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11 Mar 2009
Paris, March 11, 2009 -- Moody's Investors Service says that the Baa2 long term issuer ratings
of Fortis SA/NV and Fortis N.V., as well as the A2
insurance financial strength rating of Fortis Insurance Belgium,
remain under review for possible downgrade, following the announcement
that a new agreement has been made between Fortis, BNP Paribas and
the Belgian State.
According to this new agreement, BNP Paribas would buy 75%
of Fortis Bank SA/NV from the Belgian State and Fortis Bank would acquire
25% of Fortis Insurance Belgium from the Fortis Group. The
distribution agreement between Fortis Insurance Belgium and Fortis Bank
SA/NV would also be maintained until 2020 and the new agreement also includes
further cooperation in non-life insurance between Fortis and BNP
Paribas outside Belgium. Furthermore, Fortis' investment
in the structured assets SPV would be limited to EUR760 million,
and this investment would be funded thanks to a EUR1 billion loan from
Fortis Bank SA/NV. This transaction will be subject to the vote
of Fortis' shareholders, which Moody's understands will
take place in April.
Moody's notes that, if completed, this transaction would
clarify the Group's strategy, with a clear focus on insurance
operations through Fortis Insurance Belgium and Fortis Insurance International,
while the commercial collaboration between Fortis' insurance operations
and BNP Paribas could bring more stability to the Group's franchise.
Moody's also acknowledges that the proforma balance sheet of the
Group would improve, with a proforma equity position as of 30th
of September 2008 of EUR7 billion and a cash position of around EUR6 billion,
covering EUR2.5 billion of senior debt and the EUR1 billion debt
to Fortis Bank SA/NV. The hybrid debts issued by Fortis Hybrid
Financing (NITSH I, NITSH II and the Hybrones) will continue to
be economically matched by loans to operating entities.
Nonetheless, Moody's also notes that the Group will keep off-balance
sheet commitments towards its previously owned entities, either
through the Relative Performance Notes in relation to the CASHES or through
its co-obligation in debts issued by Fortis Bank Nederland (Holding),
Fortis Insurance Netherlands and Fortis Bank SA/NV.
Furthermore, until the proposed transaction is accepted by the shareholders,
the legal uncertainties remain high, as the sale of Fortis Bank
SA/NV to the Belgian State and the subsequent sale of the Bank to BNP
Paribas together with a partial sale of Fortis Insurance Belgium to the
French banking Group has been rejected by a previous Shareholders Assembly
in February 2009.
Moody's added that the impact of volatile financial markets in 2008
and early 2009 on Fortis Insurance Belgium's results and capitalisation
remain uncertain. Moreover, the successive announcements
related to the potential change of ownership of Fortis Insurance Belgium
may have had impacts on the franchise of the company that are challenging
to assess at this stage.
Moody's review for possible downgrade on Fortis Insurance Belgium will
therefore focus on the extent to which a) the new agreement is completed
b) the uncertainties of the last months have damaged the franchise of
Fortis Insurance Belgium and the financial situation of the company.
Moody's expects to conclude its review after the shareholders'
vote on the transaction and after the annual results of Fortis Insurance
Belgium are disclosed.
The review for possible downgrade of Fortis SA/NV and Fortis N.V.
will be concluded with the review of Fortis Insurance Belgium's
rating, and Moody's expects the ratings of Fortis Holding
companies to reflect the financial strength of the Group's operating insurance
companies as well as the subordination of the holding company creditors.
Nonetheless, the review will also focus on the specific resources
and obligations of the holding companies (including the off-balance
sheet items) and will consider whether additional notching is required
to reflect the holding companies' financial position.
The review for possible downgrade for the P-2 short-term
rating of the Group will focus on the liquidity position of the Group
in light of the recent initiatives launched by the Group to repay its
Commented on the hybrid debts issued by the Group (NITSH I, NITSH
II, the Hybrones and FRESH, all currently rated Ba1,
under review for possible downgrade), Moody's said that it
continues to review the likelihood of the mandatory deferral triggers
to be breached and whether any additional notching is necessary for these
junior instruments. It will also review the possibility for the
Group to use its Alternative Coupon Satisfaction Mechanism in case of
breach of these triggers and the ability of Fortis Insurance Belgium and
Fortis Bank SA/NV to serve the coupons on the debts which match certain
notes issued by the holding companies.
Headquartered in Brussels, Belgium and in Utrecht, the Netherlands,
Fortis Group had total assets of EUR 974.3 billion and reported
shareholders' equity (including minority interest) of EUR 30.4
billion as of June 30th 2008.
The principal methodologies used in rating Fortis Insurance Belgium,
Fortis SA/NV, Fortis N.V. and Fortis' funding
vehicles are "Moody's Global Rating Methodology for Property and
Casualty Insurers" and "Moody's Global Rating Methodology
for Life Insurers", which can be found at www.moodys.com
in the Credit Policy & Methodologies directory, in the Ratings
Methodologies subdirectory. Other methodologies and factors that
may have been considered in the process of rating these issuers can also
be found in the Credit Policy & Methodologies directory.
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's says that Fortis Group ratings remain on review down following new proposed sale agreement
Financial Institutions Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
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