investments in the period in which they previously recognised impairment loss is recognised arise. Realised gains or losses are presented within in the income statement. gains on realisation of investments. Dividends and interest income from financial assets at fair value 2.9 Derivative financial instruments through profit or loss is recognised in the income Derivatives are initially recognised at fair value on the statement as part of interest and similar income when date a derivative contract is entered into and are the right to receive payments is established. Dividend subsequently re-measured at their fair value. The from investments is recognised when the Association Association does not practice hedge accounting. has an unconditional right to receive the dividend. 2.10 Cash and cash equivalents Dividend paid is recognised as a liability at the time Cash and cash equivalents include cash in hand and when the General Meeting approves the payment of deposits held at call with banks, brokers and fund the dividend. managers. In the balance sheet, cash and cash equivalents that relate to investment management is Interest on held-to-maturity investments is included in presented as other financial investments. All other the income statement and reported as interest and cash is presented as cash and cash equivalents. In similar income. In the case of an impairment, the the cash flow statement, cash and cash equivalents impairment loss is been reported as a deduction from do not include cash and cash equivalents presented the carrying value of the investment and recognised as other financial investments. in the income statement 2.11 Equipment Offsetting financial instruments Fixed assets are comprised of assets intended for Financial assets and liabilities are offset and the net long term ownership and use. Costs for maintenance amount reported in the balance sheet when there is a are expensed as incurred. If the carrying value of a legally enforceable right to offset the recognised non-current asset exceeds the estimated recoverable amounts and there is an intention to settle on a net amount, the asset is written down to the recoverable basis or realise the asset and settle the liability amount. simultaneously. 2.12 Technical provisions Impairment of financial assets Technical provisions are calculated in accordance The Association assesses at the end of each with the Regulations for annual accounts for reporting period whether there is objective evidence insurance companies. that a financial asset or group of financial assets is impaired. A financial asset or a group of financial Gross claims reserve assets is impaired and impairment losses are The gross claims reserve comprises estimates of the incurred only if there is objective evidence of expected remaining exposure from claims that have impairment as a result of one or more events that been reported to the Association (RBNS), and from occurred after the initial recognition of the asset (a claims that have been incurred but which have not ‘loss event’) and that loss event (or events) has an yet been reported (IBNR). impact on the estimated future cash flows of the financial asset or group of financial assets that can be Provisions for reported claims are made by assessing reliably estimated. the liability of each claim. Actuarial methods are used in estimating the total cost of outstanding claims. The Evidence of impairment may include indications that claim provisions have not been discounted. the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that In accordance with the Norwegian regulations for they will enter bankruptcy or other financial insurance companies a provision for Internal Claims reorganisation, and where observable data indicate Handling Expenses (unallocated loss adjustment that there is a measurable decrease in the estimated expenses, or ULAE) is included in the Gross claims future cash flows, such as changes in arrears or reserve. economic conditions that correlate with defaults.
For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
15 Assuranceforeningen Gard - gjensidig- Notes to the accounts
Note 2 - Accounting Policies (cont’d) 2.16 Events after the reporting period New information on the Association’s financial position at Contingency reserve the end of the reporting period, which becomes known The contingency reserve is retained to meet after the end of the reporting period, is recorded in the unforeseen fluctuations in claims exposure, possible annual accounts. Events after the reporting period that do catastrophes and extraordinary claims patterns that not affect the Association’s financial position at the end of fall within the Association’s liabilities. the reporting period but which will affect the financial The minimum requirement set by the FSA for the position in the future are disclosed if significant. contingency reserve is 15 per cent of the FSA’s minimum requirement for the net claims reserve. The contingency reserve as set by the FSA includes in addition minimum requirements for Reinsurance reserves. The reinsurance reserve is retained to meet possible losses if the Association’s reinsurers fail to meet their obligations under a reinsurance contract.
2.13 Employee benefits Employees are covered by pension plans which comply with Norwegian laws and regulations.The Association has defined benefit pension plans only.
Pension obligations The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using a straight- line earnings method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in income.
2.14 Provisions, contingent liabilities and assets Provisions are recognised when the Association has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. For potential obligations whose likelihood is neither remote nor not probable (i.e. not ‘more likely than not’), a contingent liability is disclosed.
There is no provision for contingent liabilities recognised in the balance sheet.
Contingent assets are not recognised in the financial statements but are disclosed if it is likely that resources embodying economic benefits will flow to the Association.
2.15 Changes to accounting principles Changes in accounting principles and corrections of errors in previous year accounts are presented in accordance with IAS 8.
16 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 3 - Intra-group transactions
Reinsurance agreements Gard P. & I. (Bermuda) Ltd. and the Association have entered into mutual reinsurance agreements. The Association reinsures a proportion amounting to 2 per cent of Gard P. & I. (Bermuda) Ltd. risks that is not reinsured elsewhere (15 per cent for policy years up to and including 2009). The Association cedes to Gard P. & I. (Bermuda) Ltd. by way of reinsurance 25 per cent of the Association's risks that are not reinsured elsewhere (85 per cent for policy years up to and including 2009).
Received from Gard P. & I. (Bermuda) Ltd. Ceded to Gard P. & I. (Bermuda) Ltd. 21.02.14 21.02.13 21.02.14 21.02.13 Amounts in USD million to 20.02.15 to 20.02.14 to 20.02.15 to 20.02.14 Reinsurance 7.3 6.5 20.0 20.2 Reinsurers' share of gross settled claims 4.9 4.0 43.3 63.4 Commission 1.9 1.6 6.3 5.4
Received from Gard P. & I. (Bermuda) Ltd. Ceded to Gard P. & I. (Bermuda) Ltd. As at As at As at As at
Amounts in USD million 20.02.2015 20.02.2014 20.02.2015 20.02.2014 Reinsurers' share of gross claims reserve 12.8 21.4 111.2 168.4
The Association has entered into a stop loss reinsurance agreement protecting the former against and adverse claims development with Gard Reinsurance Co Ltd (a company owned by Gard P.& I. (Bermuda) Ltd.). Ceded to Gard Reinsurance Co Ltd 21.02.14 21.02.13 Amounts in USD million to 20.02.15 to 20.02.14 Ceded reinsurance 1.3 1.2
Ceded to Gard Reinsurance Co Ltd As at As at Amounts in USD million 20.02.2015 20.02.2014 Reinsurers' share of claims reserve 13.8 11.1
The Association and Gard P. & I. (Bermuda) Ltd. have entered into a reinsurance agreement with Hydra, which is a segregated accounts company. The Association's segregated account (cell) in hydra is covering the former companies' liability to a layer of the international Group (IG) Pool and retention in the first market excess layer.
Ceded to Hydra 21.02.14 21.02.13 Amounts in USD million to 20.02.15 to 20.02.14 Ceded reinsurance 0.0 9.4 Reinsurers' share of gross settled claims 1.6 1.7 Reinsurers' share of gross claims reserve 13.7 14.9
The Association has entered into an insurance agency agreement with Gard AS, a company owned by Gard P. & I. (Bermuda) Ltd. being the general agent, whereby Gard AS is delegated authorithy as an agent and insurance intermediary to perform claims handling and underwriting functions on behalf of the Association. The Association has also entered into agreements with the subsidiaries of Gard AS for services rendered to the Association.
Insurance services Invoiced 21.02.14 21.02.13 Amounts in USD million to 20.02.15 to 20.02.14 Insurance services invoiced 21.6 18.3
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
17 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 4 - Gross written premium by geographical areas
21.02.14 21.02.13 Amounts in USD 000's to 20.02.15 to 20.02.14 EEA 52,509 62,643 Norway 11,022 1,089 Other areas 71,287 64,731 Total gross written premium 134,818 128,463
The geographical split is made based on the location of the individual client.
Note 5 - Estimated deferred call
These accounts are prepared on the basis of a Board of Directors' resolution of a 15 per cent deferred call in respect of the 2014 policy year, payable in 2015. The original estimated deferred call was 25 per cent. The deferred call for the 2013 year was also reduced to 15 per cent from 25 per cent.
The reduction in deferred call amounts to USD 8.1 million (2013 USD 7.8 million).
On estimated total call basis (ETC) the gross written premium for the year to 20.02.15 is USD 142.9 million (2013 USD 124.3 million).
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
18 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 6 - Technical result and technical provisions
21.02.14 to 20.02.15 Amounts in USD 000's Total P&I
Gross premiums Gross written premiums 134,818 Change in gross provision for unearned premiums 0 Earned premiums, gross 134,818
Claims incurred, gross Incurred this year (108,327) Incurred previous years 41,923 Total claims incurred, gross (66,404)
Insurance related operating expenses, gross (20,042)
Technical result, gross 48,372
Reinsurers' share of technical result Premiums earned (56,673) Claims incurred (8,918) Commissions 7,700 Reinsurers' result (57,891)
Technical result, net (9,519)
As at 20.02.15 Amounts in USD 000's Total P&I
Technical provisions gross Provisions, at the beginning of the period (374,125) Claims paid 116,901 Claims incurred - gross this year (108,327) Claims incurred - gross previous years 41,923 Provisions, at the end of the period (323,628)
Reinsurers' share of claims provision 198,857 Provisions net, at the end of the period (124,772)
The Association is a member of the International Group of P&I clubs. Technical provision gross regarding Pooling Agreement 48,521
Provision for outstanding claims Technical provision gross (323,628) Technical provision net (124,772)
Provided guarantees outside cover, not recognised in the balance sheet, amount to USD 0.05 million as at 20.02.15.
Sensitivity analysis has been performed in order to evaluate how sensitive gross claims reserve is dependent on the actuarial methods applied. The Association applied the following methods: Development factor method, Bornhuetter Ferguson, a priori reduced method and Benktander. Based on these methodologies the gross claim reserve range between USD 0.318 million and USD 0.333 million.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
19 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 7 - Insurance related expenses and number of staff
21.02.14 21.02.13 Amounts in USD 000's to 20.02.15 to 20.02.14
Acquisition costs and commissions Sales related salaries and wages 766 1,307 Other acquisition costs 4,821 3,590 Agents' commission 9,362 7,259 Commission received (7,700) (7,128) Insurance related expenses for own account 7,248 5,028
Number of part time staff 13 11
Remuneration to Top Management, Committees and Auditor The Top Management consists of the Group Directors.
