Slide 1: H1-2018 Results: Presentation to Financial Analysts
H1-2018 RESULTS PRESENTATION TO FINANCIAL ANALYSTS JULY 25TH, 2018
Slide 2: H1-2018 Results: Net income at €62.8m; RoATE stands at 7.8%
H1-2018 Results: Net income at €62.8m; RoATE stands at 7.8% 1 2 3 4 5 H1-2018 H1-2018 CAPITAL KEY TAKE AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK 2 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Slide 3: Part 1: H1-2018 Highlights
coface PART 1 H1-2018 HIGHLIGHTS /
Slide 4: Robust first semester in normalising risk environment
Robust first semester in normalising risk environment Strong solvency ratio at 163%1 Turnover reached €685m y-t-d, up 2.1% at constant FX and perimeter; Q2-2018 up 2.1% y-o-y − Trade Credit Insurance growing again in mature markets and emerging markets recovering progressively − Client retention at
Slide 5: Fit to Win: continuing to drive an in-depth transformation
Fit to Win: continuing to drive an in-depth transformation Business Technology, Transformation and Innovation ► Technology at the heart of our cultural transformation: CEO − Reorganised IT and Operations departments into Strategic planning & PMO realigned Business Technology (BT) unit Internal Audit
Slide 6: Part 2: H1-2018 Results
coface PART 2 H1-2018 RESULTS /
Slide 7: Turnover growth at 2.1% driven by credit insurance premiums
Turnover growth at 2.1% driven by credit insurance premiums (1.0)% 2.1% Total revenue up 2.1% vs. H1-2017 at constant FX In €m 692 685 ► Trade credit insurance* growing at 2.6% at constant FX Gross Earned Premiums ► Growth driven by client activity (better volume effect) (GEP) 566 561 and record hig
Slide 8: Revenue increase driven by mature markets
Revenue increase driven by mature markets Western Europe Northern Europe Central Europe Mediterranean & Africa 0.5% 1.5% (1.8)% (1.8)% 6.9% 7.8% 5.8% 7.3% 155 152 185 142 143 175 63 67 H1-17 H1-18 H1-17 H1-18 H1-17 H1-18 H1-17 H1-18 Record retention and Stable insurance revenues; Insurance revenues
Slide 9: Supportive client activity and record retention
Supportive client activity and record retention New production1 83 82 Performance improving from Q1-2018 but 74 62 remaining prudent in highly competitive environment H1-15 H1-16 H1-17 H1-18 Retention rate1 93.0% 89.2% 90.2% 88.2% Record/high retention across all regions H1-15 H1-16 H1-17 H1-18 Pric
Slide 10: Gross loss ratio normalising after a record low Q1
Gross loss ratio normalising after a record low Q1 Loss ratio before reinsurance and including claims handling expenses, in % 56.0 57.8 54.2 50.3 42.4 43.0 39.7 45.0 ► Claims activity progressively normalising, both in terms of number and average size ► Gross loss ratio includes 1.5% gain from H1-20
Slide 11: Loss ratio stable in mature markets and progressively normalising in emerging markets
Loss ratio stable in mature markets and progressively normalising in emerging markets Loss ratio before reinsurance, including claims handling expenses – in % 8%* 7%* 5%* Group North America Asia Pacific Latin America 146.8 113.4 100.6 85.0 63.3 60.2 56.3 51.0 51.4 42.4 56.3 49.0 53.8 35.9 12.2 2.1
Slide 12: Continued tight cost controls
Continued tight cost controls * €6.0m Italy one-off (0.5)% * 2.7% * (3.9)% (0.9)% In €m Cost ratio before reinsurance, in % 172 176 171 169 167 168 External acquisition 41 37 40 38 34.7 38.0 37.4 35.7 34.8 35.7 costs (commissions) 39 40 * * 35.6 * Internal costs 131 139 128 127 131 131 Q1-17 Q2-17 Q
Slide 13: Reinsurance result impacted by record low loss ratios and growing cession rate
Reinsurance result impacted by record low loss ratios and growing accounting cession rate H1-17 H1-18 Gross earned premiums 565.6 560.7 Net earned premiums 415.5 398.7 ► Higher premium cession rate (underwriting years 26.5% 28.9% 2017 and 2018) materialising in accounting numbers Premium cession rat
Slide 14: Net combined ratio at 77.0%
Net combined ratio at 77.0% (16.7) ppts. In % Net combined ratio 93.7 ► Net combined ratio improved to 77.0% 77.0 35.5 (vs. 93.7% in H1-17) Net cost ratio 33.8 ► Investments fully financed by cost savings Net loss ratio 58.3 ► YTD net combined ratio down by (16.7) ppts. 43.2 mainly driven by lower l
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 €m H1-17 H1-18 Estate 8% Income from investment portfolio without gains on sales 2 20.7 21.3 Equities 8% Gains on sales 8.6 3.8 Bonds Investment management costs (2.2
