LA MONDIALE HALF YEAR 2018 EARNINGS. October 18, 2018

Transcription

1 LA MONDIALE HALF YEAR 2018 EARNINGS October 18, 2018

2 Cautionary note At half-year, La Mondiale does not produce full financial statements but only prepares a balance sheet and an income statement. Auditors are not required and do not issue any audit or limited review report on these financial figures. They have been presented and reviewed by La Mondiale Board on October 18, Certain statements contained herein may be forward-looking statements including, but not limited to, statements that are predictions of, or indicate, future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and La Mondiale s plan and objectives to differ materially from those expressed or implied in the forward looking statements. Please refer to La Mondiale Rapport Financier 2017 for a description of certain important factors, risks and uncertainties that may affect La Mondiale s business and/or results of operations. La Mondiale undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. Unless otherwise specified, financial statements are calculated in accordance with IFRS as adopted by the European Union. Those relating to the solvency margin are, from the January 1 st, 2016, calculated under the European Union s Solvency 2 rules. 2

3 Contents 1. Executive summary 2. A strong business model 3. Invested assets 4. Solvency & capital management 5. Appendix

4 Executive summary (SGAM, as of 06/30/2018) Robust balance sheet and strong solvency Diversified business model And high financial performance Sound asset allocation & risk management (La Mondiale) 215% S2 RATIO SGAM AG2R LA MONDIALE 251% S2 RATIO La Mondiale (solo) 209 mn HY 2018 net income 5,0 bn ~51% of FY 2017 premiums Euro net inflow still controlled in a persistent low interest rate environment 4.54% High level of policyholder of reserves surplus reserve with 2,4 bn Less than 20% of investments rated BBB+ or below (lower than the market) 6,6 bn La Mondiale IFRS Equity capital (part of group), including debts + 0,5bn compared to FY ,7 bn Total amount of subordinated debts 98,5 mn Issuance of mutual certificates (unrestricted Tier 1) Focus La Mondiale 175 mn ~57% of FY 2017 net income 3,2 bn ~51% of FY 2017 premiums 37%/63% Premium UL ** / GA * mix 31%/69% Liabilities UL ** / GA * mix Rated A- / positive outlook A- confirmed by Standard & Poor s in October 2018, improvement of outlook from stable to positive SGAM : french prudential insurance group (*) : General Account are high capital need products, (**) : Unit Linked are low capital need products 4

5 Highlights AG2R LA MONDIALE and MATMUT The General Meetings, from May 29 th to June 14 th, approved the merger project As of January 1 st, 2019, the new entity will become one of the major insurance groups in France, which will cover persons and their property. It will represent 11.9bn in insurance premiums and 7,7bn in equity, and will have 17,000 employees and 700 commercial agencies. This merger is done without capital movement or goodwill. The new group will remain a mutual group without shareholder, and will always have only policyholders. To be approved by the Supervisory Authority. Rating S&P A-, positive outlook Standard & Poor's (S&P) has confirmed on October 2, 2018 «A-» rating for SGAM AG2R LA MONDIALE and its core entities, La Mondiale, AG2R Réunica Prévoyance, Prima and Arial CNP Assurances, and improved its outlook from stable to positive (more details p.18). Euro net inflow controlled in a persistent low interest rate environment In a persistent low interest rate environment, the policy of managing net inflows in general account remains a strategic element of our balances between commercial development and the competitive level of long-term profit-sharing and solvency. The beginning of the year 2018 is marked by a stronger general account net inflow in savings, partially offset by uncertainties in supplementary pensions. The general account net inflow target for 2018 could be slightly higher than 2017 level; A savings subscription conditions tightening in the last months of 2018 has been put in place. 5

6 AG2R LA MONDIALE organization : today and tomorrow Combination of mutual or non capitalistic entities with specific governance This merger is done without capital movement or goodwill. SGAM and SGAPS are specific group structures for mutual and assimilated entities, allowing combination and sharing of resources As of January 1 st, 2019, new SGAM structure, subject to the supervisor agreement SGAM AG2R LA MONDIALE Figures as of 12/31/2017 SGAPS AG2R LA MONDIALE LA MONDIALE Umbrella SGAM and its subsidaries Common sharing of resources and governance Financial solidarity (appendix p.23) 9,8bn premiums 6,1bn equity SGAPS AG2R LA MONDIALE SGAM LA MONDIALE MATMUT MATMUT and other entities LA MONDIALE and its subsidaries Common sharing of resources and governance Same financial solidarity SGAM MATMUT 11,9bn premiums 7,7bn equity 2,1bn premiums 1,6bn equity 6