Salary incl. Board Total Amounts in USD 000's bonus remuneration remuneration
Top Management Rolf Thore Roppestad (Managing Director) 166 166 Svein Buvik 7 7 Svein A. Andersen 26 26 Bjørnar Andresen 36 36 Kristian Dalene 78 78 Kjetil Eivindstad 121 121
Members of the Board of Directors of the Association Trond Eilertsen (Chairman) 32 32 Tadeusz Niszczota (Deputy Chairman) 21 21 Morten W. Høegh (Member) 21 21 Jane Sy (Member) 21 21
Members of the Supervisory Committee of the Association Stephen Knudtzon (Member) 16 16 Arne Falkanger Thorsen (Member) 11 11 Claus Theodor Mørch (Member) 11 11 Helge Aamodt (Member) 11 11
Total 434 143 577
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
20 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 7 - Insurance related expenses and number of staff continued
The CEO has a remuneration guarantee that comes into force if the Board should ask him to leave his position. The remuneration guarantee gives him 12 months' salary in addition to a contractual six months' notice period.
The majority of the Top Management Group and certain key personnel have a pension scheme that give them the right to retire at 60 years of age and covers income included and above 12 times the base amount. The pension requires a thirty year accrual period in Gard, or will be reduced accordingly. Gard P. & I. (Bermuda) Ltd. has given a bonus promise to all employees within the group including the CEO. A bonus will be paid if predefined targets are met. The bonus will be paid through the companies where the employees work and refunded by Gard P. & I. (Bermuda) Ltd. A maximum possible bonus is 20 per cent of gross salary. A bonus of 20 per cent of gross salary is expected to be paid for the year to 20.02.2015.
Remuneration auditor 21.02.14 21.02.13 Amounts in USD 000's to 20.02.15 to 20.02.14
Auditing fee 274 64 Tax advising 25 29 Non audit services 0 8 Total auditors' fee 299 101
Net operating expenses 21.02.14 21.02.13 to 20.02.15 to 20.02.14 Amounts in USD 000's Restated
Bad debt (109) 508 Service cost 21,756 20,363 Allocated to claims handling and acquisition costs (20,691) (18,345) Other operating expenses 4,234 2,015 Pension cost, effect of change in assumptions 0 623 Other insurance related expenses 5,190 5,164
Included in other operating expenses are also revenues related to non-insurance activities.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
21 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 8 - Financial income and expenses
21.02.14 21.02.13 Amounts in USD 000's to 20.02.15 to 20.02.14
Interest and similar income Income from financial instruments held for trading (portfolio investments) 6,862 5,629 Foreign exchange gains/losses (1,147) 3,526 Total interest and similar income 5,715 9,155
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
22 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 9 - Tax
21.02.14 21.02.13 to 20.02.15 to 20.02.14 Amounts in USD 000's Restated
Income tax expenses Tax payable regarding Hong Kong branch 1,164 0 Paid foreign withheld tax 88 134 Tax expenses ordinary result 1,252 134
Income tax payable Tax at beginning of the period 0 0 Tax payable related to the period 0 0 Tax paid during the period 0 0 Currency effects 0 0 Tax payable at end of the period 0 0
Deferred tax asset Specification of tax effect resulting from temporary differences Pension obligations 3,050 3,187 Portfolio investments (3,015) (5,549) Tax loss carried forward 79,731 89,960 Other temporary differences 951 1,033 Total temporary differences 80,717 88,631
Deferred tax asset, 27 per cent of total temporary differences 21,794 23,930
Deferred tax asset is not recorded in the balance sheet as it is not likely that the tax asset will be utilised in the future.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
23 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 10 - Equipment
Art As at Amounts in USD 000's 20.02.15
Acquisition costs at beginning of year 2,946 Net additions/disposals 0 Exchange adjustments 0 Cost at end of year 2,946
Impairment (745) Exchange adjustments Depreciation at end of year (745)
Net book value at end of year 2,201
Art As at Amounts in USD 000's 20.02.14
Acquisition costs at beginning of year 2,967 Net additions/disposals (21) Exchange adjustments 0 Cost at end of year 2,946
Impairment 0 Exchange adjustments 0 Depreciation at end of year 0
Net book value at end of year 2,946
Art is not a subject to depreciation.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
24 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss
Determination of fair value The following describes the methodologies and assumptions used to determine fair values:
Financial instruments at fair value through profit or loss The fair value of financial assets classified as financial instruments at fair value through profit or loss and the fair value of bonds included is determined by reference to published price quotations in an active market. For unquoted financial assets the fair value has been estimated using a valuation technique based on assumptions that are supported by observable market prices.
Assets for which fair value approximates carrying value For financial assets and liabilities that have a short-term maturity, it is assumed that the carrying amounts approximate to their fair value. This assumption is also applied to demand deposits, and savings accounts without a specific maturity.
Fair value hierarchy The Association uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Financial instruments in Level 1 The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Association is the last trade price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarely listed equity common stocks, futures, US, UK and Germany listed goverment bonds.
Financial instruments in Level 2 The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value of an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial instruments include: * Quoted market prices or dealer quotes for similar instruments; * The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves; * The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value; * Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
Financial instruments in Level 3 Level 3 includes securitised debt instruments and investments in less liquid fund structures.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
25 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued
As at 20.02.15 As at 20.02.14 Amounts in USD 000's Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial investments Equities and investment funds 31,994 110 0 32,104 33,134 10 0 33,144 Bonds 71,448 91,648 6,435 169,531 45,734 94,560 12,392 152,685 Financial derivative assets 2,320 167 0 2,487 0 264 0 264 Cash 4,857 0 0 4,857 5,741 0 0 5,741 Pending transactions for settlement 1,270 0 0 1,270 5,973 0 0 5,973 Total financial investments 111,888 91,925 6,435 210,249 90,582 94,833 12,392 197,807
Financial liabilities Financial derivative liabilities (384) (55) 0 (439) 0 (349) 0 (349) Other payables (4,838) 0 0 (4,838) (12,675) 0 0 (12,675) Total financial liabilities (5,221) (55) 0 (5,277) (12,675) (349) 0 (13,024)
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
26 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued
The Association possesses only minority interests in quoted companies. The Association has an equity exposure of 16% of it's total investments which has not changed from the year before. Expected standard deviation (risk) in European equities is estimated to be 20%. As at 20.02.15 Equities at market Value
AGL Energy Limited 11,529 AMP Limited 24,475 Amcor Ltd. 12,728 Aurizon Holdings Limited 9,910 Australia and New Zealand Banking Group 71,639 BHP Billiton Limited 77,805 BlueScope Steel Limited 5,150 Brambles Limited 8,353 CSL Limited 12,363 Commonwealth Bank of Australia 102,362 Incitec Pivot Limited 13,264 Insurance Australia Group Limited 10,470 Lend Lease Corporation Ltd 8,273 Macquarie Group Limited 21,912 Metcash Limited 1,651 Mirvac Group 12,307 National Australia Bank Limited 80,714 Newcrest Mining Limited 18,174 Orica Limited 5,351 Origin Energy Limited 15,027 QBE Insurance Group Limited 23,131 Rio Tinto Limited 22,964 Santos Limited 2,937 Scentre Group Limited 17,845 Stockland Corporation Ltd 8,978 Suncorp Group Limited 23,583 Telstra Corporation Limited 26,202 Toll Holdings Limited 15,018 Wesfarmers Limited 42,431 Westfield Corporation Limited 13,187 Westpac Banking Corporation 87,167 Woodside Petroleum Ltd. 13,511 Woolworths Ltd 36,647 Australia Total 857,058
DIE ERSTE osterreichische Spar-Casse 9,318 OMV Aktiengesellschaft 7,831 Voestalpine AG 10,031 Austria Total 27,180
Anheuser-Busch InBev 53,384 Delhaize Group 26,906 Etat Belge 9,786 Group Bruxelles Lambert S.A 7,757 KBC Groep 11,017 Solvay 8,441 Umicore 4,684 ageas SA/NV 12,234 Belgium Total 134,209
