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Finance Avenue - Brussels - 16 November 2013 0 Bart De Smet CEO Ageas Finance Avenue 16/11/2013

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Page 1: Finance Avenue (16/11/2013)

Finance Avenue - Brussels - 16 November 2013 0

Bart De Smet

CEO Ageas

Finance Avenue

16/11/2013

Page 2: Finance Avenue (16/11/2013)

1

Conclusion Ageas’s Investor Day 2012 It’s all about ….

6 Values

5 Choices

4 Targets

Finance Avenue - Brussels - 16 November 2013

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ROE Non–Life + Other above 11%

A closer look at our targets Shifting towards Non-Life positive for overall ROE target

6M 13 (in EUR mio) Total Life Non-Life +Other

Avg insurance equity 7,818 6,040 1,777

Net profit 329 201 128

ROE 8.4% 6.7% 14.4%

2

Non-Life + Other 6M 12 6M 13

Combined ratio 98.3% 97.8%

Net profit 97 128

ROE 13.0% 14.4%

ROE Non-Life + Other already well above 11% - ahead of target

Growing contribution from non-consolidated activities not reflected in reported

Combined Ratio

Strategic choice to invest in Non-Life justified by its performance

Finance Avenue - Brussels - 16 November 2013

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A closer look at our targets Shifting towards emerging markets positive for overall ROE target

Overall ROE < 11% - ROE emerging markets > 11%

6M 13 (in EUR mio) Total Belgium UK CEU Asia

Avg insurance equity 7,818 3,695 1,102 1,189 1,831

Net profit 329 160 58 46 66

ROE 8.4% 8.6% 10.5% 7.7% 7.2%

3

Emerging markets = Turkey, China, Thailand, India & Malaysia

Solid & increasing contribution from emerging markets to

Ageas’s net profit & ROE

Emerging markets 6M 12 6M 13

Avg insurance equity 964 1,054

Net profit * 67 76

ROE 13.9% 14.5%

*excluding regional costs

Finance Avenue - Brussels - 16 November 2013

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Challenge

2.3%

At constant average insurance equity:

EUR 155-160 mio more profit

or

At constant insurance result:

EUR 1.4 bn less average insurance equity

or

a mixed scenario

A closer look at our ROE target How to meet the challenge?

FY 12

8.7% Calculation:

Insurance result EUR 624 mio /

Average insurance equity EUR 7.1 bn (FY12 – FY11)

Improvements needed:

4 Finance Avenue - Brussels - 16 November 2013 4

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How to reach Vision 2015 targets

The path towards realizing

the Vision 2015 targets

Focuses on:

1. ROE numerator : net profit

2. ROE denominator : insurance equity

Through:

1. Improving overall profitability

2. Gradually changing the company’s profile

5 Finance Avenue - Brussels - 16 November 2013 5

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Active capital management

6

How to work on ROE numerator & denominator Various levers available to realize objectives

Improve net profit levels

1.Improve profitability consolidated Life

activities through better operating margin

2.Improve profitability consolidated Non-Life

activities through better combined ratio

3.Work on overall business mix with focus on

higher ROE activities & product lines

4.Gradually change the company profile by

increasing profits from fast growing

emerging market activities

Numerator Denominator

Finance Avenue - Brussels - 16 November 2013

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Active capital management

1. Capital efficiency is an operational day-to-day concern

2. Capital allocation of means is a

strategic choice

7

Improve net profit levels

Numerator Denominator

How to work on ROE numerator & denominator Various levers available to realize objectives

Finance Avenue - Brussels - 16 November 2013

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6M 13 net cash position General Account at EUR 2.1 bn

8

RPI transaction

share buy-back

capital reduction

In EUR mio

announced cash

movements

Expected cash in of EUR 0.2 bn from transactions RPI & BNPP Call option.