7 Contents 1. Executive summary 2. A strong business model 3. Invested assets 4. Solvency & capital management 5. Appendix

8 Business activity (La Mondiale) Total Savings Premiums (in mn) Premiums : About 50% of the FY 2017 amount : Controlled decrease of GA exposure and focus on UL UL share (37%) still far above the market Pension Others Lapse : Decrease of the insurance claims ratio (in line with the French market) Net inflows : Controlled GA net inflows in a low interest rate environment Because of the lapse ratio decrease, GA net inflow should be slightly higher in 2018 than in FY 2016 FY 2017 HY 2018 G/A 71% 63% 63% UL 29% 37% 37% Net inflows (including arbitrages, in mn) Insurance lapse ratio ,9% 6,3% 5,8% Unit Linked General Account FY 2016 FY 2017 HY 2018 FY 2016 FY 2017 HY

9 Core businesses financial structure (La Mondiale) Outstanding liabilities 81,1bn Liabilities : global growth by +1,5% compared to FY 2017 Unit Linked 31% 25bn General account : +1,7% Unit linked : +1,2% General account 69% 56bn As of 06/30/2018, UL liabilities represent 31% of total liabilities (compared to 21% for the market*) Individual Pension 14% Liabilities by products 81,1bn Protection 1% Retail Savings 6% New business breakdown (APE) 444mn (as of 12/31/2017) Protection 1% Individual Pension 21% Retail Savings 2% Group Pension 24% Private Wealth Management 55% Group Pension 10% Private Wealth Management 66% * Source : Fédération Française de l Assurance 9

10 A strong financial performance (La Mondiale) Group equity capital, excluding debts (in mn) +4% compared to FY 2017 x3 compared to 10 years ago Consolidated net results (in mn) HY 2018 net result : 175mn mn HY HY 2018 net income Fair value adjustment Mutual certificates Other impacts HY2018 Equity capital target : 1bn growth every three years, thanks to the net results. 6,6bn of own funds : 4,0bn of equity capital, and 2,6bn of subordinated debts HY 2018 in line with the target. The HY 2018 result represents more than 50% of the estimated 2018 annual result, due to the significant capital gains achievement at the beginning of the year. 10

11 A strong financial performance (La Mondiale) Return on equity Consolidated Policyholder Surplus Reserves 19,4% 13,9% 11,1% 12,2% 8,1% 9,0% 8,4% 9,0% 9,3% 8,8% 4,7% HY2018 5,00% 4,50% 4,00% 3,50% 3,00% 2,50% 2,00% 1,50% 1,00% 0,50% 0,00% 0,58% 0,73% 0,17 0,23 0,43 0,36 Increase of policyholder surplus reserve by 146 mn 1,20% 0,95% 1,75% 1,58% 1,76% 0,71 0,68 0,83 3,09% 3,36% 1,54 1,74 4,33% 4,54% HY2018 2,26 2,40 2,50 2,00 1,50 1,00 0,50 0,00 Profit-sharing reserve ( bn) in % of insurance liabilities Target : Stability of the indicators by the end of the year. HY 2018 Return on equity in line with the target. HY 2018 Policyholder Surplus Reserve in advance with the target the profit sharing attributed to policyholders is underestimated. 11

12 Contents 1. Executive summary 2. A strong business model 3. Invested assets 4. Solvency & capital management 5. Appendix

13 HY 2018 asset allocation Outstanding assets 97,6bn Assets : global growth by 3,6bn (+3.7%) compared to FY 2017 Unit linked assets 25,6bn 26% General account assets 71,9bn 74% General account : +5% Unit linked : stable Assets under management have grown significantly over the last decade at an average annual growth rate of +8.6% since The UL/GA mix is stable at 26% / 74% compared to FY General account assets allocation 71,9bn 50 bn 40 bn 30 bn Property Equity Fixed Income Historical asset allocation General Account 20 bn 10 bn 0 bn HY 2018 (*) Sale and repurchase agreement (**) IFRS figures total value : 4,5bn 13