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
27 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued
As at 20.02.15 Equities at market Value
ARC Resources Ltd 4,197 Agrium Inc. 10,447 Alimentation Couche-Tard Inc. 19,400 BCE Inc. 11,807 Bank of Montreal 43,395 Barrick Gold Corporation 18,961 Blackberry Limited 28,784 Bombardier Inc. 3,921 Brookfield Asset Management Inc. 31,432 Cameco Corporation 7,567 Canadian Imperial Bank of Commerce 33,622 Canadian National Railway Company 26,989 Canadian Natural Resources Limited 30,275 Canadian Oil Sands Limited 9,972 Canadian Pacific Railway Limited 4,569 Canadian Tire Corporation, Limited 13,785 Cenovus Energy Inc. 14,085 Crescent Point Energy Corp. 11,324 Enbridge Inc. 29,698 Encana Corporation 18,099 Enerplus Corporation 2,596 Exxon Mobil Corporation 5,597 Fairfax Financial Holdings Limited 12,644 Fortis Inc. 5,333 George Weston Limited 9,074 Goldcorp Inc. 13,439 Husky Energy Inc. 6,037 Intact Financial Corporation 13,812 Kinross Gold Corporation 7,932 Magna International Inc. 15,012 Manulife Financial Corporation 36,255 Metro Inc. 6,069 National Bank of Canada 19,214 Pembina Pipeline Corporation 10,611 Pengrowth Energy Corporation 473 Penn West Petroleum Ltd. 3,998 Potash Corporation of Saskatchewan Inc. 18,722 Power Corporation of Canada 36,455 Rogers Communications Inc. 21,211 Royal Bank of Canada 78,923 Shaw Communications Inc. 3,979 Sun Life Financial Inc. 19,125 Suncor Energy Inc. 51,753 TELUS CORP 5,115 Talisman Energy Inc. 16,592 Teck Resources Ltd. 15,589 The Bank of Nova Scotia 58,569 The Thomson Company Inc. 14,229 The Toronto-Dominion Bank 71,556 TransAlta Corporation 1,375 TransCanada Corporation 35,218 Yamana Gold Inc. 4,548 Canada Total 993,384
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
28 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
A.P. Moller - Maersk A/S 36,499 Angel Lux Parent S.A.R.L. 10,109 Carlsberg A/S 9,810 Danske Bank A/S 32,374 Novo Nordisk A/S 23,245 Vestas Wind Systems A/S 8,143 Denmark Total 120,180
Fortum Oy 9,555 Kone Oy 14,231 Metso Oy 3,666 Nokia Oy 53,418 Sampo Oy 15,286 Stora Enso Oy 13,858 UPM-Kymmene Oy 22,098 Wartsila Oy 8,357 Finland Total 140,469
ACCOR 12,958 ALSTOM 26,212 AXA 81,823 Air France - KLM 9,267 Airbus Group N.V. 26,599 Alcatel Lucent 13,068 Arkema 9,544 BNP Paribas 86,880 BPCE 9,374 Bouygues 20,163 CNP Assurances 10,001 Cap Gemini 12,299 Carrefour 45,889 Casino Guichard-Perrachon 9,024 Compagnie De Saint-Gobain 31,048 Compagnie Generale de Geophysique - Veri 2,123 Compagnie Generale des Etablissements Mi 22,180 Danone 37,516 Eiffage 5,115 Essilor International (Compagnie General) 9,597 Federation Nationale Du Credit Agricole 27,721 GDF Suez 83,141 Gouvernement De France 13,861 Kering 17,355 L'Air Liquide societe anonyme pour l'Etu 37,931 L'Oreal 24,008 La Farge 19,736 Lagardere SCA 6,439
Publicis Groupe SA 7,374 Renault 28,170 Rexel 9,428 SCOR SE 7,742 SES S.A. 7,622 STMicroelectronics N.V. 8,712 SUEZ Environnement Company 4,368
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
29 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Safran 10,299 Sanofi 120,014 Schneider Electric SA 35,137 Societe Generale 52,982 Sodexo 8,370 TECHNIP 5,945 Thales 4,652 Total SA 202,902 Unibail-Rodamco SE 15,416 VINCI 33,743 Valeo 16,007 Vallourec 3,999 Veolia Environnement-VE 29,837 Vivendi 54,100 LVMH MOET HENNESSY LOUIS VUITTON 31,224 France Total 1,408,915
Allianz SE 120,330 Aurubis AG 5,970 BASF SE 93,302 Bayer Aktiengesellschaft 73,741 Bayerische Motoren Werke Aktiengesellsch 56,584 Bilfinger SE 6,161 Brenntag AG 8,279 COMMERZBANK Aktiengesellschaft 27,873 Continental Aktiengesellschaft 19,572 Daimler AG 114,116 Deutsche Bank Aktiengesellschaft 63,362 Deutsche Borse Aktiengesellschaft 13,299 Deutsche Lufthansa Aktiengesellschaft 7,179 Deutsche Post AG 43,326 Deutsche Telekom AG 115,053 E.ON SE 105,058 Eurx Estxx50 79,375 Franz Haniel & Cie. GmbH 10,719 Fresenius Medical Care AG & Co. KGaA 10,727 Fresenius SE & Co. KGaA 12,413 HDI Haftpflichtverband der Deutschen Ind 9,332 HeidelbergCement AG 12,043 Lavena 1 S.ar.l. 12,621 Linde Aktiengesellschaft 24,890 METRO AG 19,813 Munchener Ruckversicherungs-Gesellschaft 60,067 Porsche Automobil Holding SE 10,894 RWE Aktiengesellschaft 42,313 SAP AG 22,443 Siemens Aktiengesellschaft 88,767 TUI AG 5,401 Equities and investment funds consist of the following 22,378 Volkswagen Aktiengesellschaft 66,487 adidas AG 9,389 Germany Total 1,393,277
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
30 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Greek Organisation of Football Prognosti 2,142 Greece Total 2,142
AIA Group Limited 31,171 Investment funds, net 13,728 Equities and investment funds 18,846 HSBC Holdings PLC 10,761 Hang Lung Group Limited 13,102 Henderson Land Development Company Limit 6,390 Hutchison Whampoa Limited 35,691 John Swire & Sons Limited 9,831 King Lun Holdings Limited 1,198 Li & Fung Limited 6,761 New World Development Company Limited 11,307 Power Assets Holdings Limited 10,926 Sun Hung Kai Properties Limited 35,530 The Central People's Government of the P 18,124 The Link Real Estate Investment Trust 9,715 The Wharf (Holdings) Limited 7,414 Hong Kong Total 240,495
Bank Leumi le-Israel B.M. 9,384 Bezeq The Israel Telecommunication Corp. 3,718 Israel Corporation Ltd. 9,733 Teva Pharmaceutical Industries Limited 46,028 Israel Total 68,863
Assicurazioni Generali S.p.A. 51,694 Atlantia S.p.A. 10,328 Banca Monte dei Paschi di Siena S.p.A. 3,998 Banca popolare dell'Emilia Romagna, Soci 5,956 Banco Popolare Societa Cooperativa 8,613 Intesa Sanpaolo SpA 67,279 Mediaset S.p.A. 6,295 Mediobanca - Banca di Credito Finanziari 7,742 Rocca & Partners Stichting Administratie 2,801 Saipem S.p.A. 3,929 Snam S.p.A. 7,389 Telecom Italia S.p.a. 60,178 Terna - Rete Elettrica Nazionale S.p.A. 7,587 UniCredit, Societa' Per Azioni 69,001 Unione di Banche Italiane S.C.P.A. 11,821 Italy Total 324,611
Aeon Co., Ltd. 43,029 Aisin Seiki Co., Ltd. 58,952 Ajinomoto Co., Inc. 38,957 Asahi Glass Co., Ltd. 50,839 Asahi Group Holdings, Ltd. 11,398 Asahi Kasei Corp. 29,295 Astellas Pharma Inc. 70,485 Bridgestone Corporation 83,639 Canon Inc. 103,945 Capcom Co., Ltd. 35,744
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
31 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Central Japan Railway Company 103,117 Chubu Electric Power Co., Inc. 14,279 DENSO Corporation 16,840 DOWA HOLDINGS Co., Ltd. 27,394 Dai Nippon Printing Co., Ltd. 16,219 Daiichi Sankyo Co. Ltd. 44,466 Daikin Industries, Ltd. 10,979 Daito Trust Construction Co., Ltd. 8,094 Daiwa House Industry Co., Ltd. 23,755 Daiwa Securities Group Inc. 3,833 Denki Kagaku Kogyo Kabushiki Kaisha 32,781 Dentsu Inc. 18,303 East Japan Railway Company 89,448 East Nippon Expressway Company Limited 7,886 Eisai Co., Ltd. 26,143 Electric Power Development Co., Ltd. 30,204 FANUC Corporation 23,528 FUJIFILM Holdings Corporation 25,951 Fuji Heavy Industries, Ltd. 9,735 Fujitsu Limited 56,021 Fukuoka Financial Group, Inc. 10,919 Hankyu Hanshin Holdings, Inc. 8,967 Hitachi, Ltd. 105,313 Honda Motor Co., Ltd. 174,757 Isetan Mitsukoshi Holdings Ltd. 9,787 Isuzu Motors Limited 34,334 J.Front Retailing Co., Ltd. 13,163 JFE Holdings, Inc. 22,948 JSR Corporation 30,560 JTEKT Corporation 43,680 JX Holdings, Inc. 75,491 Japan Tobacco Inc. 25,571 KDDI Corporation 39,573 KYOCERA Corporation 14,046 Kajima Corporation 9,767 Kao Corporation 18,777 Kawasaki Heavy Industries, Ltd. 5,688 Kintetsu Corporation 5,614 Kirin Holdings Company, Limited 28,380 Kobe Steel, Ltd. 12,531 Komatsu Ltd. 22,590 Konica Minolta Holdings, Inc. 8,841 Kubota Corporation 15,447 Kyushu Electric Power Co., Inc. 5,515 LIXIL Group Corporation 5,025 MS&AD Insurance Group Holdings, Inc. 22,516 Marubeni Corporation 23,420 Mazda Motor Corporation 65,886 Medipal Holdings Corporation 9,949 Meiji Holdings Co., Ltd. 10,686 Mitsubishi Chemical Holdings Corporation 13,301 Mitsubishi Corporation 116,816 Mitsubishi Electric Corporation 58,823 Mitsubishi Estate Co., Ltd 10,988 Mitsubishi Gas Chemical Company Inc. 19,831
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
