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Madrid, 2 of March 2010
2009 RESULTS PRESENTATIONMr. Francisco Arregui, General Manager and Mr. Juan Casanovas, CFO
2
CONTENTS
1. Introduction
2. 2009 in figures
3. Grupo Catalana Occidente’s share
4. A Group prepared for the future
6
2009 better than 2008?
High competitive environment in traditional business
Atypical cyclonic storm
Increase of credit insurance demand and restrictive
supply
INTRODUCTIONPrincipal facts
6
EXTERNAL
INTERNAL
Atradius’ Special Action Plan
Measures on business
Measures on expenses
Synergies achievement – set up of Corporate IT
7
2008 2009
Premiums 3,231.4 3,034.6
Traditional business ordinary profit 162.6 138.1
Credit insurance ordinary profit -172.7 -80.8
(figures in million euros)
Sound and recurrent traditional business
INTRODUCTIONMain magnitudes of 2009
Technical result 144.1 137.2Financial result 73.5 50.4
Traditional business 1,690.4 1,716.8Credit insurance business 1,540.7 1,317.8
-6.1%1.6%
-14.5%
8
2008 2009
First quarter
Second quarter
Third quarter
Fourth quarter
25.2
10.2
- 65.5
-142.6
-71.9
-33.0
10.0
14.1
(figures in million euros))
Gradual improvement
INTRODUCTIONMain magnitudes of 2009
Credit insurance ordinary profit
Attributable profit 104.4 101.2
Consolidated profit 2.8 37.9
9
2008 2009
Long term capital (*) 1,604.8
Technical provisions 7,251.4
Excess of solvency 1,488.4
Funds under management 7,793.3
Rating
(*) Includes Equity and subordinated debt (**) Excluding Atradius’ minority interests acquired by the transaction
+2.9%Excluding transaction
426.2%Of minimum required
Robust balance sheet
A-
INTRODUCTIONMain magnitudes of 2009
1,422.1 (**)
6,920.8
1,447.8 (**)
7,767.9
A-
(figures in million euros)
377.1%Of minimum required
10
2009 better than 2008?
High competitive environment in traditional business
Atypical cyclonic storm
Increase of credit insurance demand and restrictive
supply
INTRODUCTIONPrincipal facts
10
EXTERNAL
INTERNAL
Atradius’ Special Action Plan
Measures on business
Measures on expenses
Synergies achievement – set up of Corporate IT
Atradius’ minorities acquisition
11
INTRODUCTIONPrincipal facts – Atradius’ minority interests acquisition
11
Purchase agreement with Atradius’ minority interests
GCO acquires directly 26.66%
INOC,SA acquires the 9.11% of Atradius NV capital
GCO has the right to acquire the 9.11% to INOC,SA in 2 years
Atradius’ valuation: 1,500 M€ (18.87 euros per share)
* Pending of regulatory approval
PURCHASE AGREEMENT*
12
INTRODUCTIONPrincipal facts – Atradius’ minority interests acquisition
2009 Structure 2010 Structure
GCO
INOC, SA
Grupo Crédito y Caución, SL
ATRADIUS, NV
Crédito y Caución
100%
56,71%
73,84%
CCS ESA
9,88% 11,28% 5,00%
GCO
INOC, SA
Grupo Crédito y Caución, SL
ATRADIUS, NV
Crédito y Caución
100%
56.71%
64.23%
73.84%
CCS GES+ NAC
ESA
9.88% 11.28% 5.00%
S Re DB SO
25.0% 9.1% 1.7%
GCO
INOC, SA
Grupo Crédito y Caución, SL
ATRADIUS, NV
Crédito y Caución
100%
56,71%
9,11%26,66%64,23%
73,84%
CCS ESA
9,88% 11,28% 5,00%
GCO
INOC, SA
Grupo Crédito y Caución, SL
ATRADIUS, NV
Crédito y Caución
100%
56.71%
9.11%26.66%64.23%
73.84%
CCS GES+ NAC
ESA
9.88% 11.28% 5.00%
Economic stake of 47.43% Economic stake of 74.09%
Total investment
535 + 400
13
INTRODUCTIONPrincipal facts – Atradius’ minority interests acquisition
Profit and Loss
In 2010% Attributable profit: 74.09%
Balance Sheet in 2009 figures
Equity - 228.7 M€ (minority interests)Goodwill + 168.8 M€Debt + 397.4 M€
Solvency
Available capital - 228.7 M€ (426.2% vs. 477.3%)S&P confirmed A - rating with negative outlook
IMPACT ON RESULTS, BALANCE SHEET AND SOLVENCY
15
Premiums and Results
Traditional business performance
Credit insurance business performance
Capital and Solvency
Investments
2009 IN FIGURES
16
1.2%
2008 2009% CHG.
