AM Best Upgrades Issuer Credit Ratings of Coface SA’s Main Operating Subsidiaries

AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating of A (Excellent) of Compagnie française d’assurance pour le commerce extérieur (la Compagnie) (France), Coface North America Insurance Company (CNAIC) (USA) and Coface Re SA (Coface Re) (Switzerland), which are subsidiaries of Coface SA (Coface), the non-operating holding company of the Coface group. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Coface’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management. The ratings of la Compagnie and CNAIC consider their strategic importance to the Coface group as key operating entities. Coface Re is strategically important to the group as its sole intragroup reinsurer.

The rating upgrade of the Long-Term ICRs reflects the improvement in Coface’s operating performance to a level considered supportive of AM Best’s strong assessment. The group achieved strong results in 2022 and 2023, reporting net income of EUR 283 million under IFRS 4 (EUR 240 million restated under IFRS 17) and EUR 241 million under IFRS 17, respectively, driven by an overall good claim experience. Technical performance is supported by significant and consistent positive prior-year development, driven by the group’s conservative reserving methodology. AM Best notes that the group’s prospective performance may be subject to volatility, driven by the uncertain global operating environment. However, the group is able to take prompt risk-mitigating actions on non-performing business when required, and AM Best expects cross-cycle performance metrics to remain supportive of the strong assessment.

Coface’s balance sheet strength assessment is underpinned by consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the group’s risk-adjusted capitalisation to remain at the strongest level prospectively, supported by good internal capital generation. Offsetting factors include significant operating leverage, driven by the group’s factoring business, and a high dependence on reinsurance, although the associated risks are moderated by the group’s well-diversified, high credit quality reinsurance panel.

Coface’s favourable business profile assessment is underpinned by its leading position in the global credit insurance market, which is characterised by high barriers to entry. The group has made consistent investments in its pricing tools and data management capabilities, allowing it to maintain its competitive advantage. Although the group is largely a mono-line insurer, its exposures are well-diversified by geography and industry. Fee-based services and factoring businesses in Poland and Germany also provide some diversification.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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