Fortis Inc. · TSX:FTS
Fortis — 9M 2001 Earnings Presentation
40 slides from Fortis's earnings presentation, Nov 22, 2001
Slide 1: Good operational performance in new environment – 9 Months Results 2001
“Good operational performance in new environment” 9 Months Results 2001 Presentation to the Investment Community Anton van Rossum, CEO Herman Verwilst, Deputy CEO Gilbert Mittler, CFO 22 November 2001 1
Slide 2: 9M results 2001: Net profit
9M results 2001: Net profit (EUR million) + 19% 2506 2105 1697 1 037 786 851 811 706 663 658 619 548 457 454 1Q 2Q 3Q 9M 4Q . 1Q 2Q 3Q 9M 4Q . 1Q 2Q 3Q 9M 1999 2000 2001 2
Slide 3: 9M results 2001: highlights
9M results 2001: highlights 6 Net operating profit excluding capital gains and harmonisation credit provisions + 11% 6 Operating expenses Bank stable 3Q/2Q 6 Unification of the shares 6 Progress in implementation Asia strategy 6 Successful IT integration 6 Risk Weighted Commitments decreased 3Q/2Q 3
Slide 4: Fortis in 2001
Fortis in 2001 2000 9M 2001 2001 objective Net operating profit per share 1.94 1.60 2.17 Net operating profit 2,355 million 2,070 million 2,807 million Average number of shares 1,215 million 1,293 million 1,293 million Non-operational items 413 million 436 million Net profit 2,768 million 2,506 mill
Slide 5: Fortis in 2001
Fortis in 2001 2001 objective 2001 revised Net operating profit per share 2.17 = + 12% 2.04 = + 5% Net operating profit + 19% + 12% Immediate impact 11 September: EUR 20 million Lower stock market related revenues • Lower commission income • Lower capital gains Explains shortfall of 170 million net
Slide 6: Fortis in 2001
Fortis in 2001 2001 revised 2001 objective 2.04 = + 5% Net operating profit per share 2.17 = + 12% + 12% Net operating profit + 19% Immediate impact 11 September: EUR 20 million Lower stock market related revenues • Lower commission income • Lower capital gains Explains shortfall of 170 million net
Slide 7: Fortis vs. European financial institutions
Fortis vs. European financial institutions 22% 19% 19% 9 month RoE annualised 18% 17% 17% 16% 16% 15% 14% 14% 13% 12% 12% 8% 8% 6% 6% 5% 1% RO Pa i s N k s CH G G a nk EB S nk s he a ia e Sw olo k k re a nz an le an ba O ai e fr B rt AB an an CS nd a ba ut ord S EG M ap BS U Fo nn B ér Pa ri B li b
Slide 8: The creation of Fortis Bank
The creation of Fortis Bank June 1999 end 1999 March 2000 End 2003 Legally becoming one bank Showing one 17 September face to the 2001 markets Showing one face to the employees A fast cross border Showing one face to the customers integration to create one bank Operating as one bank 8
Slide 9: The IT Migration in figures
The creation of Fortis Bank The IT Migration in figures 7 1st integration of this size in Belgium 7 1.000 IT people during 2 years 7 2.000 users associated to the tests 7 10.000 new programs or modifications 7 13.000 coordinated changes per month, during 18 months 7 Weekend of 14-17 September 2001:
Slide 10: 9M results 2001: acquisitions and disposals
9M results 2001 Insurance 7 1Q 2000: Sale of Long Term Care, US 7 4Q 2000: Acquisition of AMLIC, US 7 4Q 2000: Acquisition of ASR, Netherlands 7 2Q 2001: Sale of FFG, US 7 3Q 2001: Sale of Australian insurance activities 7 3Q 2001: Acquisition Dental Benefits Division of Protective Life, US 7 3Q 200
Slide 11: 9M results 2001 (EUR million)
9M results 2001 (EUR million) 9M 2000 9M 2001 Increase Fortis Net Operating Profit (excl. Cap gains 1,309 1,455 + 11% and harmonization credit provisions) Capital gains 699 511 - 27% Harmonization credit provisions (26) 104 * Net operating Profit 1,982 2,070 + 4% Non Operating income 123 436 * Net P
Slide 12: 9M results 2001: Insurance
9M results 2001 (EUR million) 9M 2000 9M 2001 Increase Insurance Net Operating Profit (excl. Cap gains) 680 775 + 14% Capital gains 337 224 - 34% Net operating Profit 1,017 999 - 2% Non Operating income 52 436 * Net Profit 1,069 1,436 + 34% Gross unrealized Capital Gains Insurance: Shares 3,550 2,52
Slide 13: 9M results 2001: Bank
