Coface reports first-half net income of €123.2m, confirming an
excellent start to the year. Annualised return on tangible equity
at 13.5%
Paris, 28 July 2021 – 17:35
Coface reports first-half net income of €123.2m,
confirming an excellent start to
the year. Annualised return on tangible equity at
13.5%
- Turnover for
the first half-year: €768m, up 7.4% at constant FX and
perimeter
-
Trade credit insurance premiums increased by 8.5%, reflecting the
improvement in the economic environment
-
Retention reached 92.4% in a more competitive market. The price
effect remains positive (+2.3%) during the semester but pricing has
now turned negative
-
Information services rose by +11.0% and factoring by +10.9%
- Net loss
ratio at 21.4%, down by 36.0 ppts; net combined ratio at 51.9%
(51.0% for Q2-2021)
-
Gross loss ratio decreased by 29.4 ppts to 29.5%, in an environment
still characterised by a low level of claims
-
Net cost ratio improved by 0.8 ppt to 30.4%, reflecting revenue
growth and continued investments
-
In the first half of the year, government schemes have lowered
pre-tax profit by €24.9m
- Net income
(group share) at €123.2m, including €66.9m for
Q2-2021; annualised
RoATE1 at 13.5%
-
Estimated solvency ratio at
191%2,
and
186%2
excluding government schemes, above the target range
(155% - 175%)
Unless otherwise indicated, changes are expressed
by comparison with the results as at 30 June 2020.1 RoATE = Average
return on equity I 2 This estimated solvency ratio disclosed is a
preliminary calculation made according to Coface’s interpretation
of Solvency II regulations and using the Partial Internal Model.
The final calculation may differ from this preliminary calculation.
The estimated Solvency ratio is not audited.
Xavier Durand, Coface
Chief Executive Officer,
commented:
“Coface’s second-quarter 2021 results are fully
in line with those of the first quarter. They reflect its excellent
operating performance in an environment that remains highly
unusual. Indeed, the expected increase in the number of
post-COVID-19 bankruptcies has not yet materialised. However,
Coface continues to expect a progressive rise in claims when the
numerous business support measures are finally withdrawn.
In this period of economic rebound, Coface
continues to support its clients with guarantees that are now very
close to pre-pandemic levels. Since the beginning of the COVID-19
crisis, the cost for Coface of the risk-sharing agreements signed
with several governments amounts to €31m.
Finally, Coface is also continuing to invest in
the improvement of its trade credit insurance business as well as
in adjacent businesses. Factoring and information services
confirmed their growth potential with respective increases of 10.9%
and 11.0% during the first half of the year.”
Key figures at 30 June
2021
The Board of Directors of COFACE SA
examined the consolidated financial statements at 30 June 2021 at
its meeting of 28 July 2021. The Audit Committee, at its meeting on
23 July 2021, also previously reviewed them. These interim
consolidated financial statements have been subject to limited
review by the statutory auditors. The limited review report is
being issued.
Income
statements items in €m |
H1-20 |
H1-21 |
% |
% ex. FX* |
Gross earned premiums |
599.1 |
638.7 |
+6.6% |
+8.5% |
Services
revenue |
125.5 |
129.3 |
+3.0% |
+2.5% |
REVENUE |
724.6 |
768.0 |
+6.0% |
+7.4% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
40.4 |
155.8 |
+285.9% |
+297.7% |
Investment
income, net of management expenses |
16.7 |
15.9 |
(5.2)% |
+1.2% |
CURRENT OPERATING INCOME |
57.1 |
171.6 |
+200.6% |
+208.5% |
Other
operating income / expenses |
(1.8) |
0.4 |
(125.5)% |
(127.9)% |
OPERATING INCOME |
55.4 |
172.1 |
+210.9% |
+219.2% |
NET INCOME |
24.0 |
123.2 |
+414.3% |
+436.2% |
|
|
|
|
|
Key
ratios |
H1-20 |
H1-21 |
% |
% ex. FX* |
Loss ratio net of reinsurance |
57.4% |
21.4% |
(36.0) |
ppts |
Cost ratio net of reinsurance |
31.2% |
30.4% |
(0.8) |
ppt |
COMBINED RATIO NET OF REINSURANCE |
88.6% |
51.9% |
(36.8) |
ppts |
|
|
|
|
|
Balance sheet items in €m |
H1-20 |
H1-21 |
% |
% ex. FX* |
Total Equity (group share) |
1,916.2 |
1,996.2 |
+4.2% |
|
SOLVENCY RATIO |
191%1 |
191%1 |
0 |
ppt |
* Also excludes scope impact1 This estimated solvency ratio
constitutes a preliminary calculation made according to Coface’s
interpretation of Solvency II regulations and using the Partial
Internal Model. The result of the definitive calculation may differ
from the preliminary calculation. The estimated solvency ratio is
not audited.