14 HY 2018 fixed income allocation BBB 9% A 29% Credit Exposure by Credit Rating BBB+ 9% A- 11% A 10% Others 9% A+ 8% AA- 8% AAA 13% AA+ 4% AA 28% AAA 13% AA 41% Total fixed income exposure is at 58,5bn (excluding mutual funds and repo) Limited exposure to risky investments with as less than 20% of the investments currently rated BBB+ or below An estimated 13-year liabilities duration, but the liabilities sensitivity is however far lower and on line with the fixed income duration (7.5). This is a key strategic element of our asset management policy Credit Exposure by Issuer Type Portfolio by maturity band 30% 25% Other corporates 30% Sovereign 29% 20% 15% 10% Sub Financials 5% Guaranteed government bonds 3% 5% 0% < 1 year > 1 year to 3 years > 3 to 5 years > 5 to 7 years > 7 to 10 years > 10 to 30 years Senior Financials 14% Covered bonds 9% Supra / Agencies 10% 14

15 HY 2018 fixed income allocation Sovereign exposure (La Mondiale) Sovereign bond exposure Austria 3% Belgium 8% Others 7% France 68% Total Sovereign exposure is at 14,4bn Sovereign exposure is 29% of total fixed income exposure Peripheral 14% Peripheral countries exposure Portugal 142m 7% Ireland 478m 23% Italy 382m 19% Spain 1 026m 51% Total Sovereign on Peripheral countries exposure is at 2,0bn Peripheral countries exposure is 14% of this sovereign bucket, hence only 4% of the total investments High level of unrealized gains ( 282m), that allows credit shock absorption 15

16 HY 2018 property allocation 2% 2% Geographic breakdown (market value) Paris and Paris region's offices Total Property exposure is at 3,0bn (fair value : 4,5bn) La Mondiale property assets represent sq.m. and are mainly offices located in the center of or in Western Paris, i.e. only Prime Real Estate % Other offices in France Paris and Paris region's homes Annual revenue ( per sq.m) HY2018 Good rental market, especially on all recently delivered surfaces, to post a very good vacancy rate around 3% Exceptional IPD index outperformances of 2015 and 2016 explained by the strong value creation on the deliveries of the restructured buildings 20,0% 15,0% 10,0% 5,0% 0,0% -5,0% Total performance, as of 12/31/2017 La Mondiale Property IPD (french market)

17 Contents 1. Executive summary 2. A strong business model 3. Invested assets 4. Solvency & capital management 5. Appendix

18 Standard & Poor s improves AG2R LA MONDIALE s rating to A-, positive outlook Insurance group SGAM AG2R LA MONDIALE (AG2R LM) has strengthened its capitalization and continues to reduce the proportion of new business with long-term guaranteed interest rates. AG2R LM's merger with retail property and casualty mutual insurer Matmut, expected in January 2019, will diversify earnings and further enhance capital adequacy. S&P are revising our outlook to positive from stable on AG2R LM's core subsidiaries AG2R Réunica Prévoyance, PRIMA, La Mondiale, and Arial CNP Assurances. The positive outlooks on AG2R LM's subsidiaries indicate that S&P could raise the ratings in the next months if the group successfully merges with Matmut, maintains a satisfactory operating performance, and continues to reduce its sensitivity to low interest rates. A-, outlook positive S&P also affirmed 'A- for financial strength and issuer credit ratings on these entities. At the same time, they also affirmed 'BBB' issue rating on La Mondiale s subordinated debt. In the base-case scenario, S&P expect the group will consistently exceed the 'AA' capital level under our capital adequacy requirements. S&P have therefore revised their view of AG2R LM's financial risk profile to moderately strong to capture capital strengthening. 18

19 Solvency 2 SCR coverage ratio Eligible own funds bn 11, SGAM solvency ratio 224% 215% SCR bn 5,2 Key Sensitivities Eligible own funds bn 12,1 HY 2018 SCR bn 5,6 Decrease of the ratio by 9% : - Positive impact of the HY result and of the issue of debt - Negative impact of the financial environment, -9bps the decrease of the UFR and the amortization of the transitional measures The own funds does not include all the debts, due to the possibility of early payment of some of them. The amount of the transitional measure on technical provision is 3,9bn and represents 69pts of ratio. The measure has been agreed by the supervisor until Interest rate -50bps Interest rate +50bps Equity market -10% -20pts -7pts +20pts Despite persistently low rates, the HY 2018 ratio excluding transitional measures remains stable. The issuer La Mondiale (solo) S2 ratio is at 251%. 19

