European bancassurance benchmark

Corinne Legrand
August 2008
Milliman Research Report
European
bancassurance
benchmark
Prepared by:
Corinne Legrand
August 2008
European bancassurance benchmark
Corinne Legrand
August 2008
Milliman
Research Report
CONTENTS
EXECUTIVE SUMMARY 2
Report objective 2
Methodology and structure of the report 2
Key findings 2
BACKGROUND DATA ON EUROPEAN BANCASSURANCE 4
Bancassurance: a major distribution channel in Europe 4
Bancassurance: still seen as a key development opportunity in the European
insurance industry 5
BANCASSURERS CAN BUILD ON AN EXCLUSIVE DISTRIBUTION NETWORK BUT THE
PRODUCTIVITY OF THE BRANCH NETWORK VARIES WIDELY 6
Average productivity per branch varies significantly across countries 6
Factors driving these differences 6
Post office productivity 8
BANCASSURERS HAVE ACCESS TO A CAPTIVE CLIENT BASE BUT THE ABILITY TO
CROSS-SELL INSURANCE PRODUCTS TO THE BANKS CLIENTS VARIES WIDELY 9
Penetration rates 9
How are these penetration rates achieved? 9
How can penetration rates be improved? 10
ACQUISITION EXPENSES 13
Commissions 13
Analysis by type of commissions 13
Non-commission acquisition expenses 14
ADMINISTRATION EXPENSES 15
Administration expenses ratio 15
Staff ratio 16
METHODOLOGY 17
LIST OF COMPANIES ANALYSED IN THE SURVEY 19
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EXECUTIVE SUMMARY
Report objective
The key success factors for European bancassurers are usually measured by commercial efficiency
and low cost base.
The objective of this Milliman analysis is to set up a benchmark of commercial productivity and
expense levels across leading bancassurers in Europe. It focuses on bancassurance-dominated
markets France, Italy, Spain, and Portugal, and selected pure bancassurers in Belgium, Germany,
and the United Kingdom.
Our analysis provides essential information to:
bancassurers present in these markets, to help them assess their performance and understand
how it can be improved
traditional insurers seeking to develop bancassurance distribution, to help them assess the
performance, development potential, and value of possible bancassurance targets
insurers in developing bancassurance markets around the world, to help them assess development
opportunities and set up performance benchmarks
In this report, we present a summary of the results of the Milliman benchmark analysis and explain the
main differences by country, by business model, and by business line.
Methodology and structure of the report
For this report, we analysed publicly available financial and commercial data for a sample of 35
bancassurers across Europe. The list of companies is shown in the appendix.
We then derived from this analysis a number of benchmark indicators:
productivity per branch
customer penetration
non-commission acquisition expenses as a percentage of new business Annual Premium
Equivalent (APE)
entry commissions as a percentage of new business APE
administration expenses as a percentage of reserves
Building on our in-depth knowledge of these bancassurance markets, we proceeded to an analysis
of these benchmark indicators to explain the main differences by country, business model, and
business line.
Key findings
Bancassurance commercial productivity, measured as premiums per branch, varies largely across
countries. The highest productivity levels are reached in mature life insurance markets in which
life insurance products are tax advantaged compared to other forms of savings products, e.g. in
France (2.5 million per branch on average) and Belgium (2.38 million). In countries such as Italy,
where life insurance products do not benefit from a favourable tax treatment compared to other
savings products, the commercial productivity depends largely on the level of priority assigned to
life insurance business by the bank and can vary from one to ten.
Reasonably successful bancassurers in mature life insurance markets can achieve penetration
rates of 15% to 25% of the banks customer base by selling fairly standardised products to
their mass-market customers and cross-selling life insurance risk products with loans and
mortgages. Bancassurers can further increase their penetration rate up to 35% and more by
expanding their life insurance product offerings to their affluent customers and by expanding
The objective of this Milliman
analysis is to set up a
benchmark of commercial
productivity and expense
levels across leading
bancassurers in Europe.
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their insurance product range to new product lines, e.g. non-credit-related risk products and
non-life insurance products.
Commissions represent between 82% and 94% of acquisition expenses. Average commissions-
to-new-business APE ratios are around 35% in Italy, Spain, and Portugal, and significantly higher
in France (47%). The level of non-commission acquisition expenses varies largely by country
from 1.9% of new business APE in Portugal to 7.7% in Italy. These differences can be driven by
different compliance requirements across countries and by different structures of sales support
implemented by companies.
