Half year results
30.06.2016
26.10.2016
Agenda
 Key June 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
2
Key June 2016 highlights
1
Key events
2
Operating
result
Financial
results
Net
income





Switch V operation (redemption bonus of 10% to the holders of a First A product)
Terrorist attacks in Brussel : cost of €10M after reinsurance and TRIP
Reduction of duration gap mainly through the acquisition of hedging instruments
Recovery of tax dispute (€204M)
Brexit
BGAAP – Ethias SA
IFRS – Ethias Group
 €135M o/w €112M from Non-Life
 €109M o/w €108M from Non-Life
 €282M taking into account :
 The cost of the Switch V operation -€6M
 €260M taking into account:
 The recovery of tax dispute : €204M
 Other exceptionals and tax: -€51M




Dotation of of LAT provision: -€71M
Recovery of tax dispute : +€204M
Switch V premium: -€6M
Other exceptionals and tax: +€22M
Non-Life
3
Business units
(IFRS)
4
 GWP €850M
 Technical result €103M
 COR 91.8%
Equity
Balance sheet
strength (IFRS)
5
Investment
portfolio
Life
 GWP €564M
 Technical result -€30M
Debt ratio
Solvency II
U/R gains
 €2,207M, from €1,869M in  18.5%, down from 21.5%  125.10% vs 131.56% end  €2,123M, up from
2015
2015
in 2015
€1,622M in 2015
 €18.6B total investment portfolio
 78.8% invested in bonds (o.w. 60% government bonds, o.w. 93% rated BBB or higher)
 7.5% held in cash
 2.7% in real estate - office buildings and nursing homes (cash flow guaranteed over the long term)
Agenda
 Key June 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
4
Key events in Q2 2016
Decrease in the life reserves for Individuals
Recovery of tax dispute
Launch in December 2015 of the Switch V operation
(holders of a First A are offered an exceptional
redemption bonus of 10%) with surrenders of €65M
for a cost of €6M
Recovery of €204M within the frame of the dispute
between Ethias and the tax authorities with regards
to the pension insurance
03/2016
12/2015
02/2016
Creation of an Organism
Financing Pensions
(OFP)
Creation of an OFP multiemployers in first and second
pillar
06/2016
Terrorist attack in Brussel
Brexit
Cost for Ethias of €10M after
reinsurance and TRIP
.
Succes of 60+ retirement plan, one of the measures of
reduction of overhead costs
Reduction of the duration gap (Switch V, acquisition of hedging instruments, …)
Decrease in interest rates (loss of 58bps for the swap 10 years between end december 2015 and end june 2016)
Agenda
 Key June 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
6
Balanced Non-Life/Life inflows despite discontinuation of Life Individuals
Evolution of GWP (€M)
2,716
2,473
1,450
1,236
2,401
2,471
1,109
1,171
Non-Life
Life
1,438
588
1,237
1,266
1,292
1,300
2012
2013
2014
2015
Evolution of Non-Life GWP (€M)
Public and Corporate Sector
1,237
1,266
1,292
543
554
Public and Corporate Sector
Individuals
1,300
1,236
95
723
738
Individuals
1,450
68
1,109
58
561
1,171
55
1,382
298
705
Q2 2016
Evolution of Life GWP (€M)
850
532
850
1,141
739
1,051
1,116
588
22
566
2014
2015
Q2 2016
552
2012
▪
2013
2014
2015
Steady increase of Non-Life GWP between 2012-2015
Q2 2016
2012
▪
▪
2013
Discontinuation of Life Individuals (EC decision)
High 2013 GWP of €1.4 billion of Life to Public & Corporate Sector
impacted by one-offs (unique premiums)
7
Evolution in net result
Evolution in net result under BGAAP (€M)
282
180
▪
110
50
-135
2012
2013
2014
2015
Q2 2016
Evolution in operational result under BGAAP (€M)
+31%
222
211
267
Strong operational 2015 result of €291M, after adjusting the
reported net result of €50M by the following elements :
− €(166)M allocation to flashing light reserve
− €(243)M gross costs related to Switch IV
− €44M of recovery on tax dispute
− €124M of non-recurring items and tax : essentially gains on disposals
of securities and reversals of surplus financial provisions partially
offset by the acquisition cost of a derivative instrument for hedging
