6M results 2014 Press Conference
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Transcript of 6M results 2014 Press Conference
2014 RESULTS Press conference
6M
6 August 2014
6M Results
Press conference I 6M 14 Results I 6 August 2014 2
Solid Insurance performance – Non-Life affected by floods & storms Group net result driven by Insurance – General Account impacted by legacies Shareholders’ equity up on unrealised gains/losses New share buy-back
Insurance net profit of EUR 340 million (+3%) – Q2 EUR 195 million
Inflow @ 100% of EUR 13.8 billion (+10%) – Q2 EUR 6.0 billion
Group combined ratio at 102.0% (vs.96.8%) – 4.6% impact floods & storm
Life Technical Liabilities at EUR 72.0 billion* (+4%)
Group net profit of EUR 31 million (-93%) – Q2 EUR 1 million
General Account net result of EUR (309) million Including EUR (157) million RPN(i) & EUR (130) million provision
FortisEffect
Shareholders’ equity at EUR 9.2 billion or EUR 41.11 per share Insurance solvency at 208%, Group solvency at 203% Net cash position General Account at EUR 1.6 billion
Starting as of 11/08/14 for EUR 250 million
Main messages Ageas posts solid 6M 14 Insurance results
Press conference I 6M 14 Results I 6 August 2014 3 * Consolidated entities only
Belgium UK
CEU Asia
Total Ageas
Life Non-Life Life Non-Life Life Non-Life Life Non-Life Life Non-Life
Inflows @ Ageas’s part Strong Life growth, excluding FX impact total inflows up 8% In EUR million
Press conference I 6M 14 Results I 6 August 2014 4
1,595 1,547
51 64 849 1,000
1,590 1,798
4,085 4,410 739 761
971 1,010 207 212
114 110
2,032 2,092
(1%)
5% 15%
12%
6%
2,334 2,308
1,023 1,074 1,056 1,213 1,704
1,908
6,117 6,502
6M 13 6M 14 6M 13 6M 14 6M 13 6M 14 6M 13 6M 14 6M 13 6M 14
Insurance net result Strong Life result in all segments, Non-Life suffering
Belgium UK
CEU Asia
Total Ageas
Life Non-Life Life Non-Life Other Life Non-Life Life Non-Life Life Non-Life Other
9 6 9 6
121
186
(1)1 25 28
56 70
201
285 38
6
50 25
20 10
10 8
119
49
160
193
58
32 46 37
66 78
329 340
6M 13 6M 14 6M 13 6M 14 6M 13 6M 14 6M 13 6M 14 6M 13 6M 14
In EUR million
Press conference I 6M 14 Results I 6 August 2014 5
6M 13 6M 146M 13 6M 14
Press conference I 6M 14 Results I 6 August 2014 6
Net result: Strong in Life; Non-Life negatively impacted by hailstorm
In EUR million In EUR billion
Operating margin Guaranteed: solid investment margin
Non-Life combined ratio @ 100.2% excluding hailstorm
Inflow*: Non-Life increased but offset by Life
Life Technical liabilities: acquisition of Fidea’s group Life & shadow accounting In EUR billion
Belgium : Headlines Strong operating results in Life offset by hailstorm effect in Non-Life
**
Operating margin Unit-Linked
In % avg technical liabilities In % avg technical liabilities
6
6M 13 6M 14
Life Non-Life
57
23
(6)Q2 13 Q2 14
2.1 2.1
1.0 1.0
3.1 3.1
6M 13 6M 14
Life Non-Life
1.1 1.0
0.4 0.4
1.5 1.4
Q2 13 Q2 14
Q2 13 Q2 14
In % NEP
Q2 13 Q2 146M 13 6M 14Q2 13 Q2 14
97.5% 105.7% 95.4% 109.9%
0.29%0.38%
0.27%0.41%
1.06%0.91%0.98%0.84%
121186
38
160
193
80
111
105
53.2 54.0 55.5
FY 13 3M 14 6M 14
6M 13 6M 14
When excluding weather, better Non-Life & Life results offset by Retail In EUR million
United Kingdom: Headlines Strong recovery of operating results in second quarter
Non-Life combined ratio Q1 weather impact, excellent Q2
9 6(1) 1
50
25
58
32
6M 13 6M 14
Life Other Non-Life
Q2 13 Q2 14
96.3% 100.7%94.0% 95.4%
