ageas SA/NV — Interim / Quarterly Report 2010

Sep 1, 2010

Ageas Finance N.V. Interim Financial Statements 2010

Interim Financial Statements for the first half-year 2010 Ageas Finance N.V.

Ageas Finance N.V.
Archimedeslaan 6
3584 BA Utrecht (the Netherlands)
Tel. +31 (0)30 252 53 04
Fax +31 (0)30 252 53 10

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Ageas Finance N.V.: Interim Financial Statements 2010

Contents

Report of the Board of Directors on the 2010 financial half year 3

Interim Financial Statements for the first half-year 2010 6

Statement of Financial position 7

Statement of Comprehensive Income 8

Statement of changes in net equity 9

Statement of cash flows 10

General notes 11

Accounting policies 11

General 11

Notes to the financial statements 15

1. Due from group companies 15
2. Derivatives and other receivables 15
3. Cash and cash equivalents 15
4. Capital and reserves 15
5. Interest-bearing loans and borrowings 16
6. Bank overdrafts 17
7. Tax payable 17
8. Derivatives, deposits and other payables 18
9. Net financial margin 18
10. Operating expenses 18
11. Income tax expense 19
12. Risk Management 19
13. Related parties 19
14. Operating segments 20
15. Off-balance sheet items 20
16. Management remuneration 20
17. Contingent liabilities 20
18. Post-balance sheet date events 21

Other information 22

Provisions of the articles of association concerning profit appropriation 22

Review report 23

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Ageas Finance N.V. Interim Financial Statements 2010
3

Report of the Board of Directors on the 2010 financial half year

General

Fortis changed its name into ageas in June 2010. In turn, Fortis Finance N.V. changed its name into Ageas Finance N.V. on 16 June 2010.

In the past Ageas Finance N.V. operated as the window to the financial markets for ageas entities by issuing both short-term and long-term debt securities under a Belgian/Dutch Commercial Paper program and a Euro Medium Term Note (EMTN) program. Proceeds were primarily on-lent to ageas holding entities, to finance leverage that existed at this level in the group. ageas SA/NV (former Fortis SA/NV) in Belgium and ageas N.V. (former Fortis N.V.) in The Netherlands, jointly the holding companies of ageas, provided joint and several guarantees for debt issued by Ageas Finance N.V.

Confronted with the international financial crisis, ageas has undergone a complete metamorphosis. Its Dutch banking and insurance activities has been sold to the Dutch State, while the other banking activities have been sold to the Belgian State, which in turn sold 75% of Fortis Bank NV/SA to BNP Paribas.

The sale of material group companies stated above implied that a default was triggered under the EMTN program, which could not be cured. As a result, holders of Ageas Finance N.V. bonds are at all times entitled to demand the early redemption of their bonds in accordance with Conditions 7(a)(vii) and 7(a)(ix) of the Terms and Conditions. For all bonds other than structured notes, such redemption takes place at par value plus accrued interest until the date of effective early redemption. To enable Ageas Finance N.V. to early redeem the external bondholders, Ageas Finance N.V. has concluded agreements with its borrowers, that lead to the early redemption of the amounts due from borrowers at par.

Most bonds were redeemed as result of received early redemption requests in the first half-year 2009. In November 2009 Ageas Finance N.V. launched a public bid on the remaining outstanding notes at par, to assure that all note holders were informed about the ability to turn in their notes at par value (custodians need to inform their clients of any public bid). The appetite to participate to the bid was low: only 5% of the remaining note holders reacted on the offer.

On 30 June 2010 Eur 896 million of the EMTN notes remained outstanding, versus Eur 915 million at year end 2009.

The shares of Ageas Finance N.V. are indirectly held by ageas SA/NV (former Fortis SA/NV) and ageas N.V. (former Fortis N.V.) via Ageas Utrecht N.V. (former Fortis Utrecht N.V.) and Ageas Insurance N.V. (former Fortis Insurance N.V.) The latter is the direct and sole shareholder of Ageas Finance N.V.

