Slide 1: Q1-2020 Results: Presentation to Financial Analysts
Q1-2020 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 23 APRIL 2020
Slide 2: Q1-2020 Results: Net income at €12.7M; RoATE stands at 3.0%
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
Slide 3: Part 1: Q1-2020 Highlights
coface PART 1 Q1-2020 HIGHLIGHTS A
Slide 4: Coface reports €12.7M net income for Q1-2020
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
Slide 5: Major economic slowdown expected
MAJOR ECONOMIC SLOWDOWN EXPECTED COFACE’S WORLD GDP GROWTH FORECAST INCREASED PREVENTION ACTIONS (annual average, %) (# of credit limits cancelled or reduced) 4.3 180,000 3.2 3.0 3.0 3.3 3.2 2.5 2.7 2.5 2.3 160,000 140,000 120,000 -1.3 -1.7 100,000 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 80,
Slide 6: Actively acting to mitigate impact of Covid-19 crisis
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 action
Slide 7: Part 2: Q1-2020 Results
coface PART 2 Q1-2020 RESULTS A
Slide 8: Turnover growth at 0.9%
TURNOVER GROWTH AT 0.9% 1.4% 0.9% 365 370 Total revenue up 0.9% vs Q1-2019 at constant FX In €m • Trade credit insurance1 premiums growing at 0.2% at constant FX Gross Earned Premiums (GEP) 299 301 • Higher new business and retention, offset by lower realized and expected client activity • Other rev
Slide 9: Lower client activity slowing growth momentum
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% 97 102 75 80 81 72 34 38 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
Slide 10: Record high retention, growing new business offset slowing activity
RECORD HIGH RETENTION, GROWING NEW BUSINESS OFFSET SLOWING ACTIVITY production* 51 43 34 35 Growing new production in almost all regions New Strong start of the year before lockdown Q1-17 Q1-18 Q1-19 Q1-20 93.1% 94.0% 94.3% 91.3% Retention rate* Retention at record / high level Q1-17 Q1-18 Q1-19 Q1-
Slide 11: Gross loss ratio increasing to 55.2% in a riskier environment
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 41.9 45.9 45.8 39.8 One large market loss 45.1* 44.4* 42.2** Anticipation of an increase in the
Slide 12: Loss ratio evolution mostly driven by one large loss
LOSS RATIO EVOLUTION MOSTLY DRIVEN BY ONE LARGE LOSS Loss ratio before reinsurance, including claims handling expenses – in % 7%* 5%* Group North America 9%* Asia Pacific Latin America 70.3 55.2 59.3 57.9** 60.1*** 51.4 49.0 53.8 44.2** 43.5*** 39.1 45.8 46.1 35.9 35.9 23.6 FY-17 FY-18 FY-19 Q1-20 F
Slide 13: Loss ratio for the quarter at 55.2%
LOSS RATIO FOR THE QUARTER AT 55.2% Loss ratio before reinsurance, including claims handling expenses – in % 5%* Group North America Asia Pacific Latin America 9%* 7%* 72.4** 66.2*** 70.3 55.2 62.3 59.3 63.5 45.9 46.2 44.6 51.3 49.4 39.8 41.9** 36.5 40.2 46.1 31.7 28.6 20.2 Q1-19 Q2-19 Q3-19 Q4-19 Q
Slide 14: Stable costs drives cost ratio improvement
STABLE COSTS DRIVES COST RATIO IMPROVEMENT 0.2% (0.3)% In €m 185 176 177 174 176 40 42 38 External acquisition 41 42 Cost ratio before reinsurance, in % costs (commissions) 33.2 34.6 33.7 35.9 32.3 Internal costs 134 137 132 144 138 V% V% ex. FX Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19
Slide 15: Reinsurance results reflect higher loss activity
REINSURANCE RESULTS REFLECT HIGHER LOSS ACTIVITY Q1-19 Q1-20 Gross earned premiums 299.0 301.2 ► Starting on January 2020, cession rate has moved to 23%, split Net earned premiums 212.3 219.3 into 2 quota shares 29.0% 27.2% Premium cession rate ► Ceded claims increased with higher gross loss ratio G
Slide 16: Net combined ratio at 86.8% on rising loss ratio
NET COMBINED RATIO AT 86.8% ON RISING LOSS RATIO +12.3 ppts. In % 86.8 Net combined ratio 77.5 78.1 80.4 ► Net cost ratio improved to 29.7% (vs 31.9% in Q1-19) 74.5 29.7 Net cost ratio 31.9 32.2 31.0 35.6 ► Loss ratio at 57.1%, reflecting higher large losses and expected increase in defaults 57.1 Ne
Slide 17: Agile management of financial portfolio in the crisis
AGILE MANAGEMENT OF FINANCIAL PORTFOLIO IN THE CRISIS Q4-19 Q1-20 Q1-20 vs. €m % €m % Q4-19 ► Trimmed high yield bond exposure early in the crisis Bonds 2,119.2 74% 1,773.3 64% (10.4)% Loans, Deposit & other financial 318.8 11% 648.4 23% +12.2% - o/w Money market funds (UCITS) 172.1 6% 432.5 16% + 9
Slide 18: Financial portfolio: stabilised yield and lower realized gains
FINANCIAL PORTFOLIO: STABILISED YIELD AND LOWER REALIZED GAINS €m Q1-19 Q1-20 Investment Real Estate Income from investment portfolio without gains on sales** 10.6 9.6 Equities 9% Gains on sales and impairement, net of hedging*** (0.5) (2.2) 4% FX effect (1.1) (2.4) Other (3.9) (2.3) Loans, Bonds De
Slide 19: Q1-2020 net income at €12.7M
Q1-2020 NET INCOME AT €12.7M Income statement items - in €m Q1-19 Q1-20 ► Current operating income at €30.9m down mostly on higher loss ratio and lower Current operating income 57.2 30.9 financial income Other operating income and expenses (0.2) (0.2) Operating income 56.9 30.7 Finance costs (5.3) (
Slide 20: RoATE stands at 3.0%, down 5.9 ppts.
