Vardia Insurance ASA : secures its solvency position and remaining operations through the sale of its Swedish insurance portfolio and repurchase of the Norwegian distribution business

Oslo, 28 April 2016: Reference is made to the stock exchange 
release in connection with the Company's interim report for 
the fourth quarter 2015 dated 29 February 2016, where Vardia 
Insurance Group ASA ('Vardia' or the 'Company') announced 
that the Board had initiated a strategic review. The process 
has resulted in the Company selling its Swedish insurance 
portfolio to Gjensidige, and reacquiring the distribution 
business in Norway that was divested in 2015. 

'Realising the values built in Sweden has secured Vardia's 
solvency position and has enabled the Company to concentrate 
on building and developing the Norwegian business. Vardia 
has successfully established a challenger position in the 
Norwegian insurance market, despite thin capitalisation and 
high start-up costs, and this transaction will provide a 
solid footing to develop the Company towards profitability. 
Going forward, the Company will be fully focused on one 
sustainable customer centric platform in Norway. We will 
continue to develop the business in a responsible manner and 
with adequate capitalisation' says Espen Husstad, CEO of 
Vardia.  

Following an extensive process where the Board has evaluated 
several options, including a sale of the entire Company, 
Vardia entered on 27 April 2016 into an agreement with 
Gjensidige Forsikring ASA ('Gjensidige'), whereby Gjensidige 
acquires the Company's insurance portfolio in Sweden (the 
'Swedish Portfolio') for a consideration of SEK 200 million 
(the 'Portfolio Transaction'). The Company has also entered 
into a share purchase agreement for the repurchase of  
Vardia Norge AS and its distribution business (the 
'Distribution Transaction'), which was divested due to 
capital considerations as a part of the restructuring 
announced by the Company on 11 August 2015.

On 20 March 2016, it became clear that Vardia was in breach 
of the capital requirement regulations as of 29 February 
2016. Vardia has had an ongoing dialogue with the Norwegian 
Financial Supervisory Authority (the 'NFSA'), and the 
Company was granted a time-limited dispensation from the 
solvency capital requirement by the NFSA on the basis that 
the Company was working towards remedying the situation 
through its ongoing strategic review. The Company will apply 
for an extension of the time-limited dispensation until 
closing of the transactions.

Upon completion of the Portfolio and Distribution 
Transactions, the Company is expected to have a solvency 
ratio in excess of the Board's comfort target level of 130%, 
taking into account the consideration received for the 
Swedish Portfolio, the effect of the Swedish Portfolio 
Transaction on the Company's solvency capital requirement 
('SCR'), the cost of reintegrating the distribution 
business, transaction costs, and the expected operating loss 
in the period until closing including restructuring and 
other extraordinary costs.

Divestment of the Swedish Portfolio

In 2015 Vardia had gross premiums written of NOK 611 million 
in Sweden, primarily relating to the property and motor 
segments. The table below details selected financial metrics 
for the Swedish Portfolio for the years 2014 and 2015 as 
reported in the Company's 4th quarter report for 2015. 

NOKm    2015    2014
Gross premiums written  611 474
Premiums earned for own account 139 96
Incurred claims and operating expenses for own account  201 
173
Combined ratio for own account  144.5%  179.9% 

Since the restructuring of the company in 2015, the Swedish 
Portfolio has been handled by Vardia Försäkring AB through a 
distribution agreement. The distribution agreement will be 
transferred together with the Swedish Portfolio as part of 
the agreement with Gjensidige. The Company has no employees 
dedicated solely to the Swedish Portfolio, and accordingly 
the Portfolio Transaction does not include transfer of any 
employees. The assets to be transferred to Gjensidige 
include all Swedish insurance policies written by Vardia 
prior to closing of the Transaction.

The Portfolio Transaction will include all technical 
reserves associated with the Swedish portfolio, and all 
customer and reinsurance receivables and liabilities. The 
table below details the balance sheet items that will be 
included in the Portfolio Transaction. 

NOKm        31.12.2015
Receivables in connection with direct insurance and 
reinsurance     195.9
Reinsurance share of gross technical reserves       
452.3
Other assets        13.6
Cash and cash equivalents       122.6
Total assets        784.4
        
Gross premium reserve       329.5
Gross claims reserve        267.7
Liabilities in connection with direct insurance and 
reinsurance     169.3
Other liabilities       17.9
Total liabilities       784.4

Gjensidige has completed its due diligence investigation of 
the Swedish Portfolio. Based on the satisfaction of the 
remaining conditions precedents, being approval by the NFSA 
and the Swedish Competition Authority, completion of 
agreements related to IT licences and the acquisition by 
Gjensidige of the shares in Vardia Försäkring AB, and other 
customary closing conditions, closing of the Portfolio 
Transaction is expected to take place on or about 1 July 
2016.

Acquisition of the Norwegian distribution business

On 11 August 2015 the Company announced a restructuring of 
the Company that included a divestment of the subsidiaries 
Vardia Forsikring AS, Vardia Eksterne Kanaler AS and Vardia 
Försäkring AB. The transaction enabled the Company to 
account for the sales costs in a manner that under the 
prevailing regulations were beneficial from a capital 
perspective. Following the divestment of the Swedish 
Portfolio, the Company will have the capacity to reintegrate 
the distribution business in Norway and establish an 
integrated business with a strong distribution platform. 

The Company has entered into a share purchase agreement for 
the repurchase of Vardia Norge AS (including its 
subsidiaries Vardia Forsikring AS, Vardia Ekterne Kanaler 
AS, Vardia Skadeoppgjør AS and Vardia Fordel AS). Since the 
separation from Vardia, Vardia Norge AS has developed and 
started to implement a cost reduction plan for the 
distribution activities. As of 31 December 2015, Vardia 
Norge AS had approx. 250 employees and operations in six 
locations. After closing of the Distribution Transaction and 
following implementation of the ongoing initiatives, the 
operations are expected to be consolidated. Reintegration of 
the distribution activities is an important step in securing 
the competitiveness of Vardia going forward, and will 
establish a solid platform to further develop the company. 

There are no agreements that have been entered into, or that 
are planned to be entered into, in connection with the 
transactions for the benefit of Vardia's senior employees or 
members of the board of directors. 

The Company will publish an information memorandum in 
accordance with section 3.5 of Oslo Stock Exchange's 
Continuing Obligations, and provide more details on the 
transactions in the Company's presentation of its first 
quarter results on 11 May 2015. 

Carnegie Investment Bank and ABG Sundal Collier act as 
financial advisors to the Company in connection with the 
transactions. Advokatfirmaet Wiersholm acts as legal advisor 
to the Company.

For further information:
Bård Standal, Chief Financial Officer of Vardia Insurance 
Group ASA
Phone: +47 41 52 14 90 - bard.standal@vardia.no