32 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Mitsubishi Heavy Industries, Ltd. 18,431 Mitsubishi Materials Corporation 10,476 Mitsubishi Motors Corporation 5,491 Mitsubishi UFJ Financial Group, Inc. 252,881 Mitsui & Co., Ltd. 46,071 Mitsui Chemicals, Inc. 4,960 Mitsui Fudosan Co., Ltd. 39,019 Mitsui O.S.K. Lines, Ltd. 9,555 Mizuho Financial Group, Inc. 62,633 Murata Manufacturing Co., Ltd. 13,793 NEC Corp. 18,022 NH Foods Ltd. 16,659 Nidec Corporation 9,926 Nikon Corporation 4,336 Nintendo Co., Ltd. 38,803 Nippon Telegraph and Telephone Corporati 243,925 Nippon Yusen Kabushiki Kaisha 40,509 Nissan Motor Co., Ltd. 124,378 Nitto Denko Corporation 7,469 Nomura Holdings, Inc. 19,709 Nuclear Damage Liability Facilitation Fu 35,792 ORIX Corporation 83,125 Obayashi Corporation 4,638 Oji Holdings Corporation 6,027 Osaka Gas Co., Ltd. 14,828 Ose Topix 126,600 Otsuka Holdings Co.,Ltd. 9,633 Panasonic Corporation 46,357 Resona Holdings, Inc. 23,371 Ricoh Company, Ltd. 14,903 SCREEN Holdings Co., Ltd. 22,664 SECOM Co., Ltd. 7,372 SHIMAMURA Co., Ltd. 35,212 SMC Corporation 6,871 SUMCO Corporation 112,286 Sekisui Chemical Co., Ltd. 12,086 Sekisui House Reit, Inc. 9,774 Seven & I Holdings Co Ltd 35,992 Sharp Corporation 12,900 Shimizu Corporation 8,613 Shin-Etsu Chemical Co., Ltd. 31,674 Shiseido Company, Limited 5,254 Showa Denko K.K. 11,763 Showa Shell Sekiyu K.K. 4,869 SoftBank Corp. 27,010 Sojitz Corporation 10,983 Sompo Japan Nipponkoa Holdings, Inc. 20,718 Sony Corporation 141,937 Sumitomo Chemical Co., Ltd. 14,503 Sumitomo Corporation 30,306 Sumitomo Electric Industries Ltd. 77,545 Sumitomo Metal Mining Co., Ltd. 7,331 Sumitomo Mitsui Financial Group, Inc. 120,117 Sumitomo Mitsui Trust Holdings,Inc. 18,041 Sumitomo Realty & Development Co., Ltd. 8,501
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
33 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Suzuki Motor Corporation 16,697 T&D Holdings, Inc. 20,245 TDK Corporation 24,075 TV Asahi Holdings Corporation 17,826 Taisei Corporation 12,755 Takeda Pharmaceutical Co Ltd 49,023 The Chugoku Electric Power Company,Inc 6,476 The Dai-Ichi Life Insurance Company, Lim 71,048 The Kansai Electric Power Company, Incor 13,316 The Shizuoka Bank, Ltd. 12,419 Tobu Railway Co., Ltd. 11,968 Tohoku Electric Power Co., Inc. 8,858 Tokio Marine Holdings, Inc. 35,393 Tokyo Electron Limited 45,748 Tokyo Gas Co., Ltd. 28,197 Tokyu Corporation 8,360 TonenGeneral Sekiyu K.K. 6,824 Toppan Printing Co., Ltd. 6,861 Toray Industries, Inc. 51,990 Toshiba Corporation 81,034 Toyota Industries Corporation 8,003 Toyota Motor Corporation 257,643 Toyota Tsusho Corp 25,273 West Japan Railway Company 28,609 Yamada Denki Co., Ltd. 73,429 Yamaha Motor Co., Ltd. 7,295 Yamato Holdings Co., Ltd. 8,923 Japan Total 5,299,689
1GS Holdings Corp 3,958 Bs Financial Group Inc. 611 Hana Financial Group Inc. 8,686 Hyundai Heavy Industries Co., Ltd. 12,146 Hyundai Mobis Co., Ltd. 6,616 Hyundai Motor Company 30,378 Hyundai Steel Company 10,377 KB Financial Group Inc. 27,351 KIA Motors Corp. 16,026 KJB Financial Group Co., Ltd. 358 KT Corporation 8,521 KT&G Corporation 14,121 Korea Electric Power Corporation 26,150 LG Chem, Ltd. 14,871 LG Corp. 12,370 LG Display Co., Ltd. 10,485 LG Electronics Inc. 13,583 POSCO 33,562 SK Holdings Co., Ltd. 11,498 SK Hynix Inc. 13,910 SK Innovation Co., Ltd. 14,848 Samsung C&T Corporation 8,296 Samsung Electronics Co., Ltd. 114,963 Sk Telecom Co Ltd 19,308 Woori Bank 4,928 Korea (South) Total 6,227,819
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
34 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
ASML Holding 9,578 Aegon N.V. 35,708 Akzo Nobel N.V. 22,094 ArcelorMittal 39,108 Delta Lloyd N.V. 8,978 Koninklijke Ahold N.V. 17,953 Koninklijke DSM N.V. 9,910 Koninklijke KPN N.V. 26,152 Koninklijke Philips N.V. 32,895 L'Arche Green N.V. 28,261 PostNL N.V. 3,401 RANDSTAD HOLDING nv 6,719 Regering Van de Staat der Nederlanden 1,657 Stichting Administratiekantoor Unilever 44,838 Stichting ING Aandelen 80,194 Wolters Kluwer N.V. 9,331 Netherlands Total 376,777
Spark New Zealand Limited 13,629 New Zealand Total 13,629
DNB ASA 20,574 Norsk Hydro ASA 7,484 Orkla ASA 10,180 Seadrill Limited 5,137 Statoil ASA 51,597 Yara International ASA 19,856 Norway Total 114,828
EDP- Energias de Portugal, S.A. 8,581 Portugal Telecom, SGPS, S.A. 2,655 Portugal Total 11,236
CapitaLand Limited 6,512 DBS GROUP HOLDINGS LTD 21,353 Jardine Matheson Holdings Limited 12,768 Keppel Corporation Limited 6,053 Noble Group Limited 15,253 Oversea-Chinese Banking Corporation Limited 28,227 Singapore, Government of 20,448 United Overseas Bank Limited 16,682 Wilmar International Limited 2,910 Singapore Total 130,206
Banco Popular Espanol, S.A. 7,560 Banco Santander, S.A. 210,680 Banco de Sabadell, S.A. 13,443 Caja de Ahorros y Pensiones de Barcelona 9,685 ENEL - SPA 3,609 Ferrovial, S.A. 10,667 Fundacion Mapfre 10,513 Gartler S.L. 16,946 Gas Natural SDG, S.A. 13,224 Iberdrola, S.A. 65,726 Red Electrica Corporacion, S.A. 7,386 Repsol, S.A. 50,670 Telefonica S A 167,846 Spain Total 587,955
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
35 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
AB SKF 8,912 AB Volvo 15,668 Aktiebolaget Electrolux 11,053 Assa Abloy AB 7,545 Atlas Copco Aktiebolag 15,418 Boliden AB 6,681 Ericsson 36,025 H & M Hennes & Mauritz AB 26,954 Nordea Bank AB 48,149 Sandvik AB 16,286 Skandinaviska Enskilda Banken AB 19,304 Skanska AB 16,854 Svenska Cellulosa Aktiebolaget SCA 15,759 Svenska Handelsbanken AB 15,646 Swedbank AB 16,815 Tele2 AB 4,646 TeliaSonera AB 22,413 Sweden Total 304,128
ABB Ltd. 39,224 Adecco S.A. 9,927 Baloise-Holding AG 8,643 Compagnie Financiere Richemont SA 16,597 Credit Suisse Group AG 40,122 Givaudan SA 15,395 Holcim Ltd 23,601 Nestle S.A. 164,025 Novartis AG 161,044 Roche Holding AG 93,924 SGS SA 6,059 Schweizerische Eidgenossenschaft 13,020 Transocean Ltd. 7,254 UBS Group AG 30,408 Zurich Insurance Group AG 78,766 Switzerland Total 1,188,009
Anglo American PLC 34,277 AstraZeneca PLC 90,159 Aviva PLC 47,613 BAE Systems PLC 37,002 BG Group PLC 44,212 BHP Billiton PLC 44,107 BP P.L.C. 268,154 BT Group PLC 42,562 Balfour Beatty PLC 3,592 Bank of Ireland 9,544 Barclays PLC 106,051 British American Tobacco p.l.c. 82,159 CRH public limited company 28,262 Capita PLC 11,682 Carnival PLC 1,591 Centrica PLC 31,299 Compass Group PLC 20,150 Diageo PLC 33,309 Direct Line Insurance Group PLC 14,322 E. Abaroa Foundation 9,995 3M Company 68,761
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
36 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
ACE Limited 35,839 ADT Corp. 7,561 AFLAC Incorporated 23,920 AGCO Corporation 4,844 AT&T Inc. 302,426 AbbVie Inc. 31,508 Abbott Laboratories 84,514 Accenture Public Limited Company 21,718 Actavis Public Limited Company 23,946 Activision Blizzard, Inc. 13,450 Adobe Systems Incorporated 7,541 Aetna Inc. 33,587 Agilent Technologies, Inc. 3,020 Air Products and Chemicals, Inc. 18,919 Alcoa Inc. 30,380 Alliant Energy Corporation 7,753 Alpha Natural Resources, Inc. 2,185 Altria Group, Inc. 96,817 Amazon.com, Inc. 18,416 Ameren Corporation 14,266 American Capital Agency Corp. 11,606 American Electric Power Company, Inc. 36,700 American Express Company 36,482 American International Group, Inc. 82,333 American Water Works Company, Inc. 14,240 Ameriprise Financial, Inc. 17,978 AmerisourceBergen Corporation 44,157 Amgen Inc. 37,838 Anadarko Petroleum Corporation 28,797 Analog Devices, Inc. 9,934 Annaly Capital Management, Inc. 27,840 Anthem, Inc. 69,259 Aon PLC 19,265 Apache Corporation 27,548 Apple Inc. 253,033 Applied Materials, Inc. 16,912 Archer-Daniels-Midland Company 58,936 Arrow Electronics, Inc. 13,560 Assurant, Inc. 10,193 AutoZone, Inc. 14,959 Experian plc 7,865 Friends Life Group Limited 8,591 G4S PLC 6,349 GKN PLC 7,636 Garfield Weston Foundation 3,967 GlaxoSmithKline PLC 99,550 Glencore PLC 46,425 HSBC Holdings PLC 250,508 Home Retail Group PLC 10,475 Imperial Tobacco Group PLC 46,697 Indivior PLC 935 International Consolidated Airlines Group 2,719 J Sainsbury PLC 10,412 Johnson Matthey PLC 11,343 Kingfisher plc 10,534 Land Securities Group PLC 18,850 Legal & General Group PLC 23,659 Lloyds Banking Group PLC 51,783 Man Group PLC 10,626
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
37 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Marks and Spencer Group P.L.C. 8,882 Mondi plc 10,237 NEXT PLC 6,418 National Grid PLC 59,281 Old Mutual Public Limited Company 22,801 Pearson PLC 13,834 Prudential Public Limited Company 46,327 RSA Insurance Group PLC 11,762 Reckitt Benckiser Group PLC 31,546 Reed Elsevier PLC 11,719 Rexam PLC 8,710 Rio Tinto PLC 63,299 Rolls-Royce Holdings plc 21,822 Royal Bank of Scotland GRP Ord 28,943 Royal Dutch Shell PLC 407,052 SABMiller plc 36,461 SSE PLC 33,517 Severn Trent PLC 8,724 Sky PLC 9,876 Smith & Nephew PLC 9,897 Smiths Group PLC 5,130 Standard Chartered PLC 37,125 Standard Life PLC 14,783 Tesco PLC 54,505 The British Land Company Public Limited 10,555 Thomas Cook Group plc 5,156 Unilever PLC 45,105 United Utilities Group PLC 17,551 Vodafone Group Public Limited Company 194,150 WM Morrison Supermarkets P L C 20,005 WPP PLC 21,863 Wolseley Limited 15,306 Fut mar 15 Ftse 100 105,706 United Kingdom Total 33,960,447