International Financial Reporting Standards

The Ageas Finance N.V. Interim Financial Statements for the first half-year 2010, including the 2009 comparative figures, are prepared in accordance with IFRS – including International Accounting Standards ('IFRS') and Interpretations – at 30 June 2010 and as adopted by the European Union. For IAS 39, Financial Instruments: Recognition and Measurement, the execution regarding hedge accounting (the so-called 'carve out') decreed by the European Union on 19 November 2004 is taken into account.

Where accounting policies are not specifically mentioned below, reference should be made to the IFRS as adopted by the European Union.

The accounting policies used to prepare the Interim Financial Statements for the half-year 2010 are consistent with those applied in the Financial Statements for the year ended 31 December 2009.

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Ageas Finance N.V.: Interim Financial Statements 2010

According to the accounting policies ageas opted to fair value part of its assets and liabilities, while other parts are valued at amortised cost. With a view at the early redemption process described above, whereby the EMTN debt is redeemable at par value, Ageas Finance N.V. assumed that this par value represents the best estimate of their fair value, except if trades in the publicly listed notes is observed on the Luxembourg stock exchange above 100%; in these cases the listed trade value is used.

Results and appropriation of profit

In the first half of 2010 Ageas Finance N.V. realised a net loss after tax of EUR 4,071,856 compared to a net profit of EUR 97,429,805 recorded in the first half of 2009.

The huge swing in the half-year results in 2010 versus half-year 2009 is predominantly due to the following elements:

Effects on first half year result 2010:

Negative carry

Previously issued securities included a certain credit spread. After the redemption of all loans to borrowers, these credit spreads were no longer covered by credit spreads realized on the on-loans, causing a negative interest margin, referred to as "Negative carry".

Taxation

Related to the year 2007 an additional expense has been recognised.

Effects on first half year result 2009:

Credit default swaps

Ageas Finance N.V. in the past issued two credit linked bonds, which were hedged by credit default swaps (CDS). In the past these bonds were valued at fair value including the value of the embedded CDS, thus the valuation of the CDS were result-neutral for Ageas Finance N.V.

The unexpected default on these notes, and the early redemption that followed as a consequence of this default, created a mismatch, as the relating CDS remained outstanding in full. At December 31, 2008 the fair value of the CDS amounted to EUR 83.1 million (liability) and this open position created an unrealised loss in 2008. The revaluation of these CDS at the first half year 2009 closing lead to an unrealised gain of EUR 38 million.

Unwinding Interest rate swap

As indicated earlier, all loans granted to group companies, including loans with fixed interest rates, have been redeemed at par value in the course of 2009, thereby disregarding the fair value of these loans. Consequently, a derivative concluded between Ageas Finance N.V. and a group entity to hedge its interest position, was also unwound without settling the fair value. This unwinding was done in March 2009 and resulted in a gross profit of EUR 57.9 million for Ageas Finance N.V.

Risk management

Exposure to credit, interest rate and currency risks arise in the normal course of Ageas Finance N.V. business. The board decided to use derivative financial instruments to economically hedge exposure to fluctuations in foreign exchanges rates, interest rates and other risk on a deal by deal basis. The board monitors these risks on a day by day basis and minimises the open positions if and when economically possible.

Prospects

The outstanding debt of ageas Finance is in default. Due to cross default language in the terms and conditions of the EMTN programme, any new issued loan would immediately default; Ageas Finance N.V. therefore will not issue new

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Ageas Finance N.V. Interim Financial Statements 2010 5

bonds until the last defaulted bond is redeemed, which could take up to 2015. After the last redemption, management will review the future for the company.

The appetite to participate in the public bid launched in November 2009 was low, like the low volume of early redemption requests observed in the second half of 2009. Ageas Finance N.V. therefore changed the introduced early redemption request procedure from monthly to quarterly in 2010.

