FINANCIAL STATEMENTS 101 4.1. Consolidated fi nancial statements 102 4.2. Notes to the consolidated fi nancial statements 113 4.3. Statutory Auditors’ report on the consolidated fi nancial statements 210 4.4. Company fi nancial statements at 31 December 2009 212 4.5. Notes to the Company fi nancial statements 219 4.6. Statutory Auditors’ report on the fi nancial statements 258
2009 Signing in June of a long-term (25-year), exclusive partnership agreement with Barclays, which was strengthened by the creation in September of a joint venture called Barclays Vida y Pensiones Compañia de Seguros (BVP) to distribute a full range of life insurance and pension products in Spain, Portugal and Italy.
Thanks to this longstanding experience, CNP Assurances is ideally placed to track economic and social changes and offer appropriate solutions to clients.
Effective financial management is also essential in the Pensions business, since investment performance is anticipated to some extent in the valuation rate of interest applied to benefits, and in the Personal Risk business, where it helps to optimise premium rates.
* Dividend to be recommended at the Annual General Meeting to be held on 25 May 2010.
Additionally, after noting the disparity between forecasts contained in the 2008-2012 business plan, and actual 2008 figures and company forecasts for 2009 at the start of the year, the committee expressed concern as to whether the business plan was in tune with the new economic and financial paradigm. It made known to the Board its desire to see a review conducted on the core metrics determining the Company’s future.
This report describes the situation within CNP Assurances, but also addresses the procedures for the control and management of subsidiaries.
The internal control system is built around a reference framework comprising internal delegations of authority and documentation such as the Internal Control Charter and the Code of Conduct. Bodies whose specific duty it is to manage risks, under the auspices of the Audit Committee and the Board of Directors, are presented in a subsequent section of this report.
Strategic planning consists of rolling down to the lowest level in the organisation the medium-term strategies proposed by the Executive Committee and approved by the Board of Directors.
Miscellaneous (holiday indemnities, EPI, bonus, company car) 12,904.87 10,220.49 totAl REmUNERAtIoN – ChIEf ExECUtIvE offICER 917,229.87 943,420.49 xavier larnaudie-Eiffel, deputy Chief Executive officer Antoine lissowski, deputy Chief Executive officer gérard ménéroud, deputy Chief Executive officer Jean-Pierre walbaum, deputy Chief Executive officer
Giving an average remuneration per Executive Committee member (CEO + Deputy CEOs): 582,239.93 590,882.56
■ Société Foncière de la CNP (SCI), representative of CNP Assurances, legal manager.
■ Gimar Finance (SCA), representative of CNP Assurances on the Supervisory Board (term expired on 27 April 2005).
■ Société Nationale Immobilière - SNI (SAEM), Chairman of the Supervisory Board.
Alain Quinet was elected to the Board of Directors by the General Meeting of 21 April 2009 to fill the seat left vacant by the resignation of Dominique Marcel. His current term expires at the Annual General Meeting to be called in 2012 to approve the 2011 financial statements.
■ Société Forestière de la Caisse des dépôts (SA), member of the Board of Directors.
■ Transdev (SA), representative of Financière Transdev, member of the Board of Directors.
■ Grévin et Compagnie (SA), representative of Compagnie des Alpes, Director.
Business address: BPCE, 50 avenue Pierre Mendès France, 75013 Paris, France.
■ Caisse Nationale des Caisses d’Epargne (CNCE), Chairman of the Executive Board (term expired 31 July 2009).
The French Government was elected to the Board of Directors by the General Meeting of 10 July 2007. Its current term expires at the Annual General Meeting to be called in 2012 to approve the 2011 financial statements.
After serving on the Supervisory Board of CNP Assurances since 8 June 2004, Philippe Baumlin was elected to the Board of Directors by the General Meeting of 10 July 2007. His current term expires at the Annual General Meeting to be called in 2012 to approve the 2011 financial statements.
After serving on the Supervisory Board of CNP Assurances since 7 June 2005, Henri Proglio was elected to the Board of Directors by the General Meeting of 10 July 2007. His current term expires at the Annual General Meeting to be called in 2012 to approve the 2011 financial statements.
■ Veolia Eau (SCA), member of the Supervisory Board (since 30 December 2009, formerly non-partner legal manager until 27 November 2009).