Avnet, Inc. 9,917 Avon Products, Inc. 3,414 BB&T Corporation 25,702 Baker Hughes Incorporated 19,872 Bank of America Corporation 251,269 Baxter International Inc. 27,771 Becton, Dickinson and Company 20,953 Bed Bath & Beyond Inc. 11,071 Berkshire Hathaway Inc. 359,030 Best Buy Co., Inc. 35,902 Biogen Idec Inc. 9,793 BlackRock, Inc. 36,157 Blackhawk Network Holdings, Inc. 3,582 Boston Properties, Inc. 13,380 Boston Scientific Corporation 15,449 Bristol-Myers Squibb Company 60,399 Broadcom Corporation 17,202 Bunge Limited 31,847 C.H. Robinson Worldwide, Inc. 5,220 CA, Inc. 6,303 CDK Global, Inc. 4,224 CF Industries Holdings, Inc. 7,401 CIT Group Inc. 6,696 CME Group Inc. 22,619
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
38 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
CMS Energy Corporation 9,393 CONSOL Energy Inc. 5,683 CST Brands, Inc. 4,721 CSX Corporation 23,072 CVS Caremark Corporation 109,992 California Resources Corporation 1,836 Calpine Corporation 9,548 Cameron International Corporation 6,781 Campbell Soup Company 6,716 Capital One Financial Corporation 46,385 CarMax, Inc. 11,446 Cardinal Health, Inc. 52,758 CareFusion Corporation 12,951 Carnival Corporation 21,851 Caterpillar Inc. 48,722 Celgene Corporation 11,849 CenterPoint Energy, Inc. 12,538 CenturyLink, Inc. 39,463 Charles Schwab Corporation 11,415 Charter Communications, Inc. 16,885 Chesapeake Energy Corporation 15,124 Chevron Corporation 277,907 Chubb Corporation 26,442 Cigna Corporation 28,450 Clorox Company 7,844 Coach, Inc. 9,970 Coca-Cola Company 106,982 Coca-Cola Enterprises, Inc. 11,803 Cognizant Technology Solutions Corporation 9,079 Colgate-Palmolive Company 27,042 Comcast Corporation 111,004 Comerica Incorporated 13,245 Community Health Systems, Inc. 7,521 Computer Sciences Corporation 7,764 ConAgra Foods, Inc. 24,060 ConocoPhillips 156,052 Consolidated Edison, Inc. 24,544 Corning Incorporated 30,002 Costco Wholesale Corporation 49,719 Crown Holdings, Inc. 13,654 Cummins Inc. 20,527 DISH Network Corporation 3,759 DTE Energy Company 13,395 DaVita HealthCare Partners Inc. 10,621 Danaher Corporation 21,043 Darden Restaurants, Inc. 5,972 Dean Foods Company 5,769 Deere & Company 35,586 Delphi Automotive PLC 9,909 Delta Air Lines, Inc. 31,927 Denbury Resources Inc. 6,638 Devon Energy Corporation 23,039 DirecTV 31,501 Discover Financial Services 18,949 Dollar General Corporation 17,206 Dominion Resources, Inc. 35,589 Dover Corporation 7,152 Dow Chemical Company 52,403 Dr Pepper Snapple Group, Inc. 3,783
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
39 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Duke Energy Corporation 59,977 E. I. du Pont de Nemours and Company 56,582 EMC Corporation 37,026 EOG Resources, Inc. 17,487 ETRADE Financial Corporation 13,833 Eastman Chemical Company 10,188 Eaton Corporation Public Limited Company 19,360 eBay Inc. 25,123 Ecolab Inc. 13,504 Edison International 23,136 Eli Lilly and Company 68,286 Emerson Electric Co. 29,628 Ensco PLC 6,815 Entergy Corporation 34,346 Express Scripts Holding Company 49,152 Exxon Mobil Corporation 417,139 Facebook, Inc. 13,982 FedEx Corporation 47,124 Fidelity National Financial, Inc. 14,383 Fidelity National Information Services, 14,354 Fifth Third Bancorp 18,188 FirstEnergy Corp. 33,627 Fiserv, Inc. 15,178 Flextronics International Ltd. 18,235 Fluor Corporation 5,696 Ford Motor Company 75,965 Franklin Resources, Inc. 7,799 Freeport-McMoRan Inc. 30,813 Frontier Communications Corporation 23,207 Gannett Co., Inc. 3,327 Gap, Inc. 12,833 General Dynamics Corporation 47,935 General Electric Company 259,285 General Growth Properties, Inc. 15,627 General Mills, Inc. 32,135 General Motors Company 75,149 Genuine Parts Company 13,864 Genworth Financial, Inc. 7,686 Gilead Sciences, Inc. 24,626 Goldman Sachs Group, Inc. 87,903 Goodyear Tire & Rubber Company 7,310 Google Inc. 64,845 HCA Holdings, Inc. 47,318 HCP, Inc. 19,861 Halliburton Company 20,856 Harley-Davidson, Inc. 9,141 Harris Corporation 13,161 Hartford Financial Services Group, I 30,895 Health Care REIT, Inc. 16,859 Health Net, Inc. 5,423 Henry Schein, Inc. 13,685 Hertz Global Holdings, Inc. 6,125 Hess Corporation 31,207 Hewlett-Packard Company 117,972 HollyFrontier Corporation 10,113 Home Depot, Inc. 97,649 Honeywell International Inc. 45,621 Host Hotels & Resorts, Inc. 7,336 Hudson City Bancorp, Inc. 11,623
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
40 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Humana Inc. 26,697 Huntington Bancshares Incorporated 9,798 Illinois Tool Works Inc. 26,265 Ingersoll-Rand Public Limited Company 19,886 Ingram Micro Inc. 9,126 Integrys Energy Group, Inc. 9,262 J. C. Penney Company, Inc. 16,210 JPMorgan Chase & Co. 269,519 Jabil Circuit, Inc. 5,911 Jacobs Engineering Group Inc. 5,333 J. M. Smucker Company 8,168 Johnson & Johnson 185,682 Johnson Controls, Inc. 26,656 Juniper Networks, Inc. 4,066 Kellogg Company 9,229 KeyCorp 18,548 Keysight Technologies, Inc. 1,343 Kimberly-Clark Corporation 33,728 Kinder Morgan, Inc. 14,822 Kohl's Corporation 13,344 Kraft Foods Group, Inc. 14,495 Kroger Co. 75,265 L Brands, Inc. 21,682 L-3 Communications Holdings, Inc. 18,602 Laboratory Corporation of America Holding 5,812 Las Vegas Sands Corp. 8,690 Lear Corporation 10,464 Liberty Global PLC 8,828 Liberty Interactive Corporation 13,358 Lincoln National Corporation 22,526 Lockheed Martin Corporation 44,062 Loews Corporation 29,619 Lorillard, Inc. 19,305 Lowe's Companies, Inc. 58,333 LyondellBasell Industries N.V. 34,831 M&T Bank Corporation 14,561 MGM Resorts International 543 Macy's, Inc. 26,053 Manpowergroup Inc. 14,708 Marathon Oil Corporation 35,730 Marathon Petroleum Corporation 45,078 Marsh & McLennan Companies, Inc. 16,511 MasterCard Incorporated 6,537 Mattel, Inc. 5,566 Maxim Integrated Products, Inc. 13,321 McDonald's Corporation 63,390 McGraw Hill Financial, Inc. 15,067 McKesson Corporation 60,498 Meadwestvaco Corporation 11,863 Medtronic Public Limited Company 67,287 Merck & Co., Inc. 128,078 MetLife, Inc. 54,582 Micron Technology, Inc. 18,033 Microsoft Corporation 182,963 Mosaic Company 20,277 Motorola Solutions, Inc. 10,056 Murphy Oil Corporation 19,103 Murphy USA Inc. 24,610 Mylan Inc. 13,889
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
41 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
NIKE, Inc. 25,062 NRG Energy, Inc. 8,404 Nabors Industries Ltd 3,907 National Amusements, Inc. 28,140 National Oilwell Varco, Inc. 18,356 Navient Corporation 9,926 Navistar International Corporation 7,735 NetApp, Inc. 11,957 New York Community Bancorp, Inc. 5,567 Newmont Mining Corporation 27,678 News Corporation 5,414 NextEra Energy, Inc. 38,122 NiSource Inc. 13,653 Noble Corporation PLC 11,166 Noble Energy, Inc. 9,423 Nordstrom, Inc. 7,847 Norfolk Southern Corporation 29,497 Northern Trust Corporation 15,137 Northrop Grumman Corporation 35,990 Now, Inc. 1,965 Nucor Corporation 15,174 ONEOK, Inc. 11,441 Occidental Petroleum Corporation 51,985 Omnicom Group Inc. 13,094 Oracle Corporation 66,312 Owens-Illinois, Inc. 3,730 PACCAR Inc 18,667 PG&E Corporation 38,321 PPG Industries, Inc. 24,611 PPL Corporation 30,293 Parker-Hannifin Corporation 11,874 PartnerRe Ltd. 14,123 Paychex, Inc. 8,325 Peabody Energy Corporation 7,001 People's United Financial, Inc. 12,605 Pepco Holdings, Inc. 12,449 PepsiCo, Inc. 109,560 Pfizer Inc. 208,328 Philip Morris International Inc. 92,424 Phillips 66 65,120 Pinnacle West Capital Corporation 9,471 Pitney Bowes Inc. 2,208 PNC Financial Services Group, Inc. 44,382 Procter & Gamble Company 174,323 Progressive Corporation 16,631 Prudential Financial, Inc. 44,688 Public Service Enterprise Group Incorpor 25,020 Public Storage 9,609 QUALCOMM Incorporated 49,849 Quest Diagnostics Incorporated 8,612 R. R. Donnelley & Sons Company 11,294 Raytheon Company 26,131 Regions Financial Corporation 15,562 Reinsurance Group of America, Incorporated 8,657 Republic Services, Inc. 7,805 Reynolds American Inc. 21,357 Rite Aid Corporation 11,760 Rockwell Automation, Inc. 8,510 Ross Stores, Inc. 16,451
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
42 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value
