Slide 1: H1-2016 results
H1-2016 results Semester in line with July 4th announcement Preparing to transform Coface into the most agile, global trade credit partner in the industry July 27th, 2016
Slide 2: Important legal information
Important legal information IMPORTANT NOTICE: This presentation has been prepared exclusively for the purpose of the disclosure of Coface Group’s H1-2016 results, released on July 27th, 2016. This presentation includes only summary information and does not purport to be comprehensive. The Coface Gro
Slide 3: Agenda
Agenda 1. Key business highlights for H1-2016 2. H1-2016 results 3. Fit to Win: 2016-2019 strategic plan
Slide 4: Key business highlights for H1-2016
1 Key business highlights for H1-2016
Slide 5: H1-2016 financial highlights
H1-2016 financial highlights Net Income (group share) down at €26m for H1-2016, of which €3m in Q2 - Impacted by increased loss ratio as previously communicated Turnover at €717m, down -5.7% vs. H1-2015 (-3.4% ex. FX1), similar to trend in Q1 − Price erosion in mature markets, combined with impa
Slide 6: H1-2016 business highlights
H1-2016 business highlights Following strong 2015 actions, continuing with more granular/segmented adjustments : − Reviewed commercial and risk U/W policy for higher risk areas (Trading, Commodities, Single Risk) Risk and portfolio − Continuing risks adjustments in certain countries: Brazil, China
Slide 7: H1-2016 Results
2 H1-2016 Results
Slide 8: Turnover continued softness with (3.4)% vs. H1-2015
Turnover continued softness with (3.4) % vs. H1-2015 Same trends as in Q1: revenues impacted by persisting soft conditions in mature markets and volatility in emerging markets Total turnover (€m) Fees (€m) (5.7)% (3.4)% 760 72 72 (€2.7m) one-off 717 Other 157 turnover 151 Fees Gross Earned 603 566
Slide 9: Contrasted regional performances
Contrasted regional performances Western Europe Northern Europe Central Europe Mediterranean and Africa Turnover (10.9)% (10.0)% Turnover (4.7)% (4.7)% Turnover (1.4)% +2.0% Turnover (7.0)% (5.2)% €m €m €m €m 188 167 €(2.7)m one-off 179 166 158 61 166 62 H1-2015 H1-2016 H1-2015 H1-2016 H1-2015 H1-20
Slide 10: Commercial performance
Commercial performance €m €m production1 89 85 79 81 New business production down at 81M€ New driven by lower level of large deals H1-2013 H1-2014 H1-2015 H1-2016 89.0% 90.4% 88.0% 90.2% Retention rate1 Overall retention rate remains good H1-2013 H1-2014 H1-2015 H1-2016 0.4% Price effect 1 Pri
Slide 11: Emerging Markets: the adjustment process is not over, especially on the micro side
Emerging Markets: the adjustment process is not over, especially on the “micro” side Brazil: Business Insolvencies & GDP Growth China: Corporate Bond Defaults and NPL (sources: Coface and Serasa) (sources: Bloomberg and NBS) In % 20 7 400 3 Corporate bond defaults Business Insolvencies (2009 = 100)
Slide 12: Coface cut exposures significantly and continues to monitor them
Coface cut exposures significantly and continues to monitor them Brazil example China example - Cut Brazil exposure by 55% in last 18 months - Exposure on China reduced by 47% vs. Dec. 2014 - Focusing on lower quality risk exposure reduction - Continuing to drive China for China exposure reductions
Slide 13: Development of loss ratio is longer than before…
