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Investor Day 2015 - A smooth transition to Solvency II

This document discusses Ageas's transition to Solvency II reporting. It provides an overview of key differences between Solvency I and Solvency II, including the move to a market consistent valuation approach and risk-based capital requirements under Solvency II. The document then summarizes Ageas's results under the Solvency II standard formula, including the group's Solvency II ratio of 177% for fiscal year 2014. Bridges are presented showing the adjustments made to translate IFRS equity into Solvency II own funds.

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A smooth transition to SOLVENCY II
2 Speakers Emmanuel Van Grimbergen Group Risk Officer Filip Coremans Chief Risk Officer
3 SOLVENCY I SOLVENCY II Basic principles Results Standard Formula Results Solvency II ageas RISK APPETITE & CAPITAL MANAGEMENT SENSITIVITIES FUTURE REPORTING CONCLUSIONS
SOLVENCY I
5 Ageas’s current reporting per segment FY ‘14 & 6M ‘15 SOLVENCY I 4,451 5,800 8,669 10,125 4,218 4,325 4,630 5,828 8,848 10,153 4,218 4,325 179 28 > Under Solvency I expected dividends are only taken into account at year end 2,240 2,905 2,516 365 2,524 396 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 1,066 1,061 450 1,271 457 1,672 2,461 2,004 733 789 616 604 4,756 5,430 845 953 480 557 Belgium UK CEU Asia Excess Capital RMC Total Ageas GAIn EUR mio Solvency ratio 189% 215% 231% 241% 176% 173% 273% 312% 206% 234% 210% 235%
6 A straight forward calculation mechanism SOLVENCY I Required Minimum Capital (RMC) Volume based approach with simple formula In % of Life technical liabilities, Non-Life premiums & capital at risk Unrealised Gains on fixed income eliminated from regulatory capital Life technical liabilities @ interest rates embedded in each policy Non Controlled Participations (NCP) included @ our share – RMC based on local rules Available capital = IFRS equity & correction prudential filters Ageas specific General
7 Capital management decisions based on IFRS Solvency SOLVENCY I Dividend determined by IFRS net profit Target Insurance Solvency I ratio Ageas = 200% Risk appetite focused on protecting Solvency I ratio & net profit Dividend @ 40-50% of IFRS Insurance net profit Capital upstream subject to Local Solvency Solvency I capital requirement vs. dividend upstream Ageas specific General
SOLVENCY II BASIC PRINCIPLES
9 SOLVENCY II BASIC PRINCIPLES From simplistic but stable Solvency I to realistic but more volatile Solvency II Market consistent valuation Risk based approach European regulation Framework > Reflecting economic situation vs. accounting view > Available capital (Own Funds) on market value / marked to model basis > More complex > Integrated risk view > Choice between standard formula or (partial) internal model > Solvency Capital Requirement (SCR) > Based on effective risks taken within company, covering both assets & liabilities > Required capital influenced by risk mitigation actions > In principle more level playing field
10 Pillar I Three-pillar framework strives for an integrated risk view BASIC PRINCIPLES Possible calculation methods Ageas specific Reporting Interaction level Risk Quantification > Standard Formula > (Partial) Internal model > Standard Formula (PIM in future) > Minimum Capital Requirement (MCR) > Solvency Capital Requirement (SCR) > Approval by regulator Risk Management > Company specific > Ageas view > Own Risk & Solvency Assessment (ORSA) > Supervisory review process Risk Communication > Solvency & Financial Condition Report (SFCR) Regular Super- visory Report (RSR) Quarterly results (IFS) > Transparency & disclosure Pillar II Pillar III SOLVENCY II
11 Three possible computation methods for risk quantification under Pillar I SOLVENCY II BASIC PRINCIPLES > Currently use of Standard Formula > Approval process PIM Non-Life ongoing Internal Model Partial Internal Model (PIM) Standard Formula Standard calculation method based on risk indicators & typology as defined by EIOPA Full internal model tailored to the company’s risk profile Blended approach, combining internal model with Standard Approach Ageas specific General
12 Solvency II ratio based on Market Consistent Balance Sheet (MCBS) BASIC PRINCIPLES Fair value liabilities Fair value assets Own Funds Including qualifying subdebt = Solvency II ratio Own Funds SCR Free Funds SCR SOLVENCY II
13 SCR is level of capital expected to be required by regulators SOLVENCY II BASIC PRINCIPLES Fair value assets SCR Solvency Capital Requirements Fair value SCR99.5% loss percentile Estimated value after 1/200 year events 99.5% confidence level To absorb significant losses in 1 in 200 year events First supervisory intervention level when Free Funds < zero 1 year time horizon SCR Free Funds Fair value liabilities
14 Major risk types which require capital BASIC PRINCIPLES Similar Catastrophe to Life - Mortality - Longevity - Disability / Morbidity - Lapse - Expense - Revision Operational RiskAdjustments Market risk Health Default Life IntangibleNon-Life - Interest rate - Equity - Property - Spread - Currency - Concentration - Mortality - Longevity - Disability / Morbidity - Lapse - Expense - Revision - Catastrophe - Premium reserve - Lapse - Catastrophe Basic SCR - Premium reserve - Lapse Non-Similar to Life SCRSOLVENCY II
15 Main adjustments aside capital charges by risk type SOLVENCY II BASIC PRINCIPLES Adjustments Diversification benefits Loss Absorption capacity of Deferred Tax (LADT) Non-Controlled Participations (NCP) Losses can partly be compensated by tax savings – subject to recoverability test of tax benefits Not all risks will crystallize at the same moment provided that the underlying sources of risk, are not fully dependent SCR European NCP’s (Luxembourg & Tesco) do not diversify with other risks
16 MCR: Final treshold SOLVENCY II BASIC PRINCIPLES Fair value liabilities Fair value assets SCR Floor of 25% SCR & cap of 45% of SCR Breach triggers very strict recovery plan Non compliance with recovery plan induces mandatory stop of new business & supervisor taking over MCR: Minimum Capital Requirement = part of SCR Free Funds MCR