Ageas Finance N.V. decided to use its available cash to grant a new loan to Ageas Insurance N.V.; the returns that can be realized on this loan is higher than the returns that can be realized on holding cash at current accounts at banks. The spread realized on this loan will minimise the Negative carry. To avoid liquidity risks, the loan includes an option for Ageas Finance N.V. to ask for early redemption at par, in case redemption of outstanding bonds emerge.

As result of the events and developments occurred between May 2007 and October 2008 (capital increase and acquisition of parts of ABN Amro 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 Insurance N.V. became involved in a number of legal proceedings as well as administrative and criminal investigations in Belgium, the Netherland and the USA, some of which could result in substantial but currently unquantifiable future liabilities. These could jeopardize the ability of Ageas Insurance N.V. to service the loan granted.

Apart from the interest result, IFRS obliges companies to fair value interest rate swaps. As these swaps near their maturity, the value of these swaps will trigger unrealized capital losses; the timing of these accounting losses depend on the interest environment during the life time of these options. The interest rate swaps will cause approximately Eur 37 million unrealized capital losses up to 2014.

Given the uncertainty and the potential losses in the coming years, the sole shareholder Ageas Insurance N.V. has provided capital support for an amount up to Eur 20 million at the moment that losses reduce the capital of the company below zero.

Employees

Ageas Finance N.V. has no employees of its own. Its activities are performed by employees of ageas group companies.

Management representation

Management declares that, to the best of their knowledge, the interim financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and that the management report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

Utrecht (NL), 25 August 2010

The Board of Directors:

J.H. Brugman
C.F. Oosterloo
P. Goris

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Ageas Finance N.V. Interim Financial Statements 2010

Interim Financial Statements for the first half-year 2010

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Ageas Finance N.V. Interim Financial Statements 2010 7

Statement of Financial position

(before appropriation of profit)

In thousands of euro		30 June	31 December
	Note	2010	2009
Assets
Current assets
Due from group companies	1	950,100
Derivatives and other receivables	2	58,727	88,888
Cash and cash equivalents / bank overdrafts	3	1,351,673	944,360
Total assets		2,360,500	1,033,248
Equity
Issued capital		125	125
Retained earnings		37,000	(43,474)
Result for the year		(4,072)	80,474
Total equity	4	33,053	37,125
Liabilities
Long term liabilities
Interest-bearing loans and borrowings	5	895,979	914,949
Interest-bearing subordinated loans	5	26,092	26,092
Current liabilities
Bank overdrafts	6	1,349,123
Tax payable	7	29,560	28,368
Derivatives, deposits and other payables	8	26,693	26,714
Total liabilities		2,327,447	996,123
Total equity and liabilities		2,360,500	1,033,248

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Ageas Finance N.V. Interim Financial Statements 2010

Statement of Comprehensive Income

For the first half year

In thousands of euro	Note	1^{st} HY 2010	1^{st} HY 2009
Income
Financial income	10	60,896	225,286
Financial expenses	10	(63,487)	(104,403)
Net financial margin		(2,591)	120,883
Operating expenses	11	(129)	(219)
Rating expenses		(102)	(330)
EMTN-program expenses		(59)	(63)
Operating result before tax		(2,881)	120,271
Income tax	12	(1,191)	(22,841)
Result for the period		(4,072)	97,430
Other comprehensive income		-	-
Total comprehensive income		(4,072)	97,430
Total result for the year attributable to shareholders		(4,072)	97,430
Total comprehensive income attributable to shareholders		(4,072)	97,430

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Ageas Finance N.V. Interim Financial Statements 2010 9

Statement of changes in net equity

	2010	2009
In thousands of euro
Balance beginning of year	37,125	82,629
Profit (loss) for the 1^{st} half-year	(4,072)	97,430
Balance per the end of june	33,053	54,081
Profit (loss) for the 2nd half year	pm	(16,956)
Balance per the end of december	pm	37,125

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Ageas Finance N.V. Interim Financial Statements 2010

