Slide 1: H1-2020 Results: Presentation to Financial Analysts
H1-2020 RESULTS PRESENTATION TO FINANCIAL ANALYSTS 29 JULY 2020
Slide 2: H1-2020 Results: Net Income at €24.0M; RoATE at 2.8%
H1-2020 RESULTS: NET INCOME AT €24.0M; ROATE AT 2.8% 1 2 3 4 5 H1-2020 H1-2020 CAPITAL KEY TAKE-AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT & OUTLOOK 2 H1-2020 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 29 JULY 2020
Slide 3: Part 1: H1-2020 Highlights
coface PART 1 H1-2020 HIGHLIGHTS A
Slide 4: Coface continues to execute, reports profitable Q2-2020 and €24M net profit in H1-2020
COFACE CONTINUES TO EXECUTE, REPORTS PROFITABLE Q2-2020 AND €24M NET PROFIT IN H1-2020 Turnover reached €725m y-t-d, down 0.6% at constant FX and perimeter; Q2-2020 decline limited to -2.1% despite lockdown impact • Record new business and retention drive positive net production (€33m) • First posit
Slide 5: Economic environment remains challenging
ECONOMIC ENVIRONMENT REMAINS CHALLENGING COFACE’S WORLD GDP GROWTH FORECAST ECONOMIC OUTLOOK IS UNCERTAIN (annual average, %) 5.1 4.3 3.2 2.7 3.0 3.0 3.3 3.2 • 2020 GDP will be significantly down despite recent 2.5 2.3 2.5 rebound • Expecting pandemic impact to last into 2021 until a vaccine and/or
Slide 6: Actively acting to mitigate impact of Covid-19 crisis
ACTIVELY ACTING TO MITIGATE IMPACT OF COVID-19 CRISIS INCREASED PREVENTION ACTIONS (# of credit limits cancelled or reduced) 290,000 EXPOSURE EVOLUTION REFLECTS 240,000 REGIONAL RISK LEVELS 190,000 x 2.7 (exposure, in € bn) vs Q4 140,000 -5.2% -7.2% -0.7%* 120 90,000 40,000 100 -5.4% Q1 Q1 Q1 Q1 Q1
Slide 7: High level of protection from external reinsurance, reinforced by government schemes
HIGH LEVEL OF PROTECTION FROM EXTERNAL REINSURANCE, REINFORCED BY GOVERNEMENT SCHEMES GOVERNMENT SCHEMES* (% of total exposure protected - policyholder view) Coface reinsurance program is made of: • 2 Quota-share (QS) with one up for renewal in 2021 • A per risk Excess of Loss (XS or XoL), Finalised
Slide 8: Build to Lead plan demonstrates agility and resilience in stressed environment
BTL PLAN DEMONSTRATE AGILITY AND RESILIENCE IN STRESSED ENVIRONMENT EXECUTING ON MONITORING CAREFULLY BUILD TO LEAD WHAT WE CAN CONTROL WHAT WE DON’T CONTROL • Industry leading RISK MANAGEMENT • New business • Agile, proactive • Retention • Client activity SERVICE • Fast, consistent, flexible • Prev
Slide 9: Part 2: H1-2020 Results
coface PART 2 H1-2020 RESULTS A
Slide 10: Turnover decreasing slightly at -0.6%
TURNOVER DECREASING SLIGHTLY AT -0.6% (1.1)% (0.6)% 733 725 Total revenue down -0.6% vs H1-2019 at constant FX In €m • Trade Credit Insurance1 decreasing by 2.3% at constant FX and Gross Earned Premiums perimeter driven by declining client activity (past and projected) (GEP) 605 599 • Turnover still
Slide 11: Turnover reflecting lower client activity
TURNOVER REFLECTING LOWER CLIENT ACTIVITY Western Europe Northern Europe Central Europe Mediterranean & Africa (3.3)% (3.7)% (5.8)% (5.8)% 2.8% 0.1% 5.0% 5.6% 191 201 147 143 156 147 72 74 H1-19 H1-20 H1-19 H1-20 H1-19 H1-20 H1-19 H1-20 Very low client activity in TCI (revenues Low level of client a
Slide 12: Delivering strong retention, new business and positive pricing
DELIVERING STRONG RETENTION, NEW BUSINESS AND POSITIVE PRICING 86 production* 74 62 65 Confirming new business rebound while keeping New selective growth strategy H1-17 H1-18 H1-19 H1-20 93.0% 93.0% 93.4% 90.2% Retention rate* Record high retention H1-17 H1-18 H1-19 H1-20 0.2% effect* Price (1.6)% (
Slide 13: Gross loss ratio increasing to 59.0% in riskier environment
GROSS LOSS RATIO INCREASING TO 59.0% IN RISKIER ENVIRONMENT Loss ratio before reinsurance and including claims handling expenses, in % 62.8 ► Gross loss ratio increased by 7.6 points vs Q1-20 driven by: 59.0 55.2 45.9 45.8 40.9 39.8 41.9 45.1* 44.4* Increased claims due to Covid-19 crisis 42.2**
Slide 14: Loss ratio increased from record lows
