Our mission: to develop and manage insurance products 22 From design to launch, an end-to-end approach 24 Tailor-made group products 25 Serving policyholders 27 Businesses and skills 29 A trusted, dynamic asset manager 31
The health insurance and personal risk insurance markets also continued to grow in 2001. Insurers are coming up with an increasingly wide range of personalised offerings, in response to social trends, especially the growing need for solutions to the financing of long-term care.
In October 2001, CNP Assurances launched Nuances 3D, targeted at ordinary savers, and Nuances Plus, a product aimed at the better off. Designed for a competitive and changing market, Nuances 3D offers savers the opportunity to invest in growth funds, greater flexibility, innovative management solutions and a unit-linked offering eligible for inclusion in a PEP account. The product won the special prize for innovation at the Le Revenu 2002 awards. Nuances Plus includes options allowing savers to lock in gains and to earn enhanced yields, as well as an offering qualifying for the “DSK” tax incentive. Nuances Plus will be marketed by a dedicated sales force and will be offered following a review of the client’s personal finances.
Pensions Pensions offerings for both individuals and companies provide an opportunity to build up capital over the long term, in order to supplement the pension received under government-sponsored pay-as-you-go schemes. CNP Assurances is present in three segments of the pensions market: • company pensions, allowing companies of all sizes to provide their employees with a supplementary pension over and above the amount received under the governmentsponsored pay-as-you-go scheme; • civil service pensions, including pensions for elected government officials, in the form of specific defined benefit plans; • personal pensions, with products sold via the networks.
A major acquisition in Brazil On 6 July 2001, CNP Assurances acquired 50.75% of the capital of Caixa Seguros SA, Brazil’s sixth largest insurance company in terms of premium income. The Group lost no time in assuming full management control of the business and launching the first internal reorganisation measures, including by appointing its own directors and managers. Caixa Seguros was set up in 1996 to distribute insurance products via the Caixa Econômica Federal (CEF) banking network and is still
Caixa Seguros was consolidated as from 1 July 2001. The purchase price of EUR 537.2 million breaks down as follows: Equity in net assets EUR 77.4m 14.4%
■ Value of in-force business: discounted present value of the future earnings stream from in-force business less the cost of the capital needed to comply with solvency margin requirements. ■ Embedded value (EV): NAV + value of in-force business.
Share performance in 2001… In 2001, CNP Assurances outperformed both the general French index and the industry index. After a dismal first half, which saw a 12% drop in the CAC 40 and an even greater 15% fall in the DJ Insurance index of European insurance stocks, the stock market was shaken by the terrorist attacks of 11 September 2001 in New York and Washington. Insurance stocks performed badly in 2001, due to market concerns about the level of claims resulting from the December 1999 storms, the terrorist attacks and, in France, the explosion at the AZF plant in Toulouse, coupled with the overall decline in share prices. The DJ Insurance index lost 30.6%
CONTROL AND OVERSIGHT The Supervisory Board met five times in 2001 with an average attendance rate of 80%.
These unrealised capital gains, which represent a future source of investment yield for policyholders and of profits for shareholders, also contribute to the Group’s solvency margin, and as such play the same role as quasi-equity. In 2001, the Group’s solvency margin before unrealised gains represented 109% of the regulatory minimum. This coverage rate reflects the increase in subordinated debt issues, carried out under the authorisation given to the Executive Board by the Annual General Meeting of 6 June 2001.
The Supervisory Board—with extensive back-up from the Audit Committee—examined in detail the transaction terms and conditions, as well as the transfer of operational control of the business to CNP Assurances and the various local management issues.
February 2001: CNP announces its entry into the Brazilian market The acquisition of 50.75% of the capital of Caixa Seguros S.A. announced on 14 February 2001 was completed on 6 July. Caixa Seguros S.A.’s other main shareholder, Caixa Econômica Federal (CEF), is one of Brazil’s leading public banks and the top-ranking player in the savings segment with 25% of the market.
The company was licensed in January 2001 and began marketing its offer at the beginning of the second quarter.
As of 31 January, L’Age d’Or Expansion had 31 employees, including six persons at the company’s headquarters in Troyes, Eastern France. The company and its network of 64 franchisees in France and Belgium generated turnover of approximately EUR 3.2 million in 2001.
CNP Assurances, the AZUR-GMF Group and Mutuelle Générale (MG), came on stream on 5 June. Gespré Europe has already been selected by Assurposte to manage Complétys Santé, a product comprising health insurance and a full range of related services. CNP Assurances and AZUR-GMF both hold 40% of Gespré Europe S.A.’s capital and MG holds 20%.
The novel approach is intended to deliver balanced and lasting partnerships with brokers, thereby serving CNP Assurances’ ambition to become a top provider of personal risk and health insurance to the SME segment.
