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| Press releases 2008 |
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| First Quarter 2008 Business Review |
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| Paris, 13 May 2008 |
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Premium income in France down 17.9% excluding Fourgous
transfers,
in line with the performance of the bancassurance
sector
International premium income up
16.3%
Technical reserves up 6.6%, despite lower stock market
prices
Target of double-digit growth in recurring profit in 2008
reaffirmed
CNP
Assurances’s premium income declined 19% in the first quarter of 2008, as a
difficult financial environment led to strong competition from easy access
savings products in France and Italy. Premium income in France was down
24% on a reported basis and 18% excluding Fourgous transfers, while
international premium income was up 16%. Reflecting the trend observed in the
fourth quarter of 2007, the French life insurance market was adversely affected
by stiff competition from short-term savings products offered by banks and also
by a fall-off in unit-linked sales and Fourgous transfers due to lower stock
market prices. By contrast, the Group's technical reserves – which are the main
drivers of earnings growth – rose by 6.6% despite the decline in stock market
prices, without which the increase would have reached 7.6%. Based on this
performance and as announced at the Annual General Meeting of 22 April 2008, the
Group reaffirms its target of double-digit growth in recurring profit for the
year, barring any significant worsening of the financial
crisis .
1 - First quarter business
review
Note:
In line
with the new partnership agreement with UniCredit in Italy approved on 22
January 2008 (see 3.1 below), since 1 January, CNP UniCredit Vita has been
marketing, through the UniCredit network, a product range aligned with the
UniCredit Group’s other life insurance offerings. The range includes products
without a deferred participation feature that are accounted for in accordance
with IAS 39, by recognising only the premium loading in revenue (unlike under
French GAAP, where the total premium income is reported as
revenue).
As a result
of this shift in product mix, CNP UniCredit Vita’s reported premium income under
IFRS declined compared with first-quarter 2007, although new money was
higher.
1.1 - Consolidated revenue
Technical
reserves, which are
the main driver of earnings growth, rose by 6.6% over the twelve months to 31
March 2008, excluding deferred participation. The increase is net of a 1%
decline in linked liabilities. It
compares with an 8.3% rise over the twelve months to 31 December 2007, of which
0.1 point was attributable to growth in linked
liabilities.
Premium
income for the
first three months of the year amounted to €7,638.2 million, down 22.1% on a
reported basis and 22.8% like-for-like (based on a comparable scope of
consolidation and at constant exchange rates).
Premium
income under French GAAP (which includes total premiums from Italian products
versus only the premium loading under IFRS) contracted 19.1% to €8,130.5
million. The decline related in full
to operations in France, where premiums were down
24.3% or 17.9% excluding Fourgous transfers, and mirrored the experience of
other bancassurers (excluding Fourgous transfers). By contrast, international
premiums rose 16%.
According
to estimates published by the industry federation (FFSA), the French savings and
pensions market contracted by 10% in the first quarter to €36.5 billion under
French GAAP, including an 18% fall in the bancassurance segment. This decline in
the French market, observed over the last six months, was due to the
attractiveness of easy access savings products offered by the banks.
Nevertheless, technical reserves rose 5% on an annualised basis (reflecting 6%
growth in reserves for non-unit-linked contracts and a 1% decline in linked
liabilities) and net new money came to €13.3 billion.
1.2 - Revenue by business
segment
First-quarter
revenue growth was held back by the savings business. Sales of pure insurance
products, which generate very high margins, continued to expand rapidly, with
loan insurance premiums up 12%, property and casualty premiums up 9% and
personal risk premiums up 2%.
In the
savings and pensions segment, unit-linked sales contracted by 21.1% to
€1,926.1 million. The decline was entirely attributable to the 46.4% drop
in sales in France, which
masked gains of 5.7% in Italy
and 51.7% in Brazil.
|
|
IFRS |
French
Gaap |
|
Premium
income
(in
€m) |
Q1
2008 |
Q1
2007 |
%
change |
Q1
2008 |
%
change |
|
Savings |
5,682.6 |
8,047.2 |
-
29.4 |
6,174.7 |
-
24.6 |
|
Pensions |
582.8 |
475.5 |
+
22.6 |
583.1 |
+
1.4 |
|
Personal risk |
559.9 |
549.1 |
+
2.0 |
559.9 |
+
2.0 |
|
Loan
insurance |
635.8 |
568.5 |
+
11.8 |
635.8 |
+
11.8 |
|
Health
insurance |
86.7 |
86.7 |
-
0.1 |
86.7 |
-
0.1 |
|
Property &
Casualty |
90.4 |
83.1 |
+
8.8 |
90.4 |
+
8.8 |
|
TOTAL |
7,638.2 |
9,810.2 |
-
22.1 |
8,130.5 |
-
19.1 |
Premium income in Spain
includes CNP Vida only in the first quarter of
2008.