50
5
Inflow* up 5%, flat excluding FX In EUR billion
In % NEP In EUR million
Other Income: incl. positive contribution from legal settlement (EUR 6 million)
0.1 0.1
1.1 1.1
1.2 1.2
6M 13 6M 14
Life Non-Life
0.0 0.00.6 0.6
0.6 0.6
Q2 13 Q2 14
6M 13 6M 14
59 59
Q2 13 Q2 14
122 129
* incl. non-consolidated partnerships @ 100%
51
(1) 1
31 35
35 38
Q2 13 Q2 14
7 Press conference I 6M 14 Results I 6 August 2014
Net profit Q2 13 included EUR 9 million one-off in Turkey In EUR million In EUR billion
Excellent Non-Life combined ratio improvement in Motor & Household
227% 210% 207%
Inflow* boosted by strong sales in Luxembourg Life In EUR billion
Continental Europe: Headlines Results on track
**
Operating margin Guaranteed: lower U/W & investment margin
Press conference I 6M 14 Results I 6 August 2014 8
Life Technical liabilities up 2%
In % avg technical liabilities
Operating margin Unit-Linked: lower fee income in Portugal In % avg technical liabilities
25 28
2010
46
37
6M 13 6M 14
Life Non-Life
13 9
16
4
28
13
Q2 13 Q2 14
1.82.3
0.6
0.62.4
2.8
6M 13 6M 14
Life Non-Life
0.91.4
0.3
0.31.2
1.6
Q2 13 Q2 14
6M 13 6M 14 Q2 13 Q2 14 6M 13 6M 14 Q2 13 Q2 14 6M 13 6M 14 Q2 13 Q2 14
95.5% 91.4% 94.4% 88.1%0.94% 0.82% 0.98% 0.58%
0.53%
0.17%
0.53%
0.10%
In % NEP
* incl. non-consolidated partnerships @ 100%
13.9 14.3 14.2
15.0 15.2 15.9
28.9 29.5 30.1
FY 13 3M 14 6M 14
Conso Non-conso
2432
4528
36
Q2 13 Q2 146M 13 6M 14 Q2 13 Q2 14
Inflow: successful sales campaigns & channel development in China & Thailand
10
8
6M 13 6M 14
Life Non-Life
10
8
6M 13 6M 14
Life Non-Life
Net result: strong growth due to good operational performance In EUR million In EUR billion
Non-Life combined ratio reflects good underwriting performance
Life Technical liabilities up across all entities In EUR billion
Asia: Headlines New business & profit growth Life / Strong Non-Life underwriting result
Press conference I 6M 14 Results I 6 August 2014 9
**
In % avg technical liabilities In EUR million
Result non-conso partnerships: up 30% on good Life operational performance
5.4 6.3
0.40.45.96.7
6M 13 6M 14Life Non-Life
2.3 2.1
0.2 0.2
2.5 2.3
Q2 13 Q2 14
Q2 13 Q2 146M 13 6M 14
94.2%89.1%
95.9%
89.1%
1.54% 1.53%
0.97%
1.60%
56 70
6678
49 64
5972
In % NEP
* incl. non-consolidated partnerships @ 100%
Life operating margin Hong Kong: improved due to capital gains
2435
4
52940
Q2 13 Q2 14
2.0 2.0 2.1
25.9 28.2 29.6
27.930.3 31.7
FY 13 3M 14 6M 14
Conso Non-conso
General Account result driven by further increase of RPN(i) liability and provision FortisEffect
Press conference I 6M 14 Results I 6 August 2014 10
In EUR million
(157)
(130)
(9)(12) (2)
(309)
Reval RPN(i) Legalprovision
Staffexpenses
Otheroperatingexpenses
Other* Net result
Strategic decisions
Press conference I 6M 14 Results I 6 August 2014 11
Up to EUR 250 million of its outstanding shares Buy-back launched as of 11 August 2014 For a period ending at 31 July 2015 Independent broker mandated to execute Through open market purchases on NYSE Euronext Brussels
Shares to be held as treasury shares Cancellation of these shares subject to approval @ General meeting of Shareholders No impact on solvency position of Insurance activities Ageas has informed the National Bank that this operation can be considered as non-strategic, according to
article 36/3 §2 of the law of 22 February 1998 determining the statute of the National Bank of Belgium.
