Slide 1: FY-2017 Results Presentation to Financial Analysts
FY-2017 RESULTS PRESENTATION TO FINANCIAL ANALYSTS FEBRUARY 12TH, 2018
Slide 2: FY-2017 Results: Net income at €83.2m and capital return activated
FY-2017 Results: Net income at €83.2m and capital return activated 1 2 3 4 5 FY-2017 FY-2017 CAPITAL KEY TAKE AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK 2 FY-2017 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 12 FEB. 2018
Slide 3: Part 1 FY-2017 Highlights
coface PART 1 FY-2017 HIGHLIGHTS /
Slide 4: €83.2m net income, driven by loss ratio improvement
€83.2m net income, driven by loss ratio improvement FY-2017 highlights (1/2) Turnover reaches €1,354.9m up 0.3% at constant FX and perimeter1, Q4-2017 up 2.3% y-o-y − Mature markets picking up at +2.8% ; no significant change in emerging markets − Strong client activity benefiting from supportive ec
Slide 5: Solvency ratio at 166% allows additional capital distribution
Solvency ratio at 166% allows additional capital distribution FY-2017 highlights (2/2) RoATE stands at 5.3% for the year Estimated solvency ratio above target range at c.166%1 −Increased solvency ratio driven by better risk performance, optimized reinsurance structure and model refinement −Maintaine
Slide 6: Part 2 FY-2017 Results
coface PART 2 FY-2017 RESULTS /
Slide 7: Revenue growth turning positive, helped by client activity
Revenue growth turning positive, helped by client activity (4.0)% (3.4)% Total revenue up 0.3% vs. FY-2016*; Q4-2017 up 2.3% y-o-y* In €m (0.3)% 0.3%* 1,411 1,358 1,355 ► Growth improved in Q4-2017 mainly driven by good client activity (better volume effect) Gross Earned Premiums (GEP) 1,115 1,115 1
Slide 8: Improved performance in mature markets, lower in EM
Improved performance in mature markets, lower in EM Western Europe Northern Europe Central Europe Mediterranean & Africa (14.2)% (13.1)% (1.1)% (1.1)% 4.9% 5.4% 5.3% 3.7% 2.3% 3.6%* 327 307 304 332 348 274 281 121 128 FY-16 FY-16 FY-17 FY-16 FY-17 FY-16 FY-17 FY-16 FY-17 ex. SEGM* Improved retention
Slide 9: Supportive client activity and solid retention
Supportive client activity and solid retention New production1 152 139 138 129 New production still impacted by risk action plans in Emerging Markets FY-14 FY-15 FY-16 FY-17 Retention rate1 89.1% 89.7% 87.9% 88.0% Overall retention continuing to improve FY-14 FY-15 FY-16 FY-17 Price effect 1 (1.0)%
Slide 10: Continued loss ratio improvement
Continued loss ratio improvement Loss ratio before reinsurance and including claims handling expenses, in % ► Gross loss ratio keeps improving on the back of lower average claim value 61.8 57.8 54.2 63.3 51.4 43.0 50.3 ► Q4-2017 negatively impacted (+9.7pts) 9.7 by facultative business, with minor i
Slide 11: Clear overall improvement, with special cases in Western Europe & North America
Clear overall improvement, with special cases in Western Europe & North America Loss ratio before reinsurance, including claims handling expenses – in % 9%* 7%* 6%* Group North America Asia Pacific Latin America 146.8 113.4 100.6 85.0 63.3 56.3 59.9 60.2 47.6 51.0 51.4 49.0 51.4 53.8 24.1 35.9 FY-14
Slide 12: Continuing to drive tight cost controls
Continuing to drive tight cost controls 1ex. one-off in Italy: 0.8% 1 1.4% 1 (0.9)% 1.5% 1.7% 2.3% In €m 169 172 176 167 168 671 683 39 41 37 Italy 39 40 External acquisition 6 one-off 153 158 costs (commissions) €6.0m Italy 6 one-off 130 131 133 128 127 Internal costs 518 519 Q4-16 Q1-17 Q2-17 Q3-1
Slide 13: Reinsurance: more resilient structure, stable cession
Reinsurance: more resilient structure, stable cession FY-16 FY-17 ► Q4-2017 has seen several large claims in facultative business. They are highly reinsured with partners Gross earned premiums 1,115.1 1,109.7 Net earned premiums 857.6 808.2 ► Higher premium cession rate (underwriting year 2017) 27.2
Slide 14: Net combined ratio at 86.6% driven by lower loss ratio
Net combined ratio at 86.6% driven by lower loss ratio (14.0)ppts In % 100.6 Net combined ratio 86.6 ► Costs savings financing investments in long term 35.1 value creation Net cost ratio 35.2 Ex. SEGM* ► Full year net combined ratio down by -14.0 ppts* mainly driven by lower losses 65.5 Net loss rat
Slide 15: Financial portfolio: slight increase of investment income
Financial portfolio: slight increase of investment income Keeping a diversified and proactive investment strategy Investment Real Estate €m FY-16 FY-17 7% Equities Income from investment portfolio 2 43.5 49.8 7% Income from investment portfolio without gains on sales 40.0 39.9 Bonds Investment manag
Slide 16: FY-2017 net income at €83.2m
FY-2017 net income at €83.2m FY-16 Income statement items - in €m FY-16 FY-17 ex. SEGM* Current operating income 60.9 34.8 155.0 Gain on State export guarantees transfer 75.0 75.0 0.0 ► Sharp improvement in operating performance at €154.4m Fit to Win investments & restructuring expenses (38.6) (38.6
Slide 17: RoATE stands at 5.3% for FY-2017