1. TurnoverCoface recorded
consolidated turnover of €768.0m for H1-2021, up by +7.4% at
constant FX and perimeter compared to H1-2020. On a reported basis
(at current perimeter and exchange rates), turnover rose by 6.0%
due to the appreciation of the euro against other currencies
notably the US dollar.
Turnover benefited from the increase in client
activities, both past and expected. After a sluggish first quarter
(positive impact of +0.2%), the second quarter saw more sustained
growth (+1.7%). The price effect followed an opposite trend since
the increases recorded in the first quarter (+2.6%) did not recur.
In Q2-2021, the price effect was actually negative at -0.3%, as the
trade credit insurance market quickly returned to its pre-Covid
trends.
The retention rate remained high in all regions
and stands at 92.4% for the Group, down 1 point compared to H1-2020
in a market that has become more competitive again. New business
amounted to €72m, down from a record year in 2020, but up from
2019.
Turnover from insurance activities (including
bonding and Single Risk) grew by +8.5% at constant FX and perimeter
compared to H1-2020, as a result of previous repricing well as past
and anticipated increases in client activities.
Revenues from other activities (factoring and
services) was up +2.5% compared to H1-2020. Fee and commission
income was down in the first half of the year despite a good
recovery in Q2-2021 (+6.0%). Turnover from factoring was up +10.9%
at constant perimeter and FX due to the recovery in volumes
financed. Growth in business information services reached
+11.0%.
Total revenue - cumulated - in €m |
H1-20 |
H1-21 |
% |
% ex. FX1 |
Northern Europe |
147.0 |
166.9 |
+13.6% |
+9.8% |
Western Europe |
142.6 |
153.7 |
+7.8% |
+7.9% |
Central & Eastern Europe |
73.5 |
75.4 |
+2.6% |
+2.4% |
Mediterranean & Africa |
200.5 |
212.0 |
+5.7% |
+7.0% |
North America |
69.2 |
66.3 |
(4.2)% |
+3.2% |
Latin America |
34.7 |
36.2 |
+4.2% |
+17.4% |
Asia
Pacific |
57.1 |
57.6 |
+0.8% |
+6.5% |
Total Group |
724.6 |
768.0 |
+6.0% |
+7.4% |
In Northern Europe, revenues increased by +13.6%
(and +9.8% at constant FX) mainly due to the rebound in activity, a
good level of new business and the impact of past price increases.
Factoring revenues were up +10.8%.
In Western Europe, turnover was up by +7.8% and
by +7.9% 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
+2.6% and +2.4% at constant FX as a result of increased activity
offset by higher premium refunds. Factoring revenues rose in Poland
by +8.8% (+11.7% at constant FX).
In the Mediterranean and Africa, a region driven by Italy and
Spain, turnover rose by +5.7% and by +7.0% at constant FX. This was
due to the economic recovery as well as solid growth in service
revenues.
In North America, turnover declined by -4.2% on
a reported basis but rose +3.2% at constant FX. Higher pricing was
partially offset by an increase in premium refunds.
Turnover for the Asia-Pacific region was up
+0.8% on a reported basis but +6.5% at constant FX, mainly due to
the recovery in client activities.
In Latin America, turnover rose by +4.2% at
current FX, but +17.4% at constant FX. The region recorded an
increase in new business against a backdrop of higher pricing and
the normalisation of risks after several difficult years.
2. Result
The combined ratio, net of reinsurance, stood at
51.9% for H1-2021 (an improvement of 36.8 ppts compared to
H1-2020). Excluding the effect of government schemes, the net
combined ratio was 61.5%.
(i) Loss ratio
The gross loss ratio for H1-2021 stood at 29.5%,
an improvement of 29.4 ppts compared to the previous year. The
gross loss ratio for Q2-2021 improved by 33.2 ppts compared to
Q2-2020 (29.6% vs 62.8%).
The Group’s reserving policy remains unchanged.
