Your Partner in Insurance
Annual Report 2011 3
Utrecht | 14 March 2012 Brussels Report of the Board of Directors of Ageas Report of the Board of Directors of Ageas Ageas Consolidated Financial Statements ageas N.V. Company Financial Statements ageas N.V. Company Financial Statements Message of the Chairman and CEO of AgeasMessage of the Chairman and CEO ageas SA/NV Company Financial Statements Annual Report 2011 Annual Report
Annual Report 2011 4
Annual Report 2011
5 ...... 118 ...... 108 ...... 116 ...... 141 ...... 169 ...... 13 ...... 45 ...... 167 ...... 166 ...... 24 ...... 156 ...... 162 ...... 48 ...... 157 ...... 159 ...... 53 ...... 17 ...... 160 ...... 168 ...... 142 ...... 18 ...... 65 ...... 105 ...... 128 ...... 153 ...... 49 ...... 74 ...... 76 ...... 143 ...... 69 ...... 75 ...... 149 ...... 46 ...... 126 ...... 170 ...... 52 ...... 47 ...... 50 ...... 14 ...... 125 ...... 7 ...... 150 ...... 51 ...... 10 ...... 11 n-life insurance contracts ...... n-life insurance contracts nd share purchase plans ...... nd share purchase plans 2011 ...... 2011 Liabilities related to unit-linked contracts ...... Liabilities related to unit-linked contracts Liabilities arising from No ...... Debt certificates Call option BNP Paribas shares ...... Call option BNP Paribas shares ...... Accrued interest and other assets ...... Property, plantequipment and ...... Goodwill and other intangible assets ...... Liabilities arising from Life insurance contracts ...... Liabilities arising from Life investment contracts Financial investments ...... Financial investments ...... Investment property Loans ...... Investments in associates ...... Reinsurance and other receivables Remuneration of Board of Director members and...... Executive Committee members ...... Audit fees ...... Related parties ...... Information on segments ...... Cash and cash equivalents Non-controlling interests ...... Non-controlling interests ...... Earnings per share ...... Risk Management ...... Supervision and solvency Post-employment benefits,long-term other employee and benefits termination ...... benefits Employee share option a Legal structure ...... Legal structure ...... Summaryof accounting policies ...... Acquisitions and disposals ...... Shareholders’ equity Corporate Governance Statement...... Developments and results ...... Developments and results
29 26 27 28 23 24 25 20 21 22 17 18 19 Notes to the Consolidated statement of financial position ...... Notes to the Consolidated statement of financial position 15 16 12 13 14 9 10 11 6 7 8 3 4 5 General Notes ...... General Notes 1 2 Consolidated statement of changes in equity...... Consolidated cash flow statement Consolidated statement of financial position ...... Consolidated statement of financial position ...... Consolidated income statement Consolidated statement of comprehensive income...... 1 2 ...... Ageas Consolidated Financial Statements 2011 Message of the Chairman and CEO of Ageas ...... Message of the Chairman and CEO of Ageas ...... Message theto shareholders ...... Report of the Board of Directors of Ageas Key events in Introduction ...... Contents AGEAS at a glance...... 2011
Annual Report 2011 ageas SA/NV Company Financial Statements 2011 2011 ...... Statements ageas SA/NVCompanyFinancial report auditor’s Independent ...... ofDirectors Board ofthe Statement ...... 56 55 54 53 position financial of Consolidatedstatement onthe ...... recorded Notes toitemsnot 52 51 50 49 48 47 46 45 44 43 42 41 40 39 38 statement income Notes totheConsolidated ...... 37 36 35 34 33 32 31 30 6 andabbreviations Glossary ...... shares bearer of and registration Dematerialisation inspection public for ...... documents ofcompany Availability caution with treated be to statements Forward-looking ...... Other information ...... 2011 Statements Financial ageas N.V.Company ......
Interest, dividend and other investment income income andother investment dividend Interest, ...... Insurance premiums ...... liabilities financial assetsand of financial Fair value ...... on NCI option put written to related Liability ...... Provisions ...... liabilities other and interest Accrued ...... RPN(I) ...... liabilities assetsand tax deferred and Current ...... Borrowings liabilities Subordinated ...... Events after the date of the statement of financial position position financial of statement of the date the after Events ...... management under Assets ...... agreements Lease ...... liabilities Contingent ...... taxexpenses Income ...... Other expenses ...... Staff expenses ...... expenses commission and Fee ...... DutchState disputes and MCS conversion Impact ...... impairments in Change ...... costs Finance ...... andbenefits claims Insurance ...... Other income ...... income commission and Fee ...... ofassociates Share of result ...... contracts unit-linked to related income Investment ...... revaluations...... and sales Result on
...... 255 ...... 176 ...... 251 ...... 179 ...... 173 ...... 200 ...... 195 ...... 193 ...... 191 ...... 171 ...... 196 ...... 210 ...... 205 ...... 186 ...... 197 ...... 193 ...... 209 ...... 190 ...... 254 ...... 178 ...... 192 ...... 252 ...... 206 ...... 253 ...... 191 ...... 189 ...... 180 ...... 195 ...... 185 ...... 181 ...... 174 ...... 188 ...... 190 ...... 235 ...... 207 ...... 213 ...... 194 ...... 199
Annual Report 2011
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FUM 12,557 Employees Total Assets € (265) million € 90,602 million € 90,602 million € 70,600 million Net result General inflow amounted EUR 11,237 to million.
101.1% to shareholders € (313) million Combined ratio € 7,760 million € 7,760 million € (578) million Net result Insurance Net result attributable Shareholders’ equity ates. Excluding the equityas reported associates, under IFRS, the
1)
2011 at a 207% € 0.08 Insurance AGEAS Gross Inflow Solvency ratio glance 17,219 million Dividend per share
1) Gross inflow inflow of includes the Ageas’s equity associ
Annual Report 2011 figures havebeenchanged comparative The 1) Employees Solvency ratio Group Insurance ratio Solvency ratio life Cost Combined ratio data Other onequity Return December 31 at price Share share per Dividend share per Earnings Basic EUR) (in information Share equity Total interests Non controlling equity Shareholders’ management under Funds Total assets position financial of Statement Eliminations) (incl. General which of - Insurance which of - shareholders to attributable result Net Total income Gross Inflow Statement Income 8
for comparison reasons (see note 36 Liability related to written put option onNCI putoption written to related 36Liability comparisonreasons(see note for
70,599.6 70,599.6 90,602.2 12,004.8 11,237.1 8,367.7 8,367.7 7,760.3 ( 265.1 ) ( 265.1 ) ( 313.1 ) ( 578.2 12,557 12,557 101.1% 236.9% 207.0% ( 7.2%) ( 0.23 ) ( 0.23 607.4 607.4 0.51% 2011 1.20 1.20 0.08
78,131.7 72,970.3 72,970.3 93,324.0 78,131.7 99,166.7 16,749.0 12,017.7 13,647.1 12,184.2 9,166.0 9,346.5 9,346.5 8,646.0 9,166.0 8,421.7 ( 168.2 ) 704.8 704.8 ) ( 168.2 11,707 10,613 10,613 11,707 107.3% 103.8% 103.8% 107.3% 281.9% 316.9% 316.9% 233.9% 281.9% 232.0% 391.3 505.0 505.0 1,209.8 391.3 223.1 744.3 700.5 700.5 744.3 2010 0.53% 0.59% 0.59% 0.53% 1.74 2.59 2.59 0.08 0.49 1.74 0.08 0.09 2.5% 18.7% 18.7% 2.5% 1)
).
2009 2009 1)
Variance from 2010 to 2011 2011 to 2010 ( 31.0%) ( 31.0%) ( 18.4%) ( 36.6%) ( 12.0%) ( 15.9%) ( 15.9%) ( 10.8%) ( 3.3%) ( 3.3%) ( 5.7%) ( 8.7%) ( 7.9%) ( 9.6%) ( 8.6%) ( 7.8%) 7.3% 7.3% 0% * * * *
Variance from 2009 to 2010 to 2009 ( 11.1%) ( 10.7%) ( 86.7%) ( 32.8%) ( 81.7%) ( 22.5%) ( 81.6%) ( 18.5%) ( 0.8%) ( 1.9%) ( 2.6%) 10.3% 3.4% 6.3% 7.1% 6.3% 1.4% 0% *
Annual Report 2011 9 Euro Stoxx Stoxx Insurance Euro Index: 31 December 2008 = 100 Index: 31 December Ageas Ageas Shareprice compared to Ageas Shareprice Euro Insurance Stoxx 0 31/12/08 31/3/09 30/6/09 30/9/09 31/12/09 31/3/10 30/6/10 30/9/10 31/12/10 31/3/11 30/6/11 30/9/11 31/12/11 50 100 150 200 250 300 350 400
Annual Report 2011 Key eventsin2011 10 Boizardasmem Christophe of appointment Ageasannouncedthe 3) representatives of Gathering 2) retail isopento publicplatform newweb-basedfree This 1) . . . . responsible for Legal, next to his position asChief hisposition RiskOffice to next Legal, responsible for gradually reduce his professional involvement involvement gradually reducehisprofessional aperi for as legacyissues wellasonongoingmatters financial and Legal, CEO Finance Ageasandresponsible for Deputy of Colmant, operational success of the Group. theGroup. successof operational opportunities, networking create to Partnerships, the celebrate trends. andfocu them specifically organisedtowards events of informed
anniversary of its presence in China in China presence ofits anniversary the10th Ageas celebrated the German Life activities activities Life the German of sale the on reached Agreement AKSigorta ofa in stake ofacquisition Closing director non-executive as Brückner Ronny of nomination the approved Shareholders of Meeting The General OCTOBER JANUARY APRIL JULY
from all its associates and joint ventures in allits ventures associates andjoint from in Ageas and to pursue a career outside of the Group. He will remain with the Gro the Hewillremainwith the pursuea Group. of Ageasandto career outside in
shareholders and investors. Allr shareholders andinvestors. r. Patrick Depovere, CFO of Ageas of Manag r. Patrick andmemberof CFO the Depovere, Group od of 2od of De on1 years mem Kurt Schepper, starting October 2011. to contribute to the group-wide dynamics and to emphasise i group-wide dynamicsandto the the contribute to to ssing on topics and themes of wide and current interest, directl ssing on of interest, andthemes wide andcurrent topics ...... ber of the Group Executive Committee and as Chief Offi andasChief Committee Financial Executive Group ber ofthe
programme buy-back share of Announcement bonds bonds of Greek ofallmaturities Impairment increase their stakeinAKSigorta increase their to agree Sabanci and Ageas announced changes Management Club Ageas the of Launch (Turkey) inAKSigorta stake ofa of acquisition Announcement left the company. He Ageasasanindepe company. will howeverassist the left Ghent. is Ageas's Partnership a majorpillarof Ghent. NOVEMBER FEBRUARY AUGUST MAY egistered membershencehaveara
1)
3)
global strategy and this two days' forum served to highlight and served days'forum highlight to two andthis global strategy pid access to public information about Ageasandare public about pid accessto information y connected to y to Ageas's developm connected mportance of each to of the andeverycomponent mportance up until 31 March 2012. 31March2012. up until ber of the became ber ofthe Committee, Group Executive ement Committee, has expressed his wish to hasexpressedhiswishto Committee, ement ...... cer with effect from 5 September 2011. Bruno 5September from effect cer with
ndent academic advisor academic ndent Malaysia in presence ofits anniversary 2020 Impairment bondsmaturing Greek before and Cardif LuxVie(Luxembourg) Fortis LuxVie Paribas agreedto merge Ageas, BGLBNPParibasand Ageas celebrated the10 Ageas celebrated results 2010 solid of Presentation Acquisition ofCastle Cover (UK) activities activities theAsian about day Investor securities debt Tier-1 Fortis the of Purchase Ageas Partnership Days Ageas organisedthe firstthe editionof Vie completed Merger ofVie andCardif Fortis Lux Lux SEPTEMBER DECEMBER
MARCH JUNE
on financial andeconomic on financial ents or to widersocial orto ents 2)
th
Introduction
The Ageas Annual Report 2011 includes the Report of the Board of Directors of Ageas, the AAgeas Consolidated Financial Statements 2011, with comparative figures for 2010, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, as well as the Financial Statements of ageas SA/NV, prepared in accordance with the legal and regulatory requirements applicable in Belgium and the Financial Statements of ageas N.V., prepared in accordance with the legal and regulatory requirements applicable in the Netherlands.
All amounts in the tables of this Annual Report are denominated in millions of euros, unless stated otherwise.
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Message of the Chairman and CEO of Ageas Message of the Chairman
Annual Report 2011 SolvencyII. knownas regulations the upcoming of implementation thesmooth toensure effort significant timeand invested Finallywehave 2012. which wascompletedinJanuary programme, buy-back ashare decisiontolaunch our drivers behind alsothemain were of ourshare undervaluation combined withthe base capitalandcash ofastrong The existence this area. scoreswellin Ageas base. thatcapital toprotect why itisimportant and be wellcapitalised, to whyitisimportant year alsohighlighted past The decline. market reflectthecontinuing to equity portfolio onour registered impairments sametime,we the At Greek debt. outstanding our impaired allof thiscontextwe in economies, and European Southern against inparticular exposure sovereign debt our toreduce wehavecontinued Asyouknow, investment portfolio. toour this yearwithrespect decisions important We tooksome shareholders. andcommitted ofhavingloyal thesignificance these difficulttimes, in recognise,particularly success.Wealso other’s ensure each to partners closelywithour working clients’needsand offering to product our well,adapting wehaveresponded and for support lookedtous have They growth. slowratesof and unemployment rates, oflowinterest withthechallenge grappling of whomare many customers, our and partners our for demanding been equally butithas todobusiness, time beenadifficult has of theworld.It everycorner feltin hasbeen events ofthese impact the in Europe, ourdoorstep on playingout been political debateshave While the global scale. a confidence on market instability anddiminishing economic crisis,enormous financial ofthe left withtheremnants Wewere justhowtough. couldhavepredicted butfew be tough, would continueto environment the knowingthat year the We began Dear Shareholders, Message totheshareholders 14
continued successfully. objectives, have Group’s strategic with the line portfolio,in the tostreamline crisis, whileefforts zone Euro ofthe theimpact itswaythrough managing focused on group has Our profit driver. a major being particular withMotor in restoringtheprofitabilityofN beenmade has progress Significant allregions. in Non-lifeacross momentum includingpositive elsewhere advances seen important wehave butequally ofinflows, inrespect group’s performance the to importantcontributor beanincreasingly to Asia continues management. its company and access tothe fromimproved who arebenefiting 2,000 members hassome Clubwhichalready Ageas createdthe we shareholders, retail our franchise. For Asian onour institutional investors Dayfor Investor wehostedan businessmodel, and our businesses awarenessof andtoincrease Ageas, in community ofstakeholders create alarger to Inaneffort practices. andbest ideas exchange of a fruitful Asia for and Europe in partners from our managers ofthetop number alarge one place in together which brought Partnership Days Ageas time the first for the In June,weorganised business intheUK. (2011), providingadditional distribution power to ourinsurance CastleCover and halfof2010) Services(second Kwik FitFinancial acquisition of the fuelledby growth wasfurther with Tesco.That relationship byour others among result,driven ofour improvement a strong to leading change intermsofscale exceptional year has hadan UK Andthe ChinaandMalaysia. in of valuecreation adecade wecelebrated andjointventures, strongest partnerships so manyofour to InAsia,home inAKSigorta. acquisition ofastake andthe withSabanci partnership long-term a market through insurance theTurkishNon-life entered We have of opportunities. advantage allowingustotake growingmarkets relationships infast important new have forged isclear.We ‘partnership’ strategy differentiated ofour the value at 2011, As welookback on-life in Belgium andtheUKin inBelgium on-life
While legacy issues remain a reality for Ageas for the foreseeable We take this opportunity to thank our customers, our valued future, we have made some goood progress this year. We will partners and our staff around the world for their on-going support continue to forcefully defend the company and the interests of the and commitment to AAgeas. At the same time, we are grateful to shareholders aagainst all outstanding issues and future legal you, our shareholders, for your continued interest and confidence in proceedings. our company despite these challengiing times. As a sign of our commitment to you we intend to propose the payment of a dividend In September, Bruno Colmant left the company and we welcomed of 8 eurocent per share for 2011 at the Annual General Meetings. Christophe Boizard as our new CFO and member of the Group Executive Committee, next to Bart De Smet (CEO), and Kurt De This reflects also our solidity and our strong belief in the quality of Schepper (CROO). our activities and their underlying profitability. As we proceed in 2012, we will continue to do everything in our power to deliver value From a governance perspective, the Board took the decision to split for all of our stakeholders. the Audit and Risk Committee into an Audit Committee and a separate Risk and Capital Committee, in anticipation of new regulatory requirements. Ageas has also continued to deliver on its commitment to improve communications and to provide full transparency to the market, including release of a detailed report from the Remuneration Committee.
Dear shareholder, while we would like to see the economic crisis behind us, the reality is that turbulence will continue for the foreseeable future. This requires that we manaage our existing business prudently, remaining agile and alert to whatever lies ahead. But ultimately we also want to deliver a strong sustainable performance for the long term. With this in mind we will selectively look for further organic and inorganic growth opportunities; we will look for constant improvement in the performance of our life and Non-life businesses; and we will ensure that we have the right resources in the right place. Our success is due to the commitment and collaboration of our employees across the company. We are tremendously proud of the collaborative spirit emerging within Ageas where we see the international exchange of experiences adding real value to our partnership strategy. Jozef De Mey, Chairman (on the right) Bart De Smet, CEO (on the left)
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Report of the Board of Directors of Ageas Report of the Board of Directors
Annual Report 2011 early2012. closed tobe transaction isexpected The with AugurCapital. Lifeactivities sale oftheGerman onthe agreement an Ageas announced Finally, inearlyOctober of2011. theend at been completed andhas structure corporate ofthe simplification afurther also encompassed This transaction FortisGroup. the captiveof reinsurance former the Intreinco N.V., of business therun-off withSwissRetotransfer into anagreement further Ageasentered theiractivities. to merge Lux International withCardif atransaction Vie,signed Fortis Luxembourg shares of ofthe 50% eachholding BNP Paribas, BGL and International Insurance Ageas that announced Ageas of June, the course In sector. insurance the over50s specialisingin based intermediary aUK Castle CoverLimited, acquired Ageas of March, the end At inTurkey. four Non-lifeinsurer number the AKSigorta, percent in 31 astakeof byacquiring itsNon-lifeactivities towards enlarging step important tookan Europe Continental activities. InFebruary, itsInsurance andstrengthen actionstostreamline further undertook Ageas itsdefinedstrategy, inline with and of2011, In thecourse resilience, despitethevolatilityinmarket. showed share equityper andshareholders’ Our capitalposition activities. of portfolio abalanced strategicchoicefor of our importance the all segments,underscoring across Combined ratiosimproved theUK. inparticular improvement, showedgood results operational andour impressivegrowth activities reported Non-life, ourUK In competition. and increased circumstances challenging market the declinedfollowing inflowsinEurope activity. InLife,our Kong theHong goodwill relatedto on equitiesand sovereign bonds, onGreek impairmentcharges impactedby results wereseverely Our financial environment. tough bya been marked 2011 has Developments 1.1 Developmentsandresults 1 Codeandarticle Belgian Companies article 96ofthe withrespectiv accordance (in Code Governance Corporate Dutch Belgianand withthe 2) inaccordance inpart (included Statement Governance Corporate the ofDirectorsincludes Board of the Thisreport inInsurance. engaged associates equity companies and ofsubsidia comprises anumber whichinturn Ageas, Theyhead Ageas. of companies the twoparent are ageasN.V. ageas SA/NVand Report oftheBoardDirectorsAgeas 18
391.3 Title 9 Book 2 of the Dutch Civil Code). Dutch 2ofthe Book Title 9 391.3 2011, by Ronny Brückner as a new Board Member. Board Member. asanew Brückner 2011, byRonny ofApril meetings Shareholders’ ofthe approval after extended, was ofDirectors Board the perspective, governance From a position. offinancial the statement of thedate Events after 56 liabilitiesandNote Note 53Contingent Provisions, 35 foundinNote issuescanbe legacy this andother Detailson Ageasshares. into78,874,241 securities outstanding tendered the of 7,553 Paribas converted BNP 2012, 6 February On of62.9. apercentage reaching tender asuccessful announced Ageas Paribas and BNP 2012, January 31 instrument. On theCASHESfinancial on of atleast50% Paribas by BNP cashtender toasuccessful werebothsubject call settlement and This Ageas. by held for95% Bank and byFortis securities, issued 1Debt Tier callofthe an entire RPN(I) and the settlement of a partial on agreement an Bank reached Fortis Ageas and 2012, 26January Ageas. On Legacy issuesarestillarealityfor shares. ofthese cancellation 2012, the 26 April 25and of meetings Shareholder’s next atthe shareholders tothe ofDirectorswillpropose Board Ageas’s outstanding. ofshares amount ofthe to7.3% corresponding shares 192,168,091 intotal Itacquired programme. share buy-back the completion of the announced Ageas 2012, On25January shares outstanding. of totalamount ofthe to6.7% andcorresponding EUR 227.8million of amount foratotal asat31December 175.2 millionshares EUR 250million,Ageasbought of total amount a for programme buy-back oftheshare theinitiation inAugust Ageas announced ely ry Annual Report 2011 19 ssumption, going up from 33% to The Non-life operationsThe Non-life improved substantially compared to last year and reported a positive net result of EUR 82 million compared to EUR 2 million last year. In 2011, the UK operations returned to profit (EUR 61 million) and Continental Europe and Asia contributed 8 million EUR 10 million and EUR The respectively. result Non-life in Belgium came down to EUR 3 million hampered though by impairment charges related to Greek sovereign bonds and adverse weather related costs. These weather related costs amounted to EUR 37 million. The net result of the Insurance Other segment, which includes the UK retail distribution operations, significantly improved to EUR 30 million, compared to EUR 12 million in 2010, benefiting from the contribution and the synergies of the recently acquired activities, Kwik Fit Financial Services and Castle Cover, and including result related to the fees from partners. General Account The General Account result of EUR 265 million negativewas mainly driven by the change in valuation of the legacy issues. Aside from the legacy items, Royal ParkRPN(I), Investments, the BNP call option and the Fortis Tier 1 Debt Securities, which had combined a negative impact of million, EUR 271 the General Account result also included a positive impact of EUR 56 million related to a settlement of outstanding tax issues reducing the total negative impact of the legacy items to EUR 215 million. At the end of 2011, the fair value of the RPN(I) liability down came to EUR 190 million (EUR 465 million, end 2010). The positive impact of EUR 275 million is mainly explained by the drop of the market value of the CASHES financial instrument from 50.2% to 35.4%. Compared to end 2010, the value of the BNP Paribas option declined by EUR 214 million, mainly because of a decrease in the BNP Paribas’ share price from EUR 47.69 to EUR 30.35 and the lower time value. This negative variance was partly mitigated by a substantially higher volatility a 49%. EUR 13 million in Asia Insurance
Insurance overall The Insurance net result breaks down into a net result in Belgium of EUR 327 million negative, a net loss of EUR 8 million and EUR 64 million in Continental Europe and Asia respectively, partly offset by a in the United net profit Kingdom of EUR 86 million. The net result includes a net impairment charge on the investment portfolio of EUR 809 million of which EUR 627 million related to impairments on the Greek sovereign exposure and EUR 182 million on equities. Furthermore, Ageas decided to impair part of the goodwill related to AICA (Hong Kong) for an amount of EUR 99 million due to the low interest rate environment. Continued actions to recalibrate the investments in fixed income and equities combined with some sales activity in real estate in Belgium, resulted in realised net capital gains of EUR 167 million, of which EUR 144 in Belgium.million Part of the gains realised in Asia (EUR 23 million) to related the sale of Ageas’s stake in Taiping Pension of which (EUR 20 million Life, Non-life and Other Insurance The overall Insurance net result can be split in a Life result net of EUR 425 million negative, a Non-life net result of EUR 82 million positive and a positive net result of Other Insurance of EUR 30 million. The Life net result amounted to EUR 425 million negative compared to EUR 377 million positive in 2010. The non-recurring impairment charges on the investment portfolio and the goodwill related to AICA affected the performance. In addition, the result in Belgium included a charge amounting to EUR 20 million related to the contribution levied by the Belgian state on the insurance industry. In the UK, the Life result includes a charge of EUR 4 million related to an accelerated amortisation of deferred acquisition costs, due to higher than expected cancellations. Ageas reported a net result of EUR negative 578 million consisting of net losses of EUR 313 million for the Insurance operations and EUR 265 million for the General Account. and EUR 7 million accounted in the General Account). 1.2 Results and solvency
Annual Report 2011 related to the General Account. Account. the General related to EUR 1.1billion of anamount capitalincludes available regulatory Group Asia. The 292% in and Europe 172% inContinental UK, 234% inthe Belgium, in 174% solidat remained segments but downinall segmentscame inthebusiness The solvencyratios Belgium. inLife Management under Funds andhigher across allsegments inNon-life thegrowth following requirements, minimum solvency higher and impairments resultincluding negative Insurance followingthe ofavailablecapital theloweramount decrease reflects The 207%. to from232% ratiowentdown Insurance solvency 2010,the end ofDecember the Compared to EUR 3.6billion. to amounting requirements with minimumsolvency EUR 7.5billion, to activitiesamounted oftheInsurance Total availablecapital 2010. end 237% vs.282% of Solvency ratio aGroup to corresponding EUR4.9billion, excess amountsto solvency The 2010. endof 9.2billionatthe to EUR compared billion EUR 8.6 to amounted underIFRS regulatory capital available total 2011, Asat31December view. the regulatory on based solvencycalculation the report 2011to in Ageas decided Solvency lifeactivities. sale oftheGerman EUR 14milliononthe resultof asthenegative International aswell Cardif Lux EUR 30milliononthemergerofFortisLuxViewith resultof positive includesa Account General the result of The net EUR 121million. of 2011result impactonthe negative inatotal 28 million,resulting ofEUR taximpact deferred a 10 million,and EUR payment of first coupon impactofa positive includesthe result also The net million in2011. ofEUR32 theamortisation 159 million,including EUR of lossin2011 unrealised inanet Thisresulted year-end. 794millionat at EUR werebooked 2011 September of at theend EUR 953million Securities, acquiredat Tier 1Debt Bank The Fortis 2011. EUR 779millionend to end 2010 EUR 933million million from byEUR154 inRPIdecreased equity investment elements, Ageas’s ofboth million). Asaresult EUR 43 share at year (Ageas’s 96 milliononlast EUR post tax,up EUR 190million to onsoldswapsamounted gains the realised reserve including hedge end, the million.Atyear ofEUR586 goodwill impairment on an and million netprofit ofEUR144 negative), consisting million EUR 197 shareat negative (Ageas’s EUR 441million to amounted at100% Royal ParkInvestments result of The net 20
Association of ageas SA/NV and ageas N.V. in 2011. 2011. N.V.in ageas SA/NVand ageas Association of Articlesof ofthe amendments the about information for detailed 26 onpage Statement Governance Corporate the to Please refer ofageas Association Articlesof the to Amendments 1.3 activities. its tocontinue of EUR3.6billion equity capital withashareholders’ and sufficientresources possesses company the despite theloss, opinionthat, Directors isofthe of Board The EUR 1,183,132,659. of carried forward aloss reported has The company law withBelgian SA/NV inaccordance ageas Continuity statement 242. 237until respectively 230until231 thepages found on N.V. canbe ageas SA/NV and ofageas and incomestatement position financial of Statement respectivelythe on An explanation in2011. negativeimpact byaEUR36million partially mitigated in2010 EUR175million positiveimpactof a broken downin islimitedtoEUR139millionpositiveintotal, equity shareholders’ on million. Theimpact 2011 isEUR656 at 31December the liabilityas Based ontheseparametersthenetpresentvalueof reasons. forcomparison restated been have 2010 figures for The option. put 2018 ofthe exercise pricein of theestimated presentvalue againstthe afinancialliability recognised Ageas has Asaresult a review. subjectto been optionhave put exercise ofthe tothe related conditions and exactterms The Ageas. 2018 to 1January starting period inthesix-month Belgium AG Insurance stakein acquired toresellthe put option Bank a to Fortis granted Ageas ofthistransaction As part million. EUR1,375 amount of foran Bank toFortis Belgium AG Insurance of 25% +1share the saleof wassignedon agreement 2009 an March that on12 Ageas disclosed 2008, of Statements Financial In theConsolidated Bank Fortis heldby Belgium, AG Insurance 25%+1 shareof put optionrelatedtothe Liability withrespecttothe
SA/NV and ageas N.V. N.V. ageas and SA/NV Annual Report 2011 21
shes converted in the will be Ageas will receive953 million EUR for the redemption of the Tier 1 instrument. Ageas will pay an indemnity of EUR 287 million. Net proceeds, to be received on 26 2012, March will amount to EUR 666 million. A positive impact due to the redemption of the Tier 1 instrument amounting to EUR 131 million. This relates to EUR 159 million higher value of the instrument compared to its amortised cost value end 2011 and EUR 28 million cancellation of the corresponding deferred tax asset; A positive net impact related to the pro rata release of the RPN(I) liability amounting to EUR 21 million. Ageas reviewed the level 3 valuation of the RPN(I) and decided to include EUR 169 million floor in the valuation of the remaining RPN(I), corresponding to 37.06% of the indemnification paid. At year end, the RPN(I) liability amounted to EUR 190 million and as a result the release amounted to EUR 21 million; A negative impact of EUR 299 million due to indemnifications. This amount breaks down into the EUR 287 million indemnification paid and EUR 12 million net loss due to costs related to the transaction and including the best estimate of the fair value of the annual indemnification, based on the assumption that the remaining Ca next years. After conversion, the related shares will be dividend entitled which could lead to a potential maximum dilution of 1.3%.
The indemnity a 100% conversion for was set at EUR 456 million, so Ageas will indemnify BNP Paribas for 287 EUR million as a result of theabove conversion. Following the conversion, the to exist on RPN(I) liability ceases basis. In case BNP a pro rata Paribas exchanges additional CASHES within a period of 2 years, it will be indemnified within the limits specified in the agreement reached on 26 January 2012. Ageaswill also pay Fortis Bank an annual indemnification for the 46,439,042 non-converted shares underlying remaining CASHES outstanding. The settlement impacts on Ageas as follows: Positive impact the Net Cash position of EUR 666 million on the first quarter 2012 of impactin result Negative EUR 147 million he Board will ask, as usual, for financial position
Settlement with Fortis Bank and BNP Paribas On 26 January 2012, Ageas and Fortis Bank reached an agreement on a partial settlement of the RPN(I) and the full call of the Tier 1 instrument, issued by Fortis Bank and for 95% held by Ageas. The settlement and call were both subject to the successful cash tender by BNP Paribas on the CASHES financial instrument. On 6 February 2012, BNP Paribas converted 7,553 of the tendered securities out of 12,000 CASHES securities outstanding (62.94%) into 78,874,241 Ageas’s shares. BNP Paribas committed not to sell these shares for a period of six months. The total number of outstanding Ageas shares remains unchanged. However, the number of shares entitled to dividend and voting rights increased by 3.5%. the renewed authorisation from the shareholders to purchase up to 10% of its remaining outstanding shares. Share buy-back Ageas has completed the share buy-back programme announced on 24 August 2011. Between 24 August 2011 and 25 January 2012, Ageas has bought back 192,168,091 shares corresponding to 7.3% of the total shares outstanding and totalling EUR 250 million. At year end 2011 the buy-back stood at 175,163,656 shares, corresponding to EUR 228 million. Together with the shares previously held by Ageas, the total amount of shares now owned by Ageas amounts to 8.9%. Ageas currently holds the shares as treasury shares. Ageas’s Board decided has to propose to the shareholders at the next shareholders meetings (in Brussels on 25 April 2012 and in Utrecht on 26 April 2012) the cancellation of these bought back shares. At the same shareholders meetings, t There have been no material events since the date of the Consolidated statement of financial position that would require adjustment in Ageas Consolidated Financial Statements as at 31 December 2011. 1.5 Events after the date of the Consolidated statement of There are no transactions or other contractual relationships to be reported between ageas SA/NV and its Board members that gave rise to conflicting interests as defined in the Belgian Companies code. 1.4 Certain transactions and other contractual relationships
Annual Report 2011 structure, please refer to Note 4 Shareholders equity. equity. Shareholders 4 refer toNote please structure, andthecapital dividend rights the Ageas, of shares the outstanding on information moredetailed For instruments. collateral forthese as pledged are as longthey rights norvoting dividend not bear FRESHwhichdo tothe related shares 39,682,540 CASHES and to related shares includes125,313,283 number 2011. This atyear-end is2,623,380,817 shares issuedAgeas of The number 2011 of attheend Outstandingshares 1.7 business. ofour underlyingprofitability inthe and thecompany strength of inthe belief ourstrong reflects proposal dividend 2011. This for share per of8eurocent cashdividend agross shareholders bythe forapproval propose decidedto has Board Ageas’s Dividend 1.6 Ageas. positionof financial of statement impactonthe have asignificant will agreement the expected that itisnot 2011, Greece atyear-end Ageas on of the exposure intoaccount and taking information available thecurrently considering that concluded Ageas has ofGreece. bail out the second to related ministers zone Finance Euro bythe wasannounced agreement an 2012, On 21February Greece Bail outof affected. companies isnot insurance oftheoperating solvency 2%.The with approximately willdecrease available solvency solvency.The Group Account and oftheGeneral equity willinfluencethe above results stated The net Solvency Impact on EUR 2.8billion. by morethan will belowered Bank toFortis securities outstanding,thecreditrisk ofCASHES amount 1.8billionnominal EUR conversion of the Tier 1and of the EUR 953millionredemption ofthe As aresult EUR 2.8billion Bank of Lower creditrisktoFortis lowered inproportion. alsobe State will Belgian and the BNP Paribas payments to Thequarterly RPN(I)willbeapplied. ofthe valuation model forthe floorlevel; will remainatthis oftheRPN(I) value million floor, the the EUR169 that islowerthan aliability RPN(I)generates the forvaluing the model As longas intheresults Decreased volatility 22
otherwise the value generated by our otherwise thevaluegenerated rules: under these be addressed elementsto respective the explanations concerning thefollowing gives Boardhereby The 2008. 1January Belgium on in 2006and on31December theNetherlands in came intoforce that Directive EUTakeover implementingthe rules the statutory with accordance in prepared hasbeen Report2011 Annual Ageas thatthe declares Directorshereby theBoardof For legalpurposes, of theimplementation to related Consolidatedinformation 1.9 Committee. RiskandCapital anda Committee Governance a Corporate hascreated Ageas committees legallyrequired two Besides these Directors. of Board to2.7 refer 2011; please of inthecourse the composition to andchanges of the composition detailsabout more members, for 3 consistsof The AuditCommittee the course of 2011; please refer to 2.7 Board of Directors. Directors. of 2.7 Board to pleaserefer of 2011; the course composition in the changesto and composition of the details about formore of3members, Committeeconsists The Remuneration Directors. of 2.7 Board to pleaserefer of 2011; the course composition in the changesto and composition of the details about more for of11members, Ageas consists of of Directors The Board and Committee Directors, Remuneration of Board Ageas 1.8
of ageas SA/NV; SA/NV; of ageas Association by theArticlesof Netherlands and the Belgium and lawin laiddownby threshold exceed the that third parties of majorshareholdings any Statements Company Financial SA/NV intheageas group’ theshareholder structure of and ofequity ‘Specifications theheading Ageas listsunder 2011; Statements ConsolidatedFinancial oftheAgeas Subordinated liabilities 30 describedinNote andthesecurities shares (ifissued) preference to extendonly ofshares transfer restrictions onthe 2011; Statements ConsolidatedFinancial oftheAgeas Subordinated liabilities 30 equity and 4Shareholders’ inNotes can befound capitalstructure prevailing overviewofthe a comprehensive the EU Takeover Directive and the Ageas Annual Report Report Annual Ageas Directive andthe the EUTakeover Audit Committee Audit Committee Annual Report 2011 23 Ageas shareholders are under an to obligation meet certain notification requirements when their participation exceeds or drops below certain thresholds, as prescribed by Belgian and Dutch law and by the Articles of Associationof ageas SA/NV. For ageas SA/NV, shareholders are the to notify Company as their participationwell as the FSMA when exceeds or drops below the thresholds of 3% or 5% of the voting rights or any multiple of 5%. For ageas N.V., shareholders at least have to notify the Dutch Authority for the Financial Markets (which will inform the Company) when their participation (shares or voting rights) exceeds or drops below one of the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. Ageas publishes such information on its website. Critical size: ability to compete effectively in a market, and reach a top-5 position in the medium term. Meaningful contribution: business should be able to make a meaningful contribution to the insurance earnings of Ageas. Return in excess of cost of capital taking into account value creation and specific risks. Ability to pay dividends over time.
1.10 Strategy Ageas offers a broad range of life and Non-life products, distributed through multiple channels to consumers and SME’s. It is active in eleven countries in Europe and Asia. Ageas has increased its focus on risk business (Life Non-life) and and fee business in mature markets in Europe, to lower its dependency on investment income. Ageas’s presence in mature and emerging markets in Europe and Asia creates a balance of growing and cash generating businesses and mitigates country- specific risks. Ageas constantly invests in its businesses both organically and through add on acquisitions. Where the it sees right opportunities, Ageas acquires new businesses in attractive markets with long- term growth potential, which meet certain strategic financial and criteria: no special rights no special rights are attached to issuedshares other than those mentioned in Note 4 Shareholders’ equity and Note 30 Subordinated liabilities of the Ageas Financial Consolidated Statements 2011; share option and share purchase plans, if any, are outlined in Note 10 Employee share option and share purchase plans of the Ageas Consolidated Financial Statements 2011. The Board of Directors decides on the issuance of shares and options, as applicable, subject to local legal constraints; except for the information provided in Note 4 Shareholders’ equity, Note 13 Related parties and Note 30 Subordinated liabilities of the Ageas Consolidated Financial Statements 2011, Ageas is unaware of any agreement among shareholders that may restrict either the transfer of shares or the exercise of voting rights; board members are elected or removed by a majority of votes cast at the Generalof Meetings both ageas SA/NV and ageas N.V. Any amendment to the Articles of Association requires the General Shareholders’ Meetings to pass a resolution to that effect. If fewer than 50% of the shareholders are represented, a second meeting must be convened which will be able adopt to the resolution with 75% of the votes regardless of the quorum. For amendments to the Articles of relatedAssociation to the twinned share principle, the General Shareholders’ Meetings of both ageas SA/NV and ageas N.V.comply with must the quorum and majority requirements laid down in those articles; the Ageas Board is entitled both to issue and to buy back shares, in accordance authorisations with granted by the General Shareholders’ Meetings of ageas SA/NV and ageas N.V. The present authorisations will expire on 27 October 2013 for ageas SA/NV and on 28 October 2013 for ageas N.V.; neither ageas SA/NV nor ageas N.V. is a party to any major agreement that would either become effective, be amended and/or be terminated due to any change of control over the company as a result of a public takeover bid; neither ageas nor ageasSA/NV N.V. has entered into an agreement with its Board members or employees, which would allow the disbursement of special severance pay in the case of termination of employment as a result of a public takeover bid;
Annual Report 2011 timing and (financial) outcome remains hard to estimate. hardto outcomeremains timing and(financial) and therefore the earlystages arestillat Most legalproceedings Fortis. predecessor Ageas’s issues thatstemfrom thelegacy forsolutions to lookproactively Ageas continues dividends. profit as net consolidated Insurance the 50%of - 40% payingout hasapolicyof company 11%. The inexcessof ininsurance equity on areturn to obtain Ageas aims criteria. meetstrict of itsactivities that each toensure itsportfolio re-assesses constantly group process. The soundriskmanagement bya underpinned to risk approach a conservative adopts position.Ageas of financial statement a strong ofmaintaining theimportance Ageas understands partners. its both Ageasand of thebenefit and capabilitiesfor knowledge allowing ittoleverage level business regionaland atthecorporate, hubs competence Ageas maintains basis. onacontinuous group expertise withinthe knowledge and of and exchange development inthe Ageas invests prevent this. circumstances market strategicor where regulation, except majorityownership prefers Ageas distribution partners. with arejointventures companies Often, Ageas’soperating Ageas’s strategy. of theheart sitat partnerships andassuch, wherever itoperates partnerships indeveloping proven competence a has The group products. ofAgeas’s theirawareness increase needs and their understand tobetter itscustomers access Ageasto allow these channels sametime At the products. toaccessAgeas’s enable customers channels Multiple operates. marketinwhichit onthe depending channels distribution multiple, often and different, Ageas uses 24
df. Ageas will continue its efforts to adhere to the applicable codes. codes. applicable to the adhere willcontinueitseffortsto df. Ageas http://www.ageas.com/en/Document website: Ageas’s available on is Charter Corporate Governance The useful. thatAgeasconsiders trends (international) anticipate on to even or regulation applicable rulesand align with further Charter to Governance itsCorporate alsorevisited Ageas has information about Ageas. topublic efficientaccess investorsfastand and shareholders Club,allowingretail Shareholders’ Ageas the presented Ageas meetings Shareholders Annual at the Furthermore, Netherlands. the Belgium and meetingsin Shareholders Ordinary tothe approval Committee for Executive Group ofthe forthemembers Policy Remuneration the by submitting enterprises state autonomous companies and inlisted governance corporate reinforcing of 6April2010 law ofthe intoforce entering the alsoanticipated legislation. Ageas with thenew bylaws ofAgeas the adapting byearly 2007/36EC, Directive the implementing listedcompanies, in of shareholders certainrights of on theexercise (asamended) 2010 20 December thenewlawof of intoforce entering the onlyanticipated Ageas not stakeholders. andother public tothe disclosure andtransparent governance toeffective importance attaching great insurance group, international asan on itsfuture build to continued Ageas In 2011, CorporateGovernanceStatement 2 results. of the2012 anoutlook provide able to are not we environment andtheinsurance financial markets the uncertainties in However,giventhe ofitsbusiness. underlying profitability the andin thecompany of strength beliefinthe astrong Ageas has Outlook 1.11 s/Corp_Govern_Charter_EN.p Annual Report 2011 25
100% N.V. Intreinco Intreinco
75% Augur (the sale will be concluded
SA/NV
G Insurance G Insurance A 100% 50% geas B.V. A
100% the UK, Continental Europe, and Asia; Various Legal N.V. entities part of part of entities a 44.7% stake in Royal Park Investments – a holding entity of a portfolio of structured credits; financial assets and liabilities linked to various financing instruments. a 75% stake in AG Insurance; insurance activities in: - - - Continental Europe Continental geas Finance ageas N.V. ageas N.V.
A Ageas has further simplified its legal structure and streamlined its operational activities, by respectively liquidating two Luxembourg companies, FGF Lux S.A. and Ageasinvestlux S.A., and divesting its German insurance activities to in early 2012), its portfolio of run-off reinsurance activities to Swiss Re and by restructuring its life insurance activities in Luxembourg. In 2012, Ageas will continue to investigate further material simplification of its corporate structure taking into account the interest of all stakeholders. In 2011, Ageas acquired Castle Cover Limited and a 33.11 percent stake in AKSigorta and merged Fortis Lux Vie with Cardif Lux International (see Note 3 Acquisitionsdisposals). and Ageas currently comprises of:
100% geas Insurance geas Insurance SA A International N.V. International geasfinlux geasfinlux Ageas Asia Ageas Asia A Various Legal entities part of part of entities
geas is completed early 2011. The name change of
ageas SA/NV ageas SA/NV 50% o N.V. please early March 2011. took 100% ssss SA Financing Financing geas Hybrid geas Hybrid A
Ageas UK Ltd. Ageas UK Ltd. ssss AP 50% 50%
Ageas Reinsurance N.V. into Intreinc 44.7% * The rebranding of the legal entities into A SA/NV Royal Park Investments Investments
Ageas, the former Fortis, was created in 1990 by the cross-border merger – Europe’s first – of Belgian insurer GroupAG with Dutch bancassurance group AMEV/VSB. Our overall legal hasstructure been adapted regularly in the intervening years. Ageas has two parent companies (a Belgian one, ageas SA/NV, and one, a Dutch ageas N.V.) and shares which have been twinned to form one Ageas share. Ageas shares are ordinary shares in every respect, including voting rights and dividend entitlement. In April 2010, the name of Fortis changed into Ageas. Each Ageas share carries a single at thevote shareholders’ meetings of ageas SA/NV and ageas Ageas shareholders N.V. are thus entitled to attend and cast their votes at the general meetings of both companies. two shareholders’ The meetings basically deal with the same matters. The Articles of Association specify that for certain resolutions valid, they to be must be passed by both meetings. 2.1 Ageas’s legal structure and shares
Annual Report 2011 http://www.ageas.com/en/Pages/articles_of_association.aspx. http://www.ageas.com/en/Pages/articles_of_association.aspx. website: toour please refer N.V., ageas SA/NVand thebylawsofageas of the modification for applicable theprocedure about information detailed For more state enterprises. and autonomous listed companies in governance corporate 2010reinforcing 6April lawof force ofthe entering into the on anticipated Ageas modifications, With these N.V.: ageas and SA/NV ofageas ofAssociation the Articles to thefollowingamendments amendments, textual, non-material tomerely next approved, meeting shareholders the In April2011, ofageas Association Articlesof the to Amendments 2.2 Subordinated liabilities. in Note30 issetout liabilities subordinated Ageas’s on Additional information (‘FRESH’) liability subordinated outstanding an has Ageas of financialposition. of thestatement date afterthe Events inNote56 equityand in Note4Shareholders’ Charterand Governance Ageas Corporate inthe shares issetout onAgeas’s information Additional issued. shares any preferential classesnor share different neither are There shares. 2,623,380,817 in2011, unchanged remained of issuedshares number The total 26
the implementation of the record date. date. record ofthe the implementation meeting; the shareholders of on theagenda point additional tobringan EUR50million atleast amounts to value stockexchange whose Ageas units capital orowning 1%ofthe least at representing shareholder(s) (a) the rightfor the shareholders; to approval for report theremuneration tosubmit the obligation due; amounts any coupon insharesfor settle instruments to hybrid financial certain obligationsunder meet thecontractual to capital theauthorised sharesunder toissue authorisation SA/NV and ageas N.V. N.V. ageas and SA/NV
exchangeable into Ageas shares. Ageas shares. into exchangeable of expertise and skills set by Ageas for Board members. members. for Board skills setbyAgeas and of expertise thestandards withoutreducing renewal for submitted members are Board theexisting of themandates or for appointment proposed tobe have members whennewBoard imposed bythislaw ofDirector Board companies. The listed ofDirectors Board womeninthe participation of the initiativepromotes This participants. of the one mentor of isactivelysupporting of Directors Board ofthe Chairman level.The Board ofwomenat participation level ahigher tohave thistrend supports Ageas female. members are Board eleven outofthe two Today,already achieved by2017. shouldbe women. Thisquota shouldbe Board their members of gazette requiring from listed companies that at least 1/3 least thatat from listedcompanies gazette requiring Belgian official a lawwaspublishedinthe 2011, On 14September Code. Corporate Governance oftheDutch provisionIII.2.2 practice withthebest in accordance are independent directorsand arenon-executive ofDirectors Board ofthe majority Jin.The Shaoliang Hadders, RoelNieuwdorpand Jan Zegering Perl, Arts, Lionel McIntyre,Frank Bridget Brückner, Ronny BelénRomana, (vice-chairman), Selliers deMoranville de (CEO), Guy Smet Bart De Mey(chairman), namely: JozefDe members, ofeleven consists currently of Directors The Board Directors. of the Board member of as Hadders JanZegering Perland Nieuwdorp, Lionel Jin,Roel Shaoliang Arts, Moranville,Frank Guy deSelliers DeMey, ofJozef reappointment the approved also shareholders The by Ageas. prepared programme induction the director followed appointed The newly 2014. in of Shareholders General Meeting Annual ofthe untiltheend director asnon-executive Brückner Ronny of appointment the N.V.approved ageas and SA/NV ageas ofrespectively 2011,shareholders April 28 On 27and Composition 2.3.1 Charter. Corporate Governance intheAgeas indetail described are organisation structure and anditscomposition, Directors theBoardof responsibilities of and role The theArticlesofAssociation. two countriesand practice inthe governance legislation,normal Dutch Belgian and by defined within theframework operates of Directors The Board ofDirectors Board 2.3 s will consider the obligations s willconsiderthe Women on Board on Women rd of the ofthe , as Annual Report 2011 27 In addition, the Board, under the leadership of the Chairman and with the assistance of a third party, conducted a self-assessment. This self-assessment was organised through a web-based application followed by bilateral discussions between the Chairman and each Board member and a briefing in the Board on of Directors the outcome of this exercise. The self-assessment focussed on Board effectiveness on items such as complementarities, background of the the individual Directors, and group performance of the Board, the structure and the ofresponsibilities the Board Committees as well as the interaction between the Board members mutually, with the Chairman of the Board and with Executive Management. The web-based application included the assessment of the Chairman of the Board of Directors and the Executive Board member. There are no transactions to report in which there is a conflict of interest with Board members as required under Dutch and Belgian company law. There are two related party transactions to report in accordance with practice best provision III.6.4 of the Dutch Corporate Governance Code (see Note 13 Related parties). As a result of the related transaction, party Ronny Brückner has lost his capacity as independent member of the Board of Directors. The concept of Corporate Social Responsibility (CSR) is not new for Ageas and is in many ways adopted across the company. A project is started initiativesto bring all local together group within a wide view. This view will take into account the specific characteristics and objectives of the but local entities strives to develop a common view on CSR for Ageas. In line with its organisational model there is a very strong local empowerment with respect to social commitments allowing Ageas to benefit from the various CSR initiatives taken currently within the businesses, in line with their choices, specific priorities and own strategic views. preparation of the Meetings General of Shareholders; the strategy pursued by Ageas as a whole and by each business; ongoing development of each of the Ageas businesses; quarterly, half yearly and yearly financial statements; the Annual Report 2010; press releases; the 2012 budget; the solvency of the company; the asset management and the investment policy of the company; the risk policy framework of Ageas; investor relations and corporate communication; reports of Board Committees following each of their meetings; Ageas’s organisational and legal structure; nomination and renewal of directors appointment for by the General Meetings of Shareholders; the succession planning of the Board of Directors; actualisation of the Corporate Governance Charter of Ageas in general and the Board Committees in particular; the governance and the performance of the Group Executive Committee and Group Management Committee; the Remuneration Policy in general and the remuneration of the CEO and Executive Committee members in particular; issues; legal proceedings and legacy of follow-up various acquisition files.
2.3.2 Meetings The Board of Directors met on 11 2011.occasions in In principle, the Board of Directors has eight scheduled meetings a year. Attendancedetails can be found in 2.7 Board of Directors. In 2011, the Board meetings dealt with the following matters, among others: The CEO reported in the Board of Directors meetings on the development of the results and the general performance the of different businesses.
Annual Report 2011 offivemembers. amaximum three and minimum of a andhas directors non-executive is composedof Board Committee each Charter, Ageas Governance In linewiththe Charter. Governance Corporate the Ageas describedin are Committee Board ofeach ofreference The terms dissolved. Fortis, are issues oftheold legacy withthe todeal in2009 created taskforces temporary whichboth resultof Asa Task Force. Legal of the competences over the hastaken Committee Governance The Corporate committee. this new Force to FinancialTask fromthe aretransferred Fortis former legacies ofthe ofthe aspects to the financial related competences but alsothe discussed inthisBoardCommittee are theGroup capital positionof the relatedto andthematters Notonlyrisk and CapitalCommittee. createdRisk to riskanewly RiskCommitteerelated Audit and fromthe theresponsibilities transfer decidedto Directors therefore of Board Committees.The Board two separate committee into and Risk Audit the toseparate onatrend Ageas anticipates reference. of terms composition and includingtheir Committees, Board the Directorshasrevisited of Board the of2011, In thecourse Board 2.3.4 Committees options. 103,384 and shares of 31,211,826 total helda ofDirectors Board ofthe members 2011, 31 December On intheNetherlands. Financial Markets forthe Authority the Belgium and in FSMA tothe arereported Directors of the Board of member by each held shares optionsand ofstock and updates details lawandregulations, Belgian withDutchand In accordance in2011. Executive Committee the members of the and directors non-executive of remuneration on the information for detailed members Committee Executive members and of Director ofBoard Note11Remuneration to Please refer fees. other sharesor rights, option incentives, profit-related variableor any notreceive do directors position. Non-executive holdaBoard inwhichthey subsidiaries Ageas inthe remuneration also receive directorscan Non-executive Committee meetings. andBoard Board feesfor plusattendance annual remuneration ofabasic directorsconsists ofnon-executive The remuneration Remuneration 2.3.3 28
recommendations to the Board for final decision-making. finaldecision-making. for Board tothe recommendations Committee’s the submitted meetingand each Directors after of Board to the topics onthese the CGCreported of The Chairman dealt with: were following matters The Directors. of 2.7 Board in befound can details Attendance in2011. occasions met onnine TheCGC tohisownsituation. ofissuesrelating during discussion than other themeetings, attended CEO The Hadders. Jan Zegering de Selliers (Chairman), Guy JozefDeMey 2011: members in thefollowing The CGCcomprised Charter. Governance Corporate the Ageas (CGC) Committee Governance TheCorporate indetail CGC aredescribed ofthe and responsibilities The role 2.3.5 ofDirectors. Board found in2.7 Committeescanbe Board ofthe details Attendance
and Executive Management. Management. and Executive members Board interest of conflictsof the reviewofpotential Fortis; of theformer legacy tothe legal issuesrelated Statements; Financial in theAgeasConsolidated activities oftheCGC and the governance disclosures regarding Executive Management; ofthe members other and the of theCEO the performance Management; Executive the members of other the CEOand targets of CFO; ofthe appointment Management; Executive ofthe succession planning member; Board additional an nomination of the reviewof Directors; of Board the ofwomenin therepresentation Directors including of Board ofthe successionplanning, Directors andthe of Board of the members ofthe mandates the the renewalof particular; Committeesin Board ofthe of reference and terms and composition ingeneral Charter Governance the Corporate Group; ofthe structure organisational Moranville, RoelNieuwdorpand Annual Report 2011 29 monitoring risk management and systems, control based on reports by management (management control statements and their follow-ups).
As from the introduction the of Capital Committee Risk and part of the authority of the former Audit and Risk Committee has been moved to theand Capital Committee: Risk The Chairman of Auditthe Committee and the Chairmanthe of Risk and Capital Committee reported on the outcome of the deliberations to the Board of Directors after each meeting and presented the recommendations of Audit Committee the and the Risk and Capital Committee to the Board for decision-making. 2.3.7 The role and responsibilities of the Remuneration Committee are The Remuneration Committee (RC) described in detail in the Ageas Corporate Governance Charter. The committee is assisted by Towers Watson, an external remuneration consultancy company that provides market-related information and advice on commonly applied reward elements, best practice and expected developments. Towers Watson does not provide material compensation or benefits-related services to the Executive Committee of Ageas, or to any other part the of Ageas organisation. The Remuneration Committee consists of Roel Nieuwdorp (Chairman), Frank Arts and Belén On 23Romana. August 2011, Lionel Perl resigned from theRC to become member of the Risk and Capital Committee. The CEO and the CRO attended the meetings, other than during discussion of issues relating to their own situation. The committee met on six occasions in the year under review. Attendance details can be found in 2.7 Board of Directors. monitoring the integrity of quarterly, half-yearly and annual financial statements, including disclosures, consistent application of the valuation and accounting principles, consolidation scope, quality of the closing process, and significant issues brought forward by the CFO or the external auditors. The committee also reviewed the press releases on the quarterly, half-yearly and annual results; monitoring of the findings and the recommendations of the external auditor. This included the review of the external audit plan and the reporting by the auditor. The Audit Committee monitored the independence of the external auditor, based on factors such as its declaration of independence and fees, and by tracking the volume and nature of non-audit services pre- approved in line with Ageas’s Policy on the independence of the external audit firm; reviewing the committee’s terms of reference and an executing annual self-assessment of its performance; reviewing the disclosures regarding business risks, risk management and internal control and the Audit Committee’s activities in the Ageas Consolidated Financial Statements.
2.3.6 The role and responsibilities of the CommitteeAudit are described The Audit Committee in detail in the Ageas Corporate Governance Charter. The Audit Committee is supported by Ageas Audit Services, Compliance and Finance. In the course of 2011, the terms of reference of the Board Committees have been revisited. The Audit and Risk Committee has been split into a separate Audit Committee and Risk and Capital Committee. The Audit Committee comprised the following members in 2011: Jan Zegering Hadders (Chairman), Shaoliang Jin, Bridget McIntyre and Lionel Perl. Sufficient experience and skills with regard to audit and accounting are available among the members of the Audit Committee basedtheir upon past and current positions. Amongst others, Jan Zegering Hadders, chairman of the Audit Committee, is also chairman of the Audit Committee of Grontmij N.V. and GE Artesia Bank and Bridget McIntyre thepreviously held position of Finance Director in different major corporations and is qualified accountant. The committee met on four occasions in 2011. Attendance details can be found in 2.7 Board of Directors. The meetings were attended by the CEO, the Deputy CEO, the CFO, the CRO, the internal auditor and the external auditor. The following matters were considered:
Annual Report 2011 the year under review. review. the yearunder occasionsin four meton committee Directors.The in 2.7Boardof can befound details Attendance Brückner. andRonny Lionel Perl Selliers deMoranville(Chairman), The RCCconsistsofGuyde Charter. Governance Corporate the Ageas RCC aredescribedindetail and responsibilitiesofthe The role Capital Committee. created Riskand a newly to to riskaretransferred RiskCommitteerelated Audit and fromthe responsibilities The Committees. Board composition ofthe TheRiskandCapitalCommittee(RCC) and responsibilities revisitedthe Board ofDirectorshas the In 2011, 2.3.8 Committee. Remuneration of the in theReport canbefound Committee Remuneration onthe information Further when required. decision-making on Board the advised meeting and each after ofDirectors Board the matters to aforementioned the on Committeereported the Remuneration of The Chairman included: in2011 Committee bytheRemuneration discussed The matters 30
execution of the annual self-assessment of its performance. ofitsperformance. annual self-assessment execution ofthe the and ofreference committee’s terms the reviewof management; Ageas senior of infavour plan issued the share Statements; Financial Consolidated Ageas Committeeinthe Remuneration and activitiesofthe remuneration disclosure regarding new CFO; ofthe appointment and the pay,ifany, CFO, theirseverance CEO andthe with theDeputy thecooperation of the termination Executive Management; ofthe the targets Management; the Executive of Indicators Performance the Key Management; Executive ofthe (LTI) Incentive Term the Long Management; Executive the (STI)of Incentive Term the Short market practices; current alignedwiththe Policyingeneral the Remuneration peers; by such used Indicators Performance Key the peers, including with Management and Executive members Board ofthe remuneration ofthe the benchmarking
as CFO. Ageas joined Boizard andChristophe 2011 30 September, on company the (Deputy CEO)left Bruno Colmant course of2011. the changedin Committee Executive of theGroup The composition necessary. whenever held meetings are Further timetable. predetermined GroupExecutiveCommittee a accordingto week once a Committeemeets Executive The Group 2.4.1 Board. bythe endorsed budgets policies,plansand values, strategies, inlinewiththe Ageas to manage Committeeis Executive the Group of Therole Committee. Management Group the Association and of Articles tointhe Committee referred Executive Group CEO,the the composedof is management Ageas’s executive Executive 2.4 management whenrequired. on decision-making theBoard advised meetingand each ofDirectorsafter Board to the matters the RCCreportedonaforementioned The Chairmanof in2011included: bytheRCC discussed The matters
Ageas group. Ageas group. ofthe solvency andthe the capital allocation of the monitoring Fortis; oftheformer legacy tothe financial issuesrelated by management; risk policiesprepared the reviewof management; by reports basedon risk management, of the monitoring ofitsperformance; self-assessment annual executing an and ofreference committee’sterms the the reviewingof Annual Report 2011 31 to provide the and Board the three members of the Executive Committee; the heads of the four business segments: Steven Braekeveldt, CEO Continental Europe; Antonio CEO Cano, AG Insurance (Belgium); Barry Smith, CEO United Kingdom, and Gary Crist, Asia; CEO Emmanuel Van Grimbergen, Group Risk Officer. they are made aware, in a timely manner, of the extent to which the entity is moving toward achievement of the company’s strategic, financial and operational objectives while implementing the Ageas strategy; the operations are executed efficiently and effectively; the financial and non-financial reporting is reliable; the company acts in compliance with laws and regulations and with internal policies respect to with the conduct of business; the assets are safeguarded and liabilities are identified and managed; the companies remain within their risk limits. the budget control cycle; clear instructions and planning of the reporting process; clear processes and accounting policies and manuals; validation process for reported budget and actual figures per operating company; sign-off of the figures by local management; quarterly review and annual audit of the figures by the external auditor.
At the ofend 2011, the Group Management Committee was composed of: 2.5 Internal risk management and control systems The Board is responsible for approving appropriate systems for internal risk management and control and reviewing the implementation thereof. The Ageas internal risk management and control systems are designed management with a reasonable level of assurance that: 2.5.1 Ageas has designed its financial reporting process including the Financial reporting cycle following measures of internal control: Bart De Smet, CEO, is responsible the for Business, Strategy and Business Development, Audit, Communications and the Company Secretariat; Christophe Boizard, CFO, is responsible for Finance, Investor Relations and financial issues related to the legacy of the former Fortis; Kurt De Schepper, CRO, is responsible for Risk, Compliance, Legal and legal issues related to the legacy of the former Fortis and Support Functions (Human Resources, IT and Facility).
2.4.3 The Group Management Committee advises the Group Executive Group Management Committee Committee on issues related to defining and implementing corporate strategy, business plans and budgets and for the company’s operational activities. The Group Executive Committee discusses these topics extensively and seeks the advice of the Group Management Committee on the matters above. In principle, the Group Management Committee meets twice a month according to a predetermined timetable. Further meetings are held whenever necessary. 2.4.2 Remuneration The remuneration of the Group Executive Committee members consists of a fixed base salary, a variable annual incentive and a variable long-term incentive. Details of the remuneration paid to members of the Group Executive Committee are provided in the Report of the Remuneration Committee and Note 11 Remuneration of Board of Director members and Executive Committee members. On 31 December the 2011, Group CommitteeExecutive of Ageas is composed of Bart De Smet (CEO), Christophe Boizard (CFO) and Kurt De Schepper (Chief Risk Officer). The only CEO is the executive member of the Board of Directors. The Board of Directors thanks Bruno Colmant for his valuable contribution in this period of difficult the history of the company.
Annual Report 2011 ofAgeas. auditors the external by (annually) oraudited reviewed(quarterly) are material entities ofthe a closingthefigures for Inaddition, correct. figures are reported thatthe statement CFO awritten Group provide tothe to entityhas CFOofareporting Each fullyear. the expectations for aswellthe abusinessperspective results seenfrom presents the management inwhichlocal and localmanagement Management CFO,Performance Group Finance, between Group place meetingstake business of thefigures delivery After the closing. the what time)for at them(and isexpectedfrom or input of information on whattype to informthem HumanResources) Officeand Pension Secretary, Company Policies, Accounting Risk,Legal,Tax, (like departments non-financial alsocontacts Finance entities, Group local Beside the department). (consolidation Finance byGroup system isupdated consolidation the period, aclosing For atyear-end. quarterly and reporting theexternal takes placemonthly, internal reporting The principles. accounting withIFRS inaccordance preparation, figures Closingsforactual likethebudget place, takes actualfigures Ageas of of The reporting 2.5.3 Ageas. Board of the approval to forfinal issent the budget thebudget, Committee, approved Management oftheGroup advice onthe based Committee has, Executive After theGroup Committee. Group Management tothe advice used, issentfor assumptions the explanation on awritten including budget, andtheconsolidated Account) General andthe Continental Europe Asia, UK, (Belgium, per segment thebudget Finance, byGroup process isfinalised Once thebudget withlocalmanagement. isdiscussed found, including anyissue validation, ofthe outcome The on thebudgets. validation check a executes Finance Group arereported, budgets After the budget. specific ofthe preparation forthe taken intoaccount tobe circumstances economic strategyand discuss thefuture localentitiestopreliminary ofthe management CFO andthe theGroup of CFOOffice), (part Management Performance between place take meetings budgets, ofthe During thepreparation CFO’s. local sent tothe Group CFOand by the approved is The instruction instruction. a budget quarter with inthesecond andstarts Finance byGroup process iscoordinated Thebudget reportingcycle. basisofthefinancial isthe The budget Budget 2.5.2 process 32
duties. duties. publication theregulatory tofulfil AFM) and authorities (FSMA theregulatory to Group Finance by aresent press release and the reports or annual theinterim of thepublication, day On thesame meeting. Board this inthe on thenreports AuditCommittee The Board). of the part (as Committee with theAudit anddiscussed is firstreviewedby Allinformation Board. tothe auditor ofexternal role intheir reported tobe have viewoftheauditor thatinthe includes elements Theletter Board. the Letterto the and Board forthe presentation a prepares auditor external the Inaddition, forapproval. of Ageas Board tothe sent are memorandum andclosing presentation Board wellasthe as bepublished alldocumentsto approval, After this documents. inthe opinion includetheir to written approval give auditors final, the are documents Oncethe gives itsapproval. Committee that Executive Group itsadvicetothe gives reports and discusses the Committee Group Management Committee. The Management theGroup to sent reports are the consolidated Finance, isfinalisedbyGroup closingprocess the auditors. Once withthe arediscussed Issues auditors. external audited bythe and respectively reviewed are reports and annual The interim log. inanissue isincluded Thisexplanation reporting’s. figures inthe ofthe evolutions explainsthe analysesand Finance to this,Group Further same. the are everywhere notes different in item mentioned on therelevant checkstoensurethatfigures it executesalsocross correct figures, the docontain inthereporting verifies thatallnotes documents and the in departments non-financial the received from includestheinformation Finance Group thefigures. report on management theinternal statementsand financial and annual oftheinterim preparation forthe isresponsible itself Group Finance Annual Report 2011 33 2.6 The corporate governance reference codes Ageas’s international structure, headed by two listed parent companies, one Dutch and one Belgian, means it has to comply with two corporate governance systemsrefer that to two separate codes. While the principles underlying these codesare largely similar, there are a number of differences too. The reference codes are available on the Ageas website: http://www.ageas.com/en/Pages/governance.aspx. Because of the specific Belgo-Dutch context in which Ageas operates, we have developed our own ‘single tier’ governance structure. The structure is described in detail in the Ageas Corporate Governance Charter. Those aspects of corporate governance at Ageas that require additional explanation in the light of the Dutch or Belgian codes (the Frijns Code – formerly known as the Tabaksblat Codeand – the Belgian Corporate Governance Code respectively) can be found in the next section. 2.6.1 The Belgian Corporate Governance Code was published on Ageas and the Belgian Corporate Governance Code 12 March 2009 (the 2009 Code) which redrafted the Corporate Governance Code of 2004. It applies all companies to incorporated under Belgian law, the shares of which are traded in a regulated market. The Code uses the ‘comply or explain’ concept, which means that if a company chooses fromto deviate any of the Code’s principles, it must explain its reasons for doing so in the ‘Corporate Governance’ section of its annual report. On 23 April 2010, the law of 6 April 2010 reinforcing corporate governance in listed companies and autonomous state enterprises entered into force. This law imposes the creation of a remuneration committee within the Board of Directors and provides for mandatory provisions related to the remuneration of top management of listed companies. The law has two important consequences, it provides for a legal basis of the ‘comply or explain’ principle of the Corporate Governance Code and some of the provisions of the Corporate Governance Code have been taken over by the law. , (iii) RPN(I) and (iv) the applicable to (ii) the call Ageas,
2.5.4 Assurance 2.5.4 Assurance Even a sound system of internal risk management and control cannot eliminate in full the possibility of poor judgement in decision- making, control processes being deliberately circumvented by employees and others, management overriding controls, and the occurrence of unforeseeable circumstances. The internal risk management and control systems are intended to provide reasonable, but not absolute, assurance that the company will not be hindered in achieving its business objectives in the orderly and legitimate conductof its business by circumstances which may reasonably be foreseen, and that the financial statements are free of material misstatement. The Board has evaluated the risk profile of Ageas as well as the design and operating effectiveness of the Ageas internal risk management and control systems. It has also considered the effectiveness of remedial actions taken. Please refer to Note 7 Risk Management, Note 21 Call option BNP shares,Paribas Note 33 RPN(I), Note 53 Contingent liabilities and Note 56 Events after the date of the statement of financial position for further information on respectively (i) the principal risks option on the Paribas shares BNP
contingent liabilities. For the purpose of best practice provision II.1.5 in the Dutch Corporate Governance Code and based on the evaluation performed, the Board considers that to the best of its knowledge, the internal risk management and control systems relating to financial reporting in the year risks worked properly under review and provide a reasonable assurance that the Ageas Consolidated Financial Statements 2011 do not contain any errors of material importance. This statement cannot be construed as a statement in accordance with the requirements of Section 404 of the US Sarbanes-Oxley Act, which is not applicable to Ageas. The Board will continue its commitment to further strengthen the Ageas internal riskmanagement and control systems. Annual Report 2011 What is more, the single-tier Board structure creates a specific structure creates Board single-tier the What ismore, group. bi-national facinga meet thechallenges to over theyears developed carefully hasbeen which structure, Ageas’s governance of coherence with theinternal ofthemconflict provisions. Some Code’s meetallofthe cannot,however, It possible extent. maximum Codetothe withtheFrijns to comply Ageas aims Qualifications 2.6.2.1 exceptions. and thefollowingqualifications to 2011–subject the FrijnsCodein provisions of practice andbest with theprinciples Ageas complied 2011. last timeinApril the for Shareholders, Meetings of Annual General discussed atthe were statements Ageas’s respective 2009. January force on1 cameinto Frijns Code The 2008. 10 December ‘Frijns Code’)on Code (the Governance DutchCorporate therevised presented Committee Monitoring Governance Code Dutch Corporate it.The from havedeviated inwhichthey explain anyinstances Code, orto Governance DutchCorporate the to have adhered thatthey reports annual intheir todeclare been legallyrequired DutchFrijnsCode the Ageasand lawhave Dutch under companiesincorporated listed Since 2004, 2.6.2 explanation: detailed more item requires principles.One 2009 Code’smain appliesallthe Ageas years, Reportsofprevious Annual the Ageas explainedin by law.Asalready tobe respected have invoked and cannotbe principle thecomply-or-explain provisions, For these 34
the Corporate Governance Charter. Charter. Governance the Corporate in Code, whichisdescribed Frijns andthe Governance Code Corporate the Belgian by set requirements combined the wehave that reason, For another. fromone differ nevertheless actually contradictory, which,ifnot criteria independence allsetout forinstance, 2005, February Commission of15 European ofthe therecommendation and Companies Act Belgian ofthe Article524 Code, theFrijns Governance Code, Corporate Belgian The formulated. are director’s independence ofa criteriainrespect thewayspecific and implementation its regarding raised, however, maybe little comment.Questions requires generally thisprinciple phrasing of The judgement.’ independent that director’s suchastoaffect conflict ofinterest a creates of eitherthat management orthe shareholders company,itscontrolling withthe relationship family orother close anybusiness, from befree director should a independent, be considered that:’To Codestates Corporate Governance Belgian The ofdirectors. Independence Principle 2.3:
Corporate Governance Committee. Committee. Corporate Governance Ageas’s as applyingto been interpreted Committee’ have appointment ‘Selection and the regarding Lastly, theprovisions consideration. into beentaken not have, therefore, These provisions receipt). thistypeofdepositary issue doesnot – Ageas for shares receipts (depositary IV.2–IV.2.8 and share) this typeofpreference have doesnot Ageas shares– preference on financing (voting right IV.1.2 at Ageas), practice outthe sets –III.8.4 must beindependent only, one person of the exception with members, Board supervisory (all sections:III.2.1 casewiththefollowing This isthe Ageas. applyto moreover, Codedonot, oftheFrijns provisions Several Committee until2007. Executive theFortis of De Mey,wasamember Chairman, Jozef Ageas’s body. decision-making andthesame executives inone andnon- ofexecutives expertise which ispreciselytocombinethe essenceof the model, Board ofasingle-tier context anomaly inthe isan (III.8.1) the company positionat executive have heldan not should Board ofthe thattheChairman Similarly, theprovision model. Board withthesingle-tier reconciled be andsocannot perform, they tasks thesupervisory and members Board to supervisory specifically aregeared provisions Code).These the Frijns III.6.7 of III.6.6and (respectively of thecompany’ management takes onthe whotemporarily member Board a‘supervisory and member’ Board supervisory a‘delegated regarding therules include context. These Ageas the into betranslated could not,however, Some provisions CEO. its Boardto oftheManagement individual members provisionsfor directorsand Ageas’s non-executive to been applied have Board Supervisory of the members provisions forindividual Directors, while of Ageas’s Board to been applied havethus Board Management orthe Board Supervisory atthe Provisions aimed fit itssingle-tierstructure. provisionsto various translate the obligedto has been Ageas Code, therefore, the When applying Code. Governance theDutch for ofreference frame primary not actasthe and whichdid theNetherlands in notcustomary is framework that Annual Report 2011 35 The Supervisory Board regulationswill draw up : As explained to the Annual General Meetings of Shareholders in May 2006, Ageas has drawn up and issued the required regulations on insider trading but contrary to Best Practice II.2.6 these regulations are not published on the Ageas website, since these regulations are numerous and tailored to highly specific local and/or business requirements. In line with the objectives set by Frijns Code,the the Ageas Corporate Governance Charter contains a Policy Statement summarising principles and guidelines on the use of inside information and private investments to be adhered to by all Board members, other senior managers, officers and worldwide. employees
BP II.2.6 concerning ownership of and transactions in securities by management Board members, other than securities issued by their own company. The regulations are published on the website. The Compliance Officer is notified at least quarterly of private investments in securities listed of Dutch companies. Please refer to 1.9 of the Report of the Board of Directors for more detailed information regarding to the implementation of the EU Takeover Directive and any anti-take-over protection mechanisms. The management Board shall ensure that employees : : Shares granted to management: Shares granted to without members Board Under the long-term incentive plan, shares can be awarded only to executive Theydirectors. may up to 50% sell of the shares in order to pay the tax incurred on them. The remaining shares may not be sold until six months after termination of their relationship with Ageas. The Ageas whistle-blower procedure (Ageas Internal Alert System) is not published on the website. The procedure is intended solely for Ageas employees; external disclosure would not enhance its effectiveness, but could have undesirable repercussions in countries where procedures of this nature can be subject to legal and/or cultural objections.
