releases

Fortis (Insurance UK) reports further premium growth

Continuing to deliver on successful multi-channel distribution strategy

12th May 2010

Financial Highlights:

• Total Non-Life and Life Gross Written Premiums (GWP) increased by 18.4 per cent to GBP 234.9 million (Q1 2009: GBP 198.4 million) building on record performance in 2009.
  
  
• Non-life Gross Written Premiums (GWP) increased by 16.8 per cent to GBP 230.5 million (Q1 2009: GBP 197.4 million).
  
  
• Strong growth in Commercial lines business with sales up 77 per cent over the same period in 2009.
  
  
• Continued good progress for the Protection business with New Annual Premiums reported at GBP 5.5 million (Q1 2009: GBP 2.9 million).
  
  
• Increase in total Broker Income for retail businesses of 6.2 per cent to GBP 25.6 million (Q1 2009: GBP 24.1 million).
  
  
• Overall net loss of GBP 1.8 million (Q1 2009 net profit GBP 4 million) due to severe weather events in January, industry-wide issue of rising claims in private motor market, one-off set-up costs related to the new Tesco Bank partnership and lower realised capital gains.
  
  
• Stable net profit of GBP 3.1 million in Other Insurance activities.
  
  
• Strong non-life capital position of GBP 331 million, in excess of 2.5 times the minimum capital required by the Financial Services Authority.
  
  
• Non-life combined ratio of 110.2 per cent (Q1 2009: 108.9 per cent).
  
  
• GBP 500 million partnership with Tesco Bank on track to launch in Q4 2010 and partnership with Toyota GB PLC and Aioi Motor and General Insurance Company of Europe Limited launched successfully in February.
  
  
• Continued delivery of award-winning service: voted top for Personal lines claims and underwriting service in industry-wide Professional Broking Sentiment Survey (May 2010); awarded 'Best Underwriting Team' and 'Best E-commerce Provider' at the 2010 LifeSearch Protection awards; RIAS voted as 'Best Home Insurance Provider' at the Daily Mail's 2010 thisismoney.co.uk Awards.
  
  

Announcing the 2010 first quarter results, Barry Smith, Chief Executive, Fortis UK commented:

I am pleased that Fortis UK is continuing to deliver a resilient performance despite difficult market conditions. Our business continues to deliver strong growth, particularly in Commercial lines, Protection and retail activities reflecting the attractiveness of our high service, low cost proposition and our desire to broaden and deepen our product range. Across the industry, profitability has been hit by increasing claims in the private motor market and severe weather events. However, private motor ratios are where we expect them to be in the current market cycle and thanks to our controlled underwriting discipline, we anticipate improvements by the end of the year.

Fortis UK

Growth in Fortis UK's businesses continues at a good pace thanks to its proven multi-distribution strategy and partnership approach with brokers, clients, IFAs and suppliers. The combination of high quality service and low cost delivery remains a priority as demonstrated by continued business growth and industry recognition through service accolades.

The overall financial result has been impacted by a combination of industry-wide issues and one-off costs. Increased claims from the severe weather experienced in January, poor performance in the private motor market, lower realised capital gains compared to last year and costs incurred setting up the new partnership with Tesco Bank are the main factors behind the negative net result of GBP 1.8 million compared to GBP 4 million profit in Q1 2009.

Non-Life:

Fortis Insurance

Total GWP for the first quarter increased by 16.8 per cent to GBP 230.5 million over the same period in 2009, driven by the continued development of Fortis' Personal and Commercial lines portfolios.

Growth in the Personal lines business reflects an increase in the Household and Travel books to GBP 57.7 million and GBP 13.3 million respectively (Q1 2009: GBP 45.0 million and GBP 9.6 million). Private car GWP was broadly in line with the prior year at GBP 117.8 million (Q1 2009: GBP 119.4 million).

Complementing its strong Personal lines performance, Fortis saw a 77 per cent growth in Commercial lines to GBP 39.0 million (Q1 2009: GBP 22.0 million) as a result of its strategy to expand in this sector. In the first quarter, Fortis launched fully into the Fleet market, broadened its commercial underwriting footprint and continued to develop its electronic trading capability making it easier and more efficient for brokers to transact Commercial lines business. Additional new product developments, such as the launch of the enhanced Semploy Extra offering and progress with electronic trading on a full cycle basis, are planned in the second quarter.

