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CNP Assurances Earnings Release 2020
1208_10-q_2020-05-15_1c71e116-202d-4514-b385-42959cb699ea.pdf
Earnings Release
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Press Release
Paris, 15 May 2020
Quarterly indicators – First three months of 2020
Premium income of €6.9 billion Attributable net profit of €299 million SCR coverage ratio of 218%
Highlights
- Premium income of €6.9 billion, down 17.0%1 (down 14.4% at constant exchange rates2 )
- Decline in Savings/Pensions business in France, reflecting a softer market and more selective underwriting policies
- Premium income in Brazil up 7.6% in local currency, but down 6.4% as reported due to the real's weakness against the euro
- 48% of total premium income derived from unit-linked products, with a €1.0 billion net inflow to unit-linked Savings/Pensions products and a €1.7 billion net outflow from traditional Savings/Pensions products
- EBIT of €621 million, down 3.0% as reported (up 2.6% like-for-like)
- Attributable net profit of €299 million, down 8.2% as reported (down 4.5% like-for-like)
- APE margin of 15.6%
- Consolidated SCR coverage ratio of 218%
Antoine Lissowski, CNP Assurances' Chief Executive Officer, said:
"First-quarter results are solid. Any additional impact will have to be measured in the first half of the year. Overall, CNP Assurances has a very solid business model and balance sheet, as reflected in its high solvency ratio. Since the start of the Covid-19 crisis, our teams have worked tirelessly to continue to provide professional services that raise the bar in personal protection. In keeping with its corporate values, the company contributes to the outpouring of solidarity as we serve our policyholders and the populations most affected by the crisis."
First-quarter 2020: Brazil: €1 = BRL 4.92; Argentina: €1 = ARS 67.81 First-quarter 2019: Brazil: €1 = BRL 4.28; Argentina: €1 = ARS 44.28
1First-quarter 2019 premium income has been restated to exclude the top line contribution of Fourgous and Eurocroissance transfers for a total of €290 million, breaking down as €149 million for the BPCE network (of which €48 million in unit-linked premiums) and €141 million for the La Banque Postale network (of which €26 million in unit-linked premiums). Fourgous and Eurocroissance transfers in the first quarter of 2020 were not material.
2 Average exchange rates:
CNP Assurances | Headquarters: 4, place Raoul Dautry 75716 Paris cedex 15 – 00 33 1 42 18 88 88 I www.cnp.fr I French société anonyme with paid-up share capital of €686,618,477 I Registered in Paris, RCS 341 737 062 – Company governed by the French Insurance Code (Code des assurances)
Covid-19 impacts
Several Covid-19 related developments affected the Group's first-quarter earnings performance:
- Exceptional commercial measures have been adopted that go beyond the Group's contractual obligations, such as paying daily allowances for vulnerable policyholders and for childcare costs. These measures were originally expected to have a negative impact of €23 million on first-quarter profit but the estimate has now been raised to €50 million.
- Contribution to the solidarity fund set up by the government to help micro-enterprises and the self-employed. The original contribution of €12 million for the first quarter has now been doubled to €24 million.
- Financial market movements adversely affected the investment income during the period.
- Distribution activities were sharply reduced following the closure in March of bank branches and post offices due to the Covid-19 lockdown.
The business has been re-organised, with nearly 98% of the workforce working from home. The various home-working initiatives deployed in recent years had already been tested during the strikes of December and January, ensuring a smooth transition to the new organisation.
The decline in first-quarter premium income, due to a combination of unfavourable financial market conditions and the Group's more selective approach to new business, cannot be attributed solely to Covid-19. Results for the quarter provide only a limited view of the epidemic's probable impact on the Group's financial metrics. The full impact will depend on how the epidemic develops, how long the lockdown lasts, and how the financial markets and the personal insurance market are affected.
1. First-quarter 2020 premium income and APE margin
Consolidated premium income for the period came to €6,852 million, down 17.0% as reported (down 14.4% at constant exchange rates).
In France, premium income declined 25.2% to €4,181 million.
Savings/Pensions premium income was down 30.4%, at €3,166 million (with €1,735 million generated by La Banque Postale and €1,038 million by BPCE). The decline in Savings/Pensions premiums generated by the two historical distribution networks reflected the market environment and application of a marketing strategy specifically designed for the low interest rate environment, with a focus on transfers and stricter underwriting policies. Unit-linked products accounted for 21.4% of total Savings/Pensions premium income. Savings/Pensions net new money reflected a €0.3 billion net inflow to unit-linked contracts, and a €1.6 billion net outflow from traditional products.
