EuroBusiness Media (EBM): Gilles Benoist, welcome. You are the CEO of CNP Assurances, France's largest personal insurer. You just reported your full year earnings for 2005. What are your comments on the company's overall performance in 2005?
Gilles Benoist (GB): Well, I think we can say that 2005 was a very good year. As you know, we are doing business in three main countries: naturally our main country is France, but also Italy since 2005, and Brazil. The markets were good in these three countries, and we have had good performance in all three. And the result of that is of course in the new IFRS norms: a very good increase of the operating profit -- plus 24%; a very good, sharp increase in the net profit -- plus 46%; and a very good new embedded value -- I will give you both versions: the old one was nearly 55 euros per share, and the new European embedded value from the CFO Forum is very nearly 60 euros, which is a 10% increase in embedded value from 2005 to 2006.
EBM: You sell proportionally fewer unit-linked products than your competitors. How would you rate your ability to close that gap?
GB: Well, as you know, the gap is historical, due to the past activities of our networks. But if you look at the second half performances of the three networks, then you can see that all the networks have sharply improved their sales in unit-linked products, thanks to campaigns that we have organized in which the minimum percentage of unit-linked products in the new sales were to be at a minimum of 20 to 25%. This was for 2005. Of course we are continuing in 2006 at the same accelerated pace, and in France we are the most important player, with the greatest amount of old bond contracts. The new law in France allows us to transform these contracts -- in the pure interest of the company and the customers -- without keeping the tax historical for the customers, and avoiding certain social taxes for the customers, by including in the newly transformed products with a minimum of 20% or more of unit linked products. In France this is called the 'Fourgous Amendment' in the law, and we clearly intend to give our customers the incentive to carry out this transformation in order to obtain better returns on their contracts.
EBM: With your recent acquisition of Fineco Vita, what is your progress report on your business in Italy? How well are you doing versus your peers in the Italian market?
GB: Well, it is very clear that the performance of Fineco Vita, which is now known as CNP Capitalia Vita, has clearly outperformed the Italian market by going from 1.9 billion euros of premiums in 2004 to 2.8 billion euros in 2005, which comes to more than 1% more market share in Italy in bank insurance. So the networks were very good, and we hope that they will continue to perform at this high level.
EBM: What are the next steps you plan to take to further internationalize CNP?
GB: We still want to be bigger in Europe, and we are still looking very attentively at opportunities of course in southern Europe, Spain also, as well as other markets such as Greece and other countries. But we want to avoid degrading CNP's profitability, and not to pay prices that are too high -- and in my opinion the current prices in Spain are too high.
EBM: As interest rates seem to be rising everywhere, how immune are your earnings to further interest rate hikes?
GB: You know that CNP Insurance has always had a very prudent financial policy, being careful to remain protected from the different movements of interest rates. Be it very low interest rates -- you will perhaps remember our resistance to the Japanese scenario? But also to be protected against higher interest rates. If the rise is very brutal and sharp, we will be protected by many caps that we already bought for years, and which will protect a great part of our assets. If the movements, as many economists say, are low, slow and progressive, this will be a very good thing for us. We are happy with that. It is easier to give good returns to policyholders, and it is easier to do the asset/liability management.
EBM: What is your guidance and outlook for 2006? In France, how do you see your topline growth this year compared to the French life insurance market?
GB: Well, life insurance markets this year can be a very high performance market. But this is due to a very specific reason: a great amount of transfers from a banking product specialized in housing (PEL) to life insurance. Of course, one of our two networks, the Savings Banks, had this kind of product -- though not as greatly as some other banks… So our hope is to have a minimum of a double digit increase in premiums.
EBM: And finally, of course this is very much on everybody's mind because it's in the news: one of your major shareholders and distribution networks, the Caisse d'Epargne, seems to be moving towards a merger of some of its activities with those of Natexis Banque Populaire, to create Natixis. So there is much speculation in the market about what this means for CNP Assurances' future. What is your position on the ongoing discussions?
GB: Well, to be clear, as chief executive officer I don't have to make any comment on a project that links two of my four main shareholders. But of course, as you can guess, in the board meeting yesterday the question was asked, and the shareholders have decided they can make a statement on that subject. And as I cannot put it better than the shareholders, I will just summarize their statement. These two companies in the project have, in their public comments, presented the CNP business as being excluded from the Natixis project. The shareholders have unanimously added the following words: "The supervisory board has unanimously reaffirmed, directly and through the public comments of each of the three major shareholders, the commitment of all its members to maintain and sustain the Group business base, as well as their determination to continue in the future to grow the enterprise value of this company, CNP, a quoted group and France's leading life insurer." These are their words.
EBM: Gilles Benoist, thank you very much.
GB: Thank you.
