Belgian insurer Fortis will streamline its remaining array of businesses and resume paying a dividend, a strategic review a year after the group's carve-up has determined.
The financial services group, pared down to a pure insurer after a state-led break-up, said all businesses would have to show they could reach a critical size, contribute to earnings and generate returns exceeding cost of equity - currently 11 per cent.
Fortis, which will need a new name by May 2011, said it would resume paying a regular cash dividend of between 40 and 50 per cent of the net profit of the insurance activities. That was €228 million in the first half.
Fortis's Belgian unit, called AG Insurance, is the market leader in Belgium and among the top 20 biggest in Europe, with a scattering of activities elsewhere, notably in Britain, Luxembourg, Portugal and east Asia.
In Britain, Fortis is to underwrite motor and household insurance for the country's biggest retailer, Tesco.
It has also teamed up with French bank BNP Paribas, which owns 75 per cent of Fortis' former Belgian banking business, to take a majority state in the non-life insurance unit of Italian bank UBI Banca.
Fortis said its current capitalisation was appropriate, with a solvency level of 229 per cent. It intended for that to remain at least 200 per cent.
Fortis was carved up by the Dutch, Belgian and Luxembourg governments in October after an €11.2 billion cash injection failed to stem the slide of Fortis shares.
BNP Paribas has now taken control of Fortis's Belgian banking arm Fortis Bank and acquired the Fortis brand name. The latter also has a 25 per cent stake in Fortis division AG Insurance.
Reuters