Development of loss ratio is longer than before… Development of actual loss ratio per underwriting year (as of 30/06/2016) 70% 60% 50% 40% 30% 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year 1 Year 1 Year 1 Year 1 Year 2 Year 2 Year 2 Year 2 Year 3 Year 3 Year 3 Year 3 UWY 2012 UWY 2013 UWY 2014
Slide 14: …driven by EM, where payment terms are longer
…driven by EM, where payment terms are longer Actual loss ratio development – underwriting year 2014 (as of 30/06/2016) 140% 120% 100% 80% 60% 40% 20% 0% Q1 Year 1 Q2 Year 1 Q3 Year 1 Q4 Year 1 Q1 Year 2 Q2 Year 2 Q3 Year 2 Q4 Year 2 Q1 Year 3 Q2 Year 3 France Brazil Hong Kong / China Peak in actual
Slide 15: Contrasted loss ratio by region
Contrasted loss ratio1 by region Non mature markets still in crisis 10%* 8%* 6%* North America Asia Pacific Latin America Group • %LC2 increased to 47% (H1-2016) Brazil: 105% loss ratio in H1-2016 from 10% (FY-2013) • 34% of H1 claims reserved 61.9% relate to export 113.4% 105.2% 86.2% 127.1% 51.1%
Slide 16: Loss ratio has yet to reflect the measures taken
Loss ratio has yet to reflect the measures taken Gross loss ratio evolution1 70.1% • Adjustment in reserving policy to reflect: - Higher average cost of claims: the share 51.5% 51.1% 52.8% 50.2% 51.4% 54.0% of claims > 500 K€ (LC) in the total claims 47.6% 49.8% notified increased to 33% in H1-2016
Slide 17: Costs evolution
Costs evolution Expenses decreasing in line with premiums Stable Net cost ratio (3.9%) (2.0%) €m External acquisition 361 costs (commissions) 347 79 (5.1%) (2.8%) 75 31.4% (1.4)ppts. 29.8% 30.0% * €3.1m one-offs: Internal costs CEO severance costs ex. one-off * (€2.6m) + others (€0.5m) (3.6%) (1.8%)
Slide 18: Decreasing cost of reinsurance
Decreasing cost of reinsurance Ceded premium / GEP Ceded claims / Total claims 23% 26% 22% 22% H1-2015 H1-2016 H1-2015 H1-2016 Increased ceded premiums driven by additional Claims cession in line with H1-2015, the higher non proportional cover purchased in ‘15 cession rate is due to a one-off adjust
Slide 19: Net combined ratio driven by losses
Net combined ratio driven by losses +8.9ppts. H1-2015 Net combined * H1-2016* Net combined ratio : 81.9% ratio : 90.8% 97.7% 86.4% 84.3% 77.5% 30.8% 32.1% 29.3% Net cost ratio 27.7% 66.9% 49.8% 54.3% 55.0% Net loss ratio Q1-2015 Q2-2015 Q1-2016* Q2-2016 * Q1 2016 & H1-2016 cost ratio excluding one-o
Slide 20: Maintaining a diversified and proactive investment strategy
Maintaining a diversified and proactive investment strategy1 Investment Real Equities Estate 7% 5% Loans, Deposit & other financial 20% Total € 2.44bn1 Bonds 68% €m H1 2015 H1-2016 2 Income from investment portfolio 32.6 20.2 4 o/w gains (losses) on sales 7.9 -1.3 Investment management costs (1.5) (
Slide 21: Solvency remains strong at 155%
Solvency remains strong at 155% Coface’s comfort scale and solvency ratio* 2015* H1-2016* • Increased appetite for investment risk • Additional room to invest in business growth • Additional flexibility on the pay-out ratio 147% 155% 160% • Dividend policy based on 60+ % pay-out ratio • Invest in bu
Slide 22: Net income & RoATE
Net income & RoATE H1-2016 net income (group share) (4.2)% (6.0)% (61.3)% (59.4)% 66.1 €m 25.6 V% V% ex. FX H1-2015 H1-2016 Net income Net income (group share) (group share) Return on Average Tangible Equity (RoATE) 8.4% 8.5% (4.0)ppts. (0.2)ppts. (0.7)ppts. 3.9% +0.3ppts. 3.3% RoATE 2015 RoATE 2015
Slide 23: Fit to Win: 2016-2019 strategic plan
3 Fit to Win: 2016-2019 strategic plan
Slide 24: Fit to Win 2016-2019 is built around 3 priorities