Statement of cash flows

For the first half-year	2010	2009
In thousands of euro
Cash and cash equivalents / bank overdrafts – Balance at 1 January	944,360	1,723,103
Cash flows from operating activities
Net result	(4,072)	97,430
Net changes in operating assets and liabilities	21,148	(2,174,859)
Net cash from operating activities	17,076	(2,077,429)
Cash flows from Investing activities
Payments to customers or cash receipt from customers (deposits, long term loans)	(950,100)	4,698,915
Cash flows from financing activities
Proceeds from derivatives	31,793
Cash receipt or repayment of borrowings (subordinated, debt certificates, long term liabilities, straight loans)	(26,469)	(3,933,729)
Payment of derivatives	(14,109)
Net cash from financing activities	(8,785)	(3,933,729)
Total cash and cash equivalents / bank overdrafts - at 30 June	2,551	410,860

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Ageas Finance N.V. Interim Financial Statements 2010 11

General notes

General information

Ageas Finance N.V. is a company domiciled in The Netherlands. The address is Archimedeslaan 6, 3584 BA Utrecht.

The company is registered with the chamber of Commerce in Utrecht under number 30055940.

The shares of Ageas Finance N.V. are indirectly held by ageas SA/NV (former Fortis SA/NV) and ageas N.V. (former Fortis N.V.) via Ageas Utrecht N.V. and Ageas Insurance N.V. The latter is the direct and sole shareholder of Ageas Finance N.V.

The main activity of Ageas Finance N.V. is to provide funding to companies within the ageas group. Funds borrowed in the market are either held in cash at current accounts at banks or lend-on to ageas companies. Ageas Finance N.V. has relatively low exposure to interest and foreign currency risks.

Ageas Finance N.V. does not employ any personnel; all activities are performed by employees of other ageas entities.

The interim financial statements were authorised for issue by the Board of Directors on 25 August 2010.

Accounting policies

General

The annual accounts are prepared based on the going concern assumption.

a) Statement of compliance

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the entity as at and for the year ended 31 December 2009.

b) Basis of preparation

The interim financial statements are presented in euro, rounded to the nearest thousand. They are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, and certain interest-bearing loans and borrowings.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates are especially used in establishing the fair value of non market quoted financial instruments.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in these interim financial statements.

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Ageas Finance N.V. Interim Financial Statements 2010

Ageas Finance N.V. is the financing vehicle of the ageas group. In principle all funding transactions were lend-on to other ageas entities; due to the default of the debt the company asked its borrowers to redeem their on-loans and held the proceeds that it received as result of this redemption in cash in current accounts at banks during 2009. Ageas Finance N.V. structured deals in such a way that only limited interest rate or foreign currency risks remain on the books of Ageas Finance N.V. In certain deals derivatives were used to eliminate the interest or foreign currency risk.

Ageas Finance N.V. does not apply hedge accounting. To limit the volatility in income and equity, Ageas Finance N.V. may apply the fair value option, for deals in which derivatives are involved. This results in a situation that the funding, the on-lending and the derivative are fair valued through the income statement.

c) Changes in accounting principles

The accounting policies used to prepare these Interim Financial Statements 2010 are consistent with those applied for the year ended 31 December 2009.

d) Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at foreign exchange rates ruling at the dates the fair value was determined.

e) Financial instruments

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the company's contractual rights to the cash flows from the financial assets expire or if the company transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the company's obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the company's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Accounting for finance income and expense is discussed in note f (Financial income and expenses).

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Ageas Finance N.V. Interim Financial Statements 2016 13

Investments at fair value through profit or loss

An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the company manages such investments and makes purchase and sale decisions based on their fair value. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

(ii) Derivative financial instruments

The company holds derivative financial instruments to hedge its foreign currency, credit risk, equity risk and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised immediately in profit or loss.

f) Impairment

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

g) Financial income and expenses

Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the company's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, dividends on preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets

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Ageas Finance N.V.: Interim Financial Statements 2010

at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.

h) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

i) Fair Value Calculations

A number of the company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Derivatives

The fair value of interest rate swaps is the estimated amount that Ageas Finance N.V. would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The estimate is based on the expected cash flows and the swap interest curve applicable at the moment of valuation. The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

