Fortis Inc. · TSX:FTS

Fortis — H1 2004 Earnings Presentation

61 slides from Fortis's earnings presentation, Aug 26, 2004

  1. Slide 1: First Half Year 2004 Results

    First Half Year 2004 Results Major improvements in operating performance Net Profit tripled to EUR 2.1 billion Presentation to the Investment Community 26 August 2004

  2. Slide 2: Key figures

    First Half Year 2004 Results Key figures (EUR million) Excluding Assurant & Seguros Bilbao H1 '04 H1 '03 Change H1 '04 H1 '03 Change NOP before realised capital gains 1,226 923 33% 1,155 763 51% 1 Net realised capital gains 332 500 -34% 332 494 -33% NOP before value adj. equity portfolio 1,558 1,423

  3. Slide 3: Key figures excl Assurant & Seguros Bilbao (quarterly)

    First Half Year 2004 Results Key figures excl Assurant & Seguros Bilbao (quarterly) (EUR million) Q2 '04 Q1 '04 Change Q2 '03 Change NOP before realised capital gains 656 499 31% 460 43% Net realised capital gains 1 30 302 -90% 79 -62% NOP before value adj. equity portfolio 686 801 -14% 539 27% Valu

  4. Slide 4: Banking

    FORTIS Banking

  5. Slide 5: Net Operating Profit Bank

    First Half Year 2004 Results Net Operating Profit Bank (EUR million) H1 '04 H1 '03 Change Total revenues 1 3,791 3,667 3% Value adjustments (146) (376) -61% Operating expenses (2,534) (2,604) -3% Net Operating Profit1 814 515 58% Net Real. Cap. Gains, excl. Equity portfolio 283 342 -17% NOP before v

  6. Slide 6: Net Operating Profit Bank (quarterly development)

    First Half Year 2004 Results Net Operating Profit Bank (quarterly development) (EUR million) Q2 '04 Q1 '04 Change Q2 '03 Change Total revenues 1 1,963 1,828 7% 1,867 5% Value adjustments (39) (108) -64% (183) -79% Operating expenses (1,249) (1,285) -3% (1,291) -3% Net Operating Profit1 472 342 38% 3

  7. Slide 7: Fortis Bank Revenues

    First Half Year 2004 Results Fortis Bank Revenues (EUR million) H1 '04 H1 '03 Change Net interest income 2,329 2,089 11% Commission income 982 872 13% Realized capital gains 432 572 -24% Realised gains on venture capital (17) (19) -10% Trading 86 346 -75% Other revenues 394 360 9% Total revenues 4,2

  8. Slide 8: Net Interest Income Bank

    First Half Year 2004 Results Net Interest Income Bank (EUR million) 1,172 1,164 1,143 1,157 1,137 1,127 H1 ‘04 vs H1 ‘03: +11% because of 1,079 1,049 6 Increase in volumes 1,053 1,040 6 Increase in commercial margins 6 More favourable yield curve 6 Increased bond investments in Q2 Q2 ‘04 vs Q1 ‘04:

  9. Slide 9: Major balance sheet movements Banking

    First Half Year 2004 Results Major balance sheet movements Banking (EUR million) Q2 '04 Q1 '04 Change FY 2003 Change Loans to credit institutions (net) 87.8 78.2 12% 78.0 13% Loans to customers (net) 207.9 192.4 8% 174.4 19% Total assets banking 477.6 461.3 4% 424.0 13% Amounts owed to credit instit

  10. Slide 10: Net commission income Bank (quarterly)

    First Half Year 2004 Results Net commission income Bank (quarterly) (EUR million) Q2 '04 Q1 '04 Change Q2 '03 Change Issuance 16 11 44% 12 28% Securities transactions 114 129 -12% 122 -7% Insurance 42 42 2% 38 11% Asset management 179 187 -5% 149 20% Payment services 98 95 3% 90 9% Other, of which:

