Ageas grants investor interim dividend | The time

10 augustus 2022

08:55

The insurer promises investors EUR 1.5 gross per share after a stronger than expected first half of the year. The dividend will increase by 6 to 10 percent over the next three years.

Despite the turbulence in the financial markets, rising inflation, the war and a series of new lockdowns in Asia, Ageas

there’s a strong one first half of the year sit on.

The listed parent group, which includes AG Insurance, recorded a net profit of EUR 563 million in the first six months of the year. That is 39 percent more than in the same period last year and significantly more than the 499 million euros that analysts had expected.

That figure does include a positive revaluation of so-called RPN(i) notes, a legacy that the group carries with it from its Fortis past and that has nothing to do with its activities as an insurer. Without these effects, net profit in the first half would amount to EUR 456 million.

The strong annual report does not mean that Ageas did not experience any setbacks: the February storms weighed 75 million euros on the figures and the malaise in the financial markets took a heavy blow to the investment portfolio. Hyperinflation in Turkey has also forced Ageas to start valuing its activities in the country differently, which had a negative impact of 16 million euros.

On the other hand, the group did well commercially. Total premium income rose by 5 percent to 9 billion euros.

The Life insurance business was supported by strong growth in China, where sales of new contracts increased by 35 percent in the second quarter. The Non-Life branch, the non-life insurance, was able to grow partly due to rate increases in response to higher inflation.

No purchasing program

The figures already give Ageas sufficient confidence to promise its shareholders an interim dividend of EUR 1.5 gross per share.

It is the first time that Ageas is presenting such an interim dividend. In recent years, it had almost become a tradition for the insurer to announce a new share buyback program in mid-summer. That will not happen now, but Ageas emphasizes that investors can expect a dividend that will increase by 6 to 10 percent annually over the next three years.

We are now pursuing a growth strategy. Investors can benefit from this through our dividend policy

‘We are indeed not announcing a new purchasing program now, although we are not saying that such a thing will be completely impossible,’ responds CEO Hans De Cuyper. ‘Certainly in the period when Ageas was still dealing with the Fortis legacy, these buyback programs were a way of returning part of our capital to our shareholders. But now that legacy is behind us (in June, Ageas put an end to the Fortis settlement, ed.). We are now pursuing a growth strategy. Investors can also benefit from this through our dividend policy.’

Despite growing economic concerns and high inflation, De Cuyper sees no reason to adjust his profit targets. Ageas is therefore still aiming for a profit of 1 billion euros for this year.

‘Not that we won’t have to work hard for that in the second half of the year, because the uncertainty in the financial markets remains great,’ says De Cuyper. ‘But the impact of any natural disasters can be more limited because we can fall back on reinsurers for that. We also have fairly comfortable commissions to cover a significant portion of inflation. I also expect inflation in mainland Europe to stabilize, but less so in the UK.’

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