Bonus 319,000 (of which 209,000 as an employee and 110,000 as a corporate officer for 2008)
319,000 (of which 209,000 as an employee and 110,000 as a corporate officer for 2008)
Jean-Louis de Mourgues * Also a member of a committee of the Board. (1) Philippe Baumlin decided to pay his total fees to CDC Tiers-Monde, a charity operating in developing countries.
Not applicable Not applicable Not applicable Not applicable Not applicable * Tables 4 to 9: to date, there are no stock option or performance share plans for any CNP Assurances senior executives or employees.
CNP Assurances set up a defined benefit supplementary pension plan as approved by the 20 December 2005 Supervisory Board meeting. The Board of Directors’ meeting held on 18 December 2007 authorised the amendment of this plan following the change in governance structure.
In particular: ■ the forecasting system provides the basis for analysing the components of profit, assessing forecast profitability and measuring the impact of product decisions on future profits; ■ embedded value and new business calculations reflect the business’s current capital resources and its ability to create value. Each year, differences between forecast and actual value creation are analysed and presented at the same time as the financial statements.
General forecasting system Asset and liability projections are produced annually, in the fourth quarter, and used to calculate participation rates for the year, as well as to produce current period and future forecasts.
Other reinsurance treaties are set up for strategic and commercial reasons. Applications have been developed to monitor reinsured portfolios, in order to track results and facilitate exchanges with reinsurers.
The hedging programme is extended each year, to keep pace with growth in assets under management.
We performed our procedures in accordance with professional standards applicable in France. These standards require us to perform procedures to verify that the information given to us agrees with the underlying documents.
On 4 March 2008, the Board of Directors approved an addendum to Mr. Benoist’s employment contract. The addendum was drawn up in application of the “TEPA” Act of 21 August 2007 (Act no. 2007-1223) amending Article L.225-42-1 of the French Commercial Code. Pursuant to this addendum the payment of the benefit provided for in the event of dismissal (except for serious or gross misconduct) or forced retirement, was subject to the accomplishment, by Gilles Benoist, of a performance condition.
In this context, the amendments made to Gilles Benoist’s employment contract and corporate office are as follows: ■ the contractual termination benefit shall only be paid in the event of dismissal for any reason other than gross or serious misconduct, and shall correspond to the accumulated total of: ■ the termination benefit provided for in the applicable collective bargaining agreement (in the case of either dismissal or forced retirement) calculated based on his length of service with the Group since 1 October 1987,
Pursuant to this agreement, CNP Assurances gives full powers to Natixis AM to manage – in its name and on its behalf, or in the name and on behalf of its insurance subsidiaries – the portfolios referred to in the agreement and the cash deposited in a related account, subject to compliance with the applicable regulations and the investment guidelines and instructions issued by CNP Assurances.
2.12 Agreement for the issue of perpetual subordinated notes between CNP Assurances and Caisse Nationale des Caisses d’epargne et de Prévoyance
Standard & Poor’s press release stated its belief that CNP Assurances will likely continue to maintain a very strong position in the French life insurance market and that it remains wellpositioned to capitalise on growth opportunities in that market.
(2) CNP Vita’s premium income under IFRS includes certain reclassifications made in application of IAS 39. To better reflect the subsidiary’s sales performance, information provided in this paragraph is presented on a French GAAP basis.
In € millions 2009 chg. 2009 chg. 2009 chg. 2009 chg. 2009 chg. 2009 chg. 2009 chg.
Average insurance and financial liabilities (excluding deferred participation reserve) 253,110.0 238,515.7 6.1%
operating profit, corresponding mainly to revenue plus net investment income less contract administration costs, administrative expenses and commissions, amounted to €1,724.3 million.
As concerns fair value adjustments, 2008 was characterised by the steep decline in financial markets whereas 2009 benefited from the market turnaround.
3.4.1. IlResults 3.4.1.1. mCEv© (1) AS of 31 dECEmbER 2009 2009 mCEv© before payment of 2009 dividends 2008 mCEv© after payment of 2008 dividends 2008 mCEv© before payment of 2008 dividends
PVNBP (Present Value of New Business Premiums) 28,309 24,664 3,645 15%
■ an increase in unrealised capital gains in policyholder participation and equity.
Time value of options and guarantees (1,419) (1,400) (19) 0 (19)
The scope considered was that of all the Group’s entities that have a material impact on the value of the CNP Assurances Group and its subsidiaries in France and abroad.
Analytically, the ANAV is determined based on the consolidated Group share at the valuation date and breaks down into “required capital” and “free surplus”.
