LA MONDIALE INVESTOR PRESENTATION October 2019 C1 - Public Natixis
Proposed Transaction Inaugural Euro-denominated benchmark Perpetual non-call 10 Restricted Tier 1 Notes ✓ ✓ Callable at par anytime between 9.5 and 10 years, and at every coupon payment date thereafter, subject to regulatory approval and other conditions Principal write-down upon standard Solvency II triggers (breach of 75% of SCR, breach of 100% MCR, or breach of 100% of ✓ Key SCR not remedied within 3 months) features Discretionary and conditional principal reinstatement (write-up) ✓ ✓ Fully discretionary interest payments; mandatorily cancellable upon breach of 100% of MCR or 100% of SCR or Solvency Condition, in case of insufficient distributable items or if required by the regulator The Notes are expected to be rated BBB- by S&P ✓ Optimization of the group’s capital structure under Solvency II, with the issuance of Restricted Tier 1 securities eligible up to ✓ 20% of the total Tier 1 Capital Supportive to current positive Outlook by S&P as the notes are expected to be taken into account in the rating agency’s ✓ capital model Issuance Rationale ✓ Optimize financial flexibility in a cost-effective way while maintaining a strong financial flexibility by leaving Tier 2 and Tier 3 issuance capacities unchanged (respectively € 1.7bn and € 0.9bn as of end of June 2019) Significant buffers to principal write-down triggers as the regulatory Solvency II capital was in excess of more than € 5bn of the ✓ SCR at the end of June 2019 2 C1 - Public Natixis
Group overview €9.7bn GWP in 2018 (SGAM) €237mn net result for the first half of 2019 (SGAM) ✓ Leader in savings & pensions in France Organic capital generation of €1bn in 3 years (SGAM) ✓ Strong footprints in private wealth savings, with a large share in Unit-Linked €11.3bn eligible own funds as of HY19 (SGAM) ✓ Major player in health & protection in France SII ratios of 185% (SGAM) & 229% (La Mondiale) as of HY19 A- / Positive outlook from S&P 3 C1 - Public Natixis
Standard & Poor’s affirmed SGAM 'A -' Rating with a Positive outlook Overview Outlook “SGAM AG2R LA MONDIALE benefits from its strong brand and leading competitive position in life and protection insurance in France. ” “The positive outlook on AG2R LM indicates 'A- ’ Positive Outlook that we could raise the ratings in the next 12 months if the group continues to reduce its Business risk profile: Strong sensitivity to persisting low interest rates . The ‘A - ’ rating, positive outlook is also affirmed Financial Risk Profile: Satisfactory on AG2R LM's core subsidiaries: AG2R Prévoyance, Prima, La Mondiale, and Arial Liquidity: Exceptional CNP Assurances . An upgrade would also be predicated on AG2R LM maintaining S&P Global Ratings' capital 'AA’ Financial Strength Rating: A- adequacy around the level , and a satisfactory operating performance . ” At the same time, S&P affirmed its 'BBB' issue rating on La Mondiale's junior subordinated debt. As of September 23, 2019 4 C1 - Public Natixis
Table of contents 1. Who are we? 2. Addressing the current environment 3. Solvency & Capital management 4. Proposed transaction 5. Appendix C1 - Public Natixis
Core businesses’ financial structure Outstanding liabilities €83.4bn Unit Results in line with the Group's strategy: Linked ▪ Limit inflows on the general account (with guaranteed capital) €25.9bn ▪ 31% Keep a competitive position on the market ▪ Maximize the unit linked inflows 31% of La Mondiale’s liabilities made of UL: c. 10pts above the market General account 39% pensions / 61% savings: natural hedge between liabilities €57.5bn 69% Liabilities by products Premiums (in €m) €83.4bn 6,205 6,161 Retail Protection Savings 1% 4,224 6% 3,529 Individual 2,744 2,532 Pension 1,845 1,793 14% 831 144 143 67 FY 2017 FY 2018 HY 2019 Private Wealth Group Management G/A 67% 63% 62% Pension 55% UL 33% 37% 38% 24% Total Savings Pensions Others Figures as of HY2019 6 C1 - Public Natixis
Private wealth savings: a UL-focused market Gross Written Premiums (in €m) 325 289 Top 3 on the French market 292 4,171 3,935 143 3,237 46% of UL in Premiums : stable compared to FY 2018, far above the French market 1,702 FY 2016 FY 2017 FY 2018 HY 2019 Specific focus on HNWIs thanks to our distribution Private Wealth management Retail Savings networks (private banks) Partnerships with leading private banks and distributors Specific tax treatment and inheritance purpose Continuous product innovation bringing tailor-made solutions to our partners: dedicated funds, multiple investment options, more than 7,200 unit-linked supports A joint offer of Luxembourg and French insurance products (Source : Fédération Française de l’Assurance and Commissariat aux assurances Luxembourg) 7 C1 - Public Natixis
