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Half Year 2010 Results 25 August 2010
• CEO update
• Financials
• Conclusion
AGENDA
25 August 2010 | 2Half Year 2010 Results
Robust inflow levels
Resilient results Insurance operations
Positive Group net result
Solid and further de-risked balance sheet
Continued execution strategic plan
Key highlights
10/03/2010 I page 2
25 August 2010 | 3Half Year 2010 Results
Highlights first half 2010
Simplification legal structure through liquidation Fortis Brussels Announced sale Pension and Life activities in Turkey Acquisition Kwik-Fit Insurance Services in UK
On going execution strategic plan
Shareholder’s equity at EUR 9.2 bn or EUR 3.70 per share Capital position remains strong at 226% Capital buffer of EUR 6.0 bn above minimum required capital Southern European sovereign exposure more than halved; EUR 8.9 bn divested in H1 10
Solid & further de-risked balance sheet
Group net profit : EUR 455 mio (vs. H1 09 EUR 896 million) General Account : EUR 275 mio; Continued volatility H1 10 : Positive tax impacts more than offset lower valuation call option and higher RPN(I);
Valuation call option positively impacted by decision to move to a gradual exercise strategy H1 09 : Including EUR 697 mio positive impact of sale 25% AG Insurance to Fortis Bank
Positive Group net result
Insurance net profit : EUR 180 mio (vs. H1 09 EUR 260 mio*); Life : EUR 178 mio; Strong contribution driven by Asia & Belgium Non-Life : EUR -6 mio; Weak operational performance in Belgium & UK Other : EUR 8 mio; Steady growing UK retail operations
Resilient financial performance Insurance despite market conditions
Total inflow : EUR 9.6 bn, +22% Inflow Asia at EUR 3.4 bn, +59%; growth in all countries but especially in China Steady growth in Life, +23% & Non-Life, +18% Inflow consolidated operations at EUR 6.4 bn, +8%
Robust inflow levels
* Net Insurance result H1 09 restated from EUR 228 mio to EUR 260 mio as a result of the new segment structure and the impact of the changed Chinese Accounting Standards
25 August 2010 | 4Half Year 2010 Results
Continued strong commercial performance
BelgiumLifeNon-Life
United Kingdom*Life*Non-Life
Continental EuropeLifeNon-Life
Asia** LifeNon-Life
Total LifeNon-Life
Of which non-consolidated partnershipsLifeNon-Life
H1 09
3.52.70.8
0.5-
0.5
1.81.60.1
2.11.90.2
7.96.31.6
2.01.80.2
H1 10
3.52.70.8
0.5-
0.5
2.22.00.2
3.43.10.3
9.67.71.9
3.22.90.3
Total gross inflow (EUR bn)
Q2 09
1.71.30.4
0.2-
0.2
0.80.70.1
1.00.90.1
3.72.90.8
0.90.80.1
Q2 10
1.71.30.4
0.3-
0.3
1.11.00.1
1.61.40.2
4.63.70.9
1.51.30.2
* UK Life inflow H1 10 at EUR 11 million/ Retail distribution not reported at inflow level/ ** All entities at 100%
Q1 10
1.81.30.5
0.3-
0.3
1.11.00.1
1.81.70.1
5.04.01.0
1.71.60.1
%
(1%)(3%)
5%
22%-
20%
24%20%79%
59%**
22%23%18%
63%67%26%
25 August 2010 | 5Half Year 2010 Results
Steady inflow growth in all segments, Asia excellingEmbedded value Asian partnerships further up
Asia : +59%, all countries contributing to growth China : +72% thanks to continued expansion
distribution and product innovation
Malaysia, Thailand : Largest and respectively 2nd
largest foreign investor in Life
Hong Kong : +7%; New business up 12%
India: Growth supported by strong brands banking partners
Belgium : solid market position Stable inflow levels with Life slightly down offset by
increase in Non-Life
UK : +22%, thanks to continued flow of new partnerships Acquisition KFIS to increase contribution retail activities
New commercial partnerships, e.g. Tesco, American Express will further strengthen Non-Life
Life Protection, products available across entire IFA market
Continental Europe : +24% Recovery Luxembourg & France confirmed
Italian operations included since Q1 10
Portugal down 8% on H1 09
10/03/2010 I page 5
11%22% 26%
35%
52%43%
43%36%
30% 28% 25% 23%
7% 7% 6% 6%
2005 2008 2009 H1 2010
Asia Belgium Continental Europe UK
13.6
4.6
8.5
FY 06 FY 08 FY 09
Ageas’s inflow evolution 05 – H1 10
Embedded Value Taiping (TPIH) - China*
* Embedded value at 100%; Taiping under local methodology; HKD/EUR 0.104658 at 30 June 2010
In HKD bn
25 August 2010 | 6Half Year 2010 Results
Various views on Ageas by segment
Inflow breakdown by segmentGross inflow H1 10 = EUR 9.6 bn*
Result breakdown by segment (excl. General Account)Net result H1 10 = EUR 180 mio
Equity Breakdown by segment (incl. General Account)Total shareholders’ equity H1 10 = EUR 9.2 bn
Asia 35%
Belgium 36%ContinentalEurope 23%
Belgium 33%
GeneralAccount 32%
ContinentalEurope 11%
Asia17%
* Including non-consolidated joint ventures at 100%
United Kingdom 6%
Asia 37%
Belgium 49%ContinentalEurope 9%
United Kingdom 5%
UK 7%
25 August 2010 | 7Half Year 2010 Results
Belgium, combined ratio up due to adverse weather conditionsImpact corrective measures visible in 2nd quarter
Expense ratioClaims ratio
61.6 63.6 64.9 66.4 68.6 70.5 76.664.4
36.137.4 36.7 35.9 36.8 37.0 36.637.0
06 07 08 09 H1 09 H1 10 Q1 10 Q2 10
99.0% 100.3% 100.8% 103.1% 105.6% 107.1%100.5%
Non-Life marked by weak operating performance Extreme winter ‘10 conditions and storm Xynthia
Unfavourable development of current year claims in Motor
Weak prior & current year claims development in Workmen’s Compensation
Corrective set of measures taken since H1 09 Motor : tariff increases of 3.5% in 09 – 4.5% in 10
Fire : 50% tariff increase Natural Disaster cover (+3.5% impact on Fire portfolio; Additional increases planned of 4-5% on top of ABEX indexation in Retail Fire on new & existing contracts
Additional measures both in Motor & Fire (ex.reviewed product features
Improved combined ratio observed in 2nd quarter Positive seasonal influence and first positive results
management actions, except in Workmen’s Compensation
Combined ratio H1 10 excluding WC at 103.1% compared to 105.5% in H1 09; Q2 10 combined ratio excluding WC at 95.7%
PY loss ratio at-4.6% (vs. -6.6% in H1 09)
Combined ratio FY 06 - H1 10 AG Insurance
113.6%
25 August 2010 | 8Half Year 2010 Results
73.080.076.476.080.473.179.770.2
29.930.230.128.3
27.728.8
27.728.2
06 07 08 09 H1 09 H1 10 Q1 10 Q2 10
Other Non-Life, mixed views across the countriesUK, impact adverse weather conditions in Q1, better performance in Q2
Expense ratioClaims ratio
Non-Life marked by difficult first quarter and a better 2nd quarter UK : Industry-wide poor performance in Motor overall, but
