Coface profits up 80% but reports setback in northern Europe

Overall net profits rose to €129m in 2012, compared to €71m in 2011. However results were not as bright in northern Europe, which include Germany, the Netherlands, Denmark, Sweden and Russia. The insurers posted a drop in premiums of almost 12% to €254m for this region.

Coface blamed the fall on a reduction in its German factoring business. “In the wake of the new group strategy we have temporarily withdrawn from large debt volumes in Germany and are now concentrating on small and medium-sized debt volumes,” Coface spokesman Erich Hieronimus told Commercial Risk Europe. “As a consequence we also lost business in our core business credit insurance.”

In the past three years the credit insurer has undergone a period of unrest. When Coface’s parent company Natixis, an investment bank belonging to the French saving and cooperative banks, replaced CEO Jerome Cazes with Jean-Marc Pillu in 2010 the company also changed its strategy.

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It refocused on credit insurance, sold its third-party credit recovery business and its factoring operations outside of Poland and Germany.

Additionally, Coface’s Paris management streamlined the structure of its European credit insurance activities and merged the German, Austrian and Italian subsidiaries and their branches. Coface now operates its credit insurance activity through a single risk carrier.

Due to the substantial drop in northern Europe income, the group’s premium income increased only slightly by 3.1% in 2012 to €1.15bn. Total turnover-including fees-rose by 1.4% to €1.57bn. The combined ratio improved slightly by 0.5% to 82.2%.

Mr Hieronimus denied rumours that the German branch office has instructions from France to cut 100 jobs. “In the context of normal business processes there are talks with a few employees to think about withdrawing from their job at Coface, but there are no general instructions from the Paris management about job cuts of a larger dimension.”

However, Coface’s management has banned new recruitment, he admitted. In Germany Coface has about 650 employees, in the whole northern European region more than 1000.

The credit insurer does not expect an improvement in the trading environment through 2013. It is prepared for hard economic conditions, especially in Europe, while prospects in emerging markets are brighter.