COFACE SA launches
Power the Core
its 2024-2027 strategic plan to develop a benchmark global credit risk management ecosystem
Paris, March 4, 2024 – 6:15 p.m.
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Power the Core
builds on the successes of previous strategic plans
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Coface now has solid foundations on which to base its future development. Coface thus:
Built the best risk infrastructure in its industry
Developed an efficient sales organization in its key markets
Simplified its operating model
Established the foundations of its information service offering
Strengthened its managerial culture and the talent of its teams
Implemented a resolute responsible business program
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The new plan aims to deepen and expand quality franchises and in particular:
Achieving excellence in data and technology
Consolidate and accentuate Coface’s leadership in its historic credit insurance business
Driving double-digit profitable growth for information services
Take full advantage of its unique culture as a human-sized, deeply responsible multinational
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Coface raises its financial objectives. They are heard through the cycle:
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An undiscounted combined ratio of ~78% through the cycle, an improvement of 2 points
compared to
Build to Lead
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A cycle average RoATE of 11.0%, an improvement of 1.5 points
in an environment of interest rates equivalent to current rates -
A solvency ratio at the top of the target zone of 155%-175%, with a payout rate equal to at least 80% of consolidated net income
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An additional contribution from information services to the group’s RoATE of 50 basis points from 2027
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Xavier Durand, CEO of Coface, declared:
“The numerous successes of our Fit to Win and Build to Lead strategic plans have allowed us to build solid foundations for Coface. We have demonstrated the complementarity of our businesses, making it possible to develop a real credit risk management ecosystem with a reinforced service approach and as close as possible to our customers.
Our new plan
Power the Core
aims to capitalize on this strength as well as the commitment and expertise of our employees in order to accelerate our transformation. In particular, we will proactively invest in data and technologies, both for our credit insurance businesses and for information services.
We will thus strengthen our leadership in credit insurance while pursuing double-digit profitable growth in information services.
To achieve these ambitious objectives, we will rely on our unique culture of a multinational on a human scale, serving its customers and deeply responsible.
On the financial side, we are once again improving our cycle average objectives and aiming for a positive contribution from information services of an additional 50 basis points to RoATE 2027.
The commitment of our employees and partners will remain, as in previous plans, a critical element of our collective success in serving our customers. »
1.
Solid foundations: the plan
Build to Lead
achieved or exceeded all of its objectives
The plan
Build to Lead
was announced in February 2020. Its execution took place in a very turbulent environment: pandemic, inflationary episode, sudden rise in interest rates, return of war in Europe… Coface was able to maintain its strategic course and count on its agility to achieve or exceed all plan objectives.
Beyond the financial objectives, Coface managed to simplify its operational model, in particular by reducing the number of IT systems by 40%, and its information system complexity index by 25%.
Over the period 2020-2023 the combined ratio was significantly reduced, standing at 69.1%, a level well below the objectives of
Build to Lead
and among the best in the industry. The cost ratio continued to decline while the claims ratio benefited from past investments in risk management infrastructure.
Revenue growth, driven by record customer retention and growth in policyholder turnover, reached an average of 6% per year.
Over the last 4 years, the average return on tangible equity was 10.8%, above the objective of 9.5%.
Finally, despite the numerous economic, financial and political shocks, Coface’s solvency has constantly remained above its target zone, allowing Coface to be in 2020 one of the first European insurance groups authorized to take over, under the form of a share buyback, the return of capital to shareholders.
Information services, still not very mature in 2019, continued their development and confirmed their development potential. This is a highly synergistic activity with credit insurance, which is based on the same risk infrastructure. It is currently profitable despite significant growth investments. The growth of this service activity, without impact on regulatory capital, was 13% per year over the period 2019-2023.
2.
