Growth for Ageas in Asian Insurance Markets

Posted on Nov 12, 2010 by Sergio Ulloa (G+)

Belgium-based insurers Ageas - formerly known as Fortis - announced third-quarter net profits of €153 million (US$211 million) from its global insurance operations during the third-quarter of 2010. This reflected a year-on-year increase of 17 percent in premiums generated by Ageas, with receipts of €4.1 billion (US$5.71 billion) between July and September 2010. Ageas highlighted that its Asian operations had been notably robust with inflows totaling €4.7 billion (US$6.48 billion) - a 55 percent increase for the year-to-date, while European business inflows were up by 20 percent to €13.7 billion (US$18.9 billion) for the same period. In Ageas' home domicile Belgium, the group was stable with in-flows reported at €5.1 billion (US$ 6.9 billion) from January to September 2010. Inflows for the third-quarter totaled €1.6 billion (US$2.2 billion) - an increase of 1 percent year-on-year. There were negative figures from the Belgian life insurance business, with inflows declining by 3 percent to reach €3.8 billion (US$ 5.17 billion) for the year-to-date period, but this was offset by gross inflows in non-life premiums written increasing by 5 percent to total €1.2 billion (US$1.65 billion) - with motor and healthcare cover driving results. The Ageas life business reported net profits of €105 million (US$144.9 million), with non-life generating a further €47 million (US$64.8 million) and other insurance amounting to €1 million (US$1.38 million) in the third quarter of 2010. Ageas emerged from the global financial crisis which commenced in 2007-2008 with a new corporate strategy involving the streamlining of business activities, asset relocation and disinvestment in non-profitable segments. This has produced a strong performance in year-to-date results including the latest third quarter period between July and September 2010 in both life and non-life insurance business. Ageas non-life business in particular experienced strengthening trends in its motor and fire units after corrective measures were taken. After shareholders approval in April 2010, the rebranding from Fortis to Ageas was adopted. The group's global strategy was announced in September 2009 starting with the streamlining of its portfolio in order to improve overall profitability. Ageas - like other multi-national insurers - has been strengthening its operations in Asia; especially in China and India, which are seen as key markets for future growth. In China - the world's second largest economy - the Ageas group reported gross inflows of € 2.9 billion (US$4.0 billion) up by 65 percent for the third-quarter of 2010. The Chinese single premium new business contributed €1.4 billion (US$1.93 billion), with regular premium new business accounting for €585.1 million (US$ 807.4 million). Ageas achieved this increase by taking steps to expand its distribution capacity and by providing innovative protection products to meet local Chinese market demands. Ageas Indian joint venture IDBI Federal Life Insurance was established in 2008 and has reported health profits for the third-quarter of 2010. IDBI Federal Life Insurance reported growth in inflows of €100 million (US$138 million) - an increase of 98 percent over the previous year. The success of the Ageas Indian operations involves their partners - IDBI Bank and Federal Bank's - large distribution network in an expanding life and non-life Indian insurance industry. This is linked to the general economic expansion in India, which the country is currently enjoying. The IDBI Federal Life Insurance Company provides protection products which include, wealth, home, income, micro, loan and health insurance meeting the needs of the 1.17 billion population Other Ageas Asian operations include the partnership with Muang Thai Life of Thailand, which grew by 56 percent in the third-quarter 2010 to generate €529 million (US$730 million). Ageas are in a strong position within the Thai insurance market, which is set to experience significant growth. EtiQais Ageas a Malaysian insurance unit is a joint venture with domestic based Maybank, which saw gross inflows increase by 46 percent to €577 million (US$796.2 million). The strong growth was down to new product innovation and the evolving takaful mortgage related life insurance products, which are distributed through Malaysian banking channels. Some Ageas divestments were made under its former Fortis Insurance brand and included the sale of its Turkish life unit - Fortis Emeklilik ve Hayat - to French based BNP Paribas. Fortis Emeklilik ve Hayat reported gross written premiums in 2009 of €62 million (US$85.5 million) In September 2010, the private equity fund manager - Horizon Capital - announced that it was buying AgeasFortis Life Insurance Ukraine, resulting in Ageas exiting the Ukrainian life market as it continued with its policy of streamlining its portfolio. In July of this year, Ageas brought UK-based Kwik-Fit Insurance Services (KFIS) in a strategic move to accelerate its growth in the UK market - one of Ageas core insurance markets. The acquisition of Kwik-Fit by Ageas is part of the groups restructuring, with the aim of developing new insurance products, using the multi-channel distribution network already established within the UK. Also in 2010, Ageas formed a partnership with the largest UK supermarket chain Tesco to provide household and motor insurance in Britain. Ageas operates in Continental Europe, the UK and Asia, with Asian countries such as China and Thailand presenting Ageas with a platform for future expansion. However, Ageas believes that there are still strong opportunities for premium returns in traditional insurance markets such as the UK, particularly with the acquisition of Kwik-Fit. Ageas current strategy of streamlining and rationalization is producing sound rewards in 2010. Following in the footsteps of other global insurers, Ageas has achieved financial benefits from focusing on their Asian insurance operations particularly in China and India. Additionally, the South East Asian insurance industry is pigging-backing on the success of the two regional powerhouses and offers Ageas another avenue to increase revenue from markets such as Thailand. Insurance Company Mentioned: Ageas Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand.