Decent results but some negative signals

Ageas released a surprising set of Q3 22 results in our view. Although it was negatively impacted by market turmoil in Asia and high inflation in the UK and Turkey, Ageas had warned about these effects a few days ago. Embedding these factors into the consensus (which had been published before the warning), Ageas would have beat estimates.

A very convincing set of results

Ageas released a very strong set of Q2 results. Carried by Belgium and Asia, the firm beat market expectations. On a HY basis, Ageas remains in line with our expectations. Prospects for additional share buybacks have been tempered but we expect a dividend towards the high-end of the guidance.

Surprising Non-Life and turmoiled Asia

Ageas’ Q1 22 results yielded mixed feelings. On the one hand, P&C has been surprisingly good but could revert to lower levels, we believe. On the other hand, Asia has been disappointing and could remain disappointing for quite some time considering the local context. Solvency improved and the trend could offer perspectives of shareholder rewards.

Strong results lacking confidence

Ageas’ Q3 results have been surprisingly strong, beating by far consensus estimates. However, the deteriorating solvency ratio coupled with guidance left unchanged, while the insurer could have shown more optimism over the year-end result, leaves a glimpse of potential worries.

Tough times, believed to be temporary

Ageas’ H1 21 results are not what we would have expected. Asia’s Life business came in disappointing and Non-life is expected to be heavily impacted in the next quarter. But, overall, the outlook remains the same and the €150m share buy-back will cheer investors up. Tough times to go through but we remain positive in the medium term.

A great performance expected to last

Ageas’ performance for the first quarter of the year is very positive. We believe the worst turmoils to be past (Turkey FX impact, COVID-19 claims and high volatility on the markets) and, coupled with the recovery in economies and strong capital generation, we see the rest of 2021 as looking better than expected.

Positive year despite pandemic

Ageas released net profit at €1,141m. The Non-Life business contributed significantly to this performance (up 49% to €391m), while the Life divisions suffered and posted a 32% drop to €569m. We appreciate the resilient top line and the €2.65 to be distributed per share. Ageas also announced the acquisition of a 40% stake in the Turkish Life insurance and pensions company AvivaSA for €142m. The insurer enters a new market, with rapid growth and without problems of low interest rates.

New foray into Asian markets

Despite the pandemic, Ageas was very active during 2020 to reinforce its positions in existing markets and to clean its balance sheet. There are no fears about the capacity of the insurer to generate cash and to distribute a dividend for 2020 earnings.

Dividend catch-up

Q2 20 net profit stood at €339m, -4% yoy. H1 earnings increased by 31% to €791m thanks to the FRESH operation in Q1 (€332m). Pressures continued on the Life business (-36% in net result to €309m), contrary to Non-Life’s earnings (+56% to €181m) thanks to lower claims in Motor and Accident & Health segments. The Solvency II ratio was 192%. The insurer announced the distribution of an interim dividend of €2.38/share. Resilient performance from the Belgian company.

Equity market turmoil hits insurance result

The solid net profit (€452m, up 80% yoy) was the result of the operation on FRESH securities. The pandemic hit the insurance result, which dropped by 56% to €113m. The operating margin in the Life business declined and the high combined ratio (99.7%) resulted from bad weather conditions. The resilient Solvency II ratio (193% on 30 April) sustains the intention of management to distribute an intermediary dividend of €2.38/share later in 2020, to reach the initially announced dividend of €2.65/sha

Higher dividend but serious concerns from 2019-nCoV

Ageas reported a FY 19 net income of €979m, up 21% yoy. The Q4 was difficult with a 34% drop in the net result to €102m. Earnings were driven by Life operations (up 65% yoy to €841m). By market, Belgium and Asia contributed up to 96% of the group’s net result. The Solvency II ratio stood at 217.3%, but it does not include the impact of the transaction on Fresh securities (-12%). The proposed dividend exceeded estimates at €2.65/share.

Asian dependence

Ageas posted a 4% increase in 9M inflows to €11,680m. The growth of the top line was driven by Non-Life business (+7% to €3,453m in 9M), while the Life operations were behind the better net result (+44% to €667m in 9M). Asia and Belgium were the main contributors to the group’s profits (>85%). The Solvency II ratio stood at 199%. The results were slightly better than expected, but we prefer to remain cautious given the possible adverse weather conditions in Q4.

Excellent second quarter

Ageas posted an 4.4% increase in its inflows to €21,018m thanks to both the Life and Non-Life branches. The net result was up 37.3% to €354m, driven by an excellent Q2 for the Life business which recovered after a difficult Q1 19. The General Account released a positive result (€5m). The Solvency II ratio stood at c. 201%. We will be revising up our estimates for the full year.

Positive start to the year

Ageas posted an 8% increase in its inflows to €12,808m, driven by both the Life and Non-Life businesses. The net result was up 1.2% to €251m, saved by lower losses from the General Account (€-7m vs. €-52m in Q1 18). While the decrease in the Non-Life business was expected, as it is under transformation, the Life earnings were hit by timing differences on capital gains. The Solvency II ratio stood at 194%. Released figures are broadly in line with estimates.

Shareholders were rewarded

Ageas reported a net income of €809m, 2% lower than our estimates. Q4 was difficult with a 52% drop in the net result to €133m. The poor performance of the equity markets during Q4 affected the Life result (-70% to €45m). The Non-Life division also suffered (-29% to €88m). The Solvency ratio stood at 214% and the proposed dividend met our estimates at €2.20/share. We will keep our positive trend in the insurer’s future operating performances.

Stable 4Q22

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