EuroBusiness Media (EBM): Groupama, one of Europe’s largest mutual insurance groups, reports 2009 results. Jean Azéma, Groupama CEO, welcome. First, what are your your comments on the Group’s results and performance in 2009, a year of macro-economic slowdown and rising claims ?
Jean Azéma (JA): The economic context was tough, but Groupama’s results were indeed extremely positive. Positive as far as business development, results, and solvency ratio. Revenues grew strongly, up 7% at €17.4 billion. Growth was strong in particular in France, in Eastern Europe and in Southern Europe, where we have a strong presence, and where our business held up well compared to the local markets. Therefore we had very good business development, particularly in personal insurance. Our net income also rose, by 140% to €660 million. And at year-end our solvency ratio was 180% of the minimum requirement. Summing up, 2009 results reflect both the Group’s financial solidity, and the solidity of our strategy.
EBM: What are the highlights of 2009? Particularly in terms of new partnerships, continuing international expansion, synergies and cost optimization?
JA: 2009 was a particularly eventful year for Groupama. Eventful, because as you said we signed the new partnerships with Banque Postale in France, and with Bancaja in Spain. We developed the partnership with OTP Bank in Central Europe. But most importantly, we continued all of our investments in 2009, be they in sales and marketing, in innovation, or in identifying synergies within the Group to improve our operational performance. In sales and marketing, we continued to invest in opening new branches. We opened 25 new high street branches in France, 7 of them in Paris. We also kept on growing our network of exclusive branches in Spain and Italy. We invested in innovation with the launch of Amaguiz, which has nearly 50,000 contracts at year-end 2009. We developed our Internet insurance operations in Spain and the UK, meaning that by the end of 2009, the Group boasted more than 120,000 contracts sold via Internet. We progressed in terms of synergies. We merged all our Life Insurance businesses in France. We merged our two banks in France. We also merged all the companies we acquired in the last few years, in Italy, Turkey and Romania. We continued to rationalize our IT systems and resources, not just in France, but internationally. Groupama Information Systems took over the IT resources of our international subsidiaries, resulting in more synergies. The year was eventful and productive. There were so many things going on, it’s difficult to wrap it all up in a few words. All of the teams contributed largely to making this a successful year.
EBM: What is your update on the strengthening of the Group’s finances, particularly in view of the upcoming Solvency Two regulations?
JA: The Group’s solvency ratio was 180% at year-end 2009, so we’re well above the minimum requirement. Towards the end of 2010 beginning of 2011, we’ll learn what we have to do in 2012 for Solvency Two. We do know that we should reduce our shareholdings in equities and in real estate, that is, in the more volatile assets, given the capital adequacy requirements. Above all, we must roll out training for the entire Group on risk culture. We’ve started training on risk tolerance, and taking into account risk as part of Group governance. Of course, all this training fits within a program already initiated a number of years ago to evolve the Group, and in 2010 ultimately we’re finalizing the adaptation of the Group to Solvency Two.
EBM: We note that Groupama aggressively pursued its international expansion in 2009. What are the next priorities of your international strategy? We recall that an IPO was being planned in support of your international expansion. Is the IPO still an option in today’s market environment?
JA: We made no new acquisitions internationally in 2009 in view of the macroeconomic conditions and, given that 2007 and 2008 were years of acquisitions, we felt that 2009 should be a year of integration, which is what we did. We brought all these subsidiaries up to Group standards regarding reserves, processes and operations. It’s true that the Group’s goal is to be in the top ten European insurance companies, which means of course that we must continue to grow organically. But it also means making what I call a “transforming” acquisition, in the next few years. We had planned a big “transforming” acquisition, followed by an IPO to refinance the acquisition. But given current market conditions, as we exit the peak phase of the financial crisis, and given the new constraints for banks in terms of capital adequacy, it’s unlikely we could find the bridge financing necessary in the few months following such an acquisition. The banks just don’t have the lending capacity any more to help us bridge the gap and finance such an acquisition. So we decided to do it the other way round, i.e. first to list Groupama SA on the stock market, so that we will be in a situation to make the transforming acquisition I just mentioned. It’s a change in tactics, to adapt to the new conditions in the financial markets.
EBM: What is your outlook for 2010? And beyond this year, does your Ambition 2012 remain unchanged despite the crisis?
JA: I think that the 2009 results show that we can continue to grow even when the economy is bad, and that the investments we had made in business development are bearing fruit, and that we can increase our market share in this challenging economic environment. So we go on as before. Our ambitions are unchanged. Our Ambition 2012 is to grow our revenues to around €20 billion organically. This means growing the business by 6% every year for the next three years. Our target for margin and operating profit improvement are unchanged. Groupama is absolutely on course.
EBM: Jean Azéma, CEO of Groupama, thank you.
JA: Thank you.