Fit to Win 2016-2019 is built around 3 priorities Ambition Transformation Benefits 1 A 1. Adapt U/W and portfolio measures Position Coface Strengthen to market realities Return as the most agile, Risk Management 2. Invest in select information and key to normalized loss ratio global trade credit & I
Slide 25: Annexes
Annexes
Slide 26: Key Figures (1/3)
Key Figures (1/3) Q2-2016 focus 2015 2016 % % Income statement items - in €m Q2-2016 vs. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 like-for-like 1 Q2-2015 Consolidated revenues 389.6 370.7 366.0 363.2 365.0 351.7 (5.1)% (2.4)% of which gross earned premiums 306.9 296.1 291.1 291.8 288.5 277.2 (6.4)% (3.2)% Underwriti
Slide 27: Key Figures (2/3)
Key Figures (2/3) H1-2016 focus 2015 2016 % % Income statement items - in €m H1-2016 vs. Q1 H1 9M FY Q1 H1 9M FY like-for-like 1 H1-2015 Consolidated revenues 389.6 760.3 1,126.3 1,489.5 365.0 716.7 (5.7)% (3.4)% of which gross earned premiums 306.9 603.0 894.1 1,185.9 288.5 565.7 (6.2)% (3.4)% Unde
Slide 28: Key Figures (3/3)
Key Figures (3/3) Gross loss ratio by region : by quarter and cumulated 2015 2016 % Gross loss ratio by region - by quarter - in % Q2-2016 vs. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2-2015 Northern Europe 30.8% 36.0% 35.6% 58.3% 59.8% 56.8% +20.8 ppts. Western Europe 37.0% 31.6% 45.5% 19.2% 11.3% 69.3% +37.7 ppts
Slide 29: Bridge table
Bridge table From Operating income to Operating income excluding restated items in thousand euros Q1-2015 Q2-2015 Q1-2016 Q2-2016 H1-2015 H1-2016 Operating income 60,508 42,091 36,261 15,490 102,599 51,751 Finance costs -4,664 -5,562 -4,933 -4,283 -10,226 -9,216 Operating income including finance co
Slide 30: Overview of net combined ratio calculations
Overview of net combined ratio calculations Adjusted Net Earned Premiums Adjusted net operating expenses In €k H1-2014 H1-2015 H1-2016 In €k H1-2014 H1-2015 H1-2016 A Gross Earned Premiums 564,782 603,037 565,740 Total operating expenses 341,816 360,932 349,914 Ceded premiums -138,708 -133,524 -132,
Slide 31: Financial strength acknowledged by rating agencies
Financial strength acknowledged by rating agencies Coface is rated ‘AA-’ by Fitch Ratings and ‘A2’ by Moody’s, both with a stable outlook The positive assessments by the two agencies is based on 3 key drivers: 1. Coface's strong competitive position in the global credit insurance market 2. Robus
Slide 32: A strengthened and experienced management team
A strengthened and experienced management team CEO Xavier Durand 25+ years of international experience in regulated financial services Working for Coface since 2016 Group central functions CFO & Risk Director Corporate Secretary Chief Operating Officer Carine Pichon Carole Lytton Valérie Brami 15 ye
Slide 33: Corporate governance
Corporate governance Board of Directors Laurent MIGNON Chairman CEO of Natixis BPCE (Marguerite Non independent members Jean ARONDEL Jean-Paul DUMORTIER BERARD-ANDRIEU) ► BPCE ► BPCE ► BPCE Laurent ROUBIN Pascal MARCHETTI ► BPCE ► BPCE Sharon MACBEATH Olivier ZARROUATI Eric HÉMAR Independent members
Slide 34: Investor Relations
Investor Relations Own shares transactions as at June 30th 2016 1-2 Shareholder composition Liquidity Agreement 1 Own shares transactions Total Date # of Shares # of Shares Total LTIP2 % Total # of Employees Liqidity TOTAL Voting rights 0.24% BUY SELL Shares Agreement 30 June 2016 280,584 131,593 25