Coface SA Stock

Good day, and thank you for standing by. Welcome to the Coface SA H1 2026 Results Presentation. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Xavier Durand, CEO. Please go ahead.

Thank you very much. Good evening. Welcome, everybody. Thank you for joining on the hot summer evening like this for our report on the midyear 2026. You will have seen from the numbers, we had a strong -- another strong quarter of execution in what I would qualify as a pretty tough environment at Coface.

Just reminding everybody of the headlines. Net income at EUR 108 million or close. Solvency at 194%, so a very strong position. We had a quarter in Q2 where we saw a relative rebound of volumes versus the first quarter. So insurance premiums grew 1.4% versus a negative 1.3% in Q1, and I'll explain a little bit more in the next pages where that comes from.

Most of the operating metrics, as you will see, have been strong. The retention is close to record at 93.6%. Pricing is negative, but above historic average at minus 1.3%. We continue to grow business information double digit, and including the total perimeter, the organic growth is 12% for the semester and 19.1% with the acquisition of Cedar Rose. Debt collection growing almost 32%, and also good news on factoring, which is up 3.5% after many quarters of subdued performance, I would say, in the current economy.

I think the other good news for the quarter is the losses. The net loss ratio is better by 2.7 points versus last year at 37.4%. That brings a strong combined ratio, which is stable at 71.3% for the first half. The net cost ratio has increased by 2.7% (sic) [ 2.7 percentage points ] as we continue to deliberately invest in line with our strategic plan, and I'll go through more of that detail in the next pages.

If we step back a little bit, we are now past mid-plan for Coface, 2.5 years into Power the Core. And we'll take a look at our main financial targets, but we are reconfirming these. And actually, over the last 2.5 years, we have beaten all of our metrics, combined ratio, return on average tangible equity, solvency and the payout ratio.

We -- as you know, we evolve in an environment which is both slower growth and also an acceleration in digital and AI and connectivity. We know that at this point, what matters most for us is the long-term value creation with the BI business versus short-term profitability. So we think that the guidance we've given around the 50 basis points RoATE contribution in 2027 is now irrelevant.

We are planning to, however, adjust the 2027 dividend, which will be paid out in 2028 upwards to compensate for the difference. As I said, net income at EUR 108 million, annualized RoATE at 10.9% with a strong solvency at 194%, which is almost 20 points above the upper range of our target. We've appointed 2 new Directors to the Board on the Arch representation, Hugh Sturgess, who is President and CEO of Arch Insurance International; and Christine Todd, who is the Chief Investment Officer at Arch Capital. So 2 strong appointments here of insurance professionals to the Coface Board and a lot of continuity on the Arch side.

On Page 5, I just remind everybody of the financial targets that we had set for Power the Core. And again, I'll say it, this is -- these metrics, these goals were how we plan to position the company over the course of the plan to be able to deliver. And if you look at the actuals in blue versus the targets, you see that we've actually done better. The average combined ratio for the first 2.5 years is at 72.2%, which is way lower than the 78% we had targeted, undiscounted in the plan.

As I mentioned, our solvency at -- is about 20 points above -- actually 21 points above the upper limit of the range that we targeted, 155% to 175%. We continue to pay out over 80% of our profits to shareholders on a regular basis and maintaining a high level of profitability through this cycle. And the RoATE to date is at 12.3%. And I'll just remind everybody that, obviously, this is influenced by the high level of equity that we retain in the business. So I would again qualify this as overperformance versus the plan that we had in place.

On Page 6, I just wanted to give you some perspective on the market. On the left-hand side, this is not news, but putting it in a graph like this, I think, highlights where we stand are the Global Corporate Insolvencies Index that we've developed to represent what's going on in the world. And you see that where we are in the cycle is actually at a peak in the last 13 years.

We thought things would stabilize a little bit this year, but actually, the events in the Gulf keep putting pressure on companies. So we see continued increases in insolvencies. You see the drop that happened after COVID when governments flooded the economies with, I would say, free money.

So that had a dampening effect on insolvencies and then there's been normalization since, and we've gone back to, I would say, a much more normal behavior here. But the point is we are at a tough place in the cycle. And on the top right hand, I think I just want to illustrate also the slowdown in the economy is weighing on our core markets here. It is not often that we see negative growth in our core markets in Europe, like the U.K. is down 5.5%, Germany, 5%, France, 4.5%, Netherlands, almost 1% or 0.5%. And then the traditional growth engines in the TCI markets, which are Spain and Italy, are still growing, but at much lower rates.

Italy has been a growth engine for this industry for many, many years and is now growing 3%. So my main comment here is global insolvencies at a decade high level. Premiums under pressure in our key markets. And that explains also why these low volumes drive intense competition and you still have pressure on prices. There's a lot of need for companies to invest and catch up in AI, make sure they stay up to the pace of what's going on in the market. So we see a tendency, and that's true across all of our businesses of large companies to delay large purchase decisions, whether it's in TCI or BI or others. And yet, I would say that Coface is outperforming on both volumes and margin. And I think that's just -- I wanted to put that in perspective of what the markets look like.

On Page 7, we have a regular update on CSR. I think I've already highlighted in the last quarter one, the key achievements that we've had in 2025 versus the interim goals that we had set for ourselves. And then the message is we pretty much beat every single target that we had set for ourselves. And I also highlighted the 2030 goals, new goals that we set, further improving our performance on the key pillars. What I can say is on responsible insurer, we continue to weigh carefully how we invest the portfolio to continue to drive down the carbon emissions carried by that book. So the efforts continue.

And in terms of being a responsible employer, our key goal here was to have 40% women in the top 200 jobs in the company. Now what's happened over the course of the last few years is we've added 1,000 jobs in the data, tech and digital space. And these are typically areas where -- which are male-dominated. So for us to maintain that ratio requires work, and we're really thoughtful and proactive in that area. And then as a responsible enterprise, we want to further reduce our own carbon emissions. And the focus right now is on responsible IT and procurement. So we're working our providers hard to make sure that they also do what's required to lower the emissions that are linked to them in our own accounting.

And obviously, we are switching all of our fleet of vehicles and things like this to 100% electric and renewable energies. In terms of the culture, we have an EcoVadis rating, which puts us in the top 23% of companies that they rate. A few years ago, we had a really strong MSCI rating as well.

I think there's space here, continuing to work on the way we report our business and the actual efforts that are ongoing in the business to continue to improve the way we meet the reporting needs of these agencies and continue to strengthen our rating. So not much to report, but the work continues.

On -- let's go to Page 9. So these are -- this is my, I think, 42nd presentation to this group. So the format, as you see, it doesn't change quarter-on-quarter. I'll just comment on Page 9 that, as I said, total revenue is up 0.8% A better quarter in Q2 than we had in Q1 with insurance revenue for the first semester up 0.1%. Our other revenues continue to drive the growth of the business at almost 9%. We spoke about BI growing 12% organic and 19% with Cedar Rose. Confirms actually that we are able to grow these acquisitions when we make them, we see a clear uptick from being integrated into the Coface network.

Third-party debt collection, up at 32%. Factoring having a good quarter, I mean, Q2 was almost 5%, which, as you know, we are mainly a factoring business in Germany and in Poland. And obviously, there's been a lot of work going on in that space and things seem to be rebounding a little bit. Good performance on fees, broadly stable, I would say, in terms of percentage of fees on premiums in a market which has a strong tendency to give away the fees in order to win the business. So I take it as a sign that our clients are willing to pay for the services that we provide alongside the insurance policy.

On Page 10, we have the usual breakdown by region. I think what you see here as the headline is subdued growth around the world. I mean, clearly, that affects a lot of areas, but it affects more Europe, I would say, than the Rest of the World. You see almost 0% growth in Western Europe, almost the same in Central Europe, but slightly better news actually in Northern Europe, which is -- includes Germany. And I already mentioned that within Germany, factoring has been doing pretty well. Med & Africa has traditionally been a growth engine for us, and it is still growing, but at a much lower rate. We used to see more like 5%, 6% growth on a regular basis. So we're down to 2%. We see that the Gulf region is holding up remarkably well.

I think the governments in the area are pouring money on the economy in an effort to sustain growth, and that's affecting us. Some FX in North America, but I think overall, outside of AI, a quite flat economy. I think the good news is more in the emerging markets. So you don't see it here in these numbers because we have tough comparisons for the first half of 2025. But underneath those numbers, there are good growth momentum in Asia. I think this is the place where I think a lot is happening today in the world.

Latin America, still growing much less than before, but there's a disproportionate amount of that business, which is actually driven by European contracts with an expansion in Latin America. So -- but when you look at it, I think at this stage, a lot of the growth in the world, around the world is driven by emerging markets.

On Page 11, we show the usual metrics of our performance. You see that new business is almost at a record. And I think they almost is because, as I said, we see large deals being slower. Companies are investing in AI, trying to save costs, trying to manage the situation in the Gulf and putting off where they can decisions that are not absolutely critical. In terms of retention, we're near a record, and that's been now for years quite stable. Prices are still negative, but they're a little bit better than they were last year and generally speaking, in the last few years. And then the activity that we get from our own clients' business growth is quite subdued at 1.5%. So that's really not exciting, but I think that reflects the world economy here.

On Page 12, we have an update on risk. I think the good news is that you see the sequence on the top left of the quarterly loss ratio before reinsurance, including claims handling expenses and the story is really flat quarter-on-quarter. When you look into the details here, you see that the number of claims is back to 2019 levels, so pretty stable. The amounts have grown because there's been quite a bit of inflation since 2019, and that's reflected in an average amount, which is up by 4.6%. At the same time, we've seen still pretty good severity with a limited number of large cases that have come to hit us. So keeping our fingers crossed here, I think the business is executing.

We haven't changed our reserving policy. We have opened the new vintage at a level of 81.2%, which you see as historically reflects, I would say, the political and economic uncertainty. So it's pretty conservative. And then we have enjoyed continued strong releases from the prior vintages here with almost 44% throwback from the prior vintages. So I would say, happy to not have much to report on the risk side actually.

You can see that on Page 13, I'm not actually going to spend any time here because there's really not that much to talk about. And I -- so I will just skip that one and go to Page 14, where we have the quarterly numbers. It's an easier sequence to follow. And again, here, there's really not that much going on. A very slight uptick in Western Europe. That's because of the Coface geography. We have actually Senegal in the Coface Western Europe segment. And as you know, that's a country that's going through a little bit of a challenge right now. But outside of that, there's really nothing going on in the Rest of the World. Latin America has volatility. I think every quarter, every single quarter, I comment on that, and there's no news here. But frankly, on the risk side, there's not much to talk about.

On Page 15, we talk about the cost. So -- as we've seen, the premiums are a bit better for the quarter. The cost is still growing 3.4% quarter-on-quarter. But for those of you who've been here for a long time, this is the second best quarter in 22 quarters in a row, so in 5 years. So we've highlighted how the cost increases are slowly coming down quarter-over-quarter, and that's true again this quarter. And if you look at what makes up the increase in the cost ratio on the top right-hand side, you see there's still 0.6 points that is driven by the difference in cost inflation versus premium inflation, but that's coming down, as I said. And the rest is really deliberate investments we're making.

I mean the business is performing, and we are investing deliberately according to our plan in sales for trade credit insurance, in connectivity and data and technology and BI and debt collection. So that's 2 points, I think cost increase, and we get 0.8 percentage points back this quarter from the increase in sales that we have in the services area. I can say that these investments are really important. They position us differently. They make us better at managing the core business, insurance. And I think it's the right choice in an environment which otherwise is quite subdued and not easy.

So that's what I have to say on cost, and I'm going to pass it over to Phalla to talk about the rest of the pitch.

Thank you, Xavier. Good evening, everybody. So let's go now to Page 16, from reinsurance side, we can see that the premium cession rate is stable compared to first half last year at 27.7%, while the claim sessions rate has increased from 23.3% to 26.5%. You know that our quota share, I think, is divided by -- well, there's 2 sections, right? On the TCI side, the quota share is 23%. But on our specialties, which is single risk and bonding, the quota share is at 50%. So it's really driven by the mix of our business, and we have been able to perform some of the reserves that we put naming -- I can name the Senegal one, for instance, 50% of reserves going back to the reinsurers that, that has increased. So as a result, I think we have the reinsurance income or loss for us, but income for them has moved from EUR 52 million last year to EUR 46 million this year.

Lead us to the next page, the net combined ratio, you see is a very good one at 71.3%, very stable compared to half year last year with a decrease in the net cost ratio and a decrease -- similar increase -- decrease in the net loss ratio. From a Q2 perspective, from Q2 '29 (sic) [ Q2 '25 ] to Q2 '26 has a decrease from 74% to 72.4%. And remember that last year, the 41.1%, there are some noises in terms of accounting related to the FX where you have a little bit more in the loss -- net loss ratio and the -- I would say, the FX gain will sit in the financial income. This year, I think it's a little bit back to normal, but still, I think we have a very good net loss ratio.

Let's move to next page, I think it's Page 18 now, financial portfolio. The mark-to-market stands at EUR 3.190 billion after the payment of our dividends of EUR 186 million at the end of May. Asset allocation-wise, no changes really with a high level of cash as usual, 14% of our assets held in cash or very liquid assets.

In terms of return on investments, you can see that if you look at the first line, which is the recurrent income for our investment portfolio before gain on sales -- gain and loss on sales, moving from EUR 52 million to EUR 53 million with an accounting yield moving from 1.7% to 1.8%. This is half year, of course. As usual, I would comment on the FX impact, of course, less than last year because of the U.S. dollars and related money has not moved or a little bit less volatile this year than last year. The minus EUR 2.4 million, I think there's 2 elements here. The first one, of course, we have the usual hyperinflation accounting in Turkey stands for minus EUR 8 million at half year.

And then you have the unrealized gain on FX of EUR 5.6 million, usually offset, you can see that in terms of geography of booking with the unrealized FX loss of EUR 9 million in the insurance finance expense line. Nothing more to be added, I think, on this page. So we can move to the next one. So the half year net income at EUR 107.8 million, down 13% compared to last year the same period. I think a little bit better than in Q1. So in Q1, the net income was down 13.7%. So we're improving on this front as well.

Lead us to the next page, Page 20, return on average tangible equity. I'll start with the IFRS equity, where we're moving from EUR 2.213 billion to EUR 2.166 billion. We paid our dividend, and we accounted for the net income of the period and then the minor changes related to interest rate movement, but not very significant, lead us to a decrease of our return on average tangible equity from 11.4% at the end of full year '25 to almost 11% at half year '26, of course, with a decrease of our net income compared to last year.