1.3 -
By country and partner network
Apart from
France, where the Group’s performance was in line with that of the other
bancassurers (excluding Fourgous transfers), premium income continued to grow at
a healthy rate in other countries, particularly Brazil which enjoyed an
excellent first quarter.
|
|
IFRS |
French
GAAP |
|
Premium
income
(in
€m) |
Q1
2008 |
%
change |
Q1
2008 |
%
change
|
|
France |
6,629.9 |
-
23.4 |
6,633.7 |
-
24.3 |
|
Italy(1) |
541.2 |
-
34.7 |
951.4 |
+
5.1 |
|
Brazil |
351.9 |
+
34.4 |
419.1 |
+
31.1 |
|
Spain(2) |
58.1 |
+
979.9 |
58.1 |
+
979.9 |
|
Other |
57.1 |
- |
68.2 |
- |
|
TOTAL |
7,638.2 |
-22.1 |
8,130.5 |
-19.1 |
(1) Italian branches and Cofidis business in Italy
since 2004 and CNP UniCredit Vita.
(2) Spanish branches, Cofidis Spain and,
since 5 April 2007, CNP Vida.
France
First
quarter premium income in France amounted to €6,629.9 million,
compared with €8,657.1 million in the same period of 2007 which included
Fourgous transfers for €903 million.
Premiums
recognised on these transfers from non-unit-linked contracts to combined
unit-linked/non-unit-linked contracts totalled €263.9 million, three times less
than in first-quarter 2007. Excluding these Fourgous transfers, premium income
in France was down 17.9%, exactly
mirroring the 18% decline observed for the bancassurance segment (based on FFSA
estimates). Net new savings and pensions money amounted to €2.1
billion.
At €776.5
million, unit-linked sales were down 46% in a French market that contracted by
37% due to the unfavourable stock market conditions. This below-market
performance was due to the decline in Fourgous transfers, which have a
unit-linked content of at least 20%. Unit-linked sales by the three distribution
networks represented 14.4% of total premium income for the first
quarter.
Premium
income generated by La Banque Postale
amounted to €2,541.7 million, compared with €3,655.8 million in the first
quarter of 2007, which saw 31% growth versus first-quarter 2006. The decline was
mainly due to the lower volume of Fourgous transfers, which amounted to €143
million versus €665 million. Excluding Fourgous transfers, premium income was
down 19.8%, closely reflecting the decline observed for the French bancassurance
sector as a whole. Sales of all products
other than savings contracts (pension, personal risk and loan insurance
products) continued to grow. Marketing campaigns are underway the second
quarter to promote savings and personal risk products.
The
Savings Banks generated premium income of €2,738.6 million in the first
quarter, compared with €3,676.4 million for the same period of 2007. The total
included around €120 million in transfers from PEL home-savings accounts
versus €350 million in first-quarter 2007.
Excluding
Fourgous and PEL transfers, the decline was nearly in line with that of the
bancassurance segment as a whole. Unit-linked
sales were also down on first-quarter 2007 but nonetheless represented 18% of
total premium income generated by the network. Promotional offers will run from
April to the end of July, offering special rates on all combined
non-unit-linked/unit-linked products with a minimum unit-linked weighting.
The CNP Trésor network reported
first-quarter premium income of €167.3 million compared with €220.6 million in
the year-earlier period. The fall was due to sharply lower Fourgous transfers,
which amounted to €5 million versus €48 million. Excluding Fourgous transfers,
the downturn was just 5.8% and was essentially due to the general market
environment, competition from easy access bank products and reduced saver
appetite for unit-linked products. In the second quarter, the network will
launch promotional offers with or without a minimum unit-linked weighting
requirement.
Premium
income generated by the Companies & Local Authorities and Financial
Institutions partnership centres rose 8% and 10% respectively, reflecting the
strong 10% overall growth in sales of loan insurance in France.
International operations
Operations
outside France contributed €1,496.8 million
to first-quarter premium income under French GAAP, representing an increase of
16.3%. Premium income under IFRS was down 12.6%, due to the classification of
new Italian products.
Europe
Ø
Italy – CNP UniCredit
Vita
The Italian
life insurance market contracted by 30% in the first two months of 2008, led by
a 45% fall in the unit-linked segment. Like in France, the
sharp drop was essentially due to fallout from the subprime crisis, which forced
the banks to seek alternatives to their securitisation programmes. The shift in
their refinancing strategies drained funds away from the life insurance market,
towards bank-type savings products. The market’s poor performance also reflected
the trough in index-linked product maturities compared with the early-2007
peak.
