Viewpoints Jean-Paul Faugère, Chairman of the Board and Frédéric Lavenir, general manager

What can you say about the 2014 results that have just been presented to shareholders?

Frédéric Lavenir - They’re good. Our total revenue rose 3.2% and net profit was 4.8% higher at €1,080 million despite an unfavourable environment. Moreover, we achieved this performance in a year devoted to transforming our business. The growth in unit-linked sales and protection insurance premiums was the result of the strategies deployed as from 2013, with the continued strong momentum in Brazil also contributing to our strategic refocusing on the businesses that create the most value.

Jean-Paul Faugère - The Board of Directors congratulated the Group’s management and teams for the quality of these results. And all the directors welcomed the business model’s refocusing on more profitable business lines with the support of our partner networks.

The low interest rate environment is a challenge for insurers. How is CNP Assurances positioned?

Frédéric Lavenir - While last year’s drop in interest rates was unprecedented, we had already started to adapt to the low interest rate environment in the expectation that it would last for some time. We adjusted our investment strategy and further increased our policyholders’ surplus reserve. More fundamentally, we intend to step up our strategic diversification, in terms of both partnerships and products. We are convinced that the future of the savings business lies in developing products managed with a very long-term perspective, as this is increasingly what our customers want. This is why we have made a major commitment to the new Eurocroissance contract, with an offer that is ready to hit the market.

Jean-Paul Faugère - As an insurance company responsible for managing the savings of millions of customers in France and abroad, we fully understand the seriousness of the challenge. We have a duty to protect their capital but also to offer them an acceptable yield, taking into account inflation. We are meeting these two objectives. The technical expertise of our actuaries and asset managers is one of the hallmarks of the CNP Assurances brand. We need to be vigilant and to adopt a conservative management approach, to ensure that we can fulfil our commitments which extend a long time into the future. The savers who have chosen CNP Assurances understand the importance of these values.

Your bancassurance partnerships with BPCE and La Banque Postale are in the process of being renewed. What’s the current situation?

Frédéric Lavenir - The partnership agreement with the BPCE Group has been renewed for an initial seven-year period commencing in 2016. The new agreement’s focus on protection insurance and employee benefit plans (death/disability and health insurance) will help to drive our diversification strategy as from next year. It will also offer increased scope for business growth, thanks to the extension of term creditor insurance distribution to all BPCE networks, including Banques Populaires and Crédit

Foncier. As regards La Banque Postale, the Cachemire offer’s outstanding success has given new impetus to the partnership. Our discussions are progressing around our shared development ambitions.

Jean-Paul Faugère - BPCE will continue to be a major partner in France, even though the partnership’s substance will gradually change. Our negotiations were very constructive and it’s clear that the teams cooperated very effectively. Moreover, BPCE has reaffirmed its commitment to remaining part of our core group of stable shareholders. With La Banque Postale, I am confident that we will soon have a new agreement and I have every reason to believe that its terms will enable us to pursue growth strategies that are consistent with the objectives of both La Banque Postale and Caisse des Dépôts.

When you talk about building the protection insurance business, what does this mean in practice?

Frédéric Lavenir - I’m talking about traditional death and disability insurance – what we often refer to as personal risk insurance – but also other business lines such as health insurance, term creditor insurance and even, in Brazil, auto and homeowners’ insurance. Demographic trends in Europe and emerging middle classes in South America mean that these business lines offer significant long-term growth potential. However, they are also changing considerably, with innovations becoming both possible and necessary, allowing us to obtain higher margins than on standard savings products.

The extension of supplementary health insurance plans to SMEs, micro-enterprises and self-employed professionals will revolutionise the social protection market in France. What role does CNP Assurances intend to play?

Frédéric Lavenir - It’s a real challenge but we have the strengths and expertise to meet it, including our multi-partner model, our multi-channel platforms, and our ability to design simple health insurance plans incorporating services and optional forms of cover. Local distribution is essential to gain the confidence of small business owners, which is why we are offering our partners the technical and operational support of our in-house network of insurance advisors. However, we are also using digital channels to support mass distribution. We are ambitious, but we have the resources to meet our goals, thanks in particular to our in-house network, Amétis, and our new partnership with Alptis.

The partnership with Santander has strengthened your position in Europe. How does it fit in with your strategic goals?

Frédéric Lavenir - It’s aligned with no less than three of our strategic goals. The first is to leverage our expertise in developing and managing products distributed through multiple bancassurance partners; the second is to grow the protection insurance business, which is this new partnership’s sole focus; and the third concerns our European ambitions: we now cover ten European countries, including Germany for the first time, where we have a strong presence. It’s a fantastic opportunity for our Group.

Jean-Paul Faugère - It’s obviously a success for CNP Assurances. The fact that Santander chose us as their partner in Europe in the face of stiff competition attests to the quality of our offer. The teams involved in the bid process were particularly dynamic and adept. I and my fellow directors welcomed this investment and look forward to seeing the results. With the ending of our partnership with Barclays in Spain, which was primarily focused on the savings business, this new partnership with Santander illustrates our ability to pursue our European development while also refocusing on the protection insurance business lines.

Brazil is experiencing slower growth, but what about CNP Assurances?

Frédéric Lavenir - 2014 was an atypical year for Brazil, which hosted the Football World Cup and also held presidential elections. Our local subsidiary, Caixa Seguradora, nevertheless continued to grow, delivering an outstanding 21.7% (Like-for-like) increase in revenue from the protection insurance business, which now accounts for four-fifths of our subsidiary’s total revenue. Thanks to these results and the region’s growth potential, we remain very confident about our short and long-term outlook in South America.

Can you sum up your portfolio investment strategy? Are you increasing your investments in equities and real estate?

Jean-Paul Faugère - We do indeed plan to increase our investments in equities and real estate, and also in infrastructure projects, for the obvious reason that interest rates – particularly for government bonds – are considerably below the yields expected by our customers. We have traditionally invested more heavily than our competitors in these asset classes, first because we manage savings and pensions portfolios representing very long-term commitments and second because we are convinced it’s the right investment strategy in the current interest rate environment. We’re very comfortable with these choices, because we believe in our vocation as an institutional investor, particularly in light of our public sector roots, and welcome the fact that we can participate in financing the real economy. For example, in 2014 we invested €740 million in private equity funds and contributed to the emergence and growth of over 250 innovation-led SMEs through our participation in the France Investissement Assurances programme.

What’s the outlook for 2015?

Jean-Paul Faugère - The objective of strengthening our business model with our major partners in France will be met; the process of diversifying the product offer in France and Europe will be launched with the aim of generating higher margins in the years to come; and the Brazilian market will remain dynamic and promising.The Board of Directors will oversee adoption of the new standards introduced in the Solvency II Directive that is applicable as from 1 January 2016. It’s a big job, but one that will help quantify our various risk categories according to a transparent process.

Frédéric Lavenir - 2015 will be a year of innovation. In February, we launched our premium savings contract CNP One and our first Eurocroissance contract. We are also planning to introduce many new services. 2015 will also be the year when we affirm our digital ambitions. The decision has already been made to launch an all-digital company in Brazil in 2016. Our recently appointed Chief Digital Officer will work alongside me to lead our Group’s digital transformation which is already firmly underway.

Verbatim

“Our good performances in 2014 attest to the robustness of our business model, the quality of our strategy and our teams’ engagement in our Group’s transformation.”

Frédéric Lavenir

“We have a duty to protect the savings of the millions of customers, particularly in France, who put their trust in us.”

Jean-Paul Faugère

“In 2014, CNP Assurances contributed to the emergence and growth of 250 innovative SMEs.”