Personal Risk/Protection premium income dipped 2.4% to €1,015 million, as a result of prior year adjustments for the term creditor insurance business (which remained buoyant in the first quarter) that were partly offset by 3.4% growth in employee benefit plan premiums.
The APE margin narrowed to 8.2% from 12.3% in first-quarter 2019, due to unfavourable economic effects and a negative volume effect resulting from lower unit-linked new money in the Savings segment.
In Europe excluding France, premium income amounted to €1,224 million, an increase of 8.9%.
Savings/Pensions premiums increased by 11.3%. CNP UniCredit Vita enjoyed strong growth, with Savings premiums up 42.4%. This performance was attributable to the sales drive focused on 100% unit-linked products and the late-January launch of a new traditional savings product with a unit-linked formula (Mixa Protection). In the first quarter of 2020, unit-linked contracts accounted for 78.1% of total Savings/Pensions business.
Premium income from Personal Risk/Protection business rose 1.0% to €261 million. CNP Santander's solid momentum (with premiums up 3.5%) offset lower term creditor insurance premiums in Italy.
The APE margin was stable at 21.4%.
The contribution of Latin America to consolidated premium income was adversely affected by the real's weakness against the euro. Premium income for the period was down 6.4% as reported, at €1,447 million, but was up 7.7% in local currency.
Savings/Pensions premium income amounted to €1,092 million, down 5.0% as reported but up 9.2% at constant exchange rates. Caixa Seguradora continued to enjoy strong momentum in the Pensions segment, helped by a favourable market environment and Caixa Econômica Federal's marketing focus on insurance products in the period to mid-March when the country went into lockdown. Caixa Seguradora is still the third largest pensions provider in Brazil, with 18% of the market at end-February. The proportion of Savings/Pensions premiums represented by unit-linked contracts remained very high, at 98.7%.
Personal Risk/Protection premiums came in at €355 million, down 10.4% as reported, but up 3.3% at constant exchange rates reflecting growth in term creditor insurance business (Prestamista).
The APE margin improved slightly, rising to 31.5% from 29.7% at end-2019 thanks to a positive contribution from operations.
The Value of New Business (VNB) written by the Group3 was €100 million in first-quarter 2020.
3 The Value of New Business is calculated on a group share basis.
Quarterly indicators – First quarter 2020 3
CNP Assurances | Headquarters: 4, place Raoul Dautry 75716 Paris cedex 15 – 00 33 1 42 18 88 88 I www.cnp.fr I French société anonyme with paid-up share capital of €686,618,477 I Registered in Paris, RCS 341 737 062 – Company governed by the French Insurance Code (Code des assurances)
Average consolidated net technical reserves for the quarter totalled €322.8 billion, compared with €316.1 billion for the year-earlier period, an increase of 2.1%.
2. Quarterly indicators – First three months of 2020
Net insurance revenue (NIR) came to €701 million, down 2.2% as reported and up 3.3% at constant exchange rates.
In France, net insurance revenue declined by 4.8% to €374 million, after taking into account the €23 million in reserves set aside to cover the effects of the current health crisis.
In Europe excluding France, net insurance revenue was up a strong 10.1% at €72 million, driven by excellent momentum in CNP UniCredit Vita's unit-linked business.
In Latin America, net insurance revenue came to €255 million, down 1.2% as reported. Excluding the negative currency effect, the period-on-period change was an increase of 13.9%, reflecting an improved loss experience and increased term creditor insurance volumes.
Revenue from own-funds portfolios of €140 million was down 5.1% as reported (down 2.6% at constant exchange rates), due to lower yields on proprietary bond portfolios in France.
Total revenue came to €841 million, down 2.7% as reported and up 2.3% at constant exchange rates.
Administrative costs of €220 million were down 1.8% as reported and up 1.2% at constant exchange rates. In France, administrative costs dipped by 0.2% to €147 million.
The cost/income ratio was just 0.1-point higher at 31.3%.
At €621 million, EBIT was down 3.0% as reported (up 2.6% at constant exchange rates).
Attributable net profit came in at €299 million, down 8.2% as reported and down 4.5% at constant exchange rates.