SOLVENCY II RESULTS STANDARD FORMULA
18 Ageas chooses quality and sustainability Consolidation scope SOLVENCY II RESULTS STANDARD FORMULA > In principle comparable to IFRS consolidation scope > Belgium treated as 100% Owned – liability for Put option in General Account Non-Controlled Participations (NCP) > European participations (Tesco & Luxembourg): Solvency II Own Funds & SCR pro rata included - no diversification benefits > Non-European participations (Turkey, Thailand, Malaysia, India, China, Philippines & Vietnam) are not included in Solvency II ratio - reported separately based on Local Solvency > If any of the Non-European participations would become “deemed equivalent”, same treatment as the European participations Expected dividend > Expected pay-out by Ageas deducted from Own Funds in each quarter, based on 40% pay-out over Insurance net profit > Final calculations @ year-end
19 Non-transferable Own Funds SOLVENCY II RESULTS STANDARD FORMULA Ageas chooses quality and sustainability > Ageas takes a conservative approach > A “non-transferable” is deducted from Own Funds equal to Diversification benefits between controlled entities in SCR Free Funds belonging to 3rd party shareholders for controlled entities that are not fully owned (Italy, Portugal, & Belgium) Transitional measures > Ageas makes no use of transitional measures except for Grandfathering - up to 10 years Reporting deadlines Put option on AG Insurance > In line with IFRS treated as if put option were exercised: Ageas owns 100% & recognizes a liability at holding level > The non-transferable on AG Insurance within Insurance Own Funds is offset within General Account > This treatment assures no changes in Insurance Solvency in case the put option is NOT exercised in 2018
20 Solvency II ratio Insurance @ 177% FY ‘14 In EUR mio SOLVENCY II RESULTS STANDARD FORMULA Belgium UK CEU Asia Free Funds SCR Total Ageas GA Solvency II ratio Own Funds GA 1,355 37 1,318 Diversification / Non- transferable (592) (1,827) (1,235) Belgium 4,115 2,873 6,988 243% 957 1,014 57 UK 106% CEU 1,036 331 705 147% Asia 492 410 82 120% Insurance 3,350 4,353 7,703 177% Ageas Group 4,668 4,390 9,058 206% Non-European NCP 681 1,890 1,209 278%
21 Bridge from Insurance IFRS Equity to Insurance Solvency II Own Funds FY ‘14 11,423 1,606 1,440 2,842 9,530 7,703 (1,605) (780) (1,827) (4,438) (550) (360) (47) In EUR mioSOLVENCY II RESULTS STANDARD FORMULA IFRS Equity Expected Prop. Subord. Derecognition Reval. RE Derecognition Reval. Reval. HTM Other Total Insur- Non Eligible Dividend Conso Liabilities NCP goodwill Techn. prov. /particip./other ance Own transferable Insurance /DAC/VOBA investments Funds Own Funds
22 Solvency Capital Requirements per risk type FY ‘14 In EUR mio 4,270 843 1,109 (534) 4,353 (1,122)324 (1,753) 220445 164 387 SOLVENCY II RESULTS STANDARD FORMULA Market Counterparty Life Health Non-Life Intangible Operational European Diversification Loss mit. Loss mit. SCR Default Asset NCP between techn. prov. taxes risk types & controlled entities
23 No aggressive leverage & excellent quality of Group Own Funds FY ‘14 > Current Hybrid Tier 1 capital consists of grandfathered instruments (up to 2026) > Ageas slightly above maximum of 20% Tier 1 Hybrid* in total Tier 1 Gradual replacement by new Tier 2 issues > Substantial capacity to issue Tier 2 instruments Allowed up to 50% of SCR Current level @ Ageas 2% of SCR 9,058 1% Tier 3 1% Tier 2 76% 21% Tier 1 Unrestricted Tier 1 Hybrid* * This amoount includes Fixed Rate Reset Perpetual Subordinated (550 USD @ 6.75%) issued by AG Insur- ance - could be reclassified to Tier 2 In EUR mio SOLVENCY II RESULTS STANDARD FORMULA
24 Prudent approach of eligible Own Funds Insurance pool FY ‘14 Free Funds belonging to 3rd party shareholders in controlled entitiesBelgium Portugal Italy In EUR mio (1,115) (592) Non-transferable Own Funds (1,827) (592) (92) (29) Amount equal to diversification benefits between controlled entities in SCR Diversification between controlled entities SOLVENCY II RESULTS STANDARD FORMULA
25 General Account: Bridge from IFRS Equity to Solvency II Own Funds FY ‘14 (499) 1,355 590 1,115 149 IFRS Equity Non-transferable AG Insurance after dividend Subdebt Expected Dividend & Other Own Funds In EUR mio > Cost of Put option on AG Insurance (EUR 1,391 mio) deducted from IFRS equity > Non-transferable on AG Insurance (EUR 1,115 mio) re-added SOLVENCY II RESULTS STANDARD FORMULA
26 Large amount of capital in NCP not accounted for in Solvency II ratio FY ‘14 In EUR mio @ Ageas’s part IFRS capital Local capital requirements Local available capital Local Solvency ratio SOLVENCY II RESULTS STANDARD FORMULA Turkey 146 48 69 146% India 19 3 19 553% Thailand 395 115 563 488% China 730 239 655 275% Malaysia 315 276 584 212% Total 1,604 681 1,890 278%
SOLVENCY II RESULTS SOLVENCY IIageas
28 Main improvements on Standard Formula FY ‘14 SOLVENCY II RESULTS SOLVENCY II ageas SCR SF per risk type SCRageas per risk type Market Counterparty Default Life Health Non-Life Intangible Asset Operational European NCP Diversification Loss mit. between risk techn. prov. types & con- trolled entities Loss mit. taxes SCR 4,270 4,507 843 843 1,109 736 (534) (694) 4,353 4,208 (1,122) (1,180) 324 324 (1,753) (1,545) 220 220 445 445 164 164 387 387 In EUR mio Market Counterparty Life Health Non-Life Intangible Operational European Diversification Loss mit. Loss mit. SCR Default Asset NCP between risk techn. prov. taxes types & con- trolled entities
29 Partial Internal model Non-Life Underwriting FY ‘14 Why In scope Out of scope Status Impact > Property & Casualty = Motor, Household & Other lines > Accidents > Nature of Ageas’s Non-Life portfolio is focused on Personal lines & SME - differs from approach in Standard Formula. > Insurance Solvency ratio up 13pp > Application filed with regulator for acceptance Solvency II (pillar I) > Timing: expected beginning 2016 > What if not accepted - PIM will still be used for internal risk & capital management (pillar II) > Workmen’s compensation > Health - medical & income expenses SOLVENCY II RESULTS SOLVENCY II ageas
