Executive Board Statement

Board sees encouraging results
Despite the global financial crisis, we are on track for recovery. Earlier in the year, we announced measures to strengthen our Group at both financial and operational levels. We aimed to reduce balance sheet risk and committed to improving operational efficiency and reducing costs. In doing so, we said we would achieve total operational cost savings of up to € 300 million by year-end 2011 of which € 100 million would be achieved in the current financial year. Higher efficiency would lead to an estimated FTE reduction of 2,500 by the end of 2011.

Full confidence
The initial results of our efforts are encouraging. First, we have completed the de-risking of our investment portfolio by considerably reducing our exposure to equity, real estate and credit instruments. At the same time, we reduced our strategic stake of almost 10% in the Portuguese bank MillenniumBCP to just over 2.5%.
Secondly, we have rolled out an efficiency programme, called SENS, across most of our divisions. Through the OpEx programme, that targets every-day operational costs, we have initiated a more direct way of lowering costs.
These, and other ongoing earlier started programs, have resulted in a 9% decline of our operating expenses of the Group from € 1,755 million to € 1,599 million. To date, we have achieved cost-cuttings of around € 40 million that are the direct result of measures announced in March and we have the fullest confidence that we will meet our targeted € 100 million in cost reductions this year.
The FTE reduction programme has now reached almost 1,000 with a minimum of forced redundancies mainly due to a cutback in the use of external employees.

Preferred employer
We are aware that the changes that our Group is undergoing require full commitment from our employees, in the Netherlands and around Europe. We attach great value to our leading position in the top ten of best employers in the Netherlands. This status has once again been reinforced as we were awarded third Best Employer in the Dutch insurance industry by a leading Dutch business magazine.

Strong position
Along side focus on efficiency and cost-reduction programmes, we further committed to strengthening our capital and solvency position. The latter is up 26% to 176% of minimum regulatory requirements and compared to year-end 2008, total equity improved 14% to € 8.5 billion, helped by the support of our main shareholders. With this financial backing, we feel content to have so far overcome the effects of the credit crisis without the use of Dutch state capital support.
Furthermore, our liquidity position improved by the placement in mid-June of notes with a nominal value of € 750 million. With this successful issue, we have demonstrated our financial flexibility despite the financial economic climate. The results mentioned above give the Executive Board confidence that our Group is on track for recovery.

Results in the first half of 2009
Economic developments in the first half of 2009 resulted in a net profit of € 115 million. A modest decline compared to € 124 million in the same period last year but, compared to the significant loss in the second half of 2008, we see this result as encouraging.
Gross written premiums decreased by 3% to € 10.5 billion against € 10.8 billion in the first half the previous year. At our Health division, written premiums were down 3% to € 6.2 billion from € 6.4 billion. The decrease is mainly related to lower government contributions in the Dutch Health business. At Life, lower sales through our bank distribution channel affected the business, and gross written premiums are down 8% to € 2.4 billion.
Non-life premiums were up 4% to € 1.9 billion supported by the contribution of Oranta in Russia which was acquired at the end of 2008.
From an operational perspective, our Health and Non-life business performed well.

Sustainable value   
Despite the current economic headwind, we are taking the reins more firmly. This is because when, the economy improves, we want to be there, stronger than ever before, doing what we do best: creating value for our customers through the security insurance can provide. Creating this level of value for customers in a sustainable way ultimately creates value for our other stakeholders: distribution partners, employees and shareholders.
Driven by our cooperative background we are in a process of reaffirming our identity along the lines of a four-stakeholder model. This means that our focus on all stakeholders acts as a counter-balance to the exclusive pursuit of shareholder value.

Top ranking
Our emphasis on doing what is right for the customer has not gone by unnoticed. In April, the customer service of one of our brands in the Dutch health insurance market, Zilveren Kruis Achmea, ranked number one in accessibility for its clients, resulting in a very loyal customer base.
That helps Eureko to remain the largest player on the Dutch health insurance market in terms of numbers of insured, which in 2009 increased by 30,000 to 4,794,000.
The travel insurance offered by our brand Centraal Beheer Achmea is another example of creating value. It was rated best national insurer for travel insurance according to an independent inquiry held over the past year.
Finally, InShared, our innovative Non-life internet insurance company, kept its word by paying back customers part of their premiums that had not been used to meet expense claims.

Transparent products
The crisis has hurt consumer trust across the industry. The economic headwind has only increased customer demand for sustainable and transparent products. We are developing our products accordingly. In May we offered a financial compensation arrangement to customers with unit-linked policies.
The independent Dutch Financial Services Ombudsman has analysed our offering and has verified that our compensation matches earlier arrangements made by our peers. We are working diligently to inform all our customers as soon as possible on the details of this compensation scheme that are relevant to them.

Generating value   
Although we have already taken some promising steps in the period behind us, further effective measures will have to be implemented in the coming months and years.
At the same time, the long-term process of streamlining past mergers within our Group has gained in momentum despite the economic slowdown. We are creating an organisation with shared service centres that will offer their services through a logically diversified and market-oriented front office. That ongoing process is showing promising results. Efficiency will rise and costs will decrease. We will create a leaner and more efficient Group that generates value for all our stakeholders.

Willem van Duin
Chairman of the Executive Board, Eureko B.V.
19 August 2009