Annual Premium equivalent (APe) The APE is a sales volume indicator that corresponds to onetenth of the sum of one-off premiums and flexible premiums written during a given year plus the amount of regular premiums during that same year. Unlike the IFRS premium income, the APE generated through New Business is defined on the basis of the premium written by the CNP Assurances Group net of reinsurance and co-insurance. Furthermore, the exchange rate corresponds to the rate at 31 December 2009 and not to the average rate used to define IFRS premium income.
In compliance with MCEV© Principle 14, CNP Assurances included a liquidity premium based on the above-mentioned reference curve for product families for which the liabilities are deemed to be illiquid. These include euros savings and retirement business and annuity portfolios. The liquidity premium was valued on the basis of corporate bond spreads, which is determined as the margin above the swap rate of the iBoxx Euro Corporates bond index. Only one-third of this premium was included in the reference curve, i.e., 16 bp. In 2008, the corresponding liquidity premium stood at 70 bp.
In 2009, the absenteeism rate was 5.8%, or 4.5% excluding maternity leave. The absenteeism rate for the Group was 4.7%, or 3.7% excluding maternity leave.
15. Training For CNP Assurances, the training budget represented 5.8% of payroll in 2009, versus 5.1% in 2008. In 2009, 72.7% of employees, including 1,170 management grade and 1,051 nonmanagement grade employees, received around 4.2 days of training. There was a significant increase in the number of management training sessions in 2009 and, to a lesser degree, in the number of sessions devoted to personal development (stress management, memory building techniques, etc.). In 2009, the training budget of the Group’s international subsidiaries represented 3.08% of payroll on average and 80% of employees received training.
Other recurring operating income and expense, net 17 236.1 (130.5) (16.7)
- Treasury shares, net of tax 6.9 6.9 6.9 - Changes in scope of consolidation 2.1 0.2 2.4 83.2 85.6 * Other movements in minority interests include shares issued by CNP UniCredit Vita for an amount of €57 million.
Net income and unrealised and deferred gains and losses for the period (166.7) 1,222.4 18.4 1,074.1 172.4 1,246.5 - Deeply-subordinated debt, net of tax 108.0 (70.5) 37.5 (108.0) (70.5)
Cash flows from financing activities correspond to all cash flows leading to a change in the amount and components of equity and financing liabilities, as follows: ■ share issues and cancellations; ■ debt issues and repayments; ■ purchases and sales of treasury stock, dividends paid to owners of the parent and minority shareholders of subsidiaries.
For consolidation purposes, the acquisition balance sheet at 31 August 2009 has been prepared using provisional data. CNP Assurances will record any adjustments to amounts initially recognised within 12 months of the acquisition date (31 August 2009). In particular, goodwill, which amounted to €164.5 million at 31 December 2009, will be remeasured based on the fair value of the subsidiary’s assets and liabilities.
Subject to the customary regulatory approvals, the transaction is expected to close during the first quarter of 2010. At 31 December 2009, Global and Global Vida have been accounted for in accordance with IFRS 5, Non-current assets held for sale and discontinued operations.
On 17 December 2009, CNP Assurances exercised the put option on its 11.34% interest in NGAM, as provided for in the addendum to the memorandum of understanding concluded between CNP Assurances and the Caisse Nationale des Caisses d’Epargne (CNCE) in 2007.
These estimates and the underlying assumptions are based on past experience, regulatory information, generally accepted actuarial principles and other factors considered reasonable under the circumstances.
The adjustments made in application of IFRS 4 lead to the recognition of deferred participation in liabilities.
Assets and liabilities of foreign operations – mainly foreign subsidiaries and independent branches – including goodwill and fair value adjustments recorded on consolidation, are translated into euros at the closing exchange rate.
The Group usually calculates value in use as the net asset value of the CGU plus the present value of expected future revenues from existing portfolios and new business.
AsseTs meAsured AT AmorTised CosT ANd debT iNsTrumeNTs AvAilAble For sAle
■ IAS 19, for contracts taken out in connection with benefit plans in favour of Group employees.
This reserve also includes the deferred participation resulting from the use of shadow accounting.
3.12.3 service contracts (iAs 18) Contracts that do not expose the Group to an insurance risk or for which the insurance risk is not material are qualified as service contracts when they do not give rise to any financial asset or liability. In accordance with IAS 18, revenue from the rendering of services is recognised by reference to the stage of completion of the transaction at the reporting date, provided that the transaction’s outcome can be estimated reliably.