December 2001: signature of a partnership agreement between Crédit Immobilier de France and CNP Caution
The steep fall-off in activity and lesser inflationary pressures led to an easing of monetary policies. In the USA, the federal funds rate was cut on 11 occasions during 2001, falling from 6.50% in January to 1.75% in December. The European Central Bank lowered its intervention rate by 150 basis points to 3.25% at end-2001. Money-market rates also declined over the same period. 3-month Euribor went from 4.86% in January 2001 to 3.29% at the end of the year. The USA’s 3-month interest rate dropped from 5.89% to 1.73%.
The 3.6% decline in CNP Assurances Savings premium income in France breaks down as follows: – a 7 point decline due to lower transfers from Livret A passbook savings accounts,
In addition, the downward trend in sales of unit-linked products observed in the first half of 2001 continued in the second half, although the rate of decline appears to have levelled off. CNP Assurances’ sales of unit-linked products were down 51.6% to EUR 2,117 million, representing 16% of total Savings premium income, compared with EUR 4,372 million in 2000.
Several major group pension and early-retirement policies were signed in 2001, in an active market which remains focused on very large companies.
Premium income from sales to companies rose by a very satisfactory 7.6% to EUR 778.4 million. Growth was driven mainly by sales of pension and personal risk products.
In Argentina, premium income amounted to EUR 14.5 million. Assets managed by CNP Seguros de Vida represent only EUR 20 million and the effects of the current crisis in Argentina on this subsidiary’s results will not materially affect the results and accounts of CNP Assurances.
Total recurring operating income advanced by 6.9% to EUR 705.3 million, excluding transfers to the capitalisation reserve and the Brazilian operations. After other income and expenses, exceptional items, income from associated companies, restatement of the capitalisation reserve, goodwill amortisation and tax, consolidated net profit for the year climbed by 12.2% to EUR 528.3 million (2000: EUR 470.9 million), under the new consolidation standards. Excluding Brazil, the increase was 14.1%, to EUR 537.4 million.
In 2001, the Group benefited from the application of a lower tax rate to gains on shares sold in connection with tender offers in prior years, which were previously taxed at the standard rate. The related one-off reduction in the deferred tax liability (EUR 56 million) is dealt with in exceptional items. Total earnings, including non-recurring items, rose 10.7% to EUR 584.3 million. Excluding Brazil, the increase was 12.4%.
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2001 At 31 December 2001, the Group had total assets of EUR 145.3 billion (EUR 143.8 billion, excluding Brazil), versus EUR 132.6 billion at end-2000, representing a 9.6% increase (8.4%, excluding Brazil).
1 – Investment management Contracts with similar characteristics are grouped together into categories. Each category of contracts is backed by a portfolio of assets which are managed according to a strategy closely tailored to the profile of the related liabilities.
For each portfolio, CNP defines an investment strategy covering: – asset allocation,
The strategy is then communicated to the portfolio manager who is responsible for implementing it as effectively as possible, within the defined limits, by selecting securities and timing transactions based on market opportunities.
Strategic goals Alongside the development projects outlined above, the CNP Group intends to promote a recovery in demand for unit-linked products which offer satisfactory margins for insurers while holding out the prospect of attractive returns for the insured.
•Sopassure (holding company owned jointly by CNCEP and La Poste), represented by Daniel Caille,
– Fees allocated to the representative of the French State, Jean Bassères: EUR 15,250, paid in full to the French Treasury (Trésor public).
– CDC IXIS Asset Management (SA): permanent representative of CNP Assurances on the Supervisory Board
– Previmut (SA): permanent representative of CNP Assurances on the Board of Directors
– Solstice (Sicav investment fund): Chairman of the Board of Directors
– Société de gestion de CDC Euro Obligations (SA) (Luxembourg): permanent representative of CDC
– CDC IXIS Asset Management (SA): member of the Supervisory Board
– Banque des Antilles françaises: permanent representative of SPPACR on the Board of Directors
– CDC IXIS Capital Market (SA): permanent representative of CNCEP on the Supervisory Board
Accrued income and prepaid expenses 2,719.3 2,656.3 2,380.2 2,661.8 2,387.8 Foreign currency conversion loss 0.9
Gains on investments sold in connection with public tender offers (in excess of gains planned to be realised during the year) 0 370 1,146 Non-recurring profit 56 57 95
Intercompany loans are eliminated from the consolidated balance sheet and profit and loss account.
Equities are stated at cost, excluding transaction expenses. Dividends are credited to the profit and loss account on the payment date, excluding the avoir fiscal tax credit which is deducted from the corporate income tax charge.
For the purpose of computing the liquidity risk reserve, realisable value is determined as follows (section 332-20-1 of the Insurance Code).
– Provisions are recorded to cover any permanent impairment in value of properties or securities. The value of investments is considered as being permanently impaired in the following cases: • The related market is in a lasting downward cycle.
They are recorded in the profit and loss account on the date on which the sale is completed.
