Investor Day 2012 - Continental Europe
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Investor Day 2012 - Continental Europe

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Steven Braekeveldt - From a disparate to a coherent portfolio of activities

Steven Braekeveldt - From a disparate to a coherent portfolio of activities

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Investor Day 2012 - Continental Europe Investor Day 2012 - Continental Europe Presentation Transcript

  • Continental Europe From a disparate to a coherent portfolio of activities Steven Braekeveldt CEO Ageas Continental Europe INVESTOR DAY 2012
  • From a disparate to a coherent portfolio of activities Continental Europe in 2009 vs. today Life Life Non-Life Mixed Non-Life Mixed (6%) Non-Life (EUR 0.1 bn) Non-Life (EUR 0.5 bn) Inflows* 6M 2009: EUR 1.7 bn (94%) Life (EUR 1.6 bn) Inflows* 6M 2012: EUR 2.1 bn (75%) Life (EUR 1.6 bn)  Portfolio of entities with small market positions  Focus on core entities  Mix of wholly-owned subsidiaries, greenfield, partnerships,…  Clear focus on partnerships  Dominance Life savings (35%Life inflow)  Strategic shift towards Protection (Non-Life and Life risk)  Portfolio of entities (geographic approach)  Integrated approach: tight internal cooperation  Transformation from a Sell & Hold strategy towards a Buy & Build strategy  Focus switch from portfolio restructuring to supporting growth of local operating companies *incl. non-consolidated partnerships at 100% Investor Day 24&25 September 2012 - Andaz Liverpool Street London 1
  • Continental Europe today Zoom in on Non-Life activities GWP 6M 2012 Luxembourg (Life) France (Life) Portugal (24%) Turkey (56%) EUR 537 mio Portugal (Life + Non-Life) Ownership: 51% #2 overall insurer (Life + NL) Inflows 2011: EUR 1,308 mio - Life: EUR 1,071 mio - Non-Life: EUR 237 mio Turkey (Non-Life) Ownership: 36% #3 Non-Life insurer GWP 2011: EUR 177 mio* Italy (20%) * Consolidated amount – GWP 2011: TRY 1,137 mio (EUR 486 mio) Italy (Non-Life) Ownership: 25% #3 Non-Life insurer GWP 2011: EUR 216 mio Investor Day 24&25 September 2012 - Andaz Liverpool Street London 2
  • Continental Europe today Zoom in on Non-Life activities Portugal  JV with MBCP (N°2 bank in Portugal - 880 branches - 3 million clients)  Partnership in bancassurance  25 years exclusive distribution agreement with MBCP Italy  Strategic partnership in Non-Life bancassurance with BNP Paribas Cardif and UBI Banca (N°4 bank in Italy – 2,000 branches – 4 million clients)  10 years exclusive distribution agreement with UBI Banca Turkey  Acquisition of a 36% stake in Aksigorta, the N°4 Non-Life insurer at that time (N°3 today)  Distribution: combination of agency network (1,600 agents) with bancassurance through Akbank (N°4 bank in Turkey - 900 branches - 8 millions clients)  15 years exclusive distribution agreement with Akbank Investor Day 24&25 September 2012 - Andaz Liverpool Street London 3
  • Insurance environment Non-Life Insurance: present challenges  Economic slowdown   Better informed and in Europe (esp. Portugal & Italy) Volatile capital markets    Economic environment Customers  Lower credit  production by banks impacts associated sales Increasing diversity and competition between distribution channels(affinities, retailers, aggregators…) Distribution Investor Day 24&25 September 2012 - Andaz Liverpool Street London Regulation demanding Hybrid customers More price focus and more selective Raising claims frequency and fraud  Increasing new regulations (Solvency II, Gender Ban, Worker Compensation Act in Portugal, Bersani and Monti laws in Italy, Turkish rules re. calculation of reserves, …) 4
  • Insurance environment Non-Life Insurance: opportunities  Young and dynamic   population in Turkey Decline in investment income drives focus on underwriting performance Aging population in Europe creates potential in Health  New technologies’  Economic environment Customers Distribution  Banks increased focus  on fee and commission income Opportunities to further grow nonassociated sales in the bank channels Investor Day 24&25 September 2012 - Andaz Liverpool Street London  availability enable new approaches: Personalized, pro-active and real-time communication via social media Tailor-made Motor products via Telematics Regulation  Turkey: introduction of a compulsory insurance disaster policy 5
