Bond CNP Assure 7.5% ( FR0011345552 ) in USD

Issuer CNP Assure
Market price 100 %  ⇌ 
Country  France
ISIN code  FR0011345552 ( in USD )
Interest rate 7.5% per year ( payment 2 times a year)
Maturity Perpetual - Bond has expired



Prospectus brochure of the bond CNP Assurances FR0011345552 in USD 7.5%, expired


Minimal amount 100 000 USD
Total amount 500 000 000 USD
Detailed description CNP Assurances is a leading French insurance company specializing in personal protection and savings products, operating primarily in Europe and Latin America, with a strong focus on partnerships with banks and other financial institutions.

The Bond issued by CNP Assure ( France ) , in USD, with the ISIN code FR0011345552, pays a coupon of 7.5% per year.
The coupons are paid 2 times per year and the Bond maturity is Perpetual







Prospectus dated 15 October 2012
CNP ASSURANCES
US$500,000,000 Reset Undated Subordinated Notes
Issue Price: 100 per cent.
The US$500,000,000 Reset Undated Subordinated Notes (the Notes) of CNP Assurances (CNP Assurances or the Issuer) will be issued
outside the Republic of France on 18 October 2012 (the Issue Date).
The obligations of the Issuer under the Notes in respect of principal, interest and other amounts, constitute (subject to certain limitations
described in "Terms and Conditions of the Notes - Status of the Notes ­ Payment on the Notes in the Event of Liquidation of the Issuer")
direct, unconditional, unsecured and Ordinary Subordinated Obligations and rank and shall at all times rank without any preference among
themselves (save for certain obligations required to be preferred by French law) and equally and rateably with any other existing or future
Ordinary Subordinated Obligations, in priority to present and future Equity Securities, Undated Junior Subordinated Obligations, Dated
Junior Subordinated Obligations, prêts participatifs granted to, and titres participatifs issued by the Issuer, but behind Unsubordinated
Obligations as set out in the "Terms and Conditions of the Notes - Status of the Notes".
The Notes will bear interest (i) from (and including) the Issue Date, to (but excluding) 18 October 2018 (the First Call Date), at a fixed rate
of 7.50 per cent. per annum, payable semi-annually in arrear on 18 April and 18 October in each year commencing on 18 April 2013, and
(ii) thereafter in respect of each successive six year period, the first successive six year period commencing on (and including) the First Call
Date, at a reset rate calculated on the basis of the mid swap rates for U.S. Dollar swap transactions with a maturity of six years plus a margin,
payable semi-annually in arrear on 18 April and 18 October in each year commencing on 18 April 2019.
Payment of interest on the Notes may at the option of the Issuer, or shall, be deferred under certain circumstances, as set out in "Terms and
Conditions of the Notes - Interest - Interest Deferral".
The Issuer will have the right to redeem the Notes in whole, but not in part, on the First Call Date or on any Interest Payment Date thereafter,
as defined and further described in "Terms and Conditions of the Notes - Redemption and Purchase - Optional Redemption from the First
Call Date". The Issuer may also, at its option, redeem the Notes upon the occurrence of certain events, including a Gross-up Event, a Tax
Deductibility Event and a Regulatory Event, as further described in "Terms and Conditions of the Notes - Redemption and Purchase".
Application has been made for approval of this Prospectus to the Autorité des marchés financiers (the AMF) in France in its capacity as
competent authority pursuant to Article 212-2 of its Règlement Général which implements the Directive 2003/71/EC of 4 November 2003 as
amended (which includes the amendments made by Directive 2010/73/EU) (the Prospectus Directive).
Application has been made to Euronext Paris for the Notes to be listed and admitted to trading on Euronext Paris. Euronext Paris is a
regulated market for the purposes of the Markets in Financial Instruments Directive 2004/39/EC, appearing on the list of regulated markets
issued by the European Commission (a Regulated Market).
The Notes will be issued in bearer dematerialised form (au porteur) in the denomination of US$100,000. The Notes will at all times be in
book-entry form in compliance with Articles L.211-3 and R.211-1 of the French Code monétaire et financier. No physical documents of title
(including certificats représentatifs pursuant to Article R.211-7 of the French Code monétaire et financier) will be issued in respect of the
Notes. The Notes will, upon issue, be inscribed in the books of Euroclear France (Euroclear France) which shall credit the accounts of the
Account Holders. Account Holder shall mean any financial intermediary institution entitled to hold, directly or indirectly, accounts on
behalf of its customers with Euroclear France, and includes Euroclear Bank S.A./N.V. (Euroclear) and the depositary bank for Clearstream
Banking, société anonyme (Clearstream, Luxembourg).
