+75 years

of experience

in the top 3

global players

Power the core

2024-2027 Strategic Plan

15%

Market share

Group positioning

& organisation

COFACE SA (“the Company”) is the holding company of the Coface Group (“the Group”). It performs its activities through its primary operating subsidiary, Compagnie française d’assurance pour le commerce extérieur, and its subsidiaries. The key dates in its history are described below.

1946

Compagnie française d’assurance pour le commerce extérieur was created by decree in 1946 and established in 1948 to support French foreign trade. It is the source of the Group as it exists today. Its first shareholders – insurance companies, banks and other financial establishments – were primarily controlled by the French State. Following the privatisation of a large number of these companies in the 1980s, the French government’s indirect holdings gradually decreased.

1994

With the privatisation of SCOR (a result of the privatisation of UAP), its major shareholder, most of the capital of Compagnie française d’assurance pour le commerce extérieur became private, but Coface continued to manage State guarantees on behalf of the French State.

2000

Compagnie française d’assurance pour le commerce extérieur was listed on the primary market of the Paris Stock Exchange by its shareholders.

2002

Natexis Banques Populaires, established through the acquisition by the Caisse centrale des banques populaires of Natexis, the latter resulting from the merger of the Group’s two original shareholders (Banque française du commerce extérieur and Crédit national), acquired 35.26% of the Compagnie française d’assurance pour le commerce extérieur share capital from SCOR and became its majority shareholder, owning 54.4% of the share capital.

2006

After Compagnie française d’assurance pour le commerce extérieur was delisted from the Paris Stock Exchange in 2004, it became a wholly owned subsidiary of Natixis, the entity born out of the merger between Natexis Banques Populaires and Ixis CIB. Natixis is the financing, asset management and financial services bank of Groupe BPCE, one of the leading French banking groups, which was created by the merger of the Banques Populaires and Caisses d’Epargne in 2009.

2009 and 2010

The Company strengthened its equity through two capital increases, fully subscribed by Natixis, for €50 million and €175 million respectively, in view of maintaining the Group’s solvency margin in the sharp economic slowdown at that time.

2014

On June 27, the Company launched an initial public offering (IPO) on Compartment A of the Euronext Paris regulated market. The offering concerned a total of 91,987,426 shares, representing 58.65% of its capital and voting rights.

2018

The Company proceeded with two share buyback programmes, of €30 million and €15 million respectively, under the second pillar of the Fit to Win strategic plan, with the aim of improving the capital efficiency of its business model.

2019

On June 24, the Euronext Expert Indices Committee included COFACE SA in the SBF120, the flagship index of the Paris Stock Exchange. This was thanks to the improved liquidity of Coface securities and an increase in its market capitalisation.

2020

On February 25, Natixis announced the sale of 29.5% of the capital of COFACE SA to Arch Capital Group Ltd (“Arch”). Completion of the transaction was subject to obtaining all the required regulatory authorisations. At December 31, Natixis’ stake in the Company’s capital remained at 42.20% pending the completion of the transaction.

On October 26, the Company launched a €15 million share buyback programme. Through the Build to Lead strategic plan, Coface continues to improve the capital efficiency of its business model.

2021

On February 10, Natixis and Arch Capital Group announced that the sale of 29.5% of COFACE SA’s shares had obtained all the necessary approvals. Following this transaction, Natixis’ stake in the Company’s capital stood at 12.7%.

2022

On January 6, Natixis announced the sale of its remaining stake in COFACE SA. This disposal represented approximately 10.04% of COFACE SA’s share capital, or 15,078,095 shares. It was carried out by means of an accelerated bookbuild (ABB) at an average price of €11.55. As a result of this transaction, Natixis no longer holds any shares in COFACE SA.

2023

Its average market capitalisation in 2023 was €1,904,680,242.

The purpose of credit insurance is to protect a company against default on payment of its trade receivables. It provides conditional insurance coverage on counterparties approved by the insurer. The solution offers two basic services: the prevention of debtor risks – by selecting and monitoring insured buyers – and the collection of unpaid receivables. In the classic form of the product, these two services are the main hallmarks of the expertise of sector players.

The Group’s principal activity concerns short-term credit insurance (defined by risks of no more than 12 months), which is a market representing around €10 billion in premiums. The Group is also active in the medium-term credit insurance market through its Single Risk offer. This is a global market which is often syndicated, with a value of some €2 billion in premiums. In 2023, the Single Risk business represented approximately 1.3% of the Group’s consolidated turnover.

The Group believes that the credit insurance sector has significant growth potential. The penetration rate of credit insurance in the overall volume of trade receivables worldwide remains low – estimated at 13% by the ICISA (1) (International Credit Insurance and Surety Association) – offering real potential for client acquisition. However, long term growth in the sector remains modest, at around 3%, and typically fluctuates between 0% (2016) and 5% (2005-2009, 2019) when driven by the global economy (2). In 2020, however, the market contracted by more than 5% due to the economic crisis caused by Covid-19. This contraction then gave way to a dynamic recovery since 2021, reinforced by the effects of inflation in 2022, when the sector recorded exceptional growth of 15%.

Sector growth depends on several factors, which are sometimes contradictory:

• ●client acquisition by sector players (and conversely, the potential loss of clients);
• ●organic growth in turnover among credit insurance clients;
• ●price trends, either up or down;
• ●the risk selection policy by participants, up or down.

The Group’s activities are mainly focused on credit insurance, which represented 88.9% of its revenue in 2023. This entails providing businesses with solutions to protect them against the risk of client debtor insolvency in both their domestic and export markets.

The Group is also present in the factoring market, in Germany and in Poland, and in the surety bond market in Italy, France and Germany mainly. In some countries, mainly in Central Europe and Israel, the Group has historically sold business information and debt collection products. In 2020, the Group decided to modernise and deploy its information offering globally. It reviewed its product range, strengthened the sales force and upgraded its technology platform. The Group built a sales organisation adapted to the needs of the information market, enabling it to drive strong growth. The information services business thus saw its revenue grow by 17% in 2023.

The Group generates its consolidated turnover of €1,868 million from approximately 100,000 clients (1). Average annual income per client is less than €30,000 and is generated in very diversified business sectors and geographic regions.

The Group does not consider itself to be dependent on any particular policyholders. For the financial year ended December 31, 2023, the largest policyholder represented less than 1.75% of its consolidated turnover.

The following table shows the contribution of these activities to the Group’s consolidated turnover (at current FX and perimeter, restated for IFRS 17) at December 31, 2022 and 2023:

Thanks to its leading international presence, the Group organises its business lines around seven geographic regions in which it sells its products:

• ●Western Europe;
• ●Northern Europe;
• ●Central Europe;
• ●Mediterranean & Africa;
• ●North America;
• ●Latin America;
• ●Asia-Pacific.

The Group, which currently employs approximately 1,097 people in the Western Europe region, generated turnover of €380.1 million in the region, or 20.3% of its total turnover for the financial year ended December 31, 2023.

The Group’s activities in Western Europe are heavily oriented towards the sale of credit insurance policies. However, there are also certain local features, for example the Group also sells bonding products in France and Single Risk policies in the United Kingdom and France. All countries in this region have significantly strengthened their information offering in line with the Build to Lead strategic plan.

Western European countries are mature credit insurance markets. The offering is mainly distributed through specialised credit insurance brokers. Large brokers use their own international distribution network or third-party distribution partners, particularly for international programmes. In France, Coface rounds out its distribution network with a direct sales force across France and is diversifying its multi-channel sales approach by developing partnerships with banks.

In 2022, the region continued to develop its information offering. It also continued to improve the client experience in credit insurance.

In 2024, Coface will launch its new strategic plan Power the Core for the 2024-2027 period. This plan succeeds the Fit to Win (2016-2019) and Build to Lead (2020-2023) strategic plans. These plans have strengthened Coface’s leadership in credit insurance. They placed the client at the centre of its activities and enabled the development of specialised activities adjacent to credit insurance, such as information services.

The objective of Power the Core (2024-2027) plan is to establish the conditions to sustain Coface’s robust performance in an increasingly competitive and uncertain environment. Power the Core is structured around three main pillars:

• 1 .Strengthening Coface’s leadership in credit insurance;
• 2 .Expanding the Business Information services in synergy with credit insurance;
• 3 .Investing in data, technology and connectivity to serve clients and our business lines.

The Group will also continue to manage its capital more effectively so it can secure the resources needed to finance its growth.

As part of this plan, the Group's objectives throughout-the-cycle are :

• ●an undiscounted combined ratio at ~78%,
• ●a return on average tangible equity (RoATE) of 11.0%, at the current level of interest rate environment,
• ●a solvency ratio towards the upper end of the 155%-175% target range,
• ●a payout ratio of at least 80% of net income,
• ●an additional contribution from Business Information services to group RoATE of 50bp starting in 2027.

Coface stands out for the quality of its underwriting and its risk management. Power the Core will strengthen fundamentals while capitalising on the opportunities offered by new technologies. Commercial underwriting processes will be fully digitalised with a single interface. This will improve teams’ efficiency and the consistency of decisions. Artificial intelligence will be used to strengthen the automation and justification of risk underwriting decisions.

Coface will differentiate its sales approach and services to adapt them to the needs of its brokers and build their loyalty. The Group will also strengthen its direct sales forces and its network of partners in high-potential countries to better target mid-caps and SMEs.

Coface is one of the few players in the credit insurance market to offer solutions adapted to the needs of international key accounts, which are keen to develop their export activities while controlling their credit risk. With teams present in 35 countries, Coface Global Solutions (CGS) offers unique international coverage, able to issue policies in 100 countries.

The Group will continue to roll out its GlobaLiner offering, adapted to international customers. GlobaLiner will continue to improve the client experience and the adaptation of insurance policies in the 100 countries in which Coface operates worldwide.