  • Strategy for Non-Life Organic growth External growth  Focus on sustainable profitability  3 entities with specific skills, know-how and stage of development Integrated approach with tight internal cooperation Products • Portugal: New P&C products • Italy & Turkey: Increase nonMotor contribution Operational Excellence • Portugal: Medis • Italy & Turkey: - Pricing, - Segmentation, - Reserves methodology, - Claim process, - Fraud prevention Distribution • Portugal: New P&C products • Italy & Turkey: Increase nonMotor contribution  Add-on acquisitions in existing markets to reinforce our position  New markets − Preferably Emerging markets − Partnership model − Leading market position − Meaningful contribution − ROE > 11% Pool of people and technical skills available Investor Day 24&25 September 2012 - Andaz Liverpool Street London 6
  • Road map prioritizing our actions for external growth  Process and value chain optimized for new partnerships  Allows immediate roll-out of best practices and transfer of knowledge  Three distinct phases with clear priorities : Quick wins (0-6 months)  Improving the financials : •Active management of Investment portfolio •Balance sheet analysis  Integration in Knowledge Sharing Platform (Fraud, Claims, Cross selling, Bancassuance, Agents,…)  Governance and reporting standards Improving business case (6-18 months)  Portfolio optimization • Diversification of product mix • Improving existing products (if relevant)  Distribution optimization • Bancassurance • Agents  Technical performance: • Underwriting • Pricing • Segmentation • Claims • Fraud • Reinsurance (insourcing vs. outsourcing of risks) Investor Day 24&25 September 2012 - Andaz Liverpool Street London LT development Projects(>18months)  Co-development of new, complementary products  Introduction of additional distribution channels  IT systems  Advanced Risk Management  Advanced Capital Management (e.g. Solvency II) 7
  • Ensure sustainable profitability Portugal (1/3) GWP breakdown – Evolution 2009-2011 (in EUR mio) GDP growth in 2011*) and contracting insurance market (-0.9% in 2011), Mbcp Ageas increased its Non-Life premiums by 2% CAGR: +2.9% 214 231 237 31% 30% 31% P&C business  Health dominates, representing 59% of the 31 % 58% Health 60% 11 % 2009 total Non-Life portfolio and a market share of 25% (Medis business model) Motor  In total Non-Life, Mbcp Ageas remains a 59% 60 % 58 % 11%  In a context of economic recession (-1.6% 10% 10 % 2010 10% 10 % modest player (market share of 5.5%) 2011 Evolution of Mbcp Ageas compared to the market  A business transformation plan is set up to ) (current year vs. prior year, GWP in EUR mio) Mbcp Ageas increase P&C and Motor contributions Portuguese Market GWP Market share GWP Evolution June 2012 June 2012* June 2012 Evolution Total Non-Life 125.9 1.0% 5.6% 2,058.7 (3.90)% Health 78.7 (1.8)% 24.7% 315.9 0.00% Personal Accidents Worker Compensation Fire 7.5 7.4% 9.3% 65.2 (4.30)% 3.8 25.7% 1.2% 295.5 (10.30)% 22.4 4.5% 6.9% 400.3 9.9 (4.1)% 1.3% 822.7 (4.60)% Other 3.6 30.0% 2.3% 159.1 (i) ensuring profitability drivers defending the product margin while balancing the portfolio (ii) growing in stand-alone sales (iii) operating simple and efficient processes (1.50)% Motor  Strategic priorities aim at : (0.80)% Note: market share are calculated over the rolling last 12 months Investor Day 24&25 September 2012 - Andaz Liverpool Street London *Source: World bank 8
  • Ensure sustainable profitability Portugal (2/3) Evolution of Non-Life operating margin, 6M 2011-2012 In EUR mio – before costs allocation H1 2011: Total Non-Life operating margin = EUR 32 mio 13.2 13.1 H1 2012 : Total Non-Life operating margin = EUR 35 mio 9.1 8.8 7.5 2011: Measures taken to improve technical 5.5 5.1 3.7 margins (e.g. Non-Life Claims platform) Strong MS in Health and PA but still modest Health Motor Fire position in the Non-Life market (5.5%) Other P&C 17.1% 47% 33.3% nc Op margin/GWP 24.7% 1.3% 6.9% nc Market share (6M 2012) Evolution of GWP per business line, 6M 2009-2012 In EUR mio CAGR 2009-2012: +5.8% Evolution of Net profit in Non-Life, 6M 2011-2012 In EUR mio - 100% figure 6M 2009 76.8 6M 2010 64.9 CAGR: +20.3% 9.5 7.9 6M 2011 CAGR 2009-2012: +5.3% CAGR 2009-2012: -3.4 % 19.2 12.1 6M 2012 22.4 10.9 3.6 Motor WC 7.1 3.8 Fire Health 7.5 4.1 1.8 1.6 PA PPP 2.6 Other Investor Day 24&25 September 2012 - Andaz Liverpool Street London 6M 11 6M 12 9
