PROSPECTUS

Vardia Insurance Group ASA

(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 Brs 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 Brs
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
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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 Brs, and (iii) the listing of the New Shares on Oslo Brs. 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 BRS 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
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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 Brs and (iii) listing of the New Shares on Oslo Brs.
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 Groups 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
warnings

This summary should be read as an introduction to the Prospectus.

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
prospectus by
financial
intermediaries

Not applicable.

Section B Issuer and any guarantor

B.1

Legal and
commercial
name

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

B.2

Domicile/
Legal form/
Legislation/
Country of
incorporation
Key factors of
operations and
principal
activities

Vardia is incorporated in Norway as a Norwegian Public Limited Liability Company (nw.

allmennaksjeselskap), and is registered with the Norwegian Register of Business
Enterprises with registration number 994 288 962. The Company's registered office is
Haakon VII's gate 2, 0161 OSLO, Norway. Vardia is subject to Norwegian law, hereunder
inter alia the Norwegian Public Limited Liability Companies Act.
The Groups main focus is on 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.

Significant
recent trends
affecting the
Issuer and the

Except for changes in EEA-legislation applicable to insurance companies as further

described in this Prospectus, there are no known trends, uncertainties, claims, obligations
or occurrences which are likely to have a significant effect on Vardia or the insurance
industry.

B.3

B.4a

B.5

B.6

industry in
which it operates
Description of
group

Notifiable voting
rights

Vardia is the parent entity in the Group which consists of the following wholly owned
subsidiaries:
- Vardia Forsikring AS (Norway)
- Vardia Frskring AB (Sweden)
- Vardia Forsikringsagentur A/S (Denmark)
- Vardia Eksterne Kanaler AS (Norway)
- Vardia Agencies AS (Norway)
- Rein Forsikring AS (Norway)
To the Company's knowledge, Aakvik Holding AS (1,674,733 shares, 5.19% of the share
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
historical key
financial
information

Except for the table included under the heading "Summary of gross turnover" which are
not sourced from the Company's consolidated annual accounts, the below tables show
condensed versions of Vardia's (i) consolidated income statements, (ii) consolidated
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)
Turnover ...................................................................................
Agency business and premiums on sold policies for next year
Gross written premiums ...........................................................

2012

2013

2014

345.1
(171.9)
173.2

717.8
(146.1)
571.7

1.322.6
(156)
1,166.6

Consolidated income statements

2012 (IFRS
audited)

2013 (IFRS
audited)

2013 (IFRS,
restated)

2014 (IFRS
audited)

Gross written premiums ...........................................................

Premiums reinsured ................................................................
Premiums written for own account...........................................

173.2
(129.3)
43.9

571.2
(426.9)
144.9

571.7
(426.9)
144.9

1,166.6
(869.5)
297.1

Premiums earned for own account ...........................................

Profit/(loss) from technical accounts before changes in
security reserve ................................................................

14.9

98.1

98.1

224.3

(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

(NOK millions)

Consolidated balance sheets

(NOK millions)
Total assets .............................................................................
Total equity ............................................................................

2012 (IFRS
audited)

2013 (IFRS
audited)

2013 (IFRS,
restated)

2014 (IFRS
audited)

390.7

1,017.4

852.3

1,632.7

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
financial
information

Not applicable.

B.9

Profit forecast or
estimate

The Group's result for Q1 2015 is estimated by the Company to be a total loss of
approximately NOK 50-60 million.

B.10

Audit report
qualifications

Not applicable.

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 noncompliance with its solvency margin requirements (or the applicable capital requirements
under Solvency II) during the third quarter of 2015.
The Companys 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 Groups 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
type and the
class of the
securities and
the security
identification
code
Currency

The offer price in the Offering is denominated in Norwegian kroner.

C.3

Number of
issued shares
and par value

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

C.4

Rights attached
to the shares

All issued Shares have the same rights. The Shares to be issued under the Offering will
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
the free
transferability of
the shares
Application for
admission to
trading on a
regulated market

Except for statutory ownership limitations and approval requirements at certain ownership
thresholds, which are applicable to all insurance companies, and any lock up agreements
entered into, Vardia's Shares are freely transferable.

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.

C.2

C.6

C.7

The Company has one class of shares in issue. The New Shares offered in the Offering
will in all respect be equal to the existing Shares of the Company, once the New Shares
have been issued and registered with the Norwegian Register of Business Enterprises and
the VPS. The Company's Shares are registered in VPS under ISIN NO 0010593544.

The Company's existing Shares are listed on Oslo Brs.

The Company expects commencement of trading in the New Shares on Oslo Brs on or
about 10 June 2015. The Company has not applied for admission to trading of the Shares
on any other stock exchange or regulated market.

Section D Risks

D.1

Key risks
relating to the
issuer and its
business

Vardia is exposed to inter alia risk factors related to:

- Market cyclicality
- Competition
- 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 Vardias 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
relating to the
shares

The Shares are exposed to inter alia risk factors related to:
- Fluctuation in the share price
- 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
Brs 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

estimated
expenses

The gross proceeds to the Company from the Offering will be NOK 375 million.
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

offer and use of
proceeds

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 Companys 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 Brs 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 Companys 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.

Vardias business model continues to generate growth and it is the Company's

board of directors 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
conditions of the
offer

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. Shareholders who are
registered in the Companys 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 Brs 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.

10

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
material to the
offer

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 its affiliates 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

11

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.

E.5
E.6
E.7

Selling entity
and lock-up
agreements
Dilution
Expenses
charged to the
investor

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.
In connection with their underwriting, the Underwriters and the PP Underwriters have
undertaken lock-up obligations until the earlier of (i) the expiry of the Subscription Period
in the Offering, and (ii) 31 May 2015.
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.
Not applicable. The expenses related to the Offering will be paid by the Company.

12

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 Companys 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 Companys 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 GROUPS 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 Groups 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
Groups 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 Groups 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.

13

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-forprofit 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

14

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 Vardias 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 Companys 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

15

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.

16

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.

17

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 Groups senior management team possesses extensive operating experience, industry knowledge and an indepth 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 Vardias success. Furthermore, the Groups 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 Groups senior management or employees.
The Groups 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
Groups 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
Groups 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
Companys 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 Groups 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 Companys
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 Groups 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 Groups operations. Vardia cannot give any assurance that it will be able to retain and attract qualified
management and employees or that the Groups current operational and financial systems and controls will be

18

adequate as the Group grows. This could ultimately have an adverse effect on the Groups 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

Vardias 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 Groups 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 Companys 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 companys
ability to pay dividends, or otherwise transfer funds, to parent and/or holding companies. Restrictions, by law or
regulations can affect the Companys 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.

19

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
Companys 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 Companys 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 shareholders 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 Brs and/or the
market value of the Subscription Rights may fluctuate

An active trading market in the Subscription Rights may not develop on Oslo Brs. 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.

20

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 Brs, 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 Companys financial performance or prospects or in the prospects for companies in Vardias 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 Companys 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,

21

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.

22

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

ge Korsvold
Chairman of the
Board

Karl Hie
Deputy chairman of
the Board

Line S. Bakkevig
Board member

Nina C. Gullerud
Board member

Nils Aakvik
Board member

Ole Erik Alns

Board member
(Employee
representative)

23

4.

CAUTIONARY NOTE

4.1

FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking" statements, including, without limitation, projections, estimates,
plans and expectations regarding the Groups 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 Companys 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
Groups present and future business strategies and the environment in which the Group will operate. Factors that
could cause the Groups 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 Companys 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 Companys expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. Factors that could cause the Groups 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.

24

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 Companys
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
BDOs 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 BDOs 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.
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 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 Brs 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

25

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 Companys 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.

Vardias business model continues to generate growth and it is the Company's board of directors 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 Private Placement is fully underwritten by a guarantee consortium consisting of existing shareholders and
certain other investors.
As part of the Companys 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).

26

Shareholders who are registered in the Companys 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 Companys share capital in connection with the Rights Issue was
passed by the AGM:
"The Companys 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 Brs 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.

27

5.

The shares may not be subscribed by shareholders (or other persons) who, in the Companys
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.

8.

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.

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 Brs 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 Brs. 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 Brs
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

28

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 Companys 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

29

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 Companys 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)

(II)

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

30

(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;

(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."

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 Companys 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

31

(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 Companys 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

32

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 Brs 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 Brs 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 Brs 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

33

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.
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 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 Brs 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:

34

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.

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:
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.
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").

35

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 subscribers 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 subscribers 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 subscribers
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 subscribers 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
subscribers 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

36

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 Brs 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

37

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 Companys website www.vardia.com, the Company intends to use Oslo
Brs' 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 Companys Shares are registered in VPS, the Norwegian Central Securities Depository. The Shares
securities number is ISIN NO 0010593544. The registrar for the Companys 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 Brs
under the ticker symbol "VARDIA".
5.18

SHARE CAPITAL FOLLOWING THE OFFERING

As at the date of this Prospectus, the Companys share capital is NOK 2,579,359.04 divided into 32,241,988
shares, each with a par value of NOK 0.08. The Companys 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 Companys 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
Sand Grove Capital Opportunities Master
Funds
Home Capital AS

Box 3314, SE-103 66 Stockholm, Sweden

10,777,000

32-36 Duke St, St James, GB-London SW14 6DF, England

10,777,000

Frederik Stangsgt. 22-24, 0201 Oslo, Norway

10,777,000

Victoria India Fund AS

c/o Andensgruppen, 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.

8,729,370

Norway Marine Insurance AS

601 Carlson Parkway, Suite 330, USA-Minnetonka MN

55305, USA
Vestbrynet 4, 1176 Oslo, Norway

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

38

8,400,000

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 Zrich, 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

Strmstangen 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
Busebakk AS

Flerengstrand, 7900 Rrvik, Norway

Hybyvegen 38, 3517 Hnefoss, Norway

4,200,000
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 Mndalen, 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

Grnland 46, 3045 Drammen, Norway

3,919,000

Charles Ashley Heppenstall

15 Ch Du Molan, CH-1223 Cologny, Switzerland

3,919,000

stlandske Pensjonistboliger AS

Setra vei 18, 0786 Oslo, Norway

3,919,000

Leif Inge Slethei AS

Postboks 14, 4052, Ryneberg, 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

vre Smestadvei 6 A, 0378 Oslo, Norway

3,020,000

Karl Hie

sliveien 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 Gteborg, Sweden

2,157,000

Vikna Invest AS

Flerengstrand, 7900 Rrvik, Norway

2,100,000

Williksen Invest AS

Flerengstrand, 7900 Rrvik, Norway

2,100,000

Pine River Ultra Master Fund Ltd.

2,047,630

Brian Chang Holdings Limited

601 Carlson Parkway, Suite 330, USA-Minnetonka MN

55305
20 Stn Ming Lane #03-55, Singapore 5139687

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 Frvaltning AB

Baldersuddvgen 26, SE-134 38 Gustavsberg, Sweden

1,400,000

AHJ Holdings Limited

1,400,000

Lunner Legesenter

2 Minister Court, Mincing Lane, GB-London EC3R 7BB,

England
Hvelsrudvegen 3, 2730 Lunner, Norway

Peder Veiby

Pavelsgate 1, 0454 Oslo, Norway

1,400,000

1,750,000

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 Bnes, Norway

1,250,000

MCE Holding AS

Nedre Smrsvei 15 B, 5238 Rdal, Norway

1,079,000

Caaby AS

c/o Andensgruppen, Stortingsgt 28, 0161 Oslo, Norway

1,050,000

Arne Bjrhn

Engelsbreksplan 2, SE-114 34 Stockholm, Sweden

1,000,000

39

Rosy AS

c/o Myhre, Ullernveien 24b, 0280 Oslo, Norway

863,000

Helge Schjtt

Hkon Stresv. 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 Underwriters 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

Funds
Skeie Alpha Invest

32-36 Duke St, St James, GB-London SW14 6DF, England

41,179,000

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 Mndalen, Norway

1,425,000

Leif Inge Slethei AS

Postboks 14, 4052, Ryneberg, 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

vre Smestadvei 6 A, 0378 Oslo, Norway

1,098,000

Provobis Invest

Lilla Bommen 1, SE-411 04 Gteborg, Sweden

40

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 Smrsvei 15 B, 5238 Rdal, Norway

392,000

Helge Schjtt

Hkon Stresv. 23, 5232, Paradis, Norway

314,000

Olav Grande

Nordbergvn. 64, 0875 Oslo, Norway

314,000

Each PP Underwriters 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

41

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 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 Companys
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 investors
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

42

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

COMPANYS 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 Companys
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 Companys
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.