* toPractice’ Frijns the sections refers ‘BP’ ‘Best the of Code. BP II.2.5 financial consideration shall be retained for a period of at least five years or until at least the end of the employment, if this period is shorter. 2.6.2.2 Other exceptions 2.6.2.2 Other BP* II.1.7
have the possibility of reporting alleged irregularities of a general, operational and financial nature in the company to the chairman of the management Board or to an official by designated him, without jeopardising their legal position. irregularitiesAlleged concerning the functioning of management Board members shall be reported to the chairman of the supervisory Board. The arrangements for postedwhistle-blowers shall be on the company’s website. Annual Report 2011 36 held positions Other heldwith Positions wit mandates Other runs Term until appointed First 31December2 On (1952 –BelgianI Gu held positions Other heldwith Positions wit mandates Other runs Term until appointed First 31December2 On (1943 –BelgianN Jozef DeMey Boa 2.7 y deSellier n 0 0 s o o r h h on-executive -Male) on-executive
dependent -Male) dependent 11, Chairman of the the 11, Chairman of 11, 11, vice Chairmano d of Directors ofDirectors d ther listed companie listed ther companie listed ther deMoranville in Ageas at the end in the Ageas at end in the Ageas at
f s s B o o
the Boardthe Directo of : : None. : : Board m 01 Chairma : 2011f Chairma : 2011f oard of Directors an oard Directors of : Member The : shar 2009. : The : shar 2009. : : Chairma : Trustees Trustees Eik NVa Holding Remune C n r n n e r n e o e d ation & Nominations &Nominations ation of RenewableEnerg s and Member of the s and the Member of of the Board Dire the of of Me CredimoNV, of Board Dire the of of mber of Solvay, Adv mber of o., Ltd (Thailand) an (Thailand) Ltd o., d Ghent Festival of of Festival d Ghent f f Advisorythe Board of holders’ meeting of holders’ meeting Chairman of the C the Chairmanof o F m y 2 2 c c a d C of Pamplona. Chair Pamplona. of rporate Governance Governance rporate Corporate Governan Corporate Foundation. Foundation. landers. tors ofAgeasUK, Lt tors 015. ofAgeasInsurators 015. nced Metal nced Metal Group a Muang Thai Life In Life MuangThai ber of the Board of Boardof ber of the ommittee ofAGIns ommittee m m s s D D n n u u n C d n C d c c urance Co., Ltd (Tha urance Co., an of the Boardof the T an of Nickelan d Ivanhoe rance, non-executiv rance, irectors of Flemi irectors of the ce International, ce International, ., non-executive Bo non-executive ., e Committee andC ommittee. ommittee. A G a h e d r s i ustees ofPartners in ustees land). rd Member of Ageas rd Memberof Insu airman of the Risk the airman of a BoardMemberofT Platinum. Platinum. h-Chinese Chamber r ance andAICA n n a a (Hong Kong), Chair (Hong Kong), of Commerce,Credi of Insurance Internatio Insurance Hope andChairman d Capital Committee d Capital M (China), iping Life m m n n m m u u . of the Board of Boardof the of an of the the an of al. al. ang Thai Group Group Thai ang o Holding NV,De
Annual Report 2011 37 velopment and Investment , member of the Audit Committee of Ageas UK , member of the Audit Committee of Ageas UK
mbcp Ageas (Portugal), Vice Chairman of AG Ageas Holding BH (Malaysia), IDBI-Federal (India) and AICA (Hong ctors of Association PlaNet Association ctors Sarl. Finance of The and Hyper Company Ageas Insurance International ors of AKSigorta and Ageas UK, Ltd. and Ageas UK,ors of AKSigorta surance International,surance of Chairman Millenniu Insurance and Ageas Insurance International.Insurance geas Insurance International.geas Insurance of International. Ageas Insurance mber of Ltd. and Ageas UK, oundation and non-executive Director of NHBC. ecutive Board Member of A Sarl, Celio InternationalBoard ofthe Dire NV and member of Insurance, Holding, Insurance Etiqa F&B Mayban Insurance BH, Kong). of Member of the Direct Board ctors and Member ofctors the and Member Remuneration Committee. ofctorsCommittee. the and member Risk and Capital rectors and Member ofrectors the and Member Audit Committee. Directors and member ofDirectors the and member Audit Committee. 1 : Non-executive Board Member of AG 2011 2011 : Non-executive Board me 2011 2011 : of Ageas In Executive Board Member of 2011 of 2011 : Non-executive Board member Positions held with other listed companies Other positions held : None. : Chairman Immoring Antwerpen nv. Positions held with other listed companies Other positions held : None. : and Chairman of Director Assuralia. of Credimo NV
Positions held with other listed companies Other positions held : None. : Governor Health F First appointed untilTerm runs Other mandatesAgeas at within the end of : 2010. : The shareholders’ meeting of 2013. (1961 – British – Independent - Female) theOnmember of Board of 31 December 2011, Bridget McIntyre (1960 – Chinese – Independent - Male) theOnmember of Board of Di 31 December 2011, Shaoliang Jin First appointed untilTerm runs Other mandatesAgeas at within the end Positions held with other listed companies Other positions held : None. : 2009. : The shareholders’ meeting of 2013. : Head of the Office Board ofPing An Group. of the at Directors Ronny Brückner (1957 – Belgian – Non-executive - Male) theOnmember of Board of Dire 31 December 2011, First appointed untilTerm runs Other mandatesAgeas at within the end of 201 : 2009. : The shareholders’ meeting of 2013. First appointed untilTerm runs Other mandatesAgeas at within the end of 2011 : Non-ex : 2011. : The shareholders’ meeting of 2014. Frank Arts (1943 – Belgian – Independent - Male) theOnmember of Board of Dire 31 December 2011, (1957 – Belgian – Executive - Male) Chief Executive Officer. First appointed untilTerm runs Other mandatesAgeas at within the end of : 2009. : The shareholders’ meeting of 2013. Positions held with other listed companies Other positions held : None. : theCommittee Member of Security Sarl, of:WestbridgeInvestment Sarl, Flime Eastbridge Centrum De Sarl, Bart De Smet
Annual Report 2011 Other positions held : Director at Fenway Group and Urbina. Group andUrbina. at Fenway Director : None. : held positions Other companies listed other heldwith Positions Term runs until : The shareholders’ meeting of 2013. 2013. of shareholders’meeting The : Chairm 31December2011, BoardofDirectors, member of On the 2010. : -Male) –Independent (1946 –Dutch Hadders Jan Zegering companies listed other heldwith Positions end the within Ageas at mandates Other runs Term until appointed First 31December2011, BoardofDi member of On the 2015. of shareholders’meeting The : -Female) (1965 –SpanishIndependent 2009. : Belén Romana 201 endof the within Ageas at mandates Other runs Term until appointed First andme 31December2011, BoardofDirectors member of On the -Male) (1948 –BelgianIndependent Lionel Perl Chairm 31December2011, BoardofDirectors, member of On the -Male) –Independent (1943 –Dutch Roel Nieuwdorp 38 2015. of shareholders’meeting The : VanEenoo Dimitri 2009. : Company Secretary 201 endof the within Ageas at mandates Other runs Term until appointed First Other positions held: General Se General held: positions Other Other positions held : Professor at the University of of Antwer University atthe Professor : 2014. of shareholders’meeting The : 2009. : None. : held positions Other companies listed other heldwith Positions end the within Ageas at mandates Other runs Term until appointed First Positions held with other listed companies : Chairman of the Super the Chairmanof : companies listed other heldwith Positions Other positions held : None. None. : held positions Other
of 2011 : Non-executive Boardmember Non-executive : 2011of of 2011 : Non-executive Boardmember Non-executive : 2011of : Non-executive Boardmem Non-executive : 1 : Non-executive Board member of the AG the Boardmemberof Non-executive : 1 1 : Non-executive Boardmem Non-executive : 1 rectors and Member of the Remuneration Committee. Committee. Remuneration andMember the rectors of Committee of AG Insurance, Member of the Audit Committee of AG Insurance. ofAG Insurance. Audit Memberof Committee the of AG Insurance, Committee Committee of of GE ArtesiaCommittee Bank.
cretary of Círculo de Empresarios. ofCírculodeEmpresarios. cretary mber of the Audit Committee and the Risk and Capital Committee. Committee. RiskandCapital and the Committee Audit mber the of an of the Audit Committee andmember Committee Audit an of the Gover andmemberoftheCorporate Committee Remuneration an of the visory Board of Grontmij N.V., visory N.V., Boardof Grontmij ber of BancoEspañolber of deCr ber of Ageas UK, Ltd., Ageas Insurance International N. Ageas International AgeasUK, Ltd., Insurance ber of of Ageas Insurance International. AgeasInsurance International. of of Ageas Insurance International. AgeasInsurance International. of p in Company Law. Board member of Groep T and Borgerhoff &Lamberig p inCompany Boardmember TandBorgerhoff Law. of Groep Internation andAgeasInsurance Insurance of the Corporate Governance C Governance Corporate of the member of Supervisory the Boar edito (Banesto) (Banesto) edito and Acerinox. V., Member of the Audit Co Audit Member the of V., al, Member of the Remuneration Member Remuneration & Nominations al, the of ommittee. nance Committee. nance Committee. d of GE Artesia Bank and Chairman of the Audit the BankandChairmanof d of GE Artesia mmittee of Ageas UK, Ltd. AgeasUK,Ltd. of mmittee ts and practicing attorney. attorney. ts andpracticing Annual Report 2011 9 7 8 9 9 4 4 as d Attended Attended 39
9 9 9 9 9
Held 4 4 Force Committee meetings Corporate Governance Held Financial Task
1) 4 4 4 2 Attended
4 4
4 4 4 Attended Held Ad hoc board committees Risk and Capital Committee meetings
4 4 3 4 4 4 Force Legal Task Held Attended
4 4 4 4 Audit
Held 1) 6 6 5 6 1 Committee meetings Attended
7 5 11 10 11 11 11 11 11 11 11 Attended
shareholders meetings ofshareholders April 2011. shareholders meetings ofshareholders April 2011. 6 6 6 6
Held Remuneration 11 11 11 11 11 11 11 11 11 11 11 Committee meetings Held Board meetings
the Board of the Directors since the the Board of the Directors since the
2) 2)
1) Jozef De Mey attended these meetings as invitee. 2) of Ronny Brückner is a member Roel Nieuwdorp Lionel Perl Belén Romana Garcia Jan Zegering Hadders Frank Arts Ronny Brückner Shaoliang Jin McIntyre Bridget Mey De Jozef Moranville de Selliers de Guy Bart De Smet Name 1) Jozef De Mey attended these meetings as invitee. 2) of Ronny Brückner is a member The attendance of the meetings of the Remuneration Committee and the Legal Task Force and the Financial Task Force (ad hoc Boar Roel Nieuwdorp Lionel Perl Belén Romana Garcia Jan Zegering Hadders Frank Arts Ronny Brückner Shaoliang Jin McIntyre Bridget Mey De Jozef Moranville de Selliers de Guy Bart De Smet Name follows: Committees) was as follows: Attendance at Directors’ meetings The attendance at the meetings of the Board, Audit Committee, Risk and Capital Committee Corporate and Governance was Committee
Annual Report 2011 40 held positions Other heldwith Positions Chief RiskOfficer, r (1956 –Belgian-M Sche KurtDe held positions Other heldwith Positions responsiblef CFO, -M (1959 –French Christophe Bo see B details: Other Boa Member of the Offi Executive Chief (1957 –Belgian-M Smet Bart De Gro 2.8 o u p r a o o i e a a o c d of Directors. d ofDirectors. R r Finance, Investor zard
le) ther listed companie listed ther companie listed ther p ExecutiveC pe sponsible for Risk, Risk, sponsible for le) le) e ard of Directors. Directors. ard of r , responsible for t , responsiblefor
r
o C h s s elations andPerform elations mmittee ompliance, Legalan ompliance, e Business, Strateg : : None. : None. : None. None. : : Member
y d o a andBusinessDevel Support Functions ( Functions Support f BoardofDirect f the nce Management. o o Human Resources, I Human Resources, pment, Audit, Com Audit, pment, rs ofSopelecSA an Sc Kurt De Christophe S Bart De Executive On 31Dec m m m C C e e T T h h d d unications and the C andthe unications Boizard (CFO), Boizard et (CEO), and Facility). andFacility). ommittee cons ommittee 2011,th mber SPEE S eppe r (CRO). A . e o i sted of: A and and mpany Secreta g eas Group r iat. iat. Annual Report 2011 41 the Remuneration Policy in general the aligned with current market practices; the disclosure of theremuneration of Board and Executive Committee in the to the Notes Annual Report; the report the of Remuneration included Committee as in the Corporate Governance Statement; the Short Term Incentive (STI) and the Long Term Incentive (LTI) for the members of the Management Committee; the analysis, including sensitivity analysis and benchmarking of the Key Performance Indicators (KPI’s); the individual STI and LTI of the members of the Management Committee; the share plan in favour of senior management excluding Members of the Ageas Management Committee; the benchmarking the of remuneration of the members of the Management Committee with current market practices; the specific KPI’s for the Group Risk Officer; the Ageas Remuneration Policy applicable to all employees of Ageas or serving as guidance for all Ageas entities.
The Remuneration Committee thus discussed and prepared recommendations to the Board of on:Directors The Remuneration did Committee not recommend any change to the Remuneration Policy. The Remuneration further Committee advised the Board again not to increase the fixed salaries of the ExCo members. As a reminder: the Ageas Corporate Governance Charter foresees that the Remuneration Committee recommends on remuneration and incentive systems. As explained in the Corporate Governance Charter, the Corporate Governance and Committee the Remuneration Committee in a joined meeting make recommendations within these systems on the targets and the ultimate result. an), Frank Arts, Lionel Perl and ive III (CRD III) applicable to banks
Belén Romana. On 23 August 2011, Lionel Perl decided to step down as a member of the Remuneration Committee and to become member of newly the created Risk and Capital Committee. Thus, currently, the Remuneration Committee consists of three members: Roel Nieuwdorp (Chairman), Frank and Arts Belén Romana. The CEO and the CRO, in his capacity of responsible for HR, attended the meetings, with the exception of discussions of issues to relating their own situation. The Remuneration Committee convened six times in 2011. Please refer to 2.7 Board of Directors for more information on the attendance of the members of the Remuneration Committee. The Remuneration Policy had been determined earlier by the Board and approved by the shareholders meetings of 2010 and anticipating on the new Belgian Corporate Governance act issued on 3 May, 2010 in providing limits on severance pay and deferral mechanisms for bonuses. The Remuneration Policy continues to be under regular review to align it with prevailing market practices and evolving regulations and legislation (Belgian Corporate Governance Act, Capital Requirements Direct 2.9.1 In the course of 2011, further to the review of the Board Activity report of the Remuneration Committee Committees and their respective terms of reference, the composition of the Remuneration Committee is reshuffled. Before 23 August 2011, the Remuneration Committee consisted of four members: Roel Nieuwdorp (Chairm In accordance the with Belgian law of 6 April 2010 on the reinforcement of corporate governance in listed companies, Ageas has prepared a report of Remunerationthe Committee. Although this report was only required as from the accounting 2011, year Ageas decided to already align with this upcoming as legislation from the accounting 2010. year Already for the second time, Ageas will submit this report for approval to the General Meeting of Shareholders of April 2012. will be commented This report by the Committee. of the Remuneration chairman and consecutive Dutch ’Regeling Beheerst Beloningsbeleid‘). During its meetings, the Remuneration Committee furthermore systematically assessed each component (base salary, short term incentive and long term incentive) for compliance with (new) regulations, competitive position and the objectives and risk profile of the company. 2.9 Report of the Remuneration Committee
Annual Report 2011 extentpossible: the to anticipate trying legislation andupcoming monitoring existing Ageas isclosely new legislation Compliance with by theshareholders. forapproval modification tothese or update tosubmitany willcontinue Directors of the Board future, Inthe Board. levelsofthe remuneration the Committee) and Remuneration bythe asrecommended Executive Committee andthe Board the Policy(for theRemuneration both shareholders tothe approval submittedfor ofDirectorshas Board the In 2010, Transparency marketcompliant. legislation andbe Dutch and Belgian existing andupcoming compliance with guarantee full transparency, provide objectives werethreefold: key Committee’s Remuneration the Executive Management, andthe ofDirectors Board of the members the non-executive applicable to Policy Remuneration 2010the early In determining Key 2.9.2 objectives Board. bythe capital isdetermined level ofexcess solvency.The excess forriskand capital, corrected on thereturn takesintoaccount adjustedcapital’ risk relation tothe activityin oftheinsurance netreturn ‘normalised The concept the KPI’s: nottochange recommended Committee system, theRemuneration new ofthe recentintroduction the intoaccount Finally, andtaking 42
an approval of the shareholders. shareholders. ofthe an approval for Committee Remuneration Reportofthe a Ageas provides legislation; possible,upcoming reasonably the extent withexistingand,to to comply Policyhad new Remuneration that the verybeginning the from the Board to recommended Committee Remuneration Committee, asthe Executive of the members Policyapplicableto Remuneration the Shareholders the to approval for submitted Ageas has already in2010, value. the embedded activity, and oftheNon-life ratio the combined activity; the Life Insurance of the costsratio capital; to theriskadjusted inrelation activities insurance ofthe return net the normalised of Ageas; net profit (total) the annual
shareholders. shareholders. ofthe byavastmajority wereapproved levels remuneration and the Policy Remuneration 2010. The April ageas N.V.in SA/NVand of respectivelyageas of Shareholders General Meeting tothe approval levelsfor andremuneration Policy Remuneration proposed submitted the Board ofDirectors Committee, the oftheRemuneration recommendation Upon other hand. focusonthe business and spread geographical comparable size, of insurancecompanies European and hand size ontheone of comparable listedcompanies ofBelgian group consists This peer peers. international Belgian and levelsof prevailing remuneration with remuneration toaligntheir ofDirectors, Board the members of ofthenon-executive levels remuneration applicable and the Policy theRemuneration discussed andrevisited Towers Watson, assistanceof withthe again Committee, the Remuneration In 2009, Directors theBoardof of members non-executive ofthe The remuneration lawfirm. reputed international byawell perspective from alegal been checked Policyhasalso The Remuneration Towers Watson. was assistedby Committee theRemuneration scrutiny, permanent under but in2010, exercise,finalised this In management. ofexecutive remuneration andthe Board of non-executive remuneration the to reviseboth Committeedecided Remuneration Policy. The Remuneration new acompletely on started working Committee theRemuneration April 2009, in appointment Since their assess/review the and todevelop applied Procedure 2.9.3 Committee isfocused: Executive the and ofDirectors Board the ofboth The remuneration Market compliance
contribution and solid team performance. contribution andsolid team performance. individual bothstrong reward recognise and and tostimulate, term; andlong medium short, inthe shareholders of executivesand interests to alignthe inorder growth sustainable and long-term targets performance demanding of achievement to promote place; market inaninternational executivetalent retain motivate and abilitytoattract, continued the organisation’s to ensure Remuneration Policy Policy Remuneration Annual Report 2011 43 2.9.4 The full Remuneration Policy for Board Ageas members and Group The Remuneration Policy Executive Committee members, as approved by the General Meetings of Shareholders of April 2010 is attached to the Corporate Governance Charter (see annex 4 of the Corporate Governance Charter. The Remuneration Policy can be found on: www.ageas.com/en/Pages/Remuneration.aspx). This policy document describes the principles underlying remuneration, the relative importance various of the components remunerationof and the features of equity-linked remuneration and the applicable claw back. The Remuneration submitted Policy was for approval to the meetings of shareholders of April and 2010 reconfirmed by the shareholders in 2011 further to a clarification on severance pay. 2.9.5 The implementation of the Remuneration Policy in 2011 Board of Directors In April 2010, the MeetingGeneral of Shareholders approved the Remuneration Policy and the remuneration levels for the non- executive Board members, with effect from 1 January 2010 and remained unchanged in 2011. These remuneration levels consist of a fixed annual remuneration on the one hand and an attendance fee on the other hand. The fixed annual remuneration amounts to EUR 60,000 and EUR 45,000 respectively for the Chairman and the other non-executive Board members. Non-executive Board members receive an attendance fee of EUR 2,000 per Board meeting and EUR 1,500 per Board Committee meeting. For the Chairman of the Board of Directors and the Board Committees, the attendance fee is set at respectively EUR 2,500 per Board meeting and EUR 2,000 per Board Committee meeting. More detailed information on the actual remuneration in 2011 of the non-executive Board members can be found in Note 11 Remuneration of Board of Director members and Executive Committee members of the Ageas Consolidated Financial Statements 2011. Non-executive Board members do not receive annual incentives or stock options and are not entitled to pension rights. Non-executive Board members are not entitled to any termination indemnity.
The remuneration of the Executive Management Upon recommendationsboth by the Remuneration Committee (which is responsible for defining the Key Performance Indicators) and the Corporate Governance Committee (which was, August until 2011, responsible the for target setting) the Board of Directors determines the remuneration of the members of the Executive Management. The Remuneration advisedCommittee, the Board of Directors to submit the Remuneration Policy, applicable to the Executive Committee, for approval by the General Meeting of Shareholders of respectively ageas SA/NV and ageas N.V. in April 2010. The Remuneration Policy was approved by a vast majority of the shareholders. As from 2011, the Officer Group Risk (directly reporting to the CRO) was involved in the validation process of the KPI and the integration of risk corrective Theaspects. targets and results are assessed on the basis of data supplied by the Finance Department. Both the levels and structure remuneration of for Ageas Executive Committee members are analysed on an annual basis. At the initiative of the Remuneration Committee, Ageas’s competitive position is regularly reviewed by and discussed with Towers Watson and compared with that of other major Europe-based international insurance firms and other organisations operating on an international basis. In the second half of 2011, a second assessment of the Remuneration Policy, including its compliance with the updated international regulators and marketpractice as well as clear guidance on the methodology and scenario analysis, was performed. This assessment did not result in any change in the Remuneration Policy. It remains the opinion of the Remuneration Committee that the policy as approved by the General Assembly in 2010 and reconfirmed in 2011, has been established in the spirit new of the regulation with a deferral of the LTI and parts of the STI and assessment of the performance over the period of the deferral and fits the current situation of the company.
Annual Report 2011 in2010. 2,421,938 to EUR compared EUR 2,453,491, to Committeeamounted Executive the of remuneration thetotal claw back.In2011, and pay severance remuneration, variable regarding rules tothe limited including butnot ExecutiveCommittee, ofthe members to the above applies as described Policy CRO.TheRemuneration Schepper, Kurt De CFO,and Boizard, Christophe Board ofDirectors, the member of onlyexecutive the Smet, CEOand Bart De of Committee consisted Executive the End of2011, CFOofAgeas. as was appointed Boizard Christophe 2011, September On 5 Committee members. Executive and members ofDirector ofBoard 11 Remuneration refer toNote please information moredetailed legacy issues.For financial as wellonongoing matters economic on financialand toAgeas advise independent thelatterwillgive Colmant) whereby Bruno by SPRL(represented ColmantAcademic Bruno Ageas and between signed hasbeen agreement Company. Aconsulting leftthe DeputyCEO, Colmant, Bruno 2011, 30, On September Executive Committee Statements. Consolidated Financial Ageas ofthe Committee members andExecutive Director members of Board of Remuneration Note11 referto please information detailed more For meetings. Committee Board meetings and Board of thelowernumber ismainlydueto This previous year. to compared stable remained total remuneration the year in2011, a full for account in2010 appointed members Board that thetwo fact andthe in2011 member Board additional ofan appointment the 2010. Notwithstanding 1.12millionin to EUR compared EUR 1.19millionin2011, to amounted executive directors allnon- of remuneration the total above, levels asdescribed remuneration the Policyand withtheRemuneration In accordance members. Committee Executive members and Director of Board of Note 11Remuneration are disclosedin out paid amounts the are remunerated, mandates these extent that Tothe theAgeassubsidiaries. of ofDirectors ofsome Board to the members of itsnon-executive most todelegate of Directorsdecided Board the operating companies, mostimportant of theissuesin and awareness knowledge andtoincrease process of thedecision cascading toavoid governance, of goodcorporate In theframework Committee members. Executive Policy for withtheRemuneration inline determined CEOandistherefore tohispositionas related exclusively (the CEO)is member Board Executive ofthe The remuneration 44
Board ofDirectors 6March2012 Brussels/Utrecht, meetings. shareholders the to willbesubmittedforapproval Policy Remuneration ofthe Any modifications willbeproposed. updates modifications or ifrequired, and, environment regulatory competitive and Policy withthe ofitsRemuneration reassess thestructure willcontinueto Ageas of 2012, inthecourse new lawinBelgium, Policy Remuneration the regarding Outlook2012 withthe isalreadyaligned Policy Remuneration Ageas Although 2.9.6 Committeemembers. Executive and Group Boardmembers Ageas for remuneration The Governance Charter: the Corporate 4 of inannex isavailable Committee the Executive applicableto Policy Remuneration the on information More detailed Statements. ConsolidatedFinancial Ageas ofthe Committee members Executive members and ofDirector Board of Remuneration toNote11 refer shares please rightstoacquire other options and share shares, and matured exercised granted, of the number and individualremuneration on the information detailed For more 18months. exceed never however, paycan, maximum severance provision,the non-competition the for.Including months, isprovided 18 to increased be whichcaninspecificcircumstances 12 months, of pay Committee,aseverance Executive ofthe member For each Annual Report 2011 45
Ageas Consolidated Financial Statements 2011 Ageas Consolidated Financial
Annual Report 2011 Total liabilities Liabilities related to assets held forsale Liability related to written put option on NCI Provisions Accrued interest and other liabilities RPN(I) Deferred tax liabilities Current tax liabilities Borrowings Subordinated liabilities certificates Debt Liabilities arising from non-life insurancecontracts Liabilities related to unit-linked contracts Liabilities arising from life investment contracts Liabilities arising from life insurance contracts Liabilities assets Total sale for held Assets assets intangible other Goodwill and equipment and plant Property, assets other and interest Accrued shares BNPParibas option Call Deferred tax assets assets tax Current receivables other and Reinsurance associates in Investments contracts unit-linked to related Investments Loans property Investment investments Financial equivalents cash Cash and Assets (before appropriati Consolidated statementoffinancialposition 46 figures havebeenchanged comparative The 1) Total liabilities and equity equity Total interests Non-controlling equity Shareholders'
on ofprofit) for comparison reasons (see Note 36 Liability related to written put option onNCI putoption written to related 36Liability comparisonreasons(see Note for
Note 24 23 22 21 32 32 20 19 18 17 16 15 36 35 34 33 32 32 31 30 29 28 27 26 25 3 5 4 3
). 31 December 31 December 90,602.2 90,602.2 12,771.4 55,231.4 90,602.2 90,602.2 82,234.5 12,823.8 27,201.5 24,370.4 1,594.3 1,594.3 1,098.3 2,386.2 4,111.1 1,959.5 5,683.4 2,045.7 2,701.5 8,367.7 8,367.7 7,760.3 2,403.4 2,094.1 2,277.0 2,973.6 6,203.9 138.5 138.5 395.0 358.8 127.1 607.4 607.4 110.5 655.8 190.0 614.6 256.7 59.2 59.2 2011
31 December 99,166.7 99,166.7 21,747.3 56,232.5 99,166.7 99,166.7 90,000.7 21,830.9 26,913.8 23,938.4 1,686.0 1,686.0 1,065.0 2,042.5 3,828.5 1,732.5 4,528.2 1,900.3 3,258.3 9,166.0 9,166.0 8,421.7 2,407.6 1,947.0 2,141.7 2,926.9 5,448.6 744.3 744.3 703.2 465.0 682.3 548.9 609.0 465.1 46.4 46.4 71.5 2010
1)
Annual Report 2011 0.8 2010 2010 0.09 0.09 87.8 363.8 140.7 223.1 788.0 186.3 428.0 248.0 141.2 222.6 ( 33.9 ) ( 271.0 ) ( 149.0 ) ( 755.0 ) ( 298.4 ) ( 202.8 ) ( 694.1 ) ( 866.9 ) 9,323.7 3,005.3 9,751.6 2,432.6 13,647.1 47 12,184.2 ( 9,603.2 ) ( 1,052.4 )
( 13,505.9 )
362.5 165.6 ( 202.8 ) ( 181.9 ) ( 246.0 ) 2,000.0 9,751.6 ( 2,362.5 ) ( 9,768.8 )
2011 2011 83.3 2011 2011 275.0 135.6 427.1 277.1 642.8 ( 23.2 ) ( 95.3 ) ( 0.23 ) ( 0.23 ) ( 739.5 ) ( 937.8 ) ( 756.8 ) ( 673.5 ) ( 578.2 ) ( 214.0 ) ( 581.5 ) ( 146.5 ) ( 310.0 ) 8,738.7 3,093.3 9,421.2 1,815.9 12,004.8 ( 1,615.9 ) ( 1,163.4 ) ( 8,614.6 ) 11,237.1 ( 12,761.6 ) eatures) can be calculated as follows.
155.2 ( 398.7 ) ( 283.8 ) 9,421.2 ( 8,769.8 )
6 47 35 48 49 50 51 52 38 39 21 33 40 41 42 43 44 45 46 38 Note Note
ow of investment contracts Discretionary without F Participation tly recognised as liability)
1)
Gross inflow income premium Gross Inflow deposit accounting (direc Diluted earnings per share 1) Gross inflow (sum of gross written and premium infl premiums Net result attributable to shareholders (EUR) data share Per Basic earnings per share Tax income (expenses) Net result for the period Attributable to non-controlling interests Total expenses Result before taxation Total impact MCS conversion and Dutch State issues Fee and commission expenses Staff expenses Other expenses - MCS conversion to related Liability - Claim on ABN AMRO - Reversal of impairment FCC claim - Provision for legal disputes with Dutch State Charges related to unit-linked contracts Finance costs Change in impairments Change in provisions Expenses - Insurance claims and benefits, gross - Insurance claims and benefits, ceded Insurance claims and benefits, net Fee and commission income Other income Total income Result on sales and revaluations Investment income related to unit-linked contracts Share of result of associates Net earned premiums Interest, dividend and other investment income Unrealised gain (loss) on Call option BNP Paribas shares Unrealised gain (loss) on RPN(I) Income Income - income premium Gross - Change in unearned premiums - Ceded earned premiums Consolidated income statement Consolidated
Annual Report 2011 Total comprehensive income attributable to shareholders to shareholders attributable income comprehensive Total interests to non-controlling incomeattributable comprehensive Total interests non-controlling to attributable income comprehensive Other interests non-controlling to attributable result Net period the incomefor comprehensive Total period the for income comprehensive Other net differences, exchange foreign in Change tax Related gross differences, exchange foreign in Change net investments, of revaluation in Change tax Related gross investments, of revaluation in Change net associates, of income comprehensive other of Share tax Related gross associates, of income comprehensive other of Share net sale, for available investments of revaluation in Change tax Related gross maturity, to held to sale for available investments revaluation Reclass tax Related gross sale, for available investments of revaluation in Change Change in investments held to maturity, net tax Related gross maturity, to held investments of amortisation in Change tax Related gross maturity, to held to sale for available investments revaluation Reclass investments of revaluation in Changes income comprehensive Other period the for result Net Consolidated statementofcomprehensiveincome 48
( 120.3 ) ( 120.3 ) ( 214.9 ( 55.3 ) ( 55.3 214.9 214.9 279.4 ( 3.5 ) ( 3.5 14.0 14.0 55.3
( 149.1 ) ) ( 149.1 ) ( 673.5 ( 205.7 ) ) ( 205.7 ) ( 135.6 ) ( 341.3 ) ( 123.8 ( 40.3 ) ) ( 40.3 ) ( 95.3 318.7 318.7 332.2 332.2 248.3 372.1 ( 0.7 ) ) ( 0.7 78.7 78.7 78.7 83.9 83.9 84.6 2011
( 1,320.8 ) ) ( 1,320.8 416.1 416.1
( 1,266.8 ) ( 1,266.8 ( 173.5 ) ( 173.5 ) ( 160.3 ) ( 301.0 ) ( 333.8 ) ( 697.6 ) ( 850.7 ) ( 904.7 140.7 140.7 153.1 153.3 416.1 363.8 ( 0.2 ) ( 0.2 54.0 54.0 54.0 2010
Annual Report 2011
0.3 3.1 Total 35.3 19.3 83.9 47.4 equity 363.8 153.1 287.6 248.3 ( 29.6 ) ( 738.5 ) ( 850.7 ) ( 333.8 ) ( 189.2 ) ( 673.5 ) ( 341.3 ) ( 247.8 ) ( 230.1 ) 9,346.5 9,166.0 8,367.7 10,085.0 49
2.4 Non- 83.8 83.3 75.7 46.2 ( 1.1 ) 744.3 607.4 700.5 140.7 ( 95.3 ) ( 42.7 ) ( 51.2 ) ( 33.9 ) ( 135.6 ) ( 953.5 ) ( 301.0 ) ( 160.3 ) interests 1,654.0 controlling
3.1 4.3 0.3 81.5 Share Share equity 291.0 215.0 223.1 153.1 204.3 ( 36.4 ) ( 40.4 ) ( 26.9 ) holders' ( 578.2 ) ( 205.7 ) ( 196.6 ) ( 230.1 ) ( 549.7 ) ( 173.5 ) ( 188.1 ) 8,421.7 7,760.3 8,431.0 8,646.0
gains 221.2 291.0 291.0 512.2 770.9 770.9 ( 549.7 ) ( 549.7 ) Unrealised Unrealised and losses
223.1 223.1 223.1 ( 578.2 ) ( 578.2 ) ( 223.1 ) ( 578.2 ) 1,209.8 1,209.8 Net result ( 1,209.8 ) shareholders attributable to
81.9 81.5 81.5 163.4 153.1 153.1 ( 71.2 ) ( 71.2 ) reserve Currency translation
4.3 0.3 Other 215.0 ( 36.4 ) ( 40.4 ) ( 26.9 ) The line Other changes in equity in the column Non-controlling interests includes in 2011 the impact on the non-controlling interest of the sale of Fortis Lux Vie whereas in 2010 it includes mainly the non-controlling interest in acquired real-estate companies. Changes in equity are described in greater detail in Note 4 Shareholders’ equity, Note 5 Non-controlling interests and Note 36 Liability related to written put option on NCI. ( 196.6 ) ( 230.1 ) ( 188.1 ) reserves 3,354.3 1,209.8 12,515.9 ( 8,702.8 ) ( 9,872.5 ) ( 9,657.5 )
3.1 Share 114.7 reserve 2,105.0 premium 14,394.7 14,280.0 14,280.0 ( 12,292.8 )
89.6 Share capital 2,203.6 2,203.6 2,114.0 2,114.0
Other changes in equity Balance at 31 December 2011 In 2011, a negative amount of EUR 12,292.8 million was transferred from Other reserves to the Share premium reserve (see Note 4 Shareholders’ equity). The line Treasury shares contains in 2011 EUR 230.1 million mainly related to the share buy-back programme (see Note 4 Shareholders’ equity). The lines Restatement written put option on NCI and Impact written put option on NCI refer to the Liability related to written put option on NCI (see Note 36). Increase of capital shares Treasury compensation based Share Impact written put option on NCI Total non-owner changes in equity Transfer Dividend Net result for the period Revaluation of investments Foreign exchange differences Other non-owner changes in equity Impact written put option on NCI Other changes in equity Balance at 31 December 2010 Transfer Transfer Dividend Increase of capital shares Treasury Foreign exchange differences Other non-owner changes in equity Total non-owner changes in equity Net result for the period Revaluation of investments Restatement written put option on NCI 1 January 2010 Adjusted Balance at 1 January 2010 Balance at 1 January 2010 Consolidated statement of changes in equity statement of changes Consolidated
Annual Report 2011 Dividends paid to shareholders of the parent companies companies parent the of shareholders to paid Dividends shares treasury of sales from Proceeds shares treasury of Purchases borrowings other of Payment borrowings other of issuance the from Proceeds Proceeds from the issuance of subordinated liabilities certificates debt of Redemption Cash flow from investing activities assets intangible of sales from Proceeds assets intangible of Purchases sale) for held assets in cash (including associates and subsidiaries of Divestments andassociates subsidiaries of Acquisition equipment and plant property, of sales from Proceeds equipment and plant property, of Purchases property investment of sales from Proceeds property investment of Purchases investments financial of redemptions and sales from Proceeds investments financial of Purchases Cash flow from operating activities Income tax paid associates from received Dividend inallotheroper Net changes Liabilities related to unit-linked contracts Liabilities arising from insurance and investment contracts Borrowings contracts unit-linked to related Investments receivables other and Reinsurance Loans fortradi held Derivatives andliabilities: assets inoperating Changes expense compensation Share-based Provisions Impairments andaccretion amortisation Depreciation, associates in results of Share revaluations and onsales Result RPN(I) shares BNPParibas option Call taxation: before result in included items non-cash to Adjustments taxation before Result Consolidated cashflowstatement 50 Interest paid investments financial from received Dividend Interest received ope of disclosure Supplementary 31 December at as equivalents cash Cash and 1 January at as equivalents cash Cash and equivalents cash and of cash (decrease) Net increase cashequivalents and oncash differences rate ofexchange Effect Cash flow from financing activities interests non-controlling to paid Dividends ng (assets and liabilities) (assets ng
ational assets and liabilities and ational assets rating cash flow information flow information cash rating
Note
27 31 20 18 16 50 35 47 51 42 40 33 21 46 39 39 16 16 31 30 29 24 23 17 16 4 3 3
( 19,832.6 ) ) ( 19,832.6 ( 1,679.3 ) ) ( 1,679.3 ) ( 1,157.5 ( 1,095.6 ) ) ( 1,095.6 19,357.6 19,357.6 1,305.5 1,305.5 1,893.4 1,653.7 1,615.9 2,556.4 2,556.4 2,701.5 3,258.3 ( 109.1 ) ) ( 109.1 ) ( 707.3 ) ( 219.5 ) ( 135.6 ) ( 275.0 ) ( 756.8 ( 314.0 ) ) ( 314.0 ) ( 556.8 ) ( 773.1 ) ( 196.6 ) ( 230.1 ) ( 290.5 ) ( 119.7 ) ( 288.0 ) ( 215.2 ( 24.5 ) ) ( 24.5 ( 51.2 ) ) ( 51.2 ) ( 18.1 ) ( 16.7 ) ( 74.2 127.5 127.5 686.9 146.5 214.0 22.0 22.0 83.7 83.7 13.4 83.3 2011 7.7 7.7 2.5 6.4 6.4 0.4 9.5
( 22,847.6 ) ( 22,847.6 ( 2,377.4 ) ( 2,377.4 ) ( 5,004.9 ) ( 1,206.9 18,152.5 18,152.5 2,391.1 2,391.1 3,258.3 5,635.7 3,183.8 1,228.1 3,907.0 ( 370.3 ) ( 370.3 ) ( 567.9 ) ( 191.5 ) ( 376.6 ) ( 358.0 ) ( 131.8 ) ( 161.4 ) ( 576.1 ) ( 774.0 ) ( 340.5 ) ( 328.3 ) ( 186.3 ( 47.0 ) ( 47.0 ) ( 14.3 ) ( 66.3 ) ( 79.6 ) ( 87.8 158.2 158.2 567.7 606.9 149.0 271.0 141.2 ( 1.1 ) ( 1.1 57.9 57.9 11.6 40.9 56.5 39.9 48.1 2010 0.3 0.3 7.1 6.0 1.7 4.0
Annual Report 2011 51
General Notes
Annual Report 2011 Relative Performance Note secured obligations (RPN(I)), see Note 33 RPN(I). RPN(I). 33 seeNote obligations(RPN(I)), Note secured Relative Performance performance andtimely complete forthe assecurity State Belgian tothe (20%) ofAGInsurance shares 126,257 pledged Ageas has onthe has alisting share Ageas The share. N.V. ordinary ageas one and ageas SA/NV share oneordinary a unitthatcomprises acquire effectively shareholders share, anAgeas When purchasing Utrecht. Brussels and in Ageas from ofcharge, free uponrequest, The listisavailable inUtrecht. Commerce of Chamber ofthe register the commercial andwith inBrussels of Belgium NationalBank been filedwiththe interests has participating other companies and A listofallgroup way. most transparent activitiesinthe reflectits order to acco consortium optedfor N.V.,Ageashas ageas and SA/NV ageas of thefinancialstatements Bycombining of theirsubsidiaries. a Companies’) Parent (‘the N.V. SA/NVandageas ofageas Financial Statements includethe FinancialStatements The Consolidated the 6,Utrecht, Archimedeslaan officeat with itsregistered the Netherlands in N.V.,incorporated andageas Belgium Brussels, 1/ Markiesst Rue duMarquis at office Belgium withitsregistered in incorporated SA/NV, ageas Companiesare Parent Ageas’s two 1 Legal structure 52 Investments Royal Park SA/NV
44.7%
50% 50% ssss Ageas UKLtd.
A
geas Hybrid Financing SA ssss 100% 50% ageas SA/NV
entities partof A Various Legal Ageas Asia geasfinlux International N.V. A SA geas Insurance 100%
structure is: legal current activities.The insurance operational holding ofallthe legalentity the becoming latter N.V.The Insurance International intoAgeas N.V.weremerged Utrecht Ageas and Insurance N.V. was liquidated structure: FortisBrusselsSA/NV and Ageas its legal simplified Ageassubstantially of2010, In thecourse UnitedStates. inthe programme ADR hasasponsored Ageas Euronext. of NYSE market regulated
A ageas N.V. geas Finance Continental Europe entities partof N.V. Various Legal 100%
A B.V. B.V. geas 50% 100% A G Insurance
SA/NV
75%
Intreinco N.V. 100% Netherlands. Netherlands. unting in in unting raat 1, raat of the ofthe nd all nd all Annual Report 2011 53 y 2011, 2.2 in accounting policies Changes The following new or revised standards, interpretations and amendments to standards and interpretations have become effective on 1 January 2011 (and areendorsed by the EU): 1. IAS 1 PresentationThe amendment of financial statements (amendment)clarifies that, for each component of equity, an entity may present the breakdown of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. 2. IAS 24 Related-partyThe definition disclosures (amendment) of a related party has been amended to remove inconsistencies and to make it more simple to apply. Some entities will be required to make additional disclosures under this new definition. The entities that are most likely to be affected are those that are part of a group that includes both subsidiaries and associates, and entities with shareholders that are involved with other entities. For example, a subsidiary is now required to disclose transactions with associate ofan its parent. Similarly, disclosure is required of transactions between two entities where both entities are joint ventures (or one is an associate and the other is a joint venture) of a third entity. In addition, that an entity is controlled by an individual that is part of the key management personnel of another entity is now required to disclose transactions with that second entity. ternational Financial Reporting Standards (IFRSs) as at 1 Januar the statement of financial position IAS 1 for presentation of financial statements; IAS 16 for property, plant and equipment; IAS 23 for loans; IAS 28 for investments in associates; IAS 32 for written put options on Non-controlling interests; IAS 36 for the impairment of assets; IAS 38 for intangible assets; IAS 39 for financial instruments; IAS 40 for investment property; IFRS 3 for business combinations; IFRS 4 for the measurement of insurance contracts; IFRS 7 for the disclosures of financial instruments; IFRS 8 for operating segments.
The accounting policies are consistent with those applied for the year ended31 December 2010. IFRSsAmended effective on 1 January 2011 with importance for Ageas (and endorsed by the EU) are listed in paragraph 2.2. The accounting policies shown in this note are a summary from the complete Ageas accounting policies which can be found on www.ageas.com/en/Pages/accountingpolicies.aspx. The Ageas Consolidated Financial Statements are prepared on a going concern basis. They give a fair presentation of the financial position, financial performance and cash flows of Ageas, with relevant, reliable, comparable and understandable information. The Ageas Consolidated Financial Statements are stated in euros, which is the functional currency of the Parent Companies of Ageas. Assets and liabilities recorded in of Ageas have usually a duration of more than 12 months, except for Cash and cash equivalents, Reinsurance and other receivables, Accrued interest and other assets, Accrued interest and other liabilities and Current tax assets and liabilities. The most significant IFRSs for the measurement of assets and liabilities as applied by Ageas are: The Ageas Consolidated Financial Statements 2011 comply with In 2.1 Basis of accounting 2 accounting policies Summary of as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU).
Annual Report 2011 the income statement. the incomestatement. volatilityin isless andthere lesscomplex, accounting istherefore orloss.The profit value through at fair re-measured subsequently arenot equity. Unlikederivativeliabilities,equityinstruments same classof all ownersofthe basisto pro rata a on are offered providedthey is denominated, price theexercise currency inwhich ofthe ofcashregardless afixedamount for they areissued asequityif tobeclassified required arenow equity. Rightsissues as beclassified to amendment scope ofthe issues withinthe rights required inIAS32and forfixed’rule ‘fixed exception tothe an created therefore amendment such. The their capacityas actingin withowners atransaction represents transaction, which derivative liabilitieswasnotconsis basisas pro rata ona all existingshareholders rights issuedto foreign-currency-denominated thatclassifying (amendment) Presentation recognised The IASB Instruments: 32 Financial IAS 4. income statement. inthe orlossisrecognised gain value andany at fair measured and be recognised event should Suchan similarly. accounted for be therefore and should similarevents are controlled entity overajointly ofjointcontrol loss associateand an influence over ofsignificant subsidiary, theloss a of controlover loss It statesthat financial statements andseparate 27 Consolidated IAS 3. 54 (amendment) (amendment)
tent withthesu bstance ofthe these principles. these principles. howtoapply given hasbeen guidance further Also annual report. mostrecent the from information relevant update need to and the significant), (if measurements value tofair disclosure ofchanges cover requirements Additional andtransactions. significant events principlesfor disclosure onthe placed hasbeen (amendment) emphasis Reporting Greater Financial 34 Interim IAS 5. as follows: the accounts in are recorded generally thesecommitments settlement incash, for provide that inexistingsubsidiaries interest shareholders non-controlling to the Group bythe isgranted option a put Where subsidiaries consolidated infully shareholders buy outminority Commitments to
statement. statement. income Consolidated Group’s inthe Non-controlling interests under recorded option are withaput Non-controlling interests linkedto results the exercised, been havenot whilst theoptions Consolidated reserves; Group’s the and interests non-controlling written offagainst the purchasehas reaches itsterm, whenthecommitment Howeverif, subsidiary inquestion. the interestsin ofNon-controlling acquisition linked tothe if thestakeisbought,liabilit Consolidated reserves; Group’s inthe interestsarerecorded of non-controlling value carrying andthe options priceofthe estimated exercise inthe inthisliabilitylinkedtochanges variations subsequent reserves; Group’sConsolidated the deducted from balance options, withany underlyingthe controlling interests ofnon- thisliabilityisawrite-downinvalue of the counterpart options; of theput price exercise the estimated of presentvalue the recognised at liability is control.This the subsidiariesoverwhichitexercises liability fortheputoptionsgrant afinancial records Group withIAS32,the in accordance ed tominorityshareholdersof y is settledbythecashpayment y is notoccurred,theliabilityis Annual Report 2011 55 ruments issued to settle a liability funding requirementstheir and interaction (IAS 19) (amendment) instruments 7. 14 The limit IFRIC on a defined benefit asset, minimum This amendment applies to companiesonly that are required to make minimum funding contributions to a defined benefit pension plan and choose to pre-pay those contributions. Those affected are companies that have a defined benefit pension plan is subject that to a minimum funding requirement and have prepaid (or expect to prepay) the minimum funding requirement in respect of future employee service, to leading a pension surplus. Such entities should reconsidertheir accounting in the light of the revised guidance to determine whether an asset for the pre-paid contributions should be recognised. 8. IFRIC 19 Extinguishing financial liabilities with equity IFRIC 19 considers that equity inst represent ‘consideration paid’. It therefore requires a gain or loss to be recognised separately in profit or loss when a liability is settled through the issuance of the entity’s equity instruments. own This is consistent with the general approach to derecognition of financial liabilities established by IAS 39. The amount of the gain or loss recognised in profit or loss is determined as the difference between the carrying value of the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments cannot be reliably measured, the fair value of the existing financial liability is used to themeasure gain or loss and to record issued equity instruments. Contingent consideration arrangements from arising business combinations with acquisition dates preceding the application of IFRS 3 (2008) are accounted for in accordance with the guidance in the previous version of IFRS 3 (as issued in 2004). This amendment theclarifies that guidance in IAS 39, 32 IAS to contingentand IFRS 7 will not apply considerations arising from business combinations with an effective date prior the to application of the revised version of 3; IFRS The choice of measuring non-controlling interests at fair value or at the proportionate share of the acquiree’s net assets applies only to instruments that represent ‘present’ ownership interests and entitle their holders to a proportionate share of the net assets in the event of liquidation. All other components of non-controlling interest, e.g. the equity component of convertible bonds, warranties and options on our own shares, are measured at fair unless IFRS value requiresanother measurement basis; The application guidance in IFRS 3 applies to all share-based payment transactions that are part of a business combination, including unreplaced and voluntarily replaced share-based payment awards. IFRS 3 did not previously provide guidance for situations where the acquirer does not have an obligation to replace an award but replaces an existing acquiree award that would otherwise continuedhave unchanged after the acquisition. This amendment addresses this gap in the previous guidance. The amendment made to IFRS 3 results in the accounting for these being awards the same as for awards that the acquirer is obliged to replace.
6. (amendment) 3 Business Combinations IFRS
Annual Report 2011 Liabilities Deferred tax assets assets intangible Other Goodwill Associates Loans property Investment - Level 3 - Level instruments Financial - 2 securities debt Corporate - securities sale for Available Assets 2011 31 December year. next financial withinthe liabilities ofassetsand carrying amounts the negative) to (positiveor material adjustments significant riskof a introduces estimatebynature Each in2005. of IFRS introduction sincethe are consistent used methods the estimates and these In general period. reporting end ofthe estimates atthe measurement use ofcertain the requires conformity withIFRS, in Statements Financial Ageas Consolidated of the The preparation 2.3 Accounting estimates 56 described. has been operations risksoftheinsurance thevarious mitigates the wayAgeas 7 RiskManagement, InNote Financial Statements. Con Ageas inthe notes theapplicable to ismade reference estimates, these applicationof on the information detailed For more onNCI options put Written Deferred tax liabilities Provisions obligations Pension Non-life - - Life Liabilities for Insurance contracts
- Inactive Inactive - model Thevaluation markets - uncertainty Estimation - Discount Discount - Estimated future fair value rate - Interpretation of complextax regulations - amount estimated best the of Thecalculation - past the in events to due obligation apresent of Thelikelihood - Discount - rate - Actuarial assumptions expenses adjustment Claim - Liabilities for (incurred but not reported) claims - test inliabilityadequacy rateused Interest - - Actuarial assumptions income taxable future of timing and Amount - Interpretation of complextax regulations - value andresidual life useful the of Determination - entity the of premium risk Theinherent - Discount - variables economic and Financial rate - model Thevaluation - mix asset onthe depending uncertainties of A mix The maturity - model Thevaluation - value andresidual life useful the of Determination Inactive - input observable market not Useof markets - model Thevaluation - the nexttable. areshownin date thereporting at estimates The keymeasurement prior assumptions. the to recognitioncompared indication forloss provides abetter assumption in thischange that Ageas believes mix. target asset linewiththe in creditspread, areasonable reinvestments includes for theassumption 2010, As of rate. a riskfreediscount using investments andrelated insurancepolicies the cashflowsfor of guarantees and options embedded assumptions, estimates and best onthe istestedbased insurance liabilities The adequacyof Change inassumption solidated
Annual Report 2011 57 2.5 Consolidation principles 2.5 Consolidation Subsidiaries The Ageas Consolidated Financial Statements include those of ageas SA/NV and ageas N.V. (the ‘Parent Companies’)and their subsidiaries. Subsidiaries are those companies, of which Ageas, either directly or indirectly, has the power to govern the financial and operating policies so as to obtain benefits from its activities (‘control’). Subsidiaries are consolidated from the datewhich on effective control is transferred to Ageas and are no longer consolidated from the date that control ceases. Subsidiaries acquired exclusively a view to with resale are accounted for as non- current assets held for sale. The result on a sale of a portion of an interest in a subsidiary without a change in control is accounted for in the income statement. Intercompany transactions, balances and gains and losses on transactions between Ageas companies are eliminated. Non- controlling interests in the net assets and net results of consolidated subsidiaries are shown separately on the statement of financial position income statement.and Subsequentthe date to of acquisition, non-controlling interests comprise the amount calculated at the date of acquisition and the non-controlling interests’ share of changes in equity since the date of acquisition. The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether Ageas controls another entity. Belgium; United Kingdom (UK); Continental Europe; Asia. Events lead to an adjustment of the Consolidated Financial Statements if they provide evidence of conditions that existed at the date of the Statement of financial position; Events result in additional disclosures if they are indicative of conditions that arose after the date of the Statement of financial position, and if relevant and material.
The format forreporting segment information is based on operating segments. Ageas’s reportable operating segments are based on geographical regions. The regional split is based on the fact that the activities in these regions share the same nature and economic characteristics. The Insurance operating segments are: Activities not related to Insurance and elimination differences are reported separately from the Insurance activities in the fifth operating segment: General Account. In addition, the General Account also includes the investment in Royal Park Investments, the call option on BNP Paribas shares and the liabilities related to CASHES (RPN(I)) and the written put option on non-controlling interest. Transactions or transfers between the operating segments are entered into under normal commercial terms and conditions that would be available to unrelated third parties. Operating segments 2.4 Segment reporting 2.4 Segment Events after the reporting period relate to events that occur between the datethe statement of positionof financial the and date when the financial are statements authorised for issue. Two types of events can be identified: Events after the reporting period the reporting Events after Ageas has identified the second typeof events mentioned above for the reporting 2011period and disclosed these in Note 56.
Annual Report 2011 rules: the following according to assetsisdetermined financial available-for-sale equity) on (recognised in fair valueresults andunrealised income statement) inthe differences (recognised exchange between The distinction ofequity. a component as recorded is valuechange itemswhosefair those non-monetary exceptfor (losses), gains currency asforeign the incomestatement in arerecorded differences exchange The resulting are determined. fairvalues the that onthedate rate exchange using the translated fair valueare at arecarried that items transaction. Non-monetary ofthe date atthe existed that rate the historicalexchange using costaretranslated historical carriedat items Non-monetary items. monetary ratesfor exchange year end at are translated end atyear foreigncurrencies in balances transaction. Outstanding the of date rate atthe theexchange using accounted for are transactions currency foreign ofAgeas, For individualentities 2.6 Foreign currency ofanassociate. behalf payments on ormade obligations legalorconstructive incurred Ageas has that extent tothe recognised areonly losses to nilandfurther isreduced oftheinvestment amount carrying the recognised until Losses are transferred. theasset of impairment evidence ofan provides unlessthetransaction alsoeliminated are interest. Losses Ageas’s of the extent to are eliminated method equity for usingthe accounted andinvestments Ageas between Gains ontransactions inequity. recognised are direct equitymovements investmentspost-acquisition the Ageas’s sharein associates and of inresult as share recognised yearis forthe income share ofnet ownership The the associate. of the netassets of Ageas’s share at investmentisrecorded The notcontrol. does influence, but significant which Ageashas investmentsin These are method. equity usingthe for associates areaccounted Investments in Associates 58
the new period, converted at the new exchange rate. exchangerate. new at the converted the newperiod, and theprevious eurosof in thebalances between difference onthe based determined are value)results (fair the unrealised currency; balances inforeign previous onthe calculated rate exchange evolution ofthe onthe based determined are differences the exchange
Hong Kong dollar dollar Hong Kong US dollar sterling Pound = 1 euro for Ageas. currencies relevant ofthemost showstherates The followingtable place. takes statement recycling totheincome whena entity oftheforeign untildisposal equity recognised in are All resultingdifferences position. offinancial the statement of date onthe rate exchange closing atthe translated entity andare foreign andliabilitiesofthe as assets treated are foreign entity ofa acquisition arisingonthe value adjustments Goodwill andfair statement. income the recognised in isimmediately ineffectiveness that hedge except forany investment, net disposal ofthe until the inequity, recorded entityare foreign investment ina of anet ashedges designated instruments, other currency and borrowings items, monetary arisingon differences Exchange the sale. or losson gain of the aspart incomestatement the recognised in are differences exchange entity,such disposal ofaforeign equity.On in are recognised differences exchange Translation position. of financial statement ofthe thedate at rates prevailing theexchange using translated positionare financial statements of andtheir significantly) fluctuate exchange rates if the transaction of at thedate rate exchange atthe exceptionally (or current year forthe exchangerates daily ataverage euros, translated into are ineuros is notdenominated currency entities whosefunctional of statement flow andcash theincomestatement On consolidation, translation Foreign currency
10.05 2011 1.29 0.84
Rates at year end end year at Rates 10.39 10.39 2010 1.34 1.34 0.86
10.84 2011 1.39 0.87
Average rates Average 10.30 2010 1.33 0.86 Annual Report 2011 59 ed each period by computing the ed each period by computing discount, this premiumdiscount, this or discount over is amortised the expected life of the instrument and included in the calculation of the EIR. The carrying amount will be recalculat present value of futureestimated cash flows at the actual effective interest rate. Any adjustments are recognised in profit or loss. Available-for-saleinvestment securities are measured at fair value. Changes in the fair value are recognised directly in equity until the asset is sold, unlessthe asset is hedged by a derivative. These investments are carried at fair value with movements in fair value recognised through the income statement for the part attributable to the hedged risk and through equity for the remaining part. Held-for-trading assets and assets designated as held value at fair through profit or loss are carried atfair value. Changes in the fair value are recognised in the income statement. The (realised and unrealised) results are includedunrealised in ‘Realised and gains and losses’. Interest received (paid) on assets (liabilities) held for trading is reported as interest income (expense). Dividends received are included ‘Interest, in dividend and other investment income’. The majority of these financial assets (being bonds and equity shares) are classified as Available for Sale and measured at fair value. The unrealised gains and losses are reported in shareholders’ equity. For the insurance portfolios, where ‘unrealised‘ gains and losses of bonds have a direct impact on the measurement of the insurance liabilities, Ageas applies shadow accounting in with IFRSaccordance 4. This means that the changes in the unrealised gains and losses will affect the measurement of the insurance liabilities and are therefore not part of equity. the financial statements the financial statements
Management determines the appropriate classification of its investment securities at the time of purchase. the Investment securities with a fixed maturity where management has both the intent and the ability to hold to maturity are classified as held to maturity. Investment securities with fixed or determinable payments that are not quoted in an active market that upon initial recognition are not designated as held-for-trading nor as available-for-sale, are classified as loans and receivables. Investment securities to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices, are classified as available for sale. Investment securities that are acquired for the purpose of generating short-term profits are considered to be held for trading. Held-to-maturity investments are carried at amortised any cost less impairment changes. Any difference between the initial recognition amount resulting from transaction costs, initial premiums or discounts is amortised over the life of the investment using the effective interest method. If a held-to-maturity investment is determined to be impaired, the impairment is recognised in the income statement (see Note 16 Financial investments for details on the reclassification of Investments sale available for to Investments held to maturity). Loans and receivables are measured at amortised cost, using the effective interest rate method (EIR) less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process. For floating rate instruments the cash flows are periodically re-estimated to reflect movements in market interest rates. If the floating rate instrument initially is recognised at an amount (almost) equal to the principal repayable, the re-estimation has no effect significant on the carrying amount of the instrument and there will be no adjustments to the received interest, reported on an accrual basis. However, if a floating rate instrument is acquired at a significant premium or 2.7.1 Financial assets 2.7.1 Financial The classification and measurement of assets and liabilities is based on the nature of the underlying transactions. 2.7 used in preparing Measurement bases
Annual Report 2011 IAS39. and 32 accordance withIAS in securitieswhichshallberecognised equity issue debtor to forthecosts except expensed, costs aredirectly Any acquisitions over: transferred consideration value ofthe ofthefair excess beingthe at cost, Goodwill isinitiallymeasured 2010 January from1 combinations Goodwill frombusiness assets intangible Goodwillandother 2.7.4 theinvestment. amount of thecarrying reduce the associate from distributionsreceived equity,while inshareholders’ reported are revaluations and statement intheincome loss isrecognised or oftheprofit share Ageas’s associates.The these accounting for of method equity appliesthe Ageas incontrol), isnot investee (but ofthe policydecisions financial andoperating participate inthe to thepower influence, significant Ageas has For associateswhere Investment 2.7.3 in isimpaired. property unlessthe equity, shareholders’ Associates norin statement income inthe recognised are not property valueofthe fair inthe changes a consequence, As impairments. any accumulated and depreciation cost lessanyaccumulated carriedatits is allproperty asset, asan recognition own use.After heldfor forproperty linewiththeclassification in the costmodel, for or loss),but inprofit recognised the fairvalue in from achange orlosses (withgains property forinvestment model the fairvalue for opt in2005 did not Ageas Statements, Consolidated Financial intheAgeas ofcomparabilitytheperformance For reasons forownuse held andproperty Investmentproperty 2.7.2 60
acquiree. inthe heldequityinterest previously ofany fairvalue net ofthe liabilities assumed;and and assetsacquired identifiable inthenet share the Ageas’s
adjustments to the contingent consideration affected goodwill. affected consideration contingent the adjustments to Subsequent estimatewasdeterminable. a reliable not and morelikelythan outflowwas economic the obligation, had apresent if,Ageas only if,and wasrecognised consideration A contingent recognisedgoodwill. affect previously didnot ofinterest share Any additionalacquired separate steps. as for accounted stageswere achievedin Business combinations assets. identifiablenet acquiree’s ofthe share proportionate atthe wasmeasured as minorityinterest) (formerly known interest Thenon-controlling acquisitioncosts. the of formed part acquisition tothe attributable costsdirectly Transaction method. purchase usingthe for wereaccounted Business combinations wereapplied: following differences the requirements, withtheabove-mentioned In comparison 2010 1January priorto combinations Goodwill frombusiness or loss. profit through acquisitiondate the fair valueasat to is remeasured theacquiree in equityinterest the previously held of date fairvalue acquisition the instages, isachieved combination If thebusiness losses. impairment lessanyaccumulated at cost is measured goodwill After initialrecognition, netassets. acquiree’ sidentifiable the shareof proportionate interest’s the non-controlling value orat fair eitherat intheacquiree interests non-controlling measure any to anoption Ageas has businesscombination, For each acquiree. inthe interest non-controlling ofany amount value andthe datefair atacquisition measured transferred, the consideration of aggregate as the is measured ofanacquisition The cost method. acquisition using the for accounted are Business combinations Annual Report 2011 61 od, the liabilities are equal to od, the liabilities are equal to annuity policies during the to annuity policies during For Life insurance with contracts guaranteedminimum returns, up to reflect expected long-term interest liabilities have been set rates. The liabilities relating accumulation period are equal to accumulated policyholder balances. After the accumulation peri the present value of expected future payments. Changes in mortality tables that occurred in previous years are fully reflected in these liabilities. Non-life insurance Claims and claim adjustment expenses charged are to the income statement as incurred. Unpaid claim adjustment claims and expenses include estimates for reported claims and provisions for for workmen’s claims incurred but not reported. Non-life liabilities compensation business are presented at their net present value. Ageas does not discount other its liabilities for claims than for claims with determinable and fixed payment terms. Liability Adequacy Test The adequacy of liabilitiesinsurance Test’) is (‘Liability Adequacy tested by each company at each reporting date. The are tests performed on legal fungible level (asset pool level) for life and on a level of homogeneous product groups for Non-life. Ageas considers current best estimates of all contractual cash flows, including related cash such as (re)investmentflows returns and expenses. The assumptions are internally consistent with those used for other modelling purposes, such as embedded value. For Life Insurance contracts, the tests cash flows include resulting from embedded options and guarantees. The present value of these cash flows has been determined by using a risk-free discount rate, an allowing illiquidity premium. Any shortfall is recognised immediately in the income statement, either as a DAC- or VOBA impairment or as a loss recognition. contracts
Life insurance These liabilities relate to insurance contracts, investment contracts with discretionary participation features (DPF) and investment contracts that transfer insurance risk, financial risk or both. Investment contracts without discretionary participation features are valued at amortised cost. The DPF component concerns a conditional promise related to unrealized gains and losses. This promise remains therefore part of the Unrealised gains and losses as included in equity. Once the promise becomes unconditional, the related amount is transferred to Liabilities arising from Life insurance contracts. For Life insurance contracts, futurebenefit liabilities policy are calculated using a net level premium method (present value of future net cash flows) on the basis of actuarial assumptions as determined by historical experience and industry standards. Participating policies include any additional liabilities relating to any contractual dividends or participation features. For some designated contracts, the future policy benefit liabilities have been re-measured to reflect current market interest rates. 2.7.6 Liabilities arising from insurance and investment The measurement and recognition income statementin the depends on the IFRS classification of the financial liabilities, being: (a) financial liabilities at fair value through profit or loss, and (b) other financial liabilities measured at amortised cost. 2.7.5 Financial liabilities 2.7.5 Financial Other intangible assets with finite life Other intangible assets include intangible assets with finite life, such as trademarks, internally developed software that is not an integral part of the related hardware and licenses that are generally amortised over their useful life using the straight-line method. Value of business acquired (VOBA) Value of business acquired represents the difference between the fair value at acquisition date measured the using Ageas’s accounting policies and the subsequent carrying value of a portfolio of insurance and investment contracts acquired in a business or portfolio acquisition. VOBA is recognisedas an intangible asset and amortised over the income recognition period of the portfolio of contracts acquired.
Annual Report 2011 estimated. be reliably assets) thatcan financial group of financial asset(or flowsofthe cash future estimated impactonthe hasan (or events) that lossevent and oftheasset initialrecognition the occurred after that difficulty oftheissuer) financial significant ’triggers‘, e.g. events or (loss events ormore ofone a result impairment as of isobjectiveevidence is impairedifthere available forsale assets)classified as offinancial (or group A financialasset Financial assets prior years. in theasset for recognised been noimpairment had depreciation, net of determined, been wouldhave that carrying amount the exceed cannot amount increased That in theincomestatement. isrecognised and impairment the byadjusting amount isreversed the write-down, afterthe occurring anevent to decreases, due oravailable-for-saleequityinstruments goodwill other than onassets oftheimpairment amount periodthe If inasubsequent incomestatement. the recognised in yearis inthecurrent change ofthe amount the amount and recoverable toitsestimated assetsisreduced impaired amount of Thecarrying ofimpairment. objectiveevidence datefor reporting ateach allofitsassets Ageasreviews amount. recoverable its exceeds amount whenitscarrying An assetisimpaired Measurementofimpairedassets 2.8 assumptions. actuarial basis of on account takeninto risks are Insurance statement. intheincome valuerecognised fair change inthe withthe topolicyholders, inliabilitiesrelated value andincluded fair valuedat whicharealso contain guarantees, Certain products fund). of unitsthe bythenumber investeddivided linked contractsare which theunit- fundin ofthe value value (i.e.fair at unit measured contracts are forsuch eliminated. Theliabilities policyholders are of onbehalf debtinstruments inown made investments shares and Treasury value. atfair measured and policyholder behalf ofthe on areheld theinvestments contractswhere primarily unit-linked contractsare andinvestment insurance Ageas’s non-participating Assetsandliabilitiesrelatedtounit-linkedcontracts 2.7.7 62
identified is recognised in the income statement. statement. intheincome identified isrecognised impairment Any date. reporting ateach reviewed useful lifeand the estimated over amortised with finitelivesare Intangible assets annually. at least forimpairment tested instead amortised, but andisnot life anindefinite assetwith Goodwill isanintangible assets intangible Goodwill andother usefullife. value overitsremaining itsresidual less amount carrying ontherevised is adjustedbased periods future for depreciation the animpairment, of the recognition After statement. intheincome isrecognised impairment identified Any property. of the amount therecoverable estimate Ageas shall then), only exists(and If anysuchindication plan todispose). (e.g. sourcesofinformation internal and economic environment) in the significant changes external(e.g. considering various impaired, be anassetmay any indicationthat is whether there assesses Ageas period reporting each endof At the transfer tax). for deduction flows,without cash valueoffuture expected present inuse‘(the tosell‘or’Value valuelesscosts of ’Fair the highest amount, whichis itsrecoverable exceeds amount when thecarrying impaired and thecostmodel to according ismeasured Property forownuse held andproperty Investment property equity. recognised in are equitysecurities of animpairment after revaluations, Positive statement. income inthe are recognised impairment, ofthe recognition the after occurring toanevent objectively related can be which debt instruments of Reversal ofimpairments position. financial of thestatement of date atthe consecutive quarters) (four period prolonged below costfora cost orhasbeen below issignificantly(25%) fairvalue the consideration whether others,the include,amongst ofimpairment is objectiveevidence whether there todetermine used thetriggers For equitysecurities, Annual Report 2011 63 Fair values forFair values loans are determined discounted using cash flow models based upon Ageas’s current incremental lending rates for similar type loans. For variable-rate loans that re-price frequently and haveno significant in creditchange risk, fair values are approximated by the carryingamount. Option pricing models are used for valuing caps and prepayment options embedded in loans that have been separated in accordance with IFRS. Off-balance-sheet commitments or guarantees are fair valued based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings.
For more detailed information on the application of these methods and assumptions, reference is made the to applicable notes in the Ageas Consolidated Financial Statements. 2.10.1 premium Gross income Premium income when received Premiums from Life insurance policies and investment contracts with discretionary participation features that are considered long duration type contracts are recognised as revenue when due from the policyholder. Estimated future benefits and expenses are provided against such revenue to recognise profits over the estimated life of the policies. This matching is accomplished by the establishment of liabilities of the insurance policies and investment contracts with discretionary participation features and by the deferral and subsequent amortisation of policy acquisition costs. Premium income when earned For short duration type contracts (principally Non-life), premiums are recorded as upon inceptionwritten of the contract. Premiums are recognised in the income statement as earned on a pro-rata basis over the term of the related policy coverage. The unearned premium reserve represents the portion of the premiums written relating to the unexpired terms of the coverage. 2.10 Revenue recognition 2.10 Revenue Fair values for securities available for sale or at fair value through profit or loss are determined using market prices from active markets. If no quoted prices fromare available an active market, the fair value is determined using discounted cash flow models. Discount factors are based on the swap curve plus a spread reflecting the risk characteristics of the instrument. Fair values for securities held to maturity (only necessary for disclosures) are determined in the same way. Fair values for derivative financial instruments are obtained from active markets or determined using, as appropriate, discounted cash flow models and option pricing models. Fair values for unquoted private equity investments are estimated using applicable market multiples (e.g. price/earnings or price/cash flow ratios) refined to reflect the specific circumstances of the issuer.
