Fortis continued to strengthen its foundation in 2001 by implementing its corporate strategy. Integration projects at the banking and insurance operations proceeded according to plan.
In its home market, Fortis concentrated on improving the level of service to customers. Key elements were the successful IT integration at Fortis Bank in Belgium and ongoing integration within AMEV Stad Rotterdam Verzekeringsgroep (ASR).
Cooperation between the different Fortis businesses continued to take shape. Important strides were also made in redefining our range of activities. Fortis expanded its operations in Employee Benefits in the United States and invested in promising activities in Asia.
In September Fortis announced the unification of the Fortis (B) and Fortis (NL) shares into the new Fortis share. This announcement was received enthusiastically by the market and represents a major step towards transparency. The new Fortis share was traded on the Euronext stock exchange for the first time on 17 December and was later included in the international indices.
Fortis achieved a net operating profit of EUR 2,267 million under the difficult conditions of 2001. Including the provisions created, this represents a decline of only 4% compared with the record year of 2000. Net operating profit per share came down 10%. Results were depressed by the creation of additional provisions for the credit and investment portfolios in the fourth quarter and by lower investment income, mainly on the investment portfolio in the United States due to the deteriorated economy in the third and fourth quarters.
In addition, in view of the current market conditions, Fortis has decided to refrain from realizing extra investment return. Public bids for the LIFFE shares and SES Global resulted in a non-operating income in the fourth quarter. An additional reorganization provision was also created in the fourth quarter and charged to the non-operating items.
Net profit, including non-operating items totalling EUR 331 million, fell by only 6% to EUR 2,598 million. Return on equity was 17.9%, which is higher than the target of 15%. Earnings per share amounted to EUR 2.01 (-12%). A dividend of EUR 0.88, equal to the dividend paid out in 2000, will be proposed to the shareholders of Fortis.
Fortis retained its good solvency position in 2001. Net core capital proved to be adequate amid the difficult market conditions prevailing in 2001, owing in part to the composition and quality of the investment portfolio, which mainly consists of fixed-income securities carrying a limited risk.
At the end of the year, core capital amounted to EUR 19.2 billion, which was 16% above the lower limit set by Fortis. The investment portfolio of the US insurance business was closely reviewed in the light of the recent economic developments. A number of measures were taken to further strengthen the risk profile of this portfolio. In 2001 Fortis lifted the tier-1 ratio of its banking activities to 8.5% from 7.3%.
Thorough and uniform risk analysis in both banking and insurance allowed Fortis to reduce its economic capital from EUR 17.0 billion to EUR 16.3 billion. The net Return on Risk-Adjusted Capital (RoRAC) amounts to 14%.
(source: Fortis Bank)