Ageas Strategy in Portugal

Transcription

1 Ageas Strategy in Portugal A G E A S I N V E S T O R D AY 6 TH O F J U N E I LISBON PORTUGAL

2 Evolution of Ageas presence in Portugal Ocidental : A success story since 2005 Agenda Ageas Seguros : turnaround and independent set-up on track Strategic priorities for the coming years Conclusion I 2 I

3 Evolution of Ageas presence in Portugal I 3 I

4 2005 Ageas enters Portugal via Evolution of Ageas presence in Portugal a partnership with BCP Investment of EUR 510 mio I 4 I

5 Evolution of Ageas presence in Portugal Ageas enters Portugal via a partnership with BCP Investment of EUR 510 mio Step-up from 51% to 100% of Non-Life / Médis Investment of EUR 123 mio Distribution agreements in Life and Non-Life extended until end 2029 I 5 I

6 Ageas enters Portugal via Step-up from 51% to 100% Acquisition AXA Portugal Evolution of a partnership with BCP of Non-Life / Médis Ageas presence Investment of Investment of Investment of in Portugal EUR 510 mio EUR 123 mio EUR 264 mio Distribution agreements in Life and Non-Life extended until end 2029 I 6 I

7 Ageas enters Portugal via Step-up from 51% to 100% Acquisition AXA Portugal Portugal new Evolution of a partnership with BCP of Non-Life / Médis home market to Ageas Ageas presence Investment of Investment of Investment of in Portugal EUR 510 mio EUR 123 mio EUR 264 mio Distribution agreements in Life and Non-Life extended until end 2029 I 7 I

8 Real GDP Growth (%) Public Deficit and Debt as % Unemployment Rate (%) of GDP (%) Portuguese 4% 3% 2% 1% 0% 1.4% -1% -3% -5% -7% % 150% 120% 90% 18% 16% 14% 12% 10% 11.1% Economic Recovery -1% -2% -3% -4% -9% -11% -13% 60% 30% 8% 6% 4% 2% -5% -15% 0% 0% 08A 09A 10A 11A 12A 13A 14A 15E 16E 17E 18E 19E 08A 09A 10A 11A 12A 13A 14A 15E 16E 17E 18E 19E 08A 09A 10A 11A 12A 13A 14A 15E 16E 17E 18E 19E I 8 I

9 Strengthen our foothold in a core market we know since more than 10 years Why Portugal? Capture the growth opportunities in a recovering Portuguese economy With Mbcp Ageas, Ageas has showed the capability to generate good returns, even in difficult circumstances Ageas can now operate as a multi-channel insurer, addressing all types of clients I 9 I

10 Portugal new home market to Ageas #1 in Life #1 in Pensions #2 overall insurer #2 in Health #3 in Non-Life 2 corporate names Ocidental Grupo (Existing business) and Ageas Seguros (Acquired Axa Portugal business) 8 entities active in Life, Non-Life, Pension, Health and Direct businesses 6 brands Ocidental Seguros, Ocidental Vida, Ocidental Pensões, Medis, Ageas Seguros, Seguro Directo I 10 I

11 Complementary business mix Ocidental is strong in Life & Health, Ageas Seguros strong in Motor Omni-channel: Portugal new home market to Ageas full range of distribution channels (bancassurance, agents, direct, affinities) Distribution network of 671 branches 3,350 agents and brokers Direct platform 1,233 Médis network employees I 11 I

12 Premiums Market 4,196 N 3 in Non-Life after acquisition Consolidation likely Non-Life 2016 in EUR mio ,132 With the acquisition of AXA, Ageas becomes the 3rd player in the market (From 7% to 14%) Better diversified and more balanced portfolio : Motor & Health major Lines of Business each counting for 33% of premium volumes to continue New agency & direct distribution channel offers complementary distribution capacity besides existing bancassurance channel I 12 I

