Coface achieves record net income of €67.7m in the third quarter
Paris, 28 October 2021 – 17:35
Coface achieves record net income of
€67.7m in the third quarter
-
Turnover of first nine
months: €1,158m, up +7.9% at constant FX and perimeter, and up
+8.9% in Q3-2021
-
Trade credit insurance premiums increased by +9.3% due to growth in
activity on the back of the economic recovery and past price
adjustments
-
The price effect was positive over nine months (+1.6%) but pricing
has been negative for the past two quarters
-
Information services growing +13.4% year-to-date and +18.0% in
Q3-2021
-
9M-2021 net loss ratio at 25.4%,
improved by 29.8 ppts; Net combined ratio
at 56.1%, improved by
29.2 ppts
-
Q3-2021 net loss ratio at 31.4%, better by 18.6 ppts vs Q3-2020,
reflecting continued low loss activity
-
9M-2021 net cost ratio up 0.6 ppt to 30.7%, but improved vs 9M-2019
(31.7%), with investments continuing and variable costs returning
to normal
-
Q3-2021 net combined ratio at 62.4%, but 53.5% excluding the
temporary impact of government schemes
-
Government schemes had a negative impact of -€32m on income before
tax in Q3-2021, taking the total impact to -€57m for 9M-2021
-
Net income (group share) of €190.9m, of
which €67.7m in
Q3-2021
-
Annualised RoATE1
of 13.9%
Unless otherwise stated, evolutions are expressed
by comparison with the results as at 30 September 2020.1 RoATE =
Average return on equity
Xavier Durand, Coface’s Chief Executive
Officer, commented:
"During the third quarter, Coface delivered very
good operating performances in an environment that still remains
atypical. While government measures to support the economy are
progressively coming to an end, the rate of corporate failures has
now passed the trough.In this context, the continuation of
potential reserve releases attached to underwriting years 2020 and
the first semester 2021 would mostly benefit to the governments who
signed public reinsurance schemes. Since the beginning of the year,
these plans have reduced Coface's pre-tax profit by €57m.In this
environment, Coface continues to invest in its operational
efficiency, the quality of its services, its technological
resources and its commercial effectiveness. These investments are
bearing fruit as evidenced by the resilience of its core credit
insurance business and a new quarter of growth in adjacent
businesses such as information services and factoring which are
both growing at a double digit rate.”
Key figures at 30 September
2021
The Board of Directors
of COFACE SA examined the consolidated financial statements at 30
September 2021 (non-audited figures) at its meeting of 28 October
2021. The Audit Committee at its meeting on 26 October 2021 also
previously reviewed them.
Income
statement items in €m |
9M-2020 |
9M-2021 |
% |
% ex. FX* |
Gross earned premiums |
897.2 |
969.5 |
+8.1% |
+9.3% |
Services
revenue |
185.3 |
188.9 |
+2.0% |
+1.2% |
REVENUE |
1,082.4 |
1,158.4 |
+7.0% |
+7.9% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
74.6 |
235.2 |
+215.4% |
+219.9% |
Investment
income, net of management expenses |
23.5 |
30.9 |
+31.6% |
+40.8% |
CURRENT OPERATING INCOME |
98.1 |
266.1 |
+171.4% |
+177.7% |
Other
operating income / expenses |
(2.4) |
(0.8) |
(65.2)% |
(66.9)% |
OPERATING INCOME |
95.7 |
265.3 |
+177.3% |
+183.9% |
NET INCOME |
52.4 |
190.9 |
+264.2% |
+276.4% |
|
|
|
|
|
Key
ratios |
9M-2020 |
9M-2021 |
% |
% ex. FX* |
Loss ratio net of reinsurance |
55.2% |
25.4% |
(29.8) |
ppts. |
Cost ratio net of reinsurance |
30.1% |
30.7% |
+0.6 |
ppt. |
COMBINED RATIO NET OF REINSURANCE |
85.3% |
56.1% |
(29.2) |
ppts. |
|
|
|
|
|
Balance sheet items in €m |
2020 |
9M-2021 |
% |
% ex. FX* |
Total Equity (group share) |
1,998.3 |
2,063.2 |
+3.2% |
|
* Also excludes scope impact
1. TurnoverCoface recorded
consolidated turnover of €1,158.4m over the first nine months of
the year, up by +7.9% at constant FX and perimeter compared to 30
September 2020. Reported turnover (at current FX and perimeter)
rose by +7.0%.
Growth in Coface client activities had a
positive impact of +5.0% over the first nine months of the year.
