1. Know your clients, know your market : a perspective on FranceAIMSE Annual Conference February the 2nd, 2006

2. Table of Contents

1. The French Asset Management industry

2. The Institutional market

3. Market players and winning strategies

3. 1. The French Asset Management industry 4. The 4th largest asset management industry in the world Source: AMF/AFG A growing market highly invested inmutual funds Source: EFAMA Market shares of the European fund industry 2004 2001 1997 813 1412 1830 French UCITS Mandates 1000 2000 12% CAGR In Billion Euros 1080 750 Luxemb. 21% UnitedKingdom 9% Others 13% Italy 7% Ireland 8% France 22% Germany 16% Spain 4% A strong appetite for money market UCITS

Money market funds historically dominate as interest-bearing current accounts only appeared in 2005.

Source:EuroPerformance Guaranteed 9% Balanced 10% Equities 24% Money market 47% Bonds 10% 5. Mutual funds distribution in Europe is dominated by banks. No major change expected in channel market share Source: Cerrulli Associates

• Banks 76%

• Insurance 19%

• IFAs 3%

• Direct 2%

France Source:Cerulli Associates, BNP PAM.Figures estimated as of 2005.However, open architecture expected to increase dramatically Assets Under Management in Europe(mutual funds only) Source: FEFSI 3 700 Bn 2004 2014E Third Party Funds In-house Funds 6 000 Bn 92% 8% 70% 30%

Push strategy shifts to pull strategy

Selection and advice become the new paradigm

6. 2. The Institutional market 7. The institutional market is dominated by insurance companies. Assets by institution type (2004 estimates) Source: BIPE/Af2i

• Life insurance = 992 Bn

• Non life = 138 Bn

Insurance companies hold 1130 Bn of a total 1386 Bn held by institutional investors

8. Institutional investors importance in the economy is growing. Assets of the institutional investors in % of GDP Source: Af2i,Ministryof Finance 2004 2000 1995 55% Non-life insurance Life insurance 50% 100% % of GDP 35%

Life insurance companies account for almost the whole trend.

Mutual benefits& social protection Employees savings Others 89% 91% 61% 61% Share of the institutional investors in the households financial wealth Source: BIPE,Ministryof Finance 2004 2000 1995 25% Life insurance (unit-linked contracts) Life insurance (guaranteed contracts) 25% 50% % H. financial assets 19%

Unit-linked insurance contracts are developing, but major flows go to guaranteed insurance contracts .

Retirement plans Employees savings Others 34% 38% 21% 26% 9. How are they invested ? } Asset allocation and UCITS Source: Bank of France (securities survey of insurance companies and retirement institutions)

One third of the mutual funds in asset allocation (global balanced)

Money market 6% Others 6% Balanced 10% Equities 4% Bonds 3% Asset management delegation Source: Image et Finance (panel on competitive market, excluding. delegation within the same Group) AuM (Bn ) Insurance companies Social protection inst. Banks Miscellaneous Total Total 217 92 20 12 341 Delegation 19(9%) 53(58%) 4(20%) 7(58%) 81(24%)

Total delegated assets are estimated at 130 Bn in different forms :

• Mandates8% 8%

• Dedicated funds47% 59%

• Dedicated f. of funds 14% 7%

• Open mutual funds 31% 26%

2004 2003 10. Market trends in 2005 35% of institutional assets are managed externally in Continental Europe

France, Germany, Nordics and the Netherlands are the major markets for externally managed assets in Continental Europe.

Continental Europe 29% Via pooled or commingled funds Via dedicated institutional asset management 6% France 37% 9% Germany 33% 2% Source: Greenwich Associates Use of Investment Consultants Source: Greenwich Associates Continental Europe 32% 2004 2005 41% France 26% 19% Germany 29% 28% Increasing use of RFPs in France Source: Image et Finance % of the panel Insurance companies Social protection inst. Banks Miscellaneous Average 2004 38% 84% 13% 39% 46% 2003 43% 11. 3. Market players and winning strategies 12. Looking to the future : opportunities in France

Upcoming development of corporate pension plans (PERCO)

Increasing demand for sophisticated products : absolute return strategies, portable alpha, credit derivatives, hedge funds

Cash rich institutions will continue to demand money market funds, including innovative dynamic funds

Development of open architecture by domestic players

13. The asset management industry recognizes four macro-clusters of players. Assets under Management Client and product coverage Mapping of Asset Management players Hedge funds Opportunistic players Equities,ccy overlay Niche players Euro banks Challengers Local banks & Insurance Comp. Market leaders

• Challengers face the issue of profitability and critical size issues

• Niche players leverage on one or two core competencies to defend their franchise

• Opportunistic players step into the market on high margin products

14. The French asset management market is still mainly local.

• IXIS Asset Management

• AXA Investment Management

• Crdit Agricole Asset Management

• SG Asset Management

• BNP Paribas Asset Management

• Fortis Investment Management

• Dexia Asset Management

• Natexis Asset Management

• Groupama Asset Management

• Sogeposte

• MMA Finance

• Sinopia Asset Management

• Edmond de Rothschild Asset Management

Source: IPE

Most established asset managers in France :

International global players are entering the market, but their market share is still quite low :

• French companies 80%

• Europe (excl. France) 19%

• International (excl. EU) 1%

Source: AMF 15. Key success factors

Demonstrate long-term commitment to the market (human resources, brand, long-term credibility)

Maintain leading edge technology, structuring capabilities and clients service : create differentiation through permanent product innovation

Develop your ability to understand your clients needs and be a solution-provider (IFRS, ALM, Liability Driven Investments, absolute return strategies)

Create a superior risk management discipline and apply a clear and consistent investment philosophy

Performance is not the main criteria for hiring an asset manager, but it is the most frequently cited criteria for terminating managers

Products are not bought anymore, they are sold