against interest rate decrease
▪
291
135
Operational Q2 2016 result of €135M, after adjusting the
reported net result of €282M(*) by the following elements :
− €(6)M gross costs related to Switch V
− €204M of recovery on tax dispute
− €(51)M of non-recurring items and tax : essentially the cost for the
60+ retirement plan
2012
2013
2014
2015
Q2 2016
Evolution in operational result under BGAAP (€M)
- Breakdown
Allocation to flashing light reserve
Switch
Non-recurring result & tax
Tax dispute
Net result
222
2 40
211
180
110
166
135
51 6
243
282
-142
50
-124
-204
-135
-44
2014
2015
166
116
-15
2012
291
267
2013
378
Q2 2016
▪
▪
Over the last years, operational result in the range of €200-300M
Ethias expects to maintain its operational result in this range by
implementing its strategy and continuing the following actions :
− Cost reduction
− Operational and technical excellence
− Pro-active management on First reserves (run-down strategy)
− Improvement of underwriting
− Reduction of claim handling costs
− Strengthening of sales force
− De-risking of investment portfolio
(*) The financial statements on 30th of June have been established without
taking into account a possible allocation to the flashing-light provision.
8
Breakdown of net result under BGAAP (€M)
Technical result pre-allocation
o/w Non-Life
o/w Life
Allocation to flashing light reserve
Technical result post-allocation
o/w Non-Life
o/w Life
Non-technical result
o/w recurring items
o/w financial non recurring items
o/w non-recurring items (tax dispute)
o/w other non recurring items
Tax
Net result
Net result1
1
Post transfers and withdrawals from untaxed reserves
2012
251
193
58
(40)
211
189
22
(28)
(28)
0
0
0
(1)
182
180
2013
235
208
27
(116)
119
202
(83)
(24)
(24)
0
0
0
15
110
110
2014
401
272
129
(166)
235
263
(28)
(366)
(8)
20
(378)
0
(1)
(132)
(135)
2015
164
310
(146)
(166)
(2)
298
(300)
56
(5)
17
44
0
(3)
51
50
Q2 2016
138
111
27
0
138
111
27
146
(7)
1
204
(52)
(2)
282
282
9
Focus on Non-Life business
Evolution in Non-Life GWP of Ethias (€M)
2015
1,300
Q2 2016
850
▪
Non linear invoicing of gross written premiums
460
275
Auto
250
184
181
Worker’s
compensation
111
Fire
187
132
118 86
Healthcare
Liability
33 17
71 45
Assistance
Other
Total
Non-Life
Non-Life technical result BGAAP (€M)
Operational result
Net result¹
254
193
208
263
189
Net combined ratio of Ethias (BGAAP)
92.2%
92.0%
240
91.0%
88.7%
298
202
86.9%
111
2012
▪
1 Non-Life
2013
2014
2015
Robustness of the Non-Life model given the significant and
recurring profitability for several years now
technical result post allocation to flashing light reserve
Based on internal calculations
3 Based on Assuralia formula
2
2012²
Q2 2016
▪
2013²
2014²
2015³
Q2 20163
Net CoR among the best of the Belgian market resulting on
the one hand, from the various optimizations operated since
several years in terms of pricing, claims management and
management of overheads and, on the other hand, from of
our distribution model which is primarily direct
10
Focus on Life business (1/2)
Evolution in Life GWP (€M)
959
901
Evolution in Life GWP (€M)
Single premiums
Periodic premiums
2015
Accepted reinsurance premiums
Q2 2016
1,171
947
939
806
588
517
475
419
335
16
0
2012
2013
272
208
154
16
2014
16
2015
136
65
6
Q2 2016
1st Pillar
2nd Pillar
55 23
38 10
Life
Individuals
Other
Total Life
Life technical result BGAAP (€M)
Operational result
Net result
Other non-recurring items
Allocation to flashing light reserve
Cost of "Switch " operation
Net result
56
58
56
27
22
27
22
-28
-83
2012
▪
▪
2013
58
22 36
22
243
110
157
154
-83
-107
-28
-41
-300
2013
2014
2015
27
-300
2014
2015
Q2 2016
2012
Life technical result (pre-allocation to flashing light reserve and non-recurring items) has been positive since several years
Life result impacted by :
▪
▪
The allocation to the flashing light reserve (BGAAP constraint) for the period 2012-2015.
