Coface to back further state-backed credit insurance schemes

Xavier Durand, CEO of France-based international credit insurance group Coface, reported that the company has now entered into agreements with 11 different national governments to participate in state-backed credit insurance schemes to help businesses cope with the effects of Covid-19, and is in discussions to create such schemes in other countries.

Mr Durand revealed that the credit insurer is in continued talks over further state-backed credit insurance schemes as he reported the group’s second-quarter numbers.

Coface reported a net profit of €11.3m for the second quarter of this year. Turnover was €725m, down 0.6% at constant FX. The group reported that client retention and new business generation reached record levels, with a positive net production of €33m. The first effects of repricing are now “visible”, said the group.

Its second-quarter net loss ratio was 57.4%, up by 13.4 percentage points. The net combined ratio, net of reinsurance, for the first half of this year stands at 88.6%. This is a rise of 12.6 points compared to the first half of last year.

Coface said the net loss ratio was supported by the positive impact of new government-backed schemes, which explains why the group is keen to continue to participate in further such solutions.

“Over the first six months of the year, Coface’s teams have achieved very high levels of performance and engagement, despite the unusual and difficult operational and economic conditions. Our client retention and new business hit record high levels, resulting in a positive net production. We are also seeing the initial effects of our portfolio repricing efforts,” explained Mr Durand.

“On the risk side, we have consistently pursued preventive measures while ensuring that we exercise good judgement in our underwriting decisions. Many governments have recognised the important role that credit insurance plays in maintaining business-to-business credit. Coface has already finalised 11 government agreements and is continuing further discussions with other countries,” he added.

Coface has been actively pursuing the creation and enhancement of existing state-backed credit insurance schemes, along with other leading credit insurers, to help businesses through the pandemic crisis.

It announced as early as April that it was working with the French government to relaunch the exceptional complementary public credit insurance scheme, which was initially set up in 2008.

The same month, it revealed that it and other credit insurers would support efforts by the German government to set up a €30bn “protective shield” to secure supplier credits for companies and to “support the economy in difficult times”.

Coface said it is was also cooperating in the programme for domestic and export business. “With this cooperation, credit insurers can maintain existing cover commitments and take on new ones, despite the considerably increased risk of default,” explained Coface, in a move welcomed by German risk and insurance management association GVNW.

Then, in May, the credit insurer revealed it was supporting a new credit reinsurance programme in Belgium to support the guarantees provided for supplier credits to Belgian companies.