The Notes are expected to be rated A- by Standard & Poor's Ratings Services (Standard & Poor's). Standard & Poor's is established in the
European Union and registered under Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009
on credit rating agencies as amended by Regulation (EU) No. 513/2011 (the CRA Regulation) and included in the list of credit rating
agencies registered in accordance with the CRA Regulation published on the European Securities and Markets Authority's website as of the
date of this Prospectus. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension, change or
withdrawal at any time by the assigning rating agency.
Prospective investors should have regard to the risk factors described under the section headed "Risk Factors" in this Prospectus, in
connection with any investment in the Notes.
Sole Structuring Advisor
HSBC
Joint Lead Managers
BNP PARIBAS
Citigroup
Goldman Sachs International
HSBC
J.P. Morgan
Nomura


This Prospectus should be read and construed in conjunction with any supplement, that may be published
between the date of this Prospectus and the date of the admission to trading of the Notes on Euronext Paris,
and with all documents incorporated by reference herein (see "Documents Incorporated by Reference")
(together, the Prospectus).
This Prospectus constitutes a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC of the
European Parliament and of the Council of 4 November 2003 as amended and the relevant implementing
measures in France, in respect of, and for the purposes of giving information with regard to, the Issuer and
the Group (as defined below) and the Notes which, according to the particular nature of the Issuer and the
Notes, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial
position, profit and losses and prospects of the Issuer and the Group.
Certain information contained in this Prospectus and/or documents incorporated herein by reference has
been extracted from sources specified in the sections where such information appears. The Issuer confirms
that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain
from information published by the above sources, no facts have been omitted which would render the
information reproduced inaccurate or misleading. The Issuer has also identified the source(s) of such
information.
References herein to the Issuer are to CNP Assurances. References to the Group are to the Issuer, together
with its fully consolidated subsidiaries taken as a whole.
No person has been authorised to give any information or to make any representation other than those
contained in this Prospectus in connection with the issue or sale of the Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by the Issuer or any of the
Joint Lead Managers (each as defined in "Subscription and Sale"). Neither the delivery of this Prospectus
nor any offering or sale made in connection herewith shall, under any circumstances, create any implication
that there has been no change in the affairs of the Issuer or those of the Group since the date hereof or the
date upon which this Prospectus has been most recently supplemented or that there has been no adverse
change in the financial position of the Issuer or that of the Group since the date hereof or the date upon
which this Prospectus has been most recently supplemented or that any other information supplied in
connection with the issue of the Notes is correct as of any time subsequent to the date on which it is supplied
or, if different, the date indicated in the document containing the same. To the extent applicable, and
provided that the conditions of Article 212-25 I of the Règlement Général of the AMF are fulfilled, investors
who have already agreed to purchase or subscribe for Notes before a supplement is published, have the
right, according to Article 212-25 II of the Règlement Général of the AMF, to withdraw their acceptances
within a time limit of minimum two working days after the publication of the supplement.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any
jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The
distribution of this Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions.
The Issuer and the Joint Lead Managers do not represent that this Prospectus may be lawfully distributed, or
that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements
in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Issuer or the
Joint Lead Managers which would permit a public offering of the Notes or distribution of this Prospectus in
any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold,
directly or indirectly, and neither this Prospectus nor any offering material may be distributed or published
in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and
regulations and the Joint Lead Managers (each as defined in "Subscription and Sale") have represented that
all offers and sales by them will be made on the same terms. Persons into whose possession this Prospectus
comes are required by the Issuer and the Joint Lead Managers to inform themselves about and to observe
any such restriction. In particular, there are restrictions on the distribution of this Prospectus and the offer
or sale of Notes in the United States, the United Kingdom, France and Italy, see the section entitled
"Subscription and Sale".
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THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED OR WITH ANY SECURITIES REGULATORY AUTHORITY
OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN
EXCEPTIONS, NOTES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT IN TRANSACTIONS EXEMPT FROM
OR NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. FOR A DESCRIPTION OF
CERTAIN RESTRICTIONS ON OFFERS AND SALES OF NOTES AND ON DISTRIBUTION OF THIS
PROSPECTUS, SEE "SUBSCRIPTION AND SALE".