The cost of the "Switch" operations amounting to €243M in 2015 and to €6M in 2016
30
27 6
-3
Q2 2016
11
Focus on Life business (2/2)
Evolution in Life Individuals reserves (€M)
Impact of redemption offers on First A :
 In Q1 2015 : Switch IV operation (exceptional
7,193
1,233
5,819
503
1,201
2,122
453
910
5,274
1,149
Pro-active management of Life
Individuals reserves by offering
“First A” clients an exceptional
redemption bonus (“Switch IV”)
245
612
2,983
-1.831
3,335
2012
3,255
2013
3,268
2014
1,074
400
First A
reduction
Other products o/w Top First
First Invest (incl. Junior) : guaranteed interest rate of 0%
First B : guaranteed interest rates (limitation in time)
First A : guaranteed interest rates (no limitation in time)
72

2,744

1,016
300
1,437
1,390
2015
Q2 2016
38


redemption bonus of 4 years’ interest, equivalent
to an exit premium of c.14%) with surrenders of
€1.9 billion (for a cost of €243M) which, combined
with the interest capitalization on existing
contracts, involve a reduction of reserves for an
amount of €1.8 billion in 2015 (representing 56%
of 2014 First A reserves)
In Q2 2016 : Switch V operation (redemption
bonus of 10%) with surrenders of €65M (for a
cost of €6M)
A Switch VI operation is planned for November
2016
All those Switch operations impact positively our
SII ratio and our duration gap
Average guaranteed interest rate of First A :
3.44% as per end of June 2016
12
Other key elements
Evolution in equity (€M)
1,178
2012
▪
▪
1,263
2013
Evolution in debt ratio
1,418
1,136
1,130
2014
2015
29.0%
Q2 2016
Slight improvement in equity in 2015, the year result of around
€50M being used for the payment of a dividend to Vitrufin of about
€45M
High increase in equity in Q2 2016 due to the half year result of
€282M
▪
▪
22.8%
21.0%
23.1%
2012
2013
2014
2015
24.4%
Q2 2016
Deterioration of debt ratio in 2015 following the issuance of
additional bonds for an amount of € 170.8M in par value
Decrease in the debt ratio in Q2 2016 due to the increase in equity.
Note that this ratio doesn’t include the collateral received (€249,4M)
in guarantee of hedging operations (acquisition of forward bonds and
swaptions) against a decrease in interest rates (same amount on the
asset side)
Evolution in unrealized gains (€M)
2,123
1,860
994
1,622
Land and properties
Share interests 104
1,013
Shares
Bonds
2012
2013
2014
2015
41
Q2 2016
Others
Total unrealized gains Q2 2016
59
1,877
42
2,123
Agenda
 Key Q1 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
14
Balanced Non-Life/Life inflows despite discontinuation of Life Individuals
Evolution in GWP (€M)
2,692
2,455
1,217
1,426
2,376
2,444
1,084
1,144
Non-Life
Life
1,414
564
1,238
1,266
1,292
1,300
2012
2013
2014
2015
Evolution in Non-Life GWP (€M)
Public and Corporate Sector
1,238
1,266
1,292
543
554
Public and Corporate Sector
Individuals
1,300
1,217
95
723
738
Individuals
1,426
68
1,084
58
561
1,144
53
1,358
298
705
Q2 2016
Evolution in Life GWP (€M)
850
533
850
1,122
739
1,026
1,091
564
22
542
2014
2015
Q2 2016
552
2012
▪
2013
2014
Steady increase of Non-Life GWP
2015
Q2 2016
2012
▪
▪
2013
Discontinuation of Life Individuals (EC decision)
High 2013 GWP of €1.4 billion of Life to Public & Corporate Sector
impacted by one-offs (unique premiums)
15
Evolution in net result
Evolution in net result under IFRS (€M)
▪
638
330
147
260
2015 net result of €638M mainly resulting from :
− The reversal of Life insurance provisions following the increase in
−
−
−
−
-598
2012
2013
2014
2015
Q2 2016
Evolution in operational result under IFRS (€M)
▪
372
253
256
292
2013
2014
2015
Q2 2016 net result of €260M mainly resulting from :
− The result generated by the non-life activity