43

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 Companys 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 Groups 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
Frskring 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 Groups history, from incorporation in 2009 to date:
2009
June

Scandinavian Insurance Group AS (SIG) was established as a sales agent by Brge Leknes,
Rune Arneberg and Pl 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 Alns, 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 Frskring 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 Frskring 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.

44

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, 8th April

2015
February /
March

The Company's accounting of activated costs and direct variable costs was changed as was
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 Groups 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.

45

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.

Vardias 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:

6.4

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 Groups 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.
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 Frskring 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.

46

6.5

DESCRIPTION OF THE COMPANIES IN THE GROUP

6.5.1

Vardia Insurance Group ASA

The Groups holding company, which owns 100% of the shares in the subsidiaries.
The Groups 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. Brge Leknes, who is formally an
employee of Vardia, acts as CEO of Vardia Forsikring AS.
6.5.3

Vardia Frskring AB

Vardia Frskring AB is owned 100% by Vardia and is a Swedish private limited liability company. Vardia
Frskring 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 Frskring AB operates the call
centres in Lule, Skellefte and Sundsvall, with the administrative office located in Stockholm.
Vardia Frskring AB employed 190 people as at 31 December 201. The CEO is Andreas nstorp.
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.

47

Vardia Forsikringsagentur A/S employed 72 people as at 31 December 2014. The CEO is Carsten Mller.
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. Brge 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 GROUPS OPERATIONS

The Groups 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 Vardias 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 Groups new sales per month from January 2013 until March 2015.

48

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) Vardias 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.

49

The Groups 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.
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, lorries,
buses and working machines.
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
Familiekonomi). 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 Cooperative 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.

50

6.7.2

Sweden

Vardia Frskring AB is the operating entity for the Swedish operations, with an administrative centre in
Stockholm and call centers in Lule, Skellefte and Sundsvall. Insurance has been written for the Groups own
accounts since May 2011.
The Groups 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:
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
and campers.
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.
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.
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 (Gteborgsposten, Vstmanlands Lns 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 Frskring 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

51

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.
Vardias 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 Groups 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.

52

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 Groups 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 Vardias 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 Groups 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 Groups 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

53

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 Vardias 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
Motor & Liability
Workers Compensation and Commercial Personal accident
Personal Accident, Sickness and Travel
Group life (one year risks), Other illness and Child insurance
Medical Expenses
Individual life and disability (one year risk)
Natural Catastrophes XL

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 Groups 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 Groups 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 Groups 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.

54

2011

2012

2013

2014

1 6711

Cash and cash equivalents

31 505

43 754

131 053

184 977

Total financial assets

31 505

43 754

132 724

184 977

NOK thousands
Investments in equity shares

The investments in equity shares were shares in Rein Forsikring AS which the Company acquired in 2014.

The management and Board reviewed the Companys 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 Groups 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 Companys 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.

55

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 Companys 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.

56

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 Companys 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.

57

7.

INDUSTRY OVERVIEW

7.1

VARDIAS 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

Denmark

1%

Commercial insurance

Other

1%

1%

7%

1%

Other
Sweden

Combined

40 %
59 %

Motor
31 %

31 %

32 %
61 %

Norway

Motor

38 %
Combined

Total NOK 1,167 million

7.2

Total NOK 868 million

Total NOK 299 million

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
(NOK billion) (1)
(as at 31 December 2013)

10y CAGR of premiums

in local currency
(2004-2013)

Market
concentration(2)
(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).

(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/)

Source: Norges Bank (http://www.norges-bank.no/en/Statistics/exchange_rates/).

Excluding the maritime, offshore and aviation sectors

(4)

Source: Insurance Sweden (http://www.svenskforsakring.se/Huvudmeny/Fakta--Statistik/Statistics-list/).

(5)

Source: The Danish Insurance Association

Excluding AFA sickness insurance (avtalsfrskring)

(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)

58

In Norway, the Groups market share as at 31 December 2014, was approximately 1.3% when comparing
Vardias premium portfolio to the FNO statistics. In Sweden, the Groups 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 Groups 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 Frskrings 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 industrys 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

(NOK billion)

premium portfolio

Motor

20.6

37.2

Fire & special perils

18.5

33.5

Line of business(1)

(2)

Individual

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

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

Premium growth

(2)

____________
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.

59

(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 1s market share as of 2013 (1.0% in both 2011 and 2012). Byggmesterforsikring included

(3)

Gouda Reiseforsikring included in Gjensidiges market share as of 2014. Vardia included as of 2014. Landbruksforsikrings market

in KNIFs market share as of 2013.

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
Groups 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)
Premium growth

2004
(2)

2005

2006

2007

2008

2009

2010

2011

2012

2013

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)

60

(1)

Excluding AFA sickness insurance (avtalsfrskring). 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

Lnsfrskringar

32.2

30.5

29.3

29.4

29.6

30.5

If

22.5

20.4

20.1

20.1

19.5

Folksam

15.8

15.3

14.8

14.5

14.1

Trygg-Hansa

18.6

18.0

17.8

17.7

Others

10.9

15.8

18.0

18.3

Total

100.0

100.0

100.0

100.0

2010

2011

2012

2013

2014

28.8

28.9

29.5

29.8

30.3

19.3

18.9

18.7

18.5

18.2

18.4

14.9

15.2

15.4

15.4

15.9

16.4

17.2

16.6

16.0

15.8

16.2

16.0

15.7

19.6

18.7

21.1

21.2

20.4

20.1

19.2

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 (avtalsfrskring). 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 Lnsfrskringar, If, Folksam and Trygg-Hansa
with market shares of 30.3%, 18.4%, 16.4% and 15.7%, respectively as at 31 December 2014. Vardias 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 %)
Premium growth

2004
(1)

2005

2006

2007

2008

2009

2010

2011

2012

2013

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/inenglish/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.

61

(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.

62

8.

BOARD OF DIRECTORS,
GOVERNANCE

8.1

BOARD OF DIRECTORS

MANAGEMENT,

EMPLOYEES

AND

CORPORATE

In accordance with Norwegian law, Board is responsible for administering the Companys affairs and for
ensuring that the Companys operations are organized in a satisfactory manner.
The Companys 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 reelected. 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
ge Korsvold (born 1946), Chairman of the Board
ge 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 Hie (born 1957), Deputy chairman of the Board
Karl Hie 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. Karls 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 Nistu AS and Kristiansund
Baseselskap AS. He also holds several board positions in companies like Farout AS, Bkw AS, Smlen
Handelskompani AS and has previously been a board member in Surnadal Sparebank and Lery 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.

63

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 Bachelors degree in
International Business from Augustana College, US, and a Masters degree in International Affairs from the
University of Kentucky, US.
Ole Erik Alns (born 1966), Deputy board member (employee representative)
Ole Erik Alns was elected as deputy board member (employee representative) by the employees in Vardia in
February 2014. Alns joined Vardia in 2010, and has the primary responsibility for the Companys products
and underwriting. He has extensive insurance experience. Before joining Vardia, Alns 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 yri (born 1975), Deputy board member (employee representative)
Robert yri was elected as deputy board member (employee representative) by the employees in Vardia in
March 2015. yri 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, yri 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. yri 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

ge Korsvold

Chairman

Year 2011

Year 2016

567,5001)

Karl Hie

Deputy Chairman

Year 2011

Year 2016

437,741

Nils Aakvik

Board member

Year 2011

Year 2016

4,0632)

Line Sanderud Bakkevig

Board member

Year 2013

Year 2017

2,500

Nina Charlott Gullerud

Board member

Year 2013

Year 2016

1,333

Ole Erik Alns

Board member
(employee

Year 2014

Year 2016

359,4033)

64

Shares owned

Oskar Dag Sylte

Robert yri

representative)
Deputy board member
Deputy board member
(employee
representative)

Year 2014

Year 2016

Year 2014

Year 2016

3,478

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", Alns 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 Vardias executive management, material business contacts, and major
shareholders. Please see Section 8.5 "Remuneration and benefits" for further information on the Boards
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

Bjrnar Eilertsen

Chairman

Year 2014

Year 2016

Kjell Hetland

Member

Year 2014

Year 2016

521,579 1)

Knut Erik Haugerud

Member

Year 2015

Year 2016

1,033,1242)

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 Nring 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, ge Korsvold,

65

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

Norway
Brge Leknes

Finance
Ivar K. Z. Pedersen

Group Services & Vardia Agencies AS

Sigmund Romskoug

IR & Communication
Aleksander Nordahl

Marketing
Pl Lauvrak
Sweden
Andreas nstorp

Denmark
Carsten Mller

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

66

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.
Pl Lauvrak (born 1974), Marketing director
Pl 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.
Brge Leknes (born 1975), CEO Vardia Forsikring AS
Brge 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 Bod 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 nstorp (born 1974), CEO Vardia Frskring AB
Andreas nstorp has been the CEO of Vardia Frskring AB since 2011 and has a master in Business
Administration and Management from Lund University. Prior to becoming the CEO of Vardia Frskring AB
nstorp held several positions within Moderna Frsakringar, inter alia as a business unit director from 2007 to
2011 and head of business development in 2006 and 2007. In addition, nstorp has completed various studies
within inter alia leadership and management. nstorp is a Swedish national and citizen.
Carsten Mller (born 1974), CEO Vardia Forsikringsagentur A/S
Carsten Mller has been Vardia Forsikringsagentur A/S' CEO since September 2013 and holds a Master of
Business Administration (AVT Business School). Mller 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 Mller held different positions within If, inter alia as Head of Alliances and Media
Contact in Denmark. During the years from 2002 to 2005 Mller held different positions within Eniro, inter alia
as a division manager. Mller 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). Mller is a Danish national and citizen.
8.4.2

Executive shareholdings

The table below shows the managements direct and indirect ownership in Vardia:
Name

Position

Rune O. Arneberg

Interim CEO

Ivar K. Z. Pedersen

CFO

Sigmund Romskoug

Pl Lauvrak

Senior Vice President and

Managing Director of Vardia
Agencies AS
Investor Relation &
Communication Director
Marketing Director

Brge Leknes

CEO Vardia Forsikring

Aleksander Nordahl

67

Shares owned
381,9191)
109,759
152,8292)
2,016
513,6603)
1,002,8924)

Andreas nstorp

CEO Vardia Frskring AB

Carsten Mller

CEO Vardia Forsikringsagentur A/S

124,875
2,000

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, Brge Leknes, Pl 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

Ivar K. Z. Pedersen
Andreas nstorp

20 August 20141)
20 August 20141)

Number of shares
purchased1)
20 834
35 000

Price per share

(NOK)
12.72
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.

68

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) nstorp, who is entitled to 6 months' severance pay, and (iii) Mller, 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:
Other1)

Name

Position

Salary

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

Pension / premiums

Total

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.

Number of employees

8.6.1

2014

2013

2012

500

379

230

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

69

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
Ivar S. Williksen
Rune Arneberg
Brge Leknes
Ivar K. Z. Pedersen
Sigmund Romskoug
Pl Lauvrak
Ole Erik Alns
Andreas nstorp
Total

Number of options
granted in total
69,808
62,500
62,500
62,500
62,500
56,250
56,250
52,500
484,808

Number of options vested

and outstanding
0
20,834
20,834
0
20,834
18,750
0
0
17,500

Number of options yet to

be vested
23,270
41,667
41,667
20,833
41,667
18,750
18,750
17,500
323,207

In addition, the Company has entered into an option agreement with Carsten Mller, 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
Mller 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
Tier 1
Tier 2
Tier 3
Tier 4
Total

Number of employee
in tier
1
8
11
11
31

Number of granted options

in total for the tier
78,000
512,000
385,000
275,000
1,250,000

Number of options per

person in the tier
78,000
64,000
35,000
25,000
-

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.

