In its press release, Moody’s highlights that this rating reflect “Coface strong capitalisation, good profitability and limited exposure to Russia. Coface has consistently maintained a group’s solvency ratio above 190% since 2020 and the ratio has a low sensitivity to financial and macroeconomic shocks. This low sensitivity was reinforced by recent improvements in the group’s asset quality.”
A very strong profitability
In addition, Coface’s profitability has been very strong in the last five years, with an average combined ratio of 75% between 2017 and 2021.
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”. Moody’s expects “these improvements to translate into less ample shocks on the group’s combined ratio going forward, even if earnings volatility will remain a feature of the credit insurance industry.”
Coface’s agility and resilience
Last, in its outlook, the rating agency underscores that this “change in outlook to positive from stable 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.”
- Phalla Gervais, Chief Finance & Risk Officer