For this quarter, you know that half year, so we will comment on capital management, solid balance sheet. Total balance sheet at EUR 8.9 billion. We commented on investment portfolio at EUR 3.2 billion. The factoring assets, EUR 3.5 billion, reflecting the increase of our factoring activities backed by the factoring liabilities, which is for the refinancing that we have in front of this. Book value per share at EUR 14.5. I think we're trading at almost EUR 16. I think we're at EUR 15.80 something, which is above this level.

And then we can move to the next page, which is the solvency ratio moving from 197% at the end of December last year to 194%. You can see that the capital requirement has decreased the solvency ratio by 11 points, offset by the own fund generation, which is a good performance of our business.

This is just showing that we are financing our organic growth with the level of balance sheet that we have. On the right-hand side, as usual, you have the 2 types of stress test. The first one from the financial market shocks. We have already commented that previous quarters, the portfolio is pretty much derisked now, so we have -- we can cope with all the financial market shocks. And then the crisis scenarios, 1/50 and 1/20, again, we will be above the upper range of our comfort zone in the shock scenarios.

If we move to the next page, Page 24, just laid out how the 194% of solvency ratio is made of. EUR 2.7 billion of Solvency II own funds to be compared to the EUR 1.4 billion of capital requirements. That's pretty much it. So very, very strong again in terms of balance sheet with 194% of solvency ratio.

With this, give the floor back to Xavier.

Yes. Just to wrap it up, I think I mentioned this. So we're in a slow growth environment. We have a lot of uncertainty out there. I mean the story in the Strait of Hormuz continues to evolve almost by the hour. But we don't see at this stage what the outcome is going to look like. I think a lot of companies are dealing with this. It's going to create a longer, higher interest rates. It's going to create some inflation. It's going to create slower growth, and we see that at play. Obviously, for Europe, it's not easy.

Emerging markets are doing a little bit better. There's the AI craze going on with a lot of investments, a huge amount of investments going into that space, which also creates a need for companies to invest correlatively. In that environment, I think we have a really strong performance with a 71% combined ratio, which is well below our through-the-cycle targets. We are seeing a little bit better quarter in terms of growth for insurance and continued growth in our services activities or noninsurance activities. I think we feel good about the strategy and the choices we've made. The economy is weaker than we anticipated. The data stuff is going faster than we anticipated, but at least we got the direction right.

We are beating our financial targets that we had set for the business after the plan is completed. So we're doing that already. And we're reaffirming all these targets. We are, however, prioritizing, I would say, long-term value creation or midterm value creation in BI versus the short-term profitability because I think that business continues to see needs in terms of investment and building up its scale.

We're going to compensate the difference, which is a few cents by share in the payout that will be made in '28 for the 2027 dividend. And that's pretty much it. I think we had discussed that a couple of times before in the prior call. So no big news here.

And with that, I'm going to leave it open for questions.

[Operator Instructions] We'll now begin with the first question, which is from Michael Huttner from Berenberg.

Well done for better revenues and better margin. I have 3 questions. The first one is on the dividend. Can you compensate -- I don't quite understand what compensate means. If income isn't there, how do you compensate for the dividend? I don't understand. Does it mean I should add an extra bit to my dividend or assume it's growing? I'm puzzled.

And the second is on the business information. So the growth was 12% in Q2. I was hoping for something around 15%. And I'm just wondering, is there any -- is this a structural slowdown? I know that with Cedar Rose acquisition, you have 19%, so the underlying is fine, but I was a bit puzzled by that. And then my last question, I didn't pick it up, what is in Western Europe, which is so bad? I couldn't make it up.

Okay. Well, maybe, Phalla, you want to take the dividend question. I mean it's fairly straightforward. The 0.5 percentage points RoATE means, I think, EUR 0.04 or EUR 0.05 per share.

Yes, per share.

Right. So we're just going to increase the dividend by EUR 0.04 or EUR 0.05 per share to make sure that the dividend payout to shareholders is the same as if we had reached the target. That's it.

Understood. Okay.

Okay.

But -- okay.

Yes. In terms of Western Europe, that one is -- so we -- do you want to take that one?

Yes, I can take that one. This is the country where Senegal is -- the country itself is under restructuring, and we have some exposure there. And the country...

But Senegal isn't Europe.

Yes, that's Coface geography. I'm sorry about it. We actually changed the name of that region to call it Western Europe, Africa.

West Africa.

West Africa, something like this or whatever. So there's a piece -- a low piece of stuff in there. It's not major. It just happens to be there. So we booked some reserves.

Some reserve there, I think less than EUR 10 million. It's -- the whole country is under restructuring. So it can go -- it can last a couple of years, but still it will be, I think, supported by the IMF. You have the [ Club de Paris ] restructuring team around this, and we just follow this.

Okay.

And as I said, it's a single risk, so it's highly -- in terms of quota share, it's highly reinsured.

Okay.

So on your second question, which was BI growth, yes, we've had -- we've been attuned to 15%, I don't know, for quite a bit of time. It is a bit slower at this time. I think what we see is, as I said, large companies delaying decisions that we thought they would make faster. So I think the environment plays a role into this.

Whether that's structural or cyclical is for anybody's guess. I mean if you can read what's happening in the Gulf, let me know. What I see, though, is that it continues to grow. There's demand for what we do. I always said, because I think that's happened a couple of times in the past that I wouldn't take a quarter as a sign for long-term trends. But nevertheless, there is a slowdown.

And at the same time, I think we need to continue to invest to put this business on a good footing in an environment in digital, which is moving quite fast. There's a lot going on. I mean I'm not going to tell you guys about AI because you probably hear it on every single pitch. It's being made by every single company around the world. So that's true as well for Coface.

The good news, I think, is that we are doing quite a bit in that space. We have a Data Lab that's now 50 strong. We have 1,000 people in BI. So that's giving us capabilities that we didn't have before, and we feel good about that.

We'll now move to our next question. This is from Benoit Valleaux from ODDO BHF.

Yes. In fact, they are only related to business information. I'd just like to better understand, I mean, what has changed compared to what you had in mind when you have presented your strategic plan. At that time, I think that you expected organic growth, which is broadly in line with what you have achieved. I mean you are today at 12% Q1, Q2 this year. So maybe I'm wrong, but just to understand, I mean, do you believe that in the end, your organic growth is a bit faster than what you had in mind at that time, which can be what you need to invest a bit more than what you had in mind?

Or it does mean that, I don't know, maybe this business is a bit more costly than what you had in mind? And linked to this, there is a point I don't really understand on this business. So you plan to be breakeven, if I understand next year. Maybe still a little bit too early, but does it mean that you plan also to be breakeven in '28, '29, I mean -- and we have to wait many years before reaching profitability on this business? Or do you believe that it's only maybe delayed by 1 or maybe 2 years? Also -- yes, sorry.

I'd just like to understand also the benefit of scale, in fact, because it's all my question behind all of that. It means that to cap the EUR 1 million more revenues, you need to invest EUR 1 million more in cost. And honestly, I believe that there's a point of, we'll say, of size at which you might start to have some benefit of scale. And it seems that it's still not the case. So just to understand, I mean, do you believe that once again, it just delayed by 1 or 2 years or not really?

Yes. So a few things. So we have started this thing from scratch in tens of countries at the same time, right? So yes, we have some more size. Now we have EUR 100 million of turnover or something like this, whatever. But the scale that we have in each individual country is still very, very small.

I mean we're talking about a market that is, I don't know, EUR 15 billion or EUR 16 billion, something like this. So we're barely making a scratch at this stage. So I think just to put things in perspective, I mean, when it comes to achievement of scale, we are still very, very, very small, right?

The second thing we learned is that from the surveys we did with investors, everybody tells us we will not get any recognition for value until we reach a certain size, and that's not EUR 100 million. It's going to be bigger, right? So there's no question for us that value creation means, as you said, reaching scale, which means reaching scale market by market. And we see a lot of opportunities coming up for growth, but also a lot of changes in technology, which means the technology spend is probably going to be bigger than we thought. And that's not actually news for any business right now.

I think everybody is spending more on technology than they thought they would, but that also impacts us, particularly in BI, which is a technology-driven business. So there's some of that going on as well. So AI is coming fast. We have to be there. We have to -- there's a lot of stuff going on. We're still planning to run that thing at a quasi-neutral impact on the P&L, plus or minus whatever. But I think it's more important for us to continue to grow and to keep on par with the market evolutions than it is to just try to make a buck. And I understand your point, yes, there is a place at which we need to prove that scale matters, but I don't think we're there yet.

Okay. So not before a few years. And yes, I understand this compensation in terms of dividend and payout ratio, so it's for 2027. Initially, I mean, once again, you target to breakeven this year and plus 50 bps on RoATE 2027. So we might have imagined that 50 bps could move to, I don't know, a few tens of bps higher in '28 and so on going forward.

Yes.

From your point of view, compensation will be on '27 for 50 bps. And at this stage, you believe that could be the same for the next year or -- yes.

Yes. But -- so we haven't gone that far because our plan is '24, '25, '26, '27. So by the time we get to those stage, we'll have a new plan, right? So I'm not going to anticipate what we're going to say there. We're going to study this. We're going to do all the right diligence that you would expect us to do. So we limited our view to '27 because that's the end -- that's the last year of Power the Core, and then we'll have to come up with a new one. I don't know if it will have 3 words or 4 words or 2 words in the title. But I think we're going to revisit the whole thing, right, which you would expect us to do. So we haven't gone further than that. I don't know if that answers your point.

An additional question, if I may. Just regarding solvency, so your solvency was at 194%, so still well above your group's target. It has been well above your group target for 4 years now. It seems that in the end group target is more how I understand the capital requirement from regulator and really what you had in mind. I mean, could you be tempted to some extent to reduce a little bit the solvency margin?

Because it has been very resilient despite current challenging environment over the last few years, thanks to your strong underwriting policy and risk management policy. But you did -- do you believe that you need, I would say, such high level of buffer versus what is the target range? If you can call that target range?

I mean let me -- before Phalla jumps in, let me just remind what we said, I think, over the course of the last 10 years, which is the solvency level is a choice between several different constraints, right? One is what we agreed with the regulator, which is 155% to 175% and where we put our guidance towards.

The second one is ratings. The third one is security of our reinsurers, the requirements of the banks that fund us, particularly in factoring and other areas, the view that our clients have of us, et cetera, et cetera. So there's a lot of different things that go into trying to figure out where we should be positioned. And Phalla, maybe you want to add something to this?

Well, I think the -- 2 things. The first thing is that, of course, this level is comfortable, but it also allow us when we say that we want to compensate in '27, the low 5, we will use this as well. You can see that we are using it to grow our business. I think that's also one of the reasons why we -- I'm not saying that we're cautious, but we -- just give us some room to grow internally and externally.

And today, it's internal. You can see that it's just 11 points from full year '25 to the half year. And if we didn't have this level of comfort, this also give us some freedom of how we want to drive the business. And then as you can see that we have already made some 2 acquisitions last year. This allow us to grow externally as well. We will have the same question mark discussion, Benoit, I'm pretty sure in a couple of quarters, but I will have always the same answers to you.

Yes, we already said this. So we're disciplined about capital allocation. We -- I think I've had 10 years of that question, actually not 10, because the beginning was a little bit rough, but let's say, 8 or 7 after we went through the major turnaround in the beginning.

What we want to do is we want to be able to grow comfortably our core business. And when you look at what happened after COVID, we had an inflation surge, and we were happy to have capital because a 15% increase in premiums means a 15% increase in capital, right? So God knows where the world is going. That gives us complete flexibility there. Second, we want to be able to do acquisitions if there are some that makes sense.

So we're not going to grow for growth's sake, but we are going to grab opportunities if they make sense to us. We know that in BI and services, the multiples are much higher. We do not want to pay top dollar for big businesses, but we are happy bringing in bricks that help build the fort. And third, when we have too much, we return it to shareholders, right? So that's what we've done consistently. We've shown the dividend distribution of Coface over the years, and it's been pretty substantial.

And full year -- well, full year '25, we distributed 84%.

Yes.

We'll now take our next question. This is from Pierre Chedeville from CIC.

Yes. Not many questions left. Maybe regarding reserve release, we have the impression that you have some leeway there again still. And I was wondering if we could expect this reserve to be continuously released in the coming quarter in your view? And more generally, I can see that most financials, banking or insurance companies are progressively improving their targets when reality, if I can say, is better than expected. Things that you don't do.

And at the end of the day, I was wondering if it's really useful for us, for the financial community to compare your current loss ratio, for instance, or combined ratio with your target because there's such a big gap between them that it seems that the target seems irrelevant. And I was wondering why you don't adapt these targets a little bit more often when you see that they are so far away from the reality. And I was wondering if preparing your next plan, you are thinking of that.

Yes. We've had that discussion, by the way, I think, again, in the past when we -- every time we did a plan, we -- every time we've done a plan, we've improved our target so far, right? But the issue with our business, and those of you, everybody here on the call knows this, is it's cyclical or it's subject to economic variations. And so the -- it's not easy to define a confidence interval for that number based on the cycle.

We can do it through the cycle on average, and the cycle is kind of a theoretical definition of -- I think we're showing it here on this page where we have 13 years of insolvency. So you see we're at a peak. Are we at the peak? I don't know. I mean it very much depends what happens in the world. If the AI bubble bursts, plus the Gulf of Hormuz, plus the Red Sea is closed off, and there's a raging war in the Middle East, I think you're going to see some sporty stuff.

And if everything is kicked down -- the can keeps being kicked down the road and everything is fine. So hard to say. And I think that's -- so we are prudent. We give benchmarks, which are improving over the years. We -- I think we overdeliver. That's been our story at least up so far. And that's kind of -- and we operate by very consistent principles, which is we're going to do the smart thing for the medium term. We're trying to build to do value creation. We're not going to go for growth for growth's sake. We're not going to try to reach a number for the sake of reaching a number. We're going to do what we believe makes sense in the medium term to position this business to continue to be a really good business going forward.

[Operator Instructions] We will now take our next question. This is from Michael Huttner from Berenberg.

I had lots of little silly questions. Tax, 27%, I had in mind your run rate was a little bit lower. I just wondered, what -- a, what it means? I think it was very helpful, the appendix that you show Q1 was 26%, Q2, 28%. What's the right number to use going forward? It seems to be nudging up.

The second is kind of maybe the opposite of my colleagues. I see the positive in everything. But the -- is there any way that you can quantify that the investment that you're making in BI and stuff, how much that is benefiting the loss ratio? Because ultimately, at the moment, that is what's driving the business. And I suspect it's quite a bit, but there's no way I can do it from the outside. You can probably do it a little bit better. Then I have a really silly question. What's the TNAV number? I know you give it per share, but I'm always worried about multiplying numbers whether I'm rounding too much.

