Coface Sa · EURONEXT:COFA
Coface Sa — Investor Presentation (November 2017)
38 slides from Coface Sa's investor presentation, November 2017
Slide 1: The most agile global trade credit partner in the industry
THE MOST AGILE GLOBAL TRADE CREDIT PARTNER IN THE INDUSTRY — INVESTOR PRESENTATION NOVEMBER 2017
Slide 2: Content
Content 1 2 BUSINESS MODEL PERFORMANCE APPENDICES & STRATEGY & SOLVENCY 2 9M-2017 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS
Slide 3: Part 1: Business Model & Strategy
PART 1 BUSINESS MODEL & STRATEGY
Slide 4: Who are we?
WHO ARE WE? Coface, a publicly listed We SPECIALISE IN Our AREAS OF EXPERTISE: We also keep our customers company, has been one of FACILITATING BUSINESS- up-to-date on current market BUSINESS the WORLD’S LEADING TO-BUSINESS TRADE, CREDIT INFORMATION conditions, leveraging CREDIT INSURANCE working wi
Slide 5: Our geographical footprint is the broadest in the industry
Our geographical footprint is the broadest in the industry COFACE is present DIRECTLY, or through its PARTNERS, in 100 COUNTRIES, providing support for customers in more than 200 COUNTRIES. The Group uses its OWN INTERNATIONAL NETWORK, which is complemented by the “COFACE PARTNER” NETWORK NORTH AMER
Slide 6: Our ambition: the most agile global trade credit partner
Our ambition: To be the most agile, global trade credit partner in the industry PARTNERS LARGE FINANCIAL RETAIL SMEs MID-MARKET CORPORATES INSTITUTIONS BANKERS – B2B2B GLOBAL CONNECTED SCALE AGILITY MEANS FOR US Specialised sales close to the client Being the MOST GLOBAL credit insurer ‘FIT-TO-WIN’
Slide 7: Our value proposition: attractive sustainable returns and solid financial position
Our value proposition: Generating attractive sustainable returns and maintain solid financial position LEVERS OF SHAREHOLDER VALUE CREATION TRANSFORMATION CAPITAL OPTIMIZATION STRENGTHEN IMPROVE IMPLEMENT IMPROVE THE CAPITAL EFFICIENCY OF THE COMPANY RISK MANAGEMENT OPERATIONAL DIFFERENTIATED — & IN
Slide 8: Our operational transformation is progressing well
Our operational transformation is progressing well STRENGTHEN RISK MANAGEMENT IMPROVE OPERATIONAL EFFICIENCY IMPLEMENT DIFFERENTIATED & INFORMATION & CLIENT SERVICE GROWTH STRATEGIES Invested in information quality Streamlining organizations Driving sales efficiency in mature markets and data tools
Slide 9: First step in capital optimization achieved
First step in capital optimization achieved Reinsurance cession rate increased to 26% from 2017 ADEQUATE CAPITAL CAPITAL MANAGEMENT GOALS REMUNERATION CAPITAL ALLOCATION POLICY is a long-term factor FINANCE PROFITABLE — in strengthening our competitive & SUSTAINABLE GROWTH Ensure long-term developme
Slide 10: Success in the execution of Fit to Win relies on our people
Success in the execution of Fit to Win relies on our people LEADERSHIP TALENT REVIEW CROSS- ATTRACT — PROCESS FERTILIZATION NEW TALENT — & MOBILITY — Strengthen team Redesign process — Develop employer Local leaders brand Renovate key functions Review of top 100 roles to Lean Management Invest in st
Slide 11: Management team
Management team GROUP CENTRAL FUNCTIONS CEO Xavier Durand — 30+ years of international experience in regulated financial services Working for Coface since 2016 CFO & Risk Director General Secretary Chief Operating Officer Strategy & Business Carine Pichon Carole Lytton Valérie Brami Development Dire
Slide 12: Fit to Win: our values
Fit to Win: our values Driving a cultural transformation COURAGE & CLIENT FOCUS EXPERTISE COLLABORATION ACCOUNTABILITY CLIENT SATISFACTION FUNCTIONAL CROSS-FUNCTIONAL BOTTOM LINE AT THE CENTRE Underwriting, risk, — ACCOUNTABILITY Offers, service levels sales, systems, CROSS-MARKETS Requiring to bala
Slide 13: Fit to Win '16-'19 will transform Coface
Fit to Win ’16-’19 will transform Coface Become the most agile global trade credit partner in the industry − Reinforce risk management − Drive operational efficiency & client service − Drive differentiated growth strategies Seize long-term opportunities while managing short-term pressure − Invest on
Slide 14: Part 2: Performance & Solvency
PART 2 PERFORMANCE & SOLVENCY
Slide 15: €55.0m year-to-date net profit, driven by loss ratio improvement
€55.0m year-to-date net profit, driven by loss ratio improvement 9M-2017 highlights Turnover reaches €1,021.2m, down (0.3)% at constant FX and perimeter1; Q3-2017 up 0.2% y-o-y − Mature markets continue to grow at +2.2%; trends in emerging markets remain unchanged − Favorable economic environment dr