Companies accounted for by the equity method CARIVITA 20.00% 20.7 11.5 4.5 CDC IXIS ASSET MANAGEMENT 20.00% 145.0 0.2 3.9 PREVISOL AFPJ 29.84% 7.2 (1.1) 1.0 PREVISOL SEGUROS DE RETIRO 29.82% 0.8 0.2 0.3 PREVISOL SEGUROS DE VIDA 29.87% 0.8 (0.1) 0.2 PROVINCIA SEGUROS DE VIDA 40.00% 5.0 (3.4) 0.1
Property 308.3 313.3 312.5 Property (unit-linked portfolio) Property 308.3 313.3 312.5 Equities and equivalents 1,043.6 1,034.1 908.9 Convertible bonds 45.7 43.7 54.3 Non-voting loan stock 7.9 7.9 10.6 Variable income securities (unit-linked portfolio) Fixed income securities (unit-linked portfolio) 1,097.2 1,085.7 973.8 Bonds and bond funds 1,745.0 1,738.9 1,904.7 Money-market securities 3.4 6.4 6.4 Asset-backed securities Fixed income securities (unit-linked portfolio) Term loans and deposits 0.6 3.8 0.8 Money-market funds 165.3 205.1 10.4 Other assets (0.9) (3.8) 0.4 Bonds and other fixed income securities 1,913.4 1,950.4 1,922.7 Securities 3,010.6 3,036.1 2,896.5 Investments in non-consolidated companies 1.2 2.2 2.5 Repurchase agreements Investments in associated companies
9.1 – Breakdown of other debtors 9.2 – Other debtors by business segment
– Change in accounting methods – Goodwill written off against reserves – Other movements 8.7 8.7
Corporate income tax 116.6 *Tax rate differentials relate mainly to items taxed at reduced rates.
Investments in associated companies 257.5 Reinsurers’ share of technical reserves 2,473.6 0.1 (0.2) Debtors 2,132.3 (316.9)
(165.7) 101,527.5 Insurance company investments 8,197.2 Assets held to cover linked liabilities 583.1 583.1 Investments held by other Group companies (213.0) 44.5 Investments in associated companies 2,473.5 Reinsurers’ share of technical reserves (0.8) 1,814.6 Debtors resulting from insurance and reinsurance transactions 1.5 318.6 Other debtors 9.3 194.1 Cash at bank 137.7 Other assets 0.5 2,380.2 Accrued income and prepaid expenses
Life technical account Changes Presentation previous format 31/12/1999 31/12/1999 of method changes
Profit and loss account NON-LIFE TECHNICAL ACCOUNT Net of reinsurance In EUR thousands 31/12/01 31/12/00 31/12/99
LIFE TECHNICAL ACCOUNT Net of reinsurance In EUR thousands 31/12/01 31/12/00 31/12/99
The financial and accounting information on pages 133 to 136 has been extracted from the annual financial statements of CNP Assurances for the years ended 31 December 2001, 2000 and 1999. These financial statements were approved by the Executive Board and we issued a true and fair view opinion thereon in our statutory auditors’ reports dated, respectively, 12 April 2002,
– it also specifies the majority voting rules applicable in the case of a vote by the Board of Directors of Ecureuil Vie concerning any changes to the Commission Agreement or the Service Agreement before the expiry date of the Framework Agreement.
CNP Assurances, Dexia Crédit Local de France and Sofca (collectively, Dexia Sofaxis) have signed a 10-year partnership agreement concerning cooperation in the local government market. The agreement is automatically renewable for a further five years. The purpose of the agreement, which was approved by the CNP Assurances Supervisory Board on 20 March 2000, is to pool the partners’ brokerage and insurance underwriting expertise to offer local governments high quality products and services tailored to their needs.
Sopassure (holding company set up jointly 49,191,783 35.87% 35.95% by La Poste and the Caisse d’Epargne Group) Caisse des dépôts et consignations 50,582,880 36.88% 37.05%
The capital prior to conversion amounted to FRF 3,428,192,700. After conversion and after raising the par value of the shares to EUR 4, the capital stood at EUR 548,510,832, divided into 137,127,708 ordinary shares with a par value of EUR 4, all fully paid up.
Jean-Baptiste Le Corre, Treasurer of the MGEN mutual insurance company. Elected 18 September 1998
Compagnie suisse de réassurances, represented by Michel Liès, member of senior management of Compagnie suisse de réassurances. Appointed by the Supervisory Board on 12 October 998, appointment ratified at the General Meeting of 3 June 1999. Re-elected
Antonio Borges, Vice-Chairman and Managing Director, Goldman Sachs International. Elected 4 June 2002.
IV - PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND THE AUDIT OF THE ACCOUNTS
Shareholder Hotline The shareholder relations department can be contacted by telephone between 9:30 and 5:30 from Monday to Friday on 0 800 544 544 (calls originating in France only). By calling the freephone number, shareholders can also link up to a voice server to hear the latest news about CNP Assurances and find out the latest share price. You may also request information by mail by writing to CNP Assurances, Shareholder Relations Department, 4, place Raoul-Dautry, 75015 Paris,