EuroBusiness Media (EBM): CNP Assurances, France's largest personal insurer, just reported full year earnings for 2006. Gilles Benoist, welcome. What are your comments on the full year performance of CNP Assurance?
Gilles Benoist (GB): Well, to be very sincere, I don't see any reason not to be very happy. Because when all the figures are increasing by a double digit rate and when the first digit is at 2, meaning that the recurring profit is increasing by 23%, and when the value of new business is increasing by 30% - well I'm very happy. These are the best results of CNP since the IPO.
EBM: What are your comments on the slow-down of the life insurance market in the beginning of this year. It's true that 2006 was exceptionally high and that 2007 is an election year in France, but do you expect a catch-up later in the year once the election is over?
GB: Well sorry to disappoint you - elections have nothing to do with the figures. Because if the market was so high last year, it was that the massive transfer of savings from banking products - PEL - to life insurance represented more than half of the progression of the French market - 9% out of 17% - so the base impact is now coming, because there is no more, or very little flow of PEL, so the market is at a different rhythm. The prediction of the French Federation is only 4 % and the first months are necessarily quite negative.
EBM: What can you tell us today about your prospects for international expansion?
GB: Firstly, we are very happy with the subsidiaries that we already have. But don't forget there's a new baby in the landscape, and this baby is in Spain. We have taken the majority, the exclusive power in Scandia Vida. The closing will happen in a few weeks, and one of our first targets for 2007 is to take the power in Scandia and offer to the savings banks in Spain -- the most dynamic banks in Spain -- new products and new versions of the old products, and try to create a partnership with a certain number of these Cajas.
EBM: You recently agreed to pay higher to your distributors to encourage them to sell more unit-linked products. The new agreement really only becomes profitable for CNP when unit-linked products reach more than 21% of your volume. So, today, since this figure stands at around 17%, how soon can we expect the unit-linked products to reach the 21% mark, at which point the new commission agreement becomes more profitable for you?
GB: Well, I think this new agreement can be profitable before reaching 21%. But our hope is to reach this level - to reach this level of course in 2007 - but look at the landscape of the markets and as you must know there is a great and direct link between the level of the financial markets and the level of sales in unit-links in France. So if the markets are good we can do that with our networks, but if the markets have great problems or drops in their levels, this can be a little later.
EBM: What is your situation report today on your business in Brazil?
GB: Well, five years ago - the moment we decided this operation - many people were sceptical about our ability to make something positive in Brazil, and now it is the most profitable subsidiary of CNP. The premiums have increased by 25%, the result by 32% and the margins on new business are 22%, the double of the margins in Europe, so we are very happy, and if we have opportunities to go higher and be greater in Brazil, we will look at that with great attention.
EBM: Now that the hype over the creation of Natixis has subsided, what is the outlook for the development of your distribution through the network of Banques Populaires?
GB: Distribution is not the right word. I would say that we are beginning to build a partnership with this new network and the first step of this partnership is in credit insurance. We have signed an agreement, we are going to insure the loans of already 4 banks of this network. That's the first step. Of course there will be other banks of this network coming in. Second step, we are discussing another partnership, another agreement on collective insurance and retirement plans, and we will discuss also our partnerships of course in asset management, because we are shareholders -- more than 10% -- of the new, great asset manager that will be Natixis AM. And then perhaps other partnerships, and one day, perhaps, in life insurance. But step by step.
EBM: Gilles Benoist, CEO of CNP Assurances, thank you very much
GB: Thank you.