70

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:

71

Name

Current directorships/partnerships

Previous directorships/partnerships

CEO: Gyljandi AS

CEO: Orkla ASA, Vika Finans AS,

Kistefos AS

Board of directors
ge Korsvold

Chairman: Kjde & Kjde AS, AS

Dikkedokken, RK Offshore AS, Kjde
Transport AS, AS Rolf Kjde, Morten
Mjr Grimsrud Stiftelse, Kjde Shipping
AS, and Green Resources AS.
Board member: Tyveholmen AS,
Tyveholmen Kontorfellesskap AS,
Green Resources AS, Gyljandi AS,
Aweco Invest AS, Timex Group B.V.
and Fondsfinans AS.

Chairman: Rieber & Sn AS, Rolf Kjde

Skip I AS, Orkla Brands AS, Infront AS,
Bergmoen AS, Bergmoen Tomt AS,
Bergmoen st 2 AS, Gardermoen
Nringspark AS, Sagveien Boligbygg
KS, Waterfront Shipping AS, Western
Bulk ASA, Bryggen 2005 AS, Odin
Viking AS, Odin Viking 2 AS, Kistefos
Venture Capital Ii DA, Viking Invest 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 st 3 AS,
Bergmoen Sr 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 Hie

Deputy board member: Gynekolog

Birgitte Benthien AS, Limelight AS

72

CEO: Booz & Company AS

Board member: Booz & Company AS,
Volvat Medisinske Senter AS

Nils Aakvik

CEO: Aakvik Holding AS, Nistu AS,

Kristiansund Baseselskap AS
Chairman: Aakvik Holding AS, Nistu
AS, Nistu II AS
Board member: Fjordfish AS (deputy
chairman), I A Grimsmo og Hustru Anna
Grimsmos Legat, Lkve Eiendom AS,
Bkw AS, Smlen Handelskompani AS,
Hgw AS

Board member: El-Trade AS, Farout AS,

Surnadal Sparebank, Smla Klekkeri og
Settefiskanlegg AS, Lery Aakvik Rogn
og Stamfisk AS
Deputy board member: Fiskehelsa BA
Partner: Aakvik Samdrift DA

Deputy board member: Farout AS,

Castor Drilling Solution AS, Brottsj
AS, Kristiansund Baseselskap AS, Mre
Og Romsdal Skornfond AS, Pikhaugen
AS, Retail Property II AS, Retail
Property II Lillesand AS, Vikan
Nringspark Invest AS, Retail Property
II Mysen AS, Pikhaugen II AS
Owner: Nils Aakvik (sole
proprietorship)
Partner: Halvya Samdrift DA
Point of contact: Nistu II AS
Line Sanderud Bakkevig

CEO: Innovemus AS
Board member: Raw Performance AS
and Pro Venture Seed II

Board member: Aarland & Johnsen

Maskin AS

Member of Advisory Board Sintef

Teknologi og Samfunn
Deputy board member: Holmen
Fondsforvaltning AS, Innovemus AS
Owner: Line Bakkevig (sole
proprietorship)
Nina Charlott Gullerud

Bjrn Mhlum

73

Oskar Dag Sylte (sr.)

CEO: Rauma Industribygg AS, Dag AS

and Oskar Invest AS
Chairman: Brushuset AS, Lerstadveien
517 AS, Tusten Skiheiser AS, Olav Den
5te Invest AS, Doppelmayr AS and
Oskar Sylte Mineralvannsfabrikk AS
Board member: Lofoten Hotellinvest
AS, Dag AS, Noro Fotball AS, Oskar
Invest AS, Nringsinvest Mre Og
Romsdal AS, Nordmre og Romsdal
Eiendom AS, Bjrnsonhusets Venner
AS, Operaen i Kristiansund AS, Sangens
Hus AS, Molde Fotball AS,
Bjrnsonhuset AS, Gunnar Nisja AS, AS
Solo, Romsdal Processing AS, Kirkenes
Eiendom AS, Rauma Industribygg AS
and Sunndal Industribygg AS

CEO: Akvainvest AS, Nord Vest

Havbruk AS and Oskar Sylte
Mineralvannsfabrikk AS
Chairman: Romsdal Processing AS and
Villa Organic AS
Board member: Oskar Sylte
Mineralvannsfabrikk AS, Nord Vest
Havbruk AS and Akvainvest AS
Deputy board member: Villa Organic AS

Deputy board member: Oceana Invest

AS and ODSS AS
Point of contact: Sunndal Industribygg
AS
Ole Erik Alns

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

Consulting AS, BPR Invest AS

Chairman: Insurance Invest AS

Deputy board member: Stenao Holding

AS
Ivar K. Z. Pedersen

Board member: Skyen Terrasse

Barnehage
CEO: Nemi Forsikring AS
Chairman / board member: Norsk
Finansnrings konomigruppe

Sigmund Romskoug

CEO: Trimar AS
Chairman: Rom Invest AS, Norway
Marine Insurance AS, Ivar Lrum AS
Board member: Markedssjefene AS,
Trimar AS, Vikna Fiskeriselskap AS

74

Chairman: Vikna Eiendom AS, Ris

Invest AS, Negotiorum Gestio AS
Board member: Insurance Invest AS, Siv
Ing P Stenersen AS
Point of contact: Siv Ing P Stenersen AS

Aleksander Holand
Nordahl

Pl Lauvrak

CEO: PLV Holding AS, BPR Invest AS

Chairman: PLV Holding AS

Board member: Vardia Insurance Group

ASA and Siza Forsikring AS
Deputy board member: Insurance Invest
AS

Brge Leknes

CEO: BLS Holding AS

Chairman: BLS Holding AS

CEO: Insurance Invest AS, Bod

Forsikringssenter AS, 110% Holding AS

Board member: Rein Forsikring AS

Chairman: 110% Holding AS, Bod

Forsikringssenter AS

Owner: Leknes Consulting, BPR Invest

AS

Board member: Insurance Invest AS

Andreas nstorp

Carsten Mller

Chairman: Tigerspring A/S

Board member: Anne Crone A/S (Home

Real Estate Agent).

CEO Mller 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".

75

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 Vardias 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.

76

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 Companys
management regarding future events and circumstances. The Companys 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 Companys financial audit resulted in a need for changes in the annual
accounts, which lead to a significant weakening of the Companys 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 Companys
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

77

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)

Turnover ..................................................................................
Agency business and premiums on sold policies for next year
Gross written premiums ...........................................................

2012

2013

2014

345.1
(171.9)
173.2

717.8
(146.1)
571.7

1.322.6
(156)
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 Companys 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.

78

9.2.2

Summary of income statement data

2012 (IFRS
audited)

2013 (IFRS
audited)

2013 (IFRS
restated)

2014 (IFRS
audited)

Gross written premiums ........................................................... 173.2

Premiums reinsured ................................................................ (129.3)
Premiums written for own account ................................
43.9
Change in premium reserves gross ................................
(109.3)
Change in premium reserves ceded ................................
80.3

571.2
(426.9)
144.9
(178.0)
131.2

571.7
(426.9)
144.9
(178.0)
131.2

1,166.6
(869.5)
297.1
(247.3)
174.6
224.3

(NOK millions)

Premiums earned for own account ................................

Allocated return on investment transferred from
non-technical accounts.............................................................

14.9

98.1

98.1

0.3

1.6

1.6

3.2

Other insurance-related income ...............................................

20.2

2.0

2.0

18.4

(16.1)

(91.7)

(91.7)

(185.2)

Claims incurred for own account ................................

Premium rebates and other profit agreements ..........................

0.0

0.0

0.0

0.0

Insurance-related operational costs for own account ............... (65.6)

Profit/(loss) from technical accounts before
changes in security reserve .................................................... (46.4)
Changes in security reserve. .................................................... (3.0)

(67.8)

(159.7)

(243.7)

(57.9)
(10.9)

(149.9)
(10.9)

(183.0)
(15.3)

Profit/(loss) from technical accounts ................................

(49.5)
Net financial income ................................................................
0.1
Allocated return on investment transferred to
technical accounts ................................................................
(0.3)

(68.8)
0.4

(160.7)
0.4

(198.2)
14.4

(1.6)

(1.6)

(3.2)

Non-technical result ................................................................

(0.2)

(1.2)

(1.2)

11.2

Profit/(loss) before tax ........................................................... (49.7)

Tax ...........................................................................................
13.5

(70.0)
18.2

(162.0)
(1.7)

(187.1)
(0.9)

Profit/(loss) for the period

(36.2)

(51.8)

(163.7)

(187.9)

0.0

1.9

0.7

(0.8)

Comprehensive income

(36.2)

(50.0)

(163.0)

(188.8)

Gross loss ratio (%)...............................................................

Gross cost ratio (%) ..............................................................
Gross combined ratio (%) ..................................................

87.4
116.9
204.4

86.5
31.9
118.4

86.5
55.2
141.8

88.3
41.5
129.8

Loss ratio for own account (%) .............................................

Cost ratio for own account (%) .............................................
Combined ratio for own account (%)................................

108.5
441.3
549.9

93.6
69.1
162.7

93.6
162.9
256.5

82.6
108.7
191.2

Profit/(loss) after tax per share* ................................

(0,71)

(0,69)

(8,67)

(6,15)

Other result components ..........................................................

*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:
2013 (IFRS
audited)
98.1

Financial statements 2013

Premiums earned for own account
Claims incurred for own account

Change

98.1

(91.7)
1)

Insurance-related operational costs for own account

1)

Technical result

79

2013( IFRS restated)

(91.7)

(67.8)

(92.0)

(159.7)

(68.8)

(92.0)

(160.7)

Profit before tax1)

(70.0)

(92.0)

(162.0)

18.2

(19.9)

(1.7)

(51.8)

(111.9)

(163.7)

Other result components4)

1.9

(1.2)

0.7

Comprehensive income 5)

(50.0)

(113.0)

(163.0)

2)

Tax

Profit /(loss) for the period

3)

1)
2)
3)
4)
5)

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.
The reduction of MNOK 19.9 relates to change in deferred tax assets not recognized in the annual accounts.
The reduction of in total MNOK 111.9 is the total of 1) + 2) above (MNOK 92.0 +MNOK 19.9).
The reduction of MNOK 1.2 is related to changes in exchange rate differences due to 1).
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.

80

9.2.3

Summary of balance sheet data

2012 (IFRS

audited)
(NOK millions)
Goodwill ................................................................................
3.7
Other intangible assets ...........................................................
6.4
Investments ................................................................
0.0

2013 (IFRS
audited)

2013 (IFRS
restated)

2014 (IFRS
audited)

57.3
26.4
1.7

57.3
26.4
1.7

57.8
69.3
0

Reinsurers part of gross technical reserves ...........................

Receivables ................................................................
Tangible fixed assets other than buildings and real
estate ......................................................................................

110.3
96.6

330.8
244.2

330.8
244.2

792.0
423.3

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

Prepaid expenses and accrued interest ................................

97.8

169.8

53.7

97.2

Total assets ................................................................

Paid equity .............................................................................
Earned equity ................................................................

390.7
185.0
(85.4)

1,017.4
384.0
(134.9)

852.3
384.0
(342.0)

1,632.7
557.5
(530.8)

Total equity ................................................................

Gross technical reserves.........................................................

