Vardia Insurance Group ASA

PROSPECTUS

(a public limited liability company organised under the laws of Norway)

A fully underwritten Offering of 375,000,000 New Shares, each with a par value of NOK 0.08, through a Rights Issue and a Private Placement

The listing of up to 275,000,000 Subscription Rights in the Rights Issue for trading on Oslo Børs under the ticker symbol "VARDIA T"

The listing of 375,000,000 New Shares offered in the Rights Issue and the Private Placement on Oslo Børs

Subscription Price: NOK 1.00

Trading period for the Subscription Rights: From and including 13 May 2015 to 16:30 (CET) on 22 May 2015

Subscription and application Period: From and including 13 May 2015 to 16:30 (CET) on 27 May 2015

______This prospectus (the " Prospectus ") has been prepared in order to provide information regarding Vardia Insurance Group ASA (" Vardia " or the " Company ") and its business in connection with (i) the offering of 375,000,000 new shares in the Company with a par value of NOK 0.08 each (the " New Shares ") through (a) the fully underwritten rights issue of 275,000,000 New Shares (the "Rights Issue ") and (b) the fully underwritten private placement of 100,000,000 New Shares (the " Private Placement " and together with the Rights Issue collectively referred to as the " Offering "), (ii) the listing of up to 275,000,000 subscription rights in the Rights Issue (the " Subscription Rights ") issuable to shareholders who are registered in the Company's shareholder register as at the end of 11 May 2015 (the Company's shareholders as at the end of the date on which this Prospectus was approved, 7 May 2015, as evidenced in the Norwegian Central Securities Depository (" VPS ") in accordance with normal T+2 settlement) (the "Record Date ") on Oslo Børs, and (iii) the listing of the New Shares on Oslo Børs. All offers and sales in the United States will be made to "qualified institutional buyers" ("QIBs ") as defined in Rule 144A under the United States Securities Act of 1933, as amended (the "U.S. Securities Act ") in a private placement as contemplated under Section 4(a)(2) under the U.S. Securities Act or pursuant to another applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. All offers and sales outside the United States will be made in reliance on Regulation S (" Regulation S ") under the U.S. Securities Act. Investing in the New Shares involves a high degree of risks. Prospective investors should read the entire Prospectus and, in particular, consider Section 2 "Risk Factors" when considering an investment in the Company. The New Shares have not been, and will not be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered or sold within the United States except to QIBs in reliance on an exemption from the registration requirements of the U.S. Securities Act, or outside the United States in compliance with Regulation S. For certain restrictions on transfer, see Section 15 "Selling and Transfer Restrictions".

SUBSCRIPTION RIGHTS NOT USED TO SUBSCRIBE FOR NEW SHARES BEFORE THE END OF THE SUBSCRIPTION PERIOD 16:30 (CET) 27 MAY 2015, OR THAT ARE NOT SOLD BEFORE THE END OF TRADING ON OSLO BØRS 16:30 (CET) ON 22 MAY 2015, WILL LAPSE WITHOUT COMPENSATION TO THE HOLDER, AND CONSEQUENTLY BE OF NO VALUE.

IF THE PRIVATE PLACEMENT IS NOT RESOLVED AT THE COMPANY'S GENERAL MEETING SCHEDULED TO BE HELD ON OR ABOUT 28 MAY 2015, THE OFFERING WILL NOT BE COMPLETED AND THE SUBSCRIPTION RIGHTS WILL LAPSE WITHOUT COMPENSATION TO THE HOLDER, AND CONSEQUENTLY BE OF NO VALUE

______Manager Pareto Securities

The date of this Prospectus is 7 May 2015

Important information

This Prospectus has been prepared by the Company in connection with the (i) Offering, (ii) listing of the Subscription Rights on Oslo Børs and (iii) listing of the New Shares on Oslo Børs.

For the definitions of terms used throughout this Prospectus, see Section 17 "Definitions and Glossary of Terms" of this Prospectus.

______

The Company has furnished the information in this Prospectus. This Prospectus has been prepared in compliance with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the "Norwegian Securities Trading Act ") and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses, as amended, and as implemented in Norway (the "EU Prospectus Directive"). The Prospectus has been published in an English version only with a Swedish summary. The Financial Supervisory Authority of Norway ( Nw.: Finanstilsynet ) (the "FSA ") has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The FSA has not controlled or approved the accuracy or completeness of the information included in this Prospectus. The approval by the FSA only relates to the information included in accordance with pre-defined disclosure requirements. The FSA has not made any form of control or approval relating to corporate matters described in or referred to in this Prospectus. Furthermore, the Prospectus has been passported to Sweden through a notification to the Swedish Financial Supervisory Authority ( Sw.:Finansinspektionen ) in accordance with Section 7-9 of the Norwegian Securities Trading Act.

The Company has engaged Pareto Securities AS (the "Manager ") as the manager for the Offering.

All inquiries relating to this Prospectus must be directed to the Company. No person other than the Company is authorised to give any information, or make any representation, on behalf of the Company in connection with the Offering and, if given or made, such information or representation must not be relied upon as having been authorised by the Company.

The information contained herein is as of the date hereof and subject to change, completion or amendment without notice. There may have been changes affecting the Company or its subsidiaries (collectively referred to as the " Group ") subsequent to the date of this Prospectus. In accordance with Section 7-15 of the Norwegian Securities Trading Act, any new circumstance, material error or inaccuracy relating to information included in the Prospectus, which may have significance for the assessment of the Shares, and arises between approval of the Prospectus and the listing of New Shares, will be presented in a supplement to the Prospectus. Such supplementary prospectus shall be approved by the FSA and be published. Neither the delivery of this Prospectus nor the completion of the Offering, including listing of the New Shares, at any time after the date hereof will, under any circumstances, create any implication that there has been no change in the Group’s affairs since the date hereof or that the information set forth in this Prospectus is correct as of any time since its date.

No action to approve, register or file the Prospectus has been made outside Norway and Sweden. The distribution of this Prospectus and the offering and sale of the New Shares may in certain jurisdictions be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase, any of the New Shares in any jurisdiction in which such offer or sale would be unlawful. No one has taken any action that would permit a public offering of shares to occur outside of Norway and Sweden.

The New Shares have not been and will not be registered under the U.S. Securities Act, or with any securities authority of any state of the United States, and may not be offered or sold except pursuant to an exemption from,

or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state securities laws. The New Shares are only being offered pursuant to exemptions from, or in transactions not subject to, registration under the U.S. Securities Act, including (i) in the United States only to QIBs in reliance on an exemption from the registration requirements of the U.S. Securities Act and (ii) outside the United States only in offshore transactions (as defined in, and in accordance with, Regulation S).

The contents of this Prospectus are not to be construed as legal, business or tax advice. Each reader of this Prospectus should consult with its own legal, business or tax advisor as to legal, business or tax aspects of an investment in the New Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the New Shares.

Neither the Manager, nor any of its advisers, make any representation or warranty, whether express or implied, as to the accuracy, completeness or verification of the information set forth in this Prospectus, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation, whether as to the past or the future, by the Manager. Neither the Company nor the Manager, or any of their affiliates, representatives, advisers or selling agents, is making any representation to any offeree or purchaser of the New Shares regarding the legality of an investment in the New Shares.

In the ordinary course of their respective businesses, the Manager and certain of its affiliates have engaged, and may continue to engage, in investment and commercial banking transactions with the Group or companies in the Group.

TABLE OF CONTENTS 1. SUMMARY ...... 4 2. RISK FACTORS ...... 13 3. RESPONSIBILITY FOR THE PROSPECTUS ...... 23 4. CAUTIONARY NOTE ...... 24 5. THE OFFERING ...... 25 6. PRESENTATION OF THE GROUP ...... 44 7. INDUSTRY OVERVIEW ...... 58 8. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE ...... 63 9. SELECTED OPERATING AND FINANCIAL INFORMATION ...... 77 10. SHARES AND SHARE CAPITAL...... 96 11. REGULATORY ENVIRONMENT ...... 104 12. SECURITIES TRADING IN NORWAY ...... 108 13. NORWEGIAN TAXATION ...... 111 14. LEGAL MATTERS ...... 114 15. SELLING AND TRANSFER RESTRICTIONS ...... 115 16. ADDITIONAL INFORMATION ...... 120 17. DEFINITIONS AND GLOSSARY OF TERMS ...... 122 18. SAMMANFATTNING ...... 125

APPENDICES APPENDIX 1: SUBSCRIPTION AND APPLICATION FORM ...... 134 APPENDIX 2: STATEMENT FROM THE COMPANY'S AUDITOR REGARDING PROFIT ESTIMATE 136

1. SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable".

Section A – Introduction and warnings

A.1 Introduction and This summary should be read as an introduction to the Prospectus. warnings Any decision to invest in the New Shares should be based on consideration of the Prospectus as a whole by the investor.

Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the relevant European Union member states, have to bear the costs of translating the Prospectus before the legal proceedings are initiated.

Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.

A.2 Consent to the use of the Not applicable. prospectus by financial intermediaries

Section B – Issuer and any guarantor

B.1 Legal and The Company's legal name is Vardia Insurance Group ASA and is also sometimes referred commercial commercially to as "Vardia". name

B.2 Domicile/ Vardia is incorporated in Norway as a Norwegian Public Limited Liability Company (nw. Legal form/ allmennaksjeselskap), and is registered with the Norwegian Register of Business Legislation/ Enterprises with registration number 994 288 962. The Company's registered office is Country of Haakon VII's gate 2, 0161 OSLO, Norway. Vardia is subject to Norwegian law, hereunder incorporation inter alia the Norwegian Public Limited Liability Companies Act. B.3 Key factors of The Group’s main focus is on the market for property and casualty insurance for the retail operations and and small & medium sized enterprises (SME) segments in Norway, Sweden and Denmark. principal The Group distributes its products mainly through proactive call centres, in addition to activities insurance agents, insurance brokers and price aggregators, both as part of white label partner agreements and under the Vardia brand. B.4a Significant Except for changes in EEA-legislation applicable to insurance companies as further recent trends described in this Prospectus, there are no known trends, uncertainties, claims, obligations affecting the or occurrences which are likely to have a significant effect on Vardia or the insurance Issuer and the industry.

industry in which it operates B.5 Description of Vardia is the parent entity in the Group which consists of the following wholly owned group subsidiaries: - Vardia Forsikring AS (Norway) - Vardia Försäkring AB (Sweden) - Vardia Forsikringsagentur A/S (Denmark) - Vardia Eksterne Kanaler AS (Norway) - Vardia Agencies AS (Norway) - Rein Forsikring AS (Norway)

B.6 Notifiable voting To the Company's knowledge, Aakvik Holding AS (1,674,733 shares, 5.19% of the share rights capital) is the only shareholder who directly or indirectly has a notifiable shareholding.

Each share yields one vote at the Company's general meetings, regardless of the total number of shares the shareholder owns.

To the Company's knowledge, the Company is not directly or indirectly owned or controlled by anyone person or group.

B.7 Selected Except for the table included under the heading "Summary of gross turnover" which are historical key not sourced from the Company's consolidated annual accounts, the below tables show financial condensed versions of Vardia's (i) consolidated income statements, (ii) consolidated information balance sheets, and (iii) consolidated cash flow statements for the last three financial years. Please be advised that the figures are mainly extracted from the Company's consolidated annual accounts for 2014 as the Company has amended certain of its accounting principles.

Summary of gross turnover NOK millions ( unaudited ) 2012 2013 2014 Turnover ...... 345.1 717.8 1.322.6 Agency business and premiums on sold policies for next year (171.9) (146.1) (156) Gross written premiums ...... 173.2 571.7 1,166.6

Consolidated income statements

(NOK millions ) 2012 (IFRS 2013 (IFRS 2013 (IFRS, 2014 (IFRS audited) audited) restated) audited) Gross written premiums ...... 173.2 571.2 571.7 1,166.6 Premiums reinsured ...... (129.3) (426.9) (426.9) (869.5) Premiums written for own account...... 43.9 144.9 144.9 297.1 Premiums earned for own account ...... 14.9 98.1 98.1 224.3 Profit/(loss) from technical accounts before changes in security reserve ...... (46.4) (57.9) (149.9) (183.0) Profit/(loss) from technical accounts ...... (49.5) (68.8) (160.7) (198.2) Profit/(loss) before tax ...... (49.7) (70.0) (162.0) (187.1) Profit/(loss) for the period (36.2) (50.0) (163.0) (188.8)

Gross combined ratio (%)...... 204.4 118.4 141.8 129.8

Combined ratio for own account (%) ...... 549.9 162.7 256.5 191.2

Consolidated balance sheets

2012 (IFRS 2013 (IFRS 2013 (IFRS, 2014 (IFRS (NOK millions ) audited) audited) restated) audited) Total assets ...... 390.7 1,017.4 852.3 1,632.7 Total equity ...... 99.5 249.1 41.9 26.7 Total liabilities ...... 291.1 768.3 810.4 1,606.0 Total equity and liabilities 390.7 1,017.4 852.3 1,632.7

Consolidated cash flow statements (NOK millions ) 2012 (IFRS) 2013 (IFRS) 2014 (IFRS) Net cash flow from operating activities (54.0) (35.6) (65.6) Net cash flow from investing activities (13.8) (20.8) (42.3) Net cash flow from financing activities 80.1 143.7 160.9

Net cash flow for the period 12.2 87.3 53.0 Cash and cash equivalents at the end of the period 43.8 131.1 185.0

B.8 Pro forma Not applicable. financial information B.9 Profit forecast or The Group's result for Q1 2015 is estimated by the Company to be a total loss of estimate approximately NOK 50-60 million. B.10 Audit report Not applicable. qualifications B.11 Working capital As at the date of this Prospectus, the Group does not have sufficient working capital for its present requirements for the next twelve months. For the purposes of this working capital statement, when using the term "working capital" the Company not only includes the capital required to fulfill its obligations when they fall due, but also the capital required to operate in compliance with the applicable requirements for solvency margin capital and capital adequacy. The Group expects to be able to pay its obligations as they fall due; however, the Company is not guaranteed to be able to fully comply with the capital adequacy requirements and/or solvency margin requirements applicable for the Company for the next twelve months, if the Company continues to grow at its current pace.

Based on the Company's current estimates (which includes the net proceeds from the guaranteed Offering), the Company will – if no actions are successfully taken – be in non- compliance with its solvency margin requirements (or the applicable capital requirements under Solvency II) during the third quarter of 2015.

The Company’s shortfall of working capital in order to be in compliance with its solvency margin requirement for the next twelve months is estimated to be approximately NOK 50 million, but will be reduced to the extent that the below counter measures reduce the Company's costs or the Company's solvency margin requirement. The Company's shortfall could also be affected by the introduction of Solvency 2, which will be implemented 1 January 2016, inter alia with respect to the treatment of any subordinated debt obtained by the Company.

In order to secure continued compliance with the Company's solvency margin requirements, the Company plans to raise a subordinated Tier 2 loan of around NOK 75 million. Furthermore, the Company has initiated a number of measures in order to reduce cost and improve performance going forward. The Company expects the placement of a subordinated Tier 2 loan and the abovementioned cost reductions to be sufficient to secure

that the Company will fulfill its solvency margin requirements for at least the twelve months' following the date of this Prospectus.

Should the above measures prove insufficient to secure the Group’s working capital requirements, the Company will evaluate alternative actions such as reducing growth, increased reinsurance, additional equity offerings, sale of assets, corporate reorganization and/or sale of parts of its portfolio.

Based on the above and the information available on the date of this Prospectus, the Company is confident that the above actions will be successful in providing sufficient working capital for its present requirements for the next twelve months.

The Company will have to rely on the above measures to remain compliant with its solvency margin requirements. If none of the above financing measures are carried out or successful, the Company expects to breach the abovementioned requirements by end of the third quarter of 2015. In such event, the implications for the Company may include the FSA impose a stop of new sales, the Company losing its license to be an insurance company or the FSA demanding that the Company's insurance portfolio is sold in part or in full.

Section C – Securities

C.1 Description the The Company has one class of shares in issue. The New Shares offered in the Offering type and the will in all respect be equal to the existing Shares of the Company, once the New Shares class of the have been issued and registered with the Norwegian Register of Business Enterprises and securities and the VPS. The Company's Shares are registered in VPS under ISIN NO 0010593544. the security identification code C.2 Currency The offer price in the Offering is denominated in Norwegian kroner.

C.3 Number of At the date of the Prospectus the issued share capital is NOK 2,579,359.04 divided into issued shares 32,241,988 Shares, each with a nominal value of NOK 0.08. All the issued Shares are and par value fully paid.

C.4 Rights attached All issued Shares have the same rights. The Shares to be issued under the Offering will to the shares have the same rights as the other Vardia Shares as of the registration of the share capital increase with the Norwegian Register of Business Enterprises.

C.5 Restriction on Except for statutory ownership limitations and approval requirements at certain ownership the free thresholds, which are applicable to all insurance companies, and any lock up agreements transferability of entered into, Vardia's Shares are freely transferable. the shares C.6 Application for The Company's existing Shares are listed on Oslo Børs. admission to trading on a The Company expects commencement of trading in the New Shares on Oslo Børs on or regulated market about 10 June 2015. The Company has not applied for admission to trading of the Shares on any other stock exchange or regulated market.

C.7 Dividend policy Vardia is currently in a growth phase, but expects to distribute dividends in the future. The Company has to date not distributed any dividends since its incorporation.

Section D – Risks

D.1 Key risks Vardia is exposed to inter alia risk factors related to: relating to the - Market cyclicality issuer and its - Competition business - Legal and regulatory conditions - Regulatory regime - Risks related to changes of applicable accounting principles/standards or interpretations thereof - Tax and VAT-laws and regulations - Risks related to the recent changes to Vardia’s accounting principles - Catastrophes, natural disasters and terrorist related events - Change in availability of or cost of reinsurance coverage - Material flaws in the Group's underwriting or operating controls or failure to prevent fraud - Underwriting and reserve risk - Service providers - Organisational development and terms of employment - Loss of reputation - Risks related to growth and growth management - Risks related to Deferred acquisition costs and liability adequacy test - Litigation - Future dividends - Interest rate risk

D.3 Key risks The Shares are exposed to inter alia risk factors related to: relating to the - Fluctuation in the share price shares - Existing Shareholders who do not participate in the Offering may experience significant dilution in their shareholding - An active trading market in the Subscription Rights may not develop on Oslo Børs and/or the market value of the Subscription Rights may fluctuate - If the Offering is withdrawn, the Subscription Rights will no longer be of value - Future issuances of shares or other securities - Limited liquidity - Nominee accounts and voting rights - Difficulties for foreign investors to enforce non-Norwegian judgements - Limitations on the shareholders' ability to bring actions against the Company - Exchange rate risks - Dilution - Transfer restrictions

Section E – Offer

E.1 Net proceeds and The gross proceeds to the Company from the Offering will be NOK 375 million. estimated expenses The total costs and expenses in relation to the Offering and the listing of the Subscription Rights and the New Shares are estimated to be approximately NOK 34 million. The costs and expenses will be paid by the Company.

Consequently, the expected net proceeds to the Company from the Offering will be NOK 341 million.

E.2a Reasons for the In connection with, and shortly before the completion of, the Company's financial audit of offer and use of its annual accounts for 2014, Vardia had to make changes in the accounts, which lead to a proceeds significant weakening of the Company’s capital adequacy and solvency margin on group

level.

First, the financial audit concluded that in the parent company, Vardia Insurance Group ASA, the activated costs had to be written down as a result of the booked sales cost being

underestimated. The total impairment for 2012, 2013 and 2014 was NOK 144 million, of which NOK 49 million relates to previous years.

Second, in the opinion of the auditor, the accounting of direct variable sales cost in previous years’ group annual accounts was not in line with applicable accounting standards. Total impairment of this record is NOK 135.6 million in the Group's consolidated balance sheet, of which NOK 109 million relates to previous years.

Furthermore, IAS 12 pt. 35 sets out strict requirements for recognition of deferred tax assets from tax losses. As at 31 December 2014, these requirements were assessed to not be fulfilled. The tax benefit of NOK 49.0 million in the balance sheet as at 31 December 2013 is therefore not recognized in the restated balance sheet and consequently reduced to NOK 0.

The above matters, came as a surprise both to the board of directors and the management. The Company has been audited by the same auditor since start of operations in 2009, and has received unqualified auditor statements without remarks in all previous accounting years, including 2013, and the group consolidated accounts were also subject to thorough review by other external advisors in connection with the initial public offering in 2014 without any issues raised related to the accounting items in question.

The final conclusion to change the accounts made the board of directors aware that the group would no longer meet the regulatory minimum requirements relating to capital adequacy and solvency margin on a group level.

On a Group level, the Company is in breach of the capital adequacy and solvency margin as at 31. December 2014; however, the Group has obtained an exemption from these requirements from the FSA until 31 May 2015. As at 31 March 2015, Vardia Insurance Group ASA is in breach of the solvency margin on a company level, and the Company has obtained an exemption from this requirement from the FSA until 31. May 2015. The exemptions are conditional upon inter alia that the financial situation of the Group does not deteriorate materially in the relevant period.

On this basis it was immediately established and implemented a plan for restoring the minimum requirements with a buffer. The Company has been in a close and constructive dialogue with the FSA and Oslo Børs regarding the situation. As a consequence of the changes in accounts, the Company has to strengthen its equity with NOK 275 million in new capital.

The reasons for the Private Placement, and consequently the increase of the total gross proceeds from the Offering by NOK 100 million, are as follows:

• The audited figures deviated from the preliminary 2014 results with about NOK 12 million. The deviations were due to a stricter interpretation and a correction of the Company’s receivables.

• The strict interpretation of accounting principles, which will also give a negative effect on the 2015 results due to a larger part of the sales cost having to be accounted for directly instead of amortized.

• In order to control cancellations of insurance policies, the Company has changed the basis for its invoicing of sales commissions within the Group. Commissions will be calculated based on written premiums and not sold premiums. This will implicate higher costs in 2015, while the benefit of the change is that

cancellations will be corrected immediately.

• Vardia’s business model continues to generate growth and it is the Company's board of director’s view that as long as Vardia builds portfolio – value will be created and the Company will be profitable. The board of directors wants to ensure that the Company has an adequate capital buffer to support the growth going forward.

The net proceeds from the Offering of NOK 341 million will be used to strengthen the Company's equity in order to ensure compliance with the minimum capital adequacy and solvency margin requirements applicable to the Company for the next twelve months.

E.3 Terms and The Offering comprises an offering of 375,000,000 New Shares, with a par value of conditions of the NOK 0.08 each, at a subscription price of NOK 1 per New Share. Shareholders who are offer registered in the Company’s shareholder register as at the end of the Record Date will be granted tradable Subscription Rights for the New Shares offered in the Rights Issue. No separate subscription rights will be issued in relation to the New Shares offered in the Private Placement.

In order to secure the Company sufficient subscriptions in the Rights Issue and sufficient applications in the Private Placement, the Company, together with the Manager, has established two underwriting consortiums consisting of existing shareholders and certain external investors.

The Subscription Period for the Offering commences on 13 May 2015 and expires at 16:30 (CET) on 27 May 2015 and may not be closed prior to this date or extended.

The Subscription Rights will be issued and registered in the VPS under ISIN NO 001 0734031, and will be listed for trading on Oslo Børs under the ticker symbol "VARDIA T" from 13 May 2015 to 16:30 (CET) on 22 May 2015. The Subscription Rights will be delivered free of charge and the recipient will not be debited any charges.

The allocation of New Shares in the Rights Issue will be made by the board of directors of the Company by applying the following criteria:

a) Allocation will be made to subscribers on the basis of granted and acquired Subscription Rights which have been validly exercised during the Subscription Period.

b) If not all Subscription Rights are exercised, subscribers who have exercised Subscription Rights and oversubscribed will be allocated additional shares proportionally based on the number of Subscription Rights exercised by each such subscriber. To the extent that proportional allocation is not possible, the Company will determine the allocation by the drawing lots.

c) Shares not allocated pursuant to sub-items (a) and (b) will be allocated to subscribers who does not hold Subscription Rights and who are participants in the guarantee consortium for the Rights Issue. Allocation will be made pro rata based on the number of shares subscribed for.

d) Shares not allocated pursuant to sub-items (a), (b) and (c) will be allocated to subscribers who does not hold Subscription Rights and who are not participants in the guarantee consortium for the Rights Issue. Allocation will be made pro rata based on the number of shares subscribed for.

e) Shares not allocated pursuant to sub-items (a), (b), (c) and (d) above, will be subscribed by, and allocated to, the underwriters listed in section 5.19 in accordance with the guarantee commitments of the respective underwriters.

The allocation of New Shares in the Private Placement will be made by the board of directors of the Company by applying the following criteria:

a) Allocation will first be made to subscribers who have (i) exercised subscription rights in the Rights Issue, (ii) oversubscribed in the Rights Issue, and (iii) been allocated less shares in the Rights Issue than their total subscription. Allocation will be made proportionally based on the number of subscription rights exercised by each such subscriber in the Rights Issue. To the extent that proportional allocation is not possible, the Company will determine the allocation by drawing lots.

b) Shares not allocated pursuant to sub-item (a) will be allocated to subscribers who does not hold subscription rights in the Rights Issue and who are participants in the guarantee consortium for the Private Placement. Allocation will be made pro rata based on the number of shares subscribed for.

c) Shares not allocated pursuant to sub-items (a) and (b) will be allocated to subscribers who does not hold subscription rights in the Rights Issue and who are not participants in the guarantee consortium for the Private Placement. Allocation will be made pro rata based on the number of shares subscribed for.

d) Shares not allocated pursuant to sub-items (a), (b) and (c) above, will be subscribed by, and allocated to, the underwriters listed in section 5.19 in accordance with the guarantee commitments of the respective underwriters.

Subscriptions of New Shares in the Offering will first be allocated to the Rights Issue, then to the Private Placement. No distinction will be made between allocated and acquired/purchased Subscription Rights.

The allocation of New Shares will take place after the expiry of the Subscription Period on or about 28 May 2015 and notifications of allocation will be issued by post on or about 28 May 2015.

The payment for the allocated New Shares falls due on 3 June 2015.

The Offering is fully underwritten. Pursuant to the underwriting agreements, the underwriters shall receive an underwriting fee equal to 3% of the aggregate amount underwritten by the underwriters. Certain primary underwriters in the Private Placement may in addition receive an additional 3% underwriting fee for their commitment.

E.4 Interests The Manager or its affiliates have provided from time to time, and will provide in the material to the future, investment and commercial banking services to the Company and its affiliates in offer the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager, its employees and any affiliates may currently own Shares in the Company. Further, in connection with the Offering, the Manager, its employees and any affiliate acting as an investor for its own account may receive Subscription Rights (if they are Shareholders) and may exercise their right to take up such Subscription Rights and acquire New Shares, and, in that capacity, may retain, purchase or sell New Shares and any other securities issued by the Company or other investments for their own account and may offer or sell such securities (or other

investments) otherwise than in connection with the Offering. The Manager does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. The Manager will receive a commission in connection with the Offering and, as such, have an interest in the Offering.

Furthermore, the Underwriters' and the PP Underwriters' obligation to subscribe for New Shares will be determined based on the demand for New Shares in the Offering. Consequently, the Underwriters may as such have an interest in the Offering.

Except for the above, the Company is not aware of any natural or legal person having an interest in the Offering which is material in the context of the Offering. E.5 Selling entity In connection with their underwriting, the Underwriters and the PP Underwriters have and lock-up undertaken lock-up obligations until the earlier of (i) the expiry of the Subscription Period agreements in the Offering, and (ii) 31 May 2015. E.6 Dilution The percentage of immediate dilution resulting from the Offering for the Company's shareholders is expected to be approximately 92.1% based on the issuance of 375,000,000 New Shares. E.7 Expenses Not applicable. The expenses related to the Offering will be paid by the Company. charged to the investor

2. RISK FACTORS

2.1 GENERAL

Investing in the New Shares involves a number of risks. Prospective investors should carefully consider, among other things, the specific risk factors set out in this Section and the information elsewhere in the Prospectus before making an investment decision. The risks described below are risks concerning the Company, the Group, the Company’s and/or the Group's industry and the Company's Shares, that are deemed material by the Company and that the Company is aware of as at the date of this Prospectus. If any of the risks described below materialise, individually or together with other circumstances, the Company’s and/or the Group's business, financial position, cash flow, results of operations and/or prospects could be materially adversely affected, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares.

A prospective investor should consult his or her own expert advisors as to the suitability of an investment in the Shares. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment.

The order in which the below risk factors are presented is not intended to give any indication of the likelihood of their occurrence nor of their severity or significance.

2.2 RISK RELATED TO THE GROUP’S BUSINESS AND THE INSURANCE INDUSTRY

2.2.1 Market cyclicality The Scandinavian general insurance market is historically cyclical with operating results of insurers having fluctuated significantly because of volatile and sometimes unpredictable events, some of which are beyond direct control of any insurance company. Future events may result in adverse fluctuations in the Group's financial position and results of operations.

2.2.2 Competition The Group faces significant competition in each of the Group's lines of business, from both domestic, Nordic and international insurance companies. If the Group is unable or is perceived to be unable to compete efficiently, the Group's competitive position may be adversely affected, which as a result, may have a material adverse effect on its business, results of operations and/or financial condition.

2.2.3 Legal and regulatory conditions The legal and regulatory systems under which the Group operates and potential changes thereto may have a material adverse effect on the business. The Group's ability to conduct business requires the holding and maintenance of certain licenses, permissions and authorisations and compliance with rules and regulations. Failure to comply with any of these rules and regulations could lead to disciplinary action, the imposition of fines and/or the revocation of the license, permission or authorisation to conduct business.

The Group’s business depends on the continuing validity of several permits and exemptions and its compliance with the terms of such permits and exemptions. There is a risk that permits and exemptions needed for the Group’s business may not be issued or renewed or such issuance or renewal may be delayed, or that such permits and exemptions are revoked. If a company in the Group is unable to obtain, maintain or renew necessary permits and exemptions, the Group’s business, results of operations and financial condition could be materially adversely affected.

The insurance acts, regulations and policies, or the interpretation or enforcement thereof, may change at any time, which may have an adverse effect on the business. Vardia cannot predict the timing or form of any future changes or the effect it may have on the Group's financial position or results of operations.

2.2.4 Regulatory regime Norwegian authorities may at any time, within the frames of the EEA Agreement, introduce new legislation or implement measures that may affect the income and costs of the Group and the rest of the insurance industry. One example is that the authorities introduce measures that may affect the Group's business, for example through stricter solvency requirements or other specific requirements.

The European Union (EU) is in the process of implementing a new prudential regime for insurance undertakings. As a first step, the Solvency II Directive (2009/138/EC) was adopted by the Council of the European Union and the European Parliament in November 2009. Revisions to the Solvency II Directive are adopted in the Omnibus II Directive and scheduling the application date of the Solvency II Directive for 1 January 2016.

Solvency II is based on a three pillar structure, which can be summarized as follows:

Pillar 1: Quantitative requirements, including valuation of assets and liabilities, technical provisions, and calculation of capital requirements

Pillar 2: Requirements to the governance and risk management of the insurance companies, and supervisory control and review

Pillar 3: Supervisory reporting and public disclosure

The Solvency II Directive is a principle based framework directive which will be supplemented by implementing measures from the EU Commission and technical standards and guidance by the European Insurance and Occupational Pensions Authority (EIOPA). On 10 October 2014 the Commission adopted a Delegated Act containing implementing measures for Solvency II.

The Solvency II Directive will be implemented into Norwegian law in a new act on financial institutions and financial groups, which was adopted by the parliament on 7 April 2015, and the new act will enter into force on 1 January 2016. The FSA has provided the Ministry of Finance with a proposal for new regulations, which was subject to public consultation until 20 March 2015.

Due to the delay of the implementation of Solvency II, EIOPA has issued preparatory guidelines for the application of parts of the Solvency II rules from 1 January 2014. The guidelines regards the forward looking assessment of own risks (based on ORSA principles), pre application of internal models, submission of information to the national supervisory authorities and the system of governance. The purpose of the preparatory guidelines is to ensure effective preparation for Solvency II, so that when Solvency II is applicable, the requirements can be fully complied with. The FSA is expecting that the Norwegian insurance companies comply with the guidance from EIOPA.

Further information about the Solvency II regime is available on http://ec.europa.eu/internal_market/insurance/index_en.htm, https://eiopa.europa.eu/ and www.finanstilsynet.no.

2.2.5 Risks related to changes of applicable accounting principles/standards or interpretations thereof The Company prepares its annual accounts (and interim reports) in accordance with International Financial Reporting Standards (" IFRS ") which is a set of accounting standards developed by an independent, not-for- profit organization called the International Accounting Standards Board (" IASB ").

The IFRS and related rules and regulations are subject to potential changes both in the standards themselves as well as in the interpretation thereof. Furthermore, differences may arise between the Company and its auditor or other advisors with respect to the interpretation of IFRS and/or other applicable rules and regulations. As evidenced by recent events, changes in the Company's accounting principles or the interpretations thereof may have a material adverse effect on the Group's business and its compliance with capital and solvency margin requirements. The Group's ability to conduct business requires the holding and maintenance of certain capital

and solvency margin requirements on both company and consolidated level. Failure to comply with any of these rules and regulations could lead to disciplinary action, the imposition of fines and/or the revocation of the license, permission or authorisation to conduct business.

Moreover, the preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Uncertainties include impairment reviews, evaluation of useful lives of assets, income taxes and provisions Changes in key assumptions could lead to the recognition of additional impairment losses. Changes in evaluation of the useful lives of assets may change depreciation and amortization going forward.

Vardia cannot predict the timing or form of any future changes of IFRS or its interpretation nor the effect it may have on the Group's financial position or results of operations.

2.2.6 Tax and VAT-laws and regulations Norwegian authorities may at any time, within the frames of the EEA Agreement, introduce new legislation or implement measures related to tax or VAT legislation that may affect the Group's income and costs of the and the rest of the insurance industry. One example is the taxation of dividends. Furthermore, the relevant authorities may interpret the tax- and/or VAT-legislation different than Vardia. Such difference in interpretation could inter alia relate to the Group's structuring of its operations into different subsidiaries and /or intra group services rendered.

A difference in the interpretation of relevant tax and VAT legislation or other future changes to the current tax and/or VAT-regime could potentially have a material adverse effect on the Group's financial position or results of operations.

2.2.7 Risks related to the recent changes to Vardia’s accounting principles As set out in Section 5.1 "Reasons for the Offering and use of proceeds", Vardia recently had to make changes to the accounting principle related to activated sales cost at a group consolidated basis, leading to a significant weakening of the Company’s group equity and also having the effect that the trading price for the Shares fell significantly upon announcement of the change. There can be no assurance that no claims and/or proceedings will be initiated against the Company in relation to the changes to the accounting principles, and such claims and/or proceedings could have a material adverse effect on the Group's financial position and results of operations.

2.2.8 Catastrophes, natural disasters and terrorist-related events, may cause the Group to incur substantial losses General insurance companies, such as Vardia, frequently experience losses from unpredictable events that affect multiple individual risks covered by them. Such events include among others windstorms, severe hail, severe winter weather, other weather related events, floods, fires, industrial explosions and other man-made disasters, such as terrorist attacks (" Catastrophes ").

As a general rule, general insurance covers losses from Catastrophes, as a result of which catastrophic events may imply material adverse effect on the Group's cash flows, business, results of operations and financial position. The extent of losses from Catastrophes is a function of the frequency of catastrophic events and the severity of the individual events and the reinsurance arrangements in place.

In Norway, the Group's exposure to losses on buildings and contents due to natural perils is limited to the overall market share, as general insurance companies operating in Norway are obliged by law to participate in the Norwegian Natural Perils Pool (the " Norwegian Pool ") through which losses on buildings and their contents are distributed among the participants. The Norwegian Pool buys natural catastrophe reinsurance on behalf of its

members and the retention of the Norwegian Pool is distributed among the members in proportion to their market share based on the companies' fire insurance amounts as of July 1 of the claim year. Some Catastrophes, such as explosions, occur in small geographic areas, while others, including windstorms and floods, may produce significant damage to large, heavy populated and/or widespread areas. The frequency and severity of catastrophes are inherently unpredictable, and a single Catastrophe or multiple Catastrophes in any one year could have a material adverse effect on the Group's business, results of operations and financial position.

Losses related to Catastrophe insurances have historically been characterised by low frequency and high severity. In the event that the Group experience losses from Catastrophes, its financial results for any fiscal quarter or year could experience volatility which could have a material adverse effect on the Group's business, results of operations and financial position.

The Group generally seeks to reduce its exposure to Catastrophes through purchasing reinsurance, utilizing selective underwriting practices and monitoring risk accumulation. However, the Group's efforts to reduce exposure may not be successful and claims relating to Catastrophes could have material adverse effect on the business, results of operations and financial position of the Group.

If Catastrophe risks insured by the Group occur with greater frequency or severity than has historically been the case, related claims could have a material adverse effect on the Group's cash flows, business, results of operations and financial position, as well as on its costs of reinsurance.

2.2.9 Change in availability of or cost of reinsurance coverage An important element of the Group's risk management strategy is to purchase reinsurance, thereby transferring parts of the risk the Group underwrites to reinsurers. Under a reinsurance contract, the assuming reinsurer becomes liable to Vardia to the extent of the risk ceded although the Group remains liable to the insured as insurer.

Any decrease in the availability and amount of reinsurance, increase in the cost of reinsurance and/or the inability or refusal of reinsurers to meet their financial obligations could materially adversely affect the Group's results of operation and financial position.

2.3 OPERATIONAL RISK 2.3.1 A material flaw in the Group's underwriting or operating controls or failure to prevent fraud could increase the frequency of claims and average claim payouts The Group has operation procedures in place which its management believes are sufficient. However, any mismanagement, fraud or failure to satisfy fiduciary responsibilities or to comply with underwriting guidelines and authorization limits, or negative publicity resulting from these activities or accusations by a third part of such activities, could have material adverse effect on the business, results of operations and/or financial condition.

If the underwriting guidelines or internal control procedures are inefficient or if the employees do not properly follow these guidelines, the pricing policy of a product line may be incorrect and the Group may not have the proper reserves for claims attributable to the relevant product line.

In addition, the Group may not be able to adjust prices to avoid future losses. The Group is at risk both from customers who misrepresent or fail to fully disclose the risks against which they are seeking cover before such cover is purchased, and from employees who undertake or fail to follow procedures designed to prevent fraudulent activities.

If the Group does not train its employees in claims management effectively or fails to implement an adequate counter-fraud strategy, its profits could be adversely affected as the frequency of claims and average payouts could increase. Furthermore, an attempt to recover such costs through increased premiums could result in a decrease in policy sales.

2.3.2 Underwriting and reserve risk The Group's results depend significantly on whether the Group's claims experience is consistent with the assumptions used in underwriting, setting the prices for the products and establishing the liabilities for the obligations for future claims. To the extent that the Group's actual claims experience is less favourable than the underlying assumptions used in establishing such liabilities, the Group could be required to increase the reserves made for the liabilities, which could result in operating losses. To the extent that the Group prices certain segments/business lines incorrectly this could have negative impact on the Group.

Due to the nature and uncertain timing of the risks which the Group incurs in underwriting general insurance products, it cannot precisely determine the amounts that it will ultimately pay to meet liabilities covered by the insurance policies written. The Group's claims provisions may prove to be inadequate to cover the actual claims, particularly when payments of claims may not occur until well into the future. In accordance with industry practice and accounting and regulatory requirements, the Group maintains provisions to cover anticipated future claims payments (and related administrative expenses) with respect to losses or injuries incurred but not fully settled at the end of any year. These include both losses and injuries that have been reported to the Group ("RBNS" – reported but not settled) and those that have not yet been reported ("IBNR" – incurred but not reported). Claims provisions represent estimates of the ultimate cost, including related expenses, to bring all pending and incurred but not reported claims to final settlement. These estimates are based on actuarial and statistical projections and assumptions, including the time required to learn of and settle claims, facts and circumstances known at a given time, as well as estimates of trends in claims severity. The estimates are also based on other variable factors, including changes in the legal and regulatory environment, results of litigation, changes in medical costs, the cost of repairs and replacement, and general economic conditions. Earnings depend significantly on the extent to which the Group's actual claims experience is consistent with the projections and the assumptions it uses in setting claims provisions and subsequent premium levels.

Changes in these trends or other variable factors, including changes in legislation, could result in claims in excess of the Group's claims provisions, which may require an increase in its reserves with a corresponding reduction of the Group's net income in the period in which the deficiency is identified. To the extent that the Group's current claims provisions are insufficient to cover actual claims or claims adjustment expenses, it will have to increase its claims provisions and incur a corresponding change to its earnings in the period in which the deficiency is identified.

In addition, if the Group's claims provisions are excessive as a result of an over-estimation of risk, it may set premiums at levels too high to be able to compete effectively, which may result in a loss of customers and premium income. If the Group charges premiums that are insufficient for the cover provided, it will suffer underwriting losses, leading to volatility in earnings and unpredictable results.

Vardia monitors liabilities on a continuously basis and adjusts established claims reserves periodically, using the most current information available to the management. Any adjustments resulting from changes in reserve estimates are reflected in the results of operations. Based on the information available to the management as at the date of this Prospectus, management believes that the claims reserves are adequate. However, because claims reserving is an inherently uncertain process, management cannot assure that the ultimate claims will not materially exceed current claims reserves and have material adverse effect on the Group's financial position.

2.3.3 Service providers Vardia has outsourced certain key functions to external partners, including IT, claims handling and accounting services. In the event that our current outsourcing becomes unsatisfactory, or Vardia's third party suppliers are unable to fulfil their obligations to the Group, Vardia may be unable to locate new outsourcing partners on economically attractive terms on a timely basis.

2.3.4 Distributors Vardia somewhat uses distributors to market and sell the Group's insurance products particularly within SME insurance. Termination of or any change to these relationships may have a material adverse effect on the Group.

2.3.5 Organisational development and terms of employment The Group’s senior management team possesses extensive operating experience, industry knowledge and an in- depth understanding of the insurance industry. Vardia depends on its directors, executive officers and senior management for setting the Group's strategic direction and managing the Group's business, which both are crucial to Vardia’s success. Furthermore, the Group’s continued success also depends upon its ability to attract and retain a large group of experienced professionals.