Ageas announces new share buy-back 4rth consecutive share buy-back confirming capital management strategy
June 12 Cancellation bought-back shares (7.3% of outstanding)
6 August 12 Ageas announces EUR 200 million share buy-back
24 August 11 Ageas announces EUR 250 million share buy-back
April 13 Cancellation bought-back shares (3.8% of outstanding)
2 August 13 Ageas announces EUR 200 million share buy-back
Press conference I 6M 14 Results I 6 August 2014 12
April 14 Cancellation bought-back shares (1.1% of outstanding)
6 August 14 Ageas announces EUR 250 million share buy-back
September 13 Cancellation bought-back shares (0.2% of outstanding)
Since 2012
31,341,889 shares cancelled
- around 12% of outstanding -
1 August 14 Ageas completes 2013
EUR 200 million share buy-back - 6,513,207 shares
Press conference I 6M 14 Results I 6 August 2014 13
Towards desired company profile Ageas takes full control of the Portuguese Non-Life activities (PR 26 May ‘14)
Ageas acquires remaining 49% Médis & Occidental Seguros for EUR 122.5 million subject to price adjustment after 4 years linked to sales volume & quality targets
Upstream of EUR 290 million dividend (Life & Non-Life, @ 100%) – net cash accretive for Ageas
Exclusive distribution agreement with BCP renewed up to 2029 ; Médis & Occidental Seguros free to enter in other agreements
No goodwill creation
Possibility to explore other distribution opportunities : strengthen foothold & enhance distribution reach
6M 14 combined ratio at 90.7% 6M 14 net result of EUR 9 million (@100%)
Balance Life/Non-Life 0.9 %point in favour of Non-Life Positive impact on ROE: equity down EUR 72 million, net profit up
Transaction details
Portuguese Non-Life activities
Impact on Vision 2015 targets (Based on 6M 14 figures)
Rationale
Press conference I 6M 14 Results I 6 August 2014 14
Towards desired company profile Ageas & BNPP Cardif take full control of Italian Non-Life activities (PR 6 August ‘14)
Ageas & BNPPC both acquire 25% of UBI Assicurazioni (now each 25%*) for EUR 75 million, (each EUR 37.5 million) subject to closing adjustment
Long-term distribution agreement with UBI Banca UBIA free to enter into other distribution agreements – potential of BNP
bank network through BNL & Findomestic Subject to regulatory approval - Expected to close in 2014
Further expand Non-Life bancassurance business Possibility to explore other distribution opportunities : strengthen foothold In Italy, one of more profitable Non-Life markets in Europe
6M 14 combined ratio at 92.1% 6M 14 net result of EUR 11 million (@100%)
Balance Life/Non-Life 0.5 %point in favour of Non-Life Positive impact on ROE: net profit up
Transaction details
Italian Non-Life activities
Impact on Vision 2015 targets (Based on 6M 14 figures)
Rationale
Press conference I 6M 14 Results I 6 August 2014 15
Towards desired company profile Ageas sells Ageas Protect (UK Life activities) to AIG (PR 6 August ‘14)
Rationale
Impact on Vision 2015 targets (Based on 6M 14 figures)
Transaction details
Details on UK Protect
Transaction price of around EUR 228 mio (GBP 181 mio)
Net proceeds after costs & repayment internal loan of around EUR 33 mio (GBP 26 mio) will be up streamed to General Account
Capital gain will be realised at closing Subject to regulatory approval - Expected to close in 2014
UK Protect activities better chance to further develop in Life driven
environment of AIG Focus on developing the more material Non-Life business &
distribution activities in UK
Launched in 2008, Covering over 305.000 lives, 4.8% share in Protection market
Continuous efforts in developing business & widening product portfolio reflected in 6M 14 increase in inflow & results
Balance Life/Non-Life 0.5 pp in favour of Non-Life Positive impact on ROE: activity with low ROE
Press conference I 6M 14 Results I 6 August 2014 16
Only 2 alternative uses for General Account net cash withheld Continuation of capital management principles since 2009
1. Invest in Businesses
Organic growth Selective acquisitions Create new partnerships
2. Return to shareholders
Dividend payment Share buy-back
≈ EUR 2.1 billion ≈ EUR 900 million cash dividend over ‘09, ’10, ‘11 & ‘12 EUR 650 million share buy-backs finalized’12, ‘13 & ’14 EUR 222 million capital reduction from proceeds of BNPP
Call Option & RPI
EUR 250 million share buy-back announced
06/08/14
≈ EUR 1.3 billion from net cash on top of retained earnings
≈ EUR 600 million UK (Tesco, KFIS, Castle
Cover, Groupama) ≈ EUR 200 million CE (Italy, Turkey)
≈ EUR 320 million Asia (India, HK, China)
≈ EUR 160 million CE (Portugal, Italy)
Legal legacies
Press conference I 6M 14 Results I 6 August 2014 17
18
Amsterdam Court of Appeal renders judgment FortisEffect case Ageas announces appeal & accounting of provision
Accounting consequence
Main elements of ruling of 29/07/14