LOSS RATIO INCREASED FROM RECORD LOWS Loss ratio before reinsurance, including claims handling expenses – in % 10%* 8%* 5%* Group North America Asia Pacific Latin America 91.9 76.6 59.0 53.8 57.9** 60.1*** 51.4 44.2** 43.5*** 49.0 45.8 52.7 39.1 35.9 35.9 23.6 FY-17 FY-18 FY-19 H1-20 FY-17 FY-18 FY-
Slide 15: Loss ratio increased from record lows (by quarter)
LOSS RATIO INCREASED FROM RECORD LOWS Loss ratio before reinsurance (by quarter), including claims handling expenses – in % 10%* 8%* 5%* Group North America Asia Pacific Latin America 112.5 93.4 72.4** 66.2*** 70.3 55.2 62.8 62.3 59.3 63.5 58.0 51.3 49.4 39.8 41.9 45.9 45.8 44.6 36.5 40.2 46.1 28.6
Slide 16: Strict cost control drives cost ratio improvement
STRICT COST CONTROL DRIVES COST RATIO IMPROVEMENT (6.3)% (5.1)% In €m 177 185 176 174 176 166 External acquisition 40 42 38 Cost ratio before reinsurance, in % costs (commissions) 41 42 40 33.2 34.6 33.7 35.9 32.3 34.1 Internal costs 134 137 132 144 138 126 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q1-19
Slide 17: Reinsurance result reflects higher loss activity and government schemes
REINSURANCE RESULT REFLECTS HIGHER LOSS ACTIVITY AND GOVERNMENT SCHEMES H1-19 H1-20 ► Government schemes are in force in several countries for an Gross earned premiums 605.3 599.1 estimated impact of €8m in Q2-20 Net earned premiums 430.1 361.1 ► Premium cession rate is up about 10 ppts as a consequ
Slide 18: Net combined ratio at 88.6%
NET COMBINED RATIO AT 88.6% In % 12.6 ppts Net combined ratio 88.6 ► Net combined ratio deteriorated to 88.6% (vs 76.0% in H1-2019) 76.0 due to increase in claims ratio Net cost ratio 31.2 32.0 ► Cost ratio down 0.8 ppt showing good cost discipline Net loss ratio 57.4 ► H1-2020 net loss ratio up by
Slide 19: Financial portfolio: resilient investment income, low rates will continue to materialize
FINANCIAL PORTFOLIO: RESILIENT INVESTMENT INCOME, LOW RATES WILL CONTINUE TO MATERIALIZE €m H1-19 H1-20 Investment Real Estate Income from investment portfolio without gains on sales** 23.5 18.6 8% Gains on sales and impairement, net of hedging*** 0.4 (0.9) Equities 5% FX effect (0.3) 1.3 Other (6.9
Slide 20: H1-2020 net income at €24.0M of which €11.3M in Q2-2020
H1-2020 NET INCOME AT €24.0M OF WHICH €11.3M IN Q2-2020 Income statement items - in €m H1-19 H1-20 Current operating income 116.1 57.1 ► Current operating income at €57.1m down mostly on higher loss ratio and lower financial income Other operating income and expenses 1.1 (1.8) Operating income 117.2
Slide 21: RoATE stands at 2.8%, down 6.1 ppts
ROATE STANDS AT 2.8%, DOWN 6.1 PPTS Change in equity 1,924.5 0.0 24.0 (19.9) (12.4) 1,916.2 In €m 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
Slide 22: Part 3: Capital Management
coface PART 3 CAPITAL MANAGEMENT A
Slide 23: Solid balance sheet
SOLID BALANCE SHEET H1-2020 simplified balance sheet In €m 7,314 7,314 Goodwill & intangible assets 223 Shareholders’ 1,916 equity ► IFRS 17 “Insurance contracts” Insurance investments 2,905 • Postponed by one year but project progressing as planned Financing liabilities 382 (including hybrid debt)
Slide 24: Robust solvency over time
ROBUST SOLVENCY OVER TIME H1-2020 estimated Solvency ratio above target range 203%* 203% 3.3 ppts 1.5 ppt (17.0 ppts) Low sensitivity to market shocks 191%** market sensitivity tested through instantaneous shocks 191% 175% 155% 164% 162% 130% 30/06/2020 SCR cover (PIM) 191% 150% +100 bps Interest ra
Slide 25: Solvency required capital at 30 June 2020
SOLVENCY REQUIRED CAPITAL AT 30 JUNE 2020 Partial Internal Model 191%1 2,155 21 411 €m Operational risk 1,118 (132) 205 1,131 37 124 (61) 205 Counterparty risk 926 1,723 283 Market risk 926 926 674 Tier 3 Non-life underwriting risk Tier 2 Tier 1 SCR components Diversification Tax adjustments Total S
Slide 26: Part 4: Key Take-aways & Outlook
PART 4 KEY TAKE-AWAYS & OUTLOOK
Slide 27: Key take-aways & outlook
