Credit insurer Coface has announced the launch of its 2024-2027 strategic plan, Power the Core, with a view to develop a global ecosystem of reference for credit risk management.
With the new plan, Coface looks to build upon the successes of the previous strategic plans, like Fit to Win and Build to Lead, launched for the 2020-2023 period.
These plans have laid strong foundations – despite some having been executed in a particularly shaky environment: pandemic, inflation outbreak, brutal rise in interest rates, war coming back in Europe – which will support the new plan’s development, the firm stated.
They have helped built a best in industry risk infrastructure, developed a high-performance sales organisation in key markets, and simplified its operating model.
As well as established Business Information services (BI) foundations, defined a clear Corporate Social Responsibility roadmap, and nurtured a strong leadership culture.
Power the Core aims at developing a global credit risk management ecosystem of reference. The frim explained: “Coface’s conviction is intact: Trade Credit Insurance is a service business which exhibits high barriers to entry, is growing and among which Coface has built the best risk infrastructure in the market.
“The latter relies on proprietary data and scores, a global reach, a worldwide technology platform, a through-the-cycle underwriting experience, a robust regulatory and legal set up and a strong balance sheet.”
Power the Core will deepen and broaden the quality of Coface’s franchise, particularly targeting to reach data and technology excellence by investing to build new differentiating data and scoring capabilities, integrating the most modern modelling techniques, data science and artificial intelligence in particular.
The plan will also aim to deepen and broaden Coface’s historical Trade Credit Insurance (TCI) franchise. “Risk underwriting will remain disciplined while we will continue to invest for growth, especially on the SME and Mid-market segments, and deliver on the simplification of the customer experience,” Coface stated.
It will also pursue profitable double-digit growth in Business Information services. This would be achieved by investing to keep building sales teams with consistency, broaden data sourcing, expand use cases, and upgrade IT platforms, the firm noted.
Finally, Power the Core will aim to leverage Coface’s “unique culture of a human-sized multinational with a strong commitment to sustainability.”
Xavier Durand, Coface’s Chief Executive Officer, said: “The numerous successes of our strategic plans Fit to Win and Build to Lead have built solid foundations for Coface. We have demonstrated that our businesses complement each other, allowing for the development of a credit risk management ecosystem of reference to increase our value proposition to our customers.
“Our new plan Power the Core aims at building upon our strengths and our employees’ commitment and expertise in order to accelerate our transformation. We will in particular deliberately invest in data and technology, for our Trade Credit Insurance and our Business Information services. We will further reinforce our leadership in credit insurance while pursuing a double-digit profitable growth in information services.
“In order to reach these ambitious targets, we will leverage our unique culture of a human-sized multinational, dedicated to its clients and deeply committed to our responsibilities in sustainability matters.”
Power the Core will also give Coface ambitious financial targets for 2027 and beyond, such as an undiscounted combined ratio of ~78% through-the-cycle, a 2 ppts improvement compared to the previous plan.
Other targets include a return on average tangible equity of 11.0% through-the-cycle; a solvency ratio towards the upper end of the 155%-175% target range with a payout ratio of at least 80% of net income; and an additional contribution from Business Information services to group RoATE of 50bp starting in 2027.
Durand continued: “Finally, despite the numerous shocks, be it economic, financial, or political, Coface’s solvency has constantly remained above its target range which permitted to Coface to be in 2020 one of the very first European insurance companies to restart, with a share buyback, returns to shareholders.
“In 2019, the Business Information services were still relatively immature. Since then, they pursued their development and confirmed their growth potential. This activity has strong synergies with Trade Credit Insurance and relies on the same risk infrastructure. It is currently profitable despite significant growth investments. The growth of this pure service activity, which requires no regulatory capital, reached 13% on average between 2019 and 2023.”
