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CNP Assurances — Earnings Release 2019
Jul 29, 2019
1208_iss_2019-07-29_9f972585-1934-4b04-88fa-ece8bf7cb2cf.pdf
Earnings Release
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PRESS RELEASE
Paris, 29 July 2019
First-Half 2019 Results
Premium income of €17.6 billion, up 3.6% Net profit of €687 million, up 2.3%
HIGHLIGHTS
- Premium income of €17.6 billion, up 3.6% (up 4.6% like-for-like1 )
- Proportion of Savings/Pensions premiums represented by unit-linked contracts still high, at 39.2% (versus 42.2% in first-half 2018)
- APE margin of 16.9%, reflecting the impact of lower interest rates in Europe
- EBIT of €1,566 million, up 4.4% (up 6.2% like-for-like1 )
- Attributable net profit of €687 million, up 2.3% (up 3.3% like-for-like1 )
- Net operating free cash flow of €846 million, up 4.6%
- Consolidated SCR coverage ratio2 of 169% (versus 187% at 31 December 2018), also reflecting the impact of lower interest rates in Europe
The 2019 interim financial statements of CNP Assurances were reviewed by the Board of Directors at its meeting on 26 July 2019 and are subject to completion of the Statutory Auditors' review. This press release includes a certain number of alternative performance measures (APMs). These APMs and their calculation method are presented in the Investor/Analyst section of the CNP Assurances website www.cnp.fr/en/Investor-Analyst (2019 Results).
1 Average exchange rates:
First-half 2019: Brazil: €1 = BRL 4.34; Argentina: €1 = ARS 46.83
First-half 2018: Brazil: €1 = BRL 4.14; Argentina: €1 = ARS 26.11
2 176% excluding the advance recognition of the payment due under the new distribution agreement in Brazil (194% at end-2018)
Antoine Lissowski, CNP Assurances' Chief Executive Officer, said:
"CNP Assurances delivered a solid business performance in the first half despite the exceptionally low interest rate environment in Europe.
In Europe, we demonstrated our business model's ability to withstand a sluggish market by consolidating our positions in the unit-linked savings and term creditor insurance segments.
In Latin America, we posted impressive growth, outperforming the market to become Brazil's third largest insurance company.
In this environment, net profit was up 2.3%. Disciplined cost management is helping to drive further improvement in the cost/income ratio, and we are continuing to transform the business."
1. First-half 2019 premium income and APE margin
Consolidated premium income for the period totalled €17.6 billion, up 3.6% (up 4.6% like-for-like).
In France, premium income rose by 3.9% to €11.9 billion.
In Savings/Pensions, premium income amounted to €9.8 billion, an increase of 5.3%. Gains at CNP Patrimoine in the premium savings segment (up €1.0 billion) and at La Banque Postale (up €0.2 billion) more than offset the slower inflow of new money from the BPCE network. Unit-linked sales remained high, at 20.4% of Savings/Pensions premiums (versus 22.9% in first-half 2018) in a sluggish market and despite a decline in "Fourgous" transfers. Savings/Pensions net new money reflected a €1.4 billion net outflow from traditional products and a €1.2 billion net inflow to unit-linked contracts.
Personal Risk/Protection premium income contracted by 2.0% to €2.1 billion. Personal Risk and Health insurance premiums fell by 13.7% to €0.7 billion, due to a more selective approach that led to contract terminations at the end of 2018. Term Creditor Insurance premiums rose by 5.3% to €1.4 billion, driven by the La Banque Postale and BPCE networks. The increase also reflected the positive effect of prior-year adjustments.
The APE margin declined to 13.3% (from 19.7% in 2018), due to the impact of lower interest rates on Savings/Pensions margins assessment.
In Europe excluding France, premium income amounted to €2.5 billion, a decrease of 5.3%.
Savings/Pensions premium income contracted by 8.1% to €2.0 billion. The strong €0.3 billion increase in premium income recorded by CNP Luxembourg partly offset the decline in premiums at CNP UniCredit Vita and CNP Partners (down €0.5 billion) in an Italian insurance market hit by the withdrawal of certain tax-advantaged products. The unit-linked weighting remained very high, at 60.6% of total Savings/Pensions premiums in first-half 2019, compared with 71.7% in first-half 2018. Net new money for the period reflected a €0.5 billion net inflow to unit-linked contracts and a €0.2 billion net inflow to traditional products.
