Gjensidige insurance group interim report fourth quarter 2007

2  fourth quarter 2007

Gjensidige Forsikring consolidated

SOLID PREMIUM GROWTH IN the general insurance operations

Gjensidige reports its consolidated accounts in accordance with the International Financial Reporting Standards (IFRS) from 2007. The following profit and loss and balance sheet figures, key figures and comparison figures are based on IFRS. Reference is made to a separate Transition Document for a more detailed description of the effects of the transition to IFRS (published together with the first quarter report 2007 and available at www. gjensidige.no). The interim report has been subjected to limited auditing in accordance with SBR 2400 Limited Auditing of Companies.

group highlights • Premium income, net of reinsurance, increased by 16 per cent during the quarter compared with the corresponding quarter in 2006. The increase for the full year was 13 per cent. The growth is attributed to the acquisition of businesses in 2006 and 2007. • Underwriting result for general insurance increased by 17.5 per cent, from NOK 187.4 million in the fourth quarter 2006 to NOK 220.2 million in the fourth quarter 2007. The underwriting result for the full year was NOK 552.6 million (NOK 668.9 million). • Combined ratio, net of reinsurance, for the general insurance operations was 94.1 during the quarter (93.7 in 2006). The combined ratio, net of reinsurance, for the full year was 96.1 (94.8 in 2006). • The efficiency improvement programme is progressing according to plan. The cost ratio for the quarter was 18.1 (23.4 in 2006) and 17.5 for the full year (18.9 in 2006). • Satisfactory financial return of NOK 513.3 million for the quarter in spite of turbulent markets. The financial result for the corresponding quarter in 2006 (NOK 1,877.8 million) includes a gain of NOK 1,285 million related to the sale of shareholdings in DnB NOR. • Profit before tax during the quarter was NOK 645.0 million (NOK 1,998.5 million in 2006). Preliminary figures for 2007 show a profit before tax of NOK 3,020.3 million (NOK 4,230.5 million in 2006). • Solid income and margin improvement for health services in Hjelp24. This is due to an increase in the number of invoiced hours and integration of the acquired operations. Hjelp24 acquired Norsk Idrettsmedisinsk Institutt (NIMI) in November 2007 and strengthened thus its position as the most complete private health service provider in Norway. • Good growth in the number of customers in the new focus areas. At the end of 2007 Gjensidige Pensjon og Sparing and Gjensidige Bank both had over 22,000 customers. The bank’s gross lending totalled NOK 3.4 billion.

GROUP’s profit performance Profit before tax The group reported a profit before tax of NOK 645.0 million in the fourth quarter, compared with NOK 1,998.5 million for the corresponding period in 2006. The fourth quarter results for 2006 include a non-recurring gain of NOK 1,285 million related to the sale of shareholdings in DnB NOR. The profitability of the general insurance operations measured by the underwriting and technical insurance result improved in relation to 2006. In addition to the lower financial return, the pension and savings operations and establishment of the bank had a negative impact on the results for 2007 due to the recent start-up of the operations. Profit before tax was NOK 3,020.3 million for the full year for 2007, a decline of NOK 1,210.8 million in relation to 2006. Adjusted for the non-recurring gain related to the sale of DnB NOR shares the profit improved by NOK 74.2 million. After the year started with a greater number of large and medium-large claims than normal, the insurance-related profitability in the fourth quarter has been satisfactory, with an underwriting result for general insurance for the quarter of NOK 220.2 million, compared with NOK 187.4 million in 2006. In 2006 NOK 213.6 million was charged to the fourth quarter results among others in connection with the efficiency improvement programme for the Norwegian general insurance operations and bonus payments to the employees, while NOK 132 million was taken to income in connection with a plan change in the defined benefit pension scheme. Combined ratio, net of reinsurance, for the general insurance operations was 94.1 in the fourth quarter, compared with 93.7 in the fourth quarter 2006. The year-to-date combined ratio, net of reinsurance, was 96.1, compared with 94.8 in 2006. Profitability improved in the Commercial Norway segment as a result of changes in the portfolio composition. In the Private Norway segment average claims increased for some insurance products, and this contributed to reducing profitability. In addition, the general insurance operations in the Other Nordic segment showed weaker profitability than the operations in Norway and the Baltics. The necessary premium measures have been implemented to improve profitability. Processes have also been carried out in the fourth quarter to reduce the costs in the Danish operations in 2008 and beyond. The ongoing efficiency improvment work in the Norwegian general insurance businesses is progressing according to plan. The goal is to reduce the nominal operating expenses in relation to the cost base at the start of 2006 (NGAAP) by NOK 350 million, with full effect in the accounts as of 2008. Efficiency gains will be achieved through changes in the distribution organisation, staff and product areas and ICT, as well as changes in the pension and insurance schemes. Compared with the end of 2006, the number

Gjensidige Forsikring consolidated

fourth quarter 2007  3

Asset allocation 15,5 % Real estate 7,3 %

14,7 % Equities

Hedge fund and other financial investments Money market 25,5 %

Bonds 37,0 %

result performance Group NOK million General insurance Private Norway General insur. Commercial Norway General insurance other Nordic General insurance Baltics Technical result general insurance before amortisat. of excess value 1 Amortisation of excess value for general insurance companies Technical result general insurance after amortisation of excess value Banking Pension and Savings Return on invest. beyond allocation Other operations 2 Group’s profit before tax for the period Underwriting res. general insur. 3

4th q. 2007

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006

238.4 335.6 11.4 5.9

418.2 63.5 (12.5) (0.3)

1,115.3 863.7 22.1 26.6

1,366.3 353.2 (42.3) (0.3)

591.2

468.9

2,027.6

1,676.9

(27.6)

(9.9)

(103.3)

(20.8)

563.6

459.0

1,924.3

1,656.1

(33.8) N/A (26.3) (42.0) 135.2 1,592.7 6.3 (11.3)

(115.8) (123.0) 1,328.9 5.9

N/A (116.9) 2,695.6 (4.3)

645.0 1,998.5

3,020.3

4,230.5

552.6

668.9

220.2

187.4

Definitions: 1 The technical insurance result for general insurance consist of premium income and allocated return on investment less claims incurred and allocated insurance-related operating expenses. The allocated return on investment for the underwriting reserves is based on the government-dictated interest rate for the period. 2 Other operations consist primarily of health venture operations and non-insurancerelated income and expenses in other group companies. 3 Underwriting result = premium income, net of reinsurance – claims, net of reinsurance – premium discounts and other profit agreements – insurance-related operating expenses

Management of financial assets and property In spite of the turbulent equity markets the financial return for the quarter was satisfactory. Net financial income as a percentage of financial assets, including real estate, but excluding Gjensidige Bank and Gjensidige Pension and Savings, was 1.3 per cent in the fourth quarter, compared with 4.5 per cent for the corresponding period in 2006. For 2007 the return was 6.3 per cent, compared with 9.2 per cent in 2006. Excluding gains from the sale of DnB NOR shares, the return for 2006 was 2.1 per cent (quarter) and 6.2 per cent (full year), respectively. At the end of the quarter, 14.7 per cent of the capital was invested in equities, and two-thirds of this represents investments outside Norway. A total of 25.5 per cent is invested in the money market, 37.0 per cent in bonds, 15.5 per cent in real estate, and 7.3 per cent in hedge funds and other financial assets. The group has no direct exposure to investments associated with the subprime home loan market in the US. There are, however, some small investments through funds of hedge funds.

Tax Gjensidige Forsikring has a tax exemption for income and assets attributable to fire and livestock insurance. The company has applied the Financial Supervisory Authority of Norway’s sector categories for combined insurance for the calculation of tax exemption. The Central Taxation Office for LargeSized Enterprises has contested the company’s division between taxable and tax exempt operations and has given notice of a change in the assessment for the years 2004 to 2006. Gjensidige contests this claim, but it has decided to make a provision of NOK 180 million, NOK 30 million of which was charged as an expense in the fourth quarter, to cover any increased tax charge as a result of the changes notified.

EQUITY AND SOLVENCY Since the end of 2006, the group’s balance sheet total has increased by NOK 11,007.6 million to NOK 58,120.3 million at the end of 2007. The equity as of 31 December 2007 was NOK 20,302.5 million, and the group had a return on equity before tax of 15.4 per cent for the year, compared with 24.2 per cent in 2006. At the end of the quarter the capital ratio was 28.9 per cent, compared with 41.6 per cent in 2006, while the solvency margin was 492.6 per cent, compared with 645.2 per cent at the same time in 2006. The change in the capital ratio and solvency margin is due, for example, to acquisitions and the purchase of shares in Storebrand.

interim report

of employees in the Norwegian general insurance operations was reduced by 209, which corresponds to 9 per cent. The group reported net financial income of NOK 513.3 million in the fourth quarter, compared with NOK 1,877.8 million for the corresponding period in 2006. Excluding gains related to the sale of DnB NOR shares of NOK 1,285 million last year’s result was NOK 592.8 million.

4  fourth quarter 2007

Gjensidige Forsikring consolidated

Product groups Private Norway 8% Other 12 % Agriculture Motor 16 %

Personal accident

44 %

Property 20 %

general insurance – private norway

Cost development

The Norwegian general insurance operations are managed through the parent company Gjensidige Forsikring. The customer-oriented operations in the Private Market are organised into five geographic regions, in addition to Internet sales. The Private Market encompasses insurance related to property, motor vehicles, insurances of the person, agriculture, and other.

The cost ratio in the fourth quarter was 17.3, which is a significant improvement in relation to the corresponding period in 2006. The cost ratio for the full year 2007 was 18.7, compared with 21.1 in 2006. The segment shows a positive cost development from operations, in addition to the fact that there were significant provisions charged in connection with the efficiency improvement programme in the fourth quarter 2006. The ongoing efficiency improvement work has yielded cost savings in both the private segment distribution and staff/support areas. The changes shall have full accounting effect from 2008, and the new service concepts are expected to strengthen the company’s sales power at the same time.

Result performance The underwriting result for the quarter was NOK 93.0 million, compared with NOK 297.6 million for the same quarter in 2006. This gives a combined ratio, net of reinsurance, for the fourth quarter of 95.1, compared with 82.7 for the fourth quarter in 2006. This decline is attributed primarily to the development in the average payout per claim. The cost development is good and the cost ratio has improved significantly in relation to the same period in 2006, with an overall reduction of 8.1 percentage points. The technical result before amortisation of excess value was NOK 238.4 million in the fourth quarter, compared with NOK 418.2 million for the same quarter in 2006.

Premiums Earned premiums, net of reinsurance, were NOK 2,011.6 million in the fourth quarter, an increase of 9.2 per cent from the corresponding period in 2006. Earned premiums, net of reinsurance, was NOK 7,729.8 million for the full year 2007, an increase of 5.4 per cent compared with 2006. This is a very satisfactory development in a market characterised by very low growth and strong competition between the players. The greatest growth in premiums was for motor vehicle insurance.

Claims Claims totalled NOK 1,565.7 million in the fourth quarter, an increase of 48.3 per cent compared with 2006. The loss ratio for the segment was 77.8 in the fourth quarter 2007, compared with 57.3 for the corresponding period in 2006. The loss ratio in the fourth quarter 2006 was much lower than can normally be expected. There has been increasing claims inflation and consequently higher average claims due, for example, to higher repair prices in 2007. Premium measures and other measures have therefore been implemented to ensure satisfactory profitability. The claim frequency is at the same level as before. The loss ratio increased from 65.5 per cent in 2006 to 74.3 per cent in 2007 for the full year.

General insurance private Norway

4th q. 2007

4th q. 1.1.-31.12 1.1.-31.12 2006 2007 2006

NOK million 1,781.0 1,682.0 7,910.6 7,619.8 Gross premiums written Earned premiums, net of reinsurance 2,011.6 1,842.4 7,729.8 7,337.5 145.4 587.1 Allocated return on investments 120.3 408.3 (1,565.7) (1,055.8) (5,746.3) (4,806.2) Claims, net of reinsurance Premium discounts and other profit agreements Insurance-related operat. expenses Technical result Underwriting result 1 Loss ratio, net of reinsurance 2 Cost ratio, net of reinsurance 3 Combined ratio, net of reinsur. 4

(5.1) (347.9) 238.4

(21.5)

(10.9)

(21.7)

(467.2) (1,444.5) (1,551.3) 418.2 1,115.3 1,366.6

93.0

297.6

528.2

958.0

77.8 % 17.3 % 95.1 %

57.3 % 25.4 % 82.7 %

74.3 % 18.7 % 93.0 %

65.5 % 21.1 % 86.6 %

Definitions: 1 Underwriting result = premium income, net of reinsurance – claims, net of reinsurance – premium discounts and other profit agreements – insurance-related operating expenses 2 Loss ratio = claims, net of reinsurance / premium income, net of reinsurance 3 Cost ratio = insurance-related operating expenses / premium income, net of reinsurance 4 Combined ratio = loss ratio + cost ratio

Gjensidige Forsikring consolidated

fourth quarter 2007  5

Product groups Commercial Norway 6% 9%

Liability

Marine/ transport Personal 39 % accident 19 %

Motor

Property 27 %

Gjensidige is a key player in the business market with high market ­shares, particularly for insurances of the person. Liability insurance, property insurance, insurances of the person (including occupational injury insurance) and motor insurance, as well as marine/transport insurance, are ­offered. The customer-oriented activities in the business market for small and medium-sized enterprises are organised in the five geographic ­regions, while large and brokered customers are served by a separate unit, Corporate Customers/Brokers.

Result performance The underwriting result for the quarter was NOK 136.9 million, compared with negative NOK 91.9 million for the fourth quarter 2006. This gives a strong improvement in the combined ratio, net of reinsurance, for the quarter, with 86.1 in 2007, compared with 106.9 in 2006. There were not any large claims of significance during the quarter. In ­addition, the change in the portfolio composition as a result of a reduction in the insurances of the person component contributed to an improvement in the results. The cost development during the quarter was satisfactory. The technical result before amortisation of excess value was NOK 335.6 million in the fourth quarter, compared with NOK 63.5 million for the same period in 2006.

Premiums Earned premiums, net of reinsurance was reduced by 25 per cent to NOK 1,002.7 million in the fourth quarter, compared with NOK 1,336.1 million for the same quarter in 2006. Earned premiums for 2007 was NOK 5,072.7 million, compared with NOK 5,527.2 million in 2006. The decline is due primarily to two factors, one of which is the change in the portfolio composition and a lower percentage of insurances of the person. The second factor is the fact that the Norwegian municipal portfolio has been reinsured with the subsidiary KommuneForsikring in Denmark, which reduces the earned premiums, net of reinsurance for the quarter by NOK 280 million. See also the discussion under the Other Nordic segment.

Claims Claims totalled NOK 699.1 million in the fourth quarter, a reduction of 41.3 per cent compared with 2006. The loss ratio was 69.7 for the fourth quarter, compared with 89.2 for the fourth quarter 2006. The absence of major losses and a mild start to the winter contribute to a very good loss ratio for the quarter in isolation. The loss ratio for the full year was 85.2, compared with 90.7 in 2006. Gjensidige has deliberately reduced its exposure to insurances of the person in the commercial segment throughout

2007, and this contributes to a positive claims development. In the first half of the year there were several large and medium-large claims that have affected the loss ratio year to date. The loss of the anchor handling vessel the Bourbon Dolphin and a major fire in the first half of the year alone had a negative impact of NOK 200 million on the results. An average claim increase is also being experienced for motor insurance, for example. ­Premium increases have therefore been implemented to ensure satisfactory profitability in the future.

Cost development The cost ratio was 16.3 for the fourth quarter, an improvement over 17.7 in the corresponding period in 2006. The cost ratio year to date was 13.4, compared with 13.5 in 2006. The ongoing efficiency improvement efforts have also contributed to cost savings. General insurance commercial Norway

4th q. 2007

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006

NOK million 927.5 Gross premiums written 850.0 5,464.7 5,705.0 Earned premiums, net of reinsurance 1,002.7 1,336.1 5,072.7 5,527.2 198.7 802.2 Allocated return on investments 155.7 587.6 (699.1) (1,191.7) (4,324.3) (5,015.0) Claims, net of reinsurance Premium discounts and other profit agreements

(2.9)

0.2

(7.1)

0.0

Insurance-related operat. expenses Technical result

(163.8) 335.6

(236.8) 63.5

(679.8) 863.7

(746.9) 352.9

Underwriting result

136.9

(91.9)

61.5

(234.4)

1

Loss ratio, net of reinsurance 2 Cost ratio, net of reinsurance 3 Combined ratio, net of reinsur. 4

69.7 % 89.2 % 16.3 % 17.7 % 86.1 % 106.9 %

85.2 % 90.7 % 13.4 % 13.5 % 98.6 % 104.2 %

Definitions: 1 Underwriting result = premium income, net of reinsurance – claims, net of reinsurance – premium discounts and other profit agreements – insurance-related operating expenses 2 Loss ratio = claims, net of reinsurance / premium income, net of reinsurance 3 Cost ratio = insurance-related operating expenses / premium income, net of reinsurance 4 Combined ratio = loss ratio + cost ratio

interim report

GENERAL INSURANCE – commercial NORWAY

6 fourth quarter 2007

Gjensidige Forsikring consolidated

Product groups other Nordic 7% 4%

Other Liability Personal accident

25 %

32 %

Property

Motor 32 %

general insurance OTHER NORDIC Gjensidige has two subsidiaries in Denmark, KommuneForsikring A/S and Fair Forsikring A/S, which are included in the Gjensidige Forsikring Group from January 2007 and April 2006, respectively. The Danish companies are organised as a separate group, the Fair Group, with common management. Both companies operate in the general insurance area. KommuneForsikring is the market leader in the Danish municipal market and also focuses on the business segment. In addition, a reinsurance relationship was established with KommuneForsikring to cover Gjensidige’s municipal portfolio in Norway from 2007. Fair offers general insurance in the private market. Gjensidige also has operations in the Swedish general insurance market through its wholly owned subsidiary Tennant Insurance Group AB. Tennant is a relatively small, but fast growing general insurance company with around 100,000 customers and 84 employees divided between offices in Stockholm and Oslo. Tennant sells insurance to the private market via the Internet and partners. The company also has a small commercial portfolio.