The Joint Lead Managers have not separately verified the information contained in this Prospectus. None of
the Joint Lead Managers makes any representation, warranty or undertaking, express or implied, or accepts
any responsibility or liability, with respect to the accuracy or completeness of any of the information
contained or incorporated by reference in this Prospectus or any other information provided by the Issuer in
connection with the issue and sale of the Notes. Neither this Prospectus nor any information incorporated by
reference in this Prospectus is intended to provide the basis of any credit or other evaluation and should not
be considered as a recommendation by the Issuer or the Joint Lead Managers that any recipient of this
Prospectus or any information incorporated by reference should subscribe for or purchase the Notes. In
making an investment decision regarding the Notes, prospective investors must rely on their own
independent investigation and appraisal of the (a) the Issuer, the Group, its business, its financial condition
and affairs and (b) the terms of the offering, including the merits and risks involved. The contents of this
Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should
subscribe for or consult its own advisers as to legal, tax, financial, credit and related aspects of an
investment in the Notes. None of the Joint Lead Managers undertakes to review the financial condition or
affairs of the Issuer or the Group after the date of this Prospectus nor to advise any investor or potential
investor in the Notes of any information coming to the attention of any of the Joint Lead Managers. Potential
investors should, in particular, read carefully the section entitled "Risk Factors" set out below before making
a decision to invest in the Notes.
Neither this Prospectus nor any other information supplied in connection with the issue and sale of the Notes
(a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer or the Joint Lead Managers that any recipient of this Prospectus or any other
information supplied in connection with the issue and sale of the Notes should purchase any Notes. Neither
this Prospectus nor any other information supplied in connection with the issue and sale of the Notes
constitutes an offer or invitation by or on behalf of the Issuer or the Joint Lead Managers to any person to
subscribe for or to purchase any Notes.
The consolidated financial statements of the Issuer and the Group for the years ended 31 December 2011
and 31 December 2010 have been prepared in accordance with IFRS as adopted by the European Union.
In connection with this issue, HSBC Bank plc (the Stabilising Manager) (or persons acting on behalf of the
Stabilising Manager) may over-allot Notes or effect transactions with a view to supporting the market price
of the Notes at a level higher than that which might otherwise prevail but in doing so each Stabilising
Manager shall act as principal and not as agent of the Issuer. However, there is no assurance that the
Stabilising Manager (or persons acting on their behalf) will undertake stabilisation action. Any stabilisation
action may begin on or after the date on which adequate public disclosure of the terms of the offer of the
Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days
after the Issue Date and 60 days after the date of the allotment of the Notes. Any stabilisation action or over-
allotment must be conducted by the Stabilising Manager (or person(s) acting on their behalf) in accordance
with all applicable laws and rules. As between the Issuer and the Stabilising Manager, any loss resulting
from over-allotment and stabilisation shall be borne, and any profit arising therefrom shall be retained, by
the Stabilising Manager.
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In this Prospectus, unless otherwise specified or the context otherwise requires, references to , Euro, EUR
or euro are to the single currency of the participating member states of the European Economic and
Monetary Union which was introduced on 1 January 1999 and references to $, US$, USD and U.S. Dollars
are to the lawful currency of the United States of America.
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FORWARD-LOOKING STATEMENTS
Certain statements contained herein are forward-looking statements including, but not limited to, statements
with respect to the Issuer's business strategies, expansion and growth of operations, plans or objectives,
trends in its business, competitive advantage and regulatory changes, based on certain assumptions and
include any statement that does not directly relate to a historical fact or current fact. Forward-looking
statements are typically identified by words or phrases such as, without limitation, "anticipate", "assume",
"believe", "continue", "estimate", "expect", "foresee", "intend", "project", "anticipate", "seek", "may
increase" and "may fluctuate" and similar expressions or by future or conditional verbs such as, without
limitation, "will", "should", "would" and "could." Undue reliance should not be placed on such statements,
because, by their nature, they are subject to known and unknown risks, uncertainties, and other factors and
actual results may differ materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. Please refer to the section entitled "Risk Factors" below.
The Issuer expressly disclaims any obligation or undertaking to release publicly any updates or revisions to
any forward-looking statement contained herein to reflect any change in the Issuer's expectations with regard
thereto or any change in events, conditions or circumstances on which any such statement is based.
