Q1-2020 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 23 APRIL 2020 - PowerPoint PPT Presentation

Q1-2020 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 23 APRIL 2020

Q1-2020 RESULTS: NET INCOME AT €12.7M; ROATE STANDS AT 3.0% 1 2 3 4 Q1-2020 Q1-2020 RESULTS KEY TAKE-AWAYS APPENDICES HIGHLIGHTS & OUTLOOK 2 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

PART 1 Q1-2020 HIGHLIGHTS

COFACE REPORTS €12.7M NET INCOME FOR Q1-2020 Turnover reached € 370m y-t-d, up 0.9% at constant FX and perimeter New production and retention at high levels • Services are growing by 12% • Activity continues to slowdown ahead of crisis full impact • Q1-2020 net loss ratio up 14.5 ppts. versus Q1-2019 at 57.1%; Net combined ratio at 86.8% • Gross loss ratio up 15.3 ppts., driven by pre-Covid large losses (9 ppts.) and anticipated growing frequency • Net cost ratio down by (2.2) ppts. at 29.7% reflecting good cost discipline Financial income down to €2.7m • Hedges and early de-risking actions mitigating financial crisis impact • Increased significantly liquidity to 21% of portfolio Net income (group share) at €12.7m , down by 65.2% y-o-y Canceled dividend increases solvency ratio by 13 points RoATE at 3.0% 4 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

MAJOR ECONOMIC SLOWDOWN EXPECTED INCREASED PREVENTION ACTIONS COFACE’S WORLD GDP GROWTH FORECAST (# of credit limits cancelled or reduced) (annual average, %) 4.3 180,000 3.3 3.2 3.2 3.0 3.0 2.7 2.5 2.5 2.3 160,000 140,000 120,000 -1.3 100,000 -1.7 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 80,000 2020 CORPORATE INSOLVENCIES PER COUNTRY 60,000 (annual evolution in % - March forecasts) 40,000 39% Q1 Q1 Q1 Q1 Q1 33% '16 '17 '18 '19 '20 25% 18% • Coface anticipates a significant decline in world GDP 15% 11% • This will translate into a sharp rise in insolvencies 8% • Coface is taking record high number of prevention actions France Germany Italy US UK Asia Pac. World Source: IMF, National authorities, National data, Datastream, Coface 5 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

ACTIVELY ACTING TO MITIGATE IMPACT OF COVID-19 CRISIS Coface is demonstrating agility on an operational level: More than 95% of employees working from home • No disruption in quality of service delivered to clients • Quickly adjusting to new market reality • Taking record number of prevention actions targeted by sector and country • Initiating repricing actions and product adjustments Engaged multiple discussions with governments to support economy • Finalized agreement with German government signed on 16 April which caps Coface downside. • France relaunched CAP and CAP Export products • On going discussions with other European governments Implemented strict cost efficiency plan and redefined Build to Lead project priorities in face of current environment 6 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

PART 2 Q1-2020 RESULTS

TURNOVER GROWTH AT 0.9% 1.4% 0.9% Total revenue up 0.9% vs Q1-2019 at constant FX 370 365 In €m Trade credit insurance 1 premiums growing at 0.2% at constant FX • Gross Earned Premiums • Higher new business and retention, offset by lower realized and (GEP) 301 299 expected client activity Other revenue 2 up by 0.4% vs Q1-2019 at constant FX • Factoring flat excluding one-off • Insurance related fees 41 39 Services revenue up by 12% vs Q1-2019 • Other revenue 27 28 Q1-2019 Q1-2020 13.7% 13.1% Fees / GEP ratio Fees up by 5.2% at constant FX • 1 Including Bonding and Single Risk | 2 Other revenue includes Factoring and Services Q1-2019 Q1-2020 V% V% ex. FX 8 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

LOWER CLIENT ACTIVITY SLOWING GROWTH MOMENTUM Western Europe Northern Europe Central Europe Mediterranean & Africa (4.0)% (4.5)% 1.6% 1.6% 11.6% 2.3% 5.5% 5.7% 102 97 80 81 75 72 38 34 Q1-19 Q1-20 Q1-19 Q1-20 Q1-19 Q1-20 Q1-19 Q1-20 Growing new sales and retention. Growth at constant scope driven by Growth supported by still high new Very low client activity. Lower client activity trade credit. business and retention Insurance revenues up 3.4% Coface PKZ integrated in Q2-19 North America Asia Pacific Latin America 10.2% 7.1% (6.1)% (8.3)% (19.5)% (5.4)% 35 31 27 26 21 17 Q1-19 Q1-20 Q1-19 Q1-20 Q1-19 Q1-20 Growth driven by the US: higher new Weak activity reflecting shutdown and Challenging economic environment V% V% ex. FX prudent underwriting throughout the region business, better single risk and fees Total revenue by region, in €m 9 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