Personal Risk/Protection premium income rose 6.8% to €0.5 billion, with growth led mainly by CNP Santander but also by an increase in new money at CNP UniCredit Vita.
The APE margin in the Europe excluding France region was 18.8% in first-half 2019, versus 16.9% for the whole of 2018.
In Europe, All told, premium income totalled €14.4 billion, an increase of 2.2%. The APE margin stood at 14.0% versus 19.3% for the whole of 2018, reflecting the significant adverse effect of the economic environment.
In Latin America, premium income amounted to €3.2 billion, up 10.6% (up 16.3% at constant exchange rates).
Savings/Pensions premium income grew 16.7% (up 22.5% at constant exchange rates) to €2.4 billion, led by strong sales of pensions contracts. Unit-linked contracts remained the dominant product, accounting for 98.6% of premium income.
In Personal Risk/Protection, premium income contracted by 4.9% (but rose 0.5% excluding the currency effect), despite the growth in Term Creditor Insurance premiums (up 5.0% at constant exchange rates) following Caixa Econômica Federal's decision to increase originations in some segments of its lending business.
Caixa Seguradora continued to outperform the Brazilian insurance market, lifting its market share to 11.4% from 9.9% at end-2018.
The APE margin remained high, at 28.7% (versus 30.1% for the whole of 2018) in an environment shaped by very strong growth in the pensions business.
Average net technical reserves stood at €318.3 billion, compared with €313.4 billion in first-half 2018.
2. First-half 2019 results
Net insurance revenue (NIR) rose 9.1% to €1,607 million, up 11.1% like-for-like.
In France, net insurance revenue was up 6.6% at €919 million, including €576 million generated by the Savings/Pensions business and €343 million by the Personal Risk/Protection business.
In Europe excluding France, net insurance revenue surged by 32.9% to €149 million, breaking down as €38 million from the Savings/Pensions business and €110 million from the Personal Risk/Protection business.
In Latin America, net insurance revenue grew 8.0% (up 14.0% at constant exchange rates) to €539 million, including €113 million from the Savings/Pensions business and €426 million from the Personal Risk/Protection business.
Revenue from own-funds portfolios amounted to €405 million, representing a decline of 13.4% (down 12.5% like-for-like).
Total revenue came to €2,012 million, an increase of 3.7% (up 5.4% like-for-like).
Administrative costs amounted to €446 million, up 1.1% (up 2.7% like-for-like).
The cost/income ratio showed further improvement, at 27.8% versus 30.0% in first-half 2018.
EBIT was up 4.4% at €1,566 million (up 6.2% like-for-like).
Attributable net profit came to €687 million, an increase of 2.3% (up 3.3% like-for-like). Earnings per share amounted to €0.96, up 1.4%.
Net operating free cash flow generated in first-half 2019 totalled €846 million (up 4.6%) or €1.23 per share.
IFRS book value stood at €17.1 billion at 30 June 2019, representing €24.9 per share, while MCEV© was €21.0 billion or €30.6 per share.
The consolidated SCR coverage ratio was 169% at 30 June 2019 (187% at 31 December 2018), after taking into account repayment of the USD 500 million subordinated notes issue in July 2019.
