Morningstar | Lacklustre Nine Months From CNP
CNP Assurances reported net profit of EUR 955 million for the first nine months of 2018, for 3% growth. The press release was pretty scant of information, and we aren't particularly enamoured of what has been provided. We are therefore maintaining our EUR 23 fair value estimate and no-moat and stable moat trend ratings.Premium growth was strong at 6.5% on a like-for-like basis, mainly driven by sales of unit-linked contracts. Geographically, the two key markets for the business are France and Brazil. In France, unit-linked contracts represented nearly one fourth of the savings and pensions business, but all told, while net inflows for unit-linked business were EUR 1.9 billion, the traditional savings and pensions business posted a EUR 4.2 billion outflow. The net of these two is obviously a disappointing result, particularly given that the latter is a better-margin business, though with lower return on equity. CNP Patrimoine became CNP’s third-largest distribution channel in France.
The personal risk and protection business was also a dark spot, with premium down just under 6.0%. While protection and health premium rose 2.0%, term creditor insurance fell 10% to EUR 2 billion as CNP gave up its role as ceding insurer to Credit Agricole, "in favour of" co-ceding insurer.
In Latin America, premium growth was a similar story with a 2% increase in premium income to EUR 4.0 billion. Savings and pensions premium grew 13% to EUR 3 billion, mainly driven by the pensions business as Caixa Seguradora continued to do well in Brazil with an increase in market share of 190 basis points. This is a highly unit-linked-driven market where that product represents around 99% of the pensions and savings business. The risk and protection business declined just under 20%, or just under 1% at constant exchange rates.
Overall, this seems to be a lacklustre set of results from CNP Assurances, which has disappointed significantly on the French aggregate net flow side.
CNP Assurances is an insurance company. Co. designs, develops, distributes and manages savings, pension & personal risk, and term creditor products. Co. offers savings products and insurance against the risks of everyday life to its customers. Co.'s operations are organized along three business segments. The Savings business concerns products enabling policyholders to build up capital which they can cash in. The Pensions business concerns products designed to enable policyholders to receive an annuity or lump sum on retirement. The Personal Risk business includes products enabling policyholders to insure against the risks of death, accident or illness, property damage or liability claims.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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