International Business News

Net inflows of life insurance has turned positive in February for the first time since August. But the lights are far from all being returned to green. Explanations.

Life insurance finds the appeal to the French. Net new money (deposits less withdrawals) was positive in February in France, to the tune of 300 million euros for the first time in seven months, according to figures released Friday by the two main associations of insurers. This figure confirms the recent comments from several insurers, which reported a relative normalization of the market after a very difficult semester, unprecedented in the history of this offering.

Withdrawals down

The return to the green net inflows is primarily attributable to a sharp slowdown in redemptions (withdrawals), down 24% compared to January. They are still 21% above their level in February 2011. At the same time, payments recorded a more moderate decline of 14% compared to January 2012 and 13.5% compared with February 2011, according to figures released by the French Association of Insurance (AFA), that meets the French Federation of Insurance Companies (FFSA) and the Group of mutual insurance companies (Gema). The total amount placed on life insurance contracts has increased from 1.369 billion to 1.377 billion in January end in late February.

These figures tend to confirm the speech held by many insurers, who announced several weeks back to "a sense of normalcy," the term used by the CEO of AXA France, Nicolas Moreau, mid-February. "The movement announced inflection is confirmed over the last month," he told AFP the president of the FFSA, Bernard Spitz, while calling for caution. "It is far too early to see a trend," he warned. Life insurance, however, seems out of the rut, after a year-end nightmare.

Crisis in the eurozone and sluggish economy

The product has suffered because of the deepening crisis in the euro area, which prompted investors to favor short-term investments. But many of these products were already pushed forcefully by banks, launched a hunt for deposits in view of the arrival of the new regulatory framework, says Basel III.

Climate degradation, but also the planned reduction of Scellier, also resulted in the postponement of significant financial investments to real estate. "There was an overall campaign debt", marked, among other things, a wave of mortgage repayments, observed Mr. Moreau. He said "it is possible that at the peak of the crisis, our people have chosen to pay off debt rather than reinvest."

Calming the markets

The normalization of markets, beginning in 2012, supported by advances on Greece and off operations of the European Central Bank (ECB), have provided some form of appeasement. "The purchases have decreased significantly, people are less worried" at the end of 2011, said Thursday the CEO of the insurance arm of BNP Paribas, Eric Lombard. "On the first months of 2012, Aviva is pleased with the evolution of the collection," said Aviva France Friday. However, several factors unfavorable to life remain, primarily the arrival of the retired generation "baby boom" and the continued decline in yields. Last month, the CEO of CNP Assurances, Gilles Benoist, and had talked about "turning point".  

"Life insurance is going to find his true vocation, which is not to compete with short-term banking products, but to constitute a real reserve of long-term savings and fund pensions and dependency," he had said. A vocation that does not seem challenged by the candidates in the presidential election in a position to be elected. "On the substantive issues, there is a line of force that consensus on the left and right is one that returns a favor long-term savings," said Mr. Spitz. For him, "everybody understands that to have growth, you need investment and therefore long-term savings. I have no fear as long as this message has gone."

Management companies in France are beginning to substitute for banks and lending almost "live" business (corporate) facing the credit crunch bank , says Antoine Flamarion, president of Tikehau Capital, Credit Specialist.

Since the collapse of Lehman Brothers in 2008, and the willingness of regulators to strengthen prudential regulations that require a high level of capital to risk, banks, anxious to ease further their balance sheets, have significantly tightened their credit policies. 

"Banks are not lending, it is fine to have find lenders elsewhere," said Antoine Flamarion in an interview with Reuters, adding that Tikehau has funded a clinical enterprise private, Vitalia, belonging to private equity fund Blackstone.

Since 2008, in a highly regulated, financial corporations other than banks can finance companies.

Antoine said that Flamarion Tikehau had essentially mounted operations of this type in the world of LBO (Leveraged buyout or acquisition with debt leverage) and real estate, while broadening the spectrum to finance activities in dollars that banks no longer provide. 

"This is where we think we have the best risk / return ratio, that is where we have more room."

"Since we do not have unlimited resources, for us the question is always when at work 25 to 35 million euros, is to put it on the assets re -paid workers to Euribor plus 700, 800, 1,000, 1,200 basis points, "he said.

BANK FINANCING CERTAIN drop

The three-month Euribor, which is the reference to credit operations at variable rates in the eurozone, was just over 1% (1.036%) Friday .

"For now, we have tended to concentrate on issues and topics LBO estate," said Antoine Flamarion. 

"It was an operation at the end of 2011 real estate financing (…) We refinanced bonds estate of a foreign structure that de French assets held. Fifteen million matured. We kept the existing contract obligations and we just changed the rate. It was lent to 15%, "he said

. Tikehau also participated in financing activities such as shipping or aviation in need of dollars and that French banks do not finance more

. "There was done a little differently, we did not take the debt but we have invested capital with a family that owns the tankers, "he said

.