And then maybe -- I know you don't like to give forward-looking and you're being very cautious, but you did have in Q2 versus consensus and Q1, a better loss ratio and a better volume. It feels like, I mean, we've reached the bottom, but I don't know. But maybe you can give us a feel for what you're seeing right now.

Well, I think your last question relates to the cycle. I mean, frankly, it's anybody's bet. I mean, if you give me the scenario, I'll tell you, but the scenario moves all the time. I mean we had a war that nobody had seen coming, then everybody believed the war was over, then the war is back on again. And you tell me where it's going. I think we -- time will tell where this goes, if AI is going to continue the way it is, if it's going to turn out to be profitable, if the amounts of investments that are being made are reasonable or if it's too much, if there's a bubble that's converse, I don't know.

There's a lot of stuff going on at the same time. So to call the peak or the trough on something, I don't think it is very easy. On the transfer of know-how or technology or whatever between BI and TCI, I think it's true. I mean I think there is a -- there's learnings and there's capabilities that we would have struggled to pay for if it had been just with the TCI business and certainly not at the scale at which we're doing it.

Just the fact of having 1,000 people in the business focused on data just gives you a bit better understanding of data. It's just simple. I mean the marketing impact because we have now thousands of clients on BI gives us scale, gives us knowledge, gives us a presence in the market and opportunities to cross-sell and stuff like this. So you're seeing that. It's hard to say exactly what's going where. We know the P&L for BI, but we also know that it has a positive influence on TCI. So to me, it's pretty clear.

I'll take the question on tax.

Yes, go ahead.

Yes, I think, Michael, you know that our tax computation is really based on the business mix that we have in countries where you have different tax -- income tax rate. So that's nothing that is unusual. And that's nothing I can -- there's no guidance going forward because it really depends on the jurisdictions in where we're making our money and our taxable income. So there's nothing specific to be noticed. That's all I can say.

And it's just a computation from various jurisdictions or tax jurisdictions of our benefits. And you can see that if you look at quarter after quarter, it is true that it's [ 50 ]. The volatility is moving back and forth. What we can say is that when we look at the past, it's between [ 23% and 28% ] and will be something in between.

Okay. And the TNAV?

TNAV, I think it's EUR 2 billion.

EUR 2 billion. Okay. That's helpful. Okay. May I ask one -- just one last follow-up question. The SCOR reported today and the numbers are, funnily enough, quite good, like your numbers are quite good. The -- there seems -- the surprise or the thing I would have wished for is a bit more investment income. Am I wrong to expect more investment income to come through? I keep thinking that if you're growing the business, you've got more reserves and more assets and less interest rates not actually budging that much, we should see a little bit more, but it doesn't seem to come through very much.

Well, it's improving year after year, but you know that we have repositioned and derisked our portfolio for at least now 2 years. I think it's probably -- we're reaching a kind of run rate. Of course, we will -- with the level of cash that we have, we have very liquid asset, 40% asset allocation on this one is probably where we can see some opportunities of the market. For the time being, because the yield curve is inverse, you have a higher interest rate on the shorter tail of the yield curve than the longer one. I think this is where I'm benefiting from this, but who knows how -- where the interest rate will go. But yes, I think we have -- it's pretty much depending on the interest rate level. And the increased interest rate environment is something that we fully benefit from.

May I ask one last, I'm really naughty, but last one. So the -- it was really interesting what you said about there is clearly a crossover benefit from BI and TCI. Is there -- would it be fair to say that one would more expect the benefit in terms of large claims because clearly, you haven't had large claims in the past, I don't know, 2, 3 years? Or is it more benefit on what I would call attritional, all the little exposures?

In our industry, we obviously don't like large claims, right? I mean that's the one thing that we're trying to avoid. It's hard to say. I think, obviously, the discipline has increased. The processes are tighter. I think there's also a -- probably a structural shift in the market where it's not just us improving, it's also the entire market improving and the governments being more attentive and companies being more sophisticated and having better tools and the banks tightening up their processes.

So there's a whole bunch of things that are going on and playing into this. Very hard to pinpoint the details. But the general trend, I would say, is that we are improving the business. Digital is coming in. I mean the amount of work that's going on in digitization, AI and all that good stuff is quite impressive. At least from a historic standpoint, I think we are seeing a lot of -- quite a bit of change.

I would also, though, that's more of a personal reflection. I think you're going to see AI make changes, but I think it's going to be, in general, slower than people think because the challenges are human, the challenges are stability, control, governance, technology. So putting in it to work in a safe way and in a sustainable way is not as simple as people think. So -- which is good news because if we're able to invest and do some of that, and then it will be a differentiator for probably a longer period of time.

There are no further questions coming through. So I will now hand back to the speakers for any closing comments.

Well, look, we're right on time. I think we're -- as we said, we're halfway through the year, we're in a pretty good position. Of course, nobody knows what the future holds. The news could be coming any time. But the business is sticking with its plan. It's got a clear strategy. We're executing, and we'll take the environment as it comes. So thank you very much for your attention. And with that, I think we can close the call.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the COFACE SA Q1 2026 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Xavier Durand, CEO. Please go ahead.

Thank you. And just on time, welcome, everyone, to this first quarter 2026 report from COFACE. You will have seen the numbers. We are reporting net income close to EUR 54 million, down from last year, but I would call this a good quarter in an economic environment, which is obviously not easy.

The turnover of EUR 465 million is stable at constant FX and perimeter, and there's a few moving parts inside that. You see that insurance revenue is down 1.3%. That's really driven by, I would say, a slow economy and client activity being positive but low and lower than historic average. But the operating metrics of the business, as you will see later, remain really strong with retention close to our record. Pricing still negative, but improving. And I think that's also linked to the environment.

And at the same time, we see services growing close to 20% with business information on a consolidated basis, growing 12% organically and almost 18% on a reported basis with the acquisition that we made last year. Debt collection is strong at almost 32% factoring positive after a few quarters of, actually, flat or negative.

And when you look at the total perimeter growth, including those businesses that are not consolidated, you see 15% organic for BI and 40% for debt collection. So strong revenue growth on services. I think the other point -- the strong point, I think, of the quarter is the net loss ratio standing at 37.6% bringing the net combined ratio to 70%.

We have -- you'll see really a very flat and benign story on the loss side. The net cost ratio is up 3 points to 32.5%. We are continuing our investments. I mean, I've been saying this now for a couple of years, in line with our Power the Core plan. And we continue to move and to move forward. So we've appointed a new CEO for Strategic Partnerships. This is Katarzyna Kompowska, who is running Northern Europe.

She's being replaced by the Head of Sales for that region, Christian Stoffel, who's been with us for a number of years and has been leading both our factoring business and then been the sales leader for that region. And then we have a succession of further changes down the chain, all internal, and I think it shows that we continue to move and we have strong talent.

So net income, close to EUR 54 million. Return on average tangible equity stands at 11%, which is the range that we had set ourselves through the cycle. Clearly, the economy is, as I said, and it's pretty obvious, not very supportive. We added a page as we very often do on Page 5, to talk about Power the Core.

I mean we are really halfway through the plan. We issued the plan 2 years ago. And if you remember, this is all about Data, Connectivity and Technology. This is about building an ecosystem that really links clients, partners, distributors, building solutions around the credit space and investing in digital tools, automation and artificial intelligence-driven solutions, which are now enabled by the incredible surge in AI that we're seeing.

So we are executing on that plan. It requires investment, and we're making significant progress and significant investments. And I think it's given us a very unique and differentiated platform at a limited cost, as I've explained through many -- through last couple of years, we're doing this at pretty much a 0 impact on the P&L.

And the external revenues we generate from this activity are actually allowing us to fund the services growth and also some of these benefits percolate into the insurance business. What's different, I would say, from what we planned when we launched the plan is that the economy is tougher. Clearly, there's been tariffs. There's been deglobalization. There's the events in the Gulf and the war in the Middle East, a shock in energy. I think you're starting to see some of the impacts of that. The level of insolvency stands at a record for the last 13 years or so and continues to grow in advanced economies.

Geopolitical headwinds, I don't think I think I need to explain the details. And so that's one side. The economy is not very supportive. And the other thing that's happening, I think, is the advance of AI and the huge changes we're seeing in the technology space.

With AI now starting to impact all of the different areas of, frankly, a wide array of businesses. So if I step back and look 2 years back, I think we had the right orientation. I think that we have the right strategy.

It's just the environment is, on one hand, a little bit tougher on the economy and also accelerating on the digital space, which certainly reinforces our view that we should continue to invest and differentiate. To me, it's pretty clear.

I've laid on the right-hand side of the chart here, the revenues we generate from services, which is business information and debt collection. And you see that it's been growing about 20% a year for the last 2 years and it's still growing about 20% this quarter. And when you look at it on an annualized basis, we're over EUR 100 million now of revenues, which is starting to be meaningful for us.

The other thing I would say is that the total EFTs (sic) [ FTEs] allocated to these businesses now is over 1,000 people. So for COFACE, it's really material. It gives us capabilities, technical capabilities, intelligence and knowledge that we didn't have. And again, I think it explains part of the performance that you're seeing here today.

On Page 7, the usual pages, and I'm going to go relatively quickly to these pages because these numbers, first of all, they're always presented in the same way and a lot of these have already discussed. You see insurance revenue down 1.3%. Other revenues, which includes factoring and services up 9.2%. And I've already mentioned the double-digit growth in both business information and third-party debt collection. The one thing I want to point out on this Page 7 is the performance on insurance fees, which are the fees we charge our clients. You see that we're at 13.9%, which I think is our record so far.

Of course, part of this is because the premiums are lower, but also I think the fees are up 2.1%. And these are services that we charge to our clients inside our insurance contracts. And to me, what it means is that the services that we are proposing and we are offering are being taken up by clients, and we're able to price them.

And I think that's a recognition of the service side of this business that we've been driving both on the insurance side and on selling services independently.

On next Page 8, you're very accustomed to these charts. Nothing really new here except a couple of things. Western Europe, Northern Europe, Central Europe, I think, are showing very low growth.

This is really driven by a slow economy and a slowing economy, I would say, even further than we had in 2025. And obviously, energy shock and tariffs and all the change in globalization is impacting Europe clearly. The new thing here is that Med & Africa, which used to grow historically at a 4% to 5% range is now not growing anymore.

Obviously, that contains the Gulf area and the Middle East which is impacted, but also Southern Europe, and we're seeing slower growth there. The other thing news on this page from the prior quarters is the slowdown in emerging markets.

Latin America and Asia Pacific had higher growth. Latin America came from a double-digit growth place to, as you see, flat or slightly negative. And this is client activity, which is slowing down. And clearly, emerging markets are impacted by what's happening in the economy and geopolitics more probably or quicker because -- a lot of these countries are buying products that are now more expensive or in less supply.

If you go to Page 9, I think that's an important page because it highlights the operational performance of the business. And there's some good news here, actually. The new production is at a record level in the last 5 years. And you can see that the investments we're making in distribution, et cetera, are actually bearing fruit and continuing to drive some growth.

The retention rate at the first quarter, 94.8% is very close to the records we've ever had in this business. The pricing is still negative. I mean the competition in the market continues to be very high. There's a lot of capital that's looking for a home and a place to be invested. But at the same time, you see that pricing while being negative is not as negative as it was in the prior years.

There is demand in the market. And I think the execution on that front from COFACE is actually good. And then the volume effect remains very, very subdued. You can see that the Q1 at 0.7% is, of course, positive, but one of the slowest years that we've had historically.

So good operational performance from the business. I will then go to Page 10 to talk about losses. And you see here, we had a good quarter with losses -- loss ratio before reinsurance, including claims handling expenses at 36.3%, comparing favorably to the first quarter of 2025 in most of the quarters in the prior year.

A few comments here. First of all, claims are rising in number, and that's consistent with what I say about insolvencies, which are reaching a very high level across the majority of the economies around the world. At the same time, we're not seeing severity rise at the same level, and that's good news.

I mean it's also a tribute to the work that the teams in COFACE are doing to monitor the events and be very -- remain very close to the risk. And you see at the bottom that we haven't changed our reserving methodology. We still open the new vintage at a high level, 80%. And then we still see some very nice reserve throwbacks from the prior vintages, which continue to perform.

So I would say really a benign for COFACE risk story here. I will skip Page 11, which compares entire years '23, '24, '25, which just the first quarter of 2026 to go to Page 12, which describes the last 5 quarters. I think that's probably an easier way to look at the same numbers. And you see here that I really don't have much to report, I mean, because things are extremely stable, whether it is the large, more stable markets at the bottom, Western Europe, Northern Europe, Central Europe and Med and Africa.

Or even the, I would say, the more volatile smaller places, North America, Latin America and Asia Pacific. So really not much to say. The risk is continuing to be well under control.

I will spend some time now on Page 13, which talks about cost, and we've had this discussion now for several quarters that post the COVID shock, we have embarked inflation in our cost structure. And at the same time, we are seeing no more inflation in client activity, and that's creating a headwind for us.

You see that again this quarter, but at a lesser level, I would say, than prior. The increase in cost from Q1 '25 to Q1 '26 is 5%. We have seen higher numbers, I think, in the prior quarters. And you see the cost ratio going up driven by this difference in inflation between cost and the premiums, that's 1.6 points and continued investments that we make deliberately, both in insurance and in services that drives another 1.8% cost ratio up.

At the same time, we're getting some of this back through the increase in sales and services, and that's 1.2 points, which drives the cost ratio for the quarter at 35.2%. So I would say continuation of the story, no surprise, deliberate investments and I think made even more critical by the change in the environment that I described before, i.e., more risk, we need to stay closer and make sure we invest the money that's going to allow us to keep the risk under control.

And on the other side, developing new solutions, new ecosystems and investing in the services side of the business which so far has been a bottom-up story that is now EUR 100 million annualized.

With that, I'm going to pass it on to Phalla, who's going to take us through the rest of the presentation.

Good evening all. So we are now on Page 14 on the reinsurance page. I will start with the reinsurance results. You can see that we are passing on EUR 25 million before tax to our reinsurers. This is plus 24% compared to last year, driven by the fact that the premium cession rate has slightly increased and the reinsurers following the [ fortune ] are benefiting from the decrease on the claims ratio as the claim cessions rate has decreased from 26% to 25%.

This leads us to a net combined ratio at 70% on Page 15, you can see that we're moving up 1.4% with the net loss ratio decreasing and the net cost ratio increasing following what Xavier has described in terms of investment that we have made in our business.

If we move to Page 16, which is the financial portfolio. So the mark-to-market value is at EUR 3.26 billion. You can see that on the -- in terms of asset allocation, 15% is now holding on cash and liquid assets as we're going to pay almost EUR 190 million of dividend by the end of the month.