99.5
155.6

249.1
469.4

41.9
469.4

26.7
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
Deferred tax benefit1)
2)

Prepaid expenses and accrued interest

3)

Total assets

4)

Earned equity
Total equity5)

Other incurred expenses

and prepaid income6)
Total liabilities6)
7)

Total equity and liabilities

1)
2)

3)
4)
5)
6)
7)

2013 (IFRS
audited)
49.0

Change
(49.0)

2013 (IFRS
restated)
0.0

169.8

(116.1)

53.7

1,017.4

(165.1)

852.3

(134.9)
249.1

(207.1)
(207.2)

(342.0)
41.9

41.1

42.1

83.2

768.3

42.1

810.4

1,017.4

(165.1)

852.3

The reduction of MNOK 49.0 relates to deferred tax assets not being recognized in the annual accounts.
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).
The total reduction of MNOK 165.1 comprise 1) + 2) above (MNOK 49.0 + MNOK 116.1).
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.
The total reduction of MNOK 207.2 comprise 4) above
The increase of MNOK 42.1 relates to reclassification of unearned reinsurance commissions mentioned under 2) c. above.
The total reduction of MNOK 116.1 is described under 2) above. The total reduction of MNOK 165.1 comprise 5) and 6) above.

81

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
Companys 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 Groups 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 Companys 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 Companys 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 Companys negative
net operating income as shown in the consolidated income statements above, while the positive development of
paid equity reflects the Companys 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 Companys 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)
Cash flow from operating activities
Premiums paid, net of reinsurance ................................................
Claims paid, net of reinsurance .....................................................
Expenses paid to suppliers ............................................................

82

2012 (IFRS)

2013 (IFRS)

2014 (IFRS)

89.1
(25.1)

461.2
(217.4)

1,018.3
(579.1)

(49.1)

(156.9)

(257.5)

Expenses paid to employees, pension schemes and payroll

taxes ..............................................................................................
Net interest and financial income..................................................
Other insurance-related income ....................................................
Net cash flow from operating activities
Cash flow from investing activities
Net cash flow from shares and interests in subsidiaries ................

(89.1)

(129.7)

(221.7)

0.1

0.4

4.2

20.2

6.9

(29.9)

(54.0)

(35.6)

(65.6)

0.0

(0.5)

0.0

Net cash flow from shares and interests in associated

companies .....................................................................................
Net cash flow from obligations and certificates ............................
Net cash flow from acquisitions of intangibles and plant and
equipment .....................................................................................

0.0
0.0

(0.5)
0.0

0.0
0.0

(13.8)

(19.8)

(42.3)

Net cash flow from investing activities

(13.8)

(20.8)

(42.3)

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

Cash flow from financing activities

Dividends ......................................................................................

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 ...................................

Cash and cash equivalents at the end of the period

0.0

0.0

0.0

43.8

131.1

185.0

The Groups 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 Companys cash holdings since 31 December 2014 and up to the
date of this Prospectus.
9.2.5

Summary of Changes in Equity

The Companys 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.

83

Share

(NOK millions)

Other

Other

Natural

Share

premium

paid

earned

Minority

perils

Guarantee

Total

capital

account

equity

equity

interests

reserve

scheme

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

0.0

0.0

0.0

0.0

(5.7)

0.0

0.4

5.2

0.0

0.0

1.6

(1.6)

0.0

0.0

0.0

(0.8)
0.0
equity ................................................................

0.0

0.0

(0.8)

0.0

0.0

0.0

Other

Equity as of 1.1.2014

Change in provisions in 2014

Expensed stock options ................................

0.0
FX gains/(loss) recognised in

(2.4)

0.0

0.0

0.0

(2.4)

0.0

0.0

0.0

8.6

0.0

0.0

0.0

8.6

0.0

0.0

0.0

(187.1)

0.0

0.0

0.0

(187.1)

0.0

0.0

0.0

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

(3.3)

0.0

0.0

0.0

(3.3)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

26.8

2.6

552.4

2.5

(538.3)

0.0

0.4

7.1

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

0.5

0.0

0.0

0.0

0.5

0.0

0.0

0.0.

(3.5)

0.0

0.0

0.0

(3.5)

0.0

0.0

(162.0)

0.0

0.0

0.0

(162.0)

0.0

0.0

0.0

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

0.2

0.0

0.0

0.0

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

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

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

0.4

0.0

0.0

0.0

0.0

Other adjustments in
connection with prior periods.
Result before OCI
Other result items

Actuarial gains and losses in

pension...
Tax on other comprehensive
income
Equity as of 31.12.2014

Equity as of 1.1.2013

FX gains/(loss) recognised in
equity..
Other adjustments in
connection with prior periods.
Result before OCI
Other result items

Actuarial gains and losses in

pension...
Tax on other comprehensive
income

Paid in 2012, registered in

0.0

FX gains/(loss) recognised in

84

equity ................................................................
(0.1)
0.0

0.0

0.0

(0.1)

0.0

0.0

0.0

(36.2)
Net profit/(loss) ................................

0.0

0.0

0.0

(36.2)

0.0

0.0

0.0

99.5

0.7

183.9

0.4

(85.5)

0.0

0.0

0.1

Equity as of 31.12.2012

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 Groups
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 Groups 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 Companys insurance system and all substantial estimates
are discussed and agreed with the Companys 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 Companys 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

85

discussed and agreed with the Companys 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 Companys 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 Companys 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
Premiums ceded ............................................................... (198.6)
77.9
Premiums for own account

529.7
(399.8)

61.7
(46.5)

867.9
(644.9)

129.9

15.2

223.0

Gross business
Earned premiums ............................................................. 224.6
Claims incurred ............................................................... (193.8)
Insurance-related operational costs ................................ (93.6)
(62.8)
Insurance-technical result

418.7
(352.8)
(177.0)
(111.2)

50.1
(28.2)
(24.0)
(2.1)

693.3
(574.8)
(294.6)
(176.1)

199.5
8.9
208.4

340.2
11.8
352.0

22.7
(4.9)
17.8

562.4
15.9
578.3

Unearned premiums ......................................................... 152.1

Gross claims provision..................................................... 99.5
76.2
Gross liability ................................................................
7.1
Minimum security provisions ................................

288.0
123.2
102.4
13.4

23.4
15.5
13.2
1.1

463.4
238.1
191.9
21.6

Gross claims incurred

Current year ................................................................
Past years ................................................................
Total financial year

86

2013*

Combined

Motor

Other-land based

Total

Premiums written
Gross premiums ............................................................... 160.5
Premiums ceded ............................................................... (118.5)
Premiums for own account
42.0

298.0
(225.0)
73.0

29.3
(22.5)
6.7

487.7
(366.0)
121.7

Gross business
Earned premiums ............................................................. 113.4
Claims incurred ............................................................... (102.1)
Insurance-related operational costs ................................ (36.1)

206.5
(176.3)
(65.8)

22.1
(21.8)
(7.0)

342.0
(300.2)
(109.0)

(24.8)

(35.6)

(6.7)

(67.2)

91.6
11.6

175.2
23.5

0.2
0.0

283.6
34.8

109.8
89.9
47.0
35.6
3.9

211.3
174.0
58.3
46.4
7.2

0.2
8.0
13.8
9.7
1.1

318.5
271.8
119.0
91.8
12.3

Combined

Motor

Other-land based

Total

Premiums written
Gross premiums ...............................................................
55.5
Premiums ceded ............................................................... (42.6)

107.6
(81.4)

5.0
(2.3)

168.2
(126.3)

12.9

26.3

2.7

41.9

Gross business
Earned premiums .............................................................
20.0
Claims incurred ............................................................... (13.6)
Insurance-related operational costs ................................ (14.8)
Insurance-technical result
(8.4)

42.1
(39.4)
(30.9)
(28.2)

1.0
(0.9)
(0.8)
(0.7)

63.1
(53.9)
(46.4)
(37.2)

Gross claims incurred

Current year ................................................................
Past years ................................................................
Total financial year

(14.6)
0.0
(14.6)

(38.4)
0.0
(38.4)

(0.9)
0.0
(0.9)

(53.9)
0.0
(53.9)

40.4
7.7
6.1
1.7

73.9
19.0
9.0
3.1

3.2
1.0
0.3
0.4

117.4
27.7
15.4
5.2

Insurance-technical result
Gross claims incurred
Current year ................................................................
Past years ................................................................
Total financial year
Unearned premiums .........................................................
Gross claims provision.....................................................
Gross liability ................................................................
Minimum security provisions ................................
2012*

Premiums for own account

Unearned premiums .........................................................

Gross claims provision.....................................................
Gross liability ................................................................
Minimum security provisions ................................

*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.

87

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
Premiums ceded ............................................................... (87.0)
26.7
Premiums for own account

93.4
(71.6)
21.8

91.7
(66.1)
25.6

298.7
(224.6)
74.0

(69.7)

79.5
(73.6)
(37.7)
(31.8)

73.7
(46.7)
(22.9)
4.0

225.9
(236.6)
(86.9)
(97.6)

117.7
(14.7)
102.9
Total financial year
Unearned premiums ......................................................... 59.2
Gross claims provision..................................................... 71.8
51.8
Gross liability ................................................................
4.0
Minimum security provisions ................................

65.3
24.2
89.5
49.4
34.6
28.0
3.4

45.5
(4.9)
40.6
38.5
86.8
80.8
3.0

228.5
4.6
233.1
147.1
193.3
160.5
10.4

Combined

Motor

Other-land based

Total

Premiums written
Gross premiums ...............................................................
29.1
Premiums ceded ............................................................... (21.9)
Premiums for own account
7.3

40.0
(30.0)
10.0

14.9
(9.0)
5.9

84.0
(60.9)
23.1

Gross business
Earned premiums .............................................................
Claims incurred ...............................................................
Insurance-related operational costs ................................
Insurance-technical result ................................

17.1
(9.8)
(5.5)
1.9

23.0
(18.5)
(7.3)
(2.8)

11.6
(12.3)
(3.7)
(4.4)

51.7
(40.5)
(16.5)
(5.3)

8.9
0.0

6.3
0.0

0.2
0.0

22.4
(0.1)

9.4
13.9
6.2
4.9
1.5

6.7
19.2
8.5
5.9
2.1

0.2
4.2
9.9
7.9
0.9

23.6
37.2
24.6
18.7
4.4

Gross business
Earned premiums ............................................................. 72.8
Claims incurred ...............................................................(116.3)
Insurance-related operational costs ................................ (26.3)
Insurance-technical result ................................
Gross claims incurred
Current year ................................................................
Past years ................................................................

2013*

Gross claims incurred

Current year ................................................................
Past years ................................................................
Total financial year
Unearned premiums .........................................................
Gross claims provision.....................................................
Gross liability ................................................................
Minimum security provisions ................................

88

2012*

Motor

Other-land based

Total

1.6
(1.2)
0.4

1.5
(1.1)
0.4

2.0
(0.7)
1.2

5.0
(3.0)
2.0

Gross business
Earned premiums .............................................................
Claims incurred ...............................................................
Insurance-related operational costs ................................

0.5
(0.2)
(0.3)

0.1
0.0
(0.1)

0.2
(0.3)
(0.1)

0.8
(0.5)
(0.6)

Insurance-technical result

(0.1)

(0.0)

(0.2)

(0.3)

Gross claims incurred

Current year ................................................................
Past years ................................................................

(0.2)
0.0

0.0
0.0

(0.2)
0.0

(0.5)
0.0

Total financial year

Unearned premiums .........................................................
Gross claims provision.....................................................
Gross liability ................................................................
Minimum security provisions ................................

(0.2)
1.1
0.2
0.1
0.2

0.0
1.4
0.0
0.0
0.2

(0.2)
1.7
0.2
0.1
0.1

(0.5)
4.2
0.4
0.3
0.6

Combined

Premiums written
Gross premiums ...............................................................
Premiums ceded ...............................................................
Premiums for own account

*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)

Sweden

Norway
2013

Denmark

2014

2013

2014

2013

2014

684.4
127.5
1.9
7.7

293.6
53.7
0.9
3.8

473.7
96.1
1.3
10.7

0.0
0.0
0.0
0.0

8.5
0.6
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)

(91.6)

(79.4)

(64.8)

(2.3)

(26.6)

Gross written premiums ................................ 278.1

Premiums earned for own account ................................
44.4
Allocated investment returns ................................0.7
Other insurance-related income ................................
(1.9)

Operating profit/(loss)

(68.1)

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.
Norways 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 Companys 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.

