At the time of the release of its third-quarter results for 2001 last November, Fortis announced that it would possibly - based on its conservative provisioning policy - have to book additional provisions in the fourth quarter in relation to its credit and investment portfolios.
In view of the weakness of the financial markets and the absence of an economic recovery, Fortis carried out a thorough review of its credit and investment portfolios as part of its yearly closing process. As a result of this review the need for higher than expected provisions was identified, amongst others with regard to the investment portfolio of the insurance activities in the US. As a result, it is expected that the net operating profit for 2001 will be some 5% lower than in 2000 (EUR 2,355 million).
An additional provision of EUR 195 million after taxes was also booked for restructuring of those activities that suffer most from changing market conditions. This provision is in particular needed for the agreements with the social partners concerning early retirement. These agreements enable Fortis to adapt its operations more quickly to the changed environment and to fully benefit from the restructuring in years to come. The provision will be charged to the non-operating items.
As a result Fortis expects a net profit for 2001 of some 7 % lower than the record high net profit (EUR 2,768 million) of 2000.