investor day 2012 - non-life strategy

Investor Day 2012

Ageas UK

-

Delivering on our

Non-Life strategy

Barry Smith

CEO Ageas UK

INVESTOR DAY 2012

Investor Day 24&25 September 2012 - Andaz Liverpool Street London

Company profile

Delivering our strategy

Conclusions

295246

14 7934

6591

91434

482

FY 2009 FY 2011

Asia

CEU

UK

Belgium6,282 6,179

955 2,034

14,562

17,219

3,2926,157

4,033 2,849

FY 2008 FY 2011

Asia

CEU

UK

Belgium

18%11%

Company profile Strategic fit within Ageas

in EUR mio

Gross Inflow Net profit*

in EUR mio

Supports Ageas’s Non-Life portfolio balance

COR below 100%

Targeting customers through multi-channel distribution

Offering increasing contribution in inflows & profit

Investor Day 24&25 September 2012 - Andaz Liverpool Street London 2

* Adjustments made on net result EUR 71 mio one off tax

adjustment in Belgium (FY 09) & EUR 795 mio

impairments & capital gains on bonds & equities FY 11)

Company profile Ageas UK structure reflecting our multi-distribution strategy

Ageas Insurance

Limited

Tesco Underwriting Limited

(partnership with Tesco Bank)

Ageas UK

Barry Smith Chief Executive Officer

Ageas Insurance Solutions

Ageas UK Retail Ageas Protect


Top 10 Non-Life insurer Top 10 Broker GWP in £ mio – 2011 data

Company profile Ageas UK: a major force in key UK insurance markets

Sources: Ageas UK internal analysis of FY 2011 FSA Returns,

Insurance Times & Insurance Age


213

222

329

393

371

505

617

669

675

678

Ageas (Retail)

CGS&C

Swinton

BGL

Towergate

Saga / Autom.Ass

Willis

Aon

JLT

Marsh

4th largest Personal Lines broker

1,456

1,595

1,721

1,729

1,770

1,875

3,118

3,209

3,558

4,691

Liverpool Vic FS

BUPA

Ageas

Admiral Grp

Allianz

Zurich Fin Serv

AXA

RSA Ins Grp

Royal Bank Scot

Aviva plc

GWP in £ mio – 2011 data

GWP in £ mio – 2011 data

24

41

48

63

67

98

203

272

296

504

Carole Nash

Adrian Flux

A-Plan

Endsleigh

Hastings

Capita

Ageas Retail

Swinton Group

BGL Group

AA/SAGA

Company profile Ageas UK: growing our business while improving our returns

in £ mio

Big freeze impacting whole market

Gross Inflow Profit before tax

in £ mio


846 856 913

1,191

2,012

998 1,043

2007 2008 2009 2010 2011 6M 11 6M 12

24

64

17

(25)

105

35

64

2007 2008 2009 2010 2011 6M 11 6M 12

93 94 98

146

214

2007 2008 2009 2010 2011

751 760 814 1,035

1,766

2007 2008 2009 2010 2011

10

47

(1)

(42)

71

2007 2008 2009 2010 2011

21 24 27

35 38

2007 2008 2009 2010 2011

Company profile Insurance & Retail

in £ mio

Insurance Retail

Reflecting Tesco deal

& organic growth

More than doubled in 5 years

Gross Inflow Gross Inflow

Profit before tax Profit before tax

in £ mio

in £ mio

in £ mio Building good returns, barring

weather impacts on market

Consistent returns during

volatility Underwriting cycle



Company profile


Conclusions

Delivering our strategy – our 3 axes of growth Delivering innovation propositions that meet customer needs

Product: Increase product / service breadth & depth

Distribution: Build multi-channel distribution model

High-Service: Provide highest levels of service

Low-Cost: Operate at lowest level of cost

People: Building our knowledge & expertise

Products

Channels

Customers

COMBINED CAPABILITY

Ageas UK will become a leading manufacturer & retailer of insurance solutions

accessing customers through a range of distribution routes.