9M results 2001 (EUR million) 9M 2000 9M 2001 Increase Bank Net Operating Profit (excl. Cap gains and 795 788 - 1% harmonization credit provisions) Capital gains incl venture cap 362 287 - 21% Harmonization credit provisions (26) 104 * Net operating Profit 1,131 1,179 + 4% Non Operating income 71 -
Slide 14: Net revenues insurance +10%
9M results 2001 Net revenues insurance +10% (EUR million) Excluding financial results on behalf of policyholders 9M00 9M01 14,023 12,079 11,581 9,868 4,668 5,139 2,100 2,154 855 1,041 Premium Interest income & Other Technical Net income results of financial income charges revenues + 21% transactions
Slide 15: Breakdown of realized capital gains insurance
9M results 2001 Breakdown of realized capital gains insurance (EUR million) Before tax 9M 2000 FY 2000 9M 2001 Life 368 425 262 Non-life 71 55 15 After tax Life 284 330 206 Non-life 53 45 18 Total Before tax 439 480 277 After tax 337 375 224 15
Slide 16: Net revenues banking + 10%
9M results 2001 Net revenues banking + 10% (EUR million) 6,104 6,476 6,220 5,641 9M00 9M01 3,129 3,262 1,595 1,556 1,070 911 469 588 463 256 Net interest Net Result from Other Net Value Net income commission financial income income adjustments revenues income transactions* on loans + 4% - 2% + 17% +
Slide 17: Net interest income
9M results 2001 Net interest income (EUR million) 9M 2000 FY 2000 6M 2001 9M 2001 Interest income 17,624 23,301 10,737 15,609 - 11% Interest expense 14,495 19,145 8,573 12,347 - 15% Net interest income 3,129 4,156 2,164 3,262 + 4% Interest margin 1.36% 1.38% 1.39% 1.39% Duration of equity 11.1 year
Slide 18: Net commission income
9M results 2001 Net commission income (EUR million) 9M 2000 9M 2001 Increase Issuance 124 70 - 43% Securities transactions 610 570 - 7% Insurance 110 115 + 4% Asset management 466 491 + 5% Payment services 226 250 + 11% Other 476 529 + 11% Commissions received 2,012 2,025 +1% Commissions paid (417)
Slide 19: Funds under Management
9M results 2001 Funds under Management (EUR billion) FY 2000 Market New 9M 2001 gain money Funds under Management 157,6 (16,1) (7,4)* 134,0 7 Private customers 66,8 (8,7) (1,8) 56.2 7 Institutional clients 34,4 (3,0) (1,0) 30,4 7 Investment funds 56,4 (4,4) (4,6)* 47,4 * Impact sale of FFG (3.4) 19
Slide 20: Results on financial transactions banking
9M results 2001 Results on financial transactions banking (EUR million) 9M 2000 9M 2001 Increase Trading results 417 597 + 43% Venture capital 123 6 - 95% Realized capital gains 371 467 + 26% Fixed income 229 423 + 84% Shares & other investm. 88 38 - 57% Participating interests 54 6 -89% Total 911 1
Slide 21: Value adjustments on loans
9M results 2001 Value adjustments on loans (EUR million) 9M 2000 9M 2001 6 Value adjustments on loans 463 256 7 Contribution to FGBR 116 127 7 Value adjustments 347 129 9 Harmonisation credit provision policy (44) - 9 Harmonisation BGL - 155 9 Harmonized value adjustments 303 284 21
Slide 22: Non-performing loans
9M results 2001 Non-performing loans (EUR million) 1999 2000 9M 2001 Total loans to customers 135,588 153,116 161,590 Non-performing loans 6,267 6,241 6,414 Percentage of total 4.6 % 4.1 % 4,0% Allowances 3,362 3,375 3,502 • country risk 269 232 232 • credit institutions 24 2 2 • customers 3,069 3,1
Slide 23: Breakdown operating expenses bank
9M results 2001 Breakdown operating expenses bank (EUR million) 9M 2000 9M 2001 Increase Staff costs 2,150 2,260 + 5% Other general admin.expenses 1,415 1,560 + 10% Other depreciation 190 210 + 11% Sub total 3,755 4,030 + 7% Depreciation leasing assets 168 241 + 44% Operating expenses 3,923 4,271 +
Slide 24: Solvency
9M results 2001 Solvency (EUR billion) 21.9 18.6 19.6 17.2 Insurance 10.4 7.3 Bank 11.5 9.9 Cap Floor 9M 2001 16 Nov 24
Slide 25: One share for Fortis: Increased market visibility
One share for Fortis Increased market visibility Current weightings (%) Combined Weighting of Fortis Fortis (NL) Fortis (B) weighting (%) 1 share (%) AEX (10% limit) 3.7 0.0 3.7 8.8 BEL20 (25% limit) 0.0 20.0 20.0 25.0 Euronext 100 1.0 1.3 2.3 2.3 MSCI World 0.0 0.1 0.1 0.2 MSCI Europe 0.0 0.3 0.3 0
Slide 26: FORTIS – Solid partners, flexible solutions
FORTIS oma B. o © \ | ° @ Za | Ome av FORTIS Solid partners, flexible solutions 26
