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By focusing more on its core markets and tapping into new growth poles, the Ageas insurer aims to achieve a net profit of more than one billion euros annually until 2024. It will also increase its dividend over the next three years, says CEO Hans De Cuyper.
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“If it ain’t broke, don’t fix it.” If something works, don’t start tinkering with it unnecessarily. It could be the motto of the strategic three-year plan that Ageas presented on Tuesday evening.
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For some time now, investors and analysts have been looking forward to the accents that CEO De Cuyper, who took over as CEO from Bart De Smet last autumn, will be placing for the coming years. Not least because Ageas has been in top form in recent months and has been able to get through the corona crisis unscathed. Since the beginning of this year, the share has risen about 20 percent.
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The essence
- The insurer Ageas presented its strategy for the next three years after trading hours on Tuesday evening.
- The group expects an annual growth in earnings per share of 6 to 8 percent.
- The dividend should increase or at least remain stable over the next three years.
- Ageas hopes to realize these ambitions by continuing to deploy in the European and – especially – Asian markets where it is already active.
- At the same time, the insurer is exploring growth opportunities in areas such as healthcare, digital platforms, protection and reinsurance.
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‘Our company is in excellent condition’, says De Cuyper. “We can now build on the foundations laid over the past three years.” Now that Ageas has overcome the painful legacy of its Fortis past, it also has more flexibility to tap into new growth areas, the CEO said.
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Faster growth rate
But for the next three years, the bar is set even higher. Ageas promises to achieve an annual net profit of at least 1.1 billion to 1.2 billion euros until 2024. That means earnings per share are growing at an annual rate of 6 to 8 percent, slightly ahead of analysts’ forecasts.
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According to De Cuyper, this profit growth means that investors can assume that their dividend will increase in the next three years, or at least remain stable. Ageas has dropped its previous target of paying out at least 50 percent of its annual profit as a dividend. But with the promise of such a ‘progressive’ dividend, shareholders can expect to receive at least 1.5 billion to 1.8 billion euros over the next three years.
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The repurchase of own shares remains a possibility. But it is not guaranteed.
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Until recently, it was said that Ageas would also use part of its cash to buy back its own shares if no major takeover files were on the table. De Cuyper did not repeat that message. “It’s still a possibility, but it’s not guaranteed.”
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Asian growth
In order to realize its ambitions, the insurer will continue to focus largely on the European and Asian markets where it already has a strong position. Asia, where Ageas has been active for twenty years, accounted for 40 percent of the profit last year. By 2024, that should be 50 percent, De Cuyper said.
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Ageas can continue to grow in Asia and boost its profitability by, among other things, making greater use of a local brokerage network and investing in the digital platforms through which potential customers increasingly search for new products. At the same time, Ageas intends to focus on themes such as healthcare, protection and reinsurance in all its markets.
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Acquisitions are also possible, but as in the previous strategic plan, Ageas prefers to strengthen its position in the countries where it is already active. Although the group has not yet put away its ambition to tap into a fourth core market in Europe, in addition to Belgium, Portugal and the UK. The reasoning is that the stable income that such an extra European leg will provide can help to further support the rapid expansion in Asia.
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