strong performance in Q2
Portugal : strong performance with H1 10 combined ratio at 93.0%, despite Madeira storms in February
Italy : Negative evolution due to Southern Italy Motor book (industry wide issue); corrective measures taken
Asia : Combined ratio at 96.2% vs 97.7% last year
UK : positive impact in Q2 from corrective measures Private motor impacted by industry-wide issue of increased
personal injury claims;
Selected tariff increases in 09 & H1 10 in line with underlying risk resulted in an improvement in Motor combined ratio (106.4% Q2 10 vs 111.8% Q1 10)
Fire/ Household combined ratio improved to 98.3%, thanks to improved current year loss ratio
Travel combined ratio (125.5%) impacted by volcanic ash event and increased medical claims
Overall combined ratio in Q2 improved to 102.9%, illustrating first results of the management actions and positive seasonal impact
PY loss ratio at 0.4% vs -3.4% in H1 09
Combined ratio FY 06 - H1 10 UK
98.4 %107.4%
101.9%108.1% 104.3%106.5% 102.9%
110.2%
* Combined ratios 06-09 based on restated expense ratios; Original combined ratios 06-09 amount to 105.6%, 109.4%, 102.6% and 108.8% respectively
25 August 2010 | 9Half Year 2010 Results
Ageas’s investment portfolio on 30 June 2010
Investment portfolio (EUR 58.5 bn)In EUR bn
Fixed Income securities Southern European sovereign exposure reduced
in H1 10 to EUR 8.9 bn** by the end of June
Investment in Corporate bonds up with EUR 2.2 bn in H1 10
>95% investment grade, 94% rated A or higher
Gross unrealized gains on bonds end of June 10 up to EUR 1.7 bn
Equities Increase to EUR 1.8 bn** (EUR 1.7 bn market value) Gross unrealized gains of EUR 24 mio
Real Estate Unrealized gain net-of-tax remained intact at
EUR 0.6 bn
Total unrealized gains on investmentportfolio of EUR 2.4 bn***
Sovereign bonds*33.0
RE Inv Prop*
2.1 RE own use
(incl. Interparking)*1.4
Equities*1.7
* At market value (incl. Interparking)** At historical/amortized cost
*** Before shadow accounting
Corporate bonds*19.8
StructuredCredit Instruments0.5
25 August 2010 | 10Half Year 2010 Results
Southern European sovereign bond exposure downEUR 8.9 bn as at 30 June 2010
Gross unrealized gains on sovereign bonds of EUR 707 mio end June 10 vs EUR 871 mio end 09
Overview sovereign bond portfolio In EUR bn (at historical cost)
Estimated negative impact of EUR 55 mio on H1 2010 net profit of sovereign sales (incl. lower profit sharing assumptions)
Reallocation mainly into Belgian, German, Dutch, French, Austrian government bonds + corporate bonds
End 09 : EUR 17.8 bn in Southern Europeansovereign bonds
June 10 : EUR 8.9 bn in Southern Europeansovereign bonds
Spain1.9
Spain1.7
Portugal1.5
Others 5.0
Greece4.3Belgium
6.6 Portugal3.0
Italy 8.6
France1.6
Others5.0
Germany1.6
Italy 3.7
Belgium9.6
Greece1.9
France3.8
Germany2.9
Austria2.2
25 August 2010 | 11Half Year 2010 Results
0
2
4
6
8
10
12
1/07/0
41/0
1/05
1/07/0
51/0
1/06
1/07/0
61/0
1/07
1/07/0
71/0
1/08
1/07/0
81/0
1/09
1/07/0
91/0
1/10
1/07/1
0
Portugal Greece Belgium Germany France
An uncertain and low interest rate environmentCreating challenges for a competitive investment strategy
Uncertain economic & financial situation Inflated high interest rate scenario vs. deflated low
interest rate scenario
Final scenario will impact the entire business environment including product portfolio
Future investment strategy under study taking into account various possible scenarios Ideal asset mix or asset mix scenarios
Investment strategy
Organisational implications
Target returns vs. risk appetite
Ageas’s strenghts in an uncertain world
Appropriate match of assets & liabilities
Presence in markets with different dynamics
Healthy mix between Life & Non-Life
Strong capital position helping to absorb shocks
10/03/2010 I page 11
In %10y- Government bond yields
Source : Company Data
25 August 2010 | 12Half Year 2010 Results
Further execution of our strategy
• UK : Acquisition of Kwik-Fit Insurance Services
• Turkey : Sale Pension & Life activities to BNP Paribas Assurances
• Liquidation Fortis Brussels
H110
• Italy: Partnership with BNP Paribas Assurances and UBI Assuricazioni in Non-Life
• UK: Underwriting partnership Tesco Bank
• Thailand: Increased stake of KASIKORN Bank -> Inflows +45% in H1 10
• Russia: Discontinuationoperations
• Luxembourg : Sale Non-Life to La Bâloise
FY09
Acquire new businesses in attractive markets
Grow the core entities organically and small add-on acquisitions, based on ability to team up with different partners
Streamline the insurance portfolio, simplification of the Group structure
25 August 2010 | 13Half Year 2010 Results
Underwriter
The UK distribution modelUK at the forefront in Europe in distribution via aggregators
10/03/2010 I page 13
Traditional direct
Traditional intermediary
model
Aggregatormodel
(direct insurers)
Aggregatormodel
(intermediaresand affinities)
Customer Underwriter
Distributors & Underwriters
UnderwriterBroker
UnderwriterAggregator
Aggregator Intermediary
25 August 2010 | 14Half Year 2010 Results
Acquisition of Kwik-Fit Insurance Services in the UK
• Total consideration of GBP 215 million, net of cash investment about GBP 185 million
• Estimated goodwill and intangible assets of GBP 180 million
• Cash return on net investment expected to meet minimum requirement of 11% as of 2011
• Funding of transaction via General Account
Financials
• Ageas’s now 4th largest Personal lines intermediary distributor in the UK
• Further strengthening retail operations providing additional capacity and creating a collective retail customer base of 1.6 million clients.
• Increase combined revenues and net profit levels from Retail distribution in a very dynamic UK market
Strategic rationale
• Kwik-Fit Insurance Services (KFIS) is an insurance intermediary, which sells predominantly Personal lines products direct to customers, primarily through the internet channel leveraging the Kwik-Fit brand and the two other brands owned by KFIS, The Green Insurance Company and Express Insurance
• 2009 revenues of GBP 89 million, consolidated net assets of GBP 46 million
Transaction
25 August 2010 | 15Half Year 2010 Results
Ageas’s Core equity EUR 6.0 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, different valuation rules apply leading to a solvency ratio for FICA of 342% end of June 10.