The Group does not maintain any key person insurance on any of the Group’s senior management or employees. The Group’s ability to retain senior management as well as experienced personnel will in part depend on the Group having appropriate staff remuneration and incentive schemes in place. Vardia cannot give any assurance that the remuneration and incentive schemes it has in place will be sufficient to retain the services of the Group’s experienced personnel.

The loss of the services of the Group's senior management or the Group's inability to replace, recruit, train or retain a sufficient number of experienced personnel could have an adverse effect on the Group's operations, business, financial performance and prospects.

2.3.6 Loss of reputation The Group is dependent on the strength of its reputation with customers and distributors. Any negative publicity related to Vardia could adversely affect its reputation and the value of its brand. The Group is exposed, among others, to the risk that litigation, employee's or officer's misconduct, operational failures, disclosure of confidential information, negative publicity, whether or not founded could damage its reputation. Any erosion of Vardia's reputation may have a material adverse effect on its business, revenues, and results of operations or financial conditions.

2.3.7 Risks related to growth and growth management The Company acquired Saga Forsikring AS in December 2013 and Rein Forsikring AS in January 2014. Vardia may acquire or contract additional insurance companies, enterprises or insurance agents in the future. The Company may experience difficulties in integrating these additional assets, businesses and employees into the Group’s existing operations. Furthermore, there can be no guarantee that any existing insurance portfolio of acquired insurance companies and/or agents will have the development expected when fixing the value of such portfolio in connection with the acquisition of such insurance company and/or agent.

Vardia has experienced significant growth since its incorporation, and there is a risk that the Company does not have the required competence, capacity, routines and systems to manage its current business and monitor the Company’s fulfilment of capital adequacy and other requirements on an ongoing basis and in an efficient manner, and this could have a material adverse effect on the Group’s operations, business, financial performance, prospects and quality of its reporting.

The Group's future growth will depend upon a number of factors, both within and outside of the Company’s control. It may not be successful in expanding its operations, and any expansion may not be profitable, or may result in losses for the Company. This could ultimately have a material adverse effect on the Group’s operations, business, financial performance and prospects.

As the Group's operations continue to expand, the Group may need to increase the number of employees and enhance the scope of operational and financial systems to handle the complexity and expanded geographic area of the Group’s operations. Vardia cannot give any assurance that it will be able to retain and attract qualified management and employees or that the Group’s current operational and financial systems and controls will be

adequate as the Group grows. This could ultimately have an adverse effect on the Group’s operations, business, financial performance and prospects.

2.3.8 Deferred acquisition costs and liability adequacy test The current principle for recognizing sales costs in the group implies that direct variable sales costs which includes the below costs are being amortized over a period of 12 months. The total amount recognised as an asset per 31 December 2014 was NOK 64 million.

• Commissions to internal sales agents above a guaranteed minimum salary level

• Telephone costs on a 50% basis and postage expenses on a 78% basis

• Commissions to external agents on a 100% basis

• Certain other direct sales costs on a 95-100% basis

In the parent company the current principle for estimation of capitalised sales costs treats all commissions paid to the subsidiaries as external costs. The annulation effect (a client terminates the policy before the end of the 12 months period) is estimated based on the relationship between earned premiums written in the year as a percentage of unearned premiums at the end of the period. Based on this, approximately 55% per 31 December 2014 is estimated as the share of paid but unearned premiums which is on risk. The percentage is applied to total provision paid for 2014 risks and provisions paid for later periods are added resulting in a total deferred acquisition costs recognized on the balance sheet of NOK 204 million per 31 December 2014.

Vardia performs a quarterly liability adequacy test to assess whether the recognized insurance liabilities (less related deferred acquisition costs and intangible assets) are adequate using estimates of future cash flows at the end of each reporting period. If required, deferred acquisitions costs will be impaired and expensed in the profit and loss account.

2.3.9 The Group may be subject to litigation Vardia’s business exposes the Group to litigation and lawsuits. The Group anticipates that it in the future will be involved in litigations and other disputes from time to time. The Company cannot predict with certainty the outcome or effect of any claim or other litigation or dispute. Any future litigation or dispute may have a material adverse effect on the Group’s business, operations, financial position or results of operations, because of potential negative outcomes, the costs associated with prosecuting or defending such lawsuits or claims, and the diversion of management's attention to these matters.

2.3.10 Future dividends The Company’s ability to pay dividends to its shareholders and service any indebtedness is dependent upon the Company receiving sufficient funds from operations and operating subsidiaries in both Norway and foreign jurisdictions. Funds may be transferred to the Company from subsidiaries by way of dividends, intra-Group loans and/or group contributions, where possible. In several jurisdictions there are restrictions on a company’s ability to pay dividends, or otherwise transfer funds, to parent and/or holding companies. Restrictions, by law or regulations can affect the Company’s ability to receive funds to pay dividends to shareholders and/or service any indebtedness.

2.4 FINANCIAL RISKS

2.4.1 Interest rate volatility Investment returns are an important part of the Group's overall profitability. Interest rate volatility may adversely affect the value of the Company's investment portfolios, adversely impact the financial position and the results of operations and result in volatility in the results.

Vardia has a conservative investment policy and has hired Grieg Investor as financial advisor. The investment portfolio is as at the date of this Prospectus invested in bank deposits. The interest rate risk in the investment portfolio is aligned with Vardia's current capital position.

2.4.2 Asset management risk The current Norwegian regulation on asset management for non-life insurance companies implies limitations on Vardia's ability to invest in inter alia equities, bonds, security funds and hedgefunds. Equity investments are generally subject to higher returns and greater risk and more volatility than fixed income securities. General economic conditions, stock market conditions and many other factors beyond the Company's control may adversely affect the relevant markets for the Company's investments and thereby impair the value of the Company's investment portfolio.

2.5 RISK FACTORS RELATING TO THE SHARES

2.5.1 The price of the Shares may fluctuate significantly The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Company’s control, including quarterly variations in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, significant contracts, acquisitions or strategic relationships, publicity about the Company, the Group, its products and services or its competitors, lawsuits against the Company or a company in the Group, unforeseen liabilities, changes to the regulatory environment in which it operates or general market conditions.

In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the same industry. Those changes may occur without regard to the operating performance of these companies. The price of the Company’s Shares may therefore fluctuate based upon factors that have little or nothing to do with the Company or the Group, and these fluctuations may materially affect the price of its Shares.

The market price of the Shares could decline due to sales of a large number of the Shares in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that is deemed appropriate.

2.5.2 Existing Shareholders who do not participate in the Offering may experience significant dilution in their shareholding Subscription Rights that are not exercised by the end of the Subscription Period will automatically lapse without compensation to the holder. To the extent that an existing shareholder does not exercise its Subscription Rights prior to the expiry of the Subscription Period, whether by choice or due to a failure to comply with procedures set forth in Section Feil! Fant ikke referansekilden. "The Offering", or to the extent that an existing shareholder is not permitted to subscribe for New Shares as further described in Section 15 "Selling and Transfer Restrictions", such existing shareholder’s proportionate ownership and voting interests in the Company after the completion of the Offering will be diluted. Even if an existing shareholder elects to sell its unexercised Subscription Rights, or such Subscription Rights are sold on its behalf, the consideration it receives on the trading market for the Subscription Rights may not reflect the immediate dilution in its shareholding as a result of the completion of the Offering.

2.5.3 An active trading market in the Subscription Rights may not develop on Oslo Børs and/or the market value of the Subscription Rights may fluctuate An active trading market in the Subscription Rights may not develop on Oslo Børs. In addition, because the trading price of the Subscription Rights depends on the trading price of the Shares, the price of the Subscription Rights may be volatile and subject to the same risks as described for the Shares elsewhere in this Prospectus. The existing volatility of the Shares may also have an effect on the volatility of the Subscription Rights.

The sale of Subscription Rights by or on behalf of existing shareholders may result in a reduction in the market price of the Subscription Rights and the Shares and increased volatility in the Shares.

Certain existing shareholders may be unable to take up and exercise their Subscription Rights as a matter of applicable law. The Subscription Rights of such existing shareholders, with the exception of Subscription Rights held through financial intermediaries, may be sold on their behalf in the market by the Manager pursuant to instructions from the Company, as further described in Section 5.8, but no assurance can be given as to whether such sales may actually take place or as to the price that may be achieved. Other holders of Subscription Rights may also choose not to exercise their Subscription Rights and therefore sell them in the market. The sale of Subscription Rights by or on behalf of holders of such rights could cause significant downward pressure on, and may result in a substantial reduction in, the price of the Subscription Rights and the Shares.

2.5.4 If the Rights Issue is withdrawn, the Subscription Rights will no longer be of value The Rights Issue may be withdrawn if the conditions for the Rights Issue are not met or if the underwriting agreements are terminated for any reason. See Section 5.4 for a description of the conditions for completion of the Offering and Section 5.19 for a description of the underwriting agreements.

If the Rights Issue is withdrawn, all Subscription Rights will lapse without value, subscriptions for, and allocations of, New Shares that have been made will be disregarded and any subscription payments made will be returned without interest or any other compensation. The lapsing of Subscription Rights would be without prejudice to the validity of any trades in Subscription Rights, and investors would not receive any refund or compensation with respect to Subscription Rights purchased in the market.

2.5.5 Future issuances of Shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Shares The Company may in the future decide to offer additional Shares or other securities in order to finance new capital-intensive projects, or in connection with unanticipated capital requirement, liabilities or expenses or for any other purposes. Any such additional offering could reduce the proportionate ownership and voting interests of holders of Shares, as well as the earnings per Share and the net asset value per Share of the Company, and any offering by the Company could have a material adverse effect on the market price of the Shares.

2.5.6 Limited liquidity There can be no assurance as to the liquidity of the Shares on Oslo Børs, the ability of the holders of the Shares to sell their Shares or the price at which the holders would be able to sell their Shares. The liquidity of the trading market in the Shares, and the market price quoted for the Shares, may be adversely affected by changes in the Company’s financial performance or prospects or in the prospects for companies in Vardia’s industry in general. As a result, holders cannot be certain that an active trading market will exist in the future for the Company's shares.

2.5.7 Nominee accounts and voting rights Beneficial owners of the Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the Company’s general meetings. The Company cannot guarantee that beneficial owners of the Shares will receive the notice for a general meeting in time to instruct their nominees to effect a re-registration of their Shares or otherwise arrange for votes to be cast for such Shares.

2.5.8 Difficulties for foreign investors to enforce non-Norwegian judgements The Company is organised under the laws of Norway. As at the date of this Prospectus, all of its directors are residents of Norway, and the vast majority of its assets are in Norway. As a result, it may not be possible for non-Norwegian investors to affect service of process on the Company or the Company's directors in the investor's own jurisdiction, or to enforce against them judgements obtained in non-Norwegian courts. However,

Norway is party to the Lugano Convention and a judgement obtained in another Lugano Convention state will in general be enforceable in Norway. However, there is no regulation providing for general recognition or enforceability in Norway of judgements of non-Lugano Convention state courts, such as the courts of the United States.

2.5.9 Norwegian law may limit the shareholders' ability to bring an action against the Company The Company is a public limited company incorporated under the laws of Norway. The rights of holders of Shares are governed by Norwegian law and by the Articles of Association. These rights may differ from the rights of shareholders in e.g. typical US corporations or companies incorporated in other jurisdictions. In particular, Norwegian law limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. For instance, under Norwegian law, any action brought by a company in respect of wrongful acts committed against the company takes priority over actions brought by shareholders in respect of such acts. In addition, it may be difficult to prevail in a claim against the Company under, or enforce liabilities predicated upon, U.S. securities laws or related to laws of other jurisdictions.

2.5.10 Shareholders outside of Norway are subject to exchange rate risk The Shares are priced in Norwegian kroner ("NOK "), the lawful currency of Norway, and any future payments of dividends on the Shares will be denominated in NOK. Accordingly, any investor outside Norway is subject to adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends paid on the Shares or price received in connection with any sale of the Shares could be materially adversely affected.

2.5.11 Foreign shareholders may be diluted if they are unable to participate in future offerings Because US investors and investors in other non-Norwegian jurisdictions may be unable to participate in future offerings, their percentage shareholding, if they have been allotted Shares in the Offering, may be diluted. Under Norwegian law, unless otherwise resolved by the general meeting (or the board of directors pursuant to an authorization from the general meeting), shareholders in Norwegian public companies such as the Company have pre-emptive rights proportionate to the aggregate amount of the Shares they hold with respect to new shares issued by the Company for cash consideration. For reasons relating to U.S. securities laws or other factors, U.S. investors and investors in other non-Norwegian jurisdictions may not be able to participate in a new issuance of Shares or other securities and may face dilution as a result.

2.5.12 The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Shares have not been registered under the U.S. Securities Act or any US state securities laws or any other jurisdiction outside of Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable securities laws. See Section 15 "Selling and Transfer Restrictions". In addition, there is no assurances that shareholders residing or domiciled in the United States or other jurisdictions will be able to participate in future capital increases or rights offerings.

3. RESPONSIBILITY FOR THE PROSPECTUS

The board of directors of Vardia Insurance Group ASA hereby declares that, to the best of our knowledge, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import.

7 May 2015

The Board of Directors of Vardia Insurance Group ASA

Åge Korsvold Karl Høie Line S. Bakkevig Chairman of the Deputy chairman of Board member Board the Board

Nina C. Gullerud Nils Aakvik Ole Erik Alnæs Board member Board member Board member (Employee

representative)

4. CAUTIONARY NOTE

4.1 FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking" statements, including, without limitation, projections, estimates, plans and expectations regarding the Group’s future financial position, business strategy, plans and objectives. All forward-looking statements included in this Prospectus are based on information available to the Company, and views and assessments of the Company, as at the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless such update or revision is prescribed by law.

When used in this document, the words "anticipate", "believe", "estimate", "expect", "seek to", "may", "plan" and similar expressions, as they relate to the Group, or its management, are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate. Factors that could cause the Group’s actual results, performance or achievements to materially differ from those in the forward-looking statements include but are not limited to, the competitive nature of the markets in which the Group operates, technological developments, government regulations, changes in economical conditions or political events. These forward-looking statements reflect only the Company’s views and assessment as at the date of this Prospectus. Except for mandatory legal requirements, the Company expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Factors that could cause the Group’s actual results, performance or achievements to materially differ from those in the forward-looking statements include, but are not limited to, those described in Section 2 "Risk Factors" and elsewhere in the Prospectus.

Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements. Forward-looking statements are included in sections 1, 5, 6, 9, 10 and 11.

4.2 INFORMATION SOURCED FROM THIRD PARTIES

The information in this Prospectus that has been sourced from third parties has been accurately reproduced and as far as the Company is aware and able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used.

4.3 DISCLAIMER BY THE MANAGER

The Manager assumes no responsibility for the accuracy or completeness or the verification of this Prospectus and accordingly disclaims, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this Prospectus or any such statement.

5. THE OFFERING

5.1 REASONS FOR THE OFFERING AND USE OF PROCEEDS

5.1.1 Reasons for the Rights Issue In connection with, and shortly before the completion of, the Company's financial audit of its annual accounts for 2014, Vardia had to make changes in the accounts, which lead to a significant weakening of the Company’s capital adequacy and solvency margin on group level. The matters raised by BDO, the Company's auditor at that time, came as a surprise both to the board of directors and the management. The Company has been audited by the same auditor since start of operations in 2009, and has received unqualified auditor statements without remarks in all previous accounting years, including for the financial year 2013. The Group's consolidated accounts were also subject to thorough review by other external advisors in connection with the initial public offering in 2014 without any issues raised related to the accounting items in question.

First, the financial audit concluded that the Company's activated costs had to be written down as a result of the booked sales cost being underestimated in the profit and loss statement – meaning that the cancellations of insurance policies sold had been larger than anticipated. The total impairment for 2012, 2013 and 2014 was NOK 144 million, of which NOK 49 million relates to previous years.

Second, in the opinion of the BDO, the accounting of direct variable sales cost in previous years’ group annual accounts was not in line with applicable accounting standards. The Company has discussed and reviewed the matter related to the relevant accounting rules with several third party auditors. Both the extent of qualifying sales cost has been considered, in addition to the period of amortisation of such activated cost. The board of directors noted that different experts had different opinions regarding the extent of qualifying cost, and that BDO’s interpretation was stricter than the interpretation of applicable accounting standards by other experts. Following a thorough assessment, the board of directors approved the annual accounts for the financial year 2014 for the Company and the Group based on BDO’s strict interpretation of the accounting standards. Total impairment of this record is NOK 135.6 million in the Group's consolidated balance sheet, of which NOK 109 million relates to previous years.

Total impairment of both these conditions for the financial year 2014 was NOK 279.5 million (NOK 144 million + NOK 135.6 million). The balance sheet item in question has therefore been adjusted by NOK 279.5 million at the Group consolidated level. These amendments are also further described in note 2 to the Company's consolidated annual accounts for 2014 and in the Directors’ report for 2014.

The final conclusion made the board of directors aware that Vardia would no longer meet the regulatory minimum requirements relating to capital adequacy and solvency margin on a group level. On this basis it was immediately established and implemented a plan for restoring the minimum requirements with a buffer. The Company has been in a close and constructive dialogue with the FSA and Oslo Børs regarding the situation

The Company has amended its accounts as required by BDO in the consolidated financial statements contained in section 9. Section 9 also provides further details on the change of accounts, especially in Sections 9.2.2 and 9.2.3. On a Group level, the Company is in breach of the capital adequacy and solvency margin as at 31 December 2014; however, the Group has obtained an exemption from these requirements from the FSA until 31 May 2015. As at 31 March 2015, Vardia Insurance Group ASA is in breach of the solvency margin on a company level, and the Company has obtained an exemption from this requirement from the FSA until 31 May 2015. The exemptions are conditional upon inter alia that the financial situation of the Group does not

deteriorate materially in the relevant period. For further information on capital adequacy and solvency margin requirements and compliance on Group and Company level, see Section 9.7.

The Manager was then engaged by the Company to advice on, and provide assistance in relation to, the Offering, including the establishment of a guarantee consortium consisting of existing shareholders and certain other investors, which in short time guaranteed for the gross amount of NOK 275 million. Hence, the Rights Issue is fully underwritten.

On 9 April 2015, the Company held its annual general meeting (the " AGM ") where inter alia the Rights Issue was resolved. The Company obtained regulatory approval of the share capital increase related to the Rights Issue from the FSA on 15 April 2015.

5.1.2 Reasons for the Private Placement The reasons for the Private Placement, and consequently the increase of the total gross proceeds from the Offering by NOK 100 million, are as follows:

• The audited figures deviated from the preliminary 2014 results with about NOK 12 million. The deviations were due to a stricter interpretation and a correction of the Company’s receivables.

The Private Placement is fully underwritten by a guarantee consortium consisting of existing shareholders and certain other investors.

As part of the Company’s financial strategy, the Company plans to obtain a subordinated Tier 2 loan in the amount of approximately NOK 75 million during 2015 in order to further strengthen the capital position. The increase of gross proceeds of the Offering and the subordinated loan will ensure that the Group meets the minimum solvency capital requirement for the next twelve months with sufficient margin.

5.1.3 Use of proceeds from the Offering The net proceeds from the Offering of NOK 341 million will be used to strengthen the Company's equity in order to ensure compliance with the minimum capital adequacy and solvency margin requirements applicable to the Company for the next twelve months.

5.2 OVERVIEW OF THE OFFERING

The Offering comprises an offering of 375,000,000 New Shares, with a par value of NOK 0.08 each, at a subscription price of NOK 1 per New Share (the " Subscription Price "); divided into (i) 275,000,000 New Shares in the Rights Issue and (ii) 100,000,000 New Shares in the Private Placement. The Subscription Price for the Offering was set by the Company's board of directors in accordance with the authorization resolved at the AGM for the Rights Issue and in accordance with the principles agreed with the underwriters for the Offering (as further describe in Section 5.19).

Shareholders who are registered in the Company’s shareholder register as at the end of 11 May 2015 (the Company's shareholders as at the end of the date on which this Prospectus was approved, 7 May 2015, as evidenced in the VPS in accordance with normal T+2 settlement) will be granted tradable Subscription Rights.

In order to secure the Offering being fully subscribed, the Company, together with the Manager, has established an underwriting consortium consisting of existing shareholders and certain external investors. Please see Section 5.19 for more details on the underwriting.

Although any subscription and/or application in the Offering will be made through the subscription and application form for the Offering attached as appendix 1 to this Prospectus (the " Subscription Form ") and will not specify what part of the Offering the order pertains nor require any additional actions by the subscriber/applicant, the issue of New Shares is technically structured as two share issues.

The New Shares offered in the Rights Issue will formally be subscribed for directly by the relevant subscribers, whereas the New Shares offered in the Private Placement will formally be acquired on the basis of applications with an authorisation to the Manager to subscribe for allocated New Shares on behalf of the applicants and not direct subscriptions. Consequently, when the terms "subscriber" or "subscription" is used in this Section 5, these terms also comprises "applicants" or "application", respectively, unless otherwise stated or required by context.

5.3 RESOLUTIONS REGARDING THE OFFERING

5.3.1 Resolution regarding the Rights Issue The following resolution to increase the Company’s share capital in connection with the Rights Issue was passed by the AGM:

"The Company’s share capital is increased pursuant to the Norwegian Public Limited Liability Companies Act section 10-1 on the following conditions:

1. The share capital is increased by minimum NOK 440 000 and maximum NOK 22 000 000 to be determined by the board of directors by an issuance of minimum 5 500 000 shares and maximum 275 000 000 shares to be determined by the board of directors, each with a par value of NOK 0.08.

2. The subscription price shall be determined by the board of directors within the range of minimum NOK 1 and maximum NOK 50 per share.

3. Shareholders per 14 April 2015 (which is the tentative date for the Financial Supervisory Authority of Norway's approval of the Prospectus (the "Prospectus")) (the "Prospectus Date"), as recorded in the Company's shareholder register in the VPS following ordinary T+2 settlement, and who can legally participate in the rights issue, will in accordance with the Norwegian Public Limited Liability Companies Act section 10-4 have pre-emptive rights to subscribe for and be allocated shares in the rights issue based on their holding of shares in the Company. If the Prospectus is not approved as per the Prospectus Date, the Prospectus Date shall be postponed until the date the Prospectus is approved.

4. The subscription rights shall be freely transferable and be listed on Oslo Børs during the subscription period as described under item 7 below. The number of subscription rights issued per share held on the Prospectus Date will be determined when the subscription price and the number of shares to be issued are fixed. The number of subscription rights issued to each shareholder will be rounded down to the nearest whole subscription right. Each subscription right will give the right to subscribe for one new share (provided that the holder of said subscription right is eligible to subscribe for shares, cf. item 4 below). Oversubscription and subscription without subscription rights is permitted.

5. The shares may not be subscribed by shareholders (or other persons) who, in the Company’s view, are resident in a jurisdiction where the offering of shares or subscription would be unlawful or (for jurisdictions other than Norway) would require any prospectus, registration or similar action. The Company (or a person authorised by the Company) shall have the right (but no obligation) to sell subscription rights issued to any such shareholder, against transfer of the net proceeds from such sale to the shareholder.

6. The Prospectus shall be prepared in connection with the share capital increase. Unless the board of directors determines otherwise, the Prospectus shall not be registered with or approved by any authorities outside Norway.

7. The following allocation criteria shall apply: a) Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period.

b) If not all subscription rights are exercised, subscribers who have exercised subscription rights and oversubscribed will be allocated additional shares proportionally based on the number of subscription rights exercised by each such subscriber. To the extent that proportional allocation is not possible, the Company will determine the allocation by the drawing lots.

c) Shares not allocated pursuant to sub-items (a) and (b) will be allocated to subscribers who does not hold subscription rights and who are participants in the guarantee consortium for the Rights Issue. Allocation will be made pro rata based on the number of shares subscribed for.

d) Shares not allocated pursuant to sub-items (a), (b) and (c) will be allocated to subscribers who does not hold subscription rights and who are not participants in the guarantee consortium for the Rights Issue. Allocation will be made pro rata based on the number of shares subscribed for.

e) Shares not allocated pursuant to sub-items (a), (b), (c) and (d) above, will be subscribed by, and allocated to, the guarantee syndicate in accordance with the guarantee commitments of the respective guarantors.

8. The subscription period shall commence on 20 April 2015 and ends on 4 May 2015 at 16.30 hours (CET). If the Prospectus Date is postponed in accordance with item 3 above, the subscription period shall commence on the fourth trading day on Oslo Børs after the postponed Prospectus Date and end at 16:30 hours (CET) two weeks thereafter. In no event shall the subscription period end later than 29 May 2015. Shares not subscribed for at the expiry of the subscription period, which thus will be allocated to the guarantors, shall be subscribed for by the manager, for and on behalf of the guarantors, at the latest within three trading days after the expiry of the subscription period.

The subscription rights shall be sought listed on Oslo Børs. The board of directors are authorised to shorten the listing period of the subscription rights with "T+2" in order to facilitate allocation at the expiry of the subscription period.

9. The due date for payment for the new shares is 11 May 2015, or the fifth trading day on Oslo Børs after the expiry of the subscription period if the subscription period is postponed in accordance with sub-item 7 above. Each subscriber with a Norwegian Bank account must by completion of the subscription form, grant Pareto Securities AS and/or another investment firm appointed by the Company a one-time power of attorney to debit a stated bank account for the subscription amount corresponding to the number of allocated shares. The debit will take place on or about the due

date for payment. For subscribers without a Norwegian bank account, payment shall be made pursuant to the instructions in the subscription form attached to the Prospectus.

10. The new shares will entitle dividends from the registration of the share capital increase in the Norwegian Register of Business Enterprises. The shares will in all other respects be equal to the issued shares of the Company from the registration of the share capital increase in the Norwegian Register of Business Enterprises.

11. The estimated amount of expenses related to the share capital increase (in addition to the guarantee fee mentioned under the below section 13) is approximately NOK 15,000,000. 12. With effect from the registration of the share capital increase with the Norwegian Register of Business Enterprises, section 1-3 of the articles of association is amended to reflect the share capital and total number of shares after the share capital increase.

13. The shares are guaranteed by a guarantee consortium consisting of existing shareholders and new investors. As guarantee fee, the underwriters shall in total receive an amount equal to 3.0% of the total guarantee amount.

14. The implementation of the capital increase is conditional on: (i) the Company obtaining required regulatory approval for completion of the Rights Issue; including approval of the share capital increase from the FSA;

(ii) that the Company has not, prior to allocation of new shares in the Rights Issue, received a written notification from the FSA implying that the Rights Issue will not ensure compliance with the applicable capital solvency requirements at the time of completion of the Rights Issue;

(iii) the Company remaining exempt from the solvency capital requirements until allocation of new shares in the Rights Issue; and

(iv) that the guarantee agreements securing subscription of all such new shares in the Rights Issue remaining in full force and effect and that the guarantors there under comply with the terms of such agreements."

5.3.2 The resolution regarding the Private Placement The Company's board of directors has proposed that the Company's extraordinary general meeting to be held 28 May 2015 makes the following resolution to increase the Company’s share capital by NOK 8,000,000, in connection with the Private Placement:

"The Company's share capital is increased pursuant to the Norwegian Public Liability Companies Act section 10-1 on the following terms:

1. The share capital is increased by NOK 8,000,000 by an issuance of 100,000,000 shares, each with a par value of NOK 0.08.

2. The subscription price shall be NOK 1 per share.

3. The shareholders’ pre-emptive rights pursuant to the Norwegian Public Limited Liability Companies Act section 10-14 are set aside. The shares are already allocated and shall be subscribed for by Pareto Securities AS (or someone nominated by Pareto Securities AS) for and on behalf of the applicants who are allocated shares based on the following allocation criteria:

a. Allocation will first be made to subscribers who have (i) exercised subscription rights in the Rights Issue, (ii) oversubscribed in the Rights Issue, and (iii) been allocated less shares in the

Rights Issue than their total subscription. Allocation will be made proportionally based on the number of subscription rights exercised by each such subscriber in the Rights Issue. To the extent that proportional allocation is not possible, the Company will determine the allocation by drawing lots.

b. Shares not allocated pursuant to sub-item (a) will be allocated to subscribers who does not hold subscription rights in the Rights Issue and who are participants in the guarantee consortium for the Private Placement. Allocation will be made pro rata based on the number of shares subscribed for.

c. Shares not allocated pursuant to sub-items (a) and (b) will be allocated to subscribers who does not hold subscription rights in the Rights Issue and who are not participants in the guarantee consortium for the Private Placement. Allocation will be made pro rata based on the number of shares subscribed for.

d. Shares not allocated pursuant to sub-items (a), (b) and (c) above, will be subscribed by, and allocated to, the underwriters for the Private Placement in accordance with the guarantee commitments of the respective underwriters.

The shares may; however, not be subscribed by persons who, in the Company’s view, are resident in a jurisdiction where the offering of shares or subscription would be unlawful or (for jurisdictions other than Norway and Sweden) would require any prospectus, registration or similar action.

4. The shares shall be subscribed no later than 29 May 2015.

5. Payment for the shares shall be made no later than 3 June 2015 by cash payment to a separate account with a Norwegian credit institution.

6. The shares will entitle to dividend as from the registration of the share capital increase in the Norwegian Register of Business Enterprises.

7. The estimated amount of expenses related to the share capital increase is NOK 8.5 million (in addition to the guarantee fee described below).

8. With effect from the registration of the share capital increase with the Norwegian Register of Business Enterprises, section 1-3 of the articles of association is amended to reflect the share capital and total number of shares after the share capital increase.

9. The shares are guaranteed by a guarantee consortium consisting of existing shareholders and new investors. As guarantee fee, the underwriters shall in total receive an amount equal to 3.0% of the total guarantee amount. The primary underwriters will also receive an additional 3.0% guarantee fee for any non-syndicated part of its primary guarantee.

10. The implementation of the capital increase is conditional on:

(I) the Company obtaining required regulatory approval for completion of this share capital increase; including approval of the share capital increase from the Financial Supervisory Authority of Norway ("FSA");

(II) the Company remaining exempt from the solvency capital requirements until allocation of new shares in this share capital increase;

(III) this share capital increase, as well as the rights issue resolved by the Company's general meeting on 9 April 2015 being fully guaranteed and that, unless all the new shares offered in these two share capital increases are subscribed, the guarantee agreements securing subscription of all such new shares in the share capital increases remaining in full force and effect and that the guarantors there under comply with the terms of such agreements; and

(IV) the two share capital increases mentioned in section (III) above being registered with the Norwegian Register of Business Enterprises simultaneously."

If the above resolution is not made by the Company's general meeting, the Offering will be cancelled and withdrawn. If the Offering is cancelled and withdrawn, all Subscription Rights will lapse without value, any subscriptions for, and allocations of, New Shares that have been made will be disregarded and any payments for New Shares made will be returned to subscribers without interest or any other compensation. The lapsing of Subscription Rights shall be without prejudice to the validity of any trades in Subscription Rights, and investors will not receive any refund or compensation in respect of Subscription Rights purchased in the market.

5.4 CONDITIONS FOR COMPLETION OF THE OFFERING

As described in the resolutions under Section 5.3 above, the completion of the Rights Issue on the terms set forth in this Prospectus is conditional upon:

(i) the Company obtaining required regulatory approval for completion of the Rights Issue; including approval of the share capital increase from the FSA;

(iii) the Company remaining exempt from the solvency capital requirements until allocation of New Shares in the Rights Issue; and

(iv) that the guarantee agreements securing subscription of all such New Shares in the Rights Issue remaining in full force and effect and that the guarantors there under comply with the terms of such agreements."

The Company obtained regulatory approval of the share capital increase related to the Rights Issue from the FSA on 15 April 2015.

Completion of the Private Placement is conditional upon:

(i) the Company obtaining necessary corporate resolutions; hereunder approval of the resolution to issue New Shares in the Private Placement by the Company’s general meeting;

(ii) the Company obtaining required regulatory approval for completion of the Private Placement; including approval of the share capital increase from the FSA;

(iii) that the Company has not, prior to allocation of new shares in the Offering, received a written notification from the FSA implying that the Offering will not ensure compliance with the applicable capital solvency requirements at the time of completion of the Offering;

(iv) the Company remaining exempt from the solvency capital requirements until allocation of New Shares in the Offering;

(v) the Offering being fully guaranteed and that, unless all the New Shares offered in the Offering are subscribed, the guarantee agreements securing subscription of all such New Shares in the Offering remaining in full force and effect and that the guarantors there under comply with the terms of such agreements; and

(vi) the Offerings being registered with the Norwegian Register of Business Enterprises simultaneously.

The above conditions, combined with the Company's financial situation as described in Sections 5.1 and 9, imply that the Rights Issue and the Private Placement will only be completed if both offerings are completed and registered at the same time.

See Section 5.19 below for a description of the underwriting and the underwriting agreements, including the conditions and termination rights to which the underwriting is subject.

If it becomes clear that the above conditions will not be fulfilled, the Offering will be cancelled and withdrawn. If the Offering is cancelled and withdrawn, all Subscription Rights will lapse without value, and any subscriptions for, and allocations of, New Shares that have been made will be disregarded and any payments for New Shares made will be returned to subscribers without interest or any other compensation. The lapsing of Subscription Rights shall be without prejudice to the validity of any trades in Subscription Rights, and investors will not receive any refund or compensation in respect of Subscription Rights purchased in the market.

5.5 RECORD DATE

Shareholders who are registered in the Company’s shareholder register as at the end of 11 May 2015 (being the Company's shareholders as at the end of the date on which this Prospectus was approved, 7 May 2015, as evidenced in the VPS in accordance with normal T+2 settlement) will be granted tradable Subscription Rights for the Rights Issue.

Provided that the delivery of traded Shares was made with ordinary T+2 settlement in the VPS, Shares that were acquired until and including 7 May 2015 will give the right to receive Subscription Rights, whereas Shares that were acquired from and including 8 May 2015 will not give the right to receive Subscription Rights.

5.6 THE SUBSCRIPTION PERIOD

The subscription period for the Offering commences on 13 May 2015 and expires at 16:30 (CET) on 27 May 2015 (the "Subscription Period ") and may not be closed prior to this date or extended.

5.7 SUBSCRIPTION PRICE

The Subscription Price in the Offering is NOK 1 per New Share. No expenses or taxes are charged to the subscribers in the Offering by the Company or the Manager.

5.8 SUBSCRIPTION RIGHTS

As further described in this Section 5.8 and Section 5.10, each Subscription Right will grant the holder the right to subscribe for and be allocated one New Share in the Rights Issue as well as a preferred allocation of approximately 0.3636 of a New Share in the Private Placement (please note; however, that no fractional New Shares will be issued in the Offering). Consequently, existing shareholders must subscribe for all issued Subscription Rights as well as oversubscribe by approximately 36.3636% (i.e. subscribe for the amount of Subscription Rights times approximately 1,3636) in order to avoid dilution in the Offering.

5.8.1 Subscription Rights in the Rights Issue In accordance with the resolution passed by the AGM, Shareholders will be allocated Subscription Rights in proportion to their registered shareholding in the Company as at the Record Date. The Company will issue approximately 8.3 Subscription Rights per each Share registered as held by each Shareholder as at the Record Date. The number of Subscription Rights issued to each Shareholder will be rounded down to the nearest whole number of Subscription Rights.

Each Subscription Right gives the holder the right to subscribe for and be allocated one New Share in the Rights Issue, provided that the holder is not an Ineligible Person as defined in Section 5.24 below. Oversubscription and subscription without Subscription Rights is permitted, however, in each case, and subject to Section 5.8.2

with respect to oversubscription by holders of Subscription Rights, there can be no assurance that New Shares will be allocated for such subscriptions.

The Subscription Rights will be issued and registered in the VPS under ISIN NO 001 0734031, and will be listed for trading on Oslo Børs under the ticker symbol "VARDIA T". The Company's board of directors was authorized by the AGM to shorten the listing period of the Subscription Rights with T+2 in order to allow for allocation at the expiry of the Subscription Period. The Company's board of directors has decided to use this authorization and the listing period for the Subscription Rights will consequently commence on 13 May 2015 and expire at 16:30 (CET) on 22 May 2015. The Subscription Rights will be delivered free of charge and the recipient will not be debited any charges.

The Subscription Rights will be freely transferable subject to any relevant selling restrictions as further described in Section 5.24.

The Subscription Rights may be used to subscribe for New Shares in the Rights Issue before the end of the Subscription Period at 16:30 (CET) on 27 May 2015 or sold before end of trading of the Subscription Rights on Oslo Børs 16:30 (CET) on 22 May 2015. Subscription Rights acquired during the Subscription Period, which are settled no later than the date of the expiry of the Subscription Period (i.e. purchased during the listing period for the Subscription Rights), carry the same right to subscription and allocation of New Shares in the Rights Issue as originally granted Subscription Rights.

Subscription Rights not used to subscribe for New Shares before the expiry of the Subscription Period (i.e. before 16:30 (CET) on 27 May 2015), or that are not sold before the end of trading of Subscription Rights on Oslo Børs at 16:30 (CET) on 22 May 2015, will lapse without compensation to the holder, and consequently be of no value.

Subscription Rights of Shareholders who are Ineligible Persons (as defined in Section 5.24) will initially be credited to such Shareholders’ VPS accounts. Such credit specifically does not constitute an offer to Ineligible Persons to subscribe for New Shares. To the extent that any Shareholders are Ineligible Persons, their Subscription Rights may, upon instruction from the Company, be sold by the Manager and credited to the accounts of the relevant Shareholders, net of costs and expenses, if they have a value exceeding the costs involved in selling the Subscription Rights and there is a market for acquiring such Subscription Rights. There can be no assurance that the Company and/or the Manager will sell any Subscription Rights or, in the event that such sale is carried out, be able to sell any Subscription Rights at a profit.

5.8.2 Subscription rights in the Private Placement There will not be issued any subscription rights in connection with the Private Placement. However, due to the allocation principles in the Private Placement (as further described in Sections 5.8 and 5.10) holders of Subscription Rights who subscribe/apply for a number of New Shares exceeding the number of Subscription Rights held will be the first group of applicants to be allocated New Shares in the Private Placement.

5.9 THE SUBSCRIPTION PROCEDURE

The subscription office for subscriptions in the Offering is as follows:

Pareto Securities AS

Dronning Mauds gt 3

P.O. Box 1411 Vika

N-0115 Oslo

Norway

Telephone: +47 22 87 87 00

Telefax: +47 22 87 87 15

www.paretosec.com

The Subscription Form for the Offering must be received by the Manager prior to the expiry of the Subscription Period. Neither the Company nor the Manager may be held responsible for delays in the mail system or for Subscription Forms forwarded by facsimile that are not received in time by the Manager. It is not sufficient for the Subscription Form to be postmarked within the deadline.

Multiple subscriptions (i.e. subscriptions on more than one Subscription Form) within the Subscription Period are permitted. Please note, however, that two separate Subscription Forms submitted by the same subscriber with the same number of New Shares subscribed for on both Subscription Forms will only be counted once unless otherwise is explicitly stated on one of the Subscription Forms. In the case of multiple subscriptions through the VPS online subscription system or subscriptions made both on a Subscription Form and through the VPS online subscription system, all subscriptions will be counted.

Norwegian residents with a Norwegian identification number (Norwegian: "personnummer") may subscribe for New Shares by following the links on www.paretosec.com, which will redirect the subscriber to the VPS online subscription system. In order to use the online subscription system, the subscriber must have, or obtain, a VPS account number. Neither the Manager nor the Company assumes any responsibility for failure to subscribe or inability to subscribe for New Shares due to technical or internet problems.

If your Shares are held in a custody account in a bank or other securities institution please see section 5.13.

The Manager may at its sole discretion refuse any improperly completed, delivered or executed Subscription Forms or any subscription that may be unlawful (hereunder due to ownership restrictions as further described in Section 11.3).

The subscription for New Shares is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Manager.

5.10 ALLOCATION OF NEW SHARES

The allocation principles for the Rights Issue and the Private Placement are set out in Section 5.10.1 and 5.10.2 respectively below.

The combined allocation principles imply that the Company's existing shareholders as at the Record Date are guaranteed the option to subscribe their pro rata share of the Offering, provided they exercise all their issued Subscription Rights. Furthermore, the combined allocation principles imply that one Subscription Right gives the right to subscribe for and be allocated one New Share as well as it will provide for a preferred allocation in the Private Placement as further described below.

The allocation of New Shares will take place after the expiry of the Subscription Period on or about 28 May 2015 and notifications of allocation will be issued by post on or about 28 May 2015. The board of directors reserves the right to round off, regulate or in another way reject or reduce any subscription not covered by Subscription Rights.

The Company will publish the result of the Offering on or about 28 May 2015 through the information system of Oslo Børs at www.newsweb.no under the ticker "VARDIA".

5.10.1 Allocation of New Shares in the Rights Issue The allocation of New Shares in the Rights Issue will be made by the board of directors of the Company by applying the following criteria:

a) Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period.

5.10.2 Allocation of New Shares in the Private Placement The allocation of New Shares in the Private Placement will be made by the board of directors of the Company by applying the following criteria:

The allocation principles for the Private Placement above implies that the Company's shareholders' pre-emptive rights are set aside; however, the pre-emptive rights are mainly set aside to the benefit of the Company's existing shareholders and investors who acquire Subscription Rights from such existing shareholders.

5.11 PAYMENT FOR THE ALLOCATED NEW SHARES

The payment for the allocated New Shares falls due on 3 June 2015 (the "Payment Date ").

Subscribers who have a Norwegian bank account

Subscribers who have a Norwegian bank account must, and will by signing the Subscription Form, provide the Manager, with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount payable for the New Shares which are allocated to the subscriber.

The specified bank account is expected to be debited on or about the Payment Date. The Manager is only authorised to debit such account once, but reserves the right to make up to three debit attempts, and the authorisation will be valid for up to seven working days after the Payment Date.

The subscriber furthermore authorises the Manager to obtain confirmation from the subscriber’s bank that the subscriber has the right to dispose over the specified account and that there are sufficient funds in the account to cover the payment.

If there are insufficient funds in a subscriber’s bank account or if it for other reasons is impossible to debit such bank account when a debit attempt is made pursuant to the authorisation from the subscriber, the subscriber’s obligation to pay for the New Shares will be deemed overdue.

