Slide 1: FY-2020 Results: Presentation to Financial Analysts
FY-2020 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 10 FEBRUARY 2021
Slide 2: FY-2020 Results: Net Income at €82.9M - 100% Proposed Payout
FY-2020 RESULTS: NET INCOME AT €82.9M - 100% PROPOSED PAYOUT 1 2 3 4 5 FY-2020 FY-2020 CAPITAL KEY TAKE-AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK 2 FY-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 10 FEBRUARY 2021
Slide 3: Part 1: FY-2020 Highlights
coface PART 1 FY-2020 HIGHLIGHTS A
Slide 4: Coface Reports €82.9M Net Income Reflecting Strong End of Year
COFACE REPORTS €82.9M NET INCOME REFLECTING STRONG END OF YEAR Turnover reached €1,450.9m y-t-d, down by 0.6% at constant FX and perimeter • Trade Credit Insurance decreasing by 0.8% at constant scope and FX • Turnover resilience reinforced by risk-free adjacencies in line with Build to Lead strateg
Slide 5: Solvency Ratio at 205%; 100% Proposed Payout
SOLVENCY RATIO AT 205%1 ; 100% PROPOSED PAYOUT2 RoATE3 stands at 4.8% for the year Estimated solvency ratio at c. 205%1 • Solvency ratio at 191% excluding government schemes benefit • Solvency well above new target range set at 155-175% • Stable retention with reinsurance cession rate at 23% for 202
Slide 6: New Corporate Governance Following the Closing with Arch Capital
NEW CORPORATE GOVERNANCE FOLLOWING THE CLOSING WITH ARCH CAPITAL Board of Directors Chairman Bernardo SANCHEZ INCERA Board member Age: 60 Independent directors Eric HÉMAR Isabelle LAFORGUE Nathalie LOMON Chairman & CEO Executive VP Finance & Senior executive VP, CFO ID Logistics / Age: 57 Operation
Slide 7: Economic Environment Shows Extraordinary Conditions
ECONOMIC ENVIRONMENT SHOWS EXTRAORDINARY CONDITIONS COFACE FOOTPRINT WORLD GDP ECONOMIC OUTLOOK IS UNCERTAIN (2019 = 100) 102 • 2021 GDP economic rebound still dependant on sanitary 101.2 situation 100 98 • Impact of vaccine is unlikely to materialise until the end of 97.3 96 94.5 the summer 94 • Ex
Slide 8: Continuously Acted to Mitigate Impact During the Year
CONTINUOUSLY ACTED TO MITIGATE IMPACT DURING THE YEAR INCREASED PREVENTION ACTIONS (# of credit limits cancelled or reduced) TCI EXPOSURE* EVOLUTION REFLECTS 290,000 REGIONAL RISK LEVELS (exposure, in € bn) 240,000 190,000 x 2.1 120 -5.0 % -8.6% -5.1% vs ‘19 140,000 100 90,000 -9.6% 80 -14.8% 40,000
Slide 9: High External Reinsurance Protection, Reinforced by Government Schemes
HIGH EXTERNAL REINSURANCE PROTECTION, REINFORCED BY GOVERNEMENT SCHEMES GOVERNMENT SCHEMES* (% of total exposure protected - policyholder view) 2020 2021 Coface reinsurance program is made of: • 2 Quota-share (QS) with one renewed in 2021 Renewed • A per risk Excess of Loss (XS or XoL), 35.8% Finali
Slide 10: Part 2: FY-2020 Results
coface PART 2 FY-2020 RESULTS A
Slide 11: Turnover Showing Resilience at -0.6% and Positive End of Year
TURNOVER SHOWING RESILIENCE AT -0.6% AND POSITIVE END OF YEAR (2.0)% (0.6)% In €m 1,481 1,451 Total revenue down -0.6% vs 2019 at constant FX and perimeter with positive (+0.4%) growth in Q4-20 Gross Earned Premiums • Trade Credit Insurance1 decreasing by -0.8% at constant FX and (GEP) 1,236 1,204 s
Slide 12: Turnover Mostly Reflecting Lower Client Activity
