EUR 850.00 For Business Accounts Only

Morningstar | Ageas Really a Struggling Business

Ageas is a business born out of the failed Fortis bank and is coming to an end of its legacy issues after breakup. The remaining distressed assets have been divested, and the provisions for settlement with shareholders should be considered complete.Although Ageas has a leading position in life insurance in Belgium and a top-five position in nonlife, it has battled a low-investment-return environment and what that means for demand due to low product guarantees. These are easily replaceable by more vanilla or more traditional forms of deposit, which has led Ageas to target underwriting and look for growth in emerging markets.While underwriting in recent years has been good, it should be considered against a backdrop of selectivity and low growth. We think the target of a combined ratio structurally below 97% across the group is unrealistic. These have been good years, and this will deteriorate in the medium-term years to come.Asia has been a source of profitability, and the business has been selective in choosing its markets. However, recent returns have been boosted by one-off gains, and we caution investors not to get overexcited. Though we think Asia will remain the growth driver, and guaranteed product margin has provided stability to operating profitability in the region, these are relatively young markets that could see pressure on fees.