The Group will roll out a non-cancellable credit insurance offering that meets the needs of markets such as the United States and Japan. In doing so, the Group will continue to maintain its risk management discipline.

Coface will adapt its strategy to better address the under-penetrated SME segment by rolling out EasyLiner in several target countries. The subscription of EasyLiner has been made easier and is carried out on an online portal in order to remove the main obstacle to the adoption of credit insurance by SMEs.

The Group will complete the simplification of its offering, which it began under the Build to Lead strategic plan, with the X-Liner range. It will deploy initiatives to commit all employees to high service quality objectives. Client retention and satisfaction will be enhanced with the transformation of key claims and contract management processes.

The Group’s organisation includes seven regions and functional departments. Each of the Group’s seven regions is headed by a regional director who is a member of the Group’s Executive Committee.

This organisation, built on clearly defined responsibilities and transparent governance, aims to facilitate the implementation of the Group’s strategic guidelines.

The organisational structure is based on:

• ●the Strategy and Development Department, headed by Thibault Surer, to which the Strategic Planning, Marketing & Innovation, Partnerships, Economic Research, Datalab and Information teams report;
• ●the Commercial Underwriting Department, headed by Cyrille Charbonnel. This department comprises the Risk Underwriting, Claims & Collections and Recovery, and Commercial Underwriting Departments;
• ●the Commercial Department, led by Nicolas Garcia;
• ●the Audit Department, led by Nicolas Stachowiak;
• ●the Finance and Risk Department, headed by Phalla Gervais;
• ●the General Secretariat, led by Carole Lytton, which includes the Legal, Human Resources, Compliance and Communications departments;
• ●the Business Technologies Department, headed by Keyvan Shamsa;
• ●the Operations Department, headed by Declan Daly.

In the corporate functions (Risk, Actuarial, Compliance and Audit), the regional departments report to head office to ensure consistency in their strategy across the Group and that control activities are performed effectively and independently. For other functions, functional ties are organised according to the principle of a strong matrix organisational structure.

The organisational chart below shows the executive organisation of Coface at December 31, 2023:

Led by Thibault Surer, the scope of this department includes:

• ●Strategic Planning, which is in charge of strategic planning, strategic research and the Group’s development through external growth;
• ●Marketing & Innovation, which analyses competition (market studies), determines client segmentation, defines the Group’s product and service offering and pricing, and leads the innovation/digitalisation strategy as well as projects in this area;
• ●the Partnership Department, in charge of developing and setting up new distribution and fronting agreements;
• ●Economic Research, which performs analysis and publishes macroeconomic research;
• ●the Data Lab, in charge of supporting modelling, innovation and digital transformation projects;
• ●Information, which aims to develop information services. It is tasked primarily with selecting and coordinating information providers and service centres to supply the databases used by risk underwriting teams.

The use of efficient, reliable and secure information systems is a major challenge for the Group in the context of its commercial offerings; the digital experience provided to its clients through its products and services is an important development focus. It is also equally important for its management, reporting and internal control procedures, since it provides a global perspective on the Group’s activities, the completion of its strategic plans and its development, the management of its risks, and the follow-up given to internal and external audit report recommendations.

In recent years, the Group has focused on aligning its information systems with its strategic objectives, and modernising, unifying and securing its business data. This approach has continued under the new strategic plan, which affords great importance to the streamlining of processes and the automation of information systems. In accordance with its disaster recovery plan (DRP), all servers worldwide are hosted in two external data centres located in the Paris region in France, which will soon be supplemented with a third cold data storage solution. All data are backed up on a private cloud. These two sites combine the Group’s information system equipment (servers, storage, backups, network and telecommunications equipment, security, etc.). In the event of a failure at one of these two sites, the other takes over in a completely transparent manner for all users. The “information systems” component of the DRP is tested twice a year.

The Group has chosen to guarantee a high level of expertise and quality in data management, and has chosen open information systems, which allow it to keep abreast of the technological developments needed for its activities, through a range of applications consisting of internally developed applications and software packages.

Furthermore, the Group’s information systems follow a quality process based on the ITIL (Information Technology Infrastructure Library) standard. Its development teams apply agile methods and an active certification process. As such, the Coface Group’s information systems have been ISO 9001 certified since 2000 (1).

Overall, thanks to this new architecture, maintenance costs have fallen and security and the assurance of business continuity have improved. The Group is committed to investing in its information systems, particularly to support its commercial and innovation strategy, while also controlling related expenses and investments.

The information systems allow staff to work remotely. In accordance with the business continuity plan (BCP), the Group has strengthened its resources to maintain security and availability outside the Company’s premises. This period was also an opportunity for criminals to develop their activities. The Group therefore decided to strengthen its security by increasing the resources allocated to both human and technical security. Processes were reviewed to ensure that security is taken into account, existing solutions were improved, and new ones have been added. This work has already proven effective in countering these ever-increasing attacks.

The Group has scaled operational infrastructure to deal with crisis situations such as Covid-19 and more generally to support the Company with a mixed office/remote working model.

The Group is governed by specific regulations in each of the countries in which it operates its insurance or factoring activities, either directly, or through branches, subsidiaries or partnerships. In certain jurisdictions, information sales and/or debt collection activities may also be regulated.

The French Insurance Code (Code des Assurances), notably in Book III thereof, provides that an insurance company holding an authorisation from a Member State that allows it to perform its activities in one or more classes of insurance, may exercise these same activities, directly or through branch offices, under the European passport.

As an insurance company, Compagnie française d’assurance pour le commerce extérieur is subject to the provisions of the French Insurance Code and European Union regulations, in particular Solvency II. The Company and its branches in the European Union are placed under the supervision of the Autorité de contrôle prudentiel et de résolution (ACPR), an independent administrative authority. It ensures that insurance undertakings are always able to meet their commitments to their policyholders through the application of appropriate internal policies and a sufficient level of own funds. In this respect, level two controls have been put in place since 2008. They mainly relate to:

• ●regulatory licences and authorisations;
• ●compliance with personal data protection regulations;
• ●the implementation of procedures to guarantee the confidentiality of data;
• ●governance rules;
• ●compliance with anti-money laundering and counter-terrorist financing legislation;
• ●the Know Your Customer obligations incumbent on insurance companies; and
• ●the effectiveness of reporting procedures.

The Company, as a holding company for an insurance group, is likewise subject to the ACPR’s additional oversight as concerns compliance with the solvency standards (see Section 5.2.2 “Financial Risks”).

In accordance with Articles L.322-4 and R.322-11-1 to R.322‑11-3 of the French Insurance Code, any party (acting alone or in concert) that intends to increase or decrease its interest, directly or indirectly, in the share capital of the Company or Compagnie française d’assurance pour le commerce extérieur, such that the voting rights held by that party (or parties, in the case of a disposal or extension of interest made in concert) would go above or below the threshold of one tenth, one fifth, one third or one half of the voting rights in the Company or in Compagnie française d’assurance pour le commerce extérieur, is required to inform the ACPR of such plan and obtain its approval in advance. Pursuant to Article L.561-2 of the French Monetary and Financial Code, Compagnie française d’assurance pour le commerce extérieur is subject to the legislative mechanism relating to combating money laundering and the financing of terrorism. The current mechanism, codified under Title Six, Book V of the French Monetary and Financial Code, includes oversight of any practices whereby third parties would use insurance operations to engage in corruption or to reintroduce the proceeds of criminal offences into the legal economy. Transactions likely to be the result of an act of corruption, money laundering, or terrorism financing are analysed and, where applicable, result in a suspicious transaction report to TRACFIN (the French financial intelligence unit), which is the competent authority for these matters in France.

Following the entry into force in 2017 of the French law of December 9, 2016 on transparency, anti-corruption and the modernisation of economic life, known as the Sapin II law, the Group reviewed its internal procedures in order to verify their legal and regulatory compliance.

The prudential regime for insurance companies, which applies to the Company as an insurance group as defined in Article L.356-1 5 of the French Insurance Code, comprises two aspects which govern their operation:

• ●a financial component; and
• ●an accounting component.

The companies of the Group operating outside of the European Union are likewise subject to a prudential regime.

Regulations resulting from

• ( i )Directive 2009/138/EC of the European Parliament and of the Council of November 25, 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance, transposed by order and decree into the French Insurance Code in April and May 2015; and
• ( ii )its implementing texts, including the delegated regulations of the European Commission (“the Commission”), in particular Delegated Regulation (EU) 2015/35 supplementing the aforementioned directive, entered into force on January 1, 2016 (together, “Solvency II”).

The aim of Solvency II is, in particular, to achieve better understanding of insurers’ risks, and create a common system for all European Union members (see Section 5.2.2 “Financial risks”).

In this context, Solvency II sets out rules relating to:

• ●the valuation of assets and liabilities;
• ●technical provisions;
• ●own funds;
• ●the solvency capital requirement;
• ●the minimum capital requirement; and
• ●the investment rules that must be applied by insurance companies.

In this regard, the insurance entities located in the European Union are branches of the Company. This makes it possible to pool all these entities’ assets and to leave only the minimum amount of cash required for operational requirements at the local level.

In other countries, regardless of the legal status of the entity concerned, the Group must comply with local regulations. To that end, the entities hold their asset portfolios and their cash locally in order to meet the asset-liability and solvency requirements set by local regulators.

In addition to the general accounting obligations enacted by Articles L.123-12 et seq. of the French Commercial Code, the Group is subject to specific accounting rules for insurance companies, which have been codified under Title IV, Book III of the French Insurance Code. In fact, the inversion of the production cycle that is specific to insurance activities, i.e. the fact of providing services with an actual cost that will only be known after the fact, justifies the existence of specific accounting rules for the companies that conduct these activities.