ROATE STANDS AT 3.0%, DOWN 5.9 PPTS. 1,924.5 12.7 (74.0) 0.0 Change in equity (8.5) 1,854.7 In €m IFRS Equity Distribution to Net income impact Revaluatuion reserve Treasury shares, IFRS Equity attributable to owners shareholders (financial instruments currency translation attributable to owners of
Slide 21: Part 3: Key take-aways & outlook
PART 3 KEY TAKE-AWAYS & OUTLOOK
Slide 22: Key take-aways & outlook
KEY TAKE-AWAYS & OUTLOOK Q1-2020 net profit down, only beginning to reflect the impact of the current crisis • €12.7m net profit down mostly due to higher claims activity • Lockdown will negatively impact the activity level of Coface clients Coface has rapidly taken numerous actions to mitigate the
Slide 23: Part 4: Appendices
coface PART 4 APPENDICES A
Slide 24: Government schemes
GOVERNMENT SCHEMES FRENCH STATE AID SCHEME GERMAN STATE AID SCHEME France has relaunched its supplementary public credit insurance programs: • German policyholders (incl. non-German Scope of co-insured parties) • Gives additional capacity up to the double eligibility • Classical TCI Credit Risk CAP
Slide 25: Key figures (1/3)
KEY FIGURES (1/3) Quarterly and cumulated figures Income statements items in €m - quarterly figures Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 % % ex. FX* Gross earned premiums 299.0 306.3 312.6 317.7 301.2 +0.7% +0.3% Services revenue 66.4 60.8 58.3 59.9 69.3 +4.3% +3.6% REVENUE 365.5 367.1 370.9 377.6 370.5 +1
Slide 26: Key figures (2/3)
KEY FIGURES (2/3) Revenue by region: quarterly and cumulated figures Total revenue - by quarter - in €m Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 V% ex. FX* Northern Europe 80.2 75.9 76.7 74.7 81.5 +1.6% Western Europe 74.9 72.6 71.9 75.3 71.8 (4.5)% Central Europe 33.7 37.9 38.6 38.0 37.6 +2.3% Mediterranean &
Slide 27: Key figures (3/3)
KEY FIGURES (3/3) Financial portfolio: quarterly figures Financial portfolio Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Bonds 62% 64% 65% 66% 66% 67% 72% 74% 64% Loans, Deposit & other financial 22% 20% 20% 19% 20% 19% 13% 11% 23% Equities 8% 8% 7% 7% 6% 6% 6% 6% 4% Investment Real Estate
Slide 28: Combined ratio calculation
COMBINED RATIO CALCULATION In €k Q1-2019 Q1-2020 ► Combined ratio before reinsurance Earned Premiums (B) (C) Gross earned premiums [A] 299,029 301,176 loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Ceded premiums (86,688) (81,886) Net earned premiums [D] 212,341 219,290 ► Comb
Slide 29: Q1-20 results vs consensus
Q1-20 RESULTS VS CONSENSUS # of in M€ Consensus Q1-2020 Spread Comment replies Total revenue 6 361 370 +9.5 Expected slowdown of activity but high new Gross Earned Premiums 6 295 301 +6.2 business and retention Net Earned Premiums 4 213 219 +6.3 NEP/GEP 4 72.2% 72.8% +0.6 ppt Higher retention Net un
Slide 30: Financial calendar & investor relations contacts
FINANCIAL CALENDAR & INVESTOR RELATIONS CONTACTS Calendar Own shares transactions Own shares transactions Next Event Date Date Liquidity LTIP Buy-back Agreement (cancellation) TOTAL % Total of Voting Annual shareholders meeting 14 May 2020 (in shares) # Shares rights 31/03/2020 260,491 1,063,069 0 1
Slide 31: Important legal information
IMPORTANT LEGAL INFORMATION IMPORTANT NOTICE: This presentation has been prepared exclusively for the purpose of the disclosure of Coface Group’s results for the period ending 31 March 2020. This presentation includes only summary information and does not purport to be comprehensive. The Coface Grou