3M results 2010

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Information about 3M results 2010
Finance

Published on March 12, 2014

Author: Ageas

Source: slideshare.net

Your partner in Insurance 12 May 2010 Q1 2010 Periodic financial information

112 May 2010 | Fortis’ shareholders accepted name change on 28-29 April 2010 “The new name is a crucial element in the repositioning of the group and symbolizes the start of a new era”

212 May 2010 | Highlights first quarter 2010 Strong inflow levels  Total inflow levels up 20% to EUR 5.0 billion  Life inflow up to EUR 4.0 billion (+20%), Non-Life up to EUR 1.0 billion (+16%)  Significant growth in Asia; Total inflow at EUR 1.8 billion (+59%)  Inflow on a consolidated basis at EUR 3.3 billion, up 3% Insurance net result significantly up  First quarter net profit at EUR 85 million (Q1 09 at EUR 21 million*)  Life : EUR 91 million; strong overall recovery  Non-Life : EUR 10 million negative; adverse weather conditions and an increased claims frequency and severity in Motor in both Belgium and UK  UK Other Insurance : EUR 4 million Group net result negative due to volatility General Account  Group : EUR 209 million negative  General Account : EUR 294 million negative; Combined negative impact in Q1 of EUR 271 million on fair value call option BNP Paribas shares and RPN(I) Further rebalancing government bond portfolio  EUR 4.0 billion divested on South-European government bonds in 2010 (up to 10 May)  Position on Greece, Portugal, Italy at EUR 3.8 billion, EUR 2.2 billion and EUR 5.9 billion respectively Capital & equity position remains strong  Total insurance solvency stable at 229%  EUR 5.8 billion above regulatory minimum  Shareholders’ equity at EUR 8.5 billion, or EUR 3.4 per share * Net Insurance result Q109 restated from EUR 13 mio to EUR 21 mio as a result of the new segment structure

312 May 2010 | Reporting structure as of Q1 10 aligned with management structure Belgium Continental Europe United Kingdom Asia  Operating under name AG Insurance since June 09  25% owned by BNP Paribas Fortis  EUR 7 bn inflow in 2009; >2.5 million customers  Multi-channel strategy via brokers and banking channel  AG Employee Benefits dedicated channel for life & healthcare  Life/ Non-Life inflow : 75%/25%  Includes all European insurance activities, except Belgium & UK  EUR 4 bn inflow in 2009  Mix of mature positions (Portugal, Luxembourg), smaller positions in fast growing markets (e.g. Turkey) and new activities (e.g. Italy)  Multi-channel strategy via brokers, bancassurance, affinity partners and tied agents  Life/ Non-Life : 95%/5%  Leading national provider of Non-Life insurance; recently launched activity in Life protection business  EUR 1 bn inflow in 2009  Strong presence Personal lines & expanding Commercial lines (83%/17%);  Multi-channel strategy via brokers, affinity partners and owned distribution  Distribution agreements with ao Marks & Spencer, Tesco, Toyota, John Lewis Partnership  100% owner of specific distributors RIAS & Fortis Insurance Solutions; Reporting will include a separate line for its Other Insurance  Active in 5 countries of which Hong Kong 100% owned  EUR 4 bn inflow in 2009 (incl partnerships at 100%)  Strong partnerships with leading local partners and financial institutions in China, Malaysia, Thailand and India  100% owned activity incl regional headquarters in Hongkong;  Life/ Non-Life : 94%/6%

412 May 2010 | Commercial performance remains strong in Q110 Belgium Life Non-Life United Kingdom* Life Non-Life Other Insurance Continental Europe Life Non-Life Asia** Life Non-Life Total Life Non-Life Retail Of which non-consolidated partnerships Life Non-Life Change (3%) (6%) 7% 21% - 20% 16% 12% * 59% 63% 15% 20% 20% 16% 55% 67% 15% Q1 09 1.9 1.4 0.5 0.2 - 0.2 1.0 0.9 0.1 1.1 1.0 0.1 4.1 3.3 0.8 1.1 1.0 0.1 Q1 10 1.8 1.3 0.5 0.3 - 0.3 1.1 1.0 0.1 1.8 1.7 0.1 5.0 4.0 1.0 1.7 1.6 0.1 Total gross inflow (EUR bn) Total net profit (EUR mio)*** Q1 09 5 4 1 5 (2) 3 4 3 4 (1) 9 8 1 21 14 3 4 11 10 1 Q1 10 64 72 (8) (2) (1) (5) 4 11 10 1 12 10 2 85 91 (10) 4 10 7 3 * Life inflow Q1 10 at EUR 5 million/ Retail distribution not reported at inflow level/ ** All entities at 100%/ *** Net profit after tax & minorities