2.9 Fair value of financial instruments On initial recognition, the fair valueinstrument of a financial is the transaction price, unless the fair value is evidenced by observable current market transactions in the same instrument, or is based on a valuation technique that includes inputs only from observable markets. The principal methods and assumptions used by Ageas in determining the fair value of financial are: instruments For non-financial assets, the recoverable amount is measured as the higher of the fair cost value less the to sell and value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s length transaction knowledgeable, between willing parties, after deducting any incrementaldirect disposal costs. Value in use is the present value of estimated future cash flows expected to arise from continuing use in its present condition of an asset and from its disposal at the end of its useful life. Other assets
Annual Report 2011 andrevaluations’. in‘Resultonsales period isincluded reporting previous and the period reporting current end ofthe atthe accruals) oftheinterest unrealisedportion (i.e. excludingthe cleanfairvalue thecarrying between difference the For derivatives, and revaluations’. ‘Result onsales includedin is period reporting theprevious and period reporting ofthecurrent end valueatthe thecarrying between the difference loss, profitor fairvaluethrough at carried For financialinstruments accounting. valuehedge fair impact ofany the for after adjustment statement income the recognisedin anyimpairments asset sold,minus value ofthe theinitialbook and received proceeds between the the difference represent salesanddivestments gains orlosseson sale,realised asavailablefor classified For financialinstruments losses gainsand Realisedandunrealised 2.10.3 amount. recoverable the of measuring purpose cash flowsforthe thefuture discount usedto thatwas rate interest on theeffective based recognised isthereafter income interest amount, recoverable estimated its downto written asset hasbeen Once afinancial premium. discountor the of oramortisation the accretion and instruments rateincome floating on fixedand coupons earned includes Interestincome costs. transaction price includingdirect purchase the actual basedon interestmethod using theeffective accrual basis an on instruments allinterest-bearing statement for intheincome arerecognised expense interest and Interest income expense and Interestincome 2.10.2 64
Expenses include mortality claims and interest credited. and interest mortalityclaims Expenses include charges. surrender feesand administration insurance, coverage of the of feesfor contracts consist these from significant. Revenues riskisnot coveredinsurance the because investment contracts, as are classified that by insurancecompanies features, issued discretionary participation without contracts, This relatesto investmentcontracts from Fee revenue completed. hasbeen syndication whenthe revenue recognised as feesare syndication Loan obligation iscomplete. the performance when isrecognised Commissionrevenue underlying transaction. ofthe completion upon are recognised party, athird transaction for a of negotiation inthe orparticipating negotiating Fees arisingfrom transaction of theunderlying upon completion Fees recognised period. over thecommitment basis proportion a time on revenue as isrecognised fee commitment derivative, the a isnotconsidered loancommitment the and entered into willbe lendingarrangement thataspecific itisunlikely provided. If are services asthe as revenue recognised generally Fees are provided as servicesare Fees recognised recognised. isinitially instrument whenthe revenue recognised as are fees orloss,the profit value through at fair measured is instrument thefinancial rate. However,when effective interest tothe adjustment asan treated aregenerally financial instrument rate ofa effectiveinterest ofthe part integral are an Fees that rate interest part ofeffective Fees asintegral income commission Feeand 2.10.4 impaired. assetbecoming financial upon the or derecognition upon statement to theincome aretransferred directly intoequity recorded gains andlosses unrealised Previously recognised Annual Report 2011 1 3 19 23 60 83
65 which took financial position. Liabilities Liabilities Borrowings liabilities tax deferred and Current liabilities other and interest Accrued liabilities Total Cost Price price cost and liabilities Total 7 1 1 11 63 83
Assets Cash & cash equivalents Receivables Property, plant and equipment assets other and charges Deferred Goodwill and intangible assets Total Assets Founded in 2006 and located in Poole Dorset, close to Ageas UK’s operation centre in Bournemouth, Castle Cover Limited is the third largest specialised over 50 years of age broker, providing home, car and other personal products through its Castle Cover and Regal Insurance brands. The company serves more than 280,000 policyholders and employs around 300 staff in the UK. It is based on a similar business model to RIAS, an Ageas UK subsidiary, which is currently the second largest intermediary inthe over 50 years of age sector. Together with RIAS, will Ageas serve 1.3 million customers attractive in this market segment, currently accounting for 38% of the UK population and presenting above average growth rates relatively and high retention rates. The acquisition of Castle Cover further consolidates Ageas as the fourth largest personal lines intermediary distributor in the UK. Castle Cover generated in 2011 a net loss of EUR 0.2 million, including amortisation of intangible assets of EUR 1.6 million. 3.1.3 Estate AG Real Acquisitions AG Real Estate, a part of the Belgium activities dedicated to the real estate and parking business, has concluded some acquisitions in 2011. The largest ones are Westland (acquired for 46% for an amount of EUR 31.5 million) and Regatta (acquired for 50% for an amount of EUR 8.4 million). 2011 and 2010. Details on acquisitions and disposals, any, if
ı . Ş Ömer Sabanc ı gorta, whereby both shares will . Ş . (Sabanci), Turkey’s leading industrial and financial Ş
place after the date of the statement of financial position, are included 56 in Note Events after the date of the statement of Ageas closed in July 2011 a deal with Hac 3.1.1 AKSigorta A. 3.1.1 AKSigorta 3.1 Acquisitions in 2011 in 3.1 Acquisitions The following significant acquisitions and disposals were made in 3 and disposals Acquisitions
Holding A. conglomerate, to acquire a 31% stake in AKSigorta A. In March 2011, Ageas acquired Castle Cover Limited for a consideration of GBP 52.4 million (EUR 59.9 million). Castle Cover is a UK based intermediary specialising in the over 50’s insurance sector. The goodwill amounts to EUR 54.5 million while the intangible assets amount to EUR 8.7 million. Castle Cover is included in the consolidation scope as of the first quarter 2011. The impact of the acquisition on the Ageas’s Consolidated statement of financial position at acquisition date was as follows: 3.1.2 Castle Cover Limited (AKSigorta), a Non-life company, through the sale by Sabanci of half of its stake in the company. Following the transaction, Sabanci and Ageas have equal shareholdings in AKSigorta. The remaining shares (38%) were continued to be traded on the Istanbul Stock Exchange. As part of this transaction, Ageas paid Sabanci a total consideration of USD 220 million (EUR 154 million) upon in cash completion. The transaction was closed on 27 July 2011 and consequently AKSigorta is included as an equity associate in the consolidated scope as of this date. In 2011, total inflow was EUR 177.0 million (Ageas share EUR 58.4 million) and net profit EUR 13.4 million (Ageas share EUR 4.0 million). On 21 November 2011, Ageas and Sabanci agreed to jointly increase their shares in AKSi increase to a maximum of 36%, to further strengthen the partnership between the two groups. At year-end 2011, both entities have increased their share in AKSigorta to 33.11%; Ageas spent EUR 4.2 million on the additional acquisition. Annual Report 2011 revaluations). revaluations). and lineResultonsales (included inthe Account General forinthe 29.3millionwhichwasaccounted EUR capital gainof ina and resulted December 2011 30 completed at was The merger their activities. tomerge LuxInternational company ofCardif parent Paribas Cardif, BNP with agreement an signed in2011 Vie, Luxembourg shares inFortis ofthe 50% each which eachheld BNPP), (BGL BNP Paribas BGL and International Ageas Insurance Vie FortisLuxembourg 3.2.2 revaluations). and lineResultonsales (included inthe Account General inthe for 14.5millionwhichisalreadyaccounted to EUR amounting acapitallossforAgeas likelytoresultin The transactionis 2012. of quarter inthefirst be closed to isexpected approval and toregulatory issubject Thetransaction activities. its GermanLife of forthesale with AugurCapital anagreement signed Ageas has AG Lebensversicherung AgeasDeutschland 3.2.1 3.2 Disposals in 2011 also3.2.2). (see inthisentity percent holds 33.33 asAgeas for EUR70million equityassociate an recognised as was entity themerged sametime, Atthe the lossofcontrol. to Viedue Lux a saleofFortis as accounted for was The merger brand name. Cardif LuxVie underthe entitywilldobusiness The newlymerged BGL BNP Paribas 33.33% andBNP Paribas Cardif 33.34%. Ageas 33.33%, divided asfollows: this entityare in Shareholdings regime. (FOS) Services of Freedom the under outside Luxembourg worthclients highnet andto market Luxembourg products inthe insurance protection Lifeand entitytodistribute the newlymerged allows Thisagreement theiractivities. tomerge Lux International, ofCardif company Cardif, parent Paribas BNP 2011 with agreed in Vie, inFortisLuxembourg shares 50% ofthe which eachheld BNPP), (BGL BNP Paribas BGL and International Ageas Insurance LuxInternational LuxViewithCardif of Fortis Merger 3.1.4 66
asfollows: datewas positionatacquisition of financial statement Consolidated Ageas’s acquisitiononthe of the The impact EUR20 million. to assetsamount while theintangible EUR207 million amountsto Thegoodwill 215 million). (GBP acquisition date the ratesat exchange based on EUR 260million of consideration foratotal customers, 600,000 morethan intermediary servicing UKinsurance a (KFIS), Services Kwik-Fit Insurance acquire to withPAIPartners agreement an Ageas signed On 2July2010, Services Kwik-FitInsurance 3.3.1 3.3 Acquisitions in 2010 assets Total assets other and income Accrued unit-linked contracts to related Investments investments Financial equivalents Cash &cash Assets Assets Total assets intangible Goodwill and assets other and income Accrued equipment and plant Property, Receivables equivalents Cash &cash Assets as follows: canbedetailed sale, classifiedasheldfor AG, Lebensversicherung Deutschland ofAgeas liabilities The assetsand forsale and liabilitiesheld Detailsofassets 3.2.3 139 139
314 227 23 31 75 10 55 19 4 9 Total liabilities and cost price Cost Price Total liabilities Accrued interest and other liabilities Current and deferred tax liabilities Liabilities Total liabilities and equity Equity Total liabilities Accrued interest and other liabilities Liabilities related to unit-linked contracts investment contracts Liabilities arising from insurance and Liabilities 139 111
314 260 28 15 31 65 54 45 9 Annual Report 2011 1.6 2.8 20.2 24.2 48.8 99.8 148.6 67
Liabilities Liabilities Borrowings liabilities tax deferred and Current liabilities other and interest Accrued Provisions liabilities Total Cost Price price cost and liabilities Total 7.2 1.5 5.1 23.8 111.0 148.6
Turkey) October 2010 and resulted in a capital gain of
Metropark Assets Cash & cash equivalents Receivables Current and deferred tax assets Property, plant and equipment Intangible assets Total Assets The acquired activities of Metropark in 2011 were merged with Interparking Hispania (a subsidiary of AG Insurance). 2010 in 3.4 Disposals 3.4.1 Fortis Luxembourg Non-vie On 6 October 2009, Ageas announced the sale of its Luxembourg Non-life activities to La Bâloise, for a total consideration of EUR 23.0 million. The sale took effectively place in January 2010. The realised capital gain amounted to EUR 12.4 million. 3.4.2 Fortis Emeklilik ve Hayat (Pension and Life activities in Ageas sold its Pension Life and activities in Turkey to BNP Paribas Assurance in the last quarter of 2010. This transaction was closed on 12 EUR 8.5 million. 3.4.3 Fortis Life Insurance Ukraine Ageas Insurance International sold Fortis Life Insurance Ukraine to US based investment company Horizon Capital. The transaction was closed on 17 November 2010 and resulted in a capital loss of EUR 13.9 million. 0.2 67.4 45.0 163.5 163.7 276.1
Borrowings liabilities Other liabilities Total Cost Price Non-controlling interests price cost and liabilities Total Liabilities Liabilities 276.1 276.1
Total Assets The acquired activities of Venti M generated in 2011 a contribution to the net result attributable to shareholders of Ageas of EUR 1.9 million (2010: EUR 0.2 million).
Assets Investment property Venti M AG Real Estate, a part of the Belgium dedicated activities to the real estate and parking business, has concluded some acquisitions in 2010. The largest ones are Venti M (a real estate fund acquired for 60% in the fourth quarter of 2010) and Metropark (parking business, acquired in the first quarter of 2010). The impact of these acquisitions on the ConsolidatedAgeas statement of financial position at acquisition date was as follows: 3.3.2 Estate Acquisitions AG Real The acquired activities of Kwik-Fit Insurance Services (KFIS) generated in 2011 a net profit of EUR 7.6 million (2010: EUR 3.5 million), including amortisation of intangible assets of EUR 6.5 million in 2011 (2010: EUR 2.9 million). KFIS is an insurance intermediary, which sells predominantly personal line insurance products directly to customers, primarily through the internet, leveraging the Kwik-Fit brand and two other brands owned by KFIS: ‘The Green Insurance Company’ and ‘Express Insurance’.
Annual Report 2011 (2010: EUR 472.0 million). There were in 2011 no capital increases by non-controlling interests (2010: EUR 83.3 million). EUR83.3million). interests(2010: by non-controlling capital increases no were in2011 million).There EUR 472.0 (2010: and associates ofsubsidiaries million foracquisitions EUR296.6 to 2011amounted in consideration purchase The total disposals from received / for acquisitions Cash used Less: Non-cash consideration divested / acquired equivalents and cash Cash Less: sale from Proceeds / consideration purchase Total disposals: from received / acquisitions for Cash used taxes of net operations, ondiscontinued Result disposal of result on Taxes gross disposal, of Result of disposed assets /Net acquired Net assets interests Non-controlling Liabilities related to assets held forsale Provisions Accrued interest and other liabilities Current and deferred tax liabilities Borrowings Liabilities related to unit-linked contracts Liabilities arising from insurance and investment contracts sale for held Assets assets intangible other Goodwill and equipment and plant Property, assets other and interest Accrued assets tax deferred and Current receivables other and Reinsurance associates in Investments contracts unit-linked to related Investments Loans property Investment investments Financial equivalents cash Cash and Assets and liabilities of acquisitions and divestments disposal. of acquisitionor re provides detailsoftheassetsandliabilities below The table Assetsandliabilitiesof 3.5 68
acquisitions anddisposals sulting from the acquisition or disposal of subsidiaries, asso of ordisposal acquisition from the sulting
Acquisitions ( 288.0 ) ( 288.0 ) ( 296.6 226.9 226.9 296.6 296.6 25.5 25.5 28.0 67.3 31.3 11.5 16.2 9.4 9.4 1.3 2.2 8.6 8.6 8.6 3.2
Divestments ( 7,335.0 ) ( 7,335.0 ) ( 7,335.0 ( 591.1 ) ( 591.1 ) ( 582.9 ) ( 129.7 ( 119.7 ) ( 119.7 ) ( 129.7 ( 54.8 ) ( 54.8 ) ( 26.6 ) ( 27.6 ( 70.0 ) ( 70.0 ) ( 46.2 ) ( 37.5 ) ( 15.8 138.5 138.5 110.5 110.5 ( 0.3 ) ( 0.3 ) ( 4.4 ) ( 6.3 ) ( 1.1 ) ( 2.5 ) ( 0.7 80.0 80.0 33.8 33.8 (0.7) 2011
Acquisitions Acquisitions ( 358.0 ) ) ( 358.0 ) ( 472.0 190.1 190.1 360.4 276.1 114.0 114.0 114.0 472.0 128.4 53.0 53.0 38.6 24.6 24.2 57.0 25.1 3.7 3.7 3.0 3.0 ciates at the date date ciates atthe
Divestments ( 179.5 ) ( 179.5 ) ( 179.5 ( 14.5 ) ( 14.5 ) ( 55.7 ) ( 21.9 ) ( 11.8 ) ( 23.5 ) ( 28.5 ) ( 33.7 ) ( 15.4 ) ( 14.5 ( 0.1 ) ( 0.1 ) ( 0.1 ) ( 7.5 ) ( 0.6 ) ( 2.4 ) ( 2.9 ) ( 7.6 56.5 56.5 71.0 15.3 15.3 2010 Annual Report 2011 69 Ageas announced in August 2011, based on the shareholders’ authorisation, to initiate a share buy-back programme its of outstanding common for stock a maximum amount of up to EUR 250 million. The buy-back programme was launched of as 24 August 2011 for a period ending 23 February 2012. This programme is implemented in accordance industry with best practices and inwith the compliance applicable buyback rules and regulations. To this end, Ageas has mandated an independent broker to execute the programme through open market purchases on its behalf on NYSE Euronext. The bought back shares will be held as treasury shares until such time a decision to cancel these securities is formally approved by the shareholders. In 2011, Ageas has bought back 175,163,656 shares for a total amount of EUR 227,761,742. This corresponds to 6.7% of the total shares outstanding. Ageas completed the buy back on 25 January, 2012, a total of 192,168,091 purchased shares were for EUR 250 million, representing 7.3% of the shares outstanding. Fortis Bank has issued a financial instrument called CASHES in 2007. One of the features of this instrument is that it can only be redeemed through conversion of the instrument into 125,313,283 Ageas shares. Fortis Bank has acquired all necessary Ageas shares to redeem (consequently the CASHES they are included in the number of shares outstanding of Ageas). However, Fortis Bank and Ageas have agreed that these shares will not receive dividend nor will they have voting rights as long as these shares are pledged for the CASHES (see Note 6 Earnings per share, Note 53 Contingent liabilities and Note 56 Events after the date of the statement of financial position). The number of shares issued includes also shares that were issued related to the convertible instrument FRESH (39,682,540). The FRESH is a financial instrument that was issued in 2002 by Ageasfinlux. One of the features of this instrument is that it can only be redeemed through conversion of the instrument into 39,682,540 Ageas shares. Ageasfinlux has acquired all necessary Ageas shares to redeem the FRESH (consequently they are included in the number of shares outstanding of Ageas). However, Ageasfinlux and Ageas have agreed that these shares will not receive dividend nor will they have voting rights as long as these shares are pledged for the FRESH. As Ageasfinlux is a subsidiary of Ageas, the shares related to the FRESH are treated as treasury shares and eliminated against shareholders’ equity (see Note 6 Earnings per share and Note 30 Subordinated liabilities).
163.4 512.2 ( 578.2 ) 2,203.6 2,105.0 3,354.3 7,760.3
24,547,266 2,623,380,817 2,647,928,083
The Board of Directors of Ageas was authorised by the annual shareholders meeting of ageas SA/NV in 2011 to increase the company capital by a maximum amount of EUR 84 million to meet the coupon payment obligations of certain financial instruments, the so called Alternative Coupon Settlement Method (ACSM). A separate authorisation for ageas N.V. was not necessary in 2011 as the Board of ageas N.V. was already authorised to increase the company capital in the articles of associates. In addition the Board of Directors of Ageas and the Boards of its direct subsidiaries are authorised to acquire Ageas representing units up to a maximum of 10% of the issued share capital, for a consideration equivalent to the closing price of the Ageas unit on Euronext on the day immediately preceding the acquisition, plus a maximum of 15% or minus a maximum of 15%. Number of shares as at 31 December 2011 Shares that may be issued: - in connection with option plans (see Note 10) Total potential number of shares as at 31 December 2011
In addition to the shares already outstanding, Ageas issued options or instruments containing option features which could, upon exercise, lead to an increase in the number of outstanding shares. Shares can also duebe issued to the so-called Alternative Coupon Settlement Method included (ACSM), certain in hybrid financial instruments (for details see Note 53 Contingent liabilities). The table below gives an overview of the shares issued and the potential number of shares as at 31 December 2011. 4.1 Ordinary shares 4.1 Ordinary Shares issued and potential number of shares Unrealised gains and losses Shareholders' equity Share premium reserve reserve premium Share reserves Other Currency translation reserve Net result attributable to shareholders - Ordinary shares: 2,623,380,817 shares issued and paid consisting of one share of ageas NV nominal value EUR 0.42 and one share of ageas SA/NV par value EUR 0.42 The following table shows the composition of shareholders’ equity as at 31 December 2011. Share capital 4 Shareholders’ equity 4 Shareholders’
Annual Report 2011 Number of shares as at at as ofshares Number (acquired)/sold Balance 2010 31December at as ofshares Number (acquired)/sold Balance Issued related to MCS 2010 1January at as ofshares Number shares: ofoutstanding showsthenumber The followingtable Outstanding shares equity. directlyinshareholders’ costs,isrecognised after taxtransaction including received, paidor Consideration buy orsellsuchshares. obtained to on rights or shares, oftreasury orsale the purchase on recognised Nogainorlossis Otherreserves. heading under the equity fromshareholders’ deducted are Theshares by Ageas. back bought been thathave shares are ordinary Treasury shares Treasury shares programme. share therestricted sharesfor 1,615,000 Ageas acquired in2011. beawarded of sharesto number maximum purchasing the commitment by this tohedge decided Ageas has on 1April,2014. forfree shares existingAgeas million and1.6 zero total, between in willbeawarded, managers senior conditions,the some additional years and three thenext over group apeer to share inrelation Ageas ofthe performance relative on the Dependent management. foritssenior shareprogramme restricted a created Ageas In 2011, 70 2011 31December
2,623,380,817 2,623,380,817 2,623,380,817 2,516,657,248 106,723,569 106,723,569 Shares Shares issued issued
( 217,090,936 ) ) ( 217,090,936 ) ( 176,582,471 ( 40,508,465 ) ) ( 40,508,465 ) ( 41,629,830 1,121,365 1,121,365 Treasury Treasury shares 2,406,289,881 2,406,289,881 2,582,872,352 2,475,027,418 ( 176,582,471 ) ( 176,582,471 106,723,569 106,723,569 outstanding 1,121,365 1,121,365 Shares
written putoptiononN forthe adjustment the include reserves the Other In addition, Otherreserves. in andreported equity Shareholders’ deducted from are Ageas, back by bought i.e. ordinaryshares Treasury shares, billion. EUR 3.4 to reserves and theOther 2.1billion to EUR amounts reserve Share premium the transfer, After this flexibilityofthecompany. thefinancial to enhance Share premiumreserve tothe EUR 12.3billionfromOtherreserves of amount anegative bytransferring 2011 31 December of equity as itsshareholders’ restructured ageas N.V. 4.2 Other reserves provided in Note 30.1. 30.1. provided inNote are the FRESHsecurities of Details (1,615,000). programme share restricted and the (175,163,656) programme share buy-back the securities(39,682,540), FRESH relatetothe mainly end 2010) (asatyear 2011 atyear-end Ageas heldby shares The treasury Contingentliabilities). andNote53 Note 35Provisions (see amount same forthe recorded hasbeen a provision State, the Dutch disputeswith inthe legal evolutions Awaiting further N.V. BankNederland ofFortis overcontrol after ittook State, by theDutch isdisputed Thiscompensation MCS. parties ofthe allissuing between agreement original onthe receivables), based other and 20 Reinsurance billion(seeNote EUR2 amount of foran recognised N.V.hasbeen AMROBank ABN on of Ageas aclaim Consequently, new sharesatconversion. Ageas byissuing compensate to AMRO N.V.)had ABN N.V. (now Bank Nederland parties, Fortis the between into entered to agreements According shares. the issuanceof the costs relatedto wereno There 2010. 7December date,i.e. 1.90 atconversion EUR price of openingshare byAgeas’s multiplied (106,723,569) issued ofshares foreseennumber as thecontractually calculated corresponds tothefairvalueofliabilityforMCS, This equity. initsshareholders’ EUR 0.2billionincrease a has recorded Ageas the MCS, of Atconversion Securities (MCS). Convertible ofMandatory conversion the mandatory related to Ageas shares 106,723,569 Ageas issued 2010, On 7December on-controlling interest.
Annual Report 2011 Total 28.8 73.7 50.3 234.3 221.2 597.8 112.8 541.2 512.2 241.4 ( 14.4 ) ( 95.2 ) ( 13.1 ) ( 57.8 ) ( 29.0 ) ( 161.9 ) 71
6.1 6.1 6.1 0.5 0.5 0.5 DPF component
0.9 8.6 0.2 ( 1.6 ) ( 1.6 ) ( 1.6 ) ( 21.2 ) ( 11.7 ) ( 11.5 ) hedges Cash flow Cash
of ( 0.2 ) 231.7 231.5 215.7 151.7 151.7 139.6 ( 15.8 ) ( 12.1 ) associates Revaluation
51.8 70.3 ( 78.8 ) ( 78.8 ) Held to Held payments or dividends in a foreign arecurrency, hedged. Exchange differences arising on loans otherand currency instruments designated as hedging instruments of such investments are recordedequity in (under the heading Currency translation reserve) until the disposal of the net investment, except for any hedge ineffectiveness, recognised in the income which will be immediately statement. On disposal of a foreign exchange entity, such differences are recognised in the income statement as part of the gain or loss on the sale. maturity ( 200.9 ) investments
91.3 28.8 73.7 83.7 82.7 50.3 34.1 ( 0.5 ) ( 1.0 ) ( 6.1 ) 394.1 380.7 588.2 ( 13.4 ) ( 14.4 ) ( 95.2 ) ( 57.8 ) for sale for ( 214.6 ) Available investments cluded in shareholders’ equity
Transfer to currency translation reserve Total Related tax Non-controlling interests Discretionary participation feature (DPF) Total(including foreign exchangedifferences) Gross Related tax Shadow accounting Total 31 December 2010 Non-controlling interests Discretionary participation feature (DPF) Total(including foreign exchangedifferences) Transfer to currency translation reserve (cumulative) Gross Related tax Shadow accounting Related tax 31 December 2011 The table below shows the unrealised gains and losses included in shareholders’ equity. 4.4 in Unrealised gains and losses The currency translation reserve is a separate component of shareholders’ equity the in which exchange differences are reported from arising translation of results andthe financial positions of foreign operations that inare included the Ageas Consolidated Financial Statements. Ageas does not hedge the net investments in foreign operations unless the impact of potential foreign exchange currency movements is considered beyond Ageas’s risk appetite. However, loans not provided for permanent funding purposes and known 4.3 reserve Currency translation
Annual Report 2011 Gross unrealised gains (losses) as at 31 December 2011 31December asat (losses) gains unrealised Gross Other Amortisation Transfer from AFSto HTM associates of divestments and Acquisition differences exchange Foreign impairments of because losses unrealised Reversal sales of because losses (gains) unrealised Reversal year the during (losses) gains unrealised in Changes 2010 31December asat (losses) gains unrealised Gross Other associates of divestments and Acquisition differences exchange Foreign impairments of because losses unrealised Reversal sales of because losses (gains) unrealised Reversal year the during (losses) gains unrealised in Changes 2010 1January asat (losses) gains unrealised Gross gains and gross unrealised changesin below shows The table statement. theincome which isimmediatelyrecognisedin ineffectiveness, any hedge for except investment, of thenet until thedisposal equity inshareholders' recorded entityare foreign investment ina net ofa as hedges designated oninstruments differences arising Exchange statement. intheincome immediately recognised is hedgeineffectiveness Any equity. or lossinShareholders’ gain unrealised asan recognised hedgeare qualify asacash-flow and designated thatare valueofderivatives fair Changes inthe investments. inNote16Financial discussed indetail are forsale investments available and losseson Unrealised gains 72
losses included in shareholders’ equity for 2010 and 2011. 2011. 2010and equityfor included inshareholders’ losses
investments. toavailable-for-sale and lossesrelated gains inunrealised (DPF) and features discretionary participation under separate equity ofshareholders’ aspart accounting, reported shadow of theapplication after are, contracts related tosuch assetmix of the fairvalue the changesin conditions, unrealised terms and andstatutory onthecontractual Ageas. Depending of discretion atthe aresolely payment and declaration the timingof and amounts ofwhichthe benefits, but alsoother part guaranteed onlya not thatfeature insurancecontracts into Ageas enters investments ( 1,228.0 ) ( 1,228.0 Available 1,658.2 1,658.2 ( 262.7 ) ( 262.7 ) ( 336.8 for sale ( 53.6 ) ( 53.6 588.2 588.2 214.9 577.5 ( 0.1 ) ( 0.1 ) ( 0.1 ) ( 3.1 12.3 12.3 91.3 8.6 8.6 0.1 1.0
investments ( 200.9 ) ( 200.9 ) ( 214.9 maturity Held to 14.0 14.0
Revaluation associates associates 231.7 231.7 151.7 ( 0.6 ) ) ( 0.6 75.6 75.6 12.1 57.3 82.9 3.6 3.6 0.8 of of
Cash flow hedges hedges ( 21.2 ) ) ( 21.2 ) ( 19.4 ( 0.2 ) ) ( 0.2 ) ( 1.6 ) ( 1.4 ) ( 0.2
( 1,172.1 ) ( 1,172.1 1,740.9 1,740.9 ( 262.7 ) ( 262.7 ) ( 336.8 597.8 597.8 577.5 241.4 ( 0.1 ) ( 0.1 ) ( 0.5 ) ( 0.1 ) ( 3.1 14.0 14.0 12.2 12.9 13.1 Total 2.6 2.6
Annual Report 2011 2010 2.5% 73
2011 2011 (7.2%)
Subsidiaries Subsidiaries and are associates to dividendalso subject restrictions arising from minimum capital and solvency requirements imposed by regulators in the in countries which those subsidiaries operate and to shareholder agreements with the partners in the company. In certain situations consensus between the shareholders is required before dividend is declared. Proposed dividend2011 for Ageas’s Board has decided to propose for approval by the shareholders a gross cash dividend of 8 eurocent per share for 2011. This dividend proposal reflects our strong belief in the strength of the company and in the underlying profitability of our business. Return on equity 4.6 Return on equity Ageas calculates the Return on equity on the basis of a 12-months result and a net equity rolling average of the four past quarters. The Return on equity for 2011 and 2010 is as follows:
Once a dividend is declared, shareholders may choose to receive the dividend from ageas SA/NV from (Belgium) or ageas N.V. (the Netherlands). The gross dividend of ageas SA/NV is equal to the N.V. dividend of ageas gross If a shareholder does not elect to receive dividend from one of the above, a default primarilyprocedure will apply based on the domicile of the shareholder (for registered shares) or the central of securities depository with which the shareholders’ bank has deposited the shares (in the case of shares held in a securities account), with Belgian residents receiving solely Belgian dividends and Dutch residents receiving solely Dutch dividends. Shareholders domiciled in neither Belgium nor the Netherlands will receive a Belgian and a Dutch dividend in equal proportions. of Holders physical bearer shares who do not specify the source of their dividend will receive a wholly Belgian dividend. The companies comprising Ageas toare subject legal restrictions regarding the amount of dividend they pay to may their shareholders. The Dutch Civil Code stipulates that a Dutch company may pay dividends only if the net equity of that company exceeds the total of the paid up and called up capital and the reserves required by law or by the Articles of company’s Association. Under the Belgian Companies Code, 5% of a company’s annual net profit must be placed in a legal reserve fund until this fund reaches 10% of the share capital. No dividends may be paid if the value of the company’s net assets falls below, or following payment of a dividend would fall below, the sum of its paid-up capital and non- distributable reserves. 4.5 Dividend 4.5 Dividend
Annual Report 2011 istreated newentity merger the the 2011. Dueto at 30December was completed Themerger newentity. ofthe of theshares 33.34% holds BGL 33.33%andBNP 33.33%, BNP Paribas Paribas Cardif Ageas their activities, tomerge LuxInternational company ofCardif parent Cardif, Paribas BNP with anagreement Vie, signed Luxembourg Fortis sharesin ofthe 50%each BNPP), whichheld (BGL Paribas BNP BGL and (Ageas) International Ageas Insurance principles. IFRSaccounting byAgeas determined subsidiaryas Ageas ofan equity shareholders’ inthe a thirdparty participation of therelative (NCI)represents Non-controlling interest NCI Total Adjustment NCIAGInsurance related to Liability on written put option Total Fortis Luxembourg Vie SA (part of CEU) UK) of (part Ltd Insurance Tesco F&B/UBI Assicurazioni (part of CEU/General) CEU) of (part Ageas Millenniumbcp AGInsurance) of (part Corrège le Cortenbergh AGInsurance) of M(part Venti Interparking(part SA of AGInsurance) (Belgium) AG Insurance company Group entities. inAgeas interests significantnon-controlling themost about providesinformation The followingtable 5 Non-controlling interests 74
put option on NCI. put option written putoptionareprovidedin to Liabilityon NCIAGInsurancerelated Adjustment Details onthe 2010. wasexecutedin capital contribution a company the upof thestart to Related company. 49.9% inthis Bank Tesco and 50.1% Ageas holds bank. withTesco together Ltd. Insurance Tesco started up Ageas also (see alsoNote3.1.2). Venti M fund estate inthereal wasacquired share a 60% In 2010, 2011. atyear-end inplace longer interestisno the non-controlling asubsidiary.Consequently, as insteadof associate as anequity % of non-controlling % interest 49.9% 75.0% 49.0% 38.8% 40.0% 10.1% 25.0%
31 December 2011 31 December Amount as at at as Amount 1,401.4 1,401.4 ( 794.0 ) ( 794.0 607.4 607.4 309.3 794.0 83.0 83.0 87.6 38.7 85.1 3.7 3.7
Note 36Liabilityrelatedtowritten % of non-controlling of non-controlling % interest 50.0% 50.0% 49.9% 75.0% 49.0% 38.8% 40.0% 10.1% 25.0%
31 December 2010 31 December Amount as at at as Amount 1,622.1 1,622.1 ( 877.8 ) ( 877.8 744.3 744.3 406.6 877.8 44.1 44.1 71.8 91.1 44.9 81.9 3.9 3.9
Annual Report 2011
2010 0.09 0.09 223.1 223.1 109,605 75 2,482,267,630 2,482,377,235
0.5 2011 ( 0.23 ) ( 0.23 ) ( 578.2 ) ( 577.7 ) 615,027 2,546,116,654 2,546,731,681 Ageas shares totalling 125,313,283 issued in relation to CASHES are in 2011 and 2010 included in the ordinary shares although they do not bear dividend nor voting rights until the moment of conversion of the (see CASHES also Note 53 Contingent liabilities and Note 56 Events after the date of the statement of financial position). The adjustment for restricted shares is based on the number of shares to be granted if the restricted share programme would be executed at year-end taking into account the underlying conditions of grant.
e diluted earnings per share
In 2011, weighted average options on 25,695,544 shares (2010: 26,491,907) weighted with average exercise prices of EUR 19.89 per share (2010: EUR 19.95 ) were excluded from the calculation of diluted EPS because the exercise price of the options was higher than the average market price of the shares. During 2011 and 2010, 39,682,540 Ageas shares arising from the FRESH were fromexcluded the calculation of diluted earnings per share because the interest per share saved on these securities was higher than the basic earnings per share. Basic earnings per share (in euro per share) Diluted earnings per share (in euro per share) Weighted average number of ordinary shares for basic earnings per share Adjustments for: shares - restricted Weighted average number of ordinary sharesfor diluted earnings per share Net result attributable to shareholders Amortisation of costs of restricted shares determin to used result Net The following table details the calculation of earnings per share. 6 share Earnings per
Annual Report 2011 of our low exposure. of ourlowexposure. because limited thatwere lowlevelsledtoimpairments prolonged the and kindofexposure significantlythis not allowtoincrease marketdid volatility oftheequity The boundaries. limit counterparty and fixedsectorrating withinthe more strongly, debt even ofcorporate proportion the shouldhaveincreased rescheduling that the partof second the through capacity tocarry our has reduced This debt. corporate non-financial spreadson reduction incredit anda theBelgian debt) on spreads(also widening incredit a interestrates, increasein yearsawagradual ofthe The lastpart 2011. and 2010 during Eurozone the restof tothe gradually extended 2009and asof Greekdebt the affecting within theEuro-zone, theunrest from strongly thus suffered Ageas debt, Government European in concentration itshigh Through than anticipated. risk credit higher a represent fiscalsituation,might economic and inadifficult states, Euro-zone some awarethat became the market 2011, morein and even 2010 and During2009 debt. Governments European others, by, among flow matchingsupported astrongcash riskthrough market and ALM had limited Insurance AG andinparticular insurance companies the convergence ofEuro previousyears the conditions.In challenging market and marketvolatility yearoftremendous a 2011 wasagain 7.1 Introduction holdingactivi other financeand such asgroup business, Insurance the co to notrelated comprisesactivities whichmainly account, aGeneral Ageas has operations, its Insurance next to Moreover product ofcertain sale orthe valueofits investments the itsshareprice, itsearnings, operations, company’s may affectthe internal that,whether ofrisks anumber faces Ageas Non-life, both Lifeand ofinsurance, asaprovider markets Active inmany 7 Risk Management 76 State and a number of contingent liabilities related to litigations. litigations. liabilities relatedto ofcontingent number and a State Paribas shares,theliabilitiesrelatedtova in consistoftheinvestments legacyissues legacy issues.These
rious hybridsecuritiesrelatedtoFortis Royal Park Investments, claims on ABN AMRO, the option on BNP on ABN AMRO,theoption claimson ParkInvestments, Royal ties. In addition, the General Account also administrates the alsoadministrates Account General the Inaddition, ties. by: control adequate as ensure business aswell the addvalueto a frameworkisto ofsuch objective The framework. management a well-designedrisk through effectivelymanaged and are understood all materialrisks, that toensure is management risk approachto of Ageas’s The goal for which: risks totakeon seeks activities.Ageasonly conducting itsbusiness in risk factors orinternal external to stems fromitsexposure risktherefore Ageas’s opportunities. orfuture business objectives, its ofAgeas, capital orearnings onthevalue, impact may havean outcomes that fromanticipated asthedeviation risk Ageas defines riskframework. anappropriate portfolio levelwithin overall the individualorat atthe either managed be properly of risksthatcan transformation and warehousing, the acceptance, valuethrough creates Ageas insuranceprovider, As amultinational Risk managementframework 7.2
within it; iskept riskprofile thatthe ensuring and defining ariskappetite needed, mitigated); if (including, andmanaged monitored assessed, are identified, objectives of achievement whichaffectthe risks ensuring that trade-off. risk-reward acceptable they havean Ageas riskappetite); (i.e.withinthe they areaffordable level; the overallportfolio orat individual either atthe managed adequately they canbe understanding; it hasagood Bank, the provision related tothedispu related Bank,theprovision te withtheDutch te s andservices. or external, external, or so-called re Annual Report 2011 77 3b Risk Assessment 3b Risk Likelihood, impact Gross Inherent/residual Net Inherent/residual Management 3c Risk Management selects risk responses or sharing Avoiding, accepting, reducing risk appetite Actions to ensure within
• • • • • • ure risk responses are effectively outure risk responses carried ed in a form and time-framethated in a form and enables people to carry ectives j which meet strategic & performance objectives which meet & performance strategic objectives
This risk framework is permanently under review to ensure Ageas builds on the strengths of the past and the lessons learned during extreme market conditions of the lastyears. Also the framework will need to be regularly adapted to the needs of Ageas. The framework is targeted to support the mission, standardsobjectives, high of risk management at group and local business levels and to ensure that the above mentioned objectives are met. At Ageas, risk management is based on a set of guiding principles, which are captured by the Enterprise Risk Management (ERM) Framework (see illustration). Ageas seeks to ensure that all significant risks are identified, assessed, monitored and managed in accordance with the Group’ guidelines and standards, and intended (implicitly) to guide all business conduct within Ageas. orate Ob orate p pected value creation, capital use risk and ed and modifications are made as necessary Cor Objectives & Risk Strategy Strategy & Risk Objectives nce systems architecture architecture nce systems
nt and planning 3a Risk Identification 3a Risk risks of all types Covers risks Identifying & emerging events Monitoring 3d Risk up on follow and Ongoing monitoring exposure and actions
of the risks of his business, to • • • Integration of risk & fina Integration of risk Policies and procedures: and ens framework describe ERM monitored, assess frameworkThe is ERM Data to be consistent,auditable complete, accurate and Relevant information is identified, captured & communicat out responsibilities and drives business decisions. Required capital linked to level of risk and risk appetite Effective broader communication down, across and up the organisation Capital (re)allocation based on funding business plans Allocation takes into account optimizing ex
Data, IT, Infrastructure and Monitoring of the Framework Control Activities • • • • Capital manageme Information & Communication • • • • • Risk management Cycle
Ethics, Values & Risk Culture Values & Risk Culture Ethics, Responsibilities and accountabilities
Internal Environment Internal • •
ensuring that riskis of insolvency lowat all times kept and within the risk appetite; supporting the decision process making by ensuring that consistent, reliable timely risk information and is available to the decision makers; creating a culture of risk awareness in which each Manager carries out his duty to be aware manage them adequately, and reportthem transparently. risk organisation and governance; core risk policies guidance;and measurement and modelling methods; reporting requirements.
Ageas’s risk framework is composed of the following elements:
Annual Report 2011 below. issummarised andorganisation The riskgovernance monitored. and managed identified,assessed, promptly etc.) are orfinancial, operational objectives(strategic, of our achievement affectthe risks that that ensure isto operations and withinthe grouplevel at department Risk Management the The missionof Riskmanagementorganisationand 7.3 78
Regional & OpCo Group Board of Directors Level Level Level governance
ExCo ( Management Investment Committee Committee Investment Business Business Risk Taking
LEVEL I Risk &CapitalCommittee Ageas Ageas ExCo (CEO, CFO and Chief Risk Officer) ChiefRiskOfficer) ExCo (CEO,CFOand
MCO (incl. Regional Risk Coordinators &LocalOperating CompanyRiskOfficers) RegionalRiskCoordinators (incl. Ageas Risk Ageas Risk Committee Committee Ageas Risk Forum Audit, Risk and ALM Committees ALM and Risk Audit, Risk Management Network Risk Management Board ofDirectors ensure: isdesignedto organisation The RiskManagement Risk Control Model Control LEVEL II
group level. group level. oversight at and risk reporting aggregate consistency toenable management; risk of standards andhigh practicesharing best knowledge and of therisktaxonomy; covering allrisks decision-making, risk-related coherent and transparent functions; the risk management of independence awareness; risk acultureof and management risk regarding andaccountability clear responsibility Board Group Risk Officer Risk Function
Group
Audit Committee Group Assurance Local Audit Audit LEVEL III Annual Report 2011 79 RPI RPI General Account General Account Europe AKSigorta Continental Ageas France Cardif Lux Vie UBI Assicurazioni Ageas Deutschland Milleniumbcp Ageas The third line of defence, Internal Audit, provides independent assurance and challenges, across lines, all business the integrity and effectiveness of the risk management framework via ad hoc assessments management of processes including risk management, ensuring policies adherence and auditing risk practices.
Asia Units 7.3.1 Governance The Group Governance Policy defines requirements relating to the nature, roles and organisation of the risk committees, risk function and the Risk Officer and interaction required between the Operating Companies, Regions and Group. Governance units are defined by the Ageas Board which align with the OpCo or Regional organisation structure of the Group taking into account the regulatory treatment of the companies. Each governance unit is required to aligngovernance local risk with the requirements of this policy. India China Thailand Malaysia Hong Kong AGEAS UK UK Retail Tesco Ageas Protect Ageas Insurance Consolidated Governance Unit Equity Consolidated Governance Unit AG
Belgium Insurance
Co Co p O Grou ion g Re p The businesses, representing the first line of defence have direct responsibility for all aspects of management including the control and management of risk. Risk Management and Compliance act as the second line of defence. Risk Management, coordinates, facilitates and oversees the effectiveness and integrity of Ageas’s risk management framework.
Ageas’s risk frameworkAgeas’s risk emphasises the importance of ensuring the responsibility for good risk management is very clear within each insurance business. Each governance unit (see below) is responsible for having in place a risk framework which meets its own needs and takes account into the group standards. They will develop their risk appetite, limits and strategic asset allocation, and these will be challenged at Groupensure they level to are consistent with group policies. To monitor design the of the overall control risk and framework, detect deficiencies and optimise the approach, Ageas has adopted the ’three lines of defence’ approach:
Annual Report 2011 Ageashasinplace: On grouplevel, Group level at Organisation RiskManagement A. 80
for; for; areused they tothetask are suited and appropriate used are thatare the models that sure thatmakes (MCB) Control Board Model Group and bythe framework the riskmanagement to topicsrelated (ARF) on AgeasRiskForum advised bythe ARCis The aretaken. decisions appropriate consequence, asa placeand arein procedures risk management keyrisksarewellunderstood, that inensuring management which supports the RiskCommittee(ARC), the Ageas OpCos; communicates themtothe and restrictions investment itsetsfurther Finally, whenrelevant, necessary. takenwhere riskmitigation)are actions (including Itensures group. ofthe investmentstrategy optimise theoverall aimsto well asmarkets.It as performance overall investment OpCos anditmonitors strategies locally definedinvestment these ofOpCosto theadherence Itmonitors local Board. bythe approved theyare byOpCosbefore strategies proposed opinions oninvestment AGICO provides Specifically, the level. holding group at Management Asset &Liability and Asset Allocation Strategic relatingtothe recommendations decisionsor makingspecific This rolealsoincludes investments. regarding indecisions It advisesmanagement limits. andwithinagreed withtheriskframework in accordance managed are ensurethey marketrisksto overall monitoring of includes role (AGICO) whose Committee Investment the Ageas (MCO); Committee theManagement member of isa who Riskfunctionand theGroup Risk Officerheading Group inhisworkbythe CRO issupported Committee. The Executive ofthe a member a ChiefRiskOfficer(CRO)whois Fortis; totheformer issuesrelated legacy aspects ofthe financial on all Board the RCCmakesrecommendationto Furthermore, Board. bythe appetiteasset levelofrisk targeted tothe compared Ageas, risk profileof the monitoring of and thesupervision on Board tothe recommendations making Committee(RCC), the RiskandCapital Ageas policies; the and regulations withlegislation, monitoring compliance for theprocesses and reporting financial control over internal including Ageas, sensewithin broadest control inthe ofinternal inrespect monitoring responsibilities supervision and Board infulfillingits the AuditCommittee,assisting
OpCos: Finance) and and/or (Risk Risk/NonLife/Life)fromGroup experts (Financial includerespective members Their considerations. implementation and documentation, methods, concepts, issues, development, modelling istodiscuss of thosecommittees The keypurpose execution. decisionsorthe themanagement for not responsible but is management, guidance to gives Ageas’s RiskManagement
- Ageas Non Life Technical Committee works on Non-life worksonNon-life Committee Life Technical AgeasNon - & Committeeworksonlife(risk Technical AgeasLife - Risk TechnicalCommitteeworkson Financial Ageas - OpCos: Ageas’s across implementation theirconsistent andtoensure relevant riskmodels maintain developand exist mainlyto Board Model Control Ageas’s which reportto committees the followingtechnical - supporting the work of the Group Risk team and Ageas Risk teamand Group ofthe the work supporting - Solvency suchasthe jointriskinitiatives major coordinating - onrisksacrossthe andopinions providingriskreports - management risk acomprehensive ensuringthat - including ofthegroup overall riskprofile the monitoringof - for: RiskFunctionisresponsible the Group that has direct access to the Board. Board. tothe access that hasdirect officer risk anindependent RiskOfficerwhoactsas the Group (risk & valuation) modelling. Meetings occur every week. occureveryweek. modelling. Meetings (risk &valuation) month. per twice onaverage occur Meetings valuation) modelling. month. average twiceper on Meetingsoccur riskmodelling. counterparty market and Capital Committee). Capital Committee). Riskand andviathe (directly Board Group the CEOand to opinion and reporting risk Risk Committeeandproviding II project; group; improvements tothis group risk framework; and development coordinating framework isinplace, assetsandliabilities; holding the group and companies insurance risk profileofthe the aggregate Annual Report 2011 81 level is responsible for its managing ensuringrisks and that it has a comprehensive risk management framework in place; is responsible for managing its risks within the limits, policies and guidelines set by Ageas Group, regulators and its local Board. a Board and level Risk Committee Audit Committee to assist the Board in fulfilling its supervision; a Management Risk Committee, which supports its management team in ensuring that key risks are well understood and appropriate risk management procedures are in place; an ALM committee whose role includes monitoring of market risks to ensure they are managed in accordance risk with the framework and within agreed limits to makeand specific decisions or recommendations relating to ALM; a risk function (or risk officer) to support the work of the Risk Committee and provides risk reporting and opinions to the local CEO, local Board and to Group management; a compliance function who advises the administrative or management body compliance on with the laws, regulations and administrative requirements and group and local policies where these set additional requirements. Compliance assesses the possible impact of any changes in the legal environment on the operations of the undertaking concerned and identifies any compliance risk; an internal audit function assessing the adequacy and effectiveness of the internal control and other system elements of the risk governance system.
B. management Risk organisationInsurance at company Each Insurance company: Each Governance Unit is required to have the following in place: Local management is considered the first level of control as they have primary responsibility for identifying and managing risk within their operations.
Ageas Group Management and Risk Management is considered the second level of control – their role is primarily one of setting the high level strategy and aggregate risk and appetite to coordinate, monitor, challenge support. and Internal Audit provides an important additional level of control by both systematic and ad hoc assessments of management processes including risk management, ensuringpolicies adherence and auditing risk practices. There are a number of mechanisms to favour in place consistency, transparency, sharing of knowledge and that group wide developments benefit from the practical experience and expertise of the operating entities and that development changes are accepted and implemented. Risk Officers from each operating company are a member of the Ageas Risk Forum (ARF) which meets regularly to share knowledge and best practice and to jointly develop and improve the group enterprise risk framework. The Group Model Control Board (MCB) is composed of risk managers and technical experts (both from Group and local companies) who methodologiesdiscuss and model related topics. Changes to the group risk framework are either submitted via the ARF or Group MCB to the Ageas Risk Committee (ARC) or initiated directly by the ARC. Decisions are mostly made at ARF and MCB level and are escalated to the ARC for endorsement. If there are differences of opinion, issues will be escalated to the ARC and if necessary further to the Executive Committee. The Chief Risk Officers from the major operating companies are members of the ARC which ensures that decisions or recommendations made by the ARC take into account the views and expertise of the operations. Thesignificant most risk issues and methodologies are also reviewed and decided upon at the Management and Executive Committees and by the Board. Once changes to the group risk framework have been agreed by the group level bodies, they are then taken to each local Board for formal adoption by the operating entity.
Annual Report 2011 companies. the insurance from separately ismanaged Account General and liabilities.The assets financial others, legacy amongst Account whichcontains, the General RiskCommitteescopeincludes Ageas Note thatthe parallel). informedin Committee (MCO Executive itsadvicetothe ARC opinionthrough the informed of willhavebeen localBoard the at representatives Ageas Board. withthelocal making butresponsibilityforthefinaldecisionremains decision intheir localBoard the tosupport opinion whichisthere isan this Notethat makingprocess. localdecision part ofthe the ARCas from theopinion toknow required the localBoardis levelapproval, localBoard requiring definedas elements For those 82 ** Non-similar to life techniques techniques life Non-similarto techniques life Similarto ** * Concentration Liquidity risk Other assets Property risk currencyrisk Foreign Investment default risk Spread risk Equity risk Interest raterisk Market Risks Concentration risk - - - Counterparty default risk Counterparty Default Risks
Other assets Receivables andloans Risk mitigatingcontracts Financial Risks Financial Risks
Catastrophe Risks Expense Lapse/Persistency PremiumandReserve Non-SLT** Revision Expense Lapse/Persistency Disability/Morbidity Longevity Mortality SLT* Health Risk (A/H) Health Underwriting Risks Lapse/Persistency Expense Premium&Reserve risk P/C P/C Underwriting Risks Revision Expense Lapse/Persistency Disability/Morbidity Longevity Mortality Life risk Life Underwriting Risks Insurance Liability Risks Risks Liability Insurance Total Risk in2011. applicable taxonomyas Below istheRisk ifappropriate. basis andadjusted leastanannual at be reviewedon itwill taxonomy, over timeinthis andconsistency of stability degree keepahigh aim isto While the areidentified. allrisks ensure that to risk management and management responsibility ofbusiness anditisthe asexhaustive, beconsidered cannot The taxonomy efforts. management basis forallrisk asthe therefore Itshouldserve withintheGroup. all identifiedrisks anddefining byhighlighting response and assessment, monitoring risk identification, to approach comprehensive consistent and a ofensuring withtheobjective isdefined risks. TheRisktaxonomy of range awide exposedto Ageas istherefore many countries. across products ofinsurance awiderange across Ageas operates 7.4 Risk taxonomy Outsourcing Intangible Asset Risks Model Risks Infrastructure Failures Technology and Disasters andPublic Safety Business Continuity Event Risks Process Management Execution, Deliveryand Workplace Safety Employee Practices& Malicious Damage IT Security External Fraud Internal Fraud Other People Related Risks Practices Products &Business Conduct of Business Risks Operational Risks Risks Operational
Emerging risks Emerging risks Contagion risks Shareholder behaviour Other Customerbehaviour Other Environment Risks Economic Environment Risks Country Risk Reputation Risks Distribution Risks Competitor Risks Accounting Tax Conduct ofBusiness Solvency Regulatory Risks Strategic Risks Annual Report 2011 83 stress events defined by Group: the Group Minimum Standards on Risk Appetite define the stress events to be applied by all OpCos when monitoring if the risk appetite is met. These stress events may include standalone stress events (i.e. stress events which consider a shock on one of the risk factors) as well as combined stress events (i.e. stress events which consider a shock on multiple risk factors); local stress events: in addition to the standard group wide set of stress events eachOpCo can define additional stress tests if additional risks have been identified. The local stress events are provided by the local management (and regional office if applicable). At the same time, an advice is asked from the local independent Risk Officer on the results. Moreover, the results are communicated to the Group (to Group Risk Officer);
Ageas’s internal risk framework appetite sets a Minimum Acceptable Capital as a Target as well at Capital Ageas group level. Both are currently defined as a conservative percentage over the Required Minimum Margin in a Solvency I environment and with regards to the Solvency Capital Requirement in a Solvency II environment. Risk Appetite Statement concerning Earnings Ageas has issued a group statement to act as a guideline for itself and for its Operating Companies. This statement defined in terms of year-end budgeted IFRSearnings is not a hard limit. It is up to the (local) Board of each OpCo to decide if this statement is appropriate for the OpCo or if the OpCo needs to define more appropriate limits for its local activities. Although OpCo Boards may accept greater deviations in earnings, they must do so formally with an explanation. Risk Appetite Statement concerning Value As for Earnings, hasAgeas issued a group statement to act as a guideline for itself and for its Operating Companies. This statement defined in terms of the beginning of the year market consistent value is not a hard limit. It is up to the (local) Board of each OpCo to decide if this statement is appropriate for it or if it needs to define more appropriate limits for its local activities. Although OpCo Boards may accept greater deviations in value, they must do so formally with an explanation. Notes on stress events The Ageas Risk Appetite Policy divides stress events into three groups: target to maintain a 200% Solvency I ratio: this objective is applicable to the consolidated Ageas position. At local companies’ level, Ageas maintains capital adequacy levels at whichever is the of localhigher regulatory requirements and any additional self-imposed economic requirements in line with their risk position. At specific moments with particular conditions as referred to below, the actual solvency ratio may be lower, but then its future development needs to be charted to come to the adequate level within reasonable timing; maintain solvency even under extreme event scenarios: Ageas must remain solvent in the case of extreme plausible events.
Through a formal Risk Appetite Policy approved by its Board and Executive Committee, Ageas has defined and given itself a clear Risk Appetite Framework. Ageas’s Risk Appetite is intended Policy to ensure that each OpCo and the Group in overall, have clearly formal boundaries set for risk taking to ensure that they are able to afford the risks they take with regards to group set risk thresholds and strategies. Ageas must, at all times, maintain a solvency position such that no plausible scenario would cause the company to default on its obligations to Topolicyholders. accomplish this, Ageas has established the following objectives for its risk management strategy related to Solvency: Risk Appetite Statement concerning Solvency Ageas uses an internally defined Risk Appetite Statement. Because it acts as a hard limit, all OpCos and the Group must comply with it at all times or implement swift management actions to remedy the situation. 7.5 Risk Appetite Ageas’s risk appetite is defined through three different risk statements, in terms of solvency, value and earnings. Ageas’s Risk Appetite also uses qualitative criteria for risks that are not easily quantified but for which boundaries of acceptable activities can be described in a qualitative way.
Annual Report 2011 mix. target appropriate arrive atan liquidity issuesto andtax requirements sharing profit policyholder expectations, return, risks and long term requirements, risk appetite,capital tobalance processneeds decision allocation. The on thetactical todecide prospects and situation ofthemarket regular monitoring assetand strategic appropriate toidentifythe on assetmixstudies based companies byoperating mixisdetermined asset The overall rewarded. are appropriately and shareholder and bothcustomer for are appropriate risks beingtaken that risksandtoensure andleveloffinancial nature control the monitoring to andregular limits,stresstests investment policies, combines inalloperations risk frameworkinplace The operations. Ageas’s of riskformany mostsignificant Financial riskisthe includes: assets. This offinancial performance and value relatingtothe allrisks Financial riskencompasses 7.6 Financial Risk 84
premium, used to valuing illiquid liabilities, does not materialise. materialise. valuingilliquidliabilities,doesnot to premium, used liquidity anyassumed coverstheriskthat Liquidity riskalso assets. onliquidating duetoconstraints the businessfranchise orwithoutendangering losses suffering met without cannot be which holders contract other and policyholders, demands of cash unexpected and expected liquidity riskwhicharisesfrom and financialinstruments; prices ofassets, liabilities ofmarket volatility level andinthe inthe fromfluctuations directlyorindirectly, situation resulting, financial inthe change adverse arisesfrom market riskwhich anddebtors; the counterparties of default unexpected whicharisesfrom default counterparty (local stressevents). OpCo or byan byGroup defined eitherbe OpCos. Theycan andits riskprofileofGroup onthe information obtain additional to important butare actions notrequire may framework and appetite standard the part of are not conditions. They market or current events recent arisingoutof specific concerns dueto added thatare orcombined) scenarios (standalone these requirements: are additional Additional reporting
reached. reached. hasbeen of recovery) amount willexceedthe which allexpenses term within the term(i.e. loss or theeconomic been exhausted, effortshave all normalrecovery areinsolvent, and/or guarantors the obligor been exhausted, securitieshave and been finalised have bankruptcy proceedings theobligor’s that write-off maybe itwillincur.Conditionsfor thatAgeasconsiders theloss represent recoveryand ofits estimate Ageas’s latest on arebased Write-offs 2011. yearend EUR 18millionat positionof interest anaccrued held These assets EUR 354million. valueof fair milliontoa EUR 1,209 by cost), thatwasimpaired amortised EUR 1,563million(at of exposure bond Government Greek tothe 2011 relates in impairment The mostimportant value. fair amount isthe securities, therecoverable of markettraded case amount. In the recoverable and amount carrying between the is thedifference impairment the of Theamount contractual terms. accordance with in due tocollectallamounts willnotbeable Ageas evidence that isobjective creditriskisestablishedifthere for specific Impairment thisrisk. mitigate usedto elements arekey low ratedexposures of avoidance Diversificationand creditposition. default counterparty of outstanding close monitoring a Policyand Ageas’s Investment of theapplication through riskismitigated Within Ageas,this diversification. and collateral requirements selection, policies oncounterparty minimises thisriskthrough Ageas riskmitigation. other and re-insurance purchasing of tothe due risk)canarise risk(orcredit default Counterparty risk Default Counterparty 7.6.1 activity. localregular ofthe become part they toensure thelocalBoards by beadopted practice whichmust best policies and group the todevelop operating companies working withthe risksand financial covering riskappetite aggregate includesmonitoring GroupRiskfunction the The missionof Annual Report 2011
Total Total 42.4 56.1 ( 9.9 ) ( 8.8 ) Ageas Ageas ( 23.3 ) ( 42.0 ) ( 14.0 ) ( 21.1 ) 3,851.8 3,828.5 2,701.5 5,697.4 5,683.4 4,132.2 4,111.1 3,258.3 4,538.1 4,528.2 85 53,826.1 65,539.2 65,497.2 54,588.0 53,372.4 67,161.5 65,910.8 53,834.9 ( 1,215.6 ) ( 1,250.7 )
( 5.2 ) ( 5.2 ) ( 95.3 ) ( 95.3 ) ( 1,274.3 ) ( 1,274.3 ) ( 1,369.6 ) ( 1,369.6 ) ( 1,214.6 ) ( 1,214.6 ) ( 1,219.8 ) ( 1,219.8 ) Eliminations Eliminations
31.4 11.3 ( 2.5 ) ( 2.4 ) ( 4.9 ) ( 2.3 ) ( 2.3 ) 242.5 240.0 344.7 111.5 111.5 General General 2,259.4 2,670.1 2,670.1 2,408.2 2,405.8 7,611.6 7,606.7 3,490.1 3,490.1 2,370.7 2,368.4 6,328.3 6,326.0
Asia Asia 57.2 52.2 63.2 59.6 ( 3.2 ) ( 5.0 ) ( 8.2 ) ( 5.3 ) ( 3.6 ) ( 8.9 ) 154.0 124.7 121.5 989.8 989.8 109.6 141.8 136.5 1,325.7 1,317.5 1,369.5 1,369.5 1,684.1 1,675.2
2.7 12.9 ( 0.8 ) ( 6.1 ) ( 6.9 ) ( 0.8 ) ( 6.7 ) ( 7.5 ) 270.8 448.7 447.9 281.6 275.5 191.5 393.2 392.4 253.5 246.8 Europe Europe 8,430.7 8,430.7 9,434.5 9,427.6 7,099.8 7,099.8 7,950.9 7,943.4 Continental Continental
UK UK ( 3.5 ) ( 3.5 ) ( 3.6 ) ( 3.6 ) 184.8 481.4 477.9 184.5 764.9 761.3 1,724.3 1,724.3 2,390.5 2,387.0 2,461.9 2,461.9 3,411.3 3,407.7
22.0 18.2 ( 5.9 ) ( 6.3 ) ( 6.3 ) ( 7.9 ) ( 4.9 ) 389.3 718.7 712.4 685.1 680.2 ( 18.5 ) Belgium Belgium 2,568.9 2,563.0 1,871.2 2,886.9 2,879.0 42,447.6 42,441.3 46,146.5 46,128.0 43,545.3 42,329.7 49,006.7 47,778.3 ( 1,215.6 ) ( 1,228.4 )
Total credit risk exposure, gross Impairments Total credit risk exposure, net Reinsurance and other receivables Impairments Total Reinsurance and other receivables, net (see note 20) Interest bearing investments Impairments Total Interest bearing investments, net (see note 16) Loans Impairments Total Loans, net (see note 18) Cash and cash equivalents (see note 15) Derivatives held for trading (assets) (see note 16) 31 December 2010 Impairments Impairments Total credit risk exposure, net Impairments Impairments Total Reinsurance and other receivables, net (see note 20) Total credit risk exposure, gross Total Interest bearing investments, net (see note 16) Reinsurance and other receivables Total Loans, net (see note 18) Interest bearing investments Impairments Derivatives held for trading (assets) (seenote 16) Loans Impairments 31 December 2011 Cash and cash equivalents (see note 15)
7.6.1.1 risk exposure Credit The following table highlights the credit risk Ageas is exposed to.
Annual Report 2011 shownasfollows: graphicallybe can The exposure Total General Asia Continental Europe UK Belgium asat31December. entities the Ageas bylocationof creditrisk of ontheconcentration provides information below The table topay. orfailure bankruptcy lossduetoa capital amount of a significant toproduce withthepotential similar circumstances) default under to (i.e.tendency counterparties positively correlated of to anumber ofexposures oranaggregate single counterparties exposuresto largeaggregate to risk canarisedue Concentration Concentration 7.6.1.2 risk 86
UK CEU Asia General 2011 Belgium
check these and monitor the overall position. overall monitor the check theseand to group allowsthe Periodicalreporting continuous monitoring. isincharge of company Eachoperating requirements. any group situationand itsparticular takingintoaccount limits, counterparty itsown isresponsiblefor company Each operating portfolios. diversified and liquid granular, ofmaintaining credit riskstrategy toAgeas fundamental istherefore of concentrations Avoidance Credit risk exposure risk Credit 67,161.5 67,161.5 49,006.7 5,108.5 5,108.5 1,684.1 7,950.9 3,411.3
CEU UK Asia Percentage General 100.0% 11.8% 73.0% 7.6% 2.5% 5.1% 2011 2010
Credit risk exposure exposure risk Credit 65,539.2 65,539.2 46,146.5 6,242.0 6,242.0 1,325.7 9,434.5 2,390.5 Belgium
Percentage 100.0% 14.4% 70.4% 9.5% 2.0% 3.7% 2010 Annual Report 2011
2010 Total 4.6% 0.9% 3.4% 25.9% 65.2% 100.0% 2,390.5 9,434.5 1,325.7 6,242.0 3,411.3 7,950.9 1,684.1 5,108.5 46,146.5 65,539.2 87 49,006.7 67,161.5 Percentage
nt sectors
1 December. December. 1 1.4 1.5 91.2 45.7 Other UK 170.3 121.0 182.6 172.2
2,398.7 2,707.3 2,375.7 2,853.0 Belgium 566.1
3,013.1 2,235.2 16,978.4 42,746.4 65,539.2
32.6 42.6 29.1 47.2 Retail Retail Other Other 1,714.3 1,789.5 1,693.2 1,769.5 Credit risk exposure countries customers 2010
Asia
2011 4.5% 0.9% 4.3% 33.0% 57.3% 779.8 807.3 461.5 641.4 667.5 ( 84.8 ) ( 77.9 ) 100.0% CEU 5,435.3 7,399.1 7,023.8 1,456.2 9,711.0 Corporate customers Percentage
Credit 924.2 508.5 590.1
4,422.1 3,814.8 1,058.9 3,625.9 2,719.7 11,617.3 21,286.9 12,064.0 20,058.6 institutions 606.8
3,015.6 2,900.1
22,163.2 38,475.8 67,161.5 tion of credit risk by of the location Ageas entity as at 3
91.0 595.3 311.7 113.3 713.6 377.8 4,126.8 3,482.3 Credit risk exposure 27,209.3 32,356.4 28,104.7 32,769.4 Government and
official institutions
Belgium UK Other Other countries 2011 Asia CEU
Total The concentration of credit risk by location of counterparty can graphically be shown as at 31 follows as December. UK Europe Continental Asia countries Other Belgium The table below provides information on the concentration of credit risk by location of counterpartyas at 31 December. Asia General Total Belgium UK Europe Continental 31 December 2010 Continental Europe Europe Continental Asia General Total 31 December 2011 Belgium UK and countries. The below provides table information on the concentra To manage the concentration of credit risk, Ageas’s credit risk management policy aims to spreadcredit the differe risk across
Annual Report 2011 follows: bes cangraphically as at31December ofcounterparty creditriskbytype of concentration The investments). Note 16Financial ar in2011(details portfolio ofthe toarebalancing relates exposure and officialinstitutions theGovernment in The movement Total Other countries Asia Continental Europe UK Belgium 2010 31 December Total Other countries Asia Continental Europe UK Belgium 2011 31 December 31 Decemb asat typeofcounterparty risk by ofcredit on theconcentration information tablebelowprovides The and countries. riskacrossdiffere thecredit tospread policyaims credit riskmanagement risk,Ageas’s ofcredit concentration the To manage 88 oenetadofca ntttos Credit instit Government andofficial institutions
in EUR billions 10 15 20 25 30 35 0 5 0121 0121 0121 0121 012010 2011 2010 2011 2010 2011 2010 2011 2010 2011
utions Corporateutions customer
official institutions official Government and Government 32,356.4 32,356.4 21,244.0 10,081.8 32,769.4 32,769.4 17,430.9 14,171.0 382.2 382.2 613.2 440.0 440.0 704.5 35.2 35.2 23.0 23.0 Belgium
institutions 21,286.9 21,286.9 15,574.8 20,058.6 20,058.6 14,018.3 1,362.3 1,362.3 3,088.0 1,095.7 1,095.7 4,110.0 970.9 970.9 290.9 300.7 300.7 533.9 UK Credit s Retail Other customers
Continental Europe customers Corporate 7,399.1 7,399.1 4,599.6 9,711.0 9,711.0 1,364.4 5,424.9 1,617.3 1,070.2 881.8 881.8 196.0 930.0 791.7 234.2 234.2
customers customers 1,789.5 1,789.5 1,714.3 1,769.5 1,769.5 1,693.2 Asia Retail 42.6 42.6 32.6 47.2 47.2 29.1
Other countries 2,707.3 2,707.3 1,295.4 1,302.6 2,853.0 2,853.0 1,572.6 1,118.8 107.6 107.6 159.9 159.9 Other Other 0.3 0.3 1.4 1.7 1.7 e provided in e provided
nt sectors er. er. hown as
67,161.5 67,161.5 38,475.8 22,163.2 65,539.2 65,539.2 42,746.4 16,978.4 2,900.1 2,900.1 3,015.6 2,235.2 2,235.2 3,013.1 606.8 606.8 566.1 566.1 Total
Annual Report 2011
716.9 6,172.7 3,478.5 2,843.5 1,897.3 1,894.8 3,529.2 1,715.5 1,077.6 13,853.6 37,179.6 89 . The their Nominal Value graphically Kingdom AAA
806.6 6,619.4 3,998.8 3,162.7 2,075.6 2,000.0 1,633.9 1,237.3 1,050.6 14,315.1 36,900.0 Fair Value Value Fair Fair Value Nominal Value Italy AItaly BB+ Portugal AA- Spain United AAA Netherlands Netherlands
A AA- AA- BB+ AAA AAA AAA AAA AAA AAA at fair value in Governmental and supranational debt with Group Rating Bank AAA Investment Investment Belgium AA- AAA France Germany AAA Austria AAA European
8 6 4 2 0
16 14 12 10 in EUR billions EUR in
ratings. be shown as follows. The highest exposures on ultimate parents measured at fair value in Governmental and supranational debt with their ratings can Spain United Kingdom Total European Investment Bank Netherlands Italy Portugal Belgium Belgium France Germany Austria Highest Exposure Top 10 table below showshighest the exposures on ultimate parents measured Group rating The group rating is based on the second best of available ratings from Moody’s, Fitch and Standard & onPoor’s 31 December 2011
Annual Report 2011 curve. of the part theshorter positive oneon anda buckets long maturity the gap on imply anegative liabilities The typicallylong-insurance risk. interest-rate used tohedge aresometimes Derivatives and levelsofguarantee. marketrates prospective ofassets,currentand appetite, availability risk the account takinginto willbedetermined matching strategy andthe of suitableassets ofavailability tolack to matchdue can bedifficult business term Longer unless specificallyapproved. matching requireclose policiesusually investment testing. The stress analysisand includingmismatch of indicators number a rate riskusing itsinterest controls monitorsand Ageas measures, rates. changes ininterest to assetsandliabilities thesensitivityof mismatch between ofa Itarisesbecause Ageas’s investments. of and thevalue profitsharing and guarantees example, for companies sellthrough, theinsurance theproducts rateriskcanimpact Changes ininterest term structures. realandnominal appliestoboth ratevolatility.This rates orinterest ofinterest structure intheterm tochanges asset valueissensitive whichthenet andliabilitiesfor exists forallassets Interest raterisk InterestRateRisk 7.6.2.1 and financialinstruments. liabilities volatilityofmarketvaluesassets, the the levelandin fluctuationsin orindirectly,from resulting,directly financial situation inthe change or onadverse theriskofloss Market riskmeans Market 7.6.2 Risk Total impaired credit exposure Other receivables customers to Loans banks to Loans investments bearing Interest 31December. asat creditriskexposure andtheimpaired onimpairments provides information below The table 90
figures. reported totheIFRS withareconciliation below together inthetable toequitiesisgiven exposure totaleconomic approach, based risk andrisks.Ona underlying assets the exposure on ofequity Ageas basesitsdefinition purposes, For riskmanagement volatility, however, did not allow volatility, however,didnot and circumstances Market itsequityexposure. gradually increase intention to its earlier financial crisis.Ageashadcommunicated the solventthroughout remain companies that theinsurance toensure tolimitlossesand Ithelps hedging. and through sales equity risk to inexposure reduction the rapid in years resulted 1) CPPI stands for Constant Proportion Constant stands Proportion for CPPI 1) CPPI mechanism will betakenintheeventofsignificantfallsvalue(forexample whataction be inplaceincluding to ofcontrols arange that require policies investment and through the riskappetite on setting based or theiryield.Th market prices of Equity andreal-estateriskarisesfromthelevelorvolatility Estate Risk Real Equityand 7.6.2.2 outstanding 1,735.0 1,735.0 1,574.0 Impaired 127.8 127.8 future. a at inthe ormore date atalltimes typically, set either assets related achieved onthe by protected are liabilities ensuring that 31.8 31.8 1.4 1.4
Impairments for specific ( 1,250.0 ) ( 1,250.0 ) ( 1,215.6 credit risk credit ( 21.1 ) ( 21.1 ) ( 12.1 ( 1.2 ) ( 1.2 1 ). Pro-active management of this risk inrecent of thisrisk management ). Pro-active
Coverage 72.0% 66.4% 85.7% 77.2% 9.5% 2011 ratio ese risks arecontrolledthroughlimit ese Portfolio Insurance and is a technique for for andisatechnique Insurance Portfolio
for suchorientat ensuring that a minimumreturn is fixed ensuring that
outstanding outstanding Impaired Impaired 144.6 144.6 107.6 26.7 26.7 1.4 1.4 8.9
Impairments ion during2011. for specific credit risk credit ( 41.1 ) ( 41.1 ) ( 23.3 ( 7.8 ) ( 7.8 ) ( 1.2 ) ( 8.8
Coverage 28.4% 87.3% 85.7% 98.9% 7.2% 2010 ratio
Annual Report 2011
9.0 3.0 2010 2010 28.0 17.0 25.6 259.0 974.4 555.1 410.8 588.0 1,247.0 1,563.0 1,900.3 4,454.2 91 s held for for s held for own ported Economic exposure Economic exposure
5.6 8.8 0.1 IFRS IFRS 25.6 26.1 974.4 103.9 149.1 588.0 1,900.3 2,900.3 1,468.7 2,350.3
7.4 0.1 2011 2011 15.5 26.1 753.4 471.7 146.0 679.6 750.0 142.0 941.1 2,045.7 1,000.7 5,097.1 Economic exposure Economic exposure
7.4 0.1 IFRS IFRS 15.5 26.1 146.0 750.0 142.0 195.9 679.6 2,045.7 1,000.7 3,192.4 1,816.6 A significant portionof Ageas’s liabilities are illiquid. Ageas generally aims to hold credit assets to maturity. This helps reduce the impact of spread risk significantly because the liabilities are illiquid. Ageas cannot be forced to sell at distressed prices, but can choose to sell if it considers this to be the best course of action.
sure to real estate and how this reconciles to the figures re estate on the market of the value assets and include the asset
7.6.2.3 Spread Risk Spread risk results from the sensitivity of the value of assets, liabilities and financial instruments to changes in the level or in the volatility of credit spreads over the risk-free interest rate term structure. Spread risk is managed through limits which take into account the type of credit exposure, credit quality and, where needed, maturity, and through regular monitoring and early warning systems. Ageas also monitors its largest exposures to individual entities, groups and other potential concentrations such as sectors and geographics to ensure adequate anddiversification of identification significant concentration risk. Real estate funds funds estate Real Total risk based view on real estate exposure Unrealised capital gain Investment properties PP&E: land and buildings for own use Property intended for sale Type of asset Carrying amount Investment properties PP&E: land and buildings for own use
Total equity securities and other investments For risk management purposes, Ageas defines the exposure to real Asset allocation funds funds allocation Asset funds Commodity Debt funds (SICAFI/REITS) funds estate Real Equity funds funds Equity Private equity Alternative investments Type of asset Direct equity investments
own use. This differs from the exposure reported under IFRS definitions which exclude unrealised gains and report property held use. The table below identifies whatconsiders Ageas economic expo under IFRS. Annual Report 2011 inPortugal. institutions corporate asfinanc aswell Portugal and ofGreece bonds theGovernment in2011mainly includes grade belowinvestment amount higher. The 89.6% rat with grade investment bondsare ofthe 95.4% bonds. grade towardshighinvestment ishighlygeared portfolio The bond asfollows: graphically beshown can ratings external basedon securities ofdebt grade byinvestment quality The credit gross securities, bearing interest in investments Total Impairments net securities, bearing interest in investments Total Unrated Below investment grade grade Investment BBB A AA AAA grade Investment ratings. onexternal securitiesbased debt of grade qualitybyinvestment outlines thecredit below The table CreditRiskquality A. 92
A BBB AA 2011 Other AAA
Carrying value Carrying 54,588.0 54,588.0 53,372.4 50,909.4 18,325.1 22,026.8 1,215.6 1,215.6 2,197.0 3,102.5 7,455.0 266.0 266.0
A Percentage AA BBB 100.0% 95.4% 14.0% 34.3% 41.3% 0.5% 4.1% 5.8% 2011 2010 Other
Carrying value 53,834.9 53,834.9 53,826.1 52,064.0 10,785.6 15,095.3 23,992.9 1,570.0 1,570.0 2,190.2 192.1 192.1 8.8 8.8 AAA
ed A or Percentage ial and 100.0% 96.7% 20.0% 28.0% 44.6% 0.4% 2.9% 4.1% 2010 Annual Report 2011
103.7 117.6 105.2 222.8 2,354.8 2,311.4 1,109.6 93 15,989.6 16,093.3 10,094.7 15,870.5 16,093.3 31 December 2010
95.3 165.3 770.7 190.5 961.2 8,949.4 1,842.6 1,804.2 1,113.1 14,409.9 14,670.5 13,709.3 14,670.5 31 December 2011
The table below informationprovides on the rating ofof bonds banks and other financial institutions.
