Conversation #1 : Innovations are often crafted by customer constraints
At times, charities and foundations hold large sums of money as there may be a time gap between fund-raising and the actual launch of projects. And their status means they are not allowed to lose even a single euro. Investing these funds in a very low or even negative interest-rate environment can be highly problematic. To help them honour their commitments, CNP Assurances has devised Flexi Sérénité. Numerous options have been added since to this innovative solution designed specifically to meet the needs of charities, which won the Actif d’or award for innovation in 2016 (1).
Conversation between Audrey Koenig, Laurence de Solminihac and Vahiré Filone de Noisdens
Laurence de Solminihac,
Head of administration and finance at OHS (Objectif Handicap Solidarité), Plérin
She argued in favour of the opportunities provided by Flexi Sérénité, an innovative solution devised by CNP Assurances, in a presentation to her management team and governance bodies.
Audrey Koenig,
Head of Wealth Management, Banque Privée 1818, BPCE Group, Paris
Picking out the best options from all those available in the high-end life insurance marketplace, or building them together with insurers, is the key to portfolio management.
Vahiré Filone de Noisdens,
Partnership officer, CNP Patrimoine, Paris
CNP Patrimoine’s range of solutions is growing – with recent additions including Quattro, Flexi Sérénité and Lib’RT – to meet the needs of its partners and their customers. We look back at how the product range took shape.
Audrey Koenig,
Head of Wealth Management, Banque Privée 1818
Today, private clients are growing weary of the capital markets because they are highly volatile and disconnected from economic fundamentals. What’s more, we are witnessing enthusiasm for EMTN(2)-type structured products, which offer the prospect of higher expected returns than euro funds plus capital protection, making them lower risk than an equity investment.
Thanks to CNP Assurances’ innovations, we are able to meet their expectations. Banque 1818 targets management agreements for €5 million in assets. Our clients are charities, foundations and families, including some from the Caisses d’Épargne and Banques Populaires retail networks.
Laurence de Solminihac,
OHS’s Head of administration and finance
Restructuring prompted us to sell off a large portfolio, and to put our dormant treasury to work harder, while we finalise our project arrangements. Previously, we had used conventional banking products, passbook savings accounts and term deposit accounts. However, the returns had become almost negligible, so we decided to adopt a more diversified approach.
As a charity, we need to make sure our investments are secure and clearly demonstrate to our trustees that we are managing our cash properly. On the recommendations of our portfolio investment advisor from the Caisses d’Épargne network, the CEO and I proposed adopting Flexi Sérénité to our board of trustees. This life insurance product was new, and complex from a technical standpoint, making it difficult to explain in layman’s terms. We explained to our management bodies that at worst we would not earn any money if conditions turned against us, and at best, we would earn a higher rate of interest on the amount we invested over four years. Since the security of the investment was assured, they backed our proposal.
The Objectif Handicap Solidarité (OHS) charity cares for over 200 people with disabilities at seven medical and nursing facilities in the Côtes d’Armor department. It has a staff of 200 employees and an operating budget of around €10 million p.a.
It pays to be agile in the upscale segment
CNP Assurances pulled out all the stops to establish itself in wealth management. It set up CNP Patrimoine as a dedicated unit, built a range of life insurance products in line with the highest standards of the upscale segment, created a range of innovative products, introduced digital investment and management tools, and established a subsidiary in Luxembourg. The impact was immediate. CNP Assurances sealed distribution partnerships with the most highly respected private banks in the marketplace. Along with its two longstanding partners – La Banque Postale and the BPCE Group via Banque 1818 – wealth management’s development has been stellar, revitalising CNP Assurances’ image.
Vahiré Filone de Noisdens,
Partnership officer, CNP Patrimoine
At the outset, our goal was to address the issue of low and even negative interest rates, and the regulatory requirement to protect charities’ capital. That’s why we designed Quattro Sérénité – 25% to 35% unit-linked with 100% capital protection at the four-year maturity date. The solution appealed to charities, and the partners proposed it to other clients, who wanted to make adjustments. Their feedback was unanimous – we want it to be “longer”, with a “higher unit-linked component”. We went back to the drawing board, and a few weeks later, we launched Flexi Sérénité, a fully configurable product – the extent of the capital protection, the maturity, and the unit-linked/euro-denominated mix. It was an equally immediate success. Lib’RT, the next innovation, simplifies and provides security for investing in the financial markets. Clients are given access to a temporary unit-linked vehicle paying them interest without missing a single day, and they have three to nine months to decide on their policy’s unit-linked/euro-denominated mix.
We adjust our solutions in real time. We go out to explain them to the teams of our banking partners and we support them with the advice they provide to clients, right up to the signature – and we can even be at the meeting should they so wish.
Audrey Koenig,
Head of Wealth Management, Banque Privée 1818
We work very actively with CNP Assurances, which after just one year is now one of Banque 1818’s top five insurance partners. How has it achieved this? By demonstrating its ability to adapt its offering to market demand and to promote take-up of it by our sales teams. The dedicated team’s flexibility, its commercial presence alongside our teams and our clients, and the “CNP Assurances” name make it a key partner for Banque 1818.
Everyone wins in private equity
Private equity provides support and guidance to unlisted companies during their development and transformation, shielded away from the turbulence of the financial markets. Over the past 20 years, private equity has outperformed other asset classes. CNP Assurances is a major player and allows its wealth management clients to capitalise on these performances, while giving them the option of cashing in their savings at any time. That is the benefit of the PEPS policy, the latest addition to the CNP Patrimoine’s range of life insurance products. CNP Assurances is alone in being able to offer these arrangements because of the size of its portfolio, its expertise in selecting early-stage companies and its long tradition of working with unlisted companies.
A simpler and more innovative approach with Banque Postale
These are exciting times for the partnership with La Banque Postale. In 2017, CNP Assurances is targeting new client segments with BPE, La Banque Postale’s wealth management arm, and Easybourse, its online broker. Diversification in life insurance is gaining pace via the growth vehicle to combine capital protection and the prospect of positive returns (see box). Digitalisation is making life simpler for our clients, partners and employees. A fully digital life insurance policy is in the pipeline with Easybourse, with all payments received from partners and clients – close to three million letters in total – set to go completely electronic.
80-12: a winning combination
The value proposition behind the new “Croissance 80-12 years” vehicle designed by CNP Assurances with La Banque Postale, its distribution partner, is to increase expected returns by accepting a degree of risk. This provides a way of boosting savings returns with a guarantee covering 80% of capital after 12 years, or of diversifying an existing policy while maintaining or refreshing its tax status. Options include securing capital gains, switching to discretionary management or harnessing opportunities to boost performance.
(1)11th edition of the Actifs du Patrimoine awards held by L’Agefi
(2) Euro Medium Term Notes: debt instruments issued by corporate issuers with medium-term maturities.