The level of administration costs varies significantly across countries, from 0.08% of reserves in
France to 0.23% in Germany. This ratio is largely dependent on the size of companies and can
be as low as 0.04% for the largest bancassurers. The business model implemented joint-
venture or fully owned companies has limited impact, reflecting the fact that the level of IT and
administration integration between the bank and the insurance company is generally comparable
under both models.
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BACKGROUND DATA ON EUROPEAN BANCASSURANCE
Bancassurance: a major distribution channel in Europe
Bancassurance is a major distribution channel in Europe, accounting for over 60% of individual life
insurance premiums in France, Italy, Portugal, and Spain, and over 50% in Belgium. Bancassurance
is less developed in the United Kingdom and Germany.
EXHIBIT 1: BANCASSURANCE IN MAIN EUROPEAN INDIVIDUAL LIFE INSURANCE MARKETS

Source: Milliman analysis2006 data
In France, Italy, Spain, Portugal, and Belgium, bancassurers operate under a fully integrated model
in which:
Bancassurance companies are fully or partly owned by a bank.
Bancassurance companies have an exclusive distribution agreement with their parent bank.
Bancassurance products are fully integrated in the banks product range and are sold by branch
staff along with banking products.
In Germany and the United Kingdom, bancassurance tends to be less integrated:
Fully owned bancassurance companies and joint ventures exist, but banks frequently operate
through pure distribution agreements.
Distribution agreements are often on an exclusive basis in Germany, but in the United Kingdom
multi-tied bancassurance distribution is developing.
Life insurance products are often not sold by branch staff directly, but are referred to insurance
specialists. In Germany, this can be because insurance products tend to be more complex than
in southern Europe. In the United Kingdom, this is due to the regulation under which investment
products can be sold only by qualified financial advisers.
218.79
125.9
63.27
60.37
19.07
16.04
8.60
0
50
100
150
200
250
United Kingdom France Italy Germany Spain Belgium Portugal
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Individual premiums (m) Bancassurance market share (%)
Bancassurance is a major
distribution channel in Europe,
accounting for over 60%
of individual life insurance
premiums in France, Italy,
Portugal, and Spain.
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The main competitive advantages of bancassurance are often seen as:
the capacity to achieve high business volumes by cross-selling simple products to the banks
captive customer base
the marginal cost of distribution through an existing branch network
the operational cost efficiency of a close integration of systems and processes between the bank
and the insurance company
This report gives a view on these performance indicators and how they can vary by country and by
business model.
Bancassurance: still seen as a key development opportunity in the European
insurance industry
Bancassurance has generated a significant volume of mergers and acquisitions (M&A) activity in
Europe in 2007 and the first months of 2008. Both traditional insurers and bancassurers have
developed their bancassurance activity by acquiring 50% stakes in bancassurance companies
previously 100% owned by banks. By acquiring bancassurance ventures, traditional insurers gain
access to well-established distribution networks and customer bases, allowing them to gain market
share quickly.
Traditional insurers tend to expand into bancassurance for one of two reasons:
to diversifiy their distribution strategy and gain market share in the countries where they are already
present (This was the case with AXA with the acquisition of 50% of Montepaschi Vita in Italy in
2007, and Zurich Financial Services acquisition in Spain of 50% of Caixa Sabadells life insurance
subsidiary, CaixaSabadell Vida, in 2008.)
to expand internationally (This was the case with Groupama with the acquisition of 100% of OTP
Garancia in Hungary in 2007.)
Well-established bancassurers were also active in the M&A drive to develop internationally by
exporting their successful business model abroad. Credit Agricole, for example, acquired 50% and
management control of the life and non-life bancassurance subsidiaries of the Espirito Santo Group
in Portugal in 2006.
For the valuation of these bancassurance deals, understanding the development potential of the
bancassurance company is key. The ability to benchmark the companys productivity per branch
and bank customer-base penetration against successful competitors is an element with which to
assess a global growth potential. Benchmarking the bancassurance business mix and profitability by
business line against competitors is also essential for the definition of the business plan.
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BANCASSURERS CAN BUILD ON AN EXCLUSIVE
DISTRIBUTION NETWORK BUT THE PRODUCTIVITY OF THE
BRANCH NETWORK VARIES WIDELY
Average productivity per branch varies significantly across countries
In the typical southern Europe bancassurance models, bancassurance companies are owned (fully or
partly) by a bank and have an exclusive distribution agreement with their parent bank. Bancassurance
companies thus have access to an established branch network and to a captive customer base.
