CNP Assurances Decides To Unlock Potential Οf Cyprus Subsidiary

CNP Assurances Decides To Unlock Potential Οf Cyprus Subsidiary
| بواسطة : admin | بتاريخ 13 يونيو, 2019
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At the end of 2008, when the French insurance group CNP Assurances decided to enter the Cypriot insurance market, no one could have imagined that almost five years later, the company would be forced to share its subsidiaries in Cyprus with its biggest competitor.

And yet, the financial crisis that hit Cyprus in 2013 led the Eurogroup to decide the “haircut” of deposits in Laiki Bank, the country’s second largest bank and the transfer of most of its remaining assets to Bank of Cyprus . Laiki was CNP’s partner in the Cypriot market. Amongst the assets that were transferred to Bank of Cyprus, was the 49.9% of the shares that Laiki controlled in CNP Cyprus Insurance Holdings Ltd. The rest of the shares were controlled by CNP Assurances.

The essence of the problem wasn’t that the French group would have a new partner but the fact that this new partner was its main competitor in Cyprus, controlling two other insurance companies. It was an awkward situation: CNP operated in the market through CNP Asfalistiki and CNP Cyprialife, while its new partner, Bank of Cyprus, operated through Eurolife and General Insurance. On top of this, Bank of Cyprus executives were appointed as board members of CNP’s insurance companies.

CNP tried to change this imposed status quo. It even filed a case against Bank of Cyprus in an international arbitration court demanding a compensation of $271.4M (€240M), claiming that the Shareholders and Distribution Agreements were violated. CNP lost the case.

Most sector experts believed that CNP would abandon the Cypriot market as soon as it could. After all, the country didn’t seem to be of systemic importance for the French group, even though its Cypriot subsidiaries had significant market share both in the Health and General insurance sectors.

But the actual developments were very different from what was anticipated. CNP managed to enter into an agreement with Bank of Cyprus to buy the remaining 49.9% percent of CNP Cyprus Insurance Holdings Ltd for $110.3M (€97.5M). The amount will be paid through CNP’s own funds.

“We are very pleased to conclude this transaction with Bank of Cyprus. The outcome will further strengthen the capacity of our subsidiary, a leader in Cyprus, to expand its business with the full support of our teams in Paris. We are very motivated to contribute prominently to the development of the insurance market in Cyprus”, said Xavier Larnaudie-Eiffel, deputy CEO of CNP Assurances and Chairman of the Board of CNP Cyprus Insurance Holdings.

Takis Phidia, CEO of CNP Cyprus Insurance Holdings pointed that the agreement empowers the group in achieving new ambitious growth targets and consolidating new strategic developments. Bank of Cyprus announced that even though an accounting loss of $24.9M (€22M) will occur once the transaction is concluded, there will be a positive impact of 30 bps on the group’s main capital ratios.

The future for CNP’s presence in Cyprus looks much clearer now and the message given is that for the time being, the group will maintain its presence in the local market. In 2018, CNP Cyprus Insurance Holdings contributed $177.6M (€157M) to CNP Assurances premium income (up by 8.4% compared to the previous year) and $8.2M (€7.3M) to the group’s net profit.

“Controlling 100% of the capital of CNP Cyprus Insurance Holdings demonstrates our confidence in the future of this subsidiary, which offers a full spectrum of life and non-life insurance products and services in a country that has returned to growth since the 2013 crisis. This further reflects our confidence in the management team, which has been successfully involved in the recovery and development of the subsidiary since our initial investment in 2008” said Antoine Lissowski, CNP Assurances’ chief executive officer.

Scenarios for cooperation between CNP’s Cypriot subsidiaries and Hellenic Bank, the island’s second largest bank, have already started. Hellenic Bank announced a few months ago that it will examine all options regarding its insurance activities. A cooperation between CNP and Hellenic would be a game changer for the Cypriot insurance market.

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