Expected cash out of EUR 0.4 bn in the coming months related to capital reduction & share buy-back

688

1,216

2,055340

827

144

(≈200)

(68) (77)(270)

(57)(≈200)

≈200

FY 11 FY 12 buy-back capitalinjection

TPL

paiddividend

upstreamopco's

RPI calloption

other 6M 13

Finance Avenue - Brussels - 16 November 2013

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3 alternative uses for General Account net cash Balanced use of cash since 2009

3. Return to debtholders

Redemption of EMTN

Call/tender Hybrids

(Hybrone, NITSH I & II)

1. Invest in Businesses

Organic growth

Selective acquisitions

Create new partnerships

9

2. Return to shareholders

Dividend payment

Share buy-back

Net cash neutral

EUR 0.9 bn EMTN

redemption

EUR 1.2 bn call NITSH I/II

& tender Hybrone

≈ EUR 1.8 bn

≈ EUR 900 mio cash dividend

over ‘09, ’10, ’11 & ‘12

EUR 450 mio share buy-

backs finalized early ‘12 & ’13

EUR 200 mio share buy-back

launched 12/08/13

EUR 230 mio capital

reduction from proceeds of

BNP Call Option & RPI

≈ EUR 1.0 bn from net cash

on top of retained

earnings

≈ EUR 600 mio UK (Tesco,

KFIS, Castle Cover,

Groupama)

≈ EUR 200 mio CE (Italy,

Turkey)

≈ EUR 200 mio Asia (India,

HK, China)

Finance Avenue - Brussels - 16 November 2013

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Priority 1 : M&A : Focus on high ROE accretive activities New businesses need to pass the test on 3 key criteria

Critical size

Local presence should be

such that every entity can

compete effectively in its

market or niche

Critical size will ensure

each activity is able to

comply with Ageas’s

quality standards

Return in excess of

cost of equity

Return business will have

to exceed cost of equity

while taking into account

the business’ specificities

Return of growth business

will also take into

consideration the

expected value creation

Meaningful

contribution

Each activity should make

a meaningful contribution

to the insurance earnings

in the medium term

The contribution to the

insurance earnings should

be significant enough to

justify management time

10 Finance Avenue - Brussels - 16 November 2013

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11

1. Priority to strengthen positions in existing markets

2. Clear preference for Non-Life. Expansion in Life

on a case by case basis

3. Further expansion in fast growing emerging markets while

respecting Ageas M&A criteria & overall financial

targets

continuing to build on a successful partnership

model

4. Flexibility for opportunities where Ageas believes

its expertise can create growth & improve the

business

Inorganic

growth

Priority 1 : M&A : Focus on high ROE accretive activities Disciplined approach will drive inorganic growth development

Finance Avenue - Brussels - 16 November 2013

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1/01/2010 1/01/2011 1/01/2012 1/01/2013

2009 cash dividend: EUR 190 mio

(EUR 0.80/share)

2010 cash dividend: EUR 200 mio

(EUR 0.80/share)

2011 cash dividend: EUR 190 mio

(EUR 0.80/share)

2012 cash dividend: EUR 270 mio

(EUR 1.20/share)

2013 capital reduction: EUR 230 mio (approved –

EUR 1.00/share)

■ Ageas dividend policy reconfirmed: aim to pay out an

annual cash dividend of 40-50% of Insurance net profit

■ Dividend is funded by sufficient upstreams from Opcos;

no impact expected on net cash position in General Account

12

Priority 2 : Return to shareholders Ageas delivered upon its dividend policy since 09; positive track record

Finance Avenue - Brussels - 16 November 2013 12

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Priority 2 : Return to shareholders Ageas started annual share buy-back programs in 2011

EUR 200 mio SBB - launched 08/2013

- on going

■ If no adequate M&A opportunities would arise, Ageas intends to

continue returning cash to shareholders in the most appropriate

way (share buy backs, dividends, capital reductions…)

13

EUR 200 mio SBB - launched 08/2012

- 3.8% shares cancelled

1/01/2010 1/01/2011 1/01/2012 1/01/2013

EUR 250 mio SBB - launched 08/2011

- 7.3% shares cancelled

Finance Avenue - Brussels - 16 November 2013 13

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14

Priority 3 : Return to debtholders No longer a priority

Recent initiatives returning cash to debtholders had no impact on

net cash position General Account

No intention to bid on FRESH financial instrument

No intention to raise new external hybrid debt

Optimizing debt levels in Opcos

Clear intention to lend on part of FRESH

Return cash to debtholders no longer a priority

From now on, Ageas will only report about 2 alternative uses of net cash

Finance Avenue - Brussels - 16 November 2013

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Insurance ROE target is leading & reconfirmed at 11%

The path to realize the 2015 target is clear & well defined

targets of 97%, 85-90 bps, 40-45 bps & capital optimization

Disciplined cash management rules all decisions

on the use of cash

Priority to first reinvest cash in business & return to shareholders if no

adequate M&A opportunities

No intention to bid on FRESH instrument

Continued active capital management going forward with focus on debt

optimization

Closing remarks

15 Finance Avenue - Brussels - 16 November 2013

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9M Periodical Financial

Information

2013 RESULTS

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A consistent & robust overall

