CNP Assurances SWOT and PESTLE Analysis

Strength

1. Business expansion with unique multi-partnership model: CNP Assurances has contracts with various partners across Europe and Latin America. In France it has partnered with La Banque Postale and the BPCE group for distribution of its products. The contracts stand till 2036 and 2030, respectively. Both these firms are shareholders in CNP Assurances. This has strengthened the network in France. CNP Assurances has applied similar strategy and partnered with Caixa Econômica Federal in Brazil, UniCredit in Italy, and Santander Consumer Finance in 11 European countries. These financial institutions have deep distribution networks into their respective countries. Further the company has also partnered with different firms for different category of products to use the expertise of such firms. For instance, it has partnered with 40 wealth management firms and 196 lenders for term creditor insurance.

2. Full-fledged bancassurance integration: CNP Assurances integrated with La Banque Postale in March 2020 to roll out its bancassurance business. It will be led by Caisse des Dépôts, which is the majority shareholder in La Banque Postale. As per Fitch ratings, it has been found that insurance business supports banks through commissions. Banks get to diversify into insurance segment. Insurance firms have given capital efficient returns to banks. In return, the insurance firms get better financial ratings due to their association with banks. Insurance firms also receive a favourable regulatory treatment due to this association. There have been many successful bancassurance businesses in France and Fitch ratings considers this integration between CNP Assurances and LA Banque Postale to be one of them. This is evident from A+ rating received by CNP Assurances. In the long term this integration will help the firm to acquire more customers and expand its reach.

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Weakness

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Opportunity

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Threat

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Political

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Economic

1. Constant low interest rates in Europe result in low returns: Since European interest rates are one of the lowest in the world and they have consistently been low it leads to erosion of return from savings deposits. If the interest rates keep crumbling, it becomes difficult to invest in any new premium business. The customers cannot be promised traditional level of returns and margins will be very low for the insurer. In some extreme cases the insurer will have to use its own funds to honor the contracts. For CNP Assurances the Solvency II Coverage Ratio can reduce by 26 points if base interest rates reduce by 50 points. Although most of the change is due to accounting effects, but the long-term impact of these low interest rate certainly leads to low coverage of long-term solvency of the company.

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Social

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Technological

1. Integration of AI into insurance will generate a predict and prevent business model: As per experts there will be 1 trillion devices that will be connected to transfer data to each other. Sensors on devices like car will be a common practice. Apart from data transfer from customer, a larger stream of data will be collected from public and private ecosystems like CCTV cameras on roads. These data transfers will help the insurers to customize the products with the help of an AI system. These AI systems will be developed with cognitive technologies that involve deep learning from experience with the customers. As most of the devices like cars will be automated, there will be minimal human intervention. Even houses will be built using 3D printing so the life of the building will be assessed based on data generated by the construction machine. This system will make the customer experience smooth.

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Legal

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Environmental

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