EuroBusiness Media (EBM): Groupama, one of Europe’s largest mutual insurance companies, is releasing its results for the first half of 2011. Christian Collin, welcome. You are Groupama’s Chief Financial & Risk Officer. What are the highlights of this first half year?
Christian Collin: We achieved solid, high-quality performance in operational and technical terms. Our economic operating income increased 76%, so we were able to absorb the cost of the rescue plan for Greece.
In operational and technical terms, it’s worth noting that in non-life insurance, in property and casualty insurance, our combined ratio improved significantly – down 5 points to 99.6%, due to better control of our claims ratio, which has decreased in France and most other countries in Europe.
Our property and casualty business has been growing substantially. Revenue in the first half was up 4.5%, and even 4.7% in France, meaning we outperformed the market. We did so by adjusting rates and expanding our portfolio of contracts.
In personal life insurance, our revenue was down 11%, in line with the overall trend in a market where tax and financial uncertainty has affected savings products.
But it’s important to point out that in the first half we grew the share of revenue we earn from provident and health insurance. And in savings products, the volume of unit-linked policies quadrupled to reach 12.4% of our total portfolio, versus just 3% last year.
EBM: From a more financial standpoint, how has the sovereign debt crisis impacted Groupama, particularly the Greek crisis?
Christian Collin: Groupama has agreed to support the rescue plan for Greece, and our first-half accounts reflect that move, with a provision covering 21% of the Greek government bonds in our portfolio that mature in 2020 and earlier. That translates into a net expense of 84 million euros in our consolidated income statement, and 88 million euros for the Group as a whole.
But I must emphasise that after that provision, our net profit shows a 16% increase to 147 million euros, and that our solvency margin has held steady at 130%. And needless to say, our support for the rescue plan will in no way hinder our ability to offer policy-holders substantial returns on their savings, in line with the market.
EBM: The economic and financial environment is getting tougher. What is your response?
Christian Collin: I agree that the insurance industry is facing a tougher economic and financial environment. Our response has been to take steps to improve profitability. As you’ve certainly observed, we’ve halted our external growth policy which I consider is a reasonable approach.
To improve our technical and operational performance, we’ve introduced a full range of measures that are still ongoing. In non-life insurance, we’ve adjusted our rates, while carrying on with our risk selection and portfolio monitoring efforts. Those measures are starting to pay off. As I mentioned, our combined ratio in the first half is down to 99.6%. And our medium-term target is 98%, give or take two points, depending on the insurance cycle.
In life insurance, we’ve gone further in promoting our health and provident insurance offer, as well as our unit-linked savings products, which require less equity. That approach has already improved results, because our margin on new business has risen from 3.7% to 7.2% at 30 June.
Finally, we’ve maintained all our prior programmes to control overheads, and we’ve even taken additional steps to boost profitability at our main subsidiaries. For example, on 2 August, we disposed of our healthcare arm in the U.K. We are also working to merge Gan Eurocourtage with Groupama Transport to streamline both businesses. Our Portuguese subsidiary is now affiliated with our Spanish subsidiary in non-life insurance, and our business in Slovakia with our Hungarian subsidiary to maximise scale and performance. And our current project for Gan Assurances is to consolidate management locations, both to boost efficiency and to address small and large businesses more effectively.
EBM: Profitability obviously takes top priority, but what about growing your various businesses?
Christian Collin: Well, we’ve pulled out all the stops to sustain our business and organic growth, both through our distribution networks and online. We have been reaping the benefits of our successful web subsidiary Amaguiz. At 30 June, Amaguiz was a year ahead of its business plan, with 95,000 motor insurance and 25,000 home insurance contracts in its portfolio. Amaguiz will also be rolling out a healthcare offer, probably in the autumn.
Along the same lines, we’ve “rebooted” Clickseguros, our online sales website in Spain, with an advertising campaign already under way. Another major project involves launching a direct sales insurance offer in Poland, almost certainly in early 2012.
In addition to direct sales, we have a number of highly promising partnerships. Our joint venture with Banque Postale, in which we hold a 35% interest, has been doing well, with close to 1,000 new contracts a day, especially given we haven’t even launched an advertising campaign.
EBM: Christian Collin, Groupama Chief Financial & Risk Officer, thank you very much.
Christian Collin: Thank you.
