Ageas UK - Delivering on our Non-Life strategy. Barry Smith CEO Ageas UK

Transcription

1 Ageas UK - Delivering on our Non-Life strategy Barry Smith CEO Ageas UK INVESTOR DAY 2012 Investor Day 2012

2 Company profile Delivering our strategy Conclusions Investor Day 24&25 September Andaz Liverpool Street London

3 Company profile Strategic fit within Ageas Supports Ageas s Non-Life portfolio balance COR below 100% Targeting customers through multi-channel distribution Offering increasing contribution in inflows & profit Gross Inflow in EUR mio Net profit* in EUR mio 14,562 3,292 18% 17,219 6,157 4,033 2, ,034 6,282 6,179 Asia CEU UK Belgium % Asia CEU UK Belgium FY 2008 FY 2011 FY 2009 FY 2011 * Adjustments made on net result EUR 71 mio one off tax adjustment in Belgium (FY 09) & EUR 795 mio impairments & capital gains on bonds & equities FY 11) Investor Day 24&25 September Andaz Liverpool Street London 2

4 Company profile Ageas UK structure reflecting our multi-distribution strategy Ageas UK Barry Smith Chief Executive Officer Ageas Insurance Limited Ageas UK Retail Ageas Protect Tesco Underwriting Limited (partnership with Tesco Bank) Ageas Insurance Solutions Investor Day 24&25 September Andaz Liverpool Street London 3

5 Company profile Ageas UK: a major force in key UK insurance markets Top 10 Non-Life insurer GWP in mio 2011 data Top 10 Broker GWP in mio 2011 data Aviva plc Royal Bank Scot RSA Ins Grp AXA Zurich Fin Serv Allianz 1,875 1,770 3,209 3,118 3,558 4,691 Marsh JLT Aon Willis Saga / Autom.Ass Towergate Admiral Grp 1,729 BGL 393 Ageas 1,721 Swinton 329 BUPA Liverpool Vic FS 1,595 1,456 CGS&C Ageas (Retail) th largest Personal Lines broker GWP in mio 2011 data Sources: Ageas UK internal analysis of FY 2011 FSA Returns, Insurance Times & Insurance Age AA/SAGA BGL Group Swinton Group Ageas Retail Investor Day 24&25 September Andaz Liverpool Street London 4 Capita Hastings Endsleigh A-Plan Adrian Flux Carole Nash

6 Company profile Ageas UK: growing our business while improving our returns Gross Inflow in mio Profit before tax in mio 2, , , M 11 6M M 11 6M 12 Big freeze impacting whole market (25) Investor Day 24&25 September Andaz Liverpool Street London 5

7 Company profile Insurance & Retail Insurance Gross Inflow in mio Reflecting Tesco deal & organic growth 1,766 Retail Gross Inflow in mio More than doubled in 5 years , Profit before tax in mio Building good returns, barring weather impacts on market (1) Profit before tax in mio Consistent returns during volatility Underwriting cycle (42) Investor Day 24&25 September Andaz Liverpool Street London 6

8 Company profile Delivering our strategy Conclusions Investor Day 24&25 September Andaz Liverpool Street London

9 Delivering our strategy our 3 axes of growth Delivering innovation propositions that meet customer needs Ageas UK will become a leading manufacturer & retailer of insurance solutions accessing customers through a range of distribution routes. This will result in the delivery of consistent, competitive & sustainable propositions direct to customers, brokers and those businesses seeking intermediated insurance solutions for their customers. Product: Increase product / service breadth & depth Distribution: Build multi-channel distribution model Products High-Service: Provide highest levels of service Channels Low-Cost: Operate at lowest level of cost People: Building our knowledge & expertise Customers COMBINED CAPABILITY Investor Day 24&25 September Andaz Liverpool Street London 8

10 Delivering our strategy Product: Increase breadth and depth of products Strong product positions GWP (in 000s) Market Growth Ageas % share Position Household* 6, % % 6 Private Car* 9, % 1, % 5 Travel 583 (5.5%) % 5 Van (Commercial Motor) 3, % % 6 * includes Ageas Insurance Ltd & Tesco Underwriting inflow Motor and Household product suite Young Driver Telematics Motor Insurance Aggregator Motor Product Commercial Vehicle Product Mid-net worth Buildings and Contents Insurance Legal Protection Cover Investor Day 24&25 September Andaz Liverpool Street London 9

11 Delivering our strategy Distribution: Build a multi-channel distribution model Inflow in mio 2,000 1,800 1,600 1,400 1,200 1, Brokers Owned Affinities IFAs MGAs Tesco Implementation of the UK s multi-channel strategy has delivered: A significant growth in distribution via Affinities and owned distribution Entry into new segments such as Managed General Agents (MGAs) and Protection Investor Day 24&25 September Andaz Liverpool Street London 10