Result performance The underwriting result for the quarter was negative NOK 12.3 million, compared with negative NOK 16.3 million in 2006. The combined ratio for the quarter was 101.7, compared with 118.3 for the same quarter in 2006. The Norwegian municipal portfolio was transferred to KommuneForsikring in 2007 through reinsurance. The accounting effect of this has been taken into account in the fourth quarter 2007. The Norwegian portfolio has a marginally higher loss ratio, but a lower cost ratio, than the other businesses, and overall it makes a positive contribution to the segment’s combined ratio. The quarterly results are marked by a greater number of major losses than normal in KommuneForsikring, even though the number was fewer than in the third quarter. The claims incurred for 2006 apply only to the business in Fair Forsikring, since KommuneForsikring was not consolidated until 1 January 2007. The technical result before amortisation of excess value was NOK 11.4 million in the fourth quarter, compared with negative NOK 12.5 million for the same period in 2006.

Premiums Earned premiums, net of reinsurance, was NOK 704.1 million in the ­fourth quarter, compared with NOK 89.5 million for the corresponding period in 2006. The results for 2006 only include Fair Forsikring. In addition, the Norwegian municipal portfolio, which corresponds earned premiums, net of reinsurance, of NOK 280.0 million for the full year was transferred to KommuneForsikring in 2007. The earned premiums, net of reinsurance, was NOK 1,685.3 million year to date, compared with NOK 257.4 million in

2006. The development of the premiums in the Danish operations has been in ­accordance with the expectations.

Claims Claims in the fourth quarter totalled NOK 575.6 million, which gives a loss ratio of 81.8. The loss ratio for the full year 2007 was 81.7. There were fewer major losses in the fourth quarter, compared with the third quarter. The claim frequency is as expected, but average claims increased in Fair Forsikring.

Cost development The insurance-related operating expenses were NOK 140.6 million in the ­fourth quarter, which gives a cost ratio of 20.0. The cost ratio for the full year was 21.4. Efficiency improvement efforts for the operations in Denmark were initiated, with a special focus on Fair Forsikring. Restructuring and the introduction of a new operating model for the private area is expected to give cost savings and increased sales efficiency. A number of measures were implemented already in the fourth quarter 2007. General insurance Other NORDIC NOK million Gross premiums written Earned premiums, net of reinsurance Allocated return on investments Claims, net of reinsurance Premium discounts and other profit agreements Insur.-related operating expenses Technical insurance result before amortisation of excess value Amortisation of intangible assets Technical result after amortisation of excess value Underwriting result 1 Loss ratio, net of reinsurance 2 Cost ratio, net of reinsurance 3 Combined ratio, net of reinsur. 4

4th q. 2007 588.9 704.1 23.5 (575.6)

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006 96.2 1,810.4 89.5 1,685.3 74.4 3.9 (51.6) (1,376.3)

273.3 257.4 10.6 (144.3)

0.0

0.0

(0.5)

0.0

(140.6)

(54.3)

(360.8)

(166.0)

11.4

(12.5)

22.1

(42.3)

(23.0)

(5.5)

(85.7)

(16.4)

(11.6)

(18.0)

(63.6)

(58.7)

(12.3)

(16.3)

(52.3)

(52.9)

81.8 % 57.7 % 20.0 % 60.7 % 101.7 % 118.3 %

81.7 % 56.1 % 21.4 % 64.5 % 103.1 % 120.6 %

Definitions: 1 Underwriting result = premium income, net of reinsurance – claims, net of reinsurance – premium discounts and other profit agreements – insurance-related operating expenses 2 Loss ratio = claims, net of reinsurance / premium income, net of reinsurance 3 Cost ratio = insurance-related operating expenses / premium income, net of reinsurance 4 Combined ratio = loss ratio, net of reinsurance + cost ratio, net of reinsurance

Gjensidige Forsikring consolidated

fourth quarter 2007  7

Product groups Baltics

Marine/ transport

4%

1% 2% 2%

11 % Property

Motor 80 %

Claims

Gjensidige engages in the general insurance business in the Baltics through the subsidiary Gjensidige Baltic (formerly Parekss Insurance Company). Gjensidige Baltic is a general insurance company, and the head office is located in Riga, Latvia. The company has operations in Latvia, Lithuania and Estonia. The operations in Lithuania and Estonia are organised through branches of Gjensidige Baltic. There was a total of 300 employees in the Baltics at the end of 2007. Gjensidige Baltic acquired the Lithuanian general insurance company RESO Europa in January 2008, strengthening thus Gjensidige’s position in the Baltics further. The head office of RESO is located in Lithuania, but the company also has some business activities in Latvia and Poland. The company has a market share of around 5 per cent in Lithuania, and is the sixth largest insurance company in the country. The company distributes property, motor and liability insurance and has a premium volume of around NOK 135 million in 2007. The acquisition is contingent on regulatory approval.

The loss ratio for the fourth quarter was 64.3, compared with 68.1 for the fourth quarter 2006. The loss ratio for the full year was 63.7, an improvement over 68.1 in 2006.

Result performance The underwriting result for the quarter was NOK 2.6 million, compared with negative NOK 1.9 million for the same quarter in 2006. The combined ratio for the fourth quarter was 98.2, compared with 102.8 for the fourth quarter 2006. The good results are attributed primarily to a higher premium volume, good pricing and stricter cost control. The technical result before amortisation of excess value for this segment was NOK 5.9 million in the fourth quarter, compared with negative NOK 0.3 million for the corresponding period in 2006. Gjensidige Baltic was consolidated in the fourth quarter 2006.

Premiums The Baltic insurance market is growing rapidly and the volume of premiums written in the overall market increased by around 30 per cent in the first half of 2007. Inflation in the Baltics is high, and there is a continuous focus on what the right premium level is in relation to the increased claim costs. Earned premiums, net of reinsurance, was NOK 125.0 million for the fourth quarter, a significant increase of NOK 66.5 million per cent from the fourth quarter 2006. The earned premiums, net of reinsurance, totalled NOK 360.2 million in 2007. The segment is showing strong growth and there was a 57.4 per cent increase in the gross premiums in the fourth quarter 2007, compared with the fourth quarter 2006. The company’s market share in the Baltics has risen steadily from 5.0 per cent as of 31 December 2006 to 5.5 per cent at the end of 2007.

Cost development The insurance-related operating expenses for the fourth quarter totalled NOK 42.4 million, compared with NOK 23.0 million for the same quarter in 2006. The expenses for the full year 2007 totalled NOK 113.9 million. The increase in the expenses from the fourth quarter 2006, compared with the fourth quarter 2007, is attributed to the implementation of measures in connection with the name change from Parekss to Gjensidige Baltic, as well as a higher level of activity in the company. The cost ratio for the fourth quarter was 33.9, and the cost ratio for the full year 2007 was 31.6. Compared with competitors in the Baltics, Gjensidige Baltic has a low cost ratio. General insurance Baltics

4th q. 2007

NOK million Gross premiums written Earned premiums, net of reinsurance Allocated return on investments Claims, net of reinsurance Premium discounts and other profit agreements Insurance-related operating expenses Technical result before amortisation of excess value Amortisation of intangible assets Technical result after amortisation of excess value Underwriting result 1 Loss ratio, net of reinsurance Cost ratio, net of reinsurance 3 Combined ratio, net of reinsurance 4 2

4th q. 1.1-31.12 1.1.-31.12 2006 2007 2006

128.1 125.0 3.4 (80.3)

81.4 66.5 1.6 (45.3)

432.6 360.2 11.4 (229.5)

81.4 66.5 1.6 (45.3)

0.3

0.0

(1.5)

0.0

(42.4)

(23.0)

(113.9)

(23.0)

5.9

(0.3)

26.6

(0.3)

(4.7)

(4.4)

(17.6)

(4.4)

1.2

(4.7)

9.0

(4.7)

2.6

(1.9)

15.2

(1.9)

64.3 % 68.1 % 33.9 % 34.7 % 98.2 % 102.8 %

63.7 % 68.1 % 31.6 % 34.7 % 95.4 % 102.8 %

Definitions: 1 Underwriting result = premium income, net of reinsurance – claims, net of reinsurance – premium discounts and other profit agreements – insurance-related operating expenses 2 Loss ratio = claims, net of reinsurance / premium income, net of reinsurance 3 Cost ratio = insurance-related operating expenses / premium income, net of reinsurance 4 Combined ratio = loss ratio, net of reinsurance + cost ratio, net of reinsurance

interim report

GENERAL INSURANCE BALTICS

8 fourth quarter 2007

Gjensidige Forsikring consolidated

Pension and Savings assets under management 31.12.2007 NOK million

574

Pensions

Savings

613

PENSION AND SAVINGS

Assets under management

Gjensidige’s venture in the Pension and Savings business is organised with Gjensidige Pensjon og Sparing Holding AS (GPS) as the holding company for Gjensidige Pensjonsforsikring AS (GPF) and Gjensidige Investeringsrådgiv­ ning ASA (GIR). The companies started their operations in 2006. The three companies had a total of 105 employees at the end of 2007. GPF offers individual and group pension products with a focus on defined contribution pensions. GIR has established a broad range of savings products, and the Vekter Funds make up the core. The company’s concept is to be an independent adviser. This means that the company does not have its own funds and enters instead into agreements with fund providers that the company feels can deliver a high return over time.