− The dotation of Life insurance provisions following the decrease in
interest rates (impact of -€71M)
109
2012
interest rates (impact of €502M)
The valuation of some securities in market value – shadow FVPL
(impact of -€6M)
The recovery of €44M on tax dispute
€(243)M gross costs related to “Switch IV”
Other non-recurring items : essentially gains on disposals of
securities and reversals of surplus financial provisions partially offset
by the acquisition cost of a derivative instrument for hedging against
interest rate decrease
− The recovery of €204M on tax dispute
− The gross costs related to “Switch V” (impact of -€6M)
− Other non-recurring items (+€23M), essentially reversal of financial
Q2 2016
provisions
Evolution in operational result under IFRS (€M) Breakdown
LAT & shadow
Tax dispute
Taxes
Net result
256
Switch IV/V
803
Non-recurring items
372
166
147
59
253
30
330
-107
378
292
87
243
638
-167
-160
-496
-598
-136
109
71 6
260
-23 -1
-204
-44
2012
2013
2014
2015
Q2 2016
− The deferred tax assets of +€1M
▪
▪
Over the last years, operational result in the range of €250-300M
Ethias expects to maintain its operational results in this range by
implementing its strategy and continuing the following actions :
− Cost reduction
− Operational and technical excellence
− Pro-active management on First reserves (run-down strategy)
− Improvement of underwriting
− Reduction of claim handling costs
− Strengthening of sales force
− De-risking of investment portfolio
16
Breakdown of net result under IFRS (€M)
Breakdown of net result under IFRS (€M)
Technical result
o/w Non-Life
o/w Life
Non-technical result
o/w recurring items
o/w financial non-recurring items
o/w non-recurring items (tax dispute)
o/w other non-recurring items
Tax
Net result
For reference :
Net result BGAAP
2012
200
171
29
6
6
0
0
0
(59)
2013
366
233
133
(6)
(6)
0
0
0
(30)
2014
(439)
242
(681)
(326)
32
20
(378)
0
167
2015
630
306
324
95
30
17
44
4
(87)
Q2 2016
73
103
(30)
186
(5)
(5)
204
(8)
1
147
330
(598)
638
260
180
110
(135)
50
282
Reconciliation of net result between BGAAP & IFRS (€M)
2015
Net result BGAAP
Cancelling allocation to flashing light reserve
Q2 2016
50
282
154
0
Adjustement LAT (*) & shadow FVPL
496
Deferred taxes
-84
Other
Net result IFRS
22
-71
1
48(**)
638
(*) impact of changes in interest rates
(**) Namely includes the provision for the 60+ retirement plan (different valuation rules between BGAAP & IFRS)
260
17
Focus on Non-Life business
Evolution in Non-Life GWP of Ethias Group (€M)
1,300
2015
850
▪
Q2 2016
Non linear invoicing of gross written premiums
460
275
Auto
250
184
Worker’s
compensation
181
111
Fire
187
132
Healthcare
118 86
Liability
33 17
71 45
Assistance
Other
Total
Non-Life
Non-Life technical result IFRS (€M)
Operational result
Net combined ratio (IFRS)
Net result
92.9%
233
227
91.8%
236
90.8%
171
171
89.2%
233
242
306
86.1%
103
2012
▪
1
2013
2014
2015
Q2 2016
Robustness of the Non-Life model given the significant and
recurring profitability for several years now
Based on internal calculations
² Based on internal calculations using Assuralia methodology
2012 1
▪
2013 1
2014 1
2015²
Q2 2016
Net CoR among the best of the Belgian market resulting on
the one hand, from the various optimizations operated since
several years in terms of pricing, claims management and
management of overheads and, on the other hand, from of
our distribution model which is primarily direct
18
Focus on Life business (1/2)
Evolution in Life GWP (€M)
Evolution in Life GWP (€M)
Single premiums
Periodic premiums
2015
Accepted reinsurance premiums
Q2 2016
957
901
1,144
944
936
806
515
453
564
419
316
0
2012
2013
247
