Eureko announces 2008 results
Turbulent markets lead to negative full year results measures in place to reduce costs and improve balance sheet solvency at 175 per cent after capital increase 2009 (pro forma).
- Negative net result at €2.1 billion compared to a net profit of €979 million in 2007, due mainly to losses on investment portfolio and associated companies
- Total contributions insurance and investment contracts at €19.6 billion (2007: €15.6 billion)
- Value of new business (life insurance) at €41 million (2007: €67 million)
- Total equity down 28 per cent to €7.5 billion
- De-risking balance sheet ongoing, cost efficiency programmes initiated
- Proposal to not pay dividend on ordinary shares, proposal to pay dividend on preference shares; coupons to be paid on perpetuals due in May and June
Announcement of 2008 full year results on March 17, 2009
A press conference was held at Eureko's headquarters in Zeist at 11:00 CET.
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Statement Executive Board
Results & Market Developments
Eureko will publish its 2008 Annual Report and Embedded Value Report on 10 April 2009.
Eureko’s financial statements are prepared in accordance with International Financial Reporting Standards – including International Accounting Standards (IAS) and Interpretations – as at 31 December 2008 and as adopted by the European Union. All figures in this press release are unaudited.
Statement Executive Board
Moving forward in times of crisis
The reporting year, 2008, with its unprecedented turmoil in the financial markets, turned out to be a difficult year for Eureko. Against the backdrop of severe falls in equity markets, Eureko reports a sharp decrease in net result for 2008. The negative result amounts to €2.1 billion after tax compared to €979 million profit in 2007, driven primarily by impairments, losses on equity instruments and widened credit spreads.
The negative results on our investment portfolio also affected our capital position, down €2.9 billion. The solvency ratio decreased in 2008 as a result of this. At year-end the solvency ratio stood at 150 per cent at group level. We are thankful that our shareholders Vereniging Achmea and Rabobank confirmed their confidence in Eureko through a €1 billion capital increase which will take place in April 2009. As a consequence of this capital increase, the group solvency ratio pro forma improved to 175 per cent based on year-end 2008 figures. More steps were taken. We will reinforce our risk management framework and we have reduced our exposure to equity instruments.
Our operating results from insurance activities did not meet expectations, mainly as a result of the declining Life market and shrinking margins in the Non-Life business. Our Health business and Banking operations contributed well to net profit. Competition in our home market in the Netherlands is fierce. In an environment in which operational results from insurance activities are under pressure in general, gross written premiums rose 30 per cent mainly as the result of the successful merger with Agis.
We did expand our European activities in 2008. Oranta Insurance in Russia is a Non-Life specialist with a multi-channel distribution network with strong growth prospects.
The Executive Board has reinforced sense of urgency. In the beginning of 2009 we have accelerated the implementation of a strategic refocus called ‘SENS’ designed to boost operational performance. SENS is a proven method to gain efficiency that will improve all processes related to customer needs within Achmea, Eureko’s Dutch operation and will also lead to optimised operations. It impacts both customer satisfaction and operational efficiency. In 2007 this program has already been implemented in our Health business with very positive results.
In the current year we have also introduced an important cost reduction program. This program concentrates on various cost centres company wide.In 2011 the estimated impact of these measures will be the reduction of 2.500 FTE’s and a cost reduction of €300 million.
Eureko has had a very challenging year and 2009 will be anything but easy. We have a comprehensive package of policy-driven measures aimed at reinforcing our position. These will require full commitment from our employees, in the Netherlands and around Europe. In 2009, we will strongly focus on organic growth and creating value so that we reinforce our current presence in both the Netherlands and Europe.
Willem van Duin
Chairman of the Executive Board, Eureko B.V.
17 March 2009