IFRS classification By Available for sale Held at fair value through profit or loss maturity to Held Total banking and other financials rating By AAA AA A BBB grade investment Total BB or lower Unrated Total non-investment grade and unrated Total banks and other financials
0.6 29.8 866.7 581.7 523.0 188.5 218.3 530.9 4,910.2 4,910.2 2,720.5 4,691.9 4,910.2 5,743.5 1,207.9 1,208.5 32,302.1 32,302.1 12,691.0 12,128.2 31,093.6 32,302.1 31 December 2010 31 December 2010
0.5 43.7 27.3 71.0 704.6 421.8 1,014.7 3,374.8 1,556.4 6,650.5 6,721.5 1,333.2 1,333.7 6,721.5 6,721.5 4,867.1 2,275.0 30,176.5 31,510.2 26,643.1 31,510.2 11,739.0 15,740.7 31 December 2011 31 December 2011
Bonds and Corporate Bonds
Total non-investment grade and unrated Total corporate bonds Total investment grade grade investment Total BB or lower Unrated AAA AA A BBB Available for sale Total corporate bonds rating By IFRS classification By Total government bonds The table below provides information on Corporate bonds. BB or lower Unrated Total non-investment grade and unrated A BBB grade investment Total rating By AAA AA Available for sale Held at fair value through profit or loss maturity to Held Total government bonds IFRS classification By The table below provides information on Government bonds. B. Additional information the on quality of Government
Annual Report 2011 follows: beshownas cangraphically financials andother Banks of The rating financials other Banks and shown asfollows: be graphically bonds can ofGovernment The rating Government Bonds 94 position). offinancial statement the date of the after Note 56Events also Note which relatetolegacyissues(see (EUR 2.4billion) ABN AMRO billion) and (EUR3.6 Paribas BNP to exposures arethe financials and other Banks to exposure Included inthe
AA A
BBB AA A Other BBB 2011 2011 Other
AAA AAA 20 Reinsurance andotherreceiv 20Reinsurance
AA ables, Note 53Contingentliabili ables, Note A A AA BBB BBB 2010 2010 Other Other AAA AAA ties and Annual Report 2011
INR 7.6 34.0 34.0 34.0 16.4 19.5 19.5 19.5
95
0.4 0.4 RUB
6.8 NZD AA 22.2 ( 15.4 ) ( 15.4 )
AAA 1.1 1.2 AUD 12.1 34.8 ( 0.1 ) ( 0.1 ) ( 22.7 ) ( 22.7 )
NOK 22.8 ( 3.0 ) ( 25.8 ) ( 25.8 ) 2010
Other
A JPY 4.8 0.5 4.3 4.3 7.9 0.5 7.4 7.4
BBB
USD 496.4 530.8 432.4 ( 98.4 ) ( 647.8 ) 2,840.6 1,696.4 1,144.2 2,133.7 1,602.9
2.5 2.5 2.5 3.5 3.5 3.5 HUF
TRY Ageas accepts the mismatch arising from ownership of operating businesses in non-euro currencies as a consequence of being an international group. Ageas does, however, hedge any known cashflows (dividends or capital injections) that are due to be made within one year. The main currency risk exposures to foreign currencies as at 31 December are stated in the table below. The exposures shown are net (assets minus liabilities), after hedging. 160.1 160.1 160.1 160.1
5.8 CNY 211.0 205.2 205.2 211.0 244.3 244.3 244.3 244.3
MYR 253.8 253.8 253.8 253.8 319.7 319.7 319.7 319.7
THB AA 154.4 154.4 154.4 154.4 205.5 205.5 205.5 205.5
AAA
GBP 776.1 2,969.3 1,897.0 1,072.3 1,072.3 3,931.1 2,908.0 1,023.1 1,023.1 1,007.5
HKD A 98.4 825.2 585.2 240.0 338.4 780.1 934.5 683.2 251.3 124.9 376.2 934.5 Other
2011 BBB
Net position position Net Of which invested in equity associates Total assets assets Total liabilities Total liabilities minus assets Total Off balance Of which invested in equity associates At 31 December 2010 Total assets minus liabilities liabilities minus assets Total Off balance position Net At 31 December 2011 assets Total liabilities Total Risk 7.6.2.4 Currency Currency risk arises from changes in the level or volatility of relevant currency exchange rates when there is a mismatch between the relevant currency of the assets and liabilities. At Group level, this includes situations where Ageas has assets (from participations and investments) other than in Euro denominated assets. Ageas’s investment requiring policy limits this risk by the currency mismatch between assets and liabilities to be minimised in and most cases it is eliminated entirely. The rating of Corporate bonds can graphically be shown as follows: Corporate Bonds
Annual Report 2011 following: arethe ofliquidityrisk Types cash needs. tocover resources ofexpected theavailability reduce unexpectedly which can andelements forcash theneed in sudden increase a cancreate that intoelements riskcanbesplit Causes ofliquidity ifandwhenarising. adverse conditions (relatively) abletowithstand be to inorder position allyearlong cash asignificant Ageas kept that 2011 made circumstances in However,theextreme relatively remote. hence thisriskis and cashaccretive normally Ageas is group, As aninsurance assets. torealise be offered need to thatwould anydiscount and from on borrowings theinterests wouldarisefrom commitment. Losses meetthe to value)inorder a significantlossin assets sold(with and/or illiquid tobeborrowed fundswillneed as itfallsdue,liquid commitment meetafinancial to notavailable are liquid resources amounts. If from budgeted differsignificantly and unpredictable be can other outflows Claimsand beliquid. and maynot belong-term back thesewould assetsheldto generally term, and long are often anditsOpCos Ageas of The financialcommitments materialise. valuingilliquidliabilities,doesnot to premium, used liquidity anyassumed liquidity riskalsocoversthethat The disruption. tomarket or due structural constraints maybe These liquidatingassets. constraints on to franchise due thebusiness endangering lossesorwithout met withoutsuffering cannotbe holders, contract other and policyholders, demands of cash andunexpected riskthatexpected Liquidity riskisthe Liquidity 7.6.2.5 Risk 96
holding activities. holding activities. business and theinsurance both liabilities andthereforeincludes and assets allAgeas Itcovers date. maturity the contractual periodto remaining onthe based groupings maturity into relevant classified assetsandliabilities showsAgeas’s The followingtable conditions. stress conditions and undercurrent both shareholders to payments companies, dividend operating to/from transfers tolegacyinstruments, payments relating including liquidityismonitored theaggregate Account, General Inthe ofassetsinacrisis). (i.e.liquidity their abilitytorespond etc.), aswell rating changein innewbusiness, event, slowdown mass lapse profile, liabilityrun-off expected (i.e. and understood areknown issuesarepossible whichliquidity circumstances under risk, sothatthe liquidity monitoring and byidentifying requirements groupliquidity meet alllocaland theycan ensures Each business
of realised value. of realisedvalue. inloss conditions couldresult whenmarket liquidation ofassets the mayrequire payments orother claims amounts of risk Liquidation value concentrations; orhigh conditions due tomarket results inlosses Market liquidityrisk claim); large unanticipated an meet (forexample,to itisneeded illiquid, atthetime are assets funding, asits sufficient outside obtain be ableto risk Funding liquidity is the risk that the process of selling initself of selling the process istheriskthat is the risk that Ageas or an OpCo willnot or anOpCo Ageas istheriskthat is the risk that unexpected timing or timing unexpected istheriskthat Annual Report 2011 Total 656.1 3,659.2 3,420.1 1,904.5 8,367.7 4,362.5 9,166.0 55,798.6 10,625.6 20,518.8 90,602.2 57,995.9 18,914.0 82,234.5 57,995.9 18,914.0 81,928.5 99,166.7 90,000.7 97
385.9 6,212.9 1,820.4 6,240.8 1,686.9 1,635.9 7,618.5 1,819.5 56,072.7 49,859.8 35,076.1 15,107.9 58,245.2 35,324.6 11,979.3 50,626.7 35,324.6 11,979.3 49,509.3 Over 5 years
176.2 207.8 783.3 843.7 209.3 ( 56.8 ) 1,215.3 1,194.4 3,574.4 3,899.4 3,899.4 1-5 years 20,467.3 20,524.1 15,493.8 21,477.9 16,411.2 20,694.6 16,411.2 21,363.6
8.5 8.6 126.7 735.3 970.3 934.6 ( 971.4 ) 5,368.7 6,340.1 2,765.1 4,597.4 4,991.3 1,020.0 6,954.4 1,041.5 4,991.3 1,020.0 7,061.4 ( 2,357.0 ) 3-12 months
These instruments in the are shown table above within the net liquidity gap based on the carrying amount and including accrued interest for the period. Under the heading Liabilities including future interest the instruments are shown as follows: the interest amounts based on the rate applicable at year-end 2011 are included in the buckets Up to 1 till 1 – month 5 years. The principal amount is included under the heading Over 5 years. The FRESH is in accordance with IFRS excluded from the Liabilities including future interest since the principal amount of EUR 1,250 million can only be redeemed through conversion into Ageas shares. 7.0 7.0 87.4 553.0 939.4 584.4 420.2 730.8 584.7 444.2 730.8 3,887.8 3,334.8 1,950.2 3,561.4 1,818.7 2,976.7 1,818.7 3,000.7 1-3 months
45.3 45.3 213.6 538.0 196.6 993.5 409.4 504.9 281.8 202.2 538.0 196.6 982.1 9,941.9 3,428.3 1,524.2 2,720.3 1,738.2 13,370.2 Up to 1 month
1)
1) Hybrone: the principal loan amounts to EUR 500 million. Coupons are payable annually at the rate of 5.125% of the principal amount until June 20, 2016. After June 20, 2016, coupons will be paid at a floating rate of 3 month Euribor plus 2.00% per annum. Hybrone is included in the line Fixed rate financial instruments. Nitsh I: the principal loan amounts to US$750 million. Coupons are payable semi-annually at the rate of 8.25% Perpetual Securities. Nitsh I is included in the line Fixed rate financial instruments. Nitsh II: the principal loan amounts to EUR 625 million. Coupons are payable semi-annually at the rate of 8.00% Perpetual Securities. in the Nitsh II is included line Fixed rate financial instruments.
Includes assets and liabilities held for sale.
Net liquidity gap 1) Ageas has issued a number of perpetual financial instruments which are included in the table above. These instruments are: At 31 December 2010 assets Total liabilities Total Non-interest bearing financial instruments liabilities Non-financial interest future including liabilities Total interest future including Liabilities Fixed rate financial instruments Variable rate financial instruments Non-interest bearing financial instruments liabilities Non-financial liabilities Total Net liquidity gap Liabilities Fixed rate financial instruments Variable rate financial instruments Non-interest bearing financial instruments Non-financial assets Total assets At 31 December 2011 Assets Fixed rate financial instruments Variable rate financial instruments
Annual Report 2011 inflation or customer behaviour being different from that expected. that expected. from different being behaviour inflation orcustomer including oftriggers arange whichcanhave claims more general inclaimsor ajump leadsto such asawindstorm significant event whena riskwhichis between catastrophe split causes canbe The expected. than are higher riskthatclaims Non-life riskisthe business. forlongterm the liabilitiesespecially ultimatecostof the impacton have aconsiderable costs whichcan in and changes riskalsocoverslapsechanges biometric risks.Life toas referred aresometimes risk.These illness risk)anddisability risk(i.e. riskandmorbidity longevity risk,mortality Life riskincludes policy. start ofthe the madeat lapses, expenses and including assumptions, totheunderlying as wellchanges claims ofthe timing and uncertainty arisingfrom changes inclaims dueto risks underwriting risks refertoallinsurance Insurance 7.7 Insurance Risks risk -estate Real up risk -rate Interest down risk -rate Interest - risk Spread rate risk -market Equity 30yearevent. inevery on aone calibrated based thatare tests result ofstress as the Equity and IFRS statement income IFRS onthe thegrossimpact below shows The table Sensitivity 7.6.3 98
Real estate : (18)%. (18)%. : Real estate short onthe 50% around up anddown : Interest Rate equities (40)%; (30)%; non-regulated : ranges Thefactor factor timesduration. : risk Spread Equity
long end; long end; on the 20% toover yieldcurve end ofthe corporates; BBB 2%for AAA toalmost for from 70bp income statement statement income Impact on on Impact ( 2,931.6 ) ) ( 2,931.6 2,442.7 2,442.7 ( 869.0 ) ) ( 869.0 ) ( 903.6 ) ( 340.6
IFRS Equity Impact on Impact ( 509.3 ) ( 509.3 ( 166.2 ) ( 166.2
include: they Ingeneral benefitsoffered. and tothecover product according by vary whenpricinginsurance intoconsideration taken The factors combined ratios). value, basis (e.g.embedded posteriori anda testing) (e.g. profit basis apriori onboth portfolio, particular toa indicators appropriate andkeyperformance oftechniques range is testedusinga ofpricing Theappropriateness thebusiness. the costofmanaging claimsand those ofhandling total ofclaims,costs the them exceed on earned income plustheinvestment received that premiums thatwillensure premiums atalevel Insurance companiesaimtoset adjusted appropriately. is ensure pricing and/or improvelossexperience to inorder underwriting standards torefine analysistoolsareemployed statistical indicators and of A range lossexperience. theactual staff, whoexamines byactuarial involverevision riskand ofinsurance management the overall of locallevelaspart aresetat Underwriting policies priced. and wasdesigned product the customerswhen the made about assumptions withtheunderlying isconsistent who buystheproduct segment the customer that ensuring ismadeon attention Particular reinsurance. provisioning, and pricingpolicy, underwriting policy, combination of a risksthrough insurance manages Each business
similar products. similar products. of competitorpricing conditions,notably insurance market target levelsofprofitability; solvency capitalrequirements; time valueofmoney; reflectingthe financial conditions, administration costs; claim and policyadministration, distribution, marketing, as such product, relevant the producing other costsof trends; climate anddemographic economic the of jurisprudence, evolution of the consideration claims statisticsaswell includesanalysisof benefits. This expected withthe associated ofvariability nature the leveland and theirtiming; payouts expected and related by policyholders expected claims Annual Report 2011 99 7.7.3 risks and Persistency Expense When designing and pricing insurance assumptions policies, also need to be made relating to the costs of selling and then administrating the policies until they mature lapse or of and the rate be experienced. The of persistency that will risks that actual experience may be different than the potential impactidentified are during the product development stage can and be mitigated by thorough product design, for exampleof early use redemption penalties/loyalty bonuses, initial charges or spreading the commission paid distributorsto to align interests. 7.7.4 Non-life claims risk Non-life claims risk can differ from the expected outcome for a range of reasons. example, For short-tail claims, such as motor damage and property damage claims, are generally reported within a few days or weeks and are settled soon afterwards. The resolution of long-tail claims, such as body injury or liability claims, can take years to complete. In the case of long-tail claims, information concerning the event, treatmentsuch as medical required, may, due to its very nature, not be readily obtainable. Analysis of long-tail losses is also more difficult, requires more detailed work and is subject to greater uncertainties than analysis of short-tail losses. Ageas’s insurance companies take into account experience with similar cases and historical trends, such as reserving patterns, exposure growth, loss payments, pending levels of unpaid claims, as well as court decisions economic and conditions. To mitigate the claims risk, Ageas’s insurance companies adopt selection and underwriting policies based on their historical claims experience and modelling. They do this by client segment and class of business based on knowledge or expectations of future movements in claims frequency and severity. Ageas insurance also benefits from diversification effects by engaging in a wide range of Non-life insurance classes and geographies, and while this does not reduce the average claims it does significantly reduce the variation in the total claims book and therefore the risk. The risk of unexpectedly large claims is contained by policy limits, concentration management and reinsurance. alth business, workmen’s pricing
Disability risk covers the uncertainty in claims due to disability rates and levels that are higher than expected. This can, for example, arise in the disability business , he 7.7.2 Disability risk risk 7.7.2 Disability provisioning and underwriting policies. Ageas insurance companies also mitigate disability risk through medical selection strategies and appropriate reinsurance cover. Mortality risk arises due to unexpected changes to mortality rates because of an epidemic disease, or a major event such as an industrial accident or natural disaster. Mortality risk of this type is mitigated through limits set in the underwriting policy and via a number of excess-of-loss and catastrophe reinsurance treaties. Longevity risk is the unexpected increase in survival rates resulting in an improved life expectancy, and is managed through underwriting policy, regular reviewing of the mortality tables used for pricing and establishing liabilities, limitation of the contract period and review of pricing at renewal. Where longevity is found to be rising faster than assumed in the mortality tables, additional provisions are set up and pricing of is new products adjusted accordingly. 7.7.1 Mortality/longevity risk 7.7.1 Mortality/longevity The main exposures are mortality, disability, morbidity, longevity, lapse and expense, Non-life claims, catastrophe and reinsurance. There is diversification across geographical regions, lines product and even across the different insurance risk factors such that Ageas is not exposed to significant concentrations of insurance risks. Moreover, Ageas’s insurance companies have built in specific mitigation measures in order to minimiseexposures. their For example, lapse supported products via lapse penalties and/or market value adjustments to the pay out to the policyholders; reinsurance treaties with a limited exposure to large losses.
Annual Report 2011 nominal amounts). nominal amounts). (in productline by ofriskretention provides details below The table netclaimsbyreinsurance. to 85% more than reducedwith EUR 500millionbeforereinsurance, gross claimsof additional UK, wouldresultin and Belgium two largestmarkets, inAgeas’s simultaneously occurring storm inhundred that aone estimate We event. man-made by asingle multiple claimstriggered withhighlimits and claimsfrompolicies single floods), large and earthquakes hurricanes, (e.g. catastrophes impact ofnatural mitigation ofthe includethe externalreinsurance usesof The major risk. ofcredit management intotheoverall risk isintegrated of counterparty risk considerations.The management counterparty and onpricing primarily based selected companies are Reinsurance man-made. or mostly weatherrelated are latter events The risks). claimsexistsatgrouplevel(catastrophe accumulation of riskof anunacceptable locallimitsbut within exposures are policyholder individual i.e.where event), basis (per a portfolio or on (per risk), basis a policy-by-policy may beon This reinsurance losses. underwriting exposure to tolimittheir reinsurance contracts enterinto companiesalso insurance Ageas appropriate, Where Reinsurance 7.7.6 specificities: their intoaccount companies taking operating of the levelofeach at the risk isreinsured Catastrophe Catastrophe 7.7.5 Risk 100
case scenarios and/or through market pools (terrorism). pools(terrorism). market through case scenariosand/or ofworst- toestimates corresponding up toamounts reinsured are disability) and/or life(death catastrophes crash) and plane (fire,explosions, inNon-life catastrophes man-made loss); (stop excess oflosscover aggregate annual byan (Belgium) exposure thelargest for completed covers, loss perevent excess of isrealisedby protection The event. one in200-year the 150 and in theone between anamount to up are reinsured flood) earthquake, inNon-life(windstorm, natural catastrophes
Property &Casualty &Health Accident Life Product 2011 (amounts in millions). 31 December ended theyear in toreinsurers of premiumsceded the proportion on byproductline provides details below The table Accident Personal Life/Disability Compensation Workmen’s Marine General Third Party Liability Property Motor Hull Motor, Third Party liability Product 2011 Total Total eliminations and General Property &Casualty &Health Accident Life Product 2010 Total eliminations and General
premiums premiums 3,325.1 3,325.1 5,315.3 9,421.2 9,421.2 9,751.6 9,751.6 2,452.8 6,538.3 Highest retention retention Highest 782.3 782.3 760.7 760.7 written Gross Gross ( 1.5 ) ) ( 1.5 ( 0.2 ) ) ( 0.2 Not applicable 2,700,000 2,700,000 4,750,000 2,500,000 2,320,000 3,480,000 300,000 300,000 750,000
per risk perrisk
premiums ( 168.8 ) ( 168.8 ( 283.8 ) ( 283.8 ( 246.0 ) ( 246.0 ) ( 143.9 ( 32.9 ) ( 32.9 ) ( 82.1 ( 29.3 ) ( 29.3 ) ( 72.8 Ceded
Highest retention Highest Not applicable 77,300,000 77,300,000 4,000,000 4,000,000 2,700,000 4,750,000 2,500,000 3,500,000 3,480,000 perevent premiums 9,505.6 9,505.6 2,308.9 6,465.5 9,137.4 3,156.3 5,233.2 731.4 731.4 749.4 ( 0.2 ) ( 0.2 ) ( 1.5 Net
Annual Report 2011 101 Each year Ageas undertakes a group wide annual Key Risk Report process to identify key risks that could impact the realisation of Ageas’s objectives. assesses It also control the framework in place to ensure that these risks are managed on an ongoing basis. Each business follows on theirup key risks on at least a quarterly basis and the most significant risks are also monitored at group level. A wide range of internal and external sources is used in the identification of the key risks. In addition to being a core part of Ageas’s risk framework, this process leads to Management Control Statements made by each business and signed at group level by the Ageas CEO. Process Annually a full bottom-up control and self assessment risk exercise is made, listing in a bottom-up process all key risks the company is confronted with. The thus identified risks, categorised as per the Ageas Risk Taxonomy are assessed and reported to Ageas Group Risk by the various entities using a standard Likelihood & impact grid which provides an overview on the overall level of concern they represent (i.e. their materiality). The risks are qualitatively described and explained in relation to the objectives they are associated with. They are categorised in line with the Ageas Risk Taxonomy. 7.9 Strategic risks risks 7.9 Strategic Strategic risks cover external internal and factors that can impact Ageas’s ability to meet its current business and plan also to position itself for achieving ongoing growth and value creation. includes This changes in the regulatory, legal or landscapecompetitive and reputation 53 risks (see also Note Contingent liabilities). Business strategies need to risks take such into account and we aim to be pro-active in identifying such risks and responding to them. Ageas’s regular risk identification and assessment processes include strategic risks. These were also explicitly considered throughout the strategic review and processes planning and followed up as part of the regular performancedialogues. Risk 7.10 Total 28.9 43.4 93.8 149.5 value at ( 106.4 ) Impact on Impact on 31 December 2010 31 December 2010 pre-taxation profit at
1) 24.6 12.9 209.3 109.1 ( 122.8 ) value at Impact on Impact on Report that available is on the Ageas 31 December 2011 31 December 2011 pre-taxation result at ance as well as from external
insurance entities.further For details on the calculation of the embedded value, a referencethe is made to 2011 Embedded Value website. operational Risk Event Reporting; loss Data Collection; large loss Exposure Analysis; annual Key Risk Reporting.
All companies including financial institutions are subject to operational risk due to inadequately controlled internal processes or systems, human or non-complierror 7.8 Operational risks risks 7.8 Operational events and in general due to the uncertainty inherent in all business undertakings. The Group at a central level as well as every operating company need to have in place a process to manage operational risk. This process is an integral part of the risk management framework and needs to be approved by the appropriate local bodies. The operational risk management framework consists of company-wide processes embedded at Group level and in all operating companies, which collectively aims at identifying, assessing, managing, monitoring and reporting on operational risks. These company-wide processes are: Incurred claims 5% 1) Value refersthe to unaudited value that embedded Ageas calculates for its major Life Non-Life Sensitivities Expenses (10%) Expenses (10%) Lapse rates (10%) Life Sensitivities Mortality rates (5%)
7.7.7 Sensitivities
Annual Report 2011 capital. additional solvency holds lowlevels,Ageas toextremely obligations isreduced other and policyholder meet unableto risk ofbeing that the statistical analysis.Toensure the data usedin assumptions and thetechniques, inherentin theuncertainties completely, given eliminated cannotbe contracts investment insurance and willexceedliabilitiesarisingfrom actual outcome the The riskthat requirements. processfulfilIFRS Policy and (LAT) Testing Adequacy Ageas’s Liability statement. theincome in and recognised recorded tobeimmediately increasesinliabilities requires date and each reporting isreviewedat insurance liabilities The adequacyof data. external historical and basedoninternal using statisticalanalysis date reporting each at evaluated are estimates year.These result withinthenext the equityand shareholders’ ofassets,liabilities, amounts reported affectthe can that assumptions estimates and involves making This liabilities. these aside assetstosupport policies andsets claimson liabilitiesforfuture establishes Each insurancecompany InsuranceLiabilitiesAdequacyTesting 7.11 key risksarediscussed. evolutions ofthe the Group RiskCommittee Ageas ateach basis On amonthly Committee. RiskCommitteeandExecutive Ageas levelofthe discussed atthe isthen consolidated view a Risk consolidatesallreportsand Group thoseriskstatements. withupdateson Risk Ageas’s Group risk statementsto onthose updates quarterly provide Function) Corporate Regions(including eachOpCoand Risk Officersfrom Capital Committee and AgeasBoard. to theRiskand is communicated with thetoprisks list Quarterly, the frameworks. management theirlocalrisk in their confidence whoexpress issuedbyallCEOs Statement Control Management annual the Risk Reportisaccompaniedby Key The annual 102
investment contracts. and insurance withinLiabilities arisingfrom premiums unearned by covered –are expired risk hasnotyet but forwhichthe beenreceived whichpremiumshave contractsfor Unexpired risks– are alsoincluded. and inflation claims expenses Allowancesfor claims. unreported estimatesof claims and on reported ofpayouts forecasts prudent undiscounted into account take yearand and category, cover claimsliabilitiesbyproduct companies define Ageas insurance risk). Ingeneral, (i.e.expired settled notyetbeen have occurred but Non-life claimsliabilitiesarere Non-life Liabilities policy. relating tothat futureclaims the aside tomeet are set funds sufficient ensure that orderto apolicyissoldin established when Life liabilitiesare Life liabilities Overview ofInsuranceLiabilities events. weather European limitedto, includes,butisnot This reinsurance. suchas mitigatingfactors, risk by bereduced risk can Insurance suchashurricanes. events extreme and changes, etc.) (suchaslegislative inthepublicdomain negative changes aswell industry typeof location, risk,geographical amount of and oftype interms lackofriskdiversification insurance riskinclude thatwouldincrease Factors portfolios. diversified and more islowerforlarger outcomes oftheexpected The relativevariability cognised forclaimsthathave Annual Report 2011
life ( 2.9 ) ( 2.6 ) 7,193.7 1,182.4 8,314.3 1,028.8 43,198.7 51,571.9 41,511.7 50,852.2 103 Traditional Life gross liability split liability gross Life
Unit- linked linked 401.0 390.3 5,894.3 6,528.5 6,687.2 12,823.8 14,753.4 21,830.9
Life Total ( 2.9 ) ( 2.6 ) 1,583.4 1,419.1 49,093.0 13,722.2 64,395.7 48,198.9 23,067.7 72,683.1 iabilities were transferred2011 to in Re. Swiss
Claims 437.9 990.4 413.2 177.5 ( 90.4 ) 2,848.0 1,330.7 4,616.6 2,802.5 4,293.2 outstanding
Non-life gross liability split liability gross Non-life 347.9 222.5 338.9 611.8 204.7 premium 1,016.9 1,587.3 1,155.4 Unearned om Non-life reinsurance contractsfrom Intreinco N.V.l The
Total 660.4 617.9 177.5 ( 90.4 ) Non-life 3,195.9 2,347.6 6,203.9 3,141.4 1,602.2 5,448.6 the liabilities by operating segment. the liabilities
1)
Insurance total 1) In 2010,General the Account included the Liabilities arising fr Continental Europe Europe Continental Asia General account Eliminations 31 December 2010 Belgium UK Insurance total Continental Europe Europe Continental Asia General account Eliminations 31 December 2011 Belgium UK
The table below provides an overview of an overview provides table below The
Annual Report 2011 and including this year at each future development period. The The period. development future yearateach and includingthis to prior all yearsofoccurrence of inrespect indicated of theyear ofthefinal at’ showsanestimate re-estimated entitled‘Reserves table of therunoff part The second ofliabilityreporting. including theyear toand prior occurrence yearsof tothe relate The payments year indicated. of the of January sincethefirst period development per made payments ofclaim amount cumulative reports the Payments‘ to’Cumulative table related runoff ofthe The firstpart year. thereporting including prior toand of occurrence forallyears claimliabilities reflects theoutstanding inthisrow As such,eachamount heading. column indicated inthe theyear for date reporting the sheeton balance inthe reported liabilities the date’ represents atthebooking developed initially expenses claimsandclaim unpaid for reserves The row’Gross 28) Note (see position financial of thestatement in claims Total Claims with regard to workers' compensation and health care liabilities Other claims Percentage - Nominal - reserves re-estimated versus claims initial from redundancy/deficiency Cumulative Gross Outstanding Claims Liabilities (including IBNR) 2011 2010 2009 2008 2007 2006 2005 2004 2003 at: re-estimated Reserves 2011 2010 2009 2008 2007 2006 2005 2004 2003 at: payments Cumulative date booking the at initially developed cl liabilitiesforunpaid Gross Health: & Accident and Casualty Gross Ultimate Claims (Cumulative) for both Property & undiscounted are quoted figures material All 2011 31December at as Year Accident byIFRS. defined contractsas areinsurance contracts concerned All 2011. December 2002 until31 31December from reserves accounting of showsthemovements table development The lossreserve Lossreservedevelopmenttable 7.12 104 (not included in table) includedin table) (not
aims and claims expenses expenses aims andclaims liabilities carriedat 31December liabilities
1,325.8 1,325.8 1,334.1 1,353.7 1,387.8 1,370.9 1,341.3 1,366.7 1,359.8 1,396.5 1,101.9 1,074.8 1,055.6 1,004.3 1,455.5 8.9% 8.9% 129.7 129.7 223.9 949.7 889.9 792.9 663.3 467.5 2002
1,433.3 1,433.3 1,393.8 1,483.4 1,077.4 1,042.0 1,499.7 1,356.7 1,356.7 1,362.9 1,370.5 1,412.7 1,406.5 9.5% 9.5% 997.6 997.6 930.1 855.3 765.8 627.2 426.7 143.0 143.0 279.3 2003
1,583.0 1,583.0 1,633.4 1,118.9 1,070.7 1,014.1 1,670.8 1,476.1 1,476.1 1,479.6 1,482.5 1,531.0 1,534.4 11.7% 11.7% 920.8 920.8 807.5 667.4 462.0 194.7 194.7 357.2 2004 insurance contracts. Non-life Note28Liabilities arisingfrom disclosed in further positionis offinancial claimsinthestatement Total The amount Britishpound). relates tothe mainly exposure (the end2011 at year rate the applicablecurrency against calculated the tableare in Allamounts reconciliation lines. inthe areincluded other liabilities and some discounted level a heldon are Claimreservesthat offtable. run inthe presented are format inatriangular can bereported All reservesthat 2011. yearend at reported theamount represents (includingIBNR)’ claimliabilities outstanding The row’Gross of theliabilitiesbecomes. thevaluation reliable themore havedeveloped, claims further the
1,730.0 1,730.0 1,124.1 1,060.6 1,796.7 1,587.4 1,587.4 1,594.6 1,605.6 1,665.0 1,675.0 11.6% 11.6% 979.8 979.8 851.5 698.0 486.7 209.2 209.2 463.3 2005
1,159.9 1,159.9 1,067.9 1,900.0 1,732.2 1,732.2 1,743.7 1,762.7 1,828.1 1,832.3 8.8% 8.8% 951.0 951.0 769.9 536.9 167.8 167.8 572.3 2006
1,226.2 1,226.2 1,095.7 2,053.3 1,948.5 1,948.5 1,965.5 1,988.7 2,055.5 5.1% 5.1% 924.8 924.8 640.1 104.7 104.7 722.3 2007
1,130.5 1,130.5 2,156.2 2,043.5 2,043.5 2,064.6 2,080.4 5.2% 5.2% 934.7 934.7 663.0 112.7 112.7 913.0 2008
2,228.4 2,228.4 1,194.3 1,194.3 2,185.7 2,198.9 1.9% 1.9% 991.4 991.4 688.0 42.7 42.7 2009
2,463.0 2,463.0 1,607.8 1,607.8 2,421.9 1.7% 1.7% 814.1 814.1 41.0 41.0 2010
4,606.9 4,606.9 1,160.8 2,792.2 2,792.2 653.9 653.9
2011
Annual Report 2011
1)
1.3 2010 105 223.1 221.2 744.3 562.0 ( 14.1 ) ( 26.1 ) to 281.9% ( 406.4 ) ( 197.0 ) ( 609.0 ) ( 113.6 ) ( 819.9 ) 9,170.0 3,253.3 5,916.7 7,977.4 8,421.7 9,166.0 2,926.9 ( 1,300.1 )
2011 2011 20.3 512.2 607.4 715.2 ( 22.9 ) 236.9% ( 382.1 ) ( 187.4 ) ( 395.0 ) ( 578.2 ) ( 135.5 ) ( 252.5 ) ( 923.4 ) 8,624.6 3,640.3 4,984.3 7,826.3 7,760.3 8,367.7 2,973.6 ( 1,153.5 )
hanged for comparison reasons (see Note 36 Liability related to written put option on NCI).
Other intangible assets Expected dividend Expected dividend, related to Call option BNP Paribas shares Limitation subordinated debt to 50% of required solvency Regulatory capital Solvency ratio's Solvency requirements excess Solvency ratio Solvency 1) The comparative have been c figures Share capital and reserves Net result attributable to shareholders Unrealised gains and losses Shareholders' equity Non-controlling interests Total equity liabilities Subordinated Prudential filters Local required equalisation reserves for catastrophes Pension adjustment Revaluation of investment property, net of tax (at 90%) Adjustment valuation of available for sale investments hedge flow Cash Goodwill designated Ageas as Insurance Group. As such, Ageas is subject
8.1 supervision Ageas consolidated At the Ageas consolidated level, the Bank National of Belgium (NBB) supervises Ageas. The regulators the countries in in which the subsidiaries are located supervise the subsidiaries of Ageas in those countries, using their own solvency measures and based on local accounting principles. Based on the rules and regulations for Insurance Groups applicable in Belgium, Ageas reports on a quarterly basis to the NBB its available regulatory capital and required solvency. This prudential supervision includes quarterly verification that Ageas, on a consolidated basis, the solvency meets requirements. In June 2011, the NBB requested to adjust the calculation and limit the amount of subordinated funding and capital to Hybrid of 50% the minimum solvency requirements. Ageas has restated the comparative figures for the year 2010 accordingly. Due to the recognition in 2011 of the Liability related to the written put option the Solvency ratioon NCI was negatively by impacted 18% (2010: 22%). The reconciliation of the Shareholders’ capital to the available regulatory capital and resulting solvency ratios is as follows: The National Bank of Belgium, the lead supervisor for Ageas, has 8 and solvency Supervision supervision and reporting requirements at the consolidated level. The operating companies are subject to local supervision.
Annual Report 2011 minimum above capital total of Amount requirements solvency Minimum capital available Total 2010 31 December ratio solvency Total minimum above capital total of Amount requirements solvency Minimum capital available Total 2011 31 December Net Cash.After by replaced been capitalhas notion ofdiscretionary Account the General Forthe relatedissues. the so-calledlegacy off) aswell vehicle(inrun reinsurance internal transactions, the financing functions, group the comprises Account The General capital. availablesolvency from the investments deducting fully basisinsteadof onaproportional equity associates including the to primarilydue to 232%, 227% solvency ratiofrom increasein inaslight resulting beenrestated have 2010 figures December The adjustment. minor resultingina insurance groups NBBfor of the therules business inlinewith for theinsurance capital ownviewonregulatory its tobring decided Ageas In 2011, growth. the planned tofund as beingnecessary other and onthe advantage asacompetitive hand onone a necessity, operations insurance intheindividual base a strongcapital Ageas considers Ageascapitalmanagement 8.2 106 figures hav comparative The 1) ratio solvency Total 1)
e been changed for comparison reasons. comparisonreasons. e beenchangedfor
1,677.8 1,677.8 2,262.5 3,940.3 2,149.9 2,149.9 2,162.7 4,312.6 Belgium 174.2% 199.4%
233.5% 343.3% 490.5 490.5 367.4 857.9 466.4 466.4 191.7 658.1 UK
232.0%). 2010: December (31 minimum required of the 207.0% 7.5 billion), EUR 2010: billion(31December EUR 7.5 stood at operations oftheinsurance totalcapital 2011, the At 31December Capital positionInsurance SolvencyII. of the introduction of at thetime latest atthe theminimumtargets Ageas willreview level. Insurance at theTotal requirements minimum regulatory ofthe of200% solvencyratio minimum aggregate a Ageas targets level. capitalatGroup available thefreely for as theindicator useNetCash to Ageas decided notion, is acommonlyunderstood Cashnotion the Net Since NetCashposition. the almost equalled DiscretionaryCapital Loans), the 18 (seeNote Account the General in Tier 1loan Bank 2001-2011 Fortis ofthe acquisition the forced Continental 1,183.0 1,183.0 172.1% 210.3% Europe 407.9 407.9 565.4 973.3 620.6 620.6 562.4
1,291.0 1,291.0 1,130.9 1,130.9 292.2% 340.1% 849.2 849.2 441.8 798.4 798.4 332.5 Asia
Consolidation Adjustments 467.1 467.1 467.1 254.9 254.9 254.9
Insurance 3,892.5 3,892.5 3,637.1 7,529.6 4,290.2 4,290.2 3,249.3 7,539.5 207.0% 207.0% 232.0% 232.0% total
(incl. elim) 1,091.8 1,091.8 1,095.0 1,626.5 1,626.5 1,630.5 General 3.2 3.2 4.0 4.0
5,916.7 5,916.7 3,253.3 9,170.0 4,984.3 3,640.3 8,624.6 281.9% 236.9% Ageas Total
The solvency position per Insurance segment and for Insurance total can graphically be shown as follows:
2010: 343.3% 2010: 340.1%
2011: 292.2%
2011: 233.5% 2010: 232.0%
2010: 199.4% 2010: 210.3% 2011: 207.0%
2011: 174.2% 2011: 172.1%
Belgium UK Continental Europe Asia Insurance total
Net cash position General Account
Based on the rules and regulations of the NBB the available 31 December 2011 31 December 2010 regulatory capital of the General Account (including eliminations) Cash and cash equivalents 344.7 2,259.4 amounted to EUR 1.1 billion (331 December 2010: EUR 1.6 billion). Due from banks short term 600.0 500.0 Since most of the capital is not readily available, Ageas uses a net Debt certificates ( 256.7 ) ( 548.9 ) Net cash position 688.0 2,210.5 cash position to measure its General Account capital immediately available and as an indication for the strategic flexibility. The net cash position stood per 31 December 2011 at EUR 0.7 billion. The decrease of the net cash position since the start of the year can mainly be explained by the EUR 953 million cash payment for the acquisition of the Fortis Tier 1 Debt Securities (refer to Note 18), the acquisition of AKSigorta and Castle Cover (EUR 154 million and EUR 63 million respectively), the execution of the share buy-back programme (EUR 228 million) and the 2010 dividend payment. A nnual Report 2011 nnual Report
107 Annual Report 2011 Fair value of plan assets assets plan of value Fair obligation benefit Defined obligations unfunded of value Present obligations funded of value Present turnover, tables,employee basisofmortality onthe determined are obligations Pension salary. andlevelof service on yearsof based calculated benefitsare plans, pension benefit Under defined country mobility. facilitate cross- andto costs controltheemployer monitor and better to plans,inorder contribution by defined benefit plans defined istoreplace approach Ageas’s preferred of itsemployees. themajority planscovering pension benefit defined Ageas operates other post- plansand pension Definedbenefit 9.1.1 9.1 Post-employment benefits contract. employment employee’s of the end ofthepremature result payableasa employee benefits disability benefits.Termination long-term awardsand long-service including related service, the rendered which theemployees per monthsofthe fullyduewithintwelve whichdonotfall employeebenefits are benefits employee long-term employment. Other afterthe whicharepayable medicalcare, post-employment and aspensions such benefits, employee benefitsare Post-employment Post-employment benefits,otherlong-termemployeebenefitsand 9 108 Net defined benefit liabilities (assets) assets benefit Defined liabilities Defined benefit position: financial of statement the in Amounts Net defined benefit liabilities (assets) Unrecognised actuarial gains (losses) employment benefits employment benefits termination benefits
benefits. post-employment andother obligations pension defined-benefit regarding at 31December positionas of financial statement inthe shown oftheamounts providesdetails The followingtable retirement. after employees to begranted which continueto loans, mortgage suchas onfinancialproducts, conditions favourable premiums and insurance health of ofpart asreimbursement such other expenses alsoinclude may benefits post-employment pensions, In additionto AA-bonds. of corporate (at closingdate) basis oftheyield onthe orregion bycountry areset Discountrates discount rate. and suchasinflation assumptions economic wage driftand ( 182.5 ) ( 182.5 ( 22.9 ) ( 22.9 ) ( 81.2 281.5 281.5 304.4 281.5 362.7 545.2 323.0 222.2 2011
Defined benefit Defined pension plans pension ( 159.7 ) ( 159.7 ( 14.1 ) ( 14.1 ) ( 33.8 275.2 275.2 289.3 275.2 309.0 468.7 296.1 172.6 2010
( 9.8 ) ) ( 9.8 53.6 53.6 53.6 53.6 63.4 63.4 63.4 2011
-employment benefits -employment benefits are iod in iod in Other post Other end of end ( 6.9 ) ( 6.9 53.1 53.1 53.1 53.1 60.0 60.0 60.0 2010
Annual Report 2011
1.7 2.2 3.7 2010 2010 44.3 12.5 60.0 50.2 53.1 ( 0.1 ) ( 0.6 ) ( 0.1 ) ( 0.7 ) 109 Other post Other post- employment benefits -employment benefits ns and the l position.
2.9 2.0 2.4 2.9 2011 2011 2011 2011 53.6 53.1 ( 0.9 ) ( 1.5 ) 63.4 60.0 ( 0.9 ) ( 1.5 ) ( 1.5 )
0.8 1.9 2010 1.9 1.8 0.9 0.3 0.5 3.6 33.4 2010 ( 0.1 ) ( 2.6 ) 19.5 22.7 ( 0.1 ) ( 5.2 ) ( 2.6 ) 275.2 273.5 ( 14.7 ) ( 17.0 ) 468.7 489.8 ( 47.4 ) ( 17.0 ) pension plans pension plans Defined benefit Defined benefit
0.3 0.4 2011 0.5 3.0 0.1 0.2 3.8 39.3 ( 0.6 ) ( 1.0 ) 2011 23.6 19.8 45.9 281.5 275.2 ( 5.4 ) ( 1.3 ) ( 18.4 ) ( 13.7 ) 545.2 468.7 ( 13.7 ) From an economicview, the point of net defined liability is offset by the non-qualifying plan assets which are held Ageas within (2011: EUR 253.1 million; 2010: in aEUR 236.1 million), resulting net liability of EUR 28.4 million in 2011 (2010: million) forEUR 39.1 defined benefit pension obligations. pension plans that are withindirectly held an Ageas entity.
experience adjustment on defined benefit obligations. 31 December December 31 Actuarial losses (gains) on defined benefit obligation mainly reflect the change in discount rate and other actuarial assumptio Transfer Transfer Foreign exchange differences Other Defined benefit obligation as at Benefits paid Benefits directly paid by the employer Acquisitions and disposals of subsidiaries Settlements Actuarial losses (gains) on defined obligation benefit Participants' contributions Current service cost Interest cost Past service cost - vested benefits Curtailments Defined benefit obligation as at January 1 Other (assets) liabilities benefit defined Net as at 31 December Benefits directly paid by the employer relate to defined benefit Benefits directly paid by the employer Acquisitions and disposals of subsidiaries Transfer Foreign exchange differences Net defined benefit liabilities (assets) (assets) liabilities benefit defined Net as at 1 January Total defined benefit expense Employer's contributions The table below shows the changes in the defined benefit obligation. Defined benefit classified liabilities are under Accrued and interest other liabilities (see Note 34) and defined benefit assets are classified under Accrued interest and other assets Note 22).(see As Ageas is a financial institution in thespecialising management of employee benefits, its employees’ some of pension plans are insured by Ageas insurance companies. Under IFRS, the assets backing these pension plans are non-qualifying and consequently may not be considered as plan assets.
The following table reflects the changes in net defined benefit liabilities (assets) as recognised in the statement of financia Annual Report 2011 Acquisitions and disposals of subsidiaries subsidiaries of disposals and Acquisitions assets plan on (losses) gains Actuarial benefit obligation Actuarial gains (losses) on defined assets plan on (gains) losses actuarial unrecognised of Amortisation obligation benefit ondefined (gains) losses actuarial unrecognised of Amortisation Settlements Curtailments at1January as (losses) gains actuarial Unrecognised assets. onliabilitiesand gains(losses) actuarial unrecognised of inthetotal showsthechanges The followingtable assets onplan return Actual plans pension benefit Defined plans. pension benefit assets fordefined plan return on shows followingtable The return. and expected actual between difference aremainlythe assets onplan (losses) Actuarial gains 31December asat assets ofplan value Fair Other differences exchange Foreign Transfer paid Benefits contributions Participants' contributions Employer's assets plan on (losses) gains Actuarial assets plan on return Expected Settlements 1January asat assets ofplan value Fair plans pension benefit Defined assets. ofplan value inthefair showsthechanges The followingtable 110 the year. during actual experience year and the beginning of made assumptions actuarial between the ofdifferences because thatarise gainsandlosses actuarial are adjustments Experience 2010. and nilin2011 servicecostwere past inunrecognised The changes at31December as (losses) gains actuarial Unrecognised differences exchange Foreign Transfer
( 81.2 ) ( 81.2 ) ( 45.9 ) ( 33.8 ( 0.4 ) ( 0.4 ) ( 3.2 2011 0.1 0.1 0.3 0.1 0.3 1.0 0.3
Defined benefit benefit Defined pension plans pension ( 33.8 ) ( 33.8 ) ( 35.6 182.5 182.5 159.7 ( 5.4 ) ( 5.4 ) ( 3.2 ( 0.8 ) ( 0.8 ) ( 0.9 18.4 18.4 2011 2010 2011 0.1 0.1 4.0 0.1 8.0 0.8 0.7 0.7 0.6 1.0 0.7 0.5 4.9 4.9
( 9.8 ) ) ( 9.8 ) ( 2.9 ) ( 6.9 2011
employment benefits employment the actual theactual at the Other post- Other ( 12.5 ) ( 12.5 ) ( 43.5 159.7 159.7 180.7 ( 6.9 ) ( 6.9 ) ( 0.1 ) ( 0.2 ) ( 0.3 ) ( 5.2 10.1 10.1 14.7 14.7 2010 2010 2010 5.9 5.9 2.9 0.3 0.7 9.4
Annual Report 2011
9.5 8.7 1.7 2.2 3.7 High 2010 2007 2010 2010 4.2% 3.8% ( 0.2 ) 111 efits for
2008
with IFRS, Low 2.4% 3.8% ation and fined benefit 2009 2009
Otherpost-employment benefits Other post-employment benefits Other post-employment benefits 2.9 2.0 2.4 High 2011 2011 2011 2011 4.4% 3.8%
( 1.5 ) 2010 2010 ( 2.5 ) 2.9 5.0 ( 3.0 ) ( 4.2% ) 6.5% 13.2% ( 2.4% )
Low 3.9% 3.8% 0.9 2011 2011 1.4%
9.6 7.5 1.0 0.6 2.3 2011 2007 2010 High 33.4 19.5 22.7 2010 ( 9.4 ) ( 0.1 ) ( 3.2 ) 4.8% 5.5% 5.0% 2.0%
2008
Low 4.1% 3.5% 2.0% 1.8% 2009
Defined benefit pension plans Defined benefit pension plans Defined benefit pension plans
0.3 0.1 3.3 0.2 2011 39.3 23.6 19.8 ( 8.0 ) High
2011 4.1% 5.3% 5.4% 2.4% 0.7 8.3 ( 25.0 ) 187.0 ( ) 2010 0.4% 4.6% ( 15.7% ) 4.2% ( ) ( 9.0 ) 1.8 16.0 131.0 ( 1.9% ) 0.4% 3.7% 2.0%
Low 3.4% 3.5% 2.4% 1.8% 0.4 2011 0.1% ( 3.2 ) ( 1.8% )
Future salary increases (price inflation included) Future pension increases (price inflation included) Medical cost trend rates Discount rate Expected return on plan assets as at 31 December
Expected return on non-qualifying assets Actual return on non-qualifying assets The following table shows the principal actuarial assumptions made for the euro-zone countries.
losses (gains) on curtailments and settlements impacting are included in liabilities Staff expenses (see 50). Note All other de expense items are included in Finance costs (see Note 46). The table below shows the expected and actual return on non-qualifying assets for defined benefit pensionIn plans. accordance the expected return on non-qualifying assets cannot be deducted from the defined benefit expense. Curtailments Settlements Total defined benefit expense The current service cost, past service cost, amortisation of unrecognised actuarial losses (gains) on the defined benefit oblig Expected return on plan assets Past service cost - vested benefits Amortisation of unrecognised actuarial losses (gains) on defined benefit obligation Amortisation of unrecognised actuarial losses (gains) on plan assets Current service cost Interest cost As % of defined benefit obligation as at 31 December The following table shows the components of expenses to related the defined benefit pension plans and other post-employment ben Experience adjustments to plan assets, gain (loss) As % of plan assets as at 31 December Experience adjustments to defined benefit obligation, loss (gain) the year ended 31 December. The following tableThe following shows experience adjustments to plan assets and benefitdefined obligations.
Annual Report 2011 isasfollows: pensionobligations for the planassets of The assetmix pension liabilities. an ofassets duration the match between a close ensure allocation policyto adjusts itsasset Ageas gradually is tobeavoided. pe offunding purpose the marketsfor andemerging inderivatives stipulatesthatinvestment policy investment Ageas’s internal compa withinsurance investmentcontracts securitiesand fixed-income equitysecurities, predominantly assets comprise The plan costs -medical expense benefit defined total on the Effect costs - medical obligation benefit defined on the Effect medicalcosts: for benefit expense and obligation benefit defined effect onthe thefollowing have rateswould medicalcosttrend inassumed change A one-per-cent estate. real and equitysecurities for that return premium to a ri andadds onbonds return fortheexpected asreferences bonds corporate AA-graded curve and bond thegovernment Ageas uses significant. as notregarded are the euro-zone countries outside in benefits Other post-employment Unit obligationsinthe includeonly countries Other obligations. benefit defined Ageas’s total of 71% represents The euro-zone included) inflation (price increases pension Future included) inflation (price increases salary Future 31December as at assets plan on return Expected rate Discount plans pension benefit Defined countries. other for made actuarialassumptions showstheprincipal The followingtable 35 oryounger. employees aged for 55, to5.35% olderthan foremployees 2.35% from varies in2011 salary increases bonds. and contracts insurance ingroup mixconcentrated reflectsanasset assets onplan return The expected shorter duration. Netherlands inthe to4.35% population, young toa related longerduration a inBelgiumwith 3.90% 2011 from benefits variesin benefit defined bythe onpensionsisweighted rate The discount 112 Other Cash estate Real contracts Insurance securities Debt Equity securities
obligation on pensions. The discount rate on other post-employ onother rate Thediscount onpensions. obligation
Medical care Medical 62.0 62.0 2.3 2.3 31 December 2011 31 December 2.3% -3.0% 2.3% 13.3% 76.6% 0.8% 2.2% 0.0% 7.1% 5.0% 5.0% 4.8% 4.3% 2011
One-percent One-percent increase increase 43.1% 43.1% 20.8%
ed Kingdom. ed Kingdom. d that of d that 31 December 2010 31 December nsion plans nsion plans related to a to related ments The future The future defined defined nies. One-percent One-percent 3.0% -5.0% 3.0% decrease ( 32.3% ) ( 32.3% ) ( 16.3% sk 25.5% 63.8% 5.0% 5.0% 5.1% 5.3% 0.2% 2.8% 0.3% 7.4% 2010
Annual Report 2011
2.1% 7.8% 12.5 23.8 31.1% 59.0% 113 ollows: pension plans Defined benefit 31 December 2010 Debt Equity securities securities Equity securities
Other 2010 2010 Other 2.0% 7.4% 29.4% 61.3% contracts Insurance 31 December 2011 contracts Insurance Debt securities
ment benefit plans for the year ending 31 December 2012 are as f Debt securities Equity securities Equity securities 2011 2011 Other Other contracts Insurance contracts Insurance Debt securities
Expected contribution next year to unqualified plan assets Expected contribution next year to plan assets The employer’s contributions expected to be paid to post-employ
Insurance contracts Other The mix of the unqualified assets for pension obligations can graphically be shown as follows: securities Equity Debt securities The mix of the unqualified assets for pension obligations is as follows: The asset mix The asset mix of assetsthe plan can graphically be as follows:shown
Annual Report 2011 Net defined benefit liabilities (assets) assets benefit Defined liabilities Defined benefit position: financial of statement the in shown Amounts Net defined benefit liabilities (assets) position financial of statement the in recognised amounts Other obligation benefit Defined Note22). assets (see other and interest Accrued position under of financial in thestatement areincluded liabilities). Theassets other and Accrued interest liabilities(seeNote34 other interest and Accrued positionunder financial of statement included inthe The liabilitiesrelatedtoother net liabilities. belowshows disability benefits.Thetable long-term awardsand include long-service benefits employee Other long-term Other long-termemployeebenefits 9.2 Note 50). (see Staff expenses in million) andareincluded EUR 18.9 (2010: in2011 EUR17.3million to plans amounted todefined-contribution contributions Employer plan’s regulations. withthe inaccordance contributionscalculated of to thepayment planislimited contribution adefined to commitment The employer’s worldwide. plans contribution of defined number a Ageas operates Defined-contribution 9.1.2 plans 114
long-term employeebenefitsare
12.3 12.3 12.3 12.3 12.3 2011
2010 8.7 8.7 8.7 8.7 8.7
Note 50). expenses(see Staff includedin are other expenses Note46),all costs(see isincludedinFinance cost below. Interest areshown benefits employee long-term toother related Expenses increases salary Future rate Discount benefits. employee long-term forother theliabilities applied whencalculating assumptions ofactuarial range provides the below The table Net liability asat 31 December Transfer employer bythe paid directly Benefits Total expense Net liability asat 1 January expense Total immediately recognised costs service Past immediately recognised (gains) losses actuarial Net cost Interest cost service Current year. the during benefits term employee The followingtableshowsthechan ges inliabilitiesforotherlong-
2.9% 2.9% 3.4% Low Low
( 0.5 ) ( 0.5 12.3 12.3 5.2% 4.4% 2011 2011 2011 High 2.9 2.9 1.7 0.5 0.3 0.4 1.2 1.2 2.9 8.7
2.5% 2.5% 3.6% Low
( 0.8 ) ( 0.8 ) ( 0.4 4.9% 4.9% 5.0% 2010 2010 2010 High 0.4 0.4 0.4 8.7 9.1
Annual Report 2011
4.6 3.1 0.7 0.8 4.6 2010 2010 31.9 26.2 ( 9.2 ) ( 1.1 ) 115
2.8 0.4 2.7 2011 2011 2.7 ( 0.5 ) 2011 2011 26.2 20.3 ( 6.5 ) ( 2.1 )
January 1 at as liability Net expense Total Benefits directly paid by the employer Transfer December 31 at as liability Net Expenses relatedtermination to benefits are shown below. Interest cost is included in Finance costs (see Note 46). All other expenses are included in Staff expenses (see Note 50). Current service cost Interest cost Net actuarial losses (gains) recognised immediately Losses (gains) of curtailments or settlements Total expense
2010 26.2 26.2
2011 2011 20.3 20.3
in liabilities for termination
Net defined benefit liabilities (assets) (assets) liabilities benefit defined Net The following table shows the changes benefits during the year. Defined benefit obligation Termination Benefits are employee payable benefits as a result of either an enterprise’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to acceptredundancy voluntary in exchange for those benefits. The table below shows liabilitiestermination related to benefits included in the statement of financial position under Accrued interest and other liabilities (see Note 34). 9.3 Termination benefits 9.3 Termination
Annual Report 2011
in euros). areexpressed prices (the exercise December 2011 at 31 as outstanding plansare The followingoption Insurance. Fortis Corporate Netherlands and Fortis Insurance Fortis Bank, operations discontinued bythe who wereemployed ofAgeas employees former to and ofAgeas current employees to relates therefore inthisnote thatisdisclosed of options number The operations. discontinued the employeesof obligations towards option theexisting itselftofulfilling committed Ageas has employees. to were granted nonewoptions 2011, likein2010, In unconditional. or theyareconditional ofwhether regardless are granted, they after untilfiveyears exercised maynotbe options In general, afteraperiodoffiveyears. isstillemployed employee vested ifthe become Conditionaloptions exercise. upon are taxed the options where employees incountries to aregranted Conditional options granted. uponbeing directly totaxation subject options are where who workincountries toemployees granted options are options.Unconditional andunconditional between conditional isadifference There regulations. on localtax depending to country fromcountry plansmayvary theoption of features employees. The toits options offer ornotto yearwhether each Ageas decides Employeeshareoptions 10.1 benefits take theform of: These instruments. mayincludeshare-related committee members executive itsemployeesand for package Ageas’s remuneration Employeeshareoptionandpurchaseplans 10 116
restricted shares. a discount; at shares offered options; employee share
2016 2015 2014 2013 2012 2011 year Lapsing 2010 Total 2018 2017 2016 2015 2014 2013 2012 year Lapsing 2011 money the of out Exercisable unconditional are which Of conditional are which Of shares On newageas shares ageas On existing 31December asat Balance Lapsed 1January asat Balance are asfollows: options changesinoutstanding The 5.4years). is 4.1years(2010: 2011 yearend at outstanding options ofthe duration The average Total 2018 2017
Outstanding Number of of Number 25,696 25,696 (in '000) '000) (in 26,492 26,492 25,696 25,696 13,020 12,676 24,547 25,696 26,492 (in '000) '000) (in options options 4,828 4,828 4,944 4,347 3,265 3,257 3,467 1,588 options options 4,347 4,347 3,265 3,257 3,467 1,588 4,828 4,828 4,944 1,149 1,149 ( 796 ) ) ( 796 796 796
exercise price price exercise exercise price price exercise Weighted Weighted Weighted Weighted average average 19.89 19.89 15.44 28.03 24.61 18.55 14.88 14.24 20.48 24.61 24.61 18.55 14.88 14.24 20.48 22.07 19.89 19.89 19.95 19.95 15.44 28.03 2011
exercise price exercise Number of Number ( 5,728 ) ( 5,728 26,492 26,492 13,020 13,472 24,688 26,492 32,220 (in '000) (in Highest options 16.46 16.46 28.62 24.68 18.65 16.46 27.23 26.58 24.68 24.68 18.65 16.46 27.23 26.58 22.28 1,804 1,804 16.46 28.62
exercise price exercise exercise price exercise Weighted average Lowest 19.95 19.95 21.57 15.06 27.23 24.49 18.41 14.18 12.17 18.65 21.08 15.06 27.23 24.49 18.41 14.18 12.17 18.65 2010
Annual Report 2011
2010 470 110 ( 360 )
117
2011 110 ( 110 ) 1,615 1,615 (number of shares in '000) Number of restricted shares committed to grant as at 1 January Restricted shares committed to grant and granted Restricted shares vested December 31 at as grant to committed shares restricted of Number 10.2 Restricted shares 10.2 Restricted In 2011, Ageas created a restricted share programme for its senior management. Dependent on the relative performance of the Ageas share in relation to peer a group over the next three and years some additional conditions, the senior managers awarded, will be in total, between zero and 1.6 million existing Ageas shares for free on 1 April, 2014. hasAgeas decided to hedge this by commitment purchasing the maximum number of shares to be awarded in 2011. Ageas acquired in 1,615,000 shares for the restricted share programme. The conditions of the commitments to grant and sell restricted shares are described in Note 11 Remuneration of Board of Director Members and Executive Committee Members. The table below shows the changes in commitments for restricted shares during the year.
In 2011, Ageas recorded EUR 2.5 as staff expenses million with respect to the option plans (2010: EUR 4.3 million). As long as the options are exercised, not they have no impact shareholders’on equity, as the expenses recorded in income the statement are offset by a corresponding increase in shareholders’ equity. When the options are exercised, shareholders’equity is increased by the exercise price. In 2011 and 2010 no options were exercised. The options granted by Ageas are ten-year American at-the-money call options with a five-year vesting period, the value is based on the Simple-Cox model. The volatilitybased on market is information of external parties. All option plans and restricted share plans (see below) are settled by the delivery of Ageas shares rather than in cash. Some option plans and restricted share plans specifically state that existing shares must be delivered upon exercise. New shares may be issued in other cases.
Annual Report 2011 member. Board new executive), the (Non- and Ronny Independent) Brückner (non-executives, Hadders Zegering andJan Jin Shaoliang Perl, RoelNieuwdorp, Romana, Lionel McIntyre ,Belén Bridget Arts, Frank Independent), Selliers (CEO, executive),Guyde Smet BartDe Non-executive), De Mey(Chairman, members: Jozef ofeleven currentlycomposed istherefore Board composition. The Board’s inthe no changes were that,there from Apart Board. joinedthe (non-executive) Brückner Ronny one member, In 2011, 2011 in 2011–Remuneration BoardofDirectors Changes inthe Remuneration oftheBoardDirectors 11.1 Remuneration of Ageas ExecutiveCommittee members. 11.2entitled inparagraph Committee isclarified Executive Group the members of other CEO)andthe member (the executive Board ofthe Theremuneration ofDirectors. Board the members of non-executive of the theremuneration 11.1 describes Paragraph April 2010. Law of6 Governance isinlinewiththenewCorporate Policy Remuneration Ageas The 2010. meetings of the shareholders by and approved Board bythe earlier determined been Policyhad The Remuneration (see www.ageas.com/en/Pages/governance.aspx). time from timeto asamended Charter Governance Corporate Ageas the set forthin andwhich is 2010 respectively, April 29, N.V. on ageas 2010 and 28, on April SA/NV ofageas Meeting Shareholders the General by approved Policy,whichwas Remuneration accordance withthe in determined hasbeen Committee members Executive Group the and ofDirectors Board ofthe ofthemembers The remuneration 2011. functionduring whowerein Committeemembers Executive andof ofDirectors Board the members of ofi ontheremuneration information detailed Itcontains asappliedin2011. Policy theAgeasRemuneration This notedescribes RemunerationofBoardDirectormembersandExecutive 11 118 Committee members
de Moranville(vice-chairman, Policy. the Remuneration NV reconfirmed ageas SA/NVand ofageas meetings Shareholders theGeneral April 2011, In members. Board non-executive Ageas ofthe 2010 of 1January applicableas Policy Remuneration the andadopted approved N.V.respectively and ageas SA/NV ofageas meeting Shareholders General the In April2010, implementation Policy Remuneration meetings. Committee Board meetings and of Board number tothelower This ismainlydue to previousyear. stable compared remained total remuneration the year in2011, afull account for in2010 appointed members two Board that the thefact 2011 and in member Board anadditional of appointment Notwithstanding the andatitssubsidiaries. Ageas the levelof at meetings both forBoardCommittee fees the attendance and membership for Board remuneration basic includesthe This remuneration 1.12million). (2010:EUR 2011 in thefinancialyear EUR 1.19million to amounted members Board ofnon-executive Total remuneration remunerated. are functions These Life(Thailand). Thai and Muang Holding Co.Ltd. Group Thai Muang Directors ofAICA(HongKong), of theBoard of alsoamember SA/NV. JozefDeMeyis Insurance Directors ofAG of Board ofthe members tobe continue Lionel Perl Arts and Frank Mey (Chairman), De Jozef Ltdwhereas Ageas UK, of Directors Board ofthe members remain and BridgetMcIntyre Hadders Zegering Jan Moranville(Chairman), Guy deSelliers unpaid. functions are These Life (China). of Taiping Board ofDirectors the member of De Meyisalso company. Jozef anon-operating N.V., International Insurance Ageas of Directors Board the joined Ronny Brückner ndividual Annual Report 2011
5) 8,334 2,600 Ageas 94,276 70,000 shares 36,616 119 by current 31,000,000 31,211,826 directly held at Board Members Board 31 December 2011
2) 4) A+B Total 50,000 76,000 59,500 in 2011 120,852 100,500 161,291 145,252 210,732 141,044 125,004 (in EUR) (in 1,190,175 See infra remuneration
2) B 47,852 68,791 50,752 49,544 49,004 366,675 100,732 See infra in 2011(in EUR) as member of the Board of directors Total Remuneration of Ageas subsidiaries
2) 1) A 50,000 73,000 92,500 76,000 94,500 91,500 76,000 59,500 100,500 823,500 110,000 member as Board See infra of Ageas Remuneration in 2011 (in EUR) Remuneration of the Board of Directors The remuneration by received the members of the Board of Directors in 2011, the including remuneration received in subsidiaries and for various committees, is mentionedin the table below. The number of Ageas shares held by the Board members as at 31 December 2011 is reported in the same table.
From 2011 January 1 2011 January 1 2011 January 1 2011 January 1 28 April 2011 2011 January 1 2011 January 1 2011 January 1 2011 January 1 2011 January 1 2011 January 1
as CEO (see Note 11.2 (see as CEO forhis remuneration). details of r committeemeetings they attended as invitee. respectively previous years and the 2011 grant. , a position. where the Board member holds
Function Chairman Vice-chairman Non-executive Board member Non-executive Board member Non-executive Board member Non-executive Board member Non-executive Board member Non-executive Board member Non-executive Board member Non-executive Board member (CEO) Officer Executive Chief
(3)
Bart De Smet Total 1) an attendance fee Board members also receive fo 2) Bart not De Smet remunerated is as Board member but 3) Total to a company remuneration is paid 4) Excluding reimbursement of expenses. 5) Including 29,758 and 2,770 restricted shares from Roel Nieuwdorp Lionel Perl Belén Romana Jan Zegering Hadders Frank Arts Shaoliang Jin Ronny Brückner McIntyre Bridget Mey De Jozef Moranville de Selliers de Guy
Please refer to the Report of Remunerationthe Committee for further information the on remuneration levels applicable to non- executive Board members. In accordance the policy, non-executive with Board members did not receive annual or stock incentives options and were not entitled to pension rights. The remuneration of the ExecutiveBoard member (the CEO) is related exclusively to his position as CEO and is therefore determined with in line the Remuneration for Policy Executive Committee Members (see paragraph 11.2).
Annual Report 2011 EUR 27,500. feeof monthly consulting witha 2 years and lastsfor in October2011 starts agreement This legacyissues. financial onongoing matters aswell economic on financialand Ageas adviceto give independent latterwill wherebythe byBrunoColmant) SPRL (represented ColmantAcademic Bruno Ageas and signed between hasbeen agreement Aconsulting 2011. 30 September on lefttheCompany CEO)has Colmant(Deputy Bruno Directors. of Board ofthe executive member only CEOisthe (ChiefRiskOfficer).The Schepper Kurt De (CFO)and Boizard Christophe DeSmet(CEO), Bart composed of is of Ageas Committee Executive the 2011, September Since 5 Remuneration ofAgeas 11.2 120 100 150 200 250 50 0 eMy eMrnil At Jn rcnr cnye iudr Pr Rmn Hadders Romana Perl Nieuwdorp McIntyre Brückner Jin Arts Moranville de Mey De oe u eSlir Fak hoin Ronn Shaoliang Frank Selliers de Guy Jozef
0121 0121 0121 0121 0121 0121 0121 0121 0121 012010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 101 110 Executive CommitteeMembers
57 120
Remunerationof Board theas member 50 92
Remuneration of the Board of Directors in 2011Remuneration oftheBoardDirectors and 2010
48 99
49 76
47 89
60 58 of directors of Ageas subsidiaries
in EUR thousands in EUR 50 y Committee are further detailed hereafter. hereafter. detailed further Committee are Executive ofthe each member of remuneration ofthe The details course of2011: inthe Committeejointlyearned Executive the of The members
no termination compensations were paid in 2011. paidin2011. were compensations no termination usual benefits; other 2010) representing in EUR 155,313 to EUR 152,819(compared of an amount 2010); in EUR331,249 to (compared EUR 491,893 pension costsof and; 2010), the year or paidconcerning was earned LTI whereno lastyear to (compared EUR 116,825 of anamount for shares of69,886 Term Incentive a Long 2014; and 2013 partly in2012, 2011 willbepaid the financialyear STIover The and2013. 2012 intheyears paid adjusted and tobe is theremaining waspaidin2011, over 2010 earned Incentive Term Short only50%ofthe Policy, Remuneration approved Inlinewiththe 2010. 610,375in to EUR compared EUR335,257in2011 (STI)of Incentive Term a Short 2010); in EUR 1,325,000 to (compared ofEUR1,357,197 a baseremuneration 48
Bridge 73
27 t 53
RemunerationAgeas member of as Board 101
olLionel Belèn Jan Roel Zegering
42 115
69 93
57 108
76
54
51 95
45 104 Annual Report 2011 121 In line with the Remuneration Policy, only 50% of the EUR 168,250 of STI related to the financial year 2011 will be paid in 2012. The balance of the STI related to the financial year 2011 paid in the will be next two years, subject to – upward or downward– as foreseen revision in the Remuneration approved Policy by the General Assemblies in 2010, and financial year 2010 was EUR 71,437, this amount was revised downwards into taking account the 2011 result to EUR 58,579. The balance of the STI related to the financial year 2010 will be paid next year, subject to – upward or downward – revision; a Long Term Incentive of 33,649 shares (for a counter value of EUR 56,250), based on the Volume Weighted Average Price (VWAP) of February 2012. line In with the Remuneration Policy approved by the General Assemblies in 2010, the shares related to this Long Term incentive will be blocked until 2016 and further adjusted taking into account the evolution over the years 2012, 2013 and 2014; the vesting of 2,770 shares in implementation of the restricted– shares plan 2008. This relates to his previous function as CEO of AG Insurance and does not relate to his current position as CEO of Ageas; an amount of EUR 196,437 representing the costs of the defined contribution pension plan; an amount of EUR 64,234 representing other usual benefits such as health, death and disability cover and company car. - The initial amount to related 25% of the STI over the a base remuneration of EUR 500,000identical to 2010; a (short-term) incentiveof EUR 142,704 of which: - is related EUR 84,125 to the financial year 2011.
Bart De Smet’s remuneration in 2011 comprised:
CEO CEO The remuneration of the CEO, who is also a member of the Board of Directors, relates solely to his position as CEO. The remuneration of Bart De Smet has been determined after consultation with externalan specialised firm in executive compensation and benefits, upon recommendation of the Remuneration Committee and in accordance with the Remuneration Policy. Remuneration of the ExCo members in 2011 The Remuneration Policy of the members of the Executive Management is determined by the Board of Directors, upon proposals by the Remuneration Committee and in April 2010 ShareholdersMeetingrespectively of the General of approved by ageas SA/NV and ageas N.V. For more detailed information on the remuneration applicable to the Ageas Executive Committee Members, please refer to the Reportof the Remuneration Committee. The remuneration package is part of a contract providing main the characteristics of status: thethe description of the components of the package, the termination clauses and various other clauses such as confidentiality With effect and exclusivity. from 1 December 2009 the contracts provide for a termination indemnity in accordance with the regulations drawn up by the Belgian government or the Dutch Corporate Governance (Frijns) Code. The members of the Executive Committee are self-employed. Remuneration Policy
Annual Report 2011 Deputy CEOcomprised: Colmant, Bruno of remuneration the 1October2011, until month period 9 for the In 2011, theCompany. joined Boizard, CFO, Christophe and hasleft DeputyCEO, Colmant, Bruno of 2011. inthecourse Committee changed Executive of the The composition Committee theExecutive of Other members 122
- the initial amount related to 25% of the STI over the the STIover the of 25% related to theinitialamount - year2011. financial tothe EUR35,222isrelated - ofwhich: EUR 70,591 of incentive a (short-term) ofEUR318,750; a baseremuneration such as health, death and disability cover and company car. car. coverandcompany disability and death such ashealth, benefits usual other EUR 36,549representing of an amount plan; pension defined contribution the of thecosts EUR 118,469representing of an amount year2011; financial overthe long termincentive awarded a CEO hewasnot deputy ofthe given thedeparture downward – revision; downward –revision; upward or to– subject willbepaidnextyear, year 2010 financial tothe STI related the balanceof The EUR 35,369. to result 2011 account the takinginto revised downwards was thisamount wasEUR46,537, financial year2010 in 2010,and Assemblies General approvedbythe Policy Remuneration the foreseen in as downward –revision upward or to– years,subject next two willbepaidinthe year 2011 financial tothe STI related the balanceof The paid in2012. willbe year2011 financial tothe of STIrelated EUR 70,444 of Policy,only50% In linewiththeRemuneration
comprised: CFO Boizard, of Christophe the remuneration December 2011, until31 2011 5September from month period 4 for the In 2011,
- which represents 50% of the EUR 40,564 of STI related to STI related EUR 40,564of 50% ofthe whichrepresents - EUR 20,282: of incentive a (short-term) ofEUR138,447; a baseremuneration such as health, death and disability cover and company car. car. coverandcompany disability and death such ashealth, usual benefits other EUR 2,287representing of an amount plan; contribution pension the defined of thecosts EUR 34,612representing of an amount and2014; 2013 years 2012, overthe evolution the account takinginto adjusted and further until 2016 willbeblocked incentive Term this Long related to shares in2010,the Assemblies General by the approved Policy with theRemuneration In line 2012. February of (VWAP) Price Average Weighted Volume onthe based EUR 15,575) valueof acounter (for shares of9,318 Term Incentive a Long Policy approved by the General Assemblies in 2010; Assembliesin2010; by theGeneral Policy approved theRemuneration in asforeseen downward –revision upward or to– will bepaidinthenexttwoyears,subject 2011 financialyear to the related STI ofthe The balance 2012. willbepaidin 2011. Thisamount the financialyear Annual Report 2011 123 a Long Term Incentive of 26,919 (forshares a counter value of EUR 45,000) based on the Volume Weighted Average Price (VWAP) of February 2012. In line with the Remuneration Policy approved by the General Assemblies in 2010, the shares related to this Long Term incentive will be blocked until 2016 and further adjusted taking into account the evolution over the years 2012, 2013 and 2014; the vesting of 2,240 in implementation shares of the restricted shares plan 2008. This relates to his previous function at AG Insurance and does not relate to his current position CRO of as Ageas; an amount of EUR 142,375 representing the costs of the defined contribution pension plan; an amount of EUR 49,749 representing other usual benefits such as health, death and disability cover and company car.
In line with the Remuneration Policy, only 50% of the EUR 122,000 of theSTI related to the financial year 2011 will be paid in 2012. The balance of the STI related to the financial year 2011 will be paid in the two years, next subject to – upward or downward – revision as foreseen in the Remuneration approved Policy by the General Assemblies in 2010, and financial year 2010 was EUR 50,850, this amount was revised downwards into taking account the 2011 result to EUR 40,680 The balance of the STI related to the financial year 2010 will be paid next year subject to – upward or downward – revision;
a base remuneration EUR 400,000 of identical to 2010; a (short-term) incentiveof EUR 101,680 of which: - is related EUR 61,000 to the financial year 2011. - the initial amount related to 25% of the STI over the
In 2011, the remuneration of Kurt De Schepper, CRO comprised:
Annual Report 2011 allowedto were DeSchepper Kurt De Smetand Bart acceptance, Following 2011. 7 September them on to granted and werenow AG Insurance, of executives formercapacity intheir Schepper, De Kurt and Smet Bart De to in2008 shares wereattributed restricted time, atthat Policyapplicable and theRemuneration Plan2008 Restricted Shares of the withtherules In accordance granting after vesting3years Restricted shares DeSchepper Kurt Bart DeSmet CRO. CEOand ofrespectively the function before accepting previouslyhe function tothe and related inthepast options attributed to the relating (granted) options Details oftheshare appointment Before before. mentioned as shares performance granted ExCo were ofthe members 2010, the Assembliesin bytheGeneral Policyapproved of theRemuneration withtheterms inaccordance asExComember Since appointment Incentive Long Term 124 De Schepper Kurt Bart DeSmet
2008 2007 2006 2005 2004 2003 2002 1999 2008 2007 2006 2005 1999 Year
shares committed to grant
number of restricted of number Number of Number 10,452 10,452 12,339 14,227 17,476 granted options 2,040 2,040 9,771 8,959 8,959 8,959 8,959 5,913 2,530 5,913 in 2008 in 2,240 2,240 2,770 Total
Exercise 18.41 18.41 14.78 12.17 21.08 26.58 16.46 28.62 24.68 18.65 26.58 16.46 16.46 28.62 24.68 price sold or transferred (2010: EUR 2.05 per share). pershare wasEUR1.26 granted shares restricted value ofthe fair below.The shown 2011are in attributed shares of therestricted shares. Details therestricted accepted Theyboth restricted shares. ofthe exercise due onthe taxes topaythe 10 days period of alimited and during date as ofthat the shares of sell upto50%
Number of Number restricted restricted in 2011 in shares 11-04-2015 13-04-2014 27-04-2013 28-07-2012 31-12-2012 10-04-2011 31-12-2012 2-04-2014 1-04-2013 2-04-2012 2-04-2014 1-04-2013 2-04-2012
Expiry date
Exercised shares not sold before before or transferred 2011 Number of of Number restricted restricted
in 2011 2011 in 2,240 2,240 2,770
exercised Options Options in 2011 2011 in ld with the group ld withthegroup
from previous grants previous from 31 December 2011 31 December shares not sold or transferred Outstanding Number of Number restricted 15,385 15,385 29,758 10,452 12,339 14,227 2,040 2,040 9,771 8,959 8,959 8,959 8,959 5,913 2,530 5,913 at
Annual Report 2011
0.4 0.1 0.2 0.7 2010 Other Ageas Auditors 125
5.0 1.0 0.2 1.1 7.3 Ageas Auditors Statutory
0.2 0.2 0.4 2011 2011 Other Ageas Auditors
4.2 0.6 1.2 6.0 Ageas Auditors Statutory
The breakdown of audit fees for the year ended 31 December is as follows: Audit fees Audit-related fees Tax fees Other non-audit fees Total audit fees, which include fees for auditing the statutory and Consolidated Financial Statements, the Interim Financial Statements as well as the embedded value report; audit-related fees, which include fees performed for work on prospectuses, non-standard auditing and advisory services not related to statutory auditing; fees for tax advice; other non-audit fees, which include support fees for and advice.
