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Investor Presentation - February 2017 1
February 2017
FRENCH
UNEMPLOYMENT
INSURANCE
INVESTOR PRESENTATION

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Investor Presentation - February 2017 2
TABLE OF CONTENT
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

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COMPENSATION BY UNEMPLOYMENT INSURANCE

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COMPENSATION BY UNEMPLOYMENT INSURANCE FOR 2015
*at 12/31/2015

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MANAGEMENT OF THE INSURANCE ENTRUSTED TO THE SOCIAL PARTNERS

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TO CARRY OUT OPERATIONS OF CONTRIBUTION COLLECTION AND BENEFIT PAYMENT
UNÉDIC MANDATES TWO PUBLIC AGENCIES

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CONTINUITY AND SUSTAINABILITY OF THE SCHEME ARE GUARANTEED
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 €3bn over 5 years between 2014 and 2018.
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 2016 (article 36): authorisation to provide guarantee
• Ministerial Order granting the guarantee (processing…)

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Unédic Research and financial forecast
Contributions steady increase
Balance and net banking indebtedness of unemployment insurance scheme
Financial Forecast

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UNÉDIC RESEARCH AND FINANCIAL FORECAST
Projections updated three 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:
Unédic has an obligation to conduct a 3 year forecast and analysis of cyclical effects on
its finances
– Finance Law for 2014-2019 Art. 29: “Unédic reports every year to the Parliament and the Government, before
the 30 June at the latest, its three year financial forecast, detailing in particular the cyclical effects of salaried
employment evolution on the financial balance of the unemployment insurance scheme”

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CONTRIBUTIONS STEADY INCREASE
Unemployment insurance contributions are tied to the economic situation, but less so
than the expenditures
Sources: Unédic, INSEE, Consensus Forecasts August 2016, Unédic Calculations

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UNÉDIC RESEARCH AND FINANCIAL FORECAST
Change in cash balance of unemployment insurance
Source : Unédic, Unédic calculations September 2016

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Unédic cyclical and structural debt research
Expenditures closely tied to the economic situation
A “leverage effect” upon the balance of unemployment insurance scheme
Output gap and position in the economic cycle
Unédic structural balance since 1990
Cyclical and structural debt

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UNÉDIC CYCLICAL AND STRUCTURAL DEBT RESEARCH
Unédic research and analysis on the cyclical and structural balance of its debt
– Unédic has to keep a balanced budget over the economic cycle
– The social partners have made the choice to prioritize their mission and the social nature of
unemployment insurance which is to serve a replacement revenue to eligible jobseekers and
help them return to employment
– 2014 Finance Law prompted Unédic to conduct further analysis on its debt and the identification
of its structural and cyclical components
– Unédic uses the methodology used by international organizations (IMF, OECD…) to measure the
cyclical component of its year-end result based on the analysis of the “output gap” estimating
the present position in the economic cycle

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EXPENDITURES CLOSELY TIED TO THE ECONOMIC SITUATION
Contributions and expenditures relative to GDP
Source : Unédic, Unédic calculations September 2016

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A “LEVERAGE EFFECT” UPON THE BALANCE OF UNEMPLOYMENT INSURANCE
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
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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POSITION IN THE ECONOMIC CYCLE AND CYCLICAL BALANCE
Output gap
Sources : European commission
Since 2009, the cyclical balance of Unédic has been continuously negative due to prolonged negative output
gap over the period.

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UNÉDIC STRUCTURAL BALANCE SINCE 1990
Sources : Unédic, Unédic calculations September 2016
Between 2010 and 2015, the structural balance of Unédic was negative and represents up to -1,4bn Euros on
average each year.

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Investment-grade rating reflects Unédic rigorous management
Funding Programme for 2017
Unedic NEU MTN programme
Unédic signature strengthened internationally
Bond issues welcomed by institutional investors
Unédic funding programme at a glance
Unédic rating
FINANCIAL MANAGEMENT

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INVESTMENT-GRADE RATING REFLECTS UNÉDIC RIGOROUS MANAGEMENT
Capital market financing
– EMTN Programme (€ 37 billion) – Explicit guarantee
– Neu MTN (ex BMTN) Programme (€ 8 billion) – Implicit guarantee
– French Commercial Paper Programme (€ 10 billion)
Active management of the French CP Programme
– 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

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FUNDING PROGRAMME FOR 2017
Commercial paper
– Duration target of 3 months minimum and active maturity management
NEU MTN (ex-BMTN)
– Fixed rate, in Euros, maturity up to 7 years
– No explicit guarantee
– ECB-eligible (Tier-1)
– 0% risk weight
EMTN programme of €5bn for 2017
– Fixed rate, in Euros, maturity up to 15 years
– First demand guarantee from the French State
– ECB-eligible (Tier-1)
– 0% risk weight

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UNEDIC AIMING FOR LONGER AVERAGE MATURITY ON OUTSTANDING DEBT STRUCTURE
 Unedic objective is to structure its debt
by the economic cycle and extend the
average maturity of its outstanding debt
• 4 months average maturity for the outstanding
Commercial Papers
• 2 years 9 months average maturity for the
outstanding NEU MTN
• 5 years 10 months average maturity for the
outstanding EMTN
• 5 years average maturity for the overall outstanding
debt of Unédic
• The maximum maturity for new EMTN and NEU
MTN issuance is 15 years and 7 years respectively
Source : Unédic 31/12/2016

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UNÉDIC EMTN PROGRAMME

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UNEDIC NEU MTN PROGRAMME (EX BMTN)

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UNEDIC’S 3 FUNDING PROGRAMMES AT A GLANCE

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UNÉDIC IS RATED AA2 BY MOODY’S AND AA BY FITCH RATINGS

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FOR MORE INFORMATION, VISIT UNEDIC INVESTORS WEBSITE
http://www.unedic.org/investors-center

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DISCLAIMER
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 16-058
dated 24 February 2016 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.