Investing.com -- Shares of Gjensidige Forsikring surged 8.6% following the release of its fourth-quarter financial results, which exceeded market expectations. The Norwegian insurer reported a profit of NOK 1,203 million, a substantial 25% above the consensus, largely due to a robust performance in its insurance services.
Barclays (LON:BARC) analysts commented on the results, "We expect a positive price action on the print today, with all headline figures materially better than expectations. Margins should further accelerate as price increases continue and inflation eases. Solvency now at strong levels, supporting higher total dividends."
The company's insurance revenues reached NOK 10,019 million, surpassing consensus by approximately 2% and marking an 11.2% increase YoY on a like-for-like basis. This growth was primarily fueled by pricing adjustments in the Private sector, with property insurance prices climbing 11% and motor insurance prices up by 15%, compared to claims inflation of 11% and 6%, respectively. January saw even steeper price hikes, with property and motor insurance rates rising 17% and 19%, respectively.
The insurance service result stood out at NOK 1,670 million, 32% ahead of expectations, thanks to a significant improvement in the loss ratio. The loss ratio improved by 3.8 percentage points to 71.1%, driven by a 4.8% betterment in the underlying frequency loss ratio, particularly in Norway.
Large losses in the cost of risk (CoR) were 1 percentage point lower at 3.1%, balanced by virtually no run-off gains at 0.1% and a slight increase in risk adjustment to 0.4%. The underlying combined ratio was 3.8 percentage points better than the consensus.
However, the pre-tax loss in Pensions stood at NOK -58 million, contrasting with the consensus forecast of a NOK 65 million profit, impacted by negative mark-to-market results due to higher rates. The investment result was NOK 208 million, significantly outperforming the consensus by roughly NOK 130 million, positively influenced by high running yields, narrowing credit spreads, and favorable equity markets.
Solvency improved to 185%, approximately 5 percentage points better than expected, and increased 21 percentage points quarter over quarter. This was mainly due to the approval of the storm module in the PIM, which contributed an 18% increase announced in November.
The total dividend per share (DPS) was set at NOK 10, with NOK 9 as ordinary and NOK 1 as a special dividend, which is about 5% higher than the market consensus.
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