Fees paid to Ageas’s auditors for 2011 and 2010 can be broken down into the following components: 12 Audit fees 12 Audit
Annual Report 2011 realestate both borrowers), (jointandseveral LLC Pine and NB70 LLC DTHPartners provided to AGInsurance 2011, In December Committee members). Executive members and ofDirector Board of Remuneration 11 also Note (see EUR 27,500 feeof monthly consulting years witha 2 andlastsfor 2011 inOctober started agreement This legacyissues. financial onongoing matters aswell economic on financialand Ageas adviseto give independent latterwill wherebythe byBrunoColmant) SPRL (represented ColmantAcademic Bruno Ageas and signed between been has agreement Aconsulting 2011. 30 September on lefttheCompany CEO)has Colmant(Deputy Bruno Managers. Executive of close familymembers members and Board ofthe familymembers or toclose Managers and Executive members Board to been granted have guarantees orbank credits loans, nooutstanding 2011, December As at31 Managers. Executive of close familymembers members or Board ofthe familymembers or toclose Managers and Executive members Board ofbusinessto course the normal in guarantees loansorbank maygrantcredits, Ageas companies parties. applytonon-related that market terms commercial and the under into entered are contractsand andreinsurance deposits loans, mainlyconcern Suchtransactions business operations. in relatedparties transactionswith into enters frequently Ageas entities. related other and above to any individualreferred orsignificant controlled above, entities to referred individual ofany closefamilymembers Managers, Executive of Directors), Agea of the members andexecutive non-executive (i.e. members Board funds, pension associates, Ageas include to Parties related 13 Related parties 126
summarised below: Decemberare 31 the yearended parties during followingrelated intowiththe entered Transactions length. atarms’ tobe concluded thetransaction considers management isauniquetransaction, this Although in thecolumnOther. customers from inthelineDue table inthenext amount isincluded disclosed.The as suchishereby and IFRSrules, transaction under party related asa isregarded transaction aforementioned the ofAgeas, ofDirectors Board ofthe a member Ronny Brückner, isrelatedto is anentitywhich LLC Partners AsDTH Manhattan. indowntown properties rental residential entities holding convertinto to options AGInsurance grants and, (iv)inaddition, receivables (iii) pledgesover agreements building, (ii)guarantee owningthe purposevehicle special ofthe shares (i) pledgesover including asecuritypackage, from andbenefits of12% interest rate bearsan year, maturity of1 has a Theloan Pine Street. at 70 Yorklocated New Manhattan, in building acquisition ofalandmark USD 70million(EUR54.1million)as loanof bridge aconvertible intheU.S., investment companies
other related parties such as pension funds. suchaspension parties other related associates; part ofthefinancing the course ofits the course ly influenced by by ly influenced same s Board Annual Report 2011
0.9 2.7 0.1 1.8 0.4 5.6 2.7 2010 Total 2010 Total 2010 24.0 21.9 15.6 24.0 ( 18.4 ) ( 13.5 ) 127
Other Other
0.9 2.7 0.1 1.8 0.4 5.6 2.7 24.0 ( 18.4 ) Associates Associates
2.5 0.1 5.7 0.5 8.0 8.0 4.6 2011 2011 Total 2011 Total 24.0 63.5 87.5 87.5 15.9 ( 18.5 )
0.2 0.1 Other Other 54.1
2.3 0.1 5.7 0.5 8.0 7.9 4.6 33.4 15.9 ( 18.5 ) Associates Associates
Additionsadvances or Repayments Related party due from customers as at 31 December Loans to customers Related party due from customers as at 1 January The changes in Due from customers during the year 31 ended December are as follows: contracts investment and insurance from arising Liabilities borrowings other and liabilities subordinated certificates, Debt liabilities Other Statement of financial position - related parties Financial Investments Due from customers Other assets Operating, administrative and other expenses Insurance premiums, net of reinsurance (earned) Fee and commission income Other income Income and expenses - related parties income Interest
Annual Report 2011 the standard commercial terms and conditions. conditions. termsand commercial the standard executed under businessesare thedifferent between Transactions responsibility. managerial havefull which thebusinesses for statement items income positionsand financial statements of businesses ofall tothe isdirectallocation The aim Ageas. of the businesses of contribution thefulleconomic reflects reporting Ageas’s segment segment. separate operating asa thatispresented Account activities withintheGeneral holding other finance and suchasgroup insurance business core tothe notrelated reportsactivities Ageas In addition, Asia. and Europe Continental UnitedKingdom, Belgium, meaning operates, inwhichAgeas region isper IFRS segments under operating wayofreporting appropriate themost that Ageas decided below): detailssee (for segments intofiveoperating Ageas isorganised Operating segments CRO. the regions and geographical four the CEOsof ExCo, ofthe consisting Committee Management a Committee and Executive onalean based structure anorganisational Ageas has 14.1 General information Informationonsegments 14 128
General Account. General Account. Asia; Continental Europe; (UK); United Kingdom Belgium;
14.2 Belgium Paribas Fortis Bank Paribas FortisBank owns 25% ofAG Insurance. BNP 2009, SinceMay enterprises. to larger solutions, mainly care and health pension group unitoffering business the dedicated is Benefits Employee AG anditssubsidiaries. Fortis Paribas BNP of channels bank andviathe brokers independent 3,000 more than channels: various through Non-life insurance Lifeand range of comprehensive itscustomersa offers It companies. sized andlarge medium- aswellsmall, privateindividuals targets AG Insurance Belgium. groupin estate largest real intothe activities andhasgrown realestate which managesits AG RealEstate, of 100% owner isalsoa AG Insurance insurance. Non-life from theremainder Lifeinsurance; income comesfrom 75% ofthis 6.2 billion.Some EUR amounts to premium income andits millioncustomers 2.5 approximately company serves The history. longstanding have a of AGInsurance, the name under 2009 June since activities,operating The Belgianinsurance the specific business model of each reportable segment is applied. isapplied. segment reportable each modelof the specificbusiness to adapted methodology tailor-made a to customers, products sold to related positionnot offinancial statement ofthe For theitems external customers. to products sold the basedon used approach is abottom-up operating segments, positionto financial of statement fromthe items When allocating directlyinthebusiness. activities report support companies model,insurance business withAgeas’s In accordance Allocation rules Annual Report 2011 129 option on NCI, Intreinco N.V. and In Luxembourg, andAgeas BNP Paribas merged at the end of 2011 their respective Luxembourg Life operations into Cardif Luxembourg Vie, second largestthe Luxembourg provider of Life insurance. Furthermore, since August 2011 Ageas has become the Non-life insurance partner of Sabanci in Turkey, acquiring a 31% stake in AKSigorta. Since then both Sabanci and Ageas have further increased their stakes in the company (each owning 33.11% at year-end 2011). Ageas Continental Europe reached an agreement in October 2011 to sell its German Life activities, Ageas Deutschland Lebensversicherung, to Augur Capital. 14.6 General Account 14.6 General The General Account comprises activities not related to the core Insurance business, such as group finance and other holding activities. In addition, the General Account also includes the investment in Royal Park Investments, the call option on BNP Paribas shares, the Tier 1 debt securities, the liabilities related to CASHES (RPN(I)), the written put the claims and litigations related to events in 2008. 14.5 Asia Ageas is active in a number of countries in Asia with its regional office based in Hong Kong and the fully-owned subsidiary in Hong Kong. The other activities are organised in the form of joint ventures with leading local partners and financial institutions in China (20-24.9% owned by Ageas), Malaysia (30.95%owned by Ageas), Thailand (15-31% owned by Ageas) and India (26% owned by Ageas). In terms of reporting, Ageas reports on a consolidated basis the Hong subsidiary whileKong the other stakes are accounted for as associates.
ey). Access to markets is facilitated through
a number of key partnerships with companies enjoying a sizeable position in their respective markets. In 2011, about 83% of total inflows were Life related and 17% Non- life. Continental Europe currently consists of the insurance activities of Ageas in Europe, excluding Belgium and the United Kingdom. Active in five markets including Portugal, France, Italy and Luxembourg and since 2011 Turkey, the product range includes Life (in Portugal, France and Luxembourg) and Non-life (in Portugal, Italy and Turk 14.4 Continental Europe 14.4 Continental Ageas’s business in the UK is a leading national provider of Non- life insurance solutions and a related Life protection business launched in 2008. The UK business has a strong presence in the Personal lines market and is continuingexpand to its Commercial lines proposition. The split is around 82% Personal lines, 16% Commercial lines and 2% Life. The is the UK business affinity partner of a number of very strong including brands Tesco Bank, John Lewis Partnership, Age UK and ToyotaLimited. (GB) The UK business adopts a multi-channel distribution strategy across brokers, affinity partners and own distribution. Its 100% owned subsidiaries include RIAS and Castle Cover which have over a million customers in the growing +50 age market segment and Ageas Insurance Solutions which provides white label solutions to affinity partners, outsourcing services as well as direct internet promotion of its own brands. The successful start-up of Tesco Underwriting, the partnership with Bank (49%)Tesco and the integration of the acquired business Insurance of Kwik-Fit Services will further strengthen respective Ageas’s market positions in the UK. In order to provide transparency in respect of the contribution from its various business segments, Ageas took the decision to break down the UK results in three sub-segments – Life, Non-life and Other Insurance, which includes the retail results of its operations. 14.3 (UK) United Kingdom
Annual Report 2011 Total liabilities and equity equity Total interests Non-controlling equity Shareholders' Total liabilities Liabilities related to assets held forsale Liability related to written put option on NCI Provisions Accrued interest and other liabilities RPN(I) Deferred tax liabilities Current tax liabilities Borrowings Subordinated liabilities certificates Debt Liabilities arising from non-life insurancecontracts Liabilities related to unit-linked contracts Liabilities arising from life investment contracts Liabilities arising from life insurance contracts Liabilities assets Total sale for held Assets assets intangible other Goodwill and equipment and plant Property, assets other and interest Accrued shares BNPParibas option Call Deferred tax assets assets tax Current receivables other and Reinsurance associates in Investments contracts unit-linked to related Investments Loans property Investment investments Financial equivalents cash Cash and Assets 2011 31 December Statementoffinancialpo 14.7 130 Number of employees
sition byoperatingsegment
60,112.0 60,112.0 56,809.6 22,478.2 20,720.5 60,112.0 43,595.6 3,302.4 3,302.4 2,380.8 1,426.6 1,787.9 3,195.9 5,894.3 1,034.6 1,481.5 5,894.3 2,879.0 2,020.9 1,871.2 Belgium 5,806 5,806 921.6 361.6 894.6 357.5 118.7 680.2 150.8 27.7 27.7 15.6 15.6 34.4
2,347.6 2,347.6 4,150.9 2,461.9 4,150.9 4,150.9 1,090.5 1,007.5 3,060.4 312.7 312.7 366.9 761.3 184.5 5,238 5,238 284.2 197.3 161.2 53.3 53.3 83.0 83.0 53.1 15.4 3.6 3.6 6.7 1.6 1.6 UK
Continental 16,223.5 16,223.5 16,223.5 16,223.5 14,884.3 6,528.5 6,528.5 4,722.2 2,471.5 6,528.0 7,647.3 1,339.2 1,339.2 Europe 660.4 660.4 504.9 273.8 165.4 246.8 241.7 392.4 191.5 1,062 1,062 409.9 929.3 159.1 233.6 24.4 24.4 11.7 11.7 65.7 28.0 5.6 5.6 1.7 3.6 3.6
1,181.3 1,181.3 3,507.6 1,416.8 3,507.6 3,507.6 1,687.1 1,687.1 1,820.5 401.0 401.0 419.2 208.7 752.6 401.0 136.5 109.6 155.4 155.4 59.6 59.6 75.9 75.9 352 1.1 1.1 3.2 0.4 Asia 5.8 5.8
7,916.5 7,916.5 2,368.4 3,490.1 7,916.5 7,916.5 1,755.9 6,967.7 2,374.5 2,980.5 ( 807.1 ) ) ( 807.1 Account Account General General 138.5 138.5 395.0 162.1 804.6 122.7 344.7 948.8 948.8 110.5 655.8 186.8 190.0 134.2 256.7 88.8 88.8 78.7 78.7 1.6 1.6 99
Eliminations ( 1,308.3 ) ( 1,308.3 ) ( 1,214.6 ( 1,308.3 ) ( 1,308.3 ) ( 1,308.0 ) ( 1,090.7 ( 175.9 ) ( 175.9 ( 33.5 ) ( 33.5 ) ( 51.9 ) ( 12.9 ( 38.5 ) ( 38.5 ( 2.9 ) ( 2.9 ) ( 5.2 ( 0.3 ) ( 0.3 ) ( 0.3 9.8 9.8
90,602.2 90,602.2 82,234.5 12,823.8 27,201.5 24,370.4 90,602.2 12,771.4 55,231.4 8,367.7 8,367.7 7,760.3 2,403.4 2,094.1 2,277.0 2,973.6 6,203.9 1,594.3 1,098.3 2,386.2 4,111.1 1,959.5 5,683.4 2,045.7 2,701.5 12,557 12,557 607.4 607.4 110.5 655.8 190.0 614.6 256.7 138.5 395.0 358.8 127.1 59.2 59.2 Total
Annual Report 2011
1)
Total 71.5 46.4 131 465.1 609.0 548.9 682.3 465.0 703.2 744.3 11,707 2,926.9 2,141.7 1,947.0 2,407.6 8,421.7 9,166.0 3,258.3 1,900.3 4,528.2 1,732.5 3,828.5 2,042.5 1,065.0 1,686.0 5,448.6 90,000.7 99,166.7 56,232.5 21,747.3 99,166.7 23,938.4 26,913.8 21,830.9
2.9 2.9 8.3 ( 2.6 ) ( 62.4 ) ( 31.4 ) ( 78.1 ) ( 95.3 ) ( 34.1 ) ( 90.4 ) ( 164.6 ) ( 1,187.8 ) ( 1,507.8 ) ( 1,504.9 ) ( 1,274.3 ) ( 1,504.9 ) Eliminations
85 0.7 0.1 99.6 548.9 216.7 465.0 195.8 703.2 307.0 954.0 213.3 609.0 105.9 177.5 General Account ( 887.5 ) 2,961.1 2,367.7 7,735.5 2,677.3 1,789.8 9,525.3 2,259.4 2,670.1 2,405.8 9,525.3
4.6 Asia 0.4 2.6 1.3 NCI). 320 76.3 74.4 58.0 52.2 154.0 121.5 390.3 660.2 155.3 521.6 390.3 1,632.4 1,440.3 1,440.3 3,072.7 1,014.6 3,072.7 1,027.5
4.5 5.4 6.8 28.0 73.0 16.8 25.7 34.4 95.0 240.5 263.2 893.1 551.5 1,270 270.8 447.9 275.5 301.5 535.1 617.9 Europe 1,444.6 9,010.2 2,835.7 5,478.6 24,311.6 25,756.2 14,747.9 25,756.2 14,753.4 Continental
UK 3.1 6.3 2.6 32.9 71.8 11.3 35.4 156.5 125.5 164.2 776.1 847.9 4,327 184.8 477.9 244.3 241.2 2,090.7 2,938.6 1,741.1 2,938.6 1,602.2
34.2 16.8 34.5 5,705 892.8 359.7 389.3 104.6 712.4 145.5 388.0 Belgium 2,632.0 1,008.5 3,640.5 6,687.2 3,141.4 1,766.3 1,328.2 1,874.2 2,563.0 6,687.2 1,269.6 1,019.5 55,738.3 59,378.8 59,378.8 20,077.8 21,433.9 44,191.0
r comparison reasons (see tor comparison reasons (see Note 36 Liability related to written put option on
employees of Number 1) The comparative have been changed fo figures Non-controlling interests Total equity equity and liabilities Total Liabilities related to assets held for sale sale for held assets to related Liabilities liabilities Total Shareholders' equity RPN(I) RPN(I) liabilities other and interest Accrued Provisions NCI on option put written to related Liability Borrowings liabilities tax Current liabilities tax Deferred Liabilities related to unit-linked contracts contracts unit-linked to related Liabilities contracts insurance non-life from arising Liabilities Debt certificates liabilities Subordinated Liabilities Liabilities contracts insurance life from arising Liabilities contracts investment life from arising Liabilities Property, plant and equipment Goodwill and other intangible assets Assets held for sale Total assets Current tax assets assets tax Deferred Call option BNP Paribas shares Accrued interest and other assets Loans Investments related to unit-linked contracts Investments in associates Reinsurance and other receivables Assets Cash and cash equivalents Financial investments Investment property 31 December 2010
Annual Report 2011 Attributable to non-controlling interests interests non-controlling to Attributable period the for result Net expenses tax Income taxation before Result expenses Total expenses Other expenses Staff expenses commission Fee and issues State Dutch and MCSconversion impact Total State Dutch with disputes legal for Provision - FCCclaim impairment of Reversal - onABNAMRO Claim - Liability related to MCSconversion - provisions in Change impairments in Change costs Finance contracts unit-linked to related Charges net benefits, and claims Insurance ceded benefits, and claims Insurance - gross benefits, and claims Insurance - Expenses income Total income Other income commission Fee and associates of result of Share contracts unit-linked for investments to related Income revaluations and onsales Result RPN(I) on (loss) gain Unrealised shares BNPParibas option Call on (loss) gain Unrealised income investment other and dividend Interest, premiums earned Net premiums earned Ceded - premiums unearned in Change - Gross premium income - Income 2011 Incomestatementbyoperatingsegment 14.8 132 inflow Gross accounting deposit Inflow Gross premium income 2011 premiums andpremiuminfl grosswritten (sumof inflow Gross 1) &amortisation) depreciation (excl. expenses Non-cash income Total Total income internal Total income from external customers shareholders to attributable Net result
1)
ow of investment contracts without Discretionary Participation F without Discretionary contracts investment ow of ( 1,327.0 ) ( 1,327.0 ) ( 9,111.3 ) ( 1,370.9 ) ( 6,127.8 ) ( 6,154.5 6,178.7 6,178.7 5,933.9 8,641.1 8,641.1 8,629.8 8,641.1 2,415.5 5,859.8 5,933.9 Belgium ( 327.0 ) ( 327.0 ) ( 102.8 ) ( 429.8 ) ( 470.2 ) ( 641.9 ) ( 425.2 ) ( 601.3 ) ( 108.7 ) ( 177.3 Belgium 244.8 244.8 ( 65.1 ) ( 65.1 166.0 166.0 159.7 284.1 ( 1.5 ) ( 1.5 ) ( 9.0 11.3 11.3 40.4 26.7 91.7 7.6 7.6
( 1,138.1 ) ( 1,138.1 ) ( 1,208.7 ( 1,747.6 ) ( 1,747.6 2,034.7 2,034.7 2,034.7 1,868.5 1,868.5 1,562.0 2,034.7 1,868.5 1,868.5 1,762.3 ( 100.8 ) ( 100.8 ) ( 371.9 ( 115.6 ) ( 115.6 ) ( 177.4 ) ( 303.3 ( 15.6 ) ( 15.6 ( 31.4 ) ( 31.4 110.8 110.8 120.4 106.2 106.2 120.9 70.6 70.6 11.7 63.6 86.0 86.0 89.5 3.5 3.5 2.4 UK UK
Continental Continental ( 1,171.2 ) ( 1,171.2 ) ( 1,212.1 ( 1,340.5 ) ( 1,340.5 2,672.1 2,672.1 1,457.5 1,214.6 1,347.9 1,347.9 1,106.9 1,214.6 1,347.9 1,347.9 1,347.4 ( 145.3 ) ( 145.3 ) ( 329.1 ( 319.0 ) ( 319.0 ) ( 134.9 ) ( 181.4 Europe Europe ( 89.9 ) ( 89.9 ) ( 17.8 ( 10.0 ) ( 10.0 ) ( 91.3 ) ( 15.1 403.5 403.5 177.3 362.8 ( 4.8 ) ( 4.8 ( 8.0 ) ( 8.0 ) ( 2.6 40.9 40.9 10.2 13.4 6.4 6.4 0.5 0.5 5.4 7.4
( 179.7 ) ( 179.7 ) ( 189.8 ( 330.6 ) ( 330.6 353.0 353.0 113.6 239.4 ( 99.3 ) ( 99.3 ) ( 14.6 ) ( 75.1 ) ( 28.0 ( 75.5 ) ( 75.5 ) ( 64.1 ) ( 64.1 ) ( 61.5 ) ( 26.1 ) ( 76.8 269.1 269.1 211.4 239.4 269.1 269.1 265.3 ( 2.6 ) ( 2.6 ) ( 7.4 73.3 73.3 10.1 37.8 31.9 58.5 eatures) can be calculated as follows. asfollows. canbecalculated eatures) Asia 2.2 2.2 2.4 Asia 3.8 3.8
( 236.6 ) ) ( 236.6 ) ( 197.0 ) ( 176.0 ) ( 214.0 ( 264.2 ) ) ( 264.2 ) ( 265.6 ) ( 352.5 ) ( 315.1 Account Account General General Account Account General General ( 37.4 ) ) ( 37.4 ( 20.0 ) ) ( 20.0 ) ( 37.4 ) ( 37.4 ) ( 52.1 ) ( 18.2 275.0 275.0 263.3 ( 1.0 ) ) ( 1.0 ) ( 1.0 ( 0.4 ) ) ( 0.4 ) ( 5.1 ) ( 1.0 ) ( 1.0 ( 1.4 ) ) ( 1.4 ) ( 0.6 ) ( 9.0 12.3 12.3 86.9 86.9 1.8 1.8 6.9
Eliminations Eliminations ( 84.4 ) ( 84.4 ) ( 14.3 ) ( 70.4 ( 84.4 ) ( 84.4 ) ( 84.4 ( 0.4 ) ( 0.4 ) ( 0.4 ( 0.1 ) ( 0.1 ) ( 0.4 ) ( 0.4 ( 0.9 ) ( 0.9 ) ( 0.9 ) ( 0.9 ) ( 1.3 70.3 70.3 83.5 83.5 14.1 0.4 0.4 0.4 0.8
( 12,761.6 ) ( 12,761.6 ( 1,741.5 ) ( 1,741.5 ) ( 1,163.4 ) ( 1,615.9 ) ( 8,614.6 ) ( 8,769.8 11,237.1 11,237.1 12,004.8 12,004.8 12,004.8 1,815.9 1,815.9 9,421.2 3,093.3 8,738.7 9,421.2 ( 578.2 ) ( 578.2 ) ( 673.5 ) ( 756.8 ) ( 937.8 ) ( 739.5 ) ( 310.0 ) ( 146.5 ) ( 581.5 ) ( 214.0 ) ( 283.8 ) ( 398.7 ( 95.3 ) ( 95.3 ) ( 23.2 642.8 642.8 155.2 277.1 427.1 135.6 275.0 83.3 83.3 Total Total
Annual Report 2011
0.8 Total Total 87.8 363.8 140.7 223.1 788.0 186.3 428.0 248.0 165.6 362.5 141.2 222.6 ( 33.9 ) ( 181.9 ) ( 246.0 ) ( 271.0 ) ( 149.0 ) ( 755.0 ) ( 298.4 ) ( 202.8 ) ( 202.8 ) ( 694.1 ) ( 866.9 ) 9,751.6 2,432.6 9,751.6 9,323.7 3,005.3 2,000.0 13,647.1 13,647.1 12,184.2 13,647.1 133 ( 2,246.8 ) ( 9,768.8 ) ( 9,603.2 ) ( 2,362.5 ) ( 1,052.4 ) ( 13,505.9 )
0.2 0.7 0.7 0.6 17.6 85.7 70.7 ( 4.1 ) ( 2.7 ) ( 2.7 ) ( 2.7 ) ( 0.5 ) ( 0.5 ) ( 0.6 ) ( 0.2 ) ( 0.5 ) ( 0.5 ) ( 88.4 ) ( 88.4 ) ( 69.5 ) ( 17.6 ) ( 88.4 ) Eliminations Eliminations
0.3 0.3 4.5 3.5 1.0 0.3 0.3 14.4 20.1 ( 1.1 ) ( 1.5 ) ( 2.5 ) 362.5 393.3 229.4 127.9 ( 16.8 ) ( 56.9 ) ( 52.2 ) ( 37.8 ) ( 37.8 ) General Account General Account ( 202.8 ) ( 202.8 ) ( 522.5 ) ( 560.3 ) ( 167.0 ) ( 165.5 ) ( 271.0 ) ( 149.0 ) ( 245.9 ) 2,000.0 ( 2,362.5 ) ( 2,000.0 )
4.0 Asia 1.8 5.8 Asia eatures) can be calculated as follows. 95.1 93.5 93.5 58.8 44.0 41.6 53.6 42.5 ( 1.6 ) ( 1.0 ) ( 1.6 ) 446.5 450.5 232.9 208.2 450.5 ( 65.8 ) ( 21.8 ) ( 23.3 ) ( 24.7 ) ( 43.4 ) ( 13.6 ) 335.0 232.9 102.1 ( 355.4 ) ( 191.7 ) ( 185.9 )
5.0 0.1 57.3 51.1 10.9 37.1 ( 5.4 ) ( 5.5 ) ( 0.2 ) 157.2 108.4 368.3 278.6 185.0 ( 48.8 ) ( 21.7 ) ( 90.6 ) Europe Europe ( 194.1 ) ( 100.9 ) ( 151.9 ) ( 165.9 ) ( 231.3 ) 2,916.9 2,917.0 2,191.9 2,079.6 2,917.0 3,933.2 2,191.9 1,741.3 ( 2,759.8 ) ( 2,118.0 ) ( 2,080.9 ) Continental Continental
UK UK 5.5 3.8 51.8 56.5 44.8 50.6 ( 2.8 ) ( 6.6 ) ( 3.4 ) 970.5 104.0 ( 90.9 ) ( 28.9 ) ( 23.4 ) ( 16.8 ) ( 75.7 ) ( 12.3 ) ( 195.5 ) ( 130.1 ) ( 160.6 ) ( 824.1 ) ( 773.5 ) 1,127.8 1,179.6 1,206.8 1,179.6 1,206.8 1,206.8 ( 1,208.5 )
0.4 5.4 91.5 18.1 68.6 40.9 96.7 ( 1.4 ) 480.8 355.0 263.5 467.8 188.0 ( 79.9 ) ( 91.8 ) ( 29.3 ) ( 55.0 ) 589.2 Belgium ( 420.4 ) ( 561.5 ) ( 125.8 ) ( 480.3 ) ( 596.1 ) Belgium 9,208.1 9,226.2 6,120.2 6,065.6 2,361.8 9,226.2 6,120.2 6,709.4 ( 8,745.4 ) ( 6,633.2 ) ( 6,564.6 ) ow of investment contracts Discretionary without F Participation
1)
Gross premium income income premium Gross Inflow deposit accounting Gross inflow 2010 Total income Non-cash expenses (excl. depreciation & amortisation) 1) Gross inflow (sum of gross written and premium infl premiums Net result attributable to shareholders customers external from income Total internal income Total Income tax expenses Net result for the period Attributable to non-controlling interests Total expenses Result before taxation Total impact MCS conversion and Dutch State issues Fee and commission expenses Staff expenses Other expenses - Claim on ABN AMRO - Reversal of impairment FCC claim - Provision for legal disputes with Dutch State Finance costs Change in impairments Change in provisions - MCS conversion to related Liability - Insurance claims and benefits, gross - Insurance claims and benefits, ceded Insurance claims and benefits, net Charges related to unit-linked contracts Other income Total income Expenses Result on sales and revaluations Income related to investments for unit-linked contracts Share of result of associates Fee and commission income Net earned premiums Interest, dividend and other investment income Unrealised gain (loss) on Call option BNP Paribas shares Unrealised gain (loss) on RPN(I) Income Income - income premium Gross - Change in unearned premiums - Ceded earned premiums 2010
Annual Report 2011 Total liabilities and equity equity Total interests Non-controlling equity Shareholders' Total liabilities Liabilities related to assets held forsale Liability related to written put option on NCI Provisions Accrued interest and other liabilities RPN(I) Deferred tax liabilities Current tax liabilities Borrowings Subordinated liabilities certificates Debt Liabilities arising from non-life insurancecontracts Liabilities related to unit-linked contracts Liabilities arising from life investment contracts Liabilities arising from life insurance contracts Liabilities assets Total sale for held Assets assets intangible other Goodwill and equipment and plant Property, assets other and interest Accrued shares BNPParibas option Call Deferred tax assets assets tax Current receivables other and Reinsurance associates in Investments contracts unit-linked to related Investments Loans property Investment investments Financial equivalents cash Cash and Assets 2011 31 December Statementoffinancialpo 14.9 134 Number of employees
sition splitinto Life,Non-lifeandOtherInsurance
74,572.0 74,572.0 69,043.3 12,823.8 27,201.5 24,373.3 74,572.0 12,823.3 48,964.3 5,528.7 5,528.7 1,022.1 4,506.6 1,334.4 2,025.5 1,115.3 1,835.8 3,266.2 1,844.2 2,121.3 938.1 938.1 153.5 113.7 541.1 855.2 4,764 4,764 410.2 821.2 16.3 16.3 37.1 Life
6,203.9 6,203.9 8,779.5 6,157.4 8,779.5 8,779.5 1,603.9 1,211.5 7,175.6 Non-life 179.3 179.3 143.1 485.5 928.7 289.9 141.8 201.5 199.3 4,664 4,664 392.4 509.9 183.7 184.8 39.7 39.7 13.3 12.5 12.5 65.7 15.1
Insurance 795.1 795.1 299.7 385.3 3,030 3,030 795.1 286.6 286.6 508.5 212.7 165.0 119.2 15.5 15.5 13.5 41.3 36.2 Other 3.5 3.5 0.1 0.1 0.1 4.5 7.0
7,916.5 7,916.5 2,368.4 3,490.1 7,916.5 7,916.5 1,755.9 6,967.7 2,374.5 2,980.5 ( 807.1 ) ) ( 807.1 Account Account General General 138.5 138.5 395.0 162.1 804.6 122.7 344.7 948.8 948.8 110.5 655.8 186.8 190.0 134.2 256.7 88.8 88.8 78.7 78.7 1.6 1.6 99
Eliminations Eliminations ( 1,460.9 ) ) ( 1,460.9 ) ( 1,256.0 ( 1,460.9 ) ) ( 1,460.9 ) ( 1,460.6 ) ( 1,132.1 ( 112.4 ) ) ( 112.4 ( 149.7 ) ) ( 149.7 ) ( 175.9 ( 37.4 ) ) ( 37.4 ) ( 51.9 ) ( 13.0 ( 2.9 ) ) ( 2.9 ( 0.3 ) ) ( 0.3 ) ( 0.3 9.8 9.8
90,602.2 90,602.2 82,234.5 12,823.8 27,201.5 24,370.4 90,602.2 12,771.4 55,231.4 8,367.7 8,367.7 7,760.3 2,403.4 2,094.1 2,277.0 2,973.6 6,203.9 1,594.3 1,098.3 2,386.2 4,111.1 1,959.5 5,683.4 2,045.7 2,701.5 12,557 12,557 607.4 607.4 110.5 655.8 190.0 614.6 256.7 138.5 395.0 358.8 127.1 59.2 59.2 Total
Annual Report 2011
1)
Total 71.5 46.4 135 465.1 609.0 548.9 682.3 465.0 703.2 744.3 11,707 2,926.9 2,141.7 1,947.0 2,407.6 8,421.7 9,166.0 3,258.3 1,900.3 4,528.2 1,732.5 3,828.5 2,042.5 1,065.0 1,686.0 5,448.6 90,000.7 99,166.7 56,232.5 21,747.3 99,166.7 23,938.4 26,913.8 21,830.9
2.9 2.9 8.3 ( 8.6 ) ( 8.6 ) ( 2.6 ) ( 31.4 ) ( 78.1 ) ( 35.8 ) ( 90.4 ) ( 164.6 ) ( 166.9 ) ( 198.1 ) ( 1,227.9 ) ( 1,661.0 ) ( 1,658.1 ) ( 1,314.4 ) ( 1,658.1 ) Eliminations
85 0.7 0.1 99.6 548.9 216.7 465.0 195.8 703.2 307.0 954.0 213.3 609.0 105.9 177.5 General Account ( 887.5 ) 2,961.1 2,367.7 7,735.5 2,677.3 1,789.8 9,525.3 2,259.4 2,670.1 2,405.8 9,525.3 ). ).
5.2 0.2 2.3 2.9 6.3 91.7 11.7 Other 36.1 40.2 15.7 115.7 130.9 355.4 161.3 161.3 516.7 2,639 181.4 231.8 516.7 Insurance
4.0 51.6 18.2 10.1 49.6 181.0 245.0 610.8 963.7 392.3 4,145 282.8 243.2 165.5 115.1 938.3 393.4 142.1 190.1 Non-life 6,472.1 1,356.0 7,828.1 5,297.9 7,828.1 5,361.5
Life 39.3 21.5 67.7 4,838 897.0 408.8 680.0 655.1 501.1 199.3 906.5 4,616.5 1,239.5 5,856.0 1,870.0 1,176.4 1,657.1 2,966.8 1,572.7 1,264.0 77,098.7 82,954.7 82,954.7 23,941.0 26,913.8 21,830.9 50,659.0 21,825.4
for note comparison reasons (see 36 Liability related to written put option on NCI
employees of Number 1) The comparative have been changed figures Non-controlling interests Total equity equity and liabilities Total Liabilities related to assets held for sale sale for held assets to related Liabilities liabilities Total Shareholders' equity RPN(I) RPN(I) liabilities other and interest Accrued Provisions NCI on option put written to related Liability Borrowings liabilities tax Current liabilities tax Deferred Liabilities related to unit-linked contracts contracts unit-linked to related Liabilities contracts insurance non-life from arising Liabilities Debt certificates liabilities Subordinated Liabilities Liabilities contracts insurance life from arising Liabilities contracts investment life from arising Liabilities Property, plant and equipment Goodwill and other intangible assets Assets held for sale Total assets Current tax assets assets tax Deferred Call option BNP Paribas shares Accrued interest and other assets Loans Investments related to unit-linked contracts Investments in associates Reinsurance and other receivables Assets Cash and cash equivalents Financial investments Investment property 31 December 2010
Annual Report 2011 Attributable to non-controlling interests interests non-controlling to Attributable period the for result Net expenses tax Income taxation before Result expenses Total expenses Other expenses Staff expenses commission Fee and issues State Dutch and MCSconversion impact Total State Dutch with disputes legal for Provision - FCCclaim impairment of Reversal - onABNAMRO Claim - Liability related to MCSconversion - provisions in Change impairments in Change costs Finance contracts unit-linked to related Charges net benefits, and claims Insurance ceded benefits, and claims Insurance - gross benefits, and claims Insurance - Expenses income Total income Other income commission Fee and associates of result of Share contracts unit-linked for investments to related Income revaluations and onsales Result RPN(I) on (loss) gain Unrealised shares BNPParibas option Call on (loss) gain Unrealised income investment other and dividend Interest, premiums earned Net premiums earned Ceded - premiums unearned in Change - Gross premium income - Income 2011 Incomestatementsplitinto Life,Non-lifeandOtherInsurance 14.10 136 inflow Gross accounting deposit Inflow Gross premium income 2011 premiums andpremiuminfl grosswritten (sumof inflow Gross 1) &amortisation) depreciation (excl. expenses Non-cash income Total Total income internal Total income from external customers shareholders to attributable Net result operations discontinued of result Net shareholders to attributable Net result
1)
ow of investment contracts without Discretionary Participation F without Discretionary contracts investment ow of
( 1,558.0 ) ( 1,558.0 ) ( 6,161.3 ) ( 6,206.0 ( 1,670.1 ) ( 1,670.1 ) ( 8,618.6 8,027.9 8,027.9 2,653.1 5,233.2 5,315.3 7,131.2 7,131.2 1,815.9 5,315.3 8,027.9 7,995.6 ( 115.7 ) ( 115.7 ) ( 581.5 ( 425.1 ) ( 425.1 ) ( 425.1 ) ( 109.6 ) ( 534.7 ) ( 590.7 ) ( 522.0 ) ( 360.9 ) ( 530.4 ( 82.1 ) ( 82.1 ( 13.1 ) ( 13.1 642.8 642.8 111.8 287.1 287.4 44.7 44.7 36.8 32.3 32.3 56.0 Life Life
( 2,455.6 ) ( 2,455.6 ) ( 2,559.2 ( 3,763.3 ) ( 3,763.3 3,911.2 3,911.2 3,507.0 4,107.4 4,107.4 4,107.4 4,107.4 3,911.2 3,908.7 ( 201.7 ) ( 201.7 ) ( 398.7 ( 288.6 ) ( 288.6 ) ( 261.5 ) ( 683.0 Non-life Non-life ( 57.5 ) ( 57.5 ) ( 16.0 ( 51.4 ) ( 51.4 ) ( 50.0 103.6 103.6 265.2 147.9 147.9 ( 1.1 ) ( 1.1 77.9 77.9 24.0 12.9 24.2 82.2 82.2 82.2 15.7 97.9 2.5 2.5
Insurance Insurance ( 214.0 ) ( 214.0 ) ( 102.1 ( 14.4 ) ( 14.4 ) ( 15.4 ( 97.5 ) ( 97.5 253.5 253.5 102.3 166.6 253.5 253.5 153.0 100.5 ( 9.6 ) ( 9.6 Other Other 29.9 29.9 29.9 39.5
eatures) can be calculated as follows. asfollows. canbecalculated eatures)
( 236.6 ) ) ( 236.6 ) ( 197.0 ) ( 176.0 ) ( 214.0 ( 264.2 ) ) ( 264.2 ) ( 264.2 ) ( 265.6 ) ( 352.5 ) ( 315.1 Account Account Account Account General General General General ( 37.4 ) ) ( 37.4 ( 20.0 ) ) ( 20.0 ) ( 37.4 ) ( 37.4 ) ( 52.1 ) ( 18.2 275.0 275.0 263.3 ( 0.4 ) ) ( 0.4 ) ( 5.1 ) ( 1.0 ) ( 1.0 ( 1.0 ) ) ( 1.0 ) ( 1.0 ) ( 1.4 ) ( 0.6 ) ( 9.0 12.3 12.3 86.9 86.9 1.8 1.8 6.9
Eliminations Eliminations Eliminations Eliminations ( 150.4 ) ) ( 150.4 ( 150.4 ) ) ( 150.4 ) ( 150.4 ( 27.2 ) ) ( 27.2 ) ( 50.6 ) ( 72.9 149.4 149.4 ( 0.5 ) ) ( 0.5 ) ( 0.5 ( 0.5 ) ) ( 0.5 ) ( 0.5 ) ( 1.0 ) ( 1.0 ) ( 1.0 ) ( 1.0 ) ( 1.4 72.7 72.7 27.0 27.0 50.6 0.5 0.5 0.5 0.8
( 12,761.6 ) ( 12,761.6 ( 1,741.5 ) ( 1,741.5 ) ( 1,163.4 ) ( 1,615.9 ) ( 8,614.6 ) ( 8,769.8 11,237.1 11,237.1 12,004.8 12,004.8 12,004.8 1,815.9 1,815.9 9,421.2 3,093.3 8,738.7 9,421.2 ( 578.2 ) ( 578.2 ) ( 578.2 ) ( 673.5 ) ( 756.8 ) ( 937.8 ) ( 739.5 ) ( 310.0 ) ( 146.5 ) ( 581.5 ) ( 214.0 ) ( 283.8 ) ( 398.7 ( 95.3 ) ( 95.3 ) ( 23.2 642.8 642.8 155.2 277.1 427.1 135.6 275.0 83.3 83.3 Total Total
Annual Report 2011
0.8 Total Total 87.8 363.8 140.7 223.1 788.0 186.3 428.0 248.0 165.6 362.5 141.2 222.6 ( 33.9 ) ( 181.9 ) ( 246.0 ) ( 271.0 ) ( 149.0 ) ( 755.0 ) ( 298.4 ) ( 202.8 ) ( 202.8 ) ( 694.1 ) ( 866.9 ) 9,751.6 2,432.6 9,751.6 9,323.7 3,005.3 2,000.0 137 13,647.1 13,647.1 12,184.2 13,647.1 ( 2,246.8 ) ( 9,768.8 ) ( 9,603.2 ) ( 2,362.5 ) ( 1,052.4 ) ( 13,505.9 )
0.7 0.7 0.6 41.2 22.1 70.7 ( 0.5 ) ( 4.1 ) ( 2.7 ) ( 2.7 ) ( 2.7 ) ( 0.5 ) ( 0.5 ) ( 0.5 ) ( 0.6 ) 131.2 ( 69.5 ) ( 41.2 ) ( 22.1 ) ( 133.9 ) ( 133.9 ) ( 133.9 ) Eliminations Eliminations
0.3 0.3 0.3 0.3 4.5 3.5 1.0 14.4 20.1 ( 1.1 ) ( 1.5 ) ( 2.5 ) 362.5 393.3 229.4 127.9 ( 16.8 ) ( 56.9 ) ( 52.2 ) ( 37.8 ) ( 37.8 ) General General Account Account ( 202.8 ) ( 202.8 ) ( 522.5 ) ( 560.3 ) ( 167.0 ) ( 165.5 ) ( 271.0 ) ( 149.0 ) ( 245.9 ) 2,000.0 ( 2,362.5 ) ( 2,000.0 )
eatures) can be calculated as follows.
20.5 12.5 12.5 82.9 79.7 Other Other 40.9 ( 8.0 ) 162.6 138.2 162.6 ( 64.7 ) ( 67.2 ) ( 16.5 ) ( 10.2 ) ( 142.1 ) Insurance Insurance
3.7 1.4 2.0 5.0 9.1 10.9 28.8 70.4 ( 2.5 ) ( 2.3 ) ( 0.6 ) ( 8.6 ) ( 1.6 ) 257.3 131.8 ( 13.1 ) Non-life Non-life ( 568.3 ) ( 245.8 ) ( 277.1 ) ( 181.9 ) ( 173.2 ) 3,213.5 3,229.9 3,234.9 3,213.5 3,213.5 2,858.4 3,234.9 ( 3,237.2 ) ( 2,260.6 ) ( 2,128.8 )
Life Life 3.3 34.8 72.4 49.9 30.3 686.0 519.6 142.8 376.8 788.0 302.2 138.7 ( 72.8 ) ( 99.9 ) ( 32.9 ) ( 524.2 ) ( 362.7 ) ( 487.8 ) ( 166.4 ) ( 238.2 ) ( 755.0 ) 8,970.9 6,538.3 2,432.6 6,538.3 6,465.5 2,604.6 10,386.5 10,421.3 10,421.3 ( 9,735.3 ) ( 7,506.4 ) ( 7,476.1 )
ow of investment contracts Discretionary without F Participation
1)
Gross premium income income premium Gross Inflow deposit accounting Gross inflow 2010 Total income Non-cash expenses (excl. depreciation & amortisation) 1) Gross inflow (sum of gross written and premium infl premiums Net result attributable to shareholders customers external from income Total internal income Total Income tax expenses Net result for the period Attributable to non-controlling interests Result before taxation Fee and commission expenses Staff expenses Other expenses Total expenses - Claim on ABN AMRO - Reversal of impairment FCC claim - Provision for legal disputes with Dutch State Total impact MCS conversion and Dutch State issues Finance costs Change in impairments Change in provisions - conversion MCS to related Liability - Insurance claims and benefits, gross - Insurance claims and benefits, ceded Insurance claims and benefits, net Charges related to unit-linked contracts Other income Total income Expenses Result on sales and revaluations Income related to investments for unit-linked contracts Share of result of associates Fee and commission income Net earned premiums Interest, dividend and other investment income Unrealised gain (loss) on Call option BNP Paribas shares Unrealised gain (loss) on RPN(I) Income Income - income premium Gross - Change in unearned premiums - Ceded earned premiums 2010
Annual Report 2011 insurance whichbackthe incomestatement, the recognised in lossesoninvestments gainsand Realised andunrealised branches. liabilitiesofthese investment portfoliosbackingtheinsurance based onthe branches Non-life Lifeand various allocated tothe costs,is relatedinvestment ofthe net result. Financialincome, inthetechnical are thusincluded incomeand financial the allocated of arepart funds, liabilities,includingseparated certain insurance backing oninvestments losses gainsand expenses. Realised operating benefitsand minus claimsand financial income allocated and fees mainly includespremiums, Technical result margin. operating technical resultand of theconcept Ageas uses results, insurance To analysethe Technicalresultinsurance 14.11 138
or claimsliabilities)andOther. losses risk ofproperty the (covering toproperty damage and other Motor, Fire Accident &Health, linesofbusiness: comprises four (DPF).Non-life features participation and withoutdiscretionary with investmentcontracts alsoincludes individuals. Lifebusiness of anddeath thelife relatedto coveringrisks insurance contracts Lifebusinessincludes separately. and Non-lifebusinesses itsLife Ageasmanages segments, operating Within itsinsurance operating margin. inthe reported and thusnot contracts investment insurance or tothe notallocated allincomeandcosts, taxation, includes The reconciliationoftheoperat margin. operating the included in technical result,are tothe allocated are not and that branches liabilities ofthevarious ing margin and profit before margin andprofit ing Annual Report 2011
g 0.7 Total Total 49.1 34.7 63.3 ( 7.7 ) 139 32.8% 74.5% 0.53% Ageas 31.1% 70.0% 0.51% Ageas 186.3 141.2 175.1 121.6 149.6 324.7 467.5 430.9 431.6 ( 13.4 ) ( 19.0 ) ( 36.6 ) 107.3% 101.1% ( 807.5 ) ( 115.6 ) ( 476.7 ) ( 849.3 ) ( 511.7 ) ( 187.0 ) ( 146.5 ) ( 423.3 ) ( 756.8 ) 8,970.9 3,213.8 7,130.7 4,106.4 handling 78,131.7 70,599.6
shown below. 0.8 ( 0.5 ) ( 0.6 ) ( 2.1 ) ( 2.7 ) ( 0.4 ) ( 1.7 ) ( 0.9 ) ( 2.9 ) ( 93.0 ) Eliminations Eliminations
0.3 ( 1.0 ) 127.9 177.5 Account Account ( 688.2 ) ( 560.3 ) ( 197.0 ) ( 155.5 ) ( 352.5 ) General General
s. s. s. Asia 8.7 8.7 Asia 2.6 40.9 49.6 53.6 95.1 15.9 15.9 18.5 31.9 ( 8.1 ) 2.96% 2.76% 335.0 353.0 ( 37.7 ) ( 38.9 ) ( 61.5 ) ( 111.9 ) 1,419.1 1,583.4
8.1 5.8 1.6 4.3 6.1 3.4 7.4 13.0 20.8 25.1 27.5 10.6 10.2 ( 1.2 ) ( 8.0 ) ( 6.2 ) 30.3% 71.2% 0.56% 30.2% 66.6% 96.8% 0.58% 443.5 129.0 134.8 136.4 157.2 453.1 ( 14.1 ) ( 16.9 ) ( 16.8 ) Europe Europe 101.5% ( 206.3 ) ( 186.3 ) 3,489.7 2,219.0 23,685.6 14,382.6 Continental Continental
UK UK 1.5 2.9 7.8 27.5 24.7 51.3 61.1 20.1 66.3 58.5 66.3 54.6 ( 1.3 ) ( 7.8 ) ( 5.8 ) ( 9.1 ) 28.0% 81.5% 25.3% 74.6% 99.9% 120.9 ( 13.4 ) ( 11.7 ) ( 31.6 ) ( 43.1 ) ( 56.5 ) ( 53.6 ) ( 28.9 ) 109.5% ( 123.6 ) ( 167.0 ) 1,179.3 1,602.2 1,983.4 2,347.6
life and Non-life insurance and investment contract life and Non-life insurance and investment contract
0.7 5.4 3.7 7.6 33.4 65.8 29.8 56.2 55.8 ( 6.4 ) 0.38% 36.4% 71.0% 36.8% 66.5% 0.37% 343.2 343.9 299.2 176.2 480.8 183.9 239.7 ( 92.1 ) ( 44.7 ) ( 33.9 ) 107.4% 103.3% Belgium Belgium ( 439.9 ) ( 457.1 ) ( 505.3 ) ( 265.6 ) ( 212.2 ) ( 470.2 ) 5,118.7 1,590.7 4,507.8 1,670.9 51,340.3 52,288.9
epresents the total ofepresentstotal Insurance the liabilities for epresents the total ofepresentstotal Insurance theliabilities for claims, plus net commissions charged to the year, less internal investment costs. claims.
1) 1) Combined ratio : the sum of the claims ratio and the expense ratio. Expense ratio : expenses as a percentage of net earned premiums, of reinsurance.net Expenses include internal costs of handlin
1) Funds under management r Claims ratio : the cost of claims, net of reinsurance, as a percentage of net earned premiums, excluding the internal costs of Claims ratio ratio Claims ratio Combined FUM (average) Life % in of ratio cost Life Funds under management Result before taxation Key performance indicators Expense ratio Total technical result Capital gains (losses) allocated to operating margin Operating margin Share of result of associates Other result, including brokerage - Motor - Motor - property to damage other and Fire - Other Non-Life technical result Gross inflow Non-life Non-life inflow Gross Operating costs result technical Life - Accident & Health 2010 Life inflow Gross Life cost ratio in % of Life FUM (average) FUM (average) Life %in of ratio cost Life Funds under management 1) Funds under management r Expense ratio ratio Claims ratio Combined Share of result of associates Other result, including brokerage Result before taxation Key performance indicators Non-Life technical result Total technical result Capital gains (losses) allocated to operating margin Operating margin Life technical result result technical Life - Accident & Health - Motor - property to damage other and Fire - Other Gross inflow Life Life inflow Gross Non-life inflow Gross Operating costs 2011 The technical The technical results for the different segments and of business lines their and reconciliation with profit before taxation are
Annual Report 2011 140
Annual Report 2011 141
atement of financial position atement of financial position Notes to the Consolidated st Notes to the Consolidated
Annual Report 2011 equivalents and cash cash Total Other banks Due from hand Cash on is asfollows: 31 December equivalents asat cash of cashand The composition they wereacquired. thedat from months three oflessthan term instrumentswitha other financial accountsand current onhand, Cash includescash Cashandcashequivalents 15 142
31 December 2011 2011 31 December 2,701.5 2,701.5 2,426.9 272.5 272.5 2.1 2.1
31 December 2010 31 December 3,258.3 3,258.3 3,213.1 43.5 43.5 1.7 1.7
(31 December2010:EUR27.3million). funds inmonetary investments relatingto EUR 149.1million million)and EUR11.1 2010: paper (31December moneymarket millionrelatingto EUR119.9 includes The lineOther of dividend(EUR196.6million). payment and the 62.5million) Castle Cover(EUR (EUR154million)and AKSigorta. million), theacquisitionsof buy-back programme(EUR228 oftheshare theexecution Loans), seeNote18 (EUR 953million, Tier1loan Bank oftheFortis totheacquisition payments related bycash banks isexplained lineDuefrom inthe The decrease e on which onwhich e Annual Report 2011
Fair Total value 13.4 56.1 403.6 125.7 210.3 ( 167.6 ) ( 167.6 ) 4,553.4 4,957.0 4,893.3 5,019.0 5,032.4 5,104.9 143 56,133.7 56,400.1 56,232.5 s' equity maturity. 31 December 2011 t the 31 December 2010 e income December. etween the fair
1.4 163.9 163.9 165.3 147.9 securities
Corporate debt
cost 42.4 493.6 194.1 4,373.5 4,867.1 5,032.4 Historical/ amortised 51,399.3 56,668.2 55,231.4 ( 1,436.8 ) ( 1,436.8 )
31 December 2011 12.0 bonds 125.7 4,729.4 4,855.1 4,867.1 4,957.0 Government
Belgian national government government national Portuguese Total 31 December 2011 Total investments held to maturity to maturity held investments Total value Fair In 2011, Ageas reclassified in accordance with IFRS investments amounting to EUR 4.9 billion from Available for sale to Held to The reclassification took place against the fair valueinvestments of the at the time of the reclassification. difference The b value and the amortised cost, which amounted to EUR 210 million, remains included in Unrealised gains and losses in Shareholder and will be amortised over the remaining maturity of the investments. The amortisation is offset in the income statement agains amortisation of the difference between the book value and the nominal value of the bonds leading to a very impact limited in th statement. In the following table the government bonds that are classified as Held to maturity are detailed by country of origin as at 31 Historical cost at recognition Acquisition Historical / amortised costs Amortisation
16.1 Investments held to maturity Total Total,gross Impairments: - of investments available for sale Total impairments - maturity to Held - Available for sale - Held at fair value through profit or loss - trading for held Derivatives The composition of Financial investments is as follows: Financial investments 16 Financial investments investments 16 Financial
Annual Report 2011 millio EUR 1,003.5 ascollateral(2010: pledged hasbeen availableforsale of theInvestments 1,075.5million EUR of An amount sale for available investments Total investments other and securities equity in investments sale for Available investments Other Equity securities capital and venture equities Private securities debt in investments sale for Available instruments credit Structured securities debt Corporate bonds Government 2010 31 December sale for available investments Total investments other and securities equity in investments sale for Available investments Other Equity securities capital and venture equities Private securities debt in investments sale for Available instruments credit Structured securities debt Corporate bonds Government 2011 31 December as follows: impairments are unrealisedlosses, gains,gross grossunrealised forsaleincluding available of Investments amortisedcost and The fairvalue Investmentsavailableforsale 16.2 144
50,811.2 50,811.2 48,783.5 20,705.7 27,693.5 56,042.4 56,042.4 53,683.4 20,415.2 32,841.9 amortised Historical/ 2,027.7 2,027.7 2,010.9 2,359.0 2,359.0 2,344.9 384.3 384.3 426.3 426.3 14.6 14.6 2.2 2.2 6.5 6.5 7.6 cost
unrealised 2,055.1 2,055.1 1,957.5 1,027.0 1,848.4 1,848.4 1,662.8 917.1 917.1 185.6 185.6 184.9 821.9 824.1 Gross 97.6 97.6 97.6 13.4 16.8 16.8 gains 0.7 0.7
unrealised ( 1,467.0 ) ( 1,467.0 ) ( 1,366.4 ( 1,757.1 ) ( 1,757.1 ) ( 1,711.3 ) ( 1,363.9 ( 100.6 ) ( 100.6 ) ( 100.2 ) ( 485.0 ) ( 868.3 ( 334.8 ) ( 334.8 ( 13.1 ) ( 13.1 ( 45.8 ) ( 45.8 ) ( 45.8 ) ( 12.6 losses Gross ( 0.4 ) ( 0.4
51,399.3 51,399.3 49,374.6 21,137.8 27,852.2 56,133.7 56,133.7 53,634.9 20,902.3 32,302.1 2,024.7 2,024.7 2,008.3 2,498.8 2,498.8 2,484.0 384.6 384.6 430.5 430.5 14.2 14.2 gross gross Total Total 2.2 2.2 6.5 6.5 8.3
Impairments ( 1,436.8 ) ( 1,436.8 ) ( 1,215.6 ) ( 1,209.1 ( 221.2 ) ( 221.2 ) ( 221.2 ( 167.6 ) ( 167.6 ) ( 158.8 ) ( 157.5 ( 0.1 ) ( 0.1 ) ( 6.4 ( 1.3 ) ( 1.3 ) ( 8.8 ) ( 6.3 ) ( 2.5 and
n). n). 55,966.1 55,966.1 53,626.1 20,899.8 32,302.1 49,962.5 48,159.0 21,131.4 26,643.1 2,340.0 2,340.0 2,326.5 1,803.5 1,787.1 424.2 424.2 384.5 14.2 14.2 value 6.5 6.5 7.0 2.2 Fair
Annual Report 2011
4.2 1.3 4.6 1.1 4.8 2010 54.3 97.4 ( 59.1 ) 145
2.1 2011 2011 54.3 10.2 48.4 94.1 ( 0.1 ) ( 0.3 ) ( 20.5 ) Equity securities investments and other securities Equity credit instruments Structured securities debt Corporate bonds Government The changes in level 3 valuation are as follows: Balance as at 1 January Acquisitions/divestment of subsidiaries Maturity/redemption or repayment of the period Acquired Proceeds from sales Realised gains (losses) Reversal of impairments (losses) gains Unrealised Transfers between valuation categories Balance as at 31 December The level 3 positions are mainly sensitive to a change in the level of credit spreads. If the general level of credit spreads by 1 increases basis point, it is estimated that the market value of these positions drops by 7 basis points. This would translate into a loss of value by approximately EUR 68,000 for every basis point widening of the level of credit spreads. The changes in value of the level 3 instruments are accounted for within shareholders’ equity within unrealised gains and losses.
Total Total 424.2 384.5 2,340.0 1,803.5 55,966.1 32,302.1 20,899.8 26,643.1 21,131.4 49,962.5
8.1 46.2 54.3 73.6 20.5 94.1 Level 3 Level 3
13.5 25.3 43.8 607.6 231.8 908.5 Level 2 Level 2 1,239.0 1,252.5
378.0 267.1 Level 1 Level 1 2011 2010 2,318.4 1,551.2 32,302.1 19,660.8 54,659.3 26,617.8 20,523.8 48,959.9
0
60 50 40 30 20 10 in EUR billions EUR in Level 1: quoted prices in active markets; Level 2: observable market data in active markets; Level 3: unobservable market data (counterparty quotes).
Equity securities, private equities and investments other Total Investments AFS Government Bonds Corporate debt securities Structured credit instruments 2010 2010 Total Investments AFS Corporate debt securities Structured credit instruments Equity securities, private equities and investments other 2011 2011 Government bonds The valuation of Investments available is for sale based on: The valuation at year-end is as follows: The portfolio of the Investments available can for sale graphically be as follows shown at year-end.
Annual Report 2011 Austrian national government government national Austrian Portuguese national government government national Spanish government national Greek government national Britain Great government national French government national Italian government national German government national Dutch government national Belgian 2010 31 December Total governments national Other government national America of States United government national Slovakian government national Republic Czech government national Slovenian government national Irish government national Finnish government national Austrian Portuguese national government government national Spanish government national Greek government national Britain Great government national French government national Italian government national German government national Dutch government national Belgian 2011 31 December are asfollows: at 31December as oforigin detailedbycountry bonds Government oforigin detailedbycountry bonds Government 146 impaired. maturities are mean portfolio, bond GreekGovernment impairedit’sfull event.Ageashas as acredit Ageas viewof inthe should beconsidered Greece w crisisin economic aresultofthe bonds as Government onGreek it’sexposure significantlyimpaired in2011 Ageas has Total governments national Other government national America of States United government national Slovakian government national Republic Czech government national Slovenian government national Irish government national Finnish
32,841.9 32,841.9 27,693.5 amortised Historical/ 2,308.1 2,308.1 1,015.7 1,562.9 4,365.7 1,989.9 1,402.8 1,692.1 9,680.4 2,543.2 2,543.2 1,654.2 1,730.0 1,832.0 4,069.6 3,683.4 2,628.8 1,288.2 9,948.1 302.7 302.7 223.0 244.2 229.4 443.1 282.9 681.0 660.9 430.3 430.3 308.8 211.6 346.3 227.4 599.1 740.5 600.4 608.7 cost
gains (losses) gains unrealised ( 208.3 ) ( 208.3 ) ( 369.8 ( 539.8 ) ( 539.8 ) ( 109.7 ) ( 142.4 ) ( 129.0 ) ( 624.1 ) ( 110.3 ( 18.7 ) ( 18.7 ) ( 62.0 ) ( 90.2 ( 15.6 ) ( 15.6 136.7 136.7 186.6 216.3 116.5 111.4 149.9 149.9 128.0 158.7 Gross ( 2.5 ) ( 2.5 85.0 85.0 24.7 43.6 12.7 12.7 12.5 14.8 81.4 12.8 92.4 48.0 5.0 5.0 6.2 6.2 9.5 7.5
Impairments ( 1,209.1 ) ) ( 1,209.1 ( 1,209.1 ) ) ( 1,209.1
ing that all all ing that hich
32,302.1 32,302.1 10,076.1 26,643.1 2,624.6 2,624.6 1,511.8 1,601.0 1,207.9 4,162.0 3,573.1 2,778.7 1,336.2 2,444.8 4,552.3 1,620.1 1,619.1 1,808.6 9,791.8 436.5 436.5 321.5 221.1 358.8 234.9 489.4 755.3 613.2 593.1 387.7 220.5 249.2 210.7 381.1 307.6 472.7 925.5 353.8 704.5 value Fair
Annual Report 2011
6.8 4.5 22.0 ( 8.8 ) 108.6 139.8 ( 18.9 ) ( 19.1 ) ( 48.5 ) ( 76.1 ) ( 98.1 ) ( 158.8 ) ( 167.6 ) 2,340.0 147 53,626.1 t year-end: es debt 31 December 2010 31 December 2010 31 December 2010 unrealised d venture lated to shadow Netherlands Belgium Germany
Italy
2010 4.2 46.1 ( 3.0 ) ( 5.6 ) ( 8.0 ) 591.1 378.5 ( 49.7 ) ( 12.4 ) ( 209.0 ) ( 221.2 ) 1,803.5 48,159.0 Other ( 1,215.6 ) ( 1,436.8 ) 31 December 2011 31 December 2011 31 December 2011 France UK Austria Spain Greece
Portugal
stments available included for sale in equity (which includ rities otherand investments also includes private equities an losses in the past. This impact is significantly visible in tax re Belgium Netherlands
Germany 2011 Italy Other Austria UK France Spain Portugal Greece
- on debt securities - on equity securities and other investments Total impairments of investments available for sale Impairments of investments available for sale: - Related tax - Related Net unrealised gains and losses The tax related to gross unrealised gains and losses on Investments available for sale is impacted by the fact that the tax on Gross unrealised gains and losses tax - Related Shadow accounting The following table shows the breakdown of impairments of Investments available for sale. Available for sale investments in equity securities and other investments: Carrying amount Impairments of Investments available for sale capital. tax - Related Shadow accounting tax - Related Net unrealised gains and losses gains of Ageas’s subsidiary in France can be offset with tax accounting. Carrying amount Gross unrealised gains and losses Available for sale investments in debt securities: The table below provides the Net unrealised gains and losses on Inve securities, equity and othersecurities investments). Equity secu The shareper country in the investment portfolio of government bonds on based fair value can graphically be shown as a follows
Annual Report 2011 is basedon: loss profitor at fairvaluethrough held ofInvestments The valuation EUR 301.9million). million(2010: isEUR239.8 2011 31December as at profit orloss valuethrough fair heldat securities ofthedebt cost The amortised different bases. andlosseson gains therelated andliabilities measuring assets arisefrom wouldotherwise that mismatch accounting reduces an significantly measurement This information. current incorporates measurement assetsandwhose these of performance linked tothe features participation discretionary thebasisof on contractually or investments relatedtoinsurance primarily loss include profitor at fairvaluethrough Investments held loss or profit through value atfair held investments Total investments other and securities Equity Equity securities securities Debt instruments credit Structured securities debt Corporate or loss. profit through losses arerecorded gainsor forwhichunrealised held at fairvalue, the Investments about 31 December asat providesinformation The followingtable Investmentsheldatfairvaluethrough 16.3 31December asat Balance adjustments other and differences exchange Foreign Reversal on sale/disposal impairments of Release impairments in Increase subsidiaries of Acquisitions/divestments 1January asat Balance as follows: forsaleare available of Investments inimpairments The changes 148
Level 3: unobservable market data (counterparty quotes). quotes). (counterparty data market Level 3:unobservable activemarkets; in marketdata Level 2:observable inactivemarkets; prices Level 1:quoted profit orloss
liabilities wherecashflowsare liabilities
31 December 31 December 1,436.8 1,436.8 1,527.1 ( 221.5 ) ) ( 221.5 ( 18.9 ) ) ( 18.9 ) ( 17.5 167.6 167.6 194.1 194.1 181.0 13.1 13.1 13.1 85.7 95.3 2011 2011
31 December 31 December ( 38.6 ) ( 38.6 167.6 167.6 180.6 210.3 210.3 200.0 103.7 ( 2.6 ) ( 2.6 ) ( 4.6 32.8 32.8 10.3 10.3 10.3 96.3 2010 2010
asfollows: are 3valuation inlevel The changes profit or loss through value atfair held Investments Total Equity securities instruments credit Structured securities debt Corporate 2010 profit or loss through value atfair held Investments Total Equity securities instruments credit Structured securities debt Corporate 2011 market data in active markets). inactive market data (observable 2valuation onalevel based 2010 and are in2011 held fortrading Derivatives swaps. interestrate and equity options rateand relatetointerest mainly fortrading The Derivativesheld Total derivatives held for trading(assets) (OTC) counter the Over (assets). for trading held derivatives ofthe providesaspecification The followingtable Derivativesheldfortrading(assets) 16.4 and losses. gains unrealised realisedand isclassifiedunder revaluation which to 2010isdue and 2011 between instruments credit of Structured changeinvalue The spreads. credit levelof general widening ofthe basispoint every EUR 65,000for loss ofvaluebyapproximately intoa Thiswouldtranslate by7basispoints. drops these positions valueof themarket that point,itisestimated basis increases by1 of creditspreads level general Ifthe spreads. of credit general level inthe toachange sensitive aremainly The level3positions 31December asat Balance Unrealised gains (losses) sales from Proceeds period the of repayment or Maturity/redemption 1January asat Balance shown asfollows. canbe year-end at The valuation
31 December 2011 2011 31 December
Level 1 Level Level 1 Level 114.0 114.0 103.7 10.3 10.3 6.1 6.1 6.1
Level 2 Level Level 2 Level ( 18.3 ) ) ( 18.3 42.4 42.4 42.4 102.3 102.3 ( 5.0 ) ) ( 5.0 13.1 13.1 89.2 85.7 85.7 12.7 96.3 2011
31 December 2010 31 December Level 3 Level Level 3 Level 85.7 85.7 85.7 96.3 96.3 96.3
210.3 210.3 103.7 194.1 ( 9.2 ) ( 9.2 96.3 96.3 14.7 90.8 56.1 56.1 56.1 10.3 96.3 13.1 85.7 95.3 2010 Total Total
Annual Report 2011
2010 37.1 109.7 548.2 1,018.7 1,713.7 149
2011 2011 45.8 141.1 598.6 906.3 1,691.8 years for residential; years for residential; retail and 40 years for residential; retail and 40 years for residential; residential. Structure Closing Techniques and equipment 20 years for offices; 25 years for 50 years for offices and retail; 70 Heavy finishing 30 years for offices and retail; 40 Light finishing 20 years for offices; 25 years for 10 years for offices, retail and
The depreciation calculatedof buildings is using the straight-line method to down write the cost ofsuch assets to their residual values over their estimated useful lives. Real estate is split into the following components: structure, closing, techniques and equipment, heavy finishing and light finishing. The maximum useful life of the components is as follows: Land has an unlimited useful life and is therefore not depreciated. IT, office and equipment are depreciated over their respective useful lives, which are determined individually. As a general rule, residual values are considered to be zero. Property rented out under operating lease Ageas rents certain assets – mainly property held for investment purposes – to external parties based on operating lease agreements. As at 31 December the minimum payments be to received from irrevocable lease agreements amounted to: Less than 3 months 3 months to 1 year 1 year to 5 years More than 5 years Total
3.1 8.9 4.7 2010 17.3 ( 0.2 ) ( 0.4 ) ( 2.2 ) ( 2.0 ) 216.6 555.1 374.0 141.2 276.1 131.8 ( 49.8 ) ( 49.6 ) ( 48.7 ) ( 49.8 ) ( 181.1 ) ( 488.3 ) ( 521.2 ) ( 139.9 ) 1,950.1 1,900.3 2,455.4 1,900.3 2,471.3 1,900.3 2,238.8 2,189.7 31 December 2010 31 December 2010
2011 2011 14.0 88.7 16.2 34.5 ( 2.1 ) ( 3.5 ) 215.2 ( 37.9 ) ( 49.8 ) ( 37.9 ) ( 68.0 ) ( 60.9 ) 380.0 753.4 504.7 ( 521.2 ) ( 547.6 ) ( 248.7 ) 2,083.6 2,045.7 2,045.7 2,471.3 2,631.2 2,419.1 2,799.1 2,045.7 31 December 2011
31 December 2011
Total carrying amount Gross unrealised gain/loss Taxation Net unrealised gain/loss (not recognised in equity) Fair values supported by market evidence Fair value subject to an independent valuation Total fair value of investment property
Cost of investment property under construction An amount of EUR 296.8 million of the Investment property has been pledged as collateral as at 31 December 2011 (31 December 2010: EUR 275.9 million). The fair value of Investment property below. is set out Impairments as at 31 December December 31 at as property investment Net Increase in impairments charged to income statement Reversal of impairments credited to income statement Reversal of impairments due to disposals Other Other Accumulated depreciation as at 31 December Impairments as at 1 January Accumulated depreciation as at 1 January Depreciation expense Reversal of depreciation due to disposals Foreign exchange differences Foreign exchange differences Other Acquisition cost as at 31 December Acquisition cost as at 1 January Acquisitions/divestments of subsidiaries Additions/purchases Disposals
The following table shows the changes in Investment property for the year ended 31 December. Investment property Impairments of investment property Total investment property Investment property mainly comprises residential, commercial and mixed-use real estate. 17 Investment property property 17 Investment
Annual Report 2011 call date. call date. first afterthe date coupon quarterly atevery securities arecallable call;the non the after +2.37% Euribor month of3 interest rate an andcarry issuedin2001 wereoriginally securities subordinated The exchange. theNBBforthis by granted Fortis Bankandconsent securities by non-call ofthese a after atpar, 2011 26 September Bankon securities of Fortis coupon debt cumulative perpetual redeemable EUR 952.9 million toexchange Ageas wasobliged position). offinancial statement ofthe date the Events after alsoNote56 (see ageasN.V. ageasSA/NVand companies, now parent Fortis theformer by into entered agreement a support due to of 2011 the thirdquarter in toexchange Ageas wasobliged in 2001,which ofbondsissued consist Tier 1loan Bank The Fortis Fortis Bank. to on-lent part) (in thatare Liabilities) Subordinated 30 (seealsoNote loans subordinated Nitsh IandIIare loans subordinated Total 1 Tier Fortis Bank Nitsh II Nitsh I(USD750million) splitin: loanscanbe The subordinated Loans to banks specific credit risk - impairments: Less Total Other agreements repurchase Reverse loans Subordinated deposits Interest-bearing ofthefollowing: consists Loans tobanks Loanstobanks 18.1 loans Total (IBNR) reported not but incurred - specific credit risk - impairments: Less Total customers to Loans banks to Loans follows: of Loansisas The composition 18 Loans 150
31 December 2011 2011 31 December 2011 31 December 1,753.9 1,753.9 2,933.3 2,933.3 2,934.5 1,753.9 5,683.4 5,697.4 2,762.9 2,934.5 ( 13.3 ) ) ( 13.3 794.1 794.1 371.0 588.8 139.7 139.7 974.3 ( 1.2 ) ) ( 1.2 ) ( 0.7 66.6 66.6 2011
31 December 2010 31 December 2010 31 December 4,528.2 4,528.2 4,538.1 2,469.3 2,068.8 2,067.6 2,067.6 2,068.8 942.3 942.3 946.4 942.3 942.3 371.1 571.2 180.1 ( 0.9 ) ( 0.9 ) ( 9.0 ( 1.2 ) ( 1.2 2010
value of these securities is set at EUR 762.3 million. EUR 762.3million. issetat securities value ofthese fair the of securitiesexchanged, million parvalue With EUR952.9 8%to80%. of markdown additional applied an Ageas valuation, inthe securities bank subordinated market for discounts inthe andother observedilliquidity current However, toincorporatethe parvalue. 88%of securitieswillamountto ofthe the fairvalue assumesthat Ageas parameters these Based on moment intime. atthat acall-expectation supports further Bank, which for Fortis funding relativelyexpensive securitiesrepresent this exclusionthe After 2013. asof1January capital regulatory will beexcludedfrom securities the suggestthat guidelines grandfathering as BaselIII willbecalledearly2013, thesecurities andthat to13% amounted 2011, at26September to call that theyield Ageas estimates position). offinancial statement ofthe date the Events after Note56 also method(see this accordingto reversed has been EUR 31.8million of an amount 2011 method. In effective interest viathe quarters, over thecoming statement income reversed inthe differenceis This (see Note40). and revaluations’ ‘Result onsales line inthe theincomestatement a lossin as recognition isrecorded first amountof the priceand theacquisition between The difference as most important inputs. inputs. as mostimportant thesecurities of call date expected the 2011and September per 26 1instruments Bank Tier similarFortis spreads for curve, observed rate forward these securities,the on spreadpaid bps using the237 calculation, value present on anet based valuation techniques byusing securities valueofthe thefair determine to Ageas decided 2011. September securitieson26 the recognition of first forthe valuation reasonable a did notprovide market quotation this quotation, haveamarket 1 securities Tier 2001 Bank the Fortis Although completelyilliquid. for theseinstruments market made the banks,which torecapitalise securitiesinefforts bank subordinated in’of ‘bail existsfora crisis,fear debt European Due tothe
Annual Report 2011
0.2 5.4 ( 7.8 ) ( 0.9 ) 687.0 116.9 158.5 562.6 946.6 3,683.4 1,964.9 2,651.9 1,625.7 2,469.3 2,460.6 2,736.8 exposure 151 Unsecured s. 31 December 2010
1) 0.3 7.9 97.3 ( 0.7 ) 779.3 779.3 745.8 745.8 173.5 895.8 ( 12.1 ) 1,588.1 2,762.9 2,750.1 in excess of credit exposure credit Collateral amounts 31 December 2011
23.7 23.7 16.6 16.6 Other collateral and guarantees Collateral received Collateral ividual loan.additional As this collateral cannot be offset with
2,364.2 2,364.2 2,365.8 2,365.8 equipment Property, plant &
18.2 Loans to customers The composition toof Loans customers is as follows: Government and official institutions Residential mortgage Consumer loans Commercial loans Policyholder loans Other loans Total Less impairments: - risk credit specific - incurred but not reported (IBNR) customers to Loans Other loans includes the convertible bridge loan of 70 million USD (EUR 54.1 million) provided to DTH Partners LLC and NB 70 Pine LLC (see Note 13 parties Related for details), the remainder of Other loans consists mainly of loans to regional authorities and Governmental organisations.
