Espirito Santo: Q1 Results of Insurance Subsidiaries

May 17, 2004

Espirito Santo Financial Group S.A. (ESFG), a holding company operating in Portugal and Luxembourg, announced the non-audited results of its insurance subsidiaries in Portugal (Tranquilidade Group), Companhia de Seguros Tranquilidade, (“Tranquilidade”) (non-life), Companhia de Seguros Tranquilidade Vida (“Tranquilidade Vida”) (life) and Espirito Santo Seguros (“ES Seguros”) (non-life bancassurance) for the first quarter of 2004.

“The results of ESFG’s insurance operations continue to reflect a solid operating and financial performance during the first quarter of 2004, following the turn-around registered in 2003,” said the announcement.

“In spite of a decline of 5.6 percent in claims paid, and relatively flat operating costs, net profits after tax at the non-life insurance company, Tranquilidade, declined from 12.0 million Euros [$14.28 million] in the first quarter of 2003 to 5.5 million Euros [$6.54 million] in the first quarter of 2004,” the bulletin continued. “This decline results essentially from a flat evolution of unexpired risk reserves in the first quarter of 2004, against an exceptional release of 7.2 million Euros [$8.57 million] in the first quarter of 2003. It should be noted that this exceptional release in unexpired risk reserves in the first quarter of 2003, reflected an equally exceptional technical improvement in Tranquilidade’s performance in that period, related to the restructuring process initiated in 2001.”

The announcement noted that, “Tranquilidade reinitiated its efforts to increase business, without jeopardizing its strict underwriting standards; indeed, premiums increased from 86.3 million Euros [$102.7 million] in the first quarter of 2003 to 90.2 million Euros [$107.34 million] in the first quarter of 2004, corresponding to an increase of 4.5 percent.”

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