Royal Caribbean Cruises Ltd 10,968 SCANA Corporation 9,794 SLM Corporation 4,278 SUPERVALU Inc. 19,454 SanDisk Corporation 11,899 Schlumberger N.V. 54,190 Seagate Technology Public Limited 16,416 Sears Holdings Corporation 7,960 Sempra Energy 21,108 Seventy Seven Energy Inc. 267 Simon Property Group, Inc. 27,621 Southern Company 53,246 Southwest Airlines Co. 22,614 Southwestern Energy Company 7,962 Spectra Energy Corp. 21,786 St. Jude Medical, Inc. 11,471 Stanley Black & Decker, Inc. 7,124 Staples, Inc. 16,958 Starbucks Corporation 22,442 Starwood Hotels & Resorts Worldwide, Inc 7,705 State Street Corporation 31,751 Stryker Corporation 16,002 SunTrust Banks, Inc. 25,675 Symantec Corporation 10,505 Sysco Corporation 31,450 T. Rowe Price Group, Inc. 4,009 TE Connectivity Ltd. 18,858 TRW Automotive Holdings Corp. 15,041 Target Corporation 73,027 Tenet Healthcare Corporation 12,423 Tesoro Corporation 15,217 Texas Instruments Incorporated 28,148 Textron Inc. 9,718 TJX Companies, Inc. 23,162 Travelers Companies, Inc. 67,388 Thermo Fisher Scientific Inc. 15,740 Time Inc. 2,511 Time Warner Cable Inc. 24,961 Time Warner Inc. 69,146 Twenty-First Century Fox, Inc. 39,956 Tyco International Ltd. 15,415 Tyson Foods, Inc. 10,334 U.S. Bancorp 57,961 Union Pacific Corporation 53,545 United Continental Holdings, Inc. 27,816 United Parcel Service, Inc. 51,490 United States Steel Corporation 7,706 United Technologies Corporation 65,654 UnitedHealth Group Incorporated 96,966 Unum Group 15,465 Urban Edge Properties 1,159 V.F. Corporation 14,554 Valero Energy Corporation 71,589 Ventas, Inc. 14,867 Veritiv Corporation 471 Verizon Communications Inc. 195,488 Visa Inc. 32,760 Vornado Realty Trust 10,799 Walt Disney Company 85,522
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
43 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 11 - Financial instruments and fair values through profit or loss continued As at 20.02.15 Equities at market Value Waste Management, Inc. 24,911 Weatherford International Ltd. 13,363 Wells Fargo & Company 247,503 Western Union Company 14,490 Western Digital Corporation 21,372 Weyerhaeuser Company 43,688 Whirlpool Corporation 25,592 Whole Foods Market, Inc. 12,250 Williams Companies, Inc. 22,477 Windstream Holdings, Inc. 17,493 Wisconsin Energy Corporation 9,971 World Fuel Services Corporation 13,056 Wynn Resorts, Limited 7,607 W. W. Grainger, Inc. 5,715 Xcel Energy Inc. 20,726 Xerox Corporation 19,194 Xl Group Public Limited Company 11,065 Yahoo! Inc. 15,924 Yum! Brands, Inc. 22,406 Zimmer Holdings, Inc. 14,591 Zoetis Inc. 10,944 Fut mar 15 Emini S&P 500 316,065 USA Total 48,734,339
Total equities at market value 32,103,926
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
44 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk
Risk management framework The purpose of risk management is to enable the Association to meet its obligations to policy holders and Members. Risk management must ensure that risk taking is consistent with the Association's risk appetite and that there is an appropriate risk reward balance in all risk taking activities. This risk management framework has been approved by the CEO. The Risk and Capital Committee is responsible for proposing changes to this framework to the CEO. The Risk and Capital Committee meet regularly to discuss any commercial, regulatory and organisational requirements. The mission is to improve the understanding of current and prospective risk exposures, as well as ensure sound, holistic and transparent decision making processes in relation to risk management.
Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation. The credit exposure on the Association`s reinsurance programme is in line with the guidelines of only accepting reinsurers with an A- or higher rating. The Association is, however, faced with BBB rating exposure through the IG Pooling agreement. Among the thirteen clubs, five have ratings of BBB.
The Association also has counterparty risk towards counterparties through the financial derivative overlay programme used to manage market risk exposures. Common risk mitigation techniques are exercised in order to minimise the counterparty risk in relation to the holding of derivative contracts. The credit risk in respect of receivables is handled by group policies and by close follow up. Outstanding receivables can be netted off against outstanding claims payments to reduce the risk of doubtful debts.
The tables below provide information regarding credit risk exposure as at 20.02.2015, by classifying assets according to the median rating amongst the three market leading providers, Standard & Poor's, Moody's and Fitch. This principle is in line with new Solvency II requirements. AAA is the highest possible rating. The US long-term sovereign credit rating is considered to be AAA due to an applied median approach. Last year the corresponding rating used was according to the Standard & Poor`s rating, which was AA+.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
45 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk continued
As at As at Amounts in USD 000's 20.02.15 20.02.14
Bonds AAA 58,201 51,355 AA 7,791 14,206 A 24,115 32,681 BBB 62,837 43,880 BB 7,836 7,021 B 2,942 3,140 CCC/lower 365 398 Not rated 5,443 4 Total bonds 169,531 152,685
Financial derivative assets A 2,487 264 Total financial derivative assets 2,487 264
Cash included in other financial investments A 4,857 4,432 Total cash included in other financial investments 4,857 4,432
Reinsurers`share of gross claim reserve A 181,140 249,221 BBB 17,717 2,678 BB 0 260 Total reinsurers`share of gross claim reserve 198,857 252,159
Receivables A 7,367 9,619 BBB 177 0 Not rated 12,824 16,635 Total receivables 20,368 26,254
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
46 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk continued
As at As at Amounts in USD 000's 20.02.15 20.02.14
Cash and cash equivalents AA 6,128 14,878 A 15,431 27,770 BBB 1,189 95 Not rated 594 0 Total cash and cash equivalents 23,342 42,743
Other financial assets presented in balance sheet* A 6,127 11,714 Total other financial assets presented in balance sheet 6,127 11,714 *Includes pending transactions for settlement and other financial assets
Age analysis of receivables after provision for bad debt
As at As at Amounts in USD 000's 20.02.15 20.02.14
Not due 19,046 25,474 0-60 days 670 277 61-90 days 130 61 Above 90 days 523 442 Total 20,368 26,254
Impaired receivables As at 20.02.15 there are impaired receivables of USD 1.4 million (20.02.14 USD 1.7 million) related to past due. No collateral is held as security for the impaired receivables, but the receivables can be deducted from future claim payments if any. Impairment allowance is included in net operating expenses.
Analysis of provision for bad debt
As at As at Amounts in USD 000's 20.02.15 20.02.14
Balance as at the beginning of the period 1,723 1,411 Provision for receivables impairment 110 756 Receivables written off during the year as uncollectable (382) (288) Unused amounts reversed (76) (158) Exchange adjustment 24 2 Balance as at the end of the period 1,400 1,723
The creation and release of provision for impaired receivables have been included in 'other insurance related expenses' in the income statement. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
47 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk continued
Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. In respect of catastrophic events there is also a liquidity risk associated with the timing differences between gross cash outflows and expected reinsurance recoveries. Liquidity risk arises primarily due to the unpredictability of the timing of payment of insurance liabilities and the illiquidity of the assets held or when market depth is insufficient to absorb the required volumes of assets to be sold, resulting in asset sale at a discount. The risk is mitigated through a credit facility with Nordea Bank Norge ASA and a cash pool between the direct insurance entities in the Gard group, which improves access to liquidity across the legal entities.
Maturity profile The following tables below set out the maturity profile of liabilities combining amounts expected to be recovered within one year, between one and five years and more than five years. Liabilities not covered by IFRS 7 are classified as other liabilities in the table.
The Association maintains highly marketable financial instruments and diverse assets that can be easily liquidated in the event of an unforeseen interruption of cash flow. This, combined with the credit facility and cash pool to meet liquidity needs, gives a presentation of how assets and liabilities have been matched.
Within 1 1-5 More than No maturity As at 20.02.15 Amounts in USD 000's year years 5 years date Total
Payables and accruals 6,888 0 0 0 6,888 Other payables 8,539 0 0 0 8,539
Within 1 1-5 More than No maturity As at 20.02.14 Amounts in USD 000's year years 5 years date Total
Payables and accruals 5,402 0 0 0 5,402 Other payables 14,685 0 0 0 14,685
Market risk Market risk is the risk that the market prices will fluctuate because of changes in future expected cash flows of a financial instrument. Market risk arises from investment activities and the sensitivity of liabilities to marked prices. The most significant market risk types are: foreign exchange rates (currency risk), market interest rates (interest rate risk), and quoted price rates (price risk).
Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The currency exposure on the asset side in the Association is matched to the assumed currency exposure of liabilities. A significant share of the actual claims exposure is in another currency than the accounting currency. Based on accounting figures, there is a mismatch between assets and liabilities. The currency exposure is managed through a rolling forward programme.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
48 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk continued As at As at Amounts in USD 000's 20.02.15 20.02.14 Assets USD 300,887 310,599 EUR 53,274 85,451 GBP 41,478 46,307 Other 63,590 83,771 Total assets 459,229 526,128
Liabilities USD 296,265 348,334 EUR 61,042 75,128 GBP 39,256 46,151 Other 62,665 56,515 Totalt liabilities 459,229 526,128
Net asset exposure USD 4,622 (37,735) EUR (7,769) 10,323 GBP 2,222 156 Other 924 27,256
Net exposure in % USD 1 % -7 % EUR -2 % 2 % GBP 0 % 0 % Other 0 % 5 %
Interest rate risk Interest rate risk is the risk that the value of the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The term structure of interest bearing assets in the Association is matched to the expected duration of the liabilities. The sensitivity analysis of the bond assets of the Association has been modelled by reference to a reasonable approximation of the weighted average interest rate sensitivity of the investments held.
Equity price risk Equity price risk is the risk that the fair value in market prices will fluctuate because of changes in future expected cash flows of a financial instrument, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
The Association`s equity price risk exposure relates to financial instruments whose values will fluctuate as a result of changes in market prices.
The equity portfolio is broadly diversified. However, compared to a global benchmark portfolio based on market capitalisation, the equity portfolio is skewed towards emerging markets and small caps, which is expected to have a higher volatility than the global market as a whole.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
49 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 12 - Financial risk continued
Equities and investment funds includes equity stocks and investment in mutual funds in asset classes such as real estate, corporate bonds and absolute return. The equity allocation reported is adjusted for a derivative overlay programme. Equity beta exposure is hedged out through equity index futures in order to maintain total equity market exposure within the allowed range, and simultaneously fixed income exposure is gained through interest rate swap contracts.
Equities and investment funds consist of the following
As at As at Amounts in USD 000's 20.02.15 20.02.14
Equity stocks 31,476 33,144 Equity index futures 628 0 Total equities 32,104 33,144 Investment funds, net 0 0 Equities and investment funds 32,104 33,144
Financial instruments - sensitivity analysis The analysis below is performed for reasonably possible movements in key market variables with all other variables held constant.
As at As at Amounts in USD 000's 20.02.15 20.02.14
Impact on fixed income portfolio investments given an increase of 50 basis points (2,936) (2,422) Impact on equity portfolio given a 10% drop in quoted market prices (3,210) (3,314) Impact on total investment portfolio given a change of 10% in foreign exchange rates against USD (6,865) (8,962)
The sensitivity analysis assumes no correlation between equity price, property market and foreign currency rate risk. It also assumes that all other receivables and payables remain unchanged and that no management action is taken. The Association has no significant risk concentrations which is not in line with the overall investment guidelines set by the Board of Directors. Any impact from risk tested in the table above is not, due to tax regulations, assumed to have any taxable impact.
The methods used above for deriving sensitivity information and significant variables have not changed from the previous period.
Assuranceforeningen Gard -gjensidig- Financial Statements for the year to 20 February 2015
50 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 13 - Financial derivatives at fair value through profit or loss
Financial derivatives
Financial derivatives are integrated components in the investment philosophies and processes of the Gard group's fund management. They are used for risk management, liquidity improvement, cost reduction and to optimise return within the guidelines set for the Gard group's fund management. Financial derivatives contribute to reducing the risk of the assets not being able to cover the Association's liabilities. The Association has implemented derivative overlay programme whereby, regional equity specialists are employed with mandates which have historically provided value creation from active management. The market exposure is then hedged out through equity futures contracts in order to maintain total equity market exposure within the allowed range, and simultaneously fixed income exposure is gained through interest rate swap contracts.
Investment guidelines
The key features of the Gard group’s derivative guidelines are as follows: All options must be covered. The aggregate economic exposure of the fund may not exceed one hundred per cent of the total fund’s market value, i.e. there must be no leverage or gearing of any nature whatsoever of the fund. Derivatives must not be used to effect economic exposures beyond the limits set out in the fund guidelines. Any transactions in derivative instruments or of a partly paid nature, which might lead to a contingent liability undertaken for the Gard group will be subject to the restriction that sufficient cash or relevant securities must be retained to cover the full net exposure. In addition, there are minimum criteria for counterparties in derivative transactions.
Compliance monitoring Compliance with the guidelines is monitored on an ongoing basis through the use of both internal and external resources. Even though the investment managers have internal risk analysis and compliance monitoring processes it is necessary to have independent verification based on alternative sources of data. The global custodian is therefore responsible for detailed compliance monitoring and reporting both at the overall fund level and the individual portfolio level. The investment managers are also subject to a bi-annual independent assessment of investment processes and skills to ensure that, inter alia , risk management and compliance monitoring routines are satisfactory.
Valuation and reporting All derivative instruments are carried at independently sourced market values in accordance with principles described under note 2. Underlying contract values represent the value of the underlying gross commitments of all open contracts.
Types of financial derivatives used during the financial year
Forward exchange contracts A forward exchange contract is a contract between two parties whereby one party contracts to sell and the other party contracts to buy one currency for another, at an agreed future date, at a rate of exchange which is fixed at the time the contract is entered into.
Interest rate options An option is a contract in which the writer of the option grants the buyer of the option the right to purchase from or sell to the writer a designated instrument at a spesific price within a specified period of time. An interest rate option can be written on cash instruments or futures, and is used to manage the interest rate and volatility exposure of the portfolio. Written options generate gains in stable rate environments, but may create obligations to buy or sell underlying securities under greater rate movements. Purchased options are used to generate gains based on interest rate forecasts.
Interest rate futures An interest rate futures contract is a standardised agreement between a buyer (seller) and an established exchange or its clearing house in which the buyer (seller) agrees to take (make) delivery of a financial rate instrument at a specified price at the end of a designated period of time.
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
51 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 13 - Financial derivatives at fair value through profit or loss continued
Interest rate swaps An interest rate swap is an agreement between two parties to exchange periodic interest payments. In the most common type of swap, one party agrees to pay the other party fixed-interest payments at designated dates for the life of the contract. This instrument is used to change interest rate risk by changing the cash flow of fixed rate bonds to adjustable rate bonds or vice versa.
Equity index future An equity index future contract is a standardised agreement between a buyer (seller) and an established exchange or its clearing house in which the buyer (seller) agrees to take (make) delivery of an amount based on an equity index at designated point in time.
Notional Notional Fair value Fair value Amounts in USD 000's 20.02.15 20.02.14 20.02.15 20.02.14
Type of derivatives
Interest rate related Futures 2,726 2,388 0 0 Options 4,126 14,069 (14) (24) Swaps 6,020 9,006 126 33 Total interest rate related 12,872 25,463 112 9 Net interest rate related 12,872 25,463 112 9
Equity related contracts Futures 628 0 0 0 Net equity related 628 0 0 0
Foreign currency related Forward foreign exchange contracts 97,768 11,130 1,936 (94) USD receivables related to foreign currency contracts 0 0 0 0 Net foreign currency related 97,768 11,130 1,936 (94)
Net financial derivative assets/liabilities 2,048 (85)
Financial derivative assets 2,487 264 Financial derivative liabilities (439) (349) Net financial derivative assets/liabilities 2,048 (85)
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
52 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 14 - Receivables from direct insurance operations
As at As at Amounts in USD 000's 20.02.15 20.02.14
Direct and received premium 4,175 3,198 Accrued deferred call 11,491 11,245 Provision for bad debts (1,400) (1,723) Receivables from direct insurance operations 14,266 12,720
Note 15 - Other receivables and other payables
As at As at Amounts in USD 000's 20.02.15 20.02.14
Other receivables Other receivables 11 0 Total other receivables 11 0
Other payables Other payables 3,702 2,010 Investments transactions in progress 4,838 12,675 Total other payables 8,539 14,685
"Investment transactions in progress" refers to sales and purchases of investments at the balance sheet date, where settlements are executed after the balance sheet date.
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
53 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 16 - Cash and cash equivalents
Cash and cash equivalents includes bank deposits and cash in hand, of which USD 0.03 million as at 20.02.2015 is restricted cash. The Group has a group account agreement and participates in a cash pool agreement. Both agreements are made with the Group's main bank, Nordea Bank Norge ASA. The group account agreement implies that the Association can make overdrafts on individual bank accounts as long as the Group total bank deposit is positive.
The Group has an overdraft facility with Nordea Bank Norge ASA for an amount of USD 40 million. Through the cash pool agreement all the participating companies can make use of this overdraft facility. The cash pool agreement secures efficient use of the operating bank deposits through the companies' opportunities to make use of the overdraft facility on individual bank accounts accumulating up to USD 50 million in aggregate for the companies participating in the agreement. Each company participating in the cash pool agreement is jointly liable for the overdraft facility through unsecured guarantees.
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
54 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 17 - Pensions
The Association has defined benifit plans covering two retired employees. These contracts are financed through the Association's operations. Part time employees are included in the pension scheme in Gard AS. This pension scheme covers the required occupational pension in accordance to the Norwegian Pension Act.
Defined benifit plans entitle the employees to a defined level of future pension payments. Such future pension payments are mainly dependent on number of contributory years and the salary level on retirement.
For defined benifit plans actuarial calculations are made with regard to pension liabilities at the end of the year, and resulting changes in pension liabilities are charged to the income statement.
The Association has changed the accounting policy in respect of employee benefits, and pensions are presented in accordance with IAS19. Comparative figures have been restated.
Actuarial calculations of pension liabilities have been prepared as at 20 February 2015. These calculations show that the Association has pension liabilities amounting to USD 3.1 million.
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
55 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 17 - Pensions continued
Pension cost and pension liability have been accounted for in accordance with IAS19R. The comparative figures have been restated in accordance with IAS19R.
