2. FORTIS I
Highlights 9M 09
I page 2
Inflow
Net profit
Operational performance
Capital position
๏
๏
๏
๏
๏ง 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)
๏ง In line with YTD 08; + 1% vs Q3 08
โ AG Insurance: EUR 5.1 bn, +3% vs YTD 08. +6% vs Q3 08 thanks to a better
performance in Life and Non-Life
โ International: EUR 6.3 bn, -2% vs YTD 08; -3% vs Q3 08; Asia +21% YTD
๏ง Group YTD net profit after minority interests of EUR 1,082 mio, Q3 net profit of EUR
196 mio
โ 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
โ 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
๏ง Combined ratio YTD of 103.3% in Belgium and 104.5% in International
๏ง Improvement vs H1 09 mainly triggered by fewer large claims in both segments
๏ง Capital position remained solid; total solvency ratio at 232%
๏ง Core equity at EUR 8.5 bn, EUR 5.8 bn above minimum requirement
17/11/2009 I page 2
3. FORTIS I 17/11/2009 I page 3
Strategic review announced end of Q3; execution has started
06/10/2009: Luxemburg
Fortis announces sale of Non-
Life activities to La Bรขloise
09/11/2009: Thailand
Kasikorn Bank will increase stake in
Muang Thai Group Holding to 51%,
strenghtening ties with Joint Venture.
Fortisโ 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: Russia
Fortis announces decision
to discontinue insurance
operation in Russia
11/09/2009: UK
Tesco Personal Finance &
Fortis UK conclude
partnership discussions on
providing motor & household
insurance
17/09/2009: Italy
Acquisition of 50%+1 share in UBI
Assicurazioni, one of the leading
Non-Life bancassurance players,
by Fortis and BNP Paribas
Assurance
25/09/2009
Investor Day: publication
conclusions strategic review
4. FORTIS I I page 4
Commercial performance remains solid in Q3 09
17/11/2009 I page 4
Total gross inflow (EUR bn)
Belgium
Life
Non-Life
International*
Life
Non-Life
Total inflow*
Of which non-consolidated jvโs
Life
Non-Life
Net result insurance after minorities
Belgium (EUR mio)
International (EUR mio)
YTD 09
5.1
3.9
1.2
6.3
5.1
1.2
11.4
2.8
2.5
0.3
371
301
70
YTD 08
4.9
3.8
1.1
6.4
5.2
1.2
11.3
2.3
2.1
0.2
8
(32)
40
Change
3%
3%
4%
(2%)
(1%)
(5%)
0%
22%
23%
16%
*
*
70%
Q3 09
1.6
1.2
0.4
2.0
1.6
0.4
3.5
0.9
0.8
0.1
143
106
37
Q3 08
1.5
1.1
0.4
2.0
1.6
0.4
3.5
0.8
0.7
0.1
(313)
(281)
(30)
Change
6%
7%
3%
(3%)
(2%)
(9%)
1%
13%
13%
8%
*
*
*
* including non-consolidated joint ventures at 100%
6. 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
๏ง Q3 09 net profit before minorities EUR 141 mio,
including EUR 32 mio net positive impact on investment
portfolio
๏ง Minority interests: YTD 09 EUR 46 mio, Q3 EUR 35 mio
Life
๏ง Q3 09 net profit before minorities EUR 114 mio
๏ง Funds under management EUR 44.7 bn, +7% vs end 08
Non-Life
๏ง Q3 09 net profit before minorities EUR 27 mio
๏ง Combined ratio YTD of 103.3%, lower than H1 09
mainly due to an improved claims ratio (62.5%)
Individual Life
๏ง Bank Channel up 19% to EUR 2.6 bn
๏ง Broker channel at EUR 0.5 bn; Continued general
market decline in Life
Non-Life
๏ง Continued strong sales via broker channel to SME
business (+7%); Inflow bank channel remained stable
๏ง Successful implementation VIP Modulis
๏๏
๏๏
7. FORTIS I I page 7
Fortis Insurance International
Inflow (incl. joint ventures at 100%) (EUR bn)
17/11/2009 I page 7
Life
๏ง Inflow Non-consolidated jvโs at 100% YTD EUR 2.5 bn,
+23% thanks to strong performance Asian operations
and favourable currency rate movements
๏ง Mixed performance in Europe: Portugal higher (+2%
YTD) vs continued low inflows in France & Luxemburg
Non-Life
๏ง Inflow down 5% YTD due to adverse currency rate
evolution in the UK (YTD +7% at constant rates)
๏ง 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
41.0
70.0
+70%
Non-Life
Life
๏๏
๏๏
Total
๏ง Q3 09 net profit after minorities EUR 37 mio
๏ง Minority interests: YTD 09 EUR 37 mio, Q3 EUR 13 mio
Life
๏ง Q3 09 net profit after minorities EUR 23 mio
๏ง Funds under management EUR 21.7 bn, +10% vs end 08
Non-Life
๏ง Q3 09 net profit after minorities EUR 14 mio
๏ง Combined ratio YTD of 104.5%, lower than H1 09 as both
claims and expense ratio improved
8. 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)
๏ง EUR 83 mio: Net-of-tax positive impact revaluation call option
on BNP Paribas shares
Value RPN(I) and RPI unchanged in Q3
