CNP ASSURANCES (EPA:CNP) - CNP Assurances : Conclusion of a binding framework agreement with Caixa Seguridade

Transparency directive : regulatory news

30/08/2018 07:30

PRESS RELEASE
Paris, 30 August 2018

       Conclusion of a binding framework agreement with Caixa Seguridade

CNP Assurances announces the conclusion of a binding framework agreement
providing for the establishment of a new long-term exclusive distribution
agreement until 13 February 2041 in Brazil in the network of Caixa Econômica
Federal (CEF), one of the leading Brazilian banks and one of the five largest
in Latin America.

This agreement is an important milestone for CNP Assurances as it secures, for
the very long term (23 years) and on a new perimeter, a significant part of the
business currently conducted with CEF's network, and the exclusive access to
CEF's 78 million clients. CNP Assurances will therefore remain CEF's main life
insurance partner in Brazil and at the same time continue developing its other
activities in Latin America.

This new agreement builds on the successful track-record of CNP Assurances and
CEF's partnership since 2001, through their Caixa Seguros Holding (CSH) joint
venture, which demonstrated an ability to combine strong growth, high
profitability and regular cash flow generation:
* premium income growing by 18% p.a. on average between 2008 and 2017(1)
* value of new business growing by 16% p.a. on average between 2008 and 2017(1)
* attributable net profit growing by 14% p.a. on average between 2008 and
  2017(1)
* dividend growing by 14% p.a. on average between 2008 and 2017(1)

The new exclusivity perimeter in CEF's network includes life insurance,
consumer credit life insurance and private pension plans (vida, prestamista,
previdência). In line with the terms of the non-binding Memorandum of
Understanding signed at the end of September 2017, the new distribution
agreement will be implemented through a newly formed insurance joint venture
between CNP Assurances and Caixa Seguridade, the holding company for CEF's
insurance operations, with CNP Assurances and Caixa Seguridade owning
respectively 51% and 49% of the voting rights and 40% and 60% of the economic
rights. On the closing date, CSH will transfer to the new joint venture the
in-force insurance portfolios for the products included in the scope of the
agreement (life insurance, consumer credit life insurance and private pension
plans).

Moreover, CNP Assurances reached a separate agreement with Caixa Seguridade and
the insurance brokerage group Wiz regarding the terms of the future cooperation
with Wiz, including in particular operational back office services provided by
Wiz to CSH and to the new insurance joint venture to be created as part of the
new agreement concluded with Caixa Seguridade.

(1) In local currency.

CNP Assurances will continue holding its 51.75% equity interest in CSH, the
existing joint venture with Caixa Seguridade. CSH will keep all its existing
activities in Brazil distributed outside of the CEF network, and will keep
developing its multichannel strategy, in particular through its digital channel
Youse and through brokers.

As part of the agreement, CNP Assurances agreed to waive the existing exclusive
distribution rights of CSH for other insurance products (mortgage life
insurance (hipotecario), credit (consórcio), savings products (capitalizaçao),
P&C insurance, health (saúde), dental insurance (odonto)) should Caixa
Seguridade decide to transfer the distribution rights for these products to
other companies. The existing in-force insurance portfolios related to these
products and already underwritten by CSH will not be impacted by the agreement
and will remain on CSH's balance sheet. They could potentially be sold in the
future, after discussions with CEF and with the companies that would then be
selling these products.

As part of the agreement, CNP Assurances agreed to pay a fixed amount of
R$4.65bn (equivalent to EUR0.96bn on 28 August 2018(2)) on the closing date.
The expected internal rate of return of the investment in relation to this new
agreement is over 15%, which will contribute to long-term value creation within
the CNP Assurances group(3).

Indicatively, the new agreement (taking into account the new exclusivity
perimeter and the reduced economic rights for CNP Assurances compared to the
current situation) allows to sustainably extend the partnership with CEF and to
already secure an economic perimeter which, for the financial year 2017,
corresponded to approximately 70% of the group's share of premium income, 60%
of the value of new business and 50% of the attributable net profit achieved by
the Group in Brazil.