Payment by direct debiting is a service that banks in Norway provide in cooperation. In the relationship between the subscriber and the subscriber’s bank, the standard terms and conditions for "Payment by Direct Debiting – Securities Trading", which are set out on page 2 of the Subscription Form, will apply, provided, however, that subscribers who subscribe for an amount exceeding NOK 5 million by signing the Subscription Form provide the Manager with a one-time irrevocable authorisation to manually debit the specified bank account for the entire subscription amount.

Subscribers who do not have a Norwegian bank account

Subscribers who do not have a Norwegian bank account must ensure that payment with cleared funds for the New Shares allocated to them is made on or before the Payment Date.

Prior to any such payment being made, the subscriber must contact the Manager at +47 22 87 87 00 for further details and instructions.

5.12 OVERDUE PAYMENTS

Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 No. 100; 9.25% per annum as at the date of this Prospectus. The Company and the Manager reserve the right to have the Manager pre-fund the payment on behalf of subscribers who have not made payment for the New Shares within the Payment Date. Irrespective of such pre-funding (if any), if the subscriber fails to comply with the terms of payment or should payments not be made when due, the subscriber will remain liable for payment of the New Shares allocated to it and the New Shares allocated to such subscriber will not be delivered to the subscriber. In such case the Company and the Manager reserve the right to, at any time and at the risk and cost of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated New Shares, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated New Shares in accordance with applicable law. If New Shares are sold on behalf of the subscriber, such sale will be for the subscriber’s account and risk and the subscriber will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Manager as a result of, or in connection with, such sales. The Company and/or the Manager may enforce payment for any amounts outstanding in accordance with applicable law.

5.13 FINANCIAL INTERMEDIARIES

All persons or entities holding Shares or Subscription Rights through financial intermediaries (i.e., brokers, custodians and nominees) should read this Section 5.13. All questions concerning the timeliness, validity and form of instructions to a financial intermediary in relation to the receipt, exercise, sale or purchase of

Subscription Rights should be determined by the financial intermediary in accordance with its usual customer relations procedure or as it otherwise notifies each beneficial shareholder.

Neither the Company nor the Manager is liable for any action or failure to act by a financial intermediary through which Shares are held.

Subscription Rights

If a Shareholder holds Shares registered through a financial intermediary on the Record Date, the financial intermediary will customarily give the Shareholder details of the aggregate number of Subscription Rights to which it will be entitled. The relevant financial intermediary will customarily supply each Shareholder with this information in accordance with its usual customer relations procedures. Shareholders holding Shares through a financial intermediary should contact the financial intermediary if they have received no information with respect to the Offering.

Shareholders who hold their Shares through a financial intermediary and who are Ineligible Persons (as defined in the below Section 5.24) will not be entitled to exercise their Subscription Rights.

Subscription Period

The time by which notification of exercise instructions for subscription of New Shares must validly be given to a financial intermediary may be earlier than the expiry of the Subscription Period. Such deadline will depend on the financial intermediary. Shareholders who hold their Shares through a financial intermediary should contact their financial intermediary if they are in any doubt with respect to the deadline.

Subscription

Any Shareholder who is not an Ineligible Person and who holds its Subscription Rights through a financial intermediary and wishes to exercise its Subscription Rights, should instruct its financial intermediary in accordance with the instructions received from such financial intermediary. The financial intermediary will be responsible for collecting exercise instructions from the Shareholders and for informing the Manager of their exercise instructions.

Method of payment

Any Shareholder who holds its Subscription Rights through a financial intermediary should pay the Subscription Price for the New Shares that are allocated to it in accordance with the instructions received from the financial intermediary. The financial intermediary must pay the Subscription Price in accordance with the instructions in the Prospectus. Payment by the financial intermediary for the New Shares must be made no later than the Payment Date. Accordingly, financial intermediaries may require payment to be provided to them prior to the Payment Date.

5.14 DELIVERY AND TRADING OF THE NEW SHARES

The Company expects to register the share capital increases pertaining to the Offering in the Norwegian Register of Business Enterprises on or about 10 June 2015, provided that full payment for the allocated New Shares has been received by the Company. As soon as practically possible thereafter, the allocated and paid New Shares will be transferred to the subscribers’ VPS accounts.

The New Shares may not be traded before registration of the share capital increases with the Norwegian Register of Business Enterprises and delivery of the New Shares to the subscribers VPS-accounts. The first day of trading of the New Shares on Oslo Børs is expected to be on or about 10 June 2015.

5.15 THE RIGHTS CONFERRED BY THE NEW SHARES

The New Shares will in all respects carry full shareholder rights equal to the existing ordinary Shares of the Company, including rights to dividends, from the date the share capital increases have been registered in the

Norwegian Register of Business Enterprises. For a description of rights attaching to Shares in the Company, see Section 10 "Shares and share capital" of this Prospectus.

5.16 PUBLICATION OF INFORMATION IN RESPECT TO THE OFFERING

In addition to press releases on the Company’s website www.vardia.com, the Company intends to use Oslo Børs' information system at www.newsweb.no to publish information with respect to the Offering. The Company will publish the result of the Offering on or about 28 May 2015.

5.17 VPS REGISTRATION

The Company’s Shares are registered in VPS, the Norwegian Central Securities Depository. The Shares’ securities number is ISIN NO 0010593544. The registrar for the Company’s Shares is DNB Bank ASA, Registrar Department, Dronning Eufemias gate 30, 0191 Oslo, Norway.

Like the existing Shares of the Company, the New Shares issued in the Offering will be listed on Oslo Børs under the ticker symbol "VARDIA".

5.18 SHARE CAPITAL FOLLOWING THE OFFERING

As at the date of this Prospectus, the Company’s share capital is NOK 2,579,359.04 divided into 32,241,988 shares, each with a par value of NOK 0.08. The Company’s share capital is fully paid up and issued in accordance with Norwegian law.

The share capital following the Offering will be increased from NOK 2,579,359.04 to NOK 32,579,359.04 divided into 407,241,988 Shares, each with a par value of NOK 0.08. The New Shares issued in the Rights Issue will be issued in accordance with the resolution passed at the AGM, cf. Section 5.3.1, and the New Shares issued in the Private Placement will be issued subject to, and on the basis of, a resolution of an extraordinary general meeting in the Company to be held following the expiry of the Subscription Period, cf. Section 5.3.2. Please see Section 10 "Shares and share capital" for a further description of the Company’s share capital.

5.19 THE UNDERWRITING AND LOCK-UP OBLIGATIONS FOR THE UNDERWRITERS

5.19.1 Underwriting arrangements for the Rights Issue On 4 March 2015, the Company entered into underwriting agreements with each of the persons listed in the below table (the "Underwriters "), who in aggregate have underwritten the subscription of all the New Shares offered in the Rights Issue with a gross amount of NOK 275,000,000. If fewer than all the New Shares offered in the Rights Issue are subscribed for by the end of the Subscription Period, the Underwriters will be allocated the remaining New Shares in the Rights Issue so that the full Rights Issue is subscribed for. The table below shows the name, address and subscription amount each of the Underwriters has undertaken to underwrite:

Underwriter Address NOK underwritten

Traction Delta AB Box 3314, SE-103 66 Stockholm, Sweden 10,777,000 Sand Grove Capital Opportunities Master 32-36 Duke St, St James, GB-London SW14 6DF, England 10,777,000 Funds Home Capital AS Frederik Stangsgt. 22-24, 0201 Oslo, Norway 10,777,000 Victoria India Fund AS c/o Andenæsgruppen, Stortingsgt 28, 0161 Oslo, Norway 10,500,000 Skeie Alpha Invest Tordenskiolds gate 6 B, 0160 Oslo, Norway 9,798,000 Pine River Master Fund Ltd. 601 Carlson Parkway, Suite 330, USA-Minnetonka MN 8,729,370 55305, USA Norway Marine Insurance AS Vestbrynet 4, 1176 Oslo, Norway 8,400,000 AS Clipper Postboks 1254 Vika, 0111 Oslo, Norway 7,838,000 Verdipapirfondet KLP Aksjenorge Dronning Eufemias gate 10, 0191 Oslo, Norway 7,838,000 MP Pensjon PK Postboks 665 Sentrum, 0106 Oslo, Norway 7,838,000 Toluma Norden AS Postboks 33, 1324 Lysaker, Norway 7,838,000 Skeie Capital Investment AS Tordenskiolds gate 9, 4612 Kristiansand, Norway 7,838,000

Tigerstaden AS Lilleakerveien 16, 0283 Oslo, Norway 7,838,000 Fibonacci Asset Management AB Apelv. 18 A, SE-182 75 Stocksund, Sweden 7,838,000 Nordea Bank S.A. Mainaustrasse 21, CH-8008 Zürich, Switzerland 7,000,000 Mertoun Capital AS Markens gate 9, 4610 Kristiansand S, Norway 7,000,000 Sandnes Investering AS Domkirkeplassen 2, 4006 Stavanger, Norway 7,000,000 Canica AS Postboks 1995 Vika, 0125 Oslo, Norway 7,000,000 Strømstangen AS Postboks 1273 Vika, 0111 Oslo, Norway 5,878,000 Verdipapirfondet Storebrand Verdi Postboks 484, 1327 Lysaker, Norway 5,095,000 Sissener Canopus Postboks 1849, Vika, 0123 Oslo, Norway 4,703,000 Vikna Eiendom AS Flerengstrand, 7900 Rørvik, Norway 4,200,000 Busebakk AS Høybyvegen 38, 3517 Hønefoss, Norway 4,200,000 BD Trading AS Postboks 4, 4001 Stavanger, Norway 3,919,000 Piren Holding AS Grasholmkroken 24 A, 4077 Stavanger, Norway r 3,919,000 Wenaasgruppen AS Wenasshuset, 6386 Måndalen, Norway 3,919,000 Pareto Bank ASA Dronning Mauds gt 3, 0123 Oslo, Norway 3,919,000 Mininaste AS Ladeveien 14, 0275 Oslo, Norway 3,919,000 Apollo Asset Limited Boulevard d`Italie, MC-98000 Monaco 3,919,000 Directmarketing Invest AS Grønland 46, 3045 Drammen, Norway 3,919,000 Charles Ashley Heppenstall 15 Ch Du Molan, CH-1223 Cologny, Switzerland 3,919,000 Østlandske Pensjonistboliger AS Setra vei 18, 0786 Oslo, Norway 3,919,000 Leif Inge Slethei AS Postboks 14, 4052, Røyneberg, Norway 3,850,000 Gyljandi AS Frederik Stangs Gate 18, 0264 Oslo, Norway 3,500,000 Jason Roberts Postboks 100, 9170 Longyearbyen, Svalbard 3,500,000 Ministern AB Birger Jarlsgatan 41 A, SE-111 45 Stockholm, Sweden 3,150,000 Hetlands Gecco Management AS Øvre Smestadvei 6 A, 0378 Oslo, Norway 3,020,000 Karl Høie Åsliveien 27, 1368 Stabekk, Norway 2,614,000 Villenik AS Abbediengveien 4, 0275 Oslo, Norway 2,310,000 Provobis Invest Lilla Bommen 1, SE-411 04 Göteborg, Sweden 2,157,000 Vikna Invest AS Flerengstrand, 7900 Rørvik, Norway 2,100,000 Williksen Invest AS Flerengstrand, 7900 Rørvik, Norway 2,100,000 Pine River Ultra Master Fund Ltd. 601 Carlson Parkway, Suite 330, USA-Minnetonka MN 2,047,630 55305 Brian Chang Holdings Limited 20 Stn Ming Lane #03-55, Singapore 5139687 1,750,000 Steinar Hofstad Ullernveien 25 A, 0280 Oslo, Norway 1,750,000 Morten Werring Rederi AS Strandveien 50 D, 1366 Lysaker, Norway 1,510,000 Kristian Falnes AS Nerliveien 1, 4020 Stavanger, Norway 1,500,000 Gryningskust Förvaltning AB Baldersuddvägen 26, SE-134 38 Gustavsberg, Sweden 1,400,000 AHJ Holdings Limited 2 Minister Court, Mincing Lane, GB-London EC3R 7BB, 1,400,000 England Lunner Legesenter Håvelsrudvegen 3, 2730 Lunner, Norway 1,400,000 Peder Veiby Pavelsgate 1, 0454 Oslo, Norway 1,400,000 BLS Holding AS Skogfaret 3 E, 0382 Oslo, Norway 1,400,000 Tryggen Invest AS Bestumveien 82 C, 0283 Oslo, Norway 1,250,000 Lise AS Postboks 2353 Solli, 0250 Oslo, Norway 1,250,000 Johannes Bertorp Haldenstrasse 49, CH-6006 Luzern, Switzerland 1,250,000 GS Invest AS Skolsegglia 26, 2019 Skedsmokorset, Norway 1,250,000 Dag Eystein Koppang Jegerveien 23, 0777 Oslo, Norway 1,250,000 Dukat AS Postboks 1847 Vika, 0123 Oslo, Norway 1,250,000 Norgesinvestor Proto AS Haakon VII`s gt. 6, 0124 Oslo, Norway 1,250,000 Ulf Johan Rieber Roggesvei 56, 5155 Bønes, Norway 1,250,000 MCE Holding AS Nedre Smøråsvei 15 B, 5238 Rådal, Norway 1,079,000 Caaby AS c/o Andenæsgruppen, Stortingsgt 28, 0161 Oslo, Norway 1,050,000 Arne Björhn Engelsbreksplan 2, SE-114 34 Stockholm, Sweden 1,000,000

Rosøy AS c/o Myhre, Ullernveien 24b, 0280 Oslo, Norway 863,000 Helge Schjøtt Håkon Sætresv. 23, 5232, Paradis, Norway 863,000 Tord Cederlund Box 2189, SE-10315 Stockholm, Sweden 863,000 Magnus Waern Birger Jarlsgatan 71, SE-113 56 Stockholm, Sweden 863,000 H A Skajems planteskole AS Risveien 7, 0374 Oslo, Norway 863,000 Gaya AS Tuftevegen 29, 4355 Kvernaland, Norway 863,000 Olav Grande Nordbergvn. 64, 0875 Oslo, Norway 863,000

Sum 275,000,000

Each Underwriter’s obligation under the underwriting agreement shall remain in effect until the earlier of the date on which (i) the Underwriter has made full payment for the New Shares allocated to it, (ii) the Company has resolved not to implement the Rights Issue and (iii) the Company in writing has confirmed that the Rights Issue is fully subscribed and no other claim is outstanding. Notwithstanding the above, the underwriting shall expire in the event that the Underwriter has not been notified of any allotment under the underwriting within 24:00 (CET) on 31 May 2015.

In connection with their underwriting, the Underwriters have undertaken lock-up obligations until the earlier of (i) the expiry of the Subscription Period, and (ii) 31 May 2015.

Pursuant to the underwriting agreements, the Underwriters shall receive an underwriting fee equal to 3% of the aggregate amount underwritten by the Underwriters.

5.19.2 Underwriting arrangements for the Private Placement On 26 April 2015, the Company entered into underwriting agreements with each of the persons listed in the below table (the "PP Underwriters "), who in aggregate have underwritten the subscription of all the New Shares offered in the Private Placement for a gross amount of NOK 100,000,000. If fewer than all the New Shares offered in the Private Placement are subscribed for by the end of the Subscription Period, the PP Underwriters will be allocated the remaining New Shares so that the full Private Placement is subscribed for. The table below shows the name, address and subscription amount each of the PP Underwriters has undertaken to underwrite:

Underwriter Address NOK underwritten

Sand Grove Capital Opportunities Master 32-36 Duke St, St James, GB-London SW14 6DF, England 41,179,000 Funds Skeie Alpha Invest Tordenskiolds gate 6 B, 0160 Oslo, Norway 12,354,000 MP Pensjon PK Postboks 665 Sentrum, 0106 Oslo, Norway 8,236,000 Fibonacci Asset Management AB Apelv. 18 A, SE-182 75 Stocksund, Sweden 8,236,000 Toluma Norden AS Postboks 33, 1324 Lysaker, Norway 4,678,000 Tigerstaden AS Lilleakerveien 16, 0283 Oslo, Norway 2,850,000 Charles Ashley Heppenstall 15 Ch Du Molan, CH-1223 Cologny, Switzerland 2,470,000 Verdipapirfondet Storebrand Verdi Postboks 484, 1327 Lysaker, Norway 1,853,000 Sissener Canopus Postboks 1849, Vika, 0123 Oslo, Norway 1,710,000 BD Trading AS Postboks 4, 4001 Stavanger, Norway 1,425,000 Piren Holding AS Grasholmkroken 24 A, 4077 Stavanger, Norway r 1,425,000 Mininaste AS Ladeveien 14, 0275 Oslo, Norway 1,425,000 Wenaasgruppen AS Wenasshuset, 6386 Måndalen, Norway 1,425,000 Leif Inge Slethei AS Postboks 14, 4052, Røyneberg, Norway 1,400,000 Jason Roberts Postboks 100, 9170 Longyearbyen, Svalbard 1,273,000 Ministern AB Birger Jarlsgatan 41 A, SE-111 45 Stockholm, Sweden 1,145,000 Hetlands Gecco Management AS Øvre Smestadvei 6 A, 0378 Oslo, Norway 1,098,000 Provobis Invest Lilla Bommen 1, SE-411 04 Göteborg, Sweden 784,000

Steinar Hofstad Ullernveien 25 A, 0280 Oslo, Norway 636,000 Morten Werring Rederi AS Strandveien 50 D, 1366 Lysaker, Norway 549,000 Peder Veiby Pavelsgate 1, 0454 Oslo, Norway 509,000 Kristian Falnes AS Nerliveien 1, 4020 Stavanger, Norway 500,000 Dag Eystein Koppang Jegerveien 23, 0777 Oslo, Norway 455,000 Lise AS Postboks 2353 Solli, 0250 Oslo, Norway 455,000 Norgesinvestor Proto AS Haakon VII`s gt. 6, 0124 Oslo, Norway 455,000 Dukat AS Postboks 1847 Vika, 0123 Oslo, Norway 455,000 MCE Holding AS Nedre Smøråsvei 15 B, 5238 Rådal, Norway 392,000 Helge Schjøtt Håkon Sætresv. 23, 5232, Paradis, Norway 314,000 Olav Grande Nordbergvn. 64, 0875 Oslo, Norway 314,000

Each PP Underwriter’s obligation under the underwriting agreement shall remain in effect until the earlier of the date on which (i) the PP Underwriter has made full payment for the New Shares allocated to it, (ii) the Company has resolved not to implement the Private Placement and (iii) the Company in writing has confirmed that the Private Placement is fully subscribed and no other claim is outstanding. Notwithstanding the above, the underwriting shall expire in the event that the relevant underwriter has not been notified of any allotment under the underwriting within 24:00 (CET) on 31 May 2015.

In connection with their underwriting, the PP Underwriters have undertaken lock-up obligations until the earlier of (i) the expiry of the Subscription Period, and (ii) 31 May 2015.

Pursuant to the underwriting agreements, the PP Underwriters shall receive an underwriting fee equal to 3% of the aggregate amount underwritten by the PP Underwriters. Furthermore, certain primary underwriters will receive an additional 3% on their initial underwriting obligation.

5.20 PROCEEDS AND COSTS

The transaction costs of the Company related to the Offering are estimated to approximately NOK 34 million, and accordingly the net proceeds of the Offering will be approximately NOK 341 million.

No expenses or taxes are charged to the subscribers in the Offering by the Company or the Manager.

5.21 DILUTION

The percentage of immediate dilution resulting from the Offering for shareholders in the Company that does not participate in the Offering will be approximately 92.1%.

5.22 JURISDICTION AND GOVERNING LAW

This Prospectus, the Subscription Form and the terms and conditions of the Offering shall be governed by and construed in accordance with, and the New Shares will be issued pursuant to, Norwegian law. Any dispute arising out of, or in connection with, this Prospectus, the Subscription Form or the Offering shall be subject to the exclusive jurisdiction of Oslo District Court.

5.23 INTEREST OF NATURAL AND LEGAL PERSONS INVOLVED IN THE OFFERING

The Manager or its affiliates have provided from time to time, and will provide in the future, investment and commercial banking services to the Company and/or companies in the Group in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager, its employees and any affiliates may currently own Shares in the Company. Further, in connection with the Offering, the Manager, its employees and any affiliate acting as an investor for its own account may receive Subscription Rights (if they are Shareholders) and may exercise their right to take up such Subscription Rights and acquire New Shares, and, in that capacity, may retain, purchase or sell New Shares and any other securities issued by the Company or other investments for their own account and may offer or sell such securities (or other

Furthermore, the Underwriters and the PP Underwriters obligation to subscribe for New Shares will be determined based on the demand for New Shares in the Offering. Consequently, the Underwriters and the PP Underwriters may as such have an interest in the Offering.

Except for the above, the Company is not aware of any natural or legal person having an interest in the Offering which is material in the context of the Offering.

5.24 SELLING AND TRANSFER RESTRICTIONS

The distribution of this Prospectus and the offering and sale of the New Shares and the Subscription Rights offered hereby may in certain jurisdictions be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions and should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to apply for, subscribe for or purchase New Shares.

This Prospectus may not be used for, or in connection with, and does not constitute, any offer to sell, or an invitation to purchase, any of the New Shares or the Subscription Rights to any person who, in the Company’s view, are resident in a jurisdiction where such offering of New Shares or granting of Subscription Rights would be unlawful or (for jurisdictions other than Norway and Sweden) would require any prospectus, registration or similar action ("Ineligible Persons ").

No one has taken any action that would permit a public offering of the New Shares to occur outside of Norway and Sweden. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Prospectus and/or the Offering that are not known or identified by the Company and the Manager at the date of this Prospectus may apply in various jurisdictions as they relate to the Prospectus and the Offering. Please see Section 15 "Selling and Transfer Restrictions" for further information.

Notwithstanding any other provision of this Prospectus, the Company and the Manager reserve the right to permit investors to apply for New Shares if the Company and the Manager, in their absolute discretion, is satisfied that the transaction in question will not constitute a breach of applicable laws and regulations. In any such case, the Company and the Manager do not accept any liability for any actions that such investor takes or for any consequences that it may suffer as a result of the Company and the Manager accepting the investor’s application for New Shares.

5.25 MANDATORY ANTI-MONEY LAUNDERING PROCEDURES

The Offering is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively the "Anti-Money Laundering Legislation ").

Subscribers who are not registered as existing customers of the Manager must verify their identity to the Manager in accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period will not be allocated New Shares.

Furthermore, participation in the Offering is conditional upon the subscriber holding a VPS account. The VPS account number must be stated in the Subscription Form. VPS accounts can be established with authorised VPS

registrars, who can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity to the VPS registrar in accordance with the Anti-Money Laundering Legislation. However, non-Norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the FSA.

5.26 PARTICIPATION OF MAJOR EXISTING SHAREHOLDERS AND MEMBERS OF THE COMPANY’S MANAGEMENT, SUPERVISORY AND ADMINISTRATIVE BODIES IN THE OFFERING

The Company is not aware of whether any major shareholders of the Company or members of the Company’s management, supervisory or administrative bodies intend to subscribe for New Shares in the Offering, or whether any person intends to subscribe for more than 5% of the Offering. Some members of the Company’s management, supervisory or administrative bodies hold Shares in the Company as indicated in Section 8 "Board of Directors, Management, Employees and Corporate governance" and will as existing shareholders be granted Subscription Rights in respect of such Shares. Certain shareholders and members of the Company's management and board of directors of the Company are underwriters and as such may subscribe for shares in accordance to their underwriting commitment.

6. PRESENTATION OF THE GROUP

6.1 OVERVIEW

Vardia Insurance Group ASA is an insurance company incorporated as a public limited liability company (Nw: Allmennaksjeselskap ) under the Norwegian Public Limited Liability Companies Act and the Norwegian Insurance Companies Act, with registration number NO 994 288 962. Vardia was incorporated 8 June 2009 and the Company’s head office is located in Oslo, Norway with its registered address at Haakon VIIs Gate 2, P.O. Box 1860 Vika, 0124 Oslo, Norway, phone: +47 21 04 90 90, website: www.vardia.com.

The Group’s main focus is the market for property and casualty insurance for the retail and small & medium sized enterprises (SME) segments in Norway, Sweden and Denmark. The Group distributes its products mainly through proactive call centres, in addition to insurance agents, insurance brokers and price aggregators, both as part of white label partner agreements and under the Vardia brand.

The Group consists of the main company Vardia Insurance Group ASA, which is the 100% owner of the subsidiaries Vardia Forsikring AS, Rein Forsikring AS and Vardia Eksterne Kanaler AS in Norway, Vardia Försäkring AB in Sweden, Vardia Forsikringsagentur A/S in Denmark, in addition to Vardia Agencies AS in Norway.

The Group is headquartered in Oslo, Norway, with a number of call centres across Norway, Sweden and Denmark. As of 31 December 2014, total number of employees was 503.

The Group has grown significantly and reported gross turnover of NOK 1,323 million and gross written premiums of NOK 1,167 million for 2014, with a total number of customers of around 150,000 as of 31 December 2014.

6.2 GROUP HISTORY AND DEVELOPMENT OF THE GROUP The following summarises key events in the Group’s history, from incorporation in 2009 to date:

2009 June • Scandinavian Insurance Group AS (SIG) was established as a sales agent by Børge Leknes, Rune Arneberg and Pål Lauvrak, each with 1/3 ownership. August • Hired 50 employees and took over the infrastructure in Sortland from 1881 AS. 2010 April • Agreements with new partners, incl. Ole Erik Alnæs, Sigmund Romskoug and Ivar S. Williksen. June • Entered into agency agreement with Unison Forsikring ASA for sale of insurance in the Norwegian market. September • Vardia Försäkring AB established in Sweden. December • Received licence from FSA to operate as an insurance company, subject to capitalisation. 2011 April • Final approval from FSA to operate as an insurance company after successful capital increase of NOK 55 million. May • Started underwriting for own account in Sweden. 2012 April • Vardia Försäkring AB was awarded Swedish non-life insurance company of the year 2012. August • Terminated agency agreement with Unison Forsikring ASA; the Company started underwriting for own account in Norway. November • Vardia Agencies AS established; Lloyds Aquaculture binder transferred from Vardia Forsikring AS.

2013 January • SIG signed a strategic cooperation agreement with Mekonomen Group for the Scandinavian region. February • SIG signed strategic cooperation and partnership agreements with Stampen AB and Sector Alarm in Sweden. May • SIG signed strategic cooperation and partnership agreement with Komplett.no. June • Vardia Forsikringsagentur A/S established in Denmark. November • Scandinavian Insurance Group AS changes name and converts into Vardia Insurance Group ASA. December • Acquisition of insurance agent Saga Forsikring AS in Norway. 2014 January • Acquisition of insurance agent Rein Forsikring AS in Norway. February • Vardia Forsikringsagentur A/S (Denmark) commences operations. • Signed strategic partnership agreement with OK in Denmark April • Listing at Oslo Stock Exchange, 8 th April 2015 February / • The Company's accounting of activated costs and direct variable costs was changed as was March the recognition of deferred tax assets from tax losses resulting in the Company breaching its capital adequacy and solvency margin requirements. April • Rune Olsen Arneberg is appointed as new interim CEO in Vardia replacing Ivar S. Williksen. May • The Offering is launched.

6.3 VISION, STRATEGY AND CORE VALUES

6.3.1 Vision Vardia shall be a publicly listed, independent company delivering insurance products to the most attractive segments in the retail and corporate market in the Nordic region through proactive call centre sales.

6.3.2 Strategy The Group has a dual market approach, selling insurance under the brands of white label partners in addition to the Vardia brand.

The main distribution channel is the proactive call centre sales, which targets identified individuals within selected segments which represent attractive insurance risk and profitability.

The Company has an ambition to continue its strong growth; however, the Company's capital adequacy and solvency margin requirements will increase in line with increase in the portfolio. Thus, the Company's growth may be adjusted to the ensure compliance with such requirements, as applicable.

Based on the changes in the accounts, the Company has initiated a project to review the Company's strategy going forward. The project is to review the Group structure, business development, distribution model, accounting etc.

6.3.3 Business concept The Group’s business concept makes the Group a unique insurer in the Scandinavian market:

• Focus on proactive sales through call centres. In addition, the Group shall distribute its products through channels such as agents, insurance brokers and price aggregators.

• Have a platform and infrastructure which rapidly enables the Group to offer unique and flexible customer solutions in cooperation with white label partners.

• Make insurance easier and provide the best customer satisfaction through the most motivated and competent employees in the industry.

• Be active in the consolidation of the Nordic insurance market.

• Select the segments and individual customers which represent attractive profitability and limited risk.

• Be an independent company building a modern and efficient company, without inefficient legacy systems.

Vardia’s business proposition is "We make insurance easy". Vardia strives every day to simplify insurance and interface to our customers. Vardia focuses on the simplification of documents, web pages, mobile pages and all contact points to Vardia. Vardia simplifies terminology and strive to be transparent in its dialogue with its customers.

6.3.4 Operational philosophy Vardia strives to maximise shareholder values through its operational philosophy:

• Focus only on the most profitable part of the market through segmentation of customer groups, avoiding unprofitable risks such as customers below the age of 25 and above 65, and the high end part of the property market.

• Have solid terms, tariffs and proven underwriting guidelines; market terms to attractive customer segments ensure underwriting profitability.

• Measure performance daily on new sales; aiming to grow a large, pan-Scandinavian insurance portfolio.

• Control underwriting through segmentation and modern systems; no unwanted risk is allowed to be underwritten by sales employees. No discounts are allowed other than those defined in the underwriting systems/guidelines.

• Have robust procedures for claims handling through Crawford where Vardia has its own dedicated team; efficient, correct and reliable claims handling is essential to the Group’s reputation.

• Have strong focus on risk management and internal control; detailed procedures and monitoring throughout the organisation.

• Use reinsurance to protect company capital; quota share and excess of loss programmes with highly rated reinsurers improve capital efficiency.

6.4 LEGAL STRUCTURE OF THE GROUP

The Group consists of the main company Vardia Insurance Group ASA, owns 100% of the subsidiaries Vardia Forsikring AS and Vardia Eksterne Kanaler AS, Rein Forsikring AS in Norway, Vardia Försäkring AB in Sweden, Vardia Forsikringsagentur A/S in Denmark, in addition to Vardia Agencies AS in Norway. Rein Forsirking AS is not included in the below figure as there is no longer any operations in this company.

6.5 DESCRIPTION OF THE COMPANIES IN THE GROUP

6.5.1 Vardia Insurance Group ASA The Group’s holding company, which owns 100% of the shares in the subsidiaries.

The Group’s insurance license is held through Vardia, and is therefore the risk carrier of all insurances underwritten by the Group. Hence, Vardia is subject to regulatory capital requirements, and is the legal entity where reinsurance contracts are entered into.

Vardia Insurance Group ASA employed 17 people as at 31 December 2014.

6.5.2 Vardia Forsikring AS Vardia Forsikring AS is owned 100% by Vardia and is a Norwegian private limited liability company. Vardia Forsikring AS operates as an insurance agent, distributing insurance policies in the Norwegian market underwritten by Vardia. Vardia Forsikring AS is the operating company for the call centres in Sortland, Hamar, Porsgrunn, and Molde.

Vardia Forsikring AS employed 189 people as at 31 December 2014. Børge Leknes, who is formally an employee of Vardia, acts as CEO of Vardia Forsikring AS.

6.5.3 Vardia Försäkring AB Vardia Försäkring AB is owned 100% by Vardia and is a Swedish private limited liability company. Vardia Försäkring AB operates as an insurance agent, distributing insurance policies in the Swedish market underwritten by on a similar basis as Vardia Forsikring AS in Norway. Vardia Försäkring AB operates the call centres in Luleå, Skellefteå and Sundsvall, with the administrative office located in Stockholm.

Vardia Försäkring AB employed 190 people as at 31 December 201. The CEO is Andreas Önstorp.

6.5.4 Vardia Forsikringsagentur A/S Vardia Forsikringsagentur A/S is owned 100% by Vardia and is a Danish private limited liability company. Vardia Forsikringsagentur A/S was established in June 2013 and commenced operations as an insurance agent and distributor in February 2014. Administration and a call centre operation are based in Copenhagen, as well as a call centre in Aalborg.

Vardia Forsikringsagentur A/S employed 72 people as at 31 December 2014. The CEO is Carsten Müller.

6.5.5 Vardia Agencies AS Vardia Agencies AS is owned 100% by Vardia and is a Norwegian private limited liability company. Vardia Agencies AS is an agent underwriting aquaculture insurance ( Nw: havbruksforsikring ), marine and cargo insurance in the Norwegian market, on behalf of Lloyds syndicate.

Vardia Agencies AS employed 3 persons as at 31 December 2014. Sigmund Romskoug, who is formally an employee of Vardia, acts as CEO of Vardia Agencies AS.

6.5.6 Vardia Eksterne Kanaler AS Vardia Eksterne Kanaler AS is owned 100% by Vardia. Vardia acquired Saga Forsikring AS in December 2013, and the name was changed to Vardia Eksterne Kanaler AS in July 2014. Vardia Eksterne Kanaler was established as an insurance agent in 1998, distributing property and casualty insurance and pension products in the Norwegian market, mainly focusing on SME. Insurance is distributed through agents and insurance brokers.

Vardia Eksterne Kanaler AS employed 33 people as at 31 December 2014. Børge Leknes, who is formally an employee of Vardia, acts as CEO of Vardia Eksterne Kanaler AS.

6.5.7 Rein Forsikring AS Rein Forsikring AS is owned 100% by Vardia. The company was acquired in connection with the acquisition of Rein Forsikring, and no longer has any operations.

6.6 OTHER MATERIAL ASSETS

The Group does not own any material assets other than those related to the core operations.

6.7 DESCRIPTION OF THE GROUP’S OPERATIONS

The Group’s main operations include distribution and underwriting of property and casualty insurance. Through its proactive call centres, insurances are sold under white label brands in addition to the Vardia brand.

As Vardia’s premium portfolio has grown, call centre activity has increasingly included services to handle incoming calls, maintain renewals of existing customers and improve sale of additional products.

The below graph illustrates the Group’s new sales per month from January 2013 until March 2015.

As the graph illustrates, new sales was generally stronger in Sweden than in Norway until the autumn of 2012. Following the increase in equity capital in October 2012, the Norwegian operations were strengthened, with a significant growth in new sales. In January 2013, two larger cooperate agreements was sold. From January 2014, the new sales in Norway was strengthened due to the acquisition of Saga Forsikring. In 2014, the new sales started in Denmark, and the new sales growth is growing as expected. During the autumn of 2014, monthly new sales stabilised at a level of above NOK 90 million. New sales in 2015 have been on average NOK 95.0 million per month, and has now reached a total of NOK 284.9 million.

Due to the new sales combined with more than 85% renewal of insurances sold in previous years (which also is Vardia's ambition going forward) Vardia’s premium portfolio is expected to grow significantly. Renewals are expected to exceed new sales already in 2014, which will contribute to improve cost efficiency and lower the expense ratio.

All sales are based on strict underwriting guidelines, developed and maintained at the Company's headquarter in Oslo, which is also the base for reinsurance and general group management. The administrative offices for the operations in Sweden and Denmark are located in Stockholm and Copenhagen, respectively.

The Group provides standard insurance products for private and commercial customers in Norway, Sweden and Denmark.

6.7.1 Norway In the Norwegian market, the Group commenced operations in 2009 as an insurance agent, distributing insurances on behalf of IF… until 17 May 2010 and AIG until 2013. In June 2010, the Company signed an agency agreement with Unison Forsikring ASA, where the Group sold insurance on behalf of Unison Forsikring ASA. This agreement was terminated in August 2012, when the Company started to write Norwegian business for own account.

Operations in Norway comprise the activities in Vardia Forsikring AS, Vardia Eksterne Kanaler and Vardia Agencies AS.

The Group’s strategy in the Norwegian market is the same as the Group's strategy described in Section 6.3.2 "Strategy".

The Group sells a wide range of insurance products to the retail segment, through the lines of business described below, including;

Motor: This includes hull, third party liability insurance and personal injury. Customers can choose between mandatory cover as well as cover against collision and other risks related to the use of automobiles, motorhomes, campers and motorbikes.

Property: This includes private property (including cottages), contents and homeowner's liability. Customers can choose between cover against damage to houses and loss, or damage to contents, as well as many additional products for owners or occupants of private houses.

Accident and health: This includes personal accident, disability, health insurance as well as life insurance. Customers can choose between cover against death or disability caused by accidents and illness or medical treatment.

Individual and others: This includes travel, pleasure crafts and valuables. Customers can choose between various cover against loss and damage.

To the commercial SME segment, the Group also sells a wide range of insurance products, through the lines of business described below, including;

Property: This includes commercial buildings, contents and various liability cover, equipment, machinery and business interruption. Customers can choose between cover against damage to buildings, inventory, income loss and construction risk.

Accident and health: This includes personal accident, workers' compensation, employee benefit and group life insurance. Customers can choose between cover against death or disability caused by accidents and illness and/or medical treatment.

Liability insurance: This includes various types of liability cover, such as general third party and product liability, professional indemnity, director and officer liability and fidelity insurance.

Other products: This includes group travel and cargo. Customers can choose between various cover against loss and damage.

In addition to distribution under the Vardia brand, key white label partners in the Norwegian market includes utility company Fjordkraft, Komplett.no, NBBL, Visma, Norges Taxiforbund and NOFA (Norsk Familieøkonomi). Fjordkraft is a Norwegian utility company focusing on the retail and SME market. Komplett.no is a Norwegian company selling home electronics on internet in Scandinavia. NBBL is the Co- operative Housing Federation of Norway (NBBL), representing 48 co-operative housing associations with 500.000 members. The main distribution channel in the Norwegian market is proactive call centre sales, but insurances are also sold through agents and insurance brokers related to Vardia Eksterne Kanaler AS.

In 2014, the Group's Norwegian operations had gross written premiums of NOK 684 million, with a gross loss ratio of 85.2%. Total customers at end of 2014 were 45,000, with average number of products per customer of approximately 4.

6.7.2 Sweden Vardia Försäkring AB is the operating entity for the Swedish operations, with an administrative centre in Stockholm and call centers in Luleå, Skellefteå and Sundsvall. Insurance has been written for the Group’s own accounts since May 2011.

The Group’s strategy in the Swedish market is largely similar to that in Norway.

The Group sells a wide range of insurance products to the retail market, including:

Property: This includes private property (including cottages), contents and homeowner's liability. Customers can choose between cover against damage to houses and loss or damage to contents, as well as many additional products for owners or occupants of private houses.

Accident and health: This includes personal accident, critical illness and health insurance.

Individual and other: This includes travel, pleasure crafts and valuables. Customers can choose between various cover against loss and damage.

To the commercial (SME) segment, the Group sells;

Property: This includes commercial buildings, apartment blocks, contents and various liability cover, equipment, machinery and business interruption. Customers can choose between cover against damage to buildings, inventory, income loss and construction risk.

Accident and health: This includes personal accident and health insurance. Customers can choose between cover against death or disability caused by accidents and illness.

Liability insurance: This includes various types of liability cover, such as general third party and product liability, professional indemnity, director and officer liability and embezzlement insurance.

Other products: This includes group travel and cargo. Customers can choose between various cover against loss and damage.

Key white label partners include Mekonomen, Stampen, Skruvat.se, Kundkraft and Ahlsell. Mekonomen is a major car spare-part chain with more than 400 stores and over 2,200 workshops across the Nordic region, Skruvat.se is an online car spare-part chain. Stampen is the owning company of 27 regional newspapers in Sweden (Göteborgsposten, Västmanlands Läns Tidning etc), and Kundkraft is a Swedish online electricity aggregator (online auctions) owned by Schibsted. The two latter primarily focus on home insurance. Ahlsell is a B2B distributor of supplies for primarily electricians and plumbers. The main offering from the Group within this cooperation is commercial and motor insurance.

The Mekonomen agreement was entered into in January 2013 and represents a significant volume potential for the Group, both in Sweden, Norway and Denmark. Mekonomen customers are recognised as value-for-money oriented, and the Group has experienced strong demand for Mekonomen-branded insurance products. The insurances are fully branded, both through proactive call centre sales and through mekonomenforsakring.se. The agreement with Skruvat.se has been implemented in both Sweden and Norway by Skruvatforsakring.se and Skruvatforsikring.no respectively.

In 2014, Vardia Försäkring AB had gross written premiums of NOK 474 million, with a gross loss ratio of 80.7%. Total customers at the end of 2014 were 90,200, with an average number of products per customer of

approximately 2. The number of products per customer is generally lower in the Swedish market compared to that of Norway, as customers in Sweden has historically spread their different insurances between different insurance companies to a greater extent compared to the customers in Norway. The Group strives to increase the number of products per customer in order to improve profitability and renewal rates.

6.7.3 Denmark Vardia established Vardia Forsikringsagentur A/S in Denmark in June 2013, with an administrative centre in Copenhagen and a call center in Aalborg. In the spring of 2014 the Danish operations provided a full range of insurance products to the Danish retail market. The first motor insurance policies were sold in February 2014, and the gross written premium in 2014 was NOK 8.5 million.

Vardia Denmark has entered into a strategic partnership agreement related to non-life insurance products with the Danish energy company OK. OK is a Danish cooperative Denmark's bestselling petrol brand.

The Danish operation counted 72 employees at the end of 2014. Total customers at the end of 2014 were approximately 1,900.

6.8 SEGMENTATION AND UNDERWRITING GUIDELINES

The Group aims to generate profitable growth by strictly following its segmentation and underwriting guidelines, which seeks to identify attractive customers with low loss ratio, with potential to sell several products per customer and with high renewal rate – thereby generating an attractive combined ratio for the Group.

In general, the underwriting guidelines determine which risks and prices are acceptable to underwrite. The guidelines typically addresses criteria such as age of the insured, occupation, geography, type of car, type and value of residential house etc.

Vardia’s underwriting guidelines are absolute for the call centre operators, as it is not possible to offer insurances to individuals and companies that do not fit with the parameters, e.g. age, geography, type of car etc. The underwriting guidelines are reviewed and regularly monitored by the reinsurance partners to secure that Vardia complies with the prevailing reinsurance contracts.

The key steps in the Group’s segmentation and underwriting process include:

• Defining a target group perceived to represent attractive volume potential to Vardia, e.g. the customer base of a white label partner.