Belgium United Kingdom
Other Core Tier 1 capital
Insurance
Required Regulatory minimum
EUR 3.7 bn excess capital in Insurance + EUR 2.3 bn General
Account = EUR 6.0 bn
ActualActual Min
0.6
0.6
2.1
3.5
0.6 0.2
6.64.1
6.5
0.1
2.9
Minimum
Core equity
195% 302%Total Solvency Ratio
1.30.6
Actual Min Actual MinContinental
EuropeAsia
0.90.3
0.1
1.30.6*/**
Actual Min
238% 926%
2.5
0.2
2.3
ActualGeneral
226%
25 August 2010 | 16Half Year 2010 Results
Ageas prepares for Solvency II regulation
01- 06 : Start Solvency II / QIS 1• A 3-pillar risk based approach,
harmonised across Europe• Two levels – a “Target” Standard Capital
Requirement (SCR) and absolute Minimum Capital Requirement (MCR)
• QIS 1: tested level of prudence in technical provisions
06 : QIS 2• Tested first version of
solo Standard Capital Requirement (SCR) standard approach
70’s - 90’s : Solvency I• A simple factor-based
approach capital requirements based on accounting valuations and volumes
07 : QIS 3• Tested refinements of Standard
approach – measure financial impact on SII balance sheet
• Tested first version of Group SCR: group diversification and eligible elements of capital
08-mid 09 : QIS 4• Solvency II Directive and
CEIOPS advice on implementing measure
• Test and refinements of standards approach (calculations and calibrations)
10 : QIS 5• Test focusing on the full SII
framework – identify areas for enhancement (processes, procedures, infrastructure, other)
• Further refinements of standard approach, stresses and calibrations, own funds and technical provisiosn
Solvency II programme management in place following a defined internal implementation plan towards Solvency II compliance
Participation in previous QIS and impact of CEIOPS advise on implementing measures assessment completed using the QIS 4 framework.
Impact of QIS 5 under study, results to be communicated to regulators by Nov 15
Still significant uncertainty around the Standard Capital Requirements standard approach, but so far all indications show a positive capital position under Solvency II.
13 :• Solvency II in force• Regulatory submissions• Prepared for first required
regulatory submissions
• CEO update
• Financials
• Conclusion
AGENDA
25 August 2010 | 18Half Year 2010 Results
Reporting and management structure aligned since Q1 10First full set of financial data in H1 10
Continental Europe: Inflow FY 09 : EUR 3.9 bn Inflow H1 10 : EUR 2.2 bn Mix of mature positions, smaller
positions in fast growing markets & new activities Life/ Non-Life : 90%/10%
UK: Inflow FY 09 : EUR 0.9 bn Inflow H1 10 : EUR 0.5 bn Strong in Personal lines, expanding
Commercial lines (83%/17%) Multi-channel strategy 100% owner of specific distributors
RIAS, FIS and recently acquiredKFIS Mainly Non-Life business/ Life
activity in start-up
Asia Inflow FY 09 : EUR 4.1 bn Inflow H1 10 : EUR 3.4 bn Active in 5 countries, fast growing Strong partnerships with leading
local partners Regional headquarters in Hong Kong Life/ Non-Life : 92%/8%
Belgium Inflow FY 09 : EUR 6.9 bn Inflow H1 10 : EUR 3.5 bn 75% owned, operating under name AG
Insurance since June 09 Multi-channel via brokers and bank;
Employee Benefits dedicated channel for life & healthcare Life/ Non-Life: 75%/25%
* FY 09 inflow figures on a 100 % basis
Total Insurance: Inflow FY 09 : EUR 15.8 bn Inflow H1 10 : EUR 9.6 bn Life/ Non-Life : 80%/20%
25 August 2010 | 19Half Year 2010 Results
Key figures H1 2010
H1 10 H1 09 H2 09 FY 09
Net profit Insurance before non-controlling interests
Net profit attributable to minority interests
Net profit Insurance attributable to shareholders
Net profit General Account
Net profit attributable to shareholders
Funds under management (EUR bn)
Earnings per share (EUR) *
Net equity per share (EUR)
Net shareholders’ equity
Belgium**
UK
Continental Europe
Asia
General Account
Discretionary capital (EUR bn)
232
52
180
275
455
76.0
0.18
3.70
9,153
3,005
620
983
1,597
2,948
0.9
295
35
260***
635
896
68.5
0.36
3.14
7,760
2,327
510
833
1,170
2,920
1.3
331
86
245
69
314
73.0
0.12
3.41
8,431
2,859
513
1,002
1,203
2,854
1.3
626
121
505
705
1,210
73.0
0.49
3.41
8,431
2,859
513
1,002
1,203
2,854
1.3
EUR mio
* Based on average number of outstanding shares** Net equity 31 December 2009 after 25% minority stake Fortis Bank
*** EUR 32 million positive impact from restatement 2009 accounts following new segmentation and impact new Chinese Accounting Standards
10/03/2010 I page 19
25 August 2010 | 20Half Year 2010 Results
InsuranceResilient performance supported by capital gain in Hong Kong
Net profit at EUR 180.5 mio (vs. EUR 260.4* mio) Lower non-controlling interests (EUR 17 mio) & one-off tax
impact in Belgium of EUR 94 mio in H1 09
Solid contribution from Asian operations supported by EUR 35 mio capital gain on sale of Fortis Centre in Hong Kong
Strong Life performance vs weak operational performance in Non-Life
Net impact capital losses on restructuring investment portfolio of EUR 55 mio, partly offset by capital gain on real estate
Life at EUR 178.5 mio (vs. EUR 206.9 mio) Negative variance on non-controlling interests and income
taxes in Belgium
Strong technical result of EUR 234 mio (+15%) driven by Belgium
Operating costs up 2.6% to EUR 180 mio; Non-recurring costs in Belgium related to separation and roll-out costs related to Life Protection business in UK;
Non-Life at EUR -5.9 mio (vs. EUR 46.5 mio) Weak operational performance in UK & Belgium
Capital losses related to restructuring investment portfolio Belgium
First time inclusion of Italian operations -> increased operating costs
10/03/2010 I page 20
260.4180.5Net profit after tax & minorities*
63.970.8Life FUM (EUR bn)**
290.3293.5Profit before tax*
194.7178.3Operating margin
235.7242.3Technical result
(364.4)(393.4)Operating Costs
7,9059,636Gross Inflow
H1 09H1 10EUR mio
* H1 09 net result restated ; impact of EUR 32 mio related to transfer Corporate costs and impact new Chinese Accounting Standards** Only consolidated activities
25 August 2010 | 21Half Year 2010 Results
BelgiumStrong Life technical result, partially offset by adverse result in Non-Life
Net profit down to EUR 87.9 mio Minority interests up to EUR 31 mio (vs. EUR 10 mio H1 09)
Positive non-recurring tax benefit of EUR 94 mio in H1 09
Net negative impact of EUR 26 mio related to restructuring of investment portfolio (incl. capital gain on real estate)
Operating costs up 5%, due to non-recurring separation costs & increased staff expenses
Life net profit of EUR 103.3 mio, - 41% Strong technical result (+19%) and operating margin (+15%),
supported by higher volumes and a better investment margin
Net negative impact of EUR 3 mio due to restructuring investment portfolio, partially offset by lower profit sharing assumptions and capital gain on real estate