*****
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
% change (like-for-like) |
|---|---|---|---|---|
| Premium income | 17,570 | 16,955 | +3.6 | +4.6 |
| Average net technical reserves | 318,345 | 313,364 | +1.6 | - |
| Total revenue | 2,012 | 1,941 | +3.7 | +5.4 |
| Net insurance revenue (NIR), of which: | 1,607 | 1,474 | +9.1 | +11.1 |
| France | 919 | 862 | +6.6 | +6.6 |
| Latin America | 539 | 499 | +8.0 | +14.0 |
| Europe excluding France | 149 | 112 | +32.9 | +32.9 |
| Revenue from own-funds portfolios | 405 | 467 | -13.4 | -12.5 |
| Administrative costs, of which: | 446 | 441 | +1.1 | +2.7 |
| France | 291 | 291 | +0.2 | +0.2 |
| Latin America | 92 | 93 | -0.4 | +7.5 |
| Europe excluding France | 63 | 58 | +8.0 | +8.0 |
| Earnings before interest and taxes (EBIT) | 1,566 | 1,499 | +4.4 | +6.2 |
| Finance costs | (128) | (122) | +4.7 | +4.7 |
| Non-controlling and net equity accounted interests | (270) | (221) | +21.8 | +28.4 |
| Attributable recurring profit | 1,168 | 1,156 | +1.1 | +2.1 |
| Income tax expense | (370) | (397) | -6.7 | -5.3 |
| Fair value adjustments and net gains (losses) | 124 | 122 | +1.7 | +2.5 |
| Non-recurring items | (235) | (209) | +12.3 | +12.6 |
| Attributable net profit | 687 | 672 | +2.3 | +3.3 |
APPENDICES
Premium income by country
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
% change (like-for-like) |
|---|---|---|---|---|
| France | 11,908 | 11,460 | +3.9 | +3.9 |
| Brazil | 3,173 | 2,862 | +10.9 | +16.2 |
| Italy | 1,428 | 1,927 | -25.9 | -25.9 |
| Luxembourg(1) | 501 | 163 | +207.9 | +207.9 |
| Germany | 233 | 240 | -2.8 | -2.8 |
| Spain | 143 | 141 | +1.5 | +1.5 |
| Cyprus | 78 | 74 | +6.1 | +6.1 |
| Poland | 45 | 40 | +14.6 | +14.6 |
| Denmark | 12 | 9 | +32.8 | +32.8 |
| Norway | 12 | 10 | +20.8 | +20.8 |
| Austria | 12 | 4 | +163.7 | +163.7 |
| Argentina | 11 | 16 | -30.4 | +24.9 |
| Portugal | 3 | 3 | +14.2 | +14.2 |
| Other International | 10 | 8 | +28.5 | +28.5 |
| Total International | 5,662 | 5,496 | +3.0 | +6.0 |
| Total | 17,570 | 16,955 | +3.6 | +4.6 |
(1) Corresponds to CNP Luxembourg premium income
Premium income by segment
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
% change (like-for-like) |
|---|---|---|---|---|
| Savings | 11,273 | 10,886 | +3.5 | +3.6 |
| Pensions | 2,908 | 2,630 | +10.6 | +15.0 |
| Personal Risk | 823 | 935 | -12.0 | -10.1 |
| Term Creditor Insurance | 2,162 | 2,075 | +4.2 | +5.0 |
| Health | 208 | 239 | -12.9 | -12.6 |
| Property & Casualty | 196 | 190 | +3.4 | +7.8 |
| Total | 17,569.8 | 16,955.4 | +3.6 | +4.6 |
Premium income by country and by segment
| (in € millions) | Savings | Pensions | Personal Risk |
Term Creditor Insurance |
Health | Property & Casualty |
Total |
|---|---|---|---|---|---|---|---|
| France | 9,294 | 525 | 534 | 1,381 | 174 | 0 | 11,908 |
| Brazil | 30 | 2,376 | 256 | 325 | 15 | 170 | 3,173 |
| Italy | 1,324 | 5 | 13 | 85 | 0 | 0 | 1,428 |
| Luxembourg(1) | 501 | 0 | 0 | 0 | 0 | 0 | 501 |
| Germany | 0 | 0 | 2 | 231 | 0 | 0 | 233 |
| Spain | 92 | 2 | 0 | 49 | 0 | 0 | 143 |
| Cyprus | 27 | 0 | 7 | 0 | 19 | 26 | 78 |
| Poland | 0 | 0 | 5 | 41 | 0 | 0 | 45 |
| Denmark | 0 | 0 | 0 | 12 | 0 | 0 | 12 |
| Norway | 0 | 0 | 0 | 12 | 0 | 0 | 12 |
| Austria | 0 | 0 | 0 | 12 | 0 | 0 | 12 |
| Argentina | 3 | 0 | 6 | 2 | 0 | 0 | 11 |
| Portugal | 0 | 0 | 0 | 3 | 0 | 0 | 3 |
| Other International | 1 | 0 | 0 | 9 | 0 | 0 | 10 |
| Total International | 1,979 | 2,383 | 289 | 781 | 34 | 196 | 5,662 |
| Total | 11,273 | 2,908 | 823 | 2,162 | 208 | 196 | 17,570 |
(1) Corresponds to CNP Luxembourg premium income
Premium income by region and by partner/subsidiary
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| La Banque Postale | 4,553 | 4,308 | +5.7 |
| BPCE | 3,732 | 4,367 | -14.5 |