The Group’s consolidated financial statements are prepared in accordance with IFRS rules including the revised IFRS 17, applicable from January 1, 2023. IFRS 17 Insurance Contracts is an international financial reporting standard for the insurance sector that aims to harmonise the measurement of insurance contracts between countries, make their accounting presentation more transparent and ensuring consistency with other IFRSs. Alongside the application of this standard, IFRS 9 on financial instruments traded on spot or derivatives markets has also applied to insurance holding companies since January 1, 2023. The Group has thus adopted the French principles to show the accounting of the insurance contracts.

The policies issued in each of the countries where it is present comply with the corresponding country’s regulations. In France, credit insurance policies issued by Coface are not subject to the provisions of the French Insurance Code, but rather to those of the general law on contracts – with the exception of the provisions of Article L.111-6 (major risks), L.112-2 (pre-contractual information), L.112-4 (content of insurance policies), L.112-7 (information to be provided when the contract is offered under European freedom to provide services provisions) and L.113-4-1 (reasons to be provided to the policyholder by the credit insurer when coverage is terminated) of the French Insurance Code.

The information and biographies presented below were drawn up as at December 31, 2023. The Board of Directors of COFACE SA is composed of ten directors, with a majority of independent directors (six members), including the Chairman, as well as four directors appointed by Arch Capital.

At the meeting of November 22, 2012, the Board of Directors decided to separate the roles of Chairman of the Board of Directors and Chief Executive Officer. This decision reflects the Company’s wish to comply with best practices in corporate governance and to clearly distinguish between the strategic, decision-making and supervisory duties of the Board of Directors, and the operational and executive duties of the Chief Executive Officer. This separation was expressly reiterated by the Board of Directors at its meeting of January 15, 2016 on the appointment of Xavier Durand and on his reappointment at the meetings held on February 5, 2020 and February 27, 2024.

For the purposes of this Universal Registration Document, the Chief Executive Officer is domiciled at the Company’s head office.

The Company refers to the AFEP-MEDEF Code to prepare the report required by Article L.225-37 of the French Commercial Code.

The tables in the sections below present a summary of the compensation and benefits of any kind paid to the Company’s executive directors and members of the Company’s Board of Directors by:

• ( i )the Company;
• ( ii )companies controlled by the Company in which the office is held, within the meaning of Article L.233-16 of the French Commercial Code;
• ( iii )companies controlled by the Company or companies that control the Company in which the office is held, within the meaning of Article L.233-16 of the French Commercial Code; and
• ( iv )the Company or companies that control the Company in which the mandate is exercised, within the meaning of the same article.

Since the Company belongs to a group at the date of this Universal Registration Document, the information concerns the amounts owed by all companies in the chain of control.

The Company is a limited corporation (société anonyme) with a Board of Directors. The duties of Board Chairman, performed by Bernardo Sanchez Incera since February 10, 2021, and Chief Executive Officer, performed by Xavier Durand, have been separated.

Xavier Durand is compensated by the Company for his functions as Chief Executive Officer as described in Sections 2.3.2 and 2.3.3 below.

The Company’s compensation policy is in line with the provisions of Directive 2009/138/EC of the European Parliament and of the Council of November 25, 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) and Delegated Regulation (EU) 2015/35 of the European Commission of October 10, 2014 (Article 258(1), point 1 and Article 275).

Generally speaking, compensation practices should contribute to effective risk management at the Company, and in particular:

• ●ensure strict compliance with the laws and regulations applicable to insurance companies;
• ●prevent conflicts of interest and not encourage risk-taking beyond the limits of the Company’s risk tolerance;
• ●be consistent with the Company’s strategy, interests and long-term results;
• ●guarantee the Company’s capacity to keep an appropriate level of own funds.

In this context, Coface’s compensation policy specifies general provisions applicable to all employees according to certain criteria and provisions specific to regulated categories of employees in the definition of the Solvency II Directive.

The compensation policy is a key instrument in implementing Coface’s strategy. It seeks to attract, motivate and retain the best talent. It encourages individual and collective performance and seeks to be competitive in the market while respecting the Group’s financial balance. It complies with the regulations in force, guarantees internal equity and professional equality, particularly between men and women. It incorporates social and environmental issues.

It is proposed by the Group HR Department and is reviewed by the Nominations, Compensation and CSR Committee, and then subject to approval by the Board of Directors. The HR function is responsible for implementing the policy at the local to ensure practices are consistent within the Group, and to ensure each country is compliant with local regulations and remains competitive in the market.

Structured in a clear and transparent manner, compensation is intended to be adapted to the Group’s objectives and to assist it in its long term development strategy:

• ●fixed compensation: this is the principal component of individual compensation and depends on the skills and expertise expected for a given position. It is set at the time of hiring and reviewed annually in light of market practices, individual contribution and internal equity in strict compliance with the budgets allocated for the financial year;
• ●annual individual variable compensation (“bonus”): the Group’s variable compensation policy takes into account individual and collective performance over a given year and is assessed on the basis of financial and non-financial criteria. The eligibility rules and variable compensation level are set by function, responsibility level and market under consideration;
• ●For the Group’s Senior Managers (Top 200), the target variable compensation is set as a percentage of the base salary and may not exceed 100% of this. Variable compensation is awarded based on objectives set annually by the Management Board and the managers of each function, with the support of the Group’s HR Department. This procedure ensures that individual objectives are consistent with the Company’s strategic objectives:
  • ●for front office functions:
    • ●quantitative objectives linked to the financial performance of the entity carrying out the activity represent 20%,
    • ●objectives linked to the performance of the function in question, most of which are quantitative, represent 50%,
    • ●30% of objectives are set individually at the annual performance review. These may be quantitative and/or qualitative objectives, provided that they comply with SMART rules (specific, measurable, attainable, relevant and time-bound),
  • ●For the control and support functions, the quantitative objectives linked to the financial performance of the operating entity account for 20%, and targets set individually for 80% of the total,
  • Furthermore, to avoid any conflict of interest, for the control functions referred to in Articles 269 to 272 (audit, risk, compliance), the collective part of annual variable compensation based on financial objectives is assessed based on the Group scope, irrespective of the employee’s level of involvement, to prevent them from being directly assessed on the performance of the units placed under their control;
• ●Long-Term Incentive Plan: since 2016, the Group has awarded performance shares to two types of employees each year:
  • ●employees identified under the Solvency II Directive, which imposes a system for deferred total variable compensation. This category includes members of the Executive Committee, key functions and employees having a significant impact on the Company’s risk profile,
  • ●key employees as part of a reward and retention process.

This plan also ensures that the interests of the beneficiaries are aligned with those of the shareholders over the long term.

• ●collective variable compensation (employee savings): in France, the Group negotiated a three-year profit-sharing agreement in 2021. This agreement benefits all employees on permanent and fixed-term employment contracts, who have more than three months’ seniority within the companies forming part of the Compagnie française d’assurance pour le commerce extérieur – Fimipar economic and corporate unit (a wholly-owned subsidiary of the Group). Participation is defined according to the legal formula. Similar collective schemes exist in other Group entities depending on their legal obligations with a view to giving employees a stake in the Company’s performance;
• ●employee benefits: Employee benefits are determined locally. The Group ensures consistency of practices and guarantees a level of social protection that is competitive in the market and respectful of its employees. All members of the Executive Committee have a supplementary pension plan.

In 2020, the Group implemented a car policy aimed at harmonising practices and reducing the carbon impact of its vehicle fleet. It is gradually replacing its high-emission vehicles with petrol, hybrid or 100% electric vehicles.

The compensation of employees consists, in whole or in part, of these elements, depending on the position held, the level of responsibility and the reference market.

Pursuant to the provisions of Article 275, Section 1, Point (c) of Regulation 2015/35, Coface has identified the following functions as falling within the scope of regulated categories of employees:

• ●members of the Executive Committee including general management, the finance and risk, strategy, operations, specialised product lines, business technology functions, the General Secretariat (legal, compliance, human resources and communications), human resources, sales, risk underwriting, information, claims & recovery and collection, and regional managers;
• ●employees holding the key functions described in Articles 269 to 272 of Regulation 2015/35: audit, risk, and actuarial (the compliance key function is under the authority of the General Secretariat);
• ●employees whose professional activity has a material impact on the Company’s risk profile: compliance, risk underwriting, commercial underwriting, credit risk support, investment, reinsurance, economic research, financial communication, country managers where turnover exceeds a threshold of the Company’s total turnover determined each year.

In 2023, 32 employees fell within the regulated category. The Nominations, Compensation and CSR Committee reviews these functions, then presents them to the Board of Directors for approval. This list is reviewed each year in order to guarantee a perfect match between the evolution of the Company’s risk profile and the identification of employees.

The Group endeavours to ensure that the proportion and structure of variable compensation are balanced and that the goals set are in accordance with the Company’s strategy and risk profile.

In addition to rules common to all employees, the Group established specific compensation rules designed for the regulated categories of employees:

• ●The variable compensation package includes the annual variable compensation (bonus) and long term variable compensation (Long-Term Incentive Plan) in the form of free performance shares. Performance shares constitute the deferred component of total variable compensation and account for at least 30% of the total amount (1). They are contingent upon presence and performance conditions and have a vesting period of three years;
• ●All risk hedging transactions are prohibited.

After a somewhat turbulent 2023, which ultimately turned out much better than expected, 2024 is shaping up to be as decisive as it is uncertain. As geopolitical tensions intensify internationally, against a backdrop of ever-worsening antagonisms and strategic rivalries, no fewer than 60 national elections - presidential and/or legislative - will shape the year, in a political and social environment that is unsettled to say the least.

