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Ageas hoping for end to investor battle after 'roller-coaster' 2017: CEO


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Ageas hoping for end to investor battle after 'roller-coaster' 2017: CEO

Ageas SA/NV is hoping that its long-running investor lawsuit will be settled soon after a "roller-coaster year" for the settlement process in 2017, CEO Bart De Smet said Feb. 21.

The Belgo-Dutch insurer has been accused by groups of investors of making misleading statements in 2007 and 2008 during the financial crisis, when it was part of the former Fortis. Ageas had agreed to settle the suit, but the Amsterdam Court of Appeal in June 2017 rejected that arrangement and subsequently gave the insurer until Dec. 12 to submit an amended settlement.

The new settlement includes an additional €100 million payment from Ageas and has been accepted by the investor groups, but has not yet been declared binding by the court. Hearings have been scheduled for March 16 and March 27, and Ageas is hoping that a decision will be reached in mid-2018.

Speaking to analysts at a conference call for Ageas's 2017 results, De Smet said: "We expect a court decision before the summer and strongly believe this settlement offers a fair solution for all those affected by the past events. We hope the court will declare it binding so we can finally bring to an end this long-standing dispute in the interests of all parties concerned."

De Smet added that a good sign was that investor group ConsumentenClaim, previously one of the "most vocal opponents" of the earlier settlement offer, had "agreed to give its full support" to the amended settlement.

Last Ogden payment

Ageas also hopes that it has put behind it one of the drags on its 2016 and 2017 profit — the cut in the U.K. personal injury discount rate to negative 0.75%. The cut in the discount rate, also known as the Ogden rate, meant a jump in U.K. insurers' personal injury claims bills, with motor business bearing the brunt.

Ageas, which is one of the leading personal motor insurers in the U.K., took the bulk of the Ogden hit in its 2016 results, but booked a residual charge of €46 million in 2017, of which around €5 million came in the fourth quarter.

De Smet said the €5 million fourth-quarter payment "was the last one, so now you can say we are done." He noted that if the U.K. government revises the Ogden rate to between zero percent and positive 1%, as it is considering, this could allow Ageas to release some of the additional reserves it had set aside, but he added: "We don't anticipate that and we will wait and see how the judges and the politicians in the U.K. will deal with that review."

But although the U.K. division had had a better year in 2017, posting a €29 million profit after a €156 million loss in 2016, De Smet said: "We continue to monitor the situation closely in the U.K., where 2017 was still really a transitional year."

New dividend benchmark

Ageas boosted its dividend to €2.10 a share in 2017 from 2016's €1.70 a share, a rise De Smet attributed to "excellent results" in 2017, driven mainly by performance in Belgium, continental Europe and Asia. The net profit was €623.2 million, a big jump from 2016's €27.1 million net profit.

De Smet said the €2.10 figure should be considered the new baseline for Ageas dividends.

"Take this €2.10 as the starting point for the future, where we will do everything to not decrease it," he said, adding that the company has "a history of not decreasing the dividend in absolute terms."