TURNOVER MOSTLY REFLECTING LOWER CLIENT ACTIVITY Western Europe Northern Europe Central Europe Mediterranean & Africa (0.9)% (0.9)% (3.2)% (4.7)% (3.4)% (2.8)% 0.2% 1.6% 394 395 295 292 307 298 148 143 FY-19 FY-20 FY-19 FY-20 FY-19 FY-20 FY-19 FY-20 Lower premium (-1.6%), offset by lower Very low cl
Slide 13: Strong Commercial Metrics as Coface Continues to Support Clients
STRONG COMMERCIAL METRICS AS COFACE CONTINUE TO SUPPORT CLIENTS production* 129 133 138 116 High level of new business while keeping selective New growth strategy FY-17 FY-18 FY-19 FY-20 91.1% 91.6% 91.9% Retention 89.7% rate* Record high retention FY-17 FY-18 FY-19 FY-20 1.4% effect* Price Selectiv
Slide 14: Gross Loss Ratio at 51.8% on Strong End of the Year
GROSS LOSS RATIO AT 51.8% ON STRONG END OF THE YEAR Loss ratio before reinsurance and including claims handling expenses, in % ► FY-20 gross loss ratio up by 8.4 points on crisis impact 62.8 51.8 55.2 54.8 43.4 45.8 ► Q4-20 gross loss ratio decreased by 10.9 points vs Q4-19 driven by: 44.4* 34.9 L
Slide 15: Loss Ratio Increase Contained in All Regions
LOSS RATIO INCREASE CONTAINED IN ALL REGIONS Loss ratio before reinsurance, including claims handling expenses – in % 9%* 8%* 5%* Group North America Asia Pacific Latin America 72.3**** 63.7 57.9** 60.1*** 51.4 44.2** 51.8 49.0 45.8 53.8 48.6 43.4*** 39.1 35.9 35.9 23.6 FY-17 FY-18 FY-19 FY-20 FY-17
Slide 16: Loss Ratio Improved in All Regions vs Previous Quarter
LOSS RATIO IMPROVED IN ALL REGIONS VS PREVIOUS QUARTER Loss ratio before reinsurance (by quarter), including claims handling expenses – in % 9%* 8%* 5%* Group North America Asia Pacific Latin America 112.5 93.4 70.5 70.3 76.6 55.2 62.8 54.8 59.3 63.5 58.0 66.2** 45.8 46.1 48.3 34.9 40.2 31.8 41.4 27
Slide 17: Costs Decreasing More Than Revenues
COSTS DECREASING MORE THAN REVENUES (3.0)% (1.6)% (0.7)% 1.8% In €m 712 691 185 176 184 Cost ratio before reinsurance, in % 166 165 External acquisition 165 155 42 38 40 costs (commissions) 40 36 35.9 34.1 36.0 32.3 32.5 Internal costs 547 536 144 138 126 128 144 V% V% ex. FX FY-19 FY-20 Q4-19 Q1-20
Slide 18: Reinsurance Result Reflects Government Schemes
REINSURANCE RESULT REFLECTS GOVERNMENT SCHEMES ► Government schemes are in force in several countries for an 12M-19 12M-20 estimated negative net impact of -€13m pretax in Q4-20 and a total of -€5.9m YTD Gross earned premiums 1,235.6 1,204.3 Net earned premiums 882.0 645.1 ► Premium cession rate is
Slide 19: Net Combined Ratio at 79.8% on Strong End of the Year
NET COMBINED RATIO AT 79.8% ON STRONG END OF THE YEAR +2.1 ppts In % 77.7 79.8 Net combined ratio ► Net combined ratio up to 79.8% (vs 77.7% in 2019) due to increase in claims ratio Net cost ratio 32.7 32.1 ► Cost ratio down 0.6 ppt showing good cost discipline Net loss ratio ► 2020 net loss ratio u
Slide 20: Government Scheme's Impact on Ratio
GOVERNMENT SCHEME’S IMPACT ON RATIO GOVERNMENT SCHEMES’ IMPACT ON RATIO (%) FULL YEAR BY QUARTER (4.8) ppts 0 ppt (6.6) ppts (6.8) ppts (11.1) ppts In % In % 98.0 84.5 Net combined 91.4 Net combined 79.8 ratio 86.8 86.8 ratio 77.7 84.2 31.7 77.4 Net cost Net cost 31.6 33.5 69.4 32.1 ratio 29.7 29.7
Slide 21: Financial Portfolio: Stabilised Yield and Real Estate Impairments