In this context, the macroeconomic equation has clearly become a derivative of (geo)political balances. Consequently, our central scenario, which remains that of a prolonged but still soft landing for the global economy (+2.2% after +2.6% in 2023), is more akin to a ridge than a boulevard. There are many associated risks, some of them vertiginously bearish. After ending the year with a bang, the financial markets, still convinced that disinflation can be completely immaculate, have gradually come to their senses. Without even mentioning the disruption of value chains, brought to the fore by the strikes in the Red Sea, or the ever-increasing risk of the Middle East conflict spreading, there is no guarantee at present that the battle against inflation has been won. Neither in the long-term, of course, nor even in the short-term, despite the ongoing slowdown in the global economy. With core inflation still twice the central bank target in most developed monetary areas, the challenge for 2024 will be to see whether the monetary tightening that has been underway for over 18 months is enough to go the “last mile” and bring inflation back to 2%. And to keep it there.

Regardless, and barring an accident of course, the interest rate environment to which all agents - households, businesses, and governments - have become accustomed over the last fifteen years is now firmly in the past. While the volume of debt to be refinanced will gradually increase, there is every reason to believe that the pivot of monetary policy will not be pivotal in terms of claims, and that the upward trend in insolvencies that we have witnessed for over a year will continue. This remains the main endogenous risk to our central scenario: that the virtuous circle that has hitherto combined low insolvencies, a resilient labour market and household dissaving will be replaced by a vicious circle combining accelerating insolvencies, rising unemployment, a marked slowdown in wages and, in this context, a rise in household savings. This ultimately would have an even greater impact on demand, despite the fall in inflation.

In the framework of our central scenario, we have adjusted 13 country assessments (12 upgrades and 1 downgrade) and 22 sector assessments (17 upgrades and 5 downgrades), reflecting a significant improvement in the outlook, albeit fragile, in an environment that remains highly unstable and therefore uncertain.

On January 30, 2023, Coface announced the acquisition of North American data analytics boutique Rel8ed. The acquisition brings new, rich data sets and analytics capabilities, which will benefit Coface trade credit insurance as well as the Company’s business information customers and teams.

Coface applied IFRS 17 and IFRS 9 accounting standards from January 1, 2023. All comparisons are made with 2022 figures adjusted for the new accounting standard IFRS 17, as presented on April 27, 2023

Consolidated turnover amounted to €1,868.2 million, up 6.0% on 2022 at constant FX and perimeter. The net combined ratio stood at 64.3%, or 3.3 points above the level recorded in 2022 (67.6%). This breaks down into 2.0 points decrease in the loss ratio to 37.7% and a 1.3 point decline in the cost ratio to 26.6% in relation to 2022. The Group ended the year with net income (Group share) of €240.5 million (vs. €240.4 million in 2022) and return on equity of 13.4%.

The target solvency ratio range is between 155% and 175%. The solvency ratio is estimated at 198.54% (1) at December 31, 2023. Coface will propose the payment of a dividend (2) of €1.30 per share to shareholders, representing a payout ratio of 81%.

The changes at constant FX and perimeter, presented for comparison purposes in the tables below, take into account the integration of the following entities:

• ●In the third quarter of 2023: Coface Hungary Services and Coface Service Colombia;
• ●In the fourth quarter of 2023: Coface Services Japan and Coface Adriatics.

Information in this section is derived from the statement of cash flows in the consolidated financial statements and from Note 8 “Cash and cash equivalents” in the Company’s consolidated financial statements.

The Group’s debt comprises financial debt (financing liabilities) and operating debt linked to its factoring activities (composed of “Amounts due to banking sector companies” and “Debt securities”).

For the year ended December 31, 2023, the Group’s financing liabilities, totalling €831.7 million, comprised two subordinated borrowings.

• ●A fixed-rate issue (4.125%) of subordinated notes carried out by COFACE SA on March 27, 2014 for a nominal amount of €380 million, maturing on March 27, 2024.
• The securities are irrevocably and unconditionally guaranteed on a subordinated basis by Compagnie française d’assurance pour le commerce extérieur, the Group’s main operating entity.
• COFACE SA redeemed €153 million of the subordinated bonds issued in 2014 at a fixed price of 103.625% on September 21, 2022.
• The nominal amount after this redemption stands at €227 million, still maturing on March 27, 2024;
• ●A fixed-rate issue (at 6.000%) of subordinated notes by COFACE SA on September 22, 2022, for a nominal amount of €300 million, maturing on September 22, 2032;
• ●A fixed-rate issue (at 5.750%) of subordinated notes by COFACE on November 28, 2023, for a nominal amount of €300 million, maturing on November 28, 2033.

The amounts raised through this issue will mainly be used to refinance the subordinated notes maturing on March 27, 2024.

The Group’s operating debt is mainly linked to financing for its factoring activities.

This debt, which includes the “Amounts due to banking sector companies” and “Debt securities” items, provides refinancing for the Group’s factoring companies (Coface Finanz in Germany and Coface Poland Factoring in Poland).

Amounts due to banking sector companies, which correspond to drawdowns on the bilateral credit lines set up with various banking partners of Coface Finanz and Coface Poland Factoring and the Group’s local banks (see “Bilateral credit lines” below), amounted to €762.9 million for the financial year ended on December 31, 2023.

Debt securities amounted to €1,655.7 million for the financial year ended on December 31, 2023, including:

• ●senior units issued by the VEGA securitisation fund under the Coface Finanz factoring receivables securitisation programme (see “Securitisation programme” below), in the amount of €1,015.2 million; and
• ●commercial paper issued by COFACE SA (see “Commercial paper programme” below) to finance the activity of Coface Finanz in the amount of €640.5 million.

To date, the Coface Group’s main sources of operational financing are:

• ●A securitisation programme to refinance its factoring receivables for a maximum amount of €1,300 million;
• ●A commercial paper programme for a maximum amount of €700 million; and
• ●Bilateral credit lines for a maximum total amount of €1,787.3 million.

In 2023, the securitisation programme was increased to €1,300 million and the senior 1-year and senior 3-year units were renewed in December. The first option to extend Coface Poland Factoring’s multi-currency syndicated loan was exercised in August. This €310 million loan has an initial maturity of two years with two options for a one-year extension, at the lenders’ discretion. In May, the option to extend the fifth year of the syndicated loan serving as a back-up to COFACE SA’s €700 million commercial paper programme was exercised.

At December 31, 2023, Coface Group’s debt linked to its factoring activities amounted to €2,419 million.

To refinance its factoring activities, in February 2012 the Group set up a securitisation programme for its factoring trade receivables, guaranteed by Compagnie française d’assurance pour le commerce extérieur. In December 2023, the securitisation programme was renewed and its maximum amount was increased to €1,300 million.

At December 31, 2023, €1,015.2 million had been used under this programme.

This securitisation programme includes a number of standard acceleration clauses associated with such a programme, concerning the financial position of Coface Finanz (the ceding company) and other Group entities (including certain indicators regarding the quality of the ceded receivables), and linked to the occurrence of various events, such as:

• ●payment default of Coface Finanz or of Compagnie française d’assurance pour le commerce extérieur for any sum due under the securitisation fund;
• ●the cross default of any Group entity pertaining to debt above €100 million;
• ●closure of the asset-backed commercial paper market for a consecutive period of 180 days;
• ●winding-up proceedings concerning Coface Finanz, Coface Poland Factoring, the Company or Compagnie française d’assurance pour le commerce extérieur;
• ●the discontinuance of or substantial change to the activities practised by Coface Finanz or by Compagnie française d’assurance pour le commerce extérieur;
• ●a downgrading of the financial rating of Compagnie française d’assurance pour le commerce extérieur to below BBB- for the main funding line (maximum amount of €1,300 million);
• ●non-compliance with one of the covenants linked to the quality of the portfolio of ceded factoring receivables.

The securitisation programme does not contain a change of control clause for the Company, but contains restrictions regarding a change of control in Compagnie française d’assurance pour le commerce extérieur and the factoring companies resulting in their exit from the Group.

The three covenants set by the securitisation programme include:

At December 31, 2023, the Group complied with all of these covenants.

To refinance its factoring business, the Group also set up a number of bilateral credit lines and overdraft facilities, mainly through its subsidiaries, for a total maximum amount of €1,787.3 million:

• ●bilateral credit lines and overdraft facilities with local banks for a maximum of €745.1 million, of which €56.6 million had been drawn in Germany and €14.5 million in Poland at December 31, 2023;
• ●bilateral credit lines concluded with banks:
  • ●six lines for a maximum total amount of €475 million for Coface Finanz (with maturities ranging between one and three years), of which €241.3 million had been drawn down as of December 31, 2023,
  • ●five lines (including a syndicated loan) for a maximum total amount of €667.2 million for Coface Poland Factoring (with maturities ranging between one and three years), of which €463.8 million had been drawn down as of December 31, 2023.

The Group has a €700 million commercial paper issuance programme under which the Company regularly issues securities with due dates ranging generally between one and six months. At December 31, 2023, securities issued under the commercial paper programme totalled €640.5 million. The programme was rated P-2 by Moody’s and F1 by Fitch.

Should the commercial paper market shut down, since July 28, 2017 the Group has had a currently unused syndicated loan covering the maximum amount of the commercial paper issue programme (€700 million since August 2021). The agreement regulating this syndicated loan contains the usual restrictive clauses (such as a negative pledge clause, prohibition from assigning the assets outside the Group above a specified threshold or restrictions related to the discontinuance or any substantial change in the Group’s business activities) and early repayment clauses (payment default, cross default, non-compliance with representations, warranties and commitments, significant adverse change affecting the Company and its capacity to meet its obligations under these bilateral credit lines, insolvency and winding-up proceedings), in line with market practices. This syndicated loan was renewed in August 2021 for three years with two possibilities for an extension of one year each, which were exercised in 2022 and 2023.