1) 196.5 194.9 391.4 102.7 137.0 239.7 67 69 72 75 77 Financial instruments March 2016
1)
72 74 76 79 81 4,528.2 2,933.3 2,750.1 5,683.4 2,067.6 2,460.6 loans for which theloans for collateral which is higher than the underlying ind March 2015
Carrying amount
1) 78 80 82 83 85
March 2014
1) 86 87 88 89 90 March 2013
14% 13% 12% 11% 15% loans for which the collateral is lower than individual the underlying loan, an excess position is shown. Discount / Maturity / Maturity Discount
1) Collateral amountscredit in excess of exposure’ related to Loans to customers Total credit exposure loans 2010 2010 Loans to banks Loans to banks Loans to customers Total credit exposure loans 2011 The following table provides details on collateral and guarantees received as security for Loans to banks and Loans to customer 18.3 on Loans to banks and Loans to customers Collateral 1) of nominal value. % This valuation is sensitive with regard to the above mentioned factors. The table gives the impact below on the valuation before the illiquidity in the market taking into consideration of the various combinations of andmaturity discount rates. Sensitivity of valuationSensitivity of the for parameters used
Annual Report 2011 2010 onloans exposure impairedcredit Total customers to Loans banks to Loans 2011 customers. impaired to banksand impairedLoans assecurityfor received guarantees and oncollateral providesdetails The followingtable 31December asat Balance adjustments other and differences exchange Foreign loans uncollectible of Write-offs impairments of Release impairments in Increase 1January asat Balance as follows: are to customers Loans on Changes inimpairments 31December asat Balance adjustments other and differences exchange Foreign subsidiaries of Acquisitions/divestments 1January asat Balance Specific credit risk as follows: are tobanks of Loans impairments Changes inthe ImpairmentsonLoanstobanksandcustomers 18.4 152 l to exposurerelated inexcessof credit amounts Collateral 1) onloans exposure impairedcredit Total customers to Loans banks to Loans loans for which the collateral is lower than the underlying individual loan, an excess position isshown. anexcessposition loan, underlying the individual islowerthan collateral whichthe loans for
oans for which the collateral is higher than the underlyingindi the than ishigher which collateral oans for the outstanding Impaired 109.0 109.0 107.6 129.2 127.8 1.4 1.4 1.4
credit risk credit
Specific ( 1.7 ) ( 1.7 12.1 12.1 1.7 1.7 0.7 3.6 7.8
instruments Financial Financial
4.0 4.0 4.0 4.0 4.0
Property, plant & plant Property, equipment 121.2 121.2 121.2 157.7 157.7 ( 0.2 ) ( 0.2 IBNR 2011 2011 0.7 0.7 0.9 1.2 1.2 1.2
vidual loan. As this additional collateral cannot be off set with set beoff cannot additional collateral Asthis loan. vidual
Collateral Received and guarantees and guarantees Other collateral
credit risk risk credit
excess of impaired impaired of excess Specific credit exposure ( 2.4 ) ) ( 2.4 7.8 7.8 0.5 1.7 8.0 Collateral and guarantees in in guarantees
21.9 21.9 21.9 40.4 40.4 1)
Loans to Loans Unsecured exposure ( 0.3 ) ( 0.3 IBNR 2010 2010 1.2 1.2 0.1 1.4 5.7 5.7 4.3 1.4 7.9 6.5 1.4 0.9 0.1 0.8
Annual Report 2011 7.6 2010 31.6 21.7 18.3 67.6 Total ( 5.2 ) 253.8 154.4 244.3 933.2 ( 15.7 ) ( 52.8 ) ( 15.9 ) ( 51.7 ) amount ( 819.5 ) ( 736.2 ) ( 171.0 ) ( 121.2 ) ( 665.6 ) ( 112.0 ) ( 438.3 ) ( 119.2 ) Carrying 1,732.5 expenses 153 ( 1,334.7 ) ( 4,080.4 ) ( 1,143.6 ) ( 1,042.0 ) ( 3,994.5 )
7.4 Total 99.0 17.9 17.2 62.1 17.6 58.4 224.4 451.7 120.5 883.3 154.4 123.6 income 1,242.1 1,097.0 3,940.5 1,416.8 4,129.5 1,030.0
1.5 Total 59.9 63.6 292.4 304.8 105.5 887.1 257.2 101.3 880.1 5,131.1 2,628.6 5,995.3 4,960.5 2,114.8 7,229.9 liabilities liabilities 15,383.6 15,178.4 11,663.3 2011 2011 16.4 76.0 34.5 32.2 22.7 16.1 86.1
319.7 205.5 211.0 779.2 160.1 amount Carrying Carrying 1,959.5 Total 77.0 355.6 495.1 124.3 197.3 933.8 286.5 126.7 195.7 934.1 assets 6,163.8 3,243.2 7,738.2 5,780.6 2,584.4 9,317.3 16,221.6 15,406.3 12,662.4
% interest 30.95% 44.71% 26.00% 33.11% 33.33% 45.85% 50.00% 24.70% 34.10% 15% - 31% 20% - 24.9%
The details of the associates are as follows: 2011 Holdings Fortis Mayban Muang Thai Group Holding Holdings Taiping Royal Park Investments Insurance Life IDBI Federal AKSigorta LuxCardif Vie Association Westland Shopping center BITM Aviabel Credimo 2010 Holdings Fortis Mayban Muang Thai Group Holding Holdings Taiping Royal Park Investments Insurance Life IDBI Federal BITM Aviabel Credimo Holding ı . Ş Belgium Belgium Belgium Belgium Malaysia Thailand China Belgium India Turkey Luxembourg Belgium Ömer Sabanc ı . (‘Sabanci’), leadingTurkey’s industrial and financial Ş
Ageas closed in July 2011 a deal with Hac Credimo Other Total Cardif LuxCardif Vie Association Westland Shopping center BITM Aviabel Taiping Holdings Holdings Taiping Royal Park Investments Insurance Life IDBI Federal AKSigorta Associates Holdings Fortis Mayban Muang Thai Group Holding The following table provides an overview of the most significant Investments in associates as at 31 December. 19 in associates Investments
conglomerate, to acquire a 31% stake in AKSigorta A. A. (‘AKSigorta’), a Non-life company, through the sale by Sabanci of half of its stake in the company. The transaction was closed on 27 July 2011 and consequently AKSigorta was included as an equity associate in the consolidated scope as of that date. On 21 November 2011, Ageas andSabanci agreed to jointly increase their shares in AKSigorta, to a maximum of 36%, to further strengthen the partnership between the two groups. At year-end 2011, both entities have increased their share to 33.11% in AKSigorta (see also Note 3 Acquisitions and disposals). Ageas Insurance International (Ageas) and BGL BNP Paribas (BGL BNPP), which hold 50% each of the shares in Fortis Luxembourg Vie, signed an agreement with BNP Paribas Cardif, parent company of Cardif Lux International to merge their activities, Ageas Cardif Paribas BNP Paribas33.33%, 33.33% and BNP BGL holds 33.34% of the shares of the new entity. The merger was completed at 30 December 2011. Due to the merger the new entity is treated as an associate instead of as a subsidiary. Annual Report 2011 impaired. isnot AKSigorta associate Consequently, the of theassociate. carryingvalue the exceeded amount recoverable test wasthatthe impairment ofthe outcome The percent points. 13.6 amounts to of1.2, coefficient abeta used,including rate The discount annum. percentper of3.0 growth rate aconservative using extrapolated been thisperiodhave after Estimates period ofsixyears. over a and Ageas’smanagement local by business plansapproved basedon expected dividends calculation uses use The valuein AKSigorta. sharein Ageas’s teston an impairment for trigger Ageas wasa Sabanci and dealbetween the after the market on in shareprice reduction significant and prolonged The Istanbul StockExchange. onthe traded are of AKSigorta shares remaining Ageas, the and ofSabanci shareholdings the equal 3,nextto Note As statedin AKSigorta evaluation. element inthe on astockmarket,themarket entityislisted If the judgement. and management’s observable data ofmarket thebasis on determined variablesare These evaluated. the entitybeing riskof inherent the toreflect apremium country and agiven ratein the risk-free including variables, and economic financial various reflecting oninput depend the cash-flowmodel usedin Thekeyassumptions lesscoststosell. value use andfair in ofthevalue higher bythe amount isdetermined The recoverable carrying amount. withtheir associate ofthe amount recoverable the by comparing isperformed ofassociates amounts ofcarrying testing Impairment occurs. inIAS39, asdefined trigger, impairment impairment ifan for be tested needto ofassociates amounts The carrying Impairment of associates isdeclared. dividend before consensus isrequired situations certain company.In inthe the partners with agreements subjecttoshareholder aresometimes associates payments of Dividend associatesoperate. whichthoseequity in in thecountries byregulators imposed and solvencyrequirements minimum capital arising from restrictions dividend aresubjectto Equity associates 154
price willalsobe consideredan price EUR 2.3billion. of goodwill billion)and of 3.5 billion: 33.9% asset (EUR1.2 tax deferred a ofRPIas position offinancial the IFRSstatement was recordedin EUR3.5billion to amounting value and themarket 11.7 billion) (EUR price purchase betweenthe difference and the wasrecordedatmarketvalue(EUR8.2billion) the assetportfolio At acquisition IFRS. under combination business processes asa and people and funding portfolio, related acquisition ofthe the policies. RPIrecorded accounting IFRS Ageas based on information draw upfinancial to RPI requested Ageas amount. thecarrying of test followedbyanimpairment method isatcost, accounting equity the under oftheinvestment The initialrecognition debt. supersenior the used torepay willfirstbe byRPI generated Any cash government. the Belgian by guaranteed Bank is by Fortis funding provided Fortis Bank.The and by Paribas BNP by wasprovided senior debt mechanism. The alossabsorption theseniordebtincludes billion seniordebt; EUR 5 and debt EUR5billionsupersenior EUR 1.7billionequity, fundedby was This purchase 2009. at 12May EUR 20.5billion to amounted portfolio of the facevalue The corresponding of EUR11.7billion. foranagreedpurchaseprice structured credits portfolioof a the closingdate Bank on Fortis from RPI acquired method. theequity using for accounted stake hasbeen Bank.This Fortis portfolioof credit structured ofthe acquired part that purposevehicle aspecial (RPI), Royal ParkInvestments in stake 44.7% EUR 760.0million,a sumof total the acquired, for Ageas May2009, on12 transactions closed ofthe As aresult Royal ParkInvestments points. percent increase by1.2 ratewould discount orthe points 2.5 percent by rate woulddrop AKSigortawill in the participation assumptions, tothe analysiswithregard thesensitivity Based on still notbeimpairedifthegrowth Annual Report 2011 155 2010: EUR 2.1 billion). related to the difficult US dollar CP market. At the endeach of quarter RPI performs an impairment test on the goodwill recognised under IFRS. Since all proceeds received are used to redeem the funding, and no new business has been generated, the goodwill needs to be impaired over the expected maturity of the portfolio. Based on the review of the expected business at year end of the second quarter a value in use of the business total was calculated resulting in an impairment on Goodwill of EUR 586 million. The review at the year end 2011 resulted in a higher value in use compared to 30 June and September 2011. As resulta no additional goodwill impairment took place at year end. RPI’s net profit under IFRS, of goodwill, including impairment at 100%, as a result amounted to EUR 441 million negative or Ageas’s share of EUR 197 million negative. In addition, RPI concluded a number of interest rate swaps, exchanging variable interest streams into fixed interest streams. Ageas decided to apply cash flow hedge accounting on these swaps. All fair value movements flow through equity. During the fourth quarter a number of swaps was sold resulting in a realised gain of EUR 193 million. Since hedge accounting was applied this gain was not booked in income statement but in Shareholder’s equity and will be amortised over the coming years in the income statement. Also a number of new swaps were concluded. At year end the hedge reserve the including realised gains amounted to EUR 190 million tax. after As a result of both elements, Ageas’s equity investment in RPI decreased from EUR 933 million end 2010 to EUR 779 million. At the end of 2011, the fair value of the investment portfolio under IFRS amounts to EUR 6.0 billion (31 December 2010: EUR 7.0 billion), the goodwill to EUR 0.8 billion (31 December 2010: EUR 1.4 billion) and the deferred tax asset to EUR 0.7 billion (31 December 2010: EUR 0.7 billion). The funding measured at amortised cost, amounted to EUR 6.0 billon (31 December 2010: EUR 7.1 billion) and the equity amounted to EUR 1.7 billion (31 December
RPI manages the portfolio to maximise the value for its shareholders as defined in the management guidelines drawn up by the RPI Board. In the current circumstances, this implies a run off scenario. In such case IFRS requires amortised cost as subsequent measurement of the asset portfolio. IFRS requires for variable rate instruments, an instrument by instrument re- computation of the cost amortised based on actualised cash flow information per asset. RPI does However, not have such information available and to produce information this would require undue cost and efforts. In the absence information of such and taking into consideration that management is also using fair value information in the context of periodically monitoring the asset portfolio, Ageas decided use to for subsequent measurement of the asset portfolio the through fair value profit or loss. To determine the the cash flows of portfolio and related funding several assumptions were made such default, as loss given probability of default, pre-payment speed, housing price evolutions, additional sector and geographical data when needed. Given the fact that the uncertainties taken were into consideration when determining the cash flows, and the fact that the funding of RPI is guaranteed, the expectedflows cash have been discounted at 7.8% (31 December 2010: 7.8%) being the risk free interest rate for Belgium plus the normal equity premium. Since RPI is in fact a portfolio in run-off, the profits included in the portfolio and related funding will be realised over time and will not be replaced by profits from new transactions, the goodwill will need to be impaired in periodthe the portfolio runs off. The goodwill recognised by RPI represents for a significant part the future profits of this business. The full year 2011 result of RPI at 100%, and before an impairment test of the goodwill, amounted to EUR 144 million net profit (2010 EUR 651 million). This decrease is primarily driven by lower marked to market revaluations of the investment portfolio and lower interest income due to, especially in the fourth quarter, higher funding costs
Annual Report 2011
indirect taxes. and other VAT related to receivables includes The lineOther Dutch State). disputes and conversion MCS Note48Impact Provisions and Note35 (seealso State withtheDutch disputes provision for upofa theset in2010for this intoaccount taken Ageas has this claim. to areentitled they Insurance, Corporate and Fortis Nederland Fortis Verzekeringen Bank Nederland, Fortis the saleof conditions on and on theterms based that a statement has made Dutch State conversion. The of at themoment AMRO asdebtor foranam recorded areceivable Ageas ofconversion, a claimonABNAMROatthemoment Ageas granted partyagreement four ofthe existence issue andthe MCS ofthe oftheproceeds Since ABNAMROwasthebeneficiary equity). Note4Shareholders’ also theMCS(see of the conversion inrelationto 106.7 millionshares issued Ageas December 72010, On conversion. MCS relatestothe claim The second impairments). in 47Change Note Provisionsand (see alsoNote35 DutchState disputeswiththe for theprovision of the assessment thisclaimin include and impairment reversethe to decided in2010 Ageas State, withtheDutch on thenegotiations the claim.Based contested AMRO ABN that fact on the claim wasimpairedbased 2009,this In shares. ofpreference the holders to above amount allow ittopaythe ofABNAMRON.V.)to Limited (asubsidiary Company toFortisCapital by Ageas made (EUR 362.5million) thepayment compensationfor first claimisforfull conversion. The MCS andthe FCCtransaction the related to State Dutch the ABNAMROand Limited, Fortis CapitalCompany claimson AMRO’ arethe ABN ‘Claimson caption Included inthe Net total Impairments gross Total Other Factoring receivables onABNAMRO Claims receivables Reinsurance Receivables from intermediaries receivable commissions and Fees policyholders from Receivables contracts andinvestment insurance from arising liabilities of share Reinsurers' December. asat31 receivables andother ofreinsurance thecomponents below shows The table Reinsuranceandotherreceivables 20 156
ount ofEUR2billionwithABN N.V. of of Intreinco run-off to thethe in2011 relates activities amount The 1) 31December asat Balance adjustments other and differences exchange Foreign statement income through additions net Other years prior paid Claims year current paid Claims Change in liabilities prior years Change in liabilities current year subsidiaries of Acquisitions/divestments 1January asat Balance are shownbelow. contracts investment insurance and from of Liabilities arising reinsurer’sshare Changes inthe contracts investment insurance and from of Liabilities arising reinsurer’sshare Changes inthe 31December asat Balance adjustments other and differences exchange Foreign amounts uncollectible of Write-offs impairments of Release impairments in Increase subsidiaries of Acquisitions/divestments 1January asat Balance other receivables. Reinsurance and of intheimpairments showsthechanges The followingtable receivables other and ofReinsurance Changes inimpairments 31 December 2011 31 December 4,111.1 4,111.1 4,132.2 2,362.5 ( 21.1 ) ( 21.1 374.1 374.1 146.0 270.3 428.0 468.4 ¹ 35.1 35.1 47.8 )
( 40.4 ) ) ( 40.4 468.4 468.4 359.8 13.0 13.0 13.2 26.8 85.4 ( 1.2 ) ) ( 1.2 ) ( 0.4 ) ( 2.1 21.1 21.1 23.3 2011 2011 6.7 6.7 3.9 1.5 1.5
31 December 2010 31 December 3,828.5 3,828.5 3,851.8 2,362.5 ( 365.3 ) ( 365.3 ( 35.4 ) ( 35.4 ) ( 23.3 359.8 359.8 109.5 282.6 383.4 313.4 266.9 437.4 359.8 ( 7.0 ) ( 7.0 ) ( 0.8 ) ( 0.3 ) ( 0.2 ) ( 1.5 ) ( 0.1 23.3 23.3 54.0 57.8 2010 2010 2.6 2.6 8.6 7.0
Annual Report 2011
33% 5.29% 157 EUR 47.69 EUR 7.180 s were EUR 66.672 EUR 870 million PIM) that that PIM) EUR 609 million 31 December 2010 een the strike BNP Paribas
49% 5.98% EUR 30.35 EUR 4.660 EUR 66.672 EUR 565 million EUR 395 million 31 December 2011
he value of the call option at the of the shares on the value of the 121.2 million options The following data were used for the valuation: Estimated value, after adjustment for non standard features (30%) Volatility Given the very large number of options on BNP Paribas shares carried by Ageas, representing 10.12% of the BNP Paribas outstanding shares, the monetisation of the options is expected to have an effect on the value of traded options and hence the implied volatility. Ageas therefore decided to move to a gradual exercise strategy in accordance with a disciplined methodology to minimise the impact of the implied volatility call option. Following the move towards a gradual exercise strategy, Ageas decided to base the used volatility on extrapolated implied volatility observed in the market. T end of 2011 amounted to EUR 395 million, after adjustment for non-standard features. BNP ParibasBNP share price price Strike Volatility Dividend yield Price per option up to 10 October 2016 Theoretical value of
The theoretical value of an individual option can be calculated based on Black-Scholes option valuation techniques. Besides market observable data on the reporting date, such as interest yield, actual and strike price of the and share the remaining duration of the option, the calculation needs to include assumptions regarding future dividend and volatility. Non-standard features should also be taken into account. Value calculation Under the agreement signed on 12 May 2009, Ageas was granted a cash-settled call option by the FederalHolding and Investment Corporation (Société Fédérale de Participations et d'Investissement/Federale Participatie- en Investeringsmaatschappij – SFPI/F The granted rights include some non-standard features that differ from standard ISDA based option protocols, such as restrictions on transferability, limitations on freedom of exercise, forced exercise under specific circumstances and specific adjustment mechanics such as dilution and claim issues. Ageas can exercise the options up to 10 October 2016. Ageas decided to move to a gradual exercise strategy in accordance with a disciplined methodology, once the options are in the money, but continuously also monitors the ability to monetise the options. The options are recorded at fair value, with subsequent revaluations recorded in the income statement under unrealised gain (loss) on Call option BNP Paribas shares. 21 BNP Paribas shares Call option allows Ageas to benefit from any appreciation in the value of 121,218,054 BNP Paribas shares held by the SFPI/FPIM. These share acquired by the SFPI/FPIM in return for selling 75% + 1 share of Fortis Bank. This option entitles Ageas difference to the betw price of EUR 68 and the market price of the BNP Paribas shares at the time of exercise, or the selling price of the underlying shares, at the discretion of SFPI/FPIM. These rights have replaced the ‘coupon 42’. After the Rights Issue of BNP Paribas on 29 September 2009, the exercise price was reduced66.672. to EUR
Annual Report 2011 the options. valueof theoretical ofthe decrease ina 1.1% results kept equal, variables yield,allotherinput ofthedividend while a1%increase value, the theoretical of increase ina2.8% results variables equal, other input yield,keeping dividend ofthe decrease value. A1% the theoretical of increase 24.5% results ina equal, input variables value oftheoption;anincrease theoretical inthe decrease results ina23.6% December 2011 decrease ofthevolatilityby5%on31 A the theoreticalvalue. of increase resultsina49.6% variablesequal, input 10%, allother the volatilityby value oftheoption;anincrease in thetheoretical 45.3% decrease a 2011 resultsin on 31December volatility by10% the of adecrease theoptions: of onthevalue significant influence a have dividend yieldassumption volatility andthe applied Both the changes forassumption Sensitivity valuation 158
the volatilityby5%,allother gross proceeds. gross proceeds. dividend outthe to topropose bylaw, permitted extent able, tothe isthus Ageas realised. option are the the gainson income taxwhen corporate of losseswillavoidpayment carryforward Ageas tax ageas SA/NV. for event taxable isnotitselfa Paribas option BNP ofthe thegrant that confirmed Commissionhas The BelgianRuling practicalconstraints. account by lawandtakinginto permitted theextent to structure, othercontemplated or any monetisation exercises, of thebenefits outasdividend topay shareholders of meetings thegeneral to topropose undertaken Ageas has of proceeds Pay out 50%. to 10% from ranging market parties professional from onindications based features, non-standard these by 30%for value theoretical tolowerthe decided Ageas has valuation. theoretical tothe a significantdiscount parties willapply market professional theoption, featuresof Given theunusual features standard fornon Adjustment Annual Report 2011
2010 ( 1.9 ) ( 3.9 ) 508.2 448.7 574.6 ( 376.5 ) 159
2011 2011 16.1 ( 3.5 ) 574.6 495.5 703.3 ( 379.4 ) For details pension of plans and related pension assets see Note 9 Post-employment other benefits, long-term benefits and termination benefits. Deferred acquisition costs Changes in deferred acquisition costs to related insurance and investment contracts shown are below. Balance as at 1 January Acquisitions/divestments of subsidiaries Capitalised deferred acquisition costs Depreciation expense Other adjustments including exchange rate differences Balance as at 31 December The increase in Deferred acquisition costs can mainly be explained by the growing Life business in UK and Asia.
1.5 93.1 25.6 14.1 46.2 574.6 1,287.4 2,042.5 2,042.5 31 December 2010
1.3 23.0 66.2 703.3 114.1 146.0 2,386.2 1,332.3 2,386.2 31 December 2011
Accrued income consists mainly ofaccrued interest income on Government bonds (2011: EUR 651 million; 2010: 624 million) EUR and other bonds (2011: EUR 312 million; 2010: EUR 318 million), debt securities from credit and non-credit financial institutions (2011: EUR 210 million; 2010: EUR 237 million) and other debt securities (2011: million; EUR 122 2010: EUR 91 million). Other Total gross Impairments Accrued interest and other assets Accrued income Derivatives held for hedging purposes Property intended for sale Defined benefit assets Deferred acquisition cost Deferred other charges The table below shows the components of Accrued interest and other assets as at 31 December. 22 assets interest and other Accrued
Annual Report 2011 31 December at as Impairments Other statement income the to charged impairments in Increase 1 January at as Impairments 31December asat depreciation Accumulated Other differences exchange Foreign disposals due to depreciation of Reversal expense Depreciation Additions subsidiaries of Acquisitions/divestments 1January asat depreciation Accumulated December at31 as cost Acquisition Other differences exchange Foreign disposals to due cost of Reversal Additions subsidiaries of Acquisitions/divestments January at1 as cost Acquisition 2010 below. shown are and equipment plant Changes inProperty, and equipment plant Changes inProperty, Total Equipment improvements Leasehold use own for held buildings and Land categor each amountfor thecarrying below shows The table Property,plantandequipment 23 160 31December as at equipment and plant Property,
y of Property, plant and equipment as at 31 December. December. 31 asat and equipment plant Property, y of
Land and buildings and Land 1,484.9 1,484.9 1,418.9 1,418.9 own use ( 436.4 ) ( 436.4 ) ( 442.2 held for held ( 32.5 ) ( 32.5 ( 34.1 ) ( 34.1 ) ( 81.6 974.4 974.4 ( 8.1 ) ( 8.1 ) ( 0.5 ) ( 7.6 ) ( 0.1 32.6 32.6 12.6 39.2 39.2 0.8 0.8 2.9
31 December 2011 31 December Leasehold 1,098.3 1,098.3 1,000.7 improve- ( 26.6 ) ( 26.6 ) ( 30.5 77.3 77.3 20.3 ments ( 0.1 ) ( 0.1 ) ( 0.4 ( 0.8 ) ( 0.8 ) ( 0.8 ) ( 0.4 ) ( 5.2 ) ( 6.1 47.2 47.2 18.5 18.5 45.9 4.6 4.6 8.8 8.8 0.8 0.7
Equipment Equipment ( 148.0 ) ) ( 148.0 ) ( 127.7 ( 23.3 ) ) ( 23.3 184.0 184.0 220.1 220.1 ( 5.7 ) ) ( 5.7 ( 2.1 ) ) ( 2.1 ) ( 0.9 ) ( 0.1 29.1 29.1 10.3 72.1 72.1 5.3 5.3 0.7 1.3 1.0
31 December 2010 31 December 1,065.0 1,065.0 1,684.9 1,716.1 1,065.0 ( 611.0 ) ( 611.0 ) ( 600.4 ( 62.6 ) ( 62.6 ) ( 86.4 ) ( 38.3 974.4 974.4 ( 8.9 ) ( 8.9 ) ( 0.8 ) ( 0.5 ) ( 7.6 ) ( 1.4 ) ( 0.1 45.9 45.9 66.3 22.5 72.1 18.5 Total 6.1 6.1 1.5 4.6
Annual Report 2011
3.8 3.5 0.1 5.0 2.4 Total 26.7 74.2 11.6 ( 4.7 ) ( 2.0 ) ( 8.9 ) ( 6.5 ) 974.4 410.8 277.9 ( 20.9 ) ( 66.4 ) ( 132.9 ) ( 611.0 ) ( 659.2 ) 1,385.2 1,684.9 1,764.0 1,098.3 lion). 161 31 December 2010 intangible
2.3 3.5 4.3 77.3 34.0 10.4 ( 3.3 ) ( 3.3 ) ( 1.5 ) 220.1 238.9 ( 10.9 ) ( 30.3 ) ( 148.0 ) ( 161.6 ) Equipment
0.6 5.0 0.5 0.8 0.1 1.2 0.3 20.3 45.9 51.5 ( 1.3 ) ( 4.3 ) ( 0.4 ) ( 0.7 ) ( 0.8 ) ( 0.5 ) ments 471.7 318.0 ( 26.6 ) ( 30.7 ) ( 153.7 ) 1,472.4 1,000.7 improve- Leasehold 31 December 2011
1.0 1.4 2.1 29.4 35.2 ( 8.7 ) ( 2.2 ) ( 0.1 ) ( 8.1 ) ( 6.0 ) ( 31.8 ) held for own use ( 436.4 ) ( 466.9 ) 1,000.7 1,418.9 1,473.6 Land and buildings
Fair value of land and buildings held for own use The fair value of owner-occupied is setproperty out below. Gross unrealised gain/loss unrealised Gross Taxation Net unrealised gain/loss (not recognised in equity) The depreciation methods for Property, plant and equipment are the same as set out in Note 17 Investment property. Total fair value of Land and buildings held for own use Total carrying amount assets (see Note Goodwill and 24 other intangible assets) in accordance IFRIC 12. with An amount of EUR 259.5 million of Property, plant and equipment has pledged been as collateral (31 December 2010: mil EUR 213.1 Impairments as at 31 December Property, plant and equipment as at 31 December The amounts in the lines Other under Land and buildings held for own use relate in 2010 to the transfer of concession rights to Accumulated depreciation as at 31 December Impairments as at 1 January Reversal of impairments credited to the income statement Depreciation expense Reversal of depreciation due to disposals Foreign exchange differences Other Accumulated depreciation as at 1 January Acquisitions/divestments of subsidiaries Additions Reversal of cost due to disposals Foreign exchange differences Other Acquisition cost as at 31 December Acquisition cost as at 1 January Acquisitions/divestments of subsidiaries Additions 2011
Annual Report 2011 Accumulated amortisation as at 1 January 1January asat amortisation Accumulated December at31 as cost Acquisition Other differences exchange Foreign disposals to due cost of Reversal Adjustments arising from subsequent changes in value of assets and liabilities Additions subsidiaries of Acquisitions/divestments January at1 as cost Acquisition 2010 below. shown 2011are and years2010 the assetsfor andotherintangible Changes inGoodwill assets andotherintangible Changes inGoodwill and asset as anintangible isrecognised VOBA combination. business orina acquiredseparately portfolio ofcontracts valueofa book subsequent the dateand acquisition fair valueat betweenthe difference isthe acquired(VOBA) business Value of Total assets intangible Other software developed Internally software Purchased VOBA Goodwill follows: areas asat31December assets intangible Goodwill andother Goodwillandotherintangibleassets 24 162 December at 31 as assets intangible Goodwill andother 31 December at as Impairments Other statement income the to credited impairments of Reversal subsidiaries of Acquisitions/divestments 1 January at as Impairments 31December as at amortisation Accumulated Other differences exchange Foreign disposals due to amortisation of Reversal expense Amortisation subsidiaries of Acquisitions/divestments
31 December 2011 2011 31 December 1,594.3 1,594.3 352.5 352.5 424.4 787.9 19.0 19.0 10.5
31 December 2010 31 December 1,686.0 1,686.0 370.3 370.3 459.7 819.9 25.4 25.4 10.7
assets with indefinite usefullives. assets withindefinite anyintangible have doesnot Ageas ofgoodwill, exception With the expected lives. withtheir inaccordance assets areamortised Other intangible years atmost. 10 usefullifeof have anexpected intangible assets andother offiveyears maximum overa software isamortised general, In AG RealEstate. mainlyrelatesto similar rights,this andother licences, trademarks patents, life, suchasconcessions, afiniteuseful assetswith assets includeintangible Other intangible Ageas. Millenniumbcp and Company Asia Insurance Ageas are VOBA to contributors main contracts. The portfolio of of the period incomerecognition the amortised over Goodwill ( 48.0 ) ( 48.0 819.9 819.9 820.9 201.1 650.5 ( 1.0 ) ( 1.0 ) ( 0.2 ) ( 0.8 15.3 15.3 2.0 2.0
( 340.6 ) ( 340.6 ) ( 294.9 ( 43.6 ) ( 43.6 459.7 459.7 800.3 781.7 VOBA ( 2.4 ) ( 2.4 ) ( 0.4 19.0 19.0 0.3 0.3
Purchased software ( 25.0 ) ( 25.0 ) ( 22.0 ( 0.3 ) ( 0.3 ) ( 4.3 ) ( 0.3 ) ( 2.8 10.7 10.7 35.7 30.8 0.2 0.2 1.4 0.6 7.4
developed developed Internally software ( 32.0 ) ) ( 32.0 ) ( 23.5 ( 0.2 ) ) ( 0.2 ) ( 0.1 ) ( 9.6 ) ( 2.4 ) ( 0.2 25.4 25.4 57.4 57.4 0.2 0.2 1.2 0.3 2.3
intangible ( 147.3 ) ( 147.3 ( 46.2 ) ( 46.2 ) ( 21.6 ) ( 79.7 370.3 370.3 519.2 153.3 280.1 assets ( 1.6 ) ( 1.6 ) ( 3.0 ) ( 0.1 ) ( 0.6 ) ( 3.8 87.6 87.6 Other 0.7 0.7 0.7 0.3 2.6
1,686.0 1,686.0 2,233.5 1,800.5 ( 544.9 ) ( 544.9 ) ( 420.1 ( 45.0 ) ( 45.0 ) ( 79.1 ) ( 48.0 351.0 351.0 ( 2.6 ) ( 2.6 ) ( 4.0 ) ( 2.9 ) ( 6.5 87.6 87.6 34.6 14.3 Total 0.5 0.5 0.7 0.2 0.5 1.7
Annual Report 2011
7.1 1.8 0.5 Total 48.7 16.7 30.4 12.3 ( 0.4 ) ( 3.9 ) ( 5.3 ) ( 2.6 ) ( 7.7 ) ( 89.9 ) ( 544.9 ) ( 631.7 ) ( 102.0 ) ( 111.8 ) 2,233.5 2,337.8 1,594.3 163
7.9 1.4 4.4 uildings held Other 12.8 ( 5.1 ) ( 0.3 ) ( 0.6 ) ( 5.3 ) ( 1.6 ) ( 3.5 ) assets 352.5 519.2 545.4 ( 34.6 ) ( 147.3 ) ( 187.8 ) intangible
3.2 0.4 19.0 57.4 60.9 ( 0.1 ) ( 9.6 ) ( 0.3 ) ( 32.0 ) ( 41.9 ) software software Internally Internally developed
5.6 0.4 10.5 35.7 29.9 10.3 ( 4.4 ) ( 0.3 ) ( 11.8 ) ( 25.0 ) ( 19.4 ) software Purchased
9.0 2.0 ( 2.3 ) ( 2.7 ) VOBA 424.4 800.3 807.0 ( 41.3 ) ( 340.6 ) ( 382.6 )
7.1 0.5 50.0 19.2 ( 2.6 ) ( 1.0 ) ( 7.7 ) 787.9 820.9 894.6 ( 98.5 ) ( 106.7 ) Goodwill The recoverable amount of by a CGU is assessed means of a discounted cash-flow model of the anticipated future cash flows of the CGU. The key assumptions used in the cash-flow model depend on input reflecting various financial and economic variables, including the risk-free rate in a given country and a premium to reflect the inherent risk of the entity being evaluated.
Impairment testing of goodwill is performed annually at the end of the year by comparing the recoverable amount cash-generating of units (CGU) with their carrying amount. The recoverable amount is determined by the higher of the value in use and fair value less costs to sell. The type of acquired entity determines the definition of the CGU. Currently all CGUs, except for the UK, have been defined at (legal) entity level. The UK entities operating in the sub segment ‘Other Insurance’ are, based on the level of operational integration and common management, considered as CGU.one for own use (see Note 23 Property, plant and equipment) in accordance with IFRIC 12. goodwill Impairment of Goodwill and other intangible assets as at 31 December The amounts in theOther line under Other intangible assets relate in 2010 to thetransfer of concession rights from Land and b Foreign exchange differences Other Impairments as at 31 December Accumulated amortisation as at 31 December Impairments as at 1 January Increase in impairments charged to the income statement Amortisation expense Reversal of amortisation due to disposals Foreign exchange differences Other Acquisition cost as at 31 December Accumulated amortisation as at 1 January Acquisitions/divestments of subsidiaries Adjustments arising from subsequent changes in value of assets and liabilities liabilities and assets of value in changes subsequent from arising Adjustments Reversal of cost due to disposals Foreign exchange differences Other Acquisition cost as at 1 January Acquisitions/divestments of subsidiaries Additions 2011
Annual Report 2011 rate the impairment amounted to EUR 106.7 million. EUR 106.7million. to amounted rate theimpairment againstclosing end 2011, At year base. rate exchange an average 98.9millionon of EUR amount goodwill isimpairedforan Asia, the Company Insurance Ageas for test theimpairment outcome of negative the Becauseof CGUincludinggoodwill. value ofthe thecarrying match didnot amount recoverable test wasthatthe theimpairment of Theoutcome dataproviders. professional market by provided of1.2, coefficient thebeta risk premiumand risk,market country rate, interest on theriskfree percent isbased of9.9 rateused Thediscount developments. expected localmarket of approach realistic a percentwhichrepresents of3 a growthrate using extrapolated havebeen period afterthis Estimates 10 years. coming the growthrate expected market studiessupported, andthe, rate growth perpetual inthe difference case giventhe inthis appropriate isdeemed horizon planning 9year 9 years.The thecoming for annum per 7.5percent rateof growth an average indicate studies studies.These market onindependent rates based growth expected planisthe business driver forthe main years. The nine period of overa andAgeas’smanagement by local approved business plans on dividends, based expected use calculationuses in Thevalue dollar. Hong Kong and Euro the differences between rate iscausedbyexchange 2010 2011 and amount between change in million).The EUR299.0 (2010: EUR 308.9million to amounts Company Asia Ageas Insurance for The goodwill Company Asia Ageas Insurance Total Other Assicurazioni UBI Asia Company Insurance Ageas Ageas Millenniumbcp (retail) (UK) Ageas (CGU) unit Cash-generating isasfollows: 2011 31 December breakdownofg The evaluation. elementinthe an be considered market pr market, the islistedonastock entity Ifthe judgement. management’s thebasisof on are determined These variables 164
Goodwill Goodwill amount amount 894.6 894.6 111.0 309.0 168.4 282.5 23.7 23.7
Impairments 106.7 106.7 106.7 oodwill and impairments for the main cash-generating units asat units maincash-generating forthe andimpairments oodwill
would increase by 3.9 percent points. points. 3.9percent would increaseby discountrate the pointsor 8.1 percent dropby would growth rate willstillnotbeimpairedifthe Ageas Millenniumbcp the goodwillfor assumptions, tothe analysiswithregard thesensitivity Based on impaired. isnot Ageas goodwillforMillenniumbcp Consequently, the CGUincludinggoodwill. the carryingvalueof exceeded the amount recoverable thatthe was test theimpairment outcome of points. The to13.7percent amounts 1.05and of beta coefficient andthe marketriskpremium risk, rate,country the riskfreeinterest isbased on used discount rate The inPortugal. expected inflation of approach an pointswhichrepresents percent rate of2.0 agrowth using extrapolated been periodhave this Estimates after level of150percent. margin tothe solvency ofrelating release expected business and inlife decrease theforeseen to inrelation covered budget period inthe ofreserves therelease by impacted further projections are Cashflow on Non-lifeproducts. moreemphasis and Life products emphasison resultedinless which inPortugal, economic situation difficult the consideration planstakeinto business years. The period offive overa andAgeas’smanagement by local approved plans business basedon expected dividends, calculation uses value inuse million).The EUR168.4 (2010: EUR 168.4million to amounts forMillenniumbcpAgeas goodwill The reported Millenniumbcp Ageas amount 787.9 787.9 111.0 202.3 168.4 282.5 23.7 23.7 Net
Continental Europe (CEU) Continental Europe (CEU) United Kingdom (UK) (UK) Kingdom United CEU /Belgium Segment Segment Asia Asia
recoverable amount recoverable ice will also ice will Method used for used Method Value in use in Value use in Value use in Value use in Value use in Value
Annual Report 2011
38.3 36.4 35.2 33.0 32.1 249.4 165 Estimated amortisation of VOBA Insurance (including Kwik-Fit UK Other Insurance UKThe goodwill amount for Other Insurance Servicesand Castle Cover Limited) amounts to EUR 282.5 million (2010: EUR 216.2 million). The in change amount between 2011 and 2010 is caused by theacquisition of Castle Cover Limited in the first quarter of 2011 (EUR 57 million) as in the well as small changes opening balance and exchange rate differences betweenthe Euro and Pound Sterling. The value in use calculation uses expected dividends based on business plans approved by local management and Ageas’s over a period of five years. The business plans are based on a moderate growth and cost synergies relating to the integration of the acquired business into the existing business of RIAS. Estimates after this period have been extrapolated using a growth rate of 2.0 percent points which represents an approach of expected inflation in the United Kingdom. The discount rate used, including a beta coefficient of 1.0, amounts to 10.2 percent points. The outcome of the impairment test was that the recoverable amount exceeded the carrying value of the CGU including goodwill. Consequently, the goodwill of this CGU is not impaired. Based on the sensitivity analysis with regard to the assumptions, the goodwill for UK Other Insurance will still not be impaired if the growth rate would drop by 21.3 percent points or the discount rate would increase by 8.6 percent points. Amortisation of VOBA The expected amortisation expenses for VOBA from 2012 onwards are as follows: 2012 2013 2014 2015 2016 Later Assicurazioni amounts to
EUR 111.0 million (2010: EUR 107.1 million). The in change amount between 2011 and 2010 is caused by an adjustment in earn out agreed in the acquisition. The value in use calculation uses expected dividends based on approved business plans by local and Ageas’s management over a period of six years. Due to the relatively high average growth rate (22.6 used percent) based on the improved penetration the in distribution channel of UBI Banca and new products, the 6 year planning horizon is considered appropriate. Estimates after this period have been extrapolated using a growth rate of 2.5 percent points which represents a realistic approach of expected local market developments. The discount rate used is based on the risk free interest rate, country risk, market risk premium and the beta coefficient of 1.5 and amounts to 11.7 percent points. The outcome of the impairment test was that the recoverable amount exceeded the carrying value of the CGU including goodwill. This did not lead to an impairment of the goodwill for UBI Assicurazioni. Based on the sensitivity analysis with regard to the assumptions, the goodwill for UBI Assicurazioni would not be impaired long if the term growth rate would drop by 2.5 percent point, the discount rate would increase by 1.2 percent point and/or the expected growth rate during the budget period of six years would drop by 0.4 percent point. The reported goodwill for UBI UBI Assicurazioni UBI Assicurazioni
Annual Report 2011 31December asat Balance coverage risk including changes, Other contracts group in changes Net adjustment accounting Shadow differences exchange Foreign Transfer of liabilities other and maturities surrenders, to due Payments Time value inflow Gross subsidiaries of Acquisitions/divestments 1January asat Balance below. shown eliminations) are andbefore (gross ofreinsurance contracts liabilitiesarisingfromLifeinsurance Changes inthe Net Reinsurance Gross Eliminations Before eliminations adjustment accounting Shadow sharing profit policyholder for Reserve Liability for future policyholder benefits 31December. at contractsas from Lifeinsurance arising oftheliabilities overview providesan The followingtable LiabilitiesarisingfromLifeinsurancecontracts 25 166
31 December 2011 2011 31 December ( 1,968.7 ) ) ( 1,968.7 24,373.3 24,373.3 23,941.0 24,330.8 24,330.8 24,370.4 24,373.3 24,055.4 2,475.9 2,475.9 ( 711.3 ) ) ( 711.3 ) ( 346.4 ( 41.6 ) ) ( 41.6 ( 39.6 ) ) ( 39.6 166.1 166.1 787.1 298.4 298.4 ( 2.9 ) ) ( 2.9 42.6 42.6 28.6 19.5 19.5 2011
31 December 2010 31 December ( 1,769.7 ) ( 1,769.7 23,913.2 23,913.2 23,938.4 23,941.0 23,556.9 22,934.3 22,934.3 23,941.0 23,941.0 2,580.5 2,580.5 ( 710.6 ) ( 710.6 ) ( 109.7 ( 25.2 ) ( 25.2 ( 23.5 ) ( 23.5 323.0 323.0 874.4 874.4 ( 2.6 ) ( 2.6 61.1 61.1 47.4 47.4 65.6 52.3 2010
and 2010. material in2011 wasnot liabilities relatedtolifeinsurancecontracts the measure usedto inassumptions ofchanges The effect adequate. are liabilities thereported that confirmed year-end out at2011 testscarried The statement. intheincome recognised immediately is Any shortfall discountrate. by usingarisk-free been determined cashflowshas these valueof present The deterministic projections. from cashflowsresulting thetestsinclude Insurance contracts, ForLife liabilitycashflows. used forprojectingtheirbestestimate consistentwiththose internally are assumptions The and expenses. returns suchas(re)investment cashflows flows, includingrelated cash ofallcontractual estimates current best Ageas considers Life. poollevel)for fungiblelevel(asset onlegal performed tests are The date. reporting ateach company tested byeach (‘LiabilityAdequacyTest’)is insurance liabilities The adequacyof Annual Report 2011 167 The adequacy of insurance liabilities (‘Liability Adequacy Test’) is tested by each companyeach at reporting date. The tests are performed on legal level (asset fungible pool level) for life. Ageas considers current best estimates of all contractual cash flows, including related cash flows as (re)investment such returns and expenses. The assumptions are internally consistent with those used for projecting their best estimate liability cashflows. For Life Investment contracts, the tests include resulting cash flows from deterministic projections. The present value of these cash flows has been determined by using a risk-free discount rate. Any shortfall is recognised immediately in the income statement. The tests carried out at 2011 year-end confirmed that the reported liabilities are adequate. The effect of changes assumptions in used to measure the liabilities related to Life investment contracts was not material in 2011 and 2010.
0.3 1.5 2010 13.2 34.2 617.7 212.0 ( 76.2 ) ( 139.0 ) 3,758.1 26,913.8 26,667.6 26,913.8 26,913.8 24,332.7 ( 1,594.5 ) 31 December 2010
0.8 4.0 1.4 2011 2011 38.2 114.1 662.7 ( 11.9 ) ( 82.0 ) ( 244.7 ) 2,655.6 27,049.2 27,201.5 27,201.5 26,913.8 27,201.5 ( 2,698.2 ) 31 December 2011
Other changes, including risk coverage Balance as at 31 December Transfer of liabilities liabilities of Transfer Foreign exchange differences Shadow accounting adjustment Net changes in group contracts Acquisitions/divestments of subsidiaries Gross inflow Time value Payments due to surrenders, maturities and other Balance as at 1 January Changes in the liabilities arising from Life investment contracts are shown below. Shadow accounting adjustment Gross Reinsurance Net benefits policyholder future for Liability Reserve for policyholder profit sharing The following table provides an overview of the liabilities arising from Life investment contracts as at 31 December. 26 investment contracts arising from Life Liabilities
Annual Report 2011
31December asat Balance coverage risk including changes, Other contracts group in changes Net differences exchange Foreign Transfer of liabilities other and maturities surrenders, to due Payments Time value inflow Gross subsidiaries of Acquisitions/divestments 1January asat Balance linked insurance contracts. The followingtableshowsthechangesinliabilitiesrelatedtounit- 2011. at 30December Vie of Fortis Lux sale is duetothe The decreaseinthetotalLiabilities Total contracts Investment contracts Insurance asfollows: contracts investment insurance and contracts arebrokendowninto The liabilitiesrelatedtounit-linked Liabilitiesrelatedtounit-linkedcontracts 27 168
related toUnit-linkedcontracts
31 December 2011 2011 31 December 12,823.8 12,823.8 11,337.7 1,486.1 1,486.1 1,711.6 1,486.1 1,486.1 ( 166.1 ) ) ( 166.1 ) ( 124.7 ( 29.6 ) ) ( 29.6 ) ( 65.0 ) ( 30.8 186.7 186.7 2011 3.2 3.2 0.8
31 December 2010 31 December 21,830.9 21,830.9 20,119.3 1,646.7 1,646.7 1,711.6 1,711.6 1,711.6 ( 121.6 ) ( 121.6 ( 10.7 ) ( 10.7 ) ( 47.4 ) ( 13.8 203.1 203.1 53.8 53.8 2010 1.5 1.5
31December asat Balance coverage risk including changes, Other contracts group in changes Net differences exchange Foreign Transfer of liabilities other and maturities surrenders, to due Payments Time value inflow Gross subsidiaries of Acquisitions/divestments 1January asat Balance linked investmentcontracts. The followingtableshowsthechangesinliabilitiesrelatedtounit- ( 2,706.7 ) ) ( 2,706.7 ) ( 7,304.2 11,337.7 11,337.7 20,119.3 1,813.0 1,813.0 ( 568.6 ) ) ( 568.6 ( 27.3 ) ) ( 27.3 ( 1.4 ) ) ( 1.4 11.2 11.2 2011 2.4 2.4
( 1,782.8 ) ( 1,782.8 20,119.3 20,119.3 19,126.1 2,429.2 2,429.2 ( 179.5 ) ( 179.5 ( 33.0 ) ( 33.0 ) ( 13.2 558.6 558.6 ( 8.7 ) ( 8.7 22.6 22.6 2010
Annual Report 2011 169 The line Other relates in 2011 mainly to the sale the Liabilities for of Non-life insurance of contacts Intreinco N.V. The adequacy of insurance liabilities (‘Liability Adequacy Test’) is tested by each companyeach at reporting date. The tests are performed on a level of homogeneous product groups Non-life. for Any shortfall is recognised immediately in the income statement. The tests carried out at 2011 year-end confirmed that the reported liabilities are adequate. The effect of changes assumptions in used to measure the was liabilities related to Non-life insurance contracts not material in 2011 and 2010.
6.2 2010 42.9 315.6 182.0 ( 11.5 ) ( 14.4 ) ( 90.4 ) ( 334.7 ) 4,934.0 5,448.6 4,377.4 1,155.4 5,539.0 5,448.6 5,113.9
31 December 2010 ( 66.1 ) ( 851.0 ) ( 784.9 ) 2,326.8 1,166.6 ( 1,160.2 )
9.7 2011 2011 28.5 74.3 ( 9.5 ) (90.4) 353.7 398.7 6,203.9 5,448.6 ( 428.8 ) 4,606.9 1,587.3 6,203.9 6,203.9 5,775.1
31 December 2011 ( 85.5 ) ( 924.9 ) 2,644.7 1,364.1 ( 1,010.4 ) ( 1,280.6 )
Balance as at 31 December Change in unearned premiums liabilities of Transfer Foreign exchange differences Other changes Addition to liabilities prior years years prior liabilities to Addition Claims paid prior years years prior liabilities in Change Acquisitions/divestments of subsidiaries year current liabilities to Addition Claims paid current year year current liabilities in Change Balance as at 1 January Reinsurance Net Changes in the liabilities arising from insurance contracts for Non- life insurance contracts (gross of reinsurance and before eliminations) are shown below. Reserve for policyholder profit sharing eliminations Before Eliminations Gross Claims reserves Unearned premiums The following table provides an overview of the liabilities arising from Non-life insurance contracts as at 31 December. 28 insurance contracts arising from Non-life Liabilities
Annual Report 2011 through profit or loss are valued at minimal of the nominal value. nominal minimalofthe at arevalued loss profit or through at fairvalue securitiesheld debt the Therefore debt covenants). of breaches noother are (there nominalvalue at security holder callablebythe directly and default arein securities a result,alldebt as and debtcovenant ofa breach isnocurable there October 2008 in Fortis group former ofthe inthecomposition Due tothechanges certificates debt Total orloss profit through value fair at Held cost amortised at Held 31December. asat outstanding amounts and the issued byAgeas (EMTN) ofdebtcertificates showsthetypes The followingtable 29 Debt certificates 170
31 December 2011 2011 31 December 256.7 256.7 104.2 152.5
31 December 2010 31 December 548.9 548.9 183.2 365.7 certificates debt Total 2012 2011 below. 31 Decemberisshown asat certificatesoutstanding debt balanceof ofthe The maturity debtcertificates. againstoutstanding assets pledged any hasnot Ageas onlevel2. orlossisbased profit value through held atfair of debtsecurities Thevaluation EUR 181.0million). (2010: 2011 31December 104.2 millionasat or losswasEUR profit through value heldatfair securities ofdebt value The nominal
256.7 256.7 256.7 2011
548.9 548.9 548.9 2010
Annual Report 2011 171 In the event that dividends are not paid on the Ageas shares, or that the dividends to be declared are below a threshold with respect to any financial year(dividend yield less than 0.5%) and in certain other exceptional payment circumstances, of coupons will be made in accordance with the so-called Alternative Coupon Settlement Method (ACSM). ACSMThe implies that new Ageas shares will be issued and delivered to the holders of the FRESH. To date all coupons have been paid in cash. If the ACSM is triggered and there is insufficient authorised available capital to enable ageas N.V. and ageas SA/NV to meet the ACSM obligation, coupon the settlement will be postponed until such time as the ability to issue shares is restored. Because of these characteristics the FRESH is treated as part of Ageas’s regulatory qualifying capital. The FRESH has maturity no date, but may be exchanged for Ageas shares at a price of EUR 31.50 per share at the discretion of the holder. The FRESH will automatically be converted into Ageas shares if the price of the Ageas share is equal to or higher than EUR 47.25 on twenty consecutive stock exchange business days. 30.2 Ageas Hybrid Financing In 2006, Ageas incorporated a special purpose company named Ageas Hybrid Financing S.A., which issued perpetual deeply subordinated and ranking pari passu securities, and invested the proceeds thereof in instruments issued (former) by Ageas operating companies which qualified as solvency for those entities. The securities issued by Ageas Hybrid Financing S.A. have the benefit of a support agreement and a subordinated guarantee entered into by ageas SA/NV and ageas N.V. Ageas Hybrid Financing S.A. issued EUR 500 million of securities called ’Hybrone‘ in 2006, at an interest rate of 5.125% until 20 June 2016 and 3 month Euribor + 200 basis points thereafter. In 2008 it issued USD 750 million of securities called ’Nitsh I‘ at an interest rate of 8.25% and EUR 625 million of securities called ’Nitsh II‘ at an interest rate of 8.0%. The first call date of these two instruments is in 2013.
69.9 495.4 571.3 540.3 1,250.0 1,607.0 2,926.9 31 December 2010
71.2 496.1 588.8 567.5 2,973.6 1,250.0 1,652.4 31 December 2011
On 7 May 2002, Ageasfinlux S.A. issued undated Floating Rate a (FRESH) for securities HybridEquity-linked Subordinated capital total principal amount of EUR 1,250 million and with a denomination of EUR 250,000 each. Coupons on the securities are payable quarterly in arrears, at a variable rate of 3 month Euribor + 135 basis points. The FRESH was by Ageasfinluxissued S.A., with ageas SA/NV and ageas N.V. acting as co-obligors. The principal amount of the securities will not be repaid in cash. The sole of the recourse holders of the FRESH against any the co-obligorsof with respect to the principal amount are the 39,682,540 Ageas shares that Ageasfinlux S.A. pledged in favour of such holders. Pending the exchange of the FRESH against Ageas shares,these Ageas shares do not have any dividend rights or voting rights (the reported number of outstanding Ageas shares as at 31 December 2011 already includes the 39,682,540 issuedAgeas shares for the purpose of such exchange). 30.1 FRESH 30.1 FRESH liabilities subordinated Other liabilities subordinated Total - Hybrone - Hybrone I - Nitsh II - Nitsh Financing Hybrid Ageas FRESH The following table provides a specification of the subordinated liabilities as at 31 December. 30 Subordinated liabilities liabilities 30 Subordinated
Annual Report 2011
ACSM. the through replaced bysettlement willbe elects, thecashcoupon so S.A. Financing Ageas Hybrid debt, orif senior liabilities, excludingliabilitiesnotconsidered thesumof arelessthan if consolidatedassets solvency levelor minimum theregulatory toachieve Ageas fails that In theevent levels. minimum solvency regulatory the applicable breach of to a cashdue in theiron-loans on thecoupons topay proceeds fail the whichreceived entities ACSMifthe the coupon through topaythe or,alternatively, adividend declares Ageas year that couponinany allow ittopaythe necessaryto as funds S.A. such Financing toAgeasHybrid tocontribute are obliged ageas N.V. and SA/NV ageas agreement Under thesupport USD 750million. EUR 375millionand for SA/NV and toFortisBank EUR 250million for Insurance AG to on-lent securitieswere these of The proceeds 172
Bank. to Tesco EUR 42.0million of amount loaninthe subordinated aperpetual 2012 and in maturing loans, private related tosubordinated EUR 26.1million of an amount million) includes EUR 69.9 (2010: 2011 at yearend liabilities othersubordinated under reported million The EUR71.2 Othersubordinatedliabilities 30.3 Annual Report 2011
0.3 1.0 6.4 6.5 0.6 5.1 2010 2010 22.3 30.0 26.4 76.6 12.2 85.8 91.5 30.0 121.7 121.7 151.7 173 receivable payments minimum lease 31 December 2010 31 December 2010 Present value of the
0.9 2.7 lease 10.6 65.8 80.0 50.0 0.5 5.4 5.3 8.4 2011 2011 91.3 97.2 32.5 90.1 103.8 136.3 103.8 Minimum payments
1.0 3.1 9.5 2011 2011 18.9 32.5 31 December 2011 31 December 2011 receivable receivable payments
minimum lease Present value of the
1.6 4.7 lease 11.6 62.3 80.2 47.7 Minimum payments
Less than 3 months 3 months to 1 year 1 year to 5 years More than 5 years Total Other Total other borrowings The Other item relates mainly to the financing of real estate investments. Finance lease obligations Ageas’s obligations under finance lease agreements are detailed in the table below. Less than 3 months 3 months to 1 year 1 year to 5 years More than 5 years Total Future finance charges Other Other borrowings, excluding financial lease obligations, are classified by remaining maturity in the table below. 31.2 Due to customers The components to customersof Due are as follows: Deposits Other borrowings Funds held under reinsurance agreements Total due to customers borrowings 31.3 Other The table below shows the components of Other borrowings as at 31 December. Finance lease obligations
2010 37.1 91.3 91.3 91.3 91.5 54.2 544.4 151.7 1,262.8 1,898.5 1,898.5 2,141.7 31 December 2010 31 December 2010
2.3 2011 2011 34.9 34.9 32.6 34.9 97.2 729.0 136.3 1,279.6 2,043.5 2,043.5 2,277.0 31 December 2011 31 December 2011
2011 2011 2012 Total deposits
Contractual terms of deposits held by banks Deposits held by banks by year of contractual maturity as at 31 December are as follows: Ageas has pledged certain assets (i.e. investments, property, plant and equipment and deposits with banks) with a carrying amount of EUR 1,631.8 (2010:million EUR 1,492.5 million) against Due to bank amounts. Repurchase agreements Other Total due to banks Deposits from banks: deposits - Demand deposits - Other Total deposits
31.1 Due to banks The table below shows the components of Due to banks. Due to customers Other borrowings Total borrowings Due to banks The table below shows the components of Borrowings as at 31 December. 31 Borrowings 31 Borrowings
Annual Report 2011 Net deferred tax tax deferred Net (expense) tax income Deferred Total deferredtax liabilities Other call option BNP Paribas reserves realised Tax exempt income accrued and expense Deferred Deferred policyacquisition costs Other provisions Intangible assets equipment and plant Property, customers to Loans property Investment Unit-linked investments sale) for (available investments Financial Derivatives held for trading (assets) Deferred tax liabilities related to: assets tax Net deferred assets tax deferred Unrecognised assets tax deferred Gross Other RPN(I) losses tax Unused income deferred and expenses Accrued Other provisions benefits post-retirement and pensions for Provisions reserves claim and policy Insurance Intangible assets equipment and plant Property, property Investment sale) for (available investments Financial Deferred tax assetsrelated to: ta anddeferred assets of deferred tax The components Currentanddeferredtaxassetsliabilities 32 174 (excluding goodwill) goodwill) (excluding goodwill) (excluding
x liabilities as at 31 December are shown below. areshownbelow. 31December x liabilitiesasat
1,021.7 1,021.7 1,182.8 1,182.8 ( 255.8 ) ( 255.8 ( 94.7 ) ( 94.7 927.0 927.0 115.9 296.1 299.6 130.2 100.6 100.6 116.5 142.4 190.0 113.1 409.1 56.1 56.1 43.4 44.6 19.5 42.4 42.4 58.1 2011 1.9 1.9 2.6 7.1 6.6 1.5 1.5 1.5 3.0 2.7 Statement of financial position financial of Statement
1,073.9 1,073.9 ( 114.1 ) ( 114.1 ( 217.1 ) ( 217.1 856.8 856.8 970.9 106.0 137.2 174.6 288.1 131.1 199.1 199.1 179.7 145.7 208.7 113.6 130.4 ( 0.8 ) ( 0.8 44.0 44.0 29.8 41.7 45.4 45.4 46.3 2010 1.2 1.2 4.3 6.7 7.4 1.6 1.6 3.0
( 111.4 ) ) ( 111.4 ( 81.1 ) ) ( 81.1 ) ( 23.4 ( 10.7 ) ) ( 10.7 105.1 105.1 ( 0.7 ) ) ( 0.7 ) ( 1.7 ) ( 0.6 ) ( 6.5 ( 2.7 ) ) ( 2.7 28.2 28.2 23.1 13.1 54.0 43.7 76.9 76.9 79.9 73.0 11.0 28.1 2011 5.1 5.1 0.2 0.3 7.1 3.0 3.0 0.1 1.8 5.5
Income statement Income ( 48.3 ) ( 48.3 ) ( 25.0 ) ( 79.4 349.3 349.3 258.7 234.2 ( 6.0 ) ( 6.0 ) ( 0.1 ) ( 3.2 ) ( 0.3 ) ( 2.5 81.6 81.6 21.0 90.6 17.7 72.9 62.4 44.0 22.4 13.5 2010 0.6 0.6 0.1 0.3 3.5 2.9 2.3 6.2 1.4 Annual Report 2011 175 No deferred tax assets have Deferred tax assetsare recognised to the extent that it is probable that there will be sufficient future taxable profit against which the be utilised. deferred tax asset can been recognised unusedon (claimed) tax losses and unused tax credits of an estimated EUR 7,362 (2010: million EUR 8,229 million). From these amounts EUR 3,140 million can be an estimatedcarried forward indefinitely; 3,882 million will EUR expire in eight years. Most of the (claimed) tax loss carry forward originates from the liquidation of Brussels Liquidation Holding (the former Fortis Brussels, the company that held the banking operations). Tax wise, the loss on the sale of the Fortis only Bank materialised at the moment of liquidation. Deferred tax assets depending on future taxable profits in excess of profits arising from the reversal of existing taxable temporary differences amount to EUR 129.6 million (2010: EUR 99 million) and have been recognised based on the expectation that sufficient taxable income will be generated in future years to utilise these deferred tax assets.
2010 465.2 682.3 ( 217.1 )
2011 2011 358.8 614.6 ( 255.8 )
As at 31 December 2011, 138.5 EUR million was charged to equity related to deferred tax and EUR 24.9 million was charged to equity related to current tax (2010: EUR 39.0 million and million EUR 24.9 respectively, both charged to equity). asset tax Deferred liability tax Deferred Net deferred tax
Deferred income assets andtax are offset liabilities there is when a legally enforceable right to offset current tax assets currentagainst tax liabilities and when the deferred income taxes relate to the same taxation authority. The amounts in the statement of financial position are offset as follows:
Annual Report 2011 liabilities: following inthe resulted Thevaluation derivative instruments. forfinancial valuation techniques on model based level 3valuation a Ageasadopted oftheRPN(I), value ofthefair For thecalculation RPN(I) Fair valueof Insurance. of AG shares ofthe 20% amaximumof on a pledge State Belgian the granted Ageas, default incaseof State Belgian of the and recourse fee ofthe thepayment Tosecure amount. reference the be paidon basispointsto to70 feeamounts annual guarantee The SA/NV. Bank ofFortis benefit by Ageas,tothe interest paid the RPN(I) on guarantee state hasissueda State The Belgian State guarantee FortisBank SA/NV. to amount the reference interest on Ageas pays Ifitisnegative, Ageas. amount to on thereference paysinterest Fortis BankSA/NV ispositive, amount If thereference as: isdefined amount The reference day. trading each calculated on as amount a reference made on pointstobe basis plus20 Euribor 3-month of rate an annual at payments of theinterest quarter overthe average asthe isdetermined payment Each quarterly Mechanism position). of financial of thestatement date afterthe Events also Note56 made payments to, or being (see from, FortisBankSA/NV received quarterly thatresultsin instrument a financial The RPN(I)is 33 RPN(I) 176 Total State Belgian the towards Commitment Commitment towards Fortis Bank SA/NV
of 125,313,283 Ageas shares. Ageasshares. of 125,313,283 value market million andthe EUR2,350 between the difference less; exchange, stock theLuxembourg quotedby of theCASHESas value market million andthe EUR3,000 between the difference
31 December 2011 2011 31 December 190 190 164 26
31 December 2010 31 December 465 399 66
2011: 31 December asper payments guarantee of RPN(I)and of the market value thefair todetermine keyassumptions following the Ageas made Methodology state Belgian fee Guarantee Bank Fortis BNPParibas payments Interest spread credit term long BNP Paribas spread credit senior perpetual Ageas rate Euribor 3-month CASHES value Share price volatility dividend on consensus Market price share Ageas payments: the guarantee of RPN(I)and ofthe marketvalue the fair determine valuesto reference and followingassumptions usedthe Ageas has Referencevalues and Assumptions
has a negligible impact on value and has been ignored. ignored. hasbeen and onvalue has anegligibleimpact option BNPParibas ofthe value tothe dividends corresponding extraordinary of The payment (automatic). and EUR35.91 (optional) ofEUR23.94 CASHES atprices inthe embedded option fortheconversion alsoaccounts model the valuation model; rate interest arbitrage-free standard a through andprojected 2011 31December asat market data on calibrated havebeen rates risk-free future and the current free cashflowsbecomesnegligible; discounted of contribution beyondwhichthe future, point inthe atany years maturity of50 haveaconstant to been assumed have theCASHES purposes, For modelling December 2011. of theend at 354.2% CASHESof value ofthe the calibrated on spreadcurves withinitial market, and the calibrated on model rate interest witharisk-free stochastic perturbation, additional toCASHESwithan applicable spread curves forward on based projected been CASHEShas the priceof of2011; theend observed at options of3-months the impliedvolatility on used isbased volatility price Theshare motionmodel. Brownian geometric standard usingthe projected havebeen prices Ageas’s share
EUR 10.19 million 31 December 2011 2011 31 December EUR 4.59 million EUR 1.20 EUR 1.20 190 bps 190 bps 757 bps 35.42% 35.42% 1.36% 1.36% 6.7% 6.7% 57% 57%
31 December 2010 31 December EUR 5.03 million EUR 7.11 million EUR 1.71 685 bps 50.20% 88 bps 1.00% 4.7% 46%
Annual Report 2011 177 Assuming more favourable conditions for the four key parameters in the model (initial Ageas share price of EUR 1.65, CASHES at 25.4%, risk-free yield curve shifted downward by 50 basis points and discount rate 100 basis points higher), the fair value of the 74 million.RPN(I) decreases to EUR Assuming less favourable conditions for the four key parameters in the model (initial Ageas share price of EUR 0.75, CASHES at 45.4%, risk-free yield curve shifted upward by 50 basis points and discount rate 100 basis points lower), the fair value of the RPN(I) would increase to EUR 353 million. The fair value of the RPN(I) shows no material sensitivity to the assumed share price volatility and yield of thedividend Ageas share. an increase in the initial price of the Ageas’s share to EUR 1.65 decreases the fair value by EUR EUR 14 million to 176 million; a decrease the of starting value to EUR 0.75, increases fair the value by EUR 14 million to EUR 204 million; an increase of the market value of the CASHES to 45.4% increases the by EUR 99 million to EUR 289 million; a fair value decrease to 25.4% reduces the value by EUR 103 million to EUR 87 million; an increase of the risk-free interest rates by 50 basis points along the yield curve increases the fair value by EUR 2 million to EUR 192 million; a decrease by 50 basis points decreases the value by 2 million to EUR EUR 188 million; a decrease in the discount rate of 100 basis points increases the fair value by million toEUR 24 EUR 214 million; an increase of 100 basis points reduces the fair value by EUR 20 million to EUR 170 million.
The sensitivity of the fair value of the RPN(I) to changes in the parameters can be summarised as follows, assuming that other parameters remain unchanged: Sensitivities Sensitivities
Annual Report 2011
Total Total Other liabilities Derivatives held for trading reinsurers to Due payable Dividends payable taxes other VAT and and intermediaries policyholders agents, Due to payable Accounts liabilities benefit employee Short-term Other long-term employee benefit liabilities benefits Termination pension liabilitiesotherthan Defined benefit liabilities pension Defined benefit purposes hedging for held Derivatives expenses other Accrued costs finance Accrued Deferred revenues follows: as 31 Decemberis liabilitiesasat andother interest of Accrued The composition Accruedinterestandotherliabilities 34 178
31 December 2011 2011 31 December 2,094.1 2,094.1 438.0 438.0 127.7 460.2 194.4 304.4 117.6 105.5 15.6 15.6 43.3 33.6 89.0 12.3 20.3 53.6 21.7 56.9
31 December 2010 31 December 1,947.0 1,947.0 313.6 313.6 113.8 484.0 184.0 289.3 124.4 110.3 34.5 34.5 38.1 33.3 77.3 26.2 53.1 53.8 8.7 8.7 2.6
bepaid. small expensesto investments and to awaitingallocation cashreceived securities transactions, of theclearing to related includespayables liabilities The lineOther instrument. provisions ofthe thecontractual apartyto becomes Ageas when i.e. thedate date, trade onthe recognised are convention or market regulation by established timeframe delivery withinthe assets requiring offinancial sales purchases and All markets). inactive market data 2(observable onlevel based arevalued trading Derivatives heldfor termination benefits. and benefits employee otherlong-term benefits, employment Post- Note9 in canbefound benefitliabilities Details ofemployee Annual Report 2011 179 d to t year-end n/disputes. the owner of the AMROEUR 2 billion claim on ABN related to the conversion of the MCS (see also Note 20 Reinsurance and other receivables); the owner of the EUR 362 million claim on FCC/ABN AMRO related to (seeFCC transaction also Note 20 Reinsurance and other receivables); entitled to some related to aEUR 885 million capital guarantee included in the sales documentation (see Note 53 Contingent liabilities).
As communicated by the Dutch State and Ageas, both parties aspire to reach an amicable settlement. In this settlement the dispute over the ownership of claims on ABN AMRO related to the FCC transaction the MCSand transaction as well as the capital guarantee will be resolved. Ageas believes that the provision of EUR 2,362 million is sufficient to coveroutflow the of benefits related to the potential settlement.
3.0 0.4 2010 34.2 ( 3.0 ) ( 8.6 ) 2,381.6 2,407.6 ility of the outcome and the time involved in concluding litigatio litigations. The provisions are based on estimatesbest available a
2011 26.4 ( 3.2 ) ( 11.6 ) ( 15.8 ) 2,403.4 2,407.6
In 2010, Ageas has set up a provision, amounting to EUR 2,362 million (see also Note 47 Change in impairments), for the disputes with Dutch State. the These disputes arise from the differences in interpretation of the terms and conditions of the sale of Fortis Bank Nederland, Fortis Verzekeringen Nederland and Fortis Corporate Insurance from Ageas to the Dutch State in October 2008. The Dutch State is of the opinion that, based on the term sheets underlying the sale, they are: Balance as at 31 December Increase in provisions Reversal of unused provisions year the during Utilised Foreign exchange differences Balance as at 1 January Acquisition and divestment of subsidiaries Provisions consist of provisions for tax disputes and legal 35 Provisions 35 Provisions based on management judgement and in most cases the opinion legalof and tax advisors. The timing of the outflow of cash relate these provisions is by nature uncertain given the unpredictab
Changes in provisions during the year are as follows: Annual Report 2011
Non-controlling interest and Other Reserves. Reserves. Other and Non-controlling interest liabilityiswrittenoffagainst the exercising then matures without iftheoption However, AGInsurance. + 1shareof 25% reacquiring Ageas Bank resulting in Fortis Ageas to of cash payment in2018, If theoptionisexercised Reserves. Other inthe are recorded put option liabilityrelatedtothe ofthe value inthefair changes Subsequent equity. Shareholders’ includedin reserveswhichare Other tothe of theliabilityisadded thefairvalue and interest oftheNon-controlling value between the difference The the option. underlying Non-controlling interest value ofthe of thisliabilityisawritedownthe The counterpart liability eventhough: recognise a Ageas to requires IFRSguidance detail the In more reasons. comparison restated for been have 2010 for Thefigures AG Insurance). company of (theparent N.V. International Ageas Insurance liability relatesto Account asthe isincludedintheGeneral the liability In addition, position. of financial statement inthe put option’) related towritten (’Liability line liabilityisshowninaseparate 2018. Thisfinancial put optionin priceofthe exercise estimated ofthe present value the liabilityagainst a financial to recognise therefore obliged Ageas is withIAS32 Inaccordance option isunconditional. oftheput exercise thatthe concluded Ageas As aconsequence, areview. to beensubject option have theput of to theexercise condit and exactterms The Ageas. to 2018 1January, starting period six-month inthe AG Insurance stakein resell theacquired was approved by the Shareholder’s meetings of Ageas of May 2009. ofMay2009. Ageas meetingsof the Shareholder’s by was approved Fortis AG Insuranceto of 25% +1share onthesale wasconcluded agreement 2009 an March on12 that Ageas disclosed 2008, of Statements Financial In theConsolidated LiabilityrelatedtowrittenputoptiononNCI 36 180
the exercise price at fair value is below the net asset value. thenetasset below atfairvalueis the exerciseprice cooperation; strategic current onthe option based the planstoexercise Bank thatFortis there isnoindication exercised; notbeen has the putoption
theliabilitywillbesettledbya Bank (now named BNP Paribas Bank Fortis Bank) (now namedBNPParibas
As part of this transaction Ageas granted to Fortis Bank aput Fortis to Ageasgranted of thistransaction As part Relative impact Value liability Growth rate Relative impact Value liability Price to book Relative impact Value liability rate Discount been calculated: sensitivities have following The 2011. asat31December EUR 655.8million of theliabilityis net presentvalue Based ontheseassumptionsthe based on: method used alevel3valuation Ageas therefore for suchavalue, indicators market are no There onsettlement. bepaid expected to consideration the of amount discounted The liabilityisvaluedatthe Valuation interest. asNon-controlling recorded are of BNP) part +1share (the 25% interest toNon-controlling linked statement Consolidated income inthe theresults exercised, has notbeen option While the
a discount rate of 10%. 10%. of a discountrate dividendpay-out; 50% and a of 11%, ofreturn rate anexpected on based of 5.5% a growthinvalue companies; forinsurance multiples current market for an amount of EUR 1,375 million. Thisagree EUR 1,375million. of anamount for +1% point point +1% point +1% ( 5.3%) ( 5.3%) 10.0% 10.0% +10% +10% 5.8% 5.8% 694 694 721 621 ions related ions related option to ( 1%) point (1%) point (1%) of ment ment ( 10.0%) ( 5.6%) ( 10%) 5.6% 619 590 693 Annual Report 2011 181 9 Debt t reported at fair interest accruals. Interest accruals maximise market and minimiseinputs internal estimates and assumptions; change estimating techniques only if an improvement can be demonstrated or if a change is necessary because of the availability of information.
If no active market is available, price fair values are using estimated present value or other valuation techniques based on market conditions existing at the reporting If theredate. is a valuation technique commonly used by market participants to price an instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, Ageas applies that technique. Valuation techniques are that well established in financial markets include recent market transactions, discounted cash flows and option pricing models. An acceptablevaluation technique incorporates all factors that market participants would consider when setting a price, and should be consistent with accepted economic methodologies for pricing financial instruments. The basic principles for estimating fair value are: The fair value presented is the ‘clean’ fair value, which is the total fair value or ‘dirty’ value less fair are reported separately. Methods and assumptions used in determining fair value are largely dependent on whether the instrument is traded on financial markets and the information that is available to be incorporated into the valuation models. A summary of different financial instrument types along with the fair value treatment is included below.
Fair 2010 value 91.5 152.2 548.9 2,115.1 1,907.9 4,815.6 3,253.6 2,023.3 2,575.9 3,838.9 11,691.7
value 91.5 548.9 151.7 Carrying 3,258.3 2,067.6 2,460.6 3,828.5 2,926.9 1,898.5 5,617.5 11,615.0
Fair 2011 2011 value 97.2 255.1 135.9 2,697.9 2,614.0 2,879.0 4,109.5 2,304.3 2,040.3 4,832.8 12,300.4
value 97.2 256.7 136.3 an arm’s length transaction. Carrying Carrying 2,701.5 2,933.3 2,750.1 4,111.1 2,973.6 2,043.5 5,507.3 12,496.0
quoted price in an active market; valuation techniques; cost.
Loans from customers Other borrowings liabilities financial Total Fair value is the amount for which an asset could be exchanged, a liability settled or granteda equity instrument exchanged between knowledgeable, parties in willing Liabilities Liabilities Debt certificates liabilities Subordinated Loans from banks Ageas uses the following methods, the order in listed, when determining the fair value of financial instruments: Loans to customers Reinsurance and other receivables Total financial assets When a financial instrument is traded in an active and liquid market, its quoted market price or value provides the best evidence of fair value. No adjustment is made to the fair value of large holdings of shares, unless there is a binding agreement to sell the shares at a price other than the market price. The appropriate marketquoted price for an asset held or a liability to be issued is the current bid price, and for an asset to be acquired a or liability held, the ask price. Mid-market prices are used for as a basis establishing the fair value of assets and liabilities with offsetting market risks. Assets Cash and cash equivalents Loans to banks
The following table shows the carrying amounts and fair value of those classes of financial assets and financialliabilities no A description of the methods used to determine the value of fair financial instruments below. is given 37 and financial liabilities value of financial assets Fair value on the Ageas Consolidated statement of financial position (liabilities are, except for some debt certificates (see Note2 certificates) held at amortised cost).