Multirisk 366.6 5.1%273.9 -7.4%Other Non -Life439.9 -5.1%Auto610.0 8.3%
Traditional Business 1,690.4 1.6%Credit insurance business 1,540.7 -14.5%TOTAL PREMIUMS 3.231.1 -6.1%Service revenues 225.4 -12.2%TOTAL VOLUME 3,456.5 -6.5%Return on investments 398.4 -13.6%TOTAL REVENUES 3,854.9 -7.2%
Contributions to Pension Funds 76.7 -26.7%Contributions to Mutual Funds - 18.7
% CHG. market*
(*) According to ICEA for the Spanish insurance market. 2009 year-end
Ranking
115 4
14
9
3.51%4.76%
3.73%
2.35%
6.34%
Total
Life
Total Non - LifeMultiriskAuto
160.5%Credit Insurance
Spanish market share (*)Ranking
(figures in million euros)
2009 IN FIGURESPremiums
Life
385.2253.5417.6660.5
1,716.81,317.83,034.6
197.83.,232.4
344.43,576.8
56.2- 8.6
5.8%-5.4%
3.1%
17
Diversification and complementarity of our business mix
CONSOLIDATES BUSINESS DIVERSIFICATION
2009 IN FIGURESPremiums
lIFE
21.4%
Other Non-Life8.2%
Multirisk
12.5%
Auto
13.6%Credit
Insurance42.8%
PF +MF1.5%
ATTRIBUTABLE BUSINESS DIVERSIFICATION
Life
27.6%
Other Non-Life
10.6%
Multirisk
16.1%
Auto
17.5%
CreditInsurance
26.2%
PF +MF2.0%
18
2009 IN FIGURESPremiums
Presence in more than 40 countries
1,179 offices
More than 20,000 agents
More international potential growth
GEOGRAPHICAL DIVERSIFICATION
Spain71.8%
Italy2.2%
France3.9%
Rest of E.E.C.6.6%
Rest of countries4.7%
United Kingdom3.3%
Germany
4.4%Netherlands
3.3%
19
2008 2009% CHG.
Multirisk 31.2 32.9 5.4%Other Non-Life 53.3 46.7 -12.5%Auto 40.4 36.8 -9.0%Life 19.1 20.8 8.8%
ORDINARY NET TECHNICAL RESULT 144.1 137.2 -4.8%Financial Result 73.5 50.4 -31.4%ORDINARY TECHNICAL AND FINANCIAL RESULT 217.6 187.6 -13.8%Taxes 55.0 49.5 -10.0%
ORDINARY PROFIT FROM TRADITIONAL BUSINESS 162.6 138.1 -15.0%
ORDINARY PROFIT FROM ATRADIUS NV -172.7 -80.8
NON RECURRING RESULT 12.9 -19.4
CONSOLIDATED PROFIT 2.8 37.9 1,252.4%Attributable to minority interests -101.6 -63.2Attributable to the parent company 104.4 101.2 -3.1%
(figures in million euros)
2009 IN FIGURESResults
20
Written premiums (M€)Technical ordinary result (M€)Combined ratioOrdinary profit (M€)
1,690.4144.1
88.4%162.6
1,716.8137.2
89.1%138.1
2008 2009
Business based in Spain – slightly above of the market growth (1.6% vs. 1.2%)
Customers loyalty through our professional agent network
Technical cost and combined ratio containment
Permanent cost control and programs to exploit synergies
% chg.
p. – points
Income and results containment as a result of the Spanish economic situation
2009 IN FIGURESTraditional business performance
1.6%- 4.8%0.7 p.
