direct/ Eureko B.V. (NL) - Eureko Announces 2006 Annual Results

Satisfactory results in 2006

Merger of Achmea and Interpolis completed

Expansion in Turkey

- Net profit increased by 40%, to EUR 985 million from EUR 706 million in 2005; on a pro forma basis (including Interpolis and the former public health funds for 12 months in 2005), the increase was 4%, from EUR 946 million
- Gross written premiums increased by 117%, to EUR 14,302 million from EUR 6,577 million in 2005; on a pro forma basis, the increase was 9%, from EUR 13,112 million
- Total equity improved by 13%, to EUR 9,632 million from EUR 8,525 million in 2005
- Return on adjusted equity decreased to 14.7% from 16.9% in 2005
- Debt leverage further improved to 6.1% from 9.6% at year-end 2005
- Earnings per share decreased by 2% to EUR 2.92, from EUR 2.98
- Proposed final dividend per ordinary share of EUR 1.10 at the option of the shareholder in cash and/or stock, resulting in a total dividend of EUR 1.41, unchanged from 2005

Notes:
- All financials are statutory, except where indicated. Interpolis is consolidated into Eureko´s financials since November 2005. Comparable figures on a pro forma basis for 2005 include Interpolis and the former public health funds (including ´contribution received for health pooling´ of EUR 2,740 million as GWP) for 12 months
- Return on adjusted equity is excluding goodwill preference shares and equity instruments (tier-1 capital securities)

Announcement of results on 3 April 2007:
The press conference will start at 11:00 CET at Eureko headquarters in Zeist and can be viewed live on www.eureko.net in three languages: Dutch, English and Polish. The conference call for investors and analysts will start at 14:00 CET. More details on Eureko website: www.eureko.net
Eureko´s Financial Statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. Eureko´s Financial Statements were discussed in the Supervisory Board meeting of 29 March 2007 and will be submitted for approval to the General Meeting of Shareholders of 18 April 2007. KPMG Accountants N.V., Eureko´s auditor, has issued a qualified opinion on the Financial Statements. The qualification regards the determination of Eureko´s share in PZU´s net profit and total equity.

Chairman´s Statement

Dear Reader,

In an ever-uncertain world, characterised by ongoing geo-political tension, it is pleasing to look back on a successful year. Whilst we are gratified that hard work has produced strong results, we have continued to face pressure in our various markets. Our 2006 results are respectable, with net profit at EUR 985 million.

2006 was a transformational year, when the major focus was on the merger of Achmea and Interpolis in The Netherlands. The speed and efficiency with which that has been realised is a credit to everyone involved. Achmea is now the leading insurer on the Dutch market with an enviable and well-balanced portfolio across all areas. This has truly put us ´on the map´ and we are recognised as a true multi-channel player; we are a market leader for bancassurance (Interpolis/Rabobank); we are renowned for our direct writing and seen as an acknowledged benchmark for our peers; we are experiencing growth in the broker market.

We know that there is still much to do over the coming years, but given the saturated and very competitive market in The Netherlands, it is our intention to grow our market share, although it will be difficult. Our focus will have to be on stringent cost control. It is good to have a safe home base in The Netherlands that affords us the opportunity to expand.

Customer concerns in the Dutch market, in respect of recent returns on unit-linked policies (´beleggingsverzekeringen´), have created further challenges. I believe there is a general mistrust of these products, and as insurers we should strive for greater transparency in our products.

Following the introduction of new health legislation in the Dutch market, we anticipated growth of 200,000 new customers. This actually became 569,000 new clients, which must be seen as a testimony to our approach. There have admittedly been some client service issues in spite of 1,000 extra employees, and we have taken steps to address that. Our recent experiences proved that these measures are adequate. Recent information shows considerable progress has been made. In 2007, as expected, less than 5% of the population opted to change their insurer; Achmea experienced a growth of a further 90,000 customers as a result.

The new legislation operates within a narrow framework. I hope we will see more privatisation of the health care system. I also believe that the Dutch State should encourage further innovation and should support the launch of electronic patient files. This would lead to significant improvements in efficiency.

In respect of health developments in our other territories, health legislation reforms in Slovakia have created an opportunity for Eureko. Existing health funds there have been transferred to commercial companies, creating a new sector with enormous growth potential. We have already achieved a significant position, but as in The Netherlands, the sheer volume of new clients has created administrative pressures. However, an entirely new system will always experience teething problems and our ultimate goal is to provide a first class service to our clients. Despite the huge growth potential in the health sector, profitability is likely to remain low until other governments permit greater commercial competition.

Governments in most countries face the common dilemma of an ageing population, the cost of caring for which is not covered by the tax contributions of a smaller, younger working generation.

Meanwhile, the political situation in Poland has further frustrated Eureko´s plans for an increased shareholding in PZU S.A. Despite a partial award of an international Court of Arbitration in Eureko´s favour, as well as a number of lawsuits filed in connection with Eureko´s conflict with the Republic of Poland over PZU, the situation remains unresolved. However, Eureko continues to hope that, through discussions, an elegant solution may be achieved.