184
131
16
17
2014
16
2015
43
112
6
Q2 2016
1st Pillar
2nd Pillar
55 23
36 10
Life
Individuals
Other
Total Life
Life technical result IFRS (€M)
Operational result
Net result
195
29
133
-3
LAT
Non-recurring items
Cost "Switch" operation
Net result
195
166
324
-30
26
26
243
29
26
133
803
-107
26
6
7
-30
-125
-496
-681
-681
324
-45
-3
2012


2013
2014
2015
H1’16
2012
2013
2014
2015
Q2 2016
With the exception of 2014, the Life result (excluding non-recurring items) is positive over the period 2012-Q2 2016
The Life technical result is dependent on the results of the LAT (depending on the interest rate environment and on our duration gap) and
the cost of the "Switch” operation (for 2015 and 2016)
71
-40
19
Focus on Life business (2/2)
Evolution in Life Individuals reserves (€M) – excluding unit-linked
Other products o/w Top First
Impact of redemption offer on First A :
 In Q1 2015 : Switch IV operation (exceptional redemption
First Invest (incl. Junior) : guaranteed interest rate of 0%
First B : guaranteed interest rates (limitation in time)
First A : guaranteed interest rates (no limitation in time)
7,348
1,119
6,002
515
1,023
463
2,181
Pro-active management of Life
Individuals reserves by offering
“First A” clients an exceptional
redemption bonus (“Switch IV”)
6,309
1,167
249
634
951
2,333
3,565
3,533
2012
2013
4,259
3,516
3,593
1,109
1,188
407
2014
First A
reduction

74



39
303
1,926
2,063
2015
Q2 2016
Duration gap


31/12/2014
31/12/2015
30/06/2016
Assets
Liab. Duration
Duration Duration
gap
Assets
Liab. Duration
Duration Duration
gap
Assets
Liab. Duration
Duration Duration
gap
Total
Life
4.51
12.26
(8.71)
7.24
12.57
(3.23)
9.41
13.55
(1.89)
Total
Non-Life
3.44
5.85
0.14
4.31
4.44
1.49
4.54
4.92
1.08
bonus of 4 years’ interest, equivalent to an exit premium of
c.14%) with surrenders of €1.9 billion (for a cost of €243M)
which, combined with the interest capitalization on existing
contracts, involve a reduction of reserves for an amount of
€2.3 billion as per end 2015 (representing 55% of 2014 First A
reserves)
In Q2 2016 : Switch V operation (redemption bonus of 10%)
with surrenders of €65M (for a cost of €6M)
A Switch VI operation is planned for November 2016
All those Switch operations impact positively our SII ratio and
our duration gap
Average guaranteed interest rate of First A : 3.44% as per end
of June 2016
Life duration gap is mainly due to First A reserves
Several actions have been undertaken in 2015-Q2 2016 to reduce the
gap :
− Switch IV and V offers
− Reinvestment of cash in long-term linear bonds
− Sales of shares/ABS and reinvestment in long-term bonds
− Acquisition of financial hedging instruments related to FIRST A
(protection against decrease in interest rates)
− Review of part of the mortgage loan portfolio (switching from a
variable rate to a fixed rate)
20
Other key elements
Evolution of equity (€M)
Evolution in debt ratio
2,207
1,381
2012
▪
▪
23.3%
21.2%
1,869
1,786
21.5%
16.9%
18.5%
1,198
2013
2014
2015
2012
Q2 2016
▪
In 2015, increase in equity (despite the cost of the "Switch IV"
operation for an amount of €243M) following the reversal of the Life
insurance provisions related to the increase in interest rates
In Q2 2016, the increase is mainly explained by the recovery of tax
dispute and the non life technical result, partially offset by the
dotation of life insurance provisions following the decrease in
interest rates
▪
2013
2014
2015
Q2 2016
Improvement of debt ratio in 2015, the increase in indebtedness
resulting from the issuance of additional bonds being compensated
by the strong increase in equity
Decrease in the debt ratio in Q2 2016 due to the increase in equity.
