Credit insurer Coface has recorded a strong start to the year with a €61.2 million net income for the first quarter of 2023.
The net income figure represents a 17% increase from the €52.3 million net income figure that Coface reported in the first quarter of 2022.
Operating income for the quarter stood at €90 million, an 11.4% increase compared to last years €80.8 million.
At the same time, Coface recorded €395.3 million in gross earned premiums for Q1, a substantial improvement compared to €359.2 million from Q122.
Elsewhere, the credit insurer also recorded a consolidated turnover of €475.1 million, up 11.4% at constant perimeter and FX compared to Q122.
Turnover from the insurance business (including surety bonds and single risk) increased +10.9% at constant perimeter and FX. Coface noted that growth benefited from a sharp increase in customer activity as well as a record retention level of 95.7%, up +0.9% compared to Q122.
Coface’s combined ratio net of reinsurance stood at 66.2% for the quarter, an improvement of 1.8 ppt year on year and 7.2 ppts compared to the previous year’s quarter.
Gross loss ratio stood at 40.7%, up 9.2 ppts year on year. Coface noted that this figure reflects an increased claims frequency since H121, with the number of claims close to pre-COVID levels, and the return of relatively large claims, which nevertheless remain below average. Reserve releases remain 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.”