512 May 2010 | Gross Written premiums Non-Life Inflow* details by segment Belgium United Kingdom Continental Europe Portugal France Luxembourg Italy Germany Turkey Ukraine Asia Hong Kong Non-consolidated partnerships at 100% Malaysia Thailand China India Total Q1 09 1,401 1 900 683 74 117 8 17 1,045 66 979 144 108 705 22 3,346 Q1 10 1,315 5 1,009 554 100 327 12 16 1,700 68 1,632 185 156 1,250 41 4,029 Gross inflow Life (EUR mio) % Ownership 75% 100% 51% 100% 50%/100% 25% 100% 100% 100% 100% 31% 31%/13% 25% 26% Total Q1 09 453 217 71 59 12 95 95 73 22 836 Q1 10 483 260 119 66 54 109 109 83 26 972 Q1 09 1,854 218 970 742 74 129 8 17 1,140 66 1,074 217 130 705 22 4,182 Q1 10 1,798 265 1,129 620 100 327 54 12 16 - 1,809 68 1,741 268 182 1,250 41 5,001 * All entities at 100%

612 May 2010 | 146 158 132 144 137133 42 44 Q1 09 Q1 10 Belgium (AG Insurance) Life inflow In EUR mio Non-Life Gross Written Premiums In EUR mio 73 75 942 764 205 98 288 271 Q1 09 Q1 10 1,401 1,315 453 483  Group Life Unit-Linked Savings Traditional Other Property Accident & Health Motor (6%)  Individual Life  Down 6% to EUR 1 bn  Bank channel inflow down; Q1 09 exceptionally high thanks to specific commercial campaigns  Broker channel up 18%, in line with positive trend second half year  Unit-linked more than doubled to EUR 205 mio Group Life  Down 6%; Q1 09 inflow included exceptional premium payments related to group unit-linked contracts Funds under Management  Up 10% to EUR 46.5 billion Property and Casualty  Inflows up mainly thanks to motor (+9%)  Despite negative ABEX* evolution, property inflow up 3% Accident & Health  +8% with strong growth in health care (+17%) Combined Ratio  113.3% vs 107.1% last year  Hit from weather related winter events and storm Xynthia & unfavorable development in Workmen’s compensation * ABEX : The abex-index is based on price evolutions of public & private buildings. It reflects the national average and its evolution over a well defined period. +7%

712 May 2010 | Motor 1 5 217 260 Q1 09 Q1 10 United Kingdom Total inflow In EUR mio   Non-Life (+20%)  Driven by growth in Commercial and Personal lines Life  Significant progress in protection market  Over 80,000 customers.  Aim to have the protection products available to the whole IFA market by mid 2010 Other Insurance  RIAS & FIS income up 6% thanks to good performance renewals, add-on income and growth in partnership income Personal lines (+12%)  Strong performance in Household portfolio  Good growth in Travel account in collaboration with partners Post Office & Age Concern Commercial lines (+82%)  Full launch into Fleet market  Continuing development electronic trading capability facilitating new business generation Combined Ratio  110.2% vs 108.9% in Q1 2009  Results driven by severe weather and motor claims costs: an industry-wide issue 218 265 Non-Life Life Other Property Accident & Health 11 15 140 145 65 49 17 35 Q1 09 Q1 10 217 260 +20% +21% Non-Life Gross Written Premiums In EUR mio

