Eureko Reports 39% Net Income Gain for 1st 6 Months to $415 Million

August 17, 2005

The Netherlands-based Eureko Group joined the parade of insurance companies that have enjoyed a good first half. The company announced a 39 percent increase in net income during the period to 338 million euros ($415 million) compared to 243 million euros ($299 million) in the first six months of 2004.

The company’s bulletin also cited the following highlights:
— Gross written premiums at were 3.523 billion euros [$4.33 billion), an increase of 15 percent over the same period in 2004 of 3.051 billion euros [$3.75 billion].
— Group equity strengthened to 4.716 billion euros [$5.8 billion], from 4.041 billion euros [$4.934 billion] at year-end 2004, an increase of 17 percent.
— Debt leverage remains low and increased from 12 percent at year-end 2004 to 14 percent at June 2005.
— Return on average equity remains satisfactory at 14.9 percent compared to 15.7 percent at June 2004.
— Earnings per share increased by 56 percent from 1.00 euro [$1.23] per share at June 2004 to 1.56 euros [$1.919] per share at June 2005.

The Company’s Executive Board noted that gross written premiums were increased “partly due to the inclusion of Levob, AXA Health and OZF, which were acquired in 2004 and early 2005. It also said the Group had now “fully implemented IFRS [International Accounting Standards] from 1 January 2005 onwards, with comparable figures for 2004. As stated in an earlier press release, IFRS has had limited impact on our consolidated 2004 figures.”

As with many company’s Eureko remains committed to strengthening its “core insurance business, and to divest non-core activities.” The Group plans to continue its “focus is on selective growth, both organic and non-organic, while maintaining profitability and reduced cost levels. The Operating Companies are concentrating on initiatives to re-energise commercial vitality and offer enhanced services, particularly in our Life and Occupational Health businesses, where market conditions are challenging throughout Europe.”

Commenting on the P/C, or “Nonlife,” sector, the company said it has “experienced very strong results, due to excellent claims ratios and stringent cost control, despite the fact that some pricing pressure is now being experienced in the Dutch market, particularly with larger contracts in commercial lines. However, the impact of any softening of the market on Eureko is expected to be limited, as Achmea’s main focus is on the Small and Medium Enterprise market and on private lines.”

Eureko also reported it is making some headway in Poland, where it has been in a protracted battle with the government’s Treasury department over the control of the country’s biggest insurer Powszechny Zaklad Ubezpieczen PZU. The conflict, which has been going on since the end of 2001, has been in arbitration since October 2003. It centers on the Department’s refusal to honor Eureko’s original agreement to purchase an additional 21 percent of PZU’s shares, giving it majority control.

In the meantime Eureko effectively operates PZU, and said it “continues to perform well, with a contribution of 133 million euros [$164 million].” The bulletin noted that the “first stage of the arbitration process against the State is expected to conclude before long. PZU continues to be a solid strategic investment and our commitment to the company, and to Poland, is not diminished.”

The full report may be obtained on the Group’s Website at: http://www.eureko.net.

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