Covéa takes a new step in its strategic plan

Jun 22, 2017, by Covea

For Thierry Derez, Chairman and Chief Executive Officer, “Beyond its good results, Covéa took a new step in 2016. The transition to a single company, in particular negotiations related to the signature of a common status for all Group employees, has reinvigorated our teams without sacrificing performance. This will enable us to achieve our main strategic objective: to be an agile, innovative and efficient group capable of building the foundations for a sustainable profitable future and offering our members and customers the best insurance experience."

The Covéa Group’s revenue amounted to €16.3bn in 2016, compared with €17.1bn in 2015.
In Non-life, revenue grew by 0.8% in a tense competitive and regulatory environment. In line with the Group’s strategic choices, Life revenue fell from €5.6bn to €4.7bn.

Net income amounted to €825 million. The group currently manages nearly €105 billion in assets. Unrealised capital gains increased by 2.4% to €13.4 billion.

BUSINESS RESULTS:
GOOD PERFORMANCE IN NON-LIFE, STRATEGIC REBALANCING IN LIFE

 

Total Group turnover

In millions of euros

2015*

2016

% Change

TOTAL

17,139

16,300

-4.9%

Non-life activities

11,457

11,548

+0.8%

Life activities

5,682

4,752

-16.4%

* constant scope

 

At 31 December 2016, revenue from non-life activities increased by 0.8% in a market that was still competitive and by 1.7% at constant scope and exchange rates. This accounts for 71% of the Group's total turnover (91% of which is generated in France) compared with 67% in 2015.

Revenue from life activities decreased by 16.4% compared to 2015, in line with the group’s strategy to maintain the profitability of the life activity in a context of uncertainty over interest rates.

DISTRIBUTION OF TURNOVER

The share of international turnover in total turnover is 12.3% (compared with 15% in 2015).

 

Group turnover

In millions of euros

2015

2016

% Change

TOTAL

17,139

16,300

-4.9%

France

14,594

14,294

-2.1%

International

2,545

2,006

-21.2%

FRANCE: GAIN IN P&C MARKET SHARE, REORIENTATION IN LIFE INSURAN

  • Digital transformation serving 11.5 million Group members and customers
  • 2.2% increase in turnover in non-life insurance in France
  • The Group strengthened its position as no. 1 in motor and home insurance and rose to  no. 2 in the professionals and business segment (source FFA – dec.2015)

 

Turnover France

in € millions

2015 *

2016

Change

TOTAL

14,594

14,294

-2.1%

Property and Casualty

7,948

8,123

+2.2%

Health and Personal Accident

1,892

1,830

-3.3%

Life

4,158

3,726

-10.4%

Other markets

615

596

+3.2 %

DAMAGE AND LIABILITY INSURANCE:

COVÉA CONTINUES TO GROW IN ALL OF ITS ORIGINAL MARKETS

 

In property and liability insurance, the Group continued its development across all of its business segments with growth of 2.2%, outperforming the market (+1.5%).

With a total portfolio of 10.5 million vehicles insured (+ 55,000 additional in 2016), Covéa is France's leading motor insurer.

 

  • Motor and home

In a tense competitive environment, Covéa’s turnover in the retail market increased by 2% to €5,453m.

The Group insures nearly 9.8 million private vehicles. In this segment, turnover increased by 1.4% to exceed €3.6 billion.

Revenue for personal property damage rose by a sharp 3.1%. With market share of 17.3% in multi-risk home insurance, Covéa is the sector leader with 7.8 million homes insured (almost 80,000 additional homes in 2016, i.e. an increase of 1%).

Innovation: designed by the Personal P&C Department, Covéa has created its first guarantee base ("mobility" and "rental" options) for its three brands, in order to better respond to the new collaborative uses of its auto policyholders. GMF is the Group's first brand to deploy this new insurance solution linked to new modes of consumption.

  • Commercial

Now the second-largest insurer on this market, Covéa saw strong growth of 2.7% in this business, with turnover of nearly €2.7 billion.

CLAIMS

2016 was marked by a slight fall in the volume of insurance claims, but a general increase in the claims load and in the average cost of auto and heavy personal injury claims.
The 12 weather events recorded over the period alone accounted for €371m of the total compensation paid.