812 May 2010 | Continental Europe Life inflow In EUR mio   Inflow  Strong performance Luxembourg & France due to pick-up sales  Unit-linked sales up 17%, thanks to Luxembourg mainly  Portugal steady although down on last year; Lower structured unit-linked sales and Q1 09 benefited from high pension business sales (anticipated reduced i-rate) Funds under Management  Up 21% to EUR 22.4 bn  Increase in Portugal & Luxembourg (19% resp. 28%) Inflow  First time inclusion Italian operations compensate for deconsolidation Luxembourg Non-Life  Portugal up 10% thanks to strong development Médis brand Combined Ratio  97.6% vs. 97.1% last year (scope changed) 69 69 354 395 488 416 61 58 Q1 09 Q1 10 6659 53 12 Q1 09 Q1 10 71 119 +69% Non-Life Gross Written Premiums In EUR mio Accident & Health Motor Unit-Linked Savings Traditional Group900 1,009 +12%

912 May 2010 | +15% 59 71 36 38 Q1 09 Q1 10 Asia Life inflow In EUR mio   Inflow  Strong continued growth mainly related to non- consolidated partnerships  Hong Kong +4% (+5% excl currency rate impact)  China driven by further investments in distribution capacity & boosted by single premium product innovation  Inflow in other countries strongly supported by local bank partners Funds under Management  Up 20% to EUR 1.24 bn (Hong Kong only)  EUR 13.8 bn including non-consolidated partnerships at 100% Inflow  Both Malaysia and Thailand performed well  Strong development of the retail motor and corporate MAT lines Combined Ratio  Improved claims experiences and better cost ratios  79% thanks to UPR releases in Malaysia 700 1.574251 8 49 60 Q1 09 Q1 10 95 109 Non-Life Gross Written Premiums In EUR mio 1,045 1,700 +63% Non-Motor Motor Unit-Linked Savings Traditional * Non-motor includes Fire, MAT, Accident & Health and other lines * Group sales amounted to EUR 48 mio in Q1 09 and to EUR 58 mio in Q1 10

1012 May 2010 | Combined ratio mainly up due to adverse weather conditions First impact corrective measures visible Motor  Tariff increases of 3.5% in ‘09 - 4.5% in ‘10  Higher frequency in TPL and material damage, cfr ‘09  Severe weather related events in Jan & Feb  Additional measures, e.g. reviewed product features  Full impact corrective measures not yet visible Fire  50% tariff increase Natural Disaster cover (+3.5% impact on Fire premium income)  Impact Xynthia storm (EUR 16.5 mio) and more large claims (EUR 3.8 mio)  Additional measures envisaged Workmen’s Compensation  Higher claims frequency and aggravation of some PY claims Belgium (AG Insurance) United Kingdom Expense ratio Claims ratio76.6% 66.4%65.0%63.7%61.6% 37.0% 36.8%35.9%36.7%37.4% 06 07 08 09 Q1 10 80.0%80.4%73.1%79.7% 70.2% 30.2%27.7% 28.8% 27.7% 28.2% 06 07 08 09 Q1 10 98.4 % 107.4% 101.9% 108.1% 99.1% 100.4% 100.9% 103.2% 113.7% 110.2% Motor  Combined ratio worsened to 111.8%, as a result of the claims ratio increasing to 87.4%  Industry-wide poor performing private motor principally due to increased third party injury claims  Corrective actions taken in 09 & 10 which will benefit account in 10 and 11 Fire/Household  Combined ratio improved from 115.1% to 110.1%  Underlying loss ratio improvement offset by impact of severe weather in Jan 10

1112 May 2010 | Ageas’s Investment Portfolio at 31 March 2010 Insurance Investment Portfolio (EUR 58.3 bn) In EUR bn Fixed Income securities  99% investment grade, 90% rated A or higher  EUR 4.8 bn in BBB-status; mainly Greek government bonds (EUR 3.8 bn)  Government bonds further reduced in Q1 10 and in Q2 10 (until 10 May) − EUR 2.7 bn Italy, EUR 0.8 bn Portugal, EUR 0.5 bn Greece − Mainly redeployed in Belgian governments bonds, equities & corporate bonds  Greece at EUR 3.8 bn, Italy at EUR 5.9 bn, Portugal at EUR 2.2 bn, Spain at EUR 1.9 bn** Equities  Up to EUR 1.9 bn Real Estate  Unrealized gain net-of-tax remained intact at EUR 0.6 bn Fixed Income Securities 52.9 RE Inv Prop* 2.1 RE own use* 1.4 Equities 1.9 * Real Estate valued at market value; Unrealized gain after tax (incl. own use) amounts to EUR 0.6 billion ** Values at historical/ amortized cost

