Bancherul - BANCI / ENGLISH / FORTIS - Interim management statement

Fortis, like all financial institutions, has been confronted with a systemic financial crisis of ever-growing, unparalleled proportions.

Faced with this situation of mounting crisis and the need for immediate resolute action, and given the role and responsibilities of the governments, Fortis engaged in a series of transactions that changed the composition of the Group significantly.

As a result, Fortis decided not to publish the regular third quarter results publications for the period ended 30 September 2008. In order to comply with the European transparency directive, Fortis decided to publish an interim management statement instead, focusing on recent events and the remaining activities of the Fortis Group after the closing of the transactions announced on 29 September, 3 and 6 October.

This interim management statement contains unaudited pro forma key figures for the Fortis Group in its new constellation consisting of the General Account (containing the holding companies and the finance companies) and Fortis Insurance International (excluding Fortis Corporate Insurance).

Fortis announced that it will also take a 66% stake in a structured credit portfolio entity. This entity will not be incorporated until December 2008. Since not all transactions have closed as of the date of this interim management statement, best estimates have been used.

Fortis will publish its full year 2008 results in March 2009. The full year results will be based on the formal consolidation rules and will include the results of the divested entities until date of sale. However, these results will not impact the equity of Fortis as presented in this interim management statement as the proceeds (to be) received for the sale transactions are fixed and included as such in this pro forma interim management statement. The third quarter results of the divested companies were negatively impacted by exceptional events mentioned in previous press releases such as value adjustments on the structured credit portfolio, impairment on deferred tax assets, impairment on the participation in RFS Holdings and impairment on the goodwill of the asset managers.

Headlines pro forma financial performance and position

Fortis confirms its financial position as announced on 14 October 2008, which has been updated to include the third quarter results

Fortis reports a pro forma net loss attributable to shareholders in the third quarter of EUR 135 million (including eliminations)

Fortis Insurance International pro forma net profit attributable to shareholders in the first nine months improved year-on-year to EUR 40 million as a result of an improved claim ratio in non-life and good cost control. The pro forma net profit was impacted by losses and write-downs on investments of EUR 55 million after tax and minority interests

Fortis Insurance International recorded a pro forma net loss attributable to shareholders of EUR 30 million in the third quarter driven by capital losses and write-downs on investments of EUR 45 million after tax and minority interests. Under current market conditions, additional write-downs and capital losses are expected to be recorded in the fourth quarter 2008. Since 30 September 2008, life insurance sales reduced further, whereas non-life sales remained stable compared to the third quarter of 2008

Fortis General Account reported a pro forma net loss of EUR 99 million in the third quarter due to the negative net interest income related to the leverage created at Group level and operating expenses

After the completion of the announced transactions, the pro forma shareholders' equity of the Group is expected to amount to EUR 7.7 billion.

The pro forma net cash position of the General Account, after servicing EUR 9.1 billion of debt, is expected to be EUR 3.5 billion. This should cover the cash pledge of EUR 1.9 billion for the structured credit portfolio entity and any additional funding required related to currency effects