Morgan Stanley conference 2012

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Published on March 6, 2014

Author: Ageas

Source: slideshare.net

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Presentation for the Morgan Stanley conference in London in 2012

Creating value in a deleveraging environment Bart De Smet CEO Ageas Morgan Stanley Conference London – 29 March 2012

Value creation at Ageas Work on various levers to come to a more comprehensive story Insurance  Operational performance     General Account Life: investment yield Non-Life: combined ratio Profit generation Value creation     Reduce complexity & volatility Solve legacies Embedded Value New business Simplify Ageas’s story Constant strive to optimize the use of capital Morgan Stanley Conference I 29 March 2012 9/30/2009 1

Value Life Insurance Mix of ensuring sustained profit levels vs. long term value enhancing initiatives + EUR 734 mio 342 309 2,446 Year‐start 2011 Year‐end 2011 11 20 d No rm al iz e Ga in s/ Lo Ot he r ss es ill dw 64 Asia Continental Europe UK 3,360 Ca p Value added by New Business (VANB) (EUR mio) 3,686 638 440 162 Go o Im pa ir m en ts ts Eq ui ti es ek Gr e Embedded Value (EV) (EUR mio) 649 814 157 309 (600) im pa irm en 11 20 FY No rm al iz e d 20 10 (425) 4,980 +147** (99) (172) Belgium 32 23 0 51 43 (2) (1) (15) (3) Year‐start 2011 Morgan Stanley Conference I 29 March 2012 Year‐end 2011 2

Value Non-Life Insurance Improved operational performance should drive higher net profits + EUR 63 mio +2 (38) (27) 102.4% 104.2% 11 No rm al iz ed 20 er Ot h th er W ea ss es Combined ratio UK 108.2% 109.5% 105% 99.9% 100% 145 Ad ve rs e Ga in s/ Lo Ca p pa ir m en ts Im Eq ui ti es Im pa irm en ts 20 Gr ee k FY 110% 110% 105% 11 10 20 rm al iz ed No 115% Combined ratio Belgium* +10 82 81 115% (9) 95% 99.9% 100% 95% 90% 90% 2009 2010 2011 2009 2010 2011 * Excluding Workmen’s Compensation Morgan Stanley Conference I 29 March 2012 3

Value General Account: Clarity gained on valuation legacy issues Volatility remains but partially offsetting Call option on BNP Paribas shares RPN(i) In EUR mio In EUR mio Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Average 587 (145) 759 (316) 836 609 581 611 694 436 361 395 (442) (340) (496) (465) (190) (583) (722) Average (411) Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 RPI Sum of legacies +/- EUR 1bn In EUR mio In EUR mio 108 Average 876 505 (271) 1,027 760 760 840 933 913 899 850 779 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Morgan Stanley Conference I 29 March 2012 (290) (275) 56 (82) 208 1,025 984 Q4 09 Q4 11 4

Solution around CASHES is important step forward Transaction settled on 26 March 2012  Rationale for Ageas  Reduced credit risk to Fortis Bank EUR 4.6 bn  EUR 2.8 bn  Decreased volatility in results RPN(I) volatility  Improved liquidity position  Result of the offer : 63% converted  Impact on Net Cash position:  Impact on Net Result (in Q1 12) : EUR 953 mio redemption Tier 1 EUR (287) mio indemnifications paid --------------------EUR 666 mio  EUR 131 mio Tier 1 redemption EUR 21 mio release RPN(I) liability EUR (299) mio indemnifications paid --------------------EUR (147) mio Limited influence on equity & solvency of General Account Morgan Stanley Conference I 29 March 2012 +/- (2%) 5