Otherwise, I think that asset allocation has not changed much. If we move to the right-hand side, which is the investment income, so the P&L side of our -- the revenue of our investment portfolio. In terms of recurring revenue, the accounting yield is pretty much stabilized.

Of course, we are now -- we're not seeing any more interest rate increase, and it's stable at 0.8%. So moving from EUR 24.9 million to EUR 25.7 million. I would have the same comment on the FX. I think you can see the FX line on the investment income at EUR 0.3 million in Q1 '26. This is made of a loss, which is minus EUR 4.6 million related to hyperinflation booking on Turkey, and this is compensated and more than compensated with the FX gains that we have on investment portfolio, EUR 4.9 million.

And as usual, on the liability side, which is what you see on the line insurance finance expenses, minus EUR 15.8 million. This FX gain is compensated or have offset on the liability side as in the EUR 15.8 million of IFE, it includes EUR 5.3 million of FX loss. So net investment income net of IFE from one quarter to another, we have increased the amount by EUR 300,000.

This leads us to a net income Page 17, the way that you look at that, of course, the net earned premium is down 4.4%. This is one of the key driver on the revenues decrease. And this leads us to a net income decrease by 13%. Net book value, 15.1%, tangible book value at EUR 13.3%. I think we are trading today around EUR 16, still slightly below EUR 16.

We're now moving on Page 18, return on average tangible equity. The equity -- IFRS equity is moving from EUR 2.2 billion to almost stable as we accounted for the income of the period. And then we have the mark-to-market on our investment portfolio that goes to equity.

So slight increase at the end of the day. And then return on average tangible equity moving from 11.4% to 11%. Of course, we have increased slightly the equity, and we have the net return that has decreased compared to last year.

So just to wrap it up, and then we will have the usual Q&A session. I think it's a good quarter in what I would describe as a soft economy. Clearly, you're starting to see some of the geopolitics percolate into the economy. Companies are hesitant to invest. There's obviously a lot of increase in commodity prices, but also much less volume, et cetera, et cetera.

And I would say the whole credit insurance market or industry is affected by this, and we are, too. Our services strategy is paying off. We're seeing almost 20% growth in that. The combined ratio is holding up very well in a world where insolvencies are, I would say, at a record in the last 13 or more years.

The RoATE at 11% is in line with through-the-cycle targets, even though we're, I think, in the slowest growth economy we've seen in very, very long time. So clearly, we don't like the environment, but it is -- the business continues to perform. We are investing despite this uncertainty, we're investing along the lines that we've described for Power the Core.

We know that -- I think it's the right strategy. We are building technology and skills and an ecosystem and solutions that are valued by clients. We know that the data and AI revolution supports the choices we've made. We didn't think it would go as fast as it does, quite frankly.

And so it only reinforces our conviction that we need to continue to invest because I think slowing down in this world would be actually probably more dangerous than taking the risk of investing and not getting everything right. So I think for me, this is important, and we're right in line with things we said and the business continues to perform. So with that, I think we will open it up for questions.

[Operator Instructions] And your first question today comes from the line of Michael Huttner from Berenberg.

I just had 2. One is what are insurance services? So you've got all the different -- your business information, the debt collection, but I just wondered what is insurance service, which is different from that? And then the other question is, if commodity prices are increasing, if U.S. CPI is kind of edging up a little bit, when do you think we'll see the benefits in your revenues?

All right. So the insurance services are things we do on behalf of our clients inside the insurance contract, like if they ask us for a limit, a new limit or if they ask us for help on collections or stuff like this, we will do that inside the insurance contract, right? So it's a different source of revenues from the contracts we have, which do not include insurance, but only services, right, stand-alone.

But the debt collection appears as both, right?

Yes, it appears on both sides. I mean we -- clearly, but I would say the bulk of this pertains to management of credit lines probably, I don't know. The monitoring of portfolios and stuff like this.

The -- your second question was about inflation. So yes, we're entering a world. I think it's pretty clear that we're entering a world with lower growth, lower, I would say, effective growth. And then we have more inflation, and we're starting to see it. You saw the numbers just released in the U.S. But it's not clear that one is going to compensate for the other. I mean we're getting closer to a stagflation situation where nominal growth is actually probably the combination -- is the combination of actual growth of the economy plus the inflation.

But I think right now, the combination is not favorable. I mean I think that's basically what you're seeing. It's hard to say where it goes because I think you have a first effect on commodity prices. You have a second effect on businesses that produce from these commodities that are going to be seeing increasing costs, and they're going to try to pass on those increased costs to businesses.

And then the question is, how is that going to affect demand? And then you have central banks that are going to say, wait, inflation is coming back. So what are we going to do about it? And are we going to raise interest rates, which is going to further potentially if that happens, and it might reduce demand further.

So this is a process that's going to take some months. It depends how long the Gulf prices last. But I think elevated commodity prices that's going to last a while. It's not going to return to normal anytime soon. And if it lasts for several more months, the bulk of the impact will be '27. So that's really the issue here.

And our next question comes from the line of Benoit Valleaux from ODDO BHF.

I have 2 questions, if I may. The first one is regarding to this appointment of a new CEO Strategic Partnerships. Can you please elaborate a little bit what you are targeting in terms of what is behind, I would say, Strategic Partnerships and the potential of growth coming from those partnerships?

I have a second question. You mentioned that. Does it mean that you plan maybe to revisit the profitability targets you have for your BI business in 2027 in order to capture opportunity and to continue to invest on technology? Or is it maybe too early for you to have a view on next year contribution from this business unit?

And I have a third question, if I may, regarding loss ratio per geographical area. You have a negative loss ratio in LatAm in Q1. I know that LatAm is a small part of your business, but -- and you also had a negative loss ratio, by the way, in Q3 last year, but it's a bit unusual. Is there anything special which explains this negative loss ratio in Q1.

Well, that one is -- I'll start with that one. I mean this is 4% of our business divided by 1 quarter. So it's a very small number. A lot of the business we write in Latin America are actually linked to international contracts. And so -- and we take risk in Latin America that are disproportionate to the premiums we get in Latin America because these are global contracts, right?

So whenever you have one file that moves up or down, it throws off either a high loss ratio or it can even become negative when we get -- we recover and we release the reserves. So there's really not that much to -- much more to say. It's just the mechanics of running a very small business inside a larger group.

On the CEO, Partnerships Strategy, this is a recognition that for a firm like us, which is now developing services, on top of credit insurance and other things. These services can become solution and TCI, by the way, can become solutions for a broader set of partners out there.

We have had long-standing partnerships in Europe or in other parts of the world with large institutions, could be financial institutions, could be technology, it could be anything. And I think it's a way for us to make our offering relevant to a broader set of clients that we cannot -- we will never be able to reach ourselves directly because we just don't have the manpower or the reach or the brand or whatever it is.

There's only 5,000 people in COFACE covering the world. If you compare that to the EFTs of the services industry, it's miniscule, right? So that's the idea here. And we're making that a group position because I think it is something that matters and that we should pay attention to.

In terms of data and AI, I mean, I've basically described what we've done over the last few years, right? We have been investing from scratch basically to create the whole data and services area, which I just described during the prior discussion. And it's been growing nicely, and it requires investment, obviously.

And these investments are benefiting, obviously, the services business, but also directly and indirectly the insurance business because every time we develop a new score, we have a data lab, we have new solutions, we have more connectivity. It's increased service, increased predictability for the insurance business, et cetera, et cetera.

I think we've -- the way things are evolving, I see the need to continue to invest. It's very clear. I mean I think AI was probably on the charts, but the rhythm at which it is coming at us is a surprise, I think, for most businesses around the world, including for us. So it's working. We need to continue to invest. We've ran it so far very close to the neutral line. So where we make a little bit of money or we lose a little bit of money.

And that's been what I've been saying now for several years. It's not changing. There's a natural rhythm at which we can invest efficiently or smartly, and there's a natural rhythm at which the business can grow efficiently and smartly. Some of this will be probably impacted by what's happening in the Gulf because none of this is completely immune to the geopolitics either.

So it's a bit hard, as you say, to know exactly where this is going. The only thing I can tell you is the business has been overall, if you take the overall COFACE performance, it's been, I would say, above our targets for the last few years. And I know that we need to continue to invest. So I think this is a question that we'll have to look at.

From a business need standpoint, I think there's potential for growth and there's need for investment. I think that's -- I think these were your 3 questions, right?

Your next question today comes from the line of Pierre Chedeville from CIC.

Two questions from my side. I would like you to come back on Slide 7 because I did not really understood why you were so happy regarding insurance-related fees because when we look at figures, it's EUR 51 million and EUR 51 million. So it's a very slight increase. So if you could come back on the fact that you're happy with these figures. It was not very clear for me.

And second question, a more structural one. It's about your combined ratio, which is obviously very good this quarter. And particularly, if you compare quarter-on-quarter and not year-on-year, of course, I guess that there are kind of seasonality and also effect in cost ratio. But I would like to know if you feel that your performance is going to be structurally better than what you previously anticipated in your previous comments in terms of a cautious stance or if you think that we are going to have an increase in the combined ratio as we have seen last year in Q2, Q3 and Q4 compared to Q1 in 2025.

That's a tough one. So let me first address the fees, the insurance-related fees to the insurance premiums ratio, right? So it's EUR 51 million to EUR 51 million. We're saying in the document that the fees grew 2%.

At the same time, we're saying that the premiums shrank by 4%. So that's what I'm happy about. It means that within the insurance contract, the premiums are driven by the activity of our clients. Once you sign the deal, we bill them a percentage of their turnover. So if their turnover grows, our premiums grow. If their turnover doesn't grow or shrinks, our premiums shrink, right? So that's one thing that there's some mechanics about this.

On the other hand, the fees we charge are relative to the management of their portfolios, and they're accessing some of the services we provide within these contracts. And I think that's holding up. I don't know if that clarifies for you.

Yes. Okay. I understand. Okay.

Okay. The second thing on the quarterly results. I mean, there's always some seasonality here, obviously, because all the billings and the cost and expenses and then reserving and it doesn't happen completely in a linear manner through the year. So there is some seasonality.

But your question was also what's going to happen in the next few quarters. I mean we never make forward-looking statements, but you understand that the environment is what it is, right? So it can go either way. The Gulf thing could disappear tomorrow, in which case, things will get better probably over a period of time or it could go on for another 6 months. And then I think we're going to have some pretty interesting impact across all sorts of industries, across all sorts of geographies, and that's going to go well into '27. So very hard to predict what the environment looks like. Do you want to say something, Phalla?

Yes. I think what is important to say is that we kept exactly the same reserving methodology. So here, I think as Xavier said, we have opened the quarter pretty high at 80% for the new vintage. I think that's probably what you have to look at. I think it's probably more in the consistency of the way that we're reserving. And of course, we're not doing forward-looking that's something...

We're not changing our methods. It's just that we adjust our risk management to the environment and...

[Operator Instructions] And the next question comes from the line of Michael Huttner from Berenberg.

I had 3. So reinsurance pricing and how it benefits you the growth in business information, it feels like we've got an inflection point, but maybe I'm wrong. And then finally, business information relative to the U.S. I always feel that the U.S. is the bit where there's not -- and I just wondered whether something has changed there.

So on reinsurance pricing, I was hoping to see numbers which showed that you're beneficiary of low reinsurance costs, but I can't see them. Maybe you could point me in the right direction. On the growth of business information, so clearly, the total growth, 19.5% or 20% or whatever is really lovely.

And it feels like it's accelerating. Am I right? Have we reached a kind of inflection point? And then finally, on the U.S. where I think one of your major -- one of the -- it's a market which almost acts like a closed shop. And I just wondered, do you have a strategy where you think you will be able to break into it?

Right. So a few things on reinsurance. These are long negotiated contracts that span 3 years with -- so you can't -- you're not going to see change on reinsurance dramatic over the quarter.

In the course of the year. It's annual negotiations. What we can say is that we have negotiated, I think it's probably one of the highest commissions rate that we have received. So the condition has been pretty good for us. And of course, if we perform the same way we are performing so far, the discussion will happen again at the renewal.

That's all I can say. And it is true that today, what we see in the market is the new reinsurance type is a soft market. This is something that we will take into account at the next negotiation discussion.

On BI, I mean, I've said this either way because we had quarters where, if you recall in the past, growth was less. And then we have sometimes quarters where growth is better or whatever. I wouldn't derive any big conclusion from a quarter.

So I think you need to look at this not on a quarterly basis. We need to look at this on a multiyear basis. This is an endeavor we started probably 6, 7 years ago from nothing. And that's also linked to the prior question -- prior discussion we had.

We're looking at building something over a number of years, not what's going to happen over the next quarter. I would really caution around that. And then in terms of the U.S. market, I'm not going to comment that much here because obviously, there's only a certain level of information I'm willing to share. But it's a big market. All I can say it's a big market with probably the most sophisticated players in the world but that's fine. It's an important market for us too.

And just on the business information, if I may, just one more. You did highlight a couple of times or 3 times the EUR 100 million kind of a benchmark, you're now above that on an annualized basis. How significant is that? And at what level do you kind of say, yes, we really have achieved what we aim to do or yes, just kind of get a feel for where we are.

Michael, I really don't know the answer to your question. What I can say is, for us, it's meaningful in the sense that we have 1,000 people, EUR 100 million, which is $120 million of a business. So if you look at it and say, how many start-ups have I seen that get to 1,000 people and $120 million of turnover and cost zero that in itself, I think, reserves notice. On the other hand, we are nowhere close to being done. I mean, because this is a huge market.

There's formidable competition. There's -- it's evolving daily, et cetera, et cetera. So that's all I can say. But at least we got to this point, which was not a given from the get-go, I would say.

I will now hand the call back to Xavier Durand for closing remarks.

All right. Well, it seems like for once, we're ahead of schedule here. We -- I don't have much more to say. COFACE is focused. The environment is what it is. We will know more in a quarter, and we will see you in July. But the business is focused on execution, and that's where we are. So thank you very much for your participation. Looking forward to the next call in July.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Coface SA Full Year 2025 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Xavier Durand, CEO of the company. Please go ahead.

Thank you. Welcome, everyone. Thank you for logging in. We're happy to report our full year 2025 performance tonight.

Just before we start this, I'll just strike a little bit of a personal note to say that this is -- I've just completed my 10th year as the CEO of Coface, which means this is my 40th meeting of presentation -- quarterly presentations. It's been quite a journey as the head of this company, which is in deep transformation. It's also been successful, I think, from a financial standpoint. Our TSR -- annual TSR through the period has been 17.5%, which means that investors who have chosen to invest with us 10 years ago, have multiplied their money by 5. So quite a journey. We're looking forward to what's to come.