Annual Report 2011 assignment of the derivative. the assignment of or termination through could berealised that be thevalue isconsideredto exchange a recognised on derivatives nottraded value of Fair exchange. onarecognised derivatives traded value for most reliablefair providethe prices Quoted market makers. market andalsoindividual services, reporting financial publications and press,various include thefinancial sources Those OTC market. the regularlyin instruments traded many financial sourcesfor fromvarious available Quotations are obtainable. pricesare from whommarket intermediaries other dealersor by (OTC) markets over-the-counter in traded often are financialinstruments Non-exchange-traded with pricequotations. financial market ona traded financial instruments for areused prices Quoted market 182
considered. be pricemay the quoted to anadjustment the quote, underlying thebasicfactors from factorsdiffer derivative. Ifthese ofthe complexity andthe rating credit include thecounterparty’s derivative ofanindividual thevaluation influence Factors that grade. are investment securities whose counterparties swapsinvolving basic interestrate availablefor generally are quotes offer bidand swap rates.Dealer quoted from isderived Theswapyieldcurve swap yieldcurve. with thecurrent oftheswap the yield of acomparison incorporate swap rate for an interest methodologies Common valuation Annual Report 2011 183
and price/earnings, etc. If the share is characterised as a debt instrument, a discounted cash flow model is used. FV Calculation Nominal value. Discounted cash flow methodology; discounted yield curve is the swap curve plus spread (assets) spread (liabilities); spread minus curve swap the or is based on commercial margin computed based on the average of new production during last 3 months. Product is split linear and (non-optional) component is valued using a discounted cash flow methodology and option component valued based on option pricing model. Valuation is based on broker quotes in an in-active market (level 3). In general based on the European Venture Capital Association's valuation guidelines, using enterprise value/EBITDA, price/cash flow Furthermore, the underlying hypotheses of a model depend on the general market conditions (e.g. specific interest rates, volatilities) prevailing at the time the model is developed. There is no guarantee that the model will continue to yield adequate results should market conditions changedrastically. Any related model uncertainty is quantified as accurately as possible and is the basis for adjusting the fair value calculated by the valuation techniques and internal models. liabilities Subordinated Private equityand non-quoted participations investments shares Preference Ageas Products Current accounts, saving accounts, etc. Straight loans, deposits, etc. Mortgage loans and other instruments with option features
Preference shares (non-quoted) Ageas pursues a policy aimed at quantifying and monitoring pricing uncertainties related to the calculation of fair values using valuation techniques and internalmodels. Related uncertainties are a feature of the ‘model risk’ concept. Model risk arises the productwhen pricing requires valuation techniques which are not yet standardised or for which input data cannot be directly observed in the market, leading to assumptions about the input data themselves. The introduction of new, sophisticated products in the market has resulted in the development of mathematical models to price them. These models in turn depend on assumptions regarding the stochastic behaviour of underlying variables, numerical algorithms and other possible approximations needed to replicate the complexity of the financial instruments.
Subordinated liabilities and related receivables receivables related and liabilities Subordinated Private equity features Instruments with optional Instruments without optional features Instruments with no stated maturity Instrument Type The fair value (FV) calculation of financial instrumentsactively traded not on financial markets can be summarised as follows:
Annual Report 2011 184
Annual Report 2011 185
Notes to the Consolidated income statement Notes to the Consolidated
Annual Report 2011 Non unit-linked insurance contracts contracts insurance Non unit-linked contracts insurance unit-linked Total total business Individual premiums written Periodic premiums written Single total business Group premiums written Periodic premiums written Single Unit-linked insurance contracts December: ended 31 for theyear of Lifepremiums thedetails below shows The table Life premiums netearned Total eliminations and General Non-life premiums earned Net Life premiums Net inflow gross Total eliminations and General Gross inflow Non-life Gross inflow Life 31 December: ended year forthe premiums net earned gross inflowand of ofthecomposition overview providesan The followingtable 38 Insurance premiums 186 inflowLife gross Total accounting deposit inflow Premium premiums written Periodic premiums written Single insurance Life income premium Gross DPF with contracts investment Total premiums written Periodic premiums written Single DPF with contracts Investment contracts insurance nonunit-linked Total total business Individual premiums written Periodic premiums written Single total business Group premiums written Periodic premiums written Single
11,237.1 11,237.1 7,131.2 7,131.2 1,815.9 1,669.2 5,315.3 2,652.7 2,208.8 2,475.9 1,444.6 1,031.3 8,738.7 8,738.7 3,507.0 5,233.2 4,107.4 4,107.4 7,131.2 146.7 146.7 443.9 787.4 657.2 709.9 321.4 186.7 ( 1.5 ) ) ( 1.5 ( 1.5 ) ) ( 1.5 89.4 89.4 32.4 57.0 97.3 86.0 11.3 2011 2011 2011
12,184.2 12,184.2 9,323.7 9,323.7 2,858.4 6,465.5 3,213.5 8,970.9 8,970.9 8,970.9 2,432.6 2,220.6 6,538.3 3,754.6 3,312.6 2,580.6 1,531.4 1,049.2 212.0 212.0 442.0 782.5 748.9 728.3 320.9 203.1 104.8 ( 0.2 ) ( 0.2 ) ( 0.2 98.3 98.3 40.9 57.4 96.8 2010 2010 2010 8.0 8.0 Casualty: & Property in are grouped and other property to other damage fireand for motor, Premiums 31December. ended for theyear premiums of Non-lifeinsurance thedetails below shows The table Non-life Life premiums Net premiums reinsurance Ceded Gross premium income Life in theincomestatement. as feeincome arerecognised Fees accounting). liabilities (deposit as –directlyrecognised offees deduction contracts, is–after unit-linked mainly withoutDPF, contracts inflow ofinvestment Premium theincomestatement. in contracts withDPFisrecognised investment and contracts inflowofinsurance Premium contracts. investment and forissuedinsurance insurance companies receivedby isgrosspremiums Lifeinsurance inflow Total premium Net earned premiums Non-life insurance premiums of unearned share Reinsurers' premiums reinsurance Ceded premiums earned Gross gross premiums, unearned in Change premiums written Gross 2010 Net earned premiums Non-life insurance premiums of unearned share Reinsurers' premiums reinsurance Ceded premiums earned Gross gross premiums, unearned in Change premiums written Gross 2011
Accident & & Accident ( 27.9 ) ) ( 27.9 ) ( 17.5 ( 31.4 ) ) ( 31.4 ) ( 13.6 713.9 713.9 743.2 760.7 735.8 735.8 768.7 782.3 Health Health ( 1.4 ) ) ( 1.4 ( 1.5 ) ) ( 1.5 5,233.2 5,233.2 5,315.3
( 82.1 ) ) ( 82.1 2011 Property & 2,144.5 2,144.5 2,288.4 2,452.8 2,771.2 2,771.2 2,940.0 3,325.1 ( 145.6 ) ( 145.6 ) ( 164.4 ( 178.3 ) ( 178.3 ) ( 385.1 casualty
1.7 1.7 9.5 9.5
2,858.4 2,858.4 3,031.6 3,213.5 3,507.0 3,708.7 4,107.4 6,465.5 6,538.3 ( 173.5 ) ( 173.5 ) ( 181.9 ) ( 209.7 ) ( 398.7 ( 72.8 ) ( 72.8 Total 2010 0.3 0.3 8.0
Annual Report 2011
Total 948.4 369.0 1,541.0 2,858.4 187
890.2 164.0 casualty 1,090.3 2,144.5 Property & Property
58.2 Health 450.7 205.0 713.9 Accident &
2010 2010 Belgium UK Europe Continental insurance Non-life premiums earned Net
Total 381.8 1,601.1 1,524.1 3,507.0
162.3 casualty 1,150.1 1,458.8 2,771.2 Property & Property
65.3 Health 451.0 219.5 735.8 Accident &
Continental Europe Europe Continental insurance Non-life premiums earned Net 2011 2011 Belgium UK
Below is a breakdown of the net earned premiums Insuranceby operating segment.
Annual Report 2011 income investment and other dividend interest, Total income investment Other garage parking Revenues property investment from income Rental securities equity from income Dividend Total interest income Other interest income Interest incomeon derivatives held for trading customers to on loans income Interest on investments income Interest Interest incomeon loans to banks equivalents on cash income Interest Interest income 31December. yearended forthe investment income andother dividend ofInterest, provides details below The table Interest,dividendand otherinvestmentincome 39 188
3,093.3 3,093.3 2,501.8 2,144.3 268.4 268.4 170.8 127.1 147.7 69.1 69.1 83.2 11.8 37.8 33.1 2011
3,005.3 3,005.3 2,480.0 2,178.7 261.3 261.3 139.9 121.0 66.2 66.2 57.9 12.5 46.5 96.2 25.1 2010 on theFortisBankTier1loanacquiredin2011. (EUR 10million) received the amortisation(EUR31.8million)andinterest mainlydueto is loanstobanks on income inInterest The increase Annual Report 2011
7.6 2010 42.2 38.7 20.7 21.4 59.1 87.8 ( 5.4 ) ( 40.3 ) ( 56.2 ) 189
6.6 0.2 8.2 0.5 2011 49.9 12.7 305.2 135.6 ( 39.4 ) ( 19.3 ) ( 189.0 ) All changes in fair value of the assets and liabilities held at fair value through profit or loss are reported above. This includes unrealised gains and losses from revaluations and realised gains and losses upon derecognition of the assets or liabilities. Hedging results contain the changes in fair value attributable to the hedged risk – mainly interest-rate risk – of hedged assets and liabilities and the in fairchanges value of the hedging instruments. The line Other relates in 2011 mainly to the unrealised loss on the Tier 1 being the difference between the par value of securities exchanged (EUR million) 952.9 and the fair value of these securities ( EUR million) 762.3 (see also Note 18 Loans). This difference is expected to be reversed in the income statement over the coming quarters, via the effective interest method (see also Note 56 Events after the date of the statement of financial position).
In the context of ongoing uncertainties in the financial markets Ageas has reduced the concentration on Southern European government bonds in its investment portfolio during the year, as well as rebalanced portfolio the in other asset classes. The rebalancing of the portfolio resulted in capital gains and losses within the debt securities classified as available for sale, equity securities classified as available for sale, as well as in derivatives held for trading. Derivatives held for trading are initially recognised at acquisition cost, including any transaction costs to acquire the financial instrument. Subsequent measurement is at fair value with changes in fair value recorded in the income statement. In 2011, the line Capital gain (losses) on sale of shares of subsidiaries comprises the gain on the sale of Fortis Luxembourg Vie (EUR 29.3 million) and the losses on the sale of Ageas Deutschland Lebensversicherung AG (EUR 14.5 million) and Fortis Life Insurance Russia (EUR 1.9 million). The gain on Investments in associates relates in 2011 to the sale of Ageas’s stake in Taiping Pensions (EUR 20 million of which EUR 13 million accounted for in Asia and EUR 7 million accounted for in the General Account). Hedging results Other Total Result on sales and revaluations Capital gain (losses) on sale of shares of subsidiaries Investments in associates Property, plant and equipment loss or profit through value fair at held liabilities and Assets Debt securities classified as available for sale Equity securities classified as available for sale trading for held Derivatives Investment property Result on sales and revaluations for the year ended 31 December are broken down as follows: 40 on sales and revaluations Result
Annual Report 2011 Credimo Credimo Aviabel BITM center Shopping Westland Association Cardif Vie Lux AKSigorta IDBI Federal Life Insurance Investments Park Royal Taiping Holdings Holding Group Thai Muang Mayban Fortis Holdings 2011 associates. main below forthe inthetable December isspecified 31 yearended associatesforthe of ofresult Share Shareofresultassociates 42 contracts to unit-linked related income investment Total Realised investment income contracts -investment income Investment contracts -insurance income Investment (Un)realised gains (losses) contracts -investment (losses) gains (Un)realised contracts -insurance (losses) gains (Un)realised of: iscomposed contracts tounit-linked related The income Investmentincomerelatedtounit-linkedcontracts 41 190 associates of result of share Total Other Credimo Aviabel BITM Insurance Life federal IDBI Investments Park Royal Taiping Holdings Holding Group Thai Muang Mayban Fortis Holdings 2010 associates of result of share Total Other
(100% interest) (100% 1,030.0 1,030.0 4,129.5 1,416.8 3,940.5 1,097.0 1,242.1 income 123.6 123.6 154.4 883.3 120.5 451.7 224.4 58.4 58.4 17.6 62.1 17.2 17.9 99.0 Total 7.4 7.4
(100% interest) (100% ( 4,080.4 ) ( 4,080.4 ) ( 1,334.7 ) ( 3,994.5 ) ( 1,042.0 ) ( 1,143.6 expenses ( 121.2 ) ( 121.2 ) ( 171.0 ) ( 736.2 ) ( 819.5 ) ( 119.2 ) ( 438.3 ) ( 112.0 ) ( 665.6 ( 52.8 ) ( 52.8 ) ( 15.7 ) ( 51.7 ) ( 15.9 ( 5.2 ) ( 5.2 Total ( 1,088.4 ) ( 1,088.4 ( 581.5 ) ( 581.5 ) ( 966.3 ) ( 122.1
506.9 506.9 502.8 2011 (100% interest) interest) (100% 4.1 4.1
( 441.2 ) ) ( 441.2
income ( 16.6 ) ) ( 16.6 ) ( 13.0 ) ( 54.0 293.8 293.8 49.1 49.1 63.8 82.1 10.4 17.9 13.4 55.0 98.5 2.4 2.4 5.6 1.9 1.3 1.3 2.2 Net
20% - 24.9% -24.9% 20% 12% - 31% -31% 12% -31% 15% 34.10% 34.10% 24.70% 50.00% 26.00% 44.71% 24.90% 30.95% 34.10% 24.70% 50.00% 45.85% 33.33% 33.11% 26.00% 44.71% 30.95% interest Ageas Ageas %
Share of result of Share (Ageas share) of associates of ( 146.5 ) ( 146.5 ) ( 197.3 ( 14.2 ) ( 14.2 186.3 186.3 131.3 788.0 788.0 326.5 319.7 461.5 345.4 116.1 ( 1.9 ) ( 1.9 ) ( 4.3 ) ( 3.4 14.5 14.5 18.1 25.4 19.0 30.5 2010 0.8 0.8 1.4 1.0 4.3 0.4 2.6 0.6 1.0 6.0 4.0 6.8 6.8
Annual Report 2011 0.3 2010 2010 37.4 58.6 36.0 210.6 248.0 208.0 125.1 428.0 191 d parties. rental activities
1.5 2011 2011 11.6 51.4 36.2 265.5 277.1 186.7 151.3 427.1
Total other income The line Other includes mainly recovery of staff and other expenses from third parties, reinvoicing of service costs related to and instalment income. Other income Proceeds of sale of property intended for sale Other Other income includes the following elements for the year ended 31 December: 44 Other income 44 Other Other service fees Total fee and commission income The line Other service fees mainly relates to fees received from brokerage companies for the sale of insurance policies of thir Reinsurance commissions Insurance and investment fees Asset management Guarantees and commitment fees Fee and commission income for the year ended 31 December is specified in the table below: Fee and commission income 43 and commission income Fee
Annual Report 2011 net claimsand benefits, insurance Non-life Total of paid claims share Reinsurers' Reinsurers'share of change in liabilities gross claimsandbenefits, insurance Non-life Total Change in liabilities arising from insurance contracts, gross gross paid, Claims followingtable. areshowninthe ofreinsurance, net andbenefits, Details ofNon-lifeinsuranceclaims net andbenefits, claims Lifeinsurance Total andbenefits claims of share Reinsurers' gross andbenefits, claims Lifeinsurance Total Change in liabilities arising from insurance and investment contracts, gross gross surrenders, and Benefits shown below. are reinsurance, net of benefits, claimsand Details ofLifeinsurance net and benefits, claims insurance Total eliminations and account General insurance Non-life Life insurance below. inthetable shown are 31December year ended the benefitsfor claimsand ofinsurance The details Insuranceclaimsandbenefits 45 192
8,614.6 8,614.6 2,455.6 6,161.3 2,455.6 2,455.6 2,559.2 2,205.5 6,161.3 6,161.3 6,206.0 1,224.0 4,982.0 ( 77.0 ) ( 77.0 ) ( 26.6 ( 44.7 ) ( 44.7 353.7 353.7 ( 2.3 ) ( 2.3 2011 2011 2011
2,128.8 2,128.8 2,260.7 1,945.1 9,603.2 2,128.8 7,476.1 7,476.1 7,476.1 7,506.4 3,620.6 3,885.8 ( 63.7 ) ( 63.7 ) ( 68.1 ( 30.3 ) ( 30.3 315.6 315.6 ( 1.7 ) ( 1.7 2010 2010 2010
Annual Report 2011 2.2 4.3 0.5 7.6 2010 2010 32.7 33.9 45.7 30.6 13.2 10.6 35.1 ( 4.5 ) ( 0.6 ) ( 0.7 ) 155.6 298.4 193 ainly to the bonds
4.6 8.3 1.7 2011 2011 19.6 55.5 19.2 41.0 ( 0.6 ) ( 2.4 ) 161.8 310.0 212.2 102.0 ( 11.9 ) 1,314.9 1,615.9
Goodwill and other intangible assets in impairments change Total The Change in impairments on investments in debt securities relates primarily to the impairment on all of thematurities Greek Investment property Loans to customers Reinsurance and other receivables Property, plant and equipment included in Investments available for sale. The change in impairments on Goodwill and other intangible assets relates in 2011 m goodwill of AICA (see also Note 24 Goodwill and other intangible assets). Change in impairments of: Investments in debt securities Investments in equity securities and other The Change in impairments for the year ended 31 December is as follows: 47 Change in impairments
Other borrowings Derivatives liabilities Other Total finance costs Debt certificates liabilities Subordinated Borrowings to- due banks Borrowings - due to customers The following table shows the breakdown of Finance costs by product for the year ended 31 December. Finance costs 46 Finance costs 46 Finance
Annual Report 2011
2008, they are: are: 2008, they inOctober State theDutch to Ageas from Corporate Insurance Fortis and Nederland Verzekeringen Fortis Fortis BankNederland, of thesale sheetsunderlying theterm basedon that of theopinion is DutchState the arose because State withtheDutch The disputes Provisions). andNote35 other receivables Reinsurance and alsoNote20 (see DutchState disputeswiththe for of theprovision assessment thisclaiminthe included and impairment reverse the 2010to in Ageas decided the DutchState, negotiations with the on claim.Based contestedthe AMRO ABN fact that the basedon wasimpaired thisclaim In2009, shares. preference of holders tothe amount paytheabove N.V.) toallowit ABN AMROBank subsidiaryof (a Limited Fortis CapitalCompany byAgeasto (EUR362million)made forthepayment compensation claimforfull a in2009 recorded claim, Ageas this In additionto other receivables). Reinsurance and 20 MCS (seealsoNote of the parties between allissuing EUR 2billion,basedontheoriginalagreement an amountof for statement income the wasrecognisedthrough N.V. AMRO Bank ABN Ageas on of aclaim shares, issuanceofthe withthe Together of thisliability. thecontribution shares,against Ageas 106,723,569 N.V. issued ageas 2010, On7December amount. thesame for statement theincome a chargeto The liabilitywasrecordedthrough EUR202 totalling 2010, i.e.7December date, atconversion EUR 1.90 price of openingshare byAgeas’s multiplied (106,723,569) sh of number foreseen contractually the atfairvalue, wasmeasured holders.Thisliability towards theMCS in 2010aliability Convertible (Mandatory ofMCS conversion mandatory Related tothe ImpactMCS conversionanddisputesDutchState 48 194
Securities, see also Note 4 Shareholders’ equity), Ageas reco Ageas equity), also Note4Shareholders’ see Securities, issues State andDutch MCS conversion impact Total State Dutch with disputes legal for Provision - FCCclaim impairment of Reversal - onABNAMRO Claim - Liability related to MCSconversion - Provisions). Note35 also (see settlement thepotential to benefits related outflowof the tocover EUR 2,362millionissufficient provision of the that Ageas believes willberesolved. capital guarantee aswellthe theMCStransaction transactionand the FCC related to on ABNAMRO ofclaims the ownership over dispute settlement the In this settlement. anamicable toreach aspire both parties 2,362 the million. Ascommunicatedby Dutch Stateand Ageas, ofEUR anamount for wasrecorded a provision 2010 State, in the Dutch disputeswith inthe legal evolutions Awaiting further
Contingent liabilities). Contingent liabilities). 53 (seealsoNote documentation sales included inthe to acapitalguarantee EUR 885millionrelated entitled to other receivables); Reinsurance and alsoNote20 FCC transaction(see to AMRO related claim onFCC/ABN EUR 362million the the ownerof other receivables); and Note20Reinsurance also theMCS(see of the conversion relatedto EUR 2billionclaimonABNAMRO the ownerof
2011 ares issued
.8 million. gnised gnised ( 2,000.0 ) ( 2,000.0 2,362.5 2,362.5 ( 362.5 ) ( 362.5 202.8 202.8 202.8 2010
Annual Report 2011 2.1 0.1 7.5 4.3 2010 2010 20.3 41.8 20.8 18.9 39.4 980.6 500.0 110.7 694.1 1,052.4 195 mployment , restaurant on plans.
2.5 2.0 0.1 7.8 2011 2011 27.5 17.3 38.8 20.0 40.6 537.9 115.5 739.5 1,092.9 1,163.4
Other includes the cost of termination benefits and restructuring costs and non-monetary benefits for staff such as leased cars Defined contribution plan expenses compensation based Share Other Total staff expenses and insurance premiums. Note 9 Post-employment benefits, other long-term employees benefitsand termination benefits contains further details of post-e benefits and other long-term employee benefits, including pension costs related to defined benefit plans and defined contributi Salaries and wages Social security charges Pension expenses relating to defined benefit plans Staff expenses for the year ended 31 December are as follows: Staff expenses 50 Staff expenses 50 Staff
Custodian fees Other fee and commission expenses Total fee and commission expenses Securities Intermediaries Asset management fees Payment services The components of fee and commission expenses for the year ended 31 December are as follows: Fee and commission expenses 49 and commission expenses Fee
Annual Report 2011 travel, post, telephone, temporary staff and training included. included. staff andtraining temporary travel, post,telephone, additioninthisline (EUR39million).In savingfunds Life Belgiumonthe Solidarity taxin 0.15% 2011 the Other includesin expenses other Total Other sale for intended property of sale of Cost expenses repair and Maintenance Information technology costs costs relations public and Marketing costs acquisition deferred Depreciation costs acquisition deferred Capitalised fees Professional use own for property to relating expenses direct other and Operating property investment to relating expenses direct other and Operating expenses andrelated expenses rental lease Operating Other assets intangible Other Value of business acquired (VOBA) software developed Internally software Purchased assets intangible of Amortisation Equipment property Investment improvements Leasehold ownuse for held Buildings assets ontangible Depreciation asfollows: are 31December ended theyear for Other expenses 51 Other expenses 196
( 495.5 ) ( 495.5 379.4 379.4 103.2 159.3 937.8 937.8 255.0 110.1 70.3 70.3 37.3 34.6 41.3 30.3 60.9 31.8 13.4 13.4 79.1 2011 9.6 9.6 4.4 4.3 9.0 9.0
are expenses for are expenses ( 448.7 ) ( 448.7 866.9 866.9 204.3 111.8 376.5 152.8 24.8 24.8 10.9 62.8 92.8 48.8 38.8 21.6 43.6 23.3 49.6 34.1 2010 9.6 9.6 4.3 5.2 Annual Report 2011
1.3 7.6 7.6 1.3 2010 2010 17.7 42.0 10.0 14.6 ( 2.5 ) 29.7% 127.8 126.6 141.2 202.2 ( 32.4 ) ( 18.4 ) ( 54.7 ) ( 39.2 ) ( 222.6 ) ( 374.6 ) ( 349.3 ) ( 222.6 ) ( 355.6 ) 197 ing the
2.4 2.2 3.9 2011 2011 2011 2011 75.0 21.7 39.9 29.2 44.7 19.8 73.2 ( 3.3 ) ( 7.3 ) ( 3.7 ) ( 8.7 ) 29.5% ( 53.3 ) ( 81.0 ) ( 23.1 ) ( 83.3 ) ( 53.3 ) ( 83.3 ) ( 105.0 ) ( 756.8 ) ( 223.2 )
Actual income tax expenses (income) Foreign tax rate differential differential rate tax Foreign years previous of respect in payable tax for Adjustments Notional interest deduction Other Disallowed expenses Previously unrecognised tax losses and temporary differences Write-down and reversal of write-down of deferred tax assets, including non-compensable tax-losses of the year differences temporary on rates tax in changes of Impact profit before taxation to the weightedaverage statutory income tax rates in Belgium and the Netherlands. Increase (decrease) in taxes resulting from: Tax exempt income including capital losses Impairment of goodwill Share in result of associates Result before taxation rate tax Applicable Expected income tax expense
Total income tax expenses (income) Below is a reconciliation of expected and actual income tax expense. expectedThe income tax expense was determined by multiply Deferred tax arising from the write-down or reversal of a write-down of a deferred tax asset Previously unrecognised tax losses, tax credits and temporary differencesreducing deferred tax expense Totaldeferred tax expenses (income) Total current tax expenses Deferred tax arising from the current period Impact of changes in tax rates on deferred taxes Current tax expenses for the current period Adjustments recognised in the period for current tax of prior periods Previously unrecognised tax losses, tax credits and temporary differences increasing (reducing) current tax expenses The components of income tax expenses for the year ended 31 December are: 52 tax expenses Income
Annual Report 2011
198
Annual Report 2011 199
Notes to items not recorded on the Notes to items not recorded Consolidated statement of financial position Consolidated statement
Annual Report 2011 Rotterdam confirmed the decision of the AFM. Ageas hasfiledan Ageas AFM. of the thedecision Rotterdam confirmed District Courtof 2011the On4May District CourtinRotterdam. the before AFM ofthe the decision appealed has Ageas appeal, administrative the rejectionof After wrongdoing. of any allegations challenges Ageas information. notfullycorrect on to havetraded mayallege investors June 2008, 5 to25 periodof the imply that,for Thismight additionalmeasures. achievedwithout be later couldnot and for2008 financial objectives implythatthe EC remedieswould therequired that madepublic have Fortis should 2008 on 14June that Fortis and situationof solvency ofthe respect or misleadingin been incorrect wouldhave certainstatements June2008 that on5 alleges AFM toezicht’).The het financieel op Act (‘Wet Securities Dutch ofthe breaches for EUR288,000 N.V.of and ageas ageas SA/NV each afineon AFM levied the 2010, On 5February stage. atalater Ageas initiatedagainst being damages compensatory claims for Ageas, including against lead tonewproceedings and existing legalproceedings mayimpact ongoing investigations ofthese findings Anynegative Belgium. in investigation conducted (ii) thecriminal aswell (FSMA), Authority Markets Services and Financial Belgian bythe conducted case for(i)investigations Thisisthe stage. impactatalater suchnegative to they couldlead ruled outthat be butitcannot Ageas, for monetary consequences (material) have immediate donot investigations The ongoing Ageas. liabilitiesfor future unquantifiable butcurrently insubstantial ofwhichcouldresult Netherlands, some andthe Belgium in criminalinvestigations administrative and aswell of legalproceedings inanumber still becomeinvolved ormay Ageas isinvolved 2008), activities inSeptember/October insurance activities andDutch ofbanking divestment June 2008, solvency planin theaccelerated of announcement in October2007, of ABNAMRO ofparts acquisition increaseand capital 2008 (a.o. andOctober 2007 between May group Fortis former respect ofthe in occurred anddevelopments events ofthe as aresult In addition, itsbusiness. of ordinary course inthe arising proceedings legal disputesand in variousclaims, asadefendant Ageas isinvolved institution, financial Like anyother Contingentliabilitiesrelatedtolegal 53.1 53 Contingent liabilities 200 proceedings
thecase. be ifthatwould be paid may haveto damages which the toquantify nor actionswouldsucceed, chances thatsuch assess the notpossibleto point howeverit is Atthis on Ageas. impact material haveasevere mayultimately actions ifsuccessful allegationsofwrongdoing,such will challengeany Ageas Although proceedings. existinglegal mayalsoimpact findings The experts’ damages. for compensatory claims againstAgeas,including filed being claims andproceedings still leadtonew may ledand have Dutchexperts of the The findings April2008. 29 directorson Fortis to granted discharge annul the and(ii)to Fortis by (‘wanbeleid’) ‘mismanagement’ be deemed should report expert inthe certain factsmentioned establishing that at aimed startlegalproceedings to (i) with theOndernemingskamer arequest parties filed other and certain VEB On 16August2010, 2008. September on26 more specifically and period the subsequent investorsin to of certainfacts communication (iii)the June 2008; 2008until26 21 May asof the period ofFortis,in solvency position and authorities EC competition bythe required of ABNAMROas ofcertainparts (ii) informationonthesale willingly misrepresented); or manipulated been hasnot thatinformation experts acknowledge the (although 2007 on 9October effectuated trading update) the issue(whichincorporated rights forthe prospectus and inthe 2007 September of21 update trading inthe situation the subprime inrelationto ofFortis exposure and theposition on the information :(i) referto they Inparticular, at leastincomplete. was incorrector areas of number ina toinvestors byFortis provided information thatthe time andconclude investorsover its Fortis informed inwhich criticaloftheway are theexperts things other Among Ageaswebsite. the from downloaded canbe the report A copyof inspection. wasfiledforpublic inAmsterdam Ondernemingskamer the commissionedby report theexpert 2010, On 16June Netherlands. inthe court competent decisionwiththe this appeal against Annual Report 2011 201 by the Stichting FortisEffect and a number of individuals represented by Mr De Gier demanding to repeal the judgment of the Amsterdam District Court of 18 May 2011 in favour of Ageas, which dismissed their claim to invalidate the decisions taken by the Fortis in OctoberBoard 2008 and unwind the transactions, or alternatively, to pay damages. by VEB demanding to establish that various communications of Fortis in the period September 2007 to 3 October 2008 constitute a breach of law by Fortis and certain of its former directors and top that executives; each of these breaches is an unlawful act of all or certain defendants and that these defendants are consequently liable for damages suffered by those who bought shares in the relevant period; This includes a Fortis, claim (vis-à-vis certain of its former directors and top and executives the financial institutions acting as global coordinators and lead managers in connection with the rights issue) that the information on the position and exposure of Fortis in relation to the subprimesituation in the prospectus of 24 September 2007 for the rights issue effectuated on 9 October 2007 was incorrect and incomplete; by the Dutch State claiming an amount of 210 EUR million from the Ageas parent companies EUR 674and million from Ageas Insurance International N.V. The Dutch State bases these alleged claims on the of certainapplication provisions allegedly agreed by Fortis Insurance N.V., Fortis Insurance International N.V. and Fortis FBN(H) Preferred Investments B.V. in the context of the sale of the Dutch banking and insurance on activities 3 October 2008. proceedings initiatedproceedings before the Amsterdam District Court: - - - proceedings initiated before the Amsterdam Court of Appeal:
by a number of individuals gathered around Deminor International, demanding damages because of alleged lack of or misleading information by Fortis in the period May 2007 until October 2008; these proceedings are pending; the experts appointed by the President of the court at the request of Deminor in November 2008 to investigate the circumstances surrounding the break-up of the Fortis group have filed their final report on 18 November2011. by a number of individuals represented by Mr Modrikamen initially demanding the annulment of the sale of ASR to the Dutch State and the sale of Fortis Bank to SFPI (and damages;toor alternatively BNP Paribas),subsequently on 8 December 2009, the court a.o. decided that it is not competent to judge on actions against the Dutch defendants; on 26 April 2011, Mr Modrikamen filed an (i) appeal against the forementioned decision on competence and (ii) a trial brief on the merits regarding the sale of the Belgian bank. The claim now focuses on damages asked from the Dutch State, DNB, SFPI and BNP Paribas; Various proceedings been have initiated in Belgium and the Netherlands (in)directly (i) in relation to the September/October 2008 transactions or (ii) aiming at the payment of monetary damages based on alleged miscommunication and/or market abuse committed over by Fortis the period between May 2007 and October 2008. Such proceedings include: proceedings initiated before the Brussels Commercial Court: - - -
On 19 August 2010,On 19 August the AFM levied an additional fineeach on of ageas SA/NV and ageas N.V. of EUR 144,000 for breach of the Dutch Securities Act. The alleges AFM that Fortis did not timely inform investors on its subprime position and should have published information on its subprime position and exposure (both overall and in the as well as a US, down)break in the trading update published on 21 September 2007 in the context of the rights issue effectuated on 9 October 2007. This might imply that, for the period as of 21 September 2007, investors may allege have to traded on incomplete information. Ageas challenges any allegations of wrongdoing. After rejection of the administrative appeal, Ageas has appealed this decision of the AFM before the District Court in Rotterdam. On 9 February 2012, the District Court of Rotterdam confirmed the decision the of AFM. Ageas will file an appeal against this decision with competentthe court in the Netherlands. Ageas is also involved or may still become involved in legal proceedings directly or indirectly resulting from events and developments occurred in respect of the former Fortis group between May 2007 and October 2008:
Annual Report 2011 be thecase. paid ifthatwould be may haveto damages which the toquantify would succeed,nor suchactions that thechances possible toassess however itisnot At thispoint Ageas. on impact severe material ultimately havea thismay ifsuccessful However, incourt. any allegationsthereof challenge andwill wrongdoing deniesany Ageas As saidabove 202
- - proceedings initiated before the Utrecht District Court: DistrictCourt: theUtrecht before proceedings initiated contractual hold harmless commitments; harmless commitments; contractual hold and statutory validity ofthementioned is contestingthe Ageas group. theFortis functionswithin their originate from andwhichwould them initiatedagainst legal proceedings to the relating fromor damages resulting harmless against persons ofDutchcivillaw,toholdsuch rules 2008 and/or in into entered agreements termination under of Ageas, obligation thealleged toacknowledge thecourt requested have ofFortis executives andtop directors some former thiscontext, In will appealthisjudgment. Ageas damages. such of so, theamount and if damages, plaintiffs suffered the todecidewhether arenecessary proceedings separate that ruled itfurther 2008; to26June 22May the period in misleading information disseminated financial executive) former CEOandthe former (the and twoco-defendants Fortis that decided thecourt 2012 15 February 2008. On in miscommunication alleged dueto damages demanding Bos byMr represented ofindividuals by anumber October 2007, was incorrect and incomplete. incomplete. incorrectand was October 2007, 9 on effectuated issue for therights 2007 September of 24 theprospectus in situation subprime relation tothe in ofFortis exposure and theposition on the information that financial advisors) its andtwoof claim (vis-à-visFortis a Thisincludes 2007-2008. intheperiod various occasions on byFortis miscommunication Fortis’ alleging Against ‘InvestorClaims Dutchlaw,called under by aStichting
MCS issuers. four between the an agreement accordance with EUR 2billion,in of for theamount toAgeas sharesinitscapital AMRO Banktoissue ABN failure of the relationto ABNAMRO Groupin Bankand against ABNAMRO aclaim Ageashasinitiated MCS, ofthe Following theconversion without merits. that thisclaimis legal advisors withits consultation after court. Ageasisconvinced, billion,before EUR 1.75 of amount an damages for or, alternatively, theconversion of theannulment MCSbyclaiming the conversion of ofthe validity contested the MCSholders same December, the 7 After of Ageas. request atthe ofBrussels Commercial Court of the President bythe suspended decision werehowever this effectsof The 7December2030. MCSuntil ofthe maturity date the postpone meetingto MCSholders’ a general decided at unilaterally holders certainMCS Before 7December, Ageas shares. into106,723,569 2010 7December on converted mandatorily were N.V., and ageas SA/NV ageas Fortis BankSA/NV, (Holding)N. Fortis BankNederland in2007by (MCS)issued Securities Convertible The Mandatory position. onitsfinancial impact severe negative couldhavea this damages, topaymonetary Ageas were toorder decisions any court event that the this stage.In at unquantifiable are ofAgeasthat thefinancialposition on consequences wouldhave this transactions), these regard to respectively with FortisEffect Stichting and ofVEB/Deminor dismissed theclaims 2011 18May of DistrictCourtintwojudgments Amsterdam the that and transactions, ofthese annulment lead toan thatcould arguments have raised bycourt appointed of theexperts none that takingintoaccount ishighlyunlikely transactions (which and resultingagreements the and of 2008 September/October in Board ofDirectors Fortis bythe the decisionstaken of) of(part intheannulment result proceedings any ofthese Should
which ageas SA/NV and ageas N.V. acted as co-obligors. asco-obligors. acted N.V. andageas which ageasSA/NV (MCS) for Securities Convertible Mandatory instrument called ahybrid to initiated related havealsobeen Legal proceedings V. (now ABN AMRO Bank N.V.), BankN.V.), AMRO ABN V. (now Annual Report 2011 203 instruments of former subsidiaries instruments of former 53.2 for hybrid Contingent liabilities Ageas’s former operating entities issued a number of hybrid instruments that createdhave a contingent liability ageas N.V.for and ageas SA/NV, because these former parent companies acted as guarantor, co-obligor or provided support agreements. The thefollowing chapters describe contingent liabilities linked to these instruments. 1. CASHES CASHES (Convertible And Subordinated Hybrid Equity-linked Securities) represented 12,000 securities for a total nominal amount of EUR 3 billion, issued by Fortis Bank SA/NV, with ageas SA/NV and ageas N.V. acting as co-obligors. Fortis Bank SA/NV pays the coupon, in quarterly arrears, at a variable rate of 3 month Euribor + 2.0%, up to the exchange of the securities for Ageas shares. The securities have no maturity date and cannot be repaid in cash: they can only be exchanged into Ageas shares. A mandatory exchange takes place if the price of the Ageas share oris equal to higher than EUR 35.91 on twenty consecutive stock exchange business days (the closing share price at year end 2011 amounted to EUR 1.20). The securities can also be exchanged at the discretion of the security holders at a price of EUR 23.94 per share. At 31 December 2011, Fortis Bank SA/NV owned 125,313,283 Ageas shares, which do not have any dividend or voting rights, for the purpose of the potential exchange. In January 2012, BNP Paribas launched a tender offer on the CASHES securities at a price of 47.5% and subsequently exchanged 7,553 tendered CASHES securities for 78,874,241 underlying Ageas shares. The tender and subsequent exchange was part of a broader agreement that Ageas reached with Fortis Bank SA/NV and BNP Paribas (see subsequent events in section 56 of the Ageas Consolidated Financial Statements); Ageas paid EUR 287 million indemnity to BNP Paribas for the 63% exchange. The exchanged shares became entitled to dividend and voting right. As a result of this transaction, the nominal amount of CASHES outstanding decreased to EUR 1,112 million, for which Fortis Bank SA/NV continues to hold 46,439,042 shares.
The Dutch State thesehas joined proceedings. The Dutch State alleges that Ageas, by pursuing AMRO Bank its claim against ABN is acting in violation with the Term Sheet entered into upon the sale of Fortis Bank Nederland (Holding) N.V. to the Dutch State on 3 October 2008. The State Dutch alleges that Ageas has waived its right to the claim and that to the extent that Ageas would prevail in its claim against ABN AMRO Bank, such claim should be transferred to the Dutch State pursuantthe to title legal of damages or the terms of the Term Sheet. Before having initiated the litigation, the Dutch State has levied a conservatory attachment on Ageas’s claims against ABN AMRO Bank. In respect of all legal proceedings and investigations of which management is aware, Ageas for will make provisions such matters if and when, in the opinion of management, who consult with legal advisors, it is probable that a payment will have to be made by Ageas and the amount can be reasonably estimated. Without prejudice to any specific comments made above, given the various stages and continuously evolving nature as well as inherent uncertainties and complexity of the current proceedings and investigations, management is not in a position to determine whether any claims or actions brought against Ageas in connection with these proceedings and investigations are without merit or can be successfully defended or whether the outcome of these actions or claims may or not resultmay in a significant loss in the Ageas Consolidated Financial Statements. Therefore, no provisions have been set apart, other than a provision of EUR 2.4 billion in relation to the disputes with the Dutch State, as mentioned in Note 20 Reinsurance and other receivables. In 2008, the Fortis parent companies grantedto some former executives and directors at the time of their departure a contractual hold harmless protection covering legal expenses and, in some cases, also the financial consequences of any judicial decisions in the event that legal proceedings were brought against such persons on the basis of their mandates exercised in the company. In respect of some of these persons, Ageas is contesting the validity of the contractual hold harmless commitments to the extent they relate to the financial consequences of any judicial decisions.
Annual Report 2011
shares is restored. shares isrestored. toissue ability timeasthe untilsuch postponed settlement willbe coupon obligation,the ACSM meetthe N.V.to and ageas SA/NV ageas toenable capital authorised is insufficientavailable there and istriggered theACSM N.V.If and ageas SA/NV by ageas paid coupons the for ascompensation toAgeas Tier 1instruments ashybrid qualify that instruments needtoissue would SA/NV Bank whileFortis (ACSM), Method Settlement Coupon called Alternative withtheso N.V.inaccordance ageas and SA/NV settled byageas willmandatorilyneedtobe coupons circumstances, certain other andin 0.5%), yieldlessthan year(dividend any financial respect to with threshold arebelowa declared tobe dividends or thatthe paid, notbe would Ageas shares dividends onthe that In theevent holders. favour ofsuch in are pledged theseshares holds; SA/NV Bank Fortis shares that the Ageas are amount principal tothe co-obligors withrespect anyofthe theCASHESagainst holders of ofthe The solerecourse SA/NV holds. Bank Fortis sharesthat the up dividendon thegrossed equals that SA/NV Bank toFortis indemnity an annual pay agreed to also Ageas outstanding. remain 37% CASHESthat ofthe out additionalCASHES andconvert acquire Paribas would years,ifBNP of2 withinaperiod agreement reached stated inthe conditionsas same Paribas onthe BNP toindemnify Ageas agreed 204
33 Other contingentliabilities 53.3 disposals). Acquisitions and alsoNote3 (see S.A. Cardif LuxInternational 2011with year-end at merged that was Ageas of subsidiary S.A., aformer Lux Vie toFortis legalclaimsrelated coveroutstanding EUR 100millionto up to for S.A. LuxVie toCardif aguarantee has provided International AgeasInsurance Paribas, BNP withBGL Together issuing new shares. issuing newshares. by ageas N.V. and SA/NV ageas tocompensate Bank wouldneed which Fortis for (ACSM), Method Settlement Coupon Alternative so-called witha inaccordance ageasN.V. ageas SA/NVand sharesby the issueofordinary willbesettledthrough the coupon soelects, SA/NV Bank Fortis if levelor threshold drops belowthe solvency Bank’s ifFortis agreement support Under theparental thereafter. +1.70% Euribor 3month 2014 and October until27 of4.625% rate at aninterest N.V., and ageas ageasSA/NV now companies Fortis parent former intobythe entered agreement fromasupport 2004, whichbenefit securitiesin millionperpetual EUR 1,000 2004 issued Fortis BankSA/NV 1 debtsecurities Tier FortisBankSA/NV 2. Annual Report 2011
2010 13.9 38.9 22.8 157.3 256.1 466.2 205
2011 2011 13.2 40.6 22.1 144.9 256.4 455.1
Less than 3 months 3 months to 1 year 1 year to 5 years More than 5 years Total Annual rental expense: Lease payments es and parking facilities. The
following table reflects commitments future to non-cancellable operating leases as at 31 December. Ageas has entered into lease agreements to provide for office space, office equipment, vehicl 54 agreements Lease
Annual Report 2011 disposals). Acquisitions and alsoNote3 Vie (see sale ofLux explained bythe be can contracts tounit-linked related inInvestments The decrease management under assets Total parties third heldfor funds Total Real - estate - Equity securities Debt - securities parties: third for held Funds contracts to unit-linked related Investments account for own investments Total Other - Real - estate - Equity securities Debt - securities own account: for Investments origin: and type byinvestment management under ofAssets breakdown providesa The followingtable fee. advisory or earns amanagement on which Ageas institutional, and or either private behalf ofclients, on are managed investments that include under management Funds parties. forthird Funds held policyholders and of insurance onbehalf unit-linked investments ownaccount, for Investments include management Assets under Assetsundermanagement 55 206
31 December 2011 2011 31 December 77,133.5 77,133.5 12,771.4 59,194.2 53,372.4 5,167.9 5,167.9 1,828.2 2,835.3 1,975.9 2,045.7 1,800.2 504.4 504.4
31 December 2010 31 December 21,747.3 21,747.3 59,809.2 53,826.1 89,731.0 89,731.0 1,746.0 1,746.0 1,900.3 2,336.8 8,174.5 8,174.5 1,945.5 3,016.5 3,212.5 enacted bylaw. whichwas tosocialsecurity Fund BCPPension the MBCP from million within EUR 2,747 of thetransfer includes The lineOther 31December asat Balance Other gains/losses Market In-/outflow 1January asat Balance below: areshown parties heldforthird Changes inFunds
( 2,807.6 ) ) ( 2,807.6 5,167.9 5,167.9 8,174.5 ( 217.3 ) ) ( 217.3 18.3 18.3 2011 8,174.5 8,174.5 8,489.5 ( 244.1 ) ( 244.1 ( 14.4 ) ( 14.4 ) ( 56.5 2010
Annual Report 2011 207 CASHES will be converted in on the related shares will be Ageas will receive953 million EUR for the redemption of the Tier 1 instrument. Ageas will pay an indemnity of EUR 287 million. Net proceeds, to be received on 26 2012, March will amount to EUR 666 million. A positive impact due to the redemption of the Tier 1 instrument amounting to EUR This 131 million. relates to a EUR 159 million higher value of the instrument compared to its amortised cost value end 2011 and EUR 28 million cancellation of the corresponding deferred tax asset. A positive net impact related to the pro rata release of the RPN(I) liability amounting to EUR million. Ageas 21 reviewed the level 3 valuation of the RPN(I) and decided to include a EUR 169 million floor in the valuation of the remaining RPN(I), corresponding to 37.06% of the indemnification paid. At year end, the RPN(I) liability amounted to EUR 190 million and as a result the release amounted to EUR 21 million. A negative impact of EUR 299 million due to indemnifications. This amount breaks down into the EUR 287 million indemnification paid and a EUR 12 million net loss due to costs related to the transaction and including the best estimate of the fair value of the annual indemnification, based on the assumption that the remaining the next years. After conversi dividend entitled which could lead to a potential maximum dilution of 1.3%.
The indemnity for a 100% conversion was set at EUR456 million, so Ageas will indemnify BNP Paribas for 287 EUR million as a result of theabove conversion. Following the conversion, the to exist on RPN(I) liability ceases basis. In case BNP a pro rata Paribas exchanges additional CASHES within a period of 2 years, it will be indemnified within the limits specified in the agreement reached on 26 January 2012. Ageaswill also pay Fortis Bank SA/NV an annual indemnification for the 46,439,042 non-converted shares underlying CASHES remaining outstanding. The settlement impacts on Ageas as follows: Positive impact the Net Cash position of EUR 666 million on Negative result impact in the first quarter 2012 of EUR 147 million he Board will ask, as usual, for
On 26 January 2012, Ageas and Fortis Bank SA/NV reached an agreement on a partial settlement of the RPN(I) and the full call of the Tier 1 instrument, issued by Fortis Bank SA/NV and for 95% held by Ageas. The settlement and call were both subject to the successful cash tender by BNP Paribas on the CASHES financial instrument. On 6 February 2012, BNP Paribas converted 7,553 of the tendered securities out of 12,000 CASHES securities outstanding (62.94%) into 78,874,241 Ageas’s shares. BNP Paribas committed not to sell these shares for a period of six months. The total number of outstanding Ageas shares remains unchanged. However, the number of shares entitled to dividend and voting rights increased by 3.5%. Settlement with Fortis Bank SA/NV and BNP Paribas the renewed authorisation from the shareholders to purchase up to 10% of its remaining outstanding shares. Ageas has completed the share buy-back programme announced on 24 August 2011. Between 24 August 2011 and 25 January 2012, Ageas bought back 192,168,091 shares corresponding to 7.3% of the total shares outstanding and totalling EUR 250 million. At year end 2011 the buy back stood at 175,163,656 shares, corresponding to EUR 228 million. Together with the shares previously held by Ageas, the total amount of shares now owned by Ageas amounts to 8.9%. Ageas currently holds the shares as treasury shares. Ageas’s Board decided has to propose to the shareholders at the next shareholders meetings (in Brussels on 25 April 2012 and in Utrecht on 26 April 2012) the cancellation of these bought back shares. At the same shareholders meetings, t Share buy-back There have been no material events since the date of the Consolidated statement of financial position that would require adjustment in the Ageas Consolidated Financial Statements as at 31 December 2011. 56 position statement of financial after the date of the Events
Annual Report 2011 billion. than EUR2.8 lowered bymore willbe SA/NV Bank toFortis securities outstanding,thecreditrisk ofCASHES amount 1.8billionnominal EUR conversion of the Tier 1and of the EUR 953millionredemption ofthe As aresult billion SA/NV ofEUR2.8 Bank Lower creditrisktoFortis lowered inproportion. alsobe State will Belgian and the BNP Paribas payments to Thequarterly RPN(I)willbeapplied. ofthe valuation model forthe floorlevel; will remainatthis oftheRPN(I) value million floor, the the EUR169 that islowerthan aliability RPN(I)generates the forvaluing the model As longas intheresults Decreased volatility 208
otherwise the value generated by our otherwise thevaluegenerated Ageas. Ageas. positionof financial of statement impactonthe have asignificant will agreement the expected that itisnot 2011, Greece atyear-end Ageas on of theexposure intoaccount and taking information available thecurrently considering that concluded Ageas has ofGreece. bail out the second to related ministers zone Finance Euro bythe wasannounced agreement an 2012, On 21February Greece Bail outof affected. companies isnot insurance oftheoperating solvency 2%.The with approximately willdecrease available solvency solvency.The Group Account and oftheGeneral equity willinfluencethe above results stated The net Solvency Impact on Annual Report 2011 209 in rements ng of the Consolidated Financial The Ageas Annual consisti Report Statements and Report of the Board of Directors will be submitted to the Annual General Meetings of Shareholders forapproval on 25 April and 26 April 2012. Brückner Brussels/Utrecht, 2012 6 March Jin Arts McIntyre of Directors Board Nieuwdorp Chairman Perl Vice-Chairman Romana Chief Executive Officer Directors Frank Bart De Smet Ronny de Moranville Guy de Selliers Jozef De Mey Shaoliang Bridget Roel Lionel Belén Jan Zegering Hadders Ageas ConsolidatedFinancial Statements as at 31 December 2011
The Board of Directors of Ageas is responsible for preparing the Statement of the Board of Directors Statement of
The Board of Directors reviewed the Ageas Consolidated Financial Statements and the Report of the Board of Directors on 6 March 2012 and authorised their issue. The Board of Directors of Ageas declares that, to the best of its knowledge, the Ageas Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position, and profit or loss and of Ageas, of the uncertainties that Ageas is facing and that the information contained herein has no omissions likely to modify significantly the scope of any statements made. The Board of Directors of Ageas also declares that the Report of the Board of Directors gives a fair overview of the development and performance of the businesses of the Group. accordance with International Financial Reporting Standards as adopted by the European Union as well as with the European Transparency Directive (2004/109/EC) and the Report of the Board of Directors in accordance with the legal and regulatory requi applicable in Belgium and with Part 2 of 9 of Book the Netherlands Civil Code. Annual Report 2011 to design audit procedures that are appropriate in the inthe appropriate are that procedures to designaudit inorder Statements Financial of theConsolidated fair presentation and the entity’spreparation to controlrelevant considers internal theauditor riskassessments, those In making error. or due tofraud whether Financial Statements, Consolidated the misstatement of material risks of ofthe theassessment judgment, including auditor’s the on depend selected procedures The Statements. Financial intheConsolidated and disclosures amounts about the evidence audit toobtain procedures performing involves An audit material misstatement. from free are Statements Financial Consolidated whether the about assurance reasonable obtain the auditto plan andperform and with ethicalrequirements thatwecomply require standards Those Auditing. on Standards withInternational in accordance ouraudit We conducted audit. on our based Financial Statements Consolidated opinion onthese Our responsibilityistoexpressan Auditor’s Responsibility error. or tofraud due whether materialmisstatement, free from that are Statements Financial theConsolidated of preparation to enablethe isnecessary determines control asmanagement for suchinternal isresponsible management Netherlands CivilCode.Furthermore, ofthe Book2 andwithPart9of inBelgium applicable requirements regulatory thelegaland Union,with European by the adopted as Standards Reporting Financial accordance withInternational in FinancialStatements Consolidated ofthese presentation andfair preparation forthe isresponsible of Directors The Board Statements Consolidated Financial the ofDirectors’responsibilityfor Board information. otherexplanatory policiesand significant accounting of asummary notes, comprising and thenended flows fortheyear andcash inequity changes income, comprehensive statements of Consolidated the statement, income Consolidated 2011, the December 31 positionasat offinancial Consolidated statement comprise the which 2011, Financial Statements Ageas 208 ofthe 45to onpages assetout subsidiaries(Ageas), respective and their ageasN.V. ageas SA/NVand statementsof include thefinancial which Financial Statements, the Consolidated audited We have Statements Financial Consolidated Report onthe ageas N.V. SA/NV and ofageas Shareholders of Meetings To theGeneral Independent auditor’sreport 210
Civil Code. Netherlands 4ofthe 2:391sub Section by asrequired Statements Financial Consolidated consistentwiththe we canassess,is extent tothe report, Board management thatthe wereport Further, annexed. h hasbeen 1 atb- sub Section2:392 under required as information whether the of thisCode,and Book 2 of Part 9 with inaccordance prepared assess,hasbeen the extentwecan to report, Board themanagement whether examination result ofour asa deficienciestoreport Netherlands CivilCode,wehaveno fofthe and ate sub5 2:393 Section under legal requirements tothe CivilCode.Pursuant of theNetherlands Book 2 of Part 9 with inaccordance report Board management ofthe preparation forthe isresponsible N.V. ofageas of Directors The Board Regulatory Requirements Dutch Legaland Report onOther ofthismatter. qualified inrespect opinion isnot Our determined. be presently cannot these matters of outcome theultimate in financialliabilitiesforAgeas.However, couldresult of which some 2008, andOctober 2007 between May occurred having developments and events connection withcertain in andcriminalinvestigations as welladministrative proceedings of legal number involvedina ormaystillbecome Ageas isinvolved that inwhichisdescribed 2011 31 December asat Statements Financial Consolidated tothe toNote53 We drawattention Matter Emphasis of Netherlands CivilCode. ofthe Book2 andwithPart9of inBelgium applicable requirements andregulatory withthelegal Unionand European by the adopted as Standards Reporting Financial accordance withInternational in ended the yearthen cashflowsfor and itsconsolidated performance financial of itsconsolidated and 2011, 31 December at Ageas as positionof financial consolidated and fairviewofthe giveatrue Statements ConsolidatedFinancial the In ouropinion Opinion audit opinion. for our basis providea to and appropriate issufficient wehaveobtained auditevidence the We believethat Financial Statements. the Consolidated of presentation overall the aswellevaluating ofDirectors, Board bythe estimatesmade ofaccounting reasonableness and the policiesused ofaccounting theappropriateness includes evaluating also audit An control. internal of theentity’s the effectiveness on anopinion ofexpressing thepurpose notfor circumstances, but Annual Report 2011 211 In addition we In addition we do not express an opinion whether internal controls operated effectively during the financial ended year December 31, 2011. Amstelveen, 6 March 2012 Brussels, 6 March 2012 N.V. ACCOUNTANTS KPMG Represented by W.G. Bakker RA KPMG Réviseurs d’Entreprises/Bedrijfsrevisoren Represented by M. Lange
Report on Other LegalBelgian and Requirements Regulatory The Board of Directors ageas of SA/NV is responsible for the preparation and content of the management report on the Consolidated Financial Statements, in accordance 119 with article of the Belgian Companies’ Code. Our responsibility is to include in our report the following additional which comment, modifydoes not our opinion the on Consolidated Financial Statements. The management report, which consists of the Report of the Board of Directors of Ageas, deals with the information required by the law, and is consistent with the Consolidated Financial Statements. However, we are in a positionnot to comment on the description of the principal risks and uncertainties facing the companies included in the consolidation, the state of their affairs, their foreseeable evolution or the significant influence of certain facts on their future development. We can nevertheless confirm that matters discussed are not in obvious contradiction with the information we became aware of during the performance of our mandate.
Annual Report 2011
212
Annual Report 2011 213
ageas SA/NV Company Financial Statements 2011 Company Financial Statements
Annual Report 2011 name of ‘Fortis Capital Holding’. Holding’. Capital name of‘Fortis the under 1993 6thNovember on incorporated was publication The company and Incorporation 3. 0451.406.524. under no. legalentities of Brussels register inthe isregistered The company ofDirectors. Board ofthe resolution regionby capital the Brussels elsein anywhere to transferred officemaybe Brussels. This 1000 1, isatRueduMarquis office registered ‘ageas SA/NV’.Its name the bearing a public limitedcompany is The company 2. Identification providedelsewhere. been that hasnot ageas SA/NV on information containssolely general information Thissectionof ageas N.V. SA/NV and ofageas ofDirectors Board Report ofthe includedinthe is information’ ‘General Most ofthe 1. Foreword General information 214
indicated. unless otherwise millions ofeuros, in denominated are financialstatements these intablesof All amountsstated 5. Amounts onrequest. to others and registered shareholders yearto senteach They are Belgium. Bank of with theNational alsofiled and are office attheregistered available company are the of statements Thefinancial andperiodicals. press, newspapers thefinancial in are published GeneralMeetings notices convening and companies onthe reports Financial Gazette. Belgian Law the annexesto inthe others amongst published, are the companies of members Board resignation of and appointment Decisions onthe ofAgeas. website and atthe office registered company’s atthe at Brussels, Court Registry oftheCommercial atthe verified canbe SA/NV ofageas Association company documents The Articlesof publiccanverify the Placeswhere 4. Annual Report 2011 1 1 7 11 11 32 762 762 465 465 474 955 6,416 3,482 1,102 1,102 2,901 2,901 1,181 1,181 1,181 1,753 1,281 ( 1,476 ) 215 31 December 2010
1 6 51 14 14 12 11 25 247 190 955 115 115 190 1,181 1,181 1,181 5,054 3,626 1,102 1,102 2,752 2,637 ( 1,183 ) 31 December 2011
Provisions and deferred taxes Provisionsfor risks andcharges - Pensions and similar commitments - Taxes - Major renovation and maintenance projects - Other risks and charges Deferred taxes Amounts payable Amounts payable after more than one year borrowings - Other debts - Other Amounts payable within one year - Current portion of amountsdebts payable than one year after more - Financial institutions Credit - debts - Commercial Suppliers - Advance payments received on account of contracts in progress Amounts payable in respect of taxes, remuneration and social charges Taxes - - Other amounts payable Remuneration and social charges Accruals and deferred income liabilities Total Liabilities Shareholders’ equity Capital capital -Subscribed Share Premium Reserve revaluations to due gains Capital Reserves reserve - Legal - Reserves not available for distribution - Other - For own shares reserves - Tax-free - Reserves available for distribution forward carried / loss Profit 3 9 1 1 67 74 760 760 1,185 1,182 1,199 6,416 3,956 3,955 3,195 3,121 2,460 1,199 31 December 2010
on before profit appropriation on before profit 1 2 3 2 1 1 38 116 115 254 760 760 1,182 5,054 2,697 1,341 1,185 3,713 3,711 2,951 31 December 2011
Total assets Liquid assets Prepayments and accruedincome - Own shares Short-term investments shares - Own - investments short-term Other - Trade accounts receivableAmounts receivable within one year accounts - Trade - Other amounts receivable Amounts receivable after more than one year Stocks and contracts in progress Currentassets Enterprises linked by participating interests interests - Participating Financial fixed assets companies Affiliated interests - Participating - Loans Tangible fixed assetsTangible fixed - Equipment and motor vehicles - Other fixed assets Fixed assets Incorporation expenses Intangible fixed assets Assets Statement of financial positi Statement of
Annual Report 2011 taxes before activities, onordinary Profit charges financial Other - trade and progress in contracts stocks, than other assets oncurrent down written amounts in (-) decrease (+), Increase - payable amounts of respect in Interest - charges Financial income financial Other - Income from current assets - Income from financial fixed assets - income Financial loss Operating costs restructuring as capitalised expenses Operating - Other operating expenses - charges and risks for provisions in (-) decrease (+), Increase - accounts trade and progress in contracts onstocks, receivable down written amounts in (-) decrease (+), Increase - assets fixed and tangible intangible and expenses onformation down written amounts and Depreciation - pensions and charges social Remuneration, - goods miscellaneous and Services stocks in (+) decrease (-), Increase - - - Purchases Goods for resale, raw and ancillary materials - expenses Operating income operating Other - Own - goods finished andof progress in andcontracts construction capitalised work of stocks in (-) or decrease (+) Increase - : Turnover income Operating Income statement 216
( 41) 2011 244 275 325 40 40 13 37 11 31 46 3 1 5 5 ( 1,038 ) ( 1,038 ( 181 ) ( 181 1,181 1,044 1,742 1,760 2010 623 37 23 12 64 99 12 6 6 6 6 1 Profit for the financial year available for appropriation appropriation for available year financial the for Profit Transfer to tax-exempt reserves Transfer from tax-exempt reserves year financial the for Profit provisions tax of write-back and taxes of Adjustment Taxes profits Tax on taxes before year financial the for Profit expenses exceptional Other - assets onfinancial Impairment - Extraordinary charges asset fixed of realization on gain Capital - Other extraordinary income - Extraordinary income allocations Other Directors’ entitlements Dividends bedistributed to Profit losses of respect in contribution Shareholders’ forward becarried to Result reserves other To the To the legal reserve reserve premium andshare capital To the equity shareholders’ to Transfer reserves From the reserves premium share and capital From the equity shareholders’ from Transfers year financial previous the from forward carried Profit appropriation for available year financial the for Profit beappropriated to Profit profit of Appropriation
( 1,477 ) ( 1,477 ) ( 1,183 (1,183) 2011 294 294 294 294 50 50
( 1,477 ) ( 1,477 ) ( 1,283 ) ( 1,477 ) ( 1,283 ) ( 1,283 ) ( 1,287 ( 194 ) ( 194 1,910 1,910 2010 149 149 149 149 4 4 Annual Report 2011 74 74 760 760 760 2010 1,344 3,121 1,909 3,121 29,255 27,478 25,163 27,072 217
74 50 760 180 254 760 760 474 2011 2,697 3,121 2,647 ing interests, equity securities
Acquisitions Uncalled amounts Net book value at the end of the financial year Depreciations as at the end of the financial year Uncalled amounts Net book value at the end of the financial year Receivables from related parties Net book value at the end of the preceding financial year Change during the financial year Receivables at the end of the financial year Accumulated amounts written off interests participating by linked Enterprises Acquisition value as at the end of the preceding financial year Changes during the financial year: - Acquisition value as at the end of the financial year gains Capital Depreciation and amounts written off as at the end preceding financial yearof the Changes during the financial year: - Booked - Disposals and asset retirements Depreciations as at the end of the financial year Status of financial fixed assets Affiliated companies - Participat Acquisition value as at the end of the preceding financial year Changes during the financial year: - Acquisitions - Disposals and asset retirements Acquisition value as at the of end the financial year gains Capital Depreciation and amounts written off as at the end of the preceding financial year Changes during the financial year: - Booked - Disposals and asset retirements 2 2 1 1 2010
2 1 1 2 1 1 2011
- Furniture - Furniture - Other fixed assets - Depreciation - Other Net book value as at the end of the financial year, comprising: Net book value as at the end of the preceding financial year Change during the financial year - New expenses incurred Statement of fixed assets Notes
Annual Report 2011 shares Ordinary BE 0807.882.811 -BELGIUM 100 Brussels 15 Van Orleyestraat Royal Park Investments SA shares Ordinary –G.D.LUXEMBOURG Luxemburg 1331 6 Charlotte Duchesse Grande Boulevard Ageas Hybrid Financing SA shares Ordinary –THENETHERLANDS BAUtrecht 3584 6 Archimedeslaan N.V. International Insurance Ageas law,theV.A.T.or NATIONALNUMBER By Belgian governed acompany of case In OFFICE REGISTERED the of address full Name, issued. thecapital 10%of atleast representing entitlements ageas SA/NVholds companies as theother interest,aswell aparticipating holds SA/NV ageas inwhich comprises thecompanies The followinglist Participating interestsandentit 218
Number Number
The company (directly) (directly)
Entitlements held by by held Entitlements 44.70 44.70 50.00 50.00 %
lements inothercompanies
subsidiaries %
31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 statements statements Financial Financial as at as at
Information derived from the latest available financial statements statements financial available latest the from derived Information
Currency Currency Code Code EUR EUR EUR
(in millionsof Shareholders Shareholders equity equity 5,598 5,598 2,049 2,049 1
monetary units) units) monetary (+) or (-) (-) or (+)
in which
Result Result 235 235 335 Net
Annual Report 2011 1 1 1 1 1 9 4 2 3 6 5 1 1 34 939 474 465 181 32.7 2010 2010 2010 1,102 1,181 44,912 219 1 1 6 1 1 2 2 11 11 12 190 190 8 2 1 1 2011 46 12 2011 1,102 39.6 2011 71,237
cture ofthe shareholder group
Impairment on receivables (-) costs other for Provisions Other operating costs Taxes due - Taxes - Taxes not yet due - payable taxes Estimated Remuneration and social charges - Amounts due to the National Social Security Office - Otheramounts payable in respect of remuneration and social charges Transitory accounts expenses - Accrued - Accrued interests RPN(I) - Accrued expenses State Guarantee - Profit to be carried forward Business Results Operating expenses Employees - Total on closing date - worked Average in FTE - Hours Salary expenses - Salaries - Social security expenses - Employer’s premium for extra legal insurance - Other staff expenses Specification of equity and stru Equity Subscribed capital end - year At previous year end - At liabilities of Status Amounts payable originally due after more than one year, according to their remaining term to maturity debts - Financial loans - Other debts - Other Guaranteed amounts payable Amounts payable in respect of taxes, remuneration and social charges 7 7 % 4.62 6.74 5.05 4.78 2010 1,206 1,199 1,199 40,309,263 17,004,435 17,004,435 176,781,673 170,015,692 2,623,380,817 2,453,365,125 Number of shares
1 1 3 1 2 4 2011 2011 Amounts 7,741,863 xxxxxxxxxx xxxxxxxxxx 84,000,000 48,371,116 176,781,673 132,255,305 125,313,283 120,996,265 115,094,447 1,101,819,943 Number of shares
Directors of ageas SA/NV jointly held 31,211,826 shares and 103,384 options on Ageas units Norges Bank Fortis Bank SA/NV Ping An Life Insurance Company of China, Ltd On 31 December, the members of the Board of the company’s stable shareholders at 31 December 2011, was as follows: Ageas as at the closing date of the financial year, as shown by the notices received by the company As far as known by ageas SA/NV, the structure of Capital authorised but not subscribed Shares issued not representing capital Structure of the shareholder group of the company - Number of outstanding subscription rights - Amount of capital to be subscribed - Maximum number of shares to be issued - Amount of outstanding convertible notes - Amount of capital to be subscribed - - Maximum number of shares to be issued rights subscription with connection In - Amounts - - Number of shares Commitments to issue shares - rights conversion with connection In - The company itself Amounts - subsidiaries - - Its Number of shares Unpaid capital Own shares held by: Types of shares shares - Ordinary shares - Registered shares - Bearer - Capital increase - Capital down - Write Capital represented by - receive to Interests Changes during the financial year Transitory accounts - expenses create to Invoices - Deferred - Book value - Book Deposits – credit institutions - Maturity: more then 1 month and maximum 1 year Specification of investments Shares
Annual Report 2011 commitments of third parties are are parties third of commitments or debts other which for amount Maximum - Bills drawnor guaranteed by the company - thecompany by endorsed billsofexchange Outstanding - which of parties, third of or commitments by payable For amounts surety of byway company the by pledged orirrevocably provided security Personal sheet balance the in notreflected commitments and Rights Withholding - benefits and salaries wage, from withheld levy Advance tax - of: intheform parties third debitof the to withheld Amounts year: financial the during tax charged added value Amount of Corporates Duefrom - Corporates Dueto - parties third of debit to the taxes and added onvalue Taxes nature afinancial of Provisions Revaluation - RPN(I) charges financial Other assets current on down Amount written Capitalised interest risks andfrom costs on loanissuance down written Amounts Revaluation - RPN(I) - Default interests Other financial income Financial results 220 company bythe guaranteed
2011 2011 2011 275 275 19 3 1 1 2010 2010 2010 26 23 23 12 1 1 1 6 6 Deferred tax assets - taxes ofdeferred Sources on year financial the for the result of taxation level the on results extraordinary the of Impact assets fixed financial onrealisation gains Capital taxable not 95% which of subsidiaries, of Dividends profit taxable the estimated and statements, thefinancial in stated as taxes, before profit the between ofdifferences sources Main provisioned or taxes income for charges additional Estimated - paid or due taxes income for charges Additional - years previous for result onthe Taxes taxes income for charges additional Estimated - tax withholding oractivated taxes prepaid on Surplus - paid due or taxes Income - year financial the for result onthe Taxes Income taxes taxes other and taxes Income BNPParibas onshares Option - Deferred tax liabilities profits taxable future from deductible forward, carried Loss - -
11,149 2011 395 50 36
13,634 13,634 609 2010
Annual Report 2011 221 On 16 June2010, the expert report commissioned by the Ondernemingskamer in Amsterdam was filed for public inspection. A copy of the report can be downloaded from the website. Ageas Among other things the experts are critical of the wayin which Fortis informed its investors over time and conclude that the information provided by Fortis to investors in a number of areas was incorrect or at least incomplete. particular, In they refer to : (i) the information on the position and exposure of Fortis in relation to the subprime situation in the trading update of 21 September 2007 and in the prospectus for the rights issue (which incorporated the trading update) effectuated on 9 October2007 (although the experts acknowledge that information has not been manipulated or willingly misrepresented); (ii) information on the sale of certain parts of ABN AMRO as required by the EC competition authorities and solvency position of Fortis, in periodthe as of 21 May 2008 until 26 June 2008; (iii) the communication of certain facts to investors in the subsequent period and more specifically on 26 September 2008. On 16 August 2010, VEB and certain other parties filed a request with the Ondernemingskamer (i) to start legal proceedings aimed at establishing that certain facts mentionedin the expert report should be deemed ‘mismanagement’ (‘wanbeleid’) by Fortis and (ii) to annul the discharge granted to Fortis directors on 292008. April The findings of the Dutch experts have led and may still lead to new claims and proceedings being filed against Ageas, including claims for compensatory damages. The experts’ findings may also impact existing legal proceedings. Although Ageas anywill challenge allegations of wrongdoing, such actions if successful may ultimately have a severe material impact on Ageas. At this point however it is not possible to assess the chances that such actions would succeed, nor to quantify the damages which may have to be paid if that would be the case.
Like any other financial institution, Ageas is involved as a defendant in various claims, disputes and legal proceedings arising in the ordinary course of its business. In addition, as a result the of events and developments occurred in respect of the former Fortis group between May 2007 and October 2008 (a.o. capital increase and acquisition of parts AMRO of ABN in October 2007, announcement of the accelerated solvency plan in June 2008, divestment of banking activities and Dutch insurance activities in September/October 2008), Ageas is involved or may still become involved in a number of legal proceedings as well as administrative and criminal investigations in Belgium and the Netherlands, some of which could result in substantial but currently unquantifiable future liabilities for Ageas. The ongoing investigations do not have immediate (material) monetary consequences for Ageas, but it cannot be ruled out that they could lead to such negative impact at a later stage. This is the case for (i) investigations conducted by the Belgian Financial Services and Markets Authority (FSMA), as as well (ii) the criminal investigation conducted in Belgium. Any negative findings of these ongoing investigationsimpact may existing legal proceedings and lead to new proceedings against Ageas, including claims for compensatory damages being initiated against Ageas at a later stage. On 5 February 2010, the AFM levied a fine on each ageas SA/NV and ageas N.V. of EUR 288,000 for breaches of the Dutch Securities Act (‘Wet op het financieel toezicht’). The AFM alleges that on 5 June 2008 certain statements would have been incorrect or misleading in respect of the solvency situation of Fortis and that on 14 June 2008 Fortis should have made public that the required EC remedies would imply that the financial objectives for 2008 and later could not be achieved without additional measures. might This imply that, for the period of 5 to 25 June 2008, investors may allege to have traded on not fully correct information. Ageas challenges any allegations of wrongdoing. After rejection of the administrative appeal, Ageas has appealed the decision of the AFM before the District Court in Rotterdam. On 4 May 2011 the Court of District Rotterdam confirmed the decision of the AFM. Ageas has filed an appeal against this decision with the competent court in the Netherlands. Contingent liabilities
Annual Report 2011 2008: andOctober 2007 between May group Fortis of theformer inrespect occurred developments and events from orindirectlyresulting directly proceedings in legal become involved ormaystill Ageas isalsoinvolved intheNetherlands. court the competent this decisionwith appealagainst Ageaswillfilean AFM. ofthe decision confirmed the Rotterdam DistrictCourtof the 2012 February 9 Rotterdam. On Courtin theDistrict AFMbefore decisionofthe this has appealed Ageas appeal, administrative of the rejection After of wrongdoing. anyallegations Ageas challenges information. incomplete traded on tohave investorsmayallege 2007, September 21 period asof the that,for Thismightimply 2007. on 9October issue effectuated rights ofthe context 2007inthe September on21 update published trading inthe break down) US,aswella the overall andin exposure (both positionand onitssubprime published information have andshould position on itssubprime inform investors nottimely Fortis did that AFMalleges Act. The Dutch Securities ofthe breach EUR 144,000for of ageasN.V. ageas SA/NVand of oneach fine anadditional AFM levied the On 19August2010, 222
- - proceedings initiated before the Brussels Commercial Court: Court: BrusselsCommercial the initiatedbefore proceedings include: proceedings Such 2008. and October May2007 periodbetween the byFortisover abuse committed market and/or on allegedmiscommunication damages based ofmonetary the payment at or(ii)aiming 2008 transactions September/October tothe (i)inrelation Netherlands (in)directly and the inBelgium initiated havebeen proceedings Various 2007 until October 2008; these proceedings are pending; pending; are proceedings 2008;these 2007 untilOctober May intheperiod byFortis information of ormisleading lack alleged becauseof damages demanding International, Deminor around gathered ofindividuals by anumber Paribas; BNP and DNB,SFPI State, from theDutch asked ondamages claimnowfocuses The Belgian bank. of the sale the regarding onthemerits brief and (ii)atrial decision oncompetence forementioned the appeal against (i)an filed Modrikamen Mr April2011, 26 on defendants; Dutch againstthe on actions tojudge it isnotcompetent that decided courta.o. the 2009, on 8December damages; oralternatively Paribas), toBNP (and subsequently SFPI to SA/NV Bank Fortis saleof andthe Dutch State of ASRtothe of thesale theannulment initially demanding Modrikamen byMr represented ofindividuals by anumber
proceedings initiated before the Amsterdam District Court: Court: Amsterdam District the before proceedings initiated proceedings initiated before the Amsterdam Court of Appeal: of Appeal: Amsterdam Court the before proceedings initiated - - - - 9 October 2007 was incorrect and incomplete; incomplete; was incorrectand 2007 9 October on effectuated rightsissue forthe 2007 24 September of theprospectus in situation subprime relation tothe Fortis in of exposure positionand on the information the rights issue)that withthe connection managers in lead and coordinators actingasglobal financial institutions the executivesand and top directors certain ofitsformer claim(vis-à-visFortis, Thisincludesa period; the relevant in shares whobought by those suffered liable fordamages areconsequently defendants these that and defendants ofallorcertain isanunlawfulact of thesebreaches each executives;that and top directors certain ofitsformer and oflawbyFortis breach a 2008 constitute 3 October to 2007 September period of Fortisinthe communications various that toestablish by VEBdemanding 2011. on 18November report final have filedtheir group Fortis ofthe thebreak-up circumstances surrounding the toinvestigate 2008 inNovember Deminor request of at the court ofthe President bythe appointed the experts damages; damages; pay to alternatively, or transactions, and unwindthe 2008 Board inOctober Fortis bythe the decisionstaken whichdismissedtheirclaimtoinvalidate Ageas, in favourof 2011 May Courtof18 Amsterdam District the judgment of the torepeal DeGierdemanding byMr represented of individuals number and a by theStichtingFortisEffect 2008. 3October activitieson insurance banking and Dutch saleofthe ofthe in thecontext B.V. Investments Preferred FBN(H) Fortis N.V.and Insurance International Fortis InsuranceN.V., by Fortis agreed provisions allegedly application ofcertain claimsonthe alleged bases these State N.V.TheDutch International from AgeasInsurance million and EUR674 companies parent Ageas from the million EUR 210 of claiminganamount State by theDutch Annual Report 2011 223 V. (now ABN AMRO Bank N.V.), Legal proceedings have also been initiated related to a hybrid instrument called Mandatory Convertible Securities for(MCS) which ageas SA/NV and ageas N.V. acted as co-obligors.