"The banks are out a lot of business funding and therefore we see a lot of asset classes in finance," he said. 

Tikehau Capital manages € 800 million, including $ 250 million deal with the tradeable public debt (corporate bonds) on the credit market and 550 million euros for private debt e (private debt) in the form of mezzanine funds and special situation funds.

DREAMS OF THE DEBT

"In 550 million, is made of primary and secondary. The primary is Blackstone. In the secondary market, that we sometimes buy distressed debt," he adds .

Antoine Flamarion intends to develop the private debt activity can represent, for LBO France, a market of 5.0 billion euros.

"Normally players as we are of secondary we buy ready-made products, but we will increasingly be the primary."

"Potentially, this is a big market. For example, the Company generally sells its entire portfolio of loans to real estate professionals. It means that some of these professionals who used to borrow from the SocGen will go and borrow elsewhere so we think a number of professions, real estate and LBO on it require substitutions to banks, "he said

. Insurers will have to play an important role in this area ..

……. According to him, disintermediation is expected to increase in Europe. In other words, like what is happening for a long time in the U.S., companies are going to look more to the credit market as far 80% of their funding came from banks.

Antoine Flamarion cites the example of Blackstone, best known for its private equity activity but an activity that "private debt" provided by its subsidiary GSO manages, according to the website of Blackstone, near of $ 44 billion on nearly 180 billion in total managed by the group.

"Today, everyone dreams of making the debt. As private equity can no longer raise money, all private equity funds begin to make the debt," said the head of Tikehau.

France prepares to beat Thursday's record consumption of electricity and gas. Blame the intense cold that strikes the Hexagon. Y there is a risk of blackouts? Cars are blocked due to the snow at Saint-Arnoult-en-Yvelines toll near Paris December 8, 2010 as winter weather and freezing temperatures sub-continuous in France. (FRANCE – Tags: ENVIRONMENT TRANSPORT)

The cold wave that moved to France will intensify in the coming days, but so far, "no major blackouts are to be expected" reassures Herve Mignon, Director of Economy, Planning and transparency in TEN (a subsidiary of EDF). In total this Thursday, 41 counties are in orange alert "cold and snow", until Saturday, 7 am. Level 3 Plan "Extreme Cold" was triggered in Isere, Savoie and in the Oise and the North. "It is seven degrees below seasonal averages of both north and south," said the forecaster Meteo France Dominique Raspaud. A cold that will become even stronger to the end of the week throughout France. For Friday, says Ms. Raspaud to AFP, "is expected within 5 to Marseille in the south-west, at least 6 Bordeaux and La Rochelle, below the minus 10 in Alsace, France-Comté and Rhône Alps "… Even in Britain, a region often spared the extreme temperatures are expected least 1 or less 2 Friday morning in Brest.

Consumption soaring …

The latest forecast of RTE, EDF subsidiary that manages the French high-voltage network, the national electricity consumption would reach 95,500 megawatts (MW) this Thursday at rush hour, at 19h, grazing and the peak total of 15 December 2010 (96,710 MW). After a hard day following the historic summit next Monday could be exceeded, providing RTE for now peaked at 98,700 MW that day. However, an estimate will be refined at the mercy of weather bulletins France. The reason for the runaway? The cold wave which pushes the Hexagon shiver the French to run their electric heaters at full speed. "During cold spells in winter, when there is a degree Celsius less, this corresponds to 2,300 megawatts of additional consumption, the equivalent of twice the consumption of the city of Marseille," recalls Herve Mignon, Director of the economy, foresight and transparency in TEN.  

But … no risk of "blackout" National

"Nationally, there is no risk now, in the sense that the means of production and available national electricity imports from neighboring countries can meet the electricity consumption as expected, "said M.Mignon.

To spend the winter safely, France is indeed important to the Power Utilities. She buys from Germany and Great Britain. Belgium and Denmark can also provide electricity. Spain, if it is untouched by the cold wave, could also provide some of the energy it needs by turning to its own power base.

Increased prevention of certain departments

RTE enabled for the first time this season the device Ecowatt in both "electric peninsulas" that are Brittany and the Côte d'Azur, which were placed in "orange alert". A clear message was sent: "We invite you to moderate your consumption of electricity between 18:00 and 20:00." And for good reason, these areas suffer from a lack of internal capacity of electricity generation, and therefore rely on neighboring regions to meet their energy needs. They are located at the ends of the national grid, it creates risks of bottleneck in their diet. In the Var, 3,000 homes remained without power Thursday morning.

