Credit insurer Coface has reported its full-year 2023 results, with flat net income at €240.5 million and underwriting income growth of more than 13% to €395.4 million and a combined ratio, net of reinsurance, of 64.3%.
Alongside flat net income, insurance revenue increased 2.9% year-on-year to €1.6 billion, as services revenue rose 9% to €309.2 million, resulting in total revenue growth of 3.8% to €1.9 billion.
In terms of insurance revenue growth, the firm highlights a rise in client activity in the first half of the year, but adds that this fell into negative territory in the second half following a decline in inflation and the economic slowdown.
The retention rate reached a record level of 93.1%, but boosted by an increase in demand, new business rose to €117 million, up €7 million compared to 2022.
While the underwriting performance improved year-on-year, for 2023, Coface has reported a 65% dip in investment income to €12.4 million. Group-wide, operating income rose 1.6% to €362.9 million.
The 3.3 percentage point improvement in the combined ratio to 64.3% is comprised of a loss ratio, net of reinsurance, of 37.7% and cost ratio, net of reinsurance, of 26.6%, reflecting an improvement of 2 percentage points and 1.3 percentage points, respectively.
Xavier Durand, Chief Executive Officer, Coface, commented: “Coface delivered another strong year in a volatile and relatively weak global economic environment in 2023. Our turnover rose +6.0% at constant FX over the year due to an excellent first half, client retention which remained at record highs and an increase of service revenues. Business information revenue was up +23.4% in the last quarter, with FY growth of +17.3%, confirming this activity’s growth potential.
“Annual net income under IFRS 17 was stable at €240m thanks to an excellent underwriting margin, leading to an annualised RoATE of 13.4% despite the negative impact of the fall of certain foreign currencies (Argentina, Turkey) and a drop in real estate prices, which affected our net income. In an increasingly uncertain environment, Coface’s teams confirmed their dedication to and their high level of expertise at the service of our clients.
“We will propose a dividend of €1.30 per share at the Shareholders’ Meeting, representing a payout ratio of 81%3. This is in line with the ambitions of the Build to Lead strategic plan – the objectives of which have all been met or exceeded. We will present our new strategic plan 2024 – 2027, on 5 March.”
In terms of outlook, Coface says that the most pessimistic scenarios for 2023 did not materialise.
“While the Chinese economy continued to disappoint, the United States continued to surprise on the upside. The economic impact of higher interest rates was delayed in an environment of full employment and still strong corporate balance sheets,” says the firm.
“The most notable point of the year was the generalised decline in inflation through the second half of the year due to proactive coordinated actions of central banks and the fall of energy prices despite an increasingly tense geopolitical environment,” adds Coface.
For this year, Coface anticipates a “drawn-out soft landing for the global economy”, with growth expected at +2.2% after +2.6% last year.
“Downside risks are real, in particular due to the unprecedented number of political elections in the world, culminating with the US presidential election at the end of the year.
“As expected, business failures continued to rise, sometimes above pre-pandemic levels. However, the many preventive measures taken by Coface so far avoided a spike in recorded claims. While the number of claims has not yet reached 2019 levels, the total claims amount is now equivalent,” says Coface.