20 Subordinated redemption profile BoY2018 Subordinated Financial debts : 2,7bn A significant issuance capacity ** 1 st call date breakdown (in mn) 5,05% ,07%* 3,38%* ,75% 1,94% ,56%* 340 2,58%* 256 3,00% * : euro equivalent issuance rate, after hedging Détail of debts in appendix p.31 ** : In case of call exercice of the 2013 debt 20

21 Interest coverage and Leverage, as of 12/31/2017 Interest coverage SGAM Leverage SGAM NB : IFRS leverage doesn t take into account 146mn of Super Subordinated Debts Interest coverage and Leverage remain in a satisfying range. The issuance of $710m EoY2017/BoY2018, slightly superior to the debt of 2013, has a slight negative impact on the 2018 ratios. That would disappear from 2019 in case of call exercise of the 2013 debt. 21

22 Contents 1. Executive summary 2. A strong business model 3. Invested assets 4. Solvency & capital management 5. Appendix

23 AG2R LA MONDIALE financial solidarity SGAM AG2R LA MONDIALE 1 rst level of financial solidarity : between all affiliates into SGAPS 2 nd level of financial solidarity : between SGAPS and La Mondiale SGAPS AG2R LA MONDIALE 60% ARIAL CNP ASSURANCES Entity i Entity 1 Entity 2 Financial solidarity La Mondiale (debt issuer) 100% La Mondiale Europartner Financial solidarity Entity 3 Entity 4 100% La Mondiale Partenaire Financial solidarity - function of solvency ratios Financial solidarity - description Target 115% Financial solidarity in proportion of capital surplus SCR ratio or MCR ratio 125% Trigger 110% 2 levels of financial solidarity : - The 1rst level between the members of SGAPS - The 2 nd level between SGAPS and La Mondiale The financial solidarity process is the same in the 1 rst and the 2 nd level : if an entity solvency ratio (SCR or MCR) falls below 110%, other entities will provide extra capital in order to restore 115% solvency ratio, in proportion of their capital surplus and within the limits of their own solvency. 23

24 Overview of La Mondiale Balance sheet (consolidated, IFRS) m FY 2016 HY 2017 FY 2017 HY 2018 %Change HY 2018/ HY 2017 TOTAL ASSETS ,2% Intangible assets ,7% ow. Goodwill ,2% Insurance investments ,4% Unit Linked investments ,5% Others assets ,1% Cash and cash equivalent ,8% m FY 2016 HY 2017 FY 2017 HY 2018 %Change HY 2018/ HY 2017 TOTAL LIABILITIES ,2% Equity Group Share ,3% Minority Interests ,3% Total Equity ,5% Financing debt ,8% Insurance and financial liabilities ,4% Other liabilities ,5% 24

25 Overview of La Mondiale P&L account (consolidated, IFRS) m FY 2016 HY 2017 FY 2017 HY 2018 %Change HY 2018/ HY 2017 Revenue ,0% Financial Products ,0% Others ,9% Current operating income ,5% Current operating expenses ,0% Operating Income ,2% CONSOLIDATED NET RESULT ,0% o.w Group share ,0% o.w Minority Interest

26 Private wealth and retail savings Premiums (in mn) FY 2016 FY 2017 HY2018 Premiums : HY 2018 represents 62% of FY 2017 amount Private wealth management savings : 63% of the FY 2017 amount Retail savings : stable Part of UL : 47% (stable compared to FY 2017, far above the French market) As of 31/12/2017, 63% through domestic partnerships, 20% via international partnerships, 13% via direct distribution channel and 4% via brokers The beginning of the year 2018 is marked by a stronger general account net inflow in savings, partially offset by uncertainties in supplementary pensions. The general account net inflow target for 2018 could be slightly higher than 2017 level; A savings subscription conditions tightening in the last months of 2018 has been put in place. Private Wealth Management Retail Savings Liabilities : Slight increase of 1.3% on the 1 st semester Liabilities (in mn) HY2018 Private Wealth Management Retail Savings La Mondiale premiums growth vs Market Index base 100 = La Mondiale Life Market * * France + Luxembourg (Source : Fédération Française de l Assurance and Commissariat aux assurances Luxembourg) 26

