Surprise loss for Ageas on write-downs
BELGIAN insurer Ageas announced an unexpected fourth quarter loss of €44.5m (£37m) yesterday as it wrote down the value of its Hong Kong operation and took a €124m hit on the value of its Greek bond holdings.
Without these impairments its insurance division would have turned a full year profit of €595m, the firm said.
Overall insurance income decreased by four per cent in 2011 as it faced fierce competition from banking products and state savings products in its life assurance business.
However, year-end sales at its British subsidiary were up almost 70 per cent at £1,979m, earning £105m compared to a £25m loss in 2009.
The firm only entered the UK market four years ago but has steadily built its market share to 8.4 per cent thanks to acquisitions, organic growth and affinity partnerships.
It now has more than 1.5m customers through ventures such as Tesco Underwriting, Kwik Fit Financial Services and Castle Cover.
Barry Smith, chief executive of Ageas UK, told City A.M. he was delighted with the results and praised “the quality of the profits” which could be partly ascribed to the “financial advantage of our low-cost operation”.
“We won’t expect to see the same growth in 2012 and it will still be a tough time for many customers. We have an incredibly strong team and will aim to grow quite naturally and where we see attractive growth.”
Ageas, which emerged from the break-up of Dutch-Belgian bancassurer group Fortis, said it will propose a dividend of eight cents a share at its next annual meetings to be held in April – the same as the previous year.
The insurer will have €1.1bn of cash left after the distribution and told reporters yesterday it will prioritise investing part of the cash pile in the business, followed by shareholder distributions and debt buybacks.
Shares in the group closed down 1.5 per cent at €1.69 last night.