ING Direct 2006 Annual Report Download - page 17

SMART
Profi t and loss account (underlying)
in EUR million 2006 2005 change
Premium income 10,552 10,702 -1.4%
Operating expenses 1,805 1,869 -3.4%
Underlying profi t before tax 2,328 2,021 15.2%
Total profi t before tax* 2,362 2,031 16.3%
* Total profi t before tax is defi ned as profi t before tax including
divestments and special items.
“ We have further improved on effi ciency,
while we continue to invest in growth
through product development and setting
up of new greenfi eld operations.”
Jacques de Vaucleroy, Executive Board member
responsible for Insurance Europe
Insurance Europe
With continued profi t growth in 2006,
driven by the Netherlands and Central
Europe, Insurance Europe remains a solid
profi t contributor to ING Group. In the
Netherlands, effi ciency programmes are
progressing, while Central Europe once
again showed strong value creation.
Underlying profi t before tax increased
by 15.2% to EUR 2,328 million in 2006,
mainly due to favourable life and non-life
results in the Netherlands, favourable
non-life results in Belgium and continued
strong growth in Central and Rest of
Europe. Underlying profi t before tax
from life insurance increased by 7.1% to
EUR 1,710 million, while non-life results
increased by 45.8% to EUR 618 million.
Underlying premium income decreased
slightly by 1.4% to EUR 10,552 million.
Higher life premiums in Central and Rest of
Europe were offset by lower life premiums
in Belgium and in the Netherlands.
Underlying operating expenses declined
by 3.4%, caused by a 7% drop in the
Netherlands due to higher one-off
releases of employee benefi t and pension
provisions, lower restructuring expenses
and staff reductions.
Insurance Europe has attained strong
market positions in the markets in which
it operates and has tailored the specifi c
strategies of its individual insurance
companies to the maturity of these
respective markets.
Developments in mature markets
Operating in the mature markets of
the Netherlands, with moderate growth,
Nationale-Nederlanden (NN) focused on
improving customer satisfaction and
effi ciency. Customer satisfaction at NN
increased again, although after two years
of signifi cant increases, the growth rate in
2006 was less pronounced. Actions to
reduce the headcount at NN by 1,000 by
year-end 2007 were ahead of plan,
with a reduction of 900 at year-end 2006
compared with year-end 2004.
RVS managed to create value in a mature
and competitive market, refl ected in an
increase in the value of new business and
in the internal rate of return. Postbank
Insurance had a solid fi nancial performance.
In 2006, profi ts, premiums and value
creation at ING Insurance Belgium
decreased, mainly due to one-off factors.
Ongoing growth initiatives in
Central Europe
In the rapidly expanding markets of
Central Europe, the focus is on accelerating
growth, primarily by developing the existing
business while simultaneously investing in
future growth by setting up new greenfi eld
operations. ING reinforced its position as
the leading pension provider in the region.
In particular, the Polish pension fund
enhanced its client base signifi cantly. The
number of new product launches in Central
Europe more than tripled from 8 in 2005 to
30 in 2006. In Bulgaria, a new life company
was launched.
Looking ahead
In the Netherlands, NN aims to confi rm its
position as number one fi nancial services
provider for the intermediary by focusing
in particular on enhancing customer
satisfaction and realising net growth.
Accelerating growth in Central Europe is
the central theme for the years ahead. ING
has applied for a licence for a life insurance
company in Russia and expects to sell its
fi rst products by mid-2007. It will also
enter the voluntary pension market in
Romania in 2007, when the market is
expected to open.
ING Romania has launched a new, simple
insurance protection package under the name
SMART. It covers death and hospital treatment
in the event of an accident. Designed to be
straight-forward, SMART offers three pre-
defi ned levels of sums assured and the contract
duration is fi xed at fi ve years. Due to the
simplifi ed underwriting procedure, the policy is
issued in just fi ve minutes.
ING Group Annual Review 2006 15