This marks an increase in relation to the contribution made during
the first half of the year (+2.3%), in line with the economic
recovery. Pricing had the opposite effect, with prices falling for
the second successive quarter. However, price trends remain
positive since the beginning of the year (+1.6%).
The retention rate remains high, at 92.1%, in
what is now a more competitive market. New business amounted to
€102m, down by €12m compared to the record level achieved over the
first nine months of 2020.
Turnover from insurance activities was up +9.3%
at constant FX and perimeter compared to 9M-2020 (up +8.1% at
current FX and perimeter), benefiting from the recovery in customer
activity and past repricing.
Revenues from other activities (factoring and
services) were up +1.2% compared to 9M-2020, with contrasting
trends. Turnover from factoring rose +10.7% with an increase in
volumes refinanced. Revenues from information services increased by
+13.4% (and by +18.0% in Q3-2021). Pressure on fee and commission
income (collection fees) was impacted by the decline in claims to
be recovered.
Total revenue - cumulated - in
€m |
9M-2020 |
9M-2021 |
% |
% ex. FX1 |
Northern Europe |
221.1 |
250.4 |
+13.3% |
+10.6% |
Western Europe |
219.8 |
233.6 |
+6.3% |
+6.0% |
Central & Eastern Europe |
107.0 |
115.3 |
+7.8% |
+7.3% |
Mediterranean & Africa |
291.8 |
313.8 |
+7.5% |
+8.4% |
North America |
102.3 |
99.3 |
(3.0)% |
+2.0% |
Latin America |
50.8 |
55.3 |
+8.9% |
+18.8% |
Asia
Pacific |
89.5 |
90.7 |
+1.3% |
+5.0% |
Total Group |
1,082.3 |
1,158.4 |
+7.0% |
+7.9% |
In Northern Europe, turnover increased by +13.3%
(+10.6% at constant FX) mainly due to the rebound in customer
activity, a good level of new business and a positive price effect.
Factoring turnover rose by +9.0%.
In Western Europe, turnover was up by +6.3% and
by +6.0% at constant FX. This growth benefited from the rebound in
customer activity and the impact of past price increases, partially
offset by higher premium refunds against a backdrop of persistently
low claims.
In Central and Eastern Europe, turnover was up
+7.8% and +7.3% at constant FX as a result of increased activity
and higher prices, offset by higher premium refunds. Factoring
turnover rose by +16.3% in Poland (+19.5% at constant FX).
In the Mediterranean and Africa, a region driven
by business in Italy and Spain, turnover grew by +7.5% and by +8.4%
at constant FX, thanks to positive sales and a strong contribution
from services.
In North America, turnover declined by -3.0% as
reported but rose +2.0% at constant FX. The increase in activity
was partially offset by an increase in premium refunds.
Turnover for the Asia-Pacific region was up
+1.3% as reported but +5.0% at constant FX, mainly due to the
recovery in client activities.
In Latin America, turnover rose by +8.9% at
current FX, and by +18.8% at constant FX. This region benefited
from a recovery in new business with more attractive pricing and
from the sharp rise in commodity prices (iron ore, agricultural
products).
2. Result
The combined ratio, net of reinsurance, stood at
56.1% for 9M-2021 (an improvement of 29.2 ppts compared to
9M-2020). Excluding the effect of government schemes, the net
combined ratio was 58.8%.
(i) Loss ratio
The gross loss ratio for 9M-2021 was 25.2%, an
improvement of 32.4 ppts compared to the previous year. The gross
loss ratio for Q3-2021 was 16.9%, reflecting a further improvement
on the previous quarter (29.6% in Q2-2021). This improvement was
seen across all regions.
The Group’s reserving policy remains unchanged.
The provisioning level for the underwriting year stood at 70.5%,
consistent with historical average. Recoveries came at 47.9%, a
very high level by historical standards, reflecting the very low
loss experience.
The loss ratio net of reinsurance improved by
29.8 points to 25.4%. Unlike in previous quarters, this improvement
was slower than the one in the gross ratio, due to the impact of
government risk-sharing schemes, which are now being ran of. These
schemes have received few premiums since 1 July 2021 but are still
recording a large volume of reserve releases. Excluding government
schemes, the net loss ratio would have been 27.6%.
(ii) Cost ratio
Coface has continued with its policy of strict
cost control and investment. Over 9M-2021, costs grew by +7.1% and
+8.0% at constant FX and perimeter. This increase is calculated
compared to 9M-2020, which included a very strict lockdown and a
significant drop in variable costs. Compared to 9M-2019, the cost
increase is only +3.0%, which is lower than the growth in turnover
over the same period (+5.0%).
