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CNP Assurances . Strategy and outlook. Gilles BENOIST President of the Executive Board 20 March 2003. CONTENTS. How did CNP succeed in remaining one step ahead in last year's falling stock markets? Strategy Focus on the most profitable products

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CNP Assurances

Strategy and outlook

Gilles BENOISTPresident of the Executive Board20 March 2003


Contents l.jpg
CONTENTS

How did CNP succeed in remaining one step ahead in last year's falling stock markets?

  • StrategyFocus on the most profitable products

  • InternationalBrazil: strong potential for future business and value growth

  • Outlook


The french personal insurance market 1 growth in 2002 l.jpg
THE FRENCH PERSONAL INSURANCE MARKET:1% GROWTH IN 2002

In €bn

- 6 %

+ 1 %

  • In 2000, market boosted by substantial transfers from bank-type PEP accounts

  • Savings market up 1% in 2002 to €84.8bn (source: FFSA Feb. 2003)

  • 2003 outlook: 0% to 5% growth according to FFSA

99.6

94.8*

93.4

Transfersfrom PEPaccounts

PEP

PEP

PEP

* : estimate

2000

2001

2002


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CNP ASSURANCES OUTPERFORMED THE FRENCH MARKET

In €bn

  • Premium income up 5.3% on a constant structure and exchange rate basis (4.3% excluding Brazil), versus 1% growth in the French market as a whole

+ 6.2%

- 1.3%

18.36

17.52

17.29

2000

2001

2002


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RECURRING NET PROFIT UP 8.1%*

In €m

+ 8.1%

571.1

+ 12.2%

528.3

470.9

2000

2001

2002

* Like-for-like growth: 11.3%


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2002 RECURRING NET PROFIT

In €m Excluding consequences of falling stock markets

Change

2002 / 2001

Change

excl. Brazil

2002

Premium income18,360 + 6.2% +4.3%

Technical reserves* 140,810 + 7.3% + 7.1%

Admin. expenses542 + 6.8% + 3.5%

Recurring profit

903 + 14.4% + 9.7%

Tax on recurring profit213 + 14.0% + 10.1%

Recurring net profit571 + 8.1% + 8.1%

* Average annual increase


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WHAT ARE THE REASONS FOR CNP'S RESILIENCE?

  • Low portfolio weighting in equities (13%),unchanged for several years

  • Investment in equities dependent on having sufficient unrealised gains to protect against a sharp drop in share prices

  • In 2000 and 2001, portfolio underweighted in TMT stocks

  • Partial hedging programme set up alongside equities purchases in 1999 and 2000

  • Exceptional profits from 1999 and 2000 tender offers set aside and used to offset provision charges in 2002


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CONSEQUENCES OFFALLING STOCK MARKETS

CNP Assurances treatment of the stock market crisis in 2002

  • Trigger point for liquidity risk reserve lowered

  • Realised gains on equities: 9% of profit

  • Losses realised

  • Method used to calculate provisions for permanent impairment in value adjusted to reflect actual impairments more accurately, in accordance with CNC guidelines of 18 December 2002: €685m

  • Liquidity risk reserve booked by Ecureuil Vie: €504m

    • No postponement or deferral requested


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FINANCING OF PROVISIONS BOOKED IN 2002

  • Lower proportion of investment income allocated to policyholders

    • Transfer from policyholders' surplus reverse

    • Policyholders' surplus reserve at end-2002: around €1bn

  • Profit-taking on bonds to offset liquity risks reserve booked by Ecureuil Vie

    • After detailed analysis of ALM issues

      • coverage of commitments

      • portfolio yields

      • higher interest rates scenario

    • Continued disciplined approach to determining policyholder rates of return


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HIGH QUALITY ASSETS

in €m

  • Bonds: 98% rated A or better and 0.5% non-investment grade

  • Assets excluding unit-linked: €132,185m

Unrealised gains

30 June 2002

Unrealised gains

31 Dec. 2002

Book value

31 Dec. 2002

Breakdown(excl. U-L)

Property812 918 4,032 2.6%

Bonds3,057 6,371 112,272 84.1%

Equities3,015 (785) 27,692 13.3%

Total 6,884 6,504 143,996 100%

Very high quality assets:


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FINANCIAL STRATEGY

  • Response to a sharper fall in interest rates

    • Change in weighted guaranteed minimum yield on In Force business at end-2002

  • Good coverage of guaranteed minimum yields

3%

2.5%

CNP Group at 100%

2%

1.5%

1%

0.5%

2013

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012


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RESILIENT EMBEDDED VALUE

  • Decline in in force business in 2002 due in part to reduction in tax credit

  • New business : France €0.60 per share Total €0.77 per share

€42 per share *

€ / share

In force (2)

7.6

AdjustedNAV (1)

34.4

CAC 40

31 Dec. 2002

Number of shares at 31 Dec. 2002: 137,854,064

* After dividend and after deducting Caixa Seguros goodwill

(1) NAV used to calculated Embedded Value equals book NAV less in force and Brazil tax benefit(2) €6.9 France and €0.6 Brazil


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SOLVENCY MARGINat 31 December 2002

New presentation : European standards In €m

  • Solvency margin represents 2.21 times regulatory minimum

6,425

Unrealised gains(2)

Subordinated debt

1,153

107%

Minimum margin requirement

Shareholders' equity(1) incl.

capitalisation reserve

5,643

4,903

(1) After dividends and after deducting intangible assets(2) Unrealised gains calculated according to European standard after restatement


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CONTENTS

  • How did CNP succeed in remaining one step ahead in last year's falling stock markets?

