Ambitions and outlook for 2005
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43 Rabobank Group Annual Report 2004
Core activities
corporate sector all contributed to this handsome result. Results from
life insurance operations (excluding pension insurance) was EUR 23
million higher at EUR 94 million.
Investments
Until 2004, Interpolis recognised its results from investments in shares
and property using the indirect return method. An important feature
of this method is that recognised results from investments are based
on average yields over many years. As from 2004, Interpolis recognises
realised results from investments in shares and property directly in the
profit and loss account. The new method is in line with International
Financial Reporting Standards (IFRS). The change in accounting policy
does not affect equity. Its consequences are reflected in the profit and
loss account as reclassifications only. The effect on net profit for 2003 was
nil. The figures for 2003 have been restated for comparative purposes.
The price gains and losses on investments in shares and property were
EUR 67 million in 2004, compared with EUR 120 million in 2003.
The large difference compared with 2003 reflects not so much a
mediocre stock exchange development in 2004, but rather the stock
exchange recovery that set in in 2003. At the end of 2002, the actual
share prices were lower than their cost prices and the difference was
charged to income. Subsequent price gains in 2003 up to the cost price
level were then credited to income. This finally led to a high result from
investments in 2003.
At 31 December 2004, Interpolis had EUR 12 (11) billion in investments
for its own account and risk. The greater part, around 90%, were fixed-
interest securities, 8% was invested in shares and 2% in real estate.
In 2004, the average return on the entire portfolio was almost 9%.
A large part of the management of Interpolis' investments has been
contracted out to Robeco.
IFRS
The application of IFRS has consequences in particular for the valuation
of investments and the determination of income from investments.
For investments in shares, the changes concerning the determination of
income were partly implemented in 2004. For the rest, the investments
will be valued in 2005 mainly on the basis of market value. Similarly,
a large part of the insurance obligations will no longer be calculated
using a fixed actuarial interest rate but using current interest rates.
Under IFRS, the provision for catastrophe risk in non-life operations is
no longer allowed. The provision will therefore be released to reserves.
Under the new rules, the results are expected to show greater volatility.
For Interpolis, the year 2005 will be dominated by a number of spear
heads. It will focus explicitly on product and process innovation as well
as on multi-distribution. The results showed strong recovery in both
2003 and 2004 but the changing conditions require alertness. For that
reason, Interpolis remains focused in the short term on further control
of claim expenses and costs. In addition, 2005 will be characterised by
broader marketing of the new ZorgActief product. Central elements for
the longer term will be growth, innovative solutions, tailored service
provision and client appreciation; in other words, market leadership.
In view of the expected greater volatility of both the results from
operations and the investments, the insurer does not wish to commit
itself to a statement about the result for 2005.
www.interpolis.com
Reserves and solvency
At the end of 2004, Interpolis' reserves were EUR 1.5 billion, compared
Results (in EUR millions)
2004
2003
change
with EUR 1.3 billion at 31 December 2003. The increase has two causes:
Operating profit before taxation
308
238
29%
the positive results in the year under review and the increases in value
Results from operations
241
118
104%
of the investments in shares and real estate. The latter were due in
Results from investments
67
120
-44%
particular to developments in the stock markets outside the Netherlands.
Insurance premium income
4,012
3,893
3%
As a result of the reserves increase, the solvency position at the end of
Life
2,319
2,436
-5%
2004 improved to 189% (174%) of the requirement set by the Dutch
Non-life
1,498
1,278
17%
Central Bank. An adequate solvency position in the insurance business is
Reinsurance
195
179
9%
necessary in order to be able to meet obligations in the long term as well.
Volume of services
265
279
-5%
Pension services
127
118
8%
Occupational health safety and
reintegration
98
128
-23%
Other
40
33
21%
Solvency
189%
174%
Customer value
7.7
7.8
Market share
7%
7%
FTEs
5,173 5,328 -3%