Life FUM up 3% to EUR 46.9 bn, driven by both savings and unit-linked products
Non-Life net profit of EUR 15.4 mio negative Operating margin down on weak operating performance
Improved Combined Ratio in 2nd quarter led to improved technical result
Net capital losses on restructuring investment portfolio (EUR 23mio)
10/03/2010 I page 21
195.487.9Net profit after tax & minorities
43.446.9Life FUM (EUR bn)
171.7155.4Profit before tax
125.187.2Operating margin
175.8191.7Technical result
(209.3)(220.2)Operating costs
3,5543,503Gross inflow
H1 09H1 10EUR mio
25 August 2010 | 22Half Year 2010 Results
Net profit down to EUR 8.3 mio Severe weather conditions leading to an exceptional cost of EUR 9.4
mio
Operating costs up on roll-out Life & costs related to start-up partnership with Tesco Bank
Weak performance across the whole UK motor market
Non-Life down to EUR 2.1 mio (vs. EUR 17.3 mio) Improved 2nd quarter from positive impact of management actions
and reflecting seasonal factors
Industry wide issues, including escape of water event in January and volcanic ash in April
EUR 11 mio cost related to lower realised capital gains and investment income
Life net loss of EUR 1.7 mio (vs. EUR -3.5 mio) Continued progress in roll-out protection business
Products now available across the whole IFA market
Strong match of assets & liabilities
Steady contribution Retail operations (EUR 7.9 mio) Increased commissions more than compensate higher costs
Consolidation of KFIS will take place in 3rd quarter 2010
United KingdomNon-Life results affected by industry wide issues and lower investment income but improving; Steady contribution from Retail distribution
10/03/2010 I page 22
20.88.3Net profit after tax & minorities*
29.09.6Profit before tax*
9.2(4.6)Operating margin
0.1(6.7)Technical result
(50.2)(56.8)Operating costs
452550Gross inflow
H1 09H1 10EUR mio
* Including contribution Retail distribution reported under Other Insurance
25 August 2010 | 23Half Year 2010 Results
Continental EuropeBetter underwriting results and positive streamlining insurance portfolio
Net profit up to EUR 17.2 mio, +15% Improved performance in Luxembourg & France, partially offset by
lower contribution of Portugal
Positive impact streamlining insurance portfolio, i.e. discontinuation Russian operations
Operating costs up 14%, mainly due to inclusion Italian Non-Life operations
Life net result of EUR 14.7 mio, +18% Lower technical result & operating margin mainly due to strengthening
of the liabilities following the widening of the credit spreads on Portuguese sovereign bonds
Offsetting positive impact from higher capital gains & discontinuation Russian activities
Operating costs down 3% thanks to cost containment in all major activities
Non-Life net result of EUR 2.5 mio, +3% Relates to operations in Portugal & Italy
Operating margin slightly down, due to bad claims behaviour in Motor in Southern Italy. Corrective actions being taken
Portuguese operations resisted well despite Madeira storms in February
10/03/2010 I page 23
15.017.2Net profit after tax & minorities
19.422.5Life FUM (EUR bn)
59.461.2Profit before tax
55.150.6Operating margin
54.846.2Technical result
(86.1)(98.0)Operating costs
1,7752,209Gross inflow
H1 09H1 10EUR mio
25 August 2010 | 24Half Year 2010 Results
AsiaSolid performance supported by capital gain in Hong Kong
Net profit of EUR 67.1 mio (vs. EUR 29.2 mio) EUR 35 mio capital gain on sale Fortis Center in Hong Kong
Strong intrinsic performance from consolidated operations (EUR 7 mio)
Net result non-consolidated partnerships down to EUR 25.2 miodue to lower contribution of China
Life at EUR 62.2 mio (vs. EUR 24.1 mio) EUR 42.1 mio net result from consolidated operation in Hong
Kong, including EUR 35 mio sale Fortis Center Hong Kong
EUR 20.3 mio net result from non-consolidated partnerships, including EUR 12 mio impairment due to lower equity markets in China
Other costs slightly up to EUR 5.3 mio
Non-Life at EUR 4.9 mio (vs. EUR 5.1 mio) Relates to operations in Malaysia and Thailand
Variance relates to lower investment income in Malaysia
10/03/2010 I page 24
29.267.1Net profit after tax & minorities*
1.11.4Life FUM (EUR bn)**
30.267.3Profit before tax*
5.345.1Operating margin
5.011.1Technical result
(18.8)(18.4)Operating Costs
2,1233,374Gross Inflow*
H1 09H1 10EUR mio
* Including Inflow & Profit from partnerships respectively** Including partnerships, FUM would amount to EUR 16.1 bn compared to EUR 10.7 bn in 2009
25 August 2010 | 25Half Year 2010 Results
General AccountPositive 2nd quarter result thanks to non-recurring tax benefit
H1 10 net result of EUR 275 mio (incl. eliminations) EUR 405 mio positive tax impact following decision to liquidate
Brussels Liquidation Holding H1 09 included EUR 697 mio capital gain on sale 25% AG Insurance to
Fortis Bank
EUR 145 mio negative impact related to fair value RPN(I) and call option BNP Paribas shares EUR 121 mio negative charge on call option on BNP Paribas shares
(fair value at EUR 759 mio) EUR 24 mio negative charge on RPN(I) increasing cost to EUR 340
mio
Positive net result of EUR 23 mio related to Royal Park Investments
Other items : Net interest margin EUR 0.8 mio Staff & administrative expenses down to EUR 28 mio RPN(I) interest payment to Fortis Bank of EUR 3.2 mio Capital gain of EUR 12.4 mio on sale Luxembourg Non-Life
Net cash position General Account of EUR 2.1 bn (vs. EUR 2.8 bn end 09) EUR 0.5 bn invested in medium term deposits EUR 0.2 bn dividend payment in June
10/03/2010 I page 25
(166.0)407.2Tax
635.4274.5Net profit after tax & minorities
801.4(134.2)Profit before tax*
(52.5)(28.5)Total expenses
499.5(118.5)Other capital gains
699.512.8Realised capital gains
22.70.8Net interest income
H1 09H1 10EUR mio
25 August 2010 | 26Half Year 2010 Results
-24
23
405
-121
-10
1
-316
-301
581
697
44
Net result General Account remains volatile
FY 09
705**
H1 10In EUR mio In EUR mio
Net profit
Call option on BNP Paribas shares
Sale 25% AG Insurance
Others
RPN(I)Net-of-tax impact
legal disputeFBN
275
Deferred taximpact
RPN(I)
Call option on BNP Paribas shares
RPI
Others*
* Includes EUR 12.4 mio capital gain on sale Luxembourg Non-Life** 2009 net result General Account restated from EUR 736 mio to EUR 705 mio
25 August 2010 | 27Half Year 2010 Results
Announced simplification of Group Structure in H1 10
44,7%
50%50%50%
50% 44.7% 50%50%
Before liquidation of Fortis Brussels*
* Excluding financing structures
• First step towardssimplication of group structures: Fortis Brussels held banking activities
• Positive taxconsequences, incl. on proceedsfrom the exerciseof the call option on BNP Paribas shares