๏ง RPI : EUR 760 mio investment booked as goodwill; no change
๏ง RPN(I) : EUR 344 mio estimated cost future interest payments
Other items in Q3 09
๏ง Net interest margin slightly negative in Q3
(YTD EUR 25 mio positive):
โ Interest period mismatch between assets & liabilities
โ Absence positive interest margin on EUR 5.7 bn subordinated
loan structure Fortis Bank (unwound end of June)
๏ง Staff & administrative expenses of EUR 28 mio, including
some one-off separation costs
๏ง 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
๏ง Assuming full redemption EMTN; (EUR 1.0 bn outstanding at
30/09/2009)
๏ง Acceptance period from 10/11/09 til 30/11/09
9. FORTIS I
Update Q3 valuation call option related to BNP Paribas shares
11/16/2009 I page 9
Valuation
Black & Scholes as per
30/09/2009
Monetisation
Adjustment post BNP
Paribas capital increase
Value as per 30/09/2009
๏
๏
๏
๏
๏ง Volatility impact set at 27% โบ EUR 1,223 mio total value option as at 30 September
๏ง Dividend yield of 3.502% applied
๏ง Strike price used of EUR 66.52 per share, based on market price preemptive rights of
rights issue BNP Paribas
๏ง Non standard features: 30% haircut โบ EUR 856 mio
๏ง Volatility +5% โบ total value option +26%
๏ง Fortis continues to examine all options
๏ง Call option is not fully ISDA-compliant
๏ง Adjustment strike price from EUR 68 to EUR 66.672 per share
๏ง Number of underlying shares remained unchanged at 121.2 mio
๏ง 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
10. 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
๏
๏
๏
๏
๏ง Net discounted value all future interest payments
until a potential reimbursement of the CASHES
๏ง No change in methodology compared to end of June
๏ง Evolution Fortisโ share price
๏ง Evolution theoretical market value CASHES
๏ง Evolution long term interest rate
๏ง Fortisโ share price : EUR 3.20 per share (closing price 30/09/2009)
+ 3.75% long term rate annual increase
๏ง LT-value CASHES : 66% of par value
๏ง LT i-rate : 3.75% + 20bp
๏ง EUR 344 mio per 30/09/2009 mark-to-market value RPN(I)
๏ง 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
11. 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 bn
above Minimum
17/11/2009 I page 11
26.1
ActualActualActual Minimum Actual Minimum
2.2
2.7
0.6
2.0
3.3
2.5
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
12. FORTIS I I page 12
Discretionary Capital of the General Account: a view on liquidity &
capital
Assets Liabilities
Cash & Cash equivalents
Due from Fortis Bank Belgium
Other
Royal Park Investments
Call option net of tax on BNP P
Perpetual loan to AG insurance
Total
4.1
0.9
0.4
0.8
0.6
0.1
6.9
ST (EMTN (1.0) + Bank (0.2))
NITSH I & NITSH II
RPN(I)
Other
FRESH
Net equity
Total
1.2
0.9
0.4
0.4
1.2
2.8
6.9
Net Cash: EUR 2.9 bn
Passed on
LT assets & LT liabilities
Discretionary Capital on
balance sheet
Shareholders equity + FRESH
๏ง Invested in non-current assets on balance sheet
Total Capital
๏ง Contingent asset off balance (Fortis Bank Tier 1 loan, due Sept 2011)
๏ง Already committed to projects (Tesco JV and Italy)
Discretionary Capital * (if available in cash)
4.0
1.5
2.5
1.0
0.2
1.3
EUR bn
EUR bn
EUR bn
EUR bn
EUR bn
EUR 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
๏ง Part of discretionary capital will be reserved for prudential reasons in order to ensure liquidity at all
times
๏ง The remainder might allow a number of potential investments currently under consideration and
aimed at creating value
๏๏
9/30/2009
13. FORTIS I
Conclusion
11/16/2009 I page 13
Inflows
Net result
Outlook
Strategic review
๏
๏
๏
๏
๏ง Solid and stable commercial performance in Life & Non-Life
๏ง Satisfying performance Insurance
๏ง Positive net result General due to result on call option on BNP Paribas shares
๏ง Unchanged vs end of June
๏ง Inflow levels still expected to be at least in line with last year
๏ง Full commitment towards execution
๏ง First announcements of partnerships, divestments and discontinuations
17/11/2009 I page 13
17/11/2009 I page 13
14. 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 Fortisโ 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.
โ
15. FORTIS I
Fortis Investor Relations
11/16/2009 I page 15
Tel:
E-mail:
Website:
17/11/2009 I page 15
17/11/2009 I page 15
+ 32 2 565 53 78
+ 31 30 226 65 66
ir@fortis.com
www.fortis.com
๏๏