• The target group is further narrowed into sub-groups by defined parameters such as demographics, geography etc. in order to select the most attractive prospective customers in terms of risk and profitability.

• An underwriting filter is applied to further filter out unwanted risk of a group, e.g. by using Geodata to identify areas exposed to risk of floods, landslides or with a high concentration of wooden buildings, or to filter out the most expensive sports cars, young drivers etc.

• The individuals of the defined group are subsequently proactively approached by the call centres, often offering competitive terms and attractive insurance compared to the customers’ current insurances.

Once the target group is narrowed through the segmentation, Vardia is typically left with 60-70% of the initial customer base of a white label partner.

Geodata AS is the largest provider of Geographic Information Systems (GIS) in Norway. Geodata provides the Group with a map based solution that includes various risk datasets. These data sets include geographical areas with risk of flood, wooden houses / fire risk, mudslides, rock slides and avalanches (snow etc). The Group use these risk data to calculate a "risk-score" level, and such score is used both in price models, and also to "redline" customers / addresses that the Group does not want to insure. In addition, this map based solution gives the Group an excellent overview of existing customers and the Group's underwriting exposure.

6.9 PRICING AND TARIFFING POLICY

The Group has established detailed plans for its tariffing and pricing of the various insurance products. The tariffing principles are seen in relation to the Group’s underwriting guidelines and proactive distribution model, where the most attractive segments of the insurance market is targeted.

Based on the combination of targeted segmentation and the distribution model, the Group believes it can offer competitive prices to its selected customers and still generate an attractive underwriting result.

Within the retail segment, tariffing is based on a market customary pricing and underwriting methodology, combined with a tailored distribution targeting defined customer groups.

For the SME segment, the principles are similar to retail, but with additional factors such as type of business and industry (defined in cooperation with reinsurers), estimated maximum loss in relation to individual risks, credit scoring and claims history, in addition to limitations in Vardia’s reinsurance programme.

6.10 REINSURANCE

Vardia has a reinsurance programme consisting of quota share reinsurance contracts in addition to excess of loss ("XL") coverage related to insurance risk not ceded under quota share. The reinsurance program has been designed to represent a balanced risk offload relative to the Group’s capitalisation. Quota share reinsurance is an effective tool both to offload the Group for single risk frequency and larger exposure and additionally balance out the capital.

The current program was renegotiated in Q2 2014 and consists of both one and two year programs.

As part of the quota share arrangement, 75% of all premiums are ceded to the reinsurers, which similarly cover 75% of all claims and claims cost from external claims handler. As part of the current program, Vardia receives a commission of more than 20% of the premiums ceded, depending on the claims performance of the various lines of business. The reinsurance commissions received are booked as a negative expense, representing the difference between gross and net operating expenses.

The Group’s risk related to the retained 25% of premiums is limited through an XL reinsurance coverage, protecting the Group from large single claims. The cost related to XL coverage is deducted from gross

premiums. In case a single claim expense exceeds certain levels and thereby triggers the XL coverage, the Group will be subject to reinstatement fees in order to restore its XL coverage.

Current reinsurance program limits Vardia’s exposure to one single claim to NOK 2.5 million within motor in Sweden, NOK 1.25 million within motor Norway and NOK 625,000 within property in Sweden and Norway.

The quota share and excess of loss covers all lines of business offered by Vardia:

Line of business 75% quota share Excess of loss Property V V Motor & Liability V V Workers’ Compensation and Commercial Personal accident V V Personal Accident, Sickness and Travel V V Group life (one year risks), Other illness and Child insurance V V Medical Expenses V V Individual life and disability (one year risk) V V Natural Catastrophes XL V

For 2014, the Group ceded NOK 869.5 million of premiums, related to both its quota share and excess of loss programmes.

The main reinsurers are Munich Re (AA- rating) and Scor (A+). Strong credit ratings of reinsurance counterparts represent reduced capital requirement related to the Group’s counterparty risk, hence Vardia will aim to maintain its relationship to highly rated reinsurers. In the current reinsurance market environment, Vardia is an attractive partner, due to its extensive use of quota share, coupled with the Group’s premium volume and diversified growth in Scandinavia. Over recent years, several of the Scandinavian peers have reduced their use of reinsurance, limiting premium supply to the global reinsurers. Therefore Vardia, as a relatively young insurance company, represents an attractive opportunity for increased reinsurance premium for the reinsurers as the major companies have reduced their ceded volume.

6.11 CLAIMS HANDLING

Claims handling is a complex and demanding operation. As a relatively new company Vardia has therefore for the time being decided to outsource claims handling to Crawford & Company in Norway, Sweden and Denmark. Crawford & Company is a leading global provider of claims handling services to the insurance sector. The Group has robust procedures for claims handling through Crawford where the Group has its own dedicated team. Vardia appreciate that efficient, correct and reliable claims handling is essential to the Group’s reputation.

The Group has employed claims managers in Sweden and Norway, responsible for maintaining and monitoring the cooperation with Crawford & Company, and ensure that the Group's customers receive correct claims handling treatment at all times. As the Group continues to grow and gain scale, the outsourcing agreement may be reviewed.

6.12 INVESTMENT MANAGEMENT

As the Group focus on generating profits through insurance underwriting and has a high portion of short tail policies, the Group operates a conservative investment strategy with limited investment risk. As at the date of this Prospectus, financial assets are held as bank deposits. The deposits are spread between selected Norwegian banks, offering competitive interest rates. As of 31 December 2014, cash and cash equivalents represented NOK 185.0 million.

NOK thousands 2011 2012 2013 2014 Investments in equity shares - - 1 671 1 0 Cash and cash equivalents 31 505 43 754 131 053 184 977 Total financial assets 31 505 43 754 132 724 184 977 1The investments in equity shares were shares in Rein Forsikring AS which the Company acquired in 2014.

The management and Board reviewed the Company’s investment policy 28 January 2014, and decided to maintain the same strategy as the previous year. The Company has engaged Grieg Investor AS as its investment adviser.

6.13 SOLVENCY, CAPITALISATION AND DIVIDEND POLICY

The Group is licensed as an insurance company by the Norwegian Financial Supervisory Authority and is subject to solvency and capital adequacy requirements.

As of 31 December 2014, the Group’s solvency margin was -107.3% of the minimum regulatory requirements, while the capital adequacy ratio was -26.5%, below the minimum requirement of 8%. Please see Section 5.1 for further description of the current status and Section 9.7 for further information on capital adequacy and solvency margin requirements and compliance on both Group and Company level.

Assuming adequate capitalisation to meet expected growth, Vardia will over time consider distributing dividends to its shareholders, as part of the Company’s aim to generate attractive shareholder return. Vardia is currently in a growth phase, but expects to distribute dividends in the future.

6.14 RISK MANAGEMENT

6.14.1 Risk management procedures Vardia has established detailed risk management procedures, tailored to the type, extent and complexity of the Group's operations.

Key elements include:

• The established risk management and internal control shall ensure that Vardia's management and Board have a balanced risk exposure in light of the Group's ability to take and appetite for risk.

• Risk management and internal control shall ensure that the Group's risk exposure is within the limits approved by the Board, by ensuring that the Group understands its risk exposure, how the risk can affect the Group and which risk mitigations should be implemented.

• All managers shall at all times have a good overview of the most important risk factors within their business areas and ensure implementation of required measurements and follow-up of these.

• An annual review of the Group's most important risks for all areas of operation, in addition to a review of the Group's risk profile.

The Company has detailed risk management procedures for all parts of its operations, including contingency plans to manage unforeseen events:

• Risk tolerance: The board establishes annually the overall risk tolerance limits for the Group, and the principles for risk management and internal control, which forms the basis for the underlying risk management policies.

• Legal; at all times have a good understanding of all future regulatory requirements, prevailing laws, rules etc., and ensure that the Group is in compliance with such requirements. Every year the Company evaluate its compliance-risks as a basis for the compliance working plan.

• Financial; monitor the Group's ability to underwrite risk for own account, based on the capital situation at any time.

• Counterparty and concentration risks; the Group shall have strict requirements, approved by the Board, as to counterparties' financial strength and solidity when establishing a customer or cooperative relationship. The Company has also established guidelines for concentration risks related to counterparties.

• Financial market; Financial investments will be allocated in line with guidelines given the FSA and the Board.

• Operational risk; Vardia continuously monitors its organization and employees, recruitment strategy, employee satisfaction and performance remuneration model. Vardia regularly evaluates the efficiency of the organization structure. Losses due to weaknesses or mistakes in procedures and systems, made by employees or external parties shall be limited through efficient organization and clearly defined areas of responsibility. All unwanted incidents and deviations are recorded in a deviation register.

• Liquidity risk; detailed routines have been established to ensure that the Group can meet its liquidity requirements and financial obligations at any time. The Company aims to limit investment risk so that financial assets can be realized within short notice.

• Reinsurance credit risk; Vardia's reinsurance policy and general underwriting guidelines state that the minimum rating of all reinsurance partners shall be "A-". The Company receives regular updates from reinsurance brokers on rating development and solvency among the Group's reinsurers.

• Insurance risk; high loss ratio volatility during the Group's early stages and with limited premium portfolio is aimed to be reduced through the reinsurance program.

• Business risk; Vardia continuously monitors its prevailing market strategy, access to customer prospects and the organization's compliance with the underwriting guidelines.

• Market risk; Vardia continuously monitors the market and the competitors' development in addition to the Group's market position and reputation.

6.14.2 Vardia's Own Risk and Solvency Assessment (ORSA) Vardia executes an ORSA (Own Risk and Solvency Assessment) process at least annually to assess its overall solvency needs, taking into account its specific risk profile, risk tolerance limits and business strategy. Compliance with the capital requirements and any deviations from the assumptions underlying the solvency capital requirements is also included in the assessment.

The Company’s ORSA process consists of several workshops with key personnel (including the management, the actuarial function, the risk manager & compliance function and risk owners) discussing the above topics. The results from Vardia's annual risk- and internal control process are taken into account in the ORSA process.

The ORSA document is reviewed by the Board to ensure an efficient process and mutual understanding and evaluations of the assessment.

The results of the latest ORSA process (finished in mai 2014, based on 2013 - year end numbers) showed that Vardia had a Solvency II capital requirement of NOK 88.95 million. Total available capital was NOK 204 million, which corresponded to an SCR ratio of 229%. Included “ORSA add-on”, the SCR ratio was 211%. The identified capital needs (“ORSA add-on”) was considered not to deviate significantly from the calculated regulatory capital SCR and “stress test one”.

A new ORSA process started in March 2015 and is expected to be concluded by the Company's board of directors in Q3 2015. To what extent the change of accounts described in 5.1 will require adjustment in the ORSA process, will be reviewed.

6.15 COST REDUCTION PROGRAM

The Company has started a process to implement a cost reduction program with the aim to reduce costs in the amount of NOK 100 million (based on the current 2015 budget). It is the Company's belief that the cost cutting program will not affect the Company’s structure and Vardia will continue with its existing structure with subsidiaries in Norway, Sweden and Denmark. The call-center model will still be the main distribution channel for the Company, but the Company will also increase distribution through brokers and agents.

The cost reduction program will focus on the following main areas:

− Natural turnover in the call-centers;

− Previously planned increases of new sales teams will be postponed;

− Limited new employments in local administration;

− Change from local to central specialist functions. Reduces need for new local employees;

− Renegotiation of supplier agreements;

− Reduction in travel expenses by increased use of conference calls;

− Reduction of marketing costs;

− Increased productivity through segmentation models; and

− Increased new sale through brokers and agents will reduce distribution costs as well as secure the Company' growth.

7. INDUSTRY OVERVIEW

7.1 VARDIA’S PRINCIPAL MARKETS AND SEGMENTS The following pie charts show a breakdown of gross written premium by geographic market and segment for the Group for 2014:

Geographic split Personal insurance Commercial insurance

Denmark Other 1% 1% 1% 7 % 1% Other Motor 31 % 31 % Sweden 40 % Combined 32 % 59 % Norway 61 % Motor

38 %

Combined

Total NOK 1,167 million Total NOK 868 million Total NOK 299 million

7.2 THE GENERAL INSURANCE MARKET IN SCANDINAVIA (NORWAY, DENMARK, SWEDEN) The Scandinavian general insurance industry comprises publicly listed companies, privately held companies, bank owned insurers and mutual companies. The industry is characterized by high concentration with the four largest companies in each of Norway and Sweden accounting for approximately 74.8% and 79.9% of the total market in 2013, respectively. In Denmark, the market is more fragmented; in 2013 the four largest companies accounted for 58.2% of the market.

The following table sets out the size, growth and concentration of the general insurance market in Scandinavia.

Premiums 10y CAGR of premiums Market (NOK billion) (1) in local currency concentration (2) (as at 31 December 2013) (2004-2013) (as at 31 December 2013)

Norway (3) 72.3 4.8% 74.8% Sweden (4) 61.3 3.1% 79.9% Denmark (5) 49.1 2.5% 58.2%

______(1) 100 SEK = 91.84 NOK, 100 DKK = 104.70 NOK (average of daily FX rates for 2013). Source: Norges Bank (http://www.norges-bank.no/en/Statistics/exchange_rates/ ). (2) Defined as the aggregate market share for the four largest companies in each country. (3) Source: The Norwegian Financial Services Association ("FNO ") (https://www.fno.no/statistikk/skadeforsikring/ ) Excluding the maritime, offshore and aviation sectors (4) Source: Insurance Sweden (http://www.svenskforsakring.se/Huvudmeny/Fakta--Statistik/Statistics-list/ ). Excluding AFA sickness insurance (avtalsförsäkring) (5) Source: The Danish Insurance Association (http://www.forsikringogpension.dk/presse/Statistik_og_Analyse/statistik/forsikring/Sider/forsikring.aspx ). (*) Markets measured by domestic gross premiums (all premium payments due over the reference year prior to f.o.a. adjustments)

In Norway, the Group’s market share as at 31 December 2014, was approximately 1.3% when comparing Vardia’s premium portfolio to the FNO statistics. In Sweden, the Group’s market share as at 31 December 2014 was approximately 0.75%. The Group initiated its operations in Denmark during 2014 and the Group thus had a limited market share in Denmark as at 31 December 2014. The Group’s largest Scandinavian competitors are Gjensidige Forsikring ASA ("Gjensidige "), If P&C Insurance Holding Ltd (a subsidiary of Sampo plc) (" If… "), Codan A/S and its Swedish subsidiary Trygg-Hansa Försäkrings AB (" Codan ") (a subsidiary of RSA Insurance Group plc) and Tryg A/S (" Tryg ").

7.3 THE GENERAL INSURANCE MARKET IN NORWAY 7.3.1 Market size and growth As at 31 December 2014, the Norwegian general insurance industry’s premium portfolio was NOK 55.3 billion, according to FNO. Motor insurance was the largest business, representing 37.2% of total premium portfolio.

The following table sets out the size of the main segments of the general insurance market in Norway, in absolute amounts and as a percentage of the total premium portfolio, as at 31 December 2014:

Premium portfolio Percentage of Line of business (1) (NOK billion) premium portfolio Motor 20.6 37.2 Fire & special perils 18.5 33.5 Individual (2) 8.7 15.7 Special (3) 7.5 13.5 Total 55.3 100.0 ______Source: FNO (https://www.fno.no/contentassets/840791dfa41c42429db9306e1e576595/premie--og-markedsstatistikk-hm-15.xls (1) Based on premium portfolio. Excludes the maritime, offshore and aviation sectors. Includes only Norwegian policyholders (2) Includes children, accident, workmen's compensation, medical treatment, critical illness and safety insurances. (3) Includes leisure boat, leisure travel, liability, fish farming industry, cargo and other insurances.

According to FNO, average gross premium growth in the Norwegian general insurance market has been 4.8% year-on-year over the last 10 years (2004-2013). The rate has been volatile, however, always positive. Over the past three years the growth has been above average and it reached 6.2% in 2013.

As indicated by the table below, the loss ratio in Norway has decreased over the past two years. The main reasons for this trend are more stringent underwriting, increased pricing and a relatively low incidence of large weather-related claims. The cost ratio has also shown positive development and the main reasons for this trend are economies of scale as well as a general improvement in claims handling processes. Overall, the Norwegian general insurance industry has experienced a decrease in combined ratio during the period from 2009 to 2013 compared with the five-year period from 2004 to 2009.

The following table sets out the gross premium growth and trends in loss ratio, cost ratio and combined ratio in the general insurance market in Norway:

(in %) (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Premium growth (2) 5.7 3.8 4.0 2.7 8.8 2.2 0.9 5.1 8.9 6.2 Loss ratio 67.4 68.2 68.2 71.7 71.2 72.9 71.4 72.4 69.4 69.1 Cost ratio 22.8 23.1 22.7 21.7 22.6 22.8 20.8 19.3 17.7 16.9 Combined ratio 90.2 91.3 90.9 93.4 93.8 95.7 92.2 91.7 87.1 86.0 ______Source: FNO (https://www.fno.no/contentassets/840791dfa41c42429db9306e1e576595/resultater-i-skadeforsikring-hm-15.xls ) (1) Excludes the maritime, offshore and aviation sectors. Includes only Norwegian policyholders.

(2) Based on gross premiums (all premium payments due over the reference year prior to f.o.a. adjustments).

7.3.2 Competition The following table sets out the market shares based on premium portfolio in the general insurance market in Norway:

(in %) (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (2) 2014 (3) Gjensidige 32.4 32.9 31.2 31.0 29.6 28.4 27.9 26.3 25.3 25.4 25.2 If 31.4 31.2 31.5 29.8 28.9 27.0 25.7 25.1 24.8 24.4 22.8 Tryg 18.8 17.9 17.5 18.1 17.8 17.3 17.1 16.4 15.3 14.7 13.8 SpareBank 1 9.8 9.9 10.0 10.0 9.8 9.8 10.1 10.3 10.1 10.3 10.1 Other 7.6 8.1 9.8 11.1 13.9 17.5 19.2 21.9 24.5 25.2 28.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ______Source: FNO (https://www.fno.no/contentassets/840791dfa41c42429db9306e1e576595/premie--og-markedsstatistikk-hm-15.xls ) (1) Based on premium portfolio . Excludes the maritime, offshore and aviation sectors. Includes only Norwegian policyholders. (2) Unison Forsikring included in SpareBank 1’s market share as of 2013 (1.0% in both 2011 and 2012). Byggmesterforsikring included in KNIF’s market share as of 2013. (3) Gouda Reiseforsikring included in Gjensidige’s market share as of 2014. Vardia included as of 2014. Landbruksforsikring’s market share is partly excluded in 2014. Child, treatment and critical illness insurances (individual) included as of 2014.

The general insurance market in Norway is characterized by high concentration, with the top four insurers collectively accounting for approximately 71.9% of the Norwegian market as at 31 December 2014. The Group’s primary competitors in the general insurance market in Norway are other general insurance companies. The Group also faces competition from banks and life insurers distributing general insurance products, including Eika, DNB, Storebrand and KLP Insurance, as well as from smaller niche players. In 2014, Vardia had a market share in the Norwegian general insurance market of approximately 1.3%, making Vardia the 12th largest insurer in the Norwegian general insurance market, compared to those reporting to FNO.

7.4 THE GENERAL INSURANCE MARKET IN SWEDEN 7.4.1 Market size and growth As at 31 December 2014, the Swedish general insurance industry gross premium was SEK 69.9 billion, according to Insurance Sweden. As in Norway, motor insurance was by far the largest line of business, representing 37.2% of total premiums.

On average, the annual gross premium growth in the general Swedish insurance market was 3.1% between 2004 and 2013. As at 31 December 2013 the gross premium growth measured above average at 4.1%, according to Insurance Sweden. The loss ratio declined from 75.2% in 2004 to 73.5% in 2013.

The following table sets out the premium growth and trends in loss ratio, cost ratio and combined ratio in the general insurance market in Sweden:

(in %) (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Premium growth (2) 3.7 7.1 3.6 2.0 -1.0 0.5 5.0 4.5 1.4 4.1 Loss ratio 75.2 72.5 76.6 72.3 70.2 70.9 75.7 78.1 75.0 73.5 Cost ratio 17.6 18.3 18.4 19.1 19.7 19.1 19.1 19.3 19.8 19.5 Combined ratio 92.8 90.7 95.0 91.3 89.9 89.9 94.8 97.5 94.8 93.0 ______Source: Insurance Sweden - Gross Premiums: ( http://www.svenskforsakring.se/Huvudmeny/Fakta--Statistik/Statistics-list/Branchstatistik/ ) - Ratios: ( http://www.svenskforsakring.se/Statistics/StatSkade/Combined%20ratio/Combined%20ratio.xlsx )

(1) Excluding AFA sickness insurance (avtalsförsäkring). Includes only Swedish policyholders. (2) Based on gross premiums (all premium payments due over the reference year prior to f.o.a. adjustments).

7.4.2 Competition The following table sets out the market shares based on premium portfolio in the general insurance market in Sweden:

(in %) (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Länsförsäkringar 32.2 30.5 29.3 29.4 29.6 30.5 28.8 28.9 29.5 29.8 30.3 If 22.5 20.4 20.1 20.1 19.5 19.3 18.9 18.7 18.5 18.2 18.4 Folksam 15.8 15.3 14.8 14.5 14.1 14.9 15.2 15.4 15.4 15.9 16.4 Trygg-Hansa 18.6 18.0 17.8 17.7 17.2 16.6 16.0 15.8 16.2 16.0 15.7 Others 10.9 15.8 18.0 18.3 19.6 18.7 21.1 21.2 20.4 20.1 19.2

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ______Source: Insurance Sweden - Market Share: ( http://www.svenskforsakring.se/Huvudmeny/Fakta--Statistik/Statistics-list/Branchstatistik/Branschstatistik-kvartal-1992-/) (1) Excluding AFA sickness insurance (avtalsförsäkring). Includes only Swedish policyholders. Based on gross premiums (all premium payments due over the reference year prior to f.o.a. adjustments).

The general insurance market in Sweden is characterized by slightly higher concentration than the Norwegian market, with the top four insurers collectively accounting for approximately 80.8% of the Swedish market as at 31 December 2014. In Sweden, Vardia's largest competitors are Länsförsäkringar, If, Folksam and Trygg-Hansa with market shares of 30.3%, 18.4%, 16.4% and 15.7%, respectively as at 31 December 2014. Vardia’s gross premiums in Sweden in 2014 indicates a market share in the Swedish general insurance market of approximately 0.75% when comparing to the statistics provided by Insurance Sweden as at 31 December 2014.

7.5 THE GENERAL INSURANCE MARKET IN DENMARK 7.5.1 Market size and growth In Denmark, the average annual gross premium growth of the general insurance market was 2.5% between 2004 and 2013, according to the Danish Insurance Association. The loss ratio was at 74.3% in 2005 and has since fallen to 71.0% in 2013. Motor insurance was the largest line of business representing 26.3% of the total general insurance market in 2013, a market generating a total of DKK 46.9 billion in gross premiums.

The following table sets out the premium growth and trends in loss ratio, cost ratio and combined ratio in the general insurance market in Denmark:

(in %) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Premium growth (1) 7.1 4.1 5.0 3.0 4.3 1.1 2.7 -2.6 2.4 -2.0 Loss ratio (2) n.a. 74.3 65.7 70.7 73.3 75.9 79.3 75.2 69.6 71.0 Cost ratio (2) n.a. 17.9 20.0 17.9 17.9 17.4 18.1 17.8 17.3 18.1 Combined ratio (3) n.a. 92.2 85.7 88.6 91.2 93.3 97.3 93.0 87.0 89.1 ______Source: The Danish Insurance Association - Gross Premiums: ( http://www.forsikringogpension.dk/presse/Statistik_og_Analyse/in- english/Documents/Gross%20Premiums%20by%20class%20of%20insurance.xls ) - Ratios: (http://www.forsikringogpension.dk/presse/Statistik_og_Analyse/statistik/forsikring/branchetal/Documents/Resultatopg%C3%B8relsen%20 for%20forsikringsbranchen.xls ) (1) Based on gross premiums (all premiums due over the reference year prior to f.o.a. adjustments). Includes only Danish policyholders.

(2) Includes all, also foreign, policyholders

The Group started selling insurance in Denmark during 2014, and had no operations in the Danish market prior to that.

7.5.2 Competition The following table sets out the market shares based on premium portfolio in the general insurance market in Denmark:

(in %) (1) 2008 2009 2010 2011 2012 2013 Tryg 20.4 20.3 20.4 20.2 19.6 18.7 Topdanmark 19.1 18.2 17.6 17.5 17.4 17.5 Codan 13.7 13.6 12.9 12.5 12.6 12.3 Alm. Brand 10.2 9.9 9.8 9.7 9.5 9.7 Others 36.6 38.0 39.2 40.1 40.9 41.8 Total 100.0 100.0 100.0 100.0 100.0 100 ______Source: The Danish Insurance Association - Market Share: (http://www.forsikringogpension.dk/presse/Statistik_og_Analyse/statistik/forsikring/markedsandele/Documents/Kvartalsvise_marked sandele_Skadeforsikring_ialt.xls ) (1) Based on gross premiums (all premium payments due over the reference year prior to f.o.a. adjustments) from most Danish insurance companies. Includes only Danish policyholders.

The general insurance market in Denmark is more fragmented than the Norwegian and Swedish market and has a lower market concentration, with the top four insurers collectively accounting for approximately 58.2% of the Danish market as at 31 December 2013. In Denmark, Vardia's largest competitors are Tryg, Topdanmark, Codan and Alm. Brand, which, by year-end 2012, held market shares of 18.7%, 17.5%, 12.3% and 9.7%, respectively.

8. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE

8.1 BOARD OF DIRECTORS

In accordance with Norwegian law, Board is responsible for administering the Company’s affairs and for ensuring that the Company’s operations are organized in a satisfactory manner.

The Company’s Articles of Association provide that the Board shall have no fewer than 3 members and no more than 8 members. The members of the Board are elected by the general meeting of shareholders. The Board is elected for a term of 2 years, unless decided otherwise by the general meeting. Board members may be re- elected. In the event of equal voting, the chairman of the Board shall have the casting vote.

The Board consists of 6 members (including one board member representing the Company's employees) and two deputy board members (including one deputy board member representing the Company's employees), whereof all are independent of the management, main business associates and the main shareholders.

Vardia's business address functions as a C/O-address for the board members.

Board members

Åge Korsvold (born 1946), Chairman of the Board Åge Korsvold was appointed chairman of Board of directors in 2011. Korsvold is educated in business administration from the University of Pennsylvania in 1971. He started working for Storebrand in 1972 before becoming chief financial officer in Golden West Shipping Co. in 1976 and then in Orkla Industrier in 1977. From 1983 to 1992 Korsvold was consultant in Fondsfinans, and from 1992 to 1994 the CEO of Procorp. In 1994 he became CEO in UNI Storebrand and CEO of Kistefos in 2001. Korsvold was the CEO of Orkla ASA from April 2012 to February 2014.

Karl Høie (born 1957), Deputy chairman of the Board Karl Høie was elected member of the Board in 2011. Since 1984, Karl has been working as advisor for the top management of Norwegian and international companies, with a special focus on strategy and operational excellence. Large shares of his projects have been complex programs of operational change, where substantial growth and bottom-line effect can be documented. Karl’s work is based on close relationships with the clients, which have included major companies in Norway and abroad, both private and public, as well as equity funds. For the last 30 years, Karl has been a partner with key leadership positions in major international consulting companies. He is known for being heavily involved in the turnaround of LEGO and the oil service industry. Karl holds a M.Sc.Econ from Copenhagen Business School.

Nils Aakvik (born 1958), Board member Nils Aakvik was elected member of the Board in 2011. Aakvik is a manager in Nistuå AS and Kristiansund Baseselskap AS. He also holds several board positions in companies like Farout AS, Bkw AS, Smølen Handelskompani AS and has previously been a board member in Surnadal Sparebank and Lerøy Aakvik Rogn and Stamfisk AS.

Line Sanderud Bakkevig (born 1971), Board member Line Sanderud Bakkevig was elected member of the Board of directors in 2013. Bakkevig is an executive advisor and boardmember at RAW Performance AS. She is also Manager in Innovemus, a private investment company for industrial investments. Previously she was Senior Vice President in Storebrand Livsforsikring from 2006 until 2010. Bakkevig has broad experience from operational business development, process optimalization and general management from financial and industrial services and media. Bakkevig holds a Master of Science in Engineering and Chemistry from Norwegian University of Science and Technology (NTNU) and a Master in Management and Strategy from BI Norwegian Business School.

Nina Charlott Gullerud (born 1968), Board member Nina Charlott Gullerud was elected member of the Board in 2013. Nina Gullerud is the Country Manager for VMware in Norway. In this role, she is responsible for implementing market strategies, driving business growth and customer expansion across the region. Her broad experience ranges across sales, channels, marketing and operations, and the key to all of her accomplishments lies in collaborating closely with customers, partners and colleagues across teams. Prior to joining VMware, Nina worked for Cisco Systems both in the US, Europe and Norway, and held positions like Regional Channel Manager, Vertical Sales Manager, Director of Operations SMB Nordic; Commercial Sales North Europe; and Director Enterprise Sales.Nina has a Bachelor’s degree in International Business from Augustana College, US, and a Master’s degree in International Affairs from the University of Kentucky, US.

Ole Erik Alnæs (born 1966), Deputy board member (employee representative) Ole Erik Alnæs was elected as deputy board member (employee representative) by the employees in Vardia in February 2014. Alnæs joined Vardia in 2010, and has the primary responsibility for the Company’s products and underwriting. He has extensive insurance experience. Before joining Vardia, Alnæs was underwriter and Sales Executive at AIG Europe S.A. Past experience also includes Production Underwriter/Senior Underwriter in ACE Europe and Underwriter in Samvirke Forsikring.

Deputy board members

Oskar Dag Sylte (born 1943), Deputy board member Oskar Dag Sylte was elected as deputy board member at the annual general meeting held 26 February 2014. Sylte is a manager in the investment companies Dag AS and Oskar Invest AS. He was previously CEO in Oskar Sylte Mineralvannfabrikk AS in Molde, where he now is chairman of the board of directors. Sylte is also chairman and board Member in several other companies such as Doppelmayr AS, As Solo and Molde Fotball AS.

Robert Øyri (born 1975), Deputy board member (employee representative) Robert Øyri was elected as deputy board member (employee representative) by the employees in Vardia in March 2015. Øyri joined Vardia in November 2012 as Senior Underwriter and has been Vardia's Product Manager Liability & Auto CL in Norway since February 2015.Before joining Vardia, Øyri has experience with the insurance industry from various positions in inter alia Tryg, AIG, Gjensidige and Nemi Forsikring in the period from 2000 to 2012. Øyri has an authorization within claim settlement from BI Norwegian Business School.

For a description of the Board members' previous and current directorships, please see Section 8.7 "Conflict of interest".

8.2 THE BOARD MEMBERS' SHAREHOLDING AND TERM

The table below shows the members of the Board's direct and indirect ownership in Vardia as at the date of this Prospectus:

Name Position Member Since Term Shares owned

Åge Korsvold Chairman Year 2011 Year 2016 567,500 1)

Karl Høie Deputy Chairman Year 2011 Year 2016 437,741

Nils Aakvik Board member Year 2011 Year 2016 4,063 2)

Line Sanderud Bakkevig Board member Year 2013 Year 2017 2,500

Nina Charlott Gullerud Board member Year 2013 Year 2016 1,333

Ole Erik Alnæs Board member Year 2014 Year 2016 359,403 3) (employee

representative) Oskar Dag Sylte Deputy board member Year 2014 Year 2016 0

Robert Øyri Deputy board member Year 2014 Year 2016 3,478 (employee representative) 1) 550,000 of the shares are owned through the wholly owned company Gyljandi AS. 2) Aakvik also holds 50% of the shares in Aakvik Holding AS which holds 1,674,733 shares in Vardia. 3) 340,653 of the shares are owned through the wholly owned company OKKA Holding. As described in Section 9.6.1 "Employee share incentive scheme", Alnæs also has options to acquire shares in the Company.

None of the board of directors in Vardia has bought or sold shares in Vardia in the 12 months preceding the date of this Prospectus.

8.2.1 Independence of the Board The Board is independent of any special interests and satisfies the independence requirements of the Norwegian Code of Practice for Corporate Governance of 30 October 2014 (the "Code "). The board members are considered to be independent of Vardia’s executive management, material business contacts, and major shareholders. Please see Section 8.5 "Remuneration and benefits" for further information on the Board’s independence.

There are no family relationships between any of the members of the administrative, management or supervisory bodies, founders or the management of the Company.

8.3 CONTROL COMMITTEE

The control committee consists of three members and one deputy member, elected by Vardia's general meeting. For a further description of the control committee, please see the description in Section 10.8.1 "The Articles of Association".

The composition of Vardia's control committee and their shareholding in Vardia as at the date of this Prospectus is set out in the below table:

Name Position Member Since Term Shares owned

Bjørnar Eilertsen Chairman Year 2014 Year 2016 0

Kjell Hetland Member Year 2014 Year 2016 521,579 1)

Knut Erik Haugerud Member Year 2015 Year 2016 1,033,124 2)

Herman Schultz Deputy member Year 2014 Year 2016 3,269

1) The shares are owned through the wholly owned company Hetlands Gecco Management AS, Hetland Næring AS and Hetlands Capital AS 2) Held through his holding company Busebakk AS

Vardia's business address functions as a C/O-address for the members of the control committee.

8.4 MANAGEMENT

8.4.1 Members of the Executive Management The Group's executive management is responsible for the daily management and the operations of the Group.

24 April 2015, the board of directors of Vardia and Ivar S. Williksen, the Company's CEO and president since 2010, agreed that Ivar S. Williksen resigned as President and CEO of Vardia with immediate effect. Rune Olsen Arneberg, who has been the Company's Executive Vice President and COO since 2010, was appointed as interim CEO effective from the same date. The chairman of the Company's board of directors, Åge Korsvold,

will act as an executive chairman until further notice. The Company's board of directors has initiated a search for a new CEO of Vardia, and expects to evaluate both internal and external candidates.

Below is an overview of the current organizational structure of the Group:

Interim CEO Rune Olsen Arneberg

Finance Group Services & Vardia Agencies AS Ivar K. Z. Pedersen Sigmund Romskoug

IR & Communication Marketing Aleksander Nordahl Pål Lauvrak

Norway Sweden Denmark Børge Leknes Andreas Önstorp Carsten Müller

The executive management is presented below, for a description of the management's previous and current directorships, please see Section 8.6 "Employees". Vardia's business address functions as a C/O-address for the management.

Rune O. Arneberg (born 1963), Interim CEO Rune O. Arneberg was Vardia's chief operating officer since 2010 and up until he was appointed as the Company's interim CEO 24 April 2014. Arneberg has studied accounting at BI Norwegian Business School. He has previously held positions as Senior marketing manager at Vesta Forsikring AS (1990 – 1995), senior marketing manager and member of the leadership group of Dial Forsikring AS (1995 – 1999), project manager for the launch of Aktiv24.no with Aktiv Forsikring AS (1999 – 2000), co-founder and director of business development and IT at Factor Insurance Group ASA (2000 – 2003), CEO and founder of White Label Insurance ASA (2003 – 2006) and worked as a management consultant in the period of 2006 to 2009 before joining Vardia. Arneberg is a Norwegian national and citizen.

Ivar K. Z. Pedersen (born 1956), CFO of Vardia Ivar K. Z. Pedersen has been Vardia's CFO since 2011 and holds a master degree in business and economics from the Norwegian School of Economics and Business Administration (NHH) in addition to having attended various seminars on economics, reinsurance and administration. Pedersen has previously held positions as head of the accounting department for international reinsurance and later head of the entire accounting department in Polaris Assurance A/S (1983 – 1988), head of various departments within Gjensidige Forsikring (1988 – 2001), finance director in Nemi Forsikring AS (2001 – 2006) and CFO of Nemi Forsikring ASA (2006 – 2008) and worked as the CEO of Nemi Forsikring AS (2009 – 2011) prior to joining Vardia. Pedersen is a Norwegian national and citizen.

Sigmund Romskoug (born 1953), Senior Vice President and Managing Director of Vardia Agencies AS Sigmund Romskoug has been the Managing director of Vardia Agencies AS since 2013 and has completed various studies with the Norwegian Shipping Academy. From 1982 to 1983 he obtained a higher level of marine insurance with the Norwegian Shipping Academy. Prior to becoming the managing director of Vardia Agencies AS, Romskoug was a senior partner of Vardia. Also, Romskoug has also inter alia been a Deputy Managing Director of Nemi Forsikring ASA (2006-2009), Director of Business Development of Norway Energy & Marine Insurance ASA (Nemi and former NEFO Fender Forsikring AS) (2002-2006) and partner/co-founder of Norway Marine Insurances AS (2002). Romskoug is a Norwegian national and citizen.

Aleksander Holand Nordahl (born 1981), Investor relations and communication director Aleksander Nordahl has been the communication director of Vardia since 2014 and has studied business and economics at BI Norwegian Business School. Nordahl has previously held positions inter alia as an accountant

manager of Gambit Hill&Knowlton (2010-2013), a financial journalist of E24 Norge (2008-2010) and a financial adviser in Glitnir Securities AS (2007-2008). Nordahl is a Norwegian national and citizen.

Pål Lauvrak (born 1974), Marketing director Pål Lauvrak has been the Marketing director of Vardia since 2009 and holds a master degree from the Norwegian School of Economics and Business Administration (NHH) with specialization in strategy, organization and management. Lauvrak is the owner and co-founder of the Scandinavian Insurance Group. From 2008 to 2009 he was the owner and co-founder of Siza Forsikring, an insurance agency focusing on private and specialty line business. From 2000 to 2008 Lauvrak held different management positions within the If Skadeforsikring, inter alia as Nordic manager for Concept development. Lauvrak is a Norwegian national and citizen.

Børge Leknes (born 1975), CEO Vardia Forsikring AS Børge Leknes holds the position as CEO of Vardia Forsikring AS, Vardia Eksterne Kanaler AS and Rein Forsikring AS, and was a board member of Vardia Forsikring AS from 2009 to 2012. In addition, he held a position as board member of Vardia from 2009 to 2011 and as deputy board member from 2011 to 2014. Leknes is co-founder of Vardia. He has broad experience from the insurance industry in the Nordics, with various management positions in Bodø Forsikringssenter, If… and Storebrand. Leknes has a Business of Economics from BI Norwegian Business School in addition to having attended various seminars on insurance, leadership and management. Leknes is a Norwegian national and citizen.

Andreas Önstorp (born 1974), CEO Vardia Försäkring AB Andreas Önstorp has been the CEO of Vardia Försäkring AB since 2011 and has a master in Business Administration and Management from Lund University. Prior to becoming the CEO of Vardia Försäkring AB Önstorp held several positions within Moderna Försakringar, inter alia as a business unit director from 2007 to 2011 and head of business development in 2006 and 2007. In addition, Önstorp has completed various studies within inter alia leadership and management. Önstorp is a Swedish national and citizen.

Carsten Müller (born 1974), CEO Vardia Forsikringsagentur A/S Carsten Müller has been Vardia Forsikringsagentur A/S' CEO since September 2013 and holds a Master of Business Administration (AVT Business School). Müller has in 2009 completed a General Management Program at Harvard Business School and has attended various seminars on leadership and management training. From 2005 to 2008 Müller held different positions within If…, inter alia as Head of Alliances and Media Contact in Denmark. During the years from 2002 to 2005 Müller held different positions within Eniro, inter alia as a division manager. Müller is elected as chairman of the board in Tigerspring A/S and has previously been a board member of Anne Crone A/S (Home Real Estate Agent). Müller is a Danish national and citizen.

8.4.2 Executive shareholdings The table below shows the management’s direct and indirect ownership in Vardia:

Name Position Shares owned

Rune O. Arneberg Interim CEO 381,919 1)

Ivar K. Z. Pedersen CFO 109,759

Sigmund Romskoug Senior Vice President and 152,829 2) Managing Director of Vardia Agencies AS Aleksander Nordahl Investor Relation & 2,016 Communication Director Pål Lauvrak Marketing Director 513,660 3)

Børge Leknes CEO Vardia Forsikring 1,002,892 4)

Andreas Önstorp CEO Vardia Försäkring AB 124,875

Carsten Müller CEO Vardia Forsikrings- 2,000 agentur A/S 1) The shares are owned through the wholly owned company Villenik AS.Arneberg also has an indirect shareholding through the company BPR AS where he directly or indirectly holds less than 50% of the shares, which owns 600,000 shares and 385,000 shares under forward contracts 2) The shares are owned through the wholly owned company Rom Invest AS. Romskoug furthermore also has an indirect shareholding through companies where he directly or indirectly holds less than 50% of the shares as follows: (i) Norway Marine Insurance AS who holds 1,363,342 shares in Vardia, and (ii) Vikna Eiendom AS who holds 736,333 shares in Vardia. 3) The shares are owned privately through the wholly owned company PLV Holding AS. Lauvrak also has an indirect shareholding through the company BPR AS where he directly or indirectly holds less than 50% of the shares, which owns 600,000 shares and 385,000 shares under forward contracts 4) The shares are owned privately and through the wholly owned company BLS Holding AS. Leknes also has an indirect shareholding through the company BPR AS where he directly or indirectly holds less than 50% of the shares, which owns 600,000 shares and 385,000 shares under forward contracts

For a description of the management's holding of share options in the Company, please see Section 8.6.1 "Employee share incentive scheme".

The management and the members of the Board combined controls approximately 27% of the Shares prior to the Offering.

The table below presents an overview of acquisitions of Shares made by the members of the executive management in Vardia over the period of one year prior to the date of this Prospectus. For the sake of good order, Børge Leknes, Pål Lauvrak and Rune Arneberg have transferred 600,000 shares to its jointly controlled investment company BPR AS. The transaction is not included below as it was an internal transfer of Vardia shares.

Name Date Number of shares Price per share purchased 1) (NOK) Ivar K. Z. Pedersen 20 August 20141) 20 834 12.72 Andreas Önstorp 20 August 2014 1) 35 000 12.72 1) The shares were acquired by exercising share incentive option

8.5 REMUNERATION AND BENEFITS

8.5.1 Remuneration of the Board The nomination committee proposes the remuneration of the Board to the annual general meeting, and the annual general meeting determines the remuneration for the subsequent term to be served. For the period from the annual general meeting in 2015 to the annual general meeting in 2016, remuneration is set to NOK 250,000 for the chairman of the Board, NOK 150,000 for the deputy chairman, NOK 130,000 to each of the other board members and NOK 65,000 to the employee representative.

