FY-2018 RESULTS PRESENTATION TO FINANCIAL ANALYSTS FEBRUARY 11 TH , 2019
FY-2018 Results: Net income at € 122.3m and 100% pay-out 1 2 3 4 5 FY-2018 FY-2018 CAPITAL KEY TAKE-AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK 2 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
PART 1 FY-2018 HIGHLIGHTS
Coface reports € 122.3m net income, reflecting strong underwriting discipline in a riskier economic environment Turnover reached € 1,384.7m y-t-d, up 4.6% at constant FX and perimeter − Q4-2018 up 6.3% y-o-y and 4.0% excl. one-offs 1 − Trade Credit insurance growing at 5.7% at constant FX − Insured turnover and client retention at record level. FY 2018 net loss ratio down by (6.2) ppts. at 45.1%; Net combined ratio at 79.6% − Q4-2018 net loss ratio at 45.5%, thanks to favourable past claims management and disciplined underwriting − FY 2018 net cost ratio down by (0.7) ppt. at 34.5% vs. 35.2% in 2017, reflecting tight cost controls while sustaining investments − Net combined ratio at 81.4% for Q4-2018 Net income (group share) at € 122.3m, of which € 24.1m in Q4-2018 − Earning per share reaches record € 0.79 1 € 7.1m YoY one-off impacts 4 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
Solvency ratio stands at 169% 1 ; 100% payout proposed RoATE stands at 7.7% for the year and 8.0% 2 excluding non-recurring items Estimated solvency ratio above target range at c. 169% 1 − Increased solvency ratio driven by operating performance and continued model optimization − Quota share reinsurance cession maintained at 26% − € 15m additional share buyback launched in October 2018 completed in January 2019 − Standard formula evolution now expected to apply in 2020 − Coface is still targeting to apply for Partial Internal Model in the summer 2019. Begun discussions with regulator Active capital management to continue, in line with Fit to Win targets: − Proposed pay-out of 100% of the year's results of which at least 60% as a dividend 3 1 This estimated solvency ratio constitutes a preliminary calculation made according to Coface’s interpretation of Solvency II regul ations. The result of the definitive calculation may differ from the preliminary calculation. The estimated solvency ratio is not audited. 2 Non-recurring items amounted to € (3.8)m and mainly including € 10.6m of restructuring charges partially offset by reversals of provisions € 7.5m. 3 The proposed distribution is subject to approval by the general shareholders meeting on 16 May 2019. 5 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
Fit to Win : The right strategy as world economy becomes more volatile Delivering on key metrics Continuing to improve capital management KPIs are making progress against targets ► Solvency ratio above ► Disciplined underwriting policy upper end of target 150% 169% 2 164% 1 ► Investments more than financed by cost savings range FY 16 FY 17 FY 18 123 ► Returning capital RoATE (in %) Revenue Growth (in %) 98 50* 15 - Proposed pay-out of 100% 30 V% V% ex. FX 2.0% 4.3% 73 - At least 60% as a dividend* 20 53 1,385 20 37 2017 2018 2019f 1,358 1,355 Emerging Total dividend (EURm) Buyback Buyback (additionnal) 38 37 Mature 1 End-2017 final solvency ratio stands at 164% (based on the interpretation by Coface of Solvency II and integrating a stricter estimation for Factoring SCR to anticipate regulatory 7.7 changes). Not audited. 2 This estimated solvency ratio constitutes a preliminary calculation made according to Coface’s interpretation of Solvency II regulations. The result of the 63 5.3 definitive calculation may differ from the preliminary calculation. The estimated solvency ratio is not audited. It includes the impact of the stricter estimation for Factoring SCR. 62 63 * The proposed distribution is subject to approval by the general shareholders meeting on 16 May 2019. -0.8 2019: Continuing to focus on execution * ** FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 Loss Ratio (in %) Cost ratio (in %) ► Disciplined underwriting actions as economy slows down 35.2 35.1 65.5 ► Driving differentiated growth 51.4 34.5 45.1 FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 ► Progressing Partial Internal Model * Ex. SEGM & one-off items ** Ex. SEGM (excluding State Export Guarantees Management): € 53.4m revenue in FY-2016 and € 0.6m remainder revenue booked in FY-2017. Coface ceded this activity as from January 1st, 2017. Figures impacted by this activity have been restated so as to be comparable. 6 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