GPF’s assts under management increased by NOK 264 million in the fourth quarter and totalled NOK 574 million at the end of the year. GIR’s assets under management increased by NOK 75 million in the quarter and totalled NOK 613 million at the end of the year. Managed funds are accounted for in GPF’s balance sheet, while GIR’s managed funds are not recognised on the balance sheet.

Result performance

Pension and savings

The result before tax for the operations in the fourth quarter was a loss of NOK 26.3 million, while the result year to date is a loss of NOK 123.0 million. The operations are in a development phase, and the results are as expected. The profit margin was 0.8 per cent for the quarter and 2.5 per cent for the full year. The margins for the savings products have shown an increase and there has been growth in the share of premiums for risk products in the pension operations.

Premium and management income Gross premiums written consist of savings deposits for private group pensions and premiums for risk products related to group and individual pensions. The premium reserves transferred from other companies for transferred contracts are also included. Gross premiums written in GPF were NOK 249.5 million in the fourth quarter, compared with NOK 91.0 million for the fourth quarter 2006. Gross premiums for the full year 2007 in GPF were NOK 496.4 million, including NOK 177.0 million in transferred funds. This represents a doubling in relation to the third quarter. In August the “Fund Pension” product for the transfer of former IPA fund savings was introduced. The premiums in force year to date can be broken down into NOK 341 million for group pensions and NOK 7 million for individual pensions. GPS acquired 6,716 new customers during the quarter. A large number of the customers are also insurance customers, 84.4 per cent for the quarter and 81.6 for the full year. GIR’s management income totalled NOK 4.0 million for the fourth quarter and NOK 9.4 million for the full year.

Expenses Total expenses were NOK 141.0 million for 2007, NOK 84.9 million of which are insurance related. The cost development was as expected.

NOK million Gross premiums written Earned premiums, net of reinsurance Claims, net of reinsurance Insurance-related operat. expenses Technical result Management income Other income and expenses, including financial, net Profit before tax for the period Profit margin %

1

Assets under management, GPF Assets under management, GIR

4th q. 2007

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006

249.5 13.3 (8.7) (23.2) (18.6) 4.0

91.0 5.5 (3.4) (30.2) (28.1) 0.8

496.4 27.9 (19.3) (84.9) (76.3) 9.4

107.7 6.4 (4.1) (76.1) (73.8) 1.0

(11.7)

(14.7)

(56.1)

(44.1)

(26.3)

(42.0)

(123.0)

(116.9)

0.8

2.4

2.5

2.7

Changes in the per. 31.12.07 31.12.06 264.0 574.0 188.0 188.0 75.0 613.0 53.0 53.0

Definitions: 1 Profit margin = (premium income – claims + management income for the period) / average capital under management for the period

Gjensidige Forsikring consolidated

fourth quarter 2007  9

Interest expenses

Gjensidige Bank is a nationwide Internet bank aimed at the private market. Gjensidige Bank is marketed under the Gjensidige brand, and it offers traditional banking products adapted to electronic distribution. Gjensidige Bank was launched on 2 January 2007. The head office of the bank is located in Førde. The distribution is through the corporate ­portal gjensidige.no and via the bank’s own customer centre. The bank had a total of 32 employees at the end of 2007. Gjensidige Bank ASA is wholly owned by Gjensidige Bank Holding AS, which is in turn a wholly owned subsidiary of Gjensidige Forsikring.

The bank’s deposits increased by NOK 725.7 million during the quarter to NOK 1,701.1 million at the end of 2007. The company is still experiencing good growth, and the deposit-to-loan ratio was 50.3 per cent at the end of the fourth quarter, which is an increase of 4.0 percentage points from the end of the third quarter.

Underwriting result performance The result before tax for the fourth quarter was a loss of NOK 33.8 million. The result for the full year was a loss before tax of NOK 115.8 million. The bank is in a start-up phase and a loss has consequently been budgeted during this phase. The deposit-to-loan ratio was 50.3 per cent at the end of the fourth quarter, up from 46.3 at the end of the third quarter. The bank was marketed initially to organisational customers. A broad national launch started after that in the middle of May. The marketing utilises advertisements in national and regional newspapers and magazines, as well as direct marketing and Internet advertising. During fourth quarter 6,248 persons registered as possible customers while the full year number was around 22,200 persons. A large number of the banking customers are also insurance customers, 65 per cent for the quarter and 72 for the full year.

Interest income Net interest income was NOK 5.7 million for the fourth quarter and NOK 11.3 million year to date. Net interest measured against the average total assets was 0.72 per cent for the fourth quarter in isolation. Gjensidige Bank is experiencing a steady increase in lending and gross lending totalled NOK 3.4 billion at the end of 2007. The loan portfolio has increased by NOK 308 million in the first quarter, NOK 725 million in the second quarter, NOK 1,072 in the third quarter and NOK 1,276 in the fourth quarter, respectively. The lending consists primarily of loans with adjustable rates. The bank lends only to customers in the private market. The bank will focus strongly on marketing in the time to come to ensure stable customer growth, and additional products will be included in ­Gjensidige Forsikring’s loyalty programmes. Other income includes commissions, fees and fair value adjustments.

Expenses Operating expenses were NOK 38.4 million in the fourth quarter and NOK 126.5 million for the year to date. This development is in accordance with the expectations. Losses on loans/guarantees are general group write-downs. The capital ratio at the end of the fourth quarter was 20.8 per cent. banking NOK million Net interest and credit commission income Other income Total expenses Losses on loans/guarantees Profit before tax for the period Deposit-to-loan ratio 1 Net interest income %2 Gross lending Deposits

4th q. 2007

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006

5.7

N/A

11.3

N/A

1.7 (38.4) (2.7) (33.8)

N/A N/A N/A N/A

6.1 (126.5) (6.7) (115.8)

N/A N/A N/A N/A

56.9 50.3 N/A N/A 0.72 0.71 N/A N/A Changes in the per. 31.12.07 31.12.06 1,276.3 N/A 3,381.4 N/A 725.7 N/A 1,701.1 N/A

Definitions: 1 Deposit-to-loan ratio = deposits as a percentage of gross lending 2 Net interest income % = (Interest income – interest expenses) / average total assets The bank was established in January 2007 and therefore there are no comparison figures for 2006. .

interim report

BANKING services

10 fourth quarter 2007

Gjensidige Forsikring consolidated

OTHER OPERATIONS Other operations consist of income and expenses beyond the group’s finance and insurance-related investments, and the health venture Hjelp24 is the most important contribution. In addition, there are non-insurance related income and expenses in other group companies. Hjelp24 is Norway’s largest and leading corporate health service player with a nationwide offering. In June 2007 Hjelp24 acquired Bedriftshelse Norge and reinforced thus its position as the largest and leading HSE player in the greater Oslo region. In November Hjelp24 acquired the private hospital Norsk Idrettsmedisinsk Institutt (NIMI), and after the acquisition it is the only private health provider in Norway that can offer a complete treatment chain. NIMI was consolidated effective 1 November 2007. Hjelp24 reported operating income of NOK 114.7 million in the fourth quarter 2007, compared with NOK 71.4 million for the same quarter in 2006. The operating income totalled NOK 335.5 million in 2007, compared with NOK 265.8 million in 2006. This strong operating income growth is attributed to a combination of acquisitions and organic growth.

Other operations INCL. eliminations

4th q. 2007

NOK million Operating income Hjelp24 Operating expenses Hjelp24 EBITA Hjelp24 1

114.7 (101.5) 13.2

Insurance-related expenses within the group Other income Other expenses Profit attributable to other operations EBITA margin % 2 Gross premiums within the group 3

4th q. 1.1-31.12 1.1-31.12 2006 2007 2006 71.4 (72.4) (1.0)

(0.5)

335.5 (309.1) 26.4

265.8 (258.0) 7.8

(0.5)

9.1 (15.5)

7.3 (17.6)

30.9 (50.9)

43.1 (55.2)

6.3

(11.3)

5.9

(4.3)

11.5 (333.1)

(1.4) 0.0

7.9 (388.2)

2.9 0.0

Definitions: 1 EBITA = Earnings Before Interest, Taxes and Amortisation 2 EBITA margin = EBITA / operating income 3 Reinsurance agreements have been entered into within the group, and gross premiums lie therefore with both the ceder and reinsurer in the segment analyses. To reconcile the group’s gross premiums the intercompany premiums within the group must be eliminated.

EBITA for the quarter was NOK 13.2 million, compared with a negative EBITA of NOK 1.0 million for the fourth quarter 2006. EBITA for the year was NOK 26.4 million, compared with NOK 7.8 million in 2006. This gives an EBITA margin of 11.5 per cent for the quarter in isolation, compared with a negative EBITA margin of 1.4 per cent in the fourth quarter 2006. The EBITA margin for the year was 7.9 per cent, compared with 2.9 per cent in 2006. This improvement in the margin is due primarily to the integration of acquired operations and a higher billing rate.

