CNP Marfin Insurance Holdings Ltd, the newly formed company from the partnership agreement between France’s leading insurance company, CNP Assurances and the insurance companies of the Marfin Popular Bank of Cyprus, is counting on the rollout of new savings plans and new ‘bancassurance’ products to increase its market share in Cyprus and Greece.
CEO Takis Phidia told the Financial Mirror in his first exclusive interview since the group was formed that the savings plans and bancassurance products will draw on the expertise and know-how of CNP as well as the CNP-Marfin Insurance people who have a profound understanding of the way Cyprus and Greece markets operate.
“We will draw on the management, administrative and marketing expertise of CNP, but our products will be tailor-made to suite the needs of Cyprus and Greece,” he said.
CNP is the largest life insurer in France with premia exceeding EUR 32 bln and a presence in seven countries including Spain, Italy, Portugal, Argentine, China and now Cyprus and Greece.
Savings
Investors will be keen to protect their savings in 2009 and beyond, which is why Phidia believes that CNP Marfin, with the backing of CNP (majority owned by French government controlled entities) and Marfin Popular Bank Group, will be able to command a higher share of the market.
Also important is the fact that CNP Marfin, similar to other established life insurers, has the expertise to provide good asset diversification for investors at the lowest asset management fees.
“By investing in our funds, investors will be able to choose the degree of exposure to equities, bonds, property and cash holdings that our multiple funds offer, in addition to the fact that we charge the lowest rate for asset management,” said Phidia.
Bancassurance
The provision and sale of such savings plans are seen as a key element as to how CNP Marfin will attempt to win a higher share of new business in Greece as it seeks to lift its insurance market share to the comparable banking market share level.
Currently, Marfin Egnatia has a 5.5% to 6% market share of Greek loans and deposits and plans to lift this to 7% within the next 3-5 years. The sale of bancassurance products through the bank’s branch network is aimed to provide a similar share in the bancassurance product sales. There is clearly no intention for sales through agents network in Greece.
In the life and health sectors in Greece, Marfin had total premium income of EUR 21.4 mln in 2007 or a 0.85% market share, while in the non-life sector, it only handled EUR 4.2 mln premium income through the broking company.
CNP Marfin currently employs 300 staff in Cyprus, of whom 140 are Cyprialife and 160 Laiki Insurance and it also sells through 341 agents. In Greece, it has 45 staff and no plans to hire agents.
A major stumbling block in the sales of savings products in Greece is the 4% tax on any plan that is less than 10-years in duration, which hinders a faster growth considering that most people are reluctant to block their assets for that long to avoid the tax cost while shorter term saving plans inevitably suffer on potential yields.
Pensions
Amid many delays in the passage of pension legislation in Cyprus and inadequate framework in Greece, Phidia sees little chance of new pension plans being rolled out by CNP Marfin this year.
However, CNP’s vast experience in the pension market will enable CNP-Marfin to introduce the best possible pension products within the limits of local legislation and be ready to roll out such products as soon as circumstances allow.
Great potential
Phidia is optimistic that there is lots of room for growth in Cyprus but mostly in Greece, where the situation improved after the Greek government scrapped a 2.4% stamp duty levy on all policies.
Data provided at the CNP Marfin presentation a month ago show the potential for growth. In 2007, the size of the insurance market of Greece relative to its GDP was 2%, compared to 10% in France, 6.4% in Italy and 4.2% in Cyprus, confirming the excellent growth prospects there.
In terms of per capita income to insurance premiums, the per capita cost in Greece was 360 euros, compared to 2800 euros in France, 1600 euros in Italy and 800 euros in Cyprus.
Phidia said CNP Marfin is forecast to contribute at least EUR 24 mln in profits in 2009 to its two principal shareholders.
CNP Marfin was the largest insurance company in Cyprus in 2007 with total premium income of EUR 149.43 mln or 21.6% market share.
In terms of general business, CNP Marfin was in the lead with EUR 65.5 mln premium income and 17.7% market share, while in terms of life, it was in second place with premium income of EUR 84 mln and 26.1% share.