PART 2 FY-2018 RESULTS
Turnover growth at 4.6% driven by credit insurance premiums Total revenue up 4.6% vs. 2017 at constant FX and perimeter; 2.2% 4.6% Q4-2018 is up 6.3% y-o-y (+4.0% excl. one-offs) In € m 1,385 1,355 Trade credit insurance 1 growing at 5.7% at constant FX ► Gross Earned Premiums 1,143 (GEP) 1,110 Growth driven by record client activity (volume effect) ► and retention. Pricing remains under control Other revenue 2 down by (3.9)% vs. 2017 at constant FX, 133 136 ► Insurance related fees 112 106 driven by Factoring Other revenue FY-2017 FY-2018 12.0% 11.9% Fees / GEP ratio Fees up by 3.1% at constant FX ► FY-2017 FY-2018 1 Including Bonding and Single Risk | 2 Other revenue includes Factoring and Services V% V% ex. FX 8 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
Revenue growth driven by mature markets recovery and emerging markets improved performance Central Europe Western Europe Northern Europe Mediterranean & Africa 1.1% 1.6% (0.3)% (0.2)% 4.8% 6.1% 6.4% 8.2% 304 303 370 284 281 348 134 128 FY-17 FY-18 FY-17 FY-18 FY-17 FY-18 FY-17 FY-18 Insurance revenues growing at Growing portfolio while monitoring Growth driven by client activity and Steady portfolio growth and higher lower premium refunds +1.6% ; Lower factoring risk tightly (Poland) level of client activity Asia Pacific Latin America North America (1.5)% 2.7% 3.8% 8.3% (5.5)% 11.9% 127 122 97 95 76 72 FY-17 FY-18 FY-17 FY-18 FY-17 FY-18 Selective growth in a volatile Stabilised portfolio; Higher revenues Growing credit insurance environment through some large driven by Single Risks and clients and lower Single Risks global contracts activity V% V% ex. FX Total revenue by region, in € m 9 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
High volume effect and record high retention New production 1 New business slowly recovering, 139 138 129 116 reflecting selective growth strategy Q4-2018 slightly above Q4-2017 after slow start of the year FY-15 FY-16 FY-17 FY-18 Retention rate 1 91.1% 89.7% 88.0% 87.9% Record / High retention in most regions Record/high retention in most regions FY-15 FY-16 FY-17 FY-18 Price effect 1 Controlled price decrease Controlled price decrease (1.4)% (1.5)% (1.7)% Driving repricing of risky markets Driving repricing of risky markets (2.5)% FY-15 FY-16 FY-17 FY-18 Volume effect 1 6.1% 4.9% Client activity remains high in all markets Client activity still high in all markets 2.5% confirming previous quarters trends 0.6% FY-15 FY-16 FY-17 FY-18 1 Portfolio as of December 31 st 2018; and at constant FX and perimeter. New production: in € m 10 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
Gross loss ratio at 45.3%, stabilizing in a riskier environment Loss ratio before reinsurance and including claims handling expenses, in % ► Good claims performance (past and new) 50.3 51.4 46.5 45.3 45.0 44.2 in a riskier economic environment 39.7 46.3* 43.6* ► Q4-2018 gross loss ratio benefiting from FX movement (-1.0%) FY-2017 FY-2018 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 * excl. FX Loss ratio before reinsurance and excluding claims handling expenses, in % (9.0) ► Unchanged reserving policy (25.1) (21.4) (34.0) (27.2) ► Current underwriting year above historical average due to roll over of 75.7 72.5 74.1 70.2 70.0 past claim and end of year large 61.0 48.8 49.0 45.3 cases, particularly in Western 41.7 Europe Current underwriting year All underwriting years Prior underwriting years 11 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
Improving mature market performance, while controlling emerging markets volatility Loss ratio before reinsurance, including claims handling expenses – in % 9%* 7%* 5%* Group North America Asia Pacific Latin America 146.8 113.4 100.6 85.0 63.3 ** 60.2 57.9 51.4 ** 56.3 51.0 44.2 53.8 49.0 35.9 39.1 23.6 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 **43.8% excl. FX **51.8% excl. FX 20%* 27%* 10%* 22%* Central Europe Western Europe Northern Europe Mediterranean & Africa ** 49.8 48.4 57.4 58.5 48.8 57.2 50.3 54.0 39.8 48.9 49.6 49.7 32.6 38.5 34.6 33.2 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 FY-15 FY-16 FY-17 FY-18 **48.9% excl. FX * % of Total revenue by region 12 FY-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 11 FEBRUARY 2019
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