The evolution of the contribution of the remainder of the business related to
CEF (hipotecario, consórcio, capitalizaçao, P&C insurance, saúde, odonto) to
the Group's financial metrics will depend on the potential transfer of the
distribution rights for these products to other companies which would be
subsequently chosen by Caixa Seguridade, and on the performance of the in-force
insurance portfolios on CSH's balance sheet.

The solvency and profitability of the Group enable CNP Assurances to finance
the transaction using its own resources, without affecting its financial
strength or its capacity to pay a regular dividend. The impact of the
transaction-related payment on the consolidated SCR coverage ratio, which was
198% on 30 June 2018, is estimated at around 8 percentage points.

The closing of the transaction is subject to a number of condition precedents,
including in particular its approval by the relevant regulatory and competition
authorities.

CNP Assurances reiterates its objective of achieving organic EBIT growth of at
least 5% in 2018 compared to 2017.

"CNP Assurances is pleased to have concluded this new agreement, which allows
extending in the long-term the successful partnership between CNP Assurances
and Caixa Econômica Federal. This new agreement sustainably consolidates the
presence of CNP Assurances in the Brazilian insurance market, which continues
to offer good prospects for profitable growth" said Frédéric Lavenir, CNP
Assurances' Chief Executive Officer.

(2) BRL/EUR exchange rate of 4.84 on 28 August 2018.
(3) The level of the commissions for the products which are included in the
perimeter of the new agreement (life insurance, consumer credit life insurance
and private pension plans) will remain identical to the current situation.

About CNP Assurances

CNP Assurances is France's leading personal insurer, with net profit of
EUR1,285 million in 2017. The Group has operations in other European countries
and in Latin America, with a significant presence in Brazil, its second largest
market.

It has more than 38 million personal risk/protection insureds worldwide and
over 14 million savings/pensions policyholders. Acting as an insurer,
co-insurer and reinsurer, CNP Assurances develops innovative personal risk
insurance and savings solutions. These solutions are distributed by many
partners and are tailored to their distribution methods, ranging from physical
networks to full online, and to policyholders' needs in each country.

CNP Assurances has been listed on the Paris Stock Exchange since October 1998
and has a stable core shareholder base (Caisse des Dépôts, La Banque Postale,
Groupe BPCE and the French State).

Contacts

Press
Florence de Montmarin / +33 (0)1 42 18 86 51
Tamara Bernard        / +33 (0)1 42 18 86 19

Investors and analysts
Vincent Damas         / +33 (0)1 42 18 71 31
Jean-Yves Icole       / +33 (0)1 42 18 86 70
Typhaine Lissot       / +33 (0)1 42 18 83 66
Julien Rouch          / +33 (0)1 42 18 94 93

servicepresse@cnp.fr

infofi@cnp.fr

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Disclaimer:
Some of the statements contained in this presentation may be forward-looking
statements referring to projections, future events, trends or objectives that,
by their very nature, involve inherent risks and uncertainties that may cause
actual results to differ materially from those currently anticipated in such
statements. These risks and uncertainties may concern factors such as changes
in general econom ic conditions and financial market performance, legal or
regulatory decisions or changes, changes in the frequency and amount of insured
claims, changes in interest rates and foreign exchange rates, changes in the
policies of central banks or governments, legal proceedings, the effects of
acquisitions and divestments, and general factors affecting competition.
Further information regarding factors which may cause results to differ
materially from those projected in forward-looking statements is included in
CNP Assurances' filings with the Autorité des Marchés Financiers. CNP
Assurances does not undertake to update any forward-looking statements
presented herein to take into account any new information, future event or
other factors.

Certain prior-period information may be reclassified on a basis consistent with
current year data. The sum of the amounts presented in this document may not
correspond exactly to the total indicated in the tables and the text.
Percentages and percentage changes are calculated based on unrounded figures
and there may be certain minor differences between the amounts and percentages
due to rounding. CNP Assurances' final solvency indicators are submitted
post-publication to the insurance supervisor and may differ from the explicit
and implicit estimates contained in this document.

This document may contain alternative performance measures (such as EBIT) that
are considered useful by CNP Assurances but are not recognised in the IFRSs
adopted for use in the European Union. These measures should be treated as
additional information and not as substitutes for the balance sheet and income
statement prepared in accordance with IFRS. They may not be comparable with
those published by other companies, as their definition may vary from one
company to another.

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