RoATE stands at 5.3% for FY-2017 Change in equity 83.2 6.6 (22.4) in €m 1,802.6 1,755.2 (20.4) IFRS Equity Distribution to Net income Revaluation reserve Treasury shares, IFRS Equity attributable shareholders impact (financial instruments currency translation attributable to owners of the AFS) diffe
Slide 18: Part 3 Capital Management
coface PART 3 CAPITAL MANAGEMENT /
Slide 19: Solid balance sheet
Solid balance sheet 2017 simplified balance sheet €m ► Coface meets the criteria to apply temporary 7,223 7,223 Goodwill 217 exemption of IFRS 9 application1 & intangible assets 1,803 Shareholders’ − the deferral applies to Coface’s insurance equity business Insurance investments 2,876 388 Financing
Slide 20: Improved solvency ratio driven by lower risk & full effect of reinsurance optimization
Improved solvency ratio driven by lower risk & full effect of reinsurance optimization 2017 estimated Solvency ratio in target range Low sensitivity to market shocks market sensitivity tested through instantaneous shocks +8.0pts ~166% FY-2017 31/12/17 SCR cover +14.5pts (5.7)pts 160% 166% ~166% (Sta
Slide 21: Solvency required capital at 31 December 2017
Solvency required capital at 31 December 2017 Standard model ~166% 2,096 21 Operational risk €m 416 - Client, product and business practices - Employment practices and workplace safety, etc. 1,335 (229) 34 247 1,260 Counterparty risk 121 (94) 247 - Fixed income default risk 285 - 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 FY-2017 operating profit up €66.1m1 at €154.4m − Net combined ratio down -14ppts vs. FY-20161 at 86.6% − Improvement driven by loss ratio, especially in Asia and North America − Economic environment provides tailwind − Strong solvency at ~166%2, above the upper target − Prop
Slide 24: Part 5 Appendices
coface PART 5 APPENDICES /
Slide 25: Key figures (1/3)
Key figures (1/3) Quarterly figures Income statements items in €m - 2016 figures ex. SEGM* Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 % % ex. FX Gross earned premiums 288.5 277.2 275.8 273.6 282.2 283.4 271.6 272.5 (0.4)% +2.1% Services revenue 64.5 60.8 58.5 59.0 66.1 60.0 57.9
Slide 26: Key figures (2/3)
Key figures (2/3) Cumulated figures Income statements items in €m - 2016 figures ex. SEGM* Q1 2016 H1 2016 9M 2016 FY 2016 Q1 2017 H1 2017 9M 2017 FY 2017 % % ex. FX Gross earned premiums 288.5 565.7 841.5 1,115.1 282.2 565.6 837.2 1,109.7 (0.5)% +0.2% Services revenue 64.5 125.2 183.8 242.8 66.1 12
Slide 27: Key figures (3/3)
Key figures (3/3) Revenue by region Total revenue - by quarter - in €m Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 V% ex. FX Northern Europe 83.4 74.7 76.8 72.4 79.8 75.1 74.7 74.2 +2.6% Western Europe - ex. SEGM* 72.4 68.9 66.0 66.5 73.1 69.3 68.5 69.2 +5.8% Central Europe 30.9
Slide 28: Overall improvement visible, Western Europe & North America affected by special cases
Overall improvement visible Western Europe & North America affected by special cases Loss ratio before reinsurance, including claims handling expenses – in % 9%* 7%* 6%* Group North America Asia Pacific Latin America Highly reinsured claim Lower new claims, and better 164.5 Prior years reserve relea
Slide 29: Combined ratio calculation
Combined ratio calculation FY-2016 In €k Notes* FY-2017 FY-2016 ► Combined ratio before reinsurance ex. SEGM* (B) (C) Earned Premiums loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Gross earned premiums [A] 21 1,109,697 1,115,140 1,115,140 Ceded premiums 25 (301,545) (257,539)
Slide 30: Exposure in EM maintained at a stable share vs. 2016
Exposure in EM maintained at a stable share vs. 2016 Total exposure up 4.0% vs. previous year, in line with client activity increase Evolution of total exposure1 by country of debtor In €bn Dec-2014 74% 26% 508 2017 total exposure1 by debtors’ trade sector Dec-2015 78% 22% 475 Dec-2016 79% 21% 493 D
Slide 31: Q4-17 results vs consensus
Q4-17 results vs consensus # of in M€ Consensus Actual Spread Comment responses Total turnover 6 333 334 0 Mature markets up +4.6% in Q4-17 Gross Earned Premiums 6 276 273 -3 Robust volume increase continues Net Earned Premiums 6 201 195 -6 NEP/GEP 6 72.9% 71.4% -1.5pt Higher cession goes through th
Slide 32: 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 Chief Operating Officer Strategy & Business Carine Pichon Carole Lytton Valérie Brami Development Dire
Slide 33: Corporate governance
Corporate governance Board of Directors Laurent MIGNON Chairman CEO of Natixis Non independent members Daniel KARYOTIS Jean ARONDEL Jean-Paul DUMORTIER ► BPCE ► BPCE ► BPCE Anne SALLE MONGAUZE Isabelle RODNEY ► BPCE ► BPCE Sharon MACBEATH Olivier ZARROUATI Eric HÉMAR Independent members ► Tarkett ►
Slide 34: Financial Calendar & investor relations contacts
Financial Calendar & investor relations contacts Calendar Next Event Date IR Contacts: investors@coface.com Q1-2018 Results Apr. 24th, 2018 after market close AGM May 16th, 2018 Thomas JACQUET H1-2018 Results Jul. 26th, 2018 before market opening Head of Investor Relations & Rating Agencies 9M-2018
Slide 35: 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 2017. This presentation includes only summary information and does not purport to be comprehensive. The Coface G