Debt Investor Presentation FY 2018 Executive summary Ageas group - - PowerPoint PPT Presentation

Debt Investor Presentation

FY 2018

2

• International insurance group with focus on Europe & Asia
• Diversified product portfolio with focus on individuals & SME
• Solid & diversified investment portfolio
• Robust solvency & capital generation providing strong mitigation against

market or other external evolutions

• Strong capitalization with EUR 0.8 bn regulatory Tier 2 headroom
• Clear strategic priorities & ambitious financial targets - set as part of

Connect 21 strategic plan

• Reinsurance activities transforming holding into operating company
• Diversified sources of income
• A/stable rating

Ageas group Ageas SA/NV

Executive summary

* Based on indicative per share compensation & per 12/02/2019 Debt Investor Presentation I FY 2018

• 1. ageas group
• 2. ageas SA/NV
• 3. appendix

52% 11% 15% 21% 1%

Belgium United-Kingdom Continental Europe Asia Reinsurance

4 Debt Investor Presentation I FY 2018

International insurance group with focus on Europe & Asia

Leading market positions in most countries

UNITED-KINGDOM Non-Life #4 motorcycle insurer #3 private car insurer BELGIUM Life & Non-Life #1 Life #2 Non-Life #1 real estate CONTINENTAL EUROPE Life & Non-Life 3 markets #2 insurer in Portugal ASIA Life & Non-Life 6 partnerships in 9 markets #5 Life in China #1 General takaful in Malaysia #3 Life & #4 Non-Life in Thailand AGEAS SA/NV Internal Reinsurance with Life & Non-Life license

32% 11% 19% 38%

Belgium United-Kingdom Continental Europe Asia

GROSS INFLOWS @ageas share 2018 TOTAL: EUR 14.5 bn INSURANCE NET RESULT 2018 TOTAL: EUR 797 Mio

5 Debt Investor Presentation I FY 2018

Diversified product portfolio

Focus on individuals & SME

LIFE

GUARANTEED UNIT-LINKED 76% 24%

Guaranteed Unit-Linked

NON-LIFE

22% 42% 26% 10%

Accident & Health Motor Household Other Lines 2018 GROSS INFLOWS NON-LIFE (consolidated entities) 2018 GROSS INFLOWS LIFE (consolidated entities)

MOTOR ACCIDENT & HEALTH HOUSEHOLD OTHER

mostly driven by Motor & Household mostly guaranteed business

Internal reinsurance with Life & Non-life license

71% 29% GROSS INFLOWS @ageas share 2018 TOTAL: EUR 14.5 bn Life Non Life 64% 36% INSURANCE NET RESULT TOTAL: EUR 797 Mio Life Non Life

In EUR mio In EUR bn

Ageas group

Key financials & operational elements

6 In bps avg technical liabilities In bps avg technical liabilities In % NEP

Non-Life combined ratio Operating margin Guaranteed Operating margin Unit-Linked

Debt Investor Presentation I FY 2018

505 623 493 18 260 289 199 77 15

721 960 797

FY 16 FY 17 FY 18

Life Non-Life divestments

Inflows @ageas share Insurance Net result Ageas net result

101.1 95.2 94.3 FY 16 FY 17 FY 18 93 93 88 FY 16 FY 17 FY 18 25 27 25 FY 16 FY 17 FY 18

In EUR mio

9.7 10.0 10.3 4.4 4.4 4.2

14.1 14.4 14.5

FY 16 FY 17 FY 18

Life Non-Life

27 623 809

FY 16 FY 17 FY 18

16% 9% 58% 17% Banking Other financials Non Financials Government related

EUR 19.9 bn

46% 25% 12% 6% 7% 4%

Sovereign bonds Corporate bonds Loans Equities Real Estate Cash 49% 17% 7% 7% 3% 5% 3%2% 7% Belgium France Austria Portugal Italy Spain Germany Ireland Other 43% 22% 23% 5% 7% Investment offices Car parks Investment Retail RE Development Investment warehouses 10% 1% 9% 12% 68% Loans to banks RE Infrastructure Mortgages Other 49% 7% 20% 24% Equities Equity funds RE funds Mixed funds & others

