Successful placement new hybrid debt by AG Insurance
AG Insurance SA/NV (AGI), a 75% subsidiary of ageas SA/NV, successfully placed new subordinated securities with a maturity of 32 years, callable after 12 years for an amount of EUR 400 million at a rate of 3.5%. The new securities were settled today. The securities will qualify as available solvency margin under the prevailing European regulatory capital regime for insurers (Solvency I) and will qualify as Tier 2 capital under future European regulatory capital requirements for insurers (Solvency II).
AGI used part of the proceeds of the new subordinated notes to redeem EUR 241 million of the nominal value of the Hybrone on-loan from AHF. The redemption of the on-loan was done at 103% of the nominal amount. The transaction will have a limited negative impact of about EUR 3 million on Ageas's net result in the first quarter of 2015.
AHF tendered Hybrone Securities1
Ageas Hybrid Financing S.A. (AHF), a financing vehicle owned by ageas SA/NV, issued EUR 500 million 5.125% Perpetual Securities in 2006 (the "Hybrone Securities"). The securities are supported and guaranteed on a subordinated basis by ageas SA/NV (formerly Fortis N.V. and Fortis SA/NV).
After a tender launched in March 2013 EUR 336 million of these securities remained outstanding.
AHF launched again a tender on the remaining Hybrone securities outstanding on 19 March 2015, subject to the successful placement of the new hybrid debt by AG Insurance.
On 30 March AHF announced that EUR 241 million of the Hybrone Securities were tendered at a Purchase Price of 103%. AHF today confirmed that the financing condition was fulfilled; the tender has been settled and EUR 95 million of the Hybrone Securities will remain outstanding.
- ISIN code Hybrone : XS0257650019
Overall effects
Ageas welcomes the newly issued hybrid by AG Insurance as well as the tender offer by AHF for various reasons:
- Lower financing costs: The new hybrid dated subordinated notes issued by AG Insurance carry an interest rate of 3.5%, lower than the 5.125% rate that was applicable on the Hybrone Securities.
- Hybrid capital is more Solvency II compliant.
- The guarantees granted by Ageas on AHF hybrid debt reduce.
Ageas is an international insurance group with a heritage spanning 190 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, the UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and the 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 is the sixth largest Non-Life insurer with a number 3 position in cars insured and has a strong presence in the over 50's market. Ageas employs more than 13,000 people in the consolidated entities and over 30,000 in the non-consolidated partnerships, and has annual inflows of more than EUR 25 billion.
