Eureko's Strategy

The 2008 crisis has had a serious effect on the financial sector itself and on perceptions among customers. Trust has disappeared, especially in mature markets, such as the Netherlands, where a clear shift in demand for greater transparency was already on-going. Controvercies relating to unit-linked policies had taken their toll. Concerns about the solidity of financial institutions, and their ability to meet commitments to customers in the longer term, are now the norm. The effect of impairments on our capital position and delays in achieving operational synergies has made us take a long, hard look at the quality of our operations.

Strategic priorities

The general strategic objectives, such as maintaining and growing its dominant position in Eureko’s original domestic market, the Netherlands, are sound. Our European expansion plans to position the organisation as a significant player in a select number of markets ahead of forecast consolidation in Europe, are equally sound. The hard look focused on how to pursue those long-term objectives. We have prioritised. Rebuilding trust is imperative. Increasing transparency and reducing complexity are priorities in both our interaction with customers and business processes. This ties in with our accelerated drive to improve operational performance so that we strengthen our rating, and therefore our standing with professional financial counterparties. Furthermore, in the coming year, we will be focusing on organic growth rather than expansion through acquisitions, both in the Netherlands and Europe. We will be reinforcing partnerships with like-minded, reputable organisations, such as the cooperative Rabobank in the Netherlands and Turkey’s Garanti Bank, and seeking new partnerships that can generate greater distribution opportunities for our products.

The Eureko identity

Eureko is different from most competitors as the majority of our main shareholders are cooperative organisations. As a result, our ultimate goal is the creation of stakeholder – customers, distribution partners, shareholders and employees - rather than shareholder value alone. In the current crisis and beyond, we believe our model reinforced through a clear identity, can inspire the trust and confidence essential in today’s market. In 2008, we launched a ‘rediscovery’ process of our long-standing cooperative roots in the Netherlands. Identity in the market is more than name recognition. It is about what an organisation stands for. Achmea, Eureko’s Dutch umbrella organisation, is a community of involved people whose primary aim is to ensure customers feel they are well insured. Driven by our cooperative culture, Achmea is result-oriented and customer driven. Together, we create solutions for both the customer and society as a whole. We will be engaged in a comparable process in our European operating companies from 2009, as we aim to be the most trusted insurer in our selected markets in Europe. From this ‘rediscovery’ process, we have further refined our organisational core values: empathy, innovation and delivery. With this mindset and culture coupled with our multi-brand, multi-distribution reach, we are convinced we can maintain and grow our business into the future.

Strategy in the Netherlands

The Netherlands is one of the most mature insurance markets in Europe. All near to medium-term indications are that the total Dutch insurance market can expect only limited growth and even a decline in some business lines. There is little opportunity for growth through merger and acquisition. This market reality informs our strategic multi-brand, multi-distribution channel approach; our aim is quality rather than price leadership. The combination of more demanding customers and competition means we development. Our aim is to ensure that customers understand we have translated their demands into more transparent products, lower costs, improved service and real focus on innovation. This involves continued innovation in our value propositions and streamlining systems. In spite of the current economic environment, we have retained our innovation budget in 2009 as we see it as a cornerstone of (financial) continuity.

Business drivers

We already have top-three positions in all sectors. Our aim is to maintain and grow that position through strategic focus on development of the following key business drivers:

Strong distribution channels

In all our distribution, we aim to increase our commercial strength through offering customers multi-media access and control. In combination with continual innovation in our products and services, this will, we believe, give new momentum to a saturated market. For this reason, we are in the process of constructing multi-media communication channels for most of our brands, specifically internet. Direct distribution is further positioning its two brands, Centraal Beheer Achmea and FBTO, along target customer lines, with FBTO migrating to an internet-based provider. The launch of an innovative, internet-based brand, InShared, is fully in line this objective.

Bank distribution is firmly focused on developing insurance products under the Interpolis brand that match partner Rabobank’s integrated financial services concepts. Brokers are served by specialised brand Avéro Achmea, which we are transforming into a marketing and sales organisation to better meet broker and customer needs.

Country/market strategy

Operational excellence and cost efficiency

Operational excellence has been designated as our primary focus in 2009 and 2010. As Achmea is a group of strong brands, often brought into Eureko through merger or partnership, we must take a strategic approach to our operational excellence and cost efficiency. Our divisional structure concentrates product, service and distribution expertise. We are in the process of combining back offices so that we can standardise product development, distribution and administration to support brand-specific frontoffice services to customers. This process, called SENS, will be accelerated in 2009, not least through the development of common process optimalisation. SENS is a new way of working within Achmea that enables us to evaluate and improve the way our processes work from the client’s perspective. SENS has already been implemented successfully in our Health business, helping to achieve operational synergy and the cost efficiencies this will generate.

Strategy in Europe

While Eureko has a dominant position in its original domestic market, the Netherlands, its European activities are still a comparatively small, but growing component. This means that strategies must accommodate the differences in these markets. What unites all activities in all markets is the pursuit of profitable growth in existing brands, specifically through on-going innovation and cost efficiency.

The key driver behind Eureko’s long-term European strategy is the recognition that a greater geographic spread is in the interests of all stakeholders. A significant share of value will be generated in our European markets that offer opportunities for growth. Forecasts are that, in the longer term, there will be consolidation in the European insurance sector. Medium-sized players could be marginalised. If Eureko is to position strongly in the new European constellation, it must develop a substantial base over time. Our ultimate goal is to be a significant player in a number of markets rather than a small player in many markets. A key component in our strategy is partner-based distribution. This means we seek cooperation with partners where our combined expertise can create real value for both.

To achieve this position, our strategy is:

• Economic significance: A healthy balance between volume and growth with a number of strong positions now and investment in strong positions for the future
• Competence-based growth: Eureko has a strong competence in distributing insurance products in close cooperation with partners, such as banks and employers. We aim to focus on this competence, also through seeking like-minded partners to further grow our distribution channels.
• Strong fit with the Eureko identity: Through the recent crisis, Eureko has strengthened its positioning as a reliable and solid player focused on stakeholder value. All our activities must contribute to this major distinguishing feature.