With the Achmea and Interpolis merger accomplished, and with a leading market position in The Netherlands, it was time to re-focus on Eureko´s future strategy. We are firmly committed to achieving leading positions in key markets outside of The Netherlands and to transferring our competitive edge, via our Operating Companies and through partnership agreements, to the most relevant market segments.

Achmea, and the expertise within it, will be key to future development, and our plan is to leverage the knowledge and expertise available within our home market and our other markets, to assist Eureko companies in achieving their overall growth potential and future development.

In The Netherlands, co-operation with Rabobank has been fruitful. I believe this owes much to the gradual way in which we have developed the relationship. Rabobank initially took a 5% stake in Eureko, which included a distribution agreement whereby Rabobank undertook to distribute Achmea´s health products through its branch network. That formed the basis for future developments.

This was followed by Rabobank increasing its shareholding (just above 37%) in exchange for Eureko´s acquisition of Interpolis. It is important to note that this merger and the creation of the ´new´ Achmea were achieved by the co-operation of two organisations without an attendant army of external consultants. That, in itself, speaks volumes about the strength of the partnership.

We shall continue working on further co-operation, not only in The Netherlands. For example, we announced in November that Adrian Hegarty, the CEO of Eureko´s Irish operation, Friends First, had been appointed interim CEO of ACCBank, Ireland, a Rabobank subsidiary.

Our primary focus is to deliver value for all our stakeholders in a balanced way. Some may question whether this is achievable, given the apparent conflicting interests of each group. However, our policyholders, our customers, are at the heart of everything we do. Without them we are nothing. If our customers are treated well, that satisfied, loyal customer base translates into greater premium income, which in turn delivers enhanced shareholder and distribution partner value.

Our partnership with members of the Eurapco Alliance is very important to us. If we can take this partnership a step further, either within the framework of Eurapco or with individual partners, it would create a very big market player. We believe 2007 should be the year to explicitly explore the potential that lies within the Eurapco partners.

There has been a number of significant highlights in the past year, apart from the Achmea and Interpolis merger, and the enhanced co-operation with Rabobank. We have built a track record of improving our results, year-on-year, also recognised by the rating agencies and investors as evidenced by the positive outlook awarded by Standard & Poor´s and the success of our retail targeted hybrid capital raising.

I must also recognise my colleagues on the Executive Board, all of whom contributed to the success of the Achmea and Interpolis merger with such efficiency. Having succeeded in that task, Kick van der Pol and Margriet Tiemstra have now moved on to other challenges, and Gert van Arkel has taken retirement. I wish to pay tribute to their commitment, and to that of my fellow Executive Board colleagues whose drive helped realise this great undertaking. I recognise too that none of the successes could have been achieved without the flexibility and dedication of our employees. We are fortunate in having both a talented employee-base as well as the ongoing support commitment of our Supervisory Board. I also appreciated the constructive co-operation with the Central Works Council on the fast integration of Achmea and Interpolis. To all our colleagues, I pay tribute and express my appreciation.

Outlook
The early part of 2007 has seen increased volatility in equity and interest rate markets. We also faced the impact of Storm Kyrill, which raged over The Netherlands in January, causing damages to commercial and residential properties and greenhouses with estimated claims of EUR 125 million for Achmea. We therefore have to be cautious with respect to the outlook for this year. In broad terms, I expect the development in premium volumes to be stable in most business lines with the exception of Health, where we expect growth due to the increased number of insured and the increase in premium levels generally. The life market continues to be difficult in most markets, but we are optimistic about the outlook in the medium term due to the potential for liberalisation of the second pillar pensions market, cost reduction as a result of IT integration and ongoing focus on value of new business. In Non-Life, it seems difficult to sustain the record combined ratios realized last year, as a result of the intense competition in the market and the impact of Kyrill. The results in Health are expected to improve significantly as the dust will settle from the implementation of the new health care system in The Netherlands, in which we made a significant investment last year.

We shall continue to concentrate on cost leadership and operational excellence, in line with our stated goals of providing enhanced stakeholder value. A further focus must be on trying to achieve a resolution to the conflict with the Polish government over PZU.

When I consider the future, there is an undercurrent of excitement at the potential that is there to be seized. Eureko is in excellent financial health and well-placed to take advantage of growth opportunities that fit within our strategy.
This has been amply demonstrated by the recent announcement of our partnership agreement with Garanti Bank in Turkey, and the acquisition of 80% and 15% respectively of the Bank´s non-life and life insurance business. Turkey presents a new and exciting market to us with enormous growth potential.

Maarten Dijkshoorn

Chairman and Chief Executive Officer
3 April 2007

For the complete press release, see the pdf-version.

For further information, please contact:

International media
Lorrie Morgan
+31 - (0)30 - 693 70 65
+31 - (0)6 - 54 93 72 72

Dutch media
Marco Simmers
+31 - (0)6 - 53 43 87 18

Investor Relations
Barth Scholten
+31 - (0)30 - 693 70 51

pdf version press release:
http://hugin.info/133916/R/1116732/204295.pdf

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