Supervisory Board report

The reporting year has been a difficult period for the whole financial sector. Eureko was also caught up in the turbulence on financial markets and the abrupt fall in equity markets. The market environment meant that in addition to its more usual strategic tasks, Eureko’s Supervisory Board was closely involved in the crisis-related challenges facing Eureko. Key issue in 2008 was, of course, the credit crisis that quickly turned into a global financial crisis. With equal rapidity, we saw this crisis spill over into the real economy. It was against this backdrop that we monitored the effects of the crisis on Eureko’s performance and its ongoing activities.

Special, non-scheduled meetings of the Audit Committee were devoted to this challenging environment. As the year drew to a close, the full impact of turbulent financial markets became increasingly clear. Over the reporting year, Eureko is reporting a Net loss of €2.1 billion against a Net profit of almost €1 billion in 2007. One response has been to agree a capital increase from our main shareholders, the Achmea Association and Rabobank, in February 2009. €1 billion has been committed, with €600 million from the Association and €400 million from Rabobank. The new capital will be issued as common equity and will not affect the current ownership proportions. It was needed to bolster Eureko’s own equity and reinforce its solvency position, which had declined to 150% of regulatory minimum requirements. Through the capital increase, solvency is now pro forma a sufficient 175%.

During 2008 there were discussions with MN Services on a merger between MN Services and Syntrus Achmea, the pension services company. It was decided in December to postpone further discussions in view of the current credit crisis which requires all attention now.

At the end of 2008, Mr Maarten Dijkshoorn, Chairman of the Executive Board, decided to step down for personal considerations. The Supervisory Board took the decision to appoint Mr Willem van Duin as the new Chairman of the Executive Board on 10 February 2009.

Developments in Europe

In late 2008, Eureko acquired Russia’s Oranta Insurance Company, creating a foothold in this high-potential market. Eureko divested 75% of its stake in a number of health clinics that provide quality care to customers in Greece. However, through its 25%, Eureko manages referrals that will support cost efficiencies.

PZU in Poland

The ongoing dispute with the Polish government on the privatisation of PZU, in which Eureko has a considerable stakeholding, was a continual topic throughout the year. On 15 January 2009, Eureko filed a Call for Settlement at Warsaw’s Regional Court. Through this settlement attempt, Eureko once again will explore the possibilities for ending the long-lasting dispute on the privatisation of PZU with the Republic of Poland.

Business planning 2009 – 2011

The Supervisory Board was fully apprised of the Executive Board’s proposed strategy and business plans for the period 2009 - 2011 and has approved the strategy and business plans, although planning for the future is a difficult task in this financial crisis.

Central Works’ Council

Through our stakeholder model, employees play a crucial role in Eureko’s continuity. During the year, Supervisory Board members maintain regular contact with the Central Works’ Council. This is organised on a rotational basis so that all members have an opportunity for dialogue with this body. As in previous years, almost all Dutch members attended a Central Works’ Council meeting during 2008. The Chairman also had informal meetings with the Chairman of the Executive Board and the Board of the Central Works’ Council to discuss items including the (re) appointment of Supervisory Board members. During the meetings several key topics were explored, such as developments in the Pensions Division, including the separation into pension insurance and pension fund services, location policies, the implementation of new compliance requirements and the annual Employee Satisfaction Survey. The Supervisory Board once again experienced at first hand a Central Works’ Council that combines its critical role with a constructive approach.