1212 May 2010 | Fixed Income Securities of EUR 53.1 bn Situation end of 31 March 2010 In EUR bn Government Bonds 34.0 64% Structured Credits 0.6 1% Corporate Bonds 18.5 35% AAA 18.5 35% A 15.6 30% AA 13.9 25% BBB 4.8 9% Below Inv grade/ Unrated 0.3 1%  End of March gross unrealized gains before tax EUR 2.2 bn or EUR 1.2 bn after tax and after shadow accounting  90% bond portfolio single A or higher  60% rated AA or higher  Only 1% below investment grade or unrated  No major changes since end of Q1 10

1312 May 2010 | Government & Corporate Bond portfolio of EUR 52.4 bn Situation end of 31 March 2010  Gross unrealized gains before tax and shadow accounting (UCG) of EUR 1.2 bn (end of March 10). Gross unrealized loss on Greece at EUR 377 mio  As per 10 May, unrealized capital gains at EUR 538 mio In EUR bn  Gross unrealised gains of EUR 954 mio end Q1 10 vs EUR 649 mio end 09  91% bond portfolio single A or higher; 69% rated AA or higher; only 1% below investment grade or unrated Government bonds EUR 34.0 bn* Corporate bonds EUR 18.4 bn * All values at fair value Spain 2.0 Banking/ Other financials 9.3 Other corporates 2.4 Supra-national 2.0 Government related 4.7 Greece 3.9 Belgium 8.2 Portugal 3.2 Italy 7.4 France 2.0 Others 5.5 Germany 1.9

1412 May 2010 | General Account Q1 10 net result of EUR 294 mio negative (including eliminations)  EUR 126 mio negative charge related to RPN(I)  EUR 145 mio net-of-tax negative impact revaluation call option on BNP Paribas shares Recovery deferred taxes as a result of liquidation Fortis Brussels only in Q2 10 Investment Royal Park Investments not impacted in Q1 10 Other items :  Net interest margin EUR 4 mio negative  Staff & administrative expenses of EUR 19 mio, including some one-off separation costs  Interest payment to Fortis Bank related to RPN of EUR 1.6 mio  Capital gain of EUR 12 mio on sale Luxembourg Non-Life Net cash position General on 31 March of EUR 2.8 bn

1512 May 2010 | Update Q1 valuation call option related to BNP Paribas shares Valuation Black & Scholes as per 30/09/2009  Volatility impact set at 24% ► EUR 943 mio total value option as at 31 March  Dividend yield of 4.476% (vs 3.565% end Dec 09)  Strike price unchanged at EUR 66.672 per share  Non standard features: 30% haircut ► EUR 660 mio  Volatility +5% ► total value option +32% Monetisation  Ageas continues to examine all options Taxation  Ageas announced intention to liquidate sub-holding Fortis Brussels SA/NV  As a result deferred taxes on value call option can be offset by estimated tax losses of Ageas SA/NV  Positive impact on P&L deferred tax recovery only in second quarter 2010 Value as per 31/03/2010  Net-of-tax valuation call option on BNP Paribas shares estimated at EUR 436 mio per 31 March 2010; Deferred tax charge of EUR 224 mio

1612 May 2010 | Fair value interest mechanism related to RPN(I) Valuation methodology  Net discounted value all future interest payments until a potential reimbursement of the CASHES  End 09 methodology refined based on valuation techniques for financial derivatives Drivers quarterly interest payments  Evolution Ageas’s share price  Evolution theoretical market value CASHES  Evolution short term interest rate Value as per 31/03/2010  EUR 442 mio negative as per 31/03/2010 mark-to-market value RPN(I)  Cash interest cost Q1 10 : EUR 1.6 mio Assumptions  Ageas’s share price (B-S model) : − EUR 2.64 per share (closing price 31/03/10) − Dividend yield consistent with the proposed dividend − Share price volatility of 43% (base Q1 10 data)  LT-value CASHES: − 60.4% of par (closing price 31/03/10) vs 54.4% end 09 − Evolution based on forward spread curves  LT i-rate: Standard arbitrage-free i-rate model  Model also accounts for conversion option embedded in the CASHES