89

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.
The Companys 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 (as
further described below and in Section 11.4).
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.
Should the above measures prove insufficient to secure the Groups 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 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 Companys funding structure is considered to be sound and diversified. There are no current restrictions on
the use of the Companys 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

90

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

01.01.2013*

31.12.2013*

31.12.2014

31.03.2015

Change in
Q1 2015

0.7
3.0
180.8

2.1
0.0
380.9

2.6
0.0
552.4

(179.1)

(343.9)

(538.3)

0.4

1.0

2.5

2.6
0.0
552.4
(593.7)
2.5

0.0
0.0
0.0
(55.4)
0.0

5.9

40.1

19.2

(36.2)

(55.4)
1.8

(NOK millions)
Share capital
Paid, not yet registered
Share premium account
Retained earnings1)
Other equity
Equity

2)
3)

Reinsurance reserve
Goodwill / other intangible assets/ deferred tax
benefit Total4)

(4.8)

(13.1)

(29.2)

(27.4)

(10.0)

(83.7)

(127.1)

(128.3)

(1.2)

(8.9)

(56.7)

(137.0)

(191.9)

(54.9)

Assets with a risk weight of 0%6)

Assets with a risk weight of 20%7)
Assets with a risk weight of 50%8)

110.3
43.8
46.9

330.8
131.1
53.7

792.0
185.0
97.2

Assets with a risk weight of 100%9)

101.3

253.0

431.5

846.4
103.1
99.3
484.4

54.4
(81.9)
2.1
52.9

Net regulatory capital

5)

Weighted assets 31.12

10)

Capital adequacy ratio (%)11)

133.6

306.1

517.1

554.7

37.6

6.7

(18.5)

(26.5)

(34.6)

(8.1)

31.03. 2015

Change in
Q1 2015

(NOK millions)
Net regulatory capital12)
Share of security provisions13)
Provisions for natural disaster fund14)
Solvency margin capital15)
16)

2012

2013

2014

(8.9)
2.6

(56.7)
7.5

(137.0)
14.4

(191.9)
15.3
0.2

(54.9)
0.9
0.1

0.0

0.0

0.1

(6.3)

(49.2)

(122.5)

(176.4)

(53.9)
7.9

51.3

69.9

114.2

122.1

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)

Minimum required solvency margin

* 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)

2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)

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.
The reduction of NOK 55.4 million comprise 1) above.
The increase of NOK 1.8 million relates to change in required minimum reinsurance reserve.
The total increase of NOK 1.2 million relates to an increase in other intangible assets.
The total decrease of NOK 54.9 million comprises 2), 3) and 4) above.
The increase of NOK 54.4 million relates to increase in reinsurance share of gross technical reserves.
The decrease of NOK 81.9 million relates to decrease in cash and cash equivalents.
The increase of NOK 2.1 relates to increase in prepaid costs and earned income not receives.
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.
The increase of NOK 37.6 million comprises the weighted changes of 6)-9) above.
The decrease of 8.1 percent point refers to change in capital adequacy ratio.
The change of NOK 54.9 refers to an increase in the net regulatory capital.
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.
The increase of NOK 0.1 relates to provisions for natural disaster fund recorded in Q1 2015.
The decrease of NOK 53.9 million comprise 12), 13) and 14) above.
The change of NOK 7.9 million refers to an increase in the minimum required solvency margin.
The decrease of NOK 61.8 million comprise 15) and 16) above.
The decrease of 37.2 percent point refers to change in solvency margin capital in percent of minimum requirements. .

91

Capital adequacy and solvency margin requirements and compliance on Company

level

31.12.2014

31.03.2015

Primary capital
Capital Ratio
Solvency Margin Capital requirement

118.5
17%
114.2

Solvency Margin Capital

133.0

96.5
13.4%
122.1
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 Groups capitalization and liabilities as of 31.12.2014 and 31.03.2015. .
31.12.2014 31.03.2015

(NOK millions)

Reserves for liabilities1) ................................................................................................

1,082.0

Change in Q1 2015

1,169.0

87.0

0.0
Guaranteed ................................................................................................................................

0.0

0.0

Secured ................................................................................................................................

0.0

0.0

Unguaranteed/unsecured1)................................................................................................
1,082.0

1,169.0

87.0

Financial liabilities2) ................................................................................................524,2

521.0

(3.2)

Guaranteed ................................................................................................................................
0.0

0.0

0.0

Secured ................................................................................................................................
0.0

0.0

0.0

521.0

(3.2)

2.6

2.6

0.0

552.4

552.4

0.0

Unguaranteed/unsecured2)................................................................................................
524.2
Shareholders equity ................................................................................................

Share capital ................................................................................................

Other paid equity ................................................................................................

92

Earned equity3) ................................................................................................

(535.3)

(590.4)

(55.1)

7.1

7.1

0.0

Total3) ................................................................................................................................
26.7

(28.4)

(55.1)

Guarantee scheme ................................................................................................

1)
2)
3)

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.
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.
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 Companys indebtedness as of 31.12.2014 and 31.03.2015.

31.12.2014 31.03.2015

(NOK millions)

A. Cash1) ................................................................................................................................
185.0

Change in Q1 2015

103.1

(81.9)

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

0.0

0.0

0.0

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

0.0

0.0

0.0

103.1

(81.9)

D. Liquidity (A) + (B) + (C) 1) ................................................................................................

185.0

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

(185.0)

(103.1)

81.9

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

0.0

J. Net current financial indebtedness (I) (E) (D) 1) ................................

93

0.0

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

0.0

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

94

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 Companys 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 Groups 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.

95

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

capital

2012 1 January 2012

Change in Change in
issued share number of
capital (NOK)
Shares

Par value Subscription Total issued Total number of

per Share
price per share capital
issued Shares
(NOK)
Share
(NOK) following change
(NOK)

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

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
AS (contribution in kind)

157,222.22

7,861,111

0.02

7.20

2,076,482.22

103,824,111

Share issue in connection with

exercise of options

3,528.22

176,411

0.02

3.18

2,080,010.44

104,000,522

Share issue in connection with

2014 acquisition of Rein Forsikring
AS (contribution in kind)

24,853.64

1,242,682

0.02

8.00

2,104,864.08

105,243,204

0.08

2,104,864.08

26,310,801

466,666.72

5,833,334

0.08

30.00

2,571,530.80

32,144,135

7,828.24

97,853

0.08

12.72

2,579,359.04

32,241,988

2013 Exercise of warrants

2013

2014 Reverse share split (4:1)

2014 Initial public offering
2014 Exercise of share options

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

96

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.se1, 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
Shares

Percentage
(%)

Skandinaviska Enskilda Banken AB (nominee account)

2,495,047

7.74%

Avanza Bank AB (broker account)

2,214,754

6.87%

BNP Paribas Sec. Services S.C.A (nominee account)

1,966,303

6.10%

Aakvik Holding AS

1,674,733

5.19%

Norway Marine Insurance AS

1,363,342

4.23%

Nordnet Bank AB (nominee account)

1,200,571

3.72%

Canica AS

1,102,208

3.42%

Busebakk AS

1,033,124

3.20%

BLS Holding AS

998,726

3.10%

10

Nilvama AS

932,285

2.89%

11

Vikna Eiendom AS

736,333

2.28%

Full link: https://www.avanza.se/aktier/om-aktien.html/472459/vardia-insurance-group

97

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 Hie

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 Companys Articles of Association, the Companys 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.

98

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 Companys 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 Companys 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 Companys 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

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Any other business to be transacted at the general meeting by law or in accordance with the Companys
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 Companys Articles of Association stipulate a
longer period. The Companys Articles of Association do not include any provisions on this subject. Pursuant to
article 2-6 of the Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys share capital, approval of
merger or demerger, and amendment of the Companys 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 shareholders 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 Companys 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 Companys 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
Companys share register in the VPS or, in the case of a share transfer, report and show evidence of the
shareholders 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 Companys share premium reserve or distributable equity to share capital), the Companys
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 Companys share capital by a subscription for Shares against cash
contributions, Norwegian law provides the Companys 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
Companys 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 Companys distributable equity or from the Companys 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 Companys 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 Companys
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 87 to 810 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 34.

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 nonNorwegian 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 Companys
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 nonNorwegian 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 Companys 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 Companys behalf and in its name. The cost of any such action is not the Companys
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 Companys 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 companys 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 companys share capital, and treasury
shares may only be acquired if the companys 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:

11.3

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

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 acquirers 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 institutions
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 institutions
independence in relation to other business interests.
(d) whether the acquirers 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
(c) holdings which a person coming under section 2-6 owns or is entitled to acquire or to exercise
voting rights for.
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,
(c) an undertaking within the same group as the owner,
(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 applications 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 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 (2015/35).
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.
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.
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 Companys Shares have been listed on Oslo Brs since 8 April 2014.
12.1

INTRODUCTION

Oslo Brs was established in 1819 and is the principal market in which shares, bonds and other financial
instruments are traded in Norway. Oslo Brs is operated by Oslo Brs ASA, which also operates the regulated
marketplace Oslo Axess.
12.2

TRADING AND SETTLEMENT

Continuous trading on Oslo Brs 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 Brs 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 Brs except for
the general obligation of brokerage houses that are members of Oslo Brs to report all trades in stock exchange
listed securities.
12.3

INFORMATION, CONTROL AND SURVEILLANCE

Under Norwegian law, Oslo Brs is required to perform a number of surveillance and control functions. The
Surveillance and Corporate Control unit of Oslo Brs 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 Brs and Oslo Axess, are subject to disclosure requirements pursuant to the
Norwegian Securities Trading Act and Oslo Brs 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 Companys 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 Brs through any broker that is a member of Oslo Brs,
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 Brs 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 Brs 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 Brs
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
Brs 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 companys 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 Brs
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 shareholders 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

111

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 brokers 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

112

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 Groups 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 recipients 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 Groups 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 investors representations and warranties contained herein. Any provision of false information or
subsequent breach of these representations and warranties may subject the investor to liability.

115

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 Companys 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

116

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,

117

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 networth 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;

118

(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 Companys 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 Companys 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 all 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 Companys
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
Prospectus

Disclosure
requirements
of the
Prospectus

Reference document and link

Section 9

Audited
historical
financial
information
(Annex I,
Section 20.1)

The Annual Accounts for the year ended 31 December 2012:

http://www.vardia.com/wpcontent/uploads/2014/03/%C3%85rsregnskap-2012-med-signertbalanse-og-beretninger.pdf
The Annual Accounts for the year ended 31 December 2013:
http://www.vardia.com/wpcontent/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf
The Annual Accounts for the year ended 31 December 2014:
http://www.vardia.com/wp-content/uploads/2015/03/Vardia%C3%85rsregnskap-20141.pdf
Auditor's report for the year ended 31 December 2012:
http://www.vardia.com/wpcontent/uploads/2014/03/%C3%85rsregnskap-2012-med-signertbalanse-og-beretninger.pdf
Auditor's report for the year ended 31 December 2013:
http://www.vardia.com/wpcontent/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf
Auditor's report for the year ended 31 December 2014:
http://www.vardia.com/wp-content/uploads/2015/03/Vardia%C3%85rsregnskap-20141.pdf
Vardia's accounting principles:
http://www.vardia.com/wp-content/uploads/2015/03/Vardia%C3%85rsregnskap-20141.pdf

Section 9

Auditor's
report (Annex
I, Section
20.4.1)

Section 9

Section 10.8

16.4

Accounting
policies
(Annex I,
Section 20.1)
Articles of
association
(Annex I,
Section 21.2)
Annual reports
for the last
three financial
years
(Annex I,
Section 20.1)

Vardia's article of association

http://www.vardia.com/wp-content/uploads/2015/03/VardiaVedtekter_19_08_14.pdf
The Annual Accounts for the year ended 31 December 2012:
http://www.vardia.com/wpcontent/uploads/2014/03/%C3%85rsregnskap-2012-med-signertbalanse-og-beretninger.pdf
The Annual Accounts for the year ended 31 December 2013:
http://www.vardia.com/wpcontent/uploads/2014/03/140023_Varida_aarsrapport_komplett.pdf
The Annual Accounts for the year ended 31 December 2014:
http://www.vardia.com/wp-content/uploads/2015/03/Vardia%C3%85rsregnskap-20141.pdf

STATEMENT REGARDING EXPERT OPINIONS

This Prospectus does not refer to any expert opinions.