RECORD HIGH RETENTION, GROWING NEW BUSINESS OFFSET SLOWING ACTIVITY production* 51 43 Growing new production in almost all regions New 34 35 Strong start of the year before lockdown Q1-17 Q1-18 Q1-19 Q1-20 94.3% 94.0% 93.1% 91.3% Retention rate* Retention at record / high level Q1-17 Q1-18 Q1-19 Q1-20 -0.4% effect* Pricing impact only slightly negative even before Price -1.2% -1.6% -1.9% repricing initiatives Q1-17 Q1-18 Q1-19 Q1-20 1.8% Volume 1.3% Slower activity growth continued as expected effect* 1.1% 0.6% Trend expected to accelerate further Q1-17 Q1-18 Q1-19 Q1-20 * Portfolio as of 31 March 2020; and at constant FX and perimeter. New production: in €m 10 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

GROSS LOSS RATIO INCREASING TO 55.2% IN A RISKIER ENVIRONMENT Loss ratio before reinsurance and including claims handling expenses, in % ► Gross loss ratio has increased by 15.3 points driven by 55.2 45.9 45.8 41.9 39.8  One large market loss 45.1* 44.4* 42.2**  Anticipation of an increase in the number of corporate bankruptcies over the coming months Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 * excl. FX ** excl. FAC Loss ratio before reinsurance and excluding claims handling expenses, in % ► No change in reserving policy, opening year higher due to (24.4) (15.8) anticipation of future losses (35.0) (33.8) 76.9 71.3 72.4 71.1 ► Recoveries are lower and impacted by large loss 55.6 52.5 37.4 37.2 Current underwriting year All underwriting years Prior underwriting years 11 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

LOSS RATIO EVOLUTION MOSTLY DRIVEN BY ONE LARGE LOSS Loss ratio before reinsurance, including claims handling expenses – in % 5%* Group North America Asia Pacific 7%* Latin America 9%* 70.3 60.1*** 59.3 55.2 57.9** 53.8 51.4 49.0 44.2** 43.5*** 45.8 46.1 39.1 35.9 35.9 23.6 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 **51.8% excl. FX ***53.4% excl. FX **43.8% excl. FX ***42.9% excl. FX 10%* Western Europe Northern Europe Central Europe Mediterranean & Africa 28%* 22%* 19%* 77.9 57.2 54.0 49.6 49.7 48.4 48.8** 46.3 48.9 47.9 42.5 43.8 40.9 35.1 34.6 34.6 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 FY-17 FY-18 FY-19 Q1-20 **48.9% excl. FX * % of Total revenue by region 12 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

LOSS RATIO FOR THE QUARTER AT 55.2% Loss ratio before reinsurance, including claims handling expenses – in % 5%* Group North America Asia Pacific 7%* Latin America 9%* 72.4** 66.2*** 70.3 62.3 63.5 55.2 59.3 51.3 49.4 45.9 46.2 44.6 41.9** 39.8 40.2 46.1 36.5 31.7 28.6 20.2 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 **58.9% excl. FX ***54.0% excl. FX **42.1% excl. Coface PKZ 10%* Western Europe Northern Europe Central Europe Mediterranean & Africa 28%* 22%* 19%* 77.9 47.9 47.2 46.1 45.5 44.5 50.5 46.0 45.9 43.3 43.8 40.7 38.6 37.2 40.1 40.9 33.9 35.3 35.1 21.8** Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 ** 32.7% excl. FAC * % of Total revenue by region 13 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020

STABLE COSTS DRIVES COST RATIO IMPROVEMENT 0.2% (0.3)% In €m 185 176 177 176 174 42 38 40 External acquisition 41 42 Cost ratio before reinsurance, in % costs (commissions) 35.9 34.6 33.7 33.2 32.3 144 137 138 134 132 Internal costs Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 V% V% ex. FX ► Good cost discipline (1.2)% 33.2% (0.2)% +0.5% ► External acquisition costs benefit from US agents internalisation 32.3% Q1-2019 Earned premiums Internal External Q1 2020 overheads acquisition cost 14 Q1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 23 APRIL 2020