Pact Law, low rate, marriage Postal Bank: NPC in full transformation

The French leader in life insurance, which La Banque Postale will take control, recorded a 3.6% growth in the first half, driven by Brazil. The reform of retirement savings, coupled with the interest rate environment, will lead the CNP to adapt its offer, while diversifying into non-life insurance.

Operational, digital, regulatory and " new shareholder paradigm  " transformation  : CNP Assurances will undergo profound changes in the coming months. First, the number one French life insurance will change majority shareholder: it will no longer be the Caisse des Dépôts (40.87% of the capital currently), but La Banque Postale (itself a subsidiary of the Post, which will be controlled by the CDC), which will hold 62.13% at the end of their merger to create a large bancassurer.

A new shareholders' agreement will be signed between La Banque Postale and Groupe BPCE (Banques Populaires Caisse d'Epargne), which will hold 16.11%, as announced by both groups on Friday 26 July. The commercial partnership with BPCE was also extended until the end of 2030, potentially until 2050, reinforcing its "  multiparty business model  ", without locking it into an exclusive relationship with La Banque Postale.

After the takeover bid obtained from the Autorité des marchés financiers , the floating capital of CNP, which will remain listed on the stock market, will remain around 22%, said Antoine Lissowski, the director general, Monday, July 29, presenting the first half results.

The former CFO, who has been in charge for one year after Frédéric Lavenir's surprise departure , emphasized   CNP's " strong operational performance " in the first half of the year, "  despite an exceptionally low interest rate environment in Europe  ". left to stay: the European Central Bank (ECB) is even considering lowering rates, potentially as early as September. CNP's revenue grew by 3.6% to € 17.6 billion and net profit by 2.3% to € 687 million.

"The universe of short-term rates will mean a transformation of the life and health insurance business model," said the CNP boss.

Reform of retirement savings

The low interest rate environment requires the Group's "  continued operational transformation  ": the objective is to reduce costs - yet managed with an operating ratio of 27.8% - by digitizing 80% of the processes by 2022, which should result in recurring gains of 45 million euros by 2021. "  Digitization is not a communication gadget: it irrigates all activities,  " said the head of CNP.

Another environmental transformation is the regulatory context, with the reform of retirement savings introduced by the Pact Act , promulgated in May and whose implementing orders have just been published in the OJ. For example, a client may transfer his assets from one contract to another within the same insurance company, without losing the prior art of taxation. Retirement savings will also come to compete with life insurance: a device is planned to encourage savers to transfer their life insurance to a retirement product until January 1, 2023.

"The Pact Act will lead us to work more dynamically and creatively on the outstanding amounts of our clients. The insurers were sitting on important liabilities, the profession was sheltered from the evolutions of time. This law invites us to have a more frequent follow-up of our customers, to verify that the type of contract corresponds to their needs, "said Antoine Lissowski. "Our response will be to renew the customer proposition."

The NPM / CNP's chief executive predicts that some players, including banks, will question the continuation of their life insurance business or the sole maintenance of the most profitable customers (in units of account). He discussed discussions with certain players to buy back their client portfolio.

This more frequent relationship with customers will be enabled by the digital tools, but also by the diversification in non-life insurance provided for in the context of the merger with La Banque Postale.

"The fact that we integrate the P & C [fire, accidents, various risks: coverage of property and not people, ed] will allow to renew the dialogue with customers" put forward Antoine Lissowski.

The group also has ambitions on retirement products where CNP is "  leader with 20% market share  " as part of its joint venture Arial CNP with AG2R La Mondiale incorporated last year (CNP was 3rd and its partner number two of the supplementary pension).

Brazilian engine

If the results are mixed in France (slowdown in the collection of the BPCE network, but dynamism at La Banque Postale, decline in the provident and health business, increase in borrower insurance), activity is growing strongly, moreover 20% (at constant exchange rate) in Brazil, its second largest market (over 18% of sales).

"We are now shareholders of the third Brazilian insurer. Caixa Seguradora increased its market share from 9.9% to 11.4%, "said Antoine Lissowski.

This joint venture with one of Brazil's leading banks, Caixa Economica Federal, outperforms the Brazilian market, which is doing well, with high rates despite more volatile economic growth. CNP has the ambition to strengthen in Brazil. However, the agreement reached in August 2018 on the extension of the exclusive distribution agreement with the CEF from 2021 to 2041 is still not finalized: the new management of the Brazilian bank wants to make "  adjustments  ".

"The new team [of the Caixa Economica Federal] has much stronger ambitions in insurance and wants to change course. We should sign a variant of the agreement: we will ensure that the model is not changed substantially and that there is no change in value, "wanted to reassure the director general of CNP.

The agreement of August 30, 2018 provided for the creation of a new joint insurance company held at 51% of voting rights, but 40% of economic rights by CNP, the balance by a subsidiary of Caixa Economica Federal.

This uncertainty may have weighed on CNP's action. The stock yielded 1.5% on Monday. As a member of the SBF 120 index, CNP capitalizes more than 13 billion euros, more than Natixis (a listed subsidiary of BPCE) for comparison.

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