Slide 27: Solvency development
9M results 2001 Solvency development (EUR million) 31-12-00 30-06-01 30-09-01 16-11-01* Fortis Floor 16,063 17,327 17,154 17,368 Bank (6% of RWC) 9,546 10,190 9,860 9,983 Insurance (175% Reg. Req.) 6,517 7,137 7,294 7,385 Net Core Capital 19,399 19,029 18,643 19,587 Shareholders equity 15,197 14,740
Slide 28: Technical provisions, net of reinsurance
9M results 2001 Technical provisions, net of reinsurance (EUR million) Life 2000 3Q 2001 Net technical provisions 42,282 42,767 Net technical provisions OBO 21,556 19,452 Total 63,838 62,219 Non Life Net technical provisions 9,029 9,533 28
Slide 29: Insurance Netherlands
9M results 2001 Insurance Netherlands (EUR million) 9M 2000 9M 2001 Increase Gross premiums Life 1,200 2,800 +133% 7 Gross premiums Unit-linked 704 922 +31% Net premiums Life 1,150 2,745 +139% Gross premiums Non-Life 413 1,380 +235% Net premiums Non-life 356 1,026 +189% Net revenues 985 1,392 +41% O
Slide 30: Impact ASR and restructuring on Fortis Results
9M results 2001 Impact ASR and restructuring on Fortis Results (EUR million) I: ASR 9M 2001 Net Operating Profit ASR 172 Adjustments for Purchase Accounting (46) Finance costs AMEV for ASR: 1.2 bln Euro (32) Missed Dividend ASR (12) Net operating profit Contribution in Bank and Insurance 82 (Bank +2
Slide 31: Insurance Belgium
9M results 2001 Insurance Belgium (EUR million) 9M 2000 9M 2001 Increase Gross premiums Life 970 1,152 +19% 7 Gross premiums Unit-linked 337 232 -31% Net premiums Life 966 1,148 +19% Gross premiums Non-Life 564 596 +6% Net premiums Non-life 511 537 +5% Net revenues 539 528 -2% Operating expenses 308
Slide 32: Insurance International
9M results 2001 Insurance International (EUR million) 9M 2000 9M 2001 Increase Gross premiums Life 1,310 1,227 -6% 7 Gross premiums Unit-linked 746 386 -48% Net premiums Life 1,306 1,221 -7% Gross premiums Non-Life 809 807 - Net premiums Non-life 650 675 +4% -8% Net revenues 441 405 -4% Operating ex
Slide 33: Insurance United States
9M results 2001 Insurance United States (EUR million) 9M 2000 9M 2001 Increase Gross premiums Life 1,275 1,338 +5% Net premiums Life 843 952 +13% Gross premiums Non-Life 5,052 5,130 +2% Net premiums Non-life 3,347 3,509 +5% +4% Net revenues 2,288 2,379 +4% Operating expenses 1,974 2,055 +3% Net oper
Slide 34: Insurance United States
9M results 2001 Insurance United States (EUR million) Assurant FY 2000 9M 2001 GWP 4,634 3,351 Retention rate 10.3% 8.7% Loss ratio - Mortgages 36% 41% Retention rate = margin on GWP on behalf of Assurant 34
Slide 35: Network Banking
9M results 2001 Network Banking FY 2000 9M 2001 Net operating profit 782 884 # branches (Benelux) 2,871 2,750 Belgium 2,532 2,441 Netherlands 299 269 Luxembourg 40 40 Automation rate 76% 79% Penetration insurance Belgium 42% 43% FTE’s 22,905 22,817 IPS 17,642 17,412 - MEC 4,507 4,656 FBI 756 749 35
Slide 36: Fortis Bank Insurance
9M results 2001 Fortis Bank Insurance (EUR million) 9M 2000 9M 2001 Increase Gross premiums Life 2,203 1,947 -12% 7 Gross premiums Unit-linked 1,833 1,558 -15% Net premiums Life 2,202 1,946 -12% Gross premiums Non-Life 111 115 Net premiums Non-Life 104 111 +4% +7% Net revenues 376 378 Operating expe
Slide 37: Merchant Banking
9M results 2001 Merchant Banking (EUR million) FY 2000 1H 2001 9M 2001 Net Operating Profit 485 260 333 FTE’s 2,644 2,676 2,601 Financial Markets 894 891 908 Investment Banking 607 556 559 Information Banking 1,044 1,126 1,126 37
Slide 38: Fortis Private Banking
9M results 2001 Fortis Private Banking Funds under management (EUR billion) FY2000 Market gain New money 9M 2001 66,8 (8,7) (1,8) 56.5 FY 2000 9M 2001 Net Operating Profit (EUR million) 176 72 FTE’s 2,431 2,424 38
Slide 39: Fortis Investment Management
9M results 2001 Fortis Investment Management (EUR billion) FY 2000 Market New 9M 01 gain money Institutional clients 34,4 (3,0) (1,0) 30,4 Investment funds 56,4 (4,4) (4,6)* 47,4 Net Operating Profit 90 33 FTE’s 761 704 * Impact sale of FFG (3.4) 39
Slide 40: FORTIS – Solid partners, flexible solutions
FORTIS oma B. o © \ | ° @ Za | Ome av FORTIS Solid partners, flexible solutions 40