The rating agency Moody’s, on 28th September 2023, has upgraded the financial strength rating (Insurance Financial Strength Rating – IFSR) for Coface to A1 from A2. The agency has also changed the outlook for Coface to stable from positive.
Moody's Confidence in Coface's Sustainable Performance
In its press release, Moody’s highlights that this rating reflects “the increasing diversification of the group and the enhanced monitoring and improved management of credit risk exposures, which Moody's expects to result in lower volatility in profits and make the insurer better placed to weather an economic downturn. The upgrade also reflects the good capitalisation level maintained by the group since 2020 and the improvement in asset quality.”
In addition, Coface’s profitability has been very strong in the last five years, with an average combined ratio of 71% between 2018 and 2022.
Moody’s also believes that, since 2016, “the group has improved its risk monitoring processes and it has been more proactive to adjust its risk portfolio. Even if earnings volatility will remain a feature of the credit insurance industry, Moody's expects volatility to remain moderate.”
Last, in its outlook, the rating agency underscores that this “stable outlook reflects Moody's expectation that Coface will maintain a Solvency II ratio above 180%, a leverage ratio below 30% and that the group will not increase meaningfully its underwriting or asset risk appetite.”
A "high level of service"
We are very pleased with the upgrade from Moody’s to A1. This rewards Coface teams’ work and recognizes the high level of service offered to our clients. It also recognizes Coface’s agility and resilience, as well as the quality of its risk management, which are at the heart of our culture and expertise. Coface is on track to deliver its Build to Lead strategic plan and is actively preparing the next chapter that will be presented on 5th March 2024.
- Phalla Gervais, Chief Finance & Risk Officer