Solid & diversified investment portfolio

Stable asset mix & high quality investments

7

Loan portfolio Equity portfolio: EUR 0.4 bn UG/L Real Estate portfolio: EUR 1.8 bn UG/L not reflected in equity

Debt Investor Presentation I FY 2018

Sovereign bond portfolio: over 99% investment grade – EUR 4.6 bn UG/L Total investment portfolio EUR 79.6 bn EUR 36.9 bn Corporate bond portfolio: over 91% investment grade – EUR 1.0 bn UG/L EUR 9.8 bn EUR 4.5 bn EUR 5.6 bn

Solvency IIageas in %

In EUR bn

Own Funds SCR

8

Belgium UK CEU Reins.

Diversification

Insurance GA Group

Non-transferable

Based on local solvency requirements non EU non-controlled participations @241% at the end of 2018 Debt Investor Presentation I FY 2018

2.8 2.9 2.7 0.7 0.5 0.5 0.9 0.7 0.6 0.0 0.0 0.1 (0.3)(0.2) (0.2) 4.2 3.9 3.7 0.1 0.1 0.1 4.3 4.0 3.7

6.9 6.9 6.4 0.7 0.8 0.8 1.2 1.4 1.0 0.1 0.1 0.1 (1.5) (1.4) (1.0) 7.5 7.7 7.4 0.7 0.2 0.6 8.1 7.9 8.0

FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18

Solvency IIageas Group up to 215%

Proposed dividend already deducted

244% 237% 235% 100% 147% 167% 127% 207% 178% 278% 243% 196% 179% 196% 202% 191% 196% 215%

1,532 2,143 407 414 489 213 530 45 (112) (23) (216) (407)

1,940 2,557

99 629

FY 17 Put option & Luxembourg Capital fungibility Model refinements Market Operational impact Ogden adjustment Capital transactions Paid dividend FY 18

Group Free Capital Generation

Operational FCG in line with FY guidance - more than covering dividend accrual & SBB

In EUR mio

9 FCG Non-European NCP’s of EUR 146 mio over 9M 2018 of which EUR 372 mio operational, not included in EUR 629 mio

• Operational impact
• includes EUR 99 mio dividend upstream Non-European NCP’s
• FY guidance of EUR 500 – 540 mio for Solvency II scope
• Market: driven by spread movements & lower equity markets
• Impact adjustment of Ogden rate @ 0% best estimate - no impact on IFRS result
• Capital transactions = SBB + injection in Asia

expected dividend

Free Capital Generation

Based on 175% of SCRageas

Debt Investor Presentation I FY 2018

expected dividend

10

Insurance Solvency II sensitivities

High Solvency ratio providing resilience against market or other external evolutions

Debt Investor Presentation I FY 2018

As per 31/12/17

Based on Solvency IIageas SCR OF Solvency

Base case

Beforestress 3,934 7,713

196% Yield curve down

Down 50 bps 4,088 7,623

186% Yield curve up

Up 50 bps 3,812 7,764

204% Equity

Down 25% 3,935 7,414

188% Property

Down 15% 3,995 7,284

182% Spread*

Spreads on corporate & government bonds up 50 bps 3,910 7,395

189% Corporate spread up 50 bps

3,941 7,664

194% Sovereign spread up 50 bps

3,912 7,449

190% UFR– base case 4.20%

Down to 4.05% (already included in 3M ’18 results) Down to 3.65% (further down from 4.05%) 3,949 3,962 7,703 7,659

195% 193%

* Spread sensitivity doesn’t take into account any credit rating movement

SCRageas Risk appetite Free Capital

Target Capital 175% SCRageas

Remember: Expected dividend already deducted from Solvency IIageas

I 11 I Debt Investor Presentation I FY 2018

Risk Appetite & Capital management

Target level linked to Risk appetite

Free Funds Own Funds

• Limited to 40% Group Own Funds
• Measured under 1/30 loss event
• Local risk profile & local risk appetite