Some useful tips

The right temperature is 19 ° C, no more! A simple thing: go to 20 ° C to 19 ° C in the living rooms of 7% to reduce your energy consumption. In the rooms, ADEME cautions that it is better to keep a temperature between 16 ° C and 17 ° C. In case of absence, he should lower the heating and do not put them up after work. "They will not heat the room faster," said the Environment Agency and energy management. Reduce power consumption between 17h and 20h in winter. few simple actions like turning off appliances on standby, turn down the heat in unoccupied rooms, close the shutters at night, and use appliances after 20h. Companies must also participate in this national effort.

Europe has not found a solution to the debt crisis likely to restore investor confidence, said Friday the European Commission President Jose Manuel Barroso, calling, as a remedy, better integration.

"The truth is that, for now, there is no response to the crisis that sovereign restore investor confidence," said José Manuel Barroso to reporters on the sidelines of a conference in Portugal.

"As long as this does not occur, we will have very serious problems and debates in Europe."

Asked about the possible role of the European Central Bank to the crisis, the President of the Commission considered that it should remain independent.

Many economists believe the ECB should act as lender of last resort for the most indebted countries in the euro area to address the crisis, or that it should resort to quantitative easing operations as do the Reserve Federal and Bank of England to support their economies.

But Germany has so far been adamant against these proposals, arguing that the ECB should remain independent and that its mandate was to fight against inflation.

"We are confident that the European Central Bank will fulfill its role as it has done so far," said José Manuel Barroso.

After the state budget, MPs are looking at the Social Security budget for 2012. Objective: To reduce the deficit by more than four billion euros. Some proposed measures to achieve this will give rise to heated debates. The Palais Bourbon.

Members look from this Tuesday the draft budget law for 2012 Social Security (PLFSS). The 2012 budget for a deficit Safely down 25% from 2011, to 13.9 billion euros. The improvement is mainly on account of the austerity plan announced in late August 11 billion by François Fillon.This plan includes an increase in payroll taxes on capital income, a rise in prices of tobacco and alcohol, and especially the doubling (from 3.5 to 7%) Tax on Contracts for Health "solidarity and accountable "for complementary health.

The measure, passed in September during the 2011 supplementary budget and expected to bring $ 1.1 billion in 2012, is widely criticized. It should indeed lead to higher rates of 4.7% on average in 2012, according to the French Mutuality who also warned of a "major risk" to access to care of the population. To appease critics, including relayed by the Socialist deputies, the government passed last week in committee an amendment raising the income ceiling to qualify for assistance from the state to acquire a complementary health.Currently, only 532,000 people benefit from "health check" as two million are potentially eligible.

Another tax has already been much talked about: the tax on sodas. The terms of this new beverage tax added sugar formed during the debate on the draft 2012 budget law a bone of contention between MPs and the government. The first wish to also apply to beverages with sweeteners in order to double the revenue, while the latter can be influenced by lobbying from Coca-Cola refused to tax all sodas, on behalf of the fight against obesity. Finally, the Assembly voted two taxes: one on the sugar added to soft drinks (two cents per can) and on drinks containing artificial sweeteners.Manufacturers of sweeteners and the National Union of soft drinks were outraged.

Right and left opposed to lower sickness benefits

Among the steps that are to vote, that reforming the calculation of compensation for the disease is probably the most criticized by the left but also from the right. The government has decided by decree, applicable from 1 January 2012, the per diem currently 50% of gross salary would increase to 60% of net wages. A key, 220 million of additional revenue for health insurance. Seven million French are concerned, first 30% of employees without a contract contingency.This measure would reduce from 40 euros per month for an employee paid at minimum wage and 85 euros for a frame.

There is no doubt that MPs from all sides – including the UMP president of the Committee on Social Affairs, Pierre Mehaignerie, and the General Rapporteur of the Social Security budget, the UMP-Yves Bur, who unsuccessfully opposed the measure in committee, will return to the load session. Especially since they have already voted, in committee, a compensation: submit to payroll benefits of breach of employment contract if they exceed twice the maximum Social Security, or 73,000 euros.

For another battle: the project promoted by the budget minister, Valérie Pécresse, to submit to the CSG compensation for parental leave.MEPs decided in committee and unanimously not to retain the provision that the expected return is 140 million. But the government could push through. Finally, an amendment tabled today by the UMP deputy Philippe Meunierne, co-signed by 67 deputies, should also lead to heated clashes between the majority and the opposition. This is the book Solidarity allowance for the elderly (minimum age) only to "French, European and foreign nationals who fought for France".

This allocation – 742.27 euros per month for a single person and 1181.77 euros per month for a couple-cost 612 million euros a year. In the statement of reasons for the amendment, argued that Philip Meunierne of 70,930 recipients, 22,803 are foreign nationals outside the European Economic Area.The deputy of the Rhône amounts to "more than 200 million" euros savings resulting from the adoption of the amendment.

The New York Stock Exchange ended Thursday up 0.31%, the Dow Jones 30 Industrial winning 35.27 points to 11,539.89.

The S & P-500, wider, took 5.43 points, or 0.45% to 1215.31.