121

Page (P) in
reference
document
P 6 P 26

P 16 P 45

P 7 P 90

P 27 P 28

P 47 P 48

P 92 P 93

P 21 P 27

P1P3

All

All

All

17.

DEFINITIONS AND GLOSSARY OF TERMS

AGM
Anti-Money Laundering
Legislation
Board

Capital adequacy

Catastrophes
CET
Codan
Code
Company
Combined Ratio

Cost ratio

Earned premiums

EU Prospectus Directive
FIAA
FNO
Forward-Looking Statement
FSA
FSMA
Gjensidige
Gross Combined Ratio
Gross Cost Ratio
Gross Loss Ratio
Gross Premiums Written

The Company's annual general meeting held 9 April 2015.

Applicable anti-money laundering legislation, including the Norwegian
Money Laundering Act of 6 March 2009 No. 11and the Norwegian Money
Laundering Regulations of 13 March 2009 No. 302.
The board of directors of Vardia Insurance Group ASA.
Capital adequacy is an expression for creditworthiness and expresses the
insurance companys ability to handle its insurance liabilities. Capital
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
hail, severe winter weather, other weather related events, floods, fires,
industrial explosions and other man-made disasters, such as terrorist attacks.
Central European Time.
Codan A/S and its Swedish subsidiary Trygg-Hansa Frskrings.
The Norwegian Code of Practice for Corporate Governance of 30 October
2014.
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
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
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
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
2003 regarding information contained in prospectuses, as amended, and as
implemented in Norway.
The Norwegian Financial Institutions and Financing Activity Act of 1988.
The Norwegian Financial Services Association.
Projections, estimates, plans and expectations regarding the Groups future
financial position, business strategy, plans and/or objectives.
The Financial Supervisory Authority of Norway.
The UK Financial Services and Markets Act of 2000.
Gjensidige Forsikring ASA.
The aggregate of the Gross Claims Ratio and the Gross Cost Ratio.
The gross operating expenses in % of gross premiums earned.
The gross claims incurred in % of gross premiums earned.
Gross premiums written include the amounts the Company has received or is
owed as payment for insurance contracts when the insurance period has

122

Group
IASB
IBNR
IF
IFRS
Ineligible Jurisdictions

Ineligible Persons
Loss ratio
Manager
New Shares
NOK
Norwegian Pool
Norwegian Public Limited
Companies Act
Norwegian Securities Trading Act
Offering
Order
Relevant Member state
ORSA
Payment Date
PP Underwriters
Private Placement
Prospectus
QIB
Qualified Investors
RBNS
Regulation S
Record Date
Reinsurance
Rights Issue
Rule 144A
SME
Solvency margin capital

started.
The Company and its subsidiaries (as defined by section 1-3 of the Norwegian
Public Companies Act).
International Accounting Standards Board.
"Incurred, but not reported".
If P&C Insurance Holding Ltd (a subsidiary of Sampo plc).
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
States, or any other jurisdiction in which it would not be permissible to offer
the New Shares.
Any person who, in the Companys view, are resident in a jurisdiction where
an 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.
The loss ratio expresses the ratio of claims incurred to the earned premiums.
Pareto Securities AS.
375,000,000 new shares to be issued by the Company in the Offering.
Norwegian Kroner, the lawful currency in Norway.
The Norwegian Natural Perils Pool.
The Norwegian Public Limited Companies Act of 13 June 1997 no. 45
(Nw.:"allmennaksjeloven").
The Norwegian Securities Trading Act of 29 June 2007 no. 75 (Nw.:
verdipapirhandelloven).
The Rights Issue and the Private Placement, collectively.
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended.
A Member State of the EEA other than Norway and Sweden which has
implemented the Prospectus Directive.
"Own Risk and Solvency Assessment".
3 June 2015.
The underwriters of the Private Placement listed in Section 5.19.2.
The fully underwritten private placement of 100,000,000 New Shares.
This Prospectus dated 7 May 2015.
Qualified Institutional Buyer, as defined in Rule 144A under the U.S.
Securities Act.
As defined in Article 2(1)(e) of the Prospectus Directive.
"Recorded, but not settled".
Regulation S under the U.S. Securities Act.
11 May 2015.
Reinsurance is a contract between an insurance company and a reinsurer,
where the insurance company transfers a portion of an insurance policy to the
reinsurer.
The fully underwritten rights issue of 275,000,000 New Shares.
Rule 144 under the U.S. Securities Act.
Small and medium enterprises.
The capital that can be counted, pursuant to the regulations, as coverage of the

123

Solvency margin requirements

Subscription Form

Subscription Rights

Subscription Period
Subscription Price
Tryg
U.S. Securities Act
Underwriters
Underwriting (in insurance)
Vardia
VPS
VPS account

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
requirement that must be met is calculated on the basis of the companys
insurance liabilities.
The subscription and application form for the Offering as attached to this
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
(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 Brs.
The subscription period for the Offering commencing on 13 May 2015 and
expiring at 16:30 (CET) on 27 May 2015.
NOK 1.
Tryg A/S.
The United States Securities Act of 1933, as amended.
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
drawing up an insurance contract.
Vardia Insurance Group ASA, the holding company of the group of
companies.
Verdipapirsentralen (Norwegian Central Securities Depository), which
organizes the Norwegian paperless securities registration system.
An account with VPS for the registration of holdings of securities.

124

18.

SAMMANFATTNING

Sammanfattningen stlls upp efter informationskrav i form av ett antal punkter som ska innehlla viss
information. Dessa punkter r numrerade i avsnitt A E (A.1 E.7).
Denna sammanfattning innehller alla de punkter som ska ing i en sammanfattning fr denna typ av
vrdepapper och emittent. Eftersom vissa punkter inte behver ing, kan det finnas luckor i numreringen av
punkterna.
ven om en viss punkt ska ing i sammanfattningen fr denna typ av vrdepapper och Emittent, kan det
frekomma att det inte finns ngon relevant information att ange betrffande sdan punkt. I sdant fall
innehller sammanfattningen en kort beskrivning av aktuell punkt tillsammans med angivelsen ej tillmplig.

Avsnitt A Introduktion och varningar

A.1

Introduktion och
varningar

Denna sammanfattning br endast lsas som en introduktion till Prospektet.

Varje beslut av en investerare att investera i de Nya Aktierna ska baseras p en bedmning
efter att ha beaktat Prospektet i sin helhet.
Om yrkande avseende information i Prospektet anfrs vid domstol, kan den investerare
som r krande i enlighet med den relevanta EU-medlemsstatens nationella lagstiftning,
bli tvungen att bra kostnaderna fr att verstta Prospektet innan de rttsliga frfarandena
inleds.
Civilrttsligt ansvar kan endast lggas de personer som har lagt fram sammanfattningen,
inklusive versttningen drav, men endast om sammanfattningen r vilseledande, felaktig
eller ofrenlig med Prospektet nr den lses tillsammans med de andra delarna av
Prospektet, eller om sammanfattningen inte, nr den lses tillsammans med de andra
delarna av Prospektet, ger nyckelinformation fr att hjlpa investerare i vervgandet av
att investera i de vrdepapper som erbjuds.

A.2

Samtycke till
finansiella
mellanhnders
anvndning av
Prospektet

Ej tillmpligt.

Avsnitt B Emittenten och eventuell garantigivare

B.1

Firma och
handelsbeteckning

Bolagets firma r Vardia Insurance Group ASA och hnvisas ibland till i en kommersiell
kontext som Vardia.

B.2

Emittentens ste
och bolagsform

Vardia r bildat i Norge som ett norskt publikt aktiebolag (No. allmennaksjeselskap) och
r registrerat hos det norska Foretaksregisteret med registreringsnummer 994 288 962.
Bolaget har sitt ste p Haakon VII:s gate 2, 0161 OSLO, Norge. Vardia bedriver sin
verksamhet i enlighet med norsk rtt, bland annat den norska lagstiftningen som gller fr
publika aktiebolag.

B.3

Beskrivningen av
emittentens
verksamhet

Vardias huvudfokus r p marknaden fr sakfrskring och olycksfallsfrskring fr

privatpersoner och sm och medelstora fretag (SME) i Norge, Sverige och Danmark.
Vardia distribuerar sina produkter huvudsakligen genom proaktiva callcenter, utver detta
till frskringsagenter, frskringsfrmedlare och prissammanstllare, bde som del av nr
frskringarna erbjuds under andra varumrken genom samarbetsavtal och under
varumrket Vardia.

125

B.4a

B.5

B.6

B.7

Trender
avseende
emittenten och
de branscher i
vilka emittenten
r verksam
Beskrivning av
Koncernen och
Bolagets plats i
koncernen

Frutom frndringar i EES-lagstiftning som r tillmpliga p frskringsfretag, som

beskrivs mer ingende i Prospektet, finns det inga knda trender, oskerheter, krav,
frpliktelser eller hndelser dr det r sannolikt att de kommer att ha en vsentlig pverkan
p Vardia eller frskringsbranschen.

Strre
aktiegare,
kontroll ver
Bolaget och
anmlningspiktiga personer,
strre aktiegare
samt kontroll

Svitt Bolaget knner till r Aakvik Holding AS (1 608 067 aktier, 5,19 % av
aktiekapitalet) den enda aktiegare som direkt eller indirekt har ett anmlningspliktigt
innehav av aktier.

Utvald historisk
finansiell
information

Vardia r moderbolag i Koncernen, som bestr av fljande helgda dotterbolag:

- Vardia Forsikring AS (Norge)
- Vardia Frskring AB (Sverige)
- Vardia Forsikringsagentur A/S (Danmark)
- Vardia Eksterne Kanaler AS (Norge)
- Vardia Agencies AS (Norge)
- Rein Forsikring AS (Norge)

Varje aktie ger en rst p Bolagets bolagsstmma, oberoende av det totala antal aktier som
den aktiegaren innehar.
Svitt Bolaget knner till, s r Bolaget inte direkt eller indirekt gt eller kontrollerat av
ngon person eller grupp.
Frutom tabellen under rubriken Sammanstllning av bruttoomsttning, som inte r
hrledd frn Bolagets konsoliderade rsredovisning, visar nedanstende tabell en
sammanfattad version av Vardias (i) konsoliderade resultatrkningar, (ii) konsoliderade
balansrkningar, och (iii) konsoliderade kassafldesanalyser fr de tre senaste
rkenskapsren. Vnligen notera att uppgifterna huvudsakligen hmtats frn Bolagets
konsoliderade rsrapport frn 2014 eftersom Bolaget har ndrat vissa av sina
redovisningsprinciper.

Sammanstllning av bruttoomsttning
NOK miljoner (oreviderat)
Omsttning ..........................................................................................
Agentaffr och premier fr slda frskringar fr kommande r
Bruttopremieinkomst ...........................................................................

2012

2013

2014

345,1
(171,9)
173,2

717,8
(146,1)
571,7

1 322,6
(156)
1 166,6

Konsoliderad resultatrkning
(NOK miljoner)

2012 (IFRS
reviderade)

2013 (IFRS
reviderade)

2013 (IFRS,
omrknade)

2014 (IFRS
reviderade)

Premier tecknade fr egen rkning ....................................................

173,2
(129,3)
43,9

571,2
(426,9)
144,9

571,7
(426,9)
144,9

1 166,6
(869,5)
297,1

Premieintkter fr egen rkning .........................................................

14,9

98,1

98,1

224,3

skerhetsreserv...................................................................................

(46,4)

(57,9)

(149,9)

(183,0)

Vinst/(frlust) frn teknisk redovisning .............................................

(49,5)

(68,8)

(160,7)

(198,2)

Vinst/(frlust) fre skatt................................................................

(49,7)

(70,0)

(162,0)

(187,1)

Vinst/(frlust) fr perioden ................................................................

