NETHERLANDS - Eureko chairman Willem van Duin said the insurer and pensions provider will shed 2,500 jobs within the next two years in a bid to save €300m, after reporting the firm lost €2.1bn last year largely through poor performance on its investment portfolio and at associated companies.

The firm has operations all over Europe delivering investment and pension services, as well as insurance services, but turned a loss in 2008 after producing a net profit of €979m in the previous year.

The turmoil in the financial markets hit almost all the asset classes in its investment portfolio and liquidity pretty much dried up, making it virtually impossible to carry out risk-driven portfolio adjustments, according to the group in its presentation of its annual figures.

Operating within new markets, Eureko said it made a loss of €14m in the newly-privatised pensions sector “because of the high-risk discount rate”.

Nevertheless, its subsidiary Interamerican Romania is now in sixth position in the second-pillar market, and is looking to enter the third-pillar segment in 2009, the insurer revealed.

Eureko’s equity investments - worth 7% of its total portfolio - took the worst beating and performance fell 43%, reducing its overall position by half to €2.5bn.

That said, the company claimed a 70/130 collar equity hedge taken in May had led to a profit of US$251m (€194m).

The insurer said it responded to the volatility of the markets by divesting €1bn, or 50%, of its listed equity portfolio, as well as taking a reverse hedge on the part of the collar close to its exposure.

Its  fixed income holding meanwhile rose by 3% to 76% of its investment portfolio, and consisted of 60% government bonds and 1% of asset-backed securities, officials indicated.

Eureko, which also launched a new life company in Bulgaria last year, said it expects pension reforms in Greece to further open up the market, whereas its subsidiary Interlife Cyprus is also anticipating legislative reform on pensions.

According to officials, its life business was severely hit by the market downturn, resulting in impairment losses of €699m on equity instruments and bonds, as well as €270m worth of lower gains on equity sales.

Gross written premiums of its Dutch pension business decreased by €54m to €1.2bn, with single premiums dropping €61m, compared to 2007.

Gross written life premiums in Romania, Slovakia, Bulgaria, Cyprus and France fell by 24%.

There was no update, however, on developments relating to its holding in the Polish market and the ongoing row with the Polish government over ownership of PZU. (See earlier IPE story: Eureko says yet to resolve PZU dispute)

Eureko’s company Syntrus-Achmea had €40bn of assets under management at the end of 2008 but its fee and commission income decreased by €11m to €356m, whereas its asset management income rose by  €3m to €40m.

Pension services generated stable fees and commissions income of €232m at Syntrus-Achmea, however, its profits before tax on services dropped by €69m to a loss of €22m, according to the group.

After a €1bn capital injection by its major shareholders Syntrus Achmea and Rabobank in February, Eureko’s solvency ratio is now 175%, it said

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