Note that this ratio doesn’t include the collateral received (€249,4M)
in guarantee of hedging operations (acquisition of forward bonds
and swaptions) against a decrease in interest rates (same amount
on the asset side)
Agenda
 Key Q1 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
22
Solvency II – with use of the standard formula (1/2)
Required capital, eligible own funds and SII margin (in €M) –
Before transitory measure on technical provisions
Eligible own funds
31/12/2015
30/06/2016
▪
▪
2.062
1.939
SCR
SII margin
1.567
131.56%
1.550
125.10%
Simulation with transitory measure on
technical provisions on all life segments
179%
Deterioration of our SII margin mainly due to the important decrease in interest rates in Q2 2016.
Strengthening of our SII margin in 2016 through the technical result of the non-life business (between €200M and €300M over
the last 3 years) and the implementation of structural measures included in the plan to be submitted to the NBB for end of
November
23
Solvency II – with use of the standard formula (2/2)
Decomposition of eligible own funds
1.939
Dated hybrid
513
Perpetual hybrids
15
26.4%
1.411
Tier 1 capital represents
62% of total own funds
•
Restricted Tier 1 and a part
of Tier 2 (€75M in book
value) capital
grandfathered under
Solvency II
•
Tier 3 comprises deferred
tax assets
1.939
232
0.8%
513
1.179
Equity
•
15
72.8%
Unrestricted Restricted
Tier 1
Tier 1
Tier 2
Tier 3
Eligible
own funds
Q2 2016
Decomposition of SCR
Market risk
Counterparty default risk
Life underwriting risk
Health risk
31/12/2015
30/06/2016
930
852
291
309
213
281
207
217
506
Non-life underwriting risk
701
Diversification
BSCR
Operational risk
SCR
497
1.446
738
1.418
121
132
1.567
1.550
Agenda
 Key Q1 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
25
Total investment portfolio as of 30 June 2016
Total investment portfolio by asset class
Bonds
78.8%
Asset class (€M)
Bonds
Cash & equivalents
7.5%
Other investments
4.0%
Shares
3.8%
Real Estate
2.7%
Branch 23 (unit-linked)
1.8%
Derivatives
1.4%
Note: Figures under IFRS ; Total might not add up to 100% as a result of rounding errors
IFRS value
14,672
a/w Government bonds
8,763
Cash & cash equivalents
1,387
Other investments
738
Shares (incl. funds & participations)
713
Real Estate
502
Branch 23 (unit-linked)
342
Derivatives
263
Total
18,616
26
Bond portfolio as of 30 June 2016
Bond portfolio by sector
Bond portfolio by rating
AAA
Government 1
6%
61%
AA
Financial
45%
21%
A
Industrial
16%
3%
BBB
Real Estate
3%
Lower than BBB
Others
12%
Not rated
Total Q2 2016 IFRS value = €14,672M
Spain
2%
5%
13%
7%
Italy
38%
Spain
37%
6%
Others
17%
4%
Portugal
Ireland
Average rating of
bond portfolio: A-
PIIGS exposure
Ireland
Central & East Europe
•
58%
France
Italy
93% of total bond
portfolio is rated
BBB or higher
Total Q2 2016 IFRS value = €14,672M
Government bond portfolio by country
Belgium
•
26%
8%
3%
9%
Total Q2 2016 IFRS value = €8,763M
Note: Figures under IFRS ; Total might not add up to 100% as a result of rounding errors
1 Including bonds issued by Public Sector and guaranteed by the Belgian State
Total Q2 2016 IFRS value = €1,487M
27
Shares (incl. funds) and real estate portfolio as of 30 June 2015
Shares (incl. funds & participations) by sector
Financial
27%
Real Estate
21%
Non Cyclical
15%
Cyclical
8%
Industrial
8%
Communication
Commodities
2012
3.1%
2013
6%
4.4%
2014
3.5%
4%
Public services
3%
Technology
3%
Others
Evolution of shares (in % of total investment portolio)
2015
2.9%
Q2 2016
2.4%
5%
Total Q2 2016 IFRS value = €713M
Shares (incl. funds & participations) by asset class
Shares
63%
Participations
Funds
29%
8%
Real estate by nature
Elderly Care Center
Offices
Note: Figures under IFRS ; Total might not add up to 100% as a result of rounding errors
46%
Indirect investment
Residential
Total Q2 2016 IFRS value = €713M
48%
5%
1%
Total Q2 2016 IFRS value = €502M
Agenda
 Key Q1 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
29
Rating overview
Selected extracts from Fitch report:
“Plan to strengthen capital: Fitch Ratings understands
that the National Bank of Belgium (NBB) has asked Ethias
S.A. to strengthen the company’s capital position and
reduce the volatility of its Solvency II coverage ratio and its
sensitivity to low interest rates.”