- 15.0%
21
Premiums have risen 5.1% (market 3.1%)
Combined ratio at 91.2% (+ 0.1 points)
Increase of the technical result by 5.4%
MULTIRISK
Premiums decreased by 5.1% (market – 5.4%)
Combined ratio at 91.4% (+ 0.5 points)
Technical result drop by 9.0%
AUTO
2009 IN FIGURESTraditional business performance
2010 -
2010 -
Good performance
Difficulties of growth
2009 - Good perspectives in both, premiums and results
2009 - Difficulties of growth.Target to maintain business Technical cost increase – Cost reduction
22
OTHER NON - LIFE
LIFE
2009 IN FIGURESTraditional business performance
Premiums decreased by 7.4%
Combined ratio at 83.0% (+ 2.5 points)
Technical result drop by 12.4%
Increase of 8.3% in premiums (market 5.8%)
Lower contribution to Pension and Mutual Funds
Technical result improved by 8.9%
2010 -
2010 -
Difficulties of growth
Good performance
2009 - More competition in saving products
2009 - Difficulties of growth.Target to maintain business Technical cost increase – Cost reduction
23
2009 IN FIGURESTraditional business performance - Combined ratio
Combined ratio evolution of Traditional business
23
AUTO
MULTIRISK
OTHER NON - LIFE
TRADITIONAL BUSINESS
83.0%
91.0%89.1% 91.2%
93.2%
91.3%90.2%
92.5%
87.7%89.3%
80.5% 80.5%
91.4%90.9%
89.6%
94.5%
90.4%91.4%
88.4% 89.1%
2005 2006 2007 2008 2009
24
Written premiums (M€)Ordinary profit (M€)Combined ratio
Technical expensesCommissions Expenses
Attributable profit (M€)
1,540.7- 172.7118.1%88.9%10.3%18.9%- 78.0
1,317.8- 80.8
111.2%81.6%10.0%19.6%- 54.8
2008 2009 % chg.
Credit insurance results should be analysed quarter by quarter
2009 IN FIGURESCredit insurance business performance
-14.5%-
- 6.9 p.- 7.3 p.-0.3 p.0.7 p.
-
p. – points
25
2009 IN FIGURESCredit insurance business performance
Performance of the combined ratio of credit insurance quarter by quarter
25
217.5%
101.5% 96.1%115.7%
126.6%
99.9%93.0%
154.2%127.3%
98.2%109.3%
118.0%134.6%
90.3% 98.3%
123.5%101.4%
77.2% 91.3%109.8%
103.5%97.3%
111.3%
184.2%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Total Atradius Crédito y Caución
26
2009 IN FIGURESCredit insurance business performance
26
Spain European Economic Community and United States of America
Accumulated inter - annual variation rate / Source: Crédito y Caución Expected Default Frequency rate / Source: Atradius y KMV
27
2009 IN FIGURESCredit insurance business performance
Results evolution quarter by quarter
(figures in million euros)
Net technical resultMultirisk 4.0 8.2 9.8 9.2 4.6 11.5 9.0 7.8
Other Non - Life 9.3 19.7 15.9 8.4 11.6 19.2 14.8 1.1Auto 6.8 12.4 6.1 15.1 7.9 12.9 2.9 13.1Life 5.5 2.4 3.9 7.3 6.9 4.3 1.3 8.3
Ordinary net technical result 25.6 42.7 35.7 40.1 31.0 47.9 28.0 30.3Financial result 15.7 20.3 13.4 24.1 14.2 16.9 8.3 11.0Ordinary technical and financial result 41.3 63.0 49.1 64.2 45.2 64.8 36.3 41.3Taxes 10.7 13.6 13.4 17.3 12.2 14.7 9.3 13.3Ordinary profit from Traditional business 30.6 49.4 35.7 46.9 33.0 50.1 27.0 28.0
Ordinary profit from Atradius NV 25.2 10.2 -65.5 -142.6 -71.9 -33.0 10.0 14.1
Non recurring results 6.2 31.0 -7.8 -16.5 17.9 -0.4 -0.9 -36.0
Consolidates profit 62.0 90.6 -37.6 -112.2 -21.1 16.8 36.0 6.2Attributable to minority interests 13.3 9.5 -39.7 -84.7 -39.3 -18.2 5.1 -10.8Attributable to parent company 48.6 81.2 2.1 -27.5 18.3 34.9 30.9 17.1
3Q09 4Q091Q08 1Q09Earnings by business line
2Q08 3Q08 4Q08 2Q09
2008 result: -172.1 2009 Result: -80.8
28
Focussed on margins and technical result versus premiums growth
Policy of price increase in renewals and new business
