Non-Life

• Gross written premiums increased by 4%
• Higher profit before tax in the Netherlands
• Expense ratio improves to 29.9%

GENERAL

Eureko’s Non-life insurance activities account for 18% (H1 2008: 17%) of our total gross written premiums. We operate Non-life activities in the Netherlands, Turkey, Greece, Belgium, Slovakia, Romania, Bulgaria, Cyprus, and since the end of 2008, Russia.

Gross written premiums were up 4% from € 1,831 million to € 1,902 million. The main drivers are increased Non-life insurance business within the Netherlands and Greece and the gross written premium contribution of Oranta (acquired at the end of 2008). Organic growth amounted to 2%.

Profit before tax declined € 12 million to € 64 million. Higher claims in the Netherlands and Greece, decreased income from investments (down € 37 million) and the investment in Oranta are the main reasons for the decline in profit. Technical result was lower at € 134 million (H1 2008: € 151 million) due to higher claims although premiums increased and efficiency improved. Non-technical result improved € 5 million to A -70 million (H1 2008: A -75 million) mainly as a result of lower expenses.

The claims ratio went to 66.5% in 2009 (H1 2008: 65.7%), influenced by weather-related claims (e.g. heavy weather at the end of May, costing approximately € 24 million), more regular claims and more large fires in the Netherlands, mainly in small and medium-sized enterprises.

The net expense ratio improved from 30.2% to 29.9%. This is due to lower project costs and cost-reduction programmes implemented in the reporting period. Based on the measures currently taken, we expect this improvement to continue.

NETHERLANDS

Achmea has a leading position in the Dutch market for Non-life insurance. To strengthen this position, in April 2009 we started the integration (which will take three to five years) of our Non-life business between the Dutch divisions. The focus is on optimally serving our customers and distribution partners through various brands and distribution channels, through standardisation of products and processes, resulting in economies of scale and even more attractive products.

Compared to the same period last year, gross written premiums for Non-life insurance in the Netherlands grew 1% to € 1,532 million (H1 2008: € 1,516 million). Fierce price competition in some markets (e.g. mobility) kept premiums under pressure, but our Dutch brands were still able to achieve growth. The banking distribution channel contributed gross written premiums of € 772 million, up 5% on last year (H1 2008: € 739 million). This increase is the result of a growing number of policyholders, a growing number of policies per policyholder and regular growth (indexation) in premiums. Direct distribution contributed gross written premiums of € 550 million (H1 2008: € 564 million). The premiums show a small decrease in comparison with the first half of 2008, due mainly to heavy competition on mobility. Gross written premiums in the brokerage channel were more or less stable at € 193 million (H1 2008: € 197 million).

With the exception of broker distribution, other distribution channels in the Netherlands showed a negative claims development. Besides heavy weather and large fires, we have also seen an increase in crisis-driven legal assistance insurance cases, with an expected higher number of claims. Furthermore, there is an increase in regular claims and in the average claimed amount.

The net expense ratio in the Netherlands improved by 0.4%-points to 27.1%. Banking distribution improved its net expense ratio to 29.1% (H1 2008: 33.2%), mainly due to higher net earned premiums, lower personnel costs and lower project costs.
In Direct distribution the net expense ratio increased to 21.9% (H1 2008: 20.6%). The main reasons are lower net earned premiums, higher IT project costs and higher expenses on external personnel during the first months of the year. Broker distribution reported a lower number of FTEs and decreasing operational expenses. As a result, the net expense ratio improved by 3.8%-points to 36.9%.

Profit before tax in the Netherlands increased by € 4 million to € 53 million.

InShared

At the end of January 2009, we successfully introduced our new internet-based and 100% self-service insurance concept in direct distribution - InShared.

TURKEY

Over the first half of 2009, Eureko Sigorta contributed € 132 million (H1 2008: € 132 million) to gross written premiums. Excluding currency effects, Eureko Sigorta managed to increase its gross written premiums by 15%. Despite the economic pressure caused by the financial turmoil and the economic slowdown in Turkey, Eureko Sigorta has risen from the ninth to the seventh position in the top 10 of Turkey’s Non-life providers. With a profit before tax of € 18 million, Eureko Sigorta contributed well to Eureko’s results. The net expense ratio of 48.7% is in line with last year.

GREECE

Interamerican is performing well considering both the turmoil and the competitive environment in the Greek market. Interamerican contributed € 103 million (H1 2008: € 86 million) to gross written premiums, a 20% growth compared to last year. Profit before tax remained stable at A -3 million, mainly due to higher claims (H1 2009: € 45 million; H1 2008: € 35 million). Operating expenses are in line with last year, resulting in an improved net expense ratio of 45.3% (H1 2008: 50.1%).

BELGIUM

Gross written premiums of Avéro Insurance, € 71 million (H1 2008: € 71 million), are stable compared to last year, which is an achievement in the shrinking insurance market in Belgium. With a profit before tax of € 13 million (H1 2008: € 6 million), Avéro Insurance is currently looking into expanding its profitable Non-life brokerdriven business. The increase in profit before tax is mainly caused by realised gains on financial assets, which are the result of de-risking the Avéro Insurance balance sheet. Operating expenses (A 19 million) and net expense ratio (35.1%) are in line with last year.

RUSSIA

At the end of 2008, Eureko acquired Oranta. Oranta had a rough start due to the economic decline in Russia during the reporting period. Over the first half of 2009, Oranta contributed € 37 million to gross written premiums. Oranta is optimising its operation. Operating result is A -11 million, mainly due to higher claims. The net expense ratio is 42.3%.