The life insurance premiums per branch ratio is a good indicator of the commercial performance of
the branch network. Milliman analysis shows that this indicator varies widely across countries.
EXHIBIT 2: AVERAGE LIFE INSURANCE PREMIUMS PER BRANCH * (M)
* excluding post office distribution
Source: Milliman analysis2006 for France, Belgium, Italy, Spain, and Germany; 2007 for Portugal
Factors driving these differences
The first factor explaining these differences is the general level of development of life insurance
markets and banking sectors in these countries. In Spain, for example, the life insurance market is
relatively underdeveloped compared to other European markets. At the same time, Spain has one of
the highest bank-branch densities in Europe.
EXHIBIT 3: LIFE INSURANCE DENSITY AND DENSITY OF BANK BRANCH NETWORKS IN FRANCE AND
SPAIN
COUNTRY LIFE INSURANCE DENSITY BANK BRANCH DENSITY (NUMBER OF
(PREMIUMS PER CAPITA IN $US) BRANCHES PER 1,000 INHABITANTS) *
SPAIN 651.0 0.97
FRANCE 2,922.5 0.43
* excluding post office
Source: Sigma Swiss Re, Banque de France, and Banco de Espaa2006 data
3,00
2,50
2,00
1,50
1,00
0,50
0,00
France Belgium Italy Portugal Spain Germany
2,51
2,38
1,73
1,66
0,45
0,32
In Spain, for example, the life
insurance market is relatively
underdeveloped compared to
other European markets. At
the same time, Spain has one
of the highest bank-branch
densities in Europe.
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A second factor driving these differences is the nature of life insurance business. In France and
Belgium, individual life insurance products are basically tax-advantaged medium-term savings
products, benefiting from tax exemption on interest and capital gains when policies are held for a
minimum duration.
This means that life insurance products are by nature very similar to the investment and savings
products sold by banks and hence fairly easy for bank advisers to sell. Furthermore, the tax
advantages mean that bank advisers can encourage their clients to shift their money from other
savings products to life insurance products.
In France, for example, the 2006 market growth was strongly driven by substantial transfers from
Plans Epargne Logement (PEL), which are regulated savings products that allow savings for property
acquisition under favourable conditions. On 1 January 2006, the interest earned on PEL in force
for over 10 or 12 years became subject to income tax. As a consequence, a large number of PEL
holders transferred their PEL to life insurance policies. It is estimated that 11 billion were transferred
from PEL to life insurance products in 2006, generating a 9% life insurance market growth (out of a
total 17% market growth in 2006). These transfers benefited mainly the bancassurance distributors
because banks were able to target the PEL holders in their customer base.
The situation in Italy is different because life insurance does not benefit from any tax advantages over
other forms of saving products. The life insurance volumes produced by banks are therefore very
dependent on the commercial priorities defined by each bank. This results in large differences in the
commercial performance of banks. As shown in the graph below, the commercial performance of
banks varies much more in Italy from 0.45 million to 4.32 million per branch per year than in
France, Spain, or Portugal.
EXHIBIT 4: LIFE INSURANCE PREMIUMS PER BRANCH FOR SAMPLE BANCASSURERS IN FRANCE,
ITALY. SPAIN, AND PORTUGAL (M)
Source: Milliman analysis2006 for France, Italy, and Spain; 2007 for Portugal
The performance of Italian banks can also vary significantly year on year. In recent years, the
commercial priorities of banks and in particular their focus or lack of focus on bancassurance
may have been affected in a major way by M&A and restructuring activities. An example of this is a
bancassurer involved in restructuring the ownership of its bancassurance operation in 2006, which
saw the commercial performance per branch drop from 0.93 million per branch in 2005 to 0.58
million in 2006.
France Italy Spain Portugal
5,00
4,50
4,00
3,50
3,00
2,50
2,00
1,50
1,00
0,50
0,00
France Italy
Spain
Portugal
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Post office productivity
Finally, it is worth making a comment on post offices, which are more and more involved in the
distribution of financial and life insurance products.
Poste Vita ranked third in the Italian bancassurance market in 2006 and became the leading Italian
bancassurer in 2007.
La Banque Postale ranks second in the French bancassurance market behind Credit Agricole.
These distributors can build on extremely large branch networks but with a fairly low number of
bank advisers per branch and a less captive and often less wealthy customer base. As a result, the
productivity of post office branches is lower than the average productivity of retail banks and
savings banks.
