Christophe Boizard on the upcoming improvements in financial disclosures

1. Ageas
Upcoming
improvements in
financial disclosures
Christophe Boizard
CFO Ageas
INVESTOR DAY 2012

2. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

3. Introduction
Ageas has achieved a lot in the past 3 years
 Clarify Ageas’s structure
with focus on valuation
of General Account
 Full quarterly reporting
 Improved disclosures on
 legacy issues
 net cash position
 shareholders’ equity
 investment portfolio
2010
2009
 Improved disclosure
 Improved disclosures on
on Insurance activities
Insurance activities with
 investment portfolio
implementation of
 solvency
segment reporting:
 operating
performance
 Detailed disclosures on
SE-sovereigns




2011
2012
 Shortening quarterly
reporting deadlines
 Dedicated call on EV report
Belgium
CEU
UK
Asia
Coming from a strong banking culture, Ageas has put a lot of effort in adapting its
reporting to reach market standard in terms of pure insurance reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
2

4. Introduction
Situation today
Context: general underperformance of insurance industry over the past 15 years
 economic uncertainty & market volatility (low interest rate environment etc.)
 complex accounting with black box effect
 seemingly unconnected disclosures & reporting
 perception of poor management & lack of strategic coherence
 poor & insufficient reporting
 increased assistance needed to understand link between operating performance,
risk & capital generation
 Study by CFO Forum Investor Relations Working Group to better understand
the reasons & identify possible solutions
 Survey of fund manager perceptions of the insurance sector
 Supplemented with investors / buy-side analysts questionnaire on financial
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
3

5. Introduction
Key findings CFO forum study 19 April 2012
 Macro issues are key concern but financial reporting next in line
 Reporting problems mostly linked to life business
 Life: a long search for consistent & relevant metrics
 IFRS earnings
- important because determining dividend
- limited visibility as to key drivers of profitability
- inconsistencies across the sector
 EV / Value mgmt
- complexity
- inconsistency in calculation & assumptions
- specific interest in VANB & relation to capital efficiency
 Cash/Free capital - impact Solvency II
- minimal information on interaction assets/liabilities
- free surplus generation of life business (part of MCEV report)
 Non-Life
 Less perceived major issue but significant room for improvement remains
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
4

6. Introduction
Results of study for CFO Forum 19 April 2012
 Areas of reporting that should be
key priorities
5
4
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
5

7. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

8. Ageas’s track record on identified key areas of reporting (1/6)
 insurance segments
& General Account
5
 inflow per product line
 balance sheet
4
 P&L
3
 combined ratio
 equity / solvency
2
 details on legacy items
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
7

9. Ageas’s track record on identified key areas of reporting (2/6)
5
4
 cash position
 discretionary capital
General Account
 excess capital per
segment
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Free capital disclosure
crippled by unstabilized
solvency regulation
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
8

10. Ageas’s track record on identified key areas of reporting (3/6)
 FY embedded
value report
 dedicated call for
analysts &
investors with
Risk Officer
5
4
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
No stable definition
despite CFO forum efforts
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
9

11. Ageas’s track record on identified key areas of reporting (4/6)
5
4
 FY VANB disclosure
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
10

12. Ageas’s track record on the identified areas of reporting (5/6)
 solvency ratio, regulatory
capital & excess capital
per segment
 calculation regulatory capital
based on rules Belgian
regulator/IFRS
 reconciliation equity &
regulatory capital on
consolidated basis
5
4
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
11

13. Ageas’s track record on identified key areas of reporting (6/6)
 as from FY 2012
 giving a sneak pre-view
5
NOW
4
3
2
1
0
Group IFRS
segment
disclosures
Cash / free capital Embedded value
disclosures
reporting
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
New business
metrics
(such as IRRs and
payback periods)
Solvency
disclosures
Life IFRS 'sources
of
earnings' or
'margin
analysis'
12

14. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

15. Margin analysis Life Insurance (1/3)
More detailed reporting as of FY 2012, sneak preview
Income Statement - Life
in EUR million
Gross inflow Life
6M 12
3,427.8
6M 11
3,790.7
Change
(9.6%)
Q2 12
1,793.6
Q2 11
1,725.7
Change
3.9%
Q1 12
1,634.2
Operating margin
Non-allocated other income and expenses
Result before taxation
Income tax expenses
Non-controlling interests
Net result attributable to shareholders
276.3
50.9
389.5
( 122.7 )
61.4
205.4
77.5
( 23.1 )
89.0
( 20.9 )
16.6
51.5
*
*
*
*
*
*
106.5
26.2
163.2
( 59.4 )
23.8
80.0
( 52.8 )
( 61.2 )
( 97.1 )
18.9
( 23.9 )
( 54.3 )
*
*
*
*
*
*
169.8
24.7
226.3
( 63.3 )
37.6
125.4
Income Statement - Life
in EUR million
Gross inflow Life
Guaranteed
6M 12
2,943.3
Risk result
Investment result
Expense & other result
132.4
203.9
( 91.6 )
Operating margin
244.7
Key Performance Indicators - Life
in EUR million
Risk margin
Investment margin
Expense & other margin
Operating margin
Technical reserves (in EUR million)
Guaranteed
6M 12
0.50%
0.76%
(0.34%)
0.92%
54,387
Guaranteed Unit - Linked Unit - Linked
6M 11
6M 12
6M 11
2,680.2
484.5
1,110.4
119.5
16.4
( 91.3 )
7.0
0.3
24.3
5.1
(0.0)
27.8
44.6
31.6
ADDITIONAL
32.9
Guaranteed Unit - Linked Unit - Linked
6M 11
6M 12
6M 11
0.46%
0.12%
0.05%
0.06%
0.01%
(0.00%)
(0.35%)
0.42%
0.27%
0.17%
52,775
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
0.55%
11,462
0.32%
20,242
14

16. Margin analysis Non-Life Insurance (2/3)
More detailed reporting as of FY 2012, sneak preview
ADDITIONAL
Income Statement - Non-Life
in EUR million
Gross written premiums Non-Life
Net earned premiums
Operating margin
Result before taxation
Income tax expenses
Non-controlling interests
Net result attributable to shareholders
Income Statement - Non-Life
in EUR million
Gross written premiums Non-Life
Net earned premiums
Net underwriting result
Investment result
Other result
Operating margin
Key Performance Indicators - Non-Life
in EUR million
Net combined ratio
Net claims ratio
Net claims ratio Current Year
Net claims ratio Prior Year
Net expense ratio
Net underwriting ratio
Investment ratio
Other margin
Operating margin
Reserves ratio
Non-Life reserves (in EUR m)
6M 12
2,276.6
2,022.8
154.2
174.5
( 52.5 )
( 32.6 )
89.5
6M 11
2,123.3
1,631.7
69.5
81.7
( 23.3 )
( 10.4 )
48.0
Change
7.2%
24.0%
121.8%
113.7%
125.6%
214.5%
86.3%
Q2 12
1,090.0
1,033.8
118.4
124.0
( 38.4 )
( 22.4 )
63.2
Q2 11
1,021.6
847.9
44.7
42.2
( 13.2 )
( 5.8 )
23.2
Accident &
Health
6M 12
422.6
382.0
24.5
26.4
0.6
51.6
Accident &
Health
6M 11
423.6
373.6
16.3
14.3
( 2.6 )
28.1
Accident &
Health
6M 12
93.6%
69.2%
Accident &
Health
6M 11
95.6%
71.4%
78.6%
(9.3%)
24.3%
6.4%
6.9%
0.2%
13.5%
258.6%
1,975.5
Motor
Motor
Fire
6M 12
1,107.5
987.6
34.9
46.8
13.5
95.2
6M 11
972.8
689.2
9.2
30.3
5.5
45.0
6M 12
544.1
490.5
( 14.6 )
15.0
0.6
1.0
Motor
Motor
Fire
6M 12
96.5%
71.1%
6M 11
98.7%
71.2%
6M 12
103.0%
61.7%
6M 11
105.4%
62.8%
6M 12
105.9%
62.0%
6M 11
102.5%
60.3%
80.3%
(8.9%)
73.2%
(2.1%)
74.6%
(3.3%)
69.9%
(8.2%)
64.0%
(1.2%)
62.7%
(0.7%)
64.7%
(4.4%)
24.2%
4.4%
3.8%
(0.7%)
7.5%
251.0%
1,875.3
25.4%
3.5%
4.7%
1.4%
9.6%
148.2%
2,928.2
27.4%
1.3%
4.4%
0.8%
6.5%
170.8%
2,353.7
41.3%
(3.0%)
3.1%
0.1%
0.2%
82.2%
806.1
42.7%
(5.4%)
2.6%
0.1%
(2.7%)
93.0%
775.3
43.8%
(5.9%)
9.7%
0.1%
3.9%
270.9%
881.7
42.2%
(2.5%)
7.3%
0.4%
5.1%
272.6%
828.4
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
Change
6.7%
21.9%
165.0%
194.1%
191.5%
289.8%
171.9%
Q1 12
1,186.7
989.0
35.8
50.5
( 14.2 )
( 10.1 )
26.3
Fire Other lines Other lines
6M 11
538.7
416.9
( 22.7 )
11.0
0.3
( 11.4 )
6M 12
202.4
162.7
( 9.5 )
15.7
0.2
6.4
6M 11
188.2
152.0
( 3.9 )
11.0
0.6
7.8
ADDITIONAL
Fire Other lines Other lines
15

