Next-Finance : Can you introduce your company? What is your current outstanding assets and what is your current asset allocation?
Emmanuel Brutin : As a wholly-owned subsidiary of La Banque Postale, CNP Assurances manages the Euro contract part (approximately €275bn at the end of 2022). Our current allocation is broken down as follows:
- 10% listed shares,
- 10% unlisted assets (real estate, infrastructure and private equity ),
- 80% in interest rate products (5% in cash, 40% sovereign bonds and 35% corporate bonds).
How has your allocation changed since the War in Ukraine and with the inflationary shock to the global economy?
Since 2021, we have been quite cautious on the equity markets due to their level of valuation, but also on the bond markets due to the return of structural inflation. This is why we have reduced our equity exposure from 2021. Over the course of 2022, we have repositioned ourselves on bond products in order to benefit from the upward trend in interest rates.
Many institutional investors are placing their portfolios on the defensive given the market environment since the last quarter of 2022, with persistent inflation and a prospect of additional central bank rate hikes. Is this also your case? Do you use specific hedging strategies?
As I told you, we have been very cautious in recent years. Moreover, we have a policy of historical prudence and we use specific hedging strategies, namely:
- interest rate options (cap) in the event of a sharp rise in interest rates,
- purchases of put options on the equity market to protect us against a stock market correction,
- investments in inflation-indexed bonds to compensate for the sharp rise in interest rates.
We have a policy of historical prudence and we use specific hedging strategies, namely investments in inflation-indexed bonds to compensate for the sharp rise in interest rates.
Emmanuel Brutin, Head of Insured Portfolio Management at CNP Assurances
Arm manufacturers, hitherto neglected, has regained the favor of investors. Some arm companies want to be included in ESG portfolios, whereas so far they have been rather excluded from this type of fund... Do you have an opinion on the subject?
We are not invested in this type of listed company; these companies being mostly American.
Are you looking to reduce the carbon footprint of your portfolios? In concrete terms, what commitments have you made in terms of energy transition? What methods do you use to measure this carbon footprint within your portfolios?
By becoming a member of the Net- Zero Asset Owner Alliance in 2019, CNP Assurances has committed to achieving carbon neutrality in its investment portfolio by 2050.
We are reducing the carbon footprint of our portfolios, in particular through:
- green investments: via Green bonds and Sustainability Bonds - whose assets reach €25 billion in our portfolios compared to €17 billion in 2020 - but also via unlisted assets (HQE real estate, renewable energy infrastructure, forest or private impact debt),
- investments in impact funds with the objective of doubling their current assets (€500 million) by 2025,
Regarding the measurement of our carbon footprint, we use a method based on the market value of assets (elaborated using data from Trucost), with a primary focus on dialogue with the companies in which we are invested and complemented through arbitrage (on the occasion of bond maturities or the rotation of equity portfolios).
Since 2019, our carbon footprint has been reduced by 49%.
Emmanuel Brutin, Head of Insured Portfolio Management at CNP Assurances
Do you have a long-term objective of a 100% ESG allocation?
We have chosen to move towards a 100% ESG allocation, but this objective will not be achieved overnight. Indeed, to achieve this, we need a sufficiently broad base of investment support in this area.
Do you delegate the management of your portfolio to asset management companies? Do you have profitability objectives for your portfolio? How has it performed in 2022?
Yes, we use a management mandate with the management company Ostrum, which selects its investments in live securities on behalf of CNP Assurances, whether listed shares or bonds in the euro zone.
In addition, we use multi-management as part of our diversification outside the euro zone.
Finally, on the unlisted assets part, we work with a specialized internal team or co -investments within the Caisse des Dépôts group.
In terms of the profitability and performance objective, we do not communicate on this subject. We have a long-term vision, investing in low-volatility assets, generating returns and capital gains over time.
Emmanuel Brutin, Head of Insured Portfolio Management at CNP Assurances
What will be your favorite subjects in the coming months? On which asset classes do you intend to position yourself?
Given the current level of interest rates – in line with our investment model – we intend to strengthen our bond allocation in the coming months.