EXHIBIT 5: LIFE INSURANCE PREMIUMS PER BRANCH FOR POST OFFICES IN FRANCE AND ITALY
COUNTRY NUMBER OF BRANCHES LIFE INSURANCE PREMIUMS PER BRANCH (M)
FRANCE 17,000 0.71
ITALY 11,800 0.51
Source: Milliman analysis2006 data
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BANCASSURERS HAVE ACCESS TO A CAPTIVE CLIENT BASE
BUT THE ABILITY TO CROSS-SELL INSURANCE PRODUCTS TO
THE BANKS CLIENTS VARIES WIDELY
Penetration rates
Two ratios can be used to measure bancassurance penetration. The first indicator is the percentage
of the banks clients that holds a life insurance policy with its bancassurance company. The second
indicator is the ratio between the number of life insurance policies and the number of bank customers.
For mature bancassurers focusing primarily on selling standardised savings and risk products to the
banks mass-market customers, the first ratio is typically in the 15%25% range and the second, in
the 20%30% range.
These represent good levels of penetration for bancassurers that take a typical commercial approach
in selling standardised and fairly simple products to the banks mass-market customers.
EXHIBIT 6: AVERAGE BANCASSURANCE PENETRATION IN FRANCE AND ITALY
Source: Milliman analysis-2006 data
How are these penetration rates achieved?
European bancassurers typically target two types of customers:
the banks mass-market customers, with an offer of fairly simple life savings and pension products
the banks customers taking loans and mortgages with an offer of credit-related risk products
High penetration rates can be achieved by promoting simple life insurance savings
products aimed at mass-market customers.
Successful bancassurers have initially developed fairly standardised savings products aimed at
their mass-market customers. For the branch staff of banks who were not life insurance specialists
and were given only fairly limited life insurance training, products had to be simple to sell. And they
had to be easy to understand for clients because only limited advice could be provided by the
branch staff.
32,98%
13,70%
37,15%
20,93%
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
France
Italy
Bancassurance clients / Bank clients Bancassurance policies / Bank clients
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Bancassurers have therefore developed a strong presence in the traditional guaranteed business
and in the index-linked business, which are easy to sell based on the guaranteed or expected returns.

They have also rapidly and successfully entered the unit-linked market with a product offering usually
characterised by flexible premium payment, a narrow range of in-house funds typically between 3
and 10 funds with a focus on risk-profile funds rather than pure investment funds and a minimum
insurance content.
High penetration rates can be achieved by cross-selling credit-related insurance products
with loans and mortgages
High penetration rates can also be fairly easily achieved by bancassurers offering risk products such
as creditor insurance products linked to personal loans and mortgages.
In France, subscribing a creditor insurance policy is compulsory in order to be granted a mortgage;
it does not necessarily have to be subscribed with the bank, but that is generally the case. In Spain,
bancassurers actively cross-sell creditor insurance as well as home insurance with mortgages. In
Italy, a number of bancassurers are only starting to develop their creditor insurance offering, but
those already present in this business are achieving high penetration rates.
In the table below, we provide cross-selling rates achieved by leading banks on personal loans
and mortgages.
EXHIBIT 7: EXAMPLES OF CROSS-SELLING RATES ACHIEVED BY LEADING BANKS ON PERSONAL
LOANS AND MORTGAGES
COUNTRY PRODUCTS CROSS-SELLING RATE
SPAIN CREDITOR INSURANCE / MORTGAGES 45%
ITALY CREDITOR INSURANCE / MORTGAGES 50%
FRANCE CREDITOR INSURANCE / PERSONAL LOANS AND MORTGAGES 80%
BELGIUM CREDITOR INSURANCE / MORTGAGES 66%
SPAIN CREDITOR INSURANCE / PERSONAL LOANS 73%
ITALY CREDITOR INSURANCE / PERSONAL LOANS 99%
ITALY CREDITOR INSURANCE / CONSUMER GOODS LOANS 44%
Source: Milliman analysis2006 data
How can penetration rates be improved?
Penetration rates can be improved in two main ways:
by targeting new customer segments, in particular the banks affluent and high-net-
worth customers
by expanding the product offer to new insurance lines, e.g. non-credit-related risk products
and non-life insurance products.
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EXHIBIT 8: HOW CAN PENETRATION RATES BE IMPROVED?
