Ageas : Ageas confirms positive impact of changes in hybrid debt composition
Ageas welcomes changes in its hybrid debt composition and their positive
impact towards resolution of certain legacy issues.
Background hybrid debt
Ageas Hybrid Financing S.A. ("AHF"), a financing vehicle owned by Ageas SA/NV,
oEUR 500 million 5.125% perpetual securities in 2006 (the "Hybrone
oUSD 750 million 8.25% perpetual securities in 2008 (the "NITSH I
oEUR 625 million 8% perpetual securities in 2008 (the "NITSH II
each supported and guaranteed on a subordinated basis by ageas SA/NV (formerly
Fortis N.V. and FortisSA/NV).
Successful placement of new hybrid debt by AG Insurance
AG Insurance SA/NV ("AGI"), a 75% subsidiary of ageas SA/NV, successfully
placed and issued new perpetual subordinated notes on 21 March 2013 in an
amount of USD 550 million at an interest rate of 6.75%, to be reset every 6
years from the date of issue.
AGI will use the proceeds of the new perpetual subordinated notes to (i) call
the EUR 250 million NITSHII on-loan from AHF and (ii) redeem EUR 163.6
million nominal (at 91% of par value) of the Hybrone on-loan from AHF.
AHF to call all NITSH II securities at first call date
The call notice on the EUR 250 million NITSH II on-loan that AGI sent to AHF,
combined with a call notice on the EUR 375 million NITSH II on-loan received
from BNP Paribas Fortis SA/NV (formerly Fortis BankSA/NV) ("BNP Paribas
Fortis"), allows AHF in turn to notify the holders of the NITSH II securities
of its call and redemption of all the NITSH II securities outstanding at their
first call date on 3 June 2013.
AHF accepted all tendered Hybrone securities
Due to the early redemption by AGI of EUR 163.6 million of the EUR 500 million
Hybrone on-loan, AHF was also able to accept all tendered Hybrone securities
through the tender offer launched by AHF on 6March 2013. The cash tender
offer was executed at a purchase price of 91.0% of the nominal amount of the
Hybrone securities. The capital gain on this transaction will be recorded by
AGI in the first quarter of 2013. After the settlement of the tender offer,
EUR 336.4 million of the Hybrone securities will remain outstanding.
Ageas welcomes the newly issued hybrid debt by AGInsurance as well as the
tender offer and call by AHF for various reasons:
oThe credit exposure to BNP Paribas Fortis reduces
As result of the break-up of Fortis in 2009, AHF has a EUR375million and USD
750 million credit exposure in subordinated format to BNP Paribas Fortis. The
call by BNP Paribas Fortis of the EUR 375 million on-loan reduces Ageas'
credit exposure to BNP Paribas Fortis.
AHF continues to have a USD 750 million subordinated exposure to BNP Paribas
Fortis as a result of the on-lending by AHF of the proceeds of the NITSHI
securities. These securities have a first call date on 27August2013. AHF
will confirm the status of this exposure to the market in due course while
notifying the holders of the NITSHI securities of its intentions with regard
to a potential call of the NITSH I securities.
oThe guarantees granted on AHF hybrid debt reduce
The guarantees granted by Ageas on the AHF hybrid debt reduce significantly.
oLower financing costs
The new hybrid perpetual subordinated notes issued by AG Insurance carry
an interest rate of 6.75%, lower than the 8% rate that was applicable on
the NITSHII securities.
The replacement of hybrid securities issued by AHF with mixed exposure to
AGInsurance and BNP Paribas Fortis by hybrid securities directly issued
by AG Insurance creates greater transparency.
oHybrid capital will likely be more SolvencyII compliant
The new subordinated perpetual notes issued by AG Insurance are
expected to be SolvencyII compliant.
Ageas is an international insurance group with a heritage spanning more than
180 years. Ranked among the top 20 insurance companies in Europe, Ageas has
chosen to concentrate its business activities in Europe and Asia, which
together make up the largest share of the global insurance market. These are
grouped around four segments: Belgium, United Kingdom, Continental Europe and
Asia and served through a combination of wholly owned subsidiaries and
partnerships with strong financial institutions and key distributors around
the world. Ageas operates successful partnerships in Belgium, UK, Luxembourg,
Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has
subsidiaries in France, Hong Kong and UK. Ageas is the market leader in
Belgium for individual life and employee benefits, as well as a leading
non-life player through AG Insurance. In the UK, Ageas has a strong presence
as the fourth largest player in private car insurance and the over 50's
market. Ageas employs more than 13,000 people and has annual inflows of more
than EUR 21 billion.
pdf version of the press release
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Source: Ageas via Thomson Reuters ONE
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