13 Provisions Market Life based on technical 10,120 liabilities ,505 N 1 Position in EUR mio 4,530 Life confirmed after 3,999 acquisition 1,579 2,461 Already before acquisition, Ocidental market leader 1,316 Acquisition Ageas Seguros further reinforced market position 883 I 13 I

14 Portugal Non-Life gross inflows Market Share Portugal Life gross inflows Market Share 16% 13.5% 25% 22.80% Portugal 12% 20% 16.10% 17.70% 21.10% Market Share 8% 5.70% 6.20% 6.70% 6.80% 7.20% Excl. Ageas Seguros 15% 10% 11.00% 13.00% Excl. Ageas Seguros 4% 5% 0% 0% I 14 I

15 Portugal Net Profit as % of Total Ageas Portugal Net Profit as % of Total CEU Net Profit Insurance Net Profit 52** Portugal within * % Ageas & CEU Net Profit % % % Portugal Other * 2011 adjustment for impairments on fixed income investments ** Excluding EUR 11 mio net impact integration costs Ageas Seguros I 15 I

16 Portugal Combined Ratio Portugal Operating Margin Guaranteed Portugal within 105.0% 2.0% 1.85% Ageas & CEU Operating Performance 100.0% 95.0% 92.9% 92.8% 90.5% 93.5% 1.5% 1.0% 1.66% 1.45% 1.09% 1.55% 1.77% Excl. Ageas Seguros 90.0% 86.5% 85.0% 86.2% Excl. Ageas Seguros 0.5% 80.0% 0% I 16 I

17 Portugal Shareholder s Equity in EUR mio CEU & Portugal Dividend Upstream in EUR mio CEU Portugal France Italy Turkey Luxembourg Portugal within Ageas & CEU Equity & Dividend estimated I 17 I

18 Ocidental A success story since 2005 I 18 I

19 Manage well profitability Track record Diversified mix in Life Above market average efficiency level Bancassurance specialist Strong capacity to automate, standardize and simplify processes Intimate relationship with main distributor Success factors Simple products in a nutshell Focus in profitable customer segments Distinctive value proposition in Health Successful brand Médis Innovative Multi-channel distribution I 19 I

20 Life Inflows growing Successful strategic effort led to in a declining market stronger operational position in Life -2.4% 5.3% 33% Life Growing in a declining market with strong profitability 1,090 1,408 7,555 6,676 9% Portugal Weight of Open UL in Life portfolio New business +24% Life Net Result (before VOBA) in EUR mio 49 OCV OC Pensões Guaranteed Margin 1.66% 1.77% +0.11% I 20 I

21 Non-Life (incl. health) strongly overperforming the market and growing market share 7.5% 0.1% Non-Life ,133 4, Combined Ratio 92.9% 86.5% -6.3% Growing in a flat market Portugal Non-Life Net Result in EUR mio OCS Médis I 21 I

22 Vision statement Be the recommended Insurance Group in Portugal Ocidental Defined a strategic vision 4 Strategic Choises with four strategic choices Partners Customers Innovation People Focus on partners as our primary distribution choice Integrated Plug-In concept Exceed expectations with the highest efficiency and transparency Proximity Operational excellence Understanding customer needs Challenge boundaries to create innovative value propositions Innovative value propositions Foster entrepreneurial mindset Be a top-notch organization, agile and socially committed Distinctive HR value proposition Learning & mentoring Empowerment Shared value approach with social impact I 22 I

23 Ageas Seguros : turnaround and independent set-up on track I 23 I

24 7 Aug. 15 Mar. 1 st Apr. 26 Apr Milestones in Acquisition AXA Portugal Signing Approval from Closing & start of Rebranded into all Regulators Inclusion in Ageas seguros Q2 results I 24 I

25 Ageas Seguros Profile 675 Employees (May 16) Customers > EUR 400 mio premiums (Life + Non-Life) Mainly Motor +/- 60% of business mix I 25 I

