Coface starts the year with a net profit of €61.2 million.
Coface, a credit insurance, has had a solid start to the year, reporting a €61.2 million net income for the first quarter of 2023. The total revenue result is 17% higher than the €52.3 million net income figure announced by Coface in the first quarter of 2022.
The profit from operations for the quarter was €90 million, a 11.4% rise over the previous year’s €80.8 million. Simultaneously, Coface reported €395.3 million in gross earned premiums for Q1, a significant increase from €359.2 million in Q122.
In addition, the credit insurance reported a consolidated turnover of €475.1 million, up 11.4% at constant perimeter and FX compared to Q122.
At constant perimeter and FX, insurance business turnover climbed +10.9% (including surety bonds and single risk). The institution reported that growth was aided by an increase in client activity as well as a record retention rate of 95.7%, up +0.9% from Q122.
Its combined ratio net of reinsurance was 66.2% for the quarter, up 1.8 percentage points year on year and 7.2 percentage points from the prior year’s quarter.
The gross loss ratio was 40.7%, up 9.2 percentage points year on year. Coface observed that this statistic reflects an uptick in claims frequency after H121, with the number of claims approaching pre-COVID levels, as well as the return of relatively big claims, which remain below average. Reserve releases continue to be high.
Xavier Durand, Coface’s Chief Executive Officer, commented:
“Coface maintained its growth trend with an 11.4% increase in turnover and a record customer retention rate. Other activities, including service revenues (information sales, debt collection and fee and commission income) continued to grow double digits, once again proving the solidity of Coface’s business model.
While helping moderate inflation, ongoing monetary tightening by the main central banks also revealed weaknesses in a financial system that had become accustomed to very low rates. Fears arising from the bankruptcies of US regional banks will likely lead to a general reduction in the corporate credit supply.
The first quarter of 2023 is also the first to which the IFRS 17 and IFRS 9 accounting standards were applied. These standards did not cause any major changes to the assessment of Coface’s financial performance, which remains strong. Under this new accounting framework, Coface posted a 17% increase in net income to €61.2m and a net combined ratio of 66.3% for an annualised return on tangible equity of 13.6%, above mid-cycle targets.
Lastly, following the general meeting of 16 May, a dividend of €1.52 per share (which corresponds to 80% of our 2022 earnings) was paid on 24 May 2023.”
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