The 9M-2021 net cost ratio was up 0.6 ppt at
30.7%. Excluding government schemes, this ratio would have been
31.2%.
Net financial income for 9M-2021 was €30.9m,
including €4.6m of net realised capital gains, mostly from real
estate funds. This figure was higher than in 9M-2020 (€23.5m) as
this period recorded a sharp decline in the financial markets.
In an environment still marked by historically
low interest rates, the accounting yield excluding capital gains
was stable at 0.9%.
- Operating income and net income
Operating income for 9M-2021 was €265.3m, a
2.7-fold increase on the previous year (€95.7m), mainly due to the
improvement in the loss ratio.
The effective tax rate was 24%, compared to 28%
for 9M-2020.
In total, net income (group share) stood at
€190.9m, up +63% compared to 9M-2019, with €67.7m for Q3-2021.
3. Shareholders'
equityAt 30 September 2021, Group shareholders’ equity
stood at €2,063.22m, up €64.5m or +3.2% (compared to €1,998.3m
at 31 December 2020).
This increase is mainly due to the positive net
income of €190.9m, the payment of the dividend (-€82.0m), which was
partially offset by the decrease in unrealised capital gains
(-€28.8m).
The annualised return on average tangible equity
(RoATE) stood at 13.9% as of 30 September 2021.
4. OutlookIn
the third quarter of 2021, the global economy confirmed its
rebound. The continued rise in agricultural and other commodity
prices revived discussions about inflation, which is a key focus
for central banks. Meanwhile, many supply chains came under
pressure. The scarcity of labour in the transport sector caused
spectacular shortages in some areas. Last, the coronavirus epidemic
continues in several regions of the world.
In this context, governments and central banks
have cautiously begun to reduce their support to the economy. The
number of corporate bankruptcies has therefore logically begun to
rise in some countries.
The potential reserve releases attached to
underwriting years 2020 and H1-2021 would mostly benefit to the
governments who signed the schemes and would consequently weight on
Coface reported numbers
Coface continues to implement its Build to Lead
strategy with confidence, strengthened by the resilience of its
core credit insurance business and a new quarter of significant
growth in its adjacent activities.
Conference call for financial
analysts
Coface’s results for 9M-2021 will be discussed with financial
analysts during the conference call on 28 October at 18.00 (Paris
time). It will be available either:
- By webcast:
Coface 9M-21 results - Webcast
- By telephone:
Coface 9M-21 - conference call
The presentation will be available (in English
only) at the following address:
http://www.coface.com/Investors/financial-results-and-reports
Appendix
Quarterly results
Income
statement items in €m –Quarterly
figures |
Q1-20 |
Q2-20 |
Q3-20 |
Q4-20 |
Q1-21 |
Q2-21 |
Q3-21 |
|
% |
% ex. FX* |
Gross earned premiums |
301.2 |
297.9 |
298.1 |
307.2 |
312.1 |
326.7 |
330.7 |
|
+11.0% |
+11.0% |
Services
revenue |
69.3 |
56.3 |
59.7 |
61.3 |
65.9 |
63.4 |
59.6 |
|
(0.2)% |
(1.5)% |
REVENUE |
370.5 |
354.2 |
357.8 |
368.4 |
377.9 |
390.1 |
390.4 |
|
+9.1% |
+8.9% |
UNDERWRITING INCOME(LOSS) AFTER
REINSURANCE |
28.2 |
12.1 |
34.2 |
52.7 |
74.3 |
81.5 |
79.4 |
|
+132.2% |
+130.7% |
Investment income, net of management expenses |
2.7 |
14.0 |
6.7 |
3.4 |
5.7 |
10.1 |
15.0 |
|
+123.1% |
+157.0% |
CURRENT OPERATING INCOME |
30.9 |
26.2 |
40.9 |
56.2 |
80.0 |
91.6 |
94.5 |
|
+130.7% |
+134.7% |
Other
operating income / expenses |
(0.2) |
(1.6) |
(0.6) |
(11.4) |
(0.4) |
0.8 |
(1.3) |
|
+101.1% |
+101.7% |
OPERATING INCOME |
30.7 |
24.6 |
40.3 |
44.8 |
79.6 |
92.4 |
93.2 |
|
+131.2% |
+135.2% |
NET INCOME |
12.7 |
11.3 |
28.5 |
30.5 |
56.4 |
66.9 |
67.7 |
|
+137.8% |
+142.2% |
Income tax
rate |
50.5% |
39.9% |
42.4% |
24.5% |
24.6% |
23.0% |
23.3% |
|
(19.1) ppts |