• Available for strategic investments
• Dividend policy applied
• SBB if no sizeable M&A
• Risk reducing and/or capital strengthening measures
• Reduced dividend
• Ongoing SBB maintained - no new SBB
• Materially reduced dividend
• Ongoing SBB suspended
• Risk reducing and/or capital strengthening measures
• Coupon servicing continues
• Dividend policy still applied
• Ongoing SBB maintained - no new SBB

175% 157% 140%

I 12 I Debt Investor Presentation I FY 2018

Solvency II guidance

Coupon servicing continues even if below 140% Solvency IIageas

13

Main characteristics Hybrids

Currently debt issued both at holding & at AG Insurance level

In EUR mio

Ageas

Ageasfinlux Fresh*

Tier 1

Fixed-to-Floating Rate Callable

Tier 2

Fixed Rate Reset Perpetual Subordinated Loans

Tier 1

Fixed Rate Reset Dated Subordinated Notes

Tier 2

% 3m EUR + 135 bps 5.25% 6.75% 3.5% Amount

• utstanding

1,250 450 550 USD 400

ISIN XS0147484074 BE6261254013 BE6251340780 BE6277215545 Call date Undated, strike 315.0 mandatory 472.5 Jun 2024 Step up to 3M Euribor +413 bps Mar 2019 Step up to 6yr USD swap + 533 bps June 2027 Step up after 12 years of 100bps Other Subscribed by Ageas & BNP Paribas Fortis Public issue Public issue Market Price (31/12/18) 51.74 114.02 100.09 98.27

AG Insurance

(Belgium)

* FRESH has de facto become a perpetual instrument with no call date Debt Investor Presentation I FY 2018

151% 38% 26% 3%

Unrestricted Tier 1 Restricted Tier 1 Tier 2 Tier 3

5,619 1,405 952 83

Unrestricted Tier 1 Restricted Tier 1 Tier 2 Tier 3

14 Debt Investor Presentation I FY 2018

Capital structure Capital quality – SCR PIM coverage 216%

EUR 8,059 MIO

Strong capitalization of the group

Financial leverage @ 20.2% - Debt servicing capacity solid

• Tier 1 capacity fully used
• Tier 2 additional regulatory headroom of EUR 0.8 bn
• after call by AG Insurance of 550 USD – 6.75%,

headroom increased to EUR 1.2 bn

• 20.2% financial debt leverage on net tangible equity @FY18

calculated as (subordinated debt + senior debt)/(net tangible equity + subordinated debt + senior debt)

• after call by AG Insurance of 550 mio USD – 6.75%,

leverage decreased to 16.7%

• x11.7 debt servicing capacity
• after call by AG Insurance of 550 mio USD – 6.75%,

debt servicing capacity increased to x21.6

15 Debt Investor Presentation I FY 2018

Connect 21

A reflection of Group’s Strategy, Values and KPI’s

• 1. ageas group
• 2. ageas SA/NV
• 3. appendix

• Ageas SA/NV obtains Life & Non-Life reinsurance license from the NBB
• With quota shares accepted from controlled Non-Life entities ageasSA/NVgainsdirect access to
• perational cash-flows, becoming operating entity
• Life reinsurance to be started later

17 Debt Investor Presentation I FY 2018

ageas SA/NV not a traditional holding company

Reinsurance sets path for increased capital fungibility

ageas SA/NV Belgium UK CEU

30% QS 20% QS +LPT 30% QS + LPT

Portugal Asia 02/07/2018 Non-Life quota share as from 2019...