Sale of Dutch entities remains unaffected Dutch State: confirmation of original ruling: no liability retained Ageas:
Miscommunication in period 29/09/08 – 01/10/08 Liability retained for indemnifying damages suffered –
existence of damages & amount to be decided upon in further proceedings
Ageas will file appeal before the Supreme Court Ageas sets up provision of EUR 130 million
Provision of EUR 130 million in 6M 14, based on
Methods & assumptions commonly used in the market Benchmarking with other cases Assumptions on # shares eligible, % participation
shareholders, relative share performance
Ageas’s position
Press conference I 6M 14 Results I 6 August 2014
Press conference I 6M 14 Results I 6 August 2014 19
Status on various legal procedures
Timing & (financial) outcome remains hard to estimate
2014 expected next steps
Brussels Commercial Court re Sep/Oct 2008 transactions (Modrikamen) – interim judgement on procedural matters expected – pleadings on the merits in 2015
February 11 Claim re FRESH hybrid instrument dismissed by Brussels Court
Sep- Dec 10 Ageas starts legal procedure against Dutch State & ABN AMRO to obtain compensation in return for conversion MCS (Mandatory Convertible Securities) into Ageas’ shares
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Aga
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February 12 BNP P tender for CASHES & subsequent conversion into Ageas shares – partial settlement of RPN/RPN(I) – call Fortis Bank Tier 1 Debt Securities
February 12 Utrecht court re communication Q2 2008 in favour of plaintiffs, appeal filed
March 12 Brussels Commercial Court rules in favour of Ageas in MCS-case, appeal filed
2011 2012 2009... 2010 ...
December 13 Supreme Court rejects appeal against judgement Ondernemingskamer re mismanagement mainly in favour of plaintiffs
June 12 Agreement with ABN AMRO to settle legal proceedings concerning FCC & MCS, closing all outstanding disputes with Dutch State
2013
June 13 Fine imposed by
FSMA, appeal filed
February 14 Trade & Industry Appeals Tribunal
renders final judgment on AFM II in favour of Ageas
2014
March 14 T&I A Tribunal rejects appeal in AFM I
July 14 Amsterman Court of Appeal judges mainly in favour of plaintiffs; appeal will be filed
Legal proceedings Managed in interest of shareholders Administrative proceedings
NL: AFM fine imposed 05/02/10 re price sensitive info June 08
NL: AFM 2nd fine imposed 19/08/10 re price sensitive information Sep 07
Final judgement 04/03/2014; appeal rejected
Final judgement 14/02/2014 in favour of Ageas BE: FSMA re communication in Q2 2008 Appeal filed before Court of Appeal
Criminal procedure
Brussels – several alleged crimes June 2007 – April 2008 Public prosecutor requests referral of 7 individuals Enterprise Court (Ondernemingskamer)
At request of VEB re 2007-2008 Final judgement 06/12/13 re mismanagement, mainly in favour
plaintiffs.
Civil Lawsuits
Amsterdam - VEB re alleged miscommunication 2007-08 against Ageas, former directors/executives & banks
Amsterdam - Stichting FortisEffect, re sale of Dutch activities against Dutch State & Ageas
Proceedings ongoing
Judgement partly in favour of plaintiffs; appeal will be filed
Utrecht - Stichting Investor Claims Against Fortis re alleged miscommunication 2007-08 against Ageas & 2 financial institutions
Utrecht - 2nd case by Stichting on behalf of certain shareholders for damages from same defendants & certain former directors/executives
Proceedings ongoing
Proceedings initiated in August 2012 ; at present unclear whether both actions will be joined
Arnhem - Mr.Bos, re alleged miscommunication 2007 - 08 Appeal filed before Arnhem Court of Appeal
Brussels - Modrikamen, re Sep/Oct 2008 transactions Brussels – Various lawsuits initiated by shareholders re alleged
miscommunication 2007 – 08
Judgement procedural matters expected; Pleadings merits H1 2015 Proceedings ongoing Deminor: interim judgment procedural matters 28/04/2014
Financial instruments
Brussels Court of Appeal - MCS-holders contesting validity of conversion Judgment Brussels court 23/03/12 in favour of Ageas; Appeal by certain MCS-holders; no judgment before 2015
Other litigation
Brussels/Paris – RBS re alleged indemnity in context of ABN AMRO take- over
Proceedings before Brussels court & ICC arbitration in Paris initiated in April 2014
Press conference I 6M 14 Results I 6 August 2014 20
Situation 6 August 2014
Conclusions
Press conference I 6M 14 Results I 6 August 2014 21
Healthy growing inflow
Solid net profit Insurance, impacted by one-offs in both directions
Progress in a number of strategic files - focus on more material business
- more power to develop
4th share buy back
Press conference I 6M 14 Results I 6 August 2014 22
Disclaimer 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 Ageas’s 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 Ageas 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.