Fortis continues to be recognised for market leading levels of customer service being placed at the top of Professional Broking's industry-wide Sentiment Survey for Personal lines claims and underwriting service.

Tesco Bank Partnership

Significant progress continues to be made with the set-up of the new insurance business with Tesco Bank, of which 50.1 per cent is owned by Fortis. The senior management team for the new business, CEO Geoff Carter, Finance Director Stephen Grainge and Chief Underwriting Officer Andrew Baughan, has been appointed and recruitment to support the partnership continues. The company is on track to start transacting business by the end of the year.

Life:

Positive progress continues to be made with Fortis' Protection business, with reported New Annual Premiums of GBP 5.5 million (Q1 2009: GBP 2.9 million). The company now provides cover to over 80,000 customers (2009: 63,000 customers) and currently receives an average of more than 600 applications per day. The first quarter saw Fortis continue to roll out its proposition to specialist IFAs, nationals and networks, including SimplyBiz, Bankhall (now part of the Sesame Bankhall group) and Clarkson Hill, extending its cover to over 18,000 advisers. It is planned that Fortis UK's protection products will be available to the whole of the IFA market by the half year 2010.

Growth in the Protection business has been heavily driven by its approach to underwriting and market-leading technology which results in immediate decisions for 63 per cent of applicants. As a result, Fortis has received significant industry recognition being awarded 'Best Underwriting Team' and 'Best E-commerce Provider' at the 2010 LifeSearch Protection awards, as well as picking up four 'eee' ratings for the second year running from the Finance & Technology Research Centre.
Given that the Protection business was launched in July 2008, the net loss for the first quarter was GBP 0.6 million, in line with expectations (Q1 2009: net loss GBP 1.6 million).

Other Insurance:

Fortis UK's retail operations, RIAS and Fortis Insurance Solutions, continue to trade well in the competitive environment, and are focused on pricing, enhanced customer experience and new offerings to support new business and retention levels. RIAS has continued to launch a range of new additional cover options, and was the first over 50s insurance provider to offer MOT Protection, which gives cover for repair or replacement costs following MOT failure.

Fortis UK's retail operations saw a 6.2 per cent year on year increase in income to GBP 25.6 million, driven by good performance on renewals, add-on income and growth in partnership income, building on the healthy pipeline of partnership opportunities secured by Fortis in 2009. The company's first motor manufacturer branded scheme went live, with Fortis providing the sales, administration and claims service to Toyota GB's UK customer base. In addition, RIAS saw an overall book growth of almost 1 per cent, and its Lifetime Customer Value doubled across both motor and home policies, due to strong add-on performance at new business and renewal.

Net profit for total Other Insurance activities was stable at GBP 3.1 million in the first quarter, despite pressure on retail margins and additional investments associated with the take-up of new schemes.

Rebranding

Fortis UK's parent company adopted the new name "Ageas" following overwhelming support for the rebrand from shareholders at the end of April. The change follows the disposal of Fortis' banking assets and its sole focus as a stand-alone global insurance company. The UK business makes up one of its four key regions, along with Belgium, Continental Europe and Asia.

The use of the Fortis name will continue in the UK for the time being with the 'Ageas' brand being introduced in a controlled way. The rebranding process is expected to be completed by the first quarter of 2011.

Notes to editors

About Fortis

Fortis (Insurance UK)is a leading provider of award-winning personal, commercial and protection insurance solutions in the UK. Fortis UK distributes both its non-life and life products through a range of channels including brokers, IFAs, intermediaries, affinity partners and the Internet, as well as through its retail strategy via its wholly or partially-owned companies (RIAS, Fortis Insurance Solutions, Text2Insure and InsureTECH Systems).

Insuring in the region of 7 million customers and working with a range of partners, Fortis is recognised for delivering consistent and high-quality customer experiences. It employs almost 3,000 people with a head office based in Eastleigh and others in Belfast, Bournemouth, Gloucester, Haywards Heath, London, Redditch, Reigate and Stoke-on-Trent.

Ageas, Fortis UK's parent company, is an international insurance company 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. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading Non-Life player through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the 3rd largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a strong track record in developing partnerships with key distributors in different markets and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand. Ageas employs more than 11,000 people and has annual inflows of almost EUR 16 billion.

Press Contacts:

Fortis Press Office, Tel: 023 8035 2754, E: press.uk@fortis-uk.com