Investor relations blog

What a year!

With 2019 fast approaching, it is a good time to take a final look back at 2018.

In a year in which the markets have been clouded by some negatives – the Brexit negotiations, the US-China trade war, the volatile equity markets…to name but a few – here at Ageas we feel that a lot of good things happened too.

2018: a year of major events for the Group

The closure of a decade-long legacy inherited from the Fortis era.

When, on Friday 13 July 2018, the Amsterdam Court of Appeal declared binding the EUR 1.3 billion Settlement between Ageas and the claimants’ organisations, a page of the Group’s history was turned. Given the overwhelming support for the settlement – some 200.000 claims have already been received - and the very limited number of opt-out notices received, Ageas decided to waive its termination right. And to date over 60,000 claims have already been approved for early payment. With the settlement Ageas has regained its full strategic and financial flexibility.

Clarity on BNP Paribas’ shareholdership in AG

Also in 2018 another element of the Fortis legacy has been closed with BNP Paribas’ decision not to exercise the put option on 25% of AG Insurance, Ageas's Belgian subsidiary, and thus remaining a shareholder. Additionally the existing distribution agreement was maintained.

Upgrade to A level

For the first time in a decade, and thanks to the resolution of the legacies and the launch of its reinsurance activities, Ageas was upgraded by rating agencies to A level: A stable from S&P and IFS A+ stable from Fitch, while Moody is currently reviewing the rating for upgrade (from Baa2).

The “Ambition 2018” strategy brought to a good end

2018 was the final year of “Ambition 2018”. By reaching – at the end of the third quarter of 2018 - 5 out of its 6 financial targets, Ageas is well on track to deliver once again: combined ratio (95%), operating margin life for the guaranteed business (93%), Solvency ratio (206%), ROE (13.2%) and pay-out ratio (42%). The only target lagging behind is the life operating margin for the unit-linked business.

Connect21: a strategy towards 2021 and beyond.

In September Ageas unveiled its new 3-year strategic plan, Connect21. Through this new plan, Ageas aims to address the emerging trends and long-term challenges faced by the insurance sector. The main focus is relevance for the customer at all times through our products and services, even beyond insurance. And again, a great emphasis has also been placed on return to shareholders through a pay-out ratio target of at least 50% of the Group net result, compared to 40% to 50% of the Insurance net result previously, and a commitment to launch each year a new share buyback of at least EUR 150 million, except in the event of a sizeable M&A. This was coupled with a new commitment to achieve a 5% to 7% earnings per share CAGR.

The launch of Connect21 was also an opportunity for the Group to reaffirm its M&A principles, especially the priority given to Non-Life activities in existing and fast-growing emerging markets. In line with these principles, Ageas has since then announced two M&A operations: the acquisition in Non-Life of 40% of Royal Sundaram General Insurance, a well-established general insurer in India, and the divestment of its 33% share in Cardif Lux Vie.

A solid performance in a challenging world

In effect, 2018 has been the fourth costliest year in 50 years in terms of insured losses resulting from natural catastrophes. According to preliminary estimates from Sigma (a bulletin issued by Swiss Re) the total cost for the insurance industry has amounted to US 71billion in 2018. Despite being significantly down compared to the exceptionally high 2017 (US 143 billion), this is 11% higher than the average of the past ten years.

Global equity markets have been rattled this year with most of the indices heading towards closing the year in the red with the Chinese CSI 300 Index having lost almost a quarter of its value since the beginning of the year, the Euro Stoxx 50 Index as much as 14.4%, and the Stoxx Insurance index 11.1%.

In this bearish environment, Ageas managed to strongly outperform the sector with a share price decline limited to 4.0% and even a positive total shareholder return including dividends (TSR) of 0.7% year to date.

So, in this challenging market environment, 2018 has been a productive and successful year for Ageas. To this we raise our glass, while wishing you and your loved ones a happy and prosperous New Year.