2007 - April
2007 - April
2007 - April
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3.0<br />
Information on the company’s activities<br />
Furthermore, APRIL GROUP’s portfolios do not include any CDO or other securitization vehicles.<br />
APRIL GROUP is also subject to a credit risk through reinsurers, to which companies transfer part of the risks on their insurance<br />
policies. The Group only works with a restricted number of reinsurers whose solvency is recognized: over 75% of reinsurance<br />
transfers are carried out with reinsurers that are rated at least A by Standard & Poor’s.<br />
At December 31 st , <strong>2007</strong>, the breakdown of reinsured premiums by reinsurer rating was as follows:<br />
3.6.2.3. Follow-up procedures and resources in place<br />
With a view to improving performance and building up a<br />
clearer picture of market risks, the asset management<br />
activities of insurance companies are delegated to a<br />
specialized management company, accredited by the French<br />
securities regulator (Autorité des Marchés Financiers, AMF).<br />
BREAKDOWN OF PREMIUMS CEDED BY REINSURER<br />
RATING (%)<br />
N.D. AAA AA<br />
A+ to<br />
A-<br />
BBB+<br />
to BBB-<br />
% of premiums ceded 22.7% 1.3% 52.6% 23.0% 0.4% 100.0%<br />
< BBB<br />
Total<br />
Under this delegation, limits are set in terms of the<br />
percentage of the portfolio that may be invested on various<br />
bond and equity resources (dispersion ratios, influence<br />
ratios, restrictions in terms of issuer ratings, etc.).<br />
Sensivity of the securities portfolio<br />
Fixed-income markets:<br />
On a regular basis, i.e. every quarter, a report presenting<br />
the sensitivity of the portfolio and liabilities to changes in<br />
interest rates is submitted to the supervisory authorities.<br />
At December 31 st , <strong>2007</strong>, the average sensitivity of APRIL<br />
GROUP’s bond portfolio to changes in interest rates came<br />
out at 2.79 (2.40 at December 31 st , 2006) and if we factor in<br />
the entire portfolio (including equities and other assets), this<br />
drops to 1.61 (1.56 at December 31 st , 2006).<br />
This means that if interest rates go up by 1% in absolute<br />
value (e.g. if they rise from 4% to 5%), the bond portfolio’s<br />
value will decrease by 1.61%.<br />
Equity markets:<br />
The equity portfolio is sensitive to an upturn or downturn on<br />
the financial markets for shares.<br />
In this respect, and in light of the portfolio’s makeup, the risk<br />
on the equity portfolio can be assimilated with the risk on the<br />
main financial market indexes such as the EUROSTOXX 50.<br />
In this way, a 10% reduction in the EUROSTOXX 50 index<br />
would result in a 5,251 thousand euro reduction for the<br />
entire portfolio.<br />
In addition, the French Insurance Code, which governs<br />
insurance companies, also sets investment caps.<br />
Thanks to comprehensive reports provided by the authorized<br />
manager, notably including accounting elements (inventory,<br />
book income, unrealized capital gains or losses, etc.) and a<br />
summary of performances and various levels of exposure to<br />
the markets, the financial portfolio is monitored on a monthly<br />
basis.<br />
The members of the Finance Committee, the APRIL GROUP’s<br />
governance body, includes the heads of the various<br />
companies as well as representatives from the authorized<br />
manager. This Committee meets every quarter and plays an<br />
essential role in the monitoring and management of market<br />
risks. During its meetings, it is responsible for analyzing<br />
the various markets as well as the economic and financial<br />
environment, taking stock of management over the past<br />
period, and setting the general financial management<br />
strategies, as well as future management restrictions.<br />
29<br />
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