  11. Slide 11: Results on financial transactions Bank

    First Half Year 2004 Results Results on financial transactions Bank (quarterly development) (EUR million) Q2104 '04 Q1 '04 Change Q2 '03 Change Trading results 104 (17) 179 -42% Participations (6) 2 11 Venture capital (16) (1) (7) Realised capital gains 15 417 -96% 156 -91% Fixed income 0 408 94 Sha

  12. Slide 12: Fortis Bank Operating expenses

    First Half Year 2004 Results Fortis Bank Operating expenses (EUR million) H1 '04 H1 '03 Change FTE Operating expenses 1,450 1,455 0% Non-FTE operating expenses 1,084 1,149 -6% Total operating expenses (including leasing) 2,534 2,604 -3% Cost/Income ratio1 57.9% 59.9% FTE's 35,983 38,669 -7% Fortis B

  13. Slide 13: Credit quality Fortis Bank

    First Half Year 2004 Results Credit quality Fortis Bank (EUR million) H1 '04 Q1 '04 2003 Total loans (gross) 298,461 273,616 255,306 Customers 210,613 195,398 177,277 Credit Institutions 87,848 78,218 78,029 Non-performing loan 6,208 6,424 6,788 Percentage of total 2.1% 2.4% 2.7% Allowances1 2,726 3

  14. Slide 14: Insurance

    Insurance FORTIS 14

  15. Slide 15: Net operating profit Insurance

    First Half Year 2004 Results Net operating profit Insurance excluding Assurant and Seguros Bilbao (EUR million) H1 '04 H1 '03 Change GWP Life 4,450 4,727 -6% GWP Non-life 2,653 2,491 6% Net revenues1 1,896 1,806 5% Operating expenses (1,262) (1,256) 1% Commissions (558) (545) 2% Operating costs (645

  16. Slide 16: Developments Life excl. Assurant and Seguros Bilbao

    First Half Year 2004 Results Developments Life excl. Assurant and Seguros Bilbao (EUR million) Q2'04 Q1 '04 Change Q2'03 Change Gross premiums life 2,064 2,386 -13% 1,925 7% Technical result life 172 172 0% 171 0% Net Operating Profit1 131 127 3% 111 18% Net Real. Cap. Gains, excl. Equity portfolio

  17. Slide 17: Gross Written Premiums Life

    First Half Year 2004 Results Gross Written Premiums Life excl Assurant and Seguros Bilbao (EUR million) Total 2,064 2,386 1,925 2,802 1,338 1,826 1,239 1,217 701 625 452 446 453 351 274 255 Q2 '04 Q1 '04 Q2 '03 Q1 '03 Individual Unit-linked Group 6 Seasonality explains lower Gross Written Premiums c

  18. Slide 18: Developments Non-life excl. Assurant and Seguros Bilbao

    First Half Year 2004 Results Developments Non-life excl. Assurant and Seguros Bilbao (EUR million) Q2'04 Q1 '04 Change Q2'03 Change Gross premiums non-life 1,084 1,569 -31% 1,031 5% Technical result non-life 135 83 64% 98 39% Net Operating Profit1 100 70 44% 73 36% Net Real. Cap. Gains, excl. Equity

  19. Slide 19: Gross Written Premiums non-life

    First Half Year 2004 Results Gross Written Premiums non-life excl Assurant and Seguros Bilbao (EUR million) Total 1,084 1,569 1,031 1,460 656 608 389 389 370 368 254 287 249 257 245 237 226 227 196 186 Q2 '04 Q1 '04 Q2 '03 Q1 '03 A&H Motor Fire Other 6 All product lines showed a strong increase in G

  20. Slide 20: Technical Results non-life excl. Assurant and Seg. Bilbao

    First Half Year 2004 Results Technical Results non-life excl. Assurant and Seg. Bilbao (EUR million) 48 A&H A&H 40 40 6 Improved claims ratio in workers’ compensation in Belgium (Fortis AG) 45 Motor 26 6 Improved results from individual 30 disability at Fortis ASR 40 Fire 14 Motor & Other 23 6 Lower