(36,2)

(50,0)

(163,0)

(188,8)

Bruttopremieinkomst ................................................................
Premier fr avgiven terfrskring ....................................................

Vinst/(frlust) frn teknisk redovisning fre ndringar i

126

Brutto totalkostnadsprocent (%) ........................................................

204,4

118,4

141,8

129,8

Totalkostnadsprocent fr egen rkning (%) ................................

549,9

162,7

256,5

191,2

2012 (IFRS
reviderade)

2013 (IFRS
reviderade)

2013 (IFRS,
omrknade)

2014 (IFRS
reviderade)

Totala tillgngar .........................................................................

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

Konsoliderad balansrkning

(NOK miljoner)

Konsoliderat kassaflde
2012 (IFRS)

2013 (IFRS)

2014 (IFRS)

Nettokassaflde frn lpande verksamhet ..................................

(54,0)

(35,6)

(65,6)

Nettokassaflde frn investeringsverksamhet .............................

(20,8)
143,7

(42,3)

Nettokassaflde frn finansieringsverksamhet............................

(13,8)
80,1

Nettokassaflde fr perioden ......................................................

12,2

87,3

53,0

Likvida medel vid slutet av perioden ..........................................

43,8

131,1

185,0

(NOK miljoner)

160,9

B.8

Pro formaredovisning

Ej tillmpligt.

B.9

Resultatprognos

Bolaget berknar att Koncernens resultat fr det frsta kvartalet 2015 kommer innebra en
sammanlagd frlust om cirka 50-60 miljoner NOK.

B.10

Anmrkningar i
revisionsberttelsen
Rrelsekapital

Ej tillmpligt.

B.11

Per dagen fr detta Prospekt har Koncernen inte tillrckligt rrelsekapital fr dess
nuvarande behov under de kommande tolv mnaderna. Fr beskrivningen av
rrelsekapitalet anvnder Bolaget termen rrelsekapital fr att innefatta inte bara kapital
som behvs fr att Bolaget ska kunna betala fr sina frpliktelser i takt med att dessa
frfaller, utan ven kapital som behvs fr att bedriva verksamheten i enlighet med
tillmpliga krav p solvensmarginal och kapitaltckning. Koncernen frvntar att kunna
betala fr sina frpliktelser i takt med att dessa frfaller; dock kan det inte garanteras att
Bolaget fullt ut kommer att kunna uppfylla tillmpliga krav p kapitaltckning och
solvensmarginal under de kommande tolv mnaderna, om Bolaget fortstter att vxa i sin
nuvarande takt.
Baserat p Bolagets nuvarande berkningar (vilka inkluderar nettointkter frn det
garanterade Erbjudandet), kommer Bolaget om inga tgrder framgngsrikt genomfrs
inte att uppfylla kraven p solvensmarginal (eller tillmpliga kapitalkrav under Solvens IIdirektivet) under det tredje kvartalet 2015.
Bolagets underskott av rrelsekapital som syftar till att mjliggra fr Bolaget att uppfylla
dess krav p solvensmarginal under de kommande tolv mnaderna berknas uppg till 50
miljoner NOK, men kommer att minskas i den utstrckning mottgrderna nedan minskar
Bolagets kostnader eller Bolagets krav p solvensmarginal. Bolagets underskott kan ocks
komma att pverkas av infrandet av Solvens II-direktivet, som kommer att implementeras
den 1 januari 2016, bland annat med avseende p hanteringen av efterstllda skulder som

127

innehas av Bolaget.
I syfte att skerstlla att Bolaget fortsatt uppfyller kraven p solvensmarginal avser
Bolaget att ta upp ett efterstllt Tier-2-ln p omkring 75 miljoner NOK. Vidare har
Bolaget tagit initiativ till en rad tgrder i syfte att minska sina kostnader och frbttra sina
resultat framgent. Bolaget rknar med att upptagandet av ett efterstllt Tier-2-ln och de
ovannmnda kostnadsminskningarna r tillrckliga fr att skerstlla att Bolaget kommer
att uppfylla kraven p solvensmarginal under tminstone de tolv fljande mnaderna per
dagen fr detta Prospekt.
Skulle ovan nmnda tgrder visa sig vara otillrckliga fr att uppfylla Koncernens
rrelsekapitalbehov kommer Bolaget att utvrdera andra tgrder ssom minskning av
tillvxten, kad terfrskring, ytterligare nyemissioner, frsljning av tillgngar,
omorganiseringar och/eller frsljning av delar av dess portflj.
Mot bakgrund av ovan och den information som finns tillgnglig per dagen fr detta
Prospekt r Bolaget skra p att tgrderna ovan kommer att vara framgngsrika i att
tillhandahlla tillrckligt rrelsekapital fr dess nuvarande behov under de kommande tolv
mnaderna.
Bolaget kommer att behva stdja sig p de ovan nmnda tgrderna fr att fortsatt
uppfylla kraven p solvensmarginal. Om ingen av finansieringstgrderna ovan genomfrs
eller r framgngsrika, frvntar Bolaget att det kommer att bryta mot de ovan nmnda
kraven vid utgngen av det frsta kvartalet 2016. Om s sker kan det fr Bolaget innebra
att Finanstillsynet meddelar Bolaget frsljningsfrbud, att Bolaget frlorar sitt tillstnd
att bedriva frskringsverksamhet eller att Finanstillsynet krver att Bolagets
frskringsportflj helt eller delvis ska sljas.

Avsnitt C Vrdepapperen
C.1

Slag av
vrdepapper

C.2

Valuta

C.3

Totalt antal
aktier i Bolaget

Per dagen fr Prospektet r det totala aktiekapitalet 2 579 359,04 NOK frdelat p
32 241 988 Aktier, med ett kvotvrde om 0,08 NOK per aktie. Samtliga emitterade Aktier
r fullt betalda.

C.4

Rttigheter som
sammanhnger
med
vrdepapperen

Alla aktier ger lika rtt till innehavaren. De Nya Aktierna som ska emitteras i samband
med Erbjudandet kommer att ge lika rtt till innehavaren som de vriga aktierna i Vardia
frn och med dagen fr registreringen av aktiekapitalkningen hos det norska
Foretaksregisteret.

C.5

Inskrnkningar i
den fria
verltbarheten

Aktierna i Vardia r inte freml fr ngra verltelsebegrnsningar, med undantag fr

lagstadgade garrestriktioner och krav p godknnande vid vissa trskelniver fr gande,
vilka r tillmpliga p alla frskringsbolag, samt eventuella ingngna lock up-avtal.

C.6

Upptagande till
handel

Bolagets aktier r noterade p Oslo Brs.

Bolaget har en typ av utestende aktier. De Nya Aktierna som ges ut i samband med
Erbjudandet kommer i alla avseenden att motsvara de existerande Aktierna i Bolaget, frn
och med tidpunkten d de Nya Aktierna har emitterats och registrerats hos det norska
Foretaksregisteret och hos Verdipapirsentralen (VPS). Bolagets Aktier r registrerade
hos VPS under ISIN NO 0010593544.
Erbjudandepriset i Erbjudandet r denominerat i norska kronor.

Bolaget frvntar att handel med de Nya Aktierna p Oslo Brs inleds p dagen eller
omkring den 10 juni 2015. Bolaget har inte anskt om upptagande till handel av Aktierna
p ngon annan brs eller reglerad marknad.

128

C.7

Utdelningspolicy

Vardia r fr nrvarande i en tillvxtfas, men rknar med att kunna lmna utdelning i
framtiden. Bolaget har till dagens datum inte betalat ngra utdelningar sedan dess
bildande.

Avsnitt D Risker
D.1

Huvudsakliga
risker avseende
emittenten och
dess verksamhet

D.3

Huvudsakliga
risker avseende
vrdepapperen

Vardia r freml fr riskfaktorer relaterade till bland annat:

- Svngningar och cykler i marknaden
- Konkurrens
- Legala och regulatoriska freskrifter
- Tillsynsregleringar
- Risker som rr frndringar av tillmpliga redovisningsprinciper/standarder eller
tolkningar drav
- Lagar och freskrifter avseende skatt och moms
- Risker relaterade till nyligen genomfrda frndringar av Vardias tillmpade
redovisningsprinciper
- Katastrofer, naturkatastrofer och terroristhandlingar
- Frndringar i tillgnglighet av eller kostnader vid terfrskring
- Vsentliga fel i Koncernens frskrings- eller verksamhetskontroll eller
underltenhet att frebygga bedrgeri
- Frskrings- och premierisker
- Tjnsteleverantrer
- Verksamhetsutveckling och anstllningsvillkor
- Renommfrsmring
- Risker rrande tillvxt och tillvxtfrvaltning
- Risker rrande Aktiverade anskaffningskostnader och frlustprvning
- Tvister
- Framtida utdelningar
- Rnteniver
Riskfaktorer relaterade till Aktierna innefattar bland annat:
- Volatilitet i aktiekursen
- Existerande aktiegare som inte deltar i Erbjudandet kan drabbas av en
betydande utspdning av sina innehav
- Det finns en risk att en aktiv handel med Teckningsrtterna p Oslo Brs inte
uppstr och/eller att marknadsvrdet p Teckningsrtterna kan fluktuera
- Om Erbjudandet dras tillbaka frlorar Teckningsrtterna sitt vrde
- Framtida emissioner av aktier eller vrdepapper
- Begrnsad likviditet
- Frvaltarkonton och rstrttigheter
- Svrigheter fr utlndska investerare att verkstlla domar frn andra lnder n
Norge
- Begrnsningar i aktiegares mjligheter att fra talan mot Bolaget
- Valutakurser
- Utspdning
- verltelsebegrnsningar

Avsnitt E Erbjudandet
E.1

Emissionsintkter
och
emissionskostnader

Bolagets bruttointkter frn Erbjudandet kommer uppg till 375 miljoner NOK.
De sammanlagda kostnaderna och utgifterna hnfrliga till Erbjudandet och noteringen
av Teckningsrtterna och de Nya Aktierna berknas uppg till omkring 34 miljoner
NOK. Samtliga kostnader och utgifter kommer betalas av Bolaget.
Fljaktligen kommer den frvntade nettointkten till Bolaget frn Erbjudandet att
uppg till 341 miljoner NOK.

129

E.2a

Motiv och
anvndning av
emissionslikvid

I samband med, och strax innan frdigstllandet av, Bolagets revision av

rsredovisningen fr 2014 var Vardia tvungna att gra frndringar i sina rkenskaper,
vilket kom att innebra en vsentlig frsvagning av Bolagets finansiella stllning och
solvensmarginal p koncernniv.
Fr det frsta slogs i revisionen av rkenskaperna fast att moderbolaget Vardia
Insurance Group ASA var tvunget att skriva ned sina aktiverade kostnader till fljd av
att bokfrda frsljningskostnader undervrderats. Den sammalagda frsvagningen fr
2012, 2013 och 2014 var 144 miljoner NOK, varav 49 miljoner NOK avser tidigare r.
Fr det andra, enligt revisorn, var redovisningen av direkta rrliga frsljningskostnader
i Koncernredovisningen avseende tidigare r inte frenlig med tillmpliga
redovisningsstandarder. Den sammanlagda frsvagningen av rkenskaperna p grund av
detta uppgr till 135,6 miljoner NOK i Koncernens konsoliderade balansrkning, varav
109 miljoner NOK avser tidigare r.
Vidare stller IAS 12 punkt 35 strnga krav p redovisning av uppskjutna
skattefordringar fr skattefrluster. Per 31 december 2014 bedmdes att dessa krav inte
var uppfyllda. Skattevinsten om 49 miljoner NOK i balansrkningen den 31 december
2013 tas drfr inte upp i den omrknade balansrkningen och har fljaktligen
reducerats till 0 NOK.
Omstndigheterna ovan, kom som en verraskning fr bde styrelsen och ledningen.
Bolaget har granskats av samma revisor sedan verksamheten pbrjades 2009, och har
mottagit rena revisionsberttelser utan anmrkningar fr alla tidigare rkenskapsr,
inklusive 2013, och koncernens konsoliderade rkenskaper var ven freml fr en
genomgripande granskning av andra externa rdgivare i samband med
brsintroduktionen 2014, utan att ngra frgor stlldes angende rkenskaperna i frga.
Slutsatsen att genomfra dessa ndringar i rkenskaperna gjorde styrelsen uppmrksam
p att Koncernen inte lngre skulle n upp till minimikraven p kapitaltckning och
solvensmarginal p koncernniv.
P Koncernniv bryter Bolaget per den 31 december 2014 mot kraven p
kapitaltckning och solvensmarginal; dock har Koncernen beviljats dispens frn dessa
krav av norska Finanstillsynet fram till 31 maj 2015. Per den 31 mars 2015 bryter
Vardia Insurance Group ASA mot solvensmarginalen p bolagsniv, och Bolaget har
beviljats dispens frn detta krav frn Finanstillsynet till den 31 maj 2015. Dispenserna
r villkorande bland annat av att Koncernens finansiella situation inte vsentligt
frsmras under den relevanta perioden.
P grundval av detta beslts och implementerades omedelbart en plan fr att terstlla
minimikapitalkravet med en buffert. Bolaget har haft en nra och konstruktiv dialog
med det Finanstillsynet och Oslo Brs angende situationen. Som en fljd av ndringen
i rkenskaperna behver Bolaget frstrka sitt egna kapital med 275 miljoner NOK i
nytt kapital.
Sklen till den Riktade Emissionen, och fljaktligen kningen av den sammanlagda
bruttointkten frn Erbjudandet med 100 miljoner NOK, r fljande:

De reviderade sifforna avvek frn det preliminra resultatet fr 2014 med

omkring 12 miljoner NOK. Avvikelserna berodde p en strngare tolkning och
en rttning av Bolagets utestende fordringar.

