Gjensidige Forsikring (Hold, TP: NOK160.00) - Incumbents set to come out on top
We have reduced 2018–2020e EPS by ~1% on the back of weaker Q4 premiums and underwriting, this was only partly offset by the higher run-off gains guidance. We believe that a gradual phase out of the traditional Norwegian bonus model for car insurance is likely to benefit incumbents such as Gjensidige in the Norwegian P&C market, as its advantage on risk pricing becomes more important. Gjensidige remains our sector top pick, and is trading at a P/E of 16x versus 19–20x for Nordic peers. We reiterate HOLD and our NOK160 target price.Gjensidige Forskring provides insurance products to private and commercial customers in Norway, Denmark, Sweden and the Baltic states. Co.'s activities are divided into six segments in addition to the asset management unit which manages Co.'s investment portfolio. The Private segment provides a range of general insurance products besides banking, savings and investment products. The Commercial segment provides a range of general insurance products to the commercial and municipality markets. Co.'s investment portfolio includes all investment funds in Co. except for investment funds in the Pension and Savings and Retail Bank segments. Co.'s other segments include Nordic and Baltics.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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