Fortis outlines insurance future after $37 billion loss

BRUSSELS (Reuters) - FORTIS <:FORB.BR:>(FORA.AM)NV outlined its future as a viable insurance group on Tuesday after plunging to a 28 billion euro ($37 billion) loss in 2008 due to writedowns on the carve-out of its banking activities.

The stricken Belgian-Dutch group, pulled apart in a state-led bailout last year, said it would carry out a review of options to boost growth, consider acquisitions and eye a return of capital to shareholders, assuming they vote for the carve-up.

"This is the new start for Fortis, shareholders permitting," Chief Executive Karel De Boeck told a conference call. "A number of our companies are fast-growers and they need additional capital in order to sustain their development.

"Sometimes in this world you can find insurance companies for sale at interesting prices."

The precise make-up of the company is still in doubt. French bank BNP Paribas is poised to buy 75 percent of Fortis Bank, once the Belgian banking arm of listed Fortis Holding but now in state hands, as well as 25 percent of Fortis Insurance Belgium.

Fortis shareholders, who blocked the previous terms of the break-up deal last month, will vote on revised conditions at meetings on April 8 and 9.

"We are not a gambling institution. Ladbrokes can give you quotes on that. But what I feel in the market speaking to a lot of shareholders is that the overwhelming majority is currently in favor," De Boeck said.

He added an alternative plan for Fortis to reclaim its banking activities, outlined by a lawyer who challenged the initial deal, was not credible as Fortis had no means to buy them back.

De Boeck said Fortis would seek to reduce the legal complexity of its structure and cut staffing at its holding operation to between 40 and 50 in 2009 from 114 at the end of 2008.

Fortis's huge 2008 loss largely resulted from a negative 27.4 billion euros from discontinued activities, mainly writedowns on the sale of its banking operations.

The net result from continuing operations was a 610 million euro loss, against an 84 million euro profit in 2007.

Fortis said its rump insurance operation achieved a total net profit of 6 million euros, including a 639 million negative impact from its investment portfolios. The general division made a loss of 629 million euros due to net interest charges and took a 295 million hit from currency transactions.

The group had already said this month it would be unable to pay a dividend.

Ivan Lathouders, analyst at Bank Degroof, said most of the huge negatives were already known given Fortis Bank and Fortis Bank Nederland had already released results.

"If you look at the insurance business it seems relatively OK. Losses on investment portfolios are not as bad as expected," he said, adding he had increased his target price to 1.70 euros from 1.50 euros.

Fortis shares, which reached almost 30 euros in April 2007 before its ill-fated joint bit for ABN AMRO, were 5.7 percent higher at 1.42 euros at 0900 GMT, against a 2.7 percent gain in the DJ Stoxx European banking index <.SX7P>.

Fortis, together with Royal Bank of Scotland and Spain's Santander , bought ABN AMRO in 2007 for more than 70 billion euros and struggled to finance its part of the top-of-the-market price after the financial crisis struck.

Fortis was carved up by the Dutch, Belgian and Luxembourg governments in October after an 11.2 billion euro cash injection failed to calm investors.

(Editing by Dale Hudson and David Holmes)

($1=.7560 euro)