Employee benefit obligations are recognised in full in the balance sheet in accordance with the amendment to IAS 19, except for share grants which are recognised and measured in accordance with IFRS 2.
Perpetual subordinated notes for which the Group determines the timing of interest payments are classified as equity instruments. All other dated and undated debt instruments are classified as financing liabilities.
Cost recognition and allocation: ■ operating expenses are initially recognised by nature and are then reallocated by function; ■ costs recognised by nature that relate to a single function are posted to the function concerned without applying any allocation key.
The recommended 2009 dividend amounts to €3 per share, representing a total payout of €445.6 million.
Related parties comprise subsidiaries, associates and joint ventures and the members of senior management.
subordinated notes issued by a subsidiary and held by the Group, reinsurance and co-insurance transactions between the Group and its subsidiaries and dividends paid by subsidiaries to the Group.
BOULE DE NEIGE 3 3DEC Full France Mutual fund 60.51% 60.51% 60.09% 60.09%
In € millions based on a 100% interest CNP share 50%
finanCial statements4 notes to the consolidated financial statements 7.2.2 Changes in goodwill for the period
Estimated market value using valuation model not based solely on observable market inputs total
Remeasurement at fair value through profit Acquisitions maturity transfers to category 3 (additions)
Financial liabilities – financial instruments without DPF (excluding unit-linked) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
9.7.2 Analysis of the bond portfolio at 31 december 2008 by issuer rating
Non-current liabilities associated with held for sale and discontinued operations (17.3) (17.3) 0.0 mathematical reserves at the end of the period 5,937.3 5,695.2 242.1
Newly-consolidated companies 0.0 0.0 0.0 mathematical reserves at the end of the period 7,881.2 7,553.8 327.4
The insurer’s commitments differ according to the type of contract, as follows: savings contracts: mainly financial commitments Savings contracts fall into two broad categories: ■ non-unit-linked contracts, where the insurer is committed to paying a minimum guaranteed yield plus a share of the investment yield. The yield guarantee may be for a fixed period (generally eight years) or for the entire duration of the contract. The insurer has an obligation to pay the guaranteed capital when requested to do so by the customer, whatever the prevailing market conditions at the time.
Liabilities arising from reinsurance transactions 487.1 0.0 0.0 14.2 othER lIAbIlItIES
Total liability recognised in the balance sheet for pension and other post-employment benefit plans 112.7 90.8 77.2
(5) Fees paid by the Group (or rebilled to CDC). (6) Actuarial gains and losses recognised immediately in equity in line with Group accounting policies. (7) Increase/decrease in interest held in ICDC or other businesses.
Carrying amount of financial instruments measured at amortised cost due within 1 year due in 1 to 2 years due in 2 to 3 years due in 3 to 4 years due in 4 to 5 years beyond 5 years total 21.4.3 Carrying amount at 31 december 2007
Held-to-maturity investments 179 607 472 136 23.1.2 Future cash flows from assets at 31 december 2008
Intended holding period < 1 year 1 to 5 years 5 to 10 years 10 to 15 years
Change in life premium reserves and other technical reserves: (8,896,925) 507,570 (8,389,355) (664,164) 1,163.1%
■ In the absence of any transfer of full and unrestricted ownership, securities pledged or received as collateral are measured at their realisable value in the schedule of commitments given or received.
Insurance liabilities are discounted at a rate that is equal to the highest contractual rate, using regulatory mortality tables or internal experience-based tables if these are more conservative. CNP Assurances also has a regulatory option to defer any changes in mortality tables as these are not systematically allocated to policies. The discount rate applied to annuities takes into account the effects of a fall in interest rates when the contractual rate is considered too high compared with the expected yield from reinvested premiums.
A general reserve is set up for future contract administration costs not covered by the premium loading or by the fees levied on financial products.