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TABLE OF CONTENTS
Section
Page
Risk Factors .................................................................................................................................................7
Summary of the Prospectus......................................................................................................................... 21
Résumé en Francais (French Summary) ...................................................................................................... 30
Documents on Display................................................................................................................................ 40
Information Incorporated by Reference....................................................................................................... 41
Terms and Conditions of the Notes ............................................................................................................. 48
Use of Proceeds.......................................................................................................................................... 65
Description of the Issuer ............................................................................................................................. 66
Recent Developments ................................................................................................................................. 69
Taxation ..................................................................................................................................................... 98
Subscription and Sale ............................................................................................................................... 100
General Information ................................................................................................................................. 105
Persons responsible for the information contained in the prospectus.......................................................... 107
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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Notes. All
of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a
view on the likelihood of any such contingency occurring.
Factors which the Issuer believes may be material for the purpose of assessing the market risks associated
with the Notes are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in the
Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with the
Notes may occur for other reasons and the Issuer does not represent that the statements below regarding the
risks of holding the Notes are exhaustive. Prospective investors should read the entire Prospectus. The
following is a disclosure of risk factors that are material to the Notes in order to assess the market risk
associated with these Notes and risk factors that may affect the Issuer's ability to fulfil its obligations under
the Notes. Prospective investors should consider these risk factors before deciding to purchase Notes. The
following statements are not exhaustive. Prospective investors should consider all information provided in
this Prospectus and consult with their own professional advisers if they consider it necessary. In addition,
investors should be aware that the risks described may combine and thus intensify one another. The
occurrence of one or more risks may have a material adverse effect on the own funds, the financial position
and the operating result of the Issuer.
Each of the risks highlighted below could have a material adverse effect on the business, operations,
financial conditions or prospects of the Issuer or the Group, which in turn could have a material adverse
effect on the amount of principal and interest which investors will receive in respect of the Notes. In
addition, each of the risks highlighted below could adversely affect the trading price of the Notes or the
rights of investors under the Notes and, as a result, investors could lose some or all of their investment.
Words and expressions defined in the section entitled "Terms and Conditions of the Notes" herein shall have
the same meanings in this section. For the purpose of this section, the Group is defined as the Issuer and its
fully consolidated subsidiaries.
The order in which the following risks factors are presented is not an indication of the likelihood of their
occurrence.
RISK FACTORS RELATING TO THE ISSUER
The following risk factors relating to the Issuer are additional to those which are set out on pages 19 to 27
and on pages 57 to 67 of the 2011 Registration Document (as defined in the section entitled "Information
Incorporated by Reference") which are incorporated by reference in this prospectus.
Our performance is affected by general economic conditions and the cyclical nature of the insurance and
reinsurance industries.
Our performance is affected by changes in economic conditions, both globally and in the particular countries
in which we conduct our business. The general insurance market is cyclical in nature. Furthermore, the
timing and application of these cycles differ among our geographic and product markets. In 2008 and 2009,
there was a deterioration of economic conditions in numerous major western economies and a deceleration of
global growth. In 2010 and 2011 to date, economic conditions in the global economy remain mixed. We
continue to monitor the effect of this on our business. Unpredictable developments also affect the industry's
profitability, including changes in competitive conditions and pricing pressures, unforeseen developments in
loss trends, market acceptance of new coverages, changes in operating expenses, fluctuations in inflation and
interest rates and other changes in investment markets that affect market prices of investments and income
from such investments. Fluctuations in the availability of capital could also have a significant influence on the
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cyclical nature of the insurance market. These cycles influence the demand for and pricing of our products
and services and therefore affect our financial position, profits and dividends. Accordingly, our results of
operations may be adversely impacted if actual experience differs from management's estimates.
Our businesses, and therefore our results of operation, financial condition and liquidity may be adversely
affected by the disruption in the global financial markets.
Global credit and equity markets experienced extreme disruption from 2007 to 2011, particularly in the
United States and Europe, and these markets have not fully recovered. This disruption included greater
volatility, significantly less liquidity, widening of credit spreads and a lack of price transparency in certain
markets. These conditions resulted in the failure of a number of financial institutions and unprecedented
action by governmental authorities and central banks around the world. Recently, there has been concerns
over access to capital markets and the solvency of certain European Union member states, including Greece,
Spain, Portugal, Ireland and Italy, unrest in the Middle East and North Africa, which has led to higher oil
prices, and market volatility. If disruption to the global financial markets continues, it could adversely affect
our business, financial condition, results of operations and profitability in future periods. In addition,
companies in our industry have become subject to increased litigation and regulatory and governmental
scrutiny as a result of these events.
