Coface revenues down amid ‘sluggish’ economy
Global growth forecast rises but well down on past decade
Credit insurer Coface has reported a 10% rise in net income during the first half amid a “sluggish economic environment” that saw revenues fall by 5.2%.
The insurer has also slightly raised its global growth forecast for this year and 2025 but stressed the prediction remains “substantially lower” than the pace of growth for the previous decade.
Net income of €142.3m helped offset a drop in turnover at Coface, which was down by €923m in the first six months of the year.
Insurance revenues fell by 5.3% from a record high, due partly to the continuing decline in inflation and a lack of a rebound in clients’ activities.
Client retention remained high at 92.8% in H1 thanks to risk mitigation plans, while new business rose to €69m, an increase of €6m compared to H1 2023.
However, client activities have not returned to growth and were slightly negative at -0.1% for the first half of the year.
The decline in insurance revenue in H1 was somewhat offset by non-insurance activities, which were up by 7.9% compared to the same period in 2023. More specifically, Coface’s information services rose by 16.9%, while debt collection commissions were up by 20.3%, albeit from a low base.
Turnover was down across all regions apart for the Mediterranean and Africa region, which includes Italy and Spain, where it rose by 6% driven by robust sales in credit insurance and services and a stronger economic environment.
Coface’s combined ratio net of reinsurance stood at 63.4% for H1, an improvement of 2.1 percentage points year on year and almost flat against the previous quarter.
In terms of the economic outlook, Coface has raised its global growth rates to 2.4% and 2.7% for 2024 and 2025 respectively. The growth in emerging markets should offset the moderate growth in the US and China, it said.
However, inflation is only likely to come back in line with central bank targets of 2% if there is a decline in the labour market or in the company’s operating margins, which raises the risk of more corporate failures, it added.
Heightened political risk due to multiple national elections and ongoing conflicts are also potential headwinds, said the insurer.
