9m results 2009
TRANSCRIPT
9M 2009 trading update
17 November 2009
FORTIS I
Highlights 9M 09
I page 2
Inflow
Net profit
Operational performance
Capital position
YTD 09 EUR 11.4 bn, Q3 09 EUR 3.5 bn (incl. YTD EUR 2.8 bn from non-consolidated joint ventures, Q3 09 EUR 0.9 bn)
In line with YTD 08; + 1% vs Q3 08– AG Insurance: EUR 5.1 bn, +3% vs YTD 08. +6% vs Q3 08 thanks to a better
performance in Life and Non-Life– International: EUR 6.3 bn, -2% vs YTD 08; -3% vs Q3 08; Asia +21% YTD
Group YTD net profit after minority interests of EUR 1,082 mio, Q3 net profit of EUR 196 mio– Insurance: EUR 371 mio incl. EUR 94 mio DRD tax recovery and EUR 50 mio net
negative impact on investment portfolio; Q3 net profit of EUR 143 mio– General: EUR 711 mio; Q3 net profit of EUR 53 mio includes EUR 83 mio positive
result on value call option BNP Paribas and no change in value of RPN(I) and RPI
Combined ratio YTD of 103.3% in Belgium and 104.5% in International Improvement vs H1 09 mainly triggered by fewer large claims in both segments
Capital position remained solid; total solvency ratio at 232% Core equity at EUR 8.5 bn, EUR 5.8 bn above minimum requirement
17/11/2009 I page 2
FORTIS I 17/11/2009 I page 3
Strategic review announced end of Q3; execution has started
06/10/2009: LuxemburgFortis announces sale of Non-Life activities to La Bâloise
09/11/2009: ThailandKasikorn Bank will increase stake in Muang Thai Group Holding to 51%, strenghtening ties with Joint Venture. Fortis’ Economic interest in Life Insurance resp. Non-Life Insurance goes down to 31% and 12%. Net proceeds to be received by Fortis of EUR 41 million cash vs a total investment from 2004 til 2008 of EUR 63 million
28/10/2009: RussiaFortis announces decision to discontinue insurance operation in Russia
11/09/2009: UKTesco Personal Finance & Fortis UK conclude partnership discussions on providing motor & household insurance
17/09/2009: ItalyAcquisition of 50%+1 share in UBI Assicurazioni, one of the leading Non-Life bancassurance players,by Fortis and BNP Paribas Assurance
25/09/2009Investor Day: publication conclusions strategic review
FORTIS I I page 4
Commercial performance remains solid in Q3 09
17/11/2009 I page 4
Total gross inflow (EUR bn)
Belgium LifeNon-Life
International*LifeNon-Life
Total inflow*
Of which non-consolidated jv’sLifeNon-Life
Net result insurance after minoritiesBelgium (EUR mio)International (EUR mio)
YTD 09
5.13.91.2
6.35.11.2
11.4
2.82.50.3
37130170
YTD 08
4.93.81.1
6.45.21.2
11.3
2.32.10.2
8(32)
40
Change
3%3%4%
(2%)(1%)(5%)
0%
22%23%16%
**
70%
Q3 09
1.61.20.4
2.01.60.4
3.5
0.90.80.1
14310637
Q3 08
1.51.10.4
2.01.60.4
3.5
0.80.70.1
(313)(281)(30)
Change
6%7%3%
(3%)(2%)(9%)
1%
13%13%8%
***
* including non-consolidated joint ventures at 100%
FORTIS I I page 5
Inflow by region
17/11/2009 I page 5
(EUR mio)Fully consolidated entities
Belgium
United Kingdom
Other European countriesPortugalFranceLuxemburgUkraineGermanyTurkey
AsiaHong Kong
Equity associates at 100%MalaysiaThailandChinaIndia
Fortis Re-Insurance
Total
%Ownership
75%-1
100%
51%100%
50% / 100%100%100%100%
100%
31%40% / 15%
25%26%
100%
YTD 09
3,925
6
2,3751,652
231416
22450
2,754215
2,539394340
1,75451
9,060
YTD 08
3,799
2,9201,628
347861
31962
2,374204
2,071338259
1,45419
8,993
Q3 09
1,173
3
72748278
14318
15
84574
771112010852518
2,754
YTD 09
1,173
696
182163
19
297
29723067
2,348
YTD 08
1,127
744
165146
19
257
25720849
70
2,363
Q3 09
365
247
5450
4
83
836023
749
YTD 09
5,098
702
2,5571,815
231435
22450
3,051215
2,835624407
1,75451
11,408
YTD 08
4,926
744
3,0851,774
347880
31862
2,531204
2,327546308
1,45419
70
11,356
Q3 09
1,544
250
78153278
14718
15
92874