Dividend upstream External dividend Holding costs

I 18 I

Diversified sources of income

Reinsurance operations to generate increasing cash flows

Belgium UK CEU Asia

Reinsurance operations Interests & Investments Share buy-back

Debt Investor Presentation I FY 2018

ageas sa/nv Solvency II PIM @402%

Reinsurance operations expected to have marginal impact

Debt Investor Presentation I FY 2018

ageas SA/NV

3.7 1.4 8.1 5.5

216% 402%

ageas

• ageas SA/NV Solvency II mainly driven by

value entities within Solvency II scope

• wnded by Ageas Insurance International
• Reinsurance operations starting in 2019

expected to have limited downside impact

• n ratio in the future

Own Funds SCR

20

• Ageas offers to pay EUR 1.2 bn compensation – additional effort of EUR 0.1 bn

announced 16/10/2017

• No recognition of any wrongdoing by Ageas
• Commitment by eligible shareholders to abandon any ongoing civil proceeding & not to

start any legal proceeding related to the events

• Settlement declared binding by Amsterdam Court
• Ageas decides to waive its termination right, making the settlement final
• End of opt-out period
• Over 250,000 claims files received
• 272 opt-outs received related to slightly above 1% of total settlement amount*
• Execution ongoing
• Almost all civil proceedings (will be) terminated

14/03/2016 13/07/2018 21/12/2018 31/12/2018 Current status

Settlement around Fortis past final & in full execution

Vast majority of civil proceedings terminated

* Based on indicative per share compensation & per 12/02/2019 Debt Investor Presentation I FY 2018

21 Debt Investor Presentation I FY 2018

S&P Fitch Operating / Holding Entity

ageas SA/NV* A /stable A+ / stable Last change 10/12/2018 07/12/2018

Operating entity

AG Insurance (Belgium) A /stable A+ / stable Last change 22/11/2018 07/12/2018

• Ageas SA/NV is broadening its role to group internal reinsurance, enhancing the diversity of its future cash flows, and

its ability to honour its financial obligations

• We consequently now regard Ageas SA/NV as an operating holding company. As such, we are raising our issuer credit

rating on Ageas SA/NV to 'A' from 'BBB' and assigning our 'A' financial strength rating.

• Ageas group continues to benefit from solid levels of capital as well as business and income diversification, while

addressing some underperformance and reducing risks and volatility associated with legacy issues. We are therefore affirming our 'A' ratings on Ageas' core operating entities.

• The stable outlook on all the entities reflects our expectation that Ageas will preserve at least strong capital buffers

while continuing to post good underlying performance on the back of solid positions and distribution ties in its main markets.

• The IFS Rating assigned to ageas SA/NV follows its conversion into an operating reinsurance company from a pure holding

company as a result of ageas SA/NV's plan to become the group's internal reinsurer from 1 January 2019. The National Bank of Belgium (NBB) granted the company approval to organise and operate reinsurance activities on 2 July 2018

• The affirmation of the ratings reflects Ageas's very strong capitalisation and low financial leverage.
• Fitch believes the intra-group reinsurance ageas SA/NV plans to underwrite will enhance the group's capital

fungibility and financial flexibility. We expect the cash flow position and amount of liquid assets available at ageas SA/NV will remain sufficient to maintain a satisfactory liquidity position within the company.

* Source: S&P Global Ratings & Fitch Ratings ; ageas SA/NV has an unsolicited A3/stable issuer rating from Moody’s (25/03/2019)

A/stable-Rating for ageas SA/NV

3 notches upgrade from S&P & Fitch

• 1. ageas group
• 2. ageas SA/NV
• 3. appendix

In bps avg technical liabilities In bps avg technical liabilities In % NEP 23 In EUR mio In EUR bn In EUR bn

Life Technical Liabilities

Belgium : Headlines

Non-Life combined ratio Operating margin Unit-Linked Net result Operating margin Guaranteed