26 Ageas Seguros Key priorities Rebranding and boost commercial dynamics Launch of Ageas Seguros by the end of April 2016 Increase proximity with business partners Managing towards full independence Management and monitoring of Temporary Service Agreements (TSA) Execution Carve-out Plan Business transformation Turning unprofitable Lines Of Business (LOB) into profit Grow the profitable business and extend footprint Reduce costs Synergies and Integration Moving towards the Target Operating Model for Ageas in Portugal Simplify legal structure I 26 I As from day 1 Deadline: September 2017 From mid 2016 until 2018 Staged approach starting with top governance and support functions

27 Succesful brand launch 1 st promising signs of 1 A fast growing brand awareness: ambitious objectives! 60% transformation leading to encouraging turnaround in new business sales as from September 16! New Business Revenues In force Business 6.2% 9.5% 10.9% Ageas Seguros Key Objectives Rebranding and boost commercial dynamics 30% 34% 45% -11.2% -9.0% -6.5% -2.9% -1.6% -0.1% 0.6% -4.9% -7.8% 1.2% -0.5% 1.6% 3.0% 2.2% 2.8% 3.4% -11.4% 1% March.16 May 16 Nov % -17.7% -17.9% -13.5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec I 27 I

28 Extending the distribution footprint to spur growth in Life and Non-Life Ageas Seguros Key Objectives 1 Rebranding and boost commercial dynamics Premium Brokers Exclusive Network Private Multibrand agents in EUR mio 253 Non-Life GWP 121 Life GWP 374 Total # of agents PoS +30% , % +25% +21% Brokers grow share through selective choices. Progressively evolve from 8 to 20 Brokers. Organic growth of Exclusives and increase x-sell in Client base Private network size enlargement; focus on growth in Life (protection), Health and Home. Multibrand increase share of wallet CAGR of 15% horizon Figures do not include the 2,015 agents that are not assigned to a commercial manager I 28 I

29 IT Carve-out program - substantial investment to become fully independent 18 projects, 120 people, many internal and external stakeholders, rebuilding of January 16 most of the IT team, massive data-centre transfer, build up and/or technological September 17 2 upgrades in most applications in 18 months, until September 2017 Ageas Seguros Key Objectives Managing towards full independence IT Rebranding & Direct Migration Preparation & Set Up Data Center Set Up & Migration Finance & Risk New Applications I 29 I Some achievements Rebranding & Direct business operations integration Aprox. 60 applications updated New Ageas data center in Portugal New solutions (eg Finance and call center) implemented from a country perspective Integration Costs 2016 included ~EUR 10 mio integration costs Declining costs expected in

30 Comprehensive... based on... with diverse... and Programme... 3 axes challenges achievements Ageas Seguros Key Objectives 3 Business transformation to become profitable 14 areas for improvement 2 years program 25 projects > 3,000 Expected Improve profit in underperforming Lines of Business Growth of Networks and profitable business Improve granularity and time to market Preparing for Claims upscale Restore confidence Turn from pruning towards growth Extend footprint Pruning of the portfolio New tariff in Workers Compensation New Motor tariff Upgraded claims operating model in property New Household product Strengthening of sales tools and processes Changed sales organization Growing the exclusive network IT man-days in 2017 Fixing operational setup Optimize cost base Ensure efficient IT Move towards digital Improved collection process I 30 I

31 Improve profit underperforming LOB Motor Ageas Seguros Key Objectives 3 Business transformation to become profitable Market Context +/- 60% of business Motor accounted for 46% of Portuguese Non-Life premiums excluding Health (December 15, Portuguese Insurance Association) Distribution dominated by agents Price competition to capture new business high, price sophistication relatively low Actions taken by Ageas Motor Market Loss Ratio vs. Motor Ageas Loss Ratio* 69.7% 65.6% % 60.2% % 64.4% 2016 Below 60% Ambition 2019 Ageas Market * Gross Loss Ratio, excluding claims handling costs and investment income. I 31 I Launch of granular New Business tariff Optimization of renewals Repair with non-oem parts Strengthening of technical teams Innovative covers on auto insurance Increase of internal controls and follow-up Improve Steering to selected Bodyshops Reserves strengthening Ageas Motor Claims Frequency 11.80% 11.50% % 2016

