EuroBusiness Media (EBM): CNP Assurances, France's largest personal insurer, just reported full year earnings for 2007. Gilles Benoist, welcome.
Gilles Benoist (GB): Hello
EBM: You are the CEO of CNP Assurances, what are your comments on the company’s performance in 2007?
GB: Well, we have qualified this performance as ‘robust’ and to my opinion it is a good illustration of the solidity of the business model of the company. With a 35% increase in the recurring profit, 14% increase in the European ‘embedded value’ and an 18% increase in the value of new business, these figures are very clear on the capacity of the company to be performant, even in bad weather. And last but not least, the shareholders will have an increase by 24% of the dividend.
EBM: As you know, investors are quite concerned about the current financial crisis and its impact, in particular when it comes to asset backed securities. Could you give us a situation update about the level of your exposure and the impact for CNP.
GB: For the second time, it’s clearly robust. We’ve been very transparent on that exposure. You know that our direct exposure on sub-prime is zero; that our indirect exposure is only 10 million euros compared with 240 billion euros in assets, and so it’s not really astonishing that at the end of a very deep and great study on all the ABS portfolios, the final impact on the result is only 41 million euros, plus 6 million euros on the balance sheet. It’s a very limited and very, very modest impact, and it means that our model is very resistant.
EBM: Your main market, the French life insurance market, has been showing a dramatic slowdown since the beginning of 2008. What is your outlook in the short and medium-term in the French market and what are the consequences for CNP?
GB: Well the French Federation forecast for 2008 is a global, stable market, but a slight decrease in individual savings products - minus 2%. We share that opinion. It is clear - and it was already visible in December - that there is a competition between savings products and short-term liquid banking products, such as Livret A or other products. But this will not last for years, and it is clear that one day or another, the two major problems for people in France -- meaning retirement and long-term care -- will make them come back to long-term savings, and of course, to life insurance. As far as CNP is concerned, as more than 80% of our revenues are coming from assets managed, the impact of such “accidents” on the new premiums has a limited impact on our results, and this is the reason why we dare to give a guidance of a minimal double digit increase of our recurring profit for 2008.
EBM: Well, speaking of 2008, what is your outlook for the full year?
GB: Well, looking at the fundamentals of the company and trying really to make the market understand what we are and what we are able to do, even if the times are not so easy, we dare to say that we are able -- without any dramatic event in the market -- to achieve a double digit increase in our recurring profit for this year.
EBM: Gilles Benoist, CEO of CNP Assurances, thank you very much.
GB: Thank you.
