Related to the joint press release between Ageas and the claimants' organisations concerning the Fortis settlement, published today at 08:15 am CET, Ageas announces that it also reached an agreement with the D&O Insurers, the D&O's involved in litigation and BNP Paribas Fortis. The Group also reports on the financial consequences of today's announced settlements.
In the context of its standard governance process, Fortis had in place during the relevant period 2007-2008 three insurance policies ("the Policies") with a number of insurers ("the Insurers"):
- two successive Directors and Officers liability insurance policies, covering the directors and officers for their general responsibility to manage the company;
- a public offering of securities insurance ("POSI"), covering amongst others, directors and officers of Fortis as well as Fortis itself and its former subsidiary BNP Paribas Fortis specifically for the public rights issue that took place in 2007.
Today Ageas announces, as legal successor of Fortis, that, Ageas itself, all directors and officers involved in litigation (the "D&O's") and BNP Paribas Fortis (together "The Insured") and the Insurers reached a settlement by which the Insurers will pay a settlement amount of EUR 290 million. This settlement could only be achieved because the Insured agreed to release the Insurers from all responsibility under the Policies. In return for the release given by the D&Os and BNP Paribas Fortis, Ageas agreed to provide them certain protection. The amount will be used as partial funding of the global settlement agreed with the claimants' organisations with respect to the Fortis events in 2007 and 2008 as announced in the joint press release [No. 014] issued this morning.
Financial consequences of the Transactions:
The financial impact of the settlements announced today, with the claimants' organisations on the one hand and the D&Os and Insurers on the other hand, will be recognised in the Q1 2016 IFRS financial statements. The impact can be summarised as follows:
- Group net IFRS result: the net impact of the proposed settlements on the Group net IFRS result will amount to EUR 889 million. This is the result of:
- the charge of EUR 1,204 million related to the WCAM settlement agreement,
- plus EUR 45 million related to costs and expenses for organizations' representation of retail investors' interests and/or their future role in the settlement administration process,
- plus an additional provision of EUR 62 million related to the tail risk, estimated at 5% of the total settlement amount,
- minus the settlement amount of EUR 290 million to be contributed by the Insurers and the reversal of the provision for litigation set up in 2014 (EUR 132.6 million).
- Solvency II: The Insurance Solvency II ratio of 182% at the end of 2015 remains unaffected. The Group Solvency II ratio that amounted to 212% end 2015, will be affected by the impact of the settlements on the Group net result. Based on the ratio at the end of 2015, the Group Solvency II ratio is expected to decrease by 20%.
- Net cash position in the General Account: The expected net cash impact amounts to EUR 1,021 million which is the sum of the WCAM settlement amount including the expenses of the claimants' organisations, plus the tail risk minus the settlement amount to be contributed by the Insurers. This amount will be gradually released over an expected period of two to three years depending on the pace at which the WCAM legal procedure can be executed.
- Proposed gross dividend 2015: remains unaffected at EUR 1.65 gross per share paid in cash
For a full disclosure on the impact of the proposed settlements on the IFRS financial statements, we refer to the publication of the Q1 2016 results to be published on Thursday 19 May 2016.