Credit insurer Coface recorded a strong start to the year with €61.2 million in net income for the first quarter of 2023.
The net income figure represents a 17% increase from the €52.3 million net income figure reported by Coface in the first quarter of 2022.
Operating income for the quarter stood at €90 million, an increase of 11.4% compared to last years €80.8 million.
At the same time, Coface recorded €395.3 million in gross earned premiums for Q1, a significant 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 increase of 1.8 ppt year on year and 7.2 ppt compared to last year’s quarter.
The gross loss ratio stood at 40.7%, up 9.2 ppts year on year. Coface noted that this figure reflects an increased frequency of claims since H121, with the number of claims close to pre-COVID levels, and the return of relatively large claims , which however remains below average. Reserve releases remain high.
Xavier Durand, the Chief Executive Officer of Coface, commented: “Coface maintains its growth trajectory with an 11.4% increase in turnover and a record customer retention. Other activities, including service revenues (information sales, debt collection and fee and commission income) continue to grow in double digits, once again proving the strength of Coface’s business model.
“While helping to moderate inflation, continued monetary tightening by major central banks also exposes the weaknesses of a financial system accustomed to very low rates. Fears arising from the bankruptcy of US regional banks will likely lead to a general reduction in the supply of corporate credit.
“The first quarter of 2023 is also the first in which IFRS 17 and IFRS 9 accounting standards are applied. These standards do not cause any major changes in the evaluation 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 annualized return on tangible equity of 13.6%, above in mid-cycle targets.
“Finally, after the general meeting on May 16, a dividend of €1.52 per share (which corresponds to 80% of our earnings in 2022) was paid on 24 May 2023.”