| CNP Patrimoine | 1,846 | 848 | +117.6 |
| Companies, local authorities and mutual insurers | 1,001 | 1,143 | -12.5 |
| Financial institutions (France) | 604 | 620 | -2.6 |
| Amétis | 153 | 156 | -2.1 |
| Other France | 19 | 17 | +16.8 |
| Total France | 11,908 | 11,460 | +3.9 |
| Caixa Seguradora (Brazil) | 3,173 | 2,862 | +10.9 |
| CNP UniCredit Vita (Italy) | 1,356 | 1,774 | -23.6 |
| CNP Luxembourg (Luxembourg) | 501 | 163 | +207.9 |
| CNP Santander Insurance (Ireland) | 381 | 359 | +5.9 |
| CNP Partners (Spain) | 133 | 220 | -39.6 |
| CNP Cyprus Insurance Holdings (Cyprus) | 80 | 76 | +5.5 |
| CNP Assurances Compañía de Seguros (Argentina) | 11 | 16 | -30.4 |
| Other International | 27 | 26 | +6.0 |
| Total International | 5,662 | 5,496 | +3.0 |
| Total | 17,570 | 16,955 | +3.6 |
Unit-linked sales by region and by partner/subsidiary
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| La Banque Postale | 659 | 699 | -5.7 |
| BPCE | 514 | 1,021 | -49.7 |
| CNP Patrimoine | 771 | 350 | +120.4 |
| Amétis | 44 | 52 | -15.6 |
| Other France | 16 | 18 | -11.7 |
| Total Unit-linked France | 2,004 | 2,140 | -6.3 |
| Caixa Seguradora (Brazil) | 2,374 | 2,039 | +16.4 |
| CNP UniCredit Vita (Italy) | 915 | 1,318 | -30.6 |
| CNP Partners (Spain) | 32 | 104 | -69.3 |
| CNP Luxembourg (Luxembourg) | 209 | 74 | +181.2 |
| CNP Cyprus Insurance Holdings (Cyprus) | 27 | 27 | +0.8 |
| Total Unit-linked International | 3,557 | 3,563 | -0.2 |
| Total Unit-linked | 5,561 | 5,702 | -2.5 |
Unit-linked sales as a proportion of Savings/Pensions premiums by region
| (in € millions) | Savings/Pensions | o/w Unit-linked | o/w Traditional | % Unit-linked |
|---|---|---|---|---|
| France | 9,819 | 2,004 | 7,815 | 20.4 |
| Latin America | 2,408 | 2,374 | 34 | 98.6 |
| Europe excluding France | 1,953 | 1,183 | 770 | 60.6 |
| Total | 14,180 | 5,561 | 8,619 | 39.2 |
Premium income from partnership with La Banque Postale
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| Savings | 4,261 | 3,998 | +6.6 |
| Pensions | 192 | 222 | -13.3 |
| Personal Risk | 10 | 11 | -4.0 |
| Term Creditor Insurance | 90 | 77 | +15.9 |
| Total | 4,553 | 4,308 | +5.7 |
Premium income from partnership with BPCE
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| Savings | 3,041 | 3,752 | -19.0 |
| Pensions | 57 | 56 | +1.5 |
| Personal Risk | 59 | 63 | -5.9 |
| Term Creditor Insurance | 575 | 496 | +15.9 |
| Total | 3,732 | 4,367 | -14.5 |
Caixa Seguradora premium income by segment in BRL
| (in BRL millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| Savings | 132 | 85 | +54.6 |
| Pensions | 10,314 | 8,447 | +22.1 |
| Personal Risk | 1,111 | 1,136 | -2.2 |
| Term Creditor Insurance | 1,413 | 1,340 | +5.5 |
| Health | 66 | 162 | -59.1 |
| Property & Casualty | 739 | 682 | +8.4 |
| Total | 13,775 | 11,852 | +16.2 |
CNP UniCredit Vita premium income by segment
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| Savings | 1,295 | 1,720 | -24.7 |
| Pensions | 5 | 5 | +1.4 |
| Personal Risk | 12 | 9 | +39.5 |
| Term Creditor Insurance | 44 | 40 | +8.5 |
| Total | 1,356 | 1,774 | -23.6 |
CNP Santander Insurance premium income by country
| (in € millions) | H1 2019 | H1 2018 | % change (reported) |
|---|---|---|---|
| Germany | 233.0 | 239.4 | -2.7 |
| Poland | 45.3 | 39.5 | +14.6 |
| Spain | 39.3 | 34.4 | +14.3 |
| Italy | 18.7 | 16.8 | +11.5 |
| Denmark | 12.2 | 9.2 | +32.8 |
| Norway | 12.1 | 10.0 | +20.8 |
| Austria | 11.8 | 4.5 | +163.7 |
| Sweden | 4.9 | 3.8 | +29.4 |
| Finland | 2.3 | 1.9 | +19.4 |
| Belgium | 1.0 | 0.1 | n.m. |
| Netherlands | 0.1 | 0.0 | n.m. |
| Total | 381 | 359 | +5.9 |
INVESTOR CALENDAR
- Nine-month 2019 results indicators: Friday, 15 November 2019 at 7:30 a.m.
