Published on March 6, 2014
Optimising shareholder value in a mature market Goldman Sachs European Financials Conference Paris 8 June 2011 Bruno Colmant
Ageas’s priorities for 2011 and beyond Improve operational performance Strengthen Insurance franchise Make progress on solving legacy issues Disciplined capital management A consistent dividend policy Goldman Sachs Conference 08 06 2011 2
Q1 2011 : An improved financial & operating performance … Ageas expects an improved Insurance financial performance for 2011 Life Funds under management* Inflow In EUR bn In EUR bn 5.0 4.8 1.8 1.7 1.1 0.3 0.8 0.5 1.8 87.9 1.8 82.8 Asia 16.4 13.8 Continental Europe 22.5 23.0 UK 46.5 48.5 Q1 10 Q1 11 Belgium Q1 10 Q1 11 Net profit Non-Life Net profit Life In EUR mio In EUR mio 101 1 107 25 18 11 23 7 1 72 1 2 17 -10 67 3 15 1 (8) Q1 10 Q1 11 (5) Q1 10 * Q1 11 Funds under Management Asia include the non-consolidated partnerships on a 100% basis Goldman Sachs Conference 08 06 2011 3
Non-Life, structural measures taken to improve performance … Ageas’s result hampered in 2010 by extreme weather conditions Operational performance under pressure General market trend of increasing claims cost Exceptional impact of weather related events, impacting claims amount & claims frequency, especially in Household & Motor Workmen’s Compensation in Belgium : Increased # of permanent disability claims Pressure on future Non-Life earnings power Lower potential for reserves releases across the sector Fierce competition, specific distribution models stimulate pricing pressure Corrective measures a must, company & sector wise Tariff increases Stricter claims management Cost containment Revised policy conditions 4 Goldman Sachs Conference 08 06 2011 10/03/2010 I page 4
Non-Life performance in Belgium & UK significantly better Combined ratio improved thanks to continued measures taken since 2009 Belgium – Total Non-Life 99.0% 100.3% 100.8% 103.1% 2006 2007 2008 2009 UK – Total Non-Life 107.4% 113.6% 2010 Q1 10 100.9% 98.4% Q1 11 2006 Belgium – Motor 93.5% 93.8% 2006 2007 2007 2008 2009 201 0 Q11 0 Q11 1 UK – Motor 106.7% 112.6% 106.6% 104.8% 2008 107.4% 101.9% 108.1% 109.5% 110.2% 106.0% 2009 2010 Goldman Sachs Conference 08 06 2011 Q1 10 94.9% Q1 11 98.4% 104.0% 102.8% 2006 2007 2008 111.7% 106.2% 111.8% 2009 201 0 Q11 0 100.3% Q11 1 5
Ageas structurally works on strengthening its Insurance franchise … through streamlining, organic growth and selective expansion…. Belgium Strengthen Life & Non-Life market position UK N°1 in Life : 25% Launch partnership with Tesco mid October 10; N°2 in Non-Life : 17% Focus on operational performance N°2 market position in # cars insured Further develop multi-distribution strategy Non-Life : Improve combined ratio Life protection: Qualify business across IFA market Retail distribution: Diversification & size Recent acquisition KFIS & Castle Cover Life : Strategic Asset allocation Continental Europe Streamline current Insurance portfolio N°4 Personal lines Intermediary, n°2 in >50’s segment Asia Sale Turkey & Ukraine Life, Luxembourg N-L Selective investments in areas of growth Thailand : Entry Kasikornbank in share capital Stake UBI Assicurazioni Non-Life in Italy Deal with Aksigorta Non-Life in Turkey Strengthen market positions & partnerships Improved market presence across the region Closing Russian Life operations Non-Life: Strengthen multi-channel distribution & market position Focus on value creation Gradual shift from single to regular premiums since Q1 11 Increased focus on profitability Better underlying quality of result Goldman Sachs Conference 08 06 2011 6
General Account Ageas works on a progressive solution for the various legacy issues Litigation risk related to on going investigations 11 February 2011 : Positive judgment FRESH case 18 May 2011 : Favourable judgment in FortisEffect & VEB/Deminor case Prudent accounting & cash management 27 May 2011 : Fortis Bank’ decision not to call 2001 Debt securities (EUR 1 bn) 07 Dec 2010 : Claim filed against ABN AMRO re MCS & FCC (EUR 2.4 bn) Continued proactive management other outstanding investigations Volatile character General Account remains Q1 11 : RPN(I) FY 10 : RPN(I), Call option BNP Paribas shares, RPI, Deferred tax charges Legal simplification holding structures Belgium & the Netherlands Goldman Sachs Conference 08 06 2011 7