FINANCIAL PORTFOLIO: STABILISED YIELD AND REAL ESTATE IMPAIRMENTS €m FY-19 FY-20 Investment Real Estate Income from investment portfolio without gains on sales** 44.6 32.9 Gains on sales and impairement, net of hedging*** 3.1 (1.7) 8% Equities FX effect 1.8 (3.5) 5% Other (12.6) (0.8) 36.9 Loans, 26
Slide 22: FY-2020 Net Income at €82.9M of Which €30.5M in Q4-2020
FY-2020 NET INCOME AT €82.9M OF WHICH €30.5M IN Q4-2020 Income statement items - in €m 12M-19 12M-20 Current operating income 224.9 154.2 ► Current operating income at €154.2m is down 30% from record level Other operating income and expenses (6.0) (13.8) ► Investments & restructuring expenses at €(1
Slide 23: RoATE Stands at 4.8%, Down 4.1 ppts
ROATE STANDS AT 4.8%, DOWN 4.1 PPTS 82.9 17.8 (26.8) 1,998.3 Change in equity 1,924.5 (0.1) In €m IFRS Equity attributable Distribution to Net income impact Revaluatuion reserve Treasury shares, IFRS Equity attributable to owners of the parent shareholders (financial instruments currency translation
Slide 24: Part 3: Capital Management
coface PART 3 CAPITAL MANAGEMENT A
Slide 25: Solid Balance Sheet
SOLID BALANCE SHEET 2020 simplified balance sheet In €m 231 Goodwill & intangible assets 1,998 Shareholders’ 2,983 equity ► IFRS 17 “Insurance contracts” Insurance investments 390 • Project progressing as planned Financing liabilities (including hybrid debt) 1,804 Gross insurance reserves ► Financia
Slide 26: Robust Solvency Over Time
ROBUST SOLVENCY OVER TIME FY-2020 estimated Solvency ratio above target range 8.7 ppts (13.3 ppts) Low sensitivity to market shocks 6.5 ppts 203%* 205%** 203% 205% market sensitivity tested through instantaneous shocks 191%** 175% 155% 169% 164% 162% 130% 31/12/2020 SCR cover (PIM) 205% +100 bps Int
Slide 27: Solvency Required Capital at 31 December 2020
SOLVENCY REQUIRED CAPITAL AT 31 DECEMBER 2020 Partial Internal Model 205%1 2,204 29 417 €m Operational risk 1,145 (140) 37 169 1,077 121 (97) 1,757 Counterparty risk 908 169 305 Market risk 908 908 Tier 3 Non-life underwriting risk 682 Tier 2 Tier 1 SCR components Diversification Tax adjustments Tot
Slide 28: Part 4: Key Take-Aways & Outlook
PART 4 KEY TAKE-AWAYS & OUTLOOK
Slide 29: Key Take-Aways & Outlook
KEY TAKE-AWAYS & OUTLOOK Coface is demonstrating its resilience in extraordinary times • Claims experience de-correlated from GDP numbers on public intervention and strict risk underwriting • Growing client portfolio while adjusting pricing to the level of uncertainty • Operational performance demon
Slide 30: Part 5: Appendices
coface PART 5 APPENDICES A
Slide 31: Key Figures (1/3)
KEY FIGURES (1/3) Quarterly and cumulated figures Income statement items in €m / Quarterly figures Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 % % ex. FX* Gross earned premiums 299.0 306.3 312.6 317.7 301.2 297.9 298.1 307.2 (3.3)% (0.2)% Services revenue 66.4 60.8 58.3 59.9 69.3 56.3 59.7 61.3
Slide 32: Key Figures (2/3)
KEY FIGURES (2/3) Revenue by region: quarterly and cumulated figures Total revenue Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 V% ex. FX* by quarter - in €m Northern Europe 80.2 75.9 76.7 74.7 81.5 65.5 74.1 76.5 (1.1)% Western Europe 74.9 72.6 71.9 75.3 71.8 70.7 77.3 72.1 (3.4)% Central Europe