1712 May 2010 | Ageas’s Core equity EUR 5.8 bn above required regulatory minimum * Asia : Investments in partnerships are deducted from Total Capital; Given the significant investments in partnerships, total capital is lower than Core capital ** Under local Asian solvency regulation, DAC and VOBA are deducted from available capital; VOBA Asia amounts to EUR 340 mio; Under local regulation the solvency ratio of FICA amounts to 388% Belgium United Kingdom Other Core Tier 1 capital Ageas Insurance Required Regulatory minimum EUR 3.7 bn excess capital in Insurance + EUR 2,1 bn General Account = EUR 5.8 bn ActualActual Min 0.5 0.6 2.0 3.5 0.5 0.2 6.5 4.1 6.4 0.1 2.8 Minimum Core equity  200% 298% Total Solvency Ratio 1.3 0.5 Actual Min Actual Min Continental Europe Asia 0.8 0.3 0.1 1.3 0.5*/ ** Actual Min 250% 902% 2.3 0.2 2.1 Actual General 229%

1812 May 2010 | Discretionary Capital of the General Account: a view on liquidity & capital Net Cash: EUR 2.8 bn Passed on LT assets & LT liabilities Discretionary Capital on balance sheet Assets Cash & Cash equivalents Due from banks LT Other Royal Park Investments Call option net of tax on BNP P Loan to operating cies Total In EUR bn, 31 March 2010 3.9 0.9 1.3 0.8 0.4 0.3 7.8 Liabilities ST (EMTN (0.9) + Bank (0.2)) NITSH I & NITSH II RPN(I) Other FRESH Net equity 1.1 0.9 0.4 1.6 1.3 2.5 7.8 Shareholders equity + FRESH  Invested in non-current assets on balance sheet Total Capital  Contingent asset off balance (Fortis Bank Tier 1 loan, due Sep 11)  Already committed to projects (Tesco JV and dividend) Discretionary Capital * (if available in cash) 3.8 (1.5) 2.3 (1.0) (0.3) 1.0 Discretionary capital down due to the incurred losses in the General Account, scope change (FII holding & Fortis Re part of General Account), partially compensated by lower valuation (investment) in BNP Call option  * Fortis defines discretionary capital as the lower of the available cash and total capital of the General Account corrected for (contingent) illiquid assets and existing investment commitments

1912 May 2010 | Conclusion Inflows  Continued strong commercial performance in all regions Net result  Solid financial results Life operations  Non-Life performance impacted by adverse weather conditions; Full impact corrective measures to be expected in the next quarters  Negative net result General Account due to volatility Outlook  Strong commercial performance expected to continue but with growth rates below first quarter level  Second quarter net result will benefit from deferred tax recovery following liquidation Fortis Brussels SA/NV Balance sheet management  Management of investment portfolio in light of the current risk profile of certain asset categories  Position in Southern European government bonds reduced in Q1 10 and YTD; Proceeds mainly redeployed into other fixed income securities  Strong capital buffers within Insurance and General Account should help to resist against potential sovereign shocks

2012 May 2010 | Cautionary Statements Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Future actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in Fortis’ core markets, (ii) performance of financial markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) increasing levels of competition, (ix) changes in laws and regulations, including monetary convergence and the Economic and Monetary Union, (x) changes in the policies of central banks and/or foreign governments and (xi) general competitive factors, in each case on a global, regional and/or national basis. In addition, the financial information contained in this presentation, including the pro forma information contained herein, is unaudited and is provided for illustrative purposes only. It does not purport to be indicative of what the actual results of operations or financial condition of Fortis and its subsidiaries would have been had these events occurred or transactions been consummated on or as of the dates indicated, nor does it purport to be indicative of the results of operations or financial condition that may be achieved in the future.

2112 May 2010 | Investor Relations Tel: E-mail: Website: + 32 2 565 53 78 + 31 30 226 65 66 ir@ageas.com www.ageas.com

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