IFRS book value was €15.9 billion, representing €23.2 per share compared to €24.6 per share at 31 March 2019.
The consolidated SCR coverage ratio was 218% at 31 March 2020 versus 227% at end‑2019. The decline was due to unfavourable financial market trends – with interest rates and stock prices both down on the previous period –, the effect of which was partly offset by the adoption of the simplified economic method of calculating the portion of the policyholders' surplus reserve included in surplus own funds. The change of the ratio between 31 December 2019 and 31 March 2020 breaks down as follows: 1-point increase due to the creation of capital net of dividends, 20-point decrease due to changes in the financial markets and 10-point increase due to the change in the method of including the policyholders' surplus reserve in Tier 1 capital.
The first-quarter 2020 results indicators, on which CNP Assurances' Statutory Auditors do not provide an opinion, were reviewed by the Board of Directors at its meeting on 14 May 2020. This press release includes a certain number of alternative performance measures (APMs). These APMs and their calculation method are presented in the Investors section of the CNP Assurances website at https://www.cnp.fr/en/the-cnp-assurancesgroup/investors/results/results-presentation/2020-results.
| (in € millions) | Q1 2020 | Q1 2019 | % change (reported) |
% change (like-for-like) |
|---|---|---|---|---|
| Premium income | 6,852 | 8,2594 | -17.0 | -14.4 |
| Average net technical reserves | 322,770 | 316,063 | +2.1 | - |
| Total revenue | 841 | 863 | -2.7 | +2.3 |
| Net insurance revenue (NIR), of which: | 701 | 716 | -2.2 | +3.3 |
| France | 374 | 393 | -4.8 | -4.8 |
| Latin America | 255 | 258 | -1.2 | +13.9 |
| Europe excluding France | 72 | 66 | +10.1 | +10.1 |
| Revenue from own-funds portfolios | 140 | 147 | -5.1 | -2.6 |
| Administrative costs, of which: | 220 | 223 | -1.8 | +1.2 |
| France | 147 | 148 | -0.2 | -0.2 |
| Latin America | 38 | 45 | -14.5 | +0.1 |
| Europe excluding France | 34 | 31 | +9.3 | +9.3 |
| Earnings before interest and taxes (EBIT) | 621 | 640 | -3.0 | +2.6 |
| Finance costs | (64) | (63) | +1.6 | +1.6 |
| Non-controlling and net equity accounted interests |
(124) | (126) | -2.0 | +11.3 |
| Attributable recurring profit | 434 | 451 | -3.9 | +0.4 |
| Income tax expense | (143) | (146) | -2.2 | +2.9 |
| Fair value adjustments and net gains (losses) | 43 | 91 | -52.8 | -52.3 |
| Non-recurring items | (34) | (69) | -51.1 | -50.8 |
| Attributable net profit | 299 | 326 | -8.2 | -4.5 |
Quarterly indicators – First quarter 2020 5
4First-quarter 2019 premium income has been restated to exclude the top line contribution of Fourgous and Eurocroissance transfers for a total of €290 million, breaking down as €149 million for the BPCE network (of which €48 million in unit-linked premiums) and €141 million for the La Banque Postale network (of which €26 million in unit-linked premiums). Fourgous and Eurocroissance transfers in the first quarter of 2020 were not material.