Non-derivative financial instruments

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

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Ageas Finance N.V. Interim Financial Statements 2010 15

Notes to the financial statements

1. Due from group companies

In thousands of euro	30-06-2010	31-12-2009
Short time loans with group companies	950,100
Total

The loan granted to Ageas Insurance N.V. in the course of 2010 bears an interest of 1 month euribor + 40 basis points and is daily callable if and when redemptions take place on loans payable. As result of the events and developments occurred between May 2007 and October 2008 (capital increase and acquisition of parts of ABN Amro 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 Insurance N.V. became involved in a number of legal proceedings in Belgium and The Netherlands, some of which could result in substantial but currently unquantifiable future liabilities. Although very unlikely, these proceedings could jeopardize the ability of Fortis Insurance N.V. to service the loan granted.

2. Derivatives and other receivables

In thousands of euro	30-06-2010	31-12-2009
Accrued interest	15,125	34,419
Fair value derivatives	43,602	54,469
Total	58,727	88,888

3. Cash and cash equivalents

In thousands of euro	30-06-2010	31-12-2009
Bank balances	1,351,673	944,360
Cash and cash equivalents	1,351,673	944,360

Bank balances are held at Fortis Bank SA / N.V.

4. Capital and reserves

The movements in capital and reserves for the years ended 2009 and Half-year 2010 are as follows:

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Ageas Finance N.V.: Interim Financial Statements 2010

In thousands of euro	Share capital	Retained earnings	Result for the year	Total
Balance at 31 December 2008	125	52,504	(95,978)	(43,349)
Allocation of profit		(95,978)	95,978
Total recognised income and expense
1^{st} half-year 2009			97,430	97,430
Balance at 30 June 2009	125	(43,474)	97,430	54,081
Total recognised income and expense
2^{nd} half-year 2009			(16,956)	(16,956)
Balance at 31 December 2009	125	(43,474)	80,474	37,125
Allocation of profit		80,474	(80,474)
Total recognised income and expense 1^{st} half-year 2010			(4,072)	(4,072)
Balance at 30 June 2010	125	37,000	(4,072)	33,053

The authorised share capital comprised 1,000 ordinary shares, par value of EUR 500; 250 shares were issued and fully paid up. During 2009 and the first half-year 2010 no new shares were issued nor bought back by the company.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are held by Ageas Insurance N.V.

5. Interest-bearing loans and borrowings

The loans and borrowings can be analysed as follows:

In thousands of euro	30-06-2010	31-12-2009
Other borrowings due to customers – drawings under EMTN-program	895,979	914,949
Total loans and borrowings	895,979	914,949
Subordinated loans – other	26,092	26,092
Total interest bearing loans and borrowing	922,071	941,041

The split of total loans and borrowings by measurement principle is as follows:

Loans and borrowings at fair value	242,487	254,160
Loans and borrowings at amortised cost	679,584	686,881
Total loans and borrowings	929,798	941,041

The sale of material group companies by ageas in 2008 implied that a default was triggered under the EMTN program and Commercial Paper program, which could not be cured. As a result, holders of Ageas Finance N.V. bonds are at all times entitled to demand the early redemption of their bonds in accordance with Conditions 7(a)(vii) and 7(a)(ix) of the Terms and Conditions. For all bonds other than structured notes, such redemption takes place at par value plus accrued interest until the date of effective early redemption. Structured notes are redeemed according to the contractual agreed

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Ageas Finance N.V. Interim Financial Statements 2010 17

early redemption values. At 31 December 2009 it was assumed that these redemption values represented the proper amortised cost value or best estimate of the fair value, if applicable.

At 30 June 2010 some notes recorded at fair value were trading above their redemption values; in these cases the observed trading value at 30 June 2010 was used. The amortised cost of the loans and borrowings at fair value amounted to EUR 251 million at 31 December 2009 and EUR 239 million at 30 June 2010.