Strict underwriting policy
Reduction / Cancellation of levels of risk to companies with a greater risk risk of insolvency
Restructuring / Non renewal of loss policies
Revision of policies with high exposure
Inclusion of franchises
Rigorous cost management and operational improvement
Workforce restructuring
2009 IN FIGURESCredit insurance business performance – Special Action Plan
28
29
Risk exposure by sector – change and total weight
49,679
39,469
32,13937,168 37,101
26,793 28,807
42,105
22,522 21,497
13,982 11,567 13,7599,085
(-31.9%)
12.9%
(-40.9%)
(-37.2%)(-42.1%) (-27.6%)
(-32.9%) (-29.1%)
(-20.2%)
(-37.9%) (-23.5%)
(-40.5%) (-22.9%) (-22.6%)(-35.5%)
10.2% 8.3% 9.7% 9.6% 7.0% 7.5% 10.9% 5.8% 5.6% 3.6% 3.0% 3.6% 2.3%
2009 IN FIGURESCredit insurance business performance – Special Action Plan
100%
Cons
.st
aple
Met
als
Elec
troni
cs
Cons
truct
ion
Chem
ical
pr
oduc
ts
Tran
spor
t
Mac
hine
ry
Food
Build
ing
Mat
eria
ls
Serv
ices
Text
ile
Fina
nces
Agric
ultu
re
Pape
r
30
2009
Traditional businessInsurance activitiesHeadquartersInsurance Agency
Credit insurance business
2009 IN FIGURESCredit insurance business performance – Special Action Plan - Workforce
3,627
Total employees 6,114
2008
4,083
6,512
30
Chg.
+58-10+12+56
-456*
-398
2,4292,123
104202
2,4872,113
116258
Known leavers (including temporal workers) - 282 (1Q09 – 4Q09)Workforce restructuring (500 estimate) - 242 (4Q09)Obliged entries – Maternity + 68 (1Q09 – 4Q09)
*
Workforce evolution
Estimate workforce restructuring: 500 employeesCost saving estimate: 35 M€ annually
31
Premiums and Results
Traditional business performance
Credit insurance business performance
Capital and Solvency
Investments
2009 IN FIGURES
32
1,305.4116.6587.3
2,009.4
Long term capital at market value
EquitySubordinated debtUnrealised capital gains Long term capital
Properties’ unrealized capital gains 587.3 M€ (564.7 M€ at Dec. 2008)Strong balance situation
2008 Equity 1,488.9
Consolidated profit 37.9Dividends paid -72.9Change in valuation 114.8Change in valuation adjustments in minority interest
Changes in equity method valuation -9.3
Changes in treasury shares -1.6Total movements -183.5
2009 Equity 1,305.4
Subordinate debt 116.6
2009 Long term capital 1,422.1
2009 IN FIGURESCapital and Solvency – Long term capital
2008Lon term capital 1,604.8
(figures in million euros)
Atradius NV minority interests -228.7
Other minority interests -23.7
33
2008
Minimum requiredAvailable capitalExcess of solvency
2009
537.2
1,488.4
2,025.6 (*)
443.8
1,447.8
1,891.5 (**)
Rating S&P A-
2009 IN FIGURESCapital and Solvency – Solvency I
Spanish average
275% s/ Minimum required
426.2% of minimum required
377.1% of minimum required
(figures in million euros)
(*) – Corrected(**) – Without considering Atradius’ minority interests acquired by the transactionAverage Spanish excess of Solvency I according to ICEA data
Excluding transaction477.3% of
minimum required
34
2009 IN FIGURESCapital and Solvency – Technical provisions coverage
Excess of coverage1,688.0
120.4%Eligible assets of
Provisions
Eligible assets8,498.7
Eligible assets8,493.,8
Excess of coverage1,43.,0
(figures in million euros)
124.8%Eligible assets of
Provisions
2008 2009
35
2009 IN FIGURESInvestments
1,061.9
3,600.7
562.7
351.3
1,263.8
109.9
1,029.3
3,916.0
533.2
296.1
1,073.5
141.3
Client risk 803.9 817.7
Subsidiaries
Properties
Other investments
Short term
Fixed income
Equity
Client risk
Subsidiaries
Properties
Other investments
Short term
Fixed income
Equity
2.0%
56.1%
15.4%
4.2%
7.6%
14.7%
1.6%