Group supplementary pension: a market with a strong potential Gross Written Premiums (in €m) 1,669 #1 on the French market , through the partnership with CNP 400 Exceptional Strong growth experienced in Group Supplementary Pension over the last 20 years 1,078 Affected positively by the ageing population and the reduction of the state pension benefits going forward 956 Clients: medium and large companies, including those of the CAC 40 - covering the retirement of their employees 436 Powerful IT platform for underwriters to manage group contracts incorporating all product innovations PACTE law: an opportunity for further market development FY 2016 FY 2017 FY 2018 HY 2019 8 C1 - Public Natixis
Individual retirement plans: a selective and mature market Gross Written Premiums (in €m) #1 on the French market on Self-Employed Retirement Plans, landmark business line of La Mondiale for more than 50 years 882 864 837 Distribution network with more than 1,000 salespeople who are expert in tax and patrimonial optimization Clients: CEOs and entrepreneurs, long-term partnerships in particular with auditors / accountants Contracts with regular premium payments which 395 cannot lapse ensuring a very stable portfolio Increased needs of the French ageing population for retirement products to complement the state retirement system given the reduction of the state pension benefits Critical mass which ensures a mutualization / diversification of the longevity risk (more than 50k annuitants) without a negative selection bias FY 2016 FY 2017 FY 2018 HY 2019 9 C1 - Public Natixis
Diversification towards Protection and Health: leading positions Protection (GWP in € bn) €2.0bn €1.6bn €1.4bn Very competitive market €1.3bn Strategy is not to sacrifice profitability 1 2 for growth €1.3bn 3 4 5 Health (GWP in € bn) Aggregation of players in this market €5.1bn AG2RLM is actively participating in this €2.3bn movement by incorporating every year €2.1bn new health mutual structures €2.0bn 1 2 €1.8bn 3 4 5 Note: 2018 ranking Source: Argus de l’assurance 10 C1 - Public Natixis
Performance in line with our financial strategy Strong organic capital generation (in €m) La Mondiale: € 5.1bn of IFRS own funds (+12% compared to FY 2018, + €555m more than x3 compared to 10 years ago), as a result in HY2019 of: ✓ € 210m of net income ✓ € 21m of mutual certificates issuance 1 5,050 21 324 ✓ € 324m of fair value adjustment (evaluation of unrealized gains on almost all non-real estate investments, net of deferred profit-sharing 210 and tax) 4,495 Group equity capital target: € 1bn of growth every three years, driven by the net results ✓ Results directly contribute to equity, hence driving growth in equity 2018 FY 2018 Fair value Mutual Assets HY 2019 ✓ No dividend distribution given our mutual nature net income adjustment certificates & Others ✓ ROE is in line with our target Return on equity Equity capital and net income 6 500 19.4% €bn €m 5 400 (*) 4 300 13.9% 3 200 2 100 12.2% 1 9.3% 9.0% 8.8% 11.1% 7.8%* 0 0 8.1% 8.4% 7.6% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 E2019 Equity Net income Note : *Estimated EoY2019 11 C1 - Public Natixis
Group structure Eligible Own Funds = €11.3bn SCR = €6.1bn SGAM AG2R LA MONDIALE S2 ratio = 185% Premiums = €4.3bn LA MONDIALE SGAPS AG2R LA MONDIALE Protection & Health Pensions & Savings Eligible Own Funds = €1.4bn Eligible Own Funds = €8.7bn SCR = €1.0bn SCR = €3.8bn S2 ratio = 144% S2 ratio = 229% S2 standards Full financial S2 standards solidarity in Premiums = €1.5bn proportion of Premiums = €2.7bn Total balance sheet = €11.7bn* capital surplus Total balance sheet = €105.2bn SGAM’s prudential scope ▪ All securities issued since 2016 have a dual trigger on both the SGAM and La Mondiale solvency ratios (see details p.48) ▪ A mutual life insurance company is a company with no shareholders, i.e. results go directly into equity ▪ It has been decided to stop the merger with Matmut committed on 1/1/2019; this should be legally effective at the beginning of December 2019 and with almost no impact on the Group's solvency (estimated 2p.p. of Solvency pro-forma end of 2018) Note: *HY estimated 12 C1 - Public Natixis
Table of contents 1. Who are we? 2. Addressing the current environment 3. Solvency & Capital management 4. Proposed transaction 5. Appendix C1 - Public Natixis
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