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2016-02-09

Coface SA FY-2015 results: net income €126M and proposed dividend stable at €0.48 per share

Paris, 9 February 2016

Coface 2015 results: net income €126M and proposed dividend stable at €0.48
per share
5

* Growth in turnover: 3.4% at current scope and exchange rate (+1.2% at
constant scope and exchange rates)
* Loss ratio net of reinsurance stabilized over the last six months; combined
ratio at 83.1%
* Net income (group share): €126M for 2015, €28M in 4Q
* Stable net income per share at €0.80, distribution rate560% of net income
* Xavier Durand takes over as CEO as of today

Unless otherwise stated, variations are expressed in comparison with results
at 31 December 2014
Published results for 2014 have been restated to take into account the impact
of
IFRIC 21
The annual results 2014restated from IFRIC 21 are equivalent to those
published in 2014

At the end of 2015, a year marked by a deterioration in the global economic
environment, Coface recorded a slight increase in net income (group share),
at €126M (€125M in 2014). Turnover for the year grew by 3.4% (+1.2% at
constant scope and exchange rate), supported by emerging markets. The Group's
loss ratio net of reinsurance has stabilized over the last six months, at
52.5%. Coface is prepared for Solvency II, which came into force on 1 January
2016. The ratio of capital required to cover subscribed risks stands at
147%7, a level in line with Coface's risk appetite and dividend pay-out
policy of 60% of net income.

On the basis of its net income per share, stable at €0.80, the Group will thus
propose a dividend5of €0.48 per share.

Key figures as at 31 December 2015

The Board of Directors of COFACE SA examined the consolidated financial
statements for FY 2015 during its meeting on February 9th2016. These were
subject to review by the Audit Committee. Non-audited financial statements;
they are being certified.

----------------------------------------------------------------------------------------------------------
| Income statement items in €m 2014 2015 Change Change |
| |
| 2015 vs. 2014 re |
| *restated IFRIC 21 stated IFRIC 21 like-for-like[1] |
| Consolidated revenues 1,440.5 1,489.5 +3.4% +1.2% |
| Of which gross earned premiums 1,132.7 1,185.9 +4.7% +2.0% |
| |
| Underwriting income after reinsurance 166.2 143.4 -13.7% |
| Investment income net of expenses 42.8 53.1 +24.1% |
| |
| Operating income 199.0 192.3 -3.4% |
| Operating income, 206.1 194.1 -5.8% -6.1% |
| |
| |
|excluding restated items2 |
| |
| Net result (group share) 125.0 126.2 +1.0% +1.1% |
| Net result (group share), 139.9 140.9 +0.7% +0.8% |
|excluding restated items2 |
| |
| Key ratios (in %) 2014* 2015 |
| Loss ratio net of reinsurance 50.4% 52.5% +2.2 ppts. |
| Cost ratio net of reinsurance 29.3% 30.5% +1.2 ppts. |
| Combined ratio net of reinsurance 79.7% 83.1% +3.4 ppts. |
| |
| Balance sheet items - in €m 31/12/2014* 31/12/2015 |
| Total equity 1,724.5 1,767.0 |
| |
----------------------------------------------------------------------------------------------------------

*Published results for 2014 have been restated to take into account the impact
of IFRIC 21
The annual results 2014 restated from IFRIC 21 are equivalent to those
published in 2014
1 Turnover

In 2015, Coface's consolidated turnover was €1 489.5M, up 3.4% compared with
2014 (+1.2% at constant scope and exchange rates). This increase is a
consequence of the commercial strategy implemented by the Group, based on
product innovation, multi-channel distribution and the strengthening of its
sales processes and sales monitoring.

New contract production was lower than in the previous year, which was marked
by the signature of some large contracts. Retention of our client portfolio
was good, at 88.2%.

The competitive environment and sound profitability of contracts in mature
markets weighed on pricing throughout 2015. However, this price pressure
remained controlled: the price effect on contracts was stable compared to 30
September 2015, at -2.4%.

------------------------------------------------------------------
| Turnover in €m 2014 2015 Change Change |
| |
| like-for-like1 |
| Western Europe 461.7 457.2 (1.0)% (2.5)% |
| Northern Europe 352.0 334.9 (4.9)% (3.8)% |
| Mediterranean&Africa 226.5 246.4 +8.8% +8.5% |
| North America 113.8 131.3 +15.4% (0.6)% |
| Central Europe 113.3 114.9 +1.4% +1.4% |
| Asia Pacific 97.1 121.3 +25.0% +10.8% |
| Latin America 76.1 83.5 +9.6% +16.7% |
| Consolidated turnover 1 440.5 1 489.5 +3.4% +1.2% |
------------------------------------------------------------------
Growth in the Group's turnover was supported by emerging markets. In the
United States, the reorganization of the entire country's agency network
explains the contraction in performance. In mature markets, where contracts
profitability is higher, competition remained fierce and put pressure on
prices.

1 Results

* Combined ratio

The loss ratio net of reinsurance stood at 52.5%, stabilized over the last six
months as a result of reducing exposure to the most fragile companies and
sectors. During this period Coface continued to reduce its coverage,
particularly in emerging markets, and the effects of this approach are
materializing progressively, depending on the payment behavior.

Internal overheads remained under control: excluding exceptional items3these
decreased by 1.8% at constant scope and exchange rates (-0.5% at current
scope and exchange rates), a level significantly lower than growth in
premiums, which was up 2.0% (+4.7% at constant scope and exchange rates). The
distribution costs grew faster than premiums in 2015, due in particular to
stronger turnover growth in regions where contracts are commercialized
through brokers or partners. The cost ratio net of reinsurance was 30.5% at
31 December 2015, and 29.5% excluding exchange rate effects and exceptional
items, an increase of 0.2 points compared with 31 December 2014.

In total, the combined ratio stood at 83.1% at 31 December 2015, up 3.4 points
compared with 31 December 2014, reflecting the deterioration in the
macro-economic environment over the last year.

* Financial income

Thanks to the diversification of the financial portfolio, illustrated by
investments made in non-quoted pan-European real estate funds, financial
income4was €53.1M (of which €4.5M externalization of capital gains) at 31
December 2015, against €42.8M (of which €8.4M externalization of capital
gains) in 2014.

* Operating income and net income

Excluding restated items, operating income2stood at €194,1M and net income
(group share)2at €140.9M.

On the basis of net income per share of 0.80, a dividend5of €0.48 euro per
share will be proposed for 2015, an amount stable compared with 2014.

1 Financial solidity - Solvency II

At 31 December 2015, IFRS equity (group share) was €1 760.9M. The change in
equity is mainly the result of positive net income of €126.2M offset by the
distribution of €75.5M to shareholders and a decrease in re-evaluation
reserves of financial assets ready for sale.

Coface is prepared for the new regulatory framework, Solvency II, which came
into force on 1 January 2016. In this context, Coface plans to complete its
capital management tools and intends to set up a contingent capital line to
protect its solvency during extreme case scenario6.

Calculated on the basis of the standard formula, the coverage ratio of
required capital to insurance and factoring risk coverage was 147%7, a level
in line with the Group's risk appetite and dividend5pay-out policy of 60% of
net income per share, proposed again this year.

Ratings agencies Fitch and Moody's reconfirmed the Group's ratings (IFS) at
respectively AA- and A2 (stable outlook), on 17 September and 13 October
2015.

1 Transfer of public guarantees activity

Work is on-going by Bpifrance to prepare for the transfer of public guarantees
activity currently carried out by Coface on behalf of the French State. The
transfer is subject to modification of the applicable legislative and
regulatory framework8, which will come into effect by decree. Coface will
continue to be remunerated by the French State until the transfer of this
activity becomes effective, at a date which is not yet known.

1 Outlook

The current macroeconomic environment is demanding (weak growth in advanced
economies, greater risks in emerging markets, and the volatility of financial
markets), and no significant change in this situation is anticipated for the
year 2016. In the absence of significant rebound in global activity, and
taking into accoun...

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