Slide 16: H1-2018 net income at €62.8m, of which €27.3m in Q2-2018
H1-2018 net income at €62.8m, of which €27.3m in Q2-2018 Income statement items - in €m H1-17 H1-18 Current operating income 47.4 101.2 ► Robust operating performance in H1-2018 Fit to Win investments & restructuring expenses (0.8) (3.5) ► Limited restructuring charges Other operating income and exp
Slide 17: RoATE stands at 7.8% for H1-2018
RoATE stands at 7.8% for H1-2018 Change in equity in €m 62.8 (52.9) (1.8) (19.7) 1,791.0 1,802.6 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 t
Slide 18: Part 3: Capital Management
coface PART 3 CAPITAL MANAGEMENT /
Slide 19: Solid balance sheet
Solid balance sheet ►IFRS 9 “Financial instruments” H1-2018 simplified balance sheet − Coface meets criteria to apply temporary exemption of IFRS 9 for its insurance business, until 1 Jan 2021 €m − IFRS 9 implemented for factoring entities (in Germany & Poland) as of 1 Jan 2018, with a limited impac
Slide 20: Robust solvency over time
Robust solvency over time H1-2018 estimated Solvency ratio in target range Low sensitivity to market shocks market sensitivity tested through instantenous shocks 164%1 (0.0) ppts. (0.9) ppts. 30/06/2018 SCR cover 163% (Std) (0.5) ppts. 163% 2 H1-2018 +100 bps Interest rates 1 158% 163%1 160% 140% +1
Slide 21: Solvency required capital at 30 June 2018
Solvency required capital at 30 June 2018 Standard model 163%1 2,067 Operational risk €m - Client, product and business practices 34 - Employment practices and workplace safety, etc. 409 1,338 Counterparty risk (224) 1,270 34 254 - Fixed income default risk 124 (98) 254 - Reinsurance default risk, e
Slide 22: Part 4: Key Take-aways & Outlook
PART 4 KEY TAKE-AWAYS & OUTLOOK
Slide 23: Key take-aways & outlook
Key take-aways & outlook H1-2018 operating income doubled at €100.4m − Strong operating performance in a progressively normalising environment where risks (protectionism, populism…) are on the rise − Trade credit insurance1 growing at 2.6% − Net combined ratio at 77.0% driven by a low net loss ratio
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 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 % % ex. FX Gross earned premiums 282.2 283.4 271.6 272.5 278.4 282.3 (0.4)% +2.8% Services revenue 66.1 60.0 57.9 61.2 65.6 58.7 (2.3)% (1.1)% REVENUE 3
Slide 26: Key figures (2/2)
Key figures (2/2) Revenue by region Total revenue - by quarter - in €m Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 V% ex. FX Northern Europe 79.8 75.1 74.7 74.2 79.0 73.2 (2.6)% Western Europe 73.1 69.3 68.5 69.8 74.8 68.4 (0.7)% Central Europe 31.9 30.9 31.0 34.0 33.6 33.5 +10.5% Mediterranean
Slide 27: Exposure in EM maintained at a stable share
Exposure in EM maintained at a stable share Total exposure up 2.2% vs. end of the year, in line with client activity increase Evolution of total exposure1 by country of debtor H1-2018 total exposure1 – Top 10 countries vs. others In €bn In % Germany 14.6% France Dec-2015 78% 22% 475 Italy 35.8% USA
Slide 28: Claims under control despite a large case in Latin America
Claims under control despite a large case in Latin America Loss ratio before reinsurance, including claims handling expenses – in % 8%* 7%* 5%* Group North America Asia Pacific Latin America 128.5 63.5 61.5 79.4 60.7 54.3 57.8 54.2 38.7 54.5 47.5 43.0 50.3 39.7 45.0 26.6 9.8 39.0 31.1 15.9 -6.4 -20.
Slide 29: Combined ratio calculation
Combined ratio calculation In €k H1-2017 H1-2018 ► Combined ratio before reinsurance Earned Premiums (B) (C) Gross earned premiums [A] 565,582 560,705 loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Ceded premiums (150,072) (161,976) Net earned premiums [D] 415,510 398,729 ► Co
Slide 30: Q2-18 results vs. consensus
Q2-18 results vs. consensus # of in M€ Consensus Q2-2018 Spread Comment replies Total revenue 6 343 341 (2) Adverse FX impact Gross Earned Premiums 6 282 282 +0 GEP up +2.8% l-f-l on client activity Net Earned Premiums 6 202 200 (2) NEP/GEP 6 71.5% 70.9% (0.6) ppt Higher cession goes through the P&L
Slide 31: 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 TOTAL % Total of Voting Agreement (cancellation) (in shares) # Shares rights 9M-2018 Results Oct. 24th, 2018 after market close 30/06/2018 76,542 406
Slide 32: 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 2018. This presentation includes only summary information and does not purport to be comprehensive. The Coface Group