    StrategyFocus on the most profitable products

  • InternationalBrazil: strong potential for future business and value growth

  • Outlook


Strategy l.jpg
STRATEGY

  • Individual insurance

    • In partnership with the distribution networks

  • Focus on the most profitable types of business

    • Build sales of personal risk products (health insurance, personal risk insurance

    • Boost unit-linked sales

      • guaranteed funds


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PREMIUM INCOME BY BUSINESS SEGMENT

In €m

Build personal risk

sales

Like-for-like

change

Change / 2001

2002

Savings14,279 + 5.8% + 5.5%

Pensions1,154 - 2.2% - 4.4%

Personal risk967 + 17.0% + 17.1%

Loan insurance1,555 + 6.0% + 2.5%

Health insurance195 + 10.7% + 10.7%

Property & Casualty211 + 40.9% + 17.4%

Total 18,361 + 6.2% + 5.3%


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ROE based on recurring profitBY BUSINESS SEGMENT

(excl. Brazil)

Build personal risk

sales

€m

ROE (1)

Savings358.2 12%

Pensions73.4 14.5%

Personal risk (2)149.0 17%

Total580.6 13.3%

1 Average shareholders' equity is allocated among the business segments pro rata to regulatory solvency margins

2 Including loan insurance and health insurance


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STRATEGY

Build personal risk

sales

  • Group insurance

    • Capture additional market share:

      • leverage opportunities in the health insurance and pensions markets

      • partner the reconfiguration of mutual insurance companies and health insurance providers

      • develop a loan insurance offering for consumer loans


Personal risk products l.jpg
PERSONAL RISK PRODUCTS

Build personal risk

sales

Premiums €m

1st half 2002

Individual/group

Network

11

Aviposte

8

Resolys /Premunys / Seralys

5

Compte Prévoyance

10

Urgence et Famille

PERSONAL RISK

104

Group policies (companies)

Group policies (mutual insurers

and local authorities)

235

39

Brazilian products

Group policies (financial institutions)

485

LOAN

INSURANCE

73

Group policies (mutual insurers

and local authorities)

87

Brazilian products

Complétys Santé

1

HEALTH

INSURANCE

Group policies (companies)

81

Group policies (mutual insurers

and local authorities)

7


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INCREASED SALES OFUNIT-LINKED PRODUCTS

Build unit-linked

sales

Individual insurance In €m

% Savings turnover

Change2001

2002

2001

602 952 - 37% 9%

1,575 924 + 70% 23%

49 197 - 75% 7%

Total * 2,262 2,117 + 6.8% 16%

* Including unit-linked sales via other channels (Véga Finance, etc.)


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PRODUCT NEWS

Build unit-linked

sales

Nuances 3D unit-linked contract a resounding success

  • Launch decided in November 2000 when agreement with Savings Banks was negotiated

  • Launched in October 2001

  • First-half 2002 premium income:€1.88bn o/w €0.9bn in unit-linked

  • Reasons for success

    • asset allocation assistance (Horizon formula)

    • Innovation prize in March 2002 (le Revenu)


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    CONTENTS

    • How did CNP succeed in remaining one step ahead in last year's falling stock markets?

    • Strategy Focus on the most profitable products

      InternationalBrazil: strong potential for future business and value growth

    • Outlook


    Robust growth in brazil l.jpg
    ROBUST GROWTHIN BRAZIL

    In BRLm

    Brazil: Caixa Seguros

    Change(2) 2002 / 2001

    2002

    Savings585 + 53%

    Pensions269 + 36%

    Personal risk274 + 106%

    Loan insurance391 + 47%

    Property & Casualty301 + 43%

    Total 1,820(1) + 53%

    • €643m

    • Up 53% in BRL and 5.5% in euros on a full-year basis compared with 2001


    Brazil update on the caixa seguros acquisition l.jpg
    BRAZILUpdate on the Caixa Seguros acquisition

    • Value of 2002 new business, including tax benefit:BRL 137m

    • Excluding currency effect = Accretive impact in 2002

    • Currency effect:

      • €9.5m dilutive effect in 2002

      • translation adjustment: - €60m (€0.4/share)

      • goodwill impairment test: no impairment


    Brazil update on the caixa seguros acquisition25 l.jpg
    BRAZILUpdate on the Caixa Seguros acquisition

    • Goodwill deducted from embedded value

    • Partial hedging of book goodwill to be continued in 2003

    Goodwill


    Brazil update on the caixa seguros acquisition26 l.jpg
    BRAZILUpdate on the Caixa Seguros acquisition

    • Exclusive 20-year agreement with Brazil's second largest banking network, Caixa Economica Federal

    • Business development

      • Highly committed sales network

      • Revamped product offer

    • Massive reduction in operating costs

    Outlook


    Contents27 l.jpg
    CONTENTS

    • How did CNP succeed in remaining one step ahead in last year's falling stock markets?

    • Strategy Focus on the most profitable products

    • InternationalBrazil: strong potential for future business and value growth

      Outlook


    Current issues l.jpg
    CURRENT ISSUES

    • Pensions reform in France

    • New product opportunities arising from the proposed reform?

    • Individual pension products


    Dividend l.jpg
    DIVIDEND

    • Dividend (excluding avoir fiscal tax credit):€1.49 /share, up 7.2%

    • Payout rate: 36%


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    2003 TARGETS

    Barring an abrupt deterioration of the environment

    • Turnover growth in excess of the market

    • Recurring profit on a par with 2002, provided there are no changes in tax rules and no new provisions to cover fall in stock markets

    • Share price at a premium to Embedded Value


    Slide31 l.jpg

    CNP Assurances on line:www.cnp.frBrigitte MOLKHOUInvestor [email protected]+33 1 42 18 77 27CNP Assurances4, place Raoul dautry75716 Paris Cedex [email protected]


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