KBC has reported sales of unit-linked life insurance products declined 16% quarter-on-quarter but were up 9% year-on-year. Net fee and commission income, at €360m, was up 4% on the first quarter but down 23% from the same period in 2015. The q-o-q increase was, among other, the result of higher management fees from mutual funds and unit-linked life insurance products, thanks to reset date CPPI, the bank-insurer said during the presentation of its 2Q2016 results on Thursday August 11.
During the second quarter of 2016, investment income derived from insurance activities was up 24% on its level of the previous quarter, but down 10% on the year-earlier quarter, according to KBC. The net result for the quarter under review amounted to €721m, compared to €392m quarter-on-quarter and 666m euros year-on-year.
In the Belgium business unit (BU), which includes the activities of KBC Bank and KBC Insurance, as well as their Belgian subsidiaries (CBC Banque, KBC Asset Management, KBC Lease Group, KBC Securities, etc.), sales of life insurance products were down (-6%) on the relatively strong performance in the previous quarter, due primarily to a decrease in the sale of unit-linked products, the bank said.
SRP data shows that KBC launched 23 structured products in Belgium between April 1 and June 30, 2016, including 12 structured funds, eight unit-linked life insurance products and three structured notes. The latter are issued via KBC's international finance company (KBC Ifima). During the quarter KBC launched Universal Selection 90 NOK 1 from the Perspective compartment, its first ever structured fund denominated in Norwegian krone.
In the Czech Republic, where KBC mainly operates the brands ČSOB, ČSOB Pojišt'ovna and ČSOB Asset Management, life insurance sales were down by almost 25% on the previous quarter owing to lower sales of unit-linked products (Maximal Invest products).
KBC launched six structured products via its ČSOB subsidiary in the Czech Republic during the second quarter while in Hungary - where the sales of unit-linked products were higher, the bank-insurer sold five structured funds via K&H Bank.
In Slovakia sales of life insurance products fell by 10% owing to a decrease in the sale of unit-linked products. KBC sold two structured funds and two life wrapped products via ČSOB in Slovakia. A product that stood out was Perspektiv 3 - Inflačná zmenka (Investičné životné poisteni), a five-year capital protected product linked to the inflation (Harmonised Index of Consumer Prices - HICP).
Total assets under management (AUM) as of June 30, 2016, stood at €208bn, split between the Belgium BU (€193bn), Czech Republic BU (€9bn) and the international BU, which comprises of Bulgaria, Ireland, Hungary, Slovakia (€6bn). AUM comprised third-party assets and KBC group assets managed by the groups various asset management companies, as well as assets under advisory management at KBC Bank.
The assets, consist mainly of KBC investment funds and unit-linked insurance products, assets under discretionary and advisory management mandates of (mainly retail, private banking and institutional) clients, and certain group assets, KBC said.
'The continuing low level of interest rates, together with volatility on the financial markets, present a challenge for all financial institutions, including our own,' said Johan Thijs (pictured), KBC CEO in a statement. 'The second quarter was characterised by a good level of total income in our core business, flat operating expenses and a continuing low cost of credit. Our bank-insurance concept ultimately generated a strong result of €721m in the second quarter of this year.'
Click the link to view the KBC 2Q and 1H2016 results and the presentation.
We had to learn to live with the moratorium and we have, KBC
Structured funds have a number of advantages for us, KBC