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Fortis Shares Slide as Profit Falls 10%

Belgian-Dutch financial services firm Fortis, which is buying the Dutch operations of ABN Amro, reported a 10 percent drop in quarterly net profit on Thursday but stuck to its 2007
outlook.

Insurance claims and the credit turmoil hurt net profit, which came in at 797 million euros ($1.17 billion) in the third quarter, compared with 884 million euros a year earlier.

The shares fell 5.8 percent to 18.56 euros by 0809 GMT, making them the biggest faller among the Amsterdam blue chips. Rabobank analyst Cor Kluis said in a note the market would probably be disappointed about asset revaluations.

Fortis reiterated it would see a full year net profit before divestments of 4.2 billion euros, barring unforseen circumstances and "in particular no further deterioration in asset values."

Fortis said it had 53 billion euros in structured credit investments of which more than 97 percent was rated A or higher.

Net profit at Fortis' insurance unit fell 20 percent to 294 million euros compared with a year earlier due to claims from floods in Britain and the impact of the credit crisis on its life insurance operations, Fortis said.

The credit crisis has had no material impact on Fortis' overall results, the company said, adding that its Scaldis investment conduit was performing well and none of Scaldis' assets, totalling 18.2 billion euros, had been downgraded.

Net profit at Fortis' banking unit fell 1 percent to 587 million euros compared with a year earlier.

Fortis is buying ABN's Dutch retail and commercial banking operations and its wealth and asset management arm, and Fortis said these businesses performed in line with ABN's trading update in September.

The consortium will submit a transition plan to the Dutch Central Bank (DNB) by mid-December, detailing plans of the break-up of ABN, an operation expected to take up to three years.

In a separate statement, Fortis said its board of directors has decided to propose that Chief Executive Jean-Paul Votron's term be extended for another three years until 2011.