  21. Slide 21: Development per insurance business (1/2)

    First Half Year 2004 Results Development per insurance business (1/2) (EUR million) Fortis ASR, Gross Written Premiums Fortis AG, Gross Written Premiums 1,281 1,215 808 872 630 591 487 471 522 458 183 314 237 283 55 50 H1 '04 H1 '03 H1 '04 H1 '03 Individual Unit-linked* Group Non-life Individual Uni

  22. Slide 22: Development per insurance business (2/2)

    First Half Year 2004 Results Development per insurance business (2/2) (EUR million) Fortis Insurance International (incl FB Insurance, Gross Written FCI, excl Seg. Bilbao), Gross Written Premiums 1,114 Premiums 793 949 719 361 318 426 275 100 69 258 160 70 92 70 86 H1 '04 H1 '03 1H '04 1H '03 Indivi

  23. Slide 23: Solvency and key figures per share

    Solvency and key figures per share 23

  24. Slide 24: Capital management: Solvency

    First Half Year 2004 Results Capital management: Solvency (EUR million) Q2 'O4 Q1 '04 Q4 '03 Fortis floor 16,002 16,068 16,081 Net Core Capital (NCC) 18,956 19,550 18,474 NCC as percentage of Floor 118% 122% 115% NCC as percentage of legal minimum 187% 192% 183% Net Core Capital EUR 2.954 above Fort

  25. Slide 25: Key figures per share

    First Half Year 2004 Results Key figures per share (EUR million) H1 '04 H1 '03 Change Net equity (in Eur billion) 13.0 11.9* Net equity per share 10.04 9.16* Return on equity1 31% -2.8% NOP before realised capital gains 0.94 0.71 32% NOP before value adjustments equity portfolio 1.20 1.10 9% Net Ope

  26. Slide 26: Summary

    First Half Year 2004 Results Summary 6 Major improvements in operating performance in Banking and Insurance 6 Improved level of net interest income and commissions 6 Significant reduction in value adjustments on loans 6 In Banking and Insurance operating expenses remain well controlled 6 Life and no

  27. Slide 27: Solid partners, flexible solutions

    mt oa a= Aes. e oan” FORTIS Solid partners, flexible solutions FORTIS 27

  28. Slide 28: Annexes

    Annexes The Activities slide 29-36 General Information slide 37-45 The Businesses slide 46-59 28

  29. Slide 29: The Activities

    The Activities FORTIS 29

  30. Slide 30: Net commission income Bank

    First Half Year 2004 Results Net commission income Bank (EUR million) H1 '04 H1 '03 Change Issuance 27 23 16% Securities transactions 243 236 3% Insurance 84 86 -3% Asset management 366 304 21% Payment services 193 175 10% Other, of which: 327 305 7% Foreign exchange 10 13 -28% Trust 89 87 3% Credit

  31. Slide 31: Results on financial transactions Bank

    First Half Year 2004 Results Results on financial transactions Bank (EUR million) H1 '04 H1 '03 Change Trading results 86 346 -75% Participations (4) 4 Venture capital (17) (19) -9% Realised capital gains 432 572 -24% Fixed income 408 510 -20% Shares and others 24 62 -61% Total 497 903 -45% 31

  32. Slide 32: Realised capital gains Bank (quarterly development)

    First Half Year 2004 Results Realised capital gains Bank (quarterly development) (EUR million) Q2 '04 Q1 '04 Q4 '03 Q3 '03 Q2 '03 Pre-tax Realised capital gains shares1 (15) 1 (64) (38) 52 Realised capital gains other 14 415 (10) 1 97 Total realised capital gains (1) 416 (74) (37) 149 After-tax Net