Rationale for liquidation
ageasSA/NV
ageasNV
Fortis BrusselsSA/NV¨*
ageas UtrechtNV
RPI Insuranceactivities
ageasSA/NV
ageasNV
ageas UtrechtNVRPI
Insuranceactivities
* Now called Brussels Liquidation Holding
After liquidation of Fortis Brussels*
25 August 2010 | 28Half Year 2010 Results
Net-of-tax valuation call option on BNP Paribas shares estimated at EUR 759 mio; Value as per 30/06/10
Ageas announced the decision to liquidate sub-holding Fortis Brussels SA/NV (now Brussels Liquidation Holding)
As a result deferred tax liability of EUR 257 mio on value call option can be offset by deferred tax assets of the same amount of ageas SA/NV
Taxation
Ageas has opted to move to a gradual exercise strategy in accordance with a disciplinedmethodology over the contractually foreseen exercise period (from 10/10/10 til 09/10/16)
Decision now taken to move to a gradual exercise, in order to minimise the impact of the impliedvolatility of the shares on the value of the call option ► use volatility without a 7%-size-discount
Exercise strategy
Implied volatility (consensus) up from 27% to 39%* Dividend yield up from 3.565% to 5.208% Strike price unchanged at EUR 66.672 per share EUR 1,085 mio total value option as at 30 June 2010► 30% haircut maintained ► EUR 759 mio Volatility +5% ► total value option +22%
Valuation based on
Black & Scholes
Valuation call option on BNP Paribas shares without taxes
25 August 2010 | 29Half Year 2010 Results
EUR 286 mio negative mark-to-market value RPN(I) EUR 54 mio negative for guarantee Belgian State Cash interest cost H1 10 : EUR 3.2 mio
Valuation
Valuation model most sensitive to price CASHES CASHES +/- 5% : EUR 271 mio < RPN(i) < EUR 401 mio Detailed sensitivity analysis : see press release H1 10
Sensitivities
Ageas’s share price (B-S model) :− EUR 1.85 per share (closing price 30/06/10)− Dividend yield of 4.3% (based on 2009 dividend yield)− Share price volatility of 49% (based on implied volatility end H110)
LT-value CASHES:− 48.3% of par (closing price 30/06/10) vs 54.4% end 09− Evolution based on forward spread curves
LT i-rate: Standard arbitrage-free i-rate model
Assumptions
Evolution Ageas’s share price Evolution theoretical market value CASHES Evolution short term interest rate Conversion option embedded in CASHES
Drivers quarterly interest payments
Net discounted value all future interest paymentsuntil a potential reimbursement of the CASHES
No change to methodology applied as per end 09 (based on valuation techniques for financial derivatives)
Decision to include additional cost related to guarantee Belgian State as per 30 June
Valuation methodology
Fair value interest mechanism related to RPN(I)
► EUR 340 mio
25 August 2010 | 30Half Year 2010 Results
Financial performance Royal Park Investments**
Net IFRS result RPI H110 of EUR 51 mio at 100%, positive P&L impact Ageas of EUR 23 mio No need for impairment goodwill Value equity stake RPI at EUR 840 mio, including positive impact fair value interest rate
swaps**
Value as per 30/06/10
see www.royalparkinvestments.comMore information
Net outstanding debt end June 10 : EUR 8.6 bn Commercial paper program represents : EUR 5.1 bn EUR 2.2 bn equivalent repayment on outstanding super senior debt
Financing structure
Total net interest payments in H1 10 : EUR 110 mio Total principal collections in H1 10 : EUR 889 mio
Cash collection
Face value remaining portfolio: EUR 18.5 bn IFRS fair value: EUR 7.6 bn*
Asset Value as per
30/06/10
* Ageas refers to fair value while RPI reports Recovery value under B-GAAP corresponds to the estimated recovery value of the remaining lines of the structured credit portfolio, based on the assumptions used at closing date
** In early 2010, RPI concluded a number of interest rate swaps exchanging variable interest streams into fixed interest streams. Fair value adjustments go via equity
25 August 2010 | 31Half Year 2010 Results
Financial instruments
Civil lawsuits
Expert investigations
Criminal proceedings
Administrative proceedings
Brussels, Belgium
USA, New York
Utrecht,
The Netherlands
Amsterdam, The Netherlands
Brussels, Belgium
The Netherlands
Belgium
Belgium
Belgium & The Netherlands
• Proceedings in relation to FRESH
• Class action rejected on 18/02/10; motion for reconsideration denied on 20/05/10 : no further appeal
• Initiated by individuals represented by Mr. Bos
• Initiated by VEB/Deminor
• Initiated by Stichting Fortis Effect
• Procedure on the merits initiated by individuals, represented by MrModrikamen : court decision 08/12/09 on competence and provisional measures
• Procedure on the merits initiated by individuals, represented by DeminorInt’l : pending
• Expert report : report made public early June 2010; VEB/ESG startedlegal proceedings to establish mismanagement by Fortis
a) Experts at request of individuals represented by Mr Modrikamen : report “Van Gerven”: filed in June 09
b) Experts appointed at request of Deminor Int’l: On going & investigating specifically transactions Sep/Oct 08
• Investigation ongoing
• AFM : fine imposed 05/02/10 in relation to price sensitive info in June08: appeal filed; 2nd fine imposed on 19/08/10 in relation to pricesensitive information in Sep 07 : appeal envisaged
• CBFA : proceedings ongoing
Fortis will manage all legal proceedings & investigations in theinterest of its shareholders
25 August 2010 | 32Half Year 2010 Results
Discretionary Capital of the General Account A view on liquidity & capital
Net Cash/ deposits : EUR 2.6 bnPassed onLT assets & LT liabilities
Discretionary Capital on balance sheet
Assets
Cash & Deposits at banksDue from Fortis Bank & AG InsOther
Royal Park InvestmentsCall option net of tax on BNP PLoan to operating ciesTotal
In EUR bn, 30 June 2010
3.71.71.0
0.80.80.48.4
Liabilities
ST (EMTN (0.9) + Bank (0.2))NITSH I, II & HybroneRPN(I)OtherFRESHNet equity
1.11.70.31.11.32.9
8.4
Shareholders’ equity + FRESH Invested in non-current assets on balance sheetTotal Capital Contingent asset off balance (Fortis Bank Tier 1 loan, due Sep 11) Commitments with regard to Kwik Fit Insurance/TescoDiscretionary Capital * (if available in cash)
4.2(2.0)2.2
(1.0)(0.3)0.9
Discretionary capital down due to scope change (EUR 0.2 bn) : FII holding & Fortis Re part of the General AccountInvestment Fortis UK in Kwik-Fit Insurance Services (EUR 0.2 bn); Profit balances out against changes in non-current assets
* Ageas 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
H1 10 evolutions :
25 August 2010 | 33Half Year 2010 Results
Conclusion
Investment portfolio substantially de-risked
Continued strong capital buffers in Insurance and General Account
Shareholders’ equity up to EUR 9.2 bn or EUR 3.70 per share (incl. call option)