85418013152518
3,503
Gross inflow Life Gross Written premiums Non-Life Total
FORTIS I I page 6
AG Insurance
Inflow (EUR bn)
Net Profit before minorities (EUR mio)
17/11/2009 I page 6
3.0 3.1
0.8 0.8
1.1 1.2
YTD 08 YTD 09
Non-Life GWP
4.9 5.1
-75.8
297.0
47.4
50.0
YTD 08 YTD 09
Non-Life
+3%
-28.4
347.0
Group Life
Individual Life
Life
Total Q3 09 net profit before minorities EUR 141 mio,
including EUR 32 mio net positive impact on investment portfolio
Minority interests: YTD 09 EUR 46 mio, Q3 EUR 35 mio
Life Q3 09 net profit before minorities EUR 114 mio
Funds under management EUR 44.7 bn, +7% vs end 08
Non-Life Q3 09 net profit before minorities EUR 27 mio
Combined ratio YTD of 103.3%, lower than H1 09 mainly due to an improved claims ratio (62.5%)
Individual Life Bank Channel up 19% to EUR 2.6 bn
Broker channel at EUR 0.5 bn; Continued general market decline in Life
Non-Life Continued strong sales via broker channel to SME
business (+7%); Inflow bank channel remained stable
Successful implementation VIP Modulis
FORTIS I I page 7
Fortis Insurance International
Inflow (incl. joint ventures at 100%) (EUR bn)
17/11/2009 I page 7
Life
Inflow Non-consolidated jv’s at 100% YTD EUR 2.5 bn, +23% thanks to strong performance Asian operations and favourable currency rate movements
Mixed performance in Europe: Portugal higher (+2% YTD) vs continued low inflows in France & Luxemburg
Non-Life
Inflow down 5% YTD due to adverse currency rate evolution in the UK (YTD +7% at constant rates)
Slowdown in Malaysia in Q3 due to seasonality
Net Profit after minorities (EUR mio)
1.2 1.2
5.15.2
YTD 08 YTD 09
6.4 6.3(2%)
Non-Life GWP
Life
34.0
-18.0
36.0
59.0
YTD 08 YTD 09
41.070.0
+70%
Non-Life
Life
Total Q3 09 net profit after minorities EUR 37 mio
Minority interests: YTD 09 EUR 37 mio, Q3 EUR 13 mio
Life Q3 09 net profit after minorities EUR 23 mio
Funds under management EUR 21.7 bn, +10% vs end 08
Non-Life Q3 09 net profit after minorities EUR 14 mio
Combined ratio YTD of 104.5%, lower than H1 09 as both claims and expense ratio improved
FORTIS I I page 8
General
17/11/2009 I page 8
YTD 09 net result of EUR 711 mio (including eliminations)
Q3 09 net result of EUR 53 mio (including eliminations) EUR 83 mio: Net-of-tax positive impact revaluation call option
on BNP Paribas shares
Value RPN(I) and RPI unchanged in Q3 RPI : EUR 760 mio investment booked as goodwill; no change RPN(I) : EUR 344 mio estimated cost future interest payments
Other items in Q3 09 Net interest margin slightly negative in Q3
(YTD EUR 25 mio positive): – Interest period mismatch between assets & liabilities– Absence positive interest margin on EUR 5.7 bn subordinated
loan structure Fortis Bank (unwound end of June) Staff & administrative expenses of EUR 28 mio, including
some one-off separation costs Interest payment to Fortis Bank related to RPN of EUR 1.2 mio
Net cash position General on 30 September of EUR 2.9 bn Assuming full redemption EMTN; (EUR 1.0 bn outstanding at
30/09/2009) Acceptance period from 10/11/09 til 30/11/09
FORTIS I
Update Q3 valuation call option related to BNP Paribas shares
11/16/2009 I page 9
Valuation Black & Scholes as per30/09/2009
Monetisation
Adjustment post BNP Paribas capital increase
Value as per 30/09/2009
Volatility impact set at 27% ► EUR 1,223 mio total value option as at 30 September Dividend yield of 3.502% applied Strike price used of EUR 66.52 per share, based on market price preemptive rights of
rights issue BNP Paribas Non standard features: 30% haircut ► EUR 856 mio Volatility +5% ► total value option +26%
Fortis continues to examine all options