  33. Slide 33: Net Operating Profit Insurance (quarterly)

    First Half Year 2004 Results Net Operating Profit Insurance (quarterly) (EUR million) Q2'04 Q1 '04 Change Q2 '03 Change Net revenues1 979 1,186 -18% 1,618 -40% Operating expenses (610) (840) -27% (1,222) -50% Commissions (274) (380) -28% (582) -53% Operating costs (323) (426) -24% (638) -49% Net Ope

  34. Slide 34: Net Operating Profit Insurance (quarterly)

    First Half Year 2004 Results Net Operating Profit Insurance (quarterly) excluding Assurant and Seguros Bilbao (EUR million) Q2'04 Q1 '04 Change Q2 '03 Change Net revenues1 950 946 0% 889 7% Operating expenses (609) (653) -7% (614) -1% Commissions (274) (284) -4% (260) 5% Operating costs (323) (322)

  35. Slide 35: Pre-tax Realised capital gains Insurance

    First Half Year 2004 Results Pre-tax Realised capital gains Insurance (EUR million) Q2 '04 Q1 '04 Q4 '03 Q3 '03 Q2 '03 Life Realised capital gains shares 45 (80) (96) (109) (924) Realised capital gains other 17 35 37 28 35 Total realised capital gains 62 (45) (59) (81) (889) Non-Life Realised capita

  36. Slide 36: After-tax Realised capital gains Insurance

    First Half Year 2004 Results After-tax Realised capital gains Insurance (EUR million) Q2 '04 Q1 '04 Q4 '03 Q3 '03 Q2 '03 Life Realised capital gains shares 17 (87) (96) (82) (569) Realised capital gains other 17 24 32 20 18 Total realised capital gains 34 (63) (64) (62) (551) Non-Life Realised capit

  37. Slide 37: General Information

    General Information FORTIS 37

  38. Slide 38: Fortis' investment portfolio at 30 June 2004

    First Half Year 2004 Results Fortis’ investment portfolio at 30 June 2004 (EUR million) Bank investment portfolio Insurance investment portfolio EUR 107 billion EUR 52 billion 2% 10% 1% Real Estate & Other 11% Real Estate & Other Shares Shares 97% 79% Debt Securities Debt Securities 38

  39. Slide 39: Fortis' investment portfolio at 31 Dec 2003

    First Half Year 2004 Results Fortis’ investment portfolio at 31 Dec 2003 (EUR million) Bank investment portfolio Insurance investment portfolio EUR 104 billion EUR 54 billion 2% 10% 1% Real Estate & Other 11% Real Estate & Other Shares Shares 97% 79% Debt Securities Debt Securities 39

  40. Slide 40: Quality debt securities portfolio 30 June 2004

    First Half Year 2004 Results Quality debt securities portfolio 30 June 2004 (EUR million) Insurance Bank Fortis Rating Category AAA 29% 37% 35% AA 46% 50% 50% A 18% 10% 11% BBB 4% 1% 2% Investment Grade 97% 98% 98% Below investment grade 1% 0% 0% Unrated 2% 2% 2% Total 100% 100% 100% Portfolio (EUR

  41. Slide 41: Quality debt securities portfolio 31 Dec 2003

    First Half Year 2004 Results Quality debt securities portfolio 31 Dec 2003 (EUR million) Insurance Bank Fortis Rating Category AAA 31% 38% 36% AA 37% 51% 47% A 21% 9% 12% BBB 6% 1% 3% Investment Grade 95% 99% 98% Below investment grade 3% 0% 1% Unrated 2% 1% 1% Total 100% 100% 100% Portfolio (EUR bn

  42. Slide 42: Loans to customers

    First Half Year 2004 Results Loans to customers (EUR billion) Total loans NPL Allowances1 Q2'04 FY '03 Q2'04 FY '03 Q2'04 FY '03 Network Banking 98.4 97.7 - Retail Banking 57.4 57.4 1.6 1.8 0.6 0.6 Commercial Banking 40.9 40.3 2.4 2.5 0.9 0.9 Merchant Banking 70.9 45.6 Corporate Banking 26.1 23.8 1.

