Ageas’s Shares Surge After Strong Results

Shares of Ageas (EBR:AGES) jumped on Wednesday following the company’s first-half results and announcement of a €200 million share buyback program.

At 5:03 am (0903 GMT), Ageas traded 5.8% higher at €47.06.

Ageas’s first-half results exceeded market expectations, reporting a net operating result of €1.2 billion, surpassing consensus by 7% and JP Morgan’s estimates by 12%.

Europe led with a 20% beat versus consensus and a 35% top-line growth, significantly driven by strong contributions from the UK and Turkey.

The UK non-life insurance segment saw a remarkable 49% year-on-year growth, due to both rate increases and volume growth.

Conversely, Belgium fell 5% short of expectations due to a higher expense ratio, though capital gains provided a positive offset.

Results in Asia were in line with expectations, buoyed by €41 million in capital gains and strong life insurance performance.

Total capital gains reached €75 million, aligning with consensus but 20% ahead of JP Morgan’s expectations, largely due to significant gains in Asia, which helped mitigate a one-off tax issue in China.

The solvency ratio remained strong at 219%, exceeding consensus and JP Morgan’s estimates, mainly due to favorable model changes and robust operating capital generation.

Ageas announced a €200 million share buyback program, running from September 16, 2024, to July 31, 2025. Analysts from JP Morgan noted the program’s anticipation due to repayment of an internal loan, offset by investment in Taiping Pension in Asia.

Despite the buyback, Ageas maintained its interim dividend per share (DPS) at €1.50, which falls 8% short of expected amounts.

Ageas updated its full-year 2024 guidance to a net operating result of €1.2-1.25 billion, an increase from previous guidance of over €1.2 billion. The company also revised its cash upstream target to exceed €800 million, up from €750-800 million. Ageas’s Impact24 ambition includes a cumulative holding free cash flow target of €1.7-2.1 billion and a progressive DPS with a cumulative amount of €1.5-1.8 billion, reflecting a 6-10% CAGR. A new strategic plan will be unveiled at the Capital Markets Day (CMD) on September 23, 2024.

UBS noted that although the solvency ratio improved and guidance was updated, the combined ratio was slightly weaker than expected, with earnings in Belgium falling short.

JP Morgan acknowledged the strong first-half results and the buyback while maintaining an “underweight” rating on Ageas, citing concerns over the low cash flow yield and minority stakes in Asian joint ventures.