Balance sheet
FY 2010 inflow levels expected to exceed 2009 levelsOutlook
Resilient Insurance results supported by strong Life technical result
Non-Life performance improved but remain cautious for the future
Positive result General Account fueled by one-off tax recovery
Result
Robust commercial performance in all segments
Continued focus on growth both in Life & Non-Life
Massive increase of inflows in Asia
Recovery confirmed in Luxembourg & France
Inflows
25 August 2010 | 34Half Year 2010 Results
Selected topics
25 August 2010 | 35Half Year 2010 Results
Comparable inflow data H1 10By segment
Belgium
Gross inflow Life
GWP Non-Life
United Kingdom
Gross inflow Life
GWP Non-Life
Continental Europe
Gross inflow Life
GWP Non-Life
Asia
Gross inflow Life
GWP Non-Life
Non-consolidated partnerships (100%)
Total inflow
EUR mio
10/03/2010 I page 35
H1 10 H1 09 Change Q2 10 Q2 09 Q1 103,503
2,651
852
550
11
538
2,209
1,981
229
3,374
151
-
3,224
9,636
3,554
2,746
808
452
3
449
1,775
1,647
128
2,123
141
-
1,983
7,905
(1%)
(3%)
5%
22%
*
20%
24%
20%
79%
59%
7%
*
63%
22%
1,704
1,336
369
285
6
279
1,080
971
109
1,565
82
-
1,483
4,634
1,701
1,345
356
234
2
232
803
747
57
983
75
-
908
3,721
1,798
1,315
483
265
5
260
1,129
1,010
119
1,809
68
-
1,741
5,001
25 August 2010 | 36Half Year 2010 Results
Comparable inflow data H1 10By type
Life
Belgium
United Kingdom
Continental Europe
Asia
- Fully consolidated
- Non-consolidated partnerships (100%)
Non-Life
Belgium
United Kingdom
Continental Europe
Asia
- Fully consolidated
- Non-consolidated partnerships (100%)
Total Inflow
EUR mio
10/03/2010 I page 36
H1 10 H1 09 Change Q2 10 Q2 09 Q1 10
7,747
2,651
11
1,981
3,104
151
2,954
1,889
852
538
229
270
-
270
9,636
6,305
2,746
3
1,647
1,909
141
1,768
1,600
808
449
128
214
-
214
7,905
23%
(3%)
*
20%
63%
7%
67%
18%
5%
20%
79%
26%
*
26%
18%
3,717
1,336
6
971
1, 405
82
1,322
917
369
279
109
161
-
161
4,634
2,957
1,345
2
747
864
75
789
764
356
232
57
119
-
119
3,721
4,029
1,315
5
1,010
1,700
68
1,631
972
483
260
120
109
-
109
5,001
25 August 2010 | 37Half Year 2010 Results
7,8887,9059,6361,4371,5991,8896,4526,3067,747Total
343363***34336326%India
1,1421,2292,109***1,1421,2292,10925%China
26927640145445122423234931%/12%Thailand
34744465112317021922427443231%Malaysia
1,7921,9823,2241682142701,6241,7682,953Non-consolidatedpartnerships*
156141151***156141151100%Hong Kong
1,9482,1233,3741682142701,7801,9093,104Asia
**108**108***25%Italy
283535***283535100%Turkey
241623***241623100%Germany
111***111100%Ukraine
837288657715*83027365750%/100%Luxembourg
182153208**182153208100%France
1,0941,2831,1781011131219931,1701,05751%Portugal
2,1661,7762,2101081282292,0591,6481,981Continental Europe
4614525504544495387311100 %United Kingdom
3,3133,5543,5037078088522,6062,7462,65175% -1Belgium
H2 09H1 09H1 10H2 09H1 09H1 10H2 09H1 09H1 10% Ownership(EUR mio)
Gross Inflow Life Gross written premiums Non-Life Total
Detailed overview inflows H1 10By region/ country
25 August 2010 | 38Half Year 2010 Results
1,768 1,594
277 379
544 515
157 163
H1 09 H1 10
(3%)
244 256
249 271
251245
70 74
H1 09 H1 10
Belgium
Life inflowIn EUR mio
Non-Life Gross Written PremiumsIn EUR mio
2,746 2,651
808 852
Group Life
Unit-Linked
Savings
Traditional
Other
Property
Accident & Health
Motor
Individual Life Down 3% to EUR 2.2 bn Bank channel inflow down 6%; due to decreased
guaranteed interest rates and absence of specific campaigns
Broker channel up 15%, in line with positive trend since second half 2009
Unit-linked up 37%, successful sales of 8 tranches of structured unit-linked products
Group Life Down 5%; H1 09 inflow included exceptional premium
payments related to group contractsFunds under Management Up 3% to EUR 47 billion
Property and Casualty Inflows up mainly thanks to motor (+9%), driven by tariff
increases and portfolio growth Accident & Health +5% with strong growth in health care (+10%)Combined Ratio 107.1% vs 105.6% last year Second quarter combined ratio significantly improved to
100.5% vs 113.6% in the first quarter that was hit by weather related winter events and storm Xynthia. Workmen’s Compensation performed weak during first half.
+5%
25 August 2010 | 39Half Year 2010 Results
25 32
276 296
13610345
74
H1 09 H1 10
Motor
3 11
449539
H1 09 H1 10
United Kingdom
Total inflowsIn EUR mio
Non-Life (+20%) Driven by growth in Commercial and Personal linesLife Successful roll out of its proposition across the IFA market
(5.1% market share) Over 90,000 customersOther Insurance RIAS & FIS income up 11% on the back of greater primary
and add-on sales and growth in partnership income Sales of Whole of Life product ahead of expectations.
Collaboration between RIAS and the protection business demonstrates combined capabilities within the UK
Personal lines (+15%) Strong performance in all personal lines Good growth in the Household account (+32%)Commercial lines (+54%) Full launch into Fleet market & new Semploy product Successful extension of significant commercial
relationshipsCombined Ratio 106.5% vs 104.4% in H1 09 (but improved from Q1 10
110.2%) Results driven by severe weather and increasing motor
claims costs: an industry-wide issue
452550
Non-Life
Life
Other
Property
Accident & Health
449 538+20%
+22%
Non-Life Gross Written PremiumsIn EUR mio
25 August 2010 | 40Half Year 2010 Results
131 133
553861
912
884
79
75
H1 09 H1 10
Continental EuropeLife inflowIn EUR mio
Inflow Strong performance Luxembourg & France due to pick-up
sales Unit-linked sales up 3%, thanks to Luxembourg mainly Strongest growth in traditional savings, fueled by specific
product development Portugal steady although down on last year; Lower
structured unit-linked sales in H1 10 vs. Q1 09 benefiting from high pension business sales (anticipated reduced i-rate)
Funds under Management Up 16% to EUR 22.5 bn Increase in Portugal & Luxembourg (14% resp. 27%)
Inflow First time inclusion Italian operations (EUR 108 mio)
compensates for deconsolidation Luxembourg Non-Life Portugal up 8% thanks to strong development Médis brand
Commercial developments Mbcp Ageas Motor’ product elected ‘best choice’ by an
important Portuguese consumer rights organisation
26
31
11
21
12480
53
11
H1 09 H1 10
128
229
+79%
Non-Life Gross Written PremiumsIn EUR mio
Accident & Health
Motor
Unit-Linked
Savings
Traditional
Group1,647
1,981+20%
OtherFire
25 August 2010 | 41Half Year 2010 Results
142187
72
83
H1 09 H1 10
+26%
Asia
Life inflowIn EUR mio
Inflow Very strong growth mainly in non-consolidated partnerships
across the region Hong Kong (+7%) moderate growth in the wake of
recovering agency force China (+72%) driven by continued expansion of distribution
capacity and product innovation. Agency force close to 67,000.