Insurance performance

Both Insurance & General Account

contributing to Group net result

Balance sheet remained strong

Insurance net profit of EUR 497 mio (+11%)

Inflow @ 100% of EUR 17.8 bn (+15%)

Group combined ratio at 97.6% (vs.97.9%)

Life Technical Liabilities at EUR 69.0 bn*

Q3 insurance net profit of EUR 168 mio

Group net profit of EUR 513 mio (-1%)

General Account net result of EUR 15 mio

Q3 Group net profit of EUR 41 mio, incl.revaluation RPN(i)

Shareholders’ equity at EUR 38.30 per share

Insurance solvency at 210%, Group solvency at 226%

Net cash position General Account at EUR 2.0 bn

EUR 33 mio executed of EUR 200 mio share buy-back

Main messages Ageas’s 9M results continued positive trend

Finance Avenue - Brussels - 16 November 2013 17

* Consolidated entities only, compared to FY 2012

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293 311

143174

13

12450

497

9M 12 9M 13

Life Non-Life Other

97.9% 97.6%

9M 12 9M 13

Net result: Strong quarterly results in BE & Asia In EUR mio In EUR bn

Non-Life combined ratio: improving CY claims ratio

227% 210% 207%

0.86% 0.87%

FY 12 9M 13

0.55% 0.47%

FY 12 9M 13

Inflow*: strong growth in Asia & CEU In EUR bn

Total Insurance: Headlines Ageas insurance performance consistent & robust

18

68.8 69.0

36.5 40.2

105.3 109.2

FY 12 9M 13

Conso Non-conso

Finance Avenue - Brussels - 16 November 2013

11.113.3

4.3

4.5

15.517.8

9M 12 9M 13

Life Non-Life Other

Life Technical liabilities*: stable in consolidated, up in non-consolidated

Operating margin Guaranteed: strong quarterly result

Operating margin Unit-Linked: down but still in line with target

In % avg technical liabilities In % avg technical liabilities

* Incl. non-consolidated partnerships @ 100%

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Shareholders’ equity / share

Shareholders’ equity Net profit impact offset by lower unrealized gains & return to shareholders

In EUR mio

6,206 6,378

1,939 1,316

1,655

1,034

497 15

(692) (105) (270) (224) (190) (104)

EUR 42.27 EUR 38.30

9,799

8,727

FY 12 Net resultInsurance

Net resultGen

Account

ChangeUG/L

TreasuryShares

Dividend Capitalreduction

Revaluationput option

Forex& other

9M 13

InsuranceUG/L

InsuranceUG/L

Finance Avenue - Brussels - 16 November 2013 19

Equity per segment FY 12 9M 13 FY 12 9M 13

Belgium 3,974 ► 3,691 Asia 1,837 ► 1,685

UK 1,149 ► 1,127 Insurance 8,145 ► 7,693

Continental Europe 1,185 ► 1,191 General Account 1,655 ► 1,034

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IFRS Solvency up on Net result General Account down on capital reduction

2.4 2.4

0.5 0.5 0.6 0.6 0.5 0.6

4.0 4.1 4.0 4.1

1.72.1

0.6 0.60.8 0.9 0.9 0.8

4.14.5

1.0 0.7

5.1 5.2

4.14.6

1.1 1.1 1.41.5

1.4 1.4

8.1

8.69.1 9.3

FY 12 9M 13 FY 12 9M 13 FY 12 9M 13 FY 12 9M 13 FY 12 9M 13 FY 12 9M 13 FY 12 9M 13

Belgium

UK

CEU

Asia

Total Ageas

General Account

RMC Excess Capital

RMC Excess Capital RMC Excess Capital RMC Excess Capital RMC Excess Capital Available Capital

In EUR bn

Finance Avenue - Brussels - 16 November 2013 20

Solvency ratio

173% 188% 220% 220% 243% 258% 268% 230% 204% 210% 229% 226%

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Takeaways

Q3 confirmed 6M trends in inflow,

operating performance & net insurance

results

Results well spread across segments

Up both in Life & Non-Life

Combined ratio & Operating margins in

line with targets communicated at

Investors Update

Focus on maintaining this performance

Conclusions : positive trend continued

Finance Avenue - Brussels - 16 November 2013 21

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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.

Finance Avenue - Brussels - 16 November 2013 22