  • Ensure sustainable profitability Portugal (3/3) - Focus on Health Health Insurance Market in Portugal:  National Healthcare Service (NHS) is mainly public and Financing is done through taxes  Quality of logistics and speed to access health services are poor  Private health insurance plans covers 10% of population  Private provision of healthcare is focused on Hospitalization, Specialist care and Pharmacy  Based on the characteristics of Health insurance Market in Portugal, Mbcp Ageas launched its Health insurance platform in 1996: Medis.  Innovating business model : the first to introduce a managed care system in Portugal providing high quality health care  Operating model based on an integrated system, a strong network of providers and a multi-channel approach Operating Model :  2008: Medis grows twice the market and  Customers are identified via their Medis card  The system validates eligibility for medical act  Through Medis site, Provider introduces the medical act code and diagnosis  The system informs the Provider of (i)the amount to be paid by the customer and (ii) the amount to be paid to the Provider  Medis pays directly to the Provider 7% Agents 20,5% Distribution Agreements 3% Direct Sales 69,5% MBCP Branches Investor Day 24&25 September 2012 - Andaz Liverpool Street London registers the best satisfaction index for customers and providers (97% customer satisfaction in 2010 in Nielsen survey)  2010: Medis represents EUR 136 mio GWP  2012: with a strong 25% market share, Medis ranks 2nd on the Health insurance market in Portugal (N° 1 = CGD with 33%)  Healthcare is a business in which Ageas has competences and expertise and in which we believe we can grow 10
  • Ensure sustainable profitability Italy (1/2) GWP breakdown: Evolution 2009-2011 In EUR mio CAGR 2009-2011: +1,3% 210 mio 213 mio 15,5 % 10% 10,5% 216 mio 11% 35,5% 43,5% Motor 38% 11% 30,5% 2009 36% Accident & Health 39% 36% 2010  Strong performance in CPI Core and Non-Motor Others Fire 14% 11,5%  Focus on profitable growth (product mix switch to more profitable LoB) 2011 Auto excluded South 2012 net production in # 439 2012 312 123 (129) Jan (376) Feb (376) (322) (78) Mar Apr (429) 203 2011 (99) May Jun  Better segmentation in Motor  Reduction of Loss ratio on Motor business (Over 3 points improvement as lack of big claims in H1 2012) (638) Investor Day 24&25 September 2012 - Andaz Liverpool Street London 11
  • Ensure sustainable profitability Italy (2/2)  Actions taken in 2011 to improve business Health 2012 total net production in # and redress profitability (a.o. banc assurance product offer simplification)  Portfolio being pruned, now set for growth:  New products to increase non-Motor contribution (BluFamily, new CPI, new Household policies)  Operations optimization: − Claims management (rationalization of claims settlement center) − Implementation of a successful Fraud Prevention Program (Black box) 1501 2012 1377 913 838 933 455 2011 830 479 Jan 393 352 Feb Mar Apr 476 290 May Jun  Introduction of a new Health product, Blu Family, launched in Jan. 2012 and leading to increased sales in Health Investor Day 24&25 September 2012 - Andaz Liverpool Street London 12
  • Leverage growth potential & enhance profitability Turkey (1/2)  Phase 1 “Quick wins” realized in 2011 (a.o. Evolution of GWP per business line (Ytd) In TRY mio financials improved via active management of the investment portfolio, workshops on Knowledge Sharing) 706 607 15% 16% 9% 8% 11% 8% Health Gen. losses Other 47% 2% 14% 6M 11 Motor 2% 17% 51% Marine Fire  Now: Phase 2 “Improving business case”:  Strategic shift towards non-Motor  Agency channel profit and effectiveness 6M 12 optimization Focus on profitable growth – Market GWP Analysis June 2012 Aksigorta Market  Underwriting / Pricing / Reserves Methodologies  Claims process reengineering (Claim Management, Fraud prevention, IT systems, …) Top 10 55%  Bancassurance 45% 43% 38% 31% 18% 19% 16% 13% 10% 21% 15% 15% 14% 22% 23% 22% 22% 65% 59% 8% 3% 2% Total GWP Fire Marine Motor Other General losses Health Investor Day 24&25 September 2012 - Andaz Liverpool Street London 13
  • Leverage growth potential & enhance profitability Turkey (2/2) Evolution of GWP per distribution channel (Ytd) In % Direct sales (13%) 108 Brokers (9%) Banks (13%) Evolution of combined ratio EUR 275 mio Agencies (65%) 107 Market (Non-Life) 106.5 106 101.6 6M 11 99 Direct sales (11%) Aksigorta Brokers (13%) EUR 302 mio Agencies (59%) 2009 Banks (14%) 2010 2011 6M 12 Investor Day 24&25 September 2012 - Andaz Liverpool Street London 14
  • Conclusion: Robust Performance of Ageas Continental Europe Non-Life activities Combined ratio CEU** 2009 – 6M 12 Non-Life – evolution of GWP In EUR mio 537 Other 83 101.3% Fire 87 CAGR: +61% * 27.6% 62.4% 27 81 Accident & Health 29.2% 29.3% 25.4% 27.5% 71.0% 66.4% 70.1% 67.3% 64.9% 61.0% 2010 2011 3M 11 6M 11 3M 12 6M 12 170 2009 6M 09 30.3% 88.5% 197 128 10 12 96.6% 90.3% 30.3% Motor 99.3% 96.7% 90.0% 6M 12 * integration Turkey as of end 2011 claims ratio expense ratio ** excluding Turkey  Blueprint set up and ready for deployment Vision 2015  Pool of people with technical skills available for execution Investor Day 24&25 September 2012 - Andaz Liverpool Street London 15
  • 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 24&25 September 2012 - Andaz Liverpool Street London 16