ageas SA/NV — Investor Presentation 2013

Sep 18, 2013

PRESS RELEASE

Brussels, 18 September 2013 - 18:00 (CET)

Regulated Information - Ageas Investors Update: A clear and well defined path towards realising 2015 targets

During today's Investors Update in London, Ageas provided additional insight to the financial markets on two topics:

• 1. The path towards reaching the Vision 2015 targets: in this context, the previously set 11% Return on Equity (ROE) target for 2015 was reconfirmed. To realise this, Ageas will focus on improving overall profitability while gradually changing the company's profile. In this respect, Ageas has provided more granularity with respect to its Non-Life combined ratio and Life operating margin objectives. Secondly, more active capital management should result in a more efficient use of capital and shareholders' equity.
• 2. The priorities with respect to the use of net cash: Ageas has reconfirmed that investing in its business remains the highest priority. A disciplined acquisition approach will be respected along precise and strict financial and business criteria. If no adequate acquisition opportunities arise, Ageas intends to continue to return cash to shareholders in the most appropriate form. Finally, Ageas announced that redeeming outstanding debt is not a priority anymore. Instead, Ageas intends to further optimise its debt structure by among others on-lending part of the FRESH1 financial instrument into the operating entities. This also implies that Ageas has no intention to bid on the FRESH financial instrument at current price levels.

CEO Bart De Smet said: "We are making good progress against our targets, and we feel confident in reconfirming the commitments we made to the market a year ago. In looking at how we can create value, we have at the forefront of our minds the importance of being consistent in our actions. Consistency is what matters most and it is about doing things better every day. In this context, we have reconfirmed our Return on Equity target and we are more precise regarding our Non-Life combined ratio and Life operating margins. Our objective today was to update the market on where we are against our plans and to outline next steps in terms of execution particularly in relation to profit growth and capital management. While we acknowledge there is still work to be done in some areas, we are confident that we will deliver our targets for 2015."

¹ FRESH: Floating Rate Equity-linked Subordinated Hybrid capital securities, issued by Ageasfinlux, SA on 7 May 2002 and listed with ISIN XS0147484074.

EURONEXT BRUSSELS Ticker: AGS ISIN: BE0974264930

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Highlights of Ageas's path towards realising its key financial targets for 2015 and to managing the net cash position

1. Reaching Vision 2015 targets

Ageas recommitted today to the following strategic choices and key financial targets for 2015 that were announced in September 2012:

• a further rebalancing of the insurance portfolio between Life and Non-Life towards a 60/40 split;
• a continued focus on operational excellence in Non-Life with the objective of structurally reducing the combined ratio to below 100%;
• a sustained focus on Europe and Asia, with at least 25% of capital deployed in emerging markets;
• a return on equity of at least 11% for the insurance activities.

Vision 2015 financial targets and updates:

Ageas's Vision 2015 financial targets
	Target by end 2015	Position 30 June 2013	Position end 2012
% Life / Non-Life inflows at Ageas's part	60/40	67/33	67/33
Combined Ratio	< 100 %	97.8 %	99.1 %
Return on Equity of Insurance activities	11 %	8.4 %	8.7 %
% capital in Emerging Markets	25 %	14.8 %	12.1 %

Ageas has reconfirmed its Return on (Insurance) Equity target for 2015 of 11% based on shareholders' equity including unrealised capital gains/losses. Ageas will reach this target by continuing to gradually improve its net profit and through active capital management, which should result in a more efficient use of capital.

To improve the net profit levels of its existing businesses, Ageas will:

• 1. improve the profitability of its consolidated Life activities through a better Life operating margin. At the Ageas level this translates into an objective of 85-90 bps on Life Guaranteed contracts and 40-45 bps on Unit-Linked products;
• 1. improve the profitability of its consolidated Non-Life activities through a better combined ratio. At the Ageas level this translates into an objective of 97 % in the current interest rate environment and an intended growth in volumes in high accretive ROE Non-Life countries or segments;
• 1. work on a more balanced business mix by focusing on high ROE activities & product lines;
• 1. increase the net profit contribution from the fast growing emerging markets.

In terms of active capital management, Ageas will strive for more capital efficiency within the Group by on the one hand increasing the leverage of the operating companies while taking specific case-by-case initiatives such as reinsurance or optimising the ownership structure. On the other hand, Ageas plans initiatives to improve the capital allocation among its activities. Besides the disciplined upstreaming of the generated cash flows by the operating companies in order to fund the annual dividend and the corporate costs, Ageas also plans to optimise the capital levels as a function of the underlying business needs while respecting Ageas's standards and local solvency requirements.

2. Use of net cash

With respect to the use of the net cash position in the General Account, Ageas expects its net cash position by the end of 2013 to be around EUR 2.0 billion. Going forward, the net cash position will predominantly be used for investing in business or returning to shareholders. Returning cash to debtholders will not be part of the priority list anymore. In terms of priorities, Ageas indicates that investing in the business will be the highest priority while adopting a disciplined approach reflecting strict financial and business parameters. The acquisition strategy is based on the following principles:

• 1. priority to strengthen positions in existing markets;
• 1. a clear preference for Non-Life. Expansion in Life on a case by case basis;
• 1. further expansion in fast growing emerging markets with respect for the overall Ageas financial and M&A criteria and by continuing to build on the successful partnership model;
• 1. make use of opportunities in the event Ageas believes it can make a difference based on its expertise in insurance in Europe and Asia.

If no adequate acquisition opportunities arise, Ageas clearly intends to return cash to shareholders in the most appropriate way in the form of share buy-backs, dividends or capital reductions. Lastly, Ageas announces it has no plans to launch a tender offer on the FRESH financial instrument at the current price levels, but rather plans to on-lend part of the FRESH capital to certain Group entities in its effort to optimise the respective debt levels. As such, it could on-lend some 30% of the nominal amount of the FRESH financial instrument.

On the occasion of the Investors Update and ahead of the publication of the 9M results on 6 November 2013, Ageas announces its decision to switch to a more transparent and easy to calculate methodology to value its remaining RPN(I) liability. This is in line with IFRS13. Based on the figures of 30 June 2013, the RPN(I) liability would have represented an amount of EUR 259 million following the new methodology compared to EUR 171 million under the current model. Following past practices, this accounting impact will be part of the General Account net result and hence does not affect the Insurance net result or the net cash position.

For full details please refer to the slide presentation available today as from 20:00 CET at http://www.ageas.com/en/Pages/presentations.aspx

Ageas is an international insurance group 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. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with strong financial institutions and key distributors around the world. Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance. In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50's market. Ageas employs more than 13,000 people in the consolidated entities and over 20,000 in the non-consolidated partnerships and has annual inflows of more than EUR 21 billion.