You all have seen the numbers. We're reporting EUR 222 million of net profit in 2025, which means EUR 45.8 million in Q4 of the year. It brings the total earnings company for the last 4 years to EUR 1 billion. So that's another landmark for us. Just going through the details, you will see that revenue was up 1.3%, all things equal. With insurance growing 0.6%, positive client activity, but clearly lower below the historic average. We continue to have great retention of 92.9%, literally our record pricing has been down 1.6%. That's very much in line with long-term trend.

And it's a little bit of a -- the theme of this day here is a lot of the numbers and trends that we're going to discuss are things that are not new and have been discussing and prior quarters. So I would say really no surprise. Business information is growing double digit, 16.2% organic growth at constant FX and perimeter. We started to consolidate Cedar Rose business we bought in August last year, and we reported these first elements of consolidation in the fourth quarter numbers. That brings the total reported number for business information at almost 19%.

Debt collection is up, to 24.4% and then factoring was slightly down. That's really driven by a slow, I would say, German industrial economy and the rates that have stopped going up and slightly down. By the way, for the first time, I think we are disclosing in a little graph in the press release that shows the splits of all these different lines very explicitly year after year. So that -- I think that will help in terms of disclosure for all those that are following these different lines at a granular level.

The net loss ratio is up 5 points at 40.3%. The combined ratio stands at 73.1%. I would consider that a strong performance in the market, which is getting, obviously, tougher. 4 points up on in terms of the gross loss ratio. We haven't changed our reserving. We haven't changed the way we think of risk and management. The net cost ratio is up 2.6% (sic) [ 2.6 ppts ]. I'll go through that again, you'll see a lot of the same trends that we've already discussed in the prior quarter, with both -- some residual inflation and continued determined investments in the different areas that we've highlighted for our plan Power of the Core. That brings the net combined ratio at 76.6% in the fourth quarter which is slightly above our through-the-cycle targets, again in a market which is slow.

If we go to the next page. You see that the company continues to have a strong balance sheet. We have solvency coming in at 197%. The return on average tangible equity stands at 11.4% for the year, so down from last year as the trade credit cycle develops. The solvency is above the 155% to 175% targets. Exposure growth has been limited.

We are benefiting from better capital requirements on the factoring business, which is triggered by the fact that we're insuring this business through the new Lloyd's syndicate that we've established. And so we get a net benefit on the solvency here.

We have stable conditions in terms of retaining reinsurance for the year. We have been renegotiating all of our treaties for 2026 at slightly better favorable conditions that we -- than what we had in 2025. So the market continues to be there for us in terms of both capacity and price in the reinsurance. We are proposing a EUR 1.25 dividend per share to the general assembly. That's an 84% payout ratio. So we're paying out a little bit more than the 80% that we did in prior years, and that's in line with our targets at Power the Core.

I think the company shows its resilience as we move through the cycle. We are close to the through-the-cycle target with -- at the same time, I mean, you're all aware of World Trade being hit almost daily with new events and a lot of uncertainty. We continue to invest both organically and externally. We bought Cedar Rose during the year and we invest in data, we invest in technology, we invest in connectivity, we're investing in salespeople for TCI, and that's paying off. I mean you see the BI growth at almost 19%. So that's pretty much the story for the quarter.

If we go in for the year, sorry. And if we go to the next page, we've added 1 page just to give a little bit more color on where we are at the midterm of this plan. So we launched the plan exactly 2 years ago. It's developing in an environment which is softer, I would say. You see that the global economic growth remains below the historic average. We're at 2.7% with about 1% growth in Europe and 2.2% in the U.S. 3/4 of global growth today is driven by emerging markets. And that's something we need to take into consideration.

Global trade is quite resilient. I mean there's a lot of obstacles being put in its way, but we like to see it go fast, trade is like water. It always finds a way. We see less trading between big blocks with more trading inside blocks. We see new routes. We see connector countries. It's slow, but it's progressive, but it's happening.

There's more volatility, I'd say, pretty much across the board. Every day brings its set of news on currencies, on tariffs, on supply chains, on geopolitical events, et cetera, et cetera.

Slow growth and a lot of volatility means insolvencies are rising. We -- in most developed economies today, we are at a more than a decade high, where actually when you look at insolvency since 2013, we're pretty much at the highest level we've ever known. The market is still very competitive. I think this industry has had a good profitability over the past few years, and there's more capacity coming. So that's why you see that the rates continue to be negative.

And revenues are subdued because clearly, the activity level, the underlying growth of the economy is low. And as you know, we bill our clients as a percentage of their turnover and when their turnover doesn't grow, our turnover doesn't grow either.

So you see on the right-hand side on the top right how our portfolio over 2 years has moved. We have new business, which is actually the strongest we've had in years, offset partially by cancellations, which are the best that we've had in years. And then you see premium rates going down, compensated by activity, but activity is lower than historically what we've known. So the portfolio keeps growing because we are investing, because we are driving new business, albeit it's not very fast growth.

In that environment, I think the business is delivering. We are maintaining a high technical margin. I mean the fact that where we are in the cycle, we're still delivering through-the-cycle target type of performance. I think in itself is a testimony. I think we have the best technical results in this industry.

We continue to innovate. We continue to invest, and we've built the partnership with Lloyd's and created our own syndicates. We invest in new scores. We're putting AI into our risk evaluations. We're expanding the business information offer. We are really growing our data lab and innovation departments. Debt collection is also growing pretty fast. We are buying businesses, and we've already spoken about this.

Today, the services, the FTEs that we have in the business are around 1,000 people. So it's growing quite quickly and we are adding people in the technology area. So the company is building itself for the future. We're not just managing the short term here. And just to highlight that we are actually performing well. You can see on the right-hand side how we've returned EUR 7 per share over the last 5 years through dividends to shareholders. So still a high yield and reliable stock.

If you go to the next page, we give you a full year update on our CSR strategy. So we have 3 very simple targets to try to summarize. The first one as a responsible insurer, is to reduce the emissions of our investment portfolio. We had a target of 30% reduction from 2020 to 2025, and 40% from 2020 to 2030. We are at this stage at 54%. So we're ahead of the target. But we know that the methodology used will change because more and more sectors are being incorporated in the taxonomy. So yes, we're ahead, and we're quite proud of how much we reduced the emissions. At the same time, we can't take this as a final number because that methodology continues to evolve. And we do expect this to be put under some pressure.

If you go to the responsible employer, our target here is 40% women in the top 200 managers by 2030. We're happy to report that we are there. We have reached that number at the end of 2025, and we've grown the percentage of women in the top 200 by 1% a year over the course of the last 2 years, given the amount of competition and that we absolutely make no compromise in terms of quality of people, this is a significant achievement.

When we go to responsible enterprise, the goal here is to reduce by 11%, the -- our own emissions, through our own operations, and we've actually done much better. At this point, we are at 41% reduction. And that's after we grew the company, adding all these EFTs (sic) [ FTEs ]. So clearly, we've reduced per person, our emissions by 54%.

And when you think of what's driving this, it's really because there's a lot more technology in what we do. We actually work from home partially, we have less commutes to the office. We have reduced the office space and the consumption that we have of all the energy that's associated with buildings, getting into better buildings, et cetera, et cetera. So a lot of activity here, which is paying off.

The culture is being driven. I think we are getting good ratings from the agencies out there like EcoVadis, et cetera, putting us in the top 23% of the companies that have been rated so far. I think there's more to do to tell our story, and we are working on that.

If we go to the usual pages that we have in the stack. I'm going to Page 9. So you see the layout of the numbers. As I said, you'll find more easily read breakdowns in the press release. But -- so you see total revenues up 1.3%, insurance, up 0.6%. Other revenues, 7.8%, so clearly going faster than the insurance premiums. I think we're happy with the business information momentum here at 16%, organic and almost 19% with Cedar Rose.

Third-party debt collection continues to perform 24.4%. We're seeing really good demand from clients here. Clients that we've been working with on insurance, for example, but also others. Factoring is down. That's really the economy, I would say. And then good performance as well in insurance fees, the fees we get through our insurance contracts, which are outpacing the growth of the premium. So for us, that's good.

If I go to the next page, the description of the growth by region is very much in line with the things we've discussed through the last 3 quarters. Western Europe, there's this one-offs here and there, but pretty much reflecting a low growth economy in Western -- in that part of the world. Good performance on services there. Northern Europe, which is essentially a big piece of Germany, is Germany. You see that we have subdued growth, and that's both TCI and as I said, factoring. Central Europe is negative. We had some contracting transferred from Central Europe to Asia. So it's a bit more negative than it really is, but it's pretty much in line with the rest of Northern Europe.

If you look at Med & Africa, still outpacing those regions, and that's been the case for years, but with slightly slower growth. So we are seeing a little bit more cautious stance here. And then finally, North America kind of flat, that the growth in the world right now, as I said, is driven by emerging markets, and you see that in our numbers with Asia Pacific and Latin America growing 8% and almost 12%. Clearly, I mean that's just a reflection of the global economy.

If we go to the next page, you see that, again, we had a good year in terms of new business, best in many. That's a reflection of the work that we are doing to invest in sales forces. Inside those numbers, you actually see some significant growth in the mid-market space, which is the one that we have been targeting. And you see retention of clients at literally the historic level that we've seen for '22, '23, so 92.9% in total for the year. Prices are down. That's not new, continues to happen. I mean it's pretty much the 10-year average here, minus 1.6%. And then volume is slightly better than '24, which was a real low point, but nothing really spectacular and below the average that we've seen in the last few decades. So again, no surprises.

If you go to the last page on Page 12, you see that Q4 came in at 39.2%. So the total year came in at 37.5%. I think what you see here is the number of bankruptcies in the world clearly exceeds 2019. As I said, it is at the highest level we've seen since 2013. Our number -- there is a uncorrelated thing here, the number of claims in our portfolio is down 5% from where it was in 2019. The individual amount is higher. There's been a lot of inflation, obviously, since then. And we see severity continue to increase as the cycle develops, right, clearly. But I think the company has done a good job of containing losses here.

You can see that we haven't changed our reserving policy. We're still at 83.7% in terms of opening year. And we continue to see nice throwbacks from the prior vintages at 47%. We're pretty much at the same level that we were in 2023. So no change from a risk management standpoint.

If you go to the next page, we're able to compare the last 4 years of losses per region. And really, the message on this page is nothing particular. You look at the 4 largest, most stable regions at the bottom. They're all in the 30% to 40% range. So really not much to report on this side. And even 3 smaller and more volatile traditionally markets like North America, Latin America, Asia Pacific are all in the 40% -- low 40% range. So really not much to report. I mean the risk is under control and that's the way we look at it.

You see the same story on Page 14, which develops the latest trends by quarter. And again, here, there's not much to say. Little bit of volatility in Latin America, but we know that's by nature, a place that is more volatile. And also its place -- its much smaller for us. So mathematically, we are going to see more volatility.

If you go to Page 15 on the cost. So you see, we've had this -- the same kind of chart over the last few quarters. You see cost up Q4-on-Q4 by 3.4%. It is up, but it is up much less than it was in the prior quarter's comparison. If you look at the top right-hand side of the chart, you see that our cost ratio for the year goes from 33.7% to 35.6%. And same phenomenon we've already discussed on prior calls. Part of this is inflation that's been embarked because, as you know, we have had to raise salaries following the inflation surge in '21, '22. So that's 1.3%.

We are also making investments like in the prior quarters. That's 1.6 points of cost ratio, and that's offset by 0.9 decrease driven by the growth in services, sales that we have in the company. So the full year costs are growing 6.3% from last year. We have, as we said, embarked inflation, but also all the investments we're making in data, in technology, in connectivity and in sales are part of that story. And we're doing it because we're focused on the future. This is really about -- not about this year. This is about the next few years to come. So we think the company is well positioned. You can see on the bottom right-hand side, the cost ratio before reinsurance is slightly above where it was Q4 '24 to Q4 '25.

So that's the story. I'm going to turn it over to Phalla to take us through the next parts of [ the presentation ].

Good evening, everyone. So now we are on Page 16, and we're talking about reinsurance. As Xavier said, the thing, our reinsurance treaties have been renewed. Absolutely no issue on the renewal. We also obtain some improvement in terms of commissions. I think there are -- our insurers are really -- our reinsurers really enjoying the fact that we still have the losses under control.

In terms of cession rates, you can look at the premium cessions were pretty stable compared to last year, and the claims cessions rate has decreased slightly. As a result, we are passing on to the reinsurers EUR 112 million, slightly below what we passed to them last year, but still, I think something that they appreciate very much.

This leads to the next page, Page 17. Net combined ratio at 73% with an increase of the net cost ratio in line with the increase of the gross cost ratio that Xavier commented on. And increase on the net loss ratio, again, at the same trend. I think the gross loss ratio [ increased ] by 4 and net by 5. Nothing else to be added. I think from Q3 and in Q4, exactly the same trend on the net than on the gross.

This lead us to a net income of EUR 222 million, minus 15% compared to last year, then we have exactly the minus 15% at full year Q3 compared to full year Q4. So really -- fourth quarter really in line with what we had in the previous quarters.

Page 20, return on average tangible equity. So we look at first, the IFRS equity moving from EUR 2.194 billion to EUR 2.213 billion. We have the net income of the year, EUR 222 million, and the payment of dividend EUR 209 million, all the other captions pretty significant net-net, led us to a decrease on our return on average tangible equity from 13.9% to 11.4%, mainly driven, of course, by the increase of the net combined ratio.

For this quarter, we have the comments on the capital management. So solid balance sheet, EUR 8.090 billion total assets in euros. We commented on the investment portfolio. I think factoring at EUR 3 billion has not changed that much compared to last year. Slight decrease, but not that much. And then the tangible book value per share at EUR 13.1. I think we're trading today at EUR 16 something, which is slightly above.

Solvency. So robust solvency. We're moving from 196% to 197%, has not changed much despite the fact that we are distributing more than 84% of payout ratio. As Xavier said, I think there's 2 -- well, variations that we want to comment on. The first one is on factoring SCR, which is the risk-weighting assets. This is really coming from the fact that we are -- we have our factoring contracts previously insured by [indiscernible] by Coface with single A, is now brought to our syndicate at the Lloyds with AA. It is, of course, has a huge benefit on the factoring SCR that you can see on this page.

On the other hand, of course, it's a AA, but it goes back to us. So on the insurance side, at the end of the day, we also -- well, as you know, we're buying the AA, so this has a cost on the insurance SCR that you see here that also has a cost actually on our own funds because it's a track capital. So this explains also the 12 points -- has been deducted in the 12 points that you can see the increase.