130

Den strngare tolkningen av redovisningsprinciperna, som ven kommer att ge

en negativ effekt p resultatet fr 2015 p grund av att en strre del av
frsljningskostnaderna mste redovisas direkt istllet fr att kunna avrknas.

I syfte att kunna kontrollera avbestllningar av frskringar har Bolaget ndrat

sina grunder fr fakturering av sljarprovision inom Koncernen. Provision
kommer att berknas p grundval av tecknade premier istllet fr slda
premier. Detta kommer att innebra hgre kostnader under 2015, medan
frdelen med frndringen r att avbestllningar kommer att rttas omedelbart.

Vardias affrsmodell fortstter att skapa tillvxt och det r Bolagets styrelses
bedmning att vrde kommer att skapas och att Bolaget kommer att vara
lnsamt s lnge som Vardia fortstter att bygga sin portflj. Styrelsen vill
skerstlla att Bolaget har en tillrcklig kapitalbuffert fr att stdja tillvxten
framgent.

Nettointkterna frn Erbjudandet om 341 NOK kommer att anvndas fr att frstrka
Bolagets egna kapital i syfte att uppfylla de krav p kapitaltckning och
solvensmarginal som r tillmpliga p Bolaget under de kommande tolv mnaderna.
E.3

Villkor

Erbjudandet utgrs av ett erbjudande om 375 000 000 Nya Aktier, med ett kvotvrde
om 0,08 NOK till en teckningskurs om 1 NOK per Ny Aktie. Aktiegare som r
registrerade i Bolagets aktiebok vid slutet av avstmningsdagen kommer att tilldelas
omsttningsbara Teckningsrtter fr de Nya Aktierna som erbjuds i
Fretrdesemissionen. Inga separata teckningsrtter kommer att ges ut avseende de Nya
Aktier som erbjuds i den Riktade Emissionen.
Fr att skerstlla Bolaget en tillrcklig anslutningsgrad vid teckningen i
Fretrdesemissionen och en tillrcklig anslutning i den Riktade Emissionen har
Bolaget tillsammans med Managern etablerat tv garantikonsortier bestende av
existerande aktiegare och vissa externa investerare.
Teckningsperioden fr Erbjudandet inleds den 13 maj 2015 och upphr 16:30 (CET)
den 27 maj 2015 och fr inte avslutas tidigare n detta datum, eller frlngas.
Teckningsrtterna emitteras och registreras hos VPS under ISIN NO 001 0734031, och
kommer att tas upp till handel p Oslo Brs under tickersymbolen VARDIA T frn
den 13 maj 2015 till 16:30 (CET) den 22 maj 2015. Teckningsrtterna levereras
vederlagsfritt och mottagaren debiteras ingen kostnad.
Tilldelningen av Nya Aktier i Fretrdesemissionen beslutas av Bolagets styrelse med
tillmpning av fljande kriterier:
f)

Tilldelning ska ske till tecknare p grundval av tilldelade och frvrvade

Teckningsrtter som giltigt har utnyttjats under Teckningsperioden.

g)

Om inte samtliga Teckningsrtter utnyttjas, ska tecknare som utnyttjat sina

Teckningsrtter och vertecknat sin andel tilldelas ytterligare aktier i
proportion till antalet Teckningsrtter som utnyttjas av respektive sdan
tecknare. I den utstrckning en proportionerlig allokering inte r mjlig, ska
Bolaget avgra tilldelningen genom lottning.

h)

Aktier som inte tilldelats enligt punkterna (a) och (b) kommer att tilldelas
tecknare som inte innehar Teckningsrtter och som ingr i garantikonsortiet
fr Fretrdesemissionen. Tilldelning sker pro rata baserat p antalet tecknade
aktier.

i)

Aktier som inte tilldelats enligt punkterna (a), (b) och (c) kommer att tilldelas

131

tecknare som inte innehar Teckningsrtter och som inte ingr i

garantikonsortiet fr Fretrdesemissionen. Tilldelning ske pro rata baserat p
antalet tecknade aktier.
j)

Aktier som inte tilldelats enligt punkterna (a), (b), (c) och (d) ovan, kommer
att tecknas av, och tilldelas, garanterna som framgr av avsnitt 5.19 i enlighet
med garantitagandet fr respektive garant.

Tilldelningen av Nya Aktier i den Riktade Emissionen beslutas av Bolagets styrelse

med tillmpning av fljande kriterier:
a)

Tilldelning sker i frsta hand till tecknare som (i) har utnyttjat teckningsrtter i
Fretrdesemissionen, (ii) vertecknat Fretrdesemissionen, och (iii) blivit
tilldelade mindre aktier i Fretrdesemissionen n vad de sammanlagt tecknat
sig fr. Tilldelning sker proportionerligt baserat p antalet teckningsrtter som
utnyttjats av varje sdan tecknare i Fretrdesemissionen. I den utstrckning
proportionerlig tilldelning inte r mjlig att genomfra ska Bolaget besluta om
tilldelning genom lottdragning.

b) Aktier som inte tilldelats i enlighet med punkten (a) kommer att tilldelas
tecknare som inte innehar teckningsrtter i Fretrdesemissionen och som
ingr i garantikonsortiet fr den Riktade Emissionen. Tilldelning sker pro rata
baserat p antal aktier som tecknats.
c)

Aktier som inte tilldelats i enlighet med punkterna (a) och (b) kommer att
tilldelas tecknare som inte innehar teckningsrtter i Fretrdesemissionen och
som inte ingr i garantikonsortiet fr den Riktade Emissionen. Tilldelning sker
pro rata baserat p antal aktier som tecknats.

d) Aktier som inte tilldelats enligt punkterna (a), (b) eller (c) ovan kommer
tecknas av och tilldelas de garanter som framgr av avsnitt 5.19 i enlighet med
garantitagandena fr respektive garant.
Teckning av Nya Aktier i Erbjudandet kommer i frsta hand att tilldelas i
Fretrdesemissionen, drefter i den Riktade Emissionen. Ingen distinktion kommer att
gras mellan tilldelade och frvrvade/kpta Teckningsrtter.
Tilldelningen av Nya Aktier kommer att ske efter utgngen av Teckningsperioden
omkring den 28 maj 2015 och meddelanden om tilldelning kommer att sndas via post
omkring 28 maj 2015.
Betalning fr tilldelade Nya Aktier ska ske senast den 3 juni 2015.
Erbjudandet r fullt garanterat. I enlighet med garantiavtalen ska garanterna erhlla en
garantiersttning motsvarande 3 % av det sammanlagda belopp som garanterats av
garanterna. Vissa huvudgaranter i den Riktade Emissionen kan utver detta komma att
erhlla en garantiersttning om ytterligare 3 % fr sina taganden.
E.4

Intressen och
intressekonflikter

Managern eller dess nrstende har frn tid till annan tillhandahllit, och kan komma att
i framtiden tillhandahlla, investerings- och kommersiella banktjnster till Bolaget och
dess nrstende i den lpande verksamheten, fr vilka de kan ha erhllit och kan
komma att fortstta att erhlla sedvanlig provision och avgifter. Managern, dess
anstllda och dess nrstende kan fr nrvarande inneha Aktier i Bolaget. Vidare, i
samband med Erbjudandet, kan Managern, dess anstllda och dess nrstende i
egenskap av investerare erhlla Teckningsrtter (om de r Aktiegare) och kan komma
att anvnda sin rtt att utnyttja sdana Teckningsrtter fr att frvrva Nya Aktier, och, i
denna egenskap, behlla, kpa eller slja Nya Aktier och andra vrdepapper utgivna av
Bolaget eller andra investeringar som innehas fr egen rkning och fr erbjuda eller
slja sdana vrdepapper (eller andra investeringar) p annat stt n i anslutning till
Erbjudandet. Managern avser inte att avslja omfattningen av sdana investeringar eller

132

transaktioner utver nr sdan skyldighet fljer av lag eller freskrifter. Managern

kommer att erhlla provision med anledning av Erbjudandet och har drmed ett intresse
i Erbjudandet.
Vidare baseras Garanternas, inklusive garanterna i den Riktade Emissionen, skyldighet
att teckna Nya Aktier p efterfrgan p Nya Aktier i Erbjudandet. Fljaktligen kan
Garanterna drav ha ett intresse i Erbjudandet.
Frutom vad som framgtt av ovan knner Bolaget inte till att ngon fysisk eller
juridisk person har ett intresse i Erbjudandet som r av materiellt hnseende i
Erbjudandets kontext.
E.5

Sljande
aktiegare/Lock
up-avtal

I samband med deras garantitaganden har Garanterna och Garanterna i den Riktade
Emissionen ingtt lock-up-taganden fram till det tidigare av (i) utgngen av
Teckningsperioden i Erbjudandet och (ii) den 31 maj 2015.

E.6

Utspdningseffekt

Den omedelbara utspdningen till fljd av Erbjudandet fr Bolagets aktiegare

frvntas uppg till omkring 92.1% under antagande att det emitteras 375,000,000 Nya
Aktier.

E.7

Kostnader som
lggs investerare

Ej tillmplig. Kostnaderna fr Erbjudandet kommer att betalas av Bolaget.

133

VARDIA INSURANCE GROUP ASA

RIGHTS ISSUE AND PRIVATE PLACEMENT

SUBSCRIPTION AND APPLICATION FORM

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 Companys articles of associations and annual accounts and directors' reports for the last two years are available
at the Companys 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 Brs information system under the Companys 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 Companys 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 brs 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 subscribers 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 subscribers 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 subscribers 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
Subscribers VPS account:

Number of Subscription Rights:

SUBSCRIPTION RIGHTS SECURITIES NUMBER: ISIN NO 001 0734031

Number of New Shares subscribed

(incl. over-subscription):

(For broker: consecutive no.):

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
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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
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country
Personal ID number/
organization number
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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.
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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
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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
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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
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acknowledges that the Managers analysis and stock broking activity may conflict with the subscribers interests with regard to transactions in the Shares, including the New Shares.
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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 payers 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 payers 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 banks 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 payers 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 payers 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 payers account at the time of payment. The payers 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 payers 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 beneficiarys account between one and three working days after the indicated date of payment/delivery.

g)

If the payers account is wrongfully charged after direct debiting, the payers 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 subscribers
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 all 1
N-0252 Oslo
Norway

www.selmer.no

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