12 Delivering our strategy High-service: A lot of awards to prove Ageas delivers Business Transformation Award 2012 Claims Innovation awards 2012 Gold Standard Award for Insurance 2008, 2009, 2010, 2011 World Class status, Institute of Customer Services Insurance Times Awards 2010 & 2011 ABP Awards 2010 & 2011 UK Broker Awards 2010 & 2011 North West Contact Centre Awards 2011 British Insurance Awards 2011 & 2010 Money Wise Awards 2011 Protection Review Awards 2011 Post Magazine Claims Awards 2011 Insurance Times Claims Awards 2011 Financial Services Technology Awards 2011 LifeSearch Protection Awards 2011, 2010 & 2012 Investor Day 24&25 September Andaz Liverpool Street London 11

13 Delivering our strategy A strong brand among brokers and partners Ageas UK rebrand tracker survey results Excellent 2011 ratings compared to 2010 Very good Good Fair 68 Underperforming Underperforming Positive reputation gap between Ageas and competitors is growing Ageas Aviva Zurich AXA Brand essence Ageas business partners/brokers High fit Performing strongly with clients on delivery, service & partnership Like doing business with Source: WHY 5 Research Recommend to others Committed to working with brokers Delivers what it says Delivers service above market standard 2011 reputation monitor based on 6 point scale Investor Day 24&25 September Andaz Liverpool Street London 12

14 Claims excellence Low cost: Operate at lowest level of cost Incurred claims handling expense /net incurred claims Estimated Unit Cost Production (Private Motor 2011 One of the most efficient for claims operations Direct Line Allianz Aviva / Gresham RSA esure NFU Ageas Co-Op LV= / Highway AXA UK Market 6.2% 6.2% 5.6% 5.4% 4.8% 4.8% 4.0% Household claims mgmt costs / net incurred claims Ageas almost half that of UK Market average 7.4% Source: FSA 2010 returns and Ageas internal analysis Figures concern Ageas Insurance Limited 8.9% 11.5% 8.0% Lowest unit costs of production in Motor RBSI Allianz Co-Operative LV= Tradex esure Tesco Highway RSA Aviva Groupama Sabre NFU AXA Ageas UK Non-Life Direct Line Aviva / Gresham Lloyds TSB / St Andrews Allianz RSA NFU L&G LV= / Highway Ageas Co-Op UK Market % 4.3% 5.9% 5.4% 6.6% % 9.3% 9.0% 10.8% 10.1% % Investor Day September 2012 Andaz Liverpool Street London 13

15 Delivering our strategy Building our people knowledge & expertise RIAS Belfast Kwik Fit Insurance, The Green Insurance Company & Express Insurance Glasgow Tesco Underwriting Newcastle Ageas Insurance Limited Gloucester Ageas Protect London Focused on the customer Design solutions to meet individual needs Listen, empower and do what we say we ll do Passionate to deliver Take decisions and follow through on our actions Be dedicated and flexible Working together Work in a collaborative way with common goals Be open and build a common approach Energised Respond quickly, pro-actively and strive to make a difference Be enthusiastic with a Can do attitude to get the job done Ageas Insurance Solutions Stoke RIAS & Castle Cover Bournemouth Ageas Protect & Tesco Underwriting Reigate, Surrey Ageas Insurance Limited Eastleigh Trusted We believe in honesty and transparency Be professional, straightforward and demonstrate and understanding of each other, our clients and customers Investor Day 24&25 September Andaz Liverpool Street London 14

16 Company profile Delivering our strategy Conclusions Investor Day 24&25 September Andaz Liverpool Street London

17 Ageas announced the acquisition of GICL Further strengthening of Non-Life UK activities DRAFT 7 September: Ageas UK & Groupama SA announce exclusive negotiations Key transaction terms 20 September: they announce signing of the acquisition of Groupama s UK Non-Life business, Groupama Insurance Company Ltd Excluded from scope: Groupama s UK broking operations & GICL s DB Pension Liability, significantly de-risking the transaction Transaction subject to Regulatory Approvals & expected to be closed in Q4 12 Price of EUR 145 mio fully funded through existing capital resources book value of EUR 252 mio Expected to operate as Ageas UK subsidiary, in short term as standalone entity Key transaction highlights * based on 6M 12 figures Acceleration of a powerful UK Non-Life franchise Ageas will become n o 5 UK Non-Life insurer & n o 4 private motor insurer Highly complementary business fit strengthened offering in core business & addition of profitable new niche product lines Compelling strategic rationale complements Ageas UK s multi-channel distribution strategy, strengthens our reach in the UK broker market & adds key skills & talent to the Ageas UK team Compelling financial rationale price represents P/BV multiple of 0.53x* & P/E multiple of 5.86x* expected to exceed Ageas s minimum return thresholds Investor Day 24&25 September Andaz Liverpool Street London 16

