Gjensidige upgraded to “buy” by Jefferies with 22% total return potential

Investing.com -- Gjensidige Forsikring ASA (OL:GJFG) turnaround in margins, accelerating premium growth in Norway and the potential for earnings upgrades through 2027.

The brokerage set a new price target of NOK321, about 16% above the previous close of NOK275.60, and forecast a total shareholder return of roughly 22% including dividends.

The Oslo-based insurer, Norway’s largest non-life player with a 26% market share, has outpaced rivals Sampo and Tryg this year with a 38% share price gain. 

Jefferies noted that “GJF shares are up strongly YTD at +38% on the back of stronger than expected underwriting recovery in its core Norwegian business.” 

The analysts said further improvement is likely as pricing trends remain favorable in the company’s key market, which contributes 70% of its revenues.

Premium increases in Norway have outstripped the rest of the Nordic region. Motor insurance rates rose 12% year to date after climbing 11% in 2024, while home insurance premiums advanced 9%. 

That compares with low- to mid-single-digit growth across Denmark, Sweden and Finland. According to Jefferies, “Norwegian pricing is up ~10% YTD, outstripping claims inflation of around 5%.”

The brokerage said Gjensidige has also managed to push through higher-than-industry rate hikes while retaining about 90% of customers, aided by a customer dividend funded by the Gjensidige Foundation’s controlling stake.

The margin recovery became evident in the second quarter, when the underlying claims ratio improved by 10 percentage points from a year earlier, restoring profitability to pre-inflation levels. 

Consensus expects a 2% to 3% year-on-year improvement in margins in the second half of 2025, but Jefferies projects stronger gains. 

“This seems too conservative to us, against our estimates for a 5-6% YoY improvement in 3/4Q25e and a further 2.5% in FY26e,” the analysts said. Their forecasts place earnings 6% above consensus for 2025 and as much as 9% higher in 2026 and 2027.

Gjensidige trades on about 18.5 times forward earnings, broadly in line with peers, and offers a 4.3% dividend yield. 

Despite the rerating, Jefferies said the valuation does not yet fully reflect expected margin gains. 

The NOK321 target is based on a blended approach, applying a 5.7x price-to-NAV multiple on 2025 estimates and a 17.9x price-to-earnings multiple on 2026 projections. 

“This gives a ~14% share price upside complemented by a ~4% total dividend yield, giving a 12m expected total return of ~22%,” the note said.