In this
environment, CNP UniCredit Vita
reported premium income up 5.8% at €937.5 million under French GAAP. By
continuing to outperform its competitors in the bancassurance segment, the
Italian subsidiary significantly improved its market share compared with
first-quarter 2007. Business growth combined with the favourable effect of
contract maturities (down 84% compared with first-quarter 2007), led to net new
money of €560.5 million, contrasting with a negative €23.2 million in the
year-earlier period. These figures attest to the resounding initial success of
the product range marketed since January 2008. However, as explained above, the
application of IAS 39 to account for certain products led to a reduction in
premium income under IFRS to €527.4 million from €809.9 million in first-quarter
2007.
The Italian
loan insurance business continued to
expand rapidly, with premium income at double the first-quarter 2007
level.
CNP
UniCredit Vita Premium Income for the First Quarter of
2008
|
€m |
IFRS |
French
GAAP |
|
MARKET
SEGMENT |
Q1
2008 |
Q1
2007 |
%
change |
Q1
2008 |
Q1
2007 |
%
change |
|
Savings |
496.6 |
789.6 |
-
37.1 |
906.8 |
866.2 |
+
4.7 |
|
Pensions |
6.5 |
7.4 |
-
12.4 |
6.5 |
7.4 |
-
12.4 |
|
Personal
risk |
1.6 |
1.8 |
-
12.6 |
1.6 |
1.8 |
-
12.6 |
|
Loan
insurance |
22.7 |
11.0 |
+
105.5 |
22.7 |
11.0 |
+
105.5 |
|
TOTAL |
527.4 |
809.9 |
-
34.9 |
937.5 |
886.5 |
+
5.8 |
Ø
Portugal - Global and Global
Vida
In
Portugal, the life insurance market
confirmed its recovery, expanding 25% compared with first-quarter 2007. The
savings market grew 26%, led by the bancassurers, who recorded substantial
transfers from bank-type products to insurance products. The non-life market
remained stable.
In this
environment, the Global group reported premium income up
23.5%.
Non-life
premiums rose by a modest 1.2%, while life premiums surged 141% following the
market launch of a new range of savings products .
Ø In
Spain, CNP Vida – which has been consolidated since 5 April 2007 – had
a market share of 0.7% at end-2007. The subsidiary’s premium income rose 7.6% in
first-quarter 2008 to €49.2 million, reflecting 52.5% growth in the pensions
business and a 9.1% advance in unit-linked sales.
Latin
America
Ø
Brazil – Caixa
Seguros
Caixa Seguros reported first-quarter
premium income of BRL 1,124.2 million, up 27% in local currency in a Brazilian
market that grew 15% (excluding health insurance) in the first two months of
2008. After conversion into euros, the subsidiary’s contribution to consolidated
premium income was 31% higher, reflecting the real’s 3.2% average gain against
the euro compared with first-quarter 2007.
Caixa Seguros (Brazil) premium
income
|
BRLm |
IFRS |
French
GAAP |
|
MARKET
SEGMENT |
Q1
2008 |
Q1
2007 |
%
change |
Q1
2008 |
Q1
2007 |
%
change |
|
Savings |
16.6 |
19.0 |
-
12.6 |
197.0 |
179.1 |
+
10.0 |
|
Pensions |
557.7 |
382.7 |
+
45.7 |
557.7 |
382.7 |
+
45.7 |
|
Personal
risk |
143.8 |
130.4 |
+
10.2 |
143.8 |
130.4 |
+
10.2 |
|
Loan
insurance |
78.2 |
59.6 |
+
31.3 |
78.2 |
59.6 |
+
31.3 |
|
Property
& Casualty |
147.5 |
133.1 |
+
10.8 |
147.5 |
133.1 |
+
10.8 |
|
TOTAL |
943.8 |
724.8 |
+
30.2 |
1,124.2 |
884.9 |
+
27.0 |
Premiums increased across most
business segments (growth rates are shown in local currency):
-
Savings
premium income continued to grow rapidly, rising 10% under local GAAP. The
period-on-period fall in the IFRS amount – which corresponds to the premium
loading and not to total premiums – is due to the heavy weighting of single
premium products for which the loading rate declines over time.
-
The pensions
business expanded by a very strong 45.7%.
-
The personal
risk business also performed well, as did the loan insurance business which
grew 31.3%.
2 - General business
environment
2.1 - A persistently
unfavourable financial environment in the first
quarter
The CAC 40
index lost 16.16% in the first quarter of 2008, falling to 4707.07 points.
Equity markets were hit by several unfavourable developments. The United States
teetered on the brink of recession, with GDP inching up a mere 0.6% in the
fourth quarter of 2007 compared with 4.9% in the third quarter when 232,000 jobs
were lost, there was more bad news in the financial sector, with the
announcement of further asset writedowns linked to the subprime crisis and
continued fears of bankruptcies among monoline insurers, and raw materials
prices continued to climb. In the fixed income markets, government bonds served
as a hedge against inflation at the peak of the financial crisis and credit
spreads widened considerably. In a very tight interbank market, Western central
banks attempted to stave off a credit crunch by injecting liquidity into the
financial system and in the United States, the Fed Funds rate was
cut to 2.25% from 3% on 18 March. On the currency markets, the euro gained 7.4%
against the dollar, reaching $1.5812 on 31 March 2008.