17. Margin analysis Life & Non-Life Insurance (3/3)
Major changes as of FY 2012 vs. current reporting
 For consolidated companies only
Per segment - Total Insurance
- Belgium
- UK
- CEU
- Asia
 Abolishment of technical result & towards focus on operating margin only
Life
 Per product family
- Guaranteed
- Unit-linked
Additional disclosures
- Risk result
- Investment result
- Expense & other result
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
Non-Life
- Accident & Health
- Motor
- Fire
- Other insurance
- Net earned premium
- Net Underwriting result
- Investment result
- Other result
- CY / PY Claims ratio
- Reserves ratio
16

18. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

19. Inflow reporting
Strive for a better link between top line & bottom line performance
In EUR mio
 Consolidated & Non-consolidated @ 100%
Belgium
UK
CEU
Asia
Total Ageas
Life
Life
Life
Life
Life
Non-Life
Non-Life
Non-Life
Non-Life
Non-Life
10,815
+ 20%
8,992 2,981
2,449
+ 23%
+ 10%
3,259
898
3,982
3,582
3,236
940
+ 43%
2,361
22
6M 11
6M 12
1,481
1,016 1,140
994
1,102
6M 11
6M 12
6,543
326
2,111
+ 12%
2,642
7,834
402
537
2,910
231
38
1,250
1,574
6M 11
6M 12
3,580
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
6M 11
6M 12
6M 11
6M 12
18

20. Inflow reporting
Proportional presentation improves link with bottom line view
In EUR mio
 Consolidated & Non-consolidated @ ageas share
Belgium
75%
UK
100%
Tesco
Underwriting
+ 13%
50%
Belgium
UK
CEU
Asia
Total Ageas
CEU
Consolidated
Portugal
France
Luxembourg (FY 11)
Germany
Italy
Non-consolidated
Turkey
Luxembourg (FY 12)
51%
100%
50%
100%
25%
Life
Life
Life
Life
Life
5,734
Non-Life
Non-Life
Non-Life
Non-Life
Non-Life
5,079
1,925
1,669
36%
33%
+ 10%
2,687
2,444
Asia
Consolidated
Hong Kong
Non-consolidated
Malaysia
Thailand
China
India
705
674
+ 24%
100%
31%
31%/15%
+ 13%
837
815
1,771
909
6M 12
817
38
22
6M 11
981
6M 11
6M 12
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
885
90
1,982
25%
26%
+ 8%
947
200
727
685
890
6M 11
6M 12
6M 11
3,410
3,809
1,215
111
91
1,104
6M 12
6M 11
6M 12
19

21. Funds under Management reporting
Strive for a better link between top line & bottom line performance
In EUR bn
 Consolidated & Non-consolidated @ 100%
+ 18%
Belgium
UK
CEU
Asia
Total Ageas
Life
Life
Life
Life
Life
Non-Life
Non-Life
Non-Life
Non-Life
Non-Life
121
8
102
7
+ 3%
52
54
3
3
113
+ 51%
95
41
1
+ 12%
27
49
1
50
21
40
+ 13%
0
FY 11
6M 12
2
3
2
3
FY 11
6M 12
26
0
23
1
20
22
FY 11
6M 12
0
FY 11
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
6M 12
FY 11
6M 12
20

22. “Funds under Management” renamed into “Technical reserves”
Proportional presentation improves link with bottom line view
In EUR bn
 Consolidated & Non-consolidated @ ageas share
Belgium
75%
UK
100%
Tesco
Underwriting
+ 15%
70
50%
Belgium
UK
CEU
Asia
Total Ageas
CEU
Consolidated
Portugal
France
Luxembourg (FY 11)
Germany
Italy
Non-consolidated
Turkey
Luxembourg (FY 12)
51%
100%
50%
100%
25%
36%
33%
Life
Life
Life
Life
Life
5
Non-Life
Non-Life
Non-Life
Non-Life
Non-Life
61
4
+ 3%
39
40
2
2
65
Asia
Consolidated
Hong Kong
Non-consolidated
Malaysia
Thailand
China
India
56
+ 53%
20
100%
37
0
38
13
+ 12%
0
31%
20
+ 15%
31%/15%
25%
26%
2
0
FY 11
6M 12
2
2
FY 11
6M 12
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
0
FY 11
7
0
7
13
2
7
6M 12
0
7
FY 11
6M 12
FY 11
6M 12
21

23. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

24. More complete disclosure on investment portfolio
Reporting on new asset classes as of FY 2012
EUR mio
as you know it
what it will be like as of
FY 2012 ...
ADDITIONAL
+ further breakdown of loans
63.4
59.4
Real Estate
Equity Securities
4.5
4.3
1.8
21.4
68.7
65.2
2.1
2.4
1.6
3.7
3.4
Cash and cash
equivalents
Loans
22.8
Structured credit
instruments
Corporate bonds
31.4
33.6
FY 11
6M 12
Sovereign bonds
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
FY 11
6M 12
23

25. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

26. Shareholders’ equity
Insurance equity volatile by movements in unrealized gains & losses
In EUR bn
ADDITIONAL:
split between Insurance,
General Account & UG/L
8.8
8.6
9.4
8.9
8.4
8.0
6.8
1.6
UG/L 0.4
9.9
7.6
3.3
3.2
3.1
3.2
2.8
2.7
3.2
0.5
1.2
0.8
4.5
4.7
7.6
1.1
1.0
1.4
5.0
5.2
5.2
2.0
2.3
2.4
3M 09
4.4
6M 09
9M 09
FY 09
3M 10
6M 10
9M 10
General Account
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
5.5
FY 10
7.8
8.8
1.7
1.7
1.8
1.0
1.2
0.7
0.3
5.5
5.4
(0.3)
4.8
8.1
8.3
6M 11
5.3
5.5
5.6
5.9
9M 11
FY 11
3M 12
6M 12
(0.1)
3M 11
0.5
UG/L
Insurance
25

27. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

28. Loss reserve developments
Additional reporting on segments, based on accident year as of FY 2012
 One consolidated Loss reserve development table already disclosed in Annual Report
(note 7.12), driven by IFRS requirements, based on “book year” convention.
 Additional online yearly reporting based on “accident years” at segment level &
consolidated view
ADDITIONAL
Segment X Run-off table (2011)
Accident Year as at 31 December
All material figures quoted are undiscounted
Cumulative payments at:
2002
2003
2004
2005
2006
2007
2008
2009
201
0
201
1
2002
2003
82.3
1
64.3
238.6
288.5
328.8
360.0
387.9
41
7.1
436.7
454.3
2004
2005
2006
2007
2008
2009
2010
2011
1
55.4
75.6
1
53.8
224.1
277.0
31
8.0
353.1
387.4
41 .2
1
432.6
79.2
1
60.3
232.0
285.5
330.5
373.0
402.7
428.5
83.8
1
67.9
241
.8
299.2
352.6
390.7
424.5
95.5
1
88.0
271
.8
338.7
387.9
430.4
1
07.9
21
6.7
31
2.8
377.0
432.4
1 .2
21
237.9
332.6
406.3
1
27.3
258.9
361
.7
1
58.5
31
6.6
721
.4
685.8
680.2
658.8
654.9
657.1
635.3
625.7
621
.8
754.8
723.0
699.0
688.2
693.7
668.6
658.1
656.4
792.6
750.5
736.1
744.0
71
6.8
704.1
700.4
822.7
797.9
803.1
774.9
761
.8
756.5
880.5
884.0
853.7
842.4
832.3
940.1
896.5
894.2
880.0
963.3
939.7
933.4
1
,060.8
1
,033.1
Cost of Claims (cumulative payments + outstanding reserves:
2002
2003
2004
2005
2006
2007
2008
2009
201
0
201
1
Gross Outstanding Claims Reserves
757.1
673.8
663.2
662.1
609.9
641
.1
645.7
624.7
61
5.5
61 .5
1
157.1
189.2
228.0
276.0
326.1
400.0
473.8
571.7
716.5
from initial claims versus re-estimated reserves
145.6
accounted for this year
4.0
Claims w ith regard to w orkers' compensation and health care
Total claim s in the statem ent of financial position (Note 28)
99.7
3.9
98.4
1.7
92.1
3.7
66.2
5.3
48.2
10.1
60.0
14.2
29.9
6.3
1
,068.4
913.0
27.6
27.7
(including IBNR& Prov for costs)
Redundancy/deficiency
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
1,145.3
2,839.1
27

29. Introduction
Ageas track record in key areas of reporting
Evolving financial disclosures at Ageas
Margin analysis
Inflow / FuM proportional
Investment portfolio
Shareholders’ equity
Triangles on cost of claims – Non-Life
Conclusions

30. Conclusions
 Continuous improvements since 2009,
reflecting Ageas’s new business profile
& corresponding to Insurance market
practices
 Additional info will be released to further
improve financial disclosures in order to
help financial markets better
understand Ageas’s business model
 Future and further enhancement will
be studied going forward in line with
industry evolution of practices &
regulation (Solvency II, IFRS phase 2,...)
Investor Day 24&25 September 2012 - Andaz Liverpool Street London
29

31. 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
30