1 UNEDIC – Investor Presentation – October 2014
2 UNEDIC – Investor Presentation – October 2014
CONTENTS
Compensation by unemployment insurance Management of the insurance entrusted to the social partners Two public operators are in charge of collection and payment of benefits Continuity and sustainability of the scheme are guaranteed Summary of the modifications made to the Unemployment Insurance Agreement
3 UNEDIC – Investor Presentation – October 2014
Compensation by unemployment insurance
A compulsory insurance covering the
risk of job loss
Jointly Managed (Social Partners)
Providing replacement income
Employers’ organisations Medef, CGPME, UPA Trade unions CFDT, CFE-CGC, CFTC, CGT, CGT-FO
4 UNEDIC – Investor Presentation – October 2014
Compensation by unemployment insurance in 2013
COMPULSORY INSURANCE REPLACEMENT REVENUE
Annual budgeted expenditure:
37 billion Euros
16.4 million employees covered out of 26 million employed in France (uncovered population consists of civil servants &
entrepreneurs)
1.6 million companies covered
3,1 million workers are recipients of unemployment insurance*
Contribution rate: 6.40% of base salary
Benefit rate : 61% of previous base salary
*at 12/31/2013
5 UNEDIC – Investor Presentation – October 2014
Management of the insurance entrusted to the social partners
Responsibility of unemployment insurance
COMPULSORY UNEMPLOYMENT INSURANCE SCHEME
EVALUATES
Produces the studies and analyses supporting the strategic decision making for the insurance scheme
SOCIAL PARTNERS
LAW
MANAGES
Ensures the financial management of unemployment insurance scheme
while guaranteeing its independence
PRESCRIBES AND CONTROLS
Prescribes, guarantees and controls the conditions for implementing
unemployment insurance scheme
Labour Code Art. L 5422-13
Note: The unemployment insurance agreement is subject to government approval (Labour Code Art. 5422-21)
Labour Code Art. L 5422-10
Labour Code Art. L 5427-1 Implementation
Non profit organisation managed by the social partners
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Unédic mandates two public agencies for carrying out operations of
contribution collection and benefit payment
EMPLOYERS EMPLOYEES
JOBSEEKERS
Payment of benefits and help jobseekers reintegrate
labour market Recovery of contributions
7 UNEDIC – Investor Presentation – October 2014
An unemployment insurance scheme with guaranteed continuity and
sustainability
Collective negotiation every 2 to 3 years to ensure financial balance “over the cycle”
• A legal obligation for a balanced budget (Labour Code Art. L 5422-12)
• Definition of the mechanisms for a 2 to 3 years term, depending upon the financial situation of the unemployment insurance, the job market and unemployment figures
• Adjustable variables in order to reach equilibrium:
Contribution rate
Compensation rights
Amount and duration of benefits
• Specific measures: The last collective negotiation of May 2014 witnessed the decision to implement and provide more incentives for unemployed workers to reintegrate the labour market. The new set of measures are expected to generate savings worth €825M and €775M for 2015 and 2016 respectively
A scheme with a tacit guarantee from the French government
• Compulsory nature of the unemployment insurance (Labour Code Art. L 5422-13)
• Ministerial approval of the insurance agreements (Labour Code Art. L 5422-21)
• Unédic is substituted by the government take-over should the social partners and employers’ organisations fail and reach an agreement or obtain its governmental approval
Bonds issuance supported by an explicit State guarantee, renewed since 2011
Amending Finance Law of 30 December 2013 (article 75): authorisation to provide guarantee
Ministerial Order granting the guarantee (January 29st 2014)
8 UNEDIC – Investor Presentation – October 2014
CONTENTS
Unédic’s economic model is closely correlated to the macroeconomic situation Expenditures closely tied to the economic situation A “leverage effect” upon the balance of unemployment insurance scheme Balance and net banking indebtedness of unemployment insurance scheme Reliable financial forecasts for anticipating financial needs
FINANCIAL
SITUATION
9 UNEDIC – Investor Presentation – October 2014
Unédic’s economic model is closely correlated to the macroeconomic
situation (Annual percentage changes)
Correlation between growth in revenues and GDP
2009 2010 2011 2012 2013 2014 (Prev.) 2015 (Prev.)
Annual
revenues (€M) 30 310 31 188 31 855 32 466 33 233 33 808 34 347
10 UNEDIC – Investor Presentation – October 2014
Expenditures closely tied to the economic situation
(Annual percentage changes)
Expenditure developments amplify the economic cycle
11 UNEDIC – Investor Presentation – October 2014
Expenditures closely tied to the economic situation
Contributions and expenditures relative to GDP
12 UNEDIC – Investor Presentation – October 2014
With the current parameters of unemployment insurance (contribution rate and compensation rate),
the contributions of roughly 9 affiliated employees are necessary to compensate 1 jobseeker
A “leverage effect” upon the balance of unemployment insurance
1 employee losing his job has a compounded negative effect upon the finances of unemployment insurance: - 1 contributor + 9 contributions consumed
1 jobseeker finding a job has an enhanced positive effect upon unemployment insurance finances: + 1 contributor + 9 contributions available
There usually is a delay of 6 months to a year before this levered effect can be noticed
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Balance and net indebtedness of unemployment insurance
Source : Unédic, Unédic calculations
(€M)
Change in cash balance of unemployment insurance, € million
Prévision
4 years 5 years 7 years ?