30 Internal view Market risk focussing on spread risk FY ‘14 Types of spread risk Ageas specific In scope Impact > Insurance Solvency ratio down 4pp > Fundamental spread risk = linked to default or realised capital losses on sale > Non-fundamental spread risk = linked to short-term movements in the market > Long-term nature of liabilities > Bonds in principle kept to maturity > Fundamental spread risk included in SCR > Both on government & corporate bonds > Non-fundamental spread risk excluded > Proxy of concept of matching / volatility adjustment ageas SOLVENCY II RESULTS SOLVENCY II ageas
31 Solvency II Insurance ageas @ 186% FY ‘14 Solvency II ratio GA 1,333 27 1,307 Diversification / Non- transferable (526) (1,197) In EUR mio Belgium UK CEU Asia Free Funds SCR Total Ageas GA SOLVENCY II RESULTS SOLVENCY II ageas (1,723) 732 282 1,014 UK 139% Non-European NCP Ageas 681 1,890 1,209 ASCEU 4,906 4,234 Insurance 9,140 Belgium 278% Own Funds 4,095 2,893 3,6006,988 4,208 242% 216% 1,036 285 7,807 751 138% 492 134 358 138% 186%
32 The complete overview FY ‘14 & 6M ‘15 * In Solvency I framework Non-European NCP’s are included in Insurance ratio on IFRS equity basis whereas in Solvency II these NCP’s are not taken into consideration, but shown separately based on Local Solvency. FY ‘14 BE UK CEU ASIA Ageas insurance Ageas group NCP @ LOCAL SOLVENCY Solvency I 189% 231% 176% 273% 206% 210% * Standard Formula 243% 106% 147% 120% 177% 206% 278% Solvency II ageas 242% 139% 138% 138% 186% 216% 278% 6M ‘15 Solvency I 215% 241% 173% 312% 234% 235% * Standard Formula 252% 105% 150% 127% 178% 210% 294% Solvency II ageas 252% 139% 133% 141% 188% 221% 294% SOLVENCY I & II RESULTS
33 Some uncertainties remain, but impact on Insurance Solvency is manageable Contingent Legal Liabilities SOLVENCY II RESULTS Possible impact on SF Possible impact on SIIageas Uncertainty Ageas treatment Bonds/loans guaranteed by regional Governments or local authorities Consolidation Ancillary services company (Interparking) Parking concessions (Interparking) Treated as sovereign debt Proportional consolidation Liquid market thus valued in MCBS SCR Own Funds 0175 0 0 SCR Own Funds SCR Own Funds 0 225 SCR Own Funds 0 225 Own Funds (240) (150) SCR Own Funds (240) (150) SCR In EUR mio In EUR mio > At this stage Ageas considers it impossible to estimate the probability of success of the ongoing litigation and/or the possible magnitude of any indemnity the company would be exposed to. Therefore no capital charges have been foreseen for the legacy litigation aside from the provision of EUR 130 mio following the 29/7/2014 Amsterdam Court of Appeal decision (FortisEffect). > Such indemnity would not affect the solvency of the Insurance activities.
RISK APPETITE & CAPITAL MANAGEMENT
35 SCR &ageas Own Fundsageas leading in capital management RISK APPETITE & CAPITAL MANAGEMENT Risk appetite MAC RA : Risk appetite > Budget agreed upon within the Board for taking risk in pursuit of strategic objectives > RA limited to 40% Insurance Own Funds > Measured under 1/30 loss event > Quarterly stress test on actual Risk Consumption > Local risk profile & local risk appetite MAC: Minimum acceptable capital > Capitalization level we really want to protect > Group target: MAC = SCRageas
36 Free Surplus Risk appetite MAC RISK APPETITE & CAPITAL MANAGEMENT > Remember: Expected dividend already deducted from Solvency IIageas SCRageas 40% Own Funds 175% SCR ageas Target Capital Insurance SCR &ageas Own Fundsageas leading in capital management FREE FUNDS OWN FUNDS
37 RISK APPETITE & CAPITAL MANAGEMENT Target Capital Insurance @ 175% SCRageas
38 RISK APPETITE & CAPITAL MANAGEMENT Overview relevant capital management ratios for Ageas Insurance FY ‘14 Main concept Definition % SCRageas % Own Fundsageas Own Funds (OF) Solvency II Own Funds 7,808 186% Target Capital (TC) How much capital do we need given appetite? 7,330 175% Risk Appetite (RA) 40% of Own Funds 3,123 40% Minimum Acceptable Capital SCR (1/200 loss) ageas 4,208 Capital Consumption (CC) How much capital are we consuming? 6,950 Risk Consumption (RC) Actual (1/30 loss) 2,742 35% Minimum Acceptable Capital SCR (1/200 loss)ageas 4,208 In EUR mio
39 Bull’s eye reflects past management decisions in terms of capital discipline FY ‘14 RISK APPETITE & CAPITAL MANAGEMENT Size of the bubbles is relative to Own Funds Solvency II ageas Belgium Insurance Asia Continental Europe UK 10% 20% 30% 40% 50% 60% 70% Risk Consumption as % of Own Funds 250% 200% 150% 100%
40 Current Solvency levels & risk profile give confidence about sustainability of upstream Net profit FY ‘14 Dividend Overall observations Read-through for cash upstream BE 392 294 Low volatility - low interest rate & spread risk - very well capitalised High level of cash upstream sustainable UK* 117 ≈ 70 Low volatility – short tail business Moderate capitalization in line with moderate risk profile Upstream level depending on approval Partial Internal Model Non-Life CEU* 56 ≈ 45 Mix of stable Non-Life & Life exposed to market risk – Appropri- ately capitalised after capital management actions in 2014 Reasonable dividend upstream Asia* 172 ≈ 50 Overall well capitalised NCP’s – AICA in process of being sold Mix of capital demanding & some cash generating NCPs RISK APPETITE & CAPITAL MANAGEMENT In EUR mio * Including NCP
SENSITIVITIES
42 AGEAS INSURANCE SOLVENCY SENSITIVITIES Adequately capitalised even after severe stress tests FY ‘14 As per 31/12/14 Assumption Insurance Solvency Base case Before stress 186% Equity Down 30% 189% Spread 75% of SF capital charge for corporates applied to all bonds 175% Yield curve Down 1% (floor 0%, no UFR changes) 162% Property Down 20% 184% Ultimate Forward Rate (UFR) Divided by 2 169% 0.0% 1.0% 2.0% 3.0% 5 10 15 20 25 30 35 40 45 50 Base FY '14 Yield curve down 1% UFR div.2
FUTURE REPORTING
44 EXTERNAL FUTURE REPORTING IN QUARTERLY RESULTS Broader than current reporting on Solvency I > As of FY 2015 > On quarterly basis > SCR & Own Funds per segment > Reconciliation IFRS equity to Solvency II Own Funds > SCR per risk type > Standard formula (PIM when approved) + Solvency IIageas
CONCLUSIONS