Should any of these proceedings result in the annulment of (part of) the decisions taken by the Fortis Board of Directors in September/October 2008 ofand the resulting agreements and transactions (which is highly unlikely into account taking that none of the experts appointed by court have raised argumentscould that lead to an annulment these of transactions, and that the Amsterdamin two judgments District Court of 18 May 2011 dismissed the claims of VEB/Deminor and Stichting FortisEffect respectively with regard to these transactions), this would have consequences on the financial position of Ageas that are unquantifiable at this stage. In the event that any court decisions were to order Ageas to pay monetary damages, this could have a severe negative impact on its financial position. The Mandatory Convertible Securities (MCS) issued in 2007 by Fortis Bank Nederland (Holding) N. Fortis Bank SA/NV, ageas SA/NV and ageas N.V., were mandatorily converted on 7 December 2010 into 106,723,569 Ageas shares. Before 7 December, certain MCS holders unilaterally decided at a general MCS holders’ meeting to postpone the maturity date of the until MCS 7 December 2030. The effects of this decision were however suspended by the President of the Commercial Court of Brussels at the request of Ageas. After 7 December, the same MCS holders contested the validity of the conversion of the MCS by claiming the annulment ofconversion the or, alternatively, damages for an amount of EUR 1.75 before billion, court. Ageas is convinced, after consultation with its legal advisors that this claim is without merits. by a Stichting under Dutch law, called ‘Investor Claims Against Fortis’ alleging miscommunication by Fortis on various occasions in the period 2007-2008. This includes a claim (vis-à-vis Fortis and two of its financial advisors)that the information on the position and exposure of Fortis in relation to the subprimesituation in the prospectus of 24 September 2007, for the rights issue effectuated on 9 October 2007 was incorrect and incomplete. by a number of individuals represented by Mr Bos demanding damages due to alleged miscommunication in 2008. On 15 February 2012 the court decided that Fortis and two co-defendants (the formerand the CEO former financial executive) disseminated misleading information in the period 22 May to 26 June 2008;further it ruled that separate proceedings are necessary whether to decide the plaintiffs suffered damages, and if so, the amount of such damages. Ageas will appeal this judgment. In this context, some former directors and top executives of Fortis have requested the court to acknowledge the alleged obligation of Ageas, under termination agreements entered into in 2008 and/or rules law, to hold such of Dutch civil persons harmless against damages resulting from or relating to the legal proceedings initiated against them and which would originate from their functions within the Fortis group. Ageas is contesting the validity of the mentioned statutory and contractual hold harmless commitments; proceedings initiatedproceedings before the Utrecht District Court: - -
As said above Ageas denies anywrongdoing will and challenge any allegations thereof in court. However, if successful this may ultimately have a severe material impact on Ageas. At this point however it is not possible to assess the chances that such actions would succeed, nor to quantify the damages which may have to be paid if that would be the case. Annual Report 2011 estimated. be reasonably can amount the Ageas and by be made willhaveto a payment that advisors, itisprobable withlegal consult who management, opinionof the if andwhen,in such matters willmakeprovisionsfor Ageas isaware, management ofwhich and investigations proceedings of alllegal In respect Bank. claims againstABNAMRO Ageas’s on attachment leviedaconservatory the DutchStatehas thelitigation, initiated having Before Sheet. Term ofthe or theterms ofdamages legaltitle tothe pursuant DutchState tothe transferred be suchclaimshould AMRO Bank, ABN its claimagainst wouldprevailin Ageas that extent to the and that claim right tothe haswaivedits Ageas alleges that State The Dutch 2008. 3 October on State Dutch N.V.tothe (Holding) Bank Nederland of Fortis sale uponthe into entered Sheet withtheTerm is actinginviolation itsclaimagainstABNAMROBank bypursuing Ageas, alleges that DutchState The proceedings. has joinedthese State The Dutch MCS issuers. four between the an agreement accordance with EUR 2billion,in of for theamount toAgeas sharesin itscapital AMRO Banktoissue ABN failure of the relationto ABNAMROGroupin Bankand against ABNAMRO aclaim Ageashasinitiated MCS, ofthe Following theconversion 224
decisions. ofany judicial financial consequences to the they relate extent tothe commitments harmless hold validity ofthecontractual the Ageasiscontesting persons, ofthese of some In respect inthecompany. exercised oftheirmandates thebasis persons on such against werebrought proceedings legal the eventthat decisionsin ofanyjudicial consequences cases, alsothefinancial insome and, legal expenses covering protection hold harmless acontractual departure oftheir time directors atthe executives and former tosome granted parentcompanies the Fortis In 2008, Financial Statements. Ageas Consolidated ofthe other receivables Reinsurance and Note20 in asmentioned State, withtheDutch to thedisputes EUR 2.4billioninrelation of aprovision than other been setapart, provisions have no Therefore, Statements. Consolidated Financial Ageas the a significantlossin in may notresult or claimsmay theseactions of theoutcome or whether be successfullydefended can meritor without are andinvestigations with theseproceedings inconnection Ageas against oractionsbrought whether anyclaims determine inapositionto isnot investigations, management and proceedings current complexity ofthe and uncertainties well asinherent as nature continuouslyevolving and various stages giventhe above, made toanyspecificcomments prejudice Without Annual Report 2011 225 convert additional out CASHES Ageas agreed to indemnify BNP a periodParibas within of 2 years, if BNP Paribas would acquire and of the 37% CASHES that remain outstanding. Ageas also agreed to pay an annual indemnity to Fortis Bank SA/NV that equals the grossed up dividend on the shares that Fortis Bank SA/NV holds. The sole recourse of the ofholders the CASHES against of the any co-obligors with respect to the principal amount are the Ageas shares that Fortis Bank SA/NV holds; these shares are pledged in favour of such holders. In the event that dividends on the Ageas shares would not be paid or that the dividends to be declared are below a threshold with respect to any financial (dividend year less than yield 0.5%), and in certain other circumstances, coupons will mandatorily need to be settled by ageas SA/NV and ageas N.V. in accordance with the so called Alternative Coupon Settlement Method (ACSM), while Fortis Bank SA/NV would need to issue instruments that qualify as hybrid Tier 1 instruments to Ageas as compensation for the coupons paid by ageas SA/NV and ageas N.V. If the ACSM is triggered and there is insufficient available authorised capital to enable ageas SA/NV and ageas N.V. to meet the ACSMobligation, the coupon settlement will be postponed until such time as the ability to issue shares is restored. 2. Fortis Bank SA/NV Tier 1 debt securitiesFortis Bank SA/NV issued 2004EUR 1,000 million perpetual securities in 2004, which benefit from a support agreement entered into by the former Fortis parent companies now ageas SA/NV and ageas N.V., at an interest rate of 4.625% until 27 October 2014 and 3 month Euribor + 1.70% thereafter. Under the parental support agreement if Fortis Bank’s solvency drops below the threshold level or if Fortis Bank SA/NV so elects, the coupon will be settled through of ordinarythe issue shares by ageas SA/NV and ageas N.V. in accordance with a so-called Alternative Coupon Settlement Method (ACSM), for which Fortis Bank SA/NV would need to compensate ageas SA/NV and ageas N.V. by issuing new shares.
CASHES (Convertible And Subordinated Hybrid Equity-linked Securities) represented 12,000 securities for a total nominal amount of EUR 3 billion, issued by Fortis Bank SA/NV, with ageas SA/NV and ageas N.V. acting as co-obligors. Fortis Bank SA/NV pays the coupon, in quarterly arrears, at a variable rate of 3 month Euribor + 2.0%, up to the exchange of the securities for Ageas shares. The securities have no maturity date and cannot be repaid in cash: they can only be exchanged into Ageas shares. A mandatory exchange takes place if the price of the Ageas share oris equal to higher than EUR 35.91 on twenty consecutive stock exchange business days (the closing share price at year end 2011 amounted to EUR 1.20). The securities can also be exchanged at the discretion of the security holders at a price of EUR 23.94 per share. At 31 December 2011, Fortis Bank SA/NV owned 125,313,283 Ageas shares, which do not have any dividend or voting for rights, the purpose of the potential exchange.. In January 2012, BNP Paribas launched a tender offer on the CASHES securities at a price of 47.5% and subsequently exchanged 7,553 tendered CASHES securities for 78,874,241 underlying Ageas shares. The tender and subsequent exchange was part of a broader agreement that Ageas reached with Fortis Bank SA/NV and BNP Paribas (see subsequent events in section 56 of the Ageas Consolidated Financial Statements); Ageas paid EUR 287 million indemnity to BNP Paribas for the 63% exchange. The exchanged shares became entitled to dividend and voting right. As a result of this transaction, the nominal amount of CASHES outstanding reduced to EUR 1,112 million, for which Fortis Bank SA/NV continues to hold 46,439,042 shares. 1. CASHES Ageas’s former operating entities issued a number of hybrid instruments that createdhave a contingent liability ageas N.V.for and ageas SA/NV, because these former parent companies acted as guarantor, co-obligor or provided support agreements. The thefollowing chapters describe contingent liabilities linked to these instruments. Contingent liabilities for hybrid instruments of former subsidiaries instruments liabilities for hybrid Contingent
Annual Report 2011 fee Auditor’s - Auditors or people theyare linked to and managers directors to person, identifiable asingle of situation the mainly, or exclusively concern doesnot disclosure this as aslong statement, income the in included pensions, and remunerations andindirect direct of Amounts - persons by these controlled enterprises orother therewith associated being without enterprise the whocontrol corporate orbodies individuals managers, Directors, - Financial relationships with: - Participating interests assets fixed Financial Relationships affiliated with en assets fixed of onrealisation gains Capital - assets fixed of Realisation charges financial Other - payable amounts of respect in Interest - income financial Other - Income from current assets - Income from financial fixed assets - Financial results Other - loans Subordinated - loans - Participating interests assets fixed Financial Affiliated companies interests participating holds company Relationships with affiliated compan Related Parties 226
terprises andenterprises linke ies andies companies inwhichthe
d by participating interests 2,697 2,697 2,951 2011 180 180 760 760 760 0.9 0.9 50 50 50 37 74 1
3,120 3,194 2010 760 760 0.4 74 19 2 6 Annual Report 2011 4 6 7 2 25 11 12 (T) 9.8 19.8 37.8 44.8 44.8 (FTE) 218.00 full-time (Previous 44,912(T) 227 32.7 (FTE) equivalents Equivalents 6,053,803(T) financial year) Total in full time full in Total Total (T) or total in total or (T) Total
(FTE) 71,236 full time time full
3 3 2 2 1 1 2 1 40,400(T) 39.9 (FTE) 11,481,042 equivalents (financial year) Part time time Part Total (T) or total in in total or (T) Total 2.8 xxxxx 3,009.6 969,001 Part Time (financial year) 2 9 4 6 6 43 43 24 11 11 19 37 Full time Full 37.9 xxxxx 68,227 Full Time 10,512,041 (financial year) 105 110 111 112 113 120 121 130 134 132 133 100 101 102 103 1200 1201 1202 1203 1210 1211 1212 1213 Codes Codes
Manual workers workers Manual Other Breakdown by occupational category staff Managerial and supervisory staff Clerical Secondary Secondary non-university Higher University University Women Elementary Men Elementary Secondary non-university Higher contract Contract for a specified task Substitution Breakdown gender by and level of education Number of employees listed in the personnel register Breakdown by type of employment contract contract Permanent contract Fixed-term On last day of financial year Actual number of hours worked Staffing cost Value of benefits in addition to salary/wages During financial year and previous financial year Average number of employees
Employees listed in the personnel register Statement of persons employed Statement of persons Numbers of Joint Committees applicable to the enterprise Social balance sheet Social balance
Annual Report 2011 half time for the enterprise on a self employed basis basis employed onaself enterprise the for time half least at work to continue that people of number the Of which: Other reason Redundancy retirement Early Retirement contract of termination for byreason Breakdown task aspecified for Contract contract term Fixed Permanent contract contract ofemployment bytype Breakdown year the during Register personnel the in recorded adate on Terminated onadate terminated contract whose ofemployees Number Departures task aspecified for Contract Fixed-term contract Permanent contract contract ofemployment bytype Breakdown year financial during register Personnel the in entered ofemployees Number Recruitment year financial during movements Table ofstaff enterprise the to Cost worked hours of number Actual employees of number Average year During financial theenterprise to secondment and staffon Agency workers 228 Audit Committe the Inaddition, overall audit. a common audited by ru tothe bound SA/NV isnot 1:1: ageas rule the Exception to CompanyLaw. of the 6 paragraph 133, byarticle Remarks asrequired enterprise the to cost Net completed training of hours of Number involved employees of Number employer’s the at for employees initiatives training expense vocational further informal and ofsemi-formal Total financialyear during employees initiativesfor ontraining Information approval of requests for particular or exceptional audit assignments. assignments. audit or exceptional forparticular requests approval of
le 1:1 because the Ageas consortium, to which ageas SA/NV belongs, which ageasSA/NV consortium,to Ageas the because le 1:1 Codes Codes Codes 152 151 150 5843 5842 5841 212 211 210 205 350 343 342 341 340 312 311 310 305 e of the Ageas consortium follows a systematic approach fort systematic approach followsa Ageas consortium of the e Full time 36,454 (FTE) Agency workers Agency Men 271 19 20 21 1 8 1 2 7 9 255,347 3,754 3.6 Part time Codes Codes 5853 5852 5851
Staff onsecondments Staff equivalents equivalents he Total in full time is Women 14,085 (FTE) (FTE) 19.8 20.8 86 5 8 1 2 7 9 1 Annual Report 2011 229 Conversion of assets and liabilities denominated in foreign currencies Assets and denominated liabilities in foreign currencies are converted in euro at the exchange rates at the end of the financial year. Gains or losses arising from these conversions and exchange rate differences in connection with transactions in the of course the financial year are taken to the income statement. Appropriation of profit Since shareholders cannot elect the of source their dividend payment until after the Annual General Meeting, it is impossible for ageas SA/NV to topresent this Annual General Meeting financial statements after appropriation of dividend. Because of this, the Minister has given permission for the company financial statements for 2010, 2011 and 2012 to be drawn up before appropriation of profit.
Short-term investments Securities are recorded at their acquisition price. Reductions in value are recorded to the amount of the long-term capital losses incurred. If these reductions in value subsequently diminish, they will be reversed in the amount of such diminution. Profits on the sale of securities are determined on the basis of the average acquisition price of the securities. Amounts receivable and liquid assets Amounts receivable and liquid assets are accounted for at face value or at acquisition price. The three items above are reducedat the in value if, balance sheet date, and taking into account the value of any guarantees attached to each receivable or liquid asset, recovery is uncertain or doubtful. Financial fixed assets Financial fixed assets consist only of ownership interests in Ageas companies. They are accounted for at their acquisition price, excluding acquisition costs. Incorporation expenses Expenses relating to a capital increase or an issue of shares and convertible and non-convertible notes are amortised over a maximum period of five years. Summary of valuation principles Summary of
Annual Report 2011 Provisions). Provisions). under (seealso State withtheDutch disputes provision for upofa set for the account takenthisinto ageas SA/NVhas this claim. to areentitled they Insurance, Corporate and Fortis Nederland Fortis Verzekeringen Bank Nederland, Fortis the saleof conditions on and on theterms based that a statement has made State The Dutch byageasN.V.). billion isrecorded however, EUR1 2 billion, EUR amounts to totalreceivable (the of conversion at themoment AMRO asdebtor billionwithABN EUR1 amount of foran areceivable recorded SA/NV ageas conversion, moment of a claimonABNAMROatthe SA/NV ageas granting agreement the4party of theexistence MCSissueand ofthe the proceeds beneficiaryof ABNAMROwas the MCS.Since the conversion of million sharesinrelationtothe issued106.7 SA/NV 2010, ageas 7December On conversion. MCS relatestothe claim The second State. withtheDutch disputes provision for ofthe intheassessment includethisclaim and the impairment toreverse ageas SA/NVdecided the DutchState, negotiations with onthe theclaim.Based AMRO contested ABN the factthat on claimwasimpairedbased 2009 this N.V.).In byageas recorded millionis however, EUR181 EUR 362 million, claim amountsto total shares (the ofpreference holders tothe amount pay theabove toallowit AMRO N.V.) ABN (asubsidiaryof Company Limited Capital Fortis byAgeasto made thepayment for compensation isforfull first claim The MCSconversion. the transaction and theFCC to related State million andtheDutch EUR1,185 Limited, ABNAMRO withinoneyear: receivable Amounts Company onFortisCapital theclaims are Included inthiscaption b. 0.016million). (EUR Financing (EUR 760million)andAgeasHybrid Royal ParkInvestments (EUR2,697million), International Insurance inAgeas alsoparticipations ageas SA/NVholds to: milliondue million toEUR3,710 from EUR3,954 EUR 3,713million Fixedassets: decreased December2011 31 assetsasper fixed The Financial a. ASSETS income statement Additional disclosureonitemsinthe 230
International. International. Insurance to Ageas milliongranted EUR 180 a loanof EUR 424million; of an amount ageas SA/NVfor to Ageasinvestlux from all assetsandliabilities of the transfer
statement offinancialpositionand EUR (1,183)million. to forwarddecreased the losscarried As aconsequence Ageasinvestlux (EUR50million). participationin the revaluation of million) andthe RPN(I)(EUR275 ofthe million invaluation EUR (1,183) the change forward: Profit/losscarried million relatedto closedwithaprofitofEUR294 The financialyear e. unavailable reserves. the to millionwastransferred EUR 115 of amount an programme buy-back share Ageas ofthe framework the in Furthermore, outdividend. topay deducted was of thereserves EUR 149million of million. Anamount toEUR2,637 EUR2,637million EUR 2,901million fordistribution: Reservesavailable from decreased fordistribution available The reserves d. EUR115million result of: Unavailablereserves: asa werecreated reserves The unavailable EUR 955million reserve: Sharepremium c. Subscribedsharecapital:EUR1,102million b. a. million EUR3,656 equity: Shareholders’ LIABILITIES ANDSHAREHOLDERS’EQUITY
Share Unit Plans (EUR 1 million). (EUR 1million). Share UnitPlans therestricted frameof inthe shares 1,615,000 a buy-inof million); (EUR114 shares of175,163,656 back a sharebuy
Annual Report 2011 231 Lawyers, consultants Expenses charged by AG Insurance Yearly shareholders meetings Directors fees Marketing and advertisements Insurance1 Other4 10 Salary expenses 13 1 2 4 11 b. The operating expenses are as follows: Operating million expenses: EUR 46 Information on the Ageas Consolidated Financial Statements Together with ageas N.V. the company is part of the Ageas consortium. The two companies publish together Consolidated Financial Statements. The Ageas Consolidated Financial Statements are available at the group’s two registered offices, at Rue du Marquis 1, 1000 Brussels 6,Utrechtand Archimedeslaan(Belgium) 3584 BA (the Netherlands). Appropriation of profit ageas SA/NV in andBelgium ageas N.V. in the Netherlands together form the holding companies of Ageas. The listed shares of ageas SA/NV and ageas N.V. were twinned at the end of 2001 to form a new listed security, the Ageas share. One Ageas share comprises one ordinary share of ageas SA/NV and one ordinary share of ageas N.V. including all the rights attached to those shares, such rights andas voting dividend rights. ageas SA/NV and ageas N.V. pursue the same dividend policy and shareholders may elect to receive dividend either from ageas SA/NV or from ageas N.V. Shareholders have to state their preferred source of dividend on a ‘dividend election form’ that is not available until after the Annual General Meetings of ageas SA/NV and ageas N.V. Since shareholders cannot elect the source of their dividend payment until after the Annual General Meeting, it is impossible for ageas SA/NV to present to this Annual General Meeting financial statements after appropriation of dividend. Because of this, the Minister has given permission for the company financial statements for 2010, 2011 and 2012 to be drawn up before appropriation of profit. the owner of the AMROEUR 2 billion claim on ABN related to the conversion of the MCS; the owner of the 362 million EUR claim on FCC/ABN AMRO related to FCC transaction; entitled to some related to aEUR 885 million capital guarantee included in the sales documentation. debts to suppliers EUR 14 million; or withholding taxes or EUR 11 million; remuneration and social charges or EUR 1 million; debts to the shareholders for an amount of 25EUR million.
a. This amount mainly relates to the re-invoicing of services related to Operating income: EUR 6 million the Solvency II programme (EUR 3 million) and the re-invoicing of costs incurred in the frame of the Restricted Share Units Plan (EUR 1 million). INCOME STATEMENT INCOME STATEMENT g. The debt consists of: Amounts payable within one year: EUR 51 million f. In 2010, Ageas set up a provision for the disputes with the Dutch State. These disputes arise from the differencesinterpretation in of Provisions: EUR 1,181 million the terms and conditions of the sale of Fortis Bank Nederland, Fortis Verzekeringen Nederland and Corporate Fortis Insurance from Ageas to the Dutch State in October 2008. The State Dutch is of the opinion that on based the term sheets underlying the sale they are: As communicated by the Dutch State and Ageas, both parties aspire to reach an amicable settlement. In this settlement the dispute over the ownership of claims on ABN AMRO related to the FCC transaction the MCSand transaction as well as the capital guarantee will be resolved. Ageas believes that the provision of EUR 2,362 million is sufficient to coveroutflow any of benefits related to the settlement. The provision is for an amount of EUR 1,181 million booked in the accounts of ageas N.V. and for EUR 1,181 million in the accounts of ageas SA/NV.
Annual Report 2011 financialstatements. disclosures inthe and amounts aboutthe auditevidence toobtain procedures wehaveperformed withthesestandards, In accordance misstatement. ofmaterial free statements are financial whetherthe about assurance obtain reasonable the auditto plan andperform we requirethat auditing standards Those Bedrijfsrevisoren’. der Reviseurs d'Entreprises/Instituut des issuedbythe‘Institut as standards, with Belgianauditing Belgiumand applicable in legalrequirements accordance withthe audit in our conducted We audit. onour statements based financial opinion onthese istoexpressan Our responsibility circumstances. inthe reasonable thatare accounting estimates andmaking accounting policies; appropriate applying selecting and orerror; tofraud due misstatement,whether material free from thatare financialstatements of presentation fair and preparation tothe relevant control maintaininginternal implementing and includes:designing, This responsibility statements. of thefinancial the preparation is responsiblefor BoardofDirectors The company's 294million. EUR of for theyear result millionanda of EUR5,054 total which showabalance-sheet Belgium, and applicablein framework reporting with thefinancial inaccordance prepared 2011, 31December ended year and forthe of SA/NV as ofageas the financialstatements audited We have matter paragraph emphasisof statementswith financial onthe Unqualified opinion additional comments. required and the statements financial opinion onthe inclu This report audit mandate. ofour on theperformance you we reportto requirements withlegalandstatutory In accordance SA/NV asofandfortheyearended31December2011 Statutory auditor’sreport tothegeneralsharehold 232
ers’ meetingonthefinancialstatements ofageas opinion is not qualified in respect of this matter. thismatter. inrespectof qualified opinion isnot Our bedetermined. presently matterscannot these outcome of ultimate However,the in financialliabilitiesforthecompany. couldresult of which some 2008, andOctober 2007 between May occurred having developments and events connection withcertain in andcriminalinvestigations as welladministrative proceedings inanumberlegal becomeinvolved involved ormaystill is the company that inwhichisdescribed contingent liabilities to relating financialstatements the note to tothe We drawattention inBelgium. framework applicable reporting with thefinancial inaccordance results position and and financial networth viewofthecompany’s and fair give atrue 2011 December asof31 financialstatements the In ouropinion, opinion. basis forour a reasonable provides obtained wehave audit evidence that the Webelieve audit. forour necessary information explanations and the officers Directorsandresponsible of Board from the obtained Finally,wehave a whole. takenas financial statements the of as wellthepresentation by management, estimates made accounting of thereasonableness usedand accounting policies ofthe appropriateness the also evaluated have control. We internal entity’s ofthe effectiveness onthe opinion expressing an of thepurpose notfor circumstances,but inthe appropriate are that auditprocedures todesign inorder financial statements ofthe and fairpresentation preparation the entity’s relevant to control considersinternal auditor the those riskassessments, In making error. or tofraud due whether the financialstatements, of ofmaterialmisstatement oftherisks including theassessment judgment, theauditor’s on depend selected The procedures des our des our Annual Report 2011 233 Without prejudice to certain formal minoraspects of importance, the accounting records are maintained in accordance with the legal and regulatory requirements applicable in Belgium. There are no transactions undertaken or decisions taken in violation of the company’s bylaws or the Company Code that we have to reportyou. to
Brussels, 6 March 2012 KPMG Réviseurs d’Entreprises/Bedrijfsrevisoren Statutory auditor Represented by Olivier Macq Réviseur d’Entreprises/Bedrijfsrevisor Michel Lange Réviseur d’Entreprises/Bedrijfsrevisor The management report which consistsdocument of the entitled Report of of the Board Directors of Ageas deals with the information required by the law and is consistent with the financial statements. However, we are not in a position to comment on the of description the principal risks and uncertainties which the company is facing, the state of its affairs, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters discussed are not in obvious contradiction with the information that we became aware of during the performance of our audit. In addition, we do not express an opinion on whether internal controls operated effectively during financial yearthe ended 31 December 2011.
Additional comments The company's Board of Directors foris responsible the preparation and content of the management report, and for ensuring that the company complies with the Company Code and their by-laws. Our responsibility is to supplement our report with the following additional comments and, which do not modify our opinion the on financial statements:
Annual Report 2011
234
Annual Report 2011 235
ageas N.V. Company Financial Statements 2011 Company Financial Statements
Annual Report 2011 liabilities accrued and Otherpayables - Liabilities to credit institutions - Current Liabilities Provisions year financial current result Retained - - Other interests participating reserve Legal reserves - losses and gains Unrealised - - Share called-up and paid-up Capital premium - reserve equity Shareholders’ Liabilities equivalents cash Cash and assets accrued and receivables Other - Deferred tax assets - N.V. ClaimsABNAMROBank - assets Current Loans - Participating interests in group companies - assets fixed Financial Assets (before appropriati Statement offinancialposition 236
on ofprofit) 31 December 2011 2011 31 December ( 1,001 ) ) ( 1,001 3,658 3,658 1,634 4,863 (255) (255) 4,863 4,863 1,181 2,044 1,102 1,181 2,850 134 134 794 794 21 21 28 3 9 1
31 December 2010 31 December ( 10,235 ) ( 10,235 ( 1,147 ) ( 1,147 14,335 1,102 5,112 1,049 1,181 2,881 5,112 1,181 3,927 (244) 116 1 4 Net profit Net profit Other results after taxation companies group from Profit Income Statement (255) ( 114) (141) 2011 ( 411) (244) 2010 167 Annual Report 2011 237 Statement of financial position The following pages explanatory contain notes to the various items in the statement of financial position, including an explanation of the principles of valuation applied. Where no valuation principle is stated, the assets and liabilities are included at nominal less value, impairments where necessary. Financial fixed assets Participating interests in group companies This item consists of the 50% share in Ageas Insurance International N.V. Participating interests in group companies are carried at net asset value in accordance with the principles of valuation that apply to the Ageas Consolidated Financial Statements.
Ageas is a company with a global presence. The Ageas Consolidated Financial Statements 2011 been have prepared in accordance with International Financial Reporting Standards (IFRS as adopted by the European Union). In accordance with 2:362,section subsection 8 of the Dutch Civil Code, the Board of Directors of ageas N.V. decided to prepare the Non-Consolidated Financial Statements based on accounting principles applied in the Ageas Consolidated Financial Statements. Participating interests in group companies are carried at net asset value in accordance with the principles of valuation that apply to the Ageas Consolidated Financial Statements. The share in the results of participating interests in group companies is reported in accordance with the principles of valuation and profit determination that apply to the Ageas Consolidated Financial Statements. ageas N.V. has applied article 2:402 in preparing the income statement. All amounts stated in the tables of these Financial Statements are denominated in millions of euros, unless otherwise indicated. statement General Explanatory notes to the Statement of financial position and income financial position and notes to the Statement of Explanatory
Annual Report 2011 discounts in the market for subordinated bank securities inthe securities bank subordinated market for discounts inthe andother observedilliquidity current However, toincorporatethe value. ofpar will amountto88% ofthesecurities value that thefair Ageas assumes parameters onthese Based intime. that moment at acall-expectation supports SA/NV, whichfurther Bank for Fortis funding relativelyexpensive securitiesrepresent this exclusionthe After 2013. asof1January capital regulatory will beexcludedfrom securities the suggest that guidelines grandfathering as BaselIII willbecalledearly2013, thesecurities andthat to13% amounted 2011, at26September to call that theyield Ageas estimates inputs. most important the securitiesas of calldate expected andthe 2011 September, 26 instruments per Tier1 SA/NV Bank similarFortis spreads for curve, observed rate forward these securities,the on spreadpaid bps using the237 calculation, value present on anet based valuation techniques byusing securities valueofthe thefair determine to Ageas decided 2011. 26 September thesecuritieson of recognition the first valuation for areasonable notprovide did quotation this market quotation, market securitieshavea 1 Tier SA/NV 2001 Bank the Fortis Although completelyilliquid. for theseinstruments market made the banks,which torecapitalise securitiesinefforts bank subordinated in’of ‘bail existsfora crisis,fear debt European Due tothe date. firstcall after the coupondate at everyquarterly arecallable non call;thesecurities the +2.37% after Euribor 3 month of interestrate carryan 2001 and issuedin wereoriginally securities The subordinated exchange. NBBforthis bythe granted andconsent Fortis BankSA/NV securitiesby ofthese anon-call par, after 2011at September on 26 SA/NV Bank securities ofFortis coupondebt cumulative perpetual redeemable EUR 952.9million toexchange Ageas wasobliged Loans participations. these investmentsof the revaluations of the to isrelated participatinginterests of The revaluation 31December asat Balance interests participating of Revaluation interests participating from profit of Share Internal reorganisation received Dividend increases Capital 1January asat Balance follows: as Movements are 238
( 36 ) (36) ( 141) ( 141) 2,850 2,850 2,881 2011 146 146
( 1,435) ( 1,025) 2,881 4,107 2010 147 167 920 Reversal via the effective interest method to the income statement statement income the to method interest effective the via Reversal statement income the via 80% at Valuation Acquisition 1January asat Balance Dutch State. withthe disputes provision for ofthe this claimintheassessment andinclude theimpairment reverse decidedto ageas N.V. State, withtheDutch thenegotiations on claim.Based the N.V. contested AMRO Bank ABN factthat onthe this claimwasimpairedbased In2009, SA/NV). byageas millionisrecorded however, EUR181 362million, EUR amountsto claim (the total shares of preference totheholders amount to paythe N.V.)toallowit AMRO Bank ABN subsidiaryof (a Limited FortisCapitalCompany Ageas to made by thepayment for compensation claimisforfull first conversion. The and theMCS FCC transaction tothe related State and theDutch Limited,ABNAMROBankN.V. Capital Company claims onFortis arethe ‘ClaimsABNAMROBankN.V.’ caption Included inthe BankN.V. AMRO ABN Claims 31December asat Balance Movements are as follows as Movements are Financial Statements). Consolidated positionofthe financial of of thestatement the date after Events 56 (seealsoNote tothismethod reversed according millionhasbeen ofEUR31.8 amount 2011an In interest method. effective viathe quarters, overthecoming income statement inthe difference isreversed This taxation’. ‘Other resultsafter line inthe theincomestatement a lossin as recognition isrecorded first amountof the priceand theacquisition between The difference EUR 762.3million. issetat securities value ofthese fair the of securitiesexchanged, million parvalue With EUR952.9 8%to80%. of markdown additional applied an Ageas valuation,
(191) 2011 953 794 32 2010 Annual Report 2011 45 1,057 1,102 1,102 239 as part of the issue of CASHES Capital paid-up Capital paid-up and called-up Movements in paid-up and called-up are capital as follows: Capital paid-up and called-up as at 31 December 2009: 2,516,657,248 shares Issue of 106,723,569 shares in 2010 Capital paid-up and called-up as at 31 December 2010: 2,623,380,817 shares Issue of shares in 2011 Capital paid-up and called-up as at 31 December 2011: 2,623,380,817 shares At 31 December 2011, 2,623,380,817 twinned shares are issued and fully paid up. On 7 May 2002, 39,682,540 shares were issued due to the issuance of Floating Equity-linked Rate Subordinated Hybrid (FRESH) Capital Securities. These shares were then repurchased by the group company Ageasfinlux S.A. Further information on FRESH securities is provided in Note 30 Subordinated liabilities of the Ageas Consolidated Financial Statements. ageas N.V. issued on 19 December 2007, 125,313,283 new shares in the amount of 1.2 billion EUR (undated floating rate Convertible and Subordinated Hybrid Equity- linked Securities) which ageas for N.V. is co-obligor. Further information on CASHES securities is provided in Note 4 Shareholders’ equity and 53 Contingent liabilities of the Ageas Consolidated Financial Statements. On 7 December 2010, Ageas issued 106,723,569 Ageas shares related to the mandatory conversion of Mandatory Convertible Securities (MCS). According to agreements entered into between the parties, Fortis Bank Nederland (now N.V. ABN AMRO Bank N.V.) has to compensate Ageas by issuing new shares at conversion; this compensation is disputed, as mentioned under claims ABN AMRO Bank N.V., by the State, Dutch after it took over control of Fortis Bank Nederland N.V. There were no costs related to the issuance of the shares by ageas N.V. 103 147 ( 44) 2010 3,965 3,927 ( 244) 2 146 ( 48) 2011 3,658 3,927 ( 114) ( 255)
Balance as at 31 December Revaluation of participating interests, including foreign exchange differences Dividend paid Balance as at 1 January Capital increases buy-back Share Result
Shareholders’ equity Movements in Shareholders' equity follows: are as Cash and cash equivalents Cash and cash equivalents are carried at nominal value and are fully at the free disposal of the company. Deferred tax asset The deferred tax assets have been accounted for as it is expected that the interest income and the reversal of the loss on 6,5% redeemable perpetual cumulative coupon debt securities of Fortis Bank SA/NV (see under loans) will result in 2012 in a positive taxable result. The tax to be paid can be offset against taxable losses from the past. The second claim relates to the MCS conversion. On 7 December 2010, ageas N.V. issued 106.7 shares in million relation to the conversion of the MCS. Since ABN AMRO Bank N.V. was the beneficiary of the proceeds of the MCS issue and the existence of the 4 party agreement granting ageas a claim N.V. AMRO on ABN Bank N.V. at the moment of conversion, ageas N.V. recorded a receivable for an amount of EUR 1 billion with ABN AMRO Bank N.V. as debtor at the moment of conversion (the total EUR 2 billion,receivable amounts to however, EUR1 billion is recorded by ageas SA/NV). The Dutch State has made a statement that based on the terms and conditions on the sale of Fortis Bank Nederland, Fortis Verzekeringen Nederland and Fortis Corporate Insurance, they are entitled to this Ageas N.V.claim. taken has this into account for the set up of a provision for disputes with the Dutch State (see also under Provisions).
Annual Report 2011 are asfollows: reserve losses gainsand intheUnrealised interests. Movements participating of the revaluation to related a reserve This concerns and losses Unrealised gains fiveyears). period (usually over thevesting isamortised received amount the on, From2008 premium reserve. share under isrecorded options forthe operating companies fromthe received amount N.V.The and ageas SA/NV by ageas werecovered options past. The employees inthe to Ageas shares options on granted of Ageas companies operating of A number billion. EUR 1.6 to reserves and theOther 2.0billion to EUR amounts reserve Share premium the transfer, After this Statements). Financial Consolidated position ofthe offinancial statement date ofthe the Eventsafter 56 (see alsonote flexibilityofthecompany thefinancial to enhance premium reserve 12.3 billionfromt transferring EUR 2011 by of31December as itsequity ageas NVrestructured 2011 31December asat Balance Transfer from Other reserve options for companies group from received Amounts 2010 31December asat Balance options for companies group from received Amounts shares 106,723,569 of Issue 2009 31December asat Balance follows: areas reserve premium Share Movements in reserve premium Share 240 for: This isareserve interests Legal Reserveparticipating 2011 31December asat Balance 2011 in Changes 2010 31December asat Balance 2010 in Changes 2009 31December asat Balance
retained earnings from associates. fromassociates. retained earnings market; isnoliquid whichthere andfor income statement, inthe arerecognised associateswhich from unrealised gains
he Other reserves to the Share reserves tothe he Other (12,293) (1,001) ( 1,147) ( 1,294) 14,335 14,277 2,044 146 147 56 2 2 these securities is formally approved by the shareholders. bytheshareholders. formallyapproved these securitiesis tocancel untiladecision reserves theother from and deducted outstanding. Theshareswillbeheldastreasury the shares 7.3%of EUR 250million,representing for shares werepurchased 192,168,091 2012, 25 January, on thebuyback Ageas completed million. EUR 228 valueof backwithatotal bought shares are 175,163,656 endofDecember At the EUR 250million. maximum of 2012 witha till23February 2011 24august period shares inthe backitsown bought Ageas has 2011, 24 August on As announced From profit appropriation 2010 2010 appropriation From profit 2010 31December asat Balance paid Dividend interests participating reserve legal in Changes 2009 appropriation From profit 2009 31December asat Balance as follows: are reserves Movements inOther Other reserves 2011 31December asat Balance 2011 in Changes 2010 31December asat Balance 2010 in Changes 2009 31December asat Balance and the Other reserves to EUR 1.6 billion. EUR 1.6 to reserves and theOther 2.0billion to EUR amounts reserve Share premium the transfer, After this Statements). Financial Consolidated position ofthe offinancial statement date ofthe the Eventsafter 56 (see alsonote flexibilityofthecompany thefinancial to enhance premium reserve 12.3 billionfromt transferring EUR 2011 by of31December as itsequity ageas NVrestructured 2011 31December asat Balance Transfer to share premium reserve ownshares of Acquisition paid Dividend interests participating reserve legal in Changes
he Other reserves to the Share reserves tothe he Other
( 10,478) ( 10,235 ) ( 10,235 12,293 1,634 ( 114) ( 244) (23) (23) 264 134 116 139 ( 48) ( 18) ( 44) 23 18 Annual Report 2011 241 Current liabilities Other liabilities These concern the amount related to option plans that has to be amortised against share the premium reserve, amounts payable related to the share buy back programme and accrued interests on the liabilities to credit institutions. Option plans A description of the option plans on the sharesof ageas N.V. is included in the Notes 10 Employee share option and share purchase plans and 11 Remuneration Members of Board and Executive Committee Members of the Ageas Consolidated Financial Statements. 244 264 ( 264) ( 244) ( 244) ( 255) ( 255) the owner of the 2 billion claim on ABN AMROEUR Bank N.V. related to the conversion of the MCS; the owner of the 362 million EUR claim on FCC/ABN AMRO Bank N.V. related to FCC transaction; are entitled to some EUR 885 million related to a capital guarantee included in the sales documentation.
In 2010, Ageas has set up a provision for the disputes with the Dutch State. These disputes arise from the differences in interpretation of the terms and conditions of the sale of Fortis Bank Nederland, Fortis Verzekeringen Nederland and Fortis Corporate Insurance from Ageas to the DutchState in October 2008. The Dutch State is of the opinion that based on the term sheets underlying the sale they are: As communicated by the Dutch State and Ageas, both parties aspire to reach an amicable settlement. In this settlement the dispute over the ownership of claims on ABN AMRO Bank N.V. related to the FCC transaction and the MCS transaction as well the capital guarantee will be resolved. Ageas believes that the provision of EUR 2,362 million is sufficient to cover any outflow of benefits related to the settlement. The provision is for an amount of EUR 1,181 million booked in the accounts of ageas and forN.V. EUR 1,181 million in the accounts of ageas SA/NV. Provisions Result current financial year Balance as at 31 December 2011 Profit appropriation Profit current financial year Balance as at 31 December 2010 Profit appropriation Balance as at 31 December 2009 Movements in the retained profit current financial year are as follows: Retained result currentRetained result financial year
Annual Report 2011
Statements. Statements. Consolidated Financial Ageas 11 ofthe provided inNote Directorsare of Board tothe paid remuneration Details ofthetotal years. fromprevious with carry-backlosses inconnection result pre-taxation isowedonthe tax No corporation result. a positivetaxable willresultin Securities Coupon Perpetual Cumulative Redeemable 6.5% thelosson of thereversal and interest income thatthe thatitisexpected thefact dueto 2011 recognised in been EUR 28millionhas to amounting asset tax A deferred EUR 32millionwasalreadyreversed. 2011, method. During effective interest viathe quarters, over thecoming statement income inthe bereversed expected to is This difference statement. loss intheincome as a (EUR 762million)isrecorded of firstrecognition amount (EUR 953million)andthe Securities Coupon Cumulative Perpetual Redeemable 6.5% priceofthe theacquisition between The difference debts. and on receivables expenses income,interest mainlyofinterest Other resultsconsist participating interests. from theprofit sharein ofthe upprimarily The resultismade General Income statement 242
liabilities linkedtotheseinstruments. contingent describethe following chapters The agreements. support provided or co-obligor as guarantor, companies acted parent these SA/NV, because ageas N.V. and liability forageas contingent a thatcreate securities senior debt instruments and of hybrid anumber issued entities operating Ageas (former) (2010: EUR 575 million). million EUR 257 debtis outstanding ofcurrent total amount The subsidiaries. facilitiesofAgeas andcredit respect toliabilities with guarantees eachextended have ageasN.V. ageas SA/NVand Institute. tothe commitments Bishopsgate's for and Bishopsgate, behalf of on Institute mentioned previously bythe out ofpoliciesissued arising commitments current the concerns guarantee Ageas N.V.'s 1991. 31December Underwriterson London Institute of ofthe itsmembership terminated Limited Insurance Bishopsgate Limited. Insurance Bishopsgate of onbehalf London Underwriters of Institute tothe guarantee a has extended ageas N.V. financial position Commitments notreflectedinthestatementof Annual Report 2011 243 On 16 June2010, the expert report commissioned by the Ondernemingskamer in Amsterdam was filed for public inspection. A copy of the report can be downloaded from the website. Ageas Among other things the experts are critical of the wayin which Fortis informed its investors over time and conclude that the information provided by Fortis to investors in a number of areas was incorrect or at least incomplete. particular, In they refer to : (i) the information on the position and exposure of Fortis in relation to the subprime situation in the trading update of 2 September 2007 and in the prospectus for the rights issue (which incorporated the trading update) effectuated on 9 October2007 (although the experts acknowledge that information has not been manipulated or willingly misrepresented); (ii) information on the sale of certain parts of ABN AMRO as required by the EC competition authorities and solvency position of Fortis, in periodthe as of 21 May 2008 until 26 June 2008; (iii) the communication certain of facts to investors in the subsequent period and specificallymore on 26 September 2008. On 16 August 2010, VEB and certain other parties filed a request with the Ondernemingskamer (i) to start legal proceedings aimed at establishing that certain facts mentionedin the expert report should be deemed ‘mismanagement’ (‘wanbeleid’) by Fortis and (ii) to annul the discharge granted to Fortis directors on 292008. April The findings of the Dutch experts have led and may still lead to new claims and proceedings being filed against Ageas, including claims for compensatory damages. The experts’ findings may also impact existing legal proceedings. Although Ageas anywill challenge allegations of wrongdoing, such actions if successful may ultimately have a severe material impact on Ageas. At this point however it is not possible to assess the chances that such actions would succeed, nor to quantify the damages which may have to be paid if that would be the case.
Like any other financial institution, Ageas is involved as a defendant in various claims, disputes and legal proceedings arising in the ordinary course of its business. In addition, as a result the of events and developments occurred in respect of the former Fortis group between May 2007 and October 2008 (a.o. increase capital and acquisition parts ofof ABN AMRO in October 2007, announcement of theaccelerated solvency plan in June 2008, divestment of banking activities and Dutch insurance activities in September/October 2008), Ageas is involved or may still become involved in a number of legal proceedings as well as administrative and criminal investigations in Belgium and the Netherlands, some of which could result in substantial but currently unquantifiablefuture liabilities for Ageas. The ongoing investigations do not have immediate (material) monetary consequences for Ageas, but it cannot be ruled out that they could lead to such negative impact at a later stage. This is the case for (i) investigations conducted by the Belgian Financial Services and Markets Authority (FSMA), as as well (ii) the criminal investigation conducted in Belgium. Any negative findings of these ongoing investigationsimpact may existing legal proceedings and lead to new proceedings against Ageas, including claims for compensatory damages being initiated against Ageas at a later stage. On 5 February 2010, the AFM levied a fine on each ageas SA/NV and ageas N.V. of EUR 288,000 for breaches of the Dutch Securities Act (‘Wet op het financieel toezicht’). The AFM alleges that on 5 June 2008 certain statements would have been incorrect or misleading in respect of the solvency situation of Fortis and that on 14 June 2008 Fortis should have made public that the required EC remedies would imply that the financial objectives for 2008 and later could not be achieved without additional measures. might This imply that, for the period of 5 to 25 June 2008, investors may allege to have traded on not fully correct information. Ageas challenges any allegations of wrongdoing. After rejection of the administrative appeal, Ageas has appealed the decision of the AFM before the District Court in Rotterdam. On 4 May 2011 the Court of District Rotterdam confirmed the decision of the AFM. Ageas has filed an appeal against this decision with the competent court in the Netherlands. Contingent liabilities Contingent
Annual Report 2011 2008: andOctober 2007 between May group Fortis of theformer inrespect occurred developments and events from orindirectlyresulting directly proceedings in legal become involved ormaystill Ageas isalsoinvolved intheNetherlands. court the competent this decisionwith appealagainst Ageaswillfilean AFM. ofthe decision confirmed the Rotterdam DistrictCourtof the 2012 February 9 Rotterdam. On Courtin theDistrict AFMbefore decisionofthe this has appealed Ageas appeal, administrative of the rejection After of wrongdoing. anyallegations Ageas challenges information. incomplete traded on tohave investorsmayallege 2007, September 21 period asof the that,for Thismightimply 2007. on 9October issue effectuated rights ofthe context 2007inthe September on21 update published trading inthe break down) US,aswella the overall andin exposure (both positionand onitssubprime published information have andshould position on itssubprime inform investors nottimely Fortis did that AFMalleges Act. The Dutch Securities ofthe breach EUR 144,000for of ageasN.V. ageas SA/NVand oneach fine anadditional AFM levied the On 19August2010, 244
- - proceedings initiated before the Brussels Commercial Court: Court: Commercial Brussels the before proceedings initiated include: proceedings Such 2008. and October May2007 periodbetween the byFortisover abuse committed market and/or on allegedmiscommunication damages based ofmonetary the payment at or(ii)aiming 2008 transactions September/October tothe (i)inrelation Netherlands (in)directly and the inBelgium initiated havebeen proceedings Various pending; pending; are proceedings these 2008; until October May 2007 intheperiod byFortis information of ormisleading lack alleged becauseof damages demanding International, Deminor around gathered ofindividuals by anumber Paribas; BNP and DNB,SFPI State, theDutch from damages asked nowfocuseson claim bank.The Belgian sale ofthe the the meritsregarding on (ii) atrialbrief and competence decisionon aforementioned the appeal against (i)an filed Modrikamen Mr April2011, 26 on defendants; Dutch againstthe on actions tojudge it isnotcompetent that decided courta.o. the 2009, on 8December damages; oralternatively Paribas), toBNP (and subsequently SFPI to SA/NV Bank Fortis saleof andthe Dutch State of ASRtothe of thesale theannulment initially demanding Modrikamen byMr represented ofindividuals by anumber
- proceedings initiated before the Amsterdam District Court: Court: AmsterdamDistrict the initiatedbefore proceedings proceedings initiated before the Amsterdam Court of Appeal: of Appeal: Amsterdam Court the before proceedings initiated - - - 9 October 2007 was incorrect and incomplete; incomplete; was incorrectand 2007 9 October on effectuated rightsissue forthe 2007 24 September of theprospectus in situation subprime relation tothe Fortis in of exposure positionand on the information the rights issue)that withthe connection managers in lead and coordinators actingasglobal financial institutions the executivesand and top directors certain ofitsformer claim(vis-à-visFortis, Thisincludesa period; the relevant in shares whobought by those suffered liable fordamages areconsequently defendants these that and defendants ofallorcertain isanunlawfulact of thesebreaches each executives;that and top directors certain ofitsformer and oflawbyFortis breach a 2008 constitute 3 October to 2007 September period of Fortisinthe communications various that toestablish by VEBdemanding 2011. 18 November on report filed their final have Fortis group former ofthe thebreak-up circumstances surrounding the toinvestigate 2008 inNovember Deminor request of at the court ofthe President bythe appointed the experts damages; damages; pay to alternatively, or transactions, and unwindthe 2008 Board inOctober Fortis bythe the decisionstaken whichdismissedtheirclaimtoinvalidate Ageas, in favourof 2011 May Courtof18 Amsterdam District the judgment of the torepeal DeGierdemanding byMr represented of individuals number and a by theStichtingFortisEffect 2008. 3October activitieson insurance banking and Dutch saleofthe ofthe in thecontext B.V. Investments Preferred FBN(H) Fortis N.V.and Insurance International Fortis InsuranceN.V., by Fortis agreed provisions allegedly application ofcertain claimsonthe alleged bases these State N.V.TheDutch International from AgeasInsurance million and EUR674 companies parent Ageas from the million EUR 210 of claiminganamount State by theDutch Annual Report 2011 245 V. (now ABN AMRO Bank N.V.), Legal proceedings have also been initiated related to a hybrid instrument called Mandatory Convertible Securities for(MCS) which ageas SA/NV and ageas N.V. acted as co-obligors.
Should any of these proceedings result in the annulment of (part of) the decisions taken by the Fortis Board of Directors in September/October 2008 ofand the resulting agreements and transactions (which is highly unlikely into account taking that none of the experts appointed by court have raised argumentscould that lead to an annulment these of transactions, and that the Amsterdamin two judgments District Court of 18 May 2011 dismissed the claims of VEB/Deminor and Stichting FortisEffect respectively with regard to these transactions), this would have consequences on the financial position of Ageas that are unquantifiable at this stage. In the event that any court decisions were to order Ageas to pay monetary damages, this could have a severe negative impact on its financial position. The Mandatory Convertible Securities (MCS) issued in 2007 by Fortis Bank Nederland (Holding) N. Fortis Bank SA/NV, ageas SA/NV and ageas N.V., were mandatorily converted on 7 Decemberv2010 into 106,723,569 Ageas shares. Before 7 December, certain MCS holders unilaterally decided at a general MCS holders’ meeting to postpone the maturity date of the until MCS 7 December 2030. The effects of this decision were however suspended by the President of the Commercial Court of Brussels at the request of Ageas. After 7 December, the same MCS holders contested the validity of the conversion of the MCS by claiming the annulment ofconversion the or, alternatively, damages for an amount of EUR 1.75 before billion, court. Ageas is convinced, after consultation with its legal advisors that this claim is without merits. Following the conversion of the MCS, Ageas has initiated a claim against ABN AMRO Bank and ABN AMRO Group in relation to the failure of ABN AMRO Bank to issue shares in its capital to Ageas for the amount of EUR 2 billion, in accordance with an agreement between the four MCS issuers. by a Stichting under Dutch law, called ‘Investor Claims Against Fortis’ alleging miscommunication by Fortis on various occasions in the period 2007-2008. This includes a claim (vis-à-vis Fortis and two of its financial advisors) that the information on the position and exposure of Fortis in relation to the subprimesituation in the prospectus of 24 September 2007 for therights issue effectuated on 9 October 2007, was incorrect and incomplete. by a number of individuals represented by Mr Bos demanding damages due to alleged miscommunication in 2008. On 15 February 2012 the court decided that Fortis and two co-defendants (the formerand the CEO former financial executive) disseminated misleading information in the period 22 May to 26 June 2008;further it ruled that separate proceedings are necessary whether to decide the plaintiffs suffered damages, and if so, the amount of such damages. Ageas will appeal this judgment. In this context, some former directors and top executives of Fortis have requested the court to acknowledge the alleged obligation of Ageas, under termination agreements entered into in 2008 and/or rules law, to hold such of Dutch civil persons harmless against damages resulting from or relating to the legal proceedings initiated against them and which would originate from their functions within the Fortis group. Ageas is contesting the validity of the statutory and contractual hold harmless commitments; - - proceedings initiatedproceedings before the Utrecht District Court:
As said above Ageas denies anywrongdoing will and challenge any allegations thereof in court. However, if successful this may ultimately have a severe material impact on Ageas. At this point however it is not possible to assess the chances that such actions would succeed, nor to quantify the damages which may have to be paid if that would be the case. Annual Report 2011 decisions. ofanyjudicial financial consequences to the they relate extent tothe commitments harmless hold validity ofthecontractual the Ageasiscontesting persons, ofthese of some In respect inthecompany. exercised of their mandates thebasis persons on such against werebrought proceedings legal the eventthat decisionsin ofanyjudicial consequences cases, alsothefinancial insome and, legal expenses covering protection hold harmless acontractual departure oftheir time directors atthe executives and former tosome granted parentcompanies the Fortis In 2008, receivables. other and 20 Reinsurance Note in asmentioned State, withtheDutch to thedisputes EUR 2.4billioninrelation of aprovision than other been setapart, provisions have no Therefore, Statements. Consolidated Financial Ageas the a significantlossin in may notresult or claimsmay theseactions of theoutcome or whether be successfullydefended can meritor without are andinvestigations with theseproceedings inconnection Ageas against oractionsbrought whether anyclaims determine inapositionto isnot investigations, management and proceedings current complexityofthe and uncertainties well asinherent as nature continuouslyevolving and various stages giventhe above, made toanyspecificcomments prejudice Without estimated. be reasonably can amount the Ageas and by be made willhaveto a payment that advisors, itisprobable withlegal consult who management, opinionof the if andwhen,in suchmatters willmakeprovisionsfor Ageas isaware, management ofwhich and investigations proceedings of alllegal In respect Bank. claims againstABNAMRO Ageas’s on attachment leviedaconservatory the DutchStatehas thelitigation, initiated having Before Sheet. Term ofthe or theterms ofdamages legaltitle tothe pursuant DutchState tothe transferred be suchclaimshould AMRO Bank, ABN its claimagainst wouldprevailin Ageas that extent to the and that claim right tothe haswaivedits Ageas alleges that State The Dutch 2008. 3 October on State Dutch N.V.tothe (Holding) Bank Nederland of Fortis sale uponthe into entered Sheet withtheTerm is actinginviolation itsclaimagainstABNAMROBank bypursuing Ageas, alleges that DutchState The proceedings. has joinedthese State The Dutch 246
right. voting todividendand became entitled exchanged shares The exchange. 63% forthe toBNPParibas 287 millionindemnity EUR Ageas paid Statements); Financial Ageas Consolidated of the inNote56 events subsequent Paribas (see BNP and SA/NV Bank withFortis reached Ageas that agreement broader was partofa exchange andsubsequent tender shares.The Ageas underlying 78,874,241 for CASHESsecurities tendered 7,553 exchanged subsequently and of 47.5% ataprice CASHES securities onthe offer atender Paribas launched BNP 2012, In January exchange. potential ofthe the purpose rights,for voting any dividendor have donot which Ageas shares, 125,313,283 owned SA/NV Bank 2011, Fortis At 31December share. per EUR 23.94 apriceof at holders security discretion ofthe atthe beexchanged securitiescanalso The to EUR1.20). amounted end 2011 atyear price closingshare business days(the exchange stock twentyconsecutive 35.91 on EUR higher than is equaltoor theAgeasshare of iftheprice place exchange takes Amandatory Ageasshares. exchanged into be they canonly repaid incash: be and cannot date nomaturity have The securities Ageas shares. securities for the exchange of tothe + 2.0%,up Euribor 3 month rateof at avariable arrears, quarterly in coupon, paysthe SA/NV Bank Fortis asco-obligors. acting ageasN.V. ageas SA/NVand with FortisBankSA/NV, billion,issuedby EUR3 amount of nominal foratotal securities 12,000 represented Securities) Equity-linked Hybrid Subordinated And CASHES (Convertible 1. CASHES instruments. linkedtothese liabilities contingent following chaptersdescribethe The agreements. support provided or co-obligor as guarantor, acted companies parent former these because SA/NV, and ageas for ageasN.V. liability acontingent have created instruments that of hybrid anumber issued entities operating Ageas’s former former subsidiaries Contingent liabilitiesforhybridinstruments of Annual Report 2011 247 to compensate ageas SA/NV and SA/NV to compensate ageas 2. Bank SA/NV Fortis Tier 1 debt securitiesFortis Bank SA/NV issued 2004EUR 1,000 million perpetual securities in 2004, which benefit a support from agreement entered into by the former Fortis parent companies now ageas SA/NV and ageas N.V., at an interest rate of 4.625% until 27 October 2014 and 3 month Euribor + 1.70% thereafter. Under the parental support agreement if Fortis Bank SA/NV’s solvency drops below the threshold level or if Fortis Bank SA/NV so elects, the coupon will be settled through the issue of ordinary shares by ageas SA/NV and ageas N.V. in accordance with a so- called Alternative Coupon Settlement Method (ACSM), for which Fortis Bank SA/NV would need ageas N.V. new shares.by issuing Utrecht, 6 March 2012 of Directors Board convert additional out CASHES
As a result of this transaction, the nominal amount of CASHES outstanding decreased to EUR 1,112for which million, Fortis Bank SA/NV continues to hold 46,439,042 shares. Ageas agreed to indemnify BNP a periodParibas within of 2 years, if BNP Paribas would acquire and of the 37% CASHES that remain outstanding. Ageas also agreed to pay an annual indemnity to Fortis Bank SA/NV that equals the grossed up dividend on the shares that Fortis Bank SA/NV holds. The sole recourse of the holders of the CASHES against any of the co-obligors with respect to the principal amount are the Ageas shares that Fortis Bank SA/NV holds; these shares pledgedare in favour of such holders. In the event that dividends on the Ageas shares would not be paid, or that the dividends to be declared are below a threshold with respect to any financial year (dividend yield less than 0.5%), and in certain other circumstances, coupons will mandatorily need to be settled by ageas SA/NV and ageas N.V. in accordance with the so called Alternative Coupon Settlement Method (ACSM), while Fortis Bank SA/NV wouldissue need to instruments that qualify as hybrid Tier 1 instruments to Ageas as compensation for the coupons paid by ageas SA/NV and ageas N.V. If the ACSM is triggered and there is insufficient available authorised capital to enable ageas SA/NV and ageas N.V. to meet the ACSMobligation, the coupon settlement will be postponed until such time as the abilityissue to shares is restored.
Annual Report 2011 Shareholders. of GeneralMeeting the disposalof isatthe of theprofit The remainder toberetained. is profit partofthe determines which Board ofDirectors The Article 25. in are contained These provisions appropriation Provisions profit of theArticles concerning of Association Other information 248
business. business. ofour underlyingprofitability inthe and thecompany strength of inthe belief ourstrong reflects proposal dividend 2011. This for share per of8eurocent cashdividend agross shareholders bythe forapproval propose decidedto has Board Ageas’s Profit appropriation Annual Report 2011 249 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis our for audit opinion. Opinion In our opinion, the company financial give statements a true and fair view of the financial position of ageas N.V. as at 31 December 2011 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Emphasis of matter We draw attention to the Note ‘Contingent liabilities’ to the company financial statements as at 31 December 2011 which describes that the company is involved or may still become involved in a number of legal proceedings as well as administrative and criminal investigations in with certainconnection events and developments having occurred between May 2007 and October 2008, some of which could result in financial liabilities for the company. However, the ultimate outcome of these matters cannot presently be determined. Our opinion is not qualified in respect of this matter. Report on other legal and regulatory requirements Pursuant to the legal requirements under Section 2:393 sub 5 part e and f of the Netherlands Civil Code, we have no deficiencies to report as a result of our examination whether the Report of the Board of Directors, to the extent we can assess, has prepared been in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b - h has been annexed. Further, we report that the Report of the of Board Directors, to the extent we can assess, is consistent with the company financial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code. Amstelveen, 6 March 2012 N.V. ACCOUNTANTS KPMG Represented by: W.G. Bakker RA
Auditor’s responsibility Our responsibility is to express an opinion on these company financial statements based on our audit. We conducted our audit in accordance with law, including the Dutch Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the company financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the company financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the company financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation the companyof financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness accountingof estimates made by the Board of Directors, as well as evaluating the overall presentation of the company financial statements. Board of Directors’ responsibility The Board of Directors is responsible for the preparation and fair presentation of these company financial statements and for the preparation of the Report of the Board of Directors, both in accordance with 9Part of Book 2 of the Netherlands Civil Code. Furthermore, management is responsible for such internal control as it determines is to necessary enable the preparation of the company financial statements that are free from material misstatement, whether due to fraud or error. To the General Meeting of Shareholders ageas of N.V. Report on the company statements financial We have audited the company financial statements of ageas N.V. as set out on page to 235 247 for the year ended 31 December 2011 which are part of the financial statements of Ageas and comprise the company balance sheet as at 31 December 2011, the company income statement for the year then ended and the explanatory notes. Independent auditor’s report Independent
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Other information
Annual Report 2011 notlimitedto: are includebut results impactour may factorsthat general Other more portfolios. investment and toourcredit of provisionsrelating rega ourexpectations limitedto butnot or imply,including express whatthosestatements substantiallyfrom events maydiffer aresubjectto statements forward-looking These future events. expectations and other forward-looking perceptions that are bas are that perceptions other forward-looking expectations and tofut refer management, inNote7Risk ofDirectorsand Board the of ActivitiesandReport Descriptionof Shareholders, to the entitl inthesections made statements the notlimitedto but including Report, thisAnnual in contained thestatements Some of Forward-looking statementstobetreatedwithcaution 252
general competitive factors on a global, regional and/or national scale. scale. national and/or regional aglobal, factorson general competitive governments; foreign banks and/or ofcentral policies changes inthe industries; securities and/or insurance, investment the relatingto regulatory changes reserves; loss adequacy of risks; inability toeconomicallyreinsurecertain otherdisasters; or natural of significant occurrence asset valuations; changesin general regional or andtaxes; regulations legislation, andforeign changes indomestic Belgium; competitionin increasing including environments, andpricing changes incompetitive rate; dollar exchange /US euro rates,including foreign exchange levelsandtrends; andpersistency mortality, morbidity lossevents; severityofinsured and the frequency markets; offinancial theperformance ratesand changes ininterest conditions; general economic
certain risks and uncertainties which means actual results, perf actualresults, whichmeans risksanduncertainties certain ed on management’s current views, estimates and assumptions conc assumptions and views,estimates current management’s ed on rding thelevel ed Message ed Message ure ormance or or ormance erning erning Annual Report 2011 253
Provision of information to shareholders and investors Listed shares Ageas shares are currently listed on NYSE Euronext Brussels, NYSE Euronext Amsterdam and the Luxembourg Stock Exchange. Ageas also has a sponsored ADR programme in the United States. ageas SA/NV, VVPR strips are listed only on NYSE Euronext Brussels. Types of shares Shares in Ageas be registeredmay or bearer shares. inspected at the Registry of the Commercial Court in Brussels ageas SA/NV) and the of CommerceChamber Utrecht in (ageas N.V.).
Financial reports on the companies and notices convening AGMs and EGMs are published in the financial press, and other newspapers and periodicals. The ReportAnnual is available from Ageas’s registered offices in Brussels and Utrecht and is also filed with the National of Bank Belgium and the Chamber of Commerce in Utrecht. The Annual Report is sent each year to registered shareholders and to others on request. Resolutions on the (re)election and removal of Ageas Board Members are published in annexes to the Law GazetteBelgian (ageas SA/NV), the NYSE Euronext Amsterdam Daily Official List (ageas N.V.) and elsewhere.
(ageas SA/NV), at the Chamber of in UtrechtCommerce (ageas N.V.) and at the companies’ registered offices. The Annual Report is filed with the National Bank of ( Belgium The Articles of Association of ageas SA/NV and ageas N.V. can be Availability of company documents for public inspection company documents for Availability of
Annual Report 2011 P.O. Box 2049, 3500 GA Utrecht, Netherlands Netherlands GAUtrecht, 3500 Box 2049, P.O. ageas N.V. Secretariat ofDirectors Board Or: Belgium Brussels, 1, 1000 Rue duMarquis SA/NV, ageas Administration Corporate rapiddemat the procedurefor hasdeviseda Ageas registered. tobedematerialised shares fortheir ofcharge, andfree request on mayarrange, shares Holdersofbearer shares. into bearer tob their shares for ofcharge, andfree on request mayarrange, shares Holders ofregistered no cost. at administered and are d remain shares registered form. These dematerialised in theirshares register to opportunity the itsshareholders Ageas offers Dematerialisation andregistrationofbearershares 254
erialisation of shares, facilitating rapid delivery. rapiddelivery. facilitating ofshares, erialisation shareholders. pertinent details fromthe received which ithaspreviously of accounts bank shares tothose registered and both bearer of totheholders dividend accruing the automaticallycredits Ageas payable, dividend becomes When AGMs. atthe theirbehalf tovoteon proxy nominate a can whichshareholders of formbymeans a resolutions and proposed encloses theagenda, AGMs, and the invitation toattend apersonal shares registered and of bothbearer sends allholders Ageas shares. registered and bearershares of both to holders freeofcharge Report, Annual Ageas andtothe results, and annual the quarterly to thoserelating notices, including out Ageas sends andcommunication Information ematerialised e converted e converted and Annual Report 2011 255 Deferred acquisition cost The cost of acquiring new and renewed insurance business, principally commissions, underwriting, agency and policy issue expenses, all of which vary with and primarily are related to the production of new business. Derivative A financial instrument such as a swap, a forward, a future contract or an option (both written and purchased). This financial instrument has a value that changes in response to changes in various underlying variables. It requires little or no net initial investment, and is settled at a future date. Disability insurance Insurance against the financial consequences of long-term disability. Discounted cash methodflow An approach to valuation, whereby projected future flows are cash discounted at an interest rate that reflects the time value of money and a risk premium that reflects the extra return investors demand for the risk that the cash flow might not materialise after all. Discretionary participation feature A contractual right to receive, as a supplement to guaranteed benefits, additional benefits: (a) that are likely to be a significant portion of the total contractual benefits; (b) whose amount or timing is contractually at the discretion of the issuer; and (c) that are contractually based on: (i) the performance of a specified pool of contracts or a specified type of contract; (ii) realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or (iii) the profit or loss of the company, fund or other entity that issues the contract. Embedded derivative A derivative instrument that is embedded in another contract – the host contract. The host contract might be a debt or equity instrument, a lease, an insurance contract or sale a or purchase contract. Employee benefits All forms of considerations given by an entity in exchange for service rendered by employees, in addition to their pay or salary.
Custody An agreement, usually between an investor and a bank (or possibly an agent or a trust company), whereby the investor deposits for safekeeping securities, gold or other valuables with the bank, which in turn takes the valuables into safekeeping for a fee. Credit spread The yield differential between government bonds and corporate bonds or credits. Clearing Administrative settlement of securities, futures and options transactions through a clearing organisation and the financial institutions associated with it (clearing members). Clean fair value The fair value excluding the unrealised portion of the interest accruals. Cash-flow hedge A hedge to mitigate exposure to fluctuations in the cash flow of a recognised asset forecastedor liability, or transaction, as a consequence of movements in variable rates or prices. Basis point (bp) One hundredth of a percentage point (0.01%). Associate A company on which Ageas has significant influence but which it does not control. Asset backed security A bond a or note backed by debt instruments (not being mortgages) or accounts receivable. Amortised cost The amount at which a financial asset or liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation/accretion of any premium/discount, and minus any write-down for impairment. Glossary and abbreviations Glossary and
Annual Report 2011 income statement. income statement. the through amount toitsrecoverable amount willbereduced carrying the suchacase, In amount. recoverable exceeds the asset of the amount wherebythecarrying A declineinvalue Impairment and disclosure. accounting andcomparable ensure transparent to January 2005 Unionsince1 European withinthe companies alllisted standard for the usedas have been Standards Reporting Financial International IFRS hedged item. andthe hedginginstrument the fairvaluesof the of changesin loss on profitor offsetting effects recognisesthe Hedge accounting Hedge accounting premiums ceded. deductionfor period,without a specific during written oraccepted contracts insurance for not earned) or (whether Total premiums Gross writtenpremiums assumed. liabilities and contingent and liabilities assetsacquired of thefairvalue in Ageas’s interest exceeds the business, to costs directlyattributable issued, plusany instruments equity and assumed, incurredor acquired, liabilities of theassets thefairvalue bywhich amount the This represents Goodwill be transferred. noteventually may Titlemayor asset. ofan incidental toownership rewards alltherisksand substantially transfers A leasethat Finance lease net income. affect reported riskandwill particular toa exposure isattributable The firm commitment. asset orliability(oraportionthereof) of arecognised inthefairvalue tochanges exposure ofan A hedge Fair valuehedge length transaction. inanarm’s willingparties knowledgeable, between sold (settled), (liab The amountforwhichanasset Fair value 256
ility) canbebought(incurred)or transactions that give an offsetting risk profile. risk profile. give anoffsetting transactions that into entitybyentering ofaforeign netassets share inthe entity’s risksofareporting financial reduce the to used A hedge Net-investment hedge Non-controlling Interest. NCI time. at agiven share price multiplied bythe outstanding shares of the number to capitalisation corresponds Market thestockmarket. by thecompany to Value attributed Market capitalisation Rand Africa, South Dollars America, of States United Taiwan,NewDollars ZAR NewLira Turkey, USD TWD TRY Thailand, THB Sweden, SEK dollar HongKong, MYR Malaysia, Baht Pounds Kingdom), (United Britain Japan, JPY Kronor HKD Ringgits Renminbi Yuan China, GBP Yen Denmark, DKK CNY CHF Switzerland, Kroner CAD Canada, AUD Australia, Francs Dollars Dollars ISO Currencycodelist appreciation. capital for incomeor rental earn Ageas to by held Property Investment property reliably. be measured can of theasset ifthecost and benefits economic future and onlyifitwillgenerate atcostif whichisrecognised asset non-monetary An identifiable Intangible asset risk. insurance significant transferring riskwithout transfersfinancial contractthat policy A lifeinsurance Investment contract the policyholder. adversely affects futureevent uncertain policyholder ifaspecified the compensate to by agreeing policyholder) (the party another insurance riskfrom accepts significant (Ageas) which oneparty under A contract Insurance contract Annual Report 2011 257 (or deferred acquisition costs or intangible assets) is recognised in equity only if the unrealised gains or losses are recognised directly in equity. Securities lending transaction A loan of a security from one counterparty toanother who must eventually return the same security as repayment. The loan is often collateralised. Securities lending allows an entity in possession of a particular security to earn enhanced returns. Structured credit instruments Securities created by repackaging cash flows from financial contracts and encompassing asset-backed securities (ABS), mortgage-backed securities (MBS) and collateralised debt obligations (CDO). Subordinated bond(loan) A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Subsidiary Any company, of which Ageas, either or indirectly, directly has the power to govern the financial and operating policies as to obtain so the benefits from (‘control’).its activities Trade date The date when Ageas becomes a party to the contractual provisions of a financial asset. Value of business acquired (VOBA) The present value of future profits from acquired insurance intangible assetand as an recognised contracts. VOBA is amortised over the period in which the premiums or gross profits of the policies are recognised. VaR Abbreviation of value at risk. A technique which uses the statistical analysis of historical market trends and volatilities to estimate the likelihood that a given portfolio’s losses will exceed a certain amount.
Shadow accounting According to IFRS 4 an insurer is permitted, but not required, to change its accounting policies so that a recognised but unrealised gain or loss on an asset affects the measurement of the insurance liabilities. The related deferred adjustment to the insurance liability Reverse repurchase agreement The purchase of securities with an agreement to resell them at a higher price at a specific future date. Provision Provisions are liabilities involving uncertainties in the amount or timing of payments. Provisions are recognised if there is a present obligation to transfer economic benefits, such as cash flows, as a result of past events and a reliable estimate can be made at the date of the statement of financial position. Private equity Equity securities of companies that are not listed on a public exchange. Investors wishing to sell their stake in a private company have to find a buyer themselves owing to the lack of a marketplace. Option A privilege sold by one party to another that offers the buyer the right, but not the to obligation, buy (call) or sell (put) a security at an agreed price during a certain period of time or on a specific date. Operating margin Operating income divided by net premium. Operating income is the profit or loss stemming from all operations, including underwriting and investments. Operating lease A contract that allows the use of an asset in return for periodic payments, but does not convey rights similar to legal ownership of financial risks related to the asset are the asset and where the borne by the lessor. Notional amount Amount of currency number units, of shares, a number of units of weight or volume or other units specified in a derivative contract.
Annual Report 2011 SPV Special purpose vehicle vehicle purpose Special counter the Over securities convertible Mandatory Liability Adequacy Test Standards Reporting Financial International UK United Committee Interpretations Reporting Financial International SPV Incurred but not reported OTC Held to maturity MCS bond hybrid subordinated linked equity rate Floating LAT IFRS Euro interbank offered rate IFRIC share per Earnings Kingdom features participation IBNR Discretionary HTM unit Cashgenerating FRESH EV Embedded swap default Credit Euribor EPS andliabilitymanagement Asset securities equity-linked hybrid subordinated and Convertible sale for Available DPF CGU CEU Continental CDS value CASHES ALM AFS Europe Abbreviations 258
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259 E-mail address: [email protected] Internet address: www.ageas.com Telephone +32 (0) 2 557 57 11, Fax +32 (0) 2 557 57 50 Telephone +31 (0)30 25 25 304, Fax +31 (0)30 25 25 310 Ageas and ageas SA/NV, Rue du Marquis 1, 1000 Brussels, Belgium Ageas and ageas N.V., Archimedeslaan 6, 3584 BA Utrecht, the Netherlands
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