The Company has not granted any loans, guarantees or other similar commitments to any member of the Board and there are no agreements regarding extraordinary bonuses to any board member. There are no service contracts with any member of the Board which provide for benefits upon termination of the directorship.

8.5.2 Remuneration of the control committee The nomination committee proposes the remuneration of the members of the control committee to the annual general meeting, and the annual general meeting determines the remuneration for the subsequent term to be served. For the period from the annual general meeting in 2015 to the annual general meeting in 2016, remuneration is set to NOK 60,000 for the chairman of the control committee, NOK 30,000 for the other members of the control committee and NOK 5,000 the deputy members per meeting attended, however, limited to NOK 30,000.

The Company has not granted any loans, guarantees or other similar commitments to any member of the control committee and there are no agreements regarding extraordinary bonuses to any board member. There are no service contracts with any member of the control committee which provide for benefits upon termination of the directorship.

8.5.3 Remuneration of executive management The Company has not granted any loans, guarantees or other similar commitments to any member of the executive management.

Except for (i) Arneberg, who is entitled to a compensation of 6 months’ salary after his termination period upon termination of employment, (ii) Önstorp, who is entitled to 6 months' severance pay, and (iii) Müller, who is entitled to 3 months' severance pay plus 50% of base salary as a compensation for competition restrictions, there are no service contracts with any member of the executive management which provide for benefits upon termination of employment.

The table below presents the remuneration figures for 2014 for Vardia's CEO and CFO:

Name Position Salary Other 1) Pension / premiums Total

Rune O. Arneberg Interim CEO 2,077,000 125,000 242,000 2,444,000

Ivar K. Z. Pedersen CFO 1,708,000 357,000 271,000 2,336,000

1) "Other" includes the cost of the life annuity for both 2012 and 2013 in connection with the retirement age of 65 years and salary above 12G ("G" is a Norwegian statutory standard measure for inter alia social contributions. G is currently NOK 85,245 and is subject to annual CPI adjustment on 1 May every year).

Please also see Section 8.5.1 "Remuneration of the Board" regarding the Company's share incentive program under which the management are included.

8.5.4 Pensions Norwegian companies are required to have a company pension plan in accordance with the Act relating to occupational pensions ( Nw: "lov om obligatorisk tjenestepensjon" ). The Company's pension plan complies with the Act relating to occupational pension. In addition, the Company has a closed defined benefit pension scheme with nine members. New employees are entered into the defined contribution pension scheme.

As at 31 December 2014, the Company's defined benefit pension scheme and carrying pension funds/obligations amounted to NOK 8.0 million.

8.6 EMPLOYEES

As at the date of this Prospectus, the Group has approximately 500 employees. The table below illustrates the development in number of employees over the last three years, as per the end of each calendar year.

2014 2013 2012

Number of employees 500 379 230

8.6.1 Employee share incentive scheme and options to employees Vardia has two set of share incentive programs. Both share incentive programs consists of three tranches, whereby one tranche vests each year following three years after the issue of the option. The exercise period for vested options is one year from the date of vesting.

The Board resolved a share incentive scheme for certain of the employees at a board meeting held 14 June 2011. The share incentive scheme implies that 8 employees are granted a total of 1,939,231 options (originally the amount was 2,389,231, but two employees have left the Group resulting in their options lapsing), each option

giving the right to subscribe for one share in Vardia at NOK 3.18. Due to the reverse share split resolved by the Company's annual general meeting held 26 February 2014 with a ratio of 4:1, the current amount of options outstanding under this program is 340,707, each option giving the right to subscribe for one share in Vardia at NOK 12.72.

The vesting date each year is 14 June each year.

The below table illustrates the terms and division of options (the amounts are listed after completion of the abovementioned reverse share split):

Employee Number of options Number of options vested Number of options yet to granted in total and outstanding be vested Ivar S. Williksen 69,808 0 23,270 Rune Arneberg 62,500 20,834 41,667 Børge Leknes 62,500 20,834 41,667 Ivar K. Z. Pedersen 62,500 0 20,833 Sigmund Romskoug 62,500 20,834 41,667 Pål Lauvrak 56,250 18,750 18,750 Ole Erik Alnæs 56,250 0 18,750 Andreas Önstorp 52,500 0 17,500 Total 484,808 17,500 323,207

In addition, the Company has entered into an option agreement with Carsten Müller, pursuant to which he was granted a right to subscribe for 210,000 shares in the Company at a subscription price of NOK 5. Pursuant to the agreement, the options will vest with an amount of 70,000 options vest on 1 September in the years 2014, 2015 and 2016. Due to the abovementioned reverse share split, the current amount of options granted to Carsten Müller is 52,500, each option giving the right to subscribe for one share in Vardia at NOK 20.00.

The Board resolved a new share incentive scheme for certain of the employees at a board meeting held 11 February 2014. The share incentive scheme implies that 31 employees are granted a total of 5,000,000 options, each option giving the right to subscribe for one share in Vardia at NOK 7.90. Due to the abovementioned reverse share split, the current amount of options outstanding under this program is 1,250,000, each option giving the right to subscribe for one share in Vardia at NOK 31.60.

The vesting date is 25 November each year and the first tranche of options will vest 25 November 2015. The 31 members of the employee share incentive scheme are divided into four tiers. The below table illustrates the division of options on the different tiers:

Tier Number of employee Number of granted options Number of options per in tier in total for the tier person in the tier Tier 1 1 78,000 78,000 Tier 2 8 512,000 64,000 Tier 3 11 385,000 35,000 Tier 4 11 275,000 25,000 Total 31 1,250,000 -

Tier 1 is expected to consist of Vardia's CEO, Tier 2 is expected to consist of the remaining executive management, Tier 3 is expected to consist of members of the regional management and employees in leading positions, and Tier 4 is expected to consist of other key employees.

All of the Company's option agreements include a clause on accelerated vesting implying that if (i) all or a substantial amount of the Shares or the Company's assets are sold to an acquirer, and (ii) the first vesting period is passed, the option holder is entitled to exercise 50% of his options at the time of completion of such acquisition.

8.7 CONFLICTS OF INTERESTS, ETC.

During the last five years preceding the date of this Prospectus, no member of the Board or the senior management has:

• any convictions in relation to indictable offences or convictions in relation to fraudulent offences;

• received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or

• been declared bankrupt or been associated with any bankruptcy, receivership or liquidiation in his capacity as a founder, director or senior manager of a company.

There are, to the Company's knowledge, no potential conflicts of interests between any duties to the issuer, of the members of the Board or the senior management and their private interests and or other duties.

Over the five years preceding the date of this document, the members of the Board and the senior management hold or have held the following directorships (apart from their directorships of the Company) and/or partnerships:

Name Current directorships/partnerships Previous directorships/partnerships

Board of directors

Åge Korsvold CEO: Gyljandi AS CEO: Orkla ASA, Vika Finans AS, Kistefos AS Chairman: Kjøde & Kjøde AS, AS Dikkedokken, RK Offshore AS, Kjøde Chairman: Rieber & Søn AS, Rolf Kjøde Transport AS, AS Rolf Kjøde, Morten Skip I AS, Orkla Brands AS, Infront AS, Mjør Grimsrud Stiftelse, Kjøde Shipping Bergmoen AS, Bergmoen Tomt AS, AS, and Green Resources AS. Bergmoen Øst 2 AS, Gardermoen Næringspark AS, Sagveien Boligbygg Board member: Tyveholmen AS, KS, Waterfront Shipping AS, Western Tyveholmen Kontorfellesskap AS, Bulk ASA, Bryggen 2005 AS, Odin Green Resources AS, Gyljandi AS, Viking AS, Odin Viking 2 AS, Kistefos Aweco Invest AS, Timex Group B.V. Venture Capital Ii DA, Viking Invest AS, and Fondsfinans AS. Kistefos Equity Holding AS, Kistefos Venture Capital Fond II AS, Kistefos Venture Capital AS, Kistefos International Equity AS, Kistefos Eiendom AS, Viking Barge AS, Viking Barge DA, Bergmoen Øst 3 AS, Bergmoen Sør AS, Bergmoen Vest AS, Viking Icebreaking & Offshore AS, Partrederiet Odin Viking DA, Coop Norge Bergmoen Eiendom AS, Protia AS, Kistefos Rederi AS, Western Bulk Shipowning VI AS, Nye Bergmoen AS, Bulk Reorganisering AS, AS Bagatelle and Seabird Exploration PLC

Board member: Vika Finans AS, Orkla ASA (deputy chairman), Springfondet 1B KS, Springfondet 1B AS, Springfondet 1A KS, Springfondet 1A AS, Springfondet II AS, Rederi AB Transatlantic, Sapa AS.

Point of contact: Kistefos Venture Capital Fond II AS

Deputy board member: Kistefos Alliance AS

Karl Høie Deputy board member: Gynekolog CEO: Booz & Company AS Birgitte Benthien AS, Limelight AS Board member: Booz & Company AS, Volvat Medisinske Senter AS

Nils Aakvik CEO: Aakvik Holding AS, Nistuå AS, Board member: El-Trade AS, Farout AS, Kristiansund Baseselskap AS Surnadal Sparebank, Smøla Klekkeri og Settefiskanlegg AS, Lerøy Aakvik Rogn Chairman: Aakvik Holding AS, Nistuå og Stamfisk AS AS, Nistuå II AS Deputy board member: Fiskehelsa BA Board member: Fjordfish AS (deputy chairman), I A Grimsmo og Hustru Anna Partner: Aakvik Samdrift DA Grimsmos Legat, Løkve Eiendom AS, Bkw AS, Smølen Handelskompani AS, Hgw AS

Deputy board member: Farout AS, Castor Drilling Solution AS, Brottsjø AS, Kristiansund Baseselskap AS, Møre Og Romsdal Såkornfond AS, Pikhaugen AS, Retail Property II AS, Retail Property II Lillesand AS, Vikan Næringspark Invest AS, Retail Property II Mysen AS, Pikhaugen II AS

Owner: Nils Aakvik (sole proprietorship)

Partner: Halvøya Samdrift DA

Point of contact: Nistuå II AS

Line Sanderud Bakkevig CEO: Innovemus AS Board member: Aarland & Johnsen Maskin AS Board member: Raw Performance AS and Pro Venture Seed II

Member of Advisory Board Sintef Teknologi og Samfunn

Deputy board member: Holmen Fondsforvaltning AS, Innovemus AS

Owner: Line Bakkevig (sole proprietorship)

Nina Charlott Gullerud - -

Bjørn Mæhlum - -

Oskar Dag Sylte (sr.) CEO: Rauma Industribygg AS, Dag AS CEO: Akvainvest AS, Nord Vest and Oskar Invest AS Havbruk AS and Oskar Sylte Mineralvannsfabrikk AS Chairman: Brushuset AS, Lerstadveien 517 AS, Tusten Skiheiser AS, Olav Den Chairman: Romsdal Processing AS and 5te Invest AS, Doppelmayr AS and Villa Organic AS Oskar Sylte Mineralvannsfabrikk AS Board member: Oskar Sylte Board member: Lofoten Hotellinvest Mineralvannsfabrikk AS, Nord Vest AS, Dag AS, Noro Fotball AS, Oskar Havbruk AS and Akvainvest AS Invest AS, Næringsinvest Møre Og Deputy board member: Villa Organic AS Romsdal AS, Nordmøre og Romsdal Eiendom AS, Bjørnsonhusets Venner AS, Operaen i Kristiansund AS, Sangens Hus AS, Molde Fotball AS, Bjørnsonhuset AS, Gunnar Nisja AS, AS Solo, Romsdal Processing AS, Kirkenes Eiendom AS, Rauma Industribygg AS and Sunndal Industribygg AS

Deputy board member: Oceana Invest AS and ODSS AS

Point of contact: Sunndal Industribygg AS

Ole Erik Alnæs CEO: Okka Holding AS

Chairman: Okka Holding AS

Management Current directorships/partnerships Previous directorships/partnerships

Rune O. Arneberg CEO: Arneberg Consulting AS CEO: Enfo Consulting AS

Chairman: Villenik AS, Arneberg Chairman: Insurance Invest AS Consulting AS, BPR Invest AS Board member: Skøyen Terrasse Deputy board member: Stenao Holding Barnehage AS

Ivar K. Z. Pedersen - CEO: Nemi Forsikring AS

Chairman / board member: Norsk Finansnærings Økonomigruppe

Sigmund Romskoug CEO: Trimar AS Chairman: Vikna Eiendom AS, Risø Invest AS, Negotiorum Gestio AS Chairman: Rom Invest AS, Norway Marine Insurance AS, Ivar Lærum AS Board member: Insurance Invest AS, Siv Ing P Stenersen AS Board member: Markedssjefene AS, Trimar AS, Vikna Fiskeriselskap AS Point of contact: Siv Ing P Stenersen AS

Aleksander Holand - - Nordahl

Pål Lauvrak CEO: PLV Holding AS, BPR Invest AS Board member: Vardia Insurance Group ASA and Siza Forsikring AS Chairman: PLV Holding AS Deputy board member: Insurance Invest AS

Børge Leknes CEO: BLS Holding AS CEO: Insurance Invest AS, Bodø Forsikringssenter AS, 110% Holding AS Chairman: BLS Holding AS Chairman: 110% Holding AS, Bodø Board member: Rein Forsikring AS Forsikringssenter AS Owner: Leknes Consulting, BPR Invest Board member: Insurance Invest AS AS

Andreas Önstorp - -

Carsten Müller Chairman: Tigerspring A/S Board member: Anne Crone A/S (Home Real Estate Agent). CEO Müller Invest Holding ApS

8.8 CORPORATE GOVERNANCE

Being a listed Company, the Company is subject to the Code.

The Company endeavors to comply with the Code and generally to maintain high standards of corporate governance and is committed to ensure that all shareholders of the Company are treated equally.

At the date of this Prospectus, the Company has deviated from the Code in the following matters:

- Sigmund Romskoug, Senior Vice President and Managing Director of Vardia Agencies AS, is a member of Vardia's nomination committee. All though it is recommended that members of the Company's executive management should not be part of the nomination committee, the Company's executive management has founded the Company and comprises a large part of the Company's shareholders base. The Company therefore finds it appropriate that the executive management is represented in the nomination committee. It is; however, pointed out that the composition of the nomination committee is decided by the Company's general meeting and not the Company as such.

- The Board as a whole functions as the Company's audit committee. The Company's articles of association Section 2-4 dictates that the whole board of directors functions as the Company's audit committee. There is a special option for insurance companies to have this arrangement in the Norwegian Insurance Companies Act section 5-12.

- The Company has not prepared main principles for its actions in connection with a takeover bid. The ownership requirements described in Section 11.3, that apply to insurance companies, make a take-over of an insurance company different than for other companies not such subject to such restrictions. The board of directors therefore wishes to retain flexibility if a take-over situation should occur.

For further information of the independence of the Board, please refer to Section 8.2.1 "Independence of the Board" above in this Prospectus.

The Company has included a report on its compliance with the Code and reasoning for any deviations in its annual report which is incorporated by reference to this Prospectus, please see Section 16.2 "Documents incorporated by reference".

8.8.1 Audit committee The Board as a whole functions as the Company's audit committee in accordance with the Norwegian Insurance Companies Act section 5-12 third paragraph and the Company's articles of association article 2-4.

8.8.2 Nomination Committee According to Vardia’s Articles of Association article 2-7, Vardia shall have a nomination committee consisting of two to three members. The nomination committee shall make proposals to the annual general meeting with regards to candidates and remuneration to the Board, the control committee and the nomination committee.

Vardia's general meeting resolved instructions for the nomination committee 26 February 2014.

Current members of the nomination committee are Sigmund Romskoug, Hans Georg Iwarsson and Jacob Svendsen.

8.9 RELATED PARTY TRANSACTIONS

The Company has not entered into any related party transactions in the time period 1 January 2012 and until the date of this Prospectus.

9. SELECTED OPERATING AND FINANCIAL INFORMATION You should read the following discussion of the financial condition and results of operations in conjunction with the financial statements incorporated by reference to this Prospectus. The following discussion contains forward-looking statements that are based on current assumptions and estimates by the Company’s management regarding future events and circumstances. The Company’s actual results could differ materially from those expressed or implied by the forward-looking statements as a result of many factors, including those described in Section 2 "Risk factors".

9.1 ACCOUNTING PRINCIPLES

The consolidated financial statements for 2013 and 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS), a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements. The consolidated financial statements for 2012 have been prepared in accordance with Norwegian Generally Accepted Accounting Principles (NGAAP). In the following overview, the 2012 consolidated financial statements have been restated in accordance with IFRS. Please note that as the 2012 IFRS numbers are identical to the 2012 NGAAP numbers, only one set of 2012 numbers is shown. The differences between 2012 IFRS and 2012 NGAAP relate to the magnitude of notes provided in the financial statements and do not affect the below overview.

As described in inter alia Section 5.1, the Company’s financial audit resulted in a need for changes in the annual accounts, which lead to a significant weakening of the Company’s group capital adequacy and solvency margin. First, in the financial account of Vardia Insurance Group ASA, the activated costs had to be written down as a result of the booked sales cost being underestimated. Second, on a consolidated basis, the accounting of direct variable sales cost in previous years’ annual accounts was not considered in line with applicable accounting standards. Total impairment due to these two conditions in the annual accounts for 2014 was approximately NOK 279.5 million (NOK 144 million + NOK 135.6 million). For 2013 isolated, the numbers were NOK 44.2 million + NOK 47.8 million respectively, in total NOK 92.0 million. The balance sheet item in question has therefore been adjusted by NOK 279.5 million at a Group consolidated level in the annual accounts for 2014. Furthermore, the tax benefit of NOK 49.0 million in the balance sheet as at 31 December 2013 was not recognized in the restated balance sheet for 2013, nor has any tax benefits been recognized in the annual accounts for 2014. These amendments are also further described in note 2 to the Company's consolidated annual accounts for 2014 and in the Directors’ annual report, incorporated hereto by reference, see below.

On a Group level, the company is in breach of the capital adequacy and solvency margin as at 31. December 2014; however, the Group has obtained an exemption from these requirements from the FSA until 31 May 2015. As at 31 March 2015, Vardia Insurance Group ASA is in breach of the solvency margin on a company level, and the Company has obtained an exemption from this requirement from the FSA until 31 May 2015. The exemptions are conditional upon inter alia that the financial situation of the Group does not deteriorate materially in the relevant period. For further information on capital adequacy and solvency margin requirements and compliance on Group and Company level, see Section 9.7.

Please be advised that the annual financial statement for 2014, hereunder the comparable figures for 2013 (having been restated) included therein, reflect the above mentioned changes; however, the annual financial statements for 2013 and 2012 as such have not been restated to reflect this change.

Please see Section 16.3 "Documents incorporated by Reference" in this Prospectus for a link to the Company’s consolidated annual accounts for 2014 which includes the Company's significant accounting policies.

9.2 CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

Except for the table included in Section 9.2.1, where not all figures are sourced from the Company's audited financial statements, and the information in Section 9.2.7, which is profit estimates and consequently not

sourced from the Company's audited financial statements, unless otherwise indicated the following tables present selected financial information extracted from audited financial statements for the year that ended 31 December 2014. Audited numbers where it is disclosed that the amended accounting principles are not reflected, are extracted from the audited financial statements for the years that ended 31 December 2012 or 2013 as applicable. The tables should be read in conjunction with the financial statements as incorporated by reference in this Prospectus (see Section 16.3 "Documents incorporated by reference").

9.2.1 Summary of gross turnover

NOK millions ( unaudited ) 2012 2013 2014 Turnover ...... 345.1 717.8 1.322.6 Agency business and premiums on sold policies for next year (171.9) (146.1) (156) Gross written premiums ...... 173.2 571.7 1,166.6

While the Group initially began operating as a cross-border insurance business in Sweden in May 2011, it has since expanded its insurance business to Norway (August 2012) and Denmark (February 2014). Product sales are primarily done through the Company’s wholly-owned subsidiaries located in the respective countries. For 2014, the Company estimates the aggregated expected turnover from its gross written premiums, gross turnover from agency agreements with other insurance providers and business signed in 2014 (though partly not effective until 2015) to equal approximately NOK 1,322.6 million.

9.2.2 Summary of income statement data

(NOK millions ) 2012 (IFRS 2013 (IFRS 2013 (IFRS 2014 (IFRS audited) audited) restated) audited) Gross written premiums ...... 173.2 571.2 571.7 1,166.6 Premiums reinsured ...... (129.3) (426.9) (426.9) (869.5) Premiums written for own account ...... 43.9 144.9 144.9 297.1 Change in premium reserves gross ...... (109.3) (178.0) (178.0) (247.3) Change in premium reserves ceded ...... 80.3 131.2 131.2 174.6 Premiums earned for own account ...... 14.9 98.1 98.1 224.3 Allocated return on investment transferred from non-technical accounts ...... 0.3 1.6 1.6 3.2 Other insurance-related income ...... 20.2 2.0 2.0 18.4 Claims incurred for own account ...... (16.1) (91.7) (91.7) (185.2) Premium rebates and other profit agreements ...... 0.0 0.0 0.0 0.0 Insurance-related operational costs for own account ...... (65.6) (67.8) (159.7 ) (243.7) Profit/(loss) from technical accounts before changes in security reserve ...... (46.4) (57.9) (149.9 ) (183.0) Changes in security reserve...... (3.0) (10.9) (10.9) (15.3) Profit/(loss) from technical accounts ...... (49.5) (68.8) (160.7 ) (198.2) Net financial income ...... 0.1 0.4 0.4 14.4 Allocated return on investment transferred to technical accounts ...... (0.3) (1.6) (1.6) (3.2) Non -technical result ...... (0.2) (1.2) (1.2) 11.2 Profit/(loss) before tax ...... (49.7) (70.0) (162.0) (187.1) Tax ...... 13.5 18.2 (1.7) (0.9) Profit/(loss) for the period (36.2) (51.8) (163.7) (187.9) Other result components ...... 0.0 1.9 0.7 (0.8) Comprehensive income (36.2) (50.0) (163.0) (188.8)

Gross loss ratio (%)...... 87.4 86.5 86.5 88.3 Gross cost ratio (%) ...... 116.9 31.9 55.2 41.5 Gross combined ratio (%) ...... 204.4 118.4 141.8 129.8

Loss ratio for own account (%) ...... 108.5 93.6 93.6 82.6 Cost ratio for own account (%) ...... 441.3 69.1 162.9 108.7 Combined ratio for own account (%) ...... 549.9 162.7 256.5 191.2

Profit/(loss) after tax per share* ...... (0,71) (0,69) (8,67) (6,15) *Earnings per share diluted is equivalent. See note 10 in the annual accounts 2014.

The effects of the changes to the group income statement are shown in the table below: Financial statements 2013 2013 (IFRS Change 2013( IFRS restated) audited) Premiums earned for own account 98.1 98.1 Claims incurred for own account (91.7) (91.7) Insurance-related operational costs for own account1) (67.8) (92.0) (159.7) Technical result 1) (68.8) (92.0) (160.7)

Profit before tax 1) (70.0) (92.0) (162.0) Tax 2) 18.2 (19.9) (1.7) Profit /(loss) for the period (51.8) (111.9) (163.7) 3) Other result components 4) 1.9 (1.2) 0.7 Comprehensive income 5) (50.0) (113.0) (163.0) 1) The reduction of in total MNOK 92.0 comprise MNOK 44.2 related to underestimated booked sales costs and MNOK 47.8 related to changes in variable sales cost. 2) The reduction of MNOK 19.9 relates to change in deferred tax assets not recognized in the annual accounts. 3) The reduction of in total MNOK 111.9 is the total of 1) + 2) above (MNOK 92.0 +MNOK 19.9). 4) The reduction of MNOK 1.2 is related to changes in exchange rate differences due to 1). 5) The reduction of in total MNOK 113.0 comprise 3) + 4) above (MNOK 111.9 + MNOK 1.2) and rounded off

The Group started underwriting for own account in Sweden in 2011 and Norway 2013, and has experienced significant growth over the last three years, with an increase in gross written premiums from NOK 173.2 million in 2012 to NOK 1,166.6 million in 2014. The sales force has been significantly strengthened this period, as well as the portfolio has been renewed. As of 31 December 2014 the gross written premiums consisted of approximately 74.4% private and 25.6% commercial insurance. Premiums written for own account have also, for the same reason as mentioned above, increased from NOK 43.9 million in 2012 to NOK 297.1 million in 2014, while premiums earned for own account increased from NOK 14.9 million to NOK 224.3 million respectively.

Net financial income has increased substantially from NOK 0.1 million in 2012 to NOK 14.1 million in 2014. The change is mainly due to an increase in the cash flow and increased bank deposits. In 2014 the Company also had a positive currency effect. See also note 15 in the annual accounts 2014.

Other insurance-related income fell from NOK 20.2 million in 2012 to NOK 2.0 million in 2013. The reason for this is that the Company was an agent for Unison Forsikring ASA in Norway until August 2012. However, other insurance-related income increased again to NOK 18.4 million in 2014 due to agent commission and increased activity and income from Vardia Agencies AS.

Claims incurred for own account have increased from NOK 16.1 million in 2012 to NOK 185.2 million in 2014, in the same way gross written premiums and premiums written for own account have increased. The loss ratio for own account have at the same time been reduced from 108.5% to 88.3%. The gross loss ratio for 2014 was higher than anticipated as extraordinary large claims caused by fires both in Sweden and Norway. Excluding the large claims in Q4 the gross claims would have been 77.1% in 2014. The claims frequency are decreasing according to the plan.

Insurance-related operational costs for own account have increased from NOK 131.8 million in 2012, to NOK 159.7 million in 2013 and up to NOK 243.7 million in 2014. These costs include property rental costs, as well as salaries and other general administration costs. Please note that these figures were directly affected by the aforementioned amendment of accounting principles. For further information, see note 1 and note 2 to the Company's consolidated annual accounts for the financial year ending on 31 December 2014, incorporated hereto by reference.

In parallel, loss from technical accounts has increased from NOK 115.6 million in 2012 to NOK 198.2 million in 2014. Loss before tax has also increased from NOK 115.9 million in 2012 to NOK 188.6 million in 2014, while loss for the period has developed from NOK 115.9 million in 2012 to NOK 192.6 million in 2014. The results for the period 2012-2014 are characterized by the fact that the Company was recently established and has experienced considerable growth.

9.2.3 Summary of balance sheet data

2012 (IFRS 2013 (IFRS 2013 (IFRS 2014 (IFRS (NOK millions ) audited) audited) restated) audited) Goodwill ...... 3.7 57.3 57.3 57.8 Other intangible assets ...... 6.4 26.4 26.4 69.3 Investments ...... 0.0 1.7 1.7 0 Reinsurers’ part of gross technical reserves ...... 110.3 330.8 330.8 792.0 Receivables ...... 96.6 244.2 244.2 423.3 Tangible fixed assets other than buildings and real estate ...... 4.7 7.2 7.2 8.2 Cash and cash equivalents ...... 43.8 131.1 131.1 185.0 Deferred tax benefit ...... 27.4 49.0 0 0 Prepaid expenses and accrued interest ...... 97.8 169.8 53.7 97.2 Total assets ...... 390.7 1,017.4 852.3 1,632.7 Paid equity ...... 185.0 384.0 384.0 557.5 Earned equity ...... (85.4) (134.9) (342.0) (530.8) Total equity ...... 99.5 249.1 41.9 26.7 Gross technical reserves ...... 155.6 469.4 469.4 1,073.8 Pension liabilities ...... 2.9 4.2 4.2 8.0 Insurance and reinsurance liabilities ...... 93.6 217.5 217.5 341.9 Other liabilities ...... 16.6 36.2 36.2 34.6 Other incurred expenses and prepaid income ...... 22.4 41.1 83.2 147.7 Total liabilities ...... 291.1 768.3 810.4 1,606.0 Total equity and liabilities 390.7 1,017.4 852.3 1,632.7

The effects of the changes to the group balance statement are shown in the table below:

Financial statements 2013 2013 (IFRS Change 2013 (IFRS audited) restated) Deferred tax benefit 1) 49.0 (49.0) 0.0 Prepaid expenses and accrued interest 2) 169.8 (116.1) 53.7 Total assets 3) 1,017.4 (165.1) 852.3 Earned equity 4) (134.9) (207.1) (342.0) Total equity 5) 249.1 (207.2) 41.9 Other incurred expenses 41.1 42.1 83.2 and prepaid income 6) Total liabilities 6) 768.3 42.1 810.4 Total equity and liabilities 7) 1,017.4 (165.1) 852.3 1) The reduction of MNOK 49.0 relates to deferred tax assets not being recognized in the annual accounts. 2) The total reduction of MNOK 116.1 comprise: a) MNOK 48.5 related to underestimated booked sales costs; b) MNOK 47.8 related to changes in variable sales cost in 2013, MNOK 61.9 related to changes in variable sales costs in 2012 (in total MNOK 109.6); and c) MNOK -42.1 related to reclassification of unearned reinsurance commissions (previously shown in the balance sheet as accrued costs and received unearned income). 3) The total reduction of MNOK 165.1 comprise 1) + 2) above (MNOK 49.0 + MNOK 116.1). 4) The reduction of MNOK 207.1 comprise 1) + 2) + 6) above (MNOK 49.0 + MNOK 116.1 + MNOK 42.1), which all have effect on the earned equity. 5) The total reduction of MNOK 207.2 comprise 4) above 6) The increase of MNOK 42.1 relates to reclassification of unearned reinsurance commissions mentioned under 2) c. above. 7) The total reduction of MNOK 116.1 is described under 2) above. The total reduction of MNOK 165.1 comprise 5) and 6) above.

The Company has expanded its balance sheet significantly since its inception. As of year-end 2012 the Company had total assets of NOK 312.4 million, which increased to NOK 852.3 million in 2013 and ended at NOK 1,632.7 million in 2014. The increase in total assets reflects the growth in the portfolio, as well as the equity issuances.

Goodwill has increased substantially, from NOK 3.7 million in 2012 to NOK 57.8 million in 2014. This is primarily due to the acquisition of Saga Forsikring AS in December 2013. Other intangible assets increased from NOK 6.4 million in 2012 to NOK 69.3 million in 2014 as a result of further development of the Company’s IT systems.

The reinsurers’ part of technical reserves has simultaneously increased from NOK 110.3 million in 2012, to NOK 330.8 million in 2013 and NOK 792.0 million in 2014. This increase is due to the extensive growth the Company has, and directly affects the reinsurers’ part of technical reserves since a major part of the business is ceded. Receivables have also gone up, from NOK 96.6 million in 2012, to NOK 244.2 million in 2013 and NOK 423.3 million in 2014, due to the fact that the majority of the Group’s customers choose monthly payments of the premium. The modest growth in tangible fixed assets other than buildings and real estate from 2012 to 2014 reflects the Company’s general need for new furniture and office equipment. Cash and bank deposits have increased from NOK 43.8 million in 2012, to NOK 131.1 million in 2013 and NOK 185.0 million in 2014. The increase in cash and bank deposits is a result of the running operation and equity issuances, see Section 10.2 "Share capital development". The Company's cash and cash equivalent in these periods have mainly consisted of bank deposits. Prepaid expenses and accrued interest increased in 2013, from NOK 47.0 million in 2012 to NOK 53.7 million in 2013. In 2014 the prepaid expenses and accrued interest increased to NOK 97.2 million at year-end.

The Company’s total equity was NOK 5.9 million in 2012, and increased to NOK 41.9 million in 2013 and decreased to NOK 26.7 million in 2014. This reduction was caused by the fact that paid equity increases slower than earned equity decreases. The negative development of earned equity is a result of the Company’s negative net operating income as shown in the consolidated income statements above, while the positive development of paid equity reflects the Company’s capital needs as a young company in its growth phase. An overview of equity issuances carried through in the years 2012 to 2014 can be found in Section 10.2 "Share capital development".

While the Company’s liabilities equaled NOK 306.4 million in 2012, these have increased to NOK 810.4 million in 2013 and NOK 1,606.0 million in 2014. The increased liabilities primarily stem from the higher gross technical reserves within general insurance as well as increased debt. Gross technical reserves have gone up from NOK 155.6 million in 2012, to NOK 469.4 million in 2013 and NOK 1,073.8 million in 2014. Similarly, insurance and reinsurance liabilities have gone up from NOK 93.6 million in 2012, to NOK 217.5 million in 2013 and NOK 314.9 million in 2014. While the increase in gross technical reserves relates to the increase in the portfolio, the increase in insurance and reinsurance liabilities results from unpaid premiums ceded to the reinsurers.

Other liabilities, which has increased from NOK 16.6 million in 2012 to NOK 34.6 million in 2014, is mainly composed of debt to various suppliers and reflects the increased activity in the Company. Other accrued expenses and prepaid income which has increased from NOK 37.7 million in 2012 to NOK 147.7 million in 2014 is mainly related to costs incurred but not yet paid.

9.2.4 Summary of cash flow statements

(NOK millions ) 2012 (IFRS) 2013 (IFRS) 2014 (IFRS) Cash flow from operating activities Premiums paid, net of reinsurance ...... 89.1 461.2 1,018.3 Claims paid, net of reinsurance ...... (25.1) (217.4) (579.1) Expenses paid to suppliers ...... (49.1) (156.9) (257.5)

Expenses paid to employees, pension schemes and payroll taxes ...... (89.1) (129.7) (221.7) Net interest and financial income...... 0.1 0.4 4.2 Other insurance-related income ...... 20.2 6.9 (29.9) Net cash flow from operating activities (54.0) (35.6) (65.6)

Cash flow from investing activities Net cash flow from shares and interests in subsidiaries ...... 0.0 (0.5) 0.0 Net cash flow from shares and interests in associated companies ...... 0.0 (0.5) 0.0 Net cash flow from obligations and certificates ...... 0.0 0.0 0.0 Net cash flow from acquisitions of intangibles and plant and equipment ...... (13.8) (19.8) (42.3) Net cash flow from investing activities (13.8) (20.8) (42.3)

Cash flow from financing activities Dividends ...... 0.0 0.0 0.0 Proceeds from capital increase ...... 80.1 143.7 160.9 Net cash flow from financing activities 80.1 143.7 160.9

Net cash flow for the period 12.2 87.3 53.0 Effect of currency fluctuations ...... 0.0 0.0 0.9 Net movement in cash and cash equivalents ...... 12.2 87.3 53.9

Net movement in cash and cash equivalents Cash and cash equivalents at the start of the period ...... 31.5 43.8 131.1 Merged, acquired and disposed companies ...... 0.0 0.0 0.0 Cash and cash equivalents at the end of the period 43.8 131.1 185.0

The Group’s cash flow consists of cash and cash equivalents. During 2014, 2013, and 2012 the Company had a negative net cash flow from operating activities of NOK 65.6 million, NOK 35.6 million and NOK 54.0 million respectively. The negative cash flow from operating activities primarily result from high administrative expenses and claims paid relative to cash flow from premiums paid.

Net cash flow from investing activities during 2014, 2013 and 2012 were also negative, with net outflows of NOK 42.3 million, 20.8 million and NOK 13.8 million respectively. The negative net cash flows from investing activities relate to investments in systems development and tangible fixed assets.

The Company had a net cash flow from financing activities during 2014, 2013 and 2012 of NOK 160.9 million, 143.7 million and NOK 80.1 million respectively. These net cash flows represent proceeds from the capital increases completed during the respective years.

There have been no significant changes in the Company’s cash holdings since 31 December 2014 and up to the date of this Prospectus.

9.2.5 Summary of Changes in Equity The Company’s equity consists of share capital, a share premium account, other paid equity, other earned equity, a natural perils reserve and a guarantee scheme. The table below details the development in equity from 2012, to 2013 and 2014. Please note that the numbers of 2012 in the table below do not reflect the changes in accounting principles, as described in note 1 and note 2 to the 2014 annual accounts. The equity as at 31 December 2012, having regard to the amended accounting principles, was NOK 5.9 million.

(NOK millions ) Share Other Other Natural Share premium paid earned Minority perils Guarantee Total capital account equity equity interests reserve scheme Equity as of 1.1.2014 41.9 2.1 380.9 1.0 (343.9) 0.0 0.0 1.8 Increase in equity ...... 9.9 0.5 9.4 0.0 0.0 0.0 0.0 0.0 Initial public offering ...... 173.4 0.0 173.4 0.0 0.0 0.0 0.0 0.0 Offering cost……………… (11.4) 0.0 (11.4) 0.0 0.0 0.0 0.0 0.0 Change in provisions in 2014 0.0 0.0 0.0 0.0 (5.7) 0.0 0.4 5.2 Expensed stock options ...... 0.0 0.0 0.0 1.6 (1.6) 0.0 0.0 0.0 FX gains/(loss) recognised in (0.8) 0.0 0.0 0.0 (0.8) 0.0 0.0 0.0 equity ...... Other……………………… (2.4) 0.0 0.0 0.0 (2.4) 0.0 0.0 0.0 Other adjustments in 8.6 0.0 0.0 0.0 8.6 0.0 0.0 0.0 connection with prior periods. Result before OCI (187.1) 0.0 0.0 0.0 (187.1) 0.0 0.0 0.0 Other result items Valuation changes……... (1.2) 0.0 0.0 0.0 (1.2) 0.0 0.0 0.0 Exchange differences…….. (1.1) 0.0 0.0 0.0 (1.1) 0.0 0.0 0.0 Actuarial gains and losses in (3.3) 0.0 0.0 0.0 (3.3) 0.0 0.0 0.0 pension…………………... Tax on other comprehensive 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 income…………………… Equity as of 31.12.2014 26.8 2.6 552.4 2.5 (538.3) 0.0 0.4 7.1

Equity as of 1.1.2013 5.9 0.7 183.9 0.4 (179.1) 0.0 0.0 0.0 Increase in equity ...... 198.4 0.4 198.0 0.0 0.0 0.0 0.0 0.0 Change in par value ...... 0.0 1.0 (1.0) 0.0 0.0 0.0 0.0 0.0 Change in provisions in 2013 ...... 0.0 0.0 0.0 0.0 1.7 0.0 0.0 1.8 Expensed stock options ...... 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 FX gains/(loss) recognised in 0.5 0.0 0.0 0.0 0.5 0.0 0.0 0.0. equity……………………….. Other adjustments in (3.5) 0.0 0.0 0.0 (3.5) 0.0 0.0 connection with prior periods. Result before OCI (162.0) 0.0 0.0 0.0 (162.0) 0.0 0.0 0.0 Other result items Valuation changes……... 1.2 0.0 0.0 0.0 1.2 0.0 0.0 0.0 Exchange differences…….. 0.6 0.0 0.0 0.0 0.6 0.0 0.0 0.0 Actuarial gains and losses in 0.2 0.0 0.0 0.0 0.2 0.0 0.0 0.0 pension…………………... Tax on other comprehensive 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 income…………………… Equity as of 31.12.2013 41.9 2.1 380.9 1.0 (343.9) 0.0 0.0 1.8

Equity as of 1.1.2012 55.3 0.5 103.8 0.0 (49.1) 0.0 0.0 0.0 Increase in equity ...... 77.1 0.2 76.9 0.0 0.0 0.0 0.0 0.0 Paid in 2012, registered in 2013 ...... 3.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0

Change in provisions in 2012 ...... 0.0 0.0 0.0 0.0 (0.1) 0.0 0.0 0.1 Expensed options ...... 0.4 0.0 0.0 0.4 0.0 0.0 0.0 0.0 FX gains/(loss) recognised in

equity ...... (0.1) 0.0 0.0 0.0 (0.1) 0.0 0.0 0.0 Net profit/(loss) ...... (36.2) 0.0 0.0 0.0 (36.2) 0.0 0.0 0.0 Equity as of 31.12.2012 99.5 0.7 183.9 0.4 (85.5) 0.0 0.0 0.1

9.2.6 Significant changes in financial trading position after 31 December 2014 Except for the matters described in 5.1.1 and 5.12, there have been no significant changes in the Group’s financial position or market position since the last financial period for which financial statements have been published.

9.2.7 Profit estimates for Q1 2015 The Q1 2015 figures presented below are unaudited profit estimates. The unaudited profit estimates are prepared in accordance with accounting principles consistent with those accounting principles used by the Group in the preparation of the audited consolidated financial statements for 2014. The final figures for Q1 2015 will be presented in the Group’s interim report for the first quarter of 2015. In connection with preparing the unaudited profit estimates, the Group's auditor has been engaged by the Group to issue a statement confirming that, in the auditor's opinion, the profit estimates have been properly compiled on the basis of the assumptions stated and that the basis used for the profit estimates are consistent with the accounting policies of the Group. The Auditor's statement is included as appendix 2 to this Prospectus.

The Company does not expect any major deviations from the below profit estimates. All premium and claims data for the period are based on information from the Company’s insurance system and all substantial estimates are discussed and agreed with the Company’s appointed actuary.

As the profit estimates are based on recorded and not reconciled figures, the main assumption for the profit estimate is that the recorded figures will not be changed during reconciliation. Furthermore, the below profit estimates are based on the following assumptions:

• that provisions is assumed to have increased by 4% compared to 4th quarter 2014, which equal the increase in sales in the same period; and • that there were no changes in pension liabilities in Q1 2015.

Vardia's underlying operations a continuing to operate according to plan. The Company’s growth has continued in Q1 2015, and the previously announced solvency capital issue has not affected the sales. New sales in 2015 has on average been NOK 95 million per month, and has reached a total of NOK 285 million by the end of Q1 2015.

In Q1 2015 gross premiums written was NOK 379 million compared to NOK 281 million in Q1 2014, a growth rate of 35%. Gross earned premiums and net earned premiums amounted to NOK 302.0 million and NOK 82.6 million, respectively. In Q1 2014, gross and net earned premiums amounted to NOK 185.6 million and NOK 45.9 million, respectively. Gross premiums written during Q1 2015 is divided between Norway with NOK 210 million (an increase of 22%), Sweden with NOK 157 million (an increase of 44%) and Denmark NOK 11 million. Vardia had a premium portfolio of NOK 1,298 million as per 31 March 2015, and the portfolio is divided between Norway with NOK 756 million, Sweden with NOK 522 million and Denmark with NOK 20 million.