Source: Milliman analysis
Penetration rates can be improved by targeting new customer segments
One of the key issues for bancassurers is to keep expanding once they have achieved a high level of
penetration in the banks mass-market customer base. In practice, this involves being able to better
target other customer segments, in particular the affluent and upper affluent segments, by:
designing a new product range aimed at the banks affluent and upper-affluent customers
developing distribution through the banks personal banking and private banking advisers, which
implies in particular developing new sales and marketing tools
The largest French bancassurers have actively developed product offers aimed at the banks affluent
and upper affluent customers in recent years. In particular, they have developed sophisticated multi-
manager unit-linked policies comparable to those sold by independent financial advisers.
Bancassurers that have been able to implement such strategies have achieved significantly higher
penetration rates than those given above. The percentage of a banks clients holding a life insurance
policy with its bancassurance company can reach 35%, and the average number of policies per
client can reach 1.5 to 2.0.
Penetration rates can be improved by expanding the insurance offer
In recent years, successful bancassurers have been able to expand their product range to new
product lines, in particular non-credit-related risk products and non-life insurance products.
The most successful non-life insurance development areas are standardised products with limited
underwriting, in particular low-premium products that can be sold using mass-marketing techniques
(for example, travel insurance or legal-expenses insurance) and products that can be packaged with
banking products (for example, home insurance with mortgages).
Non-life insurance
products
Primary bancassurance target
Expand into new
business lines
Target new
customer segments
Mass market Affluent High net worth
Savings and
pensions
Credit-related
life-risk products
Non-credit-related
life-risk products
In recent years, successful
bancassurers have been
able to expand their product
range to new product lines, in
particular non-credit-related
risk products and non-life
insurance products.
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EXHIBIT 9: SUCCESSFUL DEVELOPMENT AREAS IN EUROPEAN
NON-LIFE INSURANCE BANCASSURANCE
Source: Milliman analysis

LOW
HIGH LOW
Standardised
products with limited
underwriting
More complex
products with higher
insurance content
Non-bank-related
products
Student insurance
Health
Home
Motor
Can be packaged with
banking products
Directly linked to
banking products
Accident cover
Creditor insurance
Legal expenses
Travel insurance
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ACQUISITION EXPENSES
Acquisition expenses are split into two categories: non-commission acquisition expenses and
commissions, including initial commissions and trail commissions. Commissions represent between
82% of acquisition expenses in Italy and 94% in Portugal.
In this section, we focus on France, Italy, Spain, and Portugal, for which we are able to analyse each
of these items separately.
Commissions
Average commissions-to-new-business APE ratios are fairly similar in Portugal, Italy, and Spain at
around 35%. However, they vary widely across companies in each country.
The average commission-to-new-business APE ratio is significantly higher in France. As explained
below, the fairly high ratio in France might partly result from the high level of trail commissions paid to
distributors.
EXHIBIT 10: COMMISSIONS / NEW BUSINESS APE
Source: Milliman analysis2006 data for France, Italy, and Spain; 2007 data for Portugal
Analysis by type of commissions
The data available for France allow us to analyse the split of total commissions between entry
commissions and trail commissions.
In a typical bancassurance product, entry commissions are paid at inception and are defined as a
percentage of the initial premium paid and then subsequently of additional premiums paid.
Trail commissions are paid annually and are fund-based commissions. The level of trail commissions
depends on the level of policy annual-management charges and, in the case of unit-linked products,
on the level of rebates received from asset managers on funds. As a result, trail commissions for
unit-linked products generally vary by fund category and, in the case of multi-manager products, by
fund manager.
It is worth noting that disclosure requirements are currently more limited in France than in other
countries, such as Italy. Companies currently have limited disclosure requirements regarding the level
32,79%
47,28%
35,51% 36,13%
9,96%
33,06%
24,13%
19,00%
67,58%
54,46%
44,12%
84,00%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
90,00%
Portugal France Spain Italy
Average Minimum Maximum
Average commissions-to-
new-business APE ratios
are fairly similar in Portugal,
Italy, and Spain at around
35%. However, they vary
widely across companies in
each country.
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of charges taken on underlying funds. They do not have any obligation to disclose the levels
of rebates received from asset managers nor to allocate all or any part of such rebates to
policyholders. This allows companies to use these rebates to pay fairly high trail commissions to
distributors. However, customer and regulatory pressures could force companies to increase the
level of transparency in the future, as has already been the case in other European countries.
The entry and trail commissions are paid by the bancassurer to the bank. Depending on the banks
commercial incentive system, they can then be partly paid to the bank advisers as commissions or as
bonuses linked to the commercial objectives.
On average for the French companies analysed, entry commissions account for 49.7% of total
commissions, varying between 30% and 66% depending on companies. Trail commissions account
for 50.3%.