46 CONCLUSIONS Solid base for a smooth transition Ageas uses Solvency for capital management & risk appetite ageas Floored by Local Solvency constraints High quality of Own Funds without any material reliance on transitional mesures Remaining uncertainties on Insurance level manageable Contingent liabilities General Account excluded Target Insurance Solvency II 175% ageas FY’14 & 6M ‘15 Solvency position comfortably above target Risk appetite 40% Own Funds Clear limit on risk taking & acceptable volatility levels Resulting sensitivities manageable Effective risk position clearly within limits Ageas will continue to deliver on its commitments Continuation of Ageas’s policy on upstream & dividend pay-out Material impact on business choices already factored in day-to-day management
ANNEXES
48 ANNEXES SCR per risk type Description Market Reduction in value of assets due to market movements in interest rates, spreads, equity, property & currencies. NL Underwriting Losses due unfavourable experience in non-life loss ratios, unfavourable loss development, and catastrophic events. Life Underwriting Losses due to unfavourable experience in life underwriting assumptions such as mortality rates, lapses & expenses. Operational Losses due to failure in internal processes or other external events. Health Losses due to unfavourable experience in health underwriting assumptions such as mortality & disability rates, expenses & medical expense inflation. Counterparty Default Losses due to counterparty defaults on cash & derivative exposures, reinsurance recoverables & residential mortgage loans. Non Controlled Participations Non diversified impact of Tesco & Luxembourg Intangible Reduction in value of intangible assets (intellectual property…) Profit Sharing mitigation Loss absorbing effect due to a reduction in policyholder discretionary benefits. Diversification Reduction in required capital due to the non fully correlated sub-risks. LADT Loss absorbing effect due to the effect of deferred taxation.
49 Glossary AC consistent value of obligations. Available Capital. It is defined by EIOPA and based on the companies’ valuation of the market – consistent value of assets minus the market – CC Capital Consumption. It is defined as sum of SCRageas and Risk Consumption. Eligible Own Funds Capital (either on or off – balance sheet) which, under regulatory rules, may be taken into account (fully or partially) in determining the insurer’s available capital for Solvency purposes. It corresponds to AC Own Funds minus the non-transferable Own Funds. MCR Minimum Capital Requirement. It is the capital level representing the final threshold that triggers ultimate supervisory measures in the event that it is breached. Under standard model, it is considered as 40% of SCR. Non-transferable Own Funds The amount of the Own Funds that cannot be available to upstream to Ageas group, currently it consists of the diversification between the controlled entities and the excess that is attributable to an outside shareholders in a controlled entity. Own Funds Under Solvency II, capital is referred to as Own Funds. For Solvency II purposes the Own Funds are divided in tier 1 unrestricted, tier 1 restricted 2 and 3 to classify the “quality” of the Own Funds items. IM Internal Model. PIM Partial Internal Model. RA Risk Appetite. The budget foreseen for taking risk in pursuit of strategic objectives, limited to 40% of Own Funds. RC Risk Consumption. It is defined as an impact of 1 in 30 shock on the Own Fund. SCR Solvency Capital Requirement. It is the amount of capital to be held by an insurer to meet the Pillar I requirements under the Solvency II regime. The SCR may be calculated using either approved (Partial) internal model ((P)IM) or the standard formula (SF). SCR Ageas This SCR is tailor-made to Ageas (in comparison to SCR SF), specifically on Non-Life risk and spread risk. It is used for Risk and Capital management. SF Standard Formula. TC Target Capital. It is the amount of capital that is aimed to be held in Ageas. Currently, it is considered as 175% of SCR .ageas ANNEXES
50 Ageas will make very limited use of transitionals Transitional measures provided by EIOPA Ageas choices* To insurers in run-off by 01/01/16, a 3 or 5 year  Repackaged loans : requirements only apply if new underlying exposures added or substituted after 31/12/14  Currency risks Exposure to any member states’ central governments or central banks denominated state will be treated in the same way as domestic currency exposures (2 years)  Capital charge for equities bought on or before 01/01/16 can be phased in over 7 years using the 22% charge ap- plying under the duration-based approach as a starting point  Insurers that meet Solvency I Solvency requirements, will have up to 2 years, until 31/12/17, to comply with Solvency II SCR requirements  Firms can apply for approval of internal models for part of a group where a firm and its ultimate parent are situated in the same member state (6 years)  Valuation of technical provisions according to Solvency II principles with adjustment to relevant risk-free rate term structure, taking into account the level of Solvency I interest rates (16 years).  Deduction to technical provisions applied at the level of homogeneous risk groups (16 years)  Consolidation of third country activities based on local rules during Preparatory Phase will still ultimately be subject to an equivalence assessment as set out in the Directive & Delegated Acts  3 years extended reporting deadlines – 4th year Solvency compliant  Solvency I compliant capital instruments issued before 01/01/16 will be grandfathered for up to 10 years - possible disadvantages for new already Solvency II compliant instruments  *Ageas choices @ group level ANNEXES
51 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 assump- tions and involve known and unknown risks and uncertainties that could cause actual re- sults, 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 con- tained in this presentation, including the pro forma information contained herein, is unaudit- ed 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 2015 - A smooth transition to Solvency II

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Investor Day 2015 - A smooth transition to Solvency II

  • 1.