None

The most pessimistic scenarios for 2023 did not materialise. While the Chinese economy continued to disappoint, the United States continued to surprise on the upside. The economic impact of higher interest rates was delayed in an environment of full employment and still strong corporate balance sheets.

The most notable point of the year was the generalised decline in inflation through the second half of the year due to proactive coordinated actions of central banks and the fall of energy prices despite an increasingly tense geopolitical environment.

For 2024, Coface anticipates a drawn-out soft landing for the global economy, with growth expected at +2.2% after +2.6% in 2023. Downside risks are real, in particular due to the unprecedented number of political elections in the world, culminating with the US presidential election at the end of the year.

As expected, business failures continued to rise, sometimes above pre-pandemic levels. However, the many preventive measures taken by Coface so far avoided a spike in recorded claims. While the number of claims has not yet reached 2019 levels, the total claims amount is now equivalent.

In 2023, Coface’s IFRS 17 results were stable against the previous year, once again demonstrating Coface’s resilience in a challenging environment. This year marks the end of the Build to Lead strategic plan, with all its objectives having been met or exceeded. Coface will present its new strategic plan Power the Core (2024 - 2027), which will build on the success of the Build to Lead plan, on 5 March 2024.

The composition of the Group’s consolidated turnover (premiums, other revenue) is described under “Accounting principles and methods” in the notes to the consolidated financial statements.

“Claims expenses” correspond to claims paid under credit insurance contracts, Single Risk policies and bonding, less changes in recoveries following recourse (amounts recovered from the debtor after paying the policyholder for the claim) during the financial year, and to the change in claims provisions during the financial year, and the handling expenses for these claims, which cover the costs of processing and managing policyholders’ claims declarations, and those generated by monitoring recovery procedures (charges and provisions for internal and external debt collection fees).

Claims paid correspond to compensation paid under the policies during the financial year, net of collections received, plus costs incurred to ensure their management, regardless of the financial year during which the claim was declared or during which the event producing the claim took place, less amounts recovered during the financial year for claims previously indemnified, regardless of the year the indemnification was paid.

Claims provisions are established for claims reported but not yet settled at financial year end, as well as for claims that have not yet been reported, but which have been deemed probable by the Group, given the events that have arisen during the financial year (incurred but not reported (IBNR) provisions). The amounts thus provisioned also take into consideration a forecast of the amount to be collected for these claims. These provisions are decreased each year by reversals made following the payment of compensation or the estimate of potential losses for reported or potential claims. The difference between the amount of provisions in a given financial year (established during the first year of underwriting a policy) and the amounts revalued the following years is either a liquidation profit (revaluation downward) or loss (upwards revaluation) (see Note 23 to the consolidated financial statements).

“Operating expenses” correspond to the sum of the following items:

• ●“Contract acquisition costs”, consisting of:
  • ●external acquisition costs, namely commissions paid to business contributors (brokers or other intermediaries) and which are based on the turnover contributed by such intermediaries,
  • ●and internal acquisition costs, which are essentially fixed costs related to payroll expenses for contract acquisition and the costs of the Group’s sales network;
• ●“Administration costs” (including Group operating costs, payroll costs, IT costs, etc., excluding employee profit sharing and incentive schemes). Contract acquisition costs as well as administration costs primarily include costs linked to the credit insurance business. However, due to pooling, costs related to the Group’s other businesses are also included in these items;
• ●“Other current operating expenses” (expenses that cannot be allocated to any of the functions defined by the chart of accounts, including in particular general management expenses);
• ●“Expenses from banking activities” (general operating expenses, such as payroll costs, IT costs, etc. relating to factoring activities); and
• ●“Expenses from other activities” (overheads related exclusively to information and debt collection for customers without credit insurance).

As such, “Operating expenses” consist of all overheads, with the exception of internal investment management expenses for insurance - which are recognised in the “Investment income, net of management expenses (excluding financing costs)” aggregate - and claims handling expenses, with the latter included in the “Claims expenses” aggregate.

Total internal overheads (i.e. overheads excluding external acquisition costs (commissions)), are analysed by function, regardless of the accounting method applied to them, in all of the Group’s countries. This presentation enables a better understanding of the Group’s savings and differs on certain points from the presentation of the income statement, which meets the presentation requirements of the accounting standards.

“Cost of risk” corresponds to expenses and provisions linked to covering the ceding company risk (inherent to the factoring business) and credit risk, net of credit insurance coverage.

Underwriting income is an intermediate balance of the income statement which reflects the operational performance of the Group’s activities, excluding the management of business investments. It is calculated before and after recognition of the income or loss from ceded reinsurance:

• ●“Underwriting income before reinsurance” (or underwriting income gross of reinsurance) corresponds to the balance between consolidated turnover and the total sum of claims expenses, operating expenses and cost of risk;
• ●“Underwriting income after reinsurance” (or underwriting income net of reinsurance) includes, in addition to the underwriting income before reinsurance, the income or loss from ceded reinsurance, as defined below.

“Reinsurance income” (or income and expenses net of ceded reinsurance) corresponds to the sum of income from ceded reinsurance (claims ceded to reinsurers during the financial year under the Group’s reinsurance treaties, net of the change in provisions for claims net of recourse that was also ceded, plus the reinsurance commissions paid by reinsurers to the Group for proportional reinsurance), and charges from ceded reinsurance (premiums ceded to reinsurers during the financial year for the Group’s reinsurance treaties, net of the change in provisions for premiums also ceded to reinsurers).

“Investment income, net of management expenses (excluding financing costs)” combines the result of the Group’s investment portfolio (investment income, net gains on disposals and addition to/reversals of provisions for impairment), exchange rate differences and investment management expenses.

“Current operating income (loss)” corresponds to the sum of “Underwriting income after reinsurance”, “Net investment income excluding financing costs” and non-current items, namely “Other operating income and expenses”.

In the presentation of operating income by region, the amounts are represented before turnover from interregional flows and holding costs not charged back to the regions have been eliminated.

Tax expenses include tax payable and deferred tax that results from consolidation restatements and temporary tax differences, insofar as the tax position of the companies concerned so justifies (as more extensively described under “Accounting principles and methods” and in Note 29 to the consolidated financial statements).

Net income (Group share) corresponds to the amount of “net income from continuing operations” (corresponding to “Operating income”, net of “Financing costs”, “Share in net income of associates” and “Income tax”), “net income from discontinued operations” and “Non-controlling interests”.

Information can be found in Note 5 “Operating building and other tangible assets” of the Group’s consolidated financial statements.

CONSOLIDATED BALANCE SHEET  
& INCOME STATEMENT

SIGNIFICANT EVENTS 
& SCOPE OF CONSOLIDATION

NOTES AND APPENDICES  
CONSOLIDATED AND
PARENT COMPANY FINANCIAL STATEMENTS

These IFRS consolidated financial statements of the Coface Group as at December 31, 2023 are established in accordance with the International Financial reporting Standards (IFRS) as published by the IASB and as adopted by the European Union (1). They are detailed in the Note “Accounting principles”.

The balance sheet and income statement are presented with comparative financial information as of December 31, 2022 restated for the new IFRS 17 standard.

These IFRS consolidated financial statements for the year ended December 31, 2023 were reviewed by the Coface Group’s Board of Directors on February 27, 2024 and previously reviewed by the Audit Committee on February 26, 2024.

SA SDGP 41 was incorporated on March 23, 2000 and became COFACE SA (at the EGM held on July 26, 2007).

Pursuant to Article D.441-6 of the French Commercial Code, the table below sets out the payment terms of COFACE SA’s suppliers showing bills received and not paid at the end of the financial year for which payment is in arrears:

For the year ended December 31, 2023

To the Annual General Shareholder’s Meeting of COFACE S.A.

In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated financial statements of COFACE SA. for the year ended December 31, 2023.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2023 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit and accounts committee.

For the year ended December 31, 2023

To the Annual General Shareholders’ Meeting of COFACE SA.

In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying statutory financial statements of COFACE SA for the year ended December 31, 2023. 

In our opinion, the statutory financial statements give a true and fair view of the assets and liabilities and of the financial position of the COFACE SA as at December 31, 2023 and of the results of its operations for the year then ended in accordance with French accounting principles.

The audit opinion expressed above is consistent with our report to the Audit and accounts committee.

The Group operates in a fast-changing environment that gives rise to numerous external risks, in addition to the risks inherent in the conduct of its businesses. This chapter identifies the significant risk factors to which the Group believes it is exposed and explains how they are managed.

Despite a complex economic environment marked by geopolitical and economic tensions, the Coface Group maintained discipline in its risk management.

The table below presents the main risks to which Coface is exposed. It was prepared using the risk map, which is reviewed annually by general management and the Board of Directors’ Risk Committee. The risk map is based on a qualitative risk analysis aimed at assessing the intrinsic risk and residual impact of each risk factor, taking into account the corresponding level of control implemented within the Group.

In 2022, the risk mapping assessment methodology was adjusted according to the type of risk assessed to ensure a uniform view of all risks:

• ●a bottom-up approach for assessing operational risks, providing a hierarchical view of inherent and residual risks by selecting them according to their degree of criticality and their probability of occurrence;
• ●a top-down approach based mainly on expert analysis. This is used for risks other than operational risks, in this case credit, strategic, financial and reinsurance risks and those incorporating the ESG dimension (Environmental, Social and Governance factors). In the same way as the bottom-up approach, the methodology for assessing non-operational risks is based on a hierarchical assessment of risks based on the probability of occurrence of the risk and its impact, according to a rating scale comprising four levels (high, significant, medium, low). The analysis is supplemented by discussions with experts taking into account risk mitigating factors such as controls, procedures, governance, systems or resources. In 2023, the analysis was strengthened by taking into account the reviews carried out in each region as well as quantified risk indicators, such as risk appetite indicators, the impact on the capital requirement (SCR) or the income statement, offering an in-depth insight into the Group’s potential risks. Finally, these risks have been prioritised according to an internal calculation methodology that takes into account the level of inherent risk and its management. This allows us to rank the main risk factors as described below.

