• Net Income: EUR53 million in Q4; EUR261 million for the full year, up almost 9% from 2023.
• Total Revenue: Down 0.6% from 2023.
• Insurance Revenue: Decreased by 2.2%.
• Client Retention Rate: 92.3%.
• Pricing: Down 1.4%.
• Information Business Growth: Over 16% increase.
• Factoring: Stabilized with a slight increase of 0.3%.
• Loss Ratio: Improved by 2.5 points to 35.2%.
• Combined Ratio: Increased by 1.2 points to 68.7% in Q4.
• Cost Ratio: Increased by 3.6%.
• Solvency Ratio: 196%.
• Dividend Per Share: Proposed at EUR1.4, up EUR0.10 from last year.
• Return on Average Tangible Equity: Almost 14%, up 0.5 points from 2023.
• New Business Production: Increased compared to 2022 and 2023.
• Net Combined Ratio: 65.5%, up 1.2 points from last year.
• Investment Portfolio: Valued at almost EUR3.3 billion, with a yield of 4.1%.
• Recurring Investment Income: Increased from EUR65 million to EUR97 million.
• Book Value Per Share: EUR14.7; Tangible Book Value Per Share: EUR13.1.

• Warning! GuruFocus has detected 5 Warning Signs with AXTI.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Coface SA (CFACY) reported a net income of EUR 261 million for 2024, marking an increase of almost 9% from the previous year.
• The company maintained a high client retention rate of 92.3%, indicating strong customer loyalty.
• Coface SA (CFACY) achieved a return on average tangible equity of nearly 14%, which is the best performance under IFRS 17 rules.
• The solvency ratio remains strong at 196%, well above the target range, ensuring financial stability.
• The acquisition of Cedar Rose in the Middle East is expected to enhance Coface SA (CFACY)'s information services in a challenging region for data quality.

Negative Points

• Total revenues slightly declined by 0.6% compared to 2023, with insurance revenue down by 2.2%.
• The combined ratio increased by 1.2 points, indicating higher costs relative to premiums earned.
• The cost ratio rose by 3.6%, driven by flat revenues and continued investments in sales, data, and technology.
• The environment remains challenging with rising insolvencies, particularly in major economies, which are 20% to 30% higher than in 2019.
• The company faces uncertainties related to tariffs and potential trade wars, which could impact future operations.

Q & A Highlights

Q: Can you provide insights into the buffers built up in your reserves, given the shift from 75% to 85% in the initial aspects? A: Xavier Durand, CEO, explained that the reserve levels have been consistent, with a slight increase due to the normalizing environment post-COVID. The risk level has been rising steadily over the last three years, and the company maintains a prudent approach to reserving.

Q: Is the 3.4% growth in Q4 a new trend for Coface? A: Xavier Durand, CEO, noted that while Q4 showed a 3.4% growth, it is too early to call it a trend. The company is transitioning from a high inflation environment to a more stable one, but future growth rates remain uncertain due to potential market fluctuations.

Q: How does Coface view the potential impact of tariffs and changing trade flows on client activity? A: Xavier Durand, CEO, stated that while there is noise around tariffs, no significant actions have been observed yet. Supply chains cannot be shifted overnight, and while some gradual shifts have been seen, the main concern for clients is where to invest amidst uncertainties.

Q: With a solvency ratio far above the target range, how is Coface managing excess capital? A: Xavier Durand, CEO, explained that the company aims to balance safety and growth opportunities. The excess capital allows for funding growth, acquisitions, and rewarding shareholders, maintaining a strong position in a volatile environment.

Q: How does Coface's current performance compare to its strategic targets set for 2027? A: Xavier Durand, CEO, acknowledged that Coface is performing well against its strategic targets, with strong results in 2024 despite a challenging environment. The company remains focused on long-term goals and continuous improvement.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.