Slide 16: New schedule for investments
New schedule for investments Fit to Win What we said - €70m invested in the business, o/w €35m in technologies and process transformation, all financed by French state guarantees cession What we see - Restructuring costs coming lower than expected - New investment opportunities emerging, in a rapidl
Slide 17: Revenue growing in Q3-17, helped by client activity
Revenue growing in Q3-17, helped by client activity (4.1)% (4.1)% Total revenue down (0.3)% vs. 9M-2016*; Q3-2017 up 0.2% y-o-y* In €m (0.4)% (0.3)% 1,065 1,025 1,021 ► Growth trends consistent with H1-2017: Western Europe picking up and Med-Africa growing nicely Gross Earned Premiums Northern Europ
Slide 18: Western Europe picking up, overall growth still modest
Western Europe picking up, overall growth still modest Western Europe Northern Europe Central Europe Mediterranean & Africa (14.7)% (13.5)% (2.3)% (2.3)% 5.3% 5.6% 2.7% 0.8% 1.8% 3.2% 247 235 247 260 230 207 211 91 94 9M-16 9M-16 9M-17 9M-16 9M-17 9M-16 9M-17 9M-16 9M-17 ex. SEGM* Higher retention r
Slide 19: Sharp improvement in Asia and North America, partially offset by Western Europe
Sharp improvement in Asia and North America, partially offset by Western Europe normalization Loss ratio before reinsurance, including claims handling expenses – in % 9%* 7%* 6%* Group North America Asia Pacific Latin America 169.7 164.5 128.5 83.6 84.0 84.5 67.6 61.8 57.8 60.7 61.5 54.2 43.0 54.3 5
Slide 20: Net combined ratio at 89.8% mainly driven by lower loss ratio
Net combined ratio at 89.8% mainly driven by lower loss ratio (10.0)ppts Continuing to drive tight cost controls In % and investing in long term value creation 99.8 Net combined ratio 89.8 ► Achieved €12m cost savings, slightly ahead of schedule; 35.2 confirming €30m 2018 target Net cost ratio 35.4
Slide 21: Financial portfolio: slight increase of investment income
Financial portfolio: slight increase of investment income Keeping a diversified and proactive investment strategy Investment €m 9M-16 9M-17 Real Estate 7% Income from investment portfolio 2 31.7 39.5 Equities 3 31.9 30.8 Income from investment portfolio without gains on sales 7% Investment managemen
Slide 22: 9M-2017 net income at €55.0m
9M-2017 net income at €55.0m 9M-16 Income statement items - in €m 9M-16 9M-17 ex. SEGM* Current operating income 58.5 38.3 100.5 ► Sharp improvement in operating Fit to Win investments & restructuring expenses - - (1.7) performance at €98.2m Other operating income and expenses (2.2) (2.2) (0.5) Oper
Slide 23: RoATE stands at 4.7% for 9M-2017
RoATE stands at 4.7% for 9M-2017 Change in equity in €m 55.0 9.3 (14.7) 1,784.5 1,755.2 (20.4) IFRS equity Distribution to Net income Revaluation reserve Treasury shares, IFRS equity attributable to owners shareholders (AFS financial currency translation attributable to owners of the parent instrume
Slide 24: Solid balance sheet
Solid balance sheet 9M-2017 simplified balance sheet €m ► Coface meets the criteria to apply temporary 7,255 7,255 exemption of IFRS 9 application1 Goodwill 211 & intangible assets Shareholders’ − the deferral applies to Coface’s insurance 1,785 equity business Insurance investments 2,808 384 Financ
Slide 25: Robust solvency over time
Robust solvency over time Estimated Solvency ratio in target range Low sensitivity to market shocks market sensitivity tested through instantaneous shocks 150% (0.2) ppt (3.1) ppt 160% 30/06/17 SCR cover (Std) 148% +1.6 ppt 148% H1-2017 148% +100 bps Interest rates 143% 140% 120% 1 +100 bps Spreads
Slide 26: Key take-aways & outlook
Key take-aways & outlook 9M-17 operating profit up €62.1m1 at €98.2m − Net combined ratio down -10 ppts vs. 9M-20161 at 89.8% − Improvement driven by loss ratio, especially in Asia and North America − Economic environment provides tailwind − Net loss ratio guidance: below 54% for 2017 Effects of Fit
Slide 27: Appendices
coface / APPENDICES
Slide 28: Our history
Our history Privatisation. Coface’s creation - a French The Group continues to manage Company specialising in credit Start of international expansion guarantees on behalf insurance for exports of the French State1 1946 1992 1994 Coface becomes a wholly-owned subsidiary of Natixis, the investment, as
Slide 29: How does credit insurance work?