In a nutshell, if you look at the lowest -- the syndicate that we have created, that will put it in perspective. The first one is way for our FI business because this is -- for them, it's a huge benefit for us as well to grow the FI business because bringing their contracts to Lloyd's will allow our FI, which are the banks to decrease their capital consumption because Lloyd's is AA. And for us, at the end of the day, in our solvency, as I said, net-net, it will be a benefit that we can estimate around 2 points of solvency ratio. So I would say mostly win-win, win for the business and win for the solvency as well and the strength of the balance sheet.

On the right-hand side, you have the usual shock. So you can see the market shocks still way above the upper range of our comfort zone and then the crisis 1/50 events, 182%, again at way above the -- upper range of our comfort zone..

If we move to Page 24, this is just illustrating in amounts the fact that we have EUR 2.6 billion of Solvency II own funds to be compared with our EUR 1.317 million of total SCR factoring and insurance business all included. Xavier?

So this brings to the final page here. So another strong year. We are delivering close to through the cycle targets in a more challenging environment. The economy is weak. There's a lot of volatility. There's a lot of uncertainty. Clearly, it's challenging on the risk side, but at the same time, there's demand for the product that we have.

We have, at the same time, maintaining RoATE at 11.4%. Solvency is strong, balance sheet is strong, and the business continues to look to the future. I mean, so what we're doing, we're really investing in BI in debt collection. We are investing in sales forces, we're investing in connectivity. We're investing in technology, in data. So we're really preparing this company to go to the next phase here.

I think we are -- we have demonstrated our resilience and today, what we would call a low growth environment. And I think we are delivering numbers at the same time that we're preparing for future I think that's the main message I want to leave you with. The company just celebrated its 80 years in France. We had celebrated our 100 years, 3 years ago in Germany. And the feedback from the clients is just very good.

I mean we -- I've met many, many clients over the last week that have been with us for 50, 60, 70 years. So it stresses the fact that Coface is a short-term risk business, but wired in the long term. I mean we have long-term relationships with clients, with distributors, with rating agencies, with reinsurers, with brokers, et cetera, et cetera. And so that's really -- we're continuing down that journey.

So that's what I have for you today. Happy to take any questions you might have.

[Operator Instructions] Your first question comes from the line of Pierre Chedeville from CIC.

Two questions from my side. I know that you don't like a lot -- the guidance, but just to clearly understand that -- we understand that in Q4, we've seen a significant degradation of the combined ratio. And I wanted to know if for the coming 1 or 2 years, 76% -- or around 76% is the new normal? Or do you think that we should stay around your initial guidance of 74% through the cycle? Or do you think that the situation is a little bit worse what you anticipated 1 or 2 years ago? That is my first question.

My second question is regarding debt collection, which is working very well, which is quite understandable, according to the environment. But I wanted to know if you have a leverage on that type of activity. I mean that do you have a platform that can treat without investment, or more investment, more clients? Or if you have to invest in this activity, like you have to invest in BI, for instance, so far?

Okay. So I mean, on the first question, you are challenging us because we have taken a stance for 10 years now that we do not provide forward-looking guidance, or short-term guidance on our numbers. So I'm not going to start today, unfortunately.

I think we've been -- the story has been developing pretty clearly from, I would say, 2019 and then the government storing money at the economy, zombie companies being probably supported more than you would have expected. And then the normalization I've been talking about for what, is it, 5 years now or something like this, which has happened, frankly, slower than we probably anticipated in the first place, but it is happening. And I think Coface is demonstrating that it's able to manage this, I would say, long-term wave, which you've been seeing because you haven't seen the same correlation between our claims and what the market is showing.

So -- and at the same time, we're still delivering -- you look at the year through the cycle targets despite having record in solvency. So I think the company is performing well.

On the DATCO side, actually, the investment started years ago. When I joined Cofast, we already had a program to replace 30 or 40 different platforms by 1. And it took us years and, quite frankly, quite a bit of money to get that done. And we got it done after COVID, we decided, despite all of the difficulties of such a project, we decided to launch this program in 2021, I think it was. And it was tough because making such a radical change was disrupting to existing business, but it was at a time when claims were extremely low. So we did it.

And now I think we are benefiting from these investments, both financial, and technical and human. And that's why this business is able to grow and is actually profitable. We're making money off of it, right? So I think it's actually -- again, the result of long-term strategy and investment coming at the right time, and now we're able to see the benefits.

I must -- I will add the fact that we're probably one of the few companies, DATCO companies in the world where we have exactly one unique system, one unique process wherever you are, and wherever you have to collect in the world.

Yes, it's a unique value proposition. But I think you're right to point that it is -- we put the investment in front of them of the business, not the other way around.

Your next question comes from the line of Amalie Zdravkovic from Deutsche Bank.

Amalie from Deutsche Bank. Congratulations on the 10 years. I just have 1 quick question on the reinsurance. You mentioned sort of you've seen improved conditions. Can you give us a clarification on that in the sense that -- is that mainly on price? Or was that mainly terms and conditions that you sort of saw an improvement on there?

Yes, it's mainly on the commissions that we see from the reinsurance line.

I mean this -- it's not a dramatic change, but it's -- every time you go to the market and you asked the question again. I mean what's the price going to look like? What's the capacity going to look like? It's a win when you come back and you say, well, you know what, it's oversubscribed. We get better terms and the market is there, and people want this business. And it's been happening now for a long time. So as I said, we're long-term partners. We're not looking to radically change this program overnight. But it's been growing steadily year after year, and I think that's a good sign, particularly in this phase of the cycle.

Your next question comes from the line of Michael Huttner from Berenberg.

Fantastic. Yes. Congratulations on lots of anniversaries. I had 2 questions. One, a bit forward-looking, I beg your pardon. Here it goes. From your experience, does it feel like we're at the low point or -- the reason I ask is your -- I spoke with your fantastic IR a bit earlier and he pointed that Q4 2024 was a challenging comp. So now it's behind us. So I was hoping that we would have better comps. In other words, could talk about things relative to year-on-year improving. But of course, it depends on whether we suddenly get a shock or the trend is down. I know it's forward-looking, but going to just try my luck.

Next one is what's next steps? So you were getting a little bit more disclosure on your BI. How fast will the -- will this disclosure evolves, maybe you can give us some pointers?

And then the other one is -- so this is like 26 years ago, 27 years ago. You and your peers portray themselves as tech companies. I think that's right. I think there was a lot of branded paper showing that you were all digital and whether it was the Internet was the world then. What I don't understand is given that AI is so prevalent and fashionable and everything, are investors not kind of saying, oh, are you AI and buying your stock? Or is it you saying, well, actually, we're not. There seems to be a small disconnect there.

Okay. So I mean, if I had a crystal ball to forecast what the future looks like, I can tell you, I would be rich. I'm not sure I would share it on this call. But unfortunately, I don't have that, right?

So you see the world. I mean every day, you open the -- literally every 4 hours, you open the papers and you wonder what's next, right? So is there going to be a major geopolitical crisis? Are we going to see on the other hand, the end of the war, I -- God knows. So I mean, very -- I'm unable to answer that, quite frankly. But it looks like if I had to look at the world the way it is, we've seen increased volatility on geopolitics, tariffs, trade wars, supply chains, big technology change like greenhouse gas and carbon emissions, and the emergence of AI. So that's a lot of stuff. So it's probably going to remain volatile for some time. That would be my guess.

In terms of BI, yes, we are we're giving you more details. I think what the market has told us is that BI is too small today to be really materially impacting our business. So I think we're focused on growing the business rather than trying to analyze it today. And so we -- will there be better disclosures over time? Probably. But right now, the focus is on really running and investing in the business.

And then on AI, I'm not sure I understood your point. At the time -- I mean, 27 years ago, I wasn't here, so -- but I do remember the dot-com crisis, when everybody would label their business as a digital company, even if they were in mining or in food processing. Here, I think for Coface, there's a real thing going on because we are managing EUR 730 billion of credit exposures on 5 million lines. And we're doing this with data. We're not just taking broadcast on how we run the business. We're running line-by-line analysis and monitoring of all this stuff.

So there's a machine. It's a real data machine here. And I mean just look at the FTEs, we've got 1,000 people in the BI business. So that's real, digital. We don't produce anything physical. We just provide data. Today, if I look at the operations of Coface, we have 15,000 credit decisions every day. These decisions are 70% made by machines, helped by AI. And the other 30% are made by humans, helped by machines, helped by AI. And then we have one request of information from all corners of the world every 5 seconds. So clearly, we're not processing this with paper. It's a real digital business.

I think that's a major shift, if you will, from what the story was 20 years ago when people just had, I would say, data interfaces, or client interfaces between their business that hadn't changed that much. And here, it's a deep inside change that's going on. I don't know if that was your question, but I'm trying to provide some context.

[Operator Instructions] Your next question comes from the line of Benoit Valleaux from ODDO BHF.

Two questions on my side. Maybe the first one is regarding to competition at the beginning of this year how do you see the competitive environment? We know that a significant share of your business is renewed in Q1. So any comment would be great, on that front. And just maybe a follow-up on AI. So take on this.

But maybe on the other way regarding your portfolio and exposure, did you take any significant risk action management, I would say, to factor in any potential disruption on some sectors, some of your exposure? I mean, did it lead you to make any significant action plan?

Yes. So I mean we're always -- so Coface is a long-term company. We have relationships with clients that we'll spend decades and there's really no change to our approach to it, which means that we're always very careful at the renewal time to make sure that we strike the right balance between not taking a bad deal or going crazy on the risk at the same time, keeping those relationships that have been supporting this company over the long haul. So no change here, I would say, on the way we think about renewals.

On the AI and portfolio exposure side. I mean, we haven't seen AI yet create events in like bankruptcies in a meaningful way, right? So I think it's too early. The entire market is trying to guess who's going to be a winner, who's going to be a loser. I don't think it's just about bankruptcies here. It's more about valuations and business models for the long term. But for us, we're in 3 to 6 to 9 months max kind of risk spans. I don't think AI has disturbed that picture yet.

We use -- everybody is using AI tools for a number of things. Everybody is trying to use agents to automate things that can be automated. For us, AI is a little bit deeper because, as I said, our core business is manipulating data. And we also have a lot of internal data. So we use AI inside the company to build things that we need to build. So for us, it's -- I think it's quite important. As a tool it doesn't change what we do, but it's a good tool to use, or a better tool to use than the scores and stuff that we had before.

Okay. Maybe regarding the first question, if I may. My point is, do you believe that despite, I would say, increasing claims frequency and using increasing severity, as you mentioned, we should still have to expect I don't know, 1% to 2% price decrease this year, which is a usual long-term trend? Or do you believe that it could be a bit less than that?

Look, it hasn't -- I haven't seen any change from anyone here. I mean I think it's also because the insurance market is profitable. People have capital to deploy. This is a -- been in a pretty good space and it still looks attractive from -- if your combined ratio is 95% or 98% today, you can lower it a bit by diversifying your risk into credit. I think it still sounds attractive, I think.

Your question comes from the line of Michael Huttner from Berenberg.

Three questions. One, have you had an approach? I ask because you're obviously a specialty insurer and Zurich clearly is interested in specialty at the moment. They approached Beazley, I think, Beazley admitted or they admitted back in July, and we didn't know about it. So it's a question I have to ask.

Second is on the Lloyd's syndicate, a 2% benefit for now. Is there more to come if you increase the usage? Or is it -- are we now done?

And then the last question is, again, a forward-looking one. So for me, the biggest risk always is the one hard to guess is fraud. Does AI give you a better handle on that? Or does your data machine give you a better handle on that? And how much better is it? In other words, how much more confident are you on that risk?

I'm just trying to -- the first question was on Beazley, was it?

Well, have you had an approach? Has anybody knocked on your door and said, please, can I buy you?

Oh, well, we would never comment on any such thing. Cofast is -- I think we would never make any comments, but Coface is driving its own -- what can I say, we have our own plan. We're clear on what we want to do, where we want to go, and that's as much as I can say. Do you want to take the second one?

Just a second one. I think this was a setup, right? So -- and then once it's set up and then you grow the business, then it will go -- the capital consumption will go with the business increase. So, let's see.

The good thing about Lloyd's is it puts us at a better place when it comes to dealing with financial institutions. So it's, first of all, defensive and being able to play in the market. And then we get -- yes, we got a benefit because we have our own factoring business. So that's pace for itself that way. That's great.

And then the last question. Can you...

Forward risk. So yes, so forward risk. With all your data machine, are you better at this than you were maybe 10 or 20 years ago? .

Well, I mean, we manipulate a lot more data. So the -- I would say it's progressive. It's a cat and mouse thing because our tools get better, but the fraudsters have more tools, right? So I mean it's -- I don't think we've seen major fraud lately, but there's always been some fraud somewhere in the system. And it's the thief and the police, both getting better tools, trying to outpace each other.

Excellent. And then last, then I'll leave you. I'm sorry. Sorry to be excited, so far since the end of the year or the start of the year, has anything changed that you would kind of say, oh, there's a big difference in the market or in insolvencies or whatever?

I think we've talked about it. I think the environment continues to be surprising. I mean if you can predict what's going to be in the papers tomorrow, good luck. So I think we see continued volatility, continued uncertainty, not much more to talk about.

And we also enjoy the fact that we have not been caught in [indiscernible] another big one.

Another big one that we skipped, I guess.

[Operator Instructions] There seems to be no further questions at this time. I would like to hand back for closing remarks.

Well, thank you very much. Look, we're happy to have gone through this year '25. I'm sure '26 will be very interesting as well. But be assured the company is focused on building for the long term and managing well in the short term. So thank you very much for your attendance. We're going to leave it here. I think our next call will be -- do we have the date? In May. Okay. So we've got plenty of time here. There'll be plenty of things to go. Thank you, everybody.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Coface SA 9 Months' 2025 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Xavier Durand, CEO. Please go ahead, sir.

Thank you very much, and good evening to all. Thank you for logging in this call. We'd like to start on time. Well, I mean, as you will have seen by the announcement, we're recording another very solid quarter in the third quarter at Coface. The number is EUR 52 million for Q3 2025 of net income, which brings the total year-to-date to EUR 176.3 million. A lot of the discussions and points that I'm going to make are actually very much in line with the trends we discussed in the prior quarter. So really no big surprise.

You see total revenue for the first 9 months up 1.8%, that same FX and the parameter with the premiums for insurance growing 1.1%. You see revenues from other activities that are up almost 11% in the third quarter, which continues to validate the strategy we've put in place to develop an ecosystem around the credit management space.

We see client retention, which is back up close to our 2023 record at 93.5%. Pricing continues to be down 1.8%. So clearly, the market is competitive, and there's pressure on prices. A little bit below the -- or in line with the historic trend. The Business Information continues to show nice growth at 14.5% through the first 9 months and Debt Collection is up 38.5%. While we are seeing also a pretty good quarter in Q3 for factoring, which after a couple of negative quarters is now up 0.4%.