CNP Assurances | Headquarters: 4, place Raoul Dautry 75716 Paris cedex 15 – 00 33 1 42 18 88 88 I www.cnp.fr I French société anonyme with paid-up share capital of €686,618,477 I Registered in Paris, RCS 341 737 062 – Company governed by the French Insurance Code (Code des assurances)
APPENDICES
Premium income by country
| (in € millions) | Q1 2020 | Q1 2019 | % change | % change (like-for-like) |
|---|---|---|---|---|
| France | 4,181 | 5,589 | -25.2 | -25.2 |
| Brazil | 1,442 | 1,540 | -6.4 | +7.6 |
| Italy | 949 | 675 | +40.5 | +40.5 |
| Germany | 117 | 116 | +0.4 | +0.4 |
| Cyprus | 43 | 39 | +10.1 | +10.1 |
| Spain | 35 | 82 | -56.9 | -56.9 |
| Luxembourg | 32 | 167 | -80.6 | -80.6 |
| Poland | 23 | 22 | +4.1 | +4.1 |
| Austria | 6 | 5 | +17.4 | +17.4 |
| Norway | 6 | 5 | +8.1 | +8.1 |
| Denmark | 5 | 5 | +6.4 | +6.4 |
| Argentina | 5 | 6 | -19.2 | +23.7 |
| Portugal | 1 | 2 | -41.9 | -41.9 |
| Other International | 6 | 5 | +19.6 | +19.6 |
| Total International | 2,671 | 2,670 | 0.0 | +8.2 |
| Total | 6,852 | 8,259 | -17.0 | -14.4 |
Premium income by segment
| (in € millions) | Q1 2020 | Q1 2019 | % change | % change (like-for-like) |
|---|---|---|---|---|
| Savings | 3,905 | 5,168 | -24.4 | -24.4 |
| Pensions | 1,316 | 1,397 | -5.8 | +5.7 |
| Personal Risk Insurance | 398 | 400 | -0.6 | +4.1 |
| Term Creditor Insurance | 1,049 | 1,097 | -4.4 | -2.3 |
| Health Insurance | 92 | 99 | -6.9 | -6.2 |
| Property & Casualty | 92 | 98 | -6.5 | +5.4 |
| Total | 6,852 | 8,259 | -17.0 | -14.4 |
Quarterly indicators – First quarter 2020 6
Premium income by country and by segment
| Q1 2020 | |||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | Savings | Pensions | Personal Risk |
Term Creditor Insurance |
Health Insurance |
Property & Casualty |
Total |
| France | 2,933 | 233 | 263 | 674 | 78 | 0 | 4,181 |
| Brazil | 12 | 1,079 | 114 | 155 | 4 | 79 | 1,442 |
| Italy | 899 | 4 | 7 | 39 | 0 | 0 | 949 |
| Germany | 0 | 0 | 3 | 114 | 0 | 0 | 117 |
| Cyprus | 16 | 0 | 4 | 0 | 10 | 13 | 43 |
| Spain | 10 | 0 | 1 | 24 | 0 | 0 | 35 |
| Luxembourg | 32 | 0 | 0 | 0 | 0 | 0 | 32 |
| Poland | 0 | 0 | 3 | 21 | 0 | 0 | 23 |
| Austria | 0 | 0 | 0 | 6 | 0 | 0 | 6 |
| Norway | 0 | 0 | 0 | 6 | 0 | 0 | 6 |
| Denmark | 0 | 0 | 0 | 5 | 0 | 0 | 5 |
| Argentina | 1 | 0 | 3 | 1 | 0 | 0 | 5 |
| Portugal | 0 | 0 | 0 | 1 | 0 | 0 | 1 |
| Other International | 1 | 0 | 0 | 5 | 0 | 0 | 6 |
| Total International | 972 | 1,083 | 134 | 376 | 14 | 92 | 2,671 |
| Total | 3,905 | 1,316 | 398 | 1,049 | 92 | 92 | 6,852 |
Quarterly indicators – First quarter 2020 7
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| La Banque Postale | 1,793 | 2,039 | -12.1 |
| BPCE | 1,340 | 1,804 | -25.8 |
| CNP Patrimoine | 233 | 908 | -74.4 |
| Social protection partners (France) | 471 | 459 | +2.5 |
| Financial institutions (France) | 287 | 300 | -4.4 |
| Amétis | 50 | 70 | -29.0 |
| Other France | 8 | 8 | -6.5 |
| Total France | 4,181 | 5,589 | -25.2 |
| Caixa Seguradora (Brazil) | 1,442 | 1,540 | -6.4 |
| CNP UniCredit Vita (Italy) | 902 | 645 | +39.8 |
| CNP Luxembourg (Luxembourg) | 32 | 167 | -80.6 |
| CNP Santander Insurance (Ireland) | 193 | 187 | +3.5 |
| CNP Partners (Spain) | 39 | 72 | -45.5 |
| CNP Cyprus Insurance Holdings (Cyprus) | 44 | 40 | +10.1 |
| CNP Assurances Compañía de Seguros (Argentina) | 5 | 6 | -19.2 |
| Other International | 13 | 13 | -3.1 |
| Total International | 2,671 | 2,670 | n.m. |
| Total | 6,852 | 8,259 | -17.0 |
Premium income by region and by partner/subsidiary