The exposure to these different risks is described in more detail in Section 5.2 of this report.

The risks considered to have a major inherent impact are listed below:

Before making a decision to invest in the Company’s shares, prospective investors should consider carefully all the information set out in this document, including the risks described below. As of the date of this report, these risks, were they to occur, are those the Group believes could have a material adverse effect on the Group, its business, its financial position, its solvency, its operating results or outlook, and which are material in making an investment decision. Prospective investors should nonetheless Note that the risks described in this chapter may not be comprehensive, and that there may be additional risks that are not currently known or whose occurrence, as of the date of this Document, is not considered likely to have a material adverse effect on the Group, its business, its financial position, its operating results or outlook.

Risk governance uses an internal control system compliant with the provisions of the Solvency II Directive 2009/138/EC and the French decree of November 3, 2014 on the internal control of companies active in banking, payment services and investment services and subject to ACPR supervision.

It is divided into three lines of defence that structure the Group’s risk management and internal control policy as presented below:

The operational functions are in charge of the proper assessment of the risks generated by their activities as well as for level one controls that enable them to ensure the correct execution of their operations. To do this, they have their own governance, most often based on risk-taking delegation systems and operational committees where risks are assessed and decisions made in accordance with the Group’s operating rules. Their risk assessment and management work is laid out by the control functions on an annual basis, in particular through level one control plans.

The risk management and compliance functions establish a strong risk management culture within the company and are responsible for ensuring that the risks identified by the operational functions are effectively managed, in particular through the preparation of a risk map and level two control plans.

These two functions work closely together with the support of a dense network of more than one hundred risk and/or compliance officers in the Group’s various countries. To do this, they have a centralised tool used in all entities to manage and launch level one and level two control plans, record operational or compliance incidents, update the risk map and business continuity plans and monitor action plans intended to address identified weaknesses.

The internal audit function provides an independent assessment of the efficiency of the risk management mechanism and more broadly, of all the Group’s activities and processes, following a multi-year audit plan.

The Solvency II regulatory framework grants the Chief executive officer and, as applicable, the Deputy Chief executive officer, the status of executive directors of a group. It authorises the appointment by the Board of Directors of one or more other executive directors.

Each key function is controlled by the Chief executive officer or the effective manager and operates under the ultimate responsibility of the Board of Directors. It has direct access to the Board for reporting any major problem in its area of responsibility. This right is enshrined in the Board of Directors’ Rules of Procedure.

The professional qualifications, knowledge and experience of the heads of key functions should be adequate to enable sound and prudent management. They must be of good repute and integrity.

Key functions are free of influences that may compromise their capacity to carry out the tasks assigned to them in an objective, loyal and independent manner.

Since 2017, regional audit, risk and compliance functions report to managers in charge of these functions at Group level. Similarly, subject to compliance with local regulations, the same reporting line by function has been established between country and regional managers.

Under the responsibility of the Chief Risk Officer, the risk management function, including the internal control function, covers all the Group’s risks and reports to the Group Risk and Compliance Committee.

It is tasked with assessing the relevance and effectiveness of the internal control system. Regarding Solvency II, it works closely with the actuarial function and is responsible for drafting reports and for prudential oversight. To perform its duties, the risk management function has direct access to Board meetings.

It ensures that risk policies are defined in accordance with regulatory requirements and monitors their application. The policies are reviewed annually by senior management, then approved by the Board of Directors. They are then communicated to all the Group’s entities, thereby helping to forge a common risk culture.

The risk management function, including the internal control function:

• ●implements and monitors the risk management system;
• ●monitors the Group’s overall risk profile and identifies and assesses emerging risks;
• ●Reports on risk exposure and advises the Board of Directors on risk management matters;
• defines and monitors the Group’s appetite (1) for such risks: the risk appetite takes into account six dimensions through 18 indicators;
• ●validates the partial internal model and other operational models;
• ●updates the mapping of risks to which Coface is exposed, working closely with the operational functions;
• ●contributes to improving and formalising level one control activities implemented by operational staff;
• ●performs level two checks on operational risks, with the exception of compliance risks;
• ●ensures that continuity plans are regularly tested in all entities;
• ●collects data on incidents and losses from the various entities.

The Group’s Risk Management Department leads a network of seven regional risk managers for each region. The regional risk managers also lead a network of correspondents in the countries within their geographic scope. Specifically, these correspondents are responsible for performing the centrally established level two controls at local level, verifying compliance with Group rules and monitoring the progress of action plans.

The compliance function is in charge of developing best practices and preventing compliance risk within all Coface Group companies.

The compliance function’s scope includes:

• ●financial crime prevention:
  • ●prevention of money laundering and terrorist financing,
  • ●compliance with embargoes, asset freezes and other international financial sanctions,
  • ●fraud prevention, prevention of active/passive corruption and influence peddling (Sapin II law);
• ●protection of clients and third parties:
  • ●Business ethics,
  • ●relations with suppliers;
• ●data protection and confidentiality;
• ●professional ethics (management of conflicts of interest);
• ●prevention of agreements or arrangements between competitors;
• ●compliance with laws and regulations applicable to insurance activities.

The Group’s Internal Audit Department is placed under the responsibility of the Group Audit Director, who is also in charge of the internal audit key function. The Audit Director attends the Group General Executive Committee meetings in an advisory capacity and reports to the Group’s Chief executive officer.

The structure of the internal audit function is based on a reporting line to the Group Audit Director.

An internal audit policy defines the purview of the function. The key objectives of this function include evaluating all or a selection of the points below, according to the scope of each assignment, and reporting on them:

• ●the quality of the financial position;
• ●the level of risks effectively incurred;
• ●the quality of organisation and management;
• ●the consistency, adequacy and proper functioning of risk assessment and control systems, and their compliance with regulatory requirements;
• ●the reliability and integrity of accounting information and management information, including information linked to Solvency II issues;
• ●compliance with laws, regulations and the Group’s rules (compliance). The audit checks the quality and relevance of the procedures implemented to ensure compliance with laws, regulations and professional standards applicable to the audited activities in France and abroad, and with the Group’s policies, decisions by its corporate bodies, and its internal rules;
• ●the quality, effectiveness and smooth operation of the permanent control mechanism and other components of the governance system;
• ●the quality and level of security offered by the information systems; and
• ●the effective implementation of the recommendations of prior audit missions, whether they derive from the proceedings of the Group’s audit function or from external audits by the supervisory authorities.

Assignments are set out in an audit plan approved by the Board of Directors and cover the entire Group scope over a limited number of financial years. An audit ends with a written report and recommendations which are implemented under the supervision of the audit function.

The independence of the audit function is inherent in its mission. There should be no interference in the definition of its field of action, in the fulfilment of its proceedings or in the disclosure of the results of those proceedings.

The Group Audit Director has full authority to refer matters to the Chairman of the Audit Committee and has free access to the Audit Committee. If necessary, and after consulting the Chief executive officer and/or the Chairman of the Audit Committee, the Group Audit Director may inform the ACPR (French Prudential Supervision and Resolution Authority) of any breaches observed.

The Group Audit Department has no operational activity. It neither defines nor manages the mechanisms that it controls. The internal auditors have no other responsibility under any other function. Lastly, the Group Audit Department has access to all the information required to carry out its duties.

The actuarial function is performed by the Director of the Actuarial Department, who has reported to the Chief Financial Officer since July 1, 2016. It is tasked with advising senior management and supporting its efforts to ensure the Group’s Long-Term solvency and profitability and with overseeing compliance with Solvency II requirements, such as the recording of reserves. To perform its duties, the actuarial function has direct access to Board meetings.

The actuarial function is the point of reference for actuarial matters for several Group departments (Finance, Information, Commercial, Marketing and Claims & Collections) in all Group entities. In particular, it informs the Board of Directors on the appropriateness of the calculation of technical provisions.

In accordance with the requirements of the European Solvency II Directive, the actuarial function is in charge of the following:

• ●coordinating the calculation of technical provisions;
• ●ensuring the appropriateness of the methodologies, underlying models and assumptions used in the calculation of technical provisions;
• ●assessing the adequacy and quality of data used in the calculation of technical provisions;
• ●comparing best estimates against experience;
• ●informing the administrative, management or supervisory bodies of the reliability and adequacy of the calculation of technical provisions;
• ●overseeing the calculation of technical provisions in the cases specified in Article 82 of the directive (approximations related to data quality issues in the estimation of technical provisions);
• ●expressing an opinion on the overall underwriting policy;
• ●expressing an opinion on the adequacy of reinsurance arrangements;
• ●contributing to the effective implementation of the risk management system referred to in Article 44. In particular, it ensures compliance with reserving and underwriting policies and the correct implementation of reinsurance.

The Group continues to rely on its teams to monitor the economic situation, which is deteriorating in emerging countries in particular, and the tense geopolitical situation, which could disrupt its business activity.

In this context, it will continue to manage its debtor risk carefully and prudently and, if necessary, will implement action plans to contain this risk, as it did in previous years. The structure of the reinsurance program over several years offers good visibility for the management of debtor risk. With regard to financial and investment portfolio risks, the Group does not intend to significantly change its refinancing structure, which has proven its resilience, or its investment allocation, on which it will continue to act prudently. It will continue to invest in strengthening its risk management programs, including cyber risk, compliance risk and ESG (Environmental, Social and Governance) risk, in order to address the changes that are under way in these areas.