14 UNEDIC – Investor Presentation – October 2014
Reliable financial forecasts
Projections updated three to four times a year
• Based on macro-economic fundamentals from the Consensus of Economists:
Forecast in change of GDP rate
CPI
• Monitoring of the working population, wage rate change, unemployment benefits paid, etc.
A steering tool for social partners.
• Forecasts reviewed by unemployment insurance managers.
• A reference for the social partners negotiating the agreements:
The contribution rate can be adjusted
Conditions of access to compensation
The level of benefits and duration of compensation
15 UNEDIC – Investor Presentation – October 2014
CONTENTS
Investment-grade rating reflects Unédic’s rigorous management Unédic net indebtedness at end of year 2013 Financing Program for 2014 Unédic‘s rating Unédic’s signature strengthened internationally Bond issues welcomed by institutional investors
FINANCIAL
MANAGEMENT
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AA (Stable watch)
Aa1(Negative watch)
Investment-grade rating reflects Unédic’s rigorous management
Capital market financing
• EMTN Program (26 billion) - Fixed rate, explicitly guaranteed by the French State
• BMTN Program (3 billion) - Fixed rate
• French Commercial Paper Program (12 billion)
Active management of the French CP Program
• Setting of a duration target and active maturity management
• Setup of a liquidity buffer
Risk management
• No foreign exchange risk
• Interest rate risk managed through issuance along the yield curve of the rates representing the economic outlook for Unédic
AA+ (Stable watch)
17 UNEDIC – Investor Presentation – October 2014
Unédic net indebtedness at year 2013 end: €17.6 billion
Total indebtedness in percentages :
77% of fixed rates
23% of floating rates
€4,150 bn of short term debt (variable rate)
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Financing program for 2014
Commercial paper
• Duration target of 3 months and active maturity management
BMTN
• €3 billion BMTN program, first issuances starting October 2014
• Fixed rate, in Euros, maturity up to 3 years
Debt issuance program of €7 billion
• Fixed rate, in Euros, maturity up to 10 years
• First demand guaranty from the French State
• ECB-eligible (Tier-1)
19 UNEDIC – Investor Presentation – October 2014
Unédic is rated AA by Standard & Poor’s, Aa1 by Moody’s
and AA+ by Fitch Ratings
AA
AA+
As the cornerstone of the unemployment insurance scheme, Unédic has historically benefited from strong state support […]
[…] Unédic has implemented
conservative and prudent liquidity
policies. […]
[…] Unédic benefits from a significant tax levy to pay down its debt, with compulsory subscription
to the unemployment insurance system that provides it with a wide
fiscal base of around 16.5 million employees […] we expect Unédic to
continue to cover its expected deficits comfortably.
“ “
“
“
“
“
Aa1
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Unédic’s signature strengthened internationally
A growing interest among international investors for the Unédic’s EMTN program
A total of €17,6bn outstanding, more than 60% of which is held by foreign investors Germany and the United Kingdom are the primary European investors after France. Investors present over 5 continents and in more than 30 countries
Data derived from primary issue books
21 UNEDIC – Investor Presentation – October 2014
Bond issues welcomed by institutional investors
Ever-increasing demand 35,5% increased Chinese demand for 2014 15% increased European demand (excluding France) for 2014 due to
the quality of Unédic’s signature and trustworthy relationships built with investors
KEY FIGURES More than 35% increase in the share held by
Insurance companies in the portfolio, due to the stability of Unédic’s signature
A portfolio diversified among different types of investors
Data from primary issue books
À changer
22 UNEDIC – Investor Presentation – October 2014
Unédic 4, rue Traversière
75012 PARIS
+33 1 44 87 64 00
INVESTOR RELATIONS
Philippe Eberschweiler Chief Financial Officer [email protected] +33 1 44 87 64 47
www.unedic.fr/investors
23 UNEDIC – Investor Presentation – October 2014
This document is a draft for discussion purposes only, it is highly confidential and proprietary and should not be transmitted to any person other than its original addressee(s) without the prior written consent of Unédic. Prices and margin are meant to be indicative only and are subject to change at any time depending on market conditions. Unédic cannot be held responsible for any financial loss or other consequences of the implementation of the transactions described in this document. The French Autorité des Marchés financiers granted its visa under number 12-060 dated 13 February 2012 with respect to a base prospectus (hereinafter referred to as the “Base Prospectus”) which details this operation. The Base Prospectus is available at no cost at Unédic registered office, 4, rue de Traversière, 75012 Paris, France and on its website www.unedic.org. You are invited to report to the section “risks” of the Base Prospectus before taking a decision with respect to the implementation of the transactions described in this document or in the Base Prospectus. Should you so require, you should contact your financial, legal or tax advisor, or any other specialist, in order to confirm that any decision taken is consistent with your personal financial situation.
Disclaimer