On the Client Activity front, we'll discuss that later, but it's slightly positive, but clearly, we're in the soft part of the market here. The loss ratio is up 4 points to 39.6%, bringing the net combined ratio at 71.9% for the first 9 months. I think that's actually best performance in this industry. The gross loss is up 4 points. We are not changing our stance in terms of reserving or reserve releases. We still see nice throwbacks from the prior vintages.

The cost ratio pretty much like we've discussed in the prior quarters, is up 3.4 points. And that's really driven by our investments, which, again, are around Distribution and TCI, around Data and around Business Information, around Connectivity and Technology. The return on average tangible equity stands at 12 points, and we continue to change our leadership team and then to prepare for the next phases with the appointment of Christina, the CEO for North America. Her background in credit is an asset to keep growing this part of the world.

We added, as we often do, one page on Page 5, which talks about actually our services businesses. You can see on the right-hand side of the chart, when we add up BI and Debt Collection in dark blue and Factoring in the light blue, you can see how the percentage of these businesses as a percentage of the total increases steadily, regularly. We're almost at 11% for 2025. And I think that shows that the strategy is starting to be more material for Coface as we go ahead.

We continue to see nice growth, as I said, in Business Information. Actually, the new business that we've signed this year in annual contract value is up more than 50% versus the first 9 months of '24. So I think we're starting to see performance here in a lot of geographies. We're seeing the integration of Cedar Rose, which we closed not long ago, going well. This will be consolidated in the fourth quarter of 2025. We're actually starting to see good performance on the larger accounts and being able to sign more substantial deals.

Debt Collection itself is continuing to show that it's countercyclical. And the volumes that have been entrusted to us are up 35%. So I think these strategies are paying off. At the same time, that we're experiencing, what I call the tougher part of the Credit Cycle. Clearly, the market is not growing in our business. There's, as you know, lower inflation, slowing economies, commodity prices are pretty low.

The good news is our risk management is active as ever and has been very effective. So far, we've kept away from the recent flow of large bankruptcy news that you've been able to hear about. And we are seeing about a 16% increase in the number of risk actions that -- risk prevention activity that we carry out on the different sectors as the news develop and the market continues to evolve in a pretty -- actually unpredictable, but pretty active way.

So going into the next pages that you're very familiar with now, on Page 7, I've already described a lot of these numbers. Just one thing I want to highlight is that the insurance-related fees percentage to the total premiums that we collect is held up really nicely, from last year. So that's a substantial source of income for us and the profitability for our business. And they've been growing the fees at the same level as the insurance revenue at plus 1.6%.

On Page 8, we describe the growth by region. And I think what you see here is given the nature of our business, a reflection of the state of the global economy. I usually talk first about Northern Europe, which is essentially the German area -- Germany area and Central Europe, which is -- which economy is very connected to Germany. And you can see here that this part of the world has actually slowed down.

Same for Western Europe, which is France and the U.K. At the same time, you see Med and Africa doing a little bit better, but this is a region in the world where we used to see more like 5%, 6% annual growth and which has slowed down to 2.5% at this point. North America with an economy that's outside of the AI bubble seems to be slowing, is seeing 0.6% growth.

And really, where we are seeing more dynamic growth is now in the emerging markets. So this is the case for Asia Pacific and Latin America, which have been less affected, I would say, by the slowdown that we've seen in Europe or what's going on in the U.S.

If we go to the next page, you continue to see -- again, here, the story is very similar to prior quarters, record new production at EUR 102 million. That's really driven by the investments that we're making and by the strategy we've pursued in terms of partnerships and distribution. As I said, the retention is at a near record level. So we are very active. We take good care of our clients. We are very aware of their options. And we're still being disciplined in the way we manage risk, but I think that's our trademark.

In terms of prices, it's down 1.8%. So continues to be a very competitive market. We continue to see capacity being added into the market. And then finally, in terms of activity, we are back in positive territory, albeit just above the 0 mark at 2.1%, which historically, if you were to go back in the next -- in the last 6, 7 years would be a low level.

If I go to the cost side -- sorry, the loss side, you can see that we had another good quarter at 35.1% loss ratio before reinsurance and including the claims handling expenses. As I've discussed already several times, the number of claims is more or less at the 2019 level, while the claims amount is higher by almost 13%. What's changing is that we continue to see an increase in the average amount of the claims. We see more material cases showing up in terms of bankruptcies or insolvencies. We've seen a number of recent high profile U.S. cases. As I said before, we were absolutely not touched by these.

As you see on the bottom, we continue to open the new vintage at pretty much the same level, 78%. You see a nice throwback from prior vintages at 41.9% from the prior years. And clearly, the business continues to perform in terms of risk management.

I'll skip Page 11, that represents the full year loss ratios. I mean all I can say is that it's slowly but steadily moving upwards. Page 12 shows the quarterly story. And really, there's nothing to report on this page of any worth. It continues to be in the 4 largest markets and more stable markets that we have on the bottom of the page. It continues to be pretty benign in absolute terms. And then if you look at the smaller and more volatile markets on the top of the page, again, not much to report here. There is inherent volatility given that these are smaller places and more volatile economies, but at the same time, we're performing well. And so not much going on, on that page.

If you look at Page 13, where we talk about costs, so we've already discussed again those metrics. Costs are up 8% from the same period last year. As we did in prior quarters, we disclosed on the right-hand side how the cost ratio evolves from 2024 to 2025. And, like we said in the prior quarters, inflation accounts for 1.1 point of increase of the cost ratio. At the same time, we are making investments, which are costing us 2.4 points of cost ratio, and these are compensated partially by the contribution of services, which are growing fast, which are lowering our cost ratio by about 1 point.

Out of the 2.4 points of increase in investments, we have about 40% that are tied to the Insurance business and 60%, which are tied to the Business Information and Debt Collection businesses. And it's pretty much the story in terms of costs. So we are able to make those investments because I think our cost base is actually good. And I think the current environment completely validates our strategy of investments in Business Information, in Data, in Technology, in Connectivity and in Distribution for the paid credit insurance business, which I think carries the performance of the business.

I'll turn it over to Phalla for the next 2 pages as we usually do.

Good evening, everybody. So let's look at the reinsurance page. Now we are on Page 14. In terms of premium cession rate, you can see that has not changed last year, it's pretty stable. Claims session rate has increased a little bit. Of course, this follows the fact that our claims ratio is deteriorating a bit. This lead us to reinsurance result at minus EUR 83 million. I think we're coming back in this quarter at a normal level of reinsurance results.

We move to next page, lead us to a net combined ratio of 71.9%, still below the through the cycle level. The net cost ratio increased by 3.4. This is coming from the fact that, of course, our gross loss ratio is increasing. Net loss ratio up 4.1. Again, I think this is following the gross loss ratio increase. In terms of quarterly net combined ratio at 73.1%, I just want to remind you, I think that we're probably close to the mid-cycle now. Compared to previous quarter, just to remind everybody that last quarter, we had this impact on the net loss ratio related to the U.S. dollars drop that we haven't seen in this quarter.

If we move to Page 16, financial portfolio, the mark-to-market value stands at EUR 3.3 billion. You can see that we're still holding a high level of cash and liquid assets at 16%, which is now with the new money invested at 3.7%. We haven't changed the rest of the asset allocation for a while now because we have derisked our investment portfolio.

In terms of net investment income, I think there's 2 lines to be highlighted. The first one, of course, is the recurring income. And you can see that without -- even without gain -- realized and unrealized gain and loss, the accounting yield is increasing compared to last year. If we look at the FX impact, the minus EUR 29.4 million -- just again, I think this is also coming from just a result of the U.S. dollars drop this year by more than 10%, out of which the EUR 29 million, we have EUR 20 million coming from the FX impact -- negative impact related to the U.S. dollars and the minus EUR 9 million related to hyperinflation, especially in Turkey. The offset of the FX impact is booked actually in the insurance finance expenses on the minus EUR 0.9 million, out of which EUR 23 million is coming from the FX gain. So all in, not much impact from the U.S. dollar movement, but it's just the geography of booking that shows different lines.

If we move to Page 17, I think as a result, net income at EUR 176.3 million, down 15% compared to last year. Just again to remind everybody that last year, we had a really, really high, almost a record year in terms of net income. We're coming from a very good results. So -- but I think this year, EUR 176 million is a strong performance of our business, as Xavier highlighted. We're trading above the book value per share and above the tangible book value per share.

Return on average tangible equity has dropped with the change in IFRS equity moving from 2.193 million to EUR 2.153 million. No change at all in the work. You recognize the distribution of dividends. We booked the net income for the period, and that's pretty much it. This leads to the return on average tangible equity moving from 13.9% to 12%. Xavier?

Okay. So last page. So as I said, I think we delivered another good quarter in an environment which obviously is a bit tougher. The revenues are slightly up despite, I would say, low energy prices and economy, which is slowing in a lot of large markets, particularly Europe and the U.S. The combined ratio is at slightly below 72%, and it's better than our targets through the cycle despite the fact that we're in this not so pleasant part of the market. And at the same time, we're seeing some nice growth in services, and we continue to invest deliberately in areas of innovation around data, Technology and Connectivity as well as in Distribution for TCI.

The fact that we are disciplined, I think, is paying off. I mean, clearly, this combined ratio, I think, is an excellent level in this industry, if not the best. The fact that we've been disciplined is keeping us away from the recent flow of bankruptcy news. We are seeing new business up in TCI actually by 6%. So in this environment, I think it's pretty good.

On the business side -- on the Business Information side, we are up more than 50%. We see a nice flow of larger deals actually now. Debt Collection is up 38%. We are integrating Cedar Rose. We now have almost 850 people dedicated to BI and to Debt Collection continues to grow. And clearly, I think the strategy we've put in place of investing in those areas of differentiating through service of investing in Distribution is paying off. And the recent, I would say, environment that we operate in and the performance of the business confirms, I think, of this choice. So these services are now 11% of our total revenues. They're growing double digits, and I think we're really happy we have them.

With that, I will leave it up to questions.

[Operator Instructions]

And your first question today comes from the line of Michael Huttner from Berenberg.

Fantastic. Well done on lovely results given the environment. It really is outstanding.

I had lots of questions, 3. So gross loss ratio seems to decline quarter-on-quarter, so 38.7%, 36.9% and 35.1%. I just wondered things look as if they're improving. I know you're saying they're getting tougher, but they look as if they're improving. I just wonder if you can say anything on that?

The second is the tax in Q3 looks extraordinary. I couldn't work it out precisely, but I think it's around 19%. And then I remember you saying at the half year, tax -- in France, tax wouldn't affect you much, but it looks as if it's almost benefiting you. So I just wondered if there's anything?

And then on the growth in -- you've got both growth in new business in TCI and also in Business Information, very strong growth, EUR 80 million and 50%. When will we see that come through in terms of profit? That's it.

Okay. So I'll just handle the last question, and I think I'll let Phalla take the first 3, actually, right? There were 3. There was -- oh, 2. Tax -- the loss ratio and tax.

So in terms of TCI and BI, well, TCI is a long-term endeavor. As you know, when you hire a sales guy and it takes a few years for that person to pay back its cost, but I think it's a very worthy investment to make for the long term, accessing spaces in the market that are not currently covered by the current brokerage infrastructure.

In terms of BI, the return is a bit shorter, but the -- I would say this business is still pretty small. I mean this is a very big market in which we are growing faster than the market. We're taking share. But there's still a lot to do to make this business, I would say, of scale and matter to the company in a financial way. So I think we haven't changed our guidance in terms of what we want to get in 2027. And pretty much we're focused right now on trying to grow the business to build an infrastructure that makes sense to acquire skills and distribution and clients. And I think it will be a little bit of time before this turns material in terms of the results of the company.

I'll take the first question on the gross loss ratio between Q1, Q2 and Q3. On a quarterly basis, sometimes you have some large losses -- large special reserve that happened in Q1 and Q2. Remember that we had in Latin America and in the U.S. in the first semester, and we don't see it in Q3. So I think that you should look at the year-to-date. I think what is really meaningful is when you compare the year-to-date Q3 '25 compared to Q3 '24, which is up 4 points. And between the quarters, you have some large coming in and coming through. I think that's the answer. But overall, we see the loss ratio increasing surely and steadily.

In terms of tax, and you know that the tax in Q3 is mainly driven by the fact that we have, again, from one quarter to another, you recalculate your deferred tax. And depending on the geography where the tax rate is lower and you have more benefit, of course, it's lower down the tax rate. Nothing more than this. Will we be impacted by the -- all the changes in -- that discussed -- currently discussed, not passed yet, on the French tax? No, because I think it's the scope is really the French businesses only. And so far, we are below the threshold.

Yes. We're too small in France itself to be at the heart of the legislation that so far is being discussed. As you know, until the ink is dry, you never know. But I think at this stage, we're not in the scope.

So what tax should we use then in our estimates? Should we -- because it seems to vary. We had 26% in the first half year and now we're at 23%.

Yes. I think it depends on the geography. The taxes is driven by the geography which is applied. So when you're making more money in geography where the tax rate is lower, of course, the average tax rate is lower.

Varies a little bit, but I mean, we've kind of been pretty much in the same range, right?

Yes. We're always in the same range between 20%, 25%, and it really depend on the quarter from quarter to quarter.

Your next question today comes from the line of Benoit Valleaux from ODDO BHF.

A few questions on my side, if I may. First one, maybe, Xavier, you mentioned an increase on new business and at the same time, some pricing pressure. So can you please elaborate a little bit regarding the competitive environment? I mean, do you see this competition at this point of time of the cycle?

I have a second question related to BI. So you still continue to invest in that business? Do you believe that you could be breakeven on this business next year? And do you confirm your RoATE contribution target of 50 bps in '27? Or maybe you've changed a little bit your mind taking into consideration the growth potential of that business just to know?

And maybe a third question regarding Factoring. You just mentioned good performance in Factoring business. I know we had this discussion a few years ago, but what are the benefits of Coface to still be active in Factoring business in Germany and Poland? I mean, could you consider to exit one of those markets? Or do you still plan to continue to benefit from your existing franchise on this business?

And maybe if I may, a last question regarding reinsurance. I know it's maybe a bit too early, but do you plan to change anything regarding your reinsurance coverage? I know that you plan to remain very consistent on this, but with some -- maybe some pricing changes, could you change, for example, your attachment point regarding excess of loss or anything or not really at this stage?

All right. Well, Benoit, a great set of questions here. Well, I'm afraid on many of those questions, I'm going to be very boring because I'm going to repeat things that you already know, but I guess that's the game, right?