As at As at 20.02.15 20.02.14 Amounts in USD 000's Restated
Pension cost
Defined benefit pension plans Interest expense on earned pension 100 90 Net pension costs earning related plan 100 90
Total pension cost charged to income statement 100 90
Changes in pension assumptions charged to Other comprehensive Income 285 849
Liabilities according to the actuarial calculations: Pension obligation gross 3,050 3,187
Net pension obligation at end of year 3,050 3,187
Financial assumptions Per cent Per cent Discount rate 2.30 3.60 Assumed annual salary regulation 3.25 3.75 Assumed pension increase 1.50 2.00 Assumed regulations of public pensions 3.25 3.50 Assumed yield on funds 2.30 3.60
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
56 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 18 - Changes in contingency reserve
As at As at 20.02.15 20.02.14 Amounts in USD 000's Restated
Contingency reserve as at beginning of year, as restated 128,380 111,776
Change in contingency reserve (11,687) 15,539 Restatement of pension charged to contingency reserve 0 1,065
Contingency reserve as at end of year 116,685 128,380
Note 19 - Technical provisions and solvency margin
As at 20.02.15 As at 20.02.14 Actual FSA's minimum Actual FSA's minimum Amounts in USD 000's provisions requirements provisions requirements
Provision for claims net of reinsurance 124,772 121,309 121,966 148,551 General contingency reserves etc 116,685 27,525 128,380 33,047 Total technical provisions own account 241,457 148,834 250,346 181,598
Solvency margin 20.02.15 20.02.14
Required solvency margin 26,062 27,681 Solvency margin capital 110,379 111,892
Solvency margin capital in per cent of required solvency margin 423.5 % 404.2 %
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
57 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 20 - Changes in accounting policies
Adoption of IAS 19 The revised employee benefit standard introduces changes to the recognition, measurement, presentation and disclosure of post-employment benefits. The standard also requires net interest income/expense to be calculated as the product of the net defined benefit asset/liability and the discount rate as determined at the beginning of the year. The effect of this is to remove the previous concept of recognising an expected return on plan assets. The effect of the changes to the accounting policies is shown in the following tables.
Impact of change in accounting policy on balance sheet As at As at 20.02.14 as As at 21.02.13 as As at previously Adopt 20.02.14 previously Adopt 21.02.13 Amounts in USD 000's stated IAS 19 Restated stated IAS 19 Restated
Assets Investments
Financial investments at fair value through profit or loss Equities and investment funds 33,144 0 33,144 33,778 0 33,778 Bonds 152,685 0 152,685 160,341 0 160,341 Financial derivative assets 264 0 264 627 0 627 Other financial investments 11,714 0 11,714 12,025 0 12,025 Total investments 197,807 0 197,807 206,771 0 206,771
Reinsurers' share of technical provisions Reinsurers' share of gross claims reserve 252,159 0 252,159 274,211 0 274,211 Total reinsurers' share of technical provisions 252,159 0 252,159 274,211 0 274,211
Receivables Receivables from direct insurance operations Policyholders 12,720 0 12,720 10,352 0 10,352
Receivable from reinsurance operations Receivables from reinsurance operations 3,724 0 3,724 4,316 0 4,316 Receivables from group companies 9,810 0 9,810 10,193 10,193
Other receivables 0 0 0 3,771 0 3,771 Total receivables 26,254 0 26,254 28,632 0 28,632
Other assets Equipment 2,946 0 2,946 2,967 0 2,967 Cash and cash equivalents 42,743 0 42,743 6,569 0 6,569 Other financial assets 2,086 0 2,086 2,123 0 2,123 Total other assets 47,775 0 47,775 11,659 0 11,659
Prepayments and accrued income Accrued income and other prepayments 2,133 0 2,133 1,228 0 1,228 Total prepayments and accrued income 2,133 0 2,133 1,228 0 1,228
Total assets 526,128 0 526,128 522,501 0 522,501
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
58 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 20 - Changes in accounting policies continued As at As at 20.02.14 as As at 21.02.13 as As at previously Adopt 20.02.14 previously Adopt 21.02.13 Amounts in USD 000's stated IAS 19 Restated stated IAS 19 Restated
Equity and liabilities
Technical provisions Gross claims reserve 374,125 0 374,125 387,937 0 387,937 Total technical provisions 374,125 0 374,125 387,937 0 387,937
Contingency reserve Contingency reserve 128,961 (581) 128,380 111,949 (173) 111,776 Total contingency reserve 128,961 (581) 128,380 111,949 (173) 111,776
Provision for other liabilities Pension obligations 2,606 581 3,187 3,324 173 3,497 Total provisions for other liabilities 2,606 581 3,187 3,324 173 3,497
Payables Payables arising out of direct insurance operations 1,187 0 1,187 256 0 256 Payables arising out of reinsurance operations 2,984 0 2,984 3,261 0 3,261 Payables group companies 226 0 226 2,441 0 2,441 Financial derivative liabilities 349 0 349 611 0 611 Other payables 14,682 0 14,682 11,752 0 11,752 Total payables 19,428 0 19,428 18,321 0 18,321
Accruals and deferred income Accruals and deferred income 1,008 0 1,008 970 0 970 Total accruals and deferred income 1,008 0 1,008 970 0 970
Total liabilities 526,128 0 526,128 522,501 0 522,501
Total equity and liabilities 526,128 0 526,128 522,501 0 522,501
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
59 Assuranceforeningen Gard - gjensidig - Notes to the accounts
Note 20 - Changes in accounting policies continued
Impact of change in accounting policy on income statement As at 20.02.14 as As at previously Adopt 20.02.14 Amounts in USD 000's stated IAS 19 Restated Technical account Gross written premium 128,257 0 128,257 Ceded reinsurance (54,573) 0 (54,573) Earned premium for own account 73,684 0 73,684
Other insurance related income 40 0 40
Gross settled claims 151,735 0 151,735 Reinsurers' share of gross settled claims (98,184) 0 (98,184) Change in gross claims reserve (13,817) 0 (13,817) Reinsurers' share of change in claims reserve 22,052 0 22,052 Claims incurred for own account 61,785 0 61,785
Acquisition costs 4,897 0 4,897 Agents' commission 9,465 0 9,465 Commission received (6,966) 0 (6,966) Insurance related expenses for own account 7,396 0 7,396
Other insurance related expenses 4,541 623 5,164
Technical result before change in contingency reserve 1 (623) (622)
Change in contingency reserve (17,011) 1,472 (15,538)
Technical result (17,010) 849 (16,160)
Non-technical account Interest and similar income 9,155 0 9,155 Change in unrealised gain/loss on investments 178 0 178 Gains on realisation of investments 8,826 0 8,826 Investment management expenses (1,015) 0 (1,015) Non-technical result 17,144 0 17,144
Profit before tax 134 849 983 Taxation (134) 0 (134)
Net result 0 849 849
Other comprehensive income Remeasurement due to change in pension assumptions* 0 (849) (849) Total result 0 0 0
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
60 Assuranceforeningen Gard - gjensidig -
Note 20 - Changes in accounting policies continued
Impact of change in accounting policy on the statement of cash flows For period For period Adopt ended ended IAS 19 20.02.14 Amounts in USD 000's 20.02.14 Restated
Cash flow from operating activities Profit from ordinary operations before tax 134 849 983 Tax paid (134) 0 (134) Impairment of fixed assets 0 0 0 Change in unrealised gain/loss on investments (178) 0 (178) Change in pension obligation (718) 408 (310) Change in receivables and payables 3,872 0 3,872 Change in technical provisions and other accruals 24,390 (1,257) 23,133 Purchase/sale of other investment 8,786 0 8,786 Net cash flow from operating activities 36,152 0 36,152
Cash flow from investment activities Purchase of fixed assets 22 0 22
Net cash flow from investment activities 22 0 22
Net change in cash and cash equivalents 36,174 0 36,174 Cash and cash equivalents at beginning of year 6,569 0 6,569
Cash and cash equivalents at end of year 42,743 0 42,743
Assuranceforeningen Gard - gjensidig- Financial Statements for the year to 20 February 2015
61 62 63 64 CONTACT DETAILS FOR GARD’S GLOBAL NETWORK
Lingard Limited Gard (Greece) Ltd Gard (Singapore) Pte. Ltd. Trott & Duncan Building 2, A. Papanastasiou Avenue 72 Anson Rd 17A Brunswick Street 185 34 Kastella, Piraeus #13-02 Anson House Hamilton HM 10 Greece Singapore 079911 Bermuda Singapore Tel + 30 210 413 8752 Tel +1 441 292 6766 Email [email protected] Tel +65 6709 8450 Email [email protected] Email [email protected] Gard (HK) Ltd Gard AS Room 3505, 35F Gard (UK) Limited Kittelsbuktveien 31 The Centrium, 60 Wyndham Street 85 Gracechurch Street NO-4836 Arendal Central London EC3V 0AA Norway Hong Kong United Kingdom
Tel +47 37 01 91 00 Tel +852 2901 8688 Tel +44 (0)20 7444 7200 Email [email protected] Email [email protected] Email [email protected]
Gard AS Gard (Japan) K.K. Gard Marine & Energy- Escritório de Skipsbyggerhallen Kawade Building, 5F Representação no Brasil Ltda Solheimsgaten 11 1-5-8 Nishi-Shinbashi Rua Lauro Muller 116 – suite 2402 NO-5058 Bergen Minato-ku, Tokyo 105-0003 Botafogo, 22290-160, Norway Japan Rio de Janeiro, RJ, Brazil Tel +47 37 01 91 00 Tel +81 (0)3 3503 9291 Email [email protected] Email [email protected] Tel +55 (21) 3037 9764 Email [email protected] Gard AS Gard (Japan) K.K. Støperigt 2, Aker Brygge Vogue 406, NO-0250 Oslo 3-9-36 Higashimura, Imabari-City, Norway Ehime 799-1506, Emergency Telephone Number Japan +47 90 52 41 00 Tel +47 37 01 91 00 Email [email protected] Tel +81 898 35 3901 www.gard.no Email [email protected] Oy Gard (Baltic) Ab Bulevardi 46 Gard (North America) Inc. FIN-00120 Helsinki 40 Fulton Street Finland New York, NY 10038 USA Tel +358 30 600 3400 Email [email protected] Tel +1 212 425 5100 Email [email protected]