Call option is not fully ISDA-compliant Adjustment strike price from EUR 68 to EUR 66.672 per share Number of underlying shares remained unchanged at 121.2 mio
Net-of-tax valuation call option on BNP Paribas shares estimated at EUR 565 mio per 30 September 2009; Deferred tax charge of EUR 291 mio
17/11/2009 I page 9
17/11/2009 I page 9
FORTIS I
Update Q3 valuation interest mechanism related to RPN(I)
11/16/2009 I page 10
Valuation technique
Drivers interest payments
Assumptions
Value as per 30/09/2009
Net discounted value all future interest paymentsuntil a potential reimbursement of the CASHES
No change in methodology compared to end of June
Evolution Fortis’ share price Evolution theoretical market value CASHES Evolution long term interest rate
Fortis’ share price : EUR 3.20 per share (closing price 30/09/2009)+ 3.75% long term rate annual increase
LT-value CASHES : 66% of par value LT i-rate : 3.75% + 20bp
EUR 344 mio per 30/09/2009 mark-to-market value RPN(I) Cash interest cost Q3 09: EUR 1.2 mio (YTD 09 EUR 1.7 mio)
17/11/2009 I page 10
17/11/2009 I page 10
FORTIS I
Fortis Core equity EUR 5.8 bn above required regulatory minimum
AG Insurance Insurance International
General
Other Core Tier 1 capital
11/16/2009 I page 11
Fortis
Required Regulatory minimum
EUR 5.8 bnabove Minimum
17/11/2009 I page 11
26.1
ActualActualActual Minimum Actual Minimum
2.2
2.7
0.6
2.0
3.32.5
0.6
8.83.9
(0.1)2.6
8.5
(0.3)
0.3
2.6
Minimum
Core equity
167%
200%
360%
325%
Core Solvency Ratio
Total Solvency Ratio
FORTIS I I page 12
Discretionary Capital of the General Account: a view on liquidity & capital
Assets Liabilities
Cash & Cash equivalentsDue from Fortis Bank BelgiumOther
Royal Park InvestmentsCall option net of tax on BNP PPerpetual loan to AG insurance
Total
4.10.90.4
0.80.60.1
6.9
ST (EMTN (1.0) + Bank (0.2))NITSH I & NITSH IIRPN(I)OtherFRESHNet equity
Total
1.20.90.40.41.22.8
6.9
Net Cash: EUR 2.9 bnPassed on
LT assets & LT liabilities
Discretionary Capital on balance sheet
Shareholders equity + FRESH Invested in non-current assets on balance sheetTotal Capital Contingent asset off balance (Fortis Bank Tier 1 loan, due Sept 2011) Already committed to projects (Tesco JV and Italy)Discretionary Capital * (if available in cash)
4.01.52.51.00.21.3
EUR bnEUR bnEUR bnEUR bnEUR bnEUR bn
EUR bn, 30 September 2009
* Fortis 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
Part of discretionary capital will be reserved for prudential reasons in order to ensure liquidity at all times The remainder might allow a number of potential investments currently under consideration and
aimed at creating value
9/30/2009
FORTIS I
Conclusion
11/16/2009 I page 13
Inflows
Net result
Outlook
Strategic review
Solid and stable commercial performance in Life & Non-Life
Satisfying performance Insurance Positive net result General due to result on call option on BNP Paribas shares
Unchanged vs end of June Inflow levels still expected to be at least in line with last year
Full commitment towards execution First announcements of partnerships, divestments and discontinuations
17/11/2009 I page 13
17/11/2009 I page 13
FORTIS I I page 14
Cautionary Statements
17/11/2009 I page 14
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 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 policiesof 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 thedates indicated, nor does it purport to be indicative of the results of operations or financial condition that may be achieved in the future.
“
FORTIS I
Fortis Investor Relations
11/16/2009 I page 15
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17/11/2009 I page 15
17/11/2009 I page 15
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