Customer Relations Innovation: as part of its overall services and support for its policyholders, Covéa has implemented new initiatives in the area of claims management: digital services with "my claim tracking" and "Selfcar[e]" mobile applications and the “Illi’Cars” assistance service.

 

HEALTH AND WELFARE INSURANCE: SIGNIFICANT DEVELOPMENT IN COLLECTIVE HEALTH

The Group's health activity fell by 1.7%. This slight fall was mainly due to the implementation of the national interprofessional agreement and Covéa's refusal to enter a bidding process. Covéa recorded turnover in health insurance of nearly €1.5bn.

On the individual health market, turnover fell by 7.2%, a smaller-than-expected decline. This was partly offset by the development of the collective health business, which saw a turnover increase of 11.1%.

At 31 December 2016, the Group had 1.3 million collective health beneficiaries (+4.9%) and nearly 1.6 million individual health beneficiaries (-3.8%) excluding CMU.

 

Note: The creation of Unéopôle, a collective of mutual insurance groups of which Unéo and the MGP are members, is for GMF, with the help of Covéa, the starting point for cooperation in social protection and insurance.

 

 

LIFE INSURANCE: FOCUS ON PROFITABILITY

 

Revenues from life insurance in France stood as €3,726 million in 2016 compared with €4,158 million at the end of 2015 (-10.4%). The 12.2% fall in euro-denominated savings contracts, which caused the fall in turnover, reflects the Group’s strategic approach.

In Retirement Savings, gross premiums on unit-linked savings contracts increased by 4.1% and accounted for 11.5% of the Group’s total premiums at 31 December 2016 (compared with 9.9% at the end of 2015).

In 2016, Covéa offered rates at the high end of the average market range (between 2.01% and 2.51%). The Group focused on profitability and strengthened its provision for profit sharing in order to sustainably preserve the interests of its savers (+€211m).

In the UK, Covéa Insurance posted sales of €779m, up 0.4% (£638m, i.e. +13.1% compared to 2015). This growth was driven by the automotive and corporate markets. In 2016, Covéa Insurance launched a new automotive offering on comparator sites.

In Italy, after an exceptional year in 2015, Bipiemme Vita's turnover came out at €1,033m at end 2016
(-32.6%). This fall was due to a 25% reduction in euro-denominated sources (€248 million). Inflows of unit-linked funds were dampened by unfavourable market conditions.

Activity growth was also hampered by the merger of Banca Popolare di Milano and Banco Popolare.

Covéa managed assets of €104.8bn at 31 December 2016. It draws on the expertise of its two management companies: Covéa Finance and Covéa Immobilier [Real Estate].

Covéa Finance, the tenth-largest asset management company in France's insurance sector, manages more than €93.3bn of assets on various highly-rated markets (actions and bonds).

Covéa Immobilier [Property] pools the resources of the various Group entities in the area of investment property management. At end-2016, the latter amounted to €4.5bn and consisted of 223 buildings representing more than 661,000m². Covéa Immobilier's assets comprise 61% retail and office property located mainly in Paris and the greater Paris region.THE COMBINED GROUP RESULTS

Net income (Group share) came to €825 million.

Covéa improved its technical fundamentals with a combined ratio of 98% compared to 98.5% the previous year.

The financial investments in market value is €104.8bn. Unrealised capital gains increased from €13.1bn in 2015 to €13.4bn in 2016. This increase is mainly due to an increase in the valuation of bonds held.

The Group's combined equity capital reached €13.5bn (+5.9%).

Total technical provisions amounted to €84.4bn (+2.4%).

 

In millions of euros

2015

2016

Net income (Group share)

1,049

825

Equity Capital (Group share)

12,703

13,459

Unrealised capital gains

Financial investments (realisable value)

13,123

101,218

13,433

104,788

Technical provisions

82,433

84,433

 

Regulatory solvency ratio

Eligible equity capital

Solvency capital requirement

 

382%

20 357

5 329

 

351%

21 507

6 135

 

These accounts will be submitted for approval by the General Meeting on 29 June.