  43. Slide 43: Corporate loan portfolio by sector

    First Half Year 2004 Results Corporate loan portfolio by sector (EUR million) H1 '04 Q1 '04 H1 '03 Energy 3.3 3.3 4.1 Distribution & Services 1.6 1.6 2.9 Shipping 2.1 2.4 2.5 Chemicals & Pharma 1.7 1.4 2.5 Commodities 2.1 1.9 1.8 Aviation & Intermodal Transport 1.6 1.5 1.9 Communication & IT 1.2 1.3

  44. Slide 44: Strong solvency

    First Half Year 2004 Results Strong solvency (EUR million) Q2 'O4 Q1 '04 Q4 '03 Fortis floor 16,002 16,068 16,081 Bank (6% of RWC) 10,269 10,385 9,691 Insurance (175% of Reg. Req.) 5,733 5,683 6,390 Net Core Capital (NCC) 18,956 19,550 18,474 Shareholders equity 13,030 13,424 11,894 Perpetual loan 2

  45. Slide 45: Ratings

    First Half Year 2004 Results Ratings (EUR million) Fitch S&P Moody's Fortis Short term F1 A-1 - Long term A+ A+ A1 Outlook Stable Stable Stable Last change 6-Nov-02 16-Jul-03 2-May-03 Fortis Bank Short term F1+ A-1+ P-1 Long term AA- AA- Aa3 Outlook Stable Stable Stable Last change 18-Mar-03 16-Jul-

  46. Slide 46: The Businesses

    The Businesses FORTIS 46

  47. Slide 47: Contribution to NOP before Capital Gains

    First Half Year 2004 Results Contribution to NOP before Capital Gains Insurance Network Banking: International 6 Retail Banking Insurance Belgium 5% 6 FB Insurance 8% 6 Commercial Banking 14% Insurance Netherlands 41% 13% Investment Services: 6 Private Banking 19% 6 Asset Management Merchant 6 Infor

  48. Slide 48: Changes of scope

    First Half Year 2004 Results Changes of scope Acquisitions / Divestitures 6 Assurant, Inc.: full consolidation until 5 February 2004, afterwards net equity method 6 Fortis Insurance International: Seguros Bilbao deconsolidated end of 2003 6 Fortis Bank Hong Kong sold as of 30 April 2004 48

  49. Slide 49: Breakdown NOP Bank per Business

    First Half Year 2004 Results Breakdown NOP Bank per Business (EUR million) NOP before Net capital Value adjust- NOP capital gains gains1 ments shares H1 '04 H1 '03 H1 '04 H1 '03 H1 '04 H1 '03 H1 '04 H1 '03 Network Banking 510 228 281 354 102 (173) 893 409 FB Insurance 97 84 1 12 52 (167) 150 (70) Me

  50. Slide 50: Network Banking

    First Half Year 2004 Results Network Banking (EUR million) H1 '04 H1 '03 Change Net operating profit1 510 228 Automation rate 90% 88% 2% Penetration insurance Belgium 46% 45% 2% # branches (Benelux) 1,895 2,139 -11% Belgium (incl KN branches) 1,683 1,919 -12% Netherlands 175 183 -4% Luxembourg 37 37

  51. Slide 51: Merchant Banking

    First Half Year 2004 Results Merchant Banking (EUR million) H1 '04 H1 '03 Change Net operating profit1 235 215 9% FTE's 2,740 2,689 2% 1Before (un)realised cap gains/losses 51

  52. Slide 52: Investment Services

    First Half Year 2004 Results Investment Services (EUR million) H1 '04 H1 '03 Change Net operating profit1 165 155 6% Private Banking & Trust 72 58 25% Asset Management 22 24 -9% Information Banking 71 74 -4% FTE's 4,046 4,042 0% 1 Before (un)realised cap gains/losses 52

