To be honest we were quite puzzled by the market reaction after the publication of our 9 month results on Wednesday.

Shortly after market opening, as we had just reported an excellent insurance net result of EUR 686 million, up 16% scope-on-scope compared to last year and EUR 47 million ahead of consensus, the share went as low as €38.60, down 6.5%, before partly recovering and closing the day minus 1.9%. It was all the more surprising given the fact that these results reflected a strong operational performance with an operating margin in guaranteed product at 106 bps (vs a target of 85-90 bps) and a combined ratio below 95% (vs a target of <97%).

So what happened?

It seems that the market disappointment was linked to a lower than expected Solvency II ratio and quarterly operational Free Capital Generation (FCG) figure at EUR 110 million in Q3 compared to an underlying run-rate of 135 in the two previous quarters.

But, during our analyst call, the management was keen to emphasise the following elements:

• Solvency II is a volatile framework, therefore FCG figures should be analysed on a year to date basis rather than on a quarterly basis;

• Ageas reported a very strong FCG from non-European partnerships (on a local regulatory basis) amounting to EUR 249 million for the first half of the year (this figure is disclosed with one-quarter delay in Asia).

• IFRS results are the base to determine the dividend, rather than the FCG which corresponds to a regulatory, prudential framework and not a value one;

These comments helped ease concerns.

Overall, Ageas’ share lost 1.6% this week in a bear market, with major European indices trending downwards as earnings season sent investors running into profit-taking in a market close to two-year highs. The STOXX 50 ended the week down 2.6% but remains up 9.2% year to date. As for the Euro Stoxx Insurance, it closed down 0.5% on a particularly busy week for the sector with Allianz, Aegon, Generali, Swiss Life and Zurich Financial all also reporting results.

As for the analysts, overall they were more positive and 3 among the 20 covering Ageas increased their target price after our results. Currently, among the 17 analysts disclosing their recommendations, 10 are positive about the stock, 4 neutral and 3 negative.