Combined ratio increases by 1.3 points to 81.6% as claims rise

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French credit insurer Coface made a profit after tax of €68m in the first half of 2012, up 22.5% on the €55m it made in last year’s first half.

A big driver of the increase was the lack of restructuring costs, which reduced the first half 2011 profit by €8m. Excluding the restructuring costs, the first half 2012 profit was up 7%.

The higher profit came on the back of a 5.8% increase in overall turnover to €808m (H1 2011: €764m). Turnover in Coface’s core insurance business grew 7.2% to €766m (H1 2011: €715m). However, this was partly offset by a 14.3% drop in factoring turnover to €43m (H1 2011: €50m).

Coface chief executive Jean-Marc Pillu said: “In a deteriorated economic context, Coface has been able both to pursue its growth and support its clients through refined management of risk. Our performance in the first half of 2012 confirms the relevancy of our strategy to refocus on credit insurance.” 

Despite the increase in net profit, underwriting profitability deteriorates lightly. Coface’s combined ratio increased by 1.3 percentage points to 81.6% (H1 2011 80.3%).

Coface described the the combined ratio as “under control” and said it had been able to hold it relatively steady despite a higher claims rate. The company attributed this to its “refined management of risk”.

It also said that it had been able to control costs and improve operational efficiency. The cost ratio fell to 24.8% (H1 2011: 24.9%).

The increased profit allowed Coface to boost shareholders’ equity  by 5% to €1.5bn.

Coface H1 2012 results in €m (compared with H1 2011)

  • Total turnover: 808 (764)
  • Insurance turnover: 766 (715)
  • Factoring turnover: 43 (50)
  • Operating profit: 97 (77)
  • Operating profit excluding 2011 restructuring costs:  97 (86)
  • Net profit: 68 (55)
  • Net profit excluding 2011 restructuring costs: 68 (63)

Ratios (%)

  • Loss ratio: 56.8 (55.4)
  • Expense ratio: 24.8 (24.9)
  • Combined ratio: 81.6 (80.3)