NETHERLANDS - Bancassurer SNS Reaal has revealed SNS Property Finance's profit rose by 15.9% to €51m in the first half of 2008 thanks largely to a higher interest rate margin.

The company reported it saw a 3.8% drop in overall net profits to €226m, which it attributed to decreasing equity markets and rising interest rates.

But an autonomous growth of SNS Property Finance's credit portfolio - mainly in project finance - saw its margin rise by €13m to €101m, the company reported.

Following an increase in value of €1.4bn, the credit portfolio consisted of €7.5bn in investment finance and €5.5bn in project finance by the end of June this year.

Almost three-quarters of SNS Property Finance's ‘well-spread' portfolio was invested in the Netherlands, while 50% of the remainder was invested in France, Germany, Belgium and Scandinavia, "where property values show a relatively consistent development", said the firm.

Approximately one-third of the international portfolio is related to pressurised real estate in the US and Spain, SNS conceded.

That said, no additional contributions have been necessary this year, as initial contributions compensate for shortfalls in 2007, the company stressed, and a ‘limited number' of projects in Spain are being restructured.

SNS' insurance division saw its income from pension premiums rise by 188% to €366, mainly thanks to growth in the market from small and medium-sized businesses, with Swiss Life Netherlands contributing €137m, it said.

Gross pension contributions increased by 5.2% to 20.8% of the gross total premium income, SNS Reaal reported. Its total assets under management rose from €20.4bn to €36bn, albeit this is largely as a result of the consolidation with Swiss Life.

To protect its €2.8bn equity portfolio, SNS Insurance has largely hedged the market risks through long-term put options, it indicated.

To hedge its solvability against interest rate rises of over 6%, it has entered into swaptions contracts with an average duration of two years with an underlying value of €9bn in the first half of 2008, it added.

Sjoerd van Keulen, SNS Reaal's chairman, said he is expecting continuing negative effects of very volatile and uncertain financial market, limited access to liquidity and rising interest rate. Nevertheless he still forecasted the continuing development of the core business, as well as underlining ‘sufficient' liquidity buffers for this year and 2009.

SNS Reaal has also announced Cor van den Bos, board member and CEO of Reaal Insurance has left with immediate effect, because of ‘different views on the strategic course'. His tasks will temporarily be covered by Ronald Latenstein van Voorst, CFO of SNS Reaal.

The company also said that Henjo Hielkema has withdrawn as future chairman of the supervisory board, after objections from financial regulator De Nederlandsche Bank, because of  ‘different views on a number of equity transactions'. According to SNS Reaal, the supervisory board will temporarily chaired by deputy Han van der Kar.