  • 2.
    2 Speakers Emmanuel Van Grimbergen GroupRisk Officer Filip Coremans Chief Risk Officer
  • 3.
    3 SOLVENCY I SOLVENCY II Basicprinciples Results Standard Formula Results Solvency II ageas RISK APPETITE & CAPITAL MANAGEMENT SENSITIVITIES FUTURE REPORTING CONCLUSIONS
  • 4.
  • 5.
    5 Ageas’s current reporting per segment FY ‘14& 6M ‘15 SOLVENCY I 4,451 5,800 8,669 10,125 4,218 4,325 4,630 5,828 8,848 10,153 4,218 4,325 179 28 > Under Solvency I expected dividends are only taken into account at year end 2,240 2,905 2,516 365 2,524 396 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 FY 14 6M 15 1,066 1,061 450 1,271 457 1,672 2,461 2,004 733 789 616 604 4,756 5,430 845 953 480 557 Belgium UK CEU Asia Excess Capital RMC Total Ageas GAIn EUR mio Solvency ratio 189% 215% 231% 241% 176% 173% 273% 312% 206% 234% 210% 235%
  • 6.
    6 A straight forward calculation mechanism SOLVENCY I Required Minimum Capital (RMC) Volumebased approach with simple formula In % of Life technical liabilities, Non-Life premiums & capital at risk Unrealised Gains on fixed income eliminated from regulatory capital Life technical liabilities @ interest rates embedded in each policy Non Controlled Participations (NCP) included @ our share – RMC based on local rules Available capital = IFRS equity & correction prudential filters Ageas specific General
  • 7.
    7 Capital management decisions based on IFRS Solvency SOLVENCY I Dividend determined byIFRS net profit Target Insurance Solvency I ratio Ageas = 200% Risk appetite focused on protecting Solvency I ratio & net profit Dividend @ 40-50% of IFRS Insurance net profit Capital upstream subject to Local Solvency Solvency I capital requirement vs. dividend upstream Ageas specific General
  • 8.
  • 9.
    9 SOLVENCY II BASIC PRINCIPLES From simplistic but stable SolvencyI to realistic but more volatile Solvency II Market consistent valuation Risk based approach European regulation Framework > Reflecting economic situation vs. accounting view > Available capital (Own Funds) on market value / marked to model basis > More complex > Integrated risk view > Choice between standard formula or (partial) internal model > Solvency Capital Requirement (SCR) > Based on effective risks taken within company, covering both assets & liabilities > Required capital influenced by risk mitigation actions > In principle more level playing field
  • 10.
    10 Pillar I Three-pillar framework strives for anintegrated risk view BASIC PRINCIPLES Possible calculation methods Ageas specific Reporting Interaction level Risk Quantification > Standard Formula > (Partial) Internal model > Standard Formula (PIM in future) > Minimum Capital Requirement (MCR) > Solvency Capital Requirement (SCR) > Approval by regulator Risk Management > Company specific > Ageas view > Own Risk & Solvency Assessment (ORSA) > Supervisory review process Risk Communication > Solvency & Financial Condition Report (SFCR) Regular Super- visory Report (RSR) Quarterly results (IFS) > Transparency & disclosure Pillar II Pillar III SOLVENCY II
  • 11.
    11 Three possible computation methods for risk quantification under PillarI SOLVENCY II BASIC PRINCIPLES > Currently use of Standard Formula > Approval process PIM Non-Life ongoing Internal Model Partial Internal Model (PIM) Standard Formula Standard calculation method based on risk indicators & typology as defined by EIOPA Full internal model tailored to the company’s risk profile Blended approach, combining internal model with Standard Approach Ageas specific General
  • 12.
    12 Solvency II ratio based onMarket Consistent Balance Sheet (MCBS) BASIC PRINCIPLES Fair value liabilities Fair value assets Own Funds Including qualifying subdebt = Solvency II ratio Own Funds SCR Free Funds SCR SOLVENCY II
  • 13.
    13 SCR is level ofcapital expected to be required by regulators SOLVENCY II BASIC PRINCIPLES Fair value assets SCR Solvency Capital Requirements Fair value SCR99.5% loss percentile Estimated value after 1/200 year events 99.5% confidence level To absorb significant losses in 1 in 200 year events First supervisory intervention level when Free Funds < zero 1 year time horizon SCR Free Funds Fair value liabilities
  • 14.
    14 Major risk types which require capital BASIC PRINCIPLES SimilarCatastrophe to Life - Mortality - Longevity - Disability / Morbidity - Lapse - Expense - Revision Operational RiskAdjustments Market risk Health Default Life IntangibleNon-Life - Interest rate - Equity - Property - Spread - Currency - Concentration - Mortality - Longevity - Disability / Morbidity - Lapse - Expense - Revision - Catastrophe - Premium reserve - Lapse - Catastrophe Basic SCR - Premium reserve - Lapse Non-Similar to Life SCRSOLVENCY II
  • 15.
    15 Main adjustments aside capital charges by risktype SOLVENCY II BASIC PRINCIPLES Adjustments Diversification benefits Loss Absorption capacity of Deferred Tax (LADT) Non-Controlled Participations (NCP) Losses can partly be compensated by tax savings – subject to recoverability test of tax benefits Not all risks will crystallize at the same moment provided that the underlying sources of risk, are not fully dependent SCR European NCP’s (Luxembourg & Tesco) do not diversify with other risks
  • 16.
    16 MCR: Final treshold SOLVENCY II BASIC PRINCIPLES Fair value liabilities Fair value assets SCR Floor of25% SCR & cap of 45% of SCR Breach triggers very strict recovery plan Non compliance with recovery plan induces mandatory stop of new business & supervisor taking over MCR: Minimum Capital Requirement = part of SCR Free Funds MCR
  • 17.
  • 18.