CSR STRATEGY INTEGRATED
INTO THE STRATEGIC PLAN

4,970 EMPLOYEES
IN 58 COUNTRIES

13% of single risk 

exposure
linked to ESG (€428M)

- 36% reduction in emissions
linked to rail and air travel vs. 2019
 

/Recognition from non-financial agencies

In accordance with the requirements relating to the statement on non-financial performance, the Company this year is presenting its business model in the Section entitled “Overview of Coface” (Chapter 0), as well as the main non-financial risks and challenges relating to its business (see next page).

To reinforce its responsibility policy and make it a key component of its business activities, the Coface Group has mapped its non-financial risks since 2018. This mapping was revised and improved in the 2022 financial year to refine the qualification and quantitative assessment of risks, as well as their inclusion in the Group’s overall strategy, supplementing the risk maps already monitored by the Group and presented in Chapter 5.

The process of non-financial risk mapping is detailed in paragraph 6.7.1.

The following table summarises the main non-financial risks identified by Coface. The nature of these risks and the policies implemented to address them, as well as the main indicators monitored by Coface, are detailed in Chapter 6.3.

Cross-reference table for the Universal Registration Document (URD):

The CSR strategy is an integral part of the Build to Lead strategic plan.

Since 2021, a Group CSR Manager has been responsible for enhancing Coface’s CSR strategy and rolling it out in coordination with the various departments. The Group CSR Manager reports directly to Carole Lytton, Group General Secretary.

Work on enhancing the CSR strategy was organised at the beginning of 2021 and Coface decided to map the pillars of its CSR strategy relative to the UN Sustainable Development Goals (SDGs), a global benchmark in this area, so as to focus on desired global impacts.

The Group has prioritised 11 of the 17 SDGs, most of them selected for their relevance to Coface’s business and the management of its employees.

Other SDGs, for example “quality of education”, have been strongly prioritised given the management team’s sensitivity to these issues. The latter has been chosen as a priority in the Company’s future commitments with organisations around the world.

• ●A responsible insurer that harnesses its core businesses to contribute to a more sustainable world;
• ●A responsible employer to take into account Coface’s social and societal impact, including employee development and engagement;
• ●A responsible enterprise that works to actively reduce its environmental footprint.

These three pillars are underpinned by a foundation called “Driving the culture”, aimed at structuring the Group’s ESG approach and developing a solid responsible culture among all Coface stakeholders through a communication plan. This last pillar is essential to the success of the first three.

The pillars will be explained in more detail in the sections below.

To facilitate the management of this CSR strategy and Coface’s progress with regard to its CSR commitments, the Group sought to implement a data collection tool in 2023. During the implementation of the tool, the reporting practices of recent years were reviewed with a view to challenging and improving them. Workshops were organised with various contributors, in particular to review the relevant indicators for Coface, propose more granular indicators where possible, and harmonise data collection practices across countries and calculation methodologies, particularly between the annual report and the calculation of the carbon footprint.

The tool was also designed to start preparing for the new CSRD regulation, in particular with the GHG protocol methodology that will be followed for the next carbon review. Guidelines have thus been defined and included in the reporting protocol as well as in the data collection tool, as an input aid.

Based on the next carbon footprint assessment, the regions and countries in the reporting scope will benefit from clear and personalised GHG emission reduction targets so that they can steer their action plan and progress through the tool.

This tool was used to collect the data presented below and automatically translate the environmental data into equivalent CO2 by incorporating the emission factors included in the ADEME databases.

Convinced that its core impact is generated by its business operations, Coface has decided to undertake several structural projects internally.

Coface’s purpose is to facilitate B2B trade in domestic and export markets alike. All the items of value provided by Coface as a credit insurer – macro-economic risk analysis, the selection and supervision of commercial counterparties, insurance protection in the event of unpaid payments and the reduction of unpaid amounts through active recovery – contribute to this purpose. In times of economic difficulties, the increase in risks nevertheless leads to a tightening of the Group’s underwriting policy, which inevitably impacts client satisfaction. This risk is regularly echoed in the economic press, as was the case during the economic crisis caused by the COVID-19 outbreak in 2020.

The Group’s management in the various phases of the economic cycle hinges on striking the right balance between sound risk management and support of the business flows of insured clients. However, persistent client dissatisfaction could indicate a deviation from the Group’s stated purpose, leading to a loss of market share, pressure on prices, a deterioration in the Company’s results and at the same time a reduction in the Group’s contribution to the smoothness of B2B trade. Which is why it is vital to manage and measure this risk.

To address the risk of a deterioration in client satisfaction, Coface has implemented a policy on the continuous improvement of service quality and communication with its clients. Coface thus acknowledges that, during delicate economic phases, supporting companies also involves knowing how to explain changes in guarantees to put clients in a position to manage their risks in the most informed manner possible. This policy on improving the quality of service and communication is assessed using a series of KPIs (including the Net Satisfaction Score, Net Promoter Score and Customer Experience Index) monitored on a monthly basis by the Service Quality Board, a cross-functional body responsible for managing service quality and client satisfaction.

This Group priority was confirmed by the appointment in 2021 of a Chief Operating Officer tasked with reinforcing Coface’s programme on operational excellence and service quality and further improving the client experience.

To measure client satisfaction, the Group has chosen the Net Promoter Score (NPS) as a key indicator. Also known as the net recommendation rate, the NPS gives a voice to clients, calling on them to rate their likelihood of recommending the Company on a scale of 0 to 10 (“Would you recommend Coface to a friend or business partner?”) This indicator is interesting because it indicates an attachment to the Company and is forward-looking.

The Net Promoter Score is measured every month with clients (excluding brokers) in credit insurance, the Group’s main activity. It is based on a monthly survey with a rotating sample. Every month, around 10% of clients are surveyed, the monthly rotation serving to prevent excessive solicitation. By using this methodology, the Group obtained an average response rate (number of questionnaires validated/emails sent) of 11.3% in 2023, in line with the response rates generally observed for this type of survey. The various aspects of the survey (client countries, segments, distribution network) are sampled in a balanced manner for each wave to ensure that the results are comparable. However, the number of responses collected does not allow statistically reliable segmented analyses to be performed on a monthly basis. Any trends detected are therefore subject to qualitative additions, for example by calling “detractor” clients, which the Group has rolled out widely as part of its quality approach.

On a response scale of 0 to 10, respondents giving a score of between 0 and 6 are counted as “detractors” and respondents giving a score of 9 or 10 are counted as “promoters”. Those attributing a score of 7 and 8 are considered as “passives”. The NPS is the difference between the percentage of promoters and the percentage of detractors, oscillating on a scale from -100 (where all respondents chose a score of 6 and under) to +100 (where all respondents chose a score of 9 or 10).

For example, the following 100 responses generate an NPS of -29:

NPS measured in 2023:

The NPS fell at the beginning of the pandemic. But owing to the Group’s ability to adapt, it then rose to a satisfactory level and had improved significantly by April 2021. Since 2022, the Group’s average NPS has remained at historically high levels. This trend should be put into perspective with the relatively high coverage rates compared with the historical Coface average that the Group proposed over this period, themselves enabled by the extremely limited levels of insolvency in the economy despite price pressures and the instability corresponding to the conflict in Ukraine. It should be noted that this sustained support for clients in terms of risk acceptance has recognised as part of surveys even though inflationary pressures automatically increased the levels of coverage requested. Since mid-2023, the number of insolvencies has returned to normal in many markets, making it possible to envisage a reversal of trends on coverage rates and the NPS in the coming months.(1)

Several fundamental trends in Human Resources were observed in 2023:

• ●increased competition in the international talent market and expertise in financial services;
• ●a gradual renewal of the expectations of applicants and employees in terms of work-life balance, and in terms of the quality of the working environment and the corporate culture;
• ●the growing need to recognise oneself in diverse teams, with inclusive management;
• ●the confirmation of the need for flexibility in the organisation of the time and place of work;
• ●the volatility of talented professionals highly sensitive to salary increases and career advancement.

These challenges drover more than ever the work of Coface’s Human Resources teams. They informed the development of the teams’ skills and guided the projects and initiatives for the year.

The MyVoice survey, administered three times a year, measures the effectiveness of initiatives and the results of these trends, and guides the work of managers at all functions and levels in a highly precise manner.

The work carried out on engagement has been greatly strengthened. Coface has numerous indicators that measure progress on the priority areas of the Human Resources policy.

Career management, international occupational mobility and the identification of high potentials capable of filling tomorrow’s management and management positions are now served by firmly established processes and policies in Coface’s governance and the results are constantly improving. Around 100 employees are currently on international transfers.

the proportion of vacant senior management positions filled by internal talent during the year stabilised at a high level of over 60%.

the attrition rate of high potentials, a professional population more exposed to the market, remains consistent with the overall attrition rate, and remains at a reasonable level (around 8%). At the same time, the engagement of these high-potential professionals is high, exceeding the internal and external benchmark.

The Diversity, Equity and Inclusion initiative was particularly dynamic, contributing to establish Coface as a company perceived by talented professionals as a responsible company in this area.

Coface has stepped up training and awareness-raising for all staff on inclusive behaviour and the network of regional champions has worked in-depth across Coface’s entire scope.

To remain competitive on compensation, the Human Resources teams also worked to build a global compensation management module using the “My HR Place” tool, the first stone of which was laid in 2022. From 2024, this new tool will enable the application of wage policies as close as possible to the local teams.

Lastly, the rapid development of information sales once again strongly mobilised the Human Resources teams, with the recruitment and integration of more than 100 new employees and the management of more than 350 people dedicated to this new activity.

Coface’s headcount increased compared with 2022. The most significant increase in headcount, as in the previous year, related to sales and marketing.

