Ambitions and outlook for 2005 - - - 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%

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Annual Reports Rabobank | 2004 | | pagina 43