The average interest paid on the loans and borrowings was 5.35% in 1st half of 2010 (2009: 5.6%).

6. Bank overdrafts

In thousands of euro	30-06-2010	31-12-2009
Bank balances	1,349,122

Bank overdrafts are drawn at ABN AMRO Bank N.V. Other ageas group entities entrusted cash at accounts at the same bank, and these accounts jointly form a cash pool. In case of defaults of these group companies, ABN AMRO is entitled to compensate the cash balances of these entities.

7. Tax payable

The current tax liabilities of EUR 29,560 represent EUR 26,862 income tax over 2009 payable to Ageas Utrecht N.V., EUR 3,022 income tax over 2007 payable to ASR Nederland and EUR 324 income tax receivable over 2010 from Ageas Utrecht N.V.

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Ageas Finance N.V. Interim Financial Statements 2010

8. Derivatives, deposits and other payables

In thousands of euro	30-06-2010	31-12-2009
Accrued interest	26,617	26,264
Other payables and accrued expenses	76	114
Fair value derivatives		336
Total	26,693	26,714

9. Net financial margin

In thousands of euro	1^{st} HY 2010	1^{st} HY 2009
Interest income loans	742	33,352
Interest income derivatives	23,018	51,370
Interest income cash and cash equivalents	2,658	20,393
(Un) realised gains on derivatives	34,478	120,171
Financial income	60,896	225,286
Interest expenses loans and borrowings	(24,879)	(44,889)
Interest expenses subordinated loans		(296)
Interest expenses derivatives	(5,080)	(37,000)
Interest expenses cash and cash equivalents	(967)	(18,315)
Interest related expenses		(1,381)
(Un) realised loss on derivatives	(32,308)	(1,718)
Foreign exchange losses	(253)
Net loss on measurement from loans at fair value		(804)
Financial expenses	(63,487)	(104,403)
Net financial margin	(2,591)	120,882

10. Operating expenses

In thousands of euro	1^{st} HY 2010	1^{st} HY 2009
Accounting office fees charged by group companies	50	41
Bank costs	2	3
Audit costs	25	53
Back office / Front office fees charged by group companies		75
Other	52	47
Total	129	219

The audit costs relate to the fees charged by KPMG Accountants N.V. for the audit of the annual accounts and related matters.

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Ageas Finance N.V. Interim Financial Statements 2010 19

11. Income tax expense

Recognised in the income statement

In thousands of euro	1^{st} HY 2010	1^{st} HY 2009
Current tax expense
Current year tax income	325	20,818
Taxation previous years	(1,516)
Deferred tax expense
Origination and reversal of temporary differences		2,022
Total income tax expense in income statement	(1,191)	22,841

Reconciliation of effective tax rate

In thousands of euro	1^{st} HY 2010	1^{st} HY 2009
Profit before tax (minus = loss)	(2,880)	118,248
Domestic corporate tax rate	25.5%	25.5%
Income tax using the domestic corporate tax rate	734	(30,153)
Effect of total result in fiscal unity	(409)	7,312
Taxation previous years	(1,516)
	(1,191)	22,841
Effective corporate tax rate	(41.4%)	19.3%

12. Risk Management

Exposure to credit, interest rate and currency risks arised in the normal course of Ageas Finance N.V. business. The board decided to use derivative financial instruments to economically hedge exposure to fluctuations in foreign exchanges rates, interest rates and other risk on a deal by deal basis. The early redemption of notes leads to open currency and interest positions. The open positions are minimised if and when economically possible.

Other aspects of Ageas Finance N.V.'s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 December 2009.

Ageas Finance N.V. granted loans to Ageas Insurance N.V. for an amount of EUR 950,000 and Fortinvestlux for an amount of EUR 100.

13. Related parties

The purpose of Ageas Finance N.V. is to provide funding for the ageas group and group companies.

Due to the complete metamorphosis of Fortis the banking activities and the Dutch insurance activities of the former Fortis Group are no longer related parties since 30 September 2008.

