Credit insurer Coface has reported its first quarter of 2024 results with an improved combined ratio of reinsurance and a net income of €68.4m, up 11.9% compared to the same period the year prior.
For this year’s Q1, the insurer also recorded a consolidated turnover of €464m, down -1.6% at constant FX and perimeter.
According to the firm, trade credit insurance premiums decreased by -3.3%, due to a decline in inflation and the economic slowdown; growth in client activities was nil at the start of the year, after two negative quarters in 2023.
Coface’s client retention remains high at 93.8%, but down compared to Q1 2023; pricing effect remained negative at -1.3% in Q1-24 but improved slightly compared to Q1-23 (-1.5%).
This is largely due to very low past losses offset by the current normalisation environment, the insurer explained.
At 63.1% for Q1 2024, Coface’s combined ratio net of reinsurance saw an improvement of 3.2 ppts year on year and 4.1 ppts compared to the previous quarter.
Net loss ratio also saw improvement, growing 4.9 ppts, to 35.8%; as well as its net combined ratio, which at 63.1% improved by 3.2 ppts.
Gross loss ratio grew 7.5 ppts, to 33.2%, with stable opening year reserving and high reserve releases, Coface noted.
Additionally, net cost ratio was up by 1.6 ppt to 27.3%, a figure that reflects lower revenues and continued investments partially offset by better product mix.
Meanwhile, Coface’s net financial income was +€17.9m over the first quarter. This amount includes realised capital gains, which more than offset negative market value adjustments on real estate investments (-€6.5m) and an FX effect of -€2.7m, mostly due to the application of IAS 29 (Hyperinflation) in Turkey and Argentina (service company).
Xavier Durand, Coface’s Chief Executive Officer, commented: “Our results for the first quarter demonstrate the good execution of our strategy and reflect the current economic cycle. Our credit insurance revenues were affected by the decline in inflation and sluggish client activity, and they were down 3.3%, against a high comparison basis.
“Negative repricing has eased (-1.3%) in a still competitive market while our new business picked up, on the back of our past investments, in particular in the mid-market segment. Service revenues, which are less cyclical, continued their double-digit rise.”
He concluded: “Consistently with the strategy developed in our Power the Core plan, we continued to invest in our risk infrastructure, to better serve our clients.
“Last, our net income increased by +11.9% year on year, to €68.4m, as the combined ratio remained under control at 63.1%. RoATE stood at 14.8%, above our mid-cycle objectives.”