KEY TAKE-AWAYS & OUTLOOK Q2-2020 demonstrates Coface’s continued resilience, agility and ability to remain profitable • Coface has generated €11.3m net profit in Q2-20 in a disrupted economic environment while maintaining prudent reserving • Solvency ratio, excluding the temporary benefit from gover
Slide 28: Part 5: Appendices
coface PART 5 APPENDICES A
Slide 29: Key figures (1/3)
KEY FIGURES (1/3) Quarterly and cumulated figures Income statements items in €m - Quarterly figures Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 % % ex. FX* Gross earned premiums 299.0 306.3 312.6 317.7 301.2 297.9 (2.7)% (1.1)% Services revenue 66.4 60.8 58.3 59.9 69.3 56.3 (7.5)% (7.1)% REVENUE 365.5 367.1
Slide 30: Key figures (2/3)
KEY FIGURES (2/3) Revenue by region: quarterly and cumulated figures Total revenue by quarter - in €m Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 V% ex. FX* Northern Europe 80.2 75.9 76.7 74.7 81.5 65.5 (13.7)% Western Europe 74.9 72.6 71.9 75.3 71.8 70.7 (2.8)% Central Europe 33.7 37.9 38.6 38.0 37.6 35.9
Slide 31: Key figures (3/3)
KEY FIGURES (3/3) Financial portfolio: quarterly figures Financial portfolio Q1-18 H1-18 9M-18 FY-18 Q1-19 H1-19 9M-19 FY-19 Q1-20 H1-20 Bonds 62% 64% 65% 66% 66% 67% 72% 74% 64% 64% Loans, Deposit & other financial 22% 20% 20% 19% 20% 19% 13% 11% 23% 23% Equities 8% 8% 7% 7% 6% 6% 6% 6% 4% 5% Inves
Slide 32: Government schemes finalised: main features
GOVERNMENT SCHEMES FINALISED: MAIN FEATURES % of Eligible Policy Ceded Ceded Country Type Commissions exposure* holders premium claims Top-up Domestic France 17.8% Quota share Domestic 75% 75% 35% Domestic & Germany 17.4% Guarantee 65% 90% co-Insured All existing ones 100% 90% Netherlands 4.5% Quota
Slide 33: Total exposure down 6.4%; emerging maintained at a stable share
TOTAL EXPOSURE DOWN 6.4%; EMERGING MAINTAINED AT A STABLE SHARE Coface has improved the calculation of exposures with a consequence to show lower number due to the cancellation of some double counting. The historical data under the new methodology are presented on page 34. Evolution of total exposur
Slide 34: Historical exposure data
HISTORICAL EXPOSURE DATA Evolution of total exposure1 by country of debtor In €bn Dec-17 79% 21% 485 H1-18 79% 21% 496 Coface has improved the calculation of exposures. The historical data Dec-18 79% 21% 510 under the new methodology are presented in the table below. H1-19 79% 21% 530 Dec-19 79% 21%
Slide 35: Combined ratio calculation
COMBINED RATIO CALCULATION In €k H1-19 H1-20 ► Combined ratio before reinsurance Earned Premiums (B) (C) Gross earned premiums [A] 605,297 599,087 loss ratio before reinsurance + cost ratio before reinsurance (A) (A) Ceded premiums (175,172) (237,957) Net earned premiums [D] 430,125 361,129 ► Combin
Slide 36: Q2-20 results vs consensus
Q2-20 RESULTS VS CONSENSUS # of in M€ Consensus Q2-20 Spread Comment replies Total revenue 341 354 +13 Better new business and retention offset weak Gross Earned Premiums 287 298 +11 activity Net Earned Premiums 195 142 (53) Government schemes come in force NEP/GEP 67.9% 47.7% (20.2) ppts Government
Slide 37: 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 38: Corporate governance
CORPORATE GOVERNANCE Board of Directors Chairman François RIAHI CEO of Natixis Non independent members Jean ARONDEL Nathalie BRICKER Daniel KARYOTIS BPCE Natixis BPCE Marie PIC-PARIS Isabelle RODNEY Anne SALLE MONGAUZE BPCE BPCE BPCE Independent members Eric HÉMAR Isabelle LAFORGUE Natha
Slide 39: Financial calendar & investor relations contacts
FINANCIAL CALENDAR & INVESTOR RELATIONS CONTACTS Calendar Own shares transactions Next Event Date Liquidity Buy-back Own shares transactions Date LTIP TOTAL % Total of Voting 9M-2020 Results 29 October 2020 after market close Agreement (cancellation) (in shares) # Shares rights 30/06/2020 271,322 1,
Slide 40: 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 2020. This presentation includes only summary information and does not purport to be comprehensive. The Coface Group