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Ageas SA/ NV

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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation

While Historically Complicated, Ageas Has Core Strength and Is an Undervalued Insurer

Business Strategy and Outlook

Ageas is an improving business. However, it would do well to take a leaf out of other mid-sized European multi-line books and concentrate on core markets. Ageas has clear strength in its domestic market Belgium, evolving to be the market leader and is a dominant force in long-term savings. Its strategy in this line is to continue with the ongoing shift to unit-linked products that are capital-light despite lower margins. This is probably one of the reasons behind the company’s gradual but upward improvement in ROEs. Investments have played a decent part in improving customer service and protection offerings that can be sold into savings products, and this creates a sticker set of products and customers. These investments have oriented around improving standards of underwriting, and despite raising expenses the net effect in nonlife insurance has been positive. Ageas has a leading health insurance business with expenditure on health in Belgium being one of the highest in Europe. The firm targets price stability and ambulatory care services.

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