Fortis Bank SA/NV decided not to call Tier 1 bond 2001 Ageas fully prepared to meet its obligations… Background In 2001, Fortis Bank SA/NV issued a EUR 1 bn subordinated Tier 1 bond* Ageas to settle as co-guarantor, if Fortis SA/NV decides not to call at first call date (26/09/11) In return Ageas receives a Tier 1 bond on Fortis Bank SA/NV; 3m-coupon at EURIBOR + 237 bps Current Status On 27 May 2011, Fortis Bank SA/NV announced not to call Ageas will seek approval from NBB to redeem (in line with terms & conditions of the Securities) If approved, Ageas will settle; If no approval, the Securities remain outstanding with a floating coupon Financial implications Net result : financial instrument accounted at fair value; additional net interest income of app EUR 24 mio Net cash General Account : from EUR 2.1 bn (situation 31/03/11) to EUR 1.1 bn depending on amount called Solvency : not affected, 201% (situation 31/03/2011) solvency ratio unchanged Discretionary capital : EUR 0.2 bn (situation 31/03/11); Up with amount of cash not disbursed; In addition EUR 0.7 bn RPN(I) provision added back as permanent funding * 6.5% Redeemable Perpetual Cumulative Coupon Debt Securities Goldman Sachs Conference 08 06 2011 8
Ageas’s total IFRS solvency well above required minimum Excess capital of Insurance + General Account of EUR 4.7 bn End March 11 Total available capital Required Regulatory minimum 6.2 3.9 3.1 2.2 0.7 Actual Min Actual 0.3 0.5 */** 1.1 0.1 0.6 Min Actual Min 1.6 Actual Min Actual Minimum Actual 0.1 Belgium United Kingdom Continental Europe Asia General Account Insurance Total Solvency Ratio 177% * ** 247% 198% 984% 201% Asia : Investments in partnerships are deducted from Total Capital; given the significant investments in partnerships Under local Asian solvency regulation, different valuation rules apply leading to a solvency ratio for AICA of 468% end of March 11. Goldman Sachs Conference 08 06 2011 9
Ageas has a stringent solvency calculation methodology Example : Belgium (situation 31/03/2011) IFRS solvency ratio : 177% Local solvency ratio : 195% Excess capital range : EUR 2.7 – EUR 3.1 bn above regulatory minimum Example : solvency treatment of unrealized gains & losses on debt instruments IFRS : unrealized gains NOT included on balance, unrealized losses net of tax deducted from total capital at 100% Local : unrealized gains NOT included, unrealized losses net of tax deducted up to the total amount of unrealized gains on shares, land and buildings In addition, in a situation of rising interest rates, the valuation of liabilities are not adjusted Solvency II : Senior management & Board fully involved in programme process, steering & decision making QIS 5 : impact identified & reported to supervisor within foreseen timeline Analysis so far confirms robust Solvency II capital position, despite remaining uncertainty around SCR standard approach Goldman Sachs Conference 08 06 2011 10
Ageas’s Capital management principles ...following the communicated at Investor Day 25 September 2009 A balanced approach to ensure organic and external growth while respecting capitalization and liquidity constraints Invest in businesses Return to shareholders Support organic growth Pay annual dividend Selective expansion Return to debtholders Share buy-back + + Create trust Strategic flexibility reduced Recognition current low share price Volatile market environment vs. impact on business Debt buy-back + + - Potential increase in NAV - Strategic flexibility reduced Positive carry in P&L Volatile market environment vs. impact on business Strike the right balance between risk (including liquidity risk) and return vs. Short-term & Long-term strategic objectives Goldman Sachs Conference 08 06 2011 9/25/2009 I page 11 11
Ageas is commited to its dividend policy New dividend policy published in Sep 09 Intention to pay a regular dividend based on the net profit of the insurance activities Targeting a pay-out ratio of 40-50% On an annual base Cash dividend 2010 dividend over 2010 of EUR 0.08 Payout of app 50% In line with 2009 dividend & renewed dividend policy Payable as of 30 May 2011 Dividend related to call option on BNP Paribas shares Any gain related to exercise/monetisation call option during the exercise period In addition to regular dividend To comply with requirements European Commission Goldman Sachs Conference 08 06 2011 12
Conclusion Ageas, the journey towards real value creation has only started…. 2009 Focus on the restart of the company 2010 Focus on solidifying the structure 2011 Focus on delivery across all activities Overall focus on maximising value for the shareholder Goldman Sachs Conference 08 06 2011 13
Find out more on Ageas’s Asian activities Investor Day - London Thursday 29 September 2011 Save the date! Goldman Sachs Conference 08 06 2011 14
Investor Relations Tel: + 32 2 557 57 34 + 31 30 2525 305 E-mail: email@example.com Website: www.ageas.com Investor Relations Goldman Sachs Conference 08 06 2011 15
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