EuroBusiness Media (EBM): CNP Assurances, France's largest personal insurer, just reported earnings for 2004. Gilles Benoist, welcome. You are the CEO of CNP Assurances. What are your comments on your company's performance in 2004?
Gilles Benoist (GB): My answer would be: good performance, and the figures are there to prove that: a double-digit increase in the premiums: +10%; in the net operating profit: + 12.4%; in the embedded value + 10%; and also in the value of the new business: +31%. So a good year, and only one single digit figure -- in the net result -- the reason for which is known: the abolition in France of tax credit on dividends, which has cost us 3 or 4 points of increase of the result.
EBM: One year ago, you announced that you planned to stabilise your market share. However, it would appear that your market share has decreased for unit-linked products. Is this a matter for concern, and how do you plan to boost La Poste's distribution of unit-linked products?
GB: You are right, the slight decrease in our global market share is only due to unit-linked sales that were more modest than the global market last year. The reason for this was the modest performance of La Poste in that field. So this year we intend to boost unit-linked sales in that network. But don't forget that our global share of the market in managed assets has been remarkably stable, and that means that the persistency of our portfolio is still very good.
EBM: The new PERP private pension product, which was launched last year, has collected roughly 500 million euros for all insurers in France, versus a launch target of 1 billion euros. What are your comments on the relatively slow launch of the PERP in France?
GB: We are not disappointed at all, because it is the largest enlargement of the customer base for CNP Assurances and its main networks. We have taken a very large part of this new market, and this new market is made up of very young customers, who are half the average age of other life insurance customers in France, who enter in the product with no insurance product in their pockets, so they represent a future cross selling field. What is more, they accept monthly amounts given to the product, and they have entered into this product for 25 perhaps 30 years. So we are very pleased, and of course we will go on encouraging our networks, especially as we have very low distribution costs. But we don't practice deferred acquisition costs, so we can afford to have these young customers with modest means.
EBM: You acquired the Italian life insurer Fineco Vita, at the end of last year, for 1.6 times embedded value -- a price some analysts deemed expensive. How is the turnaround of Fineco Vita coming along, and what are your chances of making this a successful international acquisition for CNP Assurances?
GB: Firstly, I don't agree with the analysts, because I have never found a deal in European bank insurance at a price under 1.6 times the embedded value. But of course, like any acquisition, it has to be taken in hand exactly as we have done in Brazil. We just made the closing two or three weeks ago, but already our teams are in Milan. The first premiums that came in through the networks are very coherent with what we were hoping for. The operation is about taking command in the coming months.
EBM: After your Italian acquisition, which brings international business to 10% of total sales, do you plan to pursue the international expansion of CNP Assurances?
GB: It will be higher than that if we find a good opportunity in Europe. That is clear. So it could be 20% -- it will depend on what type of opportunity we can find in Europe, and only there.
EBM: What is your outlook and guidance for CNP Assurances in 2005?
GB: Well, as we are introducing Fineco Vita, we thought it would be better to give our target in terms of global consolidated premium, and not only for France. Our target is an increase in the premiums higher than the figures that are at the present time given for the French market -- between +2% and +6%. And of course, if you know CNP Assurances, insofar as the premiums will be higher and the managed assets will increase, we have another target which is a steady increase of our net result, as we have done now for six years without exception since the IPO.
EBM: What is your forecast on the evolution of interest rates, and should CNP Assurances be affected versus its comparables, considering that your portfolio is heavily balanced towards bonds?
GB: Well, at the present time we think there should be an increase in interest rates before the end of 2005, but this increase will not be a dramatic one. If by chance it was very different, and there was a sharp rise, then we would be protected by all the measures that we have taken, including the hedge measures we have taken that cover more than 19 billion euros of our assets.
EBM: Gilles Benoist, CEO of CNP Assurances, thank you very much.