This will result in the delivery of consistent, competitive & sustainable

propositions direct to customers, brokers and those businesses seeking

intermediated insurance solutions for their customers.


Delivering our strategy Product: Increase breadth and depth of products

Legal Protection Cover

Mid-net worth Buildings

and Contents Insurance Aggregator Motor Product

Motor and Household

product suite

Strong product positions

GWP (in £ 000s) Market Growth 10-11 Ageas % share Position

Household* 6,360 4.5% 395 6.2% 6

Private Car* 9,243 9.7% 1,028 11.1% 5

Travel 583 (5.5%) 61 10.4% 5

Van (Commercial Motor) 3,015 13.4% 71 3.3% 6

* includes Ageas Insurance Ltd & Tesco Underwriting inflow


Commercial Vehicle Product

Young Driver Telematics

Motor Insurance

http://www.donedealinsurance.co.uk/

http://www.donedealinsurance.co.uk/

Owned Tesco Brokers

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2004 2005 2006 2007 2008 2009 2010 2011

Affinities IFAs MGAs

Implementation of the UK’s multi-channel strategy has delivered:

A significant growth in distribution via Affinities and owned distribution

Entry into new segments such as Managed General Agents (MGAs) and Protection

Delivering our strategy Distribution: Build a multi-channel distribution model

Inflow in £ mio


Delivering our strategy High-service: A lot of awards to prove Ageas delivers

Business Transformation Award 2012

Claims Innovation awards 2012

Gold Standard Award for Insurance 2008, 2009,

2010, 2011

“World Class” status, Institute of Customer Services

Insurance Times Awards 2010 & 2011

ABP Awards 2010 & 2011

UK Broker Awards 2010 & 2011

North West Contact Centre Awards 2011

British Insurance Awards 2011 & 2010

Money Wise Awards 2011

Protection Review Awards 2011

Post Magazine Claims Awards 2011

Insurance Times Claims Awards 2011

Financial Services Technology Awards 2011

LifeSearch Protection Awards 2011, 2010 & 2012


5.6 5.4 5.1 5.1 5.1

Like doingbusiness with

Recommendto others

Committed toworking with

brokers

Delivers whatit says

Deliversservice above

marketstandard

High fit

2011 ratings compared to 2010

2011 reputation monitor based on 6 point scale

Delivering our strategy A strong brand among brokers and partners

Ageas UK rebrand tracker survey results 2010 2011

Brand essence Ageas business partners/brokers

Underperforming

Positive reputation gap between Ageas and

competitors is growing

Performing strongly with

clients on delivery, service

& partnership

Source: WHY 5 Research

Fair

Good

Very good

Excellent

6861 64 61

73

5159

44

Ageas Aviva Zurich AXA


Underperforming

Source: FSA 2010 returns and Ageas internal analysis

Figures concern Ageas Insurance Limited

Ageas almost half that of UK

Market average

Claims excellence Low cost: Operate at lowest level of cost

Incurred claims handling expense /net incurred claims Estimated Unit Cost Production (Private Motor 2011