18 Acceleration of a powerful UK Non-Life franchise Creating N o 4 in Private Motor 2011 UK market share (%) N o 4 Private Motor N o 4 Personal lines N o 5 overall... Insurer 1 Insurer 2 Insurer 3 Pro-forma Insurer 4 Ageas Insurer 6 Insurer 7 Insurer 8 Insurer 9 Insurer 10 Insurer 11 Insurer 12 Insurer 13 Groupama 1.5% 11.7% 10.2% Insurer 1 Insurer 2 Insurer 3 Pro-forma Insurer 4 Insurer 5 Ageas Insurer 7 Insurer 8 Insurer 9 Insurer 10 Insurer 11 Insurer 12 Insurer 13 Insurer 14 Insurer 15 Insurer 16 Insurer 17 Groupama 1.1% 7.1% 5.9% Insurer 1 Insurer 2 Insurer 3 Insurer 4 Pro-forma Insurer 5 Insurer 6 Insurer 7 Ageas Insurer 9 Insurer 10 Insurer 11 Insurer 12 Insurer 13 Insurer 14 Insurer 15 Insurer 16 Insurer 17 Insurer 18 Insurer 19 Insurer 20 Groupama 1.0% 5.2% 4.2% Increased size and presence in key private motor, household and commercial SME lines Enhanced growth potential through expanded product capabilities in new product areas Revenue streams not at risk from potential regulatory reforms GICL has no reliance of referral fees Source: Datamonitor, Group accounts Note: Based on FSA regulated entities. Admiral volumes based on total premiums written including premiums written by co-insurers. [GICL premiums adjusted for sale of PMI portfolio] Investor Day 24&25 September Andaz Liverpool Street London 17

19 Highly complementary business fit CIGL & Ageas UK have complementary business mixes Strong overlap in personal motor & household markets strengthened offering in core business lines Addition of GICL areas of strength to Ageas UK s platform (eg Motorcycle insurance) diversification of product mix Enhanced offering for key commercial partners Additional product niches with superior underwriting margins and strong growth potential Com property 10.5% Com motor 11.3% Other personal 8.6% Com liability 6.0% Travel 3.9% Other com 2.3% Houeshold 20.9% Personal Motor 30.7% Motorcycle 5.8% GICL GWP 408 mio 70% personal lines / 30% commercial lines Com property 3.9% Com motor 5.8% Other personal 2.0% Travel 3.5% Houeshold 23.0% Com liability 2.1% Personal Motor 59.7% Ageas UK GWP 1,721 mio 88% personal lines / 12% commercial lines Com liability Com property 2.8% 5.2% Com motor 6.9% Other personal 3.3% Travel 3.6% Houeshold 22.6% Motorcycle 1.1% Other com 0.4% Personal Motor 54.1% Pro-forma GWP 2,130 mio 85% personal lines / 15% commercial lines Source: Datamonitor (via FSA returns). GICL excludes PMI portfolio sold in 2011 Investor Day 24&25 September Andaz Liverpool Street London 18

20 Compelling strategic rationale Multi-channel distribution & resources Strengthens multichannel distribution strategy Acquisition complements Ageas UK s multi channel distribution strategy, strengthening its reach in the UK broker market Acquisition provides security for Groupama UK s existing intermediary relationships and reinforces Ageas UK s ongoing commitment to its broker relationships Transaction enhances e-trading offering, including e-fleet and e-commercial combined products Enhances skills & talent Depth and experience of GICL management talent with proven operational and financial track records will help drive the business as it is integrated into the Ageas Group Addition of expertise in niche and specialty lines to complement Ageas UK s existing underwriting talent Ability to draw on GICL s strong claims & operational management capabilities, together with Ageas UK s existing strengths in these areas Investor Day 24&25 September Andaz Liverpool Street London 19

21 Financial rationale Financial rationale of transaction Beneficial outcome for both parties - security & immediate capital release for Groupama - compelling financial rationale for Ageas & its shareholders GICL strongly capitalised & well positioned for Solvency II GICL reported net combined ratio of 97.8% & post tax profit for business acquired of EUR 29.8 mio (FY11) Defined Benefits Pension Liability excluded (liabilities retained by Groupama SA ), significantly de-risking transaction Metrics materially below recent sector acquisition multiples In-market consolidation in geographies & lines of business that Ageas UK knows well & would give rise to synergies. Expected to be highly cash generative, supporting growth in Ageas UK Strong outcome for Ageas shareholders Expected to exceed Ageas s minimum return on investment threshold of 11% Expected to result in immediate shareholder value creation post completion Represents excellent opportunity to profitably deploy Group capital Investor Day 24&25 September Andaz Liverpool Street London 20

22 Conclusions Significant scale change Good balance of manufacturing & retail distribution Contributing to increase in GWP, net profit & ROE With distinct attributes recognised in the UK market: partnership, delivery & service above market norms Mark will talk through the insurance story Andy will cover customers & distribution Investor Day 24&25 September Andaz Liverpool Street London 21

23 Disclaimer Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Future actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in Ageas s core markets, (ii) performance of financial markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) increasing levels of competition, (ix) changes in laws and regulations, including monetary convergence and the Economic and Monetary Union, (x) changes in the policies of central banks and/or foreign governments and (xi) general competitive factors, in each case on a global, regional and/or national basis. In addition, the financial information contained in this presentation, including the pro forma information contained herein, is unaudited and is provided for illustrative purposes only. It does not purport to be indicative of what the actual results of operations or financial condition of Ageas and its subsidiaries would have been had these events occurred or transactions been consummated on or as of the dates indicated, nor does it purport to be indicative of the results of operations or financial condition that may be achieved in the future. Investor Day 24&25 September Andaz Liverpool Street London 22