At 75.1%, the provisioning level for the subscription year remained
slightly higher than the historical average, reflecting Coface's
expectation that the number of bankruptcies will increase when the
economic support measures are withdrawn. Strict management of past
claims made it possible to record 48.1 ppts of recoveries over
the first half of the year. These levels remain well above the
historical average.
The loss ratio net of reinsurance improved by
36.0 ppts compared to H1-2020, to reach 21.4%. This improvement is
6.6 ppts greater than the improvement in the gross ratio. This
difference is explained by the implementation of government
reinsurance schemes, which resulted in a higher ceded reinsurance
rate for the current underwriting year, which has a higher loss
ratio. Excluding government schemes, the net loss ratio would have
been 31.0%.
(ii) Cost ratio
Coface has continued with its policy of strict
cost controls and investment. Over the first half of the year,
costs grew by +4.6% and +5.9% at constant FX and perimeter. This
increase is calculated compared to H1-2020, which was characterised
by a very strict lockdown and a significant compression of variable
costs. Compared to H1-2019, the cost increase is only +1.4%, which
is lower than the revenue increase over the same period
(+4.8%).
The H1-2021 net cost ratio improved by 0.8 ppt
to 30.4%. Excluding government schemes, the ratio would have been
identical at 30.4%.
Net financial income for H1-2021 dropped
slightly (-€0.8m) year-on-year to €15.9m. The accounting yield2,
excluding portfolio capital gains and depreciation, was stable at
0.6% (0.6% in H1-2020).
- Operating income and net
income
Operating income for H1-2021 was €171.6m, more
than triple the previous year, mainly due to the improvement in the
loss ratio.
The effective tax rate was 24%, compared to 46%
for H1-2020.
In total, net income (group share) was €123.2m,
up +57% compared to H1-2019, of which €66.9m in Q2-2021
3. Shareholders'
equityAs of 30 June 2021, Group shareholders’ equity stood
at €1,996.2m, down €2.1m, or -0.1% (compared to €1,998.3m at
31 December 2020).
The change is mainly due to the positive net
income of €123.2m, the payment of the dividend (-€82.0m) and the
fall in unrealised capital gains (-€23.4m).
The annualised return on average tangible equity
(RoATE) was 13.5% at 30 June 2021, mainly due to the improvement in
underwriting income.
The solvency ratio stands at 191%3, above the
target range (155% - 175%). Its evolution is driven by an increase
in the capital required by trade credit insurance as well as
factoring, reflecting mostly volume growth. Capital required by
invested assets is also on the rise as Coface has started to
reinvest its excess liquidity. Equity markets have also gone up.
Eligible own funds are stable, in line with shareholders’
equity.
The solvency ratio benefited to the extent of 5
points from government plans. In the absence of these risk transfer
schemes, the solvency ratio would have been at 186%2, still above
the target range.
4. OutlookIn
the second quarter of 2021, the global economy confirmed its
rebound. As such, Coface expects a global GDP growth of 5.6% in
2021 followed by 4.3% in 2022. Progress on vaccinations and the
massive measures to support the economy have led to localised
overheating resulting in big price increases of varying duration
(timber, steel, semi-conductors). These price increases have
fuelled the debate on whether some degree of persistent inflation
could return. Despite these tensions and the existence of viral
outbreaks, Coface is expecting a continued economic recovery in the
second half of the year.
Against this backdrop, the number of
bankruptcies has remained at historically low levels in most
countries, whether or not they have set up government trade credit
insurance schemes. The number of bankruptcies is therefore expected
to logically increase as the economy recovers from the public
health crisis and economic support measures are withdrawn.
In this context, Coface continues to invest in
improving its efficiency and its operating tools, while
strengthening its growth opportunities in adjacent businesses.
Coface's operations continue to be backed by a solid balance
sheet. Its solvency ratio reached 191%4, and 186%1 excluding
government schemes, which is above the target range of 155% to
175%.