In Q1 2015 other insurance related income was NOK 3.5 million, and included commissions from other insurance companies for which the Company act as agents.

The gross loss ratio in Q1 2015 was 79.5% and the net loss ratio was 82.3%. The gross claims incurred were NOK 240.1 million in Q1 2015 compared to NOK 155.6 million in Q1 2014. The claims reserves has been

discussed and agreed with the Company’s appointed actuary. The development in loss ratio is according to plan for the Company.

Total operating expenses in the first quarter of 2015 were NOK 117.1 million. Commissions received from reinsurers amounted to NOK 47.9 in Q1 2015. Some changes may occur in the final figures related to operating expenses and reinsurance commissions.

In accordance with recommendation from the Company’s appointed actuary, the security reserve has been increased with NOK 2 million in Q1 2015.

Net financial loss amounted to NOK 2.6 million. The Company’s investment strategy is conservative and the funds are deposited in various banks.

The result for Q1 2015 is estimated to be a total loss for the period of approximately NOK 50-60 million. Final calculation of currency loss/gains may have an effect on the result for Q1 2015.

At the end of Q1 2015, the Group had approximately 150.000 customers.

9.3 SEGMENT INFORMATION

9.3.1 Insurance-technical results and provisions: Land-based insurance – Private

(NOK millions )

2014 Combined Motor Other-land based Total Premiums written Gross premiums ...... 276.5 529.7 61.7 867.9 Premiums ceded ...... (198.6) (399.8) (46.5) (644.9) Premiums for own account 77.9 129.9 15.2 223.0

Gross business Earned premiums ...... 224.6 418.7 50.1 693.3 Claims incurred ...... (193.8) (352.8) (28.2) (574.8) Insurance-related operational costs ...... (93.6) (177.0) (24.0) (294.6) Insurance-technical result (62.8) (111.2) (2.1) (176.1)

Gross claims incurred Current year ...... 199.5 340.2 22.7 562.4 Past years ...... 8.9 11.8 (4.9) 15.9 Total financial year 208.4 352.0 17.8 578.3 Unearned premiums ...... 152.1 288.0 23.4 463.4 Gross claims provision...... 99.5 123.2 15.5 238.1 Gross liability ...... 76.2 102.4 13.2 191.9 Minimum security provisions ...... 7.1 13.4 1.1 21.6

2013* Combined Motor Other-land based Total Premiums written Gross premiums ...... 160.5 298.0 29.3 487.7 Premiums ceded ...... (118.5) (225.0) (22.5) (366.0) Premiums for own account 42.0 73.0 6.7 121.7

Gross business Earned premiums ...... 113.4 206.5 22.1 342.0 Claims incurred ...... (102.1) (176.3) (21.8) (300.2) Insurance-related operational costs ...... (36.1) (65.8) (7.0) (109.0) Insurance-technical result (24.8) (35.6) (6.7) (67.2)

Gross claims incurred Current year ...... 91.6 175.2 0.2 283.6 Past years ...... 11.6 23.5 0.0 34.8 Total financial year 109.8 211.3 0.2 318.5 Unearned premiums ...... 89.9 174.0 8.0 271.8 Gross claims provision...... 47.0 58.3 13.8 119.0 Gross liability ...... 35.6 46.4 9.7 91.8 Minimum security provisions ...... 3.9 7.2 1.1 12.3

2012* Combined Motor Other-land based Total Premiums written Gross premiums ...... 55.5 107.6 5.0 168.2 Premiums ceded ...... (42.6) (81.4) (2.3) (126.3) Premiums for own account 12.9 26.3 2.7 41.9

Gross business Earned premiums ...... 20.0 42.1 1.0 63.1 Claims incurred ...... (13.6) (39.4) (0.9) (53.9) Insurance-related operational costs ...... (14.8) (30.9) (0.8) (46.4) Insurance-technical result (8.4) (28.2) (0.7) (37.2)

Gross claims incurred Current year ...... (14.6) (38.4) (0.9) (53.9) Past years ...... 0.0 0.0 0.0 0.0 Total financial year (14.6) (38.4) (0.9) (53.9) Unearned premiums ...... 40.4 73.9 3.2 117.4 Gross claims provision...... 7.7 19.0 1.0 27.7 Gross liability ...... 6.1 9.0 0.3 15.4 Minimum security provisions ...... 1.7 3.1 0.4 5.2 *Please note that the amended accounting principles described in note 1 and note 2 in the 2014 annual account, are not reflected in the 2012 and 2013 figures.

9.3.2 Insurance-technical results and provisions: Land-based insurance – Commercial

(NOK millions )

2014 Combined Motor Other-land based Total Premiums written Gross premiums ...... 113.6 93.4 91.7 298.7 Premiums ceded ...... (87.0) (71.6) (66.1) (224.6) Premiums for own account 26.7 21.8 25.6 74.0

Gross business Earned premiums ...... 72.8 79.5 73.7 225.9 Claims incurred ...... (116.3) (73.6) (46.7) (236.6) Insurance-related operational costs ...... (26.3) (37.7) (22.9) (86.9) Insurance-technical result ...... (69.7) (31.8) 4.0 (97.6)

Gross claims incurred Current year ...... 117.7 65.3 45.5 228.5 Past years ...... (14.7) 24.2 (4.9) 4.6 Total financial year 102.9 89.5 40.6 233.1 Unearned premiums ...... 59.2 49.4 38.5 147.1 Gross claims provision...... 71.8 34.6 86.8 193.3 Gross liability ...... 51.8 28.0 80.8 160.5 Minimum security provisions ...... 4.0 3.4 3.0 10.4

2013* Combined Motor Other-land based Total Premiums written Gross premiums ...... 29.1 40.0 14.9 84.0 Premiums ceded ...... (21.9) (30.0) (9.0) (60.9) Premiums for own account 7.3 10.0 5.9 23.1

Gross business Earned premiums ...... 17.1 23.0 11.6 51.7 Claims incurred ...... (9.8) (18.5) (12.3) (40.5) Insurance-related operational costs ...... (5.5) (7.3) (3.7) (16.5) Insurance-technical result ...... 1.9 (2.8) (4.4) (5.3)

Gross claims incurred Current year ...... 8.9 6.3 0.2 22.4 Past years ...... 0.0 0.0 0.0 (0.1) Total financial year 9.4 6.7 0.2 23.6 Unearned premiums ...... 13.9 19.2 4.2 37.2 Gross claims provision...... 6.2 8.5 9.9 24.6 Gross liability ...... 4.9 5.9 7.9 18.7 Minimum security provisions ...... 1.5 2.1 0.9 4.4

2012* Combined Motor Other-land based Total Premiums written Gross premiums ...... 1.6 1.5 2.0 5.0 Premiums ceded ...... (1.2) (1.1) (0.7) (3.0) Premiums for own account 0.4 0.4 1.2 2.0

Gross business Earned premiums ...... 0.5 0.1 0.2 0.8 Claims incurred ...... (0.2) 0.0 (0.3) (0.5) Insurance-related operational costs ...... (0.3) (0.1) (0.1) (0.6) Insurance-technical result (0.1) (0.0) (0.2) (0.3)

Gross claims incurred Current year ...... (0.2) 0.0 (0.2) (0.5) Past years ...... 0.0 0.0 0.0 0.0 Total financial year (0.2) 0.0 (0.2) (0.5) Unearned premiums ...... 1.1 1.4 1.7 4.2 Gross claims provision...... 0.2 0.0 0.2 0.4 Gross liability ...... 0.1 0.0 0.1 0.3 Minimum security provisions ...... 0.2 0.2 0.1 0.6 *Please note that the amended accounting principles described in note 1 and note 2 in the 2014 annual account, are not reflected in the 2012 and 2013 figures.

9.3.3 Geographical segments

(NOK millions ) Norway Sweden Denmark 2013 2014 2013 2014 2013 2014 Gross written premiums ...... 278.1 684.4 293.6 473.7 0.0 8.5 Premiums earned for own account ...... 44.4 127.5 53.7 96.1 0.0 0.6 Allocated investment returns ...... 0.7 1.9 0.9 1.3 0.0 0.0 Other insurance-related income ...... (1.9) 7.7 3.8 10.7 0.0 0.0 Claims incurred for own account ...... (40.6) (102.9) (51.1) (81.9) 0.0 (0.4) Operating costs ...... (70.7) (125.8) (86.7) (91.1) (2.3) (26.9) Operating profit/(loss) (68.1) (91.6) (79.4) (64.8) (2.3) (26.6)

Gross written premiums as of 2014 can be split between Norway, Sweden and Denmark, with each country accounting for NOK 684.4 million, NOK 473.7 million and NOK 8.5 million respectively. In 2014, premiums earned for own account were split between Norway, Sweden and Denmark as follows; NOK 127.5 million, NOK 96.1 million and NOK 0.6 million.

Norway’s share of the operating loss in 2014 was NOK 91.6 million, while Sweden and Denmark contributed with losses of NOK 64.8 million and NOK 26.9 million respectively.

9.4 LIQUIDITY AND CAPITAL RESOURCES The Company believes its cash generating capability and financial condition will be adequate to meet its operating, investing and financing needs (for capital resources related to compliance with solvency margin and capital adequacy requirements, please see Sections 9.5, 9.7 and 11.4). The Company’s key sources of liquidity for the foreseeable future are likely to be cash generated from its operations, the Tier 2 loan as further described in Sections 9.5 and 9.6, and the proceeds from sales of marketable securities financial assets.

9.5 WORKING CAPITAL STATEMENT

As at the date of this Prospectus, the Group does not have sufficient working capital for its present requirements for the next twelve months. For the purposes of this Section 9.5, when using the term "working capital" the Company not only includes the capital required to fulfill its obligations when they fall due, but also the capital required to operate in compliance with the applicable requirements for solvency margin capital and capital adequacy. The Group expects to be able to pay its obligations as they fall due; however, the Company is not guaranteed to be able to fully comply with the capital adequacy requirements and/or solvency margin requirements applicable for the Company for the next twelve months, if the Company continues to grow at its current pace.

Based on the Company's current estimates (which includes the net proceeds from the guaranteed Offering), the Company will – if no actions are successfully taken – be in non-compliance with its solvency margin requirements (or the applicable capital requirements under Solvency II as further described in Section 11.4) during the third quarter of 2015.

In order to secure continued compliance with the Company's solvency margin requirements, the Company plans to raise a subordinated Tier 2 loan of around NOK 75 million. Furthermore, the Company has initiated a number of measures in order to reduce cost and improve performance going forward, see Section 6.15. The Company expects the placement of a subordinated Tier 2 loan and the abovementioned cost reductions to be sufficient to secure that the Company will fulfill its solvency margin requirements for at least the twelve months' following the date of this Prospectus.

The Company will have to rely on the above measures to remain compliant with its solvency margin requirements. If none of the above financing measures are carried out or successful, the Company expects to breach the abovementioned requirements during the third quarter of 2015. In such event, the implications for the Company may include the FSA impose a stop of new sales, the Company losing its license to be an insurance company or the FSA demanding that the Company's insurance portfolio is sold in part or in full.

9.6 FUNDING STRUCTURE AND RESTRICTIONS ON THE USE OF CAPITAL

The Company’s funding structure is considered to be sound and diversified. There are no current restrictions on the use of the Company’s capital.

The Company is aiming to raise a subordinated Tier 2 loan of around NOK 75 million to optimize the Group's capital structure and to strengthen the Company's capital adequacy and solvency margin going forward. The Company has executed initial preparations related to issuing a subordinated Tier 2 loan and the offering of the subordinated loan is expected to take place in the second quarter of 2015; however, there can be no guarantee

that such loan may be raised at all or that the terms of such loan will be deemed satisfactory by prospective investors in the Offering.

9.7 CAPITAL ADEQUACY AND SOLVENCY MARGIN

(NOK millions ) Change in 01.01.2013* 31.12.2013* 31.12.2014 31.03.2015 Q1 2015 Share capital 0.7 2.1 2.6 2.6 0.0 Paid, not yet registered 3.0 0.0 0.0 0.0 0.0 Share premium account 180.8 380.9 552.4 552.4 0.0 Retained earnings 1) (179.1) (343.9) (538.3) (593.7) (55.4) Other equity 0.4 1.0 2.5 2.5 0.0 Equity 2) 5.9 40.1 19.2 (36.2) (55.4) Reinsurance reserve 3) (4.8) (13.1) (29.2) (27.4) 1.8 Goodwill / other intangible assets/ deferred tax benefit Total 4) (10.0) (83.7) (127.1) (128.3) (1.2) Net regulatory capital 5) (8.9) (56.7) (137.0) (191.9) (54.9) Assets with a risk weight of 0% 6) 110.3 330.8 792.0 846.4 54.4 Assets with a risk weight of 20% 7) 43.8 131.1 185.0 103.1 (81.9) Assets with a risk weight of 50% 8) 46.9 53.7 97.2 99.3 2.1 Assets with a risk weight of 100% 9) 101.3 253.0 431.5 484.4 52.9 Weighted assets 31.12 10) 133.6 306.1 517.1 554.7 37.6 Capital adequacy ratio (%) 11) 6.7 (18.5) (26.5) (34.6) (8.1)

(NOK millions ) Change in 2012 2013 2014 31.03. 2015 Q1 2015 Net regulatory capital 12) (8.9) (56.7) (137.0) (191.9) (54.9) Share of security provisions 13) 2.6 7.5 14.4 15.3 0.9 Provisions for natural disaster fund 14) 0.0 0.0 0.1 0.2 0.1 Solvency margin capital 15) (6.3) (49.2) (122.5) (176.4) (53.9) Minimum required solvency margin 16) 51.3 69.9 114.2 122.1 7.9 Cover/(undercoverage) 17) (57.6) (119.2) (236.7) (298.5) (61.8) Solvency margin capital in percent of min. requirement (%) 18) (12.3) (70.4) (107.3) (144.5) (37.2) * Please note that these figures are extracted from the Company's audited consolidated annual accounts for 2014 and reflect the changes in accounts described herein.

1) The change of NOK 55.4 million was a preliminary result for Q1 2015 that was included in the last capital adequacy and solvency margin report to the FSA. The Company has not completed its work related to the financial report for Q1 2015 and the figure is consequently based on assumptions and may be subject to change. As further described in Section 9.2.7, the Company, based on the assumptions described therein, estimates that the result for Q1 2015 will be a loss in the range of NOK 50 – 60 million. 2) The reduction of NOK 55.4 million comprise 1) above. 3) The increase of NOK 1.8 million relates to change in required minimum reinsurance reserve. 4) The total increase of NOK 1.2 million relates to an increase in other intangible assets. 5) The total decrease of NOK 54.9 million comprises 2), 3) and 4) above. 6) The increase of NOK 54.4 million relates to increase in reinsurance share of gross technical reserves. 7) The decrease of NOK 81.9 million relates to decrease in cash and cash equivalents. 8) The increase of NOK 2.1 relates to increase in prepaid costs and earned income not receives. 9) The increase of NOK 52.9 comprise increases in receivables in connection with direct insurance and reinsurance of NOK 35.1 million and increases in other receivables of NOK 17.8 million. 10) The increase of NOK 37.6 million comprises the weighted changes of 6)-9) above. 11) The decrease of 8.1 percent point refers to change in capital adequacy ratio. 12) The change of NOK 54.9 refers to an increase in the net regulatory capital. 13) The change of NOK 0.9 million refers to an increase in the share of security provisions than can be included in the solvency margin capital. 14) The increase of NOK 0.1 relates to provisions for natural disaster fund recorded in Q1 2015. 15) The decrease of NOK 53.9 million comprise 12), 13) and 14) above. 16) The change of NOK 7.9 million refers to an increase in the minimum required solvency margin. 17) The decrease of NOK 61.8 million comprise 15) and 16) above. 18) The decrease of 37.2 percent point refers to change in solvency margin capital in percent of minimum requirements. .

Capital adequacy and solvency margin requirements and compliance on Company level 31.12.2014 31.03.2015 Primary capital 118.5 96.5 Capital Ratio 17% 13.4% Solvency Margin Capital requirement 114.2 122.1 Solvency Margin Capital 133.0 112.0

The Group had a negative solvency margin capital of NOK 122.5 million as of 31 December 2014. The capital adequacy ratio and solvency margin for the Group equaled negative 26.5% and negative 107.3% respectively in 2014, substantially down compared to 2012 and 2013. The latter is due to the changes in accounting principle described in note 1 and note 2 in the 2014 annual account.

The Group had a negative solvency margin capital of NOK 176.4 million as of 31 March 2015. The capital adequacy ratio and solvency margin for the Group equaled negative 34.6% and negative 144.5% respectively

The Company has, as at the date of this Prospectus, initiated a detailed self-assessment of its risk and capital situation in accordance with the Solvency II Directive 2009/138/EC article 54 (ORSA) The ORSA document is expected to be reviewed by the Board in Q3 2015 to ensure an efficient process and mutual understanding and evaluations of the assessment. For more information see 6.14.2.

For further information on the solvency capital requirements on group and company level, please see note 1, 2, 7 and 8 in the Company's consolidated annual account for the financial year ending 31 December 2014.

9.8 CAPITALIZATION AND INDEBTEDNESS Below is an overview of the Group’s capitalization and liabilities as of 31.12.2014 and 31.03.2015. .

(NOK millions ) 31.12.2014 31.03.2015 Change in Q1 2015

Reserves for liabilities 1) ...... 1,082.0 1,169.0 87.0

Guaranteed ...... 0.0 0.0 0.0

Secured ...... 0.0 0.0

Unguaranteed/unsecured 1) ...... 1,082.0 1,169.0 87.0

Financial liabilities 2) ...... 524,2 521.0 (3.2)

Guaranteed ...... 0.0 0.0 0.0

Secured ...... 0.0 0.0 0.0

Unguaranteed/unsecured 2) ...... 524.2 521.0 (3.2)

Shareholder’s equity ......

Share capital ...... 2.6 2.6 0.0

Other paid equity ...... 552.4 552.4 0.0

Earned equity 3) ...... (535.3) (590.4) (55.1)

Guarantee scheme ...... 7.1 7.1 0.0

Total 3) ...... 26.7 (28.4) (55.1) 1) The increase of NOK 87.0 comprise an increase in gross premium reserve of NOK 69.3 million, an increase in gross claims reserve of NOK 15.9 million and an increase in other technical provisions of NOK 2 million. 2) The reduction of NOK 3.2 million comprise decrease in liabilities related to direct insurance and reinsurance of NOK 8.3 million, an increase in accrued costs and receive unearned income of NOK 10.0 million, a decrease in liability for current tax and a decrease in other liabilities of NOK 4.0 million. 3) The reduction of NOK 55.1 million is based on the preliminary result for Q1 2015 as further described in note 1 to the first table of Section 9.7. In addition, an increase in provisions for natural peril fund of NOK 0.3 million.

Below is an overview of the Company’s indebtedness as of 31.12.2014 and 31.03.2015.

(NOK millions ) 31.12.2014 31.03.2015 Change in Q1 2015

A. Cash 1) ...... 185.0 103.1 (81.9)

B. Cash equivalents ...... 0.0 0.0 0.0

C. Trading securities ...... 0.0 0.0 0.0

D. Liquidity (A) + (B) + (C) 1) ...... 185.0 103.1 (81.9)

E. Current financial receivable ...... 0.0 0.0 0.0

F. Current bank debt ...... 0.0 0.0 0.0

G. Current portion of non-current debt ...... 0.0 0.0 0.0

H. Other current financial debt ...... 0.0 0.0 0.0

I. Current financial debt (F) + (G) + (H) ...... 0.0 0.0 0.0

J. Net current financial indebtedness (I) – (E) – (D) 1) ...... (185.0) (103.1) 81.9

K. Non-current bank loans ...... 0.0

0.0 0.0

L. Bonds issued ...... 0.0 0.0 0.0

M. Other non-current loans ...... 0.0 0.0 0.0

N. Non-current financial indebtedness (K) + (L) + (M) ...... 0.0 0.0 0.0

O. Net financial indebtedness (J) + (N) 1) ...... (185.0) (103.1) 81.9 1) The decrease of NOK 81.9 million relates to decrease in cash and cash equivalents.

The Company expects to receive net proceeds from the Offering in the amount of NOK 341 million. Consequently, it is expected that the Company's cash and cash equivalents will be increased by the same amount upon completion of the Offering.

9.9 INVESTMENTS

9.9.1 Principal investments In 2014, the Company had a negative net cash flow from investments in intangibles and plant and equipment of NOK 42.3 million. These investments relate to investments in systems development (including software and insurance systems) and tangible fixed assets. In 2013 and 2012, the Company had a negative net cash flow from investments in intangibles and plant and equipment of NOK 19.8 million and NOK 13.8 million respectively. These investments also relate to investments in systems development (including software and insurance systems) and tangible fixed assets.

Saga Forsikring AS was acquired on 18 December 2013 after an extensive due diligence process. The acquisition cost was NOK 56.6 million, where NOK 42.3 was categorized as "goodwill". In 2013, Saga Forsikring AS had NOK 31.8 million in revenues and a net loss of NOK 3.1 million. Following the acquisition, on 1 January 2014, the Company also acquired the portfolio that Saga Forsikring AS had written with Landbruksforsikring AS as the insurer. This portfolio primarily consisted of commercial insurance written after 2010 and had a total size of NOK 186 million. Please note that the NOK 186 million represent the portfolio size and not revenue; Saga Forsikring AS has only earned a commission on the sales related to this portfolio. The transfer of this portfolio was approved by the FSA 20 December 2013. The acquisition of this commercial portfolio has significantly strengthened the Group’s overall commercial portfolio.

On 24 January 2014, the Company signed an agreement to acquire Rein Forsikring AS. The Company had previously owned 15% of Rein Forsikring AS and now saw an opportunity to align this business with Saga Forsikring AS. The acquisition cost was NOK 11.6 million.

Both Rein Forsikring AS and Saga Forsikring AS have a substantial network of agents and brokers which the Company believes should be coordinated and developed in conjunction with each other. Both of the acquisitions were completed by contribution in kind (share issues) in the Company. The acquisitions did not significantly affect the Company’s solvency.

The Company has not made any material investments in the period from 31 December 2014 and up until the date of this Prospectus.

The Company expects significant operational growth going forward (including the establishment of its operations in Denmark) and as such these costs may increase in the coming years. The Company’s cash and cash equivalents consist of bank deposits in Norwegian banks and amounted to NOK 185.0 million by the end of 2014. The Company, together with external advisors, are assessing other asset allocations going forward. However, a conservative asset allocation approach will be maintained.

9.9.2 Future commitments As at the date of this Prospectus, the Company does not have any future investment commitments.

9.10 PORTFOLIO AMBITIONS

The Company aims to deliver a gross combined ratio of approximately 85% and net combined ratio of less than 80%. Further the Company has the ambition to deliver a gross cost ratio of less than 20% in line with comparable mature companies.

The above ambitions are intended as internal goals for the management of the Company. The goals are not intended to be, and should not be interpreted as, expectations or forecasts of the Group’s future performance. The current ambitions may be assessed due to recent events, but the Company states that the operational activities should not be affected by the changes described in Note 1 and note 2 in the 2014 annual account.

10. SHARES AND SHARE CAPITAL

10.1 GENERAL

The issued share capital of the Company is NOK 2,579,359.04 divided into 32,241,988 Shares fully paid with a nominal value of NOK 0.08 and issued in accordance with Norwegian law. The Shares are registered in the VPS register with ISIN NO 0010593544.

The Shares are equal in all respects and each Share carry one vote at the Company’ general meeting, please refer to Section 10.8 "The Articles and certain aspects of Norwegian companies law" below for a further review of rights attached to the Shares.

10.2 SHARE CAPITAL DEVELOPMENT

The following table presents the historical development in share capital and number of Shares issued by the Company:

Year Type of change in share Change in Change in Par value Subscription Total issued Total number of capital issued share number of per Share price per share capital issued Shares capital (NOK) Shares (NOK) Share (NOK) following change (NOK)

2012 1 January 2012 - - 0.01 - 477,846,25 47,784,625

2012 Private placement 8,357.30 835,730 0.01 4.00 486,203.55 48,620,355

2012 Private placement 48,620.00 4,862,000 0.01 4.00 534,823.55 53,482,355

2012 Private placement 2,750.00 275,000 0.01 4.00 537,573.55 53,757,355

2012 Private placement 105,125.00 10,512,500 0.01 4.00 642,698.55 64,269,855

2012 Private placement 44,801.45 4,480,145 0.01 4.00 687,500.00 68,750,000

2013 Exercise of warrants 8,668.35 866,835 0.01 3.50 696,168.35 69,616,835

2013 Private placement 77,290.00 7,729,000 0.01 5.00 773,458.35 77,345,835

2013 Repair issue 63,271.65 6,327,165 0.01 5.00 836,730.00 83,673,000

2013 Private placement 122,900.00 12,290,000 0.01 6.20 959,630.00 95,963,000

2013 Bonus issue 959,630.00 - 0.02 - 1,919,260.00 95,963,000

Share issue in connection with 2013 acquisition of Saga Forsikring 157,222.22 7,861,111 0.02 7.20 2,076,482.22 103,824,111 AS (contribution in kind)

Share issue in connection with 2013 3,528.22 176,411 0.02 3.18 2,080,010.44 104,000,522 exercise of options

Share issue in connection with 2014 acquisition of Rein Forsikring 24,853.64 1,242,682 0.02 8.00 2,104,864.08 105,243,204 AS (contribution in kind)

2014 Reverse share split (4:1) - - 0.08 - 2,104,864.08 26,310,801

2014 Initial public offering 466,666.72 5,833,334 0.08 30.00 2,571,530.80 32,144,135

2014 Exercise of share options 7,828.24 97,853 0.08 12.72 2,579,359.04 32,241,988

At the beginning of 2014, the Company had 104,000,522 shares outstanding and the number of shares outstanding at 31 December 2014 was 32,241,988. As indicated in the above table, the Company carried out a

reverse share split with a ratio of 4:1 in 2014.

10.3 TREASURY SHARES

As at the date of this Prospectus, the Company does not own any treasury shares and does not have an authorisation to acquire treasury shares.

10.4 BOARD AUTHORISATIONS TO ISSUE NEW SHARES

On the AGM, the general meeting resolved an authorisation to the Board to increase the Company's share capital. The authorisation authorises the Board to, on one or more occasions, in total increase Vardia's share capital by up to NOK 300,000. The authorisation may only be used in relation to acquisitions or financing of acquisitions of businesses, share incentive programs or to strengthen the Company's financial position and is valid until the annual general meeting of 2016, but at the latest until 30 June 2015. The Board may set aside the shareholders' pre-emptive rights to subscription of shares. The authorisation includes share capital increases with contribution in kind and resolutions on merger.

10.5 OPTIONS AND WARRANTS

10.5.1 Options Except for the options described in Section 8.6.1 "Employee share incentive scheme", the Company has not issued any options.

10.5.2 Warrants The Company has not issued any warrants.

10.6 SHAREHOLDER STRUCTURE

As at 1 May 2015, the Company had in total 1,288 shareholders (not counting shareholders holding shares through nominee accounts), of which 1,231 were Norwegian and 57 were non-Norwegian. In addition, and according to www.Avanza.se 1, there are 1,081 shareholders behind the nominee account "Avanza Bank AB", of which all are assumed to be non-Norwegian. The 20 largest shareholders are shown in the table below:

Name of shareholder Number of Percentage Shares (%)

1 Skandinaviska Enskilda Banken AB (nominee account) 2,495,047 7.74%

2 Avanza Bank AB (broker account) 2,214,754 6.87%

3 BNP Paribas Sec. Services S.C.A (nominee account) 1,966,303 6.10%

4 Aakvik Holding AS 1,674,733 5.19%

5 Norway Marine Insurance AS 1,363,342 4.23%

6 Nordnet Bank AB (nominee account) 1,200,571 3.72%

7 Canica AS 1,102,208 3.42%

8 Busebakk AS 1,033,124 3.20%

9 BLS Holding AS 998,726 3.10%

10 Nilvama AS 932,285 2.89%

11 Vikna Eiendom AS 736,333 2.28%

1 Full link: https://www.avanza.se/aktier/om-aktien.html/472459/vardia-insurance-group

12 JP Morgan Chase Bank, NA 716,666 2.22%

13 BPR Invest AS 600,000 1.86%

14 Gyljandi AS 550,000 1.71%

15 PLV Holding AS 513,310 1.59%

17 Gaya AS 500,001 1.55%

16 AHJ Holdings ltd 500,000 1.55%

18 Hetlands Gecco Management AS 464,954 1.44%

19 Slethei AS Leif Inge 440,000 1.36%

20 Karl Høie 437,741 1.34%

Total 20 largest shareholders ...... 20,440,098 63.40

Others ...... 11,801,890 36.60

Total ...... 32,241,988 100%

The major shareholders of the Company are defined as shareholders holding more than 5% of the share capital in the Company. To the Company's knowledge, Aakvik Holding AS (1,674,733 shares, 5.19% of the share capital) is the only major shareholder of the Company.

According to Norwegian legislation there are disclosure requirements for shareholders passing above or below certain thresholds (5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or an equivalent proportion of the voting rights). For further information see Section 12.3.4 "Disclosure requirements" below.

To the knowledge of the Board, there are no arrangements which may at a subsequent date result in a change of control of the Company.

As far as the Company is aware of, there is no other natural or legal person other than those mentioned above, which directly or indirectly has a shareholding in the Company which is noticeable under Norwegian law.

There are no differences in voting rights between the shareholders.

10.7 SHAREHOLDER AGREEMENTS

The Company is not aware of its shareholders having entered into any shareholders agreements.

10.8 THE ARTICLES AND CERTAIN ASPECTS OF NORWEGIAN COMPANIES LAW

10.8.1 The Articles of Association The Company's Articles of Association as at the date of this Prospectus are incorporated by reference, please see Section 16.3 for further information. The following is a summary of certain provisions of the Articles of Association, some of which have not been addressed in the preceding Sections.

Objective of the Company

Pursuant to article 1-2 of the Company’s Articles of Association, the Company’s object is (non-official office translation):

"The company's purpose is to carry out insurance against loss of damage business in all such sectors, mutual insurance business, as well as business which is related to the insurance business.

The company may take over risk insurances and reassurances within life insurance to the extent permitted by law."

Registered Office

The Company's registered office is in Oslo municipality.

Share capital and nominal value

The Company's current share capital is NOK 2,579,359.04 divided into 32,241,988 Shares, each with a nominal value of NOK 0.08.

Board of directors

The Board shall consist of minimum 3 and maximum 8 members as designated by the general meeting.

Control committee

The Company shall have a control committee consisting of at least three members and one deputy member. One member shall satisfy the requirement for being a judge pursuant to the Norwegian Courts Act section 54 second paragraph. The control committee shall supervise Vardia's business in accordance with the Norwegian Insurance Activity Act sections 5-6 and 5-7 and the instructions resolved by the general meeting. The general meeting's instruction shall be approved by the Financial Supervisory Authority of Norway.

Restriction on transfer of shares

The Articles of Association do not provide for any right of first refusal for the Company’s shareholders or any other restrictions on the transfer of Shares. Share transfers are not subject to Board approval.

Rights, preferences and restrictions attaching to shares are set out in the Norwegian Public Limited Companies Act. The Articles of Association do not set forth additional conditions with regard to changing the rights of shareholders than required by the Norwegian Public Limited Companies Act.

Nomination committee

The Company shall have a nomination committee consisting of two or three members, who shall be shareholders or shareholder representatives.

The nomination committee shall give recommendations to the general meeting on election of, and compensation to, Board members. The recommendations shall be justified.

The general meeting elects the members of the nomination committee, including the chairman of the committee. The nomination committee shall give a recommendation on election of members to the nomination committee.

The members of the nomination committee are elected for a period of two years. The general meeting determines compensation to the members of the nomination committee.

10.8.2 The general meeting of shareholders The Company’s shareholders exercise supreme authority in the Company through the general meeting. A shareholder may attend the general meeting either in person or by proxy. The Company is required to include a proxy form with notices of general meetings.

In accordance with Norwegian law, the annual general meeting of the Company’s shareholders is required to be held each year on or prior to 30 June. The following business must be dealt with and decided at the annual general meeting:

• Approval of the annual accounts and annual report, including the distribution of any dividend;

• Consideration of the declaration of the Board on remuneration of the executive management; and

• Any other business to be transacted at the general meeting by law or in accordance with the Company’s Articles of Association.

Norwegian law requires that written notice of general meetings are sent to all shareholders whose addresses are known at least 21 days prior to the date of the meeting, unless the Company’s Articles of Association stipulate a longer period. The Company’s Articles of Association do not include any provisions on this subject. Pursuant to article 2-6 of the Company’s Articles of Association, documents concerning matters to be considered at the general meeting are not required to be sent to the shareholders, provided that the documents are made available for the shareholders at the Company’s website. The same applies for documents which according to law shall be included in or attached to the notice of the general meeting. A shareholder is entitled to request that documents concerning matters to be handled at the general meeting are sent to him/her.

Any shareholder is entitled to have an issue discussed at a general meeting if such shareholder provides the Board with notice of the issue within seven days prior to the deadline for the notice to the general meeting, along with a proposal to a draft resolution or a justification for the matter having been put on the agenda.

In addition to the annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Board. An extraordinary general meeting shall also be convened for the consideration of specific matters at the written request of the Company’s auditor or shareholders representing a total of at least 5% of the share capital.

10.8.3 Voting rights – Amendments to the Articles of Association The Articles of Association do not set forth additional conditions with regard to changing the rights of shareholders than required by the Norwegian Public Limited Companies Act.

Each Share carries the right to one vote at the Company’s general meetings. No voting rights can be exercised with respect to treasury Shares held by the Company.

Decisions that the general meeting is entitled to make under Norwegian law or the Company’s Articles of Association are in general made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes cast are elected.

Certain decisions, including but not limited to increase or reduction of the Company’s share capital, approval of merger or demerger, and amendment of the Company’s Articles of Association, require the approval of at least two-thirds of the aggregate number of votes cast at the general meeting, as well as at least two-thirds of the share capital represented at the meeting.

Decisions that (i) would reduce any shareholder’s right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the Shares through introduction of a consent requirement, a right of first refusal upon transfers or a requirement that shareholders must have certain qualifications, require a majority vote of at least 90% of the share capital represented at the general meeting in question as well as the majority required for amendments to the Company’s Articles of Association. Certain other types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amendments to the Company’s Articles of Association.

There are no quorum requirements at general meetings.

In general, in order to be entitled to vote, a shareholder must be registered as the owner of Shares in the Company’s share register in the VPS or, in the case of a share transfer, report and show evidence of the shareholder’s share acquisition to the Company prior to the general meeting. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register as holding such Shares as nominees. Readers should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote for nominee registered Shares.

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10.8.4 Additional issuances and preferential rights If the Company issues any new Shares, including bonus share issues (involving the issuance of new Shares by a transfer from the Company’s share premium reserve or distributable equity to share capital), the Company’s Articles of Association must be amended, which requires a two-thirds majority of the aggregate number of votes cast at the general meeting, as well as at least two-thirds of the share capital represented at the general meeting. In connection with an increase in the Company’s share capital by a subscription for Shares against cash contributions, Norwegian law provides the Company’s shareholders with a preferential right to subscribe for the new Shares on a pro rata basis in accordance with their then-current shareholdings in the Company. The preferential rights may be waived by the general meeting by the majority vote as required for amendments to the Company’s Articles of Association.

The general meeting may, with a majority vote as described above, authorise the Board to issue new Shares. Such authorisation may be effective for a maximum of two years, and the par value of the Shares to be issued may not exceed 50% of the share capital at the time the authorisation is registered with the Norwegian Register of Business Enterprises. The preferential right to subscribe for Shares against consideration in cash may be set aside by the Board only if the authorisation includes such possibility for the Board.

Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided that, amongst other requirements, the Company does not have an uncovered loss from a previous accounting year, by transfer from the Company’s distributable equity or from the Company’s share premium reserve. Any bonus issues may be effected either by issuing Shares or by increasing the par value of the Shares outstanding. If the increase in share capital is to take place by new Shares being issued, these new Shares must be allocated to the shareholders of the Company in proportion to their current shareholdings in the Company.

10.8.5 Minority Rights Norwegian law contains a number of protections for minority shareholders, including but not limited to those described in this and preceding paragraphs. Any shareholder may petition the courts to have a decision of the Board or general meeting of shareholders declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the company itself. In certain circumstances shareholders may require the courts to dissolve the company as a result of such decisions.

10.8.6 Dividends Under Norwegian law, interim dividends may only be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of shareholders, if the dividend payments are based on an audited interim balance sheet presented by the Board and approved by the general meeting of shareholders. The interim balance sheet may not be dated any later than six months prior to the day the resolution of paying dividends is resolved. Any proposal to pay dividends must be recommended or accepted by the Board and approved by the shareholders at a general meeting or resolved by the Board in accordance with an authorisation from the general meeting. The shareholders at the annual general meeting may vote to reduce (but not, unless accepted by the Board, to increase) the dividends proposed by the Board. The Norwegian Public Limited Liability Companies Act provides several constraints on the distribution of dividends in cash or in kind:

• Dividends are payable only out of distributable equity. Pursuant to section 8-1 of the Norwegian Public Limited Liability Companies Act , the Company may only distribute dividends provided that, following such distribution, it retains net assets that provide coverage for the Company’s share capital and other non-distributable equity pursuant to sections 3-2 and 3-3 of the Norwegian Public Limited Liability Companies Act. The calculation shall be made on the basis of the balance sheet total in the Company’s last approved annual accounts, such, however, that it is the registered share capital at the time the resolution is adopted that forms the basis for the calculation. A deduction shall be made for the total nominal value of own shares the Company has acquired for ownership or as security prior to the

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balance sheet date. A deduction shall also be made for credit and security etc. furnished pursuant to sections 8–7 to 8–10 prior to the balance sheet date, which, pursuant to these provisions, shall be within the limits of the assets the Company may distribute as dividend. A deduction shall nonetheless not be made for credit and furnished security etc. that has been repaid or cancelled before the resolution is adopted, or for credit furnished to a shareholder insofar as the credit is cancelled by being offset against the dividend.

• In connection with the calculation above, a deduction shall be made for other transactions after the balance sheet date that, pursuant to the Norwegian Public Limited Liability Companies Act, shall be within the limits of the assets the Company may utilise for the distribution of dividends.

• The Company may only distribute dividends provided that it has sound equity and liquidity following such distribution, cf. section 3–4.

Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior government approval. However, all payments to and from Norway shall be registered with the Norwegian Currency Registry. Such registration is made by the entity performing the transaction. Further, each physical transfer of payments in currency shall be notified to the Norwegian customs. Consequently, a non- Norwegian resident may receive dividend payments without Norwegian exchange control consent if such payment is made through a licensed bank.

The Board will consider the amount of dividends (if any) to recommend for approval by the Company’s shareholders, on an annual basis, based on the annual accounts of the Company for the last financial year and the financial situation of the Company at the relevant point in time. Please see Section 10.10 "Dividends and dividend policy" for further information.

According to the Norwegian Public Limited Liability Companies Act, there is no time limit after which entitlement to dividends lapses. Further, there are no dividend restrictions or specific procedures for non- Norwegian resident shareholders in the Act. For a description of withholding tax on dividends that is applicable to non-Norwegian residents see Section 13.3.1 "Withholding tax on dividends".

10.8.7 Liability of Directors Members of the Board owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the Board members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company.

Each member of the Board may be held liable by the Company for any damage they negligently or willfully cause the Company. Norwegian law permits the general meeting to exempt any such person from liability towards the Company, but the exemption is not binding if substantially correct and complete information was not provided at the general meeting when the decision was made. If a resolution to grant such exemption from liability or not to pursue claims against such a person has been passed by a general meeting with a majority below that required to amend the Company’s Articles of Association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim on the Company’s behalf and in its name. The cost of any such action is not the Company’s responsibility, but can be recovered from any proceeds that the Company receives as a result of the action. If the decision to grant an exemption from liability or not to pursue claims is made by a majority required to amend the Articles of Association, the minority shareholders cannot pursue the claim in the Company’s name.

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10.8.8 Indemnification of Directors Neither Norwegian law nor the Articles of Association contain any provision concerning indemnification by the Company of the Board. The members of the Board are, as part of an insurance coverage covered against certain liabilities that they may incur in their capacity as such.

10.8.9 Distribution of Assets on Liquidation Under Norwegian law, a company may be wound-up by a resolution of the company’s shareholders in a general meeting passed by the same majority as required to amend the Articles of Association. After completion of the Offering the New Shares and the existing Shares rank equally in the event of a return on capital by the Company upon a winding-up or otherwise.

10.8.10 Rights of Redemption and Repurchase of Shares The share capital may be reduced by decreasing the par value of the Shares or by redemption of issued Shares. Such a decision requires the same majority as required to amend the Articles of Association. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed.

A Norwegian company may purchase its own shares if an authorisation for the board of directors of the company to this effect has been given by a general meeting with the approval of at least two-thirds of the aggregate number of votes cast and Shares represented at the meeting. The aggregate par value of treasury shares so acquired and held by the company must not exceed 10% of the company’s share capital, and treasury shares may only be acquired if the company’s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the general meeting cannot be given for a period exceeding 18 months.

10.8.11 The Financial Supervisory Authority of Norway's approval of corporate resolutions All resolutions regarding share capital increases or reductions must be approved by the Financial Supervisory Authority of Norway before execution. Such resolutions will also require amendments of the Company's articles of associations.

Furthermore, all corporate resolutions which imply an amendment of the Company's articles of association must be approved by the Financial Supervisory Authority of Norway before they can enter into force. Please see Section 10.8.3 "Voting rights – Amendments to the Articles of Association" for a description of the voting requirements for resolving amendments to the Company's articles of association.

10.9 SHAREHOLDER POLICY

Vardia will conduct an open and active information policy with emphasis on dialogue with the shareholders and the market. The information shall be equal and simultaneous for all participants in the share market.

10.10 DIVIDENDS AND DIVIDEND POLICY

Vardia is currently in a growth phase, but expects to distribute dividends in the future. The Company has to date not distributed any dividends since its incorporation.

