Slide 1: H1-2019 Results: Presentation to Financial Analysts
H1-2019 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 25 JULY 2019
Slide 2: Coface delivers record H1-2019 results
Coface delivers record H1-2019 results: Net income up 25% at €78.5m; RoATE at 9.6%; PIM* submitted 1 2 3 4 5 H1-2019 H1-2019 CAPITAL KEY TAKE AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK * Partial Internal Model. Following the approval of the Board of Directors on 25 July, the Partial In
Slide 3: Part 1: H1-2019 Highlights
coface PART 1 H1-2019 HIGHLIGHTS /
Slide 4: Coface delivers record H1-2019 in riskier economy
Coface delivers record H1-2019 in riskier economy Partial Internal Model submitted for validation Turnover reached €732m y-t-d, up 6.6% at constant FX and perimeter; Q2-2019 up 7.6% y-o-y − All regions positively contributing to growth − New production improving, retention remains high; revenues sti
Slide 5: Fit to Win fully delivering
Fit to Win fully delivering RoATE1 (%) COMBINED RATIO (%) ≥ 9% (after optimising the capital2 model) 83% through the cycle 9.6% 100.6 7.7% 86.6 79.6 76.0 35.1 5.3% 35.2 34.5 Net combined ratio 32.0 Net cost ratio 65.5 51.4 45.1 44.0 Net loss ratio -0.8%3 FY-16 FY-17 FY-18 H1-19 FY-16 FY-17 FY-18 H1-
Slide 6: Part 2: H1-2019 Results
coface PART 2 H1-2019 RESULTS /
Slide 7: Turnover growth at 6.6% driven by credit insurance premiums
Turnover growth at 6.6% driven by credit insurance premiums 7.0% 6.6% Total revenue up 6.6% vs. H1-2018 at constant FX In €m 733 685 ► Trade credit insurance1 growing at 7.5% at constant FX and perimeter (+8.5% in Q2-2019) Gross Earned Premiums (GEP) 605 561 ► Growth still driven by past client acti
Slide 8: All regions now contributing positively to growth
All regions now contributing positively to growth Western Europe Northern Europe Central Europe Mediterranean & Africa 3.0% 2.7% 2.6% 2.8% 6.6%* 2.0% 3.4% 4.6% 185 191 147 152 156 143 67 72 H1-18 H1-19 H1-18 H1-19 H1-18 H1-19 H1-18 H1-19 Record retention, growing new sales. Growth at constant scope
Slide 9: Growing new production, record high retention, some pricing opportunities
Growing new production, record high retention, some pricing opportunities 82 production1 74 62 65 New New production growing, confirming recent trend H1-16 H1-17 H1-18 H1-19 93.0% 93.0% Retention rate1 89.2% 90.2% Record/high retention H1-16 H1-17 H1-18 H1-19 Price effect 1 (1.6)% (1.7)% (1.1)% Lowe
Slide 10: Gross loss ratio stabilizing at a low level in more complex environment
Gross loss ratio stabilizing at a low level in more complex environment Loss ratio before reinsurance and including claims handling expenses, in % 45.0 46.5 45.3 42.4 40.9 39.7 43.6* 46.3* 39.8 41.9 ► Gross loss ratio stabilizing at low level 42.2** ► Favourable prior periods underwriting developmen
Slide 11: Loss ratio stable or improving in all markets
Loss ratio stable or improving in all markets Loss ratio before reinsurance, including claims handling expenses – in % 9%* 8%* 5%* Group North America Asia Pacific Latin America 146.8 85.0 63.3 51.4 60.2 57.9** 44.2** 40.9*** 49.0 53.8 50.4 39.1 40.2 35.9 23.6 24.1 FY-16 FY-17 FY-18 H1-19 FY-16 FY-1
Slide 12: Positive operating leverage drives cost ratio down
Positive operating leverage drives cost ratio down 4.4% 3.4% In €m 171 169 175 175 176 177* External acquisition 40 38 44 41 41 40 costs (commissions) Cost ratio before reinsurance, in % 34.8 35.7 37.0 36.0 33.2 34.6** 131 131 131 134 134 137 Internal costs Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q1-18
Slide 13: Reinsurance result impacted by low loss ratios
Reinsurance result impacted by low loss ratios H1-18 H1-19 Gross earned premiums 560.7 605.3 ► Premium cession rate stabilized Net earned premiums 398.7 430.1 28.9% 28.9% ► Lower claims cession rate due to recoveries on highly Premium cession rate reinsured facultatives and older claims reinsured at
Slide 14: Net combined ratio at 76.0%, below through the cycle average
Net combined ratio at 76.0%, below through the cycle average (1.0) ppts. In % Net combined ratio 77.0 76.0 ► Net combined ratio improved to 76.0% 33.8 32.0 (vs. 77.0% in H1-18) Net cost ratio ► Net cost ratio improving by 1.8 ppts. thanks to positive operating leverage 43.2 44.0 Net loss ratio H1-20
Slide 15: Financial portfolio: stabilised yield despite low rates
Financial portfolio: stabilised yield despite low rates Stable accounting yield even if the investment yield is lower Investment Real Estate €m H1-18 H1-19 8% Equities 6% Income from investment portfolio without gains on sales 2 21.3 23.5 Bonds Gains on sales and impairment / impairment's release 3.