Conference call for financial
analysts
Coface’s H1-2021 results will be discussed with financial
analysts during the conference call on 28 July 2021 at 18.00 (Paris
time). You can access the conference call either:
- By webcast: Coface H1-21 results -
Webcast
- By telephone - dial one of the
following numbers:
-
+33 1 72 72 74 03 (France)
-
+44 207 1943 759 (United Kingdom)
-
+1 646 722 4916 (United States)
The access code for participants is:
56859303#
The presentation will be available (in English only) at the
following address:
http://www.coface.com/Investors/financial-results-and-reports
Annexes
Quarterly results
Income
statements items in €m –Quarterly
figures |
Q1-20 |
Q2-20 |
Q3-20 |
Q4-20 |
Q1-21 |
Q2-21 |
|
% |
% ex. FX* |
Gross earned premiums |
301.2 |
297.9 |
298.1 |
307.2 |
312.1 |
326.7 |
|
+9.7% |
+10.9% |
Services
revenue |
69.3 |
56.3 |
59.7 |
61.3 |
65.9 |
63.4 |
|
+12.8% |
+10.3% |
REVENUE |
370.5 |
354.2 |
357.8 |
368.4 |
377.9 |
390.1 |
|
+10.1% |
+10.8% |
UNDERWRITING INCOME(LOSS) AFTER
REINSURANCE |
28.2 |
12.1 |
34.2 |
52.7 |
74.3 |
81.5 |
|
+571.7% |
+519.2% |
Investment income, net of management expenses |
2.7 |
14.0 |
6.7 |
3.4 |
5.7 |
10.1 |
|
(27.9)% |
(25.7)% |
CURRENT OPERATING INCOME |
30.9 |
26.2 |
40.9 |
56.2 |
80.0 |
91.6 |
|
+250.0% |
+232.6% |
Other
operating income / expenses |
(0.2) |
(1.6) |
(0.6) |
(11.4) |
(0.4) |
0.8 |
|
(153.2)% |
(154.7)% |
OPERATING INCOME |
30.7 |
24.6 |
40.3 |
44.8 |
79.6 |
92.4 |
|
+275.5% |
+255.4% |
NET INCOME |
12.7 |
11.3 |
28.5 |
30.5 |
56.4 |
66.9 |
|
+491.8% |
+423.6% |
Income tax
rate |
50.5% |
39.9% |
42.4% |
24.5% |
24.6% |
23.0% |
|
(16.9) pts |
|
Cumulated results
Income
statements items in €m –Cumulated
figures |
Q1-20 |
H1-20 |
9M-20 |
FY-20 |
Q1-21 |
H1-21 |
|
% |
% ex. FX* |
Gross earned premiums |
301.2 |
599.1 |
897.2 |
1,204.3 |
312.1 |
638.7 |
|
+6.6% |
+8.5% |
Services
revenue |
69.3 |
125.5 |
185.3 |
246.5 |
65.9 |
129.3 |
|
+3.0% |
+2.5% |
REVENUE |
370.5 |
724.6 |
1,082.4 |
1,450.9 |
377.9 |
768.0 |
|
+6.0% |
+7.4% |
UNDERWRITING INCOME(LOSS)AFTER
REINSURANCE |
28.2 |
40.4 |
74.6 |
127.3 |
74.3 |
155.8 |
|
+285.9% |
+297.7% |
Investment income, net of management expenses |
2.7 |
16.7 |
23.5 |
26.9 |
5.7 |
15.9 |
|
(5.2)% |
+1.2% |
CURRENT OPERATING INCOME |
30.9 |
57.1 |
98.1 |
154.2 |
80.0 |
171.6 |
|
+200.6% |
+208.5% |
Other
operating income / expenses |
(0.2) |
(1.8) |
(2.4) |
(13.8) |
(0.4) |
0.4 |
|
(125.5)% |
(127.9)% |
OPERATING INCOME |
30.7 |
55.4 |
95.7 |
140.4 |
79.6 |
172.1 |
|
+210.9% |
+219.2% |
NET INCOME |
12.7 |
24.0 |
52.4 |
82.9 |
56.4 |
123.2 |
|
+414.3% |
+436.2% |
Income tax
rate |
50.5% |
46.0% |
44.4% |
37.4% |
24.6% |
23.8% |
|
(22.2) pts |
|
* 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 2020/2021
(subject to change)9M-2021 results: 28 October
2021 (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.comCOFACE 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 impact2 Book yield calculated on the
average of the investment portfolio excluding non-consolidated
subsidiaries.3 This estimated solvency ratio constitutes a
preliminary calculation made according to Coface’s interpretation
of Solvency II regulations and using the Partial Internal Model.
The result of the definitive calculation may differ from the
preliminary calculation. The estimated solvency ratio is not
audited.4This estimated solvency ratio disclosed is a preliminary
calculation made according to Coface’s interpretation of Solvency
II regulations and using the Partial Internal Model. The final
calculation may differ from this preliminary calculation. The
estimated solvency ratio is not audited.
- 2021 07 28 PR results H1 2021
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