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11. REGULATORY ENVIRONMENT

11.1 GENERAL Regulations on insurance companies follows under the Insurance Companies Act 2005, the Financial Institutions and Financing Activity Act 1988 (" FIAA "), the Act on Supervision of Financial Institutions etc. 1956, the Insurance Agreements Act 1989, the Act on Personal Information 2000 and the Marketing Control Act 1972 and other relevant acts, with additional regulations.

A purchase of the majority of the shares in the Company will not affect the public licenses of the Company and its subsidiaries. However, under the FIAA a change of ownership of "qualified holdings" in financial institutions requires an authorization, see below for details. Insurance companies fall within the definition of "financial institutions".

11.2 LICENSE REQUIREMENTS The carrying out of insurance activities requires a public license under the Insurance Companies Act 2005.

The Company holds a license to carry on non-life insurance activities within the following insurance classes:

1. Accident

2. Sickness

3. Land vehicles (other than railway rolling stock)

4. Railway rolling stock

5. Aircraft

6. Ships (sea, lake and river and canal vessels)

7. Goods in transit (including merchandise, baggage, and all other goods)

8. Fire and natural forces

9. Other damage to property

10. Motor vehicle liability

11. Aircraft liability

12. Liability for ships (sea, lake and river and canal vessels)

13. General liability (All liability other than those forms mentioned under Nos 10, 11 and 12)

16. Miscellaneous financial loss

17. Legal expenses

18. Assistance

Additionally, the Company is licensed to provide insurances within the following life insurance classes, with a maximum of one year duration:

• Group or individual capital insurance, with the exception for disability insurance, to be paid following on the policyholder's death • Disability insurance, including waiver of premiums

11.3 OWNERSHIP REQUIREMENTS Pursuant to the FIAA Section 2-2, an authorisation is required in advance to acquire a qualifying holding in a financial institution, which is deemed to be a holding that represents 10% or more of the capital or voting rights of a financial institution, or which otherwise makes it possible to exercise significant influence over the

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management of an institution and its activities. The same applies to acquisitions whereby a qualifying holding will reach or exceed 20%, 30% or 50%, respectively, of the capital or voting rights of a financial institution, or such that the holding confers controlling influence as mentioned in section 1-3 of the Public Limited Companies Act. Pursuant to the FIAA Section 2-4, the following factors should be emphasized in the assessment of whether the owner meets the ownership requirements:

(a) the acquirer’s general reputation, professional competence, experience and previous conduct in business relationships,

(b) the general reputation, professional competence, experience and previous conduct in business relationships of persons who after the acquisition will form part of the board of directors or management of the institution’s activities,

(c) in the application of (a) and (b), consideration shall be given to whether the acquirer will be able to use the influence conferred by the holding, to obtain advantages for his own or associated activity, or indirectly exert influence on other business activity, and to whether the acquisition could result in impairment of the institution’s independence in relation to other business interests.

(d) whether the acquirer’s financial situation and available financial resources are adequate, especially in relation to the types of activity in which the institution is engaged or in which it must be assumed that the institution will become engaged after the acquisition, and whether the acquirer and its activities are subject to financial supervision,

(e) whether the financial institution is and will continue to be in a position to meet the solvency and prudential requirements and other supervisory requirements that follow from the financial legislation,

(f) whether the ownership structure of the institution after the acquisition or particular ties between the acquirer and a third party will impede effective supervision of the institution, in particular whether the group of which the institution will form part after the acquisition is organised in a manner that does not impede effective supervision, including effective exchange of information and allocation of supervisory tasks between the supervisory authorities involved,

(g) whether there are grounds for assuming that money laundering or financing of terrorism, or any attempt to commit such an act, is taking place in connection with the acquisition, or that the acquisition will increase the risk of such an act.

The assessment will further be conditional of the size of the interest in the institution.

In the event that an acquirer will reach or exceed 10 percent or 20 percent of the share capital or an equivalent portion of the voting rights in a financial institution, the relevant matters is whether the King finds the acquirer fit and proper in conjunction with the above mentioned guidelines.

Acquisitions where the acquirer reaches or exceeds 25 percent or more of the share capital or an equivalent portion of the voting rights in a financial institution will be subject to a more restrictive approach. The starting point is that the King must be convinced that, viewed in the light of the above mentioned guidelines, the acquisition may be carried out, and that the acquisition has no negative effects on the functioning of the capital and credit market.

The assessment of the ownership requirement is delegated to the Ministry of Finance and the Financial Supervisory Authority of Norway.

Consent from the above mentioned authorities are necessary before the acquisition can be carried out. The question of whether authorisation shall be granted shall be decided within a period of 60 working days reckoned from the date the FSA confirmed receipt of the notification (the assessment period). If the ministry or the FSA has made a request in writing for further information before 50 working days have elapsed, the request shall

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suspend the assessment period from the time the request is made to until the requested information is received, but not for than 20 working days, or for more than 30 days if the acquirer is not subject to supervision or is domiciled outside the EEA. Other requests for further information shall have no effect on the length of the assessment period.

In relation to the said thresholds both share holdings and the following rights and entitlements in respect of shares shall be included:

(a) holdings which the owner is entitled by agreement to acquire on his own initiative,

(b) holdings for which the owner is entitled by agreement to exercise voting rights, except voting rights exercisable by proxy as mentioned in section 5-2 of the Private Limited Companies Act and section 5-2 of the Public Limited Companies Act where no compensation is given for such proxy, and

The FIAA provides however an exemption for share acquisition agreements where the share acquisition is conditioned upon the grant of a public license, provided the following requirements are met:

• the selling shareholders shall not receive an additional premium for entering into the conditional agreement of more than 5 percent of the shares’ market value on the date of offer,

• the selling shareholders shall not receive a loan from the offeror, or

• the selling shareholder’ right to exercise voting rights for the shares shall not be limited.

The holding of shares and rights mentioned above, which are directly or indirectly owned or taken over by any of the following, are regarded as equivalent to the owners own holdings :

(a) the owner's spouse or person with whom the owner shares a household,

(b) the owner's under-age children, and under-age children of a person covered by with whom the owner lives,

(d) an undertaking in which the owner, alone or together with persons as mentioned in (a), (b) and (e), exercises influence as mentioned in the Private Limited Companies Act section 1-3 and the Public Limited Companies Act section 1-3, and

(e) someone with whom the owner must be assumed to be acting in concert in the exercise of shareholder rights.

Pursuant to FIAA, Section 2a – 3, second paragraph, no shareholder may, without permission from the King, hold an ownership interest of such size in a financial institution that a group relationship exists between the shareholder and the financial institution. The King may, in regulations, specify in more detail as to which provisions should apply for foreign enterprises. According to Section 9 of Regulations regarding ownership in financial institutions, the FIAA, Section 2a-3 second paragraph shall apply for foreign enterprises. This implies that foreign enterprises will need an authorization to establish a financial group in order to own 50 percent or more of a Norwegian financial institution.

More detailed regulations regarding the application’s content etc. are provided in Direction of 18 December, no.1639.

11.4 SOLVENCY REQUIREMENTS The European Union (EU) is in the process of implementing a new prudential regime for insurance undertakings. As a first step, the Solvency II Directive (2009/138/EC) was adopted by the Council of the

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European Union and the European Parliament in November 2009. The Omnibus II Directive (2014/51/EC) implements changes to the Solvency II Directive and scheduling the application date of the Solvency II Directive for 1 January 2016.

Solvency II is based on a three pillar structure, which can be summarized as follows:

Pillar 1: Quantitative requirements, including valuation of assets and liabilities, technical provisions, and calculation of capital requirements

Pillar 2: Requirements to the governance and risk management of the insurance companies, and supervisory control and review

Pillar 3: Supervisory reporting and public disclosure

The Solvency II Directive will be implemented into Norwegian law in a new act on financial institutions and financial groups which was adopted by the parliament on 7 April 2015, and the new act will enter into force on 1 January 2016. . The FSA has provided the Ministry of Finance with a proposal for new regulations, which is subject to public consultation until 20 March 2015.

Further information about the Solvency II regime is available on http://ec.europa.eu/internal_market/insurance/index_en.htm, https://eiopa.europa.eu/ and www.finanstilsynet.no.

For information on the Company's solvency capital requirement, please see note 7 to the Company's annual accounts for the financial year ending 31 December 2014.

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12. SECURITIES TRADING IN NORWAY

This Section 12 includes certain aspects of rules pertaining to securities trading in Norway in a Norwegian incorporated company pursuant to Norwegian legislation, but is however not a full or complete description of the matters described herein. The following summary does not purport to be a comprehensive description of all the legal considerations that may be relevant to a decision to purchase, own or dispose of Shares. Investors are advised to consult their own legal advisors concerning the overall legal consequences of their ownership of Shares.

The Company’s Shares have been listed on Oslo Børs since 8 April 2014.

12.1 INTRODUCTION

Oslo Børs was established in 1819 and is the principal market in which shares, bonds and other financial instruments are traded in Norway. Oslo Børs is operated by Oslo Børs ASA, which also operates the regulated marketplace Oslo Axess.

12.2 TRADING AND SETTLEMENT

Continuous trading on Oslo Børs and Oslo Axess takes place between 09:00 CET and 16:20 CET each trading day with a subsequent closing call from 16:20 CET to 16:25 CET. Orders may be placed in the system beginning at 08:15 CET and ending at the end of post-trade at 18:15 CET.

The settlement period for trading on Oslo Børs is three days (T+2).

The ability of brokerage houses to trade for their own accounts is restricted to trading that occurs as an integral part of either investment services or general capital management. Trading by individual employees is also restricted.

Investment services may be provided only by Norwegian brokerage houses holding a license under the Norwegian Securities Trading Act, branches of brokerage houses from an EEA-state or brokerage houses from outside the EEA that have been licensed to operate in Norway. EEA-state brokerage houses may also conduct cross-border investment services in Norway.

It is possible for brokerage houses to undertake market-making activities in listed Norwegian shares if they have a license to do so under the Norwegian Securities Trading Act, or in the case of EEA-state brokerage houses, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act covering brokers’ trading for own account. Such market-making activity, however, does not as such require notification to the FSA or Oslo Børs except for the general obligation of brokerage houses that are members of Oslo Børs to report all trades in stock exchange listed securities.

12.3 INFORMATION, CONTROL AND SURVEILLANCE

Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of Oslo Børs monitors market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments.

Companies listed on Oslo Børs and Oslo Axess, are subject to disclosure requirements pursuant to the Norwegian Securities Trading Act and Oslo Børs Continuing Obligations. Each listed company is inter alia required to immediately publicly disclose any precise information about the financial instruments, the company or other matters which may have a noticeable effect on the price of the financial instruments or related financial instruments, and which are not publicly available or commonly known in the market, unless there are legitimate reasons for postponement of such disclosure.

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12.3.1 The VPS and Transfer of Shares The VPS is the Norwegian paperless centralised securities registry. It is a computerised bookkeeping system in which the ownership of, and all transactions relating to, listed shares of Norwegian companies must be recorded. The Company’s share register is operated through the VPS. All transactions relating to securities registered with the VPS are made through computerised book entries. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To effect such entries, the individual shareholder must establish an account with a Norwegian account agent. Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents.

The entry of a transaction in the VPS is generally prima facie evidence in determining the legal rights of parties as against the issuing company or a third party claiming an interest in the given security.

A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition of shares is not prevented by law, the Articles of Association or otherwise.

12.3.2 Share Register Under Norwegian law shares are registered in the name of the owner of the shares. As a general rule, there are no arrangements for nominee registration. However, shares may be registered in the VPS in the name of a depository (bank or other nominee) approved by the FSA, as the nominee of foreign shareholders. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In the case of registration by nominees, registration with the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions, but cannot vote at general meetings on behalf of the beneficial owners.

12.3.3 Foreign Investment in Norwegian Shares Foreign investors may trade shares listed on Oslo Børs through any broker that is a member of Oslo Børs, whether Norwegian or foreign.

12.3.4 Disclosure Obligations A person, entity or group acting in concert that acquires Shares, options for shares or other rights to Shares resulting in its beneficial ownership, directly or indirectly, in the aggregate meeting or exceeding the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights in the Company has an obligation under Norwegian law to notify the Company and Oslo Børs immediately. The same applies to inter alia disposal of shares, options, other rights to shares, votes for shares or other circumstances resulting in a beneficial ownership, directly or indirectly, in the aggregate meeting or falling below said thresholds.

12.3.5 Insider Trading According to Norwegian law, subscription for, purchase of, sale of or exchange of shares which are listed or in respect of which an application for listing has been submitted, or incitement to such dispositions, must not be undertaken by anyone who has precise information about the financial instruments, the company or other matters which may have a noticeable effect on the price of the financial instruments or related financial instruments, and which are not publicly available or commonly known in the market. The same applies to entry into, purchase, sale or exchange of option or futures/forward contracts or equivalent rights connected with such shares or incitement to such disposition.

12.3.6 Mandatory Offer Requirement Pursuant to chapter 6 of the Norwegian Securities Trading Act, any person, entity or group acting in concert that acquires shares representing more than 1/3 of the voting rights of a Norwegian company listed on Oslo Børs or

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Oslo Axess is required to make an unconditional general offer for the purchase of the remaining shares in the company. The obligation to make a mandatory offer will be repeated at acquisition of shares representing more than 40% and 50% of the voting rights. The offer must be made within four weeks of the transaction that triggers the obligation to make the offer. The offer and the offer document are subject to approval by Oslo Børs before submission to the shareholders. The offer price per share must be at least as high as the highest price paid or agreed by the offeror in the six-month period prior to the date the relevant threshold was exceeded. However, if the market price is clearly higher than the price paid during the last six months, the offer price shall equal the market price. In the event that the offeror thereafter, but prior to the expiration of the offer period, acquires or agrees to acquire additional shares at a higher price, the offeror is obliged to restate its bid at that higher price. The offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. A shareholder who fails to make the required offer must within four weeks dispose of sufficient shares so that the obligation ceases to apply (i.e., to reduce the ownership to a level below the relevant threshold). Otherwise, Oslo Børs may cause the shares exceeding the relevant threshold to be sold by public auction. A shareholder who fails to make such offer cannot, as long as the mandatory bid requirement remains in force, vote for shares exceeding the relevant threshold on the company’s general meetings or exercise any rights of share ownership, except the right to receive dividends and preferential rights in the event of a share capital increase. Oslo Børs may inter alia impose a daily fine upon a shareholder who fails to make the offer within the required time frame.

12.3.7 Compulsory Acquisition Pursuant to the Norwegian Public Limited Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total number of issued shares in a Norwegian public limited liability company, as well as 90% or more of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect.

A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, pursuant to the Norwegian public limited Companies Act. However, where the offeror, after making a mandatory or voluntary offer, has acquired 90% or more of the shares and voting rights, and the offeror pursuant to Section 4-25 of the Norwegian Public Limited Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price pursuant to the requirements in the Norwegian Securities Trading Act, absent specific reasons indicating another price.

Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition. Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline.

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13. NORWEGIAN TAXATION

13.1 INTRODUCTION This subsection presents a brief outline of certain tax aspects under Norwegian law related to holding and disposal of Shares. The presentation is based on Norwegian tax regulations in force as at the date of this Prospectus and describes the tax situation for Norwegian shareholders and withholding tax for non-Norwegian shareholders. The presentation is subject to any amendments to tax laws and regulations that may occur after the date of this Prospectus, including any retroactive enforcement.

The presentation does not concern tax issues for the Company.

The presentation does not include any information with respect to taxation in any other jurisdiction than Norway, and the presentation only focuses on the shareholder categories explicitly mentioned below. Hence, the presentation does not inter alia exhaustively cover the tax situation for non-Norwegian shareholders holding or disposing Shares through a Norwegian permanent establishment. Further, special rules, which are not mentioned below, may apply to shareholders who are considered transparent entities for tax purposes and for shareholders that ceases to be resident in Norway for tax purposes (due to domestic tax law or tax treaty). Such shareholders should consult with and rely upon their own tax advisors with respect to the tax position in their country of residence and the tax consequences related to ceasing to be resident in Norway for tax purposes.

The presentation is of a general nature and is not intended to be an exhaustive analysis of all Norwegian tax aspects related to the Shares or dividends paid from the Company. Accordingly, prospective holders of Shares should consult with their own tax advisors with respect to the tax consequences under Norwegian tax regulations and tax regulations in other jurisdictions of a decision to acquire, own or dispose of Shares.

Please note that for the purpose of this subsection, a reference to a Norwegian or non-Norwegian (foreign) shareholder refers to the tax residency and not the nationality of the shareholder.

13.2 NORWEGIAN SHAREHOLDERS 13.2.1 Taxation of dividends Norwegian personal shareholders

Dividends distributed from the Company to Norwegian personal shareholders are taxable as ordinary income at a current rate of 27 percent. However, this will only apply to dividends exceeding a calculated risk-free return on the investment (tax-free return), which is tax exempt.

The tax-free return is calculated annually for each Share and pertains to the owner of the Share at the end of the year. The tax-free return is calculated on the basis of the shareholder’s cost price of the Share multiplied by a statutory risk-free interest. The risk-free interest is determined on the basis of interest on 3-months Treasury bills, as published by the Central Bank of Norway (Nw: Norges Bank ), adjusted downwards by 27 per cent (i.e. after tax interest rate). The risk-free interest rate is calculated and announced by the Ministry of Finance in January in the year after the income year; i.e. the risk-free interest rate for 2015 will not be decided until January 2016. For the income year 2014, the risk-free interest rate is set to 0.9 percent.

If the actual distributed dividend for one year is less than the calculated tax-free return (calculated on each Share), the surplus tax-free return can be carried forward to be set-off against dividends or capital gains on the same Share for subsequent years (any surplus tax-free return on one Share cannot be set-off against dividends or capital gains on other Shares). Furthermore, any such surplus tax-free return will be added to the basis for calculating the annual tax-free return on the Share for subsequent years.

Norwegian corporate shareholders

Dividends distributed from the Company to Norwegian corporations (joint stock companies and similar entities) are effectively taxed at rate of 0.81 percent (3 percent of dividend income from the Shares is included in the

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calculation of ordinary income and subject to tax at a flat rate of 27 percent under the Norwegian participation exemption method). However, dividend distributed within a tax group is fully exempt.

13.2.2 Taxation of capital gains Norwegian personal shareholders

Sale, redemption or other disposal of shares is regarded as a realisation for Norwegian tax purposes.

A capital gain or loss generated by a Norwegian personal shareholder through a realisation of Shares is taxable or tax deductible. Such capital gain or loss is included or deducted from the basis for computation of ordinary income in the year of realisation. Ordinary income is taxable at a rate of 27 percent. Gains are taxable and losses are deductible irrespective of the duration of the ownership and the number of Shares disposed of.

The gain or loss is calculated as net consideration for the Shares less the cost price on the Shares, transactional expenses and any surplus tax-free return on the Shares (as a result of non-utilization of the calculated annual tax-free returns at the time of disposal). However, any surplus tax-free return may only be deducted in order to reduce a capital gain, and not to create or increase a loss, i.e. any unused tax-free return exceeding the capital gain upon the realisation of a Share will be annulled. Further, any surplus tax-free return on one Share cannot be set-off against gains on other Shares. Expenses and broker’s commission at both the purchase and the sale are deductible when calculating the capital gain or loss. FIFO (First In - First Out) principle applies if the Shares are not acquired simultaneously.

Norwegian corporate shareholders

A capital gain generated by a Norwegian corporate shareholder through a realisation of Shares is exempt from tax under the Norwegian tax exemption method. Net losses from realisation of shares are not tax deductible for Norwegian corporate shareholders.

13.2.3 Net wealth tax Norwegian corporate shareholders are not subject to net wealth taxation.

Norwegian personal shareholders are subject to net wealth tax. The marginal net wealth tax rate is currently 0.85 percent of the value assessed. When calculating the net wealth tax base, listed shares and other listed instruments in listed companies are valued at the quoted value as of 1st of January in the assessment year.

13.3 NON-NORWEGIAN SHAREHOLDERS 13.3.1 Withholding tax on dividends Dividends distributed from the Company to non-Norwegian shareholders (personal and corporations) are generally subject to Norwegian withholding tax. The general withholding tax rate on dividends is 25 percent, but is in normally reduced to 15 percent (or lower) if a tax treaty applies.

In accordance with the present administrative system in Norway, the Company will deduct withholding tax at the regular rate or reduced rate according to an applicable tax treaty, based on the information registered with the VPS with regard to the tax-residency of the non-Norwegian shareholder. The Company is obliged to report and pay the withholding tax to the Norwegian tax authorities.

Nominee registered Shares will be subject to 25 percent withholding tax unless the nominee has obtained an approval from the Norwegian tax authorities for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee must file an application to the Norwegian tax authorities, which must include a survey of all beneficial owners that are subject to withholding tax at a reduced rate.

Non-Norwegian corporate shareholders tax resident within the European Economic Area (EEA) are exempt from Norwegian withholding tax on dividends distributed from the Company if the shareholder (i) is a corporation that is equivalent to a Norwegian (qualifying) corporate shareholder, (ii) is the beneficial owner of

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the Shares and (iii) is genuinely established and performs genuine economic activities within the relevant EEA member state.

Non-Norwegian personal shareholders tax resident within the EEA may apply for a refund corresponding to the calculated tax-free return on each individual Share, cf. the description above regarding Norwegian personal shareholders. However, the deduction for tax-free return does not apply in the event that the withholding tax rate, pursuant to an applicable tax treaty, leads to a lower taxation on the dividends than the withholding tax rate of 25 percent less the tax-free return. Any tax-free return is only available upon application, and any refund is given after the end of the income year.

Non-Norwegian shareholders that have been subject to a higher withholding tax than set out in an applicable tax treaty or the Norwegian Tax Act may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.

If Shares are held in respect of a business (permanent establishment) liable to taxation in Norway, dividends distributed from the Company will in general be subject to the same taxation as for Norwegian shareholders, cf. above.

13.3.2 Capital gains Non-Norwegian shareholders (persons and corporations) are as a main rule not subject to Norwegian tax on capital gains generated through realisation of shares. However, a tax liability in Norway may arise if shares are held in connection with a business (permanent establishment) liable to taxation in Norway, or if a person has previously been tax resident in Norway.

13.4 DUTIES ON TRANSFER OF SHARES No stamp duty or similar duties are currently imposed in Norway on the issue or transfer of shares, neither on acquisition nor disposal.

13.5 INHERTIANCE TAX Norway does impose any inheritance tax or gift tax. This applies to both Norwegian and Non-Norwegian shareholders.

Non-Norwegian shareholders (i.e. shareholders resident outside of Norway) and Norwegian shareholders (i.e. shareholders resident in Norway) being a Citizen of another country, should consult with and rely upon their own tax advisors with respect to possible inheritance and/or gift tax when shares are transferred through inheritance or as a gift.

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14. LEGAL MATTERS

14.1 DISPUTES

As an insurance company, the Group's business involves and inherent risk of disputes and litigation in connection with claims handling from time to time. However, neither the Company nor any company in the Group is, as at the date of this Prospectus, involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware), and has not been involved in any such proceedings during the previous twelve months, which may have, or have had in the recent past, significant effects on the Company and / or the Group’s financial position or profitability.

14.2 MATERIAL CONTRACTS

There are no material contracts, other than contracts entered into in the ordinary course of business, to which the Company or any member of the Group is a party, for the two years immediately preceding the date of this Prospectus.

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15. SELLING AND TRANSFER RESTRICTIONS

15.1 GENERAL The offering of the New Shares to persons resident in, or who are citizens of countries other than Norway and Sweden, may be affected by the laws of the relevant jurisdiction. Investors should consult their professional advisors as to whether they require any governmental or other consents or need to observe any other formalities to enable them to apply for, purchase or otherwise trade in the New Shares.

The Company is not taking any action to register or qualify the New Shares or otherwise permit a public offering of the New Shares in any jurisdiction other than Norway and Sweden. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and may not be copied or redistributed in whole or in part. Except as otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in any territory other than Norway and Sweden, the investor may not treat this Prospectus as constituting an invitation or offer to it, nor may the investor in any event deal in the New Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that investor, or the New Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a copy of this Prospectus, the investor may not distribute or reproduce the same, in whole or in part, or transfer the New Shares to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If the investor forwards this Prospectus into any such territories (whether under a contractual or legal obligation or otherwise), the investor must draw the recipient’s attention to the contents of this section.

Except as otherwise noted in this Prospectus: (i) the New Shares being offered in the Offering may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Member States of the EEA that have implemented the Prospectus Directive (Directive 2003/71/EC), Australia, Canada, Hong Kong, Japan, the United States, or any other jurisdiction in which it would not be permissible to offer the New Shares (the "Ineligible Jurisdictions "); and (ii) this Prospectus may not be sent to any person in any Ineligible Jurisdiction;

If an investor makes an application for, takes up or otherwise deals in New Shares, that investor will be deemed to have made or, in some cases, be required to make, the following representations and warranties to the Company and any person acting on the Group’s or its behalf, unless such requirement is waived by the Company:

a) the investor is not located in an Ineligible Jurisdiction,

b) the investor is either a QIB as defined in Rule 144A under the U.S. Securities Act, or a person other than a "U.S. person" (as such term is defined in Rule 902 of Regulation S under the U.S. Securities Act) acquiring the New Shares in an "offshore transaction" outside the United States within the meaning of, and pursuant to, Regulation S,

c) the investor understands that the New Shares have not been, and will not be, registered under the U.S. Securities Act and may not be offered, sold, pledged, resold, granted, delivered, allotted, taken up or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, registration under the U.S. Securities Act, and

d) the investor may lawfully be offered, take up, subscribe for and receive New Shares in the jurisdiction in which it resides or is currently located.

The Company and any persons acting on behalf of the Company, including the Manager, will rely upon the investor’s representations and warranties contained herein. Any provision of false information or subsequent breach of these representations and warranties may subject the investor to liability.

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Subject to the specific restrictions described below, if an investor (including, without limitation, its nominees and trustees) is outside Norway and Sweden, and wishes to deal in or apply for New Shares, the investor must satisfy itself as to full observance of the applicable laws of any relevant territory including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories. The information set out this Section is intended as a general guide only. If the investor is in any doubt as to whether it is eligible to apply for New Shares, that investor should consult its professional advisor without delay.

Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Offering into any Ineligible Jurisdiction or to any Ineligible Persons.

No action has been or will be taken by the Manager to permit the possession of the Prospectus (or any other offering or publicity materials or application form(s) relating to the Offering) in any jurisdiction where such distribution may lead to a breach of any law or regulatory requirement.

Neither the Company nor the Manager, nor any of their respective representatives, is making any representation to any offeree, applicant or purchaser of the New Shares regarding the legality of an investment in the New Shares by such offeree, applicant or purchaser under the laws applicable to such offeree, applicant or purchaser. Each investor should consult their own advisors before applying for or purchasing the New Shares. Investors are required to make their independent assessment of the legal, tax, business, financial and other consequences of an application for or purchase of the New Shares.

A further description of certain restrictions on the Offering of New Shares is set out below.

15.2 UNITED STATES The New Shares have not been, and will not be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be no public offer of the New Shares in the United States. A notification of New Shares in contravention of the above may be deemed to be invalid.

The New Shares are being offered and sold only (1) in the United States in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act only to QIBs (as that term is defined in Rule 144A) and (2) outside the United States to persons other than "U.S. Persons" (as that term is defined in Regulation S in offshore transactions in reliance upon Regulation S.

Any recipient of this document in the United States is hereby notified that this document has been furnished on a confidential basis and may not to be reproduced, retransmitted or otherwise redistributed, nor may the contents of this document be disclosed, in whole or in part, without the Company’s prior written consent under any circumstances. Furthermore, recipients are authorised to use it solely for the purpose of considering a purchase of the New Shares in the Offering and may not disclose any of the contents of this document or use any information herein for any other purpose. This document is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the New Shares. Any recipient of this document agrees to the foregoing by accepting delivery of this document.

Until 40 days after the commencement of the Offering, any offer or sale of the New Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act.

In making an investment decision with respect to the New Shares, investors must rely on their own examination of the Company and the terms of this Offering, including the merits and risks involved. The New Shares have

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not been recommended, approved or disapproved by the SEC, any state securities commission in the United States or any other United States regulatory authority nor have any of the foregoing authorities passed upon or endorsed the merits of the Offering of and the New Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense in the United States.

Prospective investors are advised to consult legal counsel prior to making any resale, pledge or transfer of the New Shares.

Rule 144A New Shares

Each U.S. Investor, by participating in the Offering described herein and as a condition to such participation, will be deemed to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is purchasing or applying for New Shares, as the case may be, that it has received a copy of this document and such other information as it deems necessary to make an investment decision and that:

a) the offer and sale of the New Shares is being made in a transaction exempt from the registration requirements of the U.S. Securities Act,

b) the New Shares have not been offered to it by the Company by means of any form of "general solicitation" or "general advertising" (within the meaning of Regulation D under the U.S. Securities Act),

c) it is (i) a QIB and (ii) purchasing the New Shares for its own account or for the account of a QIB with respect to which it exercises sole investment discretion and it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account, and (iii) aware, and each beneficial owner of such Shares has been advised, that the sale of New Shares to it is being made in a private placement as contemplated under Section 4(a)(2) under the U.S. Securities Act or pursuant to another exemption from, or in a transaction not subject to, the registration requirements thereof, and

d) it agrees that it will not re-offer, resell, pledge or otherwise transfer any of such shares except (i) outside the United States in accordance with Rule 903 or 904 of Regulation S under the U.S. Securities Act, (ii) to a person who the U.S. Investor reasonably believes is a QIB and who is purchasing the New Shares for its own account, or the account of another QIB, to whom notice is given that the resale, pledge or other transfer is being made pursuant to Rule 144A, (iii) in a transaction that is registered under the U.S. Securities Act or (iv) pursuant to another exemption from registration under the U.S. Securities Act (if available).

Regulation S New Shares

Each person to whom New Shares are distributed, offered or sold outside the United States, by participating in the Offering described herein and as a condition to such participation, will be deemed to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is purchasing or applying for New Shares, as the case may be, that it has received a copy of this document and such other information as it deems necessary to make an investment decision and that:

a) it is authorized to consummate the purchase of New Shares in compliance with all applicable laws and regulations,

b) it acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges) that the New Shares have not been, and will not be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States,

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c) it was, and the person, if any, for whose account or benefit it is acquiring the New Shares was, located outside the United States at the time the buy order for the New Shares was originated and continues to be located outside the United States and has not purchased the New Shares for the benefit of any person in the United States or entered into any arrangement for the transfer of the New Shares to any person in the United States,

d) the New Shares have not been offered to it by means of any "directed selling efforts" as defined in Regulation S, and

e) it will not offer, sell, pledge or transfer any New Shares, except in accordance with the U.S. Securities Act and any applicable laws of any state of the United States and any other jurisdiction.

Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the above stated restrictions shall not be recognised by the Company or the Manager.

The Company, the Manager and their respective affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.

15.3 UNITED KINGDOM The information contained in this Prospectus is confidential in the United Kingdom, and has not been (and will not be) approved by an authorised person for the purposes of Section 21 of the Financial Services and Markets Act of 2000, as amended ( " FSMA’’ ). In the United Kingdom, the Prospectus is being distributed solely to, and is directed solely at, persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors "). This Prospectus is being distributed in the United Kingdom to, and directed solely at Qualified Investors for the purposes of Section 86 of FSMA or persons falling within Section 86(1)(b) of FSMA who (i) are investment professionals (within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order ")), (ii) are persons falling within Article 43 of the Order, (iii) are high net- worth entities or other persons falling within Article 49(1) of the Order, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or distributed, or caused to be communicated or distributed (all such persons together being referred to as ‘‘Relevant Persons’’). The Prospectus must not be acted on or relied on in the United Kingdom by persons who are not Relevant Persons. Any investment or investment activity to which the Prospectus relates is available only to Relevant Persons in the United Kingdom and will be engaged in only with such persons. All applicable provisions of FSMA (including secondary legislation thereunder) must be complied with in respect of anything done in relation to the New Shares in, from or otherwise involving the United Kingdom. Persons who are not Relevant Persons should not rely on, nor take any action on the basis of, this Prospectus.

15.4 EEA-MEMBER STATES In relation to each Member State of the EEA other than Norway and Sweden which has implemented the Prospectus Directive (each a "Relevant Member State ") an offer of the New Shares which are the subject of the Offering contemplated by this Prospectus may not be made to the public in that Relevant Member State except that an offer in that Relevant Member State of any New Shares may be made at any time under the following exemptions under the Prospectus Directive, provided such exceptions have been implemented in that Relevant Member State:

(i) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

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(ii) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(iii) to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Manager for any such offer; or

(iv) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New Shares shall result in a requirement for the publication by the Company or the Manager of a Prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer to the public" in relation to any New Shares in any relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any New Shares to be offered so as to enable an investor to decide to purchase any New Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

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16. ADDITIONAL INFORMATION

16.1 AUDITOR AND ADVISORS

The Company’s auditor was appointed on the Company's annual general meeting 9 April 2015 and is PricewaterhouseCoopers AS, Dronning Eufemias gate 8, 0191 Oslo, Norway, with organizational number 987 009 713. PricewaterhouseCoopers AS is a member of the Norwegian Institute of Public Accountants.

Up until 9 April 2015, the Company’s auditor was BDO AS, Munkedamsveien 45, Vika Atrium, 0121 Oslo, Norway, with organisational number 993 606 650. BDO AS is a member of the Norwegian Institute of Public Accountants. As from the Company's incorporation, Inter Revisjon Oslo AS was the Company's auditor. Inter Revisjon Oslo AS and BDO AS merged in 2011, thus, Inter Revisjon Oslo AS / BDO AS has audited the annual accounts for the Company since its incorporation and up until, and including, the annual accounts for the financial year 2014. The audit reports have been unqualified for all years provided for.

BDO had been the Company's auditor since the Company's incorporation and the Company deemed it appropriate with a change after five years with the same auditor.

Pareto Securities (Dronning Mauds gate 3, P.O. Box 1411 Vika, N-0115 Oslo, Norway) are acting as the Manager for the Offering.

Advokatfirmaet Selmer (Tjuvholmen allé 1, N-0252 Oslo, Norway) is acting as legal counsel to the Company.

Advokatfirmaet Thommessen AS (Haakon VIIs gate 10, N-0116 Oslo, Norway) is acting as legal counsel to the Manager.

16.2 DOCUMENTS ON DISPLAY

Copies of the following documents will be available for inspection by physical means at the Company’s registered office during normal business hours from Monday to Friday each week (excluding public holidays) for a period of 12 months from the date of this Prospectus:

i. the Articles of Association of the Company;

ii. the historical financial information of the Company and its subsidiary undertakings for each of the two financial years preceding the publication of this Prospectus; and

iii. all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company's request any part of which is included or referred to in the registration document.

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16.3 DOCUMENTS INCORPORATED BY REFERENCE

The information incorporated by reference to this Prospectus should be read in connection with the cross reference list as set out in the table below. The following documents have been incorporated hereto by reference:

Section in Disclosure Reference document and link Page (P) in Prospectus requirements reference of the document Prospectus

Section 9 Audited The Annual Accounts for the year ended 31 December 2012: P 6 – P 26 historical http://www.vardia.com/wp- financial content/uploads/2014/03/%C3%85rsregnskap-2012-med-signert- information balanse-og-beretninger.pdf (Annex I, The Annual Accounts for the year ended 31 December 2013: P 16 – P 45 Section 20.1) http://www.vardia.com/wp- content/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf The Annual Accounts for the year ended 31 December 2014: P 7 – P 90 http://www.vardia.com/wp-content/uploads/2015/03/Vardia- %C3%85rsregnskap-20141.pdf Section 9 Auditor's Auditor's report for the year ended 31 December 2012: P 27 – P 28 report (Annex http://www.vardia.com/wp- I, Section content/uploads/2014/03/%C3%85rsregnskap-2012-med-signert- 20.4.1) balanse-og-beretninger.pdf Auditor's report for the year ended 31 December 2013: P 47 – P 48 http://www.vardia.com/wp- content/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf Auditor's report for the year ended 31 December 2014: P 92 – P 93 http://www.vardia.com/wp-content/uploads/2015/03/Vardia- %C3%85rsregnskap-20141.pdf Section 9 Accounting Vardia's accounting principles: P 21 – P 27 policies http://www.vardia.com/wp-content/uploads/2015/03/Vardia- (Annex I, %C3%85rsregnskap-20141.pdf Section 20.1) Section 10.8 Articles of Vardia's article of association P 1 – P 3 association http://www.vardia.com/wp-content/uploads/2015/03/Vardia- (Annex I, Vedtekter_19_08_14.pdf Section 21.2) - Annual reports The Annual Accounts for the year ended 31 December 2012: All for the last http://www.vardia.com/wp- three financial content/uploads/2014/03/%C3%85rsregnskap-2012-med-signert- years (Annex I, balanse-og-beretninger.pdf Section 20.1) The Annual Accounts for the year ended 31 December 2013: All http://www.vardia.com/wp- content/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf The Annual Accounts for the year ended 31 December 2014: All http://www.vardia.com/wp-content/uploads/2015/03/Vardia- %C3%85rsregnskap-20141.pdf

16.4 STATEMENT REGARDING EXPERT OPINIONS

This Prospectus does not refer to any expert opinions.

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17. DEFINITIONS AND GLOSSARY OF TERMS

AGM The Company's annual general meeting held 9 April 2015. Applicable anti-money laundering legislation, including the Norwegian Anti-Money Laundering Money Laundering Act of 6 March 2009 No. 11and the Norwegian Money Legislation Laundering Regulations of 13 March 2009 No. 302. Board The board of directors of Vardia Insurance Group ASA. Capital adequacy is an expression for creditworthiness and expresses the insurance company’s ability to handle its insurance liabilities. Capital Capital adequacy adequacy is calculated as solvency margin capital as a percentage of solvency margin requirements. Solvency margin capital should exceed the solvency margin requirement. Unpredictable events creating losses that affect multiple individual risks covered by insurances. Such events include among others windstorms, severe Catastrophes hail, severe winter weather, other weather related events, floods, fires, industrial explosions and other man-made disasters, such as terrorist attacks. CET Central European Time. Codan Codan A/S and its Swedish subsidiary Trygg-Hansa Försäkrings. The Norwegian Code of Practice for Corporate Governance of 30 October Code 2014. Company Vardia Insurance Group ASA Combined Ratio (CR ) is a key figure in the insurance sector and shows the ratio of costs (both claims incurred and operating expenses) to earned Combined Ratio premiums in the general insurance operations. The combined ratio is equal to the sum of the loss ratio and the cost ratio. Expresses the ratio of the total insurance-related operating expenses to the Cost ratio earned premiums. The sum of premiums from all insurance contracts in a given period (the consideration period). If the contract period for an insurance policy deviates from the consideration period, only the portion of the premium that coincides Earned premiums with the consideration period will be included. Earned premiums are calculated on the basis of the date when the premium is recognised as earned in the income statement, regardless of when the premium is paid. The Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November EU Prospectus Directive 2003 regarding information contained in prospectuses, as amended, and as implemented in Norway. FIAA The Norwegian Financial Institutions and Financing Activity Act of 1988. FNO The Norwegian Financial Services Association. Projections, estimates, plans and expectations regarding the Group’s future Forward-Looking Statement financial position, business strategy, plans and/or objectives. FSA The Financial Supervisory Authority of Norway. FSMA The UK Financial Services and Markets Act of 2000. Gjensidige Gjensidige Forsikring ASA. Gross Combined Ratio The aggregate of the Gross Claims Ratio and the Gross Cost Ratio. Gross Cost Ratio The gross operating expenses in % of gross premiums earned. Gross Loss Ratio The gross claims incurred in % of gross premiums earned. Gross premiums written include the amounts the Company has received or is Gross Premiums Written owed as payment for insurance contracts when the insurance period has

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started. The Company and its subsidiaries (as defined by section 1-3 of the Norwegian Group Public Companies Act). IASB International Accounting Standards Board. IBNR "Incurred, but not reported". IF If P&C Insurance Holding Ltd (a subsidiary of Sampo plc). IFRS International Financial Reporting Standards. Member States of the EEA that have implemented the Prospectus Directive (Directive 2003/71/EC), Australia, Canada, Hong Kong, Japan, the United Ineligible Jurisdictions States, or any other jurisdiction in which it would not be permissible to offer the New Shares. Any person who, in the Company’s view, are resident in a jurisdiction where an offering of New Shares or granting of Subscription Rights would be Ineligible Persons unlawful or (for jurisdictions other than Norway and Sweden) would require any prospectus, registration or similar action. Loss ratio The loss ratio expresses the ratio of claims incurred to the earned premiums. Manager Pareto Securities AS. New Shares 375,000,000 new shares to be issued by the Company in the Offering. NOK Norwegian Kroner, the lawful currency in Norway. Norwegian Pool The Norwegian Natural Perils Pool. Norwegian Public Limited The Norwegian Public Limited Companies Act of 13 June 1997 no. 45 Companies Act (Nw.:"allmennaksjeloven"). The Norwegian Securities Trading Act of 29 June 2007 no. 75 (Nw.: Norwegian Securities Trading Act verdipapirhandelloven). Offering The Rights Issue and the Private Placement, collectively. Article 19(5) of the Financial Services and Markets Act 2000 (Financial Order Promotion) Order 2005, as amended. A Member State of the EEA other than Norway and Sweden which has Relevant Member state implemented the Prospectus Directive. ORSA "Own Risk and Solvency Assessment". Payment Date 3 June 2015. PP Underwriters The underwriters of the Private Placement listed in Section 5.19.2. Private Placement The fully underwritten private placement of 100,000,000 New Shares. Prospectus This Prospectus dated 7 May 2015. Qualified Institutional Buyer, as defined in Rule 144A under the U.S. QIB Securities Act. Qualified Investors As defined in Article 2(1)(e) of the Prospectus Directive. RBNS "Recorded, but not settled". Regulation S Regulation S under the U.S. Securities Act. Record Date 11 May 2015. Reinsurance is a contract between an insurance company and a reinsurer, Reinsurance where the insurance company transfers a portion of an insurance policy to the reinsurer. Rights Issue The fully underwritten rights issue of 275,000,000 New Shares. Rule 144A Rule 144 under the U.S. Securities Act. SME Small and medium enterprises. Solvency margin capital The capital that can be counted, pursuant to the regulations, as coverage of the

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solvency margin requirement is called solvency margin capital. Insurance companies must meet a solvency margin requirement that is an expression of the risk associated with the insurance liabilities. The Solvency margin requirements requirement that must be met is calculated on the basis of the company’s insurance liabilities. The subscription and application form for the Offering as attached to this Subscription Form Prospectus as appendix 1. The 275,000,000 subscription rights issuable to shareholders who are registered in the Company's shareholder register as at the end of 11 May 2015 Subscription Rights (the Company's shareholders as at the end of the date this Prospectus was approved, 7 May 2015, as evidenced in the VPS in accordance with normal T+2 settlement) on Oslo Børs. The subscription period for the Offering commencing on 13 May 2015 and Subscription Period expiring at 16:30 (CET) on 27 May 2015. Subscription Price NOK 1. Tryg Tryg A/S. U.S. Securities Act The United States Securities Act of 1933, as amended. Underwriters The underwriters of the Rights Issue listed in Section 5.19.1. Underwriting (in insurance) is the risk and price assessment that is made when Underwriting (in insurance) drawing up an insurance contract. Vardia Insurance Group ASA, the holding company of the group of Vardia companies. Verdipapirsentralen (Norwegian Central Securities Depository), which VPS organizes the Norwegian paperless securities registration system. VPS account An account with VPS for the registration of holdings of securities.

