Eureko says yet to resolve PZU dispute
NETHERLANDS/POLAND - Eureko officials have revealed its long-running dispute with the Polish government on the acquisition of shares in state-owned insurer PZU has yet to be resolved, despite previously stating it aimed to agree a deal by June.
"Negotiations have been terminated, after a ‘negotiations memorandum' - concluded with the new government in February - expired without an amicable solution," said Maarten Dijkshoorn, chairman and chief executive of the Netherlands-headquartered insurance group, during the presentation of the firm's first half figures.
"Meanwhile, both parties' investment banks are continuing less weighty talks," he added.
According to the Dijkshoorn, the long-running international arbitrage is still ongoing, to establish damages suffered by Eureko as a result of the dispute with the Polish government.
But it was previously hoped the agreement would have been reached by now so the court could officially sanction it in the autumn, as any agreement would otherwise not be considered binding. (See earlier IPE story: Poland and Eureko seek final court settlement)
The lack of progress on the PZU problem was revealed as part of Eureko's latest financial report, but was just one element of business difficulty as its new life insurance business was down by €5m to €28m in the first six months of 2008.
Strong improvements in Dutch business activity more than offset by a decline in Ireland, it indicated, though the company noted there has been a general decrease of the life business in the Netherlands, attributed, said Eureko, to the introduction of tax-friendly saving for pensions with banks as well as a decrease of the market for pension services.
"The continuing discussion about transparency on cost loading - included in unit-linked contracts - is holding many customers back from entering this market," suggested the insurance and pensions provider.
Eureko also reported a sharp decrease in its net profit - from €561m to €124m - mainly because of losses on its equity portfolio, adding it anticipates further losses this year could substantially affect net profit.
Nevertheless, the company underlined its solvency levels remained solid at 203% of the minimum requirement.
"Our exposure to US sub-prime and UK non-conforming mortgage-related assets is negligible," Dijkshoorn stressed.
Dijkshoorn predicted Eureko could also see temporary higher cost levels, because of the merger of operations within Eureko designed to share service centres and integrate back offices.
Furthermore, Eureko's CEO announced the intended sale of its French life insurer Império to French insurer Esca. Império operates in a niche market, serving the Portuguese community in France.
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