Slide 16: H1-2019 net income up 25% at €78.5m
H1-2019 net income up 25% at €78.5m, of which €42.2m in Q2-2019 Income statement items - in €m H1-18 H1-19 Current operating income 101.2 116.1 ► Robust operating performance in H1-2019 ► Limited restructuring charges Fit to Win investments & restructuring expenses (3.5) (1.3) ► Other operating inco
Slide 17: RoATE stands at 9.6% for H1-2019
RoATE stands at 9.6% for H1-2019 Change in equity in €m 51.1 (1.7) 1,814.8 1,806.2 (119.4) 78.5 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 th
Slide 18: Part 3: Capital Management
coface PART 3 CAPITAL MANAGEMENT /
Slide 19: Solid balance sheet
Solid balance sheet H1-2019 simplified balance sheet ►IFRS 16 “Lease contracts” €m − IFRS 16 implemented as of 1 Jan. 2019; Goodwill 7,427 7,427 219 − Impact on equity is immaterial; €85m increase in assets and in & intangible assets liabilities is mainly related to the recognition of new assets and
Slide 20: Robust solvency over time
Robust solvency* over time H1-2019 estimated Solvency ratio in target range ► Estimated Solvency above the 169% (10.0) ppts. Coface comfort scale upper range of the comfort 169% 164% 163% 162% 3.9 ppts. 162% scale (140% - 160%) (0.7) ppts. 160% 150% 148% ► Insurance SCR growing in line 140% with rev
Slide 21: Solvency required capital at 30 June 2019
Solvency required capital at 30 June 2019 Standard model 162%1 Operational risk 2,144 €m - Client, product and business practices 44 - Employment practices and workplace safety, etc. 416 1,420 Counterparty risk 36 (234) 1,322 257 119 - Fixed income default risk (121) 1,065 257 - Reinsurance default
Slide 22: Part 4: Key Take-aways & Outlook
PART 4 KEY TAKE-AWAYS & OUTLOOK
Slide 23: Key take-aways & outlook
Key take-aways & outlook H1-2019 operating income increased by 17% at €117.2m despite slowing economic environment − Global economy is still growing but at a lower pace; China & US trade war, automotive, Brexit and Germany risks − Combined ratio at 76.0% due to tight risk control and operating lever
Slide 24: Part 5: Appendices
coface PART 5 APPENDICES /
Slide 25: Key figures (1/2)
Key figures (1/2) Quarterly and cumulated figures Income statements items in €m - Quarterly figures Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 % % ex. FX Gross earned premiums 278.4 282.3 292.2 289.7 299.0 306.3 +8.5% +7.1% Services revenue 65.6 58.7 58.5 59.3 66.4 60.8 +3.7% +3.4% REVENUE 344.0 340.9 350.
Slide 26: Key figures (2/2)
Key figures (2/2) Revenue by region Total revenue by quarter - in €m Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 V% ex. FX Northern Europe 79.0 73.2 76.2 74.7 80.2 75.9 +4.1% Western Europe 74.8 68.4 69.6 71.2 74.9 72.6 +5.9% Central Europe 33.6 33.5 33.7 33.0 33.7 37.9 +2.0% Mediterranean & Africa 91.8 92.
Slide 27: Exposure in EM maintained at a stable share
Exposure in EM maintained at a stable share Total exposure up 3.9% vs. end of the year, in line with client activity increase Evolution of total exposure1 by country of debtor H1-2019 total exposure1 – Top 10 countries vs. others In €bn In % Germany 14.0% Dec-16 79% 21% 493 France Italy 36.1% Dec-17
Slide 28: Loss ratio for the quarter at 41.9%
Loss ratio for the quarter at 41.9% Loss ratio before reinsurance, including claims handling expenses – in % 9%* 8%* 5%* Group North America Asia Pacific Latin America 94.1 65.8 59.5 79.4 39.7 45.0 46.5 45.3 39.8 41.9** 44.6 36.5 37.8 50.9 28.6 20.2 31.1 51.3 49.4 26.6 28.9 9.8 -2.9 -6.4 Q1-18 Q2-18
Slide 29: Combined ratio calculation
Combined ratio calculation In €k H1-18 H1-19 ► Combined ratio before reinsurance Earned Premiums (B) (C) Gross earned premiums [A] 560,705 605,297 loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Ceded premiums (161,976) (175,172) Net earned premiums [D] 398,729 430,125 ► Combin
Slide 30: Q2-19 results vs. consensus
Q2-19 results vs. consensus # of in M€ Consensus Q2-19 Spread Comment replies Total revenue 6 362 367 +5 Revenue increase driven by growing new Gross Earned Premiums 6 296 306 +10 production, high retention and past client activity Net Earned Premiums 5 211 218 +7 growth NEP/GEP 5 71.3% 71.1% (0.2)
Slide 31: Management team
Management team GROUP CENTRAL FUNCTIONS CEO Xavier Durand — 30+ years of international experience in regulated financial services Working for Coface since 2016 CFO & Risk Director General Secretary Strategy & Business Underwriting Director Carine Pichon Carole Lytton Development Director Cyrille Cha
Slide 32: 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 (in shares) # Shares rights 9M-2019 Results 23 Oct. 2019 after market close 30/06/2019 101,422 1,164
Slide 33: 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 30 June 2019. This presentation includes only summary information and does not purport to be comprehensive. The Coface Group