Fortis beats profit expectations
BRUSSELS/AMSTERDAM (Reuters) -- Dutch-Belgian bancassurer Fortis reported third quarter profit on Tuesday that beat expectations but was cautious for the whole year, saying results would be "satisfactory.''
Fortis, one of the top 10 insurers in Europe, said in a statement that net operating profit, or earnings before exceptional items and capital gains or losses, improved 16 percent on the year to 539 million euros ($639.4 million).
It said the rise was due to increased interest margins, better non-life insurance results and lower costs.
According to a Reuters poll of 16 analysts, the company was expected on average to report net operating profit of 488.06 million euros for the third quarter, with forecasts ranging from 345 million to 600 million euros.
Fortis, like its banking and insurance peers, has been suffering from one of the worst market downturns in generations, which slashed the value of investments and spawned bad debts.
But as markets start to recover, many financial companies have been painting a rosier picture, posting better earnings and braving profit forecasts.
ING earlier this month said it expected 2003 profits to be up 10-15 percent, but Fortis did not give any specific guidance.
Investors critical
"We are seeing signs of a slow recovery in the economic environment. The year to date operating performance and the improving markets give me confidence that we can look forward to a satisfactory full-year profit performance in 2003,'' Chief Executive Anton Van Rossum said in a statement.
Investors criticized Fortis for not being more specific with about five weeks left of the year.
"It's ridiculous,'' said one Belgium-based fund manager. "In November you should be able to give some kind of indication of what you expect,'' he said. "It's a missed opportunity.''
Fortis said net operating profit at its banking division fell 14 percent to 244 million euros partly on a drop in trading transactions.
Its insurance arm reported net operating profit of 332 million euros, a rise of 53 percent, largely due to gains at its non-life business.
The company said its solvency, which determines its ability to make future payouts, was strong, with its net core capital at 17.6 billion euros at the end of September up from 16.9 billion euros at June 30.
Fortis, which has a market value of about 19.6 billion euros, has underperformed the DJ Stoxx European financial services index by 17 percent since the start of the year. Its shares closed at 15.65 euros on Monday.
News on IPO awaited
The group recently announced plans to gradually sell off its U.S. insurance arm and investors had hoped Fortis would give fresh details on the planned initial public offering for the newly-named U.S. insurance unit, Assurant.
But Fortis just reiterated that it expected the IPO to take place next year and said the timing of its gradual sell-off would depend on market conditions.
Analysts estimate the unit's value at about four billion euros. Assurant recently filed with the U.S. Securities and Exchange Commission for an IPO worth up to $1.0 billion.
The U.S. plan is part of the company's strategy to focus on its core banking and insurance business in Belgium and the Netherlands, but also in Asia and some other European countries.
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