How does credit insurance work? CREDIT INSURANCE CREDIT enables a business INSURER to protect its trade receivables against Rates company B the risk of customer to evaluate its soundness non-payment 90% If B defaults, Credit Pays a insurer compensates premium A for up to 90% of the loss sustained Se
Slide 30: Our shareholder structure
Our shareholder structure COFACE SA Employees is a société anonyme 0.25% with a board GEOGRAPHICALLY DIVERSIFED of directors (conseil SHAREHOLDING STRUCTURE2 d’administration) — incorporated in France 30% France 26% United Kingdom Natixis Floating 1 19% USA & Canada 41.24% 58.52% 11% Germany COFACE’
Slide 31: Corporate governance
Corporate governance Board of Directors Laurent MIGNON Chairman CEO of Natixis Non independent members Daniel KARYOTIS Jean ARONDEL Jean-Paul DUMORTIER ► BPCE ► BPCE ► BPCE Anne SALLE MONGAUZE Isabelle RODNEY ► BPCE ► BPCE Sharon MACBEATH Olivier ZARROUATI Eric HÉMAR Independent members ► Tarkett ►
Slide 32: Key figures (1/3)
Key figures (1/3) Quarterly figures Income statements items in €m - 2016 figures ex. SEGM* Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 % % ex. FX Gross earned premiums 288.5 277.2 275.8 273.6 282.2 283.4 271.6 (1.5)% +0.3% Services revenue 64.5 60.8 58.5 59.0 66.1 60.0 57.9 (1.1)% (0.6)%
Slide 33: Key figures (2/3)
Key figures (2/3) Cumulated figures Income statements items in €m - 2016 figures ex. SEGM* Q1 2016 H1 2016 9M 2016 FY 2016 Q1 2017 H1 2017 9M 2017 % % ex. FX Gross earned premiums 288.5 565.7 841.5 1,115.1 282.2 565.6 837.2 (0.5)% (0.4)% Services revenue 64.5 125.2 183.8 242.8 66.1 126.2 184.0 +0.1%
Slide 34: Key figures (3/3)
Key figures (3/3) Revenue by region Total revenue - by quarter - in €m Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 V% ex. FX Northern Europe 83.4 74.7 76.8 72.4 79.8 75.1 74.7 (2.7)% Western Europe - ex. SEGM* 72.4 68.9 66.0 66.5 73.1 69.3 68.5 +5.0% Central Europe 30.9 30.4 30.0 30.0 31
Slide 35: Continued recovery in Asia and North America, other regions stabilized
Continued recovery in Asia and North America, other regions stabilized Loss ratio before reinsurance, including claims handling expenses – in % 9%* 7%* 6%* Group North America Asia Pacific Latin America 146.8 100.6 113.4 85.0 75.3 59.9 60.2 63.3 56.3 51.4 47.6 51.0 51.8 44.5 47.5 24.1 FY-14 FY-15 FY
Slide 36: Combined ratio calculation
Combined ratio calculation Net Earned Premiums Operating expenses 9M-2016 9M-2016 In €k 9M-2016 9M-2017 In €k 9M-2016 9M-2017 ex. SEGM* ex. SEGM* Gross earned premiums 841,506 841,506 837,182 A Commissions - General external expenses -114,092 -114,092 -117,053 Ceded premiums -198,238 -198,238 -223,6
Slide 37: Financial Calendar & investor relations contacts
Financial Calendar & investor relations contacts Calendar Next Event Date IR Contacts: [email protected] FY-2017 Results Feb. 12th, 2018 after market close Q1-2018 Results Apr. 24th, 2018 after market close Thomas JACQUET AGM May 16th, 2018 Head of Investor Relations & Rating Agencies H1-2018 Res
Slide 38: Important legal information
Important legal information IMPORTANT NOTICE: This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Coface SA in any jurisdiction or an inducement to enter into investment activi