Entry commissions represent on average 23.5% of new business APE and trail commissions 0.35%
of reserves.
Non-commission acquisition expenses
The non-commission acquisition-expenses-to-new-business APE vary significantly across countries.
They also vary largely across companies in each country.
EXHIBIT 11: NON-COMMISSION ACQUISITION EXPENSES / NEW BUSINESS APE
Source: Milliman analysis2006 data for France, Italy, and Spain; 2007 data for Portugal
The differences in the level of non-commission acquisition expenses could be linked to a number
of factors:
At country level, the differences could be driven by the level of compliance requirements. In Italy,
for example, the compliance requirements, in terms of insurance-adviser training and disclosure to
customers, are more extensive than in other European countries.
At company level, the differences might come from the structure of the sales support to
bancassurance advisers and from the agreed split of commercial expenses such as marketing,
communication, and adviser training between the bank and the insurance company.
1,91%
4,28% 4,29%
7,75%
0,58% 0,41%
2,72%
1,00%
2,62%
5,85% 5,73%
17,00%
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
14,00%
16,00%
18,00%
Portugal France Spain Italy

Average Minimum Maximum
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ADMINISTRATION EXPENSES
Administration expenses ratio
The operational efficiency of bancassurers can be assessed through the analysis of the ratio of
average administration expenses to reserves. This ratio varies significantly across Europe, varying
between 0.08% on average for bancassurers in France and 0.23% on average for bancassurers
in Germany.
EXHIBIT 12: AVERAGE ADMINISTRATION EXPENSES / RESERVES RATIO IN FRANCE, ITALY, SPAIN,
AND GERMANY
Source: Milliman analysis2006 data
This ratio is to a large extent dependent on the size of the companies. In France, for example,
this ratio can be as low as 0.04% for the largest bancassurers and can reach 0.32% for
smaller companies.
The graph below shows some correlation between the size of the reserves and the administration-
expenses-to-reserves ratios for sample Italian bancassurers
EXHIBIT 13: RESERVES AND ADMINISTRATION EXPENSES / RESERVES RATIO FOR SAMPLE
ITALIAN BANCASSURERS
Source: Milliman analysis2006 data
0,25%
0,20%
0,15%
0,10%
0,05%
0,00%
France Spain Italy Germany
0,08%
0,09%
0,14%
0,23%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
Reserves (m)
A
d
m

e
x
p
e
n
s
e
s

/

r
e
s
e
r
v
e
s

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The business model implemented full ownership or joint venture does not seem to have any
significant impact on the administrative-expenses-to-reserves ratio. This reflects the fact that the level
of integration of IT systems and processes between the bank and the bancassurance company, a
strong driver behind the operational efficiency of European bancassurers, is relatively similar under
both business models.
Staff ratio
Another way to assess the operational efficiency of bancassurers is by analysing the number of
policies per staff. This ratio makes sense only when the bancassurance company is a fully operational
company. This is often not the case for joint ventures, which can operate with limited (or no) staff and
most (or all) services provided by the parent insurance company. We have therefore carried out this
analysis only for fully owned bancassurance companies.
This analysis shows very large differences across companies, with nearly 19,000 policies per staff
in the most efficient company and around 2,000 to 3,000 in the less efficient companies. Companies
with over 4,000 policies per staff have administrative-expenses-to-reserves ratio under 0.05%,
while companies with under 4,000 policies per staff have administrative-expenses-to-reserves ratios
over 0.15%.
EXHIBIT 14: NUMBER OF POLICIES / STAFF AND ADMINISTRATION EXPENSES / RESERVES RATIO
FOR SAMPLE EUROPEAN BANCASSURERS
COMPANY NUMBER OF POLICIES PER STAFF (,000) ADMINISTRATION EXPENSES / RESERVES
FRANCE 18,85 0.04%
FRANCE 5.86 0.05%
SPAIN 4.29 0.05%
SPAIN 3.56 0.41%
GERMANY 3.11 0.25%
FRANCE 2.45 0.16%
FRANCE 2.2 0.32%
Source: Milliman analysis2006 data
This analysis shows very
large differences across
companies, with nearly 19,000
policies per staff in the most
efficient company and
around 2,000 to 3,000 in the
less efficient companies.
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Research Report
17 European bancassurance benchmark
Corinne Legrand
August 2008
METHODOLOGY
This research is based on our knowledge of bancassurance markets in Europe and on publicly
available information published by companies primarily annual reports, presentations, and
press releases.