We may also turn to the market for short-, medium- or long-term financing as a result of a drop in unrealised
gains, impairment of assets or a rise in surrender rates. Prolonged disruptions, uncertainty or volatility in the
credit markets may limit our ability to access funding and capital, particularly our ability to issue longer-
dated securities in international capital markets. These market conditions may limit our ability to replace, in
a timely manner, maturing liabilities and access the capital necessary to grow our business and pursue
further acquisitions. We may also be forced to delay raising longer term funding and capital, issue shorter
tenors than we prefer, or pay unattractive interest rates, thereby increasing our debt expense, decreasing our
profitability and significantly reducing our financial flexibility.
We are dependent on the performance of our investment portfolio.
A substantial proportion of our profits are generated from our investment portfolio. Although our general
strategic policy on investments is to reduce the risk by investing in high quality fixed interest securities with
limited maturities, favoring variable rate securities, making appropriate use of hedges and having a modest
exposure to equity investments, our investment portfolio is subject to market forces. Global debt and equity
markets have experienced historic levels of volatility and the outlook remains uncertain. Any declines in the
value of fixed income instruments, declines in equity markets, or changes in interest or foreign exchange
rates could adversely affect our investment income and overall profitability.
Further, a sharp increase of policyholders' lapses and surrenders may occur, which, if simultaneous to
significant unrealized losses in our portfolio, could generate losses. While this risk is closely monitored and
partially hedged mainly through derivatives, providing in most scenarios a level of protection we believe
appropriate, this could materially affect our profitability and financial situation.
We may incur losses associated with our counterparty exposures, including sovereign issuers.
Although we actively manage counterparty risk, we face the possibility that a counterparty will be unable to
honor its contractual obligations to us. These counterparties may have widening spreads or may default on
their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may
arise, for example, from entering into swap or other derivative contracts under which counterparties have
obligations to make payments to us, executing currency or other trades that fail to settle at the required time
due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or
other financial intermediaries. This risk may also arise from the European sovereign debt crisis, which
increased uncertainty over the ability of certain sovereign debt issuers (in particular, Greece, Spain, Portugal,
Ireland and Italy) to service their debt.
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More generally, risks and ongoing concerns about the debt crisis in Europe, as well as the possible exit from
the Eurozone of one or more European states and/or the replacement of the Euro by one or more successor
currencies, could have a detrimental impact on the global economic recovery, sovereign and non-sovereign
debt in these European countries and the financial conditions of European financial and non financial
institutions, including our counterparties and us.
We are dependent on our ability to reinsure risks.
An insurance company will usually attempt to limit its risks in particular lines of business or from specific
events by using outward reinsurance arrangements. We enter into a significant number of reinsurance
contracts to limit our risk. Under these arrangements, other reinsurers assume a portion of the claims and
related expenses in connection with insurance policies we write. The availability, amount and cost of
reinsurance depend on prevailing market conditions, in terms of price and available capacity, which may vary
significantly.
We have stringent controls with respect to the external reinsurers with which we do business, but there are
risks associated with the determination of the appropriate levels of reinsurance protection, matching of
reinsurance to underlying policies, the cost of such reinsurance and the financial security of such reinsurers.
Ceding of risk to our reinsurers does not relieve us of our primary liability to our insured. Accordingly, we
are subject to counterparty risk with respect to our reinsurers. Although we initially place our reinsurance
with reinsurers that we believe to be financially stable, this may change adversely by the time recoveries are
due which could be many years later. A reinsurer's failure to make payment under the terms of a
significant reinsurance contract would have a material adverse effect on our businesses, financial condition
and results of operations. In addition, after making large claims on our reinsurers, we may have to pay
substantial reinstatement premiums to continue reinsurance cover.
We operate in a highly competitive industry.
There is substantial competition among general insurance companies in the jurisdictions in which we do
business. We compete with general insurers many of whom have greater financial and marketing resources
and greater name recognition than we have. The recent consolidation in the global financial services
industry has also enhanced the competitive position of some of our competitors compared to us by
broadening the range of their products and services, and increasing their distribution channels and their
access to capital.