Financial
market indicators
|
|
31 March
2007 |
30 June
2007 |
31 Dec.
2007 |
31 March
2008 |
|
CAC
40 |
5,634.16 |
6,054.93 |
5,614.08 |
4,707.07 |
|
Eurostoxx
50 |
4,181.03 |
4,489.77 |
4,399.72 |
3,628.06 |
|
3-month
Euribor |
3.92% |
4.17% |
4.68% |
4.73% |
|
10-year
OAT |
4.10% |
4.61% |
4.46% |
4.10% |
|
€1 in
$ (period-end rate) |
1.33 |
1.35 |
1.47 |
1.58 |
|
€1 in
BRL (period-end rate) |
2.72 |
2.60 |
2.61 |
2.76 |
|
€1 in
BRL (average rate) |
2.77 |
2.71 |
2.66 |
2.68 |
2.2 - Regulatory
and tax environment
Under
France’s 2003 Pensions Reform Act
(“Fillon Act”), pension institutions are required to obtain a licence to operate
as a provident institution or to merge with an existing provident institution
before the end of 2008. Institutions that elect not to choose either of these
options must convert into pension plan managers and transfer their commitments
to an insurance company. This
latter option should create new impetus in the French life insurance market,
with group contracts expected to contribute two points of market growth in 2008
according to research published by the FFSA in
February.
3
- Significant events since 1 January 2008
3.1 - Significant events of the
first quarter
At its meeting on 15 January, the
Board of Directors unanimously approved the 2008-2012 Business Plan, which sets
ambitious growth targets for the next five years, including a near doubling of
Ebit and 100% growth in the value of new business.
In January, the Boards of Directors
of CNP Assurances and UniCredit approved the terms of a Memorandum of
Understanding concerning the adjustments to be made to the agreements regarding
their joint subsidiary, CNP Capitalia Vita, which has since been renamed CNP
UniCredit Vita.
Implementation of the agreement is based on the following
principles:
On 4 March,
CNP Assurances announced a very robust set of results for 2007, with
attributable recurring profit after capital gains up 31% to €1,178 million and
the value of new business up 18% at €355 million. The crisis in the
securitisation market had only a limited impact, trimming just €47 million from
pre-tax profit. The press release included estimates of the sensitivity of
reported profit and equity to various market parameters. The divided recommended
at the Annual General Meeting on 22 April amounted to €2.85 per share. In its
guidance, the Group stated that, despite the unfavourable trading conditions in
France, attributable recurring net
profit for the year should increase by at least 10% compared with 2007 unless
the crisis in the financial markets worsens.
- In the first
quarter of 2008, very few securities in the ABS portfolio were affected by
ratings downgrades and there was no deterioration in cash flows from this
portfolio. A currency hedge was set up during the period to protect Caixa
Seguros’s contribution to consolidated profit against a potential 10% fall in
the real compared with 2007.
3.2 - Significant events since the
end of the quarter
At the
Annual General Meeting, held in Paris on 22 April 2008 under the chairmanship
of Edmond Alphandéry, Chairman of the Board of Directors, shareholders approved
the financial statements of the Company and the Group for the year ended 31
December 2007. Shareholders also approved the payment of a dividend of €2.85 per
share, payable from 29 April 2008. The meeting included a review of
conditions in the French life insurance market during the first quarter and of
CNP Assurances’s performance. Gilles Benoist, Chief Executive Officer, noted
that the market contracted by an estimated 10%, with a roughly 18% fall in the
bancassurance segment. He added that, excluding Fourgous transfers, CNP
Assurances’s performance for the quarter was expected to be in line with that of
the bancassurers. Concerning the full-year outlook, he reaffirmed the Group’s
target of reporting double-digit growth in attributable recurring profit,
barring any significant worsening of the financial crisis. This information was
disclosed in a press release published after the Meeting on 22
April.
* *
*
In this
environment, recurring profit for the year before capital gains is expected to
primarily reflect strong growth both in sales of pure insurance products and in
technical reserves.
As stated
at the Annual General Meeting on 22 April, "Unless the financial crisis worsens
considerably, the Group expects a rise in technical reserves to power
double-digit growth in the Group’s recurring profit in 2008, despite the
unfavourable trading conditions in France."
See also
First-quarter 2008 premium income
Press
Relations
Sophie Messager
Tel : +33 (0)1 42 18 86 51
E-mail :
servicepresse@cnp.fr
Investor and Analyst
Relations
Brigitte Molkhou
Tel : +33 (0)1 42 18 77 27
E-mail :
infofi@cnp.fr |
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