We have defined a number of indicators to measure bancassurers productivity, commercial
efficiency, administrative efficiency, and profitability:
Productivity per branch : We defined this as premiums distributed through the bancassurance
channel divided by the number of bank branches. All the companies analysed in this report are
pure bancassurers distributing primarily through bank branches, although a minor part of premium
income can be generated by other channels, e.g. financial advisers or direct. Unless some
detail on the distribution mix was available, we have assumed that 100% of premiums were
through bancassurance.
Customer penetration : We calculated two ratios. The first is the number of insurance customers
to the number of bank clients, which measures the bancassurers penetration in the banks
customer base. The second is the number of insurance policies to the number of bank clients,
which measures the customer penetration and the equipment rate.
Acquisition expenses : We aimed to split total acquisition expenses into non-commission
acquisition expenses and commissions, and to analyse separately the non-commission acquisition-
expenses-to-new-business APE and commissions-to-new-business APE ratios. When this split
was not available in the companies annual accounts, we made estimates where possible.
Administration expenses : We defined these as administration expenses divided by reserves.
Staff ratio : We calculated two ratios: number of in-force insurance policies to staff number and
reserves to staff number.
For consistency, we used 2006 data for all bancassurance companies in France, Germany, Italy,
Spain, and the United Kingdom because 2007 annual accounts were not yet available for all
companies. Information on banks and on the relationship between the bank and the bancassurer is
also based on the 2006 situation. It is worth pointing out, however, that due to intensive M&A activity
in the European banking industry and significant restructuring of bancassurance operations in 2007,
the structure of a number of bancassurance operations changed in 2007, in particular in Italy. This is
shown in the appendix listing the companies surveyed.
We used 2007 data for Portugal, as these were available for all companies.
It has not been possible to calculate all ratios for all companies. In a number of cases, the publicly
available information was not sufficient to calculate or estimate the indicators.
Notes on indicators
New business APE
Annual reports in France, Spain, and Italy generally provide only premiums data and do not provide
new-business premiums or new-business APE data. For these companies, we estimated new-
business APE as 10% of premiums.
Acquisition and administration expenses
In French annual accounts, commissions are split into entry commissions, which are included in
acquisition expenses, and trail commissions, which are included in administration expenses. In other
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Research Report
18
European bancassurance benchmark
Corinne Legrand
August 2008
countries, all commissions are included in acquisition expenses. To ensure that data is comparable,
we have reintegrated trail commissions into acquisition commissions for French companies.
Staff related ratio
While the staff number and the related indicators (number of in-force policies per staff and reserves
per staff) make sense in the full-ownership model, this is not always the case in the joint-venture
model. In some cases, the joint venture is a virtual company, meaning that all the policy administration
is done entirely by the parent insurer. In other cases, the joint venture has some staff, but a number
of administrative tasks are carried out by the parent company. In these cases, we have estimated the
total staff, including the parent company staff, as fully dedicated to the joint venture, when possible.
Milliman
Research Report
19 European bancassurance benchmark
Corinne Legrand
August 2008
LIST OF COMPANIES ANALYSED IN THE SURVEY
We have analysed 2006 data for the companies listed below.
Due to intensive M&A activity in the European banking sector and restructuring in the bancassurance
sector, the ownership and business models changed in 2007 in a number of cases, especially in Italy.
This is shown in the comment column.
EXHIBIT 15
BANCASSURER BANK COUNTRY 2006 BUSINESS COMMENT
MODEL
PREDICA CRDIT AGRICOLE FRANCE FULL OWNERSHIP
CARDIF BNP PARIBAS FRANCE FULL OWNERSHIP
SOGECAP SOCIT GNRALE FRANCE FULL OWNERSHIP
ACMN VIE CREDIT MUTUEL NORD FRANCE FULL OWNERSHIP
ANTARIUS CRDIT DU NORD FRANCE JOINT VENTURE
ECUREUIL VIE CAISSES DEPARGNE FRANCE JOINT VENTURE CAISSES DEPARGNE
PARTLY OWNS CNP. IN
2006, ECUREUIL VIE WAS
50% HELD BY CNP AND
50% BY CAISSES
DEPARGNE. IN 2007, CNP
ACQUIRED THE 50% OF
ECUREUIL VIE HELD BY
CAISSES DEPARGNE.
PREPAR VIE BRED FRANCE FULLY OWNED
CNP BANQUE POSTALE FRANCE JOINT VENTURE BANQUE POSTALE PARTLY
OWNS CNP.