Household claims mgmt costs / net incurred claims

One of the most efficient for claims

operations

Lowest unit costs of production in Motor

Investor Day 24-25 September 2012 | Andaz Liverpool Street London 13

7.4%

4.0%

4.8%

4.8%

5.4%

5.6%

6.2%

6.2%

8.0%

8.9% 11.5%

UK Market

AXA

LV= / Highway

Co-Op

Ageas

NFU

esure

RSA

Aviva / Gresham

Allianz

Direct Line

63.1

17.8

40.2

41.9

43.3

44.4

45.7

47.0

51.4

53.4

56.2

57.1

61.4

76.7

82.5

91.1

UK Non-Life…

Ageas

AXA

NFU

Sabre

Groupama

Aviva

RSA

Highway

Tesco…

esure

Tradex

LV=

Co-Operative

Allianz

RBSI

9.0%

4.3%

4.6%

5.4%

5.9%

6.6%

9.3%

9.7%

10.1%

10.8%

11.2%

UK Market

Co-Op

Ageas

LV= / Highway

L&G

NFU

RSA

Allianz

Lloyds TSB / St Andrews

Aviva / Gresham

Direct Line

Focused on the customer • Design solutions to meet individual needs

• Listen, empower and do what we say we’ll do

Passionate to deliver • Take decisions and follow through on our actions

• Be dedicated and flexible

Working together • Work in a collaborative way with common goals

• Be open and build a common approach

Energised • Respond quickly, pro-actively and strive to make a

difference

• Be enthusiastic with a ‘Can do’ attitude to get the job

done

Trusted • We believe in honesty and transparency

• Be professional, straightforward and demonstrate and

understanding of each other, our clients and

customers

Kwik Fit Insurance,

The Green Insurance

Company & Express

Insurance

Glasgow

Tesco Underwriting

Newcastle

Ageas Insurance

Limited

Gloucester

Ageas Protect

& Tesco

Underwriting

Reigate, Surrey

Ageas Protect

London

Ageas Insurance Limited

Eastleigh

RIAS & Castle Cover

Bournemouth

Ageas Insurance

Solutions

Stoke

RIAS

Belfast

Delivering our strategy Building our people knowledge & expertise



Company profile


Conclusions

Key

transaction

terms

7 September: Ageas UK & Groupama SA announce exclusive negotiations

20 September: they announce signing of the acquisition of Groupama’s UK

Non-Life business, Groupama Insurance Company Ltd

Excluded from scope: Groupama’s UK broking operations & GICL’s DB Pension

Liability, significantly de-risking the transaction

Transaction subject to Regulatory Approvals & expected to be closed in Q4 12

Price of EUR 145 mio fully funded through existing capital resources

book value of EUR 252 mio

Expected to operate as Ageas UK subsidiary, in short term as standalone entity

DRAFT

Key

transaction

highlights

Acceleration of a powerful UK Non-Life franchise Ageas will become

no5 UK Non-Life insurer & no4 private motor insurer

Highly complementary business fit strengthened offering in core business &

addition of profitable new niche product lines

Compelling strategic rationale complements Ageas UK’s multi-channel

distribution strategy, strengthens our reach in the UK broker market & adds key

skills & talent to the Ageas UK team

Compelling financial rationale – price represents P/BV multiple of 0.53x* & P/E

multiple of 5.86x* expected to exceed Ageas’s minimum return thresholds


* based on 6M 12 figures

Ageas announced the acquisition of GICL Further strengthening of Non-Life UK activities

1.1%

5.9%

7.1%

Groupama

Insurer 17

Insurer 16

Insurer 15

Insurer 14

Insurer 13

Insurer 12

Insurer 11

Insurer 10

Insurer 9

Insurer 8

Insurer 7

Ageas

Insurer 5

Insurer 4

Pro-forma

Insurer 3

Insurer 2

Insurer 1 Increased size and presence

in key private motor,

household and commercial

SME lines

Enhanced growth potential

through expanded product

capabilities in new product

areas

Revenue streams not at risk

from potential regulatory

reforms – GICL has no

reliance of referral fees

No4 Private Motor…

Source: Datamonitor, Group accounts

Note: Based on FSA regulated entities. Admiral volumes based on total premiums written including premiums written by co-insurers. [GICL

premiums adjusted for sale of PMI portfolio]

1.0%

4.2%

5.2%

Groupama

Insurer 20

Insurer 19

Insurer 18

Insurer 17

Insurer 16

Insurer 15

Insurer 14

Insurer 13

Insurer 12

Insurer 11

Insurer 10

Insurer 9

Ageas

Insurer 7

Insurer 6

Insurer 5

Pro-forma

Insurer 4

Insurer 3

Insurer 2

Insurer 1

1.5%

10.2%

11.7%

Groupama

Insurer 13

Insurer 12

Insurer 11

Insurer 10

Insurer 9

Insurer 8

Insurer 7

Insurer 6

Ageas

Insurer 4

Pro-forma

Insurer 3

Insurer 2

Insurer 1


Acceleration of a powerful UK Non-Life franchise Creating No4 in Private Motor

No4 Personal lines… No5 overall...