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18. SAMMANFATTNING

Sammanfattningen ställs upp efter informationskrav i form av ett antal “punkter” som ska innehålla viss information. Dessa punkter är numrerade i avsnitt A –E (A.1 – E.7).

Denna sammanfattning innehåller alla de punkter som ska ingå i en sammanfattning för denna typ av värdepapper och emittent. Eftersom vissa punkter inte behöver ingå, kan det finnas luckor i numreringen av punkterna.

Även om en viss punkt ska ingå i sammanfattningen för denna typ av värdepapper och Emittent, kan det förekomma att det inte finns någon relevant information att ange beträffande sådan punkt. I sådant fall innehåller sammanfattningen en kort beskrivning av aktuell punkt tillsammans med angivelsen ”ej tillämplig”.

Avsnitt A – Introduktion och varningar

A.1 Introduktion och Denna sammanfattning bör endast läsas som en introduktion till Prospektet. varningar Varje beslut av en investerare att investera i de Nya Aktierna ska baseras på en bedömning efter att ha beaktat Prospektet i sin helhet.

Om yrkande avseende information i Prospektet anförs vid domstol, kan den investerare som är kärande i enlighet med den relevanta EU-medlemsstatens nationella lagstiftning, bli tvungen att bära kostnaderna för att översätta Prospektet innan de rättsliga förfarandena inleds.

Civilrättsligt ansvar kan endast åläggas de personer som har lagt fram sammanfattningen, inklusive översättningen därav, men endast om sammanfattningen är vilseledande, felaktig eller oförenlig med Prospektet när den läses tillsammans med de andra delarna av Prospektet, eller om sammanfattningen inte, när den läses tillsammans med de andra delarna av Prospektet, ger nyckelinformation för att hjälpa investerare i övervägandet av att investera i de värdepapper som erbjuds.

A.2 Samtycke till Ej tillämpligt. finansiella mellanhänders användning av Prospektet

Avsnitt B – Emittenten och eventuell garantigivare

B.1 Firma och Bolagets firma är Vardia Insurance Group ASA och hänvisas ibland till i en kommersiell handels- kontext som ”Vardia”. beteckning

B.2 Emittentens säte Vardia är bildat i Norge som ett norskt publikt aktiebolag (No. allmennaksjeselskap) och och bolagsform är registrerat hos det norska Foretaksregisteret med registreringsnummer 994 288 962. Bolaget har sitt säte på Haakon VII:s gate 2, 0161 OSLO, Norge. Vardia bedriver sin verksamhet i enlighet med norsk rätt, bland annat den norska lagstiftningen som gäller för publika aktiebolag.

B.3 Beskrivningen av Vardias huvudfokus är på marknaden för sakförsäkring och olycksfallsförsäkring för emittentens privatpersoner och små och medelstora företag (SME) i Norge, Sverige och Danmark. verksamhet Vardia distribuerar sina produkter huvudsakligen genom proaktiva callcenter, utöver detta till försäkringsagenter, försäkringsförmedlare och prissammanställare, både som del av när försäkringarna erbjuds under andra varumärken genom samarbetsavtal och under varumärket Vardia.

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B.4a Trender Förutom förändringar i EES-lagstiftning som är tillämpliga på försäkringsföretag, som avseende beskrivs mer ingående i Prospektet, finns det inga kända trender, osäkerheter, krav, emittenten och förpliktelser eller händelser där det är sannolikt att de kommer att ha en väsentlig påverkan de branscher i på Vardia eller försäkringsbranschen. vilka emittenten är verksam B.5 Beskrivning av Vardia är moderbolag i Koncernen, som består av följande helägda dotterbolag: Koncernen och - Vardia Forsikring AS (Norge) Bolagets plats i - Vardia Försäkring AB (Sverige) koncernen - Vardia Forsikringsagentur A/S (Danmark) - Vardia Eksterne Kanaler AS (Norge) - Vardia Agencies AS (Norge) - Rein Forsikring AS (Norge)

B.6 Större Såvitt Bolaget känner till är Aakvik Holding AS (1 608 067 aktier, 5,19 % av aktieägare, aktiekapitalet) den enda aktieägare som direkt eller indirekt har ett anmälningspliktigt kontroll över innehav av aktier. Bolaget och anmälnings- Varje aktie ger en röst på Bolagets bolagsstämma, oberoende av det totala antal aktier som piktiga personer, den aktieägaren innehar. större aktieägare samt kontroll Såvitt Bolaget känner till, så är Bolaget inte direkt eller indirekt ägt eller kontrollerat av någon person eller grupp.

B.7 Utvald historisk Förutom tabellen under rubriken “Sammanställning av bruttoomsättning”, som inte är finansiell härledd från Bolagets konsoliderade årsredovisning, visar nedanstående tabell en information sammanfattad version av Vardias (i) konsoliderade resultaträkningar, (ii) konsoliderade balansräkningar, och (iii) konsoliderade kassaflödesanalyser för de tre senaste räkenskapsåren. Vänligen notera att uppgifterna huvudsakligen hämtats från Bolagets konsoliderade årsrapport från 2014 eftersom Bolaget har ändrat vissa av sina redovisningsprinciper.

Sammanställning av bruttoomsättning

NOK miljoner (oreviderat ) 2012 2013 2014 Omsättning ...... 345,1 717,8 1 322,6 Agentaffär och premier för sålda försäkringar för kommande år (171,9) (146, 1) (156) Bruttopremieinkomst ...... 173,2 571,7 1 166,6

Konsoliderad resultaträkning

(NOK miljoner )

2012 (IFRS 2013 (IFRS 2013 (IFRS, 2014 (IFRS reviderade) reviderade) omräknade) reviderade) Bruttopremieinkomst ...... 173,2 571,2 571,7 1 166,6 Premier för avgiven återförsäkring ...... (129,3) (426,9) (426,9) (869,5) Premier tecknade för egen räkning ...... 43,9 144,9 144,9 297,1 Premieintäkter för egen räkning ...... 14,9 98, 1 98, 1 224,3 Vinst/(förlust) från teknisk redovisning före ändringar i säkerhetsreserv...... (46,4) (57, 9) (149, 9) (183,0) Vinst/(förlust) från teknisk redovisning ...... (49,5) (68,8) (160,7) (198,2) Vinst/(förlust) före skatt ...... (49,7) (70,0) (162,0) (187,1)

Vinst/(förlust) för perioden ...... (36,2) (50,0) (163,0) (188,8)

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Brutto totalkostnadsprocent (%) ...... 204,4 118,4 141,8 129,8

Totalkostnadsprocent för egen räkning (%) ...... 549,9 162,7 256,5 191,2

Konsoliderad balansräkning

2012 (IFRS 2013 (IFRS 2013 (IFRS, 2014 (IFRS (NOK miljoner ) reviderade) reviderade) omräknade) reviderade) Totala tillgångar ...... 390,7 1 017,4 852,3 1 632,7 Totalt eget kapital ...... 99,5 249,1 41,9 26,7 Totala skulder ...... 291,1 768,3 810,4 1 606,0

Totalt eget kapital och skulder ...... 390,7 1 017,4 852,3 1 632,7

Konsoliderat kassaflöde

(NOK miljoner ) 2012 (IFRS) 2013 (IFRS) 2014 (IFRS) Nettokassaflöde från löpande verksamhet ...... (54,0) (35,6) (65,6) Nettokassaflöde från investeringsverksamhet ...... (13,8) (20,8) (42,3) Nettokassaflöde från finansieringsverksamhet ...... 80,1 143,7 160,9

Nettokassaflöde för perioden ...... 12,2 87,3 53,0 Likvida medel vid slutet av perioden ...... 43,8 131,1 185,0

B.8 Pro forma- Ej tillämpligt. redovisning

B.9 Resultatprognos Bolaget beräknar att Koncernens resultat för det första kvartalet 2015 kommer innebära en sammanlagd förlust om cirka 50-60 miljoner NOK.

B.10 Anmärkningar i Ej tillämpligt. revisions- berättelsen B.11 Rörelsekapital Per dagen för detta Prospekt har Koncernen inte tillräckligt rörelsekapital för dess nuvarande behov under de kommande tolv månaderna. För beskrivningen av rörelsekapitalet använder Bolaget termen ”rörelsekapital” för att innefatta inte bara kapital som behövs för att Bolaget ska kunna betala för sina förpliktelser i takt med att dessa förfaller, utan även kapital som behövs för att bedriva verksamheten i enlighet med tillämpliga krav på solvensmarginal och kapitaltäckning. Koncernen förväntar att kunna betala för sina förpliktelser i takt med att dessa förfaller; dock kan det inte garanteras att Bolaget fullt ut kommer att kunna uppfylla tillämpliga krav på kapitaltäckning och solvensmarginal under de kommande tolv månaderna, om Bolaget fortsätter att växa i sin nuvarande takt.

Baserat på Bolagets nuvarande beräkningar (vilka inkluderar nettointäkter från det garanterade Erbjudandet), kommer Bolaget – om inga åtgärder framgångsrikt genomförs – inte att uppfylla kraven på solvensmarginal (eller tillämpliga kapitalkrav under Solvens II- direktivet) under det tredje kvartalet 2015.

Bolagets underskott av rörelsekapital som syftar till att möjliggöra för Bolaget att uppfylla dess krav på solvensmarginal under de kommande tolv månaderna beräknas uppgå till 50 miljoner NOK, men kommer att minskas i den utsträckning motåtgärderna nedan minskar Bolagets kostnader eller Bolagets krav på solvensmarginal. Bolagets underskott kan också komma att påverkas av införandet av Solvens II-direktivet, som kommer att implementeras den 1 januari 2016, bland annat med avseende på hanteringen av efterställda skulder som

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innehas av Bolaget.

I syfte att säkerställa att Bolaget fortsatt uppfyller kraven på solvensmarginal avser Bolaget att ta upp ett efterställt Tier-2-lån på omkring 75 miljoner NOK. Vidare har Bolaget tagit initiativ till en rad åtgärder i syfte att minska sina kostnader och förbättra sina resultat framgent. Bolaget räknar med att upptagandet av ett efterställt Tier-2-lån och de ovannämnda kostnadsminskningarna är tillräckliga för att säkerställa att Bolaget kommer att uppfylla kraven på solvensmarginal under åtminstone de tolv följande månaderna per dagen för detta Prospekt.

Skulle ovan nämnda åtgärder visa sig vara otillräckliga för att uppfylla Koncernens rörelsekapitalbehov kommer Bolaget att utvärdera andra åtgärder såsom minskning av tillväxten, ökad återförsäkring, ytterligare nyemissioner, försäljning av tillgångar, omorganiseringar och/eller försäljning av delar av dess portfölj.

Mot bakgrund av ovan och den information som finns tillgänglig per dagen för detta Prospekt är Bolaget säkra på att åtgärderna ovan kommer att vara framgångsrika i att tillhandahålla tillräckligt rörelsekapital för dess nuvarande behov under de kommande tolv månaderna.

Bolaget kommer att behöva stödja sig på de ovan nämnda åtgärderna för att fortsatt uppfylla kraven på solvensmarginal. Om ingen av finansieringsåtgärderna ovan genomförs eller är framgångsrika, förväntar Bolaget att det kommer att bryta mot de ovan nämnda kraven vid utgången av det första kvartalet 2016. Om så sker kan det för Bolaget innebära att Finanstillsynet meddelar Bolaget försäljningsförbud, att Bolaget förlorar sitt tillstånd att bedriva försäkringsverksamhet eller att Finanstillsynet kräver att Bolagets försäkringsportfölj helt eller delvis ska säljas.

Avsnitt C – Värdepapperen

C.1 Slag av Bolaget har en typ av utestående aktier. De Nya Aktierna som ges ut i samband med värdepapper Erbjudandet kommer i alla avseenden att motsvara de existerande Aktierna i Bolaget, från och med tidpunkten då de Nya Aktierna har emitterats och registrerats hos det norska Foretaksregisteret och hos Verdipapirsentralen (”VPS”). Bolagets Aktier är registrerade hos VPS under ISIN NO 0010593544. C.2 Valuta Erbjudandepriset i Erbjudandet är denominerat i norska kronor.

C.3 Totalt antal Per dagen för Prospektet är det totala aktiekapitalet 2 579 359,04 NOK fördelat på aktier i Bolaget 32 241 988 Aktier, med ett kvotvärde om 0,08 NOK per aktie. Samtliga emitterade Aktier är fullt betalda.

C.4 Rättigheter som Alla aktier ger lika rätt till innehavaren. De Nya Aktierna som ska emitteras i samband sammanhänger med Erbjudandet kommer att ge lika rätt till innehavaren som de övriga aktierna i Vardia med från och med dagen för registreringen av aktiekapitalökningen hos det norska värdepapperen Foretaksregisteret .

C.5 Inskränkningar i Aktierna i Vardia är inte föremål för några överlåtelsebegränsningar, med undantag för den fria lagstadgade ägarrestriktioner och krav på godkännande vid vissa tröskelnivåer för ägande, överlåtbarheten vilka är tillämpliga på alla försäkringsbolag, samt eventuella ingångna lock up-avtal.

C.6 Upptagande till Bolagets aktier är noterade på Oslo Börs. handel Bolaget förväntar att handel med de Nya Aktierna på Oslo Börs inleds på dagen eller omkring den 10 juni 2015. Bolaget har inte ansökt om upptagande till handel av Aktierna på någon annan börs eller reglerad marknad.

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C.7 Utdelningspolicy Vardia är för närvarande i en tillväxtfas, men räknar med att kunna lämna utdelning i framtiden. Bolaget har till dagens datum inte betalat några utdelningar sedan dess bildande.

Avsnitt D – Risker

D.1 Huvudsakliga Vardia är föremål för riskfaktorer relaterade till bland annat: risker avseende - Svängningar och cykler i marknaden emittenten och - Konkurrens dess verksamhet - Legala och regulatoriska föreskrifter - Tillsynsregleringar - Risker som rör förändringar av tillämpliga redovisningsprinciper/standarder eller tolkningar därav - Lagar och föreskrifter avseende skatt och moms - Risker relaterade till nyligen genomförda förändringar av Vardias tillämpade redovisningsprinciper - Katastrofer, naturkatastrofer och terroristhandlingar - Förändringar i tillgänglighet av eller kostnader vid återförsäkring - Väsentliga fel i Koncernens försäkrings- eller verksamhetskontroll eller underlåtenhet att förebygga bedrägeri - Försäkrings- och premierisker - Tjänsteleverantörer - Verksamhetsutveckling och anställningsvillkor - Renomméförsämring - Risker rörande tillväxt och tillväxtförvaltning - Risker rörande Aktiverade anskaffningskostnader och förlustprövning - Tvister - Framtida utdelningar - Räntenivåer D.3 Huvudsakliga Riskfaktorer relaterade till Aktierna innefattar bland annat: risker avseende - Volatilitet i aktiekursen värdepapperen - Existerande aktieägare som inte deltar i Erbjudandet kan drabbas av en betydande utspädning av sina innehav - Det finns en risk att en aktiv handel med Teckningsrätterna på Oslo Börs inte uppstår och/eller att marknadsvärdet på Teckningsrätterna kan fluktuera - Om Erbjudandet dras tillbaka förlorar Teckningsrätterna sitt värde - Framtida emissioner av aktier eller värdepapper - Begränsad likviditet - Förvaltarkonton och rösträttigheter - Svårigheter för utländska investerare att verkställa domar från andra länder än Norge - Begränsningar i aktieägares möjligheter att föra talan mot Bolaget - Valutakurser - Utspädning - Överlåtelsebegränsningar

Avsnitt E – Erbjudandet

E.1 Emissionsintäkter Bolagets bruttointäkter från Erbjudandet kommer uppgå till 375 miljoner NOK. och emissionskostnader De sammanlagda kostnaderna och utgifterna hänförliga till Erbjudandet och noteringen av Teckningsrätterna och de Nya Aktierna beräknas uppgå till omkring 34 miljoner NOK. Samtliga kostnader och utgifter kommer betalas av Bolaget.

Följaktligen kommer den förväntade nettointäkten till Bolaget från Erbjudandet att uppgå till 341 miljoner NOK.

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E.2a Motiv och I samband med, och strax innan färdigställandet av, Bolagets revision av användning av årsredovisningen för 2014 var Vardia tvungna att göra förändringar i sina räkenskaper, emissionslikvid vilket kom att innebära en väsentlig försvagning av Bolagets finansiella ställning och solvensmarginal på koncernnivå.

För det första slogs i revisionen av räkenskaperna fast att moderbolaget Vardia Insurance Group ASA var tvunget att skriva ned sina aktiverade kostnader till följd av att bokförda försäljningskostnader undervärderats. Den sammalagda försvagningen för 2012, 2013 och 2014 var 144 miljoner NOK, varav 49 miljoner NOK avser tidigare år.

För det andra, enligt revisorn, var redovisningen av direkta rörliga försäljningskostnader i Koncernredovisningen avseende tidigare år inte förenlig med tillämpliga redovisningsstandarder. Den sammanlagda försvagningen av räkenskaperna på grund av detta uppgår till 135,6 miljoner NOK i Koncernens konsoliderade balansräkning, varav 109 miljoner NOK avser tidigare år.

Vidare ställer IAS 12 punkt 35 stränga krav på redovisning av uppskjutna skattefordringar för skatteförluster. Per 31 december 2014 bedömdes att dessa krav inte var uppfyllda. Skattevinsten om 49 miljoner NOK i balansräkningen den 31 december 2013 tas därför inte upp i den omräknade balansräkningen och har följaktligen reducerats till 0 NOK.

Omständigheterna ovan, kom som en överraskning för både styrelsen och ledningen. Bolaget har granskats av samma revisor sedan verksamheten påbörjades 2009, och har mottagit rena revisionsberättelser utan anmärkningar för alla tidigare räkenskapsår, inklusive 2013, och koncernens konsoliderade räkenskaper var även föremål för en genomgripande granskning av andra externa rådgivare i samband med börsintroduktionen 2014, utan att några frågor ställdes angående räkenskaperna i fråga.

Slutsatsen att genomföra dessa ändringar i räkenskaperna gjorde styrelsen uppmärksam på att Koncernen inte längre skulle nå upp till minimikraven på kapitaltäckning och solvensmarginal på koncernnivå.

På Koncernnivå bryter Bolaget per den 31 december 2014 mot kraven på kapitaltäckning och solvensmarginal; dock har Koncernen beviljats dispens från dessa krav av norska Finanstillsynet fram till 31 maj 2015. Per den 31 mars 2015 bryter Vardia Insurance Group ASA mot solvensmarginalen på bolagsnivå, och Bolaget har beviljats dispens från detta krav från Finanstillsynet till den 31 maj 2015. Dispenserna är villkorande bland annat av att Koncernens finansiella situation inte väsentligt försämras under den relevanta perioden.

På grundval av detta beslöts och implementerades omedelbart en plan för att återställa minimikapitalkravet med en buffert. Bolaget har haft en nära och konstruktiv dialog med det Finanstillsynet och Oslo Börs angående situationen. Som en följd av ändringen i räkenskaperna behöver Bolaget förstärka sitt egna kapital med 275 miljoner NOK i nytt kapital.

Skälen till den Riktade Emissionen, och följaktligen ökningen av den sammanlagda bruttointäkten från Erbjudandet med 100 miljoner NOK, är följande:

• De reviderade sifforna avvek från det preliminära resultatet för 2014 med omkring 12 miljoner NOK. Avvikelserna berodde på en strängare tolkning och en rättning av Bolagets utestående fordringar.

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• Den strängare tolkningen av redovisningsprinciperna, som även kommer att ge en negativ effekt på resultatet för 2015 på grund av att en större del av försäljningskostnaderna måste redovisas direkt istället för att kunna avräknas.

• I syfte att kunna kontrollera avbeställningar av försäkringar har Bolaget ändrat sina grunder för fakturering av säljarprovision inom Koncernen. Provision kommer att beräknas på grundval av tecknade premier istället för sålda premier. Detta kommer att innebära högre kostnader under 2015, medan fördelen med förändringen är att avbeställningar kommer att rättas omedelbart.

• Vardias affärsmodell fortsätter att skapa tillväxt och det är Bolagets styrelses bedömning att värde kommer att skapas och att Bolaget kommer att vara lönsamt så länge som Vardia fortsätter att bygga sin portfölj. Styrelsen vill säkerställa att Bolaget har en tillräcklig kapitalbuffert för att stödja tillväxten framgent.

Nettointäkterna från Erbjudandet om 341 NOK kommer att användas för att förstärka Bolagets egna kapital i syfte att uppfylla de krav på kapitaltäckning och solvensmarginal som är tillämpliga på Bolaget under de kommande tolv månaderna.

E.3 Villkor Erbjudandet utgörs av ett erbjudande om 375 000 000 Nya Aktier, med ett kvotvärde om 0,08 NOK till en teckningskurs om 1 NOK per Ny Aktie. Aktieägare som är registrerade i Bolagets aktiebok vid slutet av avstämningsdagen kommer att tilldelas omsättningsbara Teckningsrätter för de Nya Aktierna som erbjuds i Företrädesemissionen. Inga separata teckningsrätter kommer att ges ut avseende de Nya Aktier som erbjuds i den Riktade Emissionen.

För att säkerställa Bolaget en tillräcklig anslutningsgrad vid teckningen i Företrädesemissionen och en tillräcklig anslutning i den Riktade Emissionen har Bolaget tillsammans med Managern etablerat två garantikonsortier bestående av existerande aktieägare och vissa externa investerare.

Teckningsperioden för Erbjudandet inleds den 13 maj 2015 och upphör 16:30 (CET) den 27 maj 2015 och får inte avslutas tidigare än detta datum, eller förlängas.

Teckningsrätterna emitteras och registreras hos VPS under ISIN NO 001 0734031, och kommer att tas upp till handel på Oslo Börs under tickersymbolen “VARDIA T” från den 13 maj 2015 till 16:30 (CET) den 22 maj 2015. Teckningsrätterna levereras vederlagsfritt och mottagaren debiteras ingen kostnad.

Tilldelningen av Nya Aktier i Företrädesemissionen beslutas av Bolagets styrelse med tillämpning av följande kriterier:

f) Tilldelning ska ske till tecknare på grundval av tilldelade och förvärvade Teckningsrätter som giltigt har utnyttjats under Teckningsperioden.

g) Om inte samtliga Teckningsrätter utnyttjas, ska tecknare som utnyttjat sina Teckningsrätter och övertecknat sin andel tilldelas ytterligare aktier i proportion till antalet Teckningsrätter som utnyttjas av respektive sådan tecknare. I den utsträckning en proportionerlig allokering inte är möjlig, ska Bolaget avgöra tilldelningen genom lottning.

h) Aktier som inte tilldelats enligt punkterna (a) och (b) kommer att tilldelas tecknare som inte innehar Teckningsrätter och som ingår i garantikonsortiet för Företrädesemissionen. Tilldelning sker pro rata baserat på antalet tecknade aktier.

i) Aktier som inte tilldelats enligt punkterna (a), (b) och (c) kommer att tilldelas

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tecknare som inte innehar Teckningsrätter och som inte ingår i garantikonsortiet för Företrädesemissionen. Tilldelning ske pro rata baserat på antalet tecknade aktier.

j) Aktier som inte tilldelats enligt punkterna (a), (b), (c) och (d) ovan, kommer att tecknas av, och tilldelas, garanterna som framgår av avsnitt 5.19 i enlighet med garantiåtagandet för respektive garant.

Tilldelningen av Nya Aktier i den Riktade Emissionen beslutas av Bolagets styrelse med tillämpning av följande kriterier:

a) Tilldelning sker i första hand till tecknare som (i) har utnyttjat teckningsrätter i Företrädesemissionen, (ii) övertecknat Företrädesemissionen, och (iii) blivit tilldelade mindre aktier i Företrädesemissionen än vad de sammanlagt tecknat sig för. Tilldelning sker proportionerligt baserat på antalet teckningsrätter som utnyttjats av varje sådan tecknare i Företrädesemissionen. I den utsträckning proportionerlig tilldelning inte är möjlig att genomföra ska Bolaget besluta om tilldelning genom lottdragning.

b) Aktier som inte tilldelats i enlighet med punkten (a) kommer att tilldelas tecknare som inte innehar teckningsrätter i Företrädesemissionen och som ingår i garantikonsortiet för den Riktade Emissionen. Tilldelning sker pro rata baserat på antal aktier som tecknats.

c) Aktier som inte tilldelats i enlighet med punkterna (a) och (b) kommer att tilldelas tecknare som inte innehar teckningsrätter i Företrädesemissionen och som inte ingår i garantikonsortiet för den Riktade Emissionen. Tilldelning sker pro rata baserat på antal aktier som tecknats.

d) Aktier som inte tilldelats enligt punkterna (a), (b) eller (c) ovan kommer tecknas av och tilldelas de garanter som framgår av avsnitt 5.19 i enlighet med garantiåtagandena för respektive garant.

Teckning av Nya Aktier i Erbjudandet kommer i första hand att tilldelas i Företrädesemissionen, därefter i den Riktade Emissionen. Ingen distinktion kommer att göras mellan tilldelade och förvärvade/köpta Teckningsrätter.

Tilldelningen av Nya Aktier kommer att ske efter utgången av Teckningsperioden omkring den 28 maj 2015 och meddelanden om tilldelning kommer att sändas via post omkring 28 maj 2015.

Betalning för tilldelade Nya Aktier ska ske senast den 3 juni 2015.

Erbjudandet är fullt garanterat. I enlighet med garantiavtalen ska garanterna erhålla en garantiersättning motsvarande 3 % av det sammanlagda belopp som garanterats av garanterna. Vissa huvudgaranter i den Riktade Emissionen kan utöver detta komma att erhålla en garantiersättning om ytterligare 3 % för sina åtaganden.

E.4 Intressen och Managern eller dess närstående har från tid till annan tillhandahållit, och kan komma att intressekonflikter i framtiden tillhandahålla, investerings- och kommersiella banktjänster till Bolaget och dess närstående i den löpande verksamheten, för vilka de kan ha erhållit och kan komma att fortsätta att erhålla sedvanlig provision och avgifter. Managern, dess anställda och dess närstående kan för närvarande inneha Aktier i Bolaget. Vidare, i samband med Erbjudandet, kan Managern, dess anställda och dess närstående i egenskap av investerare erhålla Teckningsrätter (om de är Aktieägare) och kan komma att använda sin rätt att utnyttja sådana Teckningsrätter för att förvärva Nya Aktier, och, i denna egenskap, behålla, köpa eller sälja Nya Aktier och andra värdepapper utgivna av Bolaget eller andra investeringar som innehas för egen räkning och får erbjuda eller sälja sådana värdepapper (eller andra investeringar) på annat sätt än i anslutning till Erbjudandet. Managern avser inte att avslöja omfattningen av sådana investeringar eller

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transaktioner utöver när sådan skyldighet följer av lag eller föreskrifter. Managern kommer att erhålla provision med anledning av Erbjudandet och har därmed ett intresse i Erbjudandet.

Vidare baseras Garanternas, inklusive garanterna i den Riktade Emissionen, skyldighet att teckna Nya Aktier på efterfrågan på Nya Aktier i Erbjudandet. Följaktligen kan Garanterna därav ha ett intresse i Erbjudandet.

Förutom vad som framgått av ovan känner Bolaget inte till att någon fysisk eller juridisk person har ett intresse i Erbjudandet som är av materiellt hänseende i Erbjudandets kontext.

E.5 Säljande I samband med deras garantiåtaganden har Garanterna och Garanterna i den Riktade aktieägare/Lock Emissionen ingått lock-up-åtaganden fram till det tidigare av (i) utgången av up-avtal Teckningsperioden i Erbjudandet och (ii) den 31 maj 2015.

E.6 Utspädningseffekt Den omedelbara utspädningen till följd av Erbjudandet för Bolagets aktieägare förväntas uppgå till omkring 92.1% under antagande att det emitteras 375,000,000 Nya Aktier.

E.7 Kostnader som Ej tillämplig. Kostnaderna för Erbjudandet kommer att betalas av Bolaget. åläggs investerare

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VARDIA INSURANCE GROUP ASA SUBSCRIPTION AND APPLICATION FORM RIGHTS ISSUE AND PRIVATE PLACEMENT Securities no. ISIN NO 0010593544

General information: The terms and conditions of the Offering of 375,000,000 New Shares by Vardia Insurance Group ASA (the "Company") are set out in the prospectus dated 7 May 2015 (the "Prospectus"). Terms defined in the Prospectus shall have the same meaning in this Subscription Form (which comprises a subscription in the Rights Issue and – to the extent the subscriber has subscribed for a number of New Shares exceeding the number of Subscription Rights held by such subscriber – may also comprise an application in the Private Placement, as further described and explained in the Prospectus. Consequently, when the terms "subscriber" or "subscription" is used in this Subscription Form, these terms also comprise "applicants" or "application", respectively, unless otherwise stated or required by context). The notice of, and minutes from, the AGM (with appendices), notice to the extraordinary general meeting in the Company to be held 28 May 2015, the Company’s articles of associations and annual accounts and directors' reports for the last two years are available at the Company’s office address at Haakon VIIs gate 2, 0161 Oslo, Norway and at www.vardia.com. All announcements referred to in this Subscription Form will be made through Oslo Børs’ information system under the Company’s ticker "VARDIA". Subscription procedures: The subscription period is from 13 May 2015 to 16:30 hours (CET) on 27 May 2015 (the "Subscription Period"). Correctly completed Subscription Forms must be received by the Manager before the end of the Subscription Period at the following address: Pareto Securities AS, Dronning Mauds gt 3, P.O. Box 1411 Vika, N-0115 Oslo, Norway, Telefax: +47 22 87 87 15 (the "Subscription Office"). The subscriber is responsible for the correctness of the information filled in on the Subscription Form. Subscription Forms that are incomplete or incorrectly completed, or that are received after the end of the Subscription Period, and any subscription that may be unlawful, may be disregarded, at the discretion of the Manager on behalf of the Company. Subscribers who are residents of Norway with a Norwegian personal identification number may also subscribe for New Shares through the VPS online subscription system by following the link on: www.paretosec.com. Subscriptions made through the VPS online subscription system must be duly registered before the expiry of the Subscription Period. Neither the Company nor the Manager may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Subscription Office. Subscriptions are irrevocable and binding upon receipt and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Subscription Office, or in the case of subscriptions through the VPS online subscription system, upon registration of the subscription. Subscription Price: The Subscription Price in the Offering is NOK 1 per New Share. Subscription Rights: Registered holders of the Company’s shares (the "Existing Shareholders") as appearing in the VPS as at the end of 11 May 2015 (the "Record Date") will be granted Subscription Rights giving a preferential right to subscribe for, and be allocated, the New Shares to be issued in the Rights Issue. Furthermore, the allocation principles for the Private Placement will provide for a preferred allocation of the New Shares to be issued in the Private Placement to the holders of Subscription Rights as further described in the Prospectus. Consequently, each Subscription Right grants eligible holders the right to subscribe for and be allocated one New Share in the Rights Issue as well as a preferred allocation of approximately 0.3636 of a New Share in the Private Placement (please note; however, that no fractional New Shares will be issued in the Offering). Thus, existing shareholders must subscribe for all issued Subscription Rights as well as oversubscribe by approximately 36.3636% (i.e. subscribe for the amount of Subscription Rights times approximately 1,3636) in order to avoid dilution in the Offering. Each Existing Shareholder will be granted approximately 8.3 Subscription Rights per 1 existing share registered with the respective Existing Shareholder on the Record Date. The number of Subscription Rights issued to each Existing Shareholder will be rounded down to the nearest whole Subscription Right. Each Subscription Right will, subject to applicable securities laws, give the right to subscribe for and be allocated one New Share in the Rights Issue (as well as the abovementioned preferred allocation in the Private Placement). Over-subscription and subscription without Subscription Rights is permitted. Subscription Rights not used to subscribe for New Shares before the end of the Subscription Period 16:30 (CET) 27 may 2015, or that are not sold before the end of trading on oslo børs 16:30 (CET) on 22 may 2015, will lapse without compensation to the holder, and consequently be of no value Allocation of New Shares: The New Shares will be allocated to the subscribers based on the allocation criteria set out in the Prospectus. The Company reserves the right to reject or reduce any subscription for New Shares not covered by Subscription Rights. The Company will not allocate fractional New Shares. Allocation of fewer New Shares than subscribed for does not impact on the subscriber’s obligation to pay for the New Shares allocated. Notification of allocated New Shares and the corresponding subscription amount to be paid by each subscriber is expected to be distributed in a letter from the VPS on or about 28 May 2015. Subscribers who have access to investor services through an institution that operates the subscriber’s VPS account should be able to see how many New Shares they have been allocated from 12:00 hours (CET) on or about 28 May 2015. Payment: In completing this Subscription Form, or registering a subscription through the VPS online subscription system, subscribers authorise the Manager to debit the subscriber’s Norwegian bank account for the total subscription amount payable for the New Shares allocated to the subscriber. Accounts will be debited on or about 3 June 2015 (the "Payment Date"), and there must be sufficient funds in the stated bank account from and including the date falling 2 banking days prior to the Payment Date. Subscribers who do not have a Norwegian bank account must ensure that payment for the allocated New Shares is made on or before the Payment Date. Details and instructions can be obtained by contacting the Manager, telephone: + 47 22 87 87 00. The Manager is only authorized to debit each account once, but reserves the right (but has no obligation) to make up to three debit attempts through 12 June 2015 if there are insufficient funds on the account on the Payment Date. Should any subscriber have insufficient funds in his or her account, should payment be delayed for any reason, if it is not possible to debit the account or if payments for any other reasons are not made when due, overdue interest will accrue and other terms will apply as set out under the heading "Overdue and missing payments" below. Payment by direct debiting is only available for investors that are allocated New Shares for an amount below NOK 5 million and who have a Norwegian bank account. By signing this Subscription Form, subscribers who subscribe for an amount exceeding NOK 5 million give the Manager an authorisation to manually debit the specified Norwegian bank account on or after the Payment Date.

PLEASE SEE PAGE 2 OF THIS SUBSCRIPTION FORM FOR OTHER PROVISIONS THAT ALSO APPLY TO THE SUBSCRIPTION

DETAILS OF THE SUBSCRIPTION Subscriber’s VPS account: Number of Subscription Rights: Number of New Shares subscribed (For broker: consecutive no.): (incl. over-subscription):

SUBSCRIPTION RIGHT’S SECURITIES NUMBER: ISIN NO 001 0734031 Subscription Price per New Share: Subscription amount to be paid:

NOK 1 NOK

IRREVOCABLE AUTHORIZATION TO DEBIT ACCOUNT (MUST BE COMPLETED BY SUBSCRIBERS WITH A NORWEGIAN BANK ACCOUNT) Norwegian bank account to be debited for the payment for New Shares allocated (number of New Shares allocated x NOK 1). (Norwegian bank account no.)

I/we hereby irrevocably (i) subscribe for the number of New Shares specified above subject to the terms and conditions set out in this Subscription Form and in the Prospectus, (ii) authorize and instruct the Manager (or someone appointed by it) to (a) for and on my/our behalf, subscribe for the number of New Shares allocated to me/us in the Private Placement (to the extent this Subscription Form also is to be construed as an application); and (b) take all actions required to transfer the New Shares allocated to me/us to the VPS Registrar and ensure delivery of the beneficial interests to such New Shares to me/us in the VPS, on my/our behalf, (iii) authorize the Manager to debit my/our bank account as set out in this Subscription Form for the amount payable for the New Shares allotted to me/us, and (iv) confirm and warrant to have read the Prospectus and that I/we are eligible to subscribe for New Shares under the terms set forth therein.

Place and date Binding signature must be dated in the Subscription Period. The subscriber must have legal capacity. When signed on behalf of a company or pursuant to an authorization, documentation in the form of a company certificate or power of attorney must be enclosed.

INFORMATION ON THE SUBSCRIBER – ALL FIELDS MUST BE COMPLETED First name

Surname/company

Street address

Post code/district/ country Personal ID number/ organization number Nationality

E-mail address

Daytime telephone number

ADDITIONAL GUIDELINES FOR THE SUBSCRIBER

Regulatory issues: In accordance with the Markets in Financial Instruments Directive (“MiFID”) of the European Union, Norwegian law imposes requirements in relation to business investments. In this respect, the Manager must categorize all new clients in one of three categories: eligible counterparties, professional clients and non-professional clients. All subscribers in the Offering who are not existing clients of the Manager will be categorized as non-professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber may contact Pareto Securities AS, Haakon VIIs gate 8, P.O. Box 163, N-4001 Stavanger. The subscriber represents that he/she/it is capable of evaluating the merits and risks of a decision to invest in the Company by subscribing for New Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the New Shares.

Selling Restrictions: The attention of persons who wish to subscribe for New Shares is drawn to Section 15 “Selling and transfer restrictions” of the Prospectus. The Company is not taking any action to permit a public offering of the Subscription Rights or the New Shares (pursuant to the exercise of the Subscription Rights or otherwise) in any jurisdiction other than Norway and Sweden. Receipt of the Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, the Prospectus is for information only and should not be copied or redistributed. Persons outside Norway should consult their professional advisors as to whether they require any governmental or other consent or need to observe any other formalities to enable them to subscribe for New Shares. It is the responsibility of any person wishing to subscribe for New Shares under the Offering to satisfy himself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territories. The New Shares have not been, and will not be, registered, under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered or sold, directly or indirectly, within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state laws. This Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy New Shares in any jurisdiction in which such offer or solicitation is unlawful. A notification of exercise of Subscription Rights and subscription of New Shares in contravention of the above restrictions may be deemed to be invalid. By subscribing for the New Shares, persons effecting subscriptions will be deemed to have represented to the Company that they, and the persons on whose behalf they are subscribing for the New Shares, have complied with the above selling restrictions.

Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the New Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act.

Information exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the Manager and the other entities in the Manager’s group. This may entail that other employees of the Manager or the Manager’s group may have information that may be relevant to the subscriber and to the assessment of the New Shares, but which the Manager will not have access to in its capacity as Manager for the Offering.

Information barriers: The Manager is a securities firm that offer a broad range of investment services. In order to ensure that assignments undertaken in the Manager’s corporate finance department are kept confidential, the Manager’s other activities, including analysis and stock broking, are separated from the Manager’s corporate finance department by information walls. Consequently, the subscriber acknowledges that the Manager’s analysis and stock broking activity may conflict with the subscriber’s interests with regard to transactions in the Shares, including the New Shares.

VPS account and mandatory anti-money laundering procedures: The Offering is subject to the Norwegian Money Laundering Act of 6 March 2009 No. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 No. 302 (collectively, the "Anti-Money Laundering Legislation"). Subscribers who are not registered as existing customers of the Manager must verify their identity to the Manager in accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period will not be allocated New Shares. Participation in the Offering is conditional upon the subscriber holding a VPS account. The VPS account number must be stated in the subscription form. VPS accounts can be established with authorized VPS registrars, who can be Norwegian banks, authorized securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity to the VPS registrar in accordance with the Anti-Money Laundering Legislation. However, non-Norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway.

Terms and conditions for payment by direct debiting - securities trading: Payment by direct debiting is a service the banks in Norway provide in cooperation. In the relationship between the payer and the payer’s bank the following standard terms and conditions apply:

a) The service “Payment by direct debiting – securities trading” is supplemented by the account agreement between the payer and the payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions.

b) Costs related to the use of “Payment by direct debiting – securities trading” appear from the bank’s prevailing price list, account information and/or information given in another appropriate manner. The bank will charge the indicated account for costs incurred.

c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank that in turn will charge the payer’s bank account.

d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial Contracts Act the payer’s bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary.

e) The payer cannot authorize payment of a higher amount than the funds available on the payer’s account at the time of payment. The payer’s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall immediately be covered by the payer.

f) The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the beneficiary’s account between one and three working days after the indicated date of payment/delivery.

g) If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed by the account agreement and the Norwegian Financial Contracts Act.

Overdue and missing payments: Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 No. 100; 9.25% per annum as of the date of the Prospectus. If the subscriber fails to comply with the terms of payment or should payments not be made when due, the subscriber will remain liable for payment of the New Shares allocated to it and the New Shares allocated to such subscriber will not be delivered to the subscriber. In such case the Company and the Manager reserve the right to, at any time and at the risk and cost of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated New Shares, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated New Shares in accordance with applicable law. If New Shares are sold on behalf of the subscriber, such sale will be for the subscriber’s account and risk and the subscriber will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Manager as a result of, or in connection with, such sales. The Company and/or the Manager may enforce payment for any amounts outstanding in accordance with applicable law.

Registered office and advisors

Vardia Insurance Group ASA

Haakon VII's gate 2

N-0161 OSLO

Norway

Phone: +47 21 04 90 90

www.vardia.com

Manager

Pareto Securities

Dronning Mauds gt 3

P.O. Box 1411 Vika

N-0115 Oslo

Norway

Telephone: +47 22 87 87 00

Telefax: +47 22 87 87 15

www.paretosec.com

Legal Adviser

Advokatfirmaet Selmer DA

Tjuvholmen allé 1

N-0252 Oslo

Norway

www.selmer.no

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