51.8%
18.2%
5.0%
8.1%
15.3%
2008 – 6,989.4 M€ Co. risk 2009 – 6,950.3 M€ Co. risk
(figures in million euros)Investment policy maintenance
Short term increase
36
Average portfolio rating of AA-
Large investment in short term
Government
1,387.7
Corporate2,272.0
36.9%
63.1%
Average portfolio rating of AA-Large investment in short term
BBB and no rating 2.6%
A 33.7%
AA 46.6%
AAA 17.1%
2009 IN FIGURESInvestments – Fixed income
(figures in million euros)
1,061.9
3,600.7
562.7
351.3
1,263.8
109.9
817.7Client risk
Subsidiaries
Properties
Other investments
Short term
Fixed income
Equity
1.6%
51.8%
18.2%
5.0%
8.1%
15.3%
37
Prime *
955.7
Other106.2
* Prime: singular buildings placed at the main Spanish cities
Own use
On rent
485.3
576.6
43.5% of properties valuated during 2009 (42% in 2008)Last valuations in line to previous (no capital loss)
Unrealized cap.gains On rent
390.7
Book valueOwn use
288.7
Unrealized cap.gains Own use
196.690.0%
10.0%
45.7%
54.3%
2009 IN FIGURESInvestments - Properties
Book valueOn rent
185.9
(figures in million euros)
1,061.9
3,600.7
562.7
351.3
1,263.8
109.9
817.7Client risk
Subsidiaries
Properties
Other investments
Short term
Fixed income
Equity
1.6%
51.8%
18.2%
5.0%
8.1%
15.3%
39
GRUPO CATALANA OCCIDENTE SHAREShare price performance
12/30/2002 12/30/2003 12/30/2004 12/30/2005 12/30/2006 12/30/2007 12/30/2008 12/30/2009
GCO IBEX 35 Dow Jones EUROPE STOXX Insurance
8.8 €
4.9 €
14.7 €
27.5 €
22.9 €
14.5 €15.7 €
3.9 €
40
(figures in million euros)(euros per share)
200 400 600 800 1,000
1,043.7
551.4
795
Book value
Properties’ unrealized capital gains
VIF Life (12/31/08)*
8.70 €/s
13.30 €/s
19.93 €/s
VALUE OF GRUPO CATALANA OCCIDENTE PER SHARE
* Certified by Watson Wyatt VIF – Value In ForceAV – Appraisal Value
Goodwill?
AV Non Life
GRUPO CATALANA OCCIDENTE SHAREDrivers of value – strong fundamental value
41
EPS – Earning Per ShareDPS – Dividend per sharePay - out
Dividend maintenance
GRUPO CATALANA OCCIDENTE SHAREShareholders’ remuneration
0.340.42
1.96
0.25 0.400.48
0.290.220.200.190.19
2001 2002 2003 2004 2005 2006 2007
0.51
2008
0.86
1.15
1.59
0.87
25.9%25.4%
25.2%24.5%
60.2%
47.9%76.0%54.3%
0.51
2009
0.84
43
Solid and profitable business
Credit insurance: long term investment
Important excess capital
Robust balance with insignificant financial debt
Conservative and prudent investment policy
2010 PRIORITIES
Keep portfolio and results
Return to profits
Maintain
Maintain
QIS V and work on Solvency II
A GROUP PREPARED FOR THE FUTURE
44
This presentation includes oral and written “forward-looking statements” with respect to certain plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements represents a simple forecast whose formulation does not represent a guarantee with respect to the future performance of the Company. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which may be beyond the Company’s control such as general economic conditions, performance of financial markets, the frequency and severity of insured loss events, mortality and morbidity levels and trends, persistency levels, interest rate levels, currency exchange rates, general competitive factors, changes in laws and regulations, changes in the policies of governments or regulatory authorities.
The Company undertakes no obligation to update the forward-looking statements made in this presentation or any otherforward-looking statements.
DISCLAIMER
45
THANK YOUPara mayor For further information please contact to:
TLF. 0034 93 582 05 18 // [email protected] // www.grupocatalanaoccidente.com