Insurer Financial Strength
BBB
Rating watch
positive (RWP)
Long-Term Issuer Default Rating
BBB-
Rating watch
positive (RWP)
Subordinated Debt Rating
BB
Rating watch
positive (RWP)
Last review
12 September 2016
“The rating actions follow Ethias's announcement that it is considering a plan aimed
at strengthening its Solvency II position and reducing the sensitivity of its Solvency
II coverage ratio to changes in interest rates. Resolution of the RWP will be
dependent on the successful completion of the plan.”
Fitch September 12th, 2016
“Adequate but Volatile Capital Position: Fitch considers
Ethias’group regulatory capitalization as adequate. At end2015, Ethias's group regulatory Solvency II ratio was 132%,
excluding transitional arrangements. However, the group
Solvency II margin is sensitive to interest rate changes. It
fell to 125% (excluding transitional arrangements) in 1H16,
driven by the decline in interest rates.”
“Exposure to Interest-Rate Risk: Ethias is exposed to
interest-rate risk as life technical liabilities are subject to
high minimum guaranteed returns and there is a duration
gap between assets and liabilities in the life accounts.
However, the gap shrank significantly to 3.2 years in 2015
from 8.7 in 2014, following the Switch IV operation and the
purchase of hedging derivatives. ”
“Strong Non-Life Perfomance: Ethias’s non-life financial
performance is strong. The technical non-life IFRS result for
Ethias was a strong EUR306m in 2015 (2014: EUR242m).
The net combined ratio for the group was 86.1% in 2015
(2014: 89.2%). Tight control of operating costs is key to the
group’s strategy, which is reflected in the combined ratio.”
“Solid Business Position Concentrated on Belgian
Market: Ethias a a solid business in the Belgian Insurance
market. It was the fourth-largest insurer in 2015 by gross
written premium (GWP) ), with a market share of 11.3% in
non-life insurance and 8.6% in life insurance. Ethias has
strong historical links with Belgian local public
organisations, with a market share of more than 80% in this
sector."
