Press Release:
Press Release
News Article May 2003
PARIS, May 27, 2003--Standard & Poor's Ratings Services said today that the announcement by the Belgo-Dutch financial group Fortis that it posted a €453 million loss in the first quarter of 2003 stemming from €1.2 billion in equity portfolio write-downs will not affect the ratings on Fortis Bank (AA-/Negative/A-1+), Fortis SA/NV (A+/Negative/A-1), and Fortis N.V. (A+/Negative/A-1). In the three months ending March 31, 2003, net operating profit excluding unrealized capital losses declined by a moderate 8%, with lower banking revenues and higher loan-loss provisions being partly offset by better insurance performance.
Since mid-2002, when the market value of Fortis' equity portfolio fell below its purchase price, changes in market value have gone through the profit and loss account instead of being posted against the group's reevaluation reserves. Standard & Poor's adjusts for the volatility of reevaluation reserves or unrealized capital losses when assessing the balance-sheet strength and the profitability of banks and insurers.
For the past three quarters, Fortis' capital strength has been reduced by pronounced declines in equity markets. The group is expected to maintain its moderate risk-profile and its strong commercial position in its core market in the future. However, given the erosion in its capital strength and its ongoing vulnerability to further stock market declines, the group has less flexibility to cope with the currently difficult operating environment.
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