Results 2013 compared to

REAAL Non-Life posted a net result of nil compared to a net loss of € 84 million for 2012, which had been negatively impacted by a goodwill impairment of € 110 million. The 2013 net result included an impairment of € 12 million on the capitalised client portfolio. Impairments, both in 2012 and 2013 were driven by the persistent difficult circumstances in the Non-Life market. The capitalised client portfolio related to disability, which amounted to € 56 million gross at year-end 2013, has not been impaired, but all other capitalised client portfolios have been impaired entirely.

Adjusted for these one-off items, net profit decreased from € 26 million to € 12 million. This decrease was driven by a € 66 million lower underlying result due to higher claims, most notably in fire and motor, and by the structural additional cost allocation from SNS REAAL holding. Furthermore, the underlying result in 2012 had been positively impacted by a release of provisions for unearned premiums and acquisition costs held for authorised agents of € 11 million.

Table 13: Underlying result REAAL Non-Life

In € millions 2013 2012 Change

Net result for the period - (84) 100%

Impact of one-off items (12) (110)

Adjusted net result for the period 12 26 (54%)

Gains, losses and impairments on fixed-income securities 62 10 520%

Total net impact investmentportfolio and hedges 62 10 520%

Amortisation intangible assets (6) (6) 0%

Underlying net result (44) 22 (300%)

The lower underlying result was partly compensated by a € 62 million higher net impact from gains, losses and impairments on the investment portfolio (mainly bonds) and hedges.

7.7 Income

Table 14: Breakdown gross premium income REAAL Non-Life

Gross amounts in € millions 2013 2012 Change

Motor 259 280 (8%)

Fire 214 222 (4%)

Accident & Health 131 130 1%

Transport 54 65 (17%)

Other 126 122 3%

Total gross premium income 784 819 (4%)

In a competitive non-life market, REAAL Non-Life’s gross premium income decreased modestly.

In 2012, premium income had been positively impacted by a release of the provision for unearned underwriting premiums held for authorised agents. In 2011 SNS REAAL had changed the calculation of this provision, adopting a more accurate method which takes into account the fact that policyholders had switched more and more to payments on a monthly or quarterly basis instead of annual payments. As a result, in 2012 an amount of € 14 million had been released to the pre-tax result (€ 19 million in premium income partly offset by € 5 million in acquisition costs).

Adjusted for the € 19 million impact of the release of the provision for unearned premiums in 2012, total gross premium income showed a marginal decline, mainly in transport, also due REAAL's policy to phase out some brokers with bad claims ratios. As a result, some major contracts were terminated.

Total investment income showed a modest increase, due to higher realised gains on fixed-income securities. However, direct investment income decreased due to a smaller investment portfolio following the redemption of an intercompany loan.

Table 15: Breakdown Investment income REAAL Non-Life

Gross amounts in € millions 2013 2012

Total investment income 129 67

Realised gains/ losses on equities - 1

Realised gains/losses on fixed income securities 83 14

Realised gains 83 15

Direct investment income 46 52

Direct investment income consists of interest, dividend and rental income.

direct investment income decreased due to a smaller investment portfolio following a dividend payment to the REAAL NV and the redemption of an intercompany loan in 2012. The decision to make a dividend payment took into account commitments to various stakeholders, including policy holders.

7.8 Expenses

Technical claims increased mainly due to higher claims in fire and motor insurance, including the negative impact of storm damages in the fourth quarter of 2013. This was evident in the entire industry. Results on fire insurances were lower, impacted by some large claims. The overall claims ratio increased to 67.7% (2012: 59.5%, 61.2% excluding the impact of a release of provisions for unearned premiums).

Acquisition costs showed a limited decline due to the release of accrued acquisition costs in 2012 as part of the release of the provision for unearned premiums and acquisition costs. The acquisition expense ratio slightly decreased from 23.3% to 23.0%. Excluding the impact of the above mentioned release of the provision, acquisition costs decreased marginally in line with the lower (adjusted) premium level.

Operating expenses increased by € 15 million mainly due to a structural additional cost allocation from SNS REAAL holding. As a result, the operating cost/premium ratio increased to 17.0% compared to 14.5% for 2012 due to the additional cost allocation. Excluding the additional cost allocation, operating expenses decreased with € 2 million. The combined ratio increased to 107.7% compared to 97.3% in 2012 (99.2% excluding the impact of the release of the provision for unearned premiums and acquisition costs held for authorised agents).

Impairment charges of € 16 million consisted of an impairment on the capitalised client portfolio. In 2012 there had been an impairment charge on goodwill of € 110 million.

7.9 REAAL Other

The Other activities of REAAL comprise the activities not directly managed by REAAL Life or REAAL Non-Life and holding activities. The net result of € 43 million negative was € 28 million lower compared to 2012 mainly due to a consolidation adjustment of € 26 million negative within the Insurance activities which related to sales of fixed-income investments from REAAL Non-Life to REAAL Life and vice versa. At REAAL Non-Life and REAAL Life level these sale resulted in realised gains on fixed-income investments, while at the REAAL level these gains have not been realised.