Cumulated results
Income
statement items in €m –Cumulated
figures |
Q1-20 |
H1-20 |
9M-20 |
FY-20 |
Q1-21 |
H1-21 |
9M-21 |
|
% |
% ex. FX* |
Gross earned premiums |
301.2 |
599.1 |
897.2 |
1,204.3 |
312.1 |
638.7 |
969.5 |
|
+8.1% |
+9.3% |
Services
revenue |
69.3 |
125.5 |
185.3 |
246.5 |
65.9 |
129.3 |
188.9 |
|
+2.0% |
+1.2% |
REVENUE |
370.5 |
724.6 |
1,082.4 |
1,450.9 |
377.9 |
768.0 |
1,158.4 |
|
+7.0% |
+7.9% |
UNDERWRITING INCOME(LOSS) AFTER
REINSURANCE |
28.2 |
40.4 |
74.6 |
127.3 |
74.3 |
155.8 |
235.2 |
|
+215.4% |
+219.9% |
Investment income, net of management expenses |
2.7 |
16.7 |
23.5 |
26.9 |
5.7 |
15.9 |
30.9 |
|
+31.6% |
+40.8% |
CURRENT OPERATING INCOME |
30.9 |
57.1 |
98.1 |
154.2 |
80.0 |
171.6 |
266.1 |
|
+171.4% |
+177.7% |
Other
operating income / expenses |
(0.2) |
(1.8) |
(2.4) |
(13.8) |
(0.4) |
0.4 |
(0.8) |
|
(65.2)% |
(66.9)% |
OPERATING INCOME |
30.7 |
55.4 |
95.7 |
140.4 |
79.6 |
172.1 |
265.3 |
|
+177.3% |
+183.9% |
NET INCOME |
12.7 |
24.0 |
52.4 |
82.9 |
56.4 |
123.2 |
190.9 |
|
+264.2% |
+276.4% |
Income tax
rate |
50.5% |
46.0% |
44.4% |
37.4% |
24.6% |
23.8% |
23.6% |
|
(20.8) ppts |
* Also excludes scope impact
CONTACTS |
|
MEDIA RELATIONS Saphia GAOUAOUIT. +33 (0)1 49
02 14 91saphia.gaouaoui@coface.com Corentin HENRYT. +33 (0)1
49 02 23 94corentin.henry@coface.com |
ANALYSTS / INVESTORS Thomas JACQUETT. +33
(0)1 49 02 12 58thomas.jacquet@coface.com Benoit CHASTELT. +33
(0)1 49 02 22 28benoit.chastel@coface.com |
FINANCIAL CALENDAR 2021/2022
(subject to change)FY-2021 results: 15 February
2022 (after market close)Q1-2022 results: 28 April 2022 (after
market close)Annual General Shareholders’ Meeting 2021: 17 May
2022H1-2022 results: 28 July 2022 (after market close)9M-2022
results: 27 October 2022 (after market close)
FINANCIAL INFORMATIONThis press
release, as well as COFACE SA’s integral regulatory information,
can be found on the Group’s
website:http://www.coface.com/Investors
For regulated information on Alternative
Performance Measures (APM),please refer to our Interim Financial
Report for S1-2021 and our 2020 Universal Registration
Document.
Coface:
for trade With 75 years of experience and the most
extensive international network, Coface is a leader in trade credit
insurance and adjacent specialty services, including Factoring,
Single Risk insurance, Bonding and Information services. Coface’s
experts work to the beat of the global economy, helping ~50,000
clients build successful, growing, and dynamic businesses across
the world. Coface helps companies in their credit decisions. The
Group's services and solutions strengthen their ability to sell by
protecting them against the risks of non-payment in their domestic
and export markets. In 2020, Coface employed ~4,450 people and
registered a turnover of €1.45 billion.www.coface.com COFACE
SA is quoted in Compartment A of Euronext ParisCode ISIN:
FR0010667147 / Mnémonique : COFA |
DISCLAIMER - Certain declarations featured in
this press release may contain forecasts that notably relate to
future events, trends, projects or targets. By nature, these
forecasts include identified or unidentified risks and
uncertainties, and may be affected by many factors likely to give
rise to a significant discrepancy between the real results and
those stated in these declarations. Please refer to chapter 5 “Main
risk factors and their management within the Group” of the Coface
Group's 2020 Universal Registration Document filed with AMF on
31 March 2021 under the number D.21-0233 in order to
obtain a description of certain major factors, risks and
uncertainties likely to influence the Coface Group's businesses.
The Coface Group disclaims any intention or obligation to publish
an update of these forecasts, or provide new information on future
events or any other circumstance.
1 Also excludes scope impact
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