General Account: good grasp of outstanding legacy issues Ageas does not expect new major litigation issues to rise June 09 June 10 Receipt report Belgian experts (Van Gerven/Horsmans) Receipt report Dutch experts (Ondernemingskamer) May 10 February 11 US class action dismissed Claim re FRESH hybrid instrument dismissed by Brussels Court 2009 May 11 - Claim dismissed of VEB/Deminor and FortisEffect by Amsterdam Court - Rotterdam court confirmed fine AFM I: appeal filed 2010 February 12 - Rotterdam court confirmed fine AFM II; appeal to be filed - Utrecht court re communication May-June 2008 in favour of plaintiffs; appeal to be filed 2011 2012 June 09 Sep- Dec 10 November 11 March 12 Ageas claims compensation with respect to “FCC preferred shares” from Fortis Bank NL Ageas starts legal procedure against Dutch State & ABN AMRO to obtain compensation in return for conversion of Mandatory Convertible Securities (MCS) into Ageas’ shares Receipt report Belgian experts (Cats, Smets, De Bodt) Brussels Commercial Court dismissed all claims initiated by former MCS holders Timing and (financial) outcome remains hard to estimate…. In many legal proceedings still at the stage of first instance To be expected before end June 2012  Judgment of Ondernemingskamer re mismanagement Morgan Stanley Conference I 29 March 2012 6

Ageas applies a conservative solvency calculation methodology IFRS Solvency remains solid & well above required minimum Ageas’ solvency calculation methodology : any unrealized loss on fixed income on balance is deducted, any net unrealized gain is eliminated. Solvency I Belgium Ageas passed very successfully the EIOPA solvency stress tests for Belgium & Portugal with simulated Solvency II ratios exceeding the average of the European industry in all stress test scenarios adopted. Solvency II Belgium IFRS Solvency ratio :198% Ageas Insurance ratio: 227% AG Insurance EIOPA solvency II ratio (MCR): 517% Average Insurance industry : 380% Based on 31/12/10 data Insurance Solvency Ratio Ageas as reported In EUR bn 229% 226% 6.4 6.6 207% 227% 6.8 2.8 Q4 09 Q4 10 Total available capital Morgan Stanley Conference I 29 March 2012 7.5 6.4 3.6 3.1 3.0 2.9 Q2 10 207% Q2 11 Q4 11 Required Minimum Margin (RMM) 7

Ageas strives for an optimal use of cash Almost equal share of three alternative uses of cash since 2009 Invest in Businesses    Organic growth Selective acquisitions Create new partnerships Return to shareholders   Dividend payment Share buy back Return to debtholders  Debt buy back (EMTN) May 2009 – March 2012: +/- EUR 740 mio +/- EUR 450 mio UK (Tesco, KFIS, Castle Cover)  +/- EUR 190 mio CEU (Italy, Turkey)  +/- EUR 100 mio Asia (India, HK)  Going forward : Insurance: General Account: Morgan Stanley Conference I 29 March 2012 9/30/2009 +/- EUR 850 mio +/- EUR 600 mio constant dividend over 2009, 2010 & 2011  EUR 250 mio share buy-back finalized early 2012 +/- EUR 700 mio   +/- EUR 700 mio EMTN program redeemed (31/12/2011) Lower growth in capital intense savings business Increased proportion of Non-Life and Fee related business Net cash position at EUR 1.3 bn (before dividend payment) 8

Ageas announced a share buy-back program on 24 August 2011 Program successfully completed on 25 January 2012 Ageas stock price in EUR 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 23/08/2011 Day before announcement of share buy-back program Ageas at EUR 1.09/share Share price + 34% 25/01/2012 Announcement of finalization share buy-back program Ageas at EUR 1.46/share  192 mio shares bought back (7.33%) for EUR 250 mio  Cancellation of acquired shares proposed at next shareholders’ meetings (25 & 26/04/12) Morgan Stanley Conference I 29 March 2012 9

Ageas’s operational priorities 2012   Review/ Rethink strategic asset allocation  Make further progress on unwinding legacy issues  Disciplined capital management  Morgan Stanley Conference I 29 March 2012 Confirm & further improve operational performance Prepare for regulatory changes 10

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