Malaysia (+58%) driven by non-par single premium product innovation and Takaful business through bank channel
Thailand (+50%) in the wake of the intensified relationship with K-Bank
India (+93%) driven by successful local year-end campaigns by the two partner banks and careful expansion of the agency channel
Funds under Management (EUR 16.1bn, +50%) Impact of weakening EUR : +22% Consolidated FUM (Hong Kong) : +30% or EUR 1.4bn
Inflow Malaysia (+29%) driven by retail motor and MAT* lines Thailand (+16%) driven by non-motor business through
bank channel
2,889
1,471
14
278
109
8773
92
H1 09 H1 10
214270
Non-Life Gross Written PremiumsIn EUR mio
1,909
3,104
+63%
Non-Motor
Motor
Unit-LinkedSavings
Traditional
* Non-motor includes Fire, MAT, Accident & Health and other lines
Group
* MAT: Marine Aviation & Transport
25 August 2010 | 42Half Year 2010 Results
Ageas’s investment portfolio on 30 June 2010
Investment Portfolio (EUR 58.5 bn)In EUR bn
Fixed Income securities Southern European sovereign exposure reduced in
H1 10 to EUR 8.9 bn** by the end of June
Investment in Corporate bonds up with EUR 2.2 bnin H1 10
>95% investment grade, 94% rated A or higher
Gross unrealized gains on bonds end of June 10 up to EUR 1.7 bn
Equities Increase to EUR 1.8 bn** (EUR 1.7 bn market value) Gross unrealized gains of EUR 24 mio
Real Estate Unrealized gain net-of-tax remained intact at EUR
0.6 bn
Total unrealized gains on investmentportfolio of EUR 2.4 bn***
Sovereign bonds*33.0
RE Inv Prop*
2.1 RE own use
(incl. Interparking)*1.4
Equities*1.7
* At market value (incl. Interparking)** At historical/amortized cost
*** Before shadow accounting
Corporate bonds*19.8
StructuredCredit Instruments0.5
25 August 2010 | 43Half Year 2010 Results
Fixed Income Securities of EUR 53.3 bnSituation as per 30 June 2010In EUR bn
SovereignBonds*
33.062%
Structured Credits*0.5 1%
Corporate Bonds*19.837%
AAA24.245%
A10.419%
AA15.529%
BBB1.63%
Below Inv grade/ Unrated1.63%
End of June gross unrealized gains before tax EUR 1.7 bn or EUR 1.0 bn after tax and after shadow accounting
>90% bond portfolio single A or higher 74% rated AA or higher Below investment grade or unrated up to 3%
* At market value
25 August 2010 | 44Half Year 2010 Results
Government & Corporate Bond portfolio of EUR 52.8 bnSituation as per 30 June 2010
Gross unrealized gains before tax and shadowaccounting (UCG) of EUR 0.7 bn end of June 10
compared to EUR 871 mio end 09 95% single A or higher; 78% rated AA or higher
In EUR bn
Gross unrealized gains of EUR 1.0 bn end H1 10 vs EUR 650 mio end 09
91% single A or higher; 69% rated AA or higher; only 1% below investment grade or unrated
Banking/ Other financials : 87% single A or higher; 63% ratedAA or higher
Government bonds EUR 33.0 bn* Corporate bonds EUR 19.8 bn*
* All values at fair value
Austria2.3
Banking/Other financials
8.5
Othercorporates3.8
Supra-national2.3
Government related5.3
Greece1.3
Belgium10.2 Spain
1.7
Italy 3.7
Germany3.2
Others5.1
Portugal1.4
France4.0
25 August 2010 | 45Half Year 2010 Results
10/03/2010 I page 45
In EUR bn
Equity funds0.12
Equities0.75
Other segments0.5
Belgium1.1
Mixed funds0.12
Real Estate funds0.57
Others0.12
Equity portfolio at EUR 1.6 bnSituation as per 30 June 2010
Equities at historical cost up to EUR 1.8 bn vs EUR 1.6 bn end 09 Gross unrealized gains of EUR 24 mio end H1 10 vs EUR 141 mio gross unrealized gains end 09 Breakeven situation after shadow accounting
25 August 2010 | 46Half Year 2010 Results
Real estate portfolio of EUR 3.6 bnSituation as per 30 June 2010
10/03/2010 I page 46
In EUR bn
Corporate Buildings0.2 Belgium
2.6
France0.3
Spain0.2
Car Parks1.1
Investment Offices
1.3
Investment Retail0.8
Europe/ Others0.2Italy
0.1Germany0.2
Investment for own use EUR 1.4 bn Investment property at EUR 2.2 bn Sale Eurosquare building in Brussels region in Q2 10 Net unrealized gains end June 10 nearly stable at
EUR 639 bn (not reflected in net equity)- For own use : EUR 275 mio- Investment property : EUR 364 mio
Real estate exposure mainly in Belgium- Mainly Brussels region- Office buildings : occupancy rate of 94%- Commercial assets : shopping centers & public car
parks across Europe (via Interparking)- Stable income streams
25 August 2010 | 47Half Year 2010 Results
83.1 79.8 76.7 76.5 86.0
23.6 23.2 21.6 22.622.0
2006 2007 2008 2009 H1 10
Belgium – Combined ratio by product
Property & Casualty
Motor Fire
10/03/2010 I page 47
52.7 57.0 59.9 62.2 63.8
43.1 42.2 42.0 42.5 42.7
2006 2007 2008 2009 H1 10
95.9% 99.2% 101.8% 104.7%
55.7 56.970.3 68.5 70.9
37.8 37.036.4 36.3 36.2
2006 2007 2008 2009 H1 10
93.5% 93.8%106.6% 104.8%
Expense ratio
Claims ratio
48.3 56.8 50.7 60.5 56.6
46.945.5
45.847.1 47.9
2006 2007 2008 2009 H1 10
95.3% 102.3% 96.5%107.6%107.1% 104.5%
Accident & Health
106.7% 103.0% 98.3% 99.1%108.0%
Expense ratio
Claims ratio
106.5%
25 August 2010 | 48Half Year 2010 Results
97.983.581.1
27.626.230.5
2008 2009 H1 10
United Kingdom – Combined ratio by product
Property & Casualty
Motor Fire
10/03/2010 I page 48
75.080.272.5
30.227.828.7
2008 2009 H1 10
101.2% 108.0% 105.2%
78.8 88.9 84.6
24.022.8 24.4
2008 2009 H1 10
102.8% 111.7%
Expense ratio
Claims ratio
60.561.260.0
37.838.039.9
2008 2009 H1 10
99.9% 99.2%109.0% 98.3%
Accident & Health
111.6% 109.7%125.5%
Expense ratio
Claims ratio
25 August 2010 | 49Half Year 2010 Results
Ageas’s capital of a high qualitySituation as per 30 June 2010
10/03/2010 I page 49
Reported net Shareholders’ Equity
Unrealised gains real estate
Goodwill (incl RPI)
VOBA (Value of Business Acquired)