AVIVA VITA BPU BANCA ITALY JOINT VENTURE IN 2007, BPU MERGED
WITH BANCA LOMBARDA
INTO UBI.
AVIVA LIFE BANCA MARCHE ITALY JOINT VENTURE
BPV VITA BANCO POPOLARE DI ITALY JOINT VENTURE IN 2007, BANCA POPOLARE
VERONA E NOVARA DI VERONA E NOVARA
MERGED WITH BPI INTO
INTO GRUPPO BANCO
POPOLARE. IN 2008, THE
BANCASSURANCE
COMPANY WAS
REBRANDED POPOLARE
VITA AND FONDIARIA
REPLACED CATTOLICA AS
COMPANY SHAREHOLDER.
BNL VITA BNL ITALY JOINT VENTURE
CNP CAPITALIA CAPITALIA ITALY JOINT VENTURE IN 2007, CAPITALIA
VITA WAS ABSORBED BY
UNICREDIT. THE
BANCASSURANCE
COMPANY WAS
REBRANDED CNP
UNICREDIT VITA.
CREDITRAS VITA UNICREDIT BANCA ITALY JOINT VENTURE
(CONTINUED)
The ownership and business
models changed in 2007 in a
number of cases, especially
in Italy.
Milliman
Research Report
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European bancassurance benchmark
Corinne Legrand
August 2008
EXHIBIT 15 (CONTINUED)
BANCASSURER BANK COUNTRY 2006 BUSINESS COMMENT
MODEL
EURIZON VITA SAN PAOLO IMI ITALY FULL OWNERSHIP IN DECEMBER 2006,
SAN PAOLO IMI MERGED
WITH BANCO INTESA INTO
INTESA SAN PAOLO.
INTESA VITA BANCO INTESA ITALY JOINT VENTURE IN DECEMBER 2006,
BANCO INTESA MERGED
WITH SAN PAOLO IMI INTO
INTESA SAN PAOLO.
MONTEPASCHI BPMS ITALY FULL OWNERSHIP IN 2007, AXA ACQUIRED 50%
VITA OF MONTEPASCHI VITA.
POSTE VITA POSTE ITALIANE ITALY FULL OWNERSHIP
VIDA CAIXA LA CAIXA SPAIN JOINT VENTURE IN 2007, LA CAIXA ACQUIRED
THE 50% HALF HELD BY FORTIS
IN THE BANCASSURANCE JOINT-
VENTURE CAIFOR, PARENT
COMPANY OF VIDA CAIXA.
BBVA SEGUROS BBVA SPAIN FULL OWNERSHIP
SABADELL VIDA BANCO SABADELL SPAIN FULL OWNERSHIP IN JULY 2008, ZURICH
FINANCIAL SERVICES
ACQUIRED 50% OF
BANSABADELL VIDA
UNICORP VIDA UNICAJA SPAIN JOINT VENTURE
MEDITERRANEO CAJA MEDITERRANEO SPAIN JOINT VENTURE
VIDA
SANTANDER BANCO SANTANDER SPAIN FULL OWNERSHIP
SEGUROS
R+V VOLKSBANKEN AND GERMANY FULL OWNERSHIP
RAIFFEISENBANKEN
NEUE LEBEN SPARKASSEN GERMANY JOINT VENTURE
HSBC LIFE HSBC UNITED FULL OWNERSHIP
KINGDOM
NATIONWIDE NATIONWIDE UNITED FULL OWNERSHIP IN 2007, L&G ACQUIRED
LIFE KINGDOM NATIONWIDE LIFE AND
SET UP A DISTRIBUTION
AGREEMENT WITH
NATIONWIDE.
FB FORTIS BANQUE BELGIUM FULL OWNERSHIP IN 2006, FB
ASSURANCES ASSURANCES WAS
MERGED WITH FORTIS
AG INTO FORTIS
INSURANCE BELGIUM.
KBC KBC BELGIUM FULL OWNERSHIP
OCCIDENTAL BCP BANK PORTUGAL JOINT VENTURE
VIDA
BES VIDA BES PORTUGAL JOINT VENTURE
SANTANDER SANTANDER TOTTA PORTUGAL FULL OWNERSHIP
TOTTA SEGUROS
BPI VIDA BANCO BPI PORTUGAL FULL OWNERSHIP
FIDELIDADE CGD PORTUGAL FULL OWNERSHIP
MUNIDAL
European bancassurance benchmark
Corinne Legrand
August 2008
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