Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ageas SA/ NV (AGESF, Financial) reported a 14% increase in inflows at constant FX, reaching EUR10 billion for the first half of 2024.
- Non-life inflows grew by 23%, driven by strong performance in the U.K. and Portugal.
- Reinsurance protection volumes more than doubled, showing a balanced portfolio between property and casualty lives.
- Life inflows saw a significant recovery in Portugal and growth in Belgium, driven by Group Life.
- The net operating result reached EUR613 million, with strong performance in both Life and Non-Life segments.
Negative Points
- The net operating result in Asia was negatively impacted by elevated deferred tax in China.
- The combined ratio in Turkey remains high, affecting the overall performance of the Europe segment.
- Prior year releases in Belgium were lower than the normal run rate, impacting the Non-Life segment.
- The transition to IFRS 17/9 in China has led to elevated deferred taxes, affecting the net operating result.
- The solvency ratio in China remains a concern, with potential impacts from regulatory changes and market conditions.
Q & A Highlights
Highlights of Ageas SA/NV (AGESF) Earnings Call Transcript
Q: Are there any implications from Taiping moving to IFRS 17 better than we thought? Is the regulator now taking a more realistic view when considering payout ratios?
A: Wim Guilliams, CFO: CTIH and Taiping Life have already moved to IFRS 17/9 as a reference, driving cash upstream decisions. The biggest constraint remains the solvency framework, not earnings. The solvency ratio is at a comfortable level, but future sensitivity remains a concern.
Q: Could you give more detail around the CTIH policy on dividends and what Taiping needs to do to meet that?
A: Wim Guilliams, CFO: CTIH aims for a stable dividend, requiring Taiping Life to upstream dividends. The alignment of interest ensures maximum cash upstream from Taiping Life. The solvency ratio is the main constraint for future cash upstream.
Q: What is the outlook for stability in the U.K. business, particularly in Motor pricing?
A: Hans De Cuyper, CEO: Motor pricing increased by 14% year-on-year but is softening. Household pricing is still increasing due to unresolved profitability issues. Ageas is well-positioned with agile pricing and underwriting methodologies and a lower expense ratio.
Q: Can you provide an update on the solvency ratio in China and its impact on cash upstream?
A: Christophe Vandeweghe, CRO: The core solvency ratio in China improved from 147 to 154, and the comprehensive solvency ratio slightly dropped from 285 to 278 due to regulatory changes and bond buybacks. The main driver is the increase in accounting net assets.
Q: What are the expected impacts of the IFRS Solvency II reform on Solvency II entities?
A: Christophe Vandeweghe, CRO: The overall impact is expected to be slightly positive, mainly due to the reduction in the cost of capital rate used in the risk margin calculation.
Q: How is the Non-Life business in Portugal performing, particularly in Health insurance?
A: Ben Karel Coumans, Managing Director, Europe: The increased costs in Health insurance have been compensated by repricing the book without losing market share. Profitability is now back within required levels.
Q: Can you provide more details on the operational capital consumption and its outlook?
A: Christophe Vandeweghe, CRO: The operational capital generation improved due to profitable growth. The operational free capital generation increased significantly, driven by strong sales in China and lower operational capital consumption due to asset management actions.
Q: What is the group's policy on excess capital and shareholder remuneration?
A: Hans De Cuyper, CEO: The current policy focuses on DPS growth. The announced EUR200 million share buyback is due to a strong cash and solvency position. Future policies will be discussed at the upcoming Investor Day.
Q: What are the trends in the real estate market in Belgium?
A: Wim Guilliams, CFO: The real estate market has fewer transactions but the portfolio holds up well due to low leverage and diversification. The unrealized capital gains remain strong, and the company can be selective in realizing gains due to strong insurance results.
Q: How will the new regulatory pricing in China impact Taiping Life?
A: Filip Coremans, Managing Director, Asia: The new regulatory pricing will lower guarantees and introduce a dynamic price adjustment mechanism. This will improve pricing discipline and agility, benefiting mid-term volumes and interest rate management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
