Results of Coface SA at 30/09/14: Coface continues to progress on a path of growth and profitability

Press release Paris, 29 October 2014 Results at 30 September 2014: Coface continues to progress on a path of growth and profitability * Turnover +1.8% at constant scope and exchange rates * Client retention rate still high at 91.9% and new contracts production up +8% * Continued improvement in combined ratio after reinsurance at 77.4% (-5.2 points[1]) * Current operating income[2] +28.2% and net income group share +36...

Press release

 

Paris, 29 October 2014

 

Results at 30 September 2014:
Coface continues to progress on a path of growth and profitability  

• Turnover +1.8% at constant scope and exchange rates
   
• Client retention rate still high at 91.9% and new contracts production up +8%
   
• Continued improvement in combined ratio after reinsurance at 77.4%
  (-5.2 points^[1])
   
• Current operating income^[2] +28.2% and net income group share +36.1%,
  at constant scope and exchange rates^[3]

 

 

Changes in % expressed in comparison to the first nine months of 2013

  

Commenting on these results, Jean-Marc Pillu, CEO of the Coface Group said:

 

"Coface's performance is in line with objectives. At the end of these first nine months, the Group has posted satisfactory growth and solid profitability. Coface's international presence has enabled the Group to capture growth in the most dynamic markets. While the economic environment worldwide is improving slowly, the Group continues to focus on responding to its clients' needs with innovative offers and proactive risk management. Our results demonstrate that this strategy is sound."

 

Key figures as at 30 September 2014

 

 

Income statement items - in EURM	9M 2013	9M 2014	%	% on a  comparable basis[4]
Consolidated turnover	1,075.9	1,072.0	(0.4)%	+1.8%
of which earned premiums	842.7	836.7	(0.7)%	+1.6%
Underwriting income after reinsurance	93.0	134.0	+44.0%
Investment income net of expenses, excluding restated items[5]	31.6	31.6	(0.1)%
Current operating income	152.1	165.5	+8.8%
Current operating income, excluding restated items3	129.7	164.0	+26.4%	+28.2%
Net income (group share)	98.0	103.1	+5.2%	+7.3%
Net income (group share), excluding restated items3	85.0	113.6	+33.7%	+36.1%
Key ratios - in %	9M 20131	9M 2014	Change
Loss ratio before reinsurance	55.6	49.7	(5.9) pts
Cost ratio after reinsurance	27.0	27.6	+0.6 pts
Combined ratio after reinsurance	82.6	77.4	(5.2) pts
Balance sheet items - in EURM	31/12/2013	30/09/2014	%
Total equity	1,793	1,710	(4.6)%

 

 

 

1.  Turnover

 

Group consolidated turnover was EUR1,072.0 million at the end of the first nine months of 2014. The increase in turnover (+1.8% on a comparable basis⁴ and -0.4% at current scope and exchange rate) is due to increased new contracts production (+8% compared to 30 September 2013) and still high client loyalty, with a policy retention rate of 91.9%.

 

Turnover growth is heading in the right direction in emerging markets and in North America, with these zones contributing most to the Group's development.

Coface is rolling out its new commercial organisation and continues to strengthen its sales processes to make these more effective, particularly in Western Europe and in Northern Europe.

 

The planned introduction of innovative offers and services continues: Easyliner (targeted at SMEs) launched last March is now available in eight countries.

 

 

 

 

 

2. Results

 

Current operating income² rose 28.2% to EUR164.0 million and net income (group share) was up 36.1%
to EUR113.6 million, excluding restated items³.

 

This performance is a consequence of the Group's rigorous risk management and cost control.

 

The loss ratio after reinsurance fell by 5.9 points compared to last year and stood at 49.7% at the end of the first nine months of the year.

 

 

The cost ratio after reinsurance remained quasi-stable at 27.6% (+0.6 points¹), and the rise in overheads is less than the increase in premiums.

 

In total, the combined ratio after reinsurance improved by 5.2 points¹ to 77.4%.

 

 

3. Financial solidity

 

At 30 September 2014, total IFRS equity of the group totalled EUR1,709.5 million. The change in IFRS equity is explained mainly by positive net income of EUR103.1 million, reduced by the distribution of special dividend of EUR227 million in 2Q.

 

Coface issued subordinated debt of EUR380 million in 1Q, enabling it to strengthen its regulatory equity and optimise its capital structure.

 

Following this transaction, the rating agencies Fitch and Moody's confirmed the IFS ratings that they attribute to the Group: respectively AA- and A2, stable outlook.

 

The return on average tangible equity (RoATE^[6]) was 9.6% at the end of the first nine months of the year, up 1.2 points compared to the level observed at the end of 2013.

 

 

4. Outlook

 

The economic recovery forecast for 2014 is confirmed, even if it is slower than initially expected by the markets.

 

Coface expects worldwide growth of 2.8%, i.e. 0.2 points more than in 2013. In this environment, the profitable organic growth strategy based on innovative marketing efforts and the rollout of more effective sales processes enable the Group to confirm its financial guidance^[7] for 2014:

 

• Turnover growth of between 1.5% - 2.5%;
• A combined ratio after reinsurance below 80%;
• Double-digit average growth in current operating income over three years between 2013
  and 2016^[8].

  

 

CONTACTS
MEDIA   Maria KRELLENSTEIN T. +33 (0)1 49 02 16 29 [email protected]	ANALYSTS/INVESTORS   Nicolas ANDRIOPOULOS Cécile COMBEAU T. +33 (0)1 49 02 22 94 [email protected]

 

FINANCIAL SCHEDULE 2015

17 February 2015: publication of 2014 annual results

 

FINANCIAL INFORMATION

This press release as well as the integral regulatory information of Coface SA are available on the Group's website http://www.coface.com/Investors

 

 

 

 

 

 

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 the "Disclaimers" section on page 2 of the Coface Group's Base Document registered by the AMF on 6 May 2014 under number I.14-029 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. 

 

 

 

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