(CNP) and Greek bank Marfin Popular Bank (MPB) have entered into a
bancassurance alliance initially targeting two of Europe’s most
underinsured markets, Greece and Cyprus. Under the terms of the
agreement CNP and MPB will enter into an exclusive 10-year
renewable distribution agreement which carries an extension option
in other countries where MBP operates.
Cementing the alliance, CNP will acquire a 50.1 percent stake in
MPB’s life insurance units for a cash consideration of €145 million
($225 million) plus an earn-out of €20 million linked to business
objectives. MPB will also receive a dividend of €20 million prior
to the deal’s finalisation.
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The CNP life insurance units comprise Marfin Life in Greece and
Laiki Cyprialife in Cyprus and general insurance units Laiki
Insurance in Cyprus and Marfin Brokers in Greece. CNP will assume
management control of these companies.
In 2007 MPB’s life insurance units generated premium income of €112
million with operations in Cyprus, where MPB holds a 25 percent
market share, dominating. Premium income from general insurance
units in 2007 totalled €57 million, with Cyprus where MPB has a 15
percent market share, also dominating. Net profits from life and
general insurance were €16 million and €5 million,
respectively.
Bancassurance
distribution in Greece is via MPB’s 170 branches in that country,
where it is the fifth largest bank and holds a market share of 5
percent. The objective, noted CNP, is to increase MPB’s share of
the life and general insurance markets to a similar level.
Given low insurance penetration in Greece CNP believes that Greece
offers “significant growth potential”. Indicative of the potential,
life insurance penetration in Greece was a mere 1 percent of GDP in
2007, according to reinsurer Swiss Re. Total premium income was
€2.26 billion and average annual premium per capita $277.20.
A more developed insurance market, Cyprus achieved life insurance
penetration of 1.9 percent of GDP in 2006 and average premium
income of $474.20 per capita. MPB operates 115 branches in Cyprus,
where it holds a 20 percent share of the banking market and ranks
as the second biggest bank.
Commenting on the alliance with MPB, CNP group chief executive
Gilles Benoist said beyond Greece and Cyprus it was envisioned that
CNP would be extended to country’s where MPB already has a
presence.
In 2007, MPB set a goal of aggressive expansion in South East
Europe and to this end acquired banks in Ukraine, Malta and Russia.
Excluding Greece and Cyprus, MPB now operates 451 branches in nine
countries: Australia, Romania, Serbia, the UK, Estonia, Guernsey,
Ukraine, Malta and Russia.
The bank reported net banking revenue of €1.242 billion and a net
profit of €593 million in 2007.
MPB’s expansion strategy is “fully aligned” with CNP’s Horizon 2012
strategy, said Benoist. Announced in January, the strategy calls
for CNP to almost double earnings before interest and tax (EBIT).
In 2007 CNP reported EBIT of €1.837 billion, an increase of 21
percent compared with 2007.
A key feature of CNP’s strategy is growth in international markets,
both organic and acquisitive, with the objective of operations
outside France generating one-third of total premium income in
2012. Priority growth regions are South America, Southern Europe
and the Mediterranean basin.
Progress towards increasing non-French premium income was
disappointing in the first half of 2008, especially when combined
with a 17.7 percent fall in French premium income compared with the
first half of 2007 to €12.319 billion.
Despite this fall, CNP’s home market increased its contribution
from 86 percent to 87.5 percent of the group total of €14.064
billion.
