KBC Group Life business Embedded value as at 31 Dec and analysis of change and sensitivity Foto gebouw Disclosure date: 16 June 2005

2 Cautionary Statements Embedded Value is the result of cash-flow projections with underlying assumptions and expectations. The values in this presentation are calculated on a deterministic basis. Many assumptions such as general economic conditions, performance of financial markets, taxes, changes in laws, frequency and severity of insured loss events, mortality and morbidity levels and trends, and others, are beyond KBC’s control. A modification of an assumption can result in a significantly different Embedded Value. Deviations from assumed experience are normal and are to be expected. Even without any change in the parameters, actual results will vary from those projected due to normal random fluctuations. Embedded Value cannot be considered as an absolute value. This value together with a sensitivity analysis allows the recipient to obtain an idea of the magnitude of the expected value created by their insurance activities. Under no circumstances should the inclusion of the projections (including the relevant underlying assumptions and expectations) be regarded as a representation, warranty or prediction that the business will achieve or is likely to achieve any particular results.

3 Content Life insurance activity & scope Terminology ANAV (‘Adjusted Net Asset Value’) Components Roll forward VBI (‘Value of Business In Force’) Components Assumptions Sensitivities Roll forward VNB (‘Value of New Business’)

4 Life business, overview Minor changes to published figures in order to improve model accuracy Growth in Life premium income (in ’000 EUR) % % % % % % %

5 Life business, overview Minor changes to published figures in order to improve model accuracy Growth in Technical Provisions, Life (in ’000 EUR) % % % % % % %

6 PV Tied Surplus Life Value In Force (VIF) Terminology ‘Embedded Value’ Shareholders Equity Economic Adjustments ANAV = Free Surplus As investment for Embedded Value > Equity adjustments > Asset adjustments > Resilience Reserves > Tax assets and liab. Tied Surplus Life ANAV Other Allocated Surplus PVFP* VBI** (PVFP- Cost Tied Surplus) Tied Surplus Life oror KBC standard Embedded Value Free Surplus Other Allocated Surplus Other Allocated Surplus = Tied Surplus Non Life + Other Tied Surplus *PVFP = Present Value of Future Profit **VBI = Value of Business In Force

7 Scope of current VBI figures Scope of review: KBC Insurance Belgium + Fidea + Vitis Life: total technical provisions : (000 euros) Modelled: 88% of the mathematical reserves 96.8% of the total premium income in % of the new premium income in 2004 Group entities out of scope: CEE subsidiaries (CSOB CR, CSOB SR, K&H Life, Warta Vita) and Secura: total technical provisions : (000 euros)

8 Embedded Value: overview (in ’000 EUR) 31/12/200331/12/2004 VBI Life PVFP Cost of tied surplus ( ) ( ) Tied Surplus, Life* Value In Force Other Surplus Embedded Value * Some methodological changes took place in the calculation of the ‘tied surplus, life’

9 Adjusted Net Asset Value ‘Adjusted Net Asset Value’ (ANAV) = [+]Shareholders Equity [+] Equity Adjustments ‘Minority interests’ [+]/[-] Asset Adjustments Unrealized capital gains on the investments, except for bond investments in the life portfolio (‘buy-and-hold’ philosophy) Goodwill is deducted [+]Additional Reserves Catastrophe and equalization reserves Additional reserves, life [-] Tax assets and liabilities on the above

10 ANAV as at 31/12/2004 (in ’000 EUR)

11 ANAV: Chg 31/12/2003 – 31/12/2004 (in ’000 EUR)

12 Value of Business in Force (VBI): non-economic assumptions Expenses Expenses are allocated to the different products and activities in such a way that the total expenses in the study equals the total expenses in the statutory accounts Expenses increase with expected wage inflation at 2-3% per annum Future expense reduction programmes and synergies are not taken into account Mortality Assumptions based on most recent industry experience were used Lapses Assumptions based on annual experience, investigations of surrenders and paid-ups, with a reasonable safety margin Assumptions are set by product and distribution channel

13 VBI, RBC requirements KBC RBC Requirements (legal requirements) % of the reserves % of sum at risk Unit-Linked 0.5% (0 or 1%) 0.375% (0.3%) Non-Linked Pension products Mix: 75 F.I./ 20 S./ 5 P. 8.5% (4%) 0.375% (0.3%) Non-Linked Investment products Mix: 88 F.I./11 S./ 1 P. 5.98% (4%) 0.375% (0.3%) The current RBC for Life activities is 176 % of the legal required solvency margin for the Life Activity

14 VBI, economic assumptions year bond yield (Rate from 2006 on) 4.17% pa (5.00% pa) 3.6% pa (4.80% pa) Risk premium on equity2.50% pa Risk premium used for discount rate3.50% pa Discount rate* (= Cost of Capital)8.50% pa*8.30% pa* Expense (wage) inflation (Rate from 2006 on) 2.90% pa (3.00% pa) 2.20% pa (2.50% pa) Based on the bond yield in the long run Weighted Average Cost of Capital, taking into account partial funding via subordinated loans

15 VBI, overview (’000 EUR, only reserves of modelled business) PVFPVBIVIFPVFP/ reserves VBI/ res. reserves %4.26% %3.72%

%- 10% Expenses- 3.95%+ 3.95% Lapses & Dormancy- 2.70%+ 2.93% Mortality- 3.12%+ 3.12% + 0.5%- 0.5% Discount rate- 7.43%+ 7.89% Investment Return*+ 8.58%- 9.68% VBI, sensitivity analysis Effect on VBI * The discount rate is changed consistently with the change in investment return. No profit-sharing was allocated to the 4.75% guarantees in the policies.

17 VBI, sensitivity analysis (2) Current RBC KBC Insurance 100% of the legal SM 150% of the legal SM 200% of the legal SM Embedded Value VIF VBI Changing the solvency margin (’000 EUR)

18 VBI, Chg 31/12/2003 – 31/12/2004 (EUR)

19 Value of New Business (VNB) APE *PVFPVNBPVFP as % of APE VNB as % of APE Total %17.64% (‘000 EUR) * Annualized Premium Equivalent (APE) is a measure of new business volume equal to 100% of regular premium on new contracts and 10% of single premiums New business, 2004 at date of sale

20 Review Lane Clark & Peacock Belgium reviewed the methodology and assumptions used by KBC Insurance in the determination of the Embedded Value at 31/12/2004, the Value of 2004 New Business and the analysis of the change in the value of in-force business for the Life Insurance activities of KBC Insurance. It is the view of Lane Clark & Peacock Belgium, based on the data made available, that the assumptions used are reasonable and that the methodology used by KBC Insurance is in line with basic principles described in appropriate literature. Our assignment included a review of the calculations.This review was not a detailed verification of the correctness of all calculations. This review was a limited high-level reasonableness check on the results and included a detailed review on a limited random sample of contracts of the insurance portfolio of KBC Insurance. No material issues have been discovered. Therefore, based on our work and our validation report on the work carried out by KBC Insurance, we consider the embedded value, the value of new business and the analysis of the change in the value of in-force for the life business to be reasonable and suitable for inclusion as supplementary information to the Group’s consolidated accounts.

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