Debt Investor Presentation I FY 2018

288 292 287 102 146 128

391 438 415

FY 16 FY 17 FY 18 Life Non-Life

59.0 58.3 57.3

FY 16 FY 17 FY 18 96.0 91.0 93.4 FY 16 FY 17 FY 18 86 85 85 FY 16 FY 17 FY 18 31 34 40 FY 16 FY 17 FY 18

Inflows @ageas share

3.1 2.8 3.1 1.4 1.4 1.5

4.5 4.3 4.6

FY 16 FY 17 FY 18 Life Non-Life

FY 15 FY 16 FY 17 FY18 Guaranteed interest rate 2.63% 2.49% 2.32% 2.17% Fixed income yield 3.71% 3.45% 3.34% 3.25% Liabilities Guaranteed (EUR bn) 50.3 52.9 50.4 49.1 FY 15 FY 16 FY 17 FY 18 Fixed income yield 2.11% 1.71% 1.88% 1.96% Reinvested amount (EUR bn) 4.2 4.5 2.9 3.2

• Newly invested money mostly government bonds, government related loans, corporate bonds (non

financial sector) & mortgage loans

• Almost all new investments have investment grade quality
• EUR 0.1 bn invested in high yield

Guaranteed retail Life:

• 3 consecutive guarantee decreases in 2016 from 1% to 0.25%
• Guaranteed yield increased from 0.25% to 0.5% as from 1 March 2018 in some specific products

in bank channel

Margin evolution Assets & Liabilities Belgium

Yield & guaranteed rate on back book down at the same pace

Life Back book New money Life & Non-Life

24 Debt Investor Presentation I FY 2018

In EUR mio 25 In % of NEP In EUR mio

United Kingdom: Headlines

Net result Non-Life combined ratio

Debt Investor Presentation I FY 2018

(156) 29 87 FY 16 FY 17 FY 18 112.2 103.2 96.8 FY 16 FY 17 FY 18

1,962 1,768 1,582

FY 16 FY 17 FY 18

Inflows @ageas share

26 In EUR mio In EUR bn In EUR bn In bps avg technical liabilities In bps avg technical liabilities In % NEP

Non-Life combined ratio Operating margin Unit-Linked

Continental Europe: Headlines

Net result Life Technical liabilities Operating margin Guaranteed

Debt Investor Presentation I FY 2018

49 62 54 41 53 49 77 15

90 193 118

FY 16 FY 17 FY 18 Life Non-Life divestments 15.5 16.3 16.1 20 22.1

35.5 38.4 16.1

FY 16 FY 17 FY 18 conso non-conso total 88.7 90.4 92.4 FY 16 FY 17 FY 18 121 139 108 FY 16 FY 17 FY 18 7 21 9 FY 16 FY 17 FY 18 2.0 2.1 1.9 0.8 1.0 0.9

2.8 3.1 2.8

FY 16 FY 17 FY 18 Life Non-Life

Inflows @ageas share

In EUR mio In EUR bn In EUR bn 27 In % NEP

Asia: Headlines

Net result: Non-Life combined ratio Inflows @ageas share Life Technical liabilities

Debt Investor Presentation I FY 2018

168 269 152 27 24 17 199

394 293 170

FY 16 FY 17 FY 18 Life Non-Life divestments 49.5 55.9 65.6 FY 16 FY 17 FY 18 Non-conso 85.1 87.4 90.7 FY 16 FY 17 FY 18 4.6 5.0 5.2 0.2 0.2 0.2

4.8 5.2 5.4

FY 16 FY 17 FY 18 Life Non-Life

In EUR mio 28 In % NEP In EUR mio

Reinsurance: Headlines

Shift from internal reinsuance through Intreas towards ageas SA/NVl

Net result: reflecting prudent claims reserving Inflows: incl. EUR 2 mio from ageas SA/NV Combined ratio

8 8

FY 17 FY 18

52 61

FY 17 FY 18

75.7 82.6

FY 17 FY 18

• On 02/07/2018: Ageas received the approval of the National Bank of Belgium (NBB) to
• rganise and operate reinsurance activities
• Increased capital fungibility within the Group
• Ageas holding becoming operating entity with access to operational cash-flows through

internal quota shares acceptance

• All internal reinsurance activities integrated in ageas SA/NV in the course of 2019
• Solvency II PIM for ageas SA/NV @ 402%

ageas SA/NV reinsurance activities

Debt Investor Presentation I FY 2018

In EUR mio 29

Own Funds SCR

7,874 7,998 407 414 259 213 15 587 41 (361) (216) (407)

