Dutch bancassurer SNS Reaal has been
given the go-ahead to continue restructuring after the European
Commission (EC) approved its viability plan.

SNS Reaal was kept afloat in December 2008 by
an injection of €750 million ($1 billion) by the Dutch state and
€500 million by its controlling shareholder, Stichting Beheer SNS
Reaal, by way of the issue of core tier 1 securities.

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Key aspects of the restructuring include
reducing costs; phasing out SNS Property Finance’s international
portfolio; and better capital management with a focus on repaying
the government and Stichting Beheer’s tier 1 securities

In 2008, SNS Reaal was seriously damaged by
the performance of its insurance units, composite insurer Reaal
Verzekeringen and life insurer Zwitserleven, which recorded a €550
million combined net loss.

However, banking unit SNS Retail Bank and SNS
Property Finance recorded net profits of €116 million and €28
million, respectively.

A major Dutch life insurance market player,
SNS Reaal reported recurring premium income of €1.9 billion in 2008
and single premium income of €1.7 billion, giving it market shares
of 16.5 percent and 22.6 percent in the respective segments.

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In the Dutch general insurance market SNS
Reaal reported premium income of €809 million in 2008.

SNS Reaal’s premium income in 2008 was boosted
significantly by inclusion of Axa’s Dutch insurance units acquired
in September 2007 for €1.8 billion. In 2007, Axa ranked seventh in
the Dutch life market and 11th in the general insurance market.

Inclusion of the Axa units increased SNS
Reaal’s Dutch life market share from 6 percent to 10.8 percent; its
general insurance market share from 3.6 percent to 6.0 percent; and
total Dutch insurance market share from 5.2 percent to 9.2
percent.

Though SNS Reaal did not specify its life
market share in the first half of 2009, it appears to have
improved. Specifically, the Dutch life market’s total premium
income fell 25 percent compared with the first half of 2008 with
SNS Reaal reporting a 23.8 percent fall in gross premium income to
€1.174 billion.

SNS Reaal reported a €29 million net loss in
the first half of 2009, a notable turnaround from a €558 million
net loss in the second half of 2008.

The Dutch bancassurer has set itself the
target of a strong improvement in results including achieving “over
time” a net profit of between €450 million and €500 million.

In November 2009, SNS Reaal issued €300
million three-year senior unsecured notes and followed this in
December with the repurchase of €250 million of Tier 1 securities,
€185 million from the Dutch State and €65 million from Stichting
Beheer SNS Reaal.