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Ageas Finance N.V. Interim Financial Statements 2010

Ageas Finance N.V. granted loans to Ageas Insurance N.V. and Fortinvestlux. These loans are granted at arms length.

Ageas Finance N.V. has no employees of its own; all operational and management activities are performed by employees of other ageas entities. The activities are charged to Ageas Finance N.V. based on Service level agreements.

14. Operating segments

As Ageas Finance N.V. operates as only one segment, with no subsidiaries, no segment reporting is included.

Ageas Finance N.V., being an issuing vehicle of the ageas Group, tapped the financial market for funding, that was on-lent to internal group entities. Given the default of the bonds that Ageas Finance N.V. issued, all internal clients redeemed their on-loans. In 2010 new loans have been granted to Ageas Insurance N.V. and Fortinvestlux. Besides paying coupons on debt outstanding, redeeming the principal of debt at maturity or earlier when bondholders request this, and managing the risks due to the special circumstances that link with the defaulted debt, the company is in-active.

15. Off-balance sheet items

Capital support

Given the uncertainty and the potential losses in the coming years the sole shareholder Ageas Insurance N.V. has provided capital support for an amount up to Eur 20 million at the moment that losses reduce the capital of the company below zero.

Taxation unities

Ageas Finance N.V. is part of the tax unity for corporation tax Ageas Utrecht N.V. together with, amongst others, Ageas Insurance N.V., Ageas Insurance International N.V., and Ageas Reinsurance N.V. (former Fortis Reinsurance N.V.) Ageas Utrecht N.V. acts as the head of this group tax entity. Each of the companies is, in accordance with the standard conditions, jointly and severally liable for debts arising out of corporation tax on the part of the group tax entity as a whole.

Ageas Finance N.V. is part of the "fiscale eenheid voor de omzetbelasting Fortis N.V. c.s." a fiscal unity for VAT (Value Added Tax) in the Netherlands.

16. Management remuneration

The board of directors receives their remuneration from other ageas Group companies. No remunerations are charged directly to Ageas Finance N.V.

17. Contingent liabilities

We have taken notice of the disclosure on Contingent Liabilities in the 2010 Consolidated Financial Half-year Statements of ageas in which is mentioned that ageas is or can be involved in a number of legal procedures as well as administrative and criminal investigations in Belgium and The Netherlands. Ageas Finance N.V. is of the opinion that these procedures are not likely to lead to a substantial claim liability for Ageas Finance N.V.

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Ageas Finance N.V. Interim Financial Statements 2010 21

18. Post-balance sheet date events

There have been no material events after balance sheet date that would require adjustments to the financial statements as of June 30, 2010.

Utrecht (NL), 25 August 2010.

The Board of Directors:

J.H. Brugman
C.F. Oosterloo
P. Goris

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Ageas Finance N.V. Interim Financial Statements 2010

Other information

Provisions of the articles of association concerning profit appropriation

Article 18, subsection 1 and 2, of the Articles of Association reads:

The company may make distributions to the shareholders and other persons entitled to the profit available for distribution only in so far as the equity capital of the company exceeds the aggregate of the paid-up and called-up part of the capital of the company and the reserves that have to be kept by law.

Profits may be distributed only after adoption of the annual accounts showing that such distribution is permissible.

The profit shown in the adopted annual accounts may be disposed of by the general meeting of shareholders as it sees fit.

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Ageas Finance N.V. Interim Financial Statements 2010 23

Review report

To: the shareholders of Ageas Finance N.V.

Review report

Introduction

We have reviewed the accompanying statement of financial position of Ageas Finance N.V. as at 30 June 2010, and the statements of comprehensive income, changes in equity and cash flows for the six-month period then ended ("the interim financial statements"). Management is responsible for the preparation and presentation of this interim financial statements in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial statements based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements do not give a true and fair view of the financial position as at 30 June 2010 and the results of its operations and cash flows for the six-month period then ended in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

Amstelveen, 25 August 2010

KPMG ACCOUNTANTS N.V.

W.G. Bakker RA