ORGANISATION The group had a total of 3,460 employees at the end of 2007. This breaks down into 2,033 employees in the general insurance operations in Norway, 32 employees in Gjensidige Bank, 105 employees in Gjensidige Pension and Savings, and 622 employees in the health venture Hjelp24. There are 283 employees in Denmark, 85 employees in Sweden and 300 employees in the Baltics (excluding agents).

equity certificateS AND Stock exchange listing The general meeting of Gjensidige Forsikring decided to issue equity certificates in 2007. The issue was carried out through a reclassification of 25 per cent of the equity capital, which corresponds to NOK 3,860 million, as equity certificates (primary capital). The equity certificates were transferred free of charge to the Gjensidige Foundation. After the issuance of the equity certificates Gjensidige’s general insurance policyholders at any given time have a 75 per cent financial interest in the company, while the Gjensidige Foundation has 25 per cent. The foundation is required to sell the equity certificates as instructed by Gjensidige, and the plan is to sell these in conjunction with the listing of the certificates on the Oslo Børs in 2008. The purpose of issuing listed equity certificates is to give the group greater freedom of action and opportuni-

Gjensidige Forsikring consolidated

fourth quarter 2007  11

The market value of Gjensidige’s ownership interest in Storebrand has fallen during the period after the end of the year, and this will have a significant impact on the group’s net financial income for the first quarter in the form of a write-down.

EVENTS AFTER THE BALANCE SHEET DATE

The group’s results will be affected by the future development of the financial markets and the technical insurance results. The return of the financial markets was satisfactory in 2007, but the development has been negative and extremely volatile so far in 2008. Due to a lower growth rate in the major economies there is considerable uncertainty about the future. The unrest in the financial markets since the end of last year will have an impact on Gjensidige’s results in 2008. In spite of reducing the equities component of the investment portfoliobefore the end of last year, Gjensidige is experiencing a lower than expected financial return so far this year.

Gjensidige’s board of directors decided to sell the company’s head office at Sollerud, Drammensveien 288 in January 2008. The sales contract includes a leaseback agreement, which entails that Gjensidige will continue to use the building as its head office in the future. The sale will give an accounting gain of over NOK 700 million, which will be recognised in the accounts for the first quarter of 2008. In accordance with Gjensidige’s geographic expansion strategy, an agreement was entered into to purchase the Lithuanian general insurance company RESO Europa early in 2008. The head office of RESO is located in Lithuania, and the company also has some business activities in Latvia and Poland. Reference is made to a more detailed discussion of RESO Europa above. The acquisition is contingent on regulatory approval.

OUTLOOK

A continued satisfactory development of the insurance operations is expected in spite of the increasing competition and higher claims.

Sollerud 27 February 2008 The Board of Directors of Gjensidige Forsikring BA

Jørgen Tømmerås Jorund Stellberg Marianne Bø Engebretsen Chairman Deputy chairman

Odd Kristian Hamborg

Marianne Lie

Randi B. Sætershagen

Hans Ellef Wettre

Cato Litangen

Gunnar Mjåtvedt

Magne Revheim

Petter Aasen

Tor Øwre

Helge Leiro Baastad









Chief Executive Officer

interim report

ties to participate in the structural changes that affect the financial industry in the Nordic region. A stock exchange listing of the equity certificates will, in addition to placing a value on Gjensidige, establish a security that can be used for possible acquisitions or otherwise as a means of financing the company’s strategy of geographical and product growth.

12 fourth quarter 2007

Gjensidige Forsikring consolidated

income statement 4th q. 2007

4th q. 2006

1.1-31.12 2007

1.1-31.12 2006

3,341.9 (36.0) 3,305.9 483.5 67.4 3,856.7

2,800.6 (17.6) 2,782.9 620.0 (64.7) 3,338.2

15,726.5 (250.3) 15,476.2 (658.6) 58.3 14,875.9

13,787.2 (331.5) 13,455.7 (268.2) 5.8 13,193.2

370.9

281.5

1,475.1

1,008.1

(2,620.7) 43.2 (294.8) (57.2) (2,929.5)

(2,278.4) 56.7 (156.2) 28.6 (2,349.3)

(10,156.3) 206.4 (1,533.5) (212.5) (11,695.8)

(8,287.9) 149.4 (1,858.8) (17.6) (10,014.9)

(7.7)

(21.2)

(20.0)

(21.7)

Administrative expenses including sales expenses Reinsurance commissions Change in provisions for insufficient premium level Net operating expenses

(749.4) 31.1 0.0 (718.3)

(810.4) 1.7 0.0 (808.6)

(2,720.9) 36.6 0.0 (2,684.3)

(2,566.6) 4.9 0.1 (2,561.6)

Technical result before amortisation of excess value

572.1

440.5

1,950.8

1,603.2

(27.6)

(9.9)

(103.3)

(20.8)

544.5

430.7

1,847.5

1,582.4

Financial income Income from associates Income from buildings and real estate Income from other financial assets Unrealised gains and reversal of unrealised losses on financial assets Gain on sale of securities Total financial income

10.7 465.8 424.0 17.3 1,740.7 2,658.6

5.6 421.4 296.5 536.8 1,155.7 2,416.0

39.6 881.4 1,597.7 82.8 3,645.8 6,247.2

35.4 1,118.4 1,492.4 143.4 2,681.6 5,471.2

Financial costs Administration costs on buildings and real estate Administration costs related to financial assets Interest costs Other costs related to financial assets Unrealised losses and reversal of unrealised gains on financial assets Write-downs of financial assets Loss on sale of securities Total financial costs

(33.2) (23.0) (183.8) (38.8) (839.3) 4.0 (1,031.2) (2,145.3)

(149.9) (26.7) (91.1) (63.6) (1.4) 0.4 (206.0) (538.2)

(137.7) (56.9) (619.7) (71.7) (940.4) 0.0 (1,600.6) (3,427.0)

(288.9) (55.0) (500.1) (108.5) (6.8) 0.4 (801.2) (1,760.1)

Net income and costs from financial assets

513.3

1,877.8

2,820.3

3,711.1

Allocated return on investments transferred to the technical account

(370.9)

(281.5)

(1,475.1)

(1,008.1)

Other income Other costs

101.5 (143.6)

83.7 (112.2)

380.0 (552.4)

313.9 (368.7)

Profit before tax

645.0

1,998.5

3,020.3

4,230.5

Tax

(56.0)

171.8

(541.3)

(138.7)

Profit for the period

589.1

2,170.2

2,479.0

4,091.9

NOK million Premiums Gross premiums written Ceded reinsurance premiums Premiums written, net of reinsurance Change in the gross provision for unearned premiums Change in the provision for unearned premiums, reinsurers´ share Earned premiums, net of reinsurance Allocated return on investments transferred from the non-technical account Claims Gross paid claims Paid claims, reinsurers´ share Change in the provision for claims, gross Change in the provision for claims, reinsurers´ share Claims incurred, net of reinsurance Premiums discounts and other profit agreements

Amortisation of excess value Technical result

Notes

Gjensidige Forsikring consolidated

fourth quarter 2007  13

Statement of recognised income and expense NOK million Translation differences Changes in assets available for sale Actuarial gains/losses on pensions Other adjustments Income and expenses recognised directly in equity

1.1-31.12 2007

1.1-31.12 2006

(137.1) (430.6) (326.0) 0.0 (893.7)

(8.1) (861.7) (205.8) 36.2 (1,039.4)

Profit for the period

2,479.0

4,091.9

Total recognised income and expense

1,585.3

3,052.5

interim report

14 fourth quarter 2007

Gjensidige Forsikring consolidated

BALANcE sheet NOK million

Notes

ASSETS Goodwill Intangible assets Investments in associates Buildings and real estate Tangible fixed assets other than buildings and real estate Investment property

31.12.2007

31.12.2006

1,424.8 1,022.3 186.6 1,017.5 366.9 6,041.7

557.2 586.9 151.1 930.9 252.1 7,157.9

Financial assets Financial derivatives Financial assets at fair value through profit or loss Financial assets held to maturity Loans and other receivables Financial assets available for sale Assets in life insurance with investment options Reinsurance deposits Reinsurance assets Receivables arising out of direct insurance operations Other receivables Prepaid expenses and accrued interests Cash and cash equivalents TOTAL ASSETS

239.5 23,361.8 8,885.6 3,850.0 2,765.9 497.5 0.6 302.6 3,159.3 376.7 528.7 4,092.3 58,120.3

90.5 20,520.6 7,537.4 539.6 2,434.1 52.5 0.6 414.6 2,794.0 542.0 279.3 2,271.3 47,112.7

EQUITY AND LIABILITIES Equity fund Gjensidige fund Total equity

20,302.5 0.0 20,302.5

18,717.3 300.0 19,017.3

6,060.2 23,147.1 38.4 1,233.3 248.7

5,737.9 17,556.7 25.2 946.7 306.6

4,697.0 1,424.1 269.2 497.5 202.3 58,120.3

1,977.7 1,134.4 201.2 52.5 156.5 47,112.7

4

Liabilities Provision for unearned premiums, gross Claims provisions, gross Provisions for premium discounts Pension liabilities Other provisions

7 6

Financial liabilities Other liabilities Deferred tax Liabilities arising out of direct insurance operations Accrued expenses and prepaid income Liabilities in life insurance with investment options TOTAL EQUITY AND LIABILITIES

Sollerud 27 February 2008 The Board of Directors of Gjensidige Forsikring BA

Jørgen Tømmerås Jorund Stellberg Marianne Bø Engebretsen Chairman Deputy chairman