finanCial statements4 notes to the company financial statements ll NoTe 4 Balance sheet items 4.1 ChANgES IN INtANgIblE ASSEtS, bUIldINgS, ANd INtEREStS IN SUbSIdIARIES
CNP Seguros de Vida (4) M.T. de Alvear EUR 3,816 1,966 23,054 6,060 1,741 76.47% 6 7,585 1,041 0 Insurance
4, Place RaoulDautry – 75015 Paris – France EUR 125,813 170,341 8,483,507 125,770 125,770 100.00% 0 216,592 23,031 60,638 Insurance
District, Beijing, PR of China EUR 21,081 20,733 66,855 12,250 12,250 50.00% 0 27,997 1 0 Insurance
Paris – France EUR NA NA NA 9,769 4,769 27.84% 0 NA NA 0
FONCIÈRE CNP Non-trading property company 4, Place Raoul-Dautry – 75015 Paris – France
KLEMURS Partnership limited by shares 21 avenue Kléber – 75116 Paris – France
WHITEHALL 2008 Partnership limited by shares 9-11 Grande-Rue – L-1661 Luxembourg 4.5 owNERShIP StRUCtURE
finanCial statements 4 notes to the company financial statements 4.7.2 Accrued receivables and payables
Income and expenses from investments in subsidiaries other financial income and expense total
Technical reserves – start of period 619,640 56,998 173,010,655 1,580,646 1,657,736 3,580,893 18,876,084 960,606 10,173,310 522,253 275,479 211,314,300 * Including PERP plans in accordance with Article L.441.
Caisse Nationale des Caisses d’Epargne et de Prévoyance EUR 90 4.93% until 2016 then Euribor 160 bps from 15.11.16 Undated
The first resolution concerns approval of the financial statements of the Company for the year ended 31 December 2009. It is followed by a resolution which, in accordance with French law, proposes that shareholders formally approve the consolidated financial statements of CNP Assurances.
This appointment complies with the relevant provisions of CNP Assurances’ Articles of Association.
AUthoRISAtIoN foR thE boARd of dIRECtoRS to ImPlEmENt A ShARE bUybACk PRogRAmmE. mAxImUm PURChASE PRICE: €140 PER ShARE (SEvENth RESolUtIoN)
ExPIRy of thE RESPECtIvE tERmS of offICE of thE ComPANy’S PRINCIPAl ANd dEPUty StAtUtoRy AUdItoRS (EIghth ANd NINth RESolUtIoNS)
First resolution (Approval of the financial statements of the Company for the year ended 31 December 2009)
The recording of shares in the accounts of bearer shares held by the financial intermediary is evidenced by a share ownership certificate (or proof of registration). This certificate is issued by the financial intermediary and must be appended to the postal voting form, the request for a share certificate reserved solely for holders of bearer shares that wish to attend the General Meeting by Internet, the proxy form or the admission card request drawn up in the name of the shareholder or on behalf of the shareholder that is represented by the financial intermediary.
The above disclosure thresholds are an addition to the disclosures of thresholds provided for by law”.
■ decides that the stock options granted may not be exercised prior to the end of a four-year vesting period as from the date of grant of such stock options by the Board of Directors; ■ decides within these limits and in accordance with the legislation in force that the Board of Directors shall have full powers to grant the stock options and set the conditions under which they will be granted. For this purpose, the Board of Directors is authorised in particular: ■ to provide for the lock-up clauses for all or part of the shares purchased although the lock-up period thus imposed may not exceed the regulatory period for retention of the shares in force as from the date of exercise of the stock option; ■ to set the terms and conditions of the stock options, and where applicable the criteria to be met by the beneficiaries, such as the maintenance in effect of an employment contract or a corporate office in the Company or a company affiliated with the Company under the conditions of Article L.225-180 of the French Commercial Code; ■ to decide on the conditions under which the price and the number of shares to which the stock options granted give entitlement may be adjusted during the life of the stock option, in accordance with the terms and conditions provided for in Article L.225-181 of the French Commercial Code, particularly in the event of financial transactions referred to by these provisions, that are liable to affect the value of the CNP Assurances share; ■ to temporarily suspend the right to exercise the stock options in particular if the transactions result in an adjustment in the purchase price.
additional information about the ComPany and its CaPital5 general information 5.3.5. Ilchanges in ownership structure over the last three years
of which: of which: of which: of which: CNP Assurances (treasury shares) 447,639 0.30% –
of which: of which: of which: of which: CNP Assurances (treasury shares) 504,263 0.34% –
Following the transfer of CNP Assurances to the private sector, the French State continued to hold a residual stake of approximately 2.24% of the Company’s capital.
CNP Assurances and Barclays set up a long term life bancassurance partnership in Southern Europe (25 June 2009)
Notice sent to shareholders of Annual General Meeting of 21 April 2009 (4 March 2009)
BALO of 18 March 2009 containing an amended notice of the Annual General Meeting of 21 April 2009
As part of this corporate policy, CNP Assurances’ Executive Board – the decision-making body under the former governance structure – implemented two share grant plans. The first plan took effect on 5 July 2006 and the second on 19 June 2007.