32 Improve profit underperforming LOB Workers Compensation Ageas Seguros Key Objectives 3 Business transformation to become profitable Market Context +/- 15% of business Market has underperformed recently Increased pressure & scrutiny from regulator Mergers & Acquisitions leading to increased focus on underwriting margins Actions taken by Ageas WC Market Loss Ratio vs. WC Ageas Loss Ratio* Ageas Market * Gross Loss Ratio, excluding claims handling costs and investment income % 100.0% % 110.5% 104.2% 91.3% Breakeven Ambition 2019 I 32 I Launch of granular New Business tariff Optimization of renewals Underwriting focus on more profitable micro & small segments Reserves strengthening Portfolio review Clinical network optimization WC Portfolio composition per Sum Insured in EUR mio Dec May % 20% 19% 30% 7% 20% 24% 22% 16% 9% 3% 4% Micro Small Medium Large Self. Employed Housemaids Sources: Team analysis & Portuguese Insurance Association.

33 Strategic priorities for the coming years I 33 I

34 External Ageas Portugal to become a reference in 3 areas Position Ageas in the market as distinctive player (role in society) Customer focus and emotions in the center Inorganic and organic growth in each channel 3 Areas of reference: Ageing people, Health, Connected homes in the next 5 years Vision Mission and to operate as 1 single company Internal Ageas to become a reference in the Portuguese market, a second home market for Ageas Group and a great place to work for entrepreneurial people Deliver an emotional and meaningful insurance experience into people s lives 1 Boost Innovation and entrepreneurship Operate as 1company Ageas Portugal identity, culture and spirit Be an outstanding employer with professional people I 34 I

35 To achieve full integration it is necessary to ensure Leadership Processes Integration speed Leadership People Processes IT Integration process One Ageas will run in different People IT 100% 90% speeds along 80% 4 main dimensions Keys to success Management taking up new responsibilities is a driving force for 60% the implementation Focus on non-it integration first Full harmonisation of processes is dependent on disentanglement and IT implementation (tools and core) Full synergy potential to be harvested from % 20% 0% Ageas Carve-out Dependency Dec 2016 Dec 2017 Dec 2018 Dec 2019 I 35 I

36 JV Life Bank Insurance & Life Health & Partnerships / Direct Agents & Non-Life Distribution & Sales Marketing Distribution & Sales Marketing Distribution & Sales Marketing Non- Life Life & Non-Life One Ageas Integration Program Health Direct Life Platform Health Platform Non-Life Platform Transversal areas From 2 groups working on an integrated way To 3 Business Units within Ageas Portugal Group, supported by transversal areas I 36 I

37 One Ageas - Integration Program Achieved Ongoing Targets Wave Wave Wave Wave Integration waves Country Exco Launch One AGEAS Portugal at TOM fully operational One location in both Lisbon/Porto as from 2017, critical Launch One AGEAS Portugal at management level employees level and launch change management program Legal merger Non-Life Roll out IT plan Product and process harmonisation IT core systems roll out to keep the rythm Set up Ageas Portugal Holding (APS) confirmed New governance implementation IT global planning and first enablers First core IT ready for roll-out (claims, middle-layer) Capture full potential of synergies Solvency II and capital management to integration at country level First Integration Masterplan 1 st integration wave with 10 2 nd synergies wave: all transversal 3 rd synergies wave Business Units transversal areas operating for all areas ready for full execution; fully operational companies Business Unit finding shape I 37 I

38 I 38 I Conclusion

39 Portugal new home market for Ageas Ageas may participate to market consolidation in Non-Life Work towards One Ageas Portugal by 2019 Conclusion Ageas Portugal will reach by 2019 the Group ROE Target of 11%-13% I 39 I