The level of profitability of a general insurance company is significantly influenced by the adequacy of
premium income relative to its risk profile and claims exposure, as well as the general level of business costs.
While we seek to maintain premium rates at targeted levels, the effect of competitive market conditions may
have a material adverse effect on our market share and financial condition. In addition, development of
alternative distribution channels for certain types of insurance products, including through internet may result
in increasing competition as well as pressure on margins for certain types of products. The distribution
agreements that we have with our distributors may not be renewed, or may be renewed with additional
provisions that could have adverse effects on our distribution costs or our market-share in the insurance
industry.
A downgrade in our rating may increase policy cancellations and non-renewals, adversely affect
relationships with distributors and negatively impact new business.
Our insurer financial strength rating is an important factor in establishing and maintaining our competitive
position. The rating agency regularly reviews our rating and the ratings of our main subsidiaries. Future
downgrades in the ratings of any of our subsidiaries (or the potential for such a downgrade) could, among
other things, materially increase the number of policy cancellations and non-renewals, adversely affect
relationships with the distributors of our products and services, including new sales of our products, and
negatively impact the level of our premiums and adversely affect our ability to obtain reinsurance at
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reasonable prices or at all. This could adversely affect our businesses, financial condition, results of
operations and our cost of capital.
Changes in government policy, regulation or legislation in the countries in which we operate may affect
our profitability.
We are subject to extensive regulation and supervision in the jurisdictions in which we do business. This
includes, by way of example, matters relating to licensing and examination, rate setting, trade practices,
policy reforms, limitations on the nature and amount of certain investments, underwriting and claims
practices, mandated participation in shared markets and guarantee funds, adequacy of our claims provisions,
capital and surplus requirements, insurer solvency, transactions between affiliates, the amount of dividends
that may be paid and underwriting standards. Such regulation and supervision is primarily for the benefit and
protection of policyholders and not for the benefit of investors. In some cases, regulation in one country may
affect business operations in another country. As the amount and complexity of these regulations increase,
so will the cost of compliance and the risk of non-compliance. If we do not meet regulatory or other
requirements, we may suffer penalties including fines, suspension or cancellation of our insurance licenses
which could adversely affect our ability to do business. In addition, significant regulatory action against us
could have material adverse financial effects, cause significant reputational harm or harm our business
prospects.
In addition, we may be adversely affected by changes in government policy or legislation applying to
companies in the insurance industry. These include possible changes in regulations covering pricing and
benefit payments for certain statutory classes of business, the deregulation and nationalization of certain
classes of business, the regulation of selling practices, the regulations covering policy terms and the
imposition of new taxes and assessments or increases in existing taxes and assessments. Regulatory changes
may affect our existing and future businesses by, for example, causing customers to cancel or not renew
existing policies or requiring us to change our range of products or to provide certain products (such as
terrorism or flood cover where it is not already required) and services, redesign our technology or other
systems, retrain our staff, pay increased tax or incur other costs. It is not possible to determine what changes
in government policy or legislation will be adopted in any jurisdiction in which we operate and, if so, what
form they will take or in what jurisdictions they may occur. Insurance laws or regulations that are adopted or
amended may be more restrictive than our current requirements, may result in higher costs or limit our
growth or otherwise adversely affect our operations.
Significant legal proceedings and litigation may adversely affect our business, financial condition and
results of operations.
All insurance companies are exposed to litigation relating to claims on policies they underwrite.
Accordingly, we are currently involved in such legal proceedings relating to claims lodged by policyholders,
some of which involve claims for substantial damages and other relief. Judicial decisions may expand
coverage beyond our pricing and reserving assumptions by widening liability on our policy wording or by
restricting the application of policy exclusions. There can be no assurance that the outcome of any of our
judicial proceedings will be covered by our existing provisions for outstanding claims or our reinsurance
protections or that litigation would not otherwise have a material adverse effect on our businesses, financial
condition and results of operations.
The European Union is currently in the process of introducing a new regime governing solvency
requirements, technical reserves, and other requirements for insurance companies, the effect of which is
uncertain
The European Union is in the process of developing and implementing a new regime in relation to solvency
requirements and other matters, affecting the financial strength of insurers (Solvency II) within each
Member State. It is intended that the new regime for insurers domiciled in the European Union will inter alia
apply more risk sensitive standards to capital requirements and will effect a full revision of the insurance
industry's solvency framework, prudential regime and supervision mechanisms.
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