Gjensidige Advances as Better Weather Limits Claims: Oslo Mover

Gjensidige Forsikring ASA, Norway’s largest insurer, climbed to a record in Oslo as better weather in the Nordic region led to lower-than-expected claims, boosting profit and contributing to a dividend that beat estimates.

Gjensidige, based in Lysaker, rose as much as 4.5 percent to 95 kroner, the highest intraday level since the company started trading shares in December 2010. The stock was up 1.3 percent as of 12:35 p.m., making it the biggest gainer on the Bloomberg Europe 500 Insurance Index after Sampo Oyj. More than 1.1 million shares have been traded so far, 60 percent more than the three-month average daily volume.

The insurer, which is seeking to cut costs and boost profitability as it tries to increase its market share in the Nordic region, posted fourth-quarter net income of 1.01 billion kroner ($183 million), it said today. That’s up from 575.9 million kroner a year earlier and beat the 835 million-krone average of 13 analyst estimates compiled by Bloomberg.

The better than expected performance was driven “an abnormally low-level of large claims,” Pareto Securities AS said in a note to clients. Gjensidige’s commercial Norway unit posted better than expected earnings due to an “absence of large weather-related claims and a good underlying development,” the broker said.

The company’s 6.85 kroner dividend also beat Pareto’s estimate of 6.50 kroner and a consensus of 6.25 kroner, said Pareto, which has a hold recommendation on Gjensidige.

Combined Ratio

The insurer’s combined ratio, a measure of claims and costs as a proportion of premiums, improved to 86.4 percent in the fourth quarter from 95.7 percent a year ago, according to its report. That compares with an average of 91 percent, according to three analyst estimates compiled by Bloomberg.

Like its European competitors, Gjensidige is preparing for stricter capital rules as regulators seek to impose common standards for insurers through rules known as Solvency II. The rules aren’t expected to be fully implemented before Jan. 1, 2015, Norway’s FSA said in a letter published on its website on Feb. 4. Further delays aren’t ruled out, the authority said.

Gjensidige owns 24 percent of Storebrand ASA, Norway’s second-largest publicly-traded insurer, which was up 0.5 percent as at 27.39 kroner as of 12:30 p.m. Storebrand slumped as much as 10 percent in intraday trading yesterday before closing down 8.4 percent as the insurer’s profit missed estimates and it said it needs more reserves to cover longer life-spans.