Ageas Raises Dividend by 11% as All But One Unit Help Finance

Ageas SA, the majority owner of Belgium’s biggest life insurer, said payouts from its insurance companies more than financed an 11 percent dividend increase even as lower investment gains, higher claims in third-party liability cover and U.K. integration costs dented fourth-quarter profit.

Ageas will distribute 332 million euros ($377 million) to investors, equal to 45 percent of last year’s insurance profit, the Brussels-based company said today. The insurer received 725 million euros in dividends and capital reimbursements from insurance subsidiaries and partnerships in 11 countries from Belgium to Malaysia last year, India being the sole exception.

“All units up-streamed capital, even a small dividend from China,” Albert Ploegh, an analyst at ING Groep NV in Amsterdam who recommends buying the shares, said in a note. “This is very supportive for future dividend growth.”

Ageas steered slightly more of its investments toward corporate bonds and stocks last year to compensate for record-low sovereign bond yields. The yield gap between Ageas’s fixed-income assets and its outstanding life liabilities with a guaranteed interest rate narrowed five basis points to 1.12 percent by the end of November, according to a presentation.

Fourth-quarter insurance profit of 157.9 million euros fell short of the 179 million-euro median estimate of five analysts surveyed by Bloomberg News. Ageas’s economic share of gross inflows rose 8 percent to 3.1 billion euros, accelerating from a 6 percent gain in the first nine months. Inflows at Taiping Life Insurance Co., the Chinese life insurer in which Ageas holds a 25 percent stake, surged 76 percent in the quarter.

Operating Margin

Ageas advanced as much as 2.2 percent to 31.88 euros in Brussels trading, the highest value since April last year. The shares have lost 1.4 percent in the past 12 months, which compares with a 21 percent increase in the Stoxx Europe 600 Insurance Index in the period.

Profit in the property and casualty business was held back by higher claims in third-party liability cover for small- and medium-sized enterprises in Belgium and by losses in car insurance and business integration costs in the U.K., according to Ageas.

The operating margin of Ageas’s guaranteed life business, which shrank to 0.89 percent from 0.96 percent in 2013, fell to as low as 0.62 percent in the fourth quarter amid additional provisions set aside for future expenses in the Belgian guaranteed life business.

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