This press release, along with all of CNP Assurances' regulated information published in accordance with Article L.451-1-2 of the French Monetary and Financial Code and Articles 222-1 et seq. of the Autorité des Marchés Financiers' General Regulations, is available on the Group's investor information website https://www.cnp.fr/en/thecnp-assurances-group/investors.
About CNP Assurances
A benchmark player in the French personal insurance market, CNP Assurances is active in 19 countries in Europe and Latin America, with a significant presence in Brazil, its second largest market. Acting as an insurer, co-insurer and reinsurer, CNP Assurances develops innovative personal risk/protection and savings/pensions solutions.
It has more than 37 million personal risk/protection insureds worldwide and more than 14 million savings/pensions policyholders. In line with its business model, the Group's solutions are distributed by multiple partners. The solutions are aligned with each partner's physical or digital distribution model, while also being tailored to local clients' needs in each country.
CNP Assurances has been listed on the Paris Stock Exchange since October 1998. The Group reported net profit of €1,367 million in 2018.
Contacts
Press Florence de Montmarin | +33 (0)1 42 18 86 51 Tamara Bernard | +33 (0)1 42 18 86 19 Investors and analysts Nicolas Legrand | +33 (0)1 42 18 65 95 Jean-Yves Icole | +33 (0)1 42 18 86 70 Typhaine Lissot | +33 (0)1 42 18 83 66 Julien Rouch | +33 (0)1 42 18 94 93
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Disclaimer:
Some of the statements contained in this presentation may be forward-looking statements referring to projections, future events, trends or objectives that, by their very nature, involve inherent risks and uncertainties that may cause actual results to differ materially from those currently anticipated in such statements. These risks and uncertainties may concern factors such as changes in general economic conditions and financial market performance, legal or regulatory decisions or changes, changes in the frequency and amount of insured claims, changes in interest rates and foreign exchange rates, changes in the policies of central banks or governments, legal proceedings, the effects of acquisitions and divestments, and general factors affecting competition. Further information regarding factors which may cause results to differ materially from those projected in forward-looking statements is included in CNP Assurances' filings with the Autorité des Marchés Financiers. CNP Assurances does not undertake to update any forward-looking statements presented herein to take into account any new information, future event or other factors.
Certain prior-period information may be reclassified on a basis consistent with current year data. The sum of the amounts presented in this document may not correspond exactly to the total indicated in the tables and the text. Percentages and percentage changes are calculated based on unrounded figures and there may be certain minor differences between the amounts and percentages due to rounding. CNP Assurances' final solvency indicators are submitted post-publication to the insurance supervisor and may differ from the explicit and implicit estimates contained in this document.
This document may contain alternative performance measures (such as EBIT) that are considered useful by CNP Assurances but are not recognised in the IFRSs adopted for use in the European Union. These measures should be treated as additional information and not as substitutes for the balance sheet and income statement prepared in accordance with IFRS. They may not be comparable with those published by other companies, as their definition may vary from one company to another.