Unit-linked sales by region and by partner/subsidiary
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| La Banque Postale | 329 | 293 | +12.1 |
| BPCE | 202 | 240 | -15.8 |
| CNP Patrimoine | 133 | 396 | -66.4 |
| Amétis | 14 | 19 | -29.4 |
| Other France | (1) | 4 | -115.8 |
| Total Unit-linked France | 677 | 953 | -29.0 |
| Caixa Seguradora (Brazil) | 1,078 | 1,133 | -4.9 |
| CNP UniCredit Vita (Italy) | 691 | 411 | +67.9 |
| CNP Partners (Spain) | 24 | 11 | +125.3 |
| CNP Luxembourg (Luxembourg) | 21 | 71 | -70.5 |
| CNP Cyprus Insurance Holdings (Cyprus) | 16 | 13 | +21.0 |
| Total Unit-linked International | 1,830 | 1,640 | +11.6 |
| Total Unit-linked | 2,507 | 2,593 | -3.3 |
Unit-linked sales as a proportion of Savings/Pensions premiums by region
| Q1 2020 | ||||
|---|---|---|---|---|
| (in € millions) | Savings/Pensions | o/w Unit-linked | o/w Traditional | % Unit-linked |
| France | 3,166 | 677 | 2,489 | 21.4 |
| Latin America | 1,092 | 1,078 | 14 | 98.7 |
| Europe excluding France | 963 | 752 | 211 | 78.1 |
| Total | 5,221 | 2,507 | 2,714 | 48.0 |
Premium income from partnership with La Banque Postale
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| Savings | 1,646 | 1,889 | -12.8 |
| Pensions | 89 | 100 | -10.8 |
| Personal Risk Insurance | 6 | 6 | +3.2 |
| Term Creditor Insurance | 52 | 45 | +15.4 |
| Total | 1,793 | 2,039 | -12.1 |
Premium income from partnership with BPCE
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| Savings | 1,010 | 1,429 | -29.3 |
| Pensions | 27 | 30 | -7.6 |
| Personal Risk Insurance | 26 | 28 | -7.3 |
| Term Creditor Insurance | 276 | 317 | -13.1 |
| Total | 1,340 | 1,804 | -25.8 |
Caixa Seguradora premium income by segment in BRL
| (in BRL millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| Savings | 57 | 63 | -10.7 |
| Pensions | 5,305 | 4,850 | +9.4 |
| Personal Risk Insurance | 560 | 572 | -2.2 |
| Term Creditor Insurance | 760 | 696 | +9.2 |
| Health Insurance | 22 | 40 | -44.7 |
| Property & Casualty | 386 | 365 | +5.8 |
| Total | 7,089 | 6,586 | 7.6 |
CNP UniCredit Vita premium income by segment
Quarterly indicators – First quarter 2020 10
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| Savings | 875 | 614 | +42.4 |
| Pensions | 4 | 3 | +20.3 |
| Personal Risk Insurance | 7 | 6 | +17.6 |
| Term Creditor Insurance | 17 | 22 | -22.8 |
| Total | 902 | 645 | +39.8 |
CNP Santander Insurance premium income by country
| (in € millions) | Q1 2020 | Q1 2019 | % change |
|---|---|---|---|
| Germany | 116.9 | 116.5 | +0.3 |
| Poland | 23.2 | 22.3 | +4.1 |
| Spain | 21.2 | 19.3 | +9.6 |
| Italy | 9.8 | 9.1 | +8.3 |
| Norway | 5.9 | 5.4 | +8.1 |
| Denmark | 5.5 | 5.2 | +6.4 |
| Austria | 6.0 | 5.1 | +17.4 |
| Sweden | 2.9 | 2.4 | +21.7 |
| Finland | 1.3 | 1.1 | +9.8 |
| Belgium | 0.7 | 0.5 | n.m. |
| Netherlands | 0.1 | 0.0 | n.m. |
| Total | 193 | 187 | +3.5 |
Investor Calendar
- First-half 2020 premium income and profit: Monday, 3 August 2020 at 7:30 a.m.
- Nine-month 2020 results indicators: Thursday, 19 November 2020 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 at www.cnp.fr/en/investor-analyst.
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 €1,412 million in 2019.
| 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 |
| [email protected] | |
Quarterly indicators – First quarter 2020 12
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Disclaimer:
Some of the statements contained in this document 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.