Keeping Up With The Market – Jul/Aug 2022

Every month we help you keep up with the Belgian and Luxembourg insurance market.

Mergers and Acquisitions

AXA & Monument

Back in December 2021, AXA was announcing the selling of a part of its life insurance portoflio to Monument‘s Belgian subsidiary. The regulator approve this deal in early August. In terms of technical reserves, the deal involved €2.6 billion of technical reserves.

Previously, Monument had already bought similiar  portfolio in Belgium from Allianz Benelux, ABN AMORO Life Capital Belgium and Alpha Insurance. Also, the Bermuda-based insurer Monument acquired last year the company Integrale.

Integrale

Appointed liquidator of former insurer Integrale last January, lawyer Nicholas Ouchinsky wishes the valuation of Integrale to make sure that there were no breaches of duty by Integrale’s former directors. To do so, he would like to appoint a panel of experts to analyse both Integrale and Monument Immo Management’s assets and liabilities.

On 1 september 2022, Integrale’s shareholders and bondholers received a notice to exhcange during two generale meetings at The Merode. This event might be stormy given that in April’s general meeting, the closing of the 2021 accounts did not happen given the tensions between former administrators and temporary administrators appointed by the NBB. Eventually, the provisional administrators did the closing which will be submitted to the vote of Integrale’s shareholders.

Regulation

EU regulation: sustainable investment products

The EU issue a new regulation, based on MiFId and IDD directives, which came into force on 2 August 2022. From now on, banks, fund managers and insurers have to offer sustainable investment products. Federations representing the financial and insurance sectors welcome the objective of the text. Its implementation, however, will be complicated and time-consuming, according to Febelfin and Assuralia. However, Hein Lannoy – CEO of Assuralia, said: “This is the beginning of a very important evolution, which will have an impact on the whole society”, underlines Hein Lannoy, CEO of Assuralia.

Base on sustainability criteria, new customers will be able to choose between three product categories, based on sustainability criteria. The new scheme applies to new customers. Existing customers will receive this information when their profile is updated.

Despite this noble initiative, Assuralia & Febelfin mentioned several issues such as a “complex” and “incomplete” regulation. Indeed, the nomenclature for measuring the sustainability of investment products has not yet been established. “European regulations are moving at different speeds. This makes it difficult for insurers and financial institutions,” says Hein Lannoy, CEO of Assuralia.

The two federations also critic that lack of reliable data which makes insurers and bankers currently unable to assess the sustainability of a company accurately. “This data is either lacking or not yet available in sufficient numbers. Companies will only be required to report on their sustainability performance from 2023 onwards”, points out Karel Baert, CEO of Febelfin, in a joint statement by the two federations.

Second pillar insurance: tax reform

The Ministry of Finance (FPS Finance) plans to reform second pillar insurance. The main objective is to extend access to all employees and progessively cancel the preferential treatment of a capital payment compared to an annuity payment and another tax rate on the capital payment following the 80% rule.

According to De Tijd, Assuralia is apparently concerned about this new plan. The federation understands the desire for simplification but reminds that the second pillar requires trust. People set up their pension plans for the long term and therefore make an agreement with the tax authorities.

News of the market

Ageas

Despite the current context regarding inflation, Ageas stays confident about the second semester. For the first time, the board decided that the company would pay interim dividend. This is part of Ageas’s strategy which aims at increasing dividend promise over the three years. Paying interim dividend allows them to reinforce this message to the shareholders who ask to distribute the available surplus capital.

CEO Hans de Cuyper confirms Ageas’s annual net profit target of one billion but agrees that it will require hard work given the inflation effect on the financial market. They expect to stabilize in Europe but less in the UK.

As for life insurance, the sales in China jumped by 35% during the second quarter. This is explained among other things by the lockdowns and long-term quarantines, especially in Shanghai.

FSMA

Dashboard on investment fraud

One of the main missions of the Financal Services and Market Authority (FSMA) is to combat illegal activities in the financial investments field. Early July, the authority published its biannual dashboard on investment fraud and illegal offers. It provides statistics and an overview of the main trends . this first edition highlights several elements for the first half of the year 2022:

• 159 warnings against fraudulent entities and 169 websites have been issued by the authority since January 2022
• 63% of the victims who reach out the FSMA are men, mostly around 50 years old
• 47% or the consumers asked questions about a potential provider and 53% complained about a player they invested with in the last 12 months
• the main fraud phenomenon is fraudulent trading platforms

Find more information about this dashboard here.

Sub-agent in training

In its July’s newsletter , the FSMA explained the new status of “sub-agent in training” which has been a possibility since 1 January 2022.

This status enables a “sub-agent in training” to start an insurance or reinsurance intermediation activity under that status of a self-employed person. To obtain this status, the applicant should meet all registration conditions and theoretical knowledge requirements. The relating condition to 6 months of relevant practical experience is not mandatory to access the status, but the sub-agent must acquire this experience under the enhanced supervision of an (re)insurance broker or agent.

Sources:

• L’Echo, Hans De Cuyper (Ageas): “Nous avons décidé d’augmenter notre promesse en matière de dividende”
• L’Echo, Ageas va verser pour la 1e fois un acompte sur dividende
• Assuropolis, FSMA: nouveau statut de “sous-agent en formation”
• Assuropolis, FSMA: nouveau dashboard des fraudes à l’investissement et des offres illicites de produits et services financiers
• L’Echo, Placements durables: Febelfin et Assuralia tirent le frein à main
• Assuropolis, Assuralia est préoccupée par la réforme fiscale
• Assuropolis, Le deal entre AXA et Monument est approuvé
• L’Echo, Le liquidateur veut obtenir la valorisation d’Integrale