Power the Core aims to develop the best global credit risk management ecosystem
Coface’s conviction is unchanged: credit insurance is a service business benefiting from high barriers to entry, growing and within which Coface has built the best risk infrastructure on the market. The latter is supported by proprietary data and scores, a global presence, a global technology platform, underwriting experience across credit cycles, compliance with numerous regulations and a strong balance sheet.
The strategic plan
Power the Core
» will therefore, building on these solid foundations, strengthen and deepen Coface’s franchises. In particular, this will involve:
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Invest proactively in data and technology
to build even more differentiating data sets and strengthen the capabilities of
scoring
of Coface by relying in particular on the most modern techniques, data science and artificial intelligence in particular. Investments will be more specifically oriented towards technologies and connectivity in favor of our customers -
Strengthen and extend the credit insurance franchise.
Risk underwriting will remain disciplined while investments in growth continue, particularly in the SME and
Mid-Market
as well as in simplifying the customer experience. -
Continue profitable double-digit growth in information services.
Investments will focus on continuing to strengthen sales forces, expanding data sources and information use cases (supplier risk, weak signals, etc.). Finally, the technological platform will be improved. -
Leverage a unique culture.
Coface will continue to strengthen its attractiveness as an employer and achieve the objectives of its responsible roadmap.
3.
Power the Core
: Coface sets ambitious financial objectives for 2027
Proper execution of the strategic plan will enable Coface to achieve financial objectives throughout the growing cycle:
An undiscounted combined ratio on cycle average of ~78%, an improvement of 2 points compared to the previous plan
An average return on tangible equity of 11.0% on cycle average, an increase of 1.5 points. This objective is valid under the assumption of a generally unchanged interest rate environment.
A distribution rate of results unchanged at 80% for a solvency ratio in the upper part of the target range (155%-175%).
For the year 2027, an additional contribution of information services to RoATE of 0.5%.
Webcast:
The strategic plan will be presented on March 5, 2024 at 9:00 a.m. and available by webcast via the following link:
In webcast: Coface – “Power the Core” strategic plan
The presentation will be available from 8:30 a.m. on March 5, 2024 (in English only) at the following address:
http://www.coface.com/fr/Investors/Financial-Results-et-rapports
CONTACTS
INVESTOR/ANALYST RELATIONS
Thomas JACQUET: +33 1 49 02 12 58 – [email protected]
Benoît CHASTEL: +33 1 49 02 22 28 – [email protected]
PRESS RELATIONS
Saphia GAOUAOUI: +33 1 49 02 14 91 – [email protected]
Adrien BILLET: +33 1 49 02 23 63 – [email protected]
FINANCIAL CALENDAR 2024
(subject to change)
Q1-2024 results: May 6, 2024, after trading
General Meeting: May 16, 2024
H1-2024 results: August 5, 2024, after trading
9M-2024 results: November 5, 2024, after trading
FINANCIAL INFORMATIONS
This press release and the full regulated information of COFACE SA are available on the Group’s website: https://www.coface.com/fr/investors
For regulated information relating to Alternative Performance Indicators (API), refer to the 2023 Half-Year Financial Report as well as the 2022 Universal Registration Document (see 3.7 “key financial performance indicators”).
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COFACE: FOR TRADE www.coface.com COFACE SA is listed on Compartment A of Euronext Paris |
DISCLAIMER – Certain statements contained in this press release may contain forecasts which relate in particular to future events, trends, plans or objectives. These forecasts inherently involve risks and uncertainties, identified or unidentified, and may be affected by numerous factors that could cause actual results to differ materially from those indicated in these statements. You are invited to refer to chapter 5 “Main risk factors, and their management within the Group” of the 2022 Universal Registration Document of the Coface Group filed with the AMF on April 6, 2023 under number D.23- 0244, in order to obtain a description of certain important factors, risks and uncertainties likely to influence the activities of the Coface Group. The Coface Group does not undertake in any way to publish an update or revision of these forecasts, nor to communicate new information, future events or any other circumstances.
Attachment
2024 03 04 CP Power the Core – vision 2027 – COFACE SA