27 Individual retirement plans Premiums (in mn) 419 Premiums : HY 2018 represents 48% of FY 2017 amount Almost no incoming transfers due to restrictive technical and financial conditions French market : +1% premium increase despite a -12% decrease in new contracts Liabilities : +2.9% increase on the 1 st semester FY 2016 FY 2017 HY2018 Market shares : #1 in 2017 Liabilities (in mn) Self employed retirement plans market share in Autres 22,8% La Mondiale 18,8% BNP Paribas Cardif 3,5% Groupama 4,6% Generali 18,1% HY2018 Aviva 6,3% Swiss Life 10,8% Axa 15,1% French Market Total estimated premiums : 2.7 bn * France (Source : Fédération Française de l Assurance) 27

28 Group supplementary pension Premiums (in mn) 1669 Exceptional Premiums : HY 2018 represents 39% of FY 2017 amount, excluding exceptional elements in 2017 Decrease in production combined with the seasonality effect Offsets the production advance from the general account on private wealth and savings Liabilities : +1.7% increase on the 1 st semester Market shares : #2 in 2016 FY 2016 FY 2017 HY2018 Group supplementary pension market share in 2016** Liabilities (in mn) CNP Assurances 3,9% *** Generalie Vie 3,9% Autres 23,3% Predica 5,0% Axa 30,1% French Market Total estimated premiums in 2016 : 6,4bn in 2017 : 6,2bn HY2018 Sogecap 8,4% BNP Paribas Cardif 9,0% La Mondiale 16,4% * France (Source : Fédération Française de l Assurance) ** 2017 non available *** without L

29 Continuous decrease of guaranteed rates bn 0% guaranteed btw 0% and 1% btw 1% and 2.5% btw 2.5% and 3.5% btw 3.5% and 4.5% higher than 4.5% 2,1% 1,8% 1,5% 1,3% 0,84% ,79% 10 The average guaranteed rate decrease from 0.84% in 2016 to 0.79% in Average guaranteed rate Liabilities with a gross guaranteed rate above 3.5% % 9% 29

30 SCR breakdown and Own funds tiering (SGAM) Health underwriting risk 9% Life underwriting risk 16% SCR (as of 06/30/2018) Operational risk 5% Tier 2 bn 1,3 Tier 1 bn 10,9 Own funds tiering Tier 2 10% Tier 1 90% Tier 2 23% Tier 1 193% Counterparty default risk 3% Market risk 67% Own Funds (M ) SCR eligible 100% of own funds 215% of SCR Basic Own Funds 3% 17% of diversification benefit (1) Subordinated liabilities (Restricted T1) 9% Reconciliation reserve 88% (1) Diversification benefit = (sum of net SCR excluding Operational risk SCR - net BSCR) / sum of net SCR excluding Operational risk SCR Breakdown of Tier 1 30

31 Subordinated redemption profile - details 5,05% 1 st call date breakdown (in mn) 7,07%* 3,38%* 768 2,56%* 457 6,75% 1,94% ,58%* 256 3,00% 10 * : euro equivalent issuance rate, after hedging BoY2017 Subordinated Financial debts : 2,122mn 457 mn of perpetual debt denominated in USD, with a 1 st call option in 2019, restricted T1 until 2026 Fully hedged until mn of EUR dated debt with a 1st call option in 2024, Tier2 until mn of EUR perpetual debt, with a 1 st call option in 2025, restricted Tier1 until 2026, Tier2 after 207 mn (197+10) of EUR perpetual debts, mostly outstanding amounts remaining from past liability management operations, Restricted Tier1 until mn ($ 530 mn) of Reset Subordinated Notes, with a 1 st call option in 2027 EoY2017 and BoY2018 Operations : 596mn Issuance of two redeemable subordinated notes 30NC10 : 340 mn ($400 mn) with a 1 st call option in December 2027 and 256 mn ($310 mn) with a 1 st call option in January

32 Contact details André Renaudin Chief Executive Officer David Simon Deputy Chief Executive Officer (Finances, Investments, Risks) Benoit Courmont Chief Financial & Risk Officer Jean-Louis Charles Chief Investment Officer jean-louis.charles@ag2rlamondiale.fr Marie Deboosère Investor Relations marie.deboosere@ag2rlamondiale.fr Investor Relations - Contact: infosfinancieres@ag2rlamondiale.fr AG2R LA MONDIALE , boulevard Haussmann, Paris - France 32

33 Merci