Slide 33: Key Figures (3/3)
KEY FIGURES (3/3) Financial portfolio: quarterly figures Financial portfolio Q1-19 H1-19 9M-19 FY-19 Q1-20 H1-20 9M-20 FY-20 Bonds 66% 67% 72% 74% 64% 64% 65% 68% Loans, Deposit & other financial 20% 19% 13% 11% 23% 23% 23% 19% Equities 6% 6% 6% 6% 4% 5% 5% 5% Investment Real Estate 8% 9% 8% 8% 9% 8
Slide 34: Government Schemes Finalised: Main Features
GOVERNMENT SCHEMES FINALISED: MAIN FEATURES 2020 Renewed until 30 June 2021 % of Ceded Ceded Ceded Ceded Country Type Eligible Policyholders Commissions Renewal Commissions exposure* premium claims premium claims Top-up Domestic France 22.0% Signed Quota share Domestic 75% 75% 35% 20% 20% 35% Domest
Slide 35: Exposure in EM Slightly Decreased
EXPOSURE IN EM SLIGHTLY DECREASED Total exposure down 9.5% vs prior year, decreasing share in EM Evolution of TCI exposure1 per Advanced vs Emerging markets FY-2020 total TCI exposure1 – Top 10 countries vs. others In €bn In % Germany 13.9% France Dec-17 79% 21% 485 Italy 35.4% USA 10.6% Dec-18 79%
Slide 36: Historical TCI Exposure Data
HISTORICAL TCI EXPOSURE DATA H1-18 79% 21% 496 Evolution of total TCI exposure1 by Dec-18 79% 21% 510 Advanced vs Emerging market In €bn H1-19 79% 21% 530 Dec-19 79% 21% 537 H1-20 81% 19% 503 Dec-20 81% 19% 486 Advanced Emerging Total exposure Historical total TCI exposure In % By region Top 10 coun
Slide 37: Combined Ratio Calculation
COMBINED RATIO CALCULATION In €k FY-2019 FY-2020 ► Combined ratio before reinsurance Earned Premiums (B) (C) Gross earned premiums [A] 1,235,597 1,204,334 loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Ceded premiums (353,585) (559,203) Net earned premiums [D] 882,012 645,131
Slide 38: Q4-20 Results vs Consensus
Q4-20 RESULTS VS CONSENSUS # of in M€ Consensus Q4-2020 Spread Comment replies Total revenue 4 362 368 +6 Revenue growth turned positive at constant FX Gross Earned Premiums 4 302 307 +5 supported by retention and pricing Net Earned Premiums 3 125 131 +6 NEP/GEP 3 41.2% 42.6% +1.4 ppt Impact of gove
Slide 39: Management Team
MANAGEMENT TEAM GROUP CENTRAL FUNCTIONS Xavier DURAND CEO 30+ years of international experience in regulated financial services Working for Coface since 2016 Pierre BEVIERRE Nicolas de BUTTET Cyrille CHARBONNEL Nicolas GARCIA Human Resources Director Transformation Office Director Underwriting Direc
Slide 40: New Shareholder Structure
NEW SHAREHOLDER STRUCTURE SHARE CAPITAL • The share capital of the company amounts to € 304,063,898 divided into 152,031,949 shares, all of the same class and all fully paid up and subscribed. SHAREHOLDER STRUCTURE SHAREHOLDER STRUCTURE AFTER BEFORE THE CLOSING THE CLOSING WITH ARCH CAPITAL 1.54% 2.
Slide 41: Financial Calendar & Investor Relations Contacts
FINANCIAL CALENDAR & INVESTOR RELATIONS CONTACTS Calendar Own shares transactions Next Event Date Own shares transactions Liquidity Buy-back Date LTIP TOTAL % Total of Voting Agreement (cancellation) Q1-2021 Results 27 April 2021 after market close (in shares) # Shares rights 31/12/2020 168,239 1,06
Slide 42: 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 December 2020. This presentation includes only summary information and does not purport to be comprehensive. The Coface G