Fitch September 28th, 2016
Agenda
 Key Q1 2016 highlights
 Main events in Q2 2016
 Financial performance BGAAP
 Financial performance IFRS
 Solvency II
 Investment portfolio
 Rating
 Appendix
Figures as per end of June are based on audited statutory (limited review) and non-audited consolidated financial statements
31
Consolidated balance sheet (IFRS)
2013
2014
2015
H1'2016
Assets
Goodwill
Other intangible assets
Properties and other fixed assets
Investments in associates
Investments properties
Financial investments
Reinsurers' share of insurance liabilities
Deferred tax assets
Receivables arising from insurance operations or accepted reinsurance
Receivables arising from ceded reinsurance operations
Other receivables
Other assets
Cash and cash equivalents
Available-for-sale assets including assets from discontinued operations
Total assets
29
13
133
25
357
16.773
141
126
1.226
65
634
286
1.567
4
21.380
30
14
132
21
391
17.310
114
279
1.269
62
210
281
1.893
1
22.007
45
46
136
0
433
15.912
134
170
1.291
57
278
258
1.087
0
19.847
45
66
137
0
502
16.727
156
127
1.372
60
378
203
1.387
0
21.160
Liabilities
Share capital
Reserves and retained earnings
Net profit (loss) of the period
Other items of comprehensive income
Equity of the Group
Non-controlling interests
Total equity
Insurance contract liabilities
Investment contract liabilities with discretionary participation features
Investment contract liabilities without discretionary participation features
Liabilities belonging to unit-linked insurance contracts
Profit sharing liabilities
Insurance and investment contract liabilities
Subordinated debts
Other financial debts
Employee benefits
Provisions
Derivative financial instruments
Tax payables
Deferred tax liabilities
Liabilities from operating activities
Other liabilities
Liabilities related to assets available for sale and discontinued operations
Total other liabilities
Total liabilities
1.000
249
325
170
1.744
42
1.786
8.136
9.470
0
477
13
18.096
322
42
537
149
0
35
4
186
218
5
19.594
21.380
1.000
574
-604
177
1.146
52
1.198
8.530
10.279
4
416
21
19.250
322
46
603
119
0
39
4
208
214
2
20.809
22.007
1.000
-31
633
233
1.835
34
1.869
8.607
7.351
4
359
38
16.359
454
56
502
63
20
49
0
216
259
0
17.978
19.847
1.000
557
258
336
2.151
56
2.207
9.098
7.621
4
341
4
17.068
452
300
560
17
0
79
15
228
234
0
18.953
21.160
32
Consolidated income statement (IFRS)
(in €M)
Gross premiums
Premiums ceded to reinsurers
Change in the provision for unearned premiums and outstanding risks ¹
Other income from insurance activities
Revenues from insurance activities¹
Revenues from other activities
Revenues
Investment income
Net realized gains or losses on investments
Change in fair value of investment through profit or loss ²
Net financial income
Net revenues
2013
2.692
-72
-12
3
2.611
163
2.775
658
33
82
773
3.548
2014
2.376
-41
-15
4
2.324
173
2.497
621
120
22
764
3.261
2015
2.444
-38
-7
5
2.404
199
2.603
624
34
26
684
3.287
H1'2016
1414
-37
-196
3
1.184
228
1.412
375
-4
-9
362
1.774
Benefits and claims
Net expenses or revenues ceded to reinsurers
Management costs³
Technical expenses for insurance activities
Expenses for other activities
Operating expenses
Change in depreciation and amortization on investments (net)
Other investment financial expenses
Finance costs
Financial expenses
Net expenses
Goodwill impairment
Net profit (loss) before tax
2.633
-26
281
2.887
175
3.062
25
83
18
126
3.188
3.185
-15
285
3.455
542
3.997
23
-11
18
30
4.027
2.137
-48
258
2.347
201
2.548
41
-45
20
16
2.563
1240
-12
153
1.381
131
1.512
-17
5
15
3
1.515
360
-766
724
259
-30
330
0
0
330
325
5
167
-599
1
0
-598
-604
6
-87
637
0
1
638
633
5
1
260
0
0
260
258
2
Income taxes
Net profit (loss) after tax
Investment in associates through profit or loss
Net profit (loss) before tax of available-for-sale companies and of discontinued operations
Net consolidated profit (los) attributable to :
Owners of the parent
Non-controlling interests
¹ Net of reinsurance; ² Includes change in fair value at of the fair value of investments of which the financial risk
is supported by the insured; ³ Includes contract acquisition costs, administration costs, internal claim handling
costs and other technical expenses
33
Disclaimer
These assessments are, as always, subject to the disclaimer provided below.
Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are
based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those expressed or implied in such statements. Future actual results,
performance or events may differ materially from those in such statements due to, without limitation, (i) general economic
conditions, (ii) performance of financial markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity
levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) increasing levels of competition,
(ix) changes in laws and regulations, including monetary convergence and the Economic and Monetary Union, (x) changes in the
policies of central banks and/or foreign governments and (xi) general competitive factors,
No duty to update
The company assumes no obligation to update any information or forward-looking statement contained herein, save for any
information required to be disclosed by law
Investor Relations
Website : www.ethias.be/investors