Odd Kristian Hamborg

Marianne Lie

Randi B. Sætershagen

Hans Ellef Wettre

Cato Litangen

Gunnar Mjåtvedt

Magne Revheim

Petter Aasen

Tor Øwre

Helge Leiro Baastad









Chief Executive Officer

Gjensidige Forsikring consolidated

fourth quarter 2007  15

cash flow statement 1.1-31.12 2007

1.1-31.12 2006

Premiums paid, net of reinsurance Claims paid, net of reinsurance Operating expenses paid, including commission

15,295.2 (9,952.1) (2,602.1)

12,629.0 (7,985.4) (2,172.4)

Net receipts/payments - lending to customers

(1,611.7)

(143.0)

Net receipts/payments from investments Shares and other equity participations Bonds and other fixed-income securities Financial derivatives and other financial instruments Investment property

367.3 (294.9) 620.2 392.3

(2,769.3) (403.2) (642.2) 163.1

Group contribution received and liquidation dividend Interest and other financial income Interest and fees received from customers Net receipts/payments - real estate activities Net receipts/payments - other income Payments of tax Net cash flow from operational activities

(0.0) 772.5 32.0 37.9 12.2 (23.1) 3,045.7

45.4 2,899.5 11.2 202.0 6.3 (12.5) 1,828.6

Cash flow from investment activities Payments on purchase of subsidiaries Net receipts/payments on real estate for own use Net receipts/payments on sale/purchase of equipment Net cash flow from investment activities

(2,769.6) (27.8) 772.3 (2,025.1)

(441.7) 43.7 (141.4) (539.4)

Cash flow from financing activities Payment of the general insurance company’s guarantee scheme Interest payments on borrowings Repayment of long term borrowings Receipts from term loans Net cash flow from financing activities

0.0 (46.8) (790.1) 1,500.3 663.4

31.0 0.0 (1,862.4) 88.7 (1,742.6)

Net cash flow for the period

1,684.1

(453.4)

(0.8)

6.6

Net movement in cash and cash equivalents

1,683.3

(446.8)

Cash and cash equivalents at the start of the period Merged, added and disposed companies Adjusted holdings at the beginning of the period Cash and cash equivalents at the end of the period

2,271.3 137.8 2,409.1 4,092.3

2,663.1 55.1 2,718.2 2,271.3

Net movement in cash and cash equivalents

1,683.2

(446.9)

Effect of currency fluctuations on cash and cash equivalents

interim report

NOK million

16 fourth quarter 2007

Gjensidige Forsikring consolidated

Notes to the financial statements 1. Accounting POLICIES

2. seasonal variations

The consolidated accounts for the fourth quarter of 2007, which ended on 31 December 2007, include Gjensidige Forsikring and its subsidiaries (referred to collectively as «the group»), and the group’s interests in associated companies and joint ventures. The accounting policies used in the interim reports are the same that are used in the Transition Document and are described therein. The consolidated accounts for the fourth quarter 2007 have been prepared in accordance with IFRS and IAS 34 “Interim Accounts”. The interim accounts do not include all the information that is required in complete annual accounts, and they should be read in conjunction with the Transition Document. The preparation of the interim accounts entails the use of assessments, estimates and assumptions that affect the application of accounting policies and the recorded amounts for assets and liabilities, income and expenses. The actual results may deviate from these estimates. The most important assessments made by application of the group’s accounting policies, and the most important sources of uncertainty in the estimates, are the same for the preparation of the interim accounts as stated in the Transition Document. Comparable figures are based on IFRS.

A seasonal premium is used for certain insurance products. This is due to the fact that the claims are not randomly distributed throughout the year and follow a stable seasonal pattern. Normally the premium income (premium earned) is accrued evenly over the insurance period. For products with a seasonal pattern, however, the premium income must also be accrued according to the claims pattern. Gjensidige Forsikring has seasonal premiums for the following products: pleasure craft, snow scooters and motorcycles. For motorcycles, for example, the premium earned for the period from April to September represents 85% of the annual premium. Another consequence of seasonal premiums is the fact that only the portion of the seasonal premium that the company has covered the risk for will be refunded if the customer cancels the insurance contract outside the annual renewal date. For a motorcycle policy that is taken out on 1 April and cancelled on 1 October, for example, the policyholder will only receive 15% of the annual premium refunded, even though the insurance was only in effect for six months.

All figures are stated in millions of NOK unless otherwise indicated. There may be figures and percentages that do not always add up correctly due to rounding differences.

The segments General Insurance, which is broken down further into private and commercial segments, Pension & Savings, and Banking, represent the principal components of Gjensidige’s business. These segments are evaluated regularly by Gjensidige’s group management on the basis of financial and operational information prepared especially for each segment for the purpose of monitoring development and allocating the necessary resources. Gjensidige entered into a reinsurance agreement with its subsidiary KommuneForsikring for Gjensidige’s municipal portfolio in Norway for 2007. The accounting effect of this has been taken into account in the fourth quarter. The accounting will be eliminated in the consolidated accounts.

3. Segment information

Gjensidige Forsikring consolidated

fourth quarter 2007  17

3. Segment information (cont.) GENERAL INSURANCE Norway Fourth quarter NOK million

 Private 2007 2006

 Other Nordic

 Commercial 2007 2006

Premiums, net of reinsurance Segment income 2,011.6 1,842.4 1,002.7 1,336.1 external

 Private  Commercial 2007 2006 2007 2006

Pension   Baltics

 Total

 Total

 Private 2007 2006

 Private 2007 2006

 Commercial 2007 2006

Banking 2

Total

& Savings   2007

2006

reversal 2 2007 2006

2007 2006

2007

2006

190.9

89.5

513.2

– 125.0 66.5 2,327.5 1,998.3 1,515.9 1,336.1

13.3

5.5

5.7

–

(5.7)

(1.7) 3,856.7

3,338.3

190.9

89.5

513.2

– 125.0 66.5 2,327.5 1,998.3 1,515.9 1,336.1

13.3

5.5

5.7

–

(5.7)

(1.7) 3,856.7

3,338.3

(17.4)

(12.5)

28.9

–

(18.6)

(28.1)

(33.8)

– 33.1

572.1

440.8

Segment income group 3 Total segment income

2,011.6 1,842.4 1,002.7 1,336.1

Technical result before amortis. of excess value 1

238.4

418.2

335.6

63.5

5.9

(0.3)

226.9

405.4

364.5

63.5

(27.6)

(9.9)

- Allocated return on investments

(370.9)

(281.5) 1,877.8

- Amortisation of excess value

+ Net return on investments

513.3

+ Net other income

(41.8)

(28.5)

Profit before tax

645.0

1,998.5

GENERAL INSURANCE Norway 1.1-31.12 NOK million

 Private 2007 2006

 Other Nordic

 Commercial 2007 2006

Total segment income

7,729.8 7,337.5 5,072.7 5,527.2

Technical result before 1,115.3 1,366.3 amortis. of excess value 1

863.7

353.2

 Total

 Total

 Private 2007 2006

 Private 2007 2006

 Commercial 2007 2006

Banking 2

Total

& Savings   2007

2006

reversal 2 2007 2006

2007 2006

2007

2006

548.0

257.4 1,137.3

– 360.2 66.5 8,638.0 7,661.3 6,210.0 5,527.2

27.9

6.4

11.3

–

(11.3) (1.7) 14,875.9 13,193.3

548.0

257.4 1,137.3

– 360.2 66.5 8,638.0 7,661.3 6,210.0 5,527.2

27.9

6.4

11.3

–

(11.3) (1.7) 14,875.9 13,193.3

(53.0)

(42.3)

75.1

–

26.6 (0.3) 1,088.9 1,323.7

938.8

353.2

(76.3)

(73.8) (115.8)

– 115.2

- Amortisation of excess value

1,950.8

1,603.2

(103.3)

(20.8)

- Allocated return on investments

(1,475.1) (1,008.1)

+ Net return on investments

2,820.3

+ Net other income Profit before tax

3,711.1

(172.4)

(54.9)

3,020.3

4,230.5

Definitions: 1 The technical insurance result for general insurance includes standardised financial income corresponding to the Financial Supervisory Authority of Norway’s allocated return on investment distributed in accordance with the size of the technical reserves. 2 Eliminations and reversal of the profit or loss from Gjensidige Bank, since it is not part of the technical insurance result for the Gjensidige Forsikring Group. 3 There is no intercompany income between the segments at this level. Reference is made to the information line for other operations for intercompany income at the gross premium income level.

