Ageas Has Good Partnerships, but No Clear Strategic Direction Conveyed to Investors

We think Ageas is lacking clear direction and a proven strategy. Ageas is present in Belgium, U.K., continental Europe, and Asia as well as running its own reinsurance operation. Tack on to that the importance of the business’ asset management, you are essentially left with a business that has six divisions. This is simply too many in our view. Insurance is a complex set of products and the historical approach has been one of diversification. However, what we frequently see within primary insurers and in particular multilines, with increasing diversification these businesses can lack specific expertise and master none. We understand that this approach to diversification is highly important in the reinsurance business. With exposure to large and lumpy losses these businesses will want to ensure that during those times they have more steady and reliable sources of income. But for primary insurers much of this tail risk is indemnified and this leaves managerial attention a crucial input for shareholder outcomes. What we tend to find within this and in particular in smaller multilines, is this diversification leads to a dilution of expertise and thus reduces firms' dominance in their chosen fields.