Christmas is in the air

The countdown to Christmas has begun and 3 elements make us wonder whether it has not come early this year:

• A Christmas Truce - In 1914, during the early period of World War I, soldiers from France, Germany and the UK called a temporary Christmas truce by crossing trenches to exchange seasonal greetings and food, playing football or singing Christmas carols together. This year, the 90-day truce agreed by the world’s two largest economies, after months of escalating trade tensions that weighed on the markets, feels like a welcome Christmas detente, even if temporary.

• An early Christmas present – It seems that Ageas too got an early Christmas present, with the rating agencies playing the role of Santa. Indeed, less than a month after receiving a 3 notch upgrade from S&P to A stable, Ageas received from Fitch on the 7th of December an IFSR (Insurance Financial Strength Rating) of A+ stable. With these ratings, and for the first time in a decade, Ageas now holds the same core status rating as AG Insurance. This illustrates how far the Group has come in the past 10 years. And, as good things come in threes, on the same day, Moody issued a press release confirming its review of Ageas’ rating for upgrade, which could be by more than one notch (from Baa2) to reflect the high likelihood of resolution of the legacy issues inherited from the Fortis group and the reinsurance operations.

• A New Year resolution - AG Insurance made an early New Year resolution this week when announcing its intent to intensify its focus on sustainable investments, which already represent over EUR 4 billion of its assets and account for the strongest growth in its portfolio. As part of this resolution, AG Insurance will exclude investments in tobacco, coal or weapons and will systematically take into account ESG (Environmental, Social and Governance) criteria for each investment decision. AG Insurance plans to formalise soon its commitment by signing the UN Principles of Responsible Investment.

The Christmassy colour code of green and red also prevailed in the markets this week, as ups and downs alternated following the latest news regarding the trade war, Brexit and the ECB’s confirmation of the end of its bond buying programme.  The red slightly prevailed in the insurance sector and the Stoxx insurance index closed down 0.5% while Ageas’ share ended at EUR 39.86 (-1.4%).