2011 UK market share (%)

Strong overlap in personal motor & household markets

strengthened offering in core business lines

Addition of GICL areas of strength to Ageas UK’s platform (eg Motorcycle insurance)

diversification of product mix

Enhanced offering for key commercial partners

Additional product niches with superior underwriting margins and strong growth potential

Source: Datamonitor (via FSA returns). GICL excludes PMI portfolio sold in 2011

GICL GWP £408 mio 70% personal lines / 30%

commercial lines

Ageas UK GWP £1,721 mio 88% personal lines / 12% commercial lines

Pro-forma GWP £2,130 mio 85% personal lines / 15% commercial lines


Highly complementary business fit CIGL & Ageas UK have complementary business mixes

Com motor

6.9%

Com property

5.2%

Personal Motor

54.1%

Motorcycle

1.1%

Houeshold

22.6%

Travel

3.6%

Other personal

3.3%

Com liability

2.8%Other com

0.4%Com liability

2.1%

Other personal

2.0%

Travel

3.5%

Houeshold

23.0%

Personal Motor

59.7%

Com property

3.9%Com motor

5.8%

Other com

2.3%

Com liability

6.0%

Other personal

8.6%

Travel

3.9%Houeshold

20.9%

Motorcycle

5.8%

Personal Motor

30.7%

Com property

10.5%

Com motor

11.3%

Enhances

skills & talent

Compelling strategic rationale Multi-channel distribution & resources

Acquisition complements Ageas UK’s multi channel distribution strategy,

strengthening its reach in the UK broker market

Acquisition provides security for Groupama UK’s existing intermediary

relationships and reinforces Ageas UK’s ongoing commitment to its broker relationships

Transaction enhances e-trading offering, including e-fleet and e-commercial

combined products

Strengthens

multi-

channel

distribution

strategy

Depth and experience of GICL management talent with proven operational

and financial track records will help drive the business as it is integrated into the

Ageas Group

Addition of expertise in niche and specialty lines to complement Ageas UK’s

existing underwriting talent

Ability to draw on GICL’s strong claims & operational management capabilities, together with Ageas UK’s existing strengths in these areas


Beneficial outcome for both parties - security & immediate capital release for Groupama

- compelling financial rationale for Ageas & its shareholders

GICL strongly capitalised & well positioned for Solvency II

GICL reported net combined ratio of 97.8% & post tax profit for business

acquired of EUR 29.8 mio (FY11)

Defined Benefits Pension Liability excluded (liabilities retained by Groupama

SA ), significantly de-risking transaction

Metrics materially below recent sector acquisition multiples

In-market consolidation in geographies & lines of business that Ageas UK

knows well & would give rise to synergies.

Expected to be highly cash generative, supporting growth in Ageas UK

Financial

rationale of

transaction

Strong

outcome for

Ageas

shareholders

Expected to exceed Ageas’s minimum return on investment threshold of 11%

Expected to result in immediate shareholder value creation post completion

Represents excellent opportunity to profitably deploy Group capital


Financial rationale

Conclusions

Significant scale change

Good balance of manufacturing & retail distribution

Contributing to increase in GWP, net profit & ROE

With distinct attributes recognised in the UK market:

partnership, delivery & service above market norms

Mark will talk through the insurance story

Andy will cover customers & distribution


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.

investor day 2012 - non-life strategy

Investor Relations