4. ConsolidateD statement of changes in equity NOK million

Exchange rate adjustments

Real value reserves

Balance on 31.12.2005 NGAAP IFRS implementation effect 01.01. 2006 Profit for the year Exchange rate adjustments of foreign entities Changes in assets available for sale Actual gains/losses pensions Other adjustments Total recogniced income and expenses Other adjustments Balance on 31.12. 2006 Profit for the period Exchange rate adjustments of foreign entities Changes in assets available for sale Gjensidige fund Actual gains/losses on pensions Balance on 31.12. 2007

Other equity

Total equity

12,487.1

12,487.1

3,477.7

3,477.7

4,091.9

4,091.9 (8.1) (861.7) (205.8) 36.2 19,017.3 19,017.3

(8.1) (861.7) (205.8) (8.1)

(1,067.5)

36.2 20,092.9

(8.1)

(1,067.5)

20,092.9 2,479.0

(137.1) (430.6)

(145.2)

(1,498.1)

(300.0) (326.0) 21,803.0

2,479.0 (137.1) (430.6) (300.0) (326.0) 20,302.5

interim report

Premiums, net of reinsurance Segment income 7,729.8 7,337.5 5,072.7 5,527.2 external Segment income group 3

 Private  Commercial 2007 2006 2007 2006

Pension   Baltics

18 fourth quarter 2007

Gjensidige Forsikring consolidated

5. run-off NOK million

4th q. 2007

4th q. 2006

1.1-31.12 2007

1.1-31.12 2006

General insurance total Earned premium, net of reinsurance Liquidation gain/(loss) for the period, net of reinsurance As a % of premiums earned, net of reinsurance

3,843.3 2.3 0.1

3,332.7 (66.5) (2.0)

14,848.0 49.5 0.3

13,186.8 (18.0) (0.1)

Pension and Savings Earned premium, net of reinsurance Liquidation gain/(loss) for the period, net of reinsurance As a % of premiums earned, net of reinsurance

13.4 2.2 16.7

5.5 –  0.0

27.9 2.2 8.0

6.4 –  0.0

Gjensidige Forsikring consolidated Earned premium, net of reinsurance Liquidation gain/(loss) for the period, net of reinsurance As a % of premiums earned, net of reinsurance

3,856.7 4.5 0.1

3,338.2 (66.5) (2.0)

14,875.9 51.8 0.3

13,193.2 (18.0) (0.1)

4th q. 2007

4th q. 2006

1.1-31.12 2007

1.1-31.12 2006

General insuranse total Claims provisions, gross, OB Additions/disposals from acquisitions/sales, etc. Claims for the year Claims incurred in prior years, gross Claims paid Currency exchange differences Claims provisions, gross, CB

22,800.1 – 2,941.6 25.0 (2,594.5) (47.5) 23,124.8

17,404.3 – 2,317.4 124.4 (2,278.4) (15.0) 17,552.6

17,552.6 4,157.8 11,872.4 (142.0) (10,130.3) (185.6) 23,124.8

15,374.0 281.3 10,029.5 113.1 (8,287.9) 42.6 17,552.6

Pension and Savings Claims provisions, gross, OB Additions/disposals from acquisitions/sales, etc. Claims for the year Claims incurred in prior years, gross Claims paid Currency exchange differences Claims provisions, gross, CB

14.7 – 10.1 (2.2) (0.2) – 22.3

0.7 – 3.4 – – – 4.1

4.1 – 20.7 (2.2) (0.2) – 22.3

– – 4.1 – – – 4.1

Gjensidge Forsikring consolidated Claims provisions, gross, OB Additions/disposals from acquisitions/sales, etc. Claims for the year Claims incurred in prior years, gross Claims paid Currency exchange differences Claims provisions, gross, CB

22,814.8 – 2,951.8 22.8 (2,594.7) (47.5) 23,147.1

17,405.0 – 2,320.7 124.4 (2,278.4) (15.0) 17,556.7

17,556.7 4,157.8 11,893.1 (144.2) (10,130.6) (185.6) 23,147.1

15,374.0 281.3 10,033.6 113.1 (8,287.9) 42.6 17,556.7

31.12.2007

31.12.2006

5,981.3 78.9 6,060.2

5,688.0 50.0 5,737.9

6. claims provision NOK million

7. unearned premiums NOK million General insuranse total Pension and Savings Gjensidige Forsikring consolidated

Gjensidige Forsikring consolidated

fourth quarter 2007  19

8. Off-balance-sheet liabilities NOK million

31.12.2007

Gross guarantees Gross guarantees

0.6 0.6

Commited capital Total guaranteed amount

1,222.0 1,222.0

As part of the company’s ongoing financial management, the company has undertaken to invest up to NOK 1,222.0 million in various private equity investments beyond the amounts that are recorded. Gjensidige Forsikring is responsible externally for any insurance claim that arises in cooperating mutual fire insurers’ fire insurance business.

9. BUSINESS COMBINATIONS KommuneForsikring AS

Tennant Insurance Group AB Gjensidige Forsikring entered into an agreement with the shareholders of the Tennant Group in July 2007 to acquire 100% of the shares and subscription rights in the Tennant Group. The acquisition was contingent on Gjensidige Forsikring being granted a licence to acquire the company by the Norwegian and Swedish authorities. Gjensidige Forsikring was granted a licence by the Norwegian authorities as of 7 July 2007 and a licence from the Swedish authorities as of 30 July 2007. The takeover date is 1 August. Acquisition of subsidiary Tennant Insurance Group AB NOK million Brand Contracts Customer relation Technology Labour force (part of goodwill) Goodwill Financial investments Bank deposits Material fixed assets Reinsurers part of technical provisions Claims Prepaid expenses and accrued income Total assets Total equity Technical provisions, gross Other provisions Deferred tax Other risks and liabilities Long-term interest bearing liabilities Incurred expenses and accrued income Total equity and liabilities Compensation Investments Expenses Net purchase price

The purchase method was used for the acquisition. The analysis of the acquired assets and liabilities is illustrated below. The value in excess of the net tangible assets acquired has been integrated as intangible assets and goodwill in the consolidated accounts. The fair value has been set provisionally since the final assessment has not been completed for all the components of the fair value assessment. At the time of the acquisition the Tennant Group had equity of NOK 68.8 million. The Tennant Group reported a profit of NOK 1.6 million prior to the date of the acquisition. In addition, the group had a combined ratio of 98.8 and a cost ratio or 11.9. Gjensidige Forsikring’s share of the profit after the date of acquisition totals NOK -17.5 million before amortisation of excess value and has been included in Gjensidige Forsikring’s profit and loss account. The costs related to the acquisition consist of fees for lawyers and consultants. The acquisition analysis from the third quarter has changed due to additional incurred transaction costs.

Book values at acquisition date

22.4 266.6 49.8 1.3 115.0 115.0 34.8 626.5

Real value adjustments 14.9 40.0 53.5 13.0 9.9 291.4 – – – – – – 422.7

Book value after acquisition 14.9 40.0 53.5 34.6 9.9 313.8 266.6 49.8 1.3 115.0 115.0 34.8 1,049.2

68.8 451.8 13.5 – 37.2 34.7 20.5 626.5

378.8 12.0 1.8 30.1 – – – 422.7

447.6 463.8 15.3 30.1 37.2 34.7 20.5 1,049.2

21.6

430.0 17.5 447.5

interim report

Gjensidige Forsikring entered into an agreement with Foreningen til Begrænsning av Skadeutgifter i Kommuner og Regioner f.m.b.a. in the autumn of 2006 to acquire 100% of the shares in KommuneForsikring AS and European Institute for Risk Management AS. The acquisition was contingent on Gjensidige Forsikring being granted approval to acquire the company by the Norwegian and Danish authorities, and such approval was granted on 19 January 2007. The purchase method has been used for the acquisition, and a detailed description of this was given in the interim report for the first quarter of 2007.

20  fourth quarter 2007

Gjensidige Forsikring consolidated

10. SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD Gjensidige Baltic, Gjensidige’s ventures in the Baltic States, acquired the Lithuanian general insurance company RESO Europa in January 2008. See also the discussion of this in the interim report. Gjensidige’s board of directors decided to sell the head office at Sollerud, Drammensveien 288. The sales contract includes a leaseback agreement, which entails that Gjensidige will continue to use the building as its head office. See also the discussion of this in the interim report.

The market value of Gjensidige’s ownership interest in Storebrand has fallen after the end of the year, and this will have a significant impact on the group’s net financial income for the first quarter 2008 in the form of a write-down if the market value does not change.

11. CHANGES IN CONTINGENT LIABILITIES OR CONTINGENT ASSETS   SINCE THE LAST BALANCE SHEET DATE Gjensidige Forsikring has a tax exemption for income and assets attributable to fire and livestock insurance. The company has applied the Financial Supervisory Authority of Norway’s sector categories for combined insurance for the calculation of tax exemption. The Central Taxation Office for Large-Sized Enterprises has contested the company’s division between taxable and tax exempt operations and has given notice of a change in the assessment for the years 2004 to 2006. Gjensidige contests this claim, but it has decided to make a provision of NOK 180 million to cover any increased tax charge for 2006 and 2007 as a result of the changes notified. In November 2006, Oslo Areal ASA was ordered through arbitration to pay Newsec Asset Management AS NOK 95 million as compensation for a success fee in accordance with an agreement between the companies. This fee has been settled. Newsec Asset Management instituted new proceedings against Oslo Areal, claiming an additional success fee. The main hearings were held in February, a decision was handed down in favour of Gjensidige Forsikring.

In December 2007, 25 per cent of the equity capital of Gjensidige Forsikring BA was reclassified as equity certificates (primary capital). The equity certificates were transferred free of charge to the Gjensidige Foundation. ­The foundation is required to sell the equity certificates as instructed by Gjensidige, and the plan is to sell these in conjunction with the listing of the certificates on Oslo Børs in 2008. Expenses directly related to the resale of the equityl certificates shall be charged to the Gjensidige Foundation in connection with the execution of the sale. As of 31 December 2007 around NOK 53 million related to the future resale of the equity capital certificates has accrued. The expenses have been classified as a claim against the Gjensidige Foundation. This claim is contingent on a successful stock exchange listing and execution of the resale.