8,281 8,412

FY 17 Put option & Luxembourg Capital fungibility Model refinements Market Operational impact Ogden adjustment Capital transactions Paid dividend FY 18

4,010 3,728 76 (133) (209) (17) (2)

FY 17 Put option & Luxembourg Capital fungibility Model refinements Market Operational impact Ogden adjustment Capital transactions Paid dividend FY 18

Evolution SCR & OF split between types of impact

Debt Investor Presentation I FY 2018

Solvency II PIM in %

In EUR bn

Own Funds SCR

30 Debt Investor Presentation I FY 2018

3.4 3.0 2.8 0.7 0.5 0.5 0.8 0.6 0.5 0.0 0.1 0.1 (0.3) (0.2)(0.2) 4.6 4.0 3.6 0.1 0.1 0.1 4.7 4.1 3.7

6.8 6.6 6.3 0.7 0.8 0.9 1.7 1.7 1.4 0.1 0.1 0.1 (1.6)(1.6)(1.1) 7.6 7.7 7.5 0.5 0.1 0.6 8.1 7.7 8.1

FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18

Belgium UK CEU Reins.

Diversification

Insurance GA Group

Non-transferable

Solvency PIM – reported under Pillar I – proposed dividend deducted

Group @ 216% supported by divestment Luxembourg, expiring put option & higher fungibility

Based on local solvency requirements Non EU non-controlled participations @241% at the end of 2018

( 1.4 ) ( 1.5 ) ( 1.3 ) ( 1.1 ) ( 0.9 ) ( 0.8 ) 4.8 4.3 0.3 0.3 0.7 0.8 0.5 0.5 0.7 0.7 0.7 0.5

3.9 3.7

FY 17 FY 18 Non Diversifiable Non-life UW Health UW Life UW Counterparty Default Market Loss-Absorption Deferred Taxes Loss-Absorption Techn. Liab. Diversification

Composition of SCR & OF

31 In EUR bn

Diversification Loss-Absorption Deferred Taxes

Insurance SCRageas per risk type Market risk main factor in SCR Tiering of Group PIM own funds High quality of own funds

5.3 5.6 1.3 1.4 1.0 1.0 0.1 0.1

7.7 8.1

FY 17 FY 18 Tier 3 Tier 2 Tier 1 restricted Tier 1

Debt Investor Presentation I FY 2018

32 Debt Investor Presentation I FY 2018

Disciplined cash upstream from operating companies

Upstream more than covering dividend and holding costs

268 168 294 333 391 437 82 64 50 47 36 150 53 19 48 85 52 106 43 89 77 92 8

438 488 440 488 516 622 407

2013 2014 2015 2016 2017 2018 Dividend paid in 2018 Belgium UK CEU Asia Reinsurance

Thailand 14 China 62 Malaysia 16 Turkey 7 Portugal 69 Lux 9

Upstream during based on net result of year before

33 Debt Investor Presentation I FY 2018

Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based

• n management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual

results, performance or events to differ materially from those expressed or implied in such statements. Future actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in Ageas’s core markets, (ii) performance of financial markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) increasing levels of competition, (ix) changes in laws and regulations, including monetary convergence and the Economic and Monetary Union, (x) changes in the policies of central banks and/or foreign governments and (xi) general competitive factors, in each case on a global, regional and/or national basis. In addition, the financial information contained in this presentation, including the pro forma information contained herein, is unaudited and is provided for illustrative purposes only. It does not purport to be indicative of what the actual results of operations or financial condition of Ageas and its subsidiaries would have been had these events occurred or transactions been consummated on or as of the dates indicated, nor does it purport to be indicative of the results of operations or financial condition that may be achieved in the future.

Disclaimer

34 Debt Investor Presentation I FY 2018

Tel: E-mail: Website: + 32 2 557 57 32 ir@ageas.com www.ageas.com

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