  53. Slide 53: Funds under Management

    First Half Year 2004 Results Funds under Management (EUR million) Year end Market Net new Other H1 Change 2003 gain money changes 2004 Private Banking 50.1 2.1 (0.4) 1.1 52.9 5.4% Asset Management 78.0 1.8 1.3 0.2 81.3 4.3% Other 18.7 0.0 1.2 2.0 21.9 17.0% Subtotal 146.8 3.9 2.1 3.3 156.1 6.3% Elim

  54. Slide 54: Breakdown NOP Insurance per Business

    First Half Year 2004 Results Breakdown NOP Insurance per Business (EUR million) NOP before Net capital Value adjust- NOP capital gains gains1 ments shares H1 '04 H1 '03 H1 '04 H1 '03 H1 '04 H1 '03 H1 '04 H1 '03 Fortis ASR 170 130 20 84 113 (261) 303 (47) Fortis AG 100 108 24 40 57 (273) 181 (125) Fo

  55. Slide 55: NOP Assurant and Seguros Bilbao

    First Half Year 2004 Results NOP Assurant and Seguros Bilbao (EUR million) Contribution from Assurant Q2 '04 Q1 '042 Q4 '03 Q3 '03 Q2 '03 Q1 '03 Net Operating Profit1 30 42 70 82 76 75 Net Real. Cap. Gains, excl. equity 0 0 (8) 8 8 (3) NOP before value adj. equity 30 42 62 90 84 72 Value adjustment

  56. Slide 56: Insurance Netherlands (Fortis ASR)

    First Half Year 2004 Results Insurance Netherlands (Fortis ASR) (EUR million) H1 '04 H1 '03 Change Gross premiums Life 1,567 1,646 -5% Gross premiums Unit-linked 522 592 -12% Net premiums Life 1,550 1,602 -3% Gross premiums Non-Life 1,281 1,214 6% Net earned premiums Non-Life 858 810 6% Net revenues

  57. Slide 57: Insurance Belgium (Fortis AG)

    First Half Year 2004 Results Insurance Belgium (Fortis AG) (EUR million) H1 '04 H1 '03 Change Gross premiums Life 827 963 -14% Gross premiums Unit-linked 54 50 8% Net premiums Life 822 960 -14% Gross premiums Non-Life 487 471 3% Net earned premiums Non-Life 436 410 6% Net revenues1 469 467 0% Operat

  58. Slide 58: Insurance International (incl. FCI)

    First Half Year 2004 Results Insurance International (incl. FCI) (EUR million) 3 H1 '04 H1 '03 Change Gross premiums Life 779 772 1% Gross premiums Unit-linked 318 276 15% Net premiums Life 770 765 1% Gross premiums Non-Life 793 720 10% Net earned premiums Non-Life 604 532 14% Net revenues1 332 271

  59. Slide 59: FB Insurance

    First Half Year 2004 Results FB Insurance (EUR million) H1 '04 H1 '03 Change Gross premiums Life 1,277 1,346 -5% Gross premiums Unit-linked 258 160 61% Net premiums Life 1,274 1,343 -5% Gross premiums Non-Life 92 86 6% Net earned premiums Non-Life 83 79 5% Net revenues1 255 247 3% Operating expenses

  60. Slide 60: Table of contents

    First Half Year 2004 Results Table of contents 6 Key figures 2 of 26 6 Key figures excluding Assurant and Seguros Bilbao (quarterly) 3 of 26 6 Banking 4 of 26 6 Net Operating Profit Bank 5 of 26 6 Net Operating Profit Bank (quarterly development) 6 of 26 6 Fortis Bank Revenues 7 of 26 6 Net Interest

  61. Slide 61: Solid partners, flexible solutions

    mt oa a= Aes. e oan” FORTIS Solid partners, flexible solutions FORTIS 61

Fortis — H1 2004 Earnings Presentation on 6ix