COFACE (COFA) Q2 2024 earnings summary

Executive summary

• Net income for H1 2024 reached €142.3m, up 10.4% year-over-year, with annualized ROATE at 15.3% and strong solvency at 195%.

• Turnover declined by 3.1% at constant FX and perimeter to €923m, mainly due to a 5.3% drop in trade credit insurance premiums.

• Services revenue grew 6.5%, with business information up 16.9% and third-party debt collection up 20.3%.

• Combined ratio improved to 63.4%, with a net loss ratio of 35%, reflecting robust risk management and high reserve releases.

• AM Best upgraded the rating to A (excellent) with a stable outlook.

Financial highlights

• Operating income increased by 17.5% year-over-year to €217.2m.

• Other revenues rose 6.5%-7.9%, with third-party debt collection up over 20%.

• Net financial income reached €40.8m, with investment portfolio income at €48.9m and accounting yield at 1.7%.

• Shareholders' equity stood at €2,002.9m, down 2.3% from year-end 2023, mainly due to dividend payments.

• Book value per share at €13.4; tangible book value per share at €11.8.

Outlook and guidance

• Management refrained from providing forward-looking statements due to economic uncertainty, but continues to invest in business information, technology, and services as part of the Power the Core plan.

• Global growth forecast slightly raised to 2.5% for 2024 and 2.7% for 2025, but persistent inflation and political risks may challenge margins.

• Strategic focus on growing business information and services to offset short-term declines in trade credit insurance.