DAC (Deferred Acquisition Cost)
Other*
Goodwill, DAC, VOBA related to minorities
25% tax adjustment DAC, VOBA & Other
Tangible net equity
Tangible net equity 80% of reported net shareholders’ equity
EUR bn
* Includes a.o. management contracts of public car parks
H1 10
9.2
0.5
(1.5)
(0.5)
(0.6)
(0.3)
0.4
0.3
7.4
H1 09
7.7
0.5
(1.3)
(0.5)
(0.5)
(0.3)
0.3
0.2
6.1
FY 09
8.4
0.5
(1.4)
(0.5)
(0.5)
(0.2)
0.4
0.32
6.9
25 August 2010 | 50Half Year 2010 Results
Overview of main characteristics HybridsSituation as per 30 June 2010
Ageasageas Finance,
Senior outstandings Fresh Hybrone
Ageas HybridFinancing*
Nitsh I Nitsh II
% 3m EUR + 135 5.125% 8.25% 8%
Amount (EUR mio) 896 1,250 500 USD 750 625
ISIN EMTN XS0147484074 XS0257650019 XS0346793713 XS0362491291
Call date Debt in default, early redemption at first request of bondholders
Undated exchangestrike 31.50mandatory 47.25
Jun/2016 Step up to 3M Euribor+200
Aug/2013 No step up
Jun/2013No step up
ACSM YES YES YES YES
Dividend pusher YES YES YES YES
Dividend stopper NO YES YES YES
Trigger < 0.5%dividend trigger
Liabilities > asset Liabilities > asset Liabilities > asset
Other 500on lent to AG Insurance
USD 750on lent to FBB
250 on lent toAG Insurance;375 on lent to FBB
Market Price(30/06/10)
44.90 66.94 86.08 91.17
ASR instrument TOPrS -contingent liabilities with regard to former subsidiaries –no longer exists as a result of an exchange on 4 August 2009
Fortfinlux
25 August 2010 | 51Half Year 2010 Results
* Ageas paid EUR 362 mio after ruling in summary proceedings, proceedings on the merit of the case pendingAgeas not liable for remaining principle, parental support on coupon dependent on outcome proceedings
** Only in case of an accelerated conversion*** Because of insufficient authorized shares, Ageas can exchange for cash, if CBFA consents; If no consent received, instrument remains outstanding with no liability for Ageas
Fortis Bank Nederland Fortis Bank
FCCL MCSDirect issue FBB,
2001Direct issue FBB,
2004 CASHES
% 3m EUR +260 8.75% 6.5% 4.625% 3m EUR +200
Amount (EUR mio) 88 2,000 1,000 1,000 3,000
ISIN GB0057047275 XS0328920862 BE0117584202 BE0119806116 BE0933899800
Call date FBNH did not call on 29-6-2009; coupon at the discretion of FBNH*
Exchange 7-12-2010 at EUR 18.74; # 106,723,586 shares
Sep/2011Step up to 3MEuribor+237
Oct/2014 Step up to 3M Euribor+170
Undated exchange strike EUR 23.94 mandatory EUR 35.91
ACSM YES** YES YES YES
Dividend pusher YES YES YES NO
Dividend stopper NO YES YES YES
Trigger Early conversion <5% T1 <8% CAD or default issuers
<5% T1 YES<8% CAD
<0.5% Dividend
Other ABN AMRO will callthe remainingoutstandingsecurities –Contingent Liabilityceases to exist
Coupon at discretion Issuers (FBNH & FBB & Holdings)
If not called, holders can opt to exchange in Ageas shares***
No stock settlement feature as for Direct issue FBB 2001
Coupon served by FBB, however, trig-ger ACSM linked to dividend Fortis’holdings
Market Price(30/06/10)
13.51 94.97 77.02 48.31
Overview of main characteristics Hybrids (ct’d)Situation as per 30 June 2010
25 August 2010 | 52Half Year 2010 Results
(EUR mio)
Capital 740(44%)
200(12%)
760(45%)
1,700
Senior 519 519
Commercial Paper
5,057 5,057
Super Senior 2,980 2,980
Total Capital& Debt
740 719 760 2,980 5,057 10,256
Funding structure Royal Park InvestmentsAs per 30 June 2010**
* End of February 10, senior debt Fortis Bank fully replaced by commercial paper programme, benefiting from a Belgian State Guarantee. Senior debt provided by BNP Paribas is not state guaranteed
** For more information see www.royalparkinvestments.com
State ofBelgium(SFPI/FPIM)
25 August 2010 | 53Half Year 2010 Results
Balance sheet Royal Park Investments (under IFRS)
30-06-10 31-12-09EUR mio
Assets
Securities
Deferred tax assets
Goodwill
Other assets
Liabilities and shareholders' equityLiabilities
Other liabilities
Commercial Paper
Funding, super senior
Funding, senior
Shareholders’ equity
Share capital
Share premium (additional paid in capital)
Cash Flow hedge reserves
Retained earnings
10,588
7,583
955
1,724
325
10,5888,710
154
5,057
2,980
519
1,878
850
850
127
51
10,152
7,204
943
1,724
281
10,152
8,452237
1,431
3,375
3,409
1,700
850
850
10/03/2010 I page 53
25 August 2010 | 54Half Year 2010 Results
Ratings
10/03/2010 I page 54
Operating entities
AG Insurance (Belgium)
Insurance Financial Strength
Outlook
Last change
Milleniumbcp Ageas (Portugal)
Insurance Financial Strength
Outlook
Last change
Group
Ageas
Long-term
Outlook
Last change
Fitch S&P Moody's
A+
Negative
8-Dec-09
A
Stable
9-Jul-09
BBB+
Negative
8-Dec-09
A-
Negative
17-May-10
A-
Negative
17-May-10
BBB-
Negative
17-May-10
A2
Negative
15-Jul-09
NR
Baa3
Developing
15-Jul-09
25 August 2010 | 55Half Year 2010 Results
Financial Calendar H2 2010 - 2011
2 May *Ex-dividend date –Start dividend election period
27 April Annual shareholders’meeting Brussels
9 March Annual results 2010
28 April Annual shareholders’meeting Utrecht
18 May Q1 11 Interim financial statements
31 May *Payment 2010 dividend
20 May *End of dividend election period
24 August First half results 2011
9 NovemberQ3 11 Interim financial statements
4 May *Record date
* Subject to decision of the Board of Directors and approval by the Annual Shareholders’ meeting
10 NovemberQ3 10 Periodic financial information
25 August 2010 | 56Half Year 2010 Results
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 andunknown 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.
25 August 2010 | 57Half Year 2010 Results
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