Belgian financial services group Fortis claimed a solid performance in the first nine months of the year, as its core insurance operations posted a profit and the effects of discontinued operations shrank.

Fortis posted a nine-month net profit after minority interests of 1.08 billion euros (966 million pounds). The group didn't publish comparable nine-month earnings figures in 2008. For the year 2008, the group posted a net loss of 28 billion euros on 27.4 billion euros in net losses attributed to discontinued operations. Net profit for the third quarter was 53 million euros.

The insurance division posted a net profit for the nine-month period of 371 million euros, with an insurance result for the third quarter of 143 million euros.

The company said total funds in-flow for the first nine months of the year came to 11.4 billion euros, virtually unchanged from the 11.356 billion it reported for the same period of 2008. The company's gross in-flow for the third quarter was 3.5 billion euros, a 1% rise on the 3.48 billion euros it earned over the equivalent period of 2008.

Gross written premiums for nonlife insurance for the first three quarters of 2009 came to 2.34 billion euros, a 1% fall on the 2.36 billion euros from a year earlier.

In September, Fortis said it had completed its latest strategic review on its future direction, and said that it would focus on stability and growth (BestWire, Sept. 30, 2009). The company had earlier been effectively bailed out by the governments of Belgium, Luxembourg and the Netherlands after undergoing financial problems.

Following the bailout, Fortis' Dutch operations were removed from the group the Dutch government and the sale of its Belgian operations plus Fortis Bank to BNP Paribas attracted criticism from angry shareholders. Fortis has now been effectively stripped down to its insurance segments. At the end of August, the company revamped its business divisions and created a U.K. division (BestWire Aug. 28, 2009).

"The key specific risks to Fortis (positive and negative) relate to the deployment of its spare capital, as well as the contingent liabilities associated with the legacy financing instruments of the 'old' Fortis and now residing within entities no longer owned by shareholders, but still with a potential dilutive call on Fortis shareholders," said William Elderkin, equity analyst at Citi Investment Research & Analysis, in a note on the results.

"There is also volatility associated with movements in BNP's share price and valuation of its structured credit exposures," said Elderkin. "In addition, Fortis is exposed to the usual macro and technical insurance risks of any multiline insurance business, with sustained very low interest rates probably posing the greatest risk to its core life insurance operations."