This increase reflects one of the initiatives of the Build to Lead strategic plan, namely the development of information sales. The number of employees directly dedicated to sales increased by 22% compared with the previous year, accelerating the development of this product line.

The Group’s Human Resources data system “My HR Place” is now the source used for all employment analyses and statistics, global and local, that are requested from the Human Resources teams, and in particular for this document.

Data from the system now supports studies, action plans and strategic decisions based on reliable analyses.

At December 31, 2023, Coface had 4,970 employees. Coface benefits from the diversity of cultures, working methods and practices of the countries in which the Group operates.

The figures in this report illustrate the workforce and give a global view of the Company. Given the Group’s organisational model, indicators are presented by region.

At December 31, 2023, the Group employed 4,970 people in 58 countries, compared with 4,721 at December 31, 2022. The table below shows the geographical breakdown of the Group’s workforce since December 31, 2021:

The Coface workforce increased by 5.3% in 2023. The Western Europe region, the largest in terms of headcount, comprises the employees of the Group’s head office and the French commercial entity. Next comes Central Europe where, in addition to commercial activities, two structures based in Romania carry out the production of operational tasks for other Group entities. It comprises both a shared services centre and the Group IT development centre.

The table below breaks down the Group’s workforce by type of activity since December 31, 2021:

As presented above, the Sales and Marketing activities are experiencing strong growth, particularly as a result of the strategic ambitions of the Build to Lead strategic plan relating to the development of Information Sales and the creation of value through growth.

The workforce rose 5% overall, reflecting the increase in activity and Coface’s commercial performance, despite a more volatile and complex economic environment.

Permanent contracts continued to account for the large majority of jobs at Coface:

For the Group as a whole, 98.4% of Coface employees work on permanent contracts.

Because careers are lengthening and the Group is convinced of the effectiveness of intergenerational dialogue and collaboration, diversity in Human Resources serves to drive Coface’s collective performance. This aspect is highlighted by the breakdown of the workforce by age group and region.

Several countries, where the average age of employees is over 45, are long-standing locations for Coface (Germany, USA) in which the resignation rate remains historically low. In contrast, the workforce is younger in Asia-Pacific and Latin America countries, where almost one-quarter of the workforce is under 30.

Environmental issues are becoming increasingly important in public debate. The Paris Agreement, which aims to limit global warming to 1.5 °C compared with the pre-industrial level (and thus targeting carbon neutrality by 2050 at the latest), marks a turning point by recognising the significant role played by companies in global climate governance.

Companies are facing new regulations in this respect, as well as significant pressure from investors and employees to adapt their business activity to current environmental challenges and reduce their environmental footprint.

Companies, Coface included, failing to comply with regulations and contribute to this international effort may be exposed to controversy and see their appeal fade in the eyes of internal and external stakeholders.

Seeking to contribute to this effort and adapt to current and future regulations, Coface is beginning by adapting its business model, gradually taking into account the environmental and climate risks of clients and debtors, the environmental and social impacts of investments and by demonstrating its ambition to strengthen its support for ESG projects with its Single Risk activity (as explained above in paragraph 6.2). In 2021, the Group also initiated an approach to reduce its environmental footprint, starting with measuring its carbon footprint.

A carbon assessment was finalised in 2022, based on 2019. This enabled Coface to establish an action plan to reduce its greenhouse gas (GHG) emissions and initiate a trajectory on emissions reduction (the approach explained in Section 6.4.2).

In parallel, Coface implemented a Group vehicle policy in 2020 applying to all entities, the main objectives being uniform and consistent practices and a reduction in the carbon impact of its vehicle fleet. The vehicles available in each country’s catalogue must be adapted to the use of drivers. The emphasis is on hybrid and petrol models and a limited range of models per vehicle, the aim being to increasingly reduce the environmental impact of its fleet in future years. Additional options that have a negative impact on vehicle consumption are also prohibited. As explained later in this chapter, the Group has planned a review of its car policy in 2024 in order to limit the increase in the number of cars in the fleet and strengthen the electrification of the fleet.

A travel policy for Coface France employees was also adapted and rolled out for the Group in 2018.

In addition, the building housing the head office in Bois-Colombes since 2013 has a capacity of around 1,200 employees (accounting for approximately 94% of office space in France). It has obtained NF MQE certification (high environmental quality for construction) and BREEAM certification (BRE Environmental Assessment Method). It incorporates current best practices in terms of the immediate environmental impact, construction materials and processes, and production of waste.

The head-office building also has BBC low-consumption certification. It preserves natural resources through various systems; for example, limited need for water for watering recovered from roofs and energy-efficient outdoor lighting.

To succeed in the approaches presented in reference to the first three pillars of the CSR strategy, Coface has implemented a cornerstone initiative called “Driving the culture” aimed at structuring the Group’s ESG approach and developing a robust culture of responsibility among all Coface’s stakeholders through a communication plan.

Coface introduced a CSR governance system in 2022 mainly based on a network of CSR champions in the various regions and a CSR Committee including all the members of the Executive Committee and chaired by the CEO. The Group CSR Manager also attends Group Risk Committee Meetings to ensure that ESG issues are properly taken into account at Coface. The role of champions is to communicate on the CSR strategy within their region and to collect ideas or questions from employees. The champions also organise awareness-raising initiatives or workshops in the regions, work together with the Communication Department and the regional management, and help with the implementation of the emissions reduction plan in the regions.

The role of the Group CSR Committee is to coordinate Group and regional initiatives while steering Coface’s environmental and social ambitions and progress at each level of the organisation.

The Board of Directors is regularly informed about the CSR strategy, particularly through the Nomination, Compensation and CSR Committee. The Board monitors the progress of the initiatives launched in this context.

To strengthen the development of a responsible culture at each level of the organisation, some regions, such as Latin America, have sought out CSR correspondents in each of their countries.

Pursuant to EU Regulation 2020/852 of June 18, 2020, known as the “Taxonomy Regulation”, Coface is required, when closing its 2023 financial statements, to publish the information provided for in Article 8 of said regulation, supplemented by the Commission Delegated Regulation of July 6, 2021.

The European Taxonomy classifies economic activities having a positive impact on the environment.

The objective is to direct investments towards activities considered as environmentally sustainable with a view to achieving carbon neutrality by 2050.

The Taxonomy Regulation identifies economic activities that contribute substantially to six environmental objectives:

• 1 .Climate change mitigation;
• 2 .Climate change adaptation;
• 3 .The sustainable use and protection of water and marine resources;
• 4 .The transition to a circular economy;
• 5 .Pollution prevention and control;
• 6 .The protection and restoration of biodiversity and ecosystems.

On January 1, 2024 (based on the 2023 financial year), Coface's regulatory obligation concerns the publication of information relating to eligible activities aligned with the European Taxonomy under the first two environmental objectives in force; and also the publication of information relating to eligible activities under the other four environmental objectives.

As a reminder, an aligned activity must:

• ●Be eligible for the European Taxonomy;
• ●Contribute substantially to one or more of the environmental objectives;
• ●Do Not Cause Significant Harm to any of the environmental objectives (DNSH);
• ●Carried out in compliance with certain minimum guarantees (human and social rights).

According to the European Commission FAQ published in December 2021, insurers are obliged to publish the information required by the European Taxonomy regulation based on the real information published by companies.

For fiscal year 2023, Coface will publish two regulatory ratios for the investment ratio, namely a weighted ratio based on revenue (CA) and a weighted ratio based on capital expenditure (CAPEX).

The investment ratios published below are based on the actual data reported by the companies. The ratio corresponds to the amounts of assets aligned (in market value) with the European Taxonomy regarding the first two climate objectives (climate change mitigation and adaptation) relative to the market value of the covered assets.

The exposure to Taxonomy-aligned economic activities (including aligned green bonds) of Coface’s investment portfolio amounts to 3.8% of covered assets, based on actual data weighted by the companies’ revenue.

Exposure to economic activities aligned with the Taxonomy for Coface’s investment portfolio amounts to 2.3% of covered assets, based on actual data weighted by companies’ capital expenditure.

Given the lack of actual data reported by companies, Coface is not in a position to determine investments in taxonomy-eligible activities under the other four environmental objectives. Coface will publish this information when actual data reported by companies becomes available.

In accordance with Article 7.1 of Commission Delegated Regulation (EU) 2021/2139:

• ●covered assets (ratio denominator) correspond to the total invested assets including exposures to cash and cash equivalents, excluding exposures to central governments, central banks and supranational issuers;
• ●derivatives and investments in companies not subject to the NFRD and non-EU companies are excluded from the numerator of the key indicators but are included in the denominator;
• ●exposures to assets eligible for the European Taxonomy concern corporate bonds, listed equities and cash and cash equivalents.

All Taxonomy data has been transmitted and checked by our asset manager Amundi. The Amundi Taxonomy methodology was audited by Coface in 2022.

The breakdown of environmental objectives on climate change mitigation and adaptation cannot be added up to calculate total aligned revenue and total aligned investment expenditure. Companies sometimes report only on the total, and not on detail by environmental objective. In addition, revenue, as well as capital expenditure, can be considered to be both aligned with the objective of climate change mitigation and adaptation to climate change. The addition of the two factors would thus result in double counting.

According to the European Commission’s FAQ, financial companies must report on nuclear and fossil gas activities by completing templates 1, 2, 3, 4 and 5 of the Complementary Delegated Act on Gas and Nuclear Activities.

Given the patchy actual data (reported by companies), Coface has filled in template 1 using a conservative and cautious approach. Coface will publish this information when the actual data reported by companies is available and complete.

Given the fragmented actual data (reported by companies), Coface is not in a position to communicate the breakdown of economic activities aligned with the Taxonomy referred to in lines 1 to 6. Coface will publish this information when the actual data reported by companies is available and complete.