In terms of, first of all, increase in new business, yes, we are making investments in Distribution. And I think we are not seeing any new business growth come from traditional channels, what we call brokerage basically. It's more of a churn of existing accounts between existing players. So our investment in Distribution means we are really trying to get out there and do the market development work. And I think it's paying off in the sense that we are seeing new business growth. Obviously, we choose and pick the areas to make sure that this is areas where we're going to be profitable.

It's not about lowering our price or anything like this. And a significant portion of that business that we're getting is what we call new news, so people who are not insured before. Competition remains strong. I mean I think the way the industry works, we've had 4, 5 years in total. Maybe people haven't enjoyed the same combined ratio that we have, but they still enjoy pretty good combined ratios. And so as such, it's been seen by a lot of insurers as a profitable space. And a lot of people are looking at it saying and wondering how they can add capacity.

We're seeing that at play, particularly in markets that are more dynamic like North America, where capital tends to move around faster. But we're seeing it in other places as well. Of course, other entrants don't have the infrastructure that we have. So they tend to add capacity to existing things or to go into slightly different kinds of products, but still putting pressure on the business.

In terms of BI, I mean, I've told you, I don't know how many times that we run it more or less at 0. It depends on the quarter. I mean there will be some quarters where it'll be a little bit negative or it will be 0. But the -- we haven't changed our stance. I mean I think it's a nice venture. We're learning a ton. We are building something quite unique. And in many ways, it's working. I mean we're seeing it take hold in many different geographies. We're seeing that it's beating the growth we get in any other segment actually, but it's still very small.

So whether it makes a buck or loses a buck doesn't make a difference really for Coface. I think what really matters is what we are building for the future. I think you -- we have no reason to change our guidance at this stage that we gave for 2027. So no change on this front. But again, I mean, I think for me, the key is can we build a differentiated machine for the future that will really expand the breadth of what we do and provide a different source of revenues for Coface, and that's really what we're focused on.

In terms of Factoring, that question has been asked, I think, since I joined Coface from the first day. And I asked that question myself. I mean, obviously, when I got into the business, I looked at it coming from the banking world. And I thought, well, does it make sense to keep it? I think we've concluded and still do that it does. And the reason is we are operating in 2 markets where we have scale, where we have a great team and where we have the funding and all the capabilities. And these 2 markets, which are Germany and Poland, these things are very much intertwined with our TCI business.

It's basically a product we sell along with TCI or in 1 or 2 different contracts. It's an extension -- I mean, it's basically managing the same risk, except in one case, you provide liquidity in the other case, you don't. I think we have one of the best teams in the industry, if not the best. I think these guys have been -- have a great track record. And it makes us different in the German market, and I think it's a great asset to have. It also gives us scale, quite frankly, in terms of we use the same data, we use the scores, we use the underwriting, we use -- we share a lot of clients in common. So it makes a ton of sense for me. And then I'll leave Phalla to answer the question on reinsurance. Or are we going to change the -- so...

No, we're not changing.

Short answer is no.

Maybe regarding Factoring -- thank you for the detailed answer. But as you mentioned, it is very well connected, I would say, to TCI business. But -- would you say that this is a business which is accretive or let's say, have a positive impact on your RoATE? I mean, does it have the same level of profitability?

It's neutral in terms of the percentage itself. It just adds scale and volume, and we pretty much get the same returns as we do on the insurance business.

I mean it's been the case for -- that's how we run it, by the way, right? I mean, so I think we're stronger with the 2 businesses together than we are with just one. And from an ROE standpoint, it's completely indifferent in percentage. But if we were to take a big piece out of our business, I think we would be more fragile and we would lose scale. So it probably would have a negative impact, I would say.

Your next question comes from the line of Amalie Zdravkovic from Deutsche Bank.

It's Amalie from Deutsche Bank. I have 2. First, I mean, it's a very strong underwriting result also given the environment and what you've spoken about before. Just -- I mean, how are you thinking about your risk appetite going forward? And has it changed at all? So that's question number one. And then number two, I mean, also on underwriting, more on the cost ratio going forward. I mean, how should we think about a normal level, also sort of given the continued investment strategy that you're on?

Yes. So on the risk appetite, I mean, clearly, we haven't changed our stance. I think we laid the foundation for how we operate. When I joined 9 years ago, 10 years ago, we said we're going to be very disciplined. We're not going to look for growth for growth's sake. We're not going to commit to growth or risk targets that would cause us to make short-term decisions to the detriment of medium or long-term value creation.

And then in terms of the individual actions, they vary based on whatever the environment has to offer. As you know, we have this ability in this business to expand or reduce our risk on any segment based on a permanent basis, and that's what we do. So we have a machine. We make 13,000 credit decisions every day. We -- and these decisions are all based on analysis by our economists and our risk experts who look at each and every one of 540 different sectors -- or segments, if you will. And that -- and their position on each one of those may vary based on, I don't know, tariffs, geopolitics, this or that.

But the overall stance of the business hasn't changed. And I think that's a trademark. Clients know we do this. They trust us. They trust that we are neither -- we're not going to knee-jerk in one way or another actually because that's -- I think that's the worst thing to destroy value in this business, and so we're very consistent.

In terms of cost, so there's 2 things. One is we are investing in Data, in Technology, in Collection -- in Distribution and Connectivity because it makes sense for the business for the long term. We're growing a BI business, so I'll leave that aside. But for the rest, on the insurance side, we're very thrifty. We make sure we save every penny that we can so that we are able to invest in the things that matter for tomorrow. And we're seeing the impact of this. I mean I've spoken a few times about AI and how that's helping us build better scores and better retention for clients and things like this. And it's just the beginning, I think, of that story.

And I think to some extent, there's a connection between cost and risk. I mean if we -- if I spend money building a great data stack, hiring great AI engineers and I build a score that is better than the one we had before, I increase the cost, but I reduce the risk, right? And I think that's what -- that's why we give a guidance that is focused on the combined ratio and not on the individual component because I think that would just be a mistake.

I think technology evolves, markets evolve. We will be impacted by the environment, of course. I mean, that's what we do for a living. But we can invest in more tools that help us better manipulate the stack of risk that we have on the books. And I think that's really what the business is focused on.

Your next question comes from the line of Michael Huttner from Berenberg.

Slide 5, you had this lovely progression, which looks like now 1% a year. So 8.2%, 8.9%, 10%, looks like 11%. At what stage does it become meaningful? Because many times in the presentation, you say it's still small, it's still small, it's still small. At what stage would you stand up and say, "Well, actually, now it's okay."

I should actually return the question to you.

I'm not familiar with that, Xavier. I'm asking the question. I'm not going to answer any questions. I'm not the CEO. I'm not paid that much.

But the point is, I think it's -- the question is the investor view on this and more than the CEO's view on this. For the CEO, it's strategic. It creates capability. It creates differentiation. It creates a -- I would say, a source of revenue that is independent from risk levels. It is a noncapital consuming line of business. So it makes us stronger.

I think from a client and market standpoint, we have many more clients than we did before. We're much more relevant to many more people for different reasons than we were before. And we are building knowledge. We are building capabilities. We're building technology that is differentiating because it's hard to pay for all this stuff.

So for the CEO, it makes a ton of sense even if it's not that big, right? For investors, it's a question of, all right, when do you start counting the revenue? Obviously, it's not the case today. And -- but it will be at some point in time, and I think it depends on the investor, quite frankly. But I think it needs to continue to grow for this to matter more to the investing world.

Very clear. And then on the -- I have 2 other questions. The first one is on Slide 12, I noticed Western Europe is 19.7%. And I just wondered that seems a lovely number. What happened there? What was the benefit? It's fantastic?

And then the last one is you said the benefit of increased investment in business information and technology gives you a better handle on the risk side. Can you talk a little bit about maybe some -- well, specifics, you don't need obviously not mention names, but how further -- much further ahead -- I don't know how to put the question. Can you now see risk or perceive risk than maybe previously? Or how can we get a feel for that benefit?

I'm sorry. So the first question is on Page 12...

19.7% in Western Europe?

Yes, you see ups and downs here, I mean, based on individual files and stuff like this. But I don't think we can derive on a quarter or any -- look at the other ones. So we have always had the quarter at 19% or at 13%. I mean there's some mechanics here at play that don't mean much.

Yes. I think on this page, I will probably -- especially on the way, I look at Q2 plus Q3, which to give you an average of 30%. This is probably more meaningful.

Maybe I should -- starting Q3, I should actually start commenting Page 11 more because there's inherent volatility. The more you reduce the time or the geography, you get to smaller stacks and then it doesn't mean the same thing, right? Your second -- I'm sorry, I forgot your second question.

It's the benefits of the -- how can we get a feel for the benefits of the investment in costs in terms of risk selection or underwriting or just have a feel?

Well, first of all, you see the results quarter after quarter, year after year, event after event. It's been Russia, it's been COVID, it's been -- you name it, I don't know. What was the latest? The cockroaches, whatever. So I think you see much less volatility. Probably you've been following us for years than you did 10 years ago, right? That's pretty clear.

The second thing is when you look into -- deep into the machine, you see -- take an obvious one, you see scores that are better at predicting the future, I mean, at sea. And that's because they integrate better data, fresher data, sometimes unique data that we exchange with clients, and they are more sophisticated machines that are able to get us a better correlation. So that's another very tangible way to look at risk, right? We also make investments in process. We make investments in the flow of things between different agents, which means reduction of errors, better productivity, et cetera, et cetera. I don't know if that's your question?

Yes, yes. That's very helpful.

Your next question comes from the line of Pierre Chedeville from CIC.

I have a first question regarding BI because when you look at quarterly the turnover of this activity, we have the feeling that since the beginning of the year, revenues are stable quarter after quarter, like if there were a kind of plateau, which I do not really understand because there is not a lot of cyclicality in my view in this business, which is quite a recurring business and considering the fact that you still invest.

My first question, was this kind of plateau here? And also, I would be interesting regarding an activity in development to know, for instance, comparison is not reason. But when we look at, for instance, a business like BoursoBank each quarter, they communicate on the number of new clients, net new clients, which is quite interesting as an information to measure the commercial development of growing fast activity. Do you have this kind of information to give us?

My second question is about geographies and more generally about your description of the global economy. Because when you look at your slide, Page 8, when you look at carefully the evolution with or without FX effect, what you observe is that in the biggest or the worthiest region, we are more in a resilient environment in terms of your turnover than in a decreasing or depressing environment.

We also see that economies are doing not so bad on a worldwide view. Of course, it's more difficult. But what is your view regarding the resilience of the economy and your turnover? And once again, I have the feeling that you're still very, I would not say, pessimistic, but overcautious because your comment is lagging a little bit with your figures, if I can say?

Okay. So on the -- if you don't mind, I'll probably handle these questions. But on the quarterly BI figures, I mean, this is a business where you sign annual contracts and the revenue recognition follows certain rules, right? So just because you sign a contract today doesn't mean you start recording revenues immediately, and you have to spread it over the consumption of the data by the client, basically, which usually starts small and then tends to increase and also has some seasonality in it. So I think that's the just of it.

So actually, we have seen that over the course of the last couple of years that we tend to plateau for a few quarters when you add all these things together. And then you have -- at least the last few years, we had a better Q4. And there seems to be the way this business kind of works from an accounting standpoint, but it doesn't mean that the business is not growing from a total value of the contracts that we have in the books, right?

From a number of new client standpoint, I think the case with BoursoBank is a little bit different in that there's a lot of individuals and very homogeneous set of clients in their numbers. For us, what's amazing about this business is that we have very small clients, and we have very large clients. And frankly, the turnover we get from one can be between 1 and 1,000x more. It's just -- it's actually that bad. So giving you a number of clients doesn't really mean that much because, yes, I can -- in some countries, we get a lot of small clients and the number will be impressive, but it doesn't mean much in terms of turnover. In other countries, we signed one deal and suddenly, we're twice the size that we were before.

So that's a little bit of difficulty as long as it's a small business is the means or the -- we don't have great trends to be able to monitor that are very stable in time. And that's a little bit why also the -- so far, you've seen less numbers, I think, than maybe probably you wish to have in a normal mature business because a lot of things are still being put in place and still moving. But I mean, it's a good point. The clients are growing. I think the average amount per contract is growing. And do you want to add something?

Yes, I think that the ACV is much more meaningful for us.

The annual contract value that we put on the books.

That would measure...

So that's -- when we say, for example, we have more than 50% new business more than we did last year, it means that the flow of it -- we're trying to answer that question, but in aggregate euros instead of talking about the number of clients because that is also evolving. As you know, in that business, we serve different use cases. We can look at your client book. We can look at your supply chain. We can help you identify companies. We can help you do marketing. And these are very different things.

So put it all together, and I'm not sure the number would mean a whole lot. In terms of the geographies, so the economies are not doing so bad, I would share this, but they are slowing. I mean there's arguments to say, for example, that the U.S. economy is flat if it weren't for the AI bubble, right, which means in our part, we're not in the AI space. We're in the more geared towards the old traditional industrial spaces. We're in tech, but more on tech equipment that's changing hands.

So we don't really necessarily see -- the headline number doesn't necessarily completely forecast what we are. And so -- I think I'm saying a few things. the trade, as we know it, as a percentage of GDP is slowing, right? So that's one fact. It's not just GDP, it's trade as a percentage of GDP is not growing the way it used to grow 10 years ago. We are impacted by that, clearly.

We are also impacted by prices, which are going down. You see it in the numbers. So competition is still fierce and people are lowering prices to get new business at the expense of the incumbent. And the activity we get from clients, which is typically their growth, as you see at 2% is better than the 0% we had last year, but not much to speak of when you compare that to the prior years. We used to have activities in the 6% to 11% to 12% range. So that's not happening anymore. So -- and that's just the underlying growth of our clients. So I mean, that's where we are.

I would say it's a glass half empty or half full. It depends on how we look at it.

I think that's maybe the dissonance that you're feeling is just this. We are not quite just the GDP number. It doesn't quite work that way.

We will now take the next question and the next question comes from the line of Michael Huttner from Berenberg.

Sorry, it was probably asked before and I missed it. On reinsurance, what's happening in pricing, please?

On, what?

On reinsurance, what's happening is...

Well, we don't know yet. We do these negotiations at the end of the year. So I really don't know what to say at this stage. I always hope it goes down, but until you get to it in front of people, you don't know.

There are currently no further questions. I will hand the call back to you.

Well, thank you. It was actually a lot more questions than I was expecting because we really didn't have that much news to report. So thank you for this contribution. We're going to close it here. We will report our full year numbers. That's going to be in February.

On February 19th.

February 19th. So stay tuned. And in the meantime, we're going to focus on Q4. So thank you very much.

Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect.