SII - extra information

31.12.2016

19.05.2017

SOLVENCY II – WITH USE OF THE STANDARD FORMULA (1/3)

▪ A solvability risk has been identified following the European stress test results involving that Ethias submitted a financial recovery plan to the Belgian regulator at the end of

September 2016 and an update of this plan in February 2017. This financial recovery plan included among others the implementation of a financial reinsurance program, the

implementation of other Switch operations and the integration of Whestia (an Ethias’ subsidiary offering “outstanding balance insurances”) with retroactive effect from 1st of

January 2017 (measure for which we received the approval of the regulator in March 2017)

▪ SII margin at the end of 2016 amounts to 145,9% as per annual QRT :

▪ The margin has been strengthened vs Q3 2016 mainly thanks to the results of the Switch VI operation launched in November 2016 (holders of First A were offered an

exceptional redemption bonus of 25%) with surrenders of €785M for a cost of €196M and an SII net impact of +24%

▪ This level takes into account the impact of the integration of Whestia

▪ It does not take into account the impact of the financial reinsurance program : due to the remaining level of First A reserves after the Switch VI operation, we have given

up our first line of approach, in which were more focused on the transfer of the Individual Life reserves to a reinsurer. We have now been working for several months on a

credit spread reinsurance program with an European reinsurer, with the objective of realizing the transaction in 2017

▪ End March 2017, the regulator confirmed us that the financial recovery plan has borne fruit and that it can be considered as closed

2

1,567

2,062

1,550

31/12/2015

1,7661,939

31/03/2016

1,593

2,216

30/09/2016

1,546 1,518

30/06/2016 31/12/2016¹

1,789

SCR

Eligible own funds

Required capital, eligible own funds and SII margin of Ethias SA (in €M) –

Before transitory measure on technical provisions

¹ Results from the annual QRT at end of 2016.

Unaudited figures except for 30/06/2016 (limited review)

Q1 2016

145.9%

Q4 2016¹

131.6%

110.9%

Q2 2016Q4 2015 Q3 2016

115.7%125.1%

Evolution of SII margin Breakdown of eligible own funds and SCR

SOLVENCY II – WITH USE OF THE STANDARD FORMULA (2/3)

960

215

207

707

291

121

26

506Non-life underwriting risk

Health risk

Life underwriting risk

Counterparty default risk

1,567SCR

1,472

Diversification

BSCR

Operational risk

Absorption capacity of technical provisions

Market risk

2,216

15

1,687

514Dated hybrid

Equity

Perpetual hybrids

2016

76.1%

0.7%

23.2%

514

Unrestricted

Tier 1

1,459

Restricted

Tier 1

15

Tier 3

2,216

Tier 2 Eligible

own funds

228

Tier 1 capital represents 66.5% of total

own funds

Restricted Tier 1 and a part of Tier 2

(€75M in book value) capital

grandfathered under Solvency II

Tier 3 comprises deferred tax assets

Decomposition of eligible own funds

Decomposition of SCR

248

189

254

486

690

936

118

23

1,518

1,423

31/12/201631/12/2015

3

The SCR remains quite stable :

Decrease in the SCR interest due to the

reduction of the duration gap and this,

despite the extension of the liabilities in

group insurance following the career

lengthening resulting from a regulatory

change and the extension of the liabilities

related to the FIRST A following the

decrease in average age of the

policyholders resulting from the operation

Switch VI ;

Increase in SCR Equity due to the

amortization of the shock applied to the

SCR computation (transitory measure

« equity ») and to the increase in exposure

following a prudent approach of the

market risk transfer in the frame of the

reinsurance contract between Ethias SA

and Ethias DC AAM

SOLVENCY II – IMPACT OF VOLATILITY ADJUSTMENT (3/3)4

100 %

133,15%

145,94%

-12,79%

Without VA

Base

Impact of volatility adjustment :

The SII margin is computed on the basis of the EIOPA curve with the volatility adjustment at

0,13% as per end 2016

Without this adjustment, the SII margin would be 13% lower :

No impact on the market value of assets as that value doesn’t depend on the curve

defined by the EIOPA

On the contrary, an actualization of the liabilities flows on the basis of a lower curve

generates an increase in the Best Estimates reducing the amount of eligible own funds

of 181 mios EUR

As the main components of the required capital for insurance risks and interest rates

are sensitivities of Best Estimates, the increase in the Best Estimates generates an

increase in SCR of 10 mios EUR

Disclaimer

These assessments are, as always, subject to the disclaimer provided below.

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, (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,

No duty to update

The company assumes no obligation to update any information or forward-looking statement contained herein, save for any information required to be disclosed by law

5

Investor Relations

Website : www.ethias.be/investors