Gjensidige Forsikring consolidated

fourth quarter 2007  21

12. equity CAPITAL nOTE FOR GJENSIDIGE FORSIKRING BA Class I capital Equity

NGAAP NOK million

certificate

Retained earnings as of 01.01.07 Issuance of equity certificates 1 Total Ownership fraction 2 OB Change in pension liabilities 3,4 OB Change in Real Estate 3,4 OB Change in Real Estate, subsidiaries 3,4 Total restated OB

3,860.0 3,860.0

3,860.0

Premium fund

–

–

Translation differences Actuarial gains and losses, pensions 3 Profit for the year

Cohesion fund

–

–

3

Other capital

–

Total Class I capital

–

479.8

–

Other capital

Total Class II capital

Total NGAAP

15,440.9 15,440.9 (3,860.0) – – 11,580.3 15,440.9 75.0 %

(257.2) 85.9

(257.2) 85.9

(771.6) 257.7

(771.6) 257.7

(1,028.8) 343.5

59.1

59.1

177.3

177.3

236.4

(112.2)

3,747.8

(336.7) 11,244.2

14,992.0

(35.2) (77.0)

(35.2) (77.0) 479.8

(105.6) (231.0) 1,439.4

(140.8) (308.0) 1,919.2

(224.4)

4,115.4 25.0 %

RECONCILIATION IFRS VS NGAAP NOK million

Class I

NGAAP, unconsolidated result Reversal of goodwill amortisation in subsidiaries and associates Reversal of net change in security provision Interest on fire alarm systems receivables Impairment on financial assets available for sale Other IFRS, consolidated result

479.8 30.2 71.3 6.2 26.5 5.8 619.7

NGAAP equity 31.12.2007, unconsolidated Goodwill etc in subsidiaries and associates Security provision recognised as equity under IFRS Discounting of fire alarm systems receivables Other provisions Deferred tax IFRS equity 31.12.2007, consolidated

Premium fund

– 15,440.9 3,860.0 (3,860.0) 3,860.0 11,580.9 25.0 %

479.8 3,860.0

Earned capital

11,580.9

-

(105.6) (231.0) 1,439.4 13,020.3

4,115.4 35.8 1,276.7 (20.3) (10.1) (322.1) 5,075.3

-

(673.3)

12,347.0 16,462.4 75.0 %

Class I I 1,439.4 90.5 213.8 18.7 79.4 17.5 1,859.3

Total 1,919.2 120.6 285.1 24.9 105.9 23.3 2,479.0

12,347.0 16,462.4 107.3 143.1 3,830.3 5,107.0 (60.8) (81.1) (30.4) (40.5) (966.3) (1,288.4) 15,227.2 20,302.5

Definitions 1. The General Meeting of Gjensidige Forsikring BA passed a resolution to issue equity certificates in October 2007. The issue was carried out through a reclassification of 25 per cent of the equity capital, which corresponds to NOK 3,860 million, as equity certificates (primary capital) as of 1 January 2007. The equity certificates were transferred free of charge to the Gjensidige Foundation. After the issuance of the equity certificates Gjensidige’s general insurance and insurances of the person customers at any given time have a 75 per cent financial interest in the company, while the Gjensidige Foundation has 25 per cent. 2. The company’s ownership fraction represents the ratio between Class I capital and the sum total of Class I capital and Class II capital based on the most recent audited company accounts approved by the general meeting. 3. In accordance with Gjensidige’s articles of association, transactions that are to be entered directly against equity shall be entered in such a way so as to avoid a change in the ownership fraction, unless otherwise stipulated by a mandatory rule of law, or the transactions are a result of an injection or withdrawal of capital by primary capital certificate holders or customers, or a merger with another mutual insurance company. This rule applies correspondingly in the event of a change in the accounting policies, a correction to earlier annual accounts and other similar account entries that are not made in accordance with the all-inclusive income concept. 4. After tax

interim report

Equity as at 31.12.07 Ownership fraction 2

Class II capital

22  fourth quarter 2007

Gjensidige Forsikring consolidated

key figures NOK million gjensidige forsikring consolidated Return on assets 8 Equity Return on equity annualised 1 Capital adequacy 2 Solvency margin 3 general insurance Market shares non-marine insurance Norway (FNH) per 3Q07 Gross premium written   Private  Commercial Total Norway  Other Nordic countries   Baltics  Eliminations Total Premiums, net of reinsurance 4 Premiums earned, net of reinsurance   Private  Commercial Total Norway  Other Nordic countries   Baltics Total Loss ratio, net of reinsurance 5   Private  Commercial Total Norway  Other Nordic countries   Baltics Total Cost ratio, net of reinsurance 6   Private  Commercial Total Norway  Other Nordic countries   Baltics Total

% NOK million % % %

4th q. 2007

4th q. 2006

1.1-31.12 2007

1.1-31.12 2006

1.3

4.5

6.3 20,302.5 15.4 28.9 492.6

9.2 19,017.3 24.2 41.6 645.2

%

30,5

31.2

NOK million NOK million NOK million NOK million NOK million NOK million NOK million %

1,781.0 927.5 2,708.5 588.9 128.1 (333.1) 3,092.3 98.9

1,682.0 850.0 2,532.0 96.2 81.4 2,709.6 98.0

7,910.6 5,464.7 13,375.3 1,810.4 432.6 (388.2) 15,230.0 98.4

7,619.8 5,705.0 13,324.8 273 .3 81 .4 13,679.5 97.6

NOK million NOK million NOK million NOK million NOK million NOK million

2,011.6 1,002.7 3,014.4 704.1 125.0 3,843.4

1,842.4 1,336.1 3,178.5 89.5 66.5 3,334.6

7,729.8 5,072.7 12,802.6 1,685.3 360.2 14,848.0

7,337.5 5,527.2 12,864.7 257.4 66.5 13,188.6

% % % % % %

77.8 69.7 75.1 81.8 64.3 76.0

57.3 89.2 70.7 57.7 68.1 70.3

74.3 85.2 78.7 81.7 63.7 78.6

65.5 90.7 76.3 56.1 68.1 75.9

% % % % % %

17.3 16.3 17.0 20.0 33.9 18.1

25.4 17.7 22.1 60.7 34.7 23.4

18.7 13.4 16.6 21.4 31.6 17.5

21.1 13.5 17.9 64.5 34.7 18.9

% % % % % %

95.1 86.1 92.1 101.7 98.2 94.1

82.7 106.9 92.9 118.3 102.8 93.7

93.0 98.6 95.3 103.1 95.4 96.1

86.6 104.2 94.2 120.6 102.8 94.8

2,762.7 97.2

0.3 82.1

5.0 24.0

(58.3) 16.9

Combined ratio 7   Private  Commercial Total Norway  Other Nordic countries   Baltics Total Equity  Other Nordic countries   Baltics Return on equity annualised  Other Nordic countries   Baltics

NOK million NOK million 1

% %

Gjensidige Forsikring consolidated

fourth quarter 2007  23

4th q. 2007

NOK million PENSION and savings Management of capital (GPF) Management of capital (GIR) Number of customers (pension) Number of customers (saving) Customers (pension) with insurance agreements Customers (saving) with insurance agreements Equity 9 Return on equity annualised 1

1.1-31.12 2006

188.0 53.0 6,372 2,936 4,652 2,496 236.5 (14.5)

264 .0 75.0 5,490 1,226 4,554 1,116

188 .0 53 .0 6,372 2,936 4,652 2,496

574.0 613.0 16,205 6,120 13,126 5,080 299.0 (45.9)

1,276.3 725.7 56.9 0.7 6,248 3.029

NA NA NA NA NA NA

3,381.4 1,701.1 50.3 0.7 22,244 11,516 602.0 (38.5)

NOK million %

NOK million NOK million % %

1.1-31.12 2007

NOK million %

Definitions: 1 Profit before tax for the period / average adjusted equity for the period 2 Net subordinated capital / risk-weighted calculation basis, calculated for the group based on NGAAP 3

The solvency margin is calculated in accordance with the rules of the Financial Supervisory Authority of Norway

4 Premiums written, net of reinsurance / gross premiums written (total general insurance operations) 5 Claims incurred, net of reinsurance / premium income, net of reinsurance 6 Insurance-related operating expenses / premium income, net of reinsurance 7 Loss ratio, net of reinsurance + cost ratio, net of reinsurance 8 Net financial income as a percentage of the average financial assets including property, excluding Gjensidige Bank and Gjensidige Pension and Savings 9

Includet suggested group contributions

NA NA NA NA NA NA NA NA

interim report

BANKing SERVICES (start-up January 2007) Gross lending Deposits Deposit ratio Net interest Number of registered customers Customers with insurance agreements Equity 9 Return on equity annualised 1

NOK million NOK million

4th q. 2006

gjensidige.no

Main Office GJENSIDIGE Drammensveien 288 P.O. box 276 1326 Lysaker Phone +47 915 03100