    18 Ageas chooses quality and sustainability Consolidation scope SOLVENCY II RESULTS STANDARD FORMULA >In principle comparable to IFRS consolidation scope > Belgium treated as 100% Owned – liability for Put option in General Account Non-Controlled Participations (NCP) > European participations (Tesco & Luxembourg): Solvency II Own Funds & SCR pro rata included - no diversification benefits > Non-European participations (Turkey, Thailand, Malaysia, India, China, Philippines & Vietnam) are not included in Solvency II ratio - reported separately based on Local Solvency > If any of the Non-European participations would become “deemed equivalent”, same treatment as the European participations Expected dividend > Expected pay-out by Ageas deducted from Own Funds in each quarter, based on 40% pay-out over Insurance net profit > Final calculations @ year-end
  • 19.
    19 Non-transferable Own Funds SOLVENCY II RESULTS STANDARD FORMULA Ageas chooses qualityand sustainability > Ageas takes a conservative approach > A “non-transferable” is deducted from Own Funds equal to Diversification benefits between controlled entities in SCR Free Funds belonging to 3rd party shareholders for controlled entities that are not fully owned (Italy, Portugal, & Belgium) Transitional measures > Ageas makes no use of transitional measures except for Grandfathering - up to 10 years Reporting deadlines Put option on AG Insurance > In line with IFRS treated as if put option were exercised: Ageas owns 100% & recognizes a liability at holding level > The non-transferable on AG Insurance within Insurance Own Funds is offset within General Account > This treatment assures no changes in Insurance Solvency in case the put option is NOT exercised in 2018
  • 20.
    20 Solvency II ratio Insurance @ 177% FY‘14 In EUR mio SOLVENCY II RESULTS STANDARD FORMULA Belgium UK CEU Asia Free Funds SCR Total Ageas GA Solvency II ratio Own Funds GA 1,355 37 1,318 Diversification / Non- transferable (592) (1,827) (1,235) Belgium 4,115 2,873 6,988 243% 957 1,014 57 UK 106% CEU 1,036 331 705 147% Asia 492 410 82 120% Insurance 3,350 4,353 7,703 177% Ageas Group 4,668 4,390 9,058 206% Non-European NCP 681 1,890 1,209 278%
  • 21.
    21 Bridge from Insurance IFRS Equity toInsurance Solvency II Own Funds FY ‘14 11,423 1,606 1,440 2,842 9,530 7,703 (1,605) (780) (1,827) (4,438) (550) (360) (47) In EUR mioSOLVENCY II RESULTS STANDARD FORMULA IFRS Equity Expected Prop. Subord. Derecognition Reval. RE Derecognition Reval. Reval. HTM Other Total Insur- Non Eligible Dividend Conso Liabilities NCP goodwill Techn. prov. /particip./other ance Own transferable Insurance /DAC/VOBA investments Funds Own Funds
  • 22.
    22 Solvency Capital Requirements per risk type FY‘14 In EUR mio 4,270 843 1,109 (534) 4,353 (1,122)324 (1,753) 220445 164 387 SOLVENCY II RESULTS STANDARD FORMULA Market Counterparty Life Health Non-Life Intangible Operational European Diversification Loss mit. Loss mit. SCR Default Asset NCP between techn. prov. taxes risk types & controlled entities
  • 23.
    23 No aggressive leverage & excellent quality of GroupOwn Funds FY ‘14 > Current Hybrid Tier 1 capital consists of grandfathered instruments (up to 2026) > Ageas slightly above maximum of 20% Tier 1 Hybrid* in total Tier 1 Gradual replacement by new Tier 2 issues > Substantial capacity to issue Tier 2 instruments Allowed up to 50% of SCR Current level @ Ageas 2% of SCR 9,058 1% Tier 3 1% Tier 2 76% 21% Tier 1 Unrestricted Tier 1 Hybrid* * This amoount includes Fixed Rate Reset Perpetual Subordinated (550 USD @ 6.75%) issued by AG Insur- ance - could be reclassified to Tier 2 In EUR mio SOLVENCY II RESULTS STANDARD FORMULA
  • 24.
    24 Prudent approach of eligible Own Funds Insurance pool FY‘14 Free Funds belonging to 3rd party shareholders in controlled entitiesBelgium Portugal Italy In EUR mio (1,115) (592) Non-transferable Own Funds (1,827) (592) (92) (29) Amount equal to diversification benefits between controlled entities in SCR Diversification between controlled entities SOLVENCY II RESULTS STANDARD FORMULA
  • 25.
    25 General Account: Bridge from IFRS Equity toSolvency II Own Funds FY ‘14 (499) 1,355 590 1,115 149 IFRS Equity Non-transferable AG Insurance after dividend Subdebt Expected Dividend & Other Own Funds In EUR mio > Cost of Put option on AG Insurance (EUR 1,391 mio) deducted from IFRS equity > Non-transferable on AG Insurance (EUR 1,115 mio) re-added SOLVENCY II RESULTS STANDARD FORMULA
  • 26.
    26 Large amount of capitalin NCP not accounted for in Solvency II ratio FY ‘14 In EUR mio @ Ageas’s part IFRS capital Local capital requirements Local available capital Local Solvency ratio SOLVENCY II RESULTS STANDARD FORMULA Turkey 146 48 69 146% India 19 3 19 553% Thailand 395 115 563 488% China 730 239 655 275% Malaysia 315 276 584 212% Total 1,604 681 1,890 278%
  • 27.
  • 28.
    28 Main improvements on Standard Formula FY ‘14 SOLVENCYII RESULTS SOLVENCY II ageas SCR SF per risk type SCRageas per risk type Market Counterparty Default Life Health Non-Life Intangible Asset Operational European NCP Diversification Loss mit. between risk techn. prov. types & con- trolled entities Loss mit. taxes SCR 4,270 4,507 843 843 1,109 736 (534) (694) 4,353 4,208 (1,122) (1,180) 324 324 (1,753) (1,545) 220 220 445 445 164 164 387 387 In EUR mio Market Counterparty Life Health Non-Life Intangible Operational European Diversification Loss mit. Loss mit. SCR Default Asset NCP between risk techn. prov. taxes types & con- trolled entities
  • 29.
    29 Partial Internal model Non-Life Underwriting FY ‘14 Why Inscope Out of scope Status Impact > Property & Casualty = Motor, Household & Other lines > Accidents > Nature of Ageas’s Non-Life portfolio is focused on Personal lines & SME - differs from approach in Standard Formula. > Insurance Solvency ratio up 13pp > Application filed with regulator for acceptance Solvency II (pillar I) > Timing: expected beginning 2016 > What if not accepted - PIM will still be used for internal risk & capital management (pillar II) > Workmen’s compensation > Health - medical & income expenses SOLVENCY II RESULTS SOLVENCY II ageas
  • 30.
    30 Internal view Market risk focussingon spread risk FY ‘14 Types of spread risk Ageas specific In scope Impact > Insurance Solvency ratio down 4pp > Fundamental spread risk = linked to default or realised capital losses on sale > Non-fundamental spread risk = linked to short-term movements in the market > Long-term nature of liabilities > Bonds in principle kept to maturity > Fundamental spread risk included in SCR > Both on government & corporate bonds > Non-fundamental spread risk excluded > Proxy of concept of matching / volatility adjustment ageas SOLVENCY II RESULTS SOLVENCY II ageas
  • 31.
    31 Solvency II Insurance ageas @ 186% FY‘14 Solvency II ratio GA 1,333 27 1,307 Diversification / Non- transferable (526) (1,197) In EUR mio Belgium UK CEU Asia Free Funds SCR Total Ageas GA SOLVENCY II RESULTS SOLVENCY II ageas (1,723) 732 282 1,014 UK 139% Non-European NCP Ageas 681 1,890 1,209 ASCEU 4,906 4,234 Insurance 9,140 Belgium 278% Own Funds 4,095 2,893 3,6006,988 4,208 242% 216% 1,036 285 7,807 751 138% 492 134 358 138% 186%
  • 32.
    32 The complete overview FY ‘14& 6M ‘15 * In Solvency I framework Non-European NCP’s are included in Insurance ratio on IFRS equity basis whereas in Solvency II these NCP’s are not taken into consideration, but shown separately based on Local Solvency. FY ‘14 BE UK CEU ASIA Ageas insurance Ageas group NCP @ LOCAL SOLVENCY Solvency I 189% 231% 176% 273% 206% 210% * Standard Formula 243% 106% 147% 120% 177% 206% 278% Solvency II ageas 242% 139% 138% 138% 186% 216% 278% 6M ‘15 Solvency I 215% 241% 173% 312% 234% 235% * Standard Formula 252% 105% 150% 127% 178% 210% 294% Solvency II ageas 252% 139% 133% 141% 188% 221% 294% SOLVENCY I & II RESULTS
  • 33.
    33 Some uncertainties remain, but impact on Insurance Solvencyis manageable Contingent Legal Liabilities SOLVENCY II RESULTS Possible impact on SF Possible impact on SIIageas Uncertainty Ageas treatment Bonds/loans guaranteed by regional Governments or local authorities Consolidation Ancillary services company (Interparking) Parking concessions (Interparking) Treated as sovereign debt Proportional consolidation Liquid market thus valued in MCBS SCR Own Funds 0175 0 0 SCR Own Funds SCR Own Funds 0 225 SCR Own Funds 0 225 Own Funds (240) (150) SCR Own Funds (240) (150) SCR In EUR mio In EUR mio > At this stage Ageas considers it impossible to estimate the probability of success of the ongoing litigation and/or the possible magnitude of any indemnity the company would be exposed to. Therefore no capital charges have been foreseen for the legacy litigation aside from the provision of EUR 130 mio following the 29/7/2014 Amsterdam Court of Appeal decision (FortisEffect). > Such indemnity would not affect the solvency of the Insurance activities.
  • 34.
  • 35.
    35 SCR &ageas Own Fundsageas leadingin capital management RISK APPETITE & CAPITAL MANAGEMENT Risk appetite MAC RA : Risk appetite > Budget agreed upon within the Board for taking risk in pursuit of strategic objectives > RA limited to 40% Insurance Own Funds > Measured under 1/30 loss event > Quarterly stress test on actual Risk Consumption > Local risk profile & local risk appetite MAC: Minimum acceptable capital > Capitalization level we really want to protect > Group target: MAC = SCRageas
  • 36.
    36 Free Surplus Risk appetite MAC RISK APPETITE & CAPITAL MANAGEMENT > Remember: Expecteddividend already deducted from Solvency IIageas SCRageas 40% Own Funds 175% SCR ageas Target Capital Insurance SCR &ageas Own Fundsageas leading in capital management FREE FUNDS OWN FUNDS
  • 37.
  • 38.
    38 RISK APPETITE & CAPITAL MANAGEMENT Overview relevant capital management ratios for Ageas Insurance FY‘14 Main concept Definition % SCRageas % Own Fundsageas Own Funds (OF) Solvency II Own Funds 7,808 186% Target Capital (TC) How much capital do we need given appetite? 7,330 175% Risk Appetite (RA) 40% of Own Funds 3,123 40% Minimum Acceptable Capital SCR (1/200 loss) ageas 4,208 Capital Consumption (CC) How much capital are we consuming? 6,950 Risk Consumption (RC) Actual (1/30 loss) 2,742 35% Minimum Acceptable Capital SCR (1/200 loss)ageas 4,208 In EUR mio
  • 39.
    39 Bull’s eye reflects past management decisionsin terms of capital discipline FY ‘14 RISK APPETITE & CAPITAL MANAGEMENT Size of the bubbles is relative to Own Funds Solvency II ageas Belgium Insurance Asia Continental Europe UK 10% 20% 30% 40% 50% 60% 70% Risk Consumption as % of Own Funds 250% 200% 150% 100%
  • 40.
    40 Current Solvency levels & risk profilegive confidence about sustainability of upstream Net profit FY ‘14 Dividend Overall observations Read-through for cash upstream BE 392 294 Low volatility - low interest rate & spread risk - very well capitalised High level of cash upstream sustainable UK* 117 ≈ 70 Low volatility – short tail business Moderate capitalization in line with moderate risk profile Upstream level depending on approval Partial Internal Model Non-Life CEU* 56 ≈ 45 Mix of stable Non-Life & Life exposed to market risk – Appropri- ately capitalised after capital management actions in 2014 Reasonable dividend upstream Asia* 172 ≈ 50 Overall well capitalised NCP’s – AICA in process of being sold Mix of capital demanding & some cash generating NCPs RISK APPETITE & CAPITAL MANAGEMENT In EUR mio * Including NCP
  • 41.
  • 42.
    42 AGEAS INSURANCE SOLVENCY SENSITIVITIES Adequately capitalised even after severe stress tests FY‘14 As per 31/12/14 Assumption Insurance Solvency Base case Before stress 186% Equity Down 30% 189% Spread 75% of SF capital charge for corporates applied to all bonds 175% Yield curve Down 1% (floor 0%, no UFR changes) 162% Property Down 20% 184% Ultimate Forward Rate (UFR) Divided by 2 169% 0.0% 1.0% 2.0% 3.0% 5 10 15 20 25 30 35 40 45 50 Base FY '14 Yield curve down 1% UFR div.2
  • 43.
  • 44.
    44 EXTERNAL FUTURE REPORTING IN QUARTERLY RESULTS Broader than current reportingon Solvency I > As of FY 2015 > On quarterly basis > SCR & Own Funds per segment > Reconciliation IFRS equity to Solvency II Own Funds > SCR per risk type > Standard formula (PIM when approved) + Solvency IIageas
  • 45.
  • 46.
    46 CONCLUSIONS Solid base for asmooth transition Ageas uses Solvency for capital management & risk appetite ageas Floored by Local Solvency constraints High quality of Own Funds without any material reliance on transitional mesures Remaining uncertainties on Insurance level manageable Contingent liabilities General Account excluded Target Insurance Solvency II 175% ageas FY’14 & 6M ‘15 Solvency position comfortably above target Risk appetite 40% Own Funds Clear limit on risk taking & acceptable volatility levels Resulting sensitivities manageable Effective risk position clearly within limits Ageas will continue to deliver on its commitments Continuation of Ageas’s policy on upstream & dividend pay-out Material impact on business choices already factored in day-to-day management
  • 47.
  • 48.
    48 ANNEXES SCR per risk type Description MarketReduction in value of assets due to market movements in interest rates, spreads, equity, property & currencies. NL Underwriting Losses due unfavourable experience in non-life loss ratios, unfavourable loss development, and catastrophic events. Life Underwriting Losses due to unfavourable experience in life underwriting assumptions such as mortality rates, lapses & expenses. Operational Losses due to failure in internal processes or other external events. Health Losses due to unfavourable experience in health underwriting assumptions such as mortality & disability rates, expenses & medical expense inflation. Counterparty Default Losses due to counterparty defaults on cash & derivative exposures, reinsurance recoverables & residential mortgage loans. Non Controlled Participations Non diversified impact of Tesco & Luxembourg Intangible Reduction in value of intangible assets (intellectual property…) Profit Sharing mitigation Loss absorbing effect due to a reduction in policyholder discretionary benefits. Diversification Reduction in required capital due to the non fully correlated sub-risks. LADT Loss absorbing effect due to the effect of deferred taxation.
  • 49.
    49 Glossary AC consistent valueof obligations. Available Capital. It is defined by EIOPA and based on the companies’ valuation of the market – consistent value of assets minus the market – CC Capital Consumption. It is defined as sum of SCRageas and Risk Consumption. Eligible Own Funds Capital (either on or off – balance sheet) which, under regulatory rules, may be taken into account (fully or partially) in determining the insurer’s available capital for Solvency purposes. It corresponds to AC Own Funds minus the non-transferable Own Funds. MCR Minimum Capital Requirement. It is the capital level representing the final threshold that triggers ultimate supervisory measures in the event that it is breached. Under standard model, it is considered as 40% of SCR. Non-transferable Own Funds The amount of the Own Funds that cannot be available to upstream to Ageas group, currently it consists of the diversification between the controlled entities and the excess that is attributable to an outside shareholders in a controlled entity. Own Funds Under Solvency II, capital is referred to as Own Funds. For Solvency II purposes the Own Funds are divided in tier 1 unrestricted, tier 1 restricted 2 and 3 to classify the “quality” of the Own Funds items. IM Internal Model. PIM Partial Internal Model. RA Risk Appetite. The budget foreseen for taking risk in pursuit of strategic objectives, limited to 40% of Own Funds. RC Risk Consumption. It is defined as an impact of 1 in 30 shock on the Own Fund. SCR Solvency Capital Requirement. It is the amount of capital to be held by an insurer to meet the Pillar I requirements under the Solvency II regime. The SCR may be calculated using either approved (Partial) internal model ((P)IM) or the standard formula (SF). SCR Ageas This SCR is tailor-made to Ageas (in comparison to SCR SF), specifically on Non-Life risk and spread risk. It is used for Risk and Capital management. SF Standard Formula. TC Target Capital. It is the amount of capital that is aimed to be held in Ageas. Currently, it is considered as 175% of SCR .ageas ANNEXES
  • 50.
    50 Ageas will make very limiteduse of transitionals Transitional measures provided by EIOPA Ageas choices* To insurers in run-off by 01/01/16, a 3 or 5 year  Repackaged loans : requirements only apply if new underlying exposures added or substituted after 31/12/14  Currency risks Exposure to any member states’ central governments or central banks denominated state will be treated in the same way as domestic currency exposures (2 years)  Capital charge for equities bought on or before 01/01/16 can be phased in over 7 years using the 22% charge ap- plying under the duration-based approach as a starting point  Insurers that meet Solvency I Solvency requirements, will have up to 2 years, until 31/12/17, to comply with Solvency II SCR requirements  Firms can apply for approval of internal models for part of a group where a firm and its ultimate parent are situated in the same member state (6 years)  Valuation of technical provisions according to Solvency II principles with adjustment to relevant risk-free rate term structure, taking into account the level of Solvency I interest rates (16 years).  Deduction to technical provisions applied at the level of homogeneous risk groups (16 years)  Consolidation of third country activities based on local rules during Preparatory Phase will still ultimately be subject to an equivalence assessment as set out in the Directive & Delegated Acts  3 years extended reporting deadlines – 4th year Solvency compliant  Solvency I compliant capital instruments issued before 01/01/16 will be grandfathered for up to 10 years - possible disadvantages for new already Solvency II compliant instruments  *Ageas choices @ group level ANNEXES
  • 51.
    51 Certain of thestatements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assump- tions and involve known and unknown risks and uncertainties that could cause actual re- sults, 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 con- tained in this presentation, including the pro forma information contained herein, is unaudit- ed 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.