The Nasdaq Composite Index, however, declined 5.42 points (0.21%) to 2598.62.

These data are likely to vary even slightly.

Helsinki demanded security for the vote of the new loan. The country threatened not to vote on second bailout plan. Greece in the storm

Countries in the euro area reached a compromise Monday night on the guarantees requested by Finland in Athens in exchange for new loans, about blocking for weeks the second rescue plan promised the country in crisis. "Following lengthy discussions, we reached an agreement on the terms of the collateral," or collateral requirements in exchange for new loans in Helsinki, said the leader of the finance ministers of the monetary union, Jean- Claude Juncker. The European Commissioner for Economic and Monetary Affairs, Olli Rehn, expressed his "satisfaction" that a compromise could be found at last after a meeting of ministers of the Eurogroup, Luxembourg.

Helsinki, which is facing a surge in euro-skepticism shown by the party's electoral breakthrough of the "True Finns" and a growing reluctance of his opinion to help Greece, required to be eligible collateral ("collateral" in financial jargon) in exchange for new loans promised in Athens. Greece has been promised on July 21 a second plan loan of Europe and the International Monetary Fund of 109 billion euros, plus a contribution from private creditors of the country.

The compromise provides that Finland may well benefit from the guarantees required. Helsinki threatened to block any failing device, which would have led Greece to bankruptcy. But at the request of many other countries who refused any special treatment, severe counterparts are planned for countries that would use such safeguards."Any country not ask for collateral, but there is a price to pay," warned Klaus Regling, the director of the Relief Fund for the euro area countries in difficulty, the EFSF.

Finland must first pay at one time contribution to the future permanent emergency mechanism in the euro area (SS), called to take over the EFSF mid 2013, while other countries may spread their payments over 5. In addition, it will not receive as many benefits on the operations of its partners EFSF. The Fund, financed by the guarantees provided by the countries of the euro area, up because of the money in the bond markets at a very low, due to its excellent rating, then pay for a higher rate countries in need who asks. The difference between the two is a profit to share.

Another drawback: if a country supported by its partners fails, the guarantee will be paid to Finland to maturity of bonds made by the EFSF, 20 or 30 years. "So the guarantees will be frozen for a very long time," said Mr Regling. Finally, Helsinki will not be entitled to receive over 30% of its guarantee in the end. "This is why it is unlikely that a country other than Finland so requests," summarized Mr. Regling. The compromise is the final blow to most as a political means for the Finnish government not to lose face domestically, after having made a prerequisite to his constituents.

JPMorgan, the second U.S. bank by assets, falling sharply Tuesday on Wall Street, as the entire banking sector, investors fearing prosecution series on the subject of mortgages sold to investors during the housing bubble.

The federal agency that oversees the mortgage market in the U.S. (Federal Housing Finance Agency) filed a complaint Friday against 17 major financial institutions, having sold more than $ 200 billion of bonds backed by home loans by presenting these operations in one day wrong.

These bonds are now owned by the giants Fannie Mae and Freddie Mac.

JPMorgan gave the title 3.5% by 1700 GMT, Bank of America gave 3.4% and 2.8% Citigroup.The banking sector index fell by his side at 1.97%, underperforming the S & P 500 down 1.8%.

Analysts said investors feared a flurry of lawsuits related to the identification of mortgages become toxic.

The title of Bank of America reached $ 6.80 during the session. Its course is returned to a level below the closing price recorded just before the billionaire Warren Buffett announced the acquisition of five billion dollars of preferred securities.

This transaction, announced Aug. 25, the title was boosted by 26%.

Sodexo announced Monday it had won a new catering contract for 20 new bases for U.S. Marines representing a turnover of 766 million dollars (534 million) over a period of up to seven years.

The world number two catering, behind Britain's Compass, had already announced in February to renew its contract with 31 other Marines base, representing $ 926 million in sales for up to eight years .

Sodexo, which produces over a third of its sales in the United States, and will serve a total of 51 bases in the United States, located in Arizona, California, North Carolina, South Carolina, Virginia and Washington.

Sodexo shares are virtually unchanged at 49.97 euros to 10.00, giving a market capitalization of 7.9 billion. She lost about 3% since the beginning of the year.

The Tel Aviv Stock Exchange, one of the first to open since the downgrade of U.S. sovereign debt, plunged 6% on Sunday morning.

Transactions have started almost an hour late because the automatic interruption began on when the exchange of pre-market fell more than 5%.

For the first time that these "circuit breakers" trigger from 21 September 2008, after the bankruptcy of Lehman Brothers, said a spokesman for the Exchange.

In mid-session, Tel Aviv 25 index showed a decline of 6.2%.

Stock traders fear that the United States, indispensable economic partner of Israel fall into a recession, which could promote the degradation of the sovereign rating by increasing the cost of borrowing.