Indian file

You may know the US expression to walk “in Indian file”, evoking a single line of persons with each one following another and presumably referring to the way Native Americans walked on trails through the forest. Well, since announcing last September its new strategic plan for the next 3 years, Connect21, and reaffirming its M&A principles, Ageas has announced two M&A operations, one following the other, in a somewhat Indian file. The first one was the sale of its 33% share in Cardif Lux Vie, announced two weeks ago, and the most recent one, announced on Wednesday, is in fact … an actual Indian file, the acquisition of 40% of Royal Sundaram General Insurance, a well-established general insurer in India.

These two transactions are for roughly the same amount: while the divestment from Luxembourg will generate a cash inflow of EUR 182 million, the agreement signed for the acquisition in India is for a price of EUR 186 million. More importantly, they are both in line with Ageas’ M&A principles: priority given to Non-Life activities in existing and fast growing emerging markets. Ageas is already active in the Indian Life market, so this is for the Group a great opportunity to also benefit from the great potential offered by the Non-Life market.

Ageas also reported last week a solid nine month results with a Group net Result amounting to EUR 656 million compared to EUR 360 million last year and an Insurance net Result at EUR 664 million, only down 1% scope on scope despite substantially lower capital gains and poor weather in the first half of the year. Overall, the underlying result strongly improved thanks to the solid operating performance of both the Life and our Non-Life business. Ageas also enjoyed a strong sales momentum this quarter driven by Belgium and Asia. This solid performance was somewhat overshadowed by the impairments induced by the recent market volatility, especially in Asia.

On Wednesday, after publication of results, Ageas’s share opened down 3.8% at EUR 43.55, before slowly clawing back some of the early losses in a downward oriented market. By the end of the week, Ageas had managed to outperform the insurance sector, limiting the decrease to 2.1%, compared to